INNOVATIVE ENTREPRENUERSHIP UNDER UNCERTAINTY

Year 2017, , 168 - 176, 30.06.2017

Sefer Sener , Volkan Hacioglu

https://doi.org/10.17261/Pressacademia.2017.506

Abstract

Purpose- This paper
analyzes the economic activity of innovative entrepreneurship under
uncertainty. We examine the profit maximization model of innovative firm under
two kinds of uncertainties. The first kind of uncertainty pertains to market
conditions. Erratic behavior of future prices creates market uncertainty.

Methodology-
This uncertainty is at least partly resolved by rational expectations
hypothesis. But repercussions of market imperfections still loom large in the
background of theoretical framework. The second kind of uncertainty is caused
by technological changes and the patterns of innovations. We use the black-box
approach methodology to production function and then improve it with a learning
model. Findings- The pace and space
of innovation adoption is retarded and narrowed by technological uncertainties.
This problem is tackled by neoclassical innovation models to some extent. In
particular, endogenous growth models and the industrial dynamics model attempt
to endogenize the innovation and technology under rational expectations.

Conclusion- But these
models provide incomplete insights for they do not deal with learning behavior
of innovative entrepreneurs. We propose an alternative learning model which
takes into account the adaptive and imitative behavior of individual innovators
whose economic actions matter in the general framework of real life economics.

Keywords

Innovation, technology, uncertainty, entrepreneurship, expectations

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