ABSTRACT
In the previous chapter, a duality of Schumpeter’s theory was identified. This duality is evident in Schumpeter’s division of the economic world into equilibrium and disequilibrium and in his distinction between management and entrepreneurship. Schumpeter’s theory is grounded in a duality of equilibrium and disequilibrium, not in their dichotomy. He did not reject equilibrium, nor did he deny the important role played by managers within it. Rather, he was concerned with its limitation and sought to explore what happened when equilibrium broke down. At such times ‘mere’ management must give way to entrepreneurship, leadership and innovation. This was when and where Schumpeterian rents were created. In this chapter, the duality in Schumpeter’s theory is discussed in the context of the strategic management literature. Schumpeter’s duality has been ignored by many management thinkers. In particular the origins and impact of the ‘Schumpeterian hypothesis’ – that innovation is essentially a function of imperfection in market structure and therefore a feature of equilibrium rather than of disequilibrium – is discussed.
