Uncertainty, Institutional Structure and the Entrepreneurial Process

May, 2003

While there exist numerous theories of entrepreneurship, we aim to construct an account that is thoroughly process-oriented and is thus consistent with non-teleological evolutionary foundations. To accomplish this, we combine theories of structural uncertainty with recent work in the theory of social institutions. From such a perspective, creatively thinking and acting entrepreneurial individuals can account for endogenous social change through their effect on institutions. Our approach helps to clarify many of the inconsistencies that arise in the existing entrepreneurial literature and we are able to clarify issues of entrepreneurial failure, self-employment versus entrepreneurship, entrepreneurs versus managers, and incentive for entrepreneurs in formal versus informal institutional settings.

Continue reading at Springer Link.

Praxeology, Entrepreneurship, and the Market Process

December, 2003

 

It is surely Israel M. Kirzner who has promoted the role of the entrepreneur more than any other author in the second half of the twentieth century. His description of the market process and entrepreneurship in his Competition and the Market Process (1973) represents a seminal contribution to Austrian thinking, although it has been slow to catch on in broader circles. As Humberto Barreto argues above, for example, an entrepreneurial role seems to have disappeared from mainstream economics as the theory of the firm progressed (1989, pp. 95–98). The standard core of microeconomics allows little room for entrepreneurial elements, particularly if the latter are defined in terms of uncertainty, intuition, ignorance, and disequilibrium. In light of this intellectual discord and given his recent retirement, it is timely to reconsider Kirzner's unceasing efforts to resurrect the role of the entrepreneur, and especially his effort to reconcile this role with conventional neoclassical approaches.
 

It is surely Israel M. Kirzner who has promoted the role of the entrepreneur more than any other author in the second half of the twentieth century. His description of the market process and entrepreneurship in his Competition and the Market Process (1973) represents a seminal contribution to Austrian thinking, although it has been slow to catch on in broader circles. As Humberto Barreto argues above, for example, an entrepreneurial role seems to have disappeared from mainstream economics as the theory of the firm progressed (1989, pp. 95–98). The standard core of microeconomics allows little room for entrepreneurial elements, particularly if the latter are defined in terms of uncertainty, intuition, ignorance, and disequilibrium. In light of this intellectual discord and given his recent retirement, it is timely to reconsider Kirzner's unceasing efforts to resurrect the role of the entrepreneur, and especially his effort to reconcile this role with conventional neoclassical approaches.

 

Continue reading at Cambridge Journals. 

The Normative Bias in Entrepreneurial Theory

June, 2011

This article highlights the normative bias in the entrepreneurial theories of Schumpeter and Kirzner. This bias, while significant, has remained largely implicit, and the approaches of both authors, we argue, entail "Panglossian" views of entrepreneurial processes. We trace these problems to each of the theories' teleological foundations and suggest that defining entrepreneurial "outcomes", and normatively judging those outcomes, will be more problematic than commonly admitted. We suggest analyzing entrepreneurship from a non-teleological approach that decouples the entrepreneurial act from the complex and unpredictable processes that follow from that act. Such an approach should eliminate the normative priors that currently exist and should open up a range of new areas to explore under the rubric of "entrepreneurship". We also hope to stimulate discussion between entrepreneurship and theorists, since, as we argue, there appear to be affinities between the approaches. In particular, our approach to entrepreneurial analysis implies the kinds of discontinuities that have become the hallmark of the new classical method. Our arguments are briefly illustrated by references to several brief examples at the end of the article.

Find article at World Scientific.