ABSTRACT

Structure of the chapter This chapter introduces some of most important explanations of entrepreneurship drawn from different economic theories. It starts with an explanation of the rather difficult emergence of entrepreneurship in economic theory. It traces the historical roots of economic growth theory and the glimpses of entrepreneurship that can be found in the writings of the early theorists and their interest in equilibrium theory, concepts of risk, arbitrage, the political economy, marginal utility and the prescient Marshallian ideas of knowledge, learning, partial equilibrium and organizational collaboration. Part II then offers a critique of the traditional approaches through brief references to leading figures such as Hayek before examining in some detail the work of the masters of entrepreneurship theory including Israel Kirzner and, especially, Joseph Schumpeter in Part III. Part IV explores some of the key concepts of risk, uncertainty and ambiguity that inform a considerable amount of modern writing on the subject together with references to insights from major economists such as Keynes and ideas of information and arbitration propounded by Mark Casson. Part V then covers briefly three relatively new areas of theory: the evolutionary approach to entrepreneurship with its focus on existing organizations, routines and choice based on the work of Nelson and Winter; the idea of incentives and productive, unproductive and destructive entrepreneurship as developed by William Baumol; and the idea of large firms, connected firms and networks of enterprises. The chapter concludes with signposts for other critical theoretical work explaining different manifestations of entrepreneurship in our economic and social lives.