Entrepreneurship as Coordination

Abstract

This article presents a new lens for studying entrepreneurship, what I call entrepreneurship as coordination. In certain situations, people have coordination problems. Buyers and sellers may want to go to a market, but only if the other person also goes. Instead of being stuck in a coordination problem, an entrepreneur is able to coordinate the actions of people within a market. Such coordination raises the gains from trade that buyers and sellers realize and allows the entrepreneur to earn a profit. To highlight the specific role of coordination, I use a simple model from the global games literature. I show how the entrepreneur can improve on coordination by sending a signal to each person in the market. In the limit, the entrepreneur's signal eliminates coordination failures. Finally, I show how my interpretation of entrepreneurship provides new insights by connecting different concepts of coordination used within economics.