We all know the saying “don’t judge a book by its cover,” but can we judge a book by its first chapter? I have recently had the chance to read the first chapter of Nicolai J. Foss and Peter G. Klein’s forthcoming book “Organizing Entrepreneurial Judgment: A New Approach to the Firm” which is an attempt to combine Entrepreneurial theory with ‘Theory of the firm’.

The premises of the book are simple, Foss and Klein have taken it upon themselves to address, what they consider to be important connections between the theory of entrepreneurship and the theory of the firm. This they do though a Knightian perspective of entrepreneurship. Even though that Frank Hyneman Knight is not considered to be an Austrian economics it is clear form the way the author’s presents their arguments, the list of contents, and from previous work from both scholars that this is a theory strongly founded in an Austrian economical perspective.

With the use of ‘the theory of the firm’ Foss and Klein are aiming to advance entrepreneurship research a field, within economical research that has over the last years become a hot topic, especially in all aspects of government, but still with surprisingly little advancement. It is therefore exciting when someone is attacking the thought questions of entrepreneurship and trying to address the questions of why, when, and how. Why do entrepreneurial opportunities arise? When do certain individuals and not others discover and exploit opportunities? And, How different modes of action are used to exploit those opportunities?

Foss and Klein are addressing entrepreneurship, not as an abstract concept, but as the results of judgment and actions that are firmly founded in economical uncertainty. Which not only places Frank Knight centre stage, but also departs from more traditional scholars like Joseph Schumpeter and Israel Kirzner.

Personally I do believe that the theory of entrepreneurship, will benefit from the lesson ascertain in work done within the theory of the firm. But that the theory of the firm can benefit from the perspectives in the theory of entrepreneurship, I am rather sceptical about. Theory of the firm is focused on controlling uncertainty, typical though governance, theory of entrepreneurship however is about exploiting the very same uncertainties.

So, if you can judge a book by its first chapter, it looks like that ‘Organizing Entrepreneurial Judgment: A New Approach to the Firm’ will be an interesting read, not only for those interested in the Austrian school of economics but for anyone that has an interest in understanding entrepreneurship. But do not just take my word for it, you can read the first chapter here, free and legal.

‘Organizing Entrepreneurial Judgment: A New Approach to the Firm’ can be pre-ordered at amazon.com and will be shipped January 2012.