TOWARDS AN INTERDISCIPLINARY THEORY OF ENTREPRENEURSHIP

IMPORTANCE OF ENTREPRENEURSHIP

The consequences of liberalized world trade for industrial countries are twofold.

New export markets

Jobs are shifting

Industries shifting to low cost locations

Asian countries are gaining importance

Germany trying to encourage entrepreneurship as a

tool for innovation

Unemployment is rising the relation of

entrepreneurship and job generation has became

center of interest

CONT…

Small enterprise creating more jobs

Entrepreneurship in the form of starting up of a

company can create jobs.

Entrepreneurship also act as a central figure for the

distribution of economically relevant information.

THE ROLE OF ENTREPRENEUR IN THE HISTORY OF ECONOMIC THEORY

Disappearance of Entrepreneur from economics literature.

Reason for the disappearance is the separation of micro and macro economics. Also introduction of neoclassical theory is considered as reason for disappearance of Entrepreneur.

In early economics entrepreneur has been considered as risk barer, innovator, industrial leader etc.

Marginal utility revolution at the end of 19th century was the beginning of neoclassical theory.

ENTREPRENEUR AS UNCERTAINTY-BEARER

Risk is consequence of uncontrolled and controllable change

Change has not occurred because of entrepreneur process but entrepreneur use changes for his purpose.

He considered profit of the entrepreneur as a compensation of bearing uncertainty.

THE ENTREPRENEUR AS INNOVATOR

Schumpeter listed five categories of action: The introduction of new good quality of a

good Introduction of new method of production-

some thing as yet untried in industry The opening of new market The utilization of some new source of supply

for raw materials or intermediate goods The carrying out of some new organizational

form of the industry

THE ENTREPRENEUR AS ALERT DISCOVERER

Focus-Price realized by entrepreneurs

Prices imbalance asymmetric distribution of information

ECONOMIC ROLE: Adjustment-prices-equilibrium

ECONOMIC PROBLEM: Information?

MARKET PROCESS THEORY (market= discovering+learning by accepting imperfect

knowledge)

Information- advantages for own profit Learning Competition

Aim- Maximize outcome Determine new targets

ENTREPRENEUR AS A COORDINATOR

Neo-classical theory- No theory on entrepreneurship

Implicit access Highly subjective to informationCASSON MODIFIED NEOCLASSICAL ASSUMPTION=

assymetric info+ transaction costs (marketing making service)

Entrepreneur as a coordinator- DEFINITION Dynamism, bearing economic uncertainty and

alertness Perception, imaginative

ENTREPRENEUR IN ECONOMIC THOUGHT

Entrepreneurship is difficult in economic literature

Kirzner-Entrepreneur is central element in market

process

Knight –Entrepreneur profit

Schumpeter-2 fold-

Dynamic and evolutionary perspective of economic

development

Identify the entrepreneur

ECONOMIC DECISION

Why certain individual becomes an

entrepreneur.

Model of Campbell shows that new

entrepreneurship could be stimulated by

higher profits for existing ventures , that high

profits attract imitative entrepreneurs.

Economic Decision Model , Baurnol the

development of an economic explanation of

entrepreneurship.

SYSTEMATIC PERCEPTIVE

The model of systematic approach to

entrepreneurship AGIL: Level of Social

System , Level of Economic System and Level

of Entrepreneurship System.

Function of social system

1. Concept of Systems

2. Concept of Homeostasis

3. Concept of thresholds

PSYCHOLOGICAL

Entrepreneurs are approx. 70% male

(decreasing).

Entrepreneurs are in their mid 30s

(decreasing).

Have a higher need for achievement.

Need for Independency , a prime motive.

THE BEHAVIORAL APPROACH

• The main idea is to distinguish between the

dynamic entrepreneur and more static small

business manager.

• The Schumpeter’s theory states- “ Everyone

is an entrepreneur when he actually carries

out new combinations.”

ENTREPRENEURSHIP RESEARCH SHOULD TRY TO ADDRESS THE FOLLOWING QUESTIONS:

What kinds of activities does the entrepreneur

perform?

With whom he must work?

What basic roles can be inferred from the study of

the entrepreneur’s activities?

Where does his ideas come from?

Where and how he try them?

TO CONCLUDE:

It can be concluded that the theory of

entrepreneurship will be very difficult

to develop, the unsolved problems are

still enormous.

The whole field of entrepreneurship

research and economics is still its

beginning.

The empirical data on entrepreneurial traits give interesting

insights on the person of entrepreneur but for the time being they

do not lead towards the new theory.

Firstly, if Schumpeter's understanding of entrepreneur is widely

accepted and that it may very well serve as starting point for a

future theory of entrepreneurship.

Secondly the behavioral process, the entrepreneurial pursuit of

business opportunities becomes the centre of empirical research.

Thank You