In Search of The Meaning of Entrepreneurship
In Search of The Meaning of Entrepreneurship
In Search of The Meaning of Entrepreneurship
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Robert F. Hebert
Albert N. Link
Entrepreneurship
executives.
Department of Economics
Auburn University
Auburn, AL 36849
USA.
Department of Economics
University of North Carolina at Greensboro
Greensboro, NC 27412
USJi.
(1986, p. 32).
Because neither entrepreneurs nor entrepreneurship are new concepts of human experience, it
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entrepreneurial activity.
Entrepreneur.
equated it with a deterioration of entrepreneurship. He claimed that the U.S. economy was in the
process of changing from a dynamic to a static
economy, thereby losing its capacity to generate
new technical and organizational alternatives to
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1. The entrepreneur is the person who assumes the risk associated with uncertainty.
2. The entrepreneur is the person who supplies
financial capital.
3. The entrepreneur is an innovator.
4. The entrepreneur is a decision maker.
5 . The entrepreneur is an industrial leader.
Cantillon
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opinion, continue to plague the theory of entrepreneurship for some time to come.
The crucial role of the entrepreneur in economic theory was first and foremost recognized by
Cantillon (1931, pp. 47-49) wrote, "is an entrepreneur who promises to pay to the landowner for
an uncertainty."
A. Richard Cantillon
economic agents: (1) landowners, who are financially independent: (2) entrepreneurs, who engage
in market exchanges at their own risk in order to
make a profit; and (3) hirelings, who eschew active
Cantillon broke with convention in emphasizing the economic function of the entrepreneur
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"if they be too few it will be a profitable undertaking which will encourage new hatters to open
Mises.
B. Joseph Schumpeter
economics to distinguish between risk and uncertainty. Knight pointed out that some forms of risk
are constantly called upon to exercise their business judgement, and if they guess wrong, they must
pay the price.
Cantillon argued that the origin of entrepreneurship lies in the lack of perfect foresight.
Individuals cannot know the future and/or its
impact on economic life. Cantillon did not, however, consider this lack of foresight a defect of the
continually in their economic decisions are entrepreneurs. We believe that Cantillon's conception
of the entrepreneur is extremely important to a
proper understanding of the concept in economic
analysis. But his view did not predominate, nor
was it complete in itself. It was myopic in one
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factors of production, and this function is performed in every period mechanically as it were, of
itself, constitutes no essential economic distinction," he declared (1934, p. 20). The function of
making decisions is another matter, however. In
Schumpeter's theory, the dynamic entrepreneur is
Schumpeter reduced his theory to three elemental and corresponding pairs of opposites: (1)
the circular flow (i.e., tendency toward equilibrium) on the one hand versus a change in economic routine or data on the other; (2) statics
theory has not revolutionized conventional microeconomic analysis. Moreover, the modifications of
Schumpeter's theory have had mixed results. On
the pragmatic side, Albert Hirschman has tried to
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C. T. W. Schultz
among entrepreneurs, (3) the supply of entrepreneurship is not treated as a scarce resource, and
(4) entrepreneurship is neglected whenever gen-
nomic inquiry.
(1975, p. 843).
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that entrepreneurs have not received their due in economics (1980, p. 443).
exclusive connection between risk and entrepreneurial activity. In his words, "the bearing of risk is
D. Israel Kinner
Another provocative "new" theory of entrepreneurship has been advanced by Israel Kirzner, a
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In response to his critics, Kirzner has confronted this asymmetry and has altered his
position somewhat. He now contends that uncertainty is central to the notion of entrepreneurial
activity but he maintains that the relationship is
more subtle than formerly supposed. Entrepre-
rates the main historical themes of entrepreneurship: risk, uncertainty, innovation, perception, and
change. It accomodates a range of entrepreneurial
activities within a market system, including but not
original formulation of Cantillon. Time and uncertainty may alter the form of action called entrepre-
rately analyzed.
makes decisions that run counter to the conventional wisdom either because he has better
"wider view":
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useless, role.
A second lesson that emerges from the histor-
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References
Link, Albert N., 1987, Technological Change and Productivity Growth, London: Harwood Academic Publishers.
Heath.
Rothbard, Murray N., 1985, 'Professor Hebert on Entrepreneurship', Journal of Libertarian Studies 1, 281-286.
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