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The battle for the essence of entrepreneurship

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  • Frederic Sautet

    (The Catholic University of America)

Abstract

Nicolai Foss and Peter Klein have penned a most remarkable book on the theory of the firm. They offer a rich analysis of the economic organization through the lenses of various approaches including Austrian economics and neo-institutional economics. Their work is a welcome addition to the field of entrepreneurship studies, as it focuses on the role of entrepreneurship within established organizations. While I embrace most of the authors’ conclusions, I disagree with a central piece of their analysis: The rejection of the Kirznerian framework. In establishing judgment as the fundamental explanans of the theory of entrepreneurship, Foss and Klein introduce the bias of seeing entrepreneurship as allocating resources in firms. Moreover, introducing the process of judgment does not offer new insights that cannot be obtained through Kirznerian discovery analysis. Fundamentally, the essence of entrepreneurship is at stake. And it is not a debate about semantics. It is my contention that Israel Kirzner offers a more fundamental theory of entrepreneurship — one that can be applied within and beyond the realm of the firm, and that helps us explain social change, market processes, development, and growth.

Suggested Citation

  • Frederic Sautet, 2018. "The battle for the essence of entrepreneurship," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 31(1), pages 123-139, March.
    • Handle: RePEc:kap:revaec:v:31:y:2018:i:1:d:10.1007_s11138-016-0364-x
    DOI: 10.1007/s11138-016-0364-x
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    References listed on IDEAS

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    1. Jason Arentz & Frederic Sautet & Virgil Storr, 2013. "Prior-knowledge and opportunity identification," Small Business Economics, Springer, vol. 41(2), pages 461-478, August.
    2. Murray N. Rothbard, 1995. "Economic Thought Before Adam Smith," Books, Edward Elgar Publishing, number 377.
    3. Schumpeter, Joseph A., 1947. "The Creative Response in Economic History," The Journal of Economic History, Cambridge University Press, vol. 7(2), pages 149-159, November.
    4. Minniti, Maria, 2004. "Entrepreneurial alertness and asymmetric information in a spin-glass model," Journal of Business Venturing, Elsevier, vol. 19(5), pages 637-658, September.
    5. Dulbecco, Philippe & Garrouste, Pierre, 1999. "Towards an Austrian Theory of the Firm," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 12(1), pages 43-64.
    6. Foss,Nicolai J. & Klein,Peter G., 2012. "Organizing Entrepreneurial Judgment," Cambridge Books, Cambridge University Press, number 9780521697262.
    7. Pierre Garrouste & Philippe Dulbecco, 1999. "Towards an Austrian Theory of the Firm," Post-Print halshs-01300362, HAL.
    8. Salerno, Joseph T, 1993. "Mises and Hayek Dehomogenized: Review Essay," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 6(2), pages 113-146.
    9. Buchanan, James M. & Vanberg, Viktor J., 1991. "The Market as a Creative Process," Economics and Philosophy, Cambridge University Press, vol. 7(2), pages 167-186, October.
    10. Philippe Dulbecco & Pierre Garrouste, 1999. "Towards an Austrian theory of the firm," Post-Print halshs-00274296, HAL.
    11. Scott Shane, 2000. "Prior Knowledge and the Discovery of Entrepreneurial Opportunities," Organization Science, INFORMS, vol. 11(4), pages 448-469, August.
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    Cited by:

    1. Matthew McCaffrey & Nicolai J. Foss & Peter G. Klein & Joseph T. Salerno, 2023. "Breaking out of the Kirznerian box: A reply to Sautet," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 36(3), pages 1-21, September.

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    More about this item

    Keywords

    Organizing Entrepreneurial Judgment: A New Approach to the Firm; Discovery; Entrepreneurship; Firm; Judgment; Kirzner; Ownership; Uncertainty; Opportunity; Subjectivism;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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