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Entrepreneurship and Comparative Advantage

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  • Carmen Elena Dorobat
  • Mihai-Vladimir Topan

Abstract

This article advances a blueprint for understanding the function entrepreneurs perform in international trade, by drawing on the connection between comparative advantage and entrepreneurial judgement. The mutual benefits of specialisation and exchange are demonstrated whenever we find a minimum relative difference between the productivity of resources; however, we argue in this article that the concrete pattern of specialisation—manifest in exchanges between individuals, firms or states—cannot be discovered from outside the market. Rather, comparative advantage has an irreducible entrepreneurial component, and international specialisation is an entrepreneurially driven phenomenon. We explain this by unearthing the connection between entrepreneurship (understood as judgement of the allocation of resources under uncertainty), the heterogeneity of capital and comparative advantage.

Suggested Citation

  • Carmen Elena Dorobat & Mihai-Vladimir Topan, 2015. "Entrepreneurship and Comparative Advantage," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 24(1), pages 1-16, March.
    • Handle: RePEc:sae:jouent:v:24:y:2015:i:1:p:1-16
    DOI: 10.1177/0971355714560036
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    References listed on IDEAS

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    3. Israel M. Kirzner, 1997. "Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 60-85, March.
    4. Foss,Nicolai J. & Klein,Peter G., 2012. "Organizing Entrepreneurial Judgment," Cambridge Books, Cambridge University Press, number 9780521697262, January.
    5. David B. Audretsch & Roy Thurik, 2001. "Linking Entrepreneurship to Growth," OECD Science, Technology and Industry Working Papers 2001/2, OECD Publishing.
    6. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    7. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(2), pages 190-207.
    8. Ronald W. Jones, 1961. "Comparative Advantage and the Theory of Tariffs: A Multi-Country, Multi-Commodity Model," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 28(3), pages 161-175.
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    Cited by:

    1. Dorobat, Carmen-Elena & McCaffrey, Matthew & Topan, Mihai Vladimir, 2024. "Exploring the microfoundations of hybridity: A judgment-based approach," Journal of Business Venturing, Elsevier, vol. 39(4).

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