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Entrepreneurship theories

Entrepreneurship theories. Per L. Bylund Robert J. Trulaske, Sr. College of Business University of Missouri. Three Approaches. Structural Industrial organization, market structure, the entrepreneurial firm Occupational Entrepreneurship as self-employment Functional The economic function

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Entrepreneurship theories

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  1. Entrepreneurship theories Per L. Bylund Robert J. Trulaske, Sr. College of Business University of Missouri

  2. Three Approaches • Structural • Industrial organization, market structure, the entrepreneurial firm • Occupational • Entrepreneurship as self-employment • Functional • The economic function • The classical approach: Cantillon (1755)

  3. Traditions Hébert & Link: • German tradition • von Thünen, Schumpeter (1911) • Chicago • Knight (1921), Schultz • Austrian • Mises (1949), Shackle, Kirzner (1973)

  4. Why entrepreneurship? • Schumpeter (1911), Kirzner (1973) • explanans for econ. development, market process • Cantillon (1755), Menger (1871), Mises (1949) • main actor; “driving force of the market” • price determination • Knight (1921) • judgment, future-oriented imagination • the firm, organization

  5. Innovation (Schumpeter) • Creativedestruction • “its role in the perennial gale of creative destruction” • New combinations • 1. production of new types of goods, or change of properties of the existing goods • 2. introduction of the new method of production, that may be based on the new scientific discovery • 3. opening of a new market • 4. use of the new sources of raw materials and intermediate goods • 5. new organization of production

  6. Innovation (Schumpeter) • Disequilibration • Disruptivetechnologies • Empirical studies • Technologyuse and development • Patent data

  7. Opportunities (Kirzner) • Alertness • “Entrepreneurship does not consist of grasping a free ten-dollar bill which one has already discovered to be resting in one’s hand; it consists in realizing that it is in one’s hand and that it is available for the grasping” • Arbitrage of price discrepancies • “Pure” entrepreneurship • Cannot make a loss • No capital investment • Instantaneous

  8. Opportunities (Kirzner) • Equilibration • The nature of opportunity • objective vs. subjective • discovered vs. created • Empirical studies • Identifying, measuring opportunity • How entrepreneurs find opportunity • How to measure?

  9. Judgment (Knight) • Risk vs. uncertainty • “Estimate of an estimate” • Knowledge of where to find knowledge • Imaginative entrepreneur • Judgment cannot earn a wage • the firm • earns residual

  10. Judgment (Knight) • Recently rediscovered • “Softer,” seemingly less well-defined concept • Empirical studies • Yet to come; how to measure? • Comparing ex ante decisions, ex post outcomes

  11. Entrepreneurship theories, summary • Structural • “Small-firm-is-entrepreneurial” • Occupational • Self-employment • Functional • Innovation • Opportunity • Judgment

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