Entrepreneurship

BIBLIOGRAPHY

The concept of entrepreneurship and the portrayal of the entrepreneur as leading economic figure, even cultural hero, derive from both the evident nature of the market system and the projected self-image of middle-class business leaders. As with any such concept, its meaning depends on the larger model of which it is a part and its more or less precise relationships to other key figures. Defining the entrepreneur or entrepreneurship deals with a term whose meaning is highly variable in use, and generates serious questions.

The term capitalist could refer to all business people, or to only the suppliers of capital, with the others as managers—the promotional, organizational, and operational decision makers—and with the entrepreneur performing a particular function or role, transcending the others. Even that array of possibilities is rendered further complicated by formulations that treat the entrepreneur as either (1) an active promoter or agent of change; or (2) a passive responder to market signals and to change; and either (1) a creator or (2) finder of opportunities.

A troublesome question is whether entrepreneurship refers (1) to a particular function(s) or (2) to persons. If the answer is persons and not function(s) per se, then the correlative question is whether it refers to a particular group of persons or to an aspect of the behavior of all persons. Some individuals may well undertake more and/or more specialized entrepreneurship. But all individuals undertake one or more of the functions of entrepreneurship that can enter the definition of the term—even if it is a matter of reacting to price and other signals in a creative way.

Further difficulties arise when one tries to distinguish the certain behavior(s) or qualities that constitute entrepreneurship, requiring that one identify what makes any activity or quality “entrepreneurial.” But that effort is a part of the larger and vexing question of the definition of entrepreneur(ship), say, one that does not equate entrepreneurs with business managers as organizers and decision makers.

Two further, interrelated questions are, first, whether the meaning and defense of capitalism involves a system dominated by capitalists and/or entrepreneurs, or a market system of economic agents without such domination, that is, whether capitalism or market economy is the more systemic term; and, second, whether some kind of entrepreneur(ship) has the critical role in all economic systems, i.e., whether only one generic economic system exists and therefore actual economies differ principally in the identity and institutional setting of entrepreneurship.

Several considerations almost invariably enter discussions of entrepreneurship. One consideration is that the entrepreneur is achievement oriented, manifesting the type A personality and always seeking success. The second consideration is that the substantive meaning of achievement is a matter of culture. In market economies, especially capitalist ones, success is achieved through rising in large, important organizational structures, acquisition of wealth, and similar iconic honors. The third consideration concerns the entrepreneur serving as a driving force in the economy, whatever the specifics of its organization and structure. One consideration that often but by no means always enters discussion is the relation of business and governmental entrepreneurs. This relation may take the form of a competition over the use of resources; movement among key leadership positions in private and public sectors; another involves the tendency of entrepreneurs to act up to, if not even beyond, the limits imposed by law.

Definitions typically turn on the incorporation of functions. One definition, centering on coordination, can be close to that of manager or decision maker within the firm; alternatively the usage may turn on the contribution that individual entrepreneurship makes to coordination that is systemic, that is, going beyond the firm to the economic system. In either case, the key element is capability in participating in institutionalized decision making processes specializing in the making of policy.

A second function often ensconced within a definition is that of adventurer, the role of formulating a vision and acting upon it. At its most dramatic, this definition tends to make capitalism a civilized game of power in monetary form. This entrepreneur is not content with finding niches or paths not seen by others, and therefore goes beyond finding to creating them themselves. One definition centers on the heroic role itself. This definition recognizes entrepreneurship as a system-specific honorific channel of achievement motivation and/or a designation of such achievement.

Other definitions that incorporate functions are the management of risk or, more properly, uncertainty; the marshalling, management or analysis, and application of information; serving as the adjudicator of conflicting interests within and between firms; and the identification if not creation of opportunities. Some definitions may combine functions, such as innovation under uncertainty and asymmetrical information. Not all definitions apply equally well to both entrepreneurial function and their application to specific individuals.

The concept of the entrepreneur, whether it be understood to pertain to a class of person or an aspect of all agents’ activity or one function or another, is related to other concepts as well. Innovation can result from entrepreneurial activities in in-house or external research and development generating new technology. Both market structure and the form of competition are both influenced by entrepreneurial activity along technological, strategic, and political lines, and influence the form, direction, and mode of entrepreneurial activity. Although much economic theorizing is static, the introduction of entrepreneurship both opens up a wider range of efficient results and multiple paths of economic growth, and the possibility of multiple efficient results and economic-growth paths amenable to entrepreneurial activity. The realm of entrepreneurship is, moreover, transformed by Canadian-American economist John Kenneth Galbraith’s concept of a new industrial state in which corporate and general economic decision making are expanded from the top levels of corporate managements and a mix of government-business antagonism and quid pro quo relationships to decision making lower down in the corporation, in technological and educational elements, and to a system of more or less joint planning for economic stability. In Galbraith’s conception, the entrepreneur is less heroic but no less important a figure.

Finally, attention should be given to Italian economist Vilfredo Pareto’s theory of the circulation of elites and what may or may not be its modern formulation, the market for corporate control and therein competition between entrepreneurs. An alternative formulation juxtaposes individuals with power to competitive forces.

SEE ALSO Capitalism, State; Enterprise; Socialism; State, The

BIBLIOGRAPHY

Barreto, Humberto. 1989. The Entrepreneur in Microeconomic Theory. New York: Routledge.

Casson, Mark. 2003. The Entrepreneur. 2nd ed. Northampton, MA: Edward Elgar.

Galbraith, John Kenneth. 1967. The New Industrial State. Boston: Houghton Mifflin.

Kalantaridis, Christos. 2004. Understanding the Entrepreneur: An Institutionalist Perspective. Burlington, VT: Ashgate.

Kirzner, Israel M. 1973. Competition and Entrepreneurship. Chicago: University of Chicago Press.

Kirzner, Israel M. 1985. Discovery and the Capitalist Process. Chicago: University of Chicago Press.

Klapp, Merrie Gilbert. 1987. The Sovereign Entrepreneur: Oil Policies in Advanced and Less Developed Capitalist Countries. Ithaca, NY: Cornell University Press.

McClelland, David C. 1961. The Achieving Society. Princeton, NJ: Van Nostrand.

McIntosh, Wayne V. 1997. Judicial Entrepreneurship. Westport, CT: Greenwood Press.

Witt, Ulrich. 2003. The Evolving Economy. Northampton, MA: Edward Elgar.

Warren J. Samuels