Is Entrepreneurship Only About Entering A New Business

In this paper, the authors consider the exit/entry problem from an entrepreneurial point of view. A model of predictable behavior, originally developed by Ronald Heiner is used to explain the entry exit behavior of the competitive firm facing uncertainty. The exit-entry model presented in this paper is different from previous models in the sense that it explains how greater uncertainty will cause inflexibility in behavior. Assuming no exit/entry cost, conclusion can be made that they pay the price for this shortcoming by suffering occasional losses for staying in the market when they should exit, and hence lowering their long run profitability. With cost associated to exit and entry, this conclusion should be modified but still holds. The model also provides them with more flexibility since they do not have to specify the sources of uncertainty or any limit to output price.