Recognizing entrepreneurs by income: The issues of identification

In today’s high-tech economy, it is even more difficult to identify entrepreneurship than a century ago. New actors such as start-up founders, venture capitalists, patent brokers, marketers, etc. combine the features of both entrepreneurs and owners of the factors of production, i.e., employees, capitalist owners, and landowners. At the same time, it is crucial to analytical ly differentiate between the entrepreneurial function and other functions in the economic system for forming such institutional conditions that would ensure coordination and distribution effects stimulating entrepreneurs to use their potential in expand ing turnover. The study proposes an operationalization of the definition of “entrepreneurial activity” by differentiating between entrepreneurial income (in the economic sense) and income from the factors of production. The foundation of research resides in new institutional economics, theories of entrepreneurship by R. Cantillon, J. Schumpeter, F. Knight, and I. Kirzner, as well as the neo-Austrian approach. In addition to general research methods, the work uses the elements of economic and mathematical modelling designed to expose the nature of entrepreneurial income. The findings show that entrepreneurial income is not linked to the factors of production but still blends with income from these factors in economic calculations. The paper spots the prob lem of excessive regulatory restrictions imposed on entrepreneurial activity while implementing price controls by the method of economically justified costs. The research results help understand the nature of entrepreneurial income and lay the theoretical foundations for developing approaches to price regulation and intra-firm labour management that would not undermine incen tives for entrepreneurship.