New Competition

The Firm: This characteristic distinguishes how the entrepreneurial firm compares to hierarchical firm. The entrepreneurial firm is a strategically oriented firm that chooses the terrain on which to compete. It does not seek to maximize profits by only minimizing costs, but seeks strategic advantages on the basis of innovation in product, process, and organization. Innovation in the entrepreneurial firm takes place by making marginal adjustments to product, process, and organization slowly making it better. Another component to the firm is the creation of organizational flexibility that promotes learning. Persistence to detail is operated at every level directed towards improving the production of their role.

The Production Chain: The production chain extends from the first to the last operational phase in turning raw material and labor into a final product. There are four forms of coordinated production chains: hierarchical-bureaucratic and hierarchical-clan in vertically integrated enterprises, market amongst autonomous and independent firms, and consultative-cooperative amongst mutually independent firms.

The Sector: Neoclassical economics notes than an industrial sector is one of organizationally carbon copy firms producing indistinguishable products and competing by price. A sector can include a variety of inter-firm practices and extra-firm agencies such as trade associations, apprenticeship programs, labor education facilities, joint marketing arrangements, amd regulatory commissions, each of which facilitates inter-firm cooperation. Firms of a sector not only compete, but also cooperate to provide common services, to shape “the rules of the market game”, and to shape complementary investment strategies. Firms can cooperate over prices in order to compete over different aspects of their product or service. This can affect economic performance and therefore the challenge is to establish means of cooperation that generate