Abstract and Keywords
This article argues that traditional managerial economics is too oriented toward short-run efficiency at the expense of an understanding of the requirements for long-run competitive advantage. To address innovation and growth, managerial economics must encompass intangible assets and capabilities. The article covers the management of intangible assets such as business models, organizational design, and intellectual property. It also discusses key ideas such as cospecialization, complementary assets, and increasing returns. These concepts are brought together in the Dynamic Capabilities framework, which has been the subject of an extensive strategic management literature. Dynamic capabilities, the strength of which determine the firm’s ability to address and shape changing business environments, require managers to adopt an entrepreneurial role. Managers, especially entrepreneurial managers, are too little represented in managerial economics. This lacuna weakens the ability of the field to understand and address the long-term needs of the modern business enterprise.
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