| What are the strenghts and weaknesses of the neoclassical model | See picture |
| What does Schumpeter's dynamic view of competition say about entrepeneurs? | Schumpeter’s dynamic view of competition:
• Innovation creates disequilibrium in the market – market power and abnormal profit for the innovator
• Other competitors forced to exit or whole industry disappears (creative destruction)
• Imitation follows, abnormal profit and market share of innovator declines normal profit and equilibrium will be restored |
| How does the austrian school view competition and entrepreneurs? | Austrian school view of competition put entrepreneur at the center:
• Entrepreneurs respond more quickly, discover new information to adjust plans and improve outcomes
• With new information and trading opportunities, other entrepreneurs appear and resources are reallocated to them |
| How has ownership and control changed over the years according to Kay? | Kay argues that today control matters more than ownership. In the mid 19th century, ownership meant control. In the mid 1930s the ownership and control were split. Today, rarely the owner controls the means of production in large firms. However, there can be tension between manager’s objectives and shareholders’ (i.e., owners). This creates the need of managerial theories of the firm, as managers now hold the control of the firm. |
