Entrepreneurial opportunities, implicit contracts and market making for complex consumer goods

Godley, A. C. ORCID: https://orcid.org/0000-0002-3160-2499 (2013) Entrepreneurial opportunities, implicit contracts and market making for complex consumer goods. Strategic Entrepreneurship Journal, 7 (4). pp. 273-287. ISSN 1932-4391 doi: 10.1002/sej.1167

Abstract/Summary

This article extends the theory of entrepreneurial opportunity exploitation, outlining how under certain conditions, opportunity exploitation is dependent on market making innovations. Where adverse selection and moral hazard characterize markets, consumers are likely to withdraw regardless of product quality. In order to overcome consumer resistance, entrepreneurs must signal credible commitments. But because consumers purchase without fully specifying requirements, entrepreneurs' commitments take the partial form of implicit contracts, creating strong mutual commitments to repeated transactions. These commitments enable novel markets to function, but introduce additional costs. This article illustrates the theory with the historic case of Singer in sewing machines

Item Type	Article
URI	https://reading-clone.eprints-hosting.org/id/eprint/29536
Identification Number/DOI	10.1002/sej.1167
Refereed	Yes
Divisions	Henley Business School > Leadership, Organisations and Behaviour
Uncontrolled Keywords	entrepreneurial opportunities; opportunity exploitation; implicit contracts; credible commitments; market making; price rigidity
Publisher	Wiley
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