Entrepreneurial Efficiency: An Empirical Framework and Evidence
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This paper examines a particular aspect of entrepreneurship, namely firms' activities in adapting to idiosyncratic environ- mental changes by appropriately reallocating resources. It presents an empirical framework that examines the social value of firms' abilities to predict and adapt to the movement of idiosyncratic shocks. In order to demonstrate how to implement our menthod, the quantitative effect of firms' prediction ability on Tatal Factor Productivity (TFP) is investigated using semi-aggregated data from Japan's Census of Manufacturing.
Abstract
This paper examines a particular aspect of entrepreneurship, namely firms' activities in adapting to idiosyncratic environ- mental changes by appropriately reallocating resources. It presents an empirical framework that examines the social value of firms' abilities to predict and adapt to the movement of idiosyncratic shocks. In order to demonstrate how to implement our menthod, the quantitative effect of firms' prediction ability on Tatal Factor Productivity (TFP) is investigated using semi-aggregated data from Japan's Census of Manufacturing.
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