n48949SE Academic Article uri icon


  • This paper develops a simple model of entrepreneurial enterprises. The analysis differs from traditional work on entrepreneurship by analyzing why entrepreneurial activities are typically conducted in small firms owned by the entrepreneur. I argue that ownership incentives are an advantage of small firms. When the probability of success of an economic activity becomes small, if becomes costly for large firms to commit to strong incentives, and small workerowned firms emerge. The paper discusses application of the theory to innovation, wildcat oil exploration, restaurants and retail trade, professional practices, salesmen, and franchising. Copyright 1995, Wiley Blackwell. All rights reserved

published proceedings

  • Economic Inquiry

author list (cited authors)

  • WIGGINS, S. N.

publication date

  • January 1, 1995 11:11 AM