ABSTRACT
Entrepreneurship is the act of observing an unexploited profit opportunity, and then exploiting it. Israel Kirzner defines entrepreneurship more narrowly, as simply the act of noticing a profit opportunity that has previously gone unnoticed.1 The actions the entrepreneur takes to exploit the profit opportunity are then, following Kirzner, acts of production rather than entrepreneurship. While this book views entrepreneurship more broadly than Kirzner, there is some merit in considering Kirzner’s more narrow definition, because it focuses on the fact that entrepreneurship is the implementation of an innovative idea rather than the production based on the idea.2 Kirzner’s narrow definition of entrepreneurship clearly distinguishes entrepreneurship from the routine activities of production, and also distinguishes the approach to entrepreneurship and economic progress used here from the Ricardian production function approach to economic growth discussed in Chapter 2. Entrepreneurship means finding new ways to employ inputs and finding new markets and new types of output, and is not captured well in the Ricardian approach to economic growth which focuses on the quantities of inputs and advances in technology, as Chapter 2 explained.
