Integrating the exploration-exploitation dilemma and bad institutions to the Austrian theory of destructive entrepreneurship: a new perspective

Abstract

Contemporary Austrian theory has expanded widely on the relationship between entrepreneurship and the structure of production, yet it has never touched on the existence of an exploration-exploitation dilemma within organizations. The objective of the article is to show that the integration of the exploration-exploitation dilemma into the Austrian theory adds new fruitful elements to the function of the destructive entrepreneur, as presented by the Austrian economists of the firm. By showing how an organization's complexity can motivate destructive entrepreneurship on competition, it firstly explains how their analytical tools, which were limited in this area to the infra-organizational field, can also be applied to the catallactic field; it secondly enriches the traditional Austrian vision of the relation between institutions and entrepreneurship, in highlighting a reverse causal relationship, that has not yet been pointed by Austrian literature on entrepreneurship, between bad institutions and the destructive entrepreneur.