The Theory of Entrepreneurial Rent

  • Chandra S. Mishra


The theory of entrepreneurial rent argues that the source of competitive advantage lies in the firm’s value creation and appropriation mechanism enhanced by the entrepreneurial behavior and sustained by the entrepreneurial incentives. Entrepreneurial logic emphasizes the firm’s proactive exploitation of environmental uncertainty and complexity, recognition of complex stimuli, organizational agility, managerial promotional focus, and distant searches for superior opportunities. The entrepreneurial incentives enhance management learning, which further enhances the management logics and situation awareness, enabling the firm to seize cognitively distant opportunities that provide the value creation engine its fuel. It is the firm’s superior execution of the business model that exploits the value opportunities in a timely manner, sustained by the entrepreneurial incentives, which creates and sustains the competitive advantage. It is the management’s desire to earn an entrepreneurial surplus that drives the firm’s superior performance. Entrepreneurial incentives enhance the firm’s alertness, agility, absorptive capacity, proactive adaptation, and opportunity focus. The firm’s entrepreneurial behavior is a source of competitive advantage that provides the firm an entrepreneurial rent and the management an entrepreneurial surplus. Several research propositions are developed herein.


Business Model Situation Awareness Dynamic Capability Management Logic Transactive Memory 
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Copyright information

© The Author(s) 2017

Authors and Affiliations

  • Chandra S. Mishra
    • 1
  1. 1.Florida Atlantic UniversityBoca RatonUSA

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