Abstract:
In the absence of a unique theory of entrepreneurship or leadership, an attempt is being made to apply several modern tools and concepts of economics - namely, rent-seeking versus profit-seeking, collective action theory and Coase Theorem to redefine the observed roles of these important economic agents. While all three are found to be engaged in collective action process to achieve some common goals of their stakeholders, this process tends to be broader in terms of scale and scope as a manager goes up the ladder to assume the role of an entrepreneur or even a
leader. While a manager manages only a limited number of stakeholders to maximize private profits, the collective action process becomes broader and dynamic in the hands of entrepreneurs bringing in periodic innovations to start up new business or significantly renew an existing business. An entrepreneur becomes a leader when he involves a social process bringing in fresh stakeholders to internalize possible negative externalities and redefine property rights across broader group to maximize the value of their common assets. Leadership thus tends to go beyond supernormal profits or private rent earning to maximize long run profits of a larger group of stakeholders. Using
examples from India, this paper shows how collective action theory as well as the Coasian negotiation process can work hand in hand to elevate a manager to the level of an entrepreneur and beyond to produce business leaders, who can convert private business into a social business.
