Entrepreneurial Efficiency: An Empirical Framework and Evidence

Katsuya Takii

Professor, Osaka School of International Public Policy, Osaka University, 1-31, Machikameyama, Toyonaka, Osaka 560-0043, Japan, Fax: +81-6-6850-5656 takii@osipp.osaka-u.ac.jp

JEL Classification: D21, D61, O40

Abstract

This paper examines a particular aspect of entrepreneurship, namely firms' activities in adapting to idiosyncratic environmental 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.

Keywords:

Entrepreneurship, Prediction ability, Total factor productivity, Allocative efficiency, Aggregate production function

Acknowledgments

I would like to thank Carmen Li, boyan Jovanovic and seminar participants at the University of Essex, the Kansai Macro Workahop, Osaka Prefecture University, OSIPP and Sogang University for helpful comments. I also thank Kenjiro Hirata for his excellent assistance. Financial support from the Japanese Ministry of Education, Culture, Sports, Science, and Technology (the Grant-in-Aid for Scientific Research) is gratefully acknowledged.

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