The chapter provides a starting point for studying the vast and growing subject of entrepreneurship by examining some of the economic theories and ideas that help us to make sense of the importance of entrepreneurship and innovation for economic and social development. It identifies critically the use and application of key economic theories that help to obtain an understanding of how entrepreneurship allocates scarce resources, shapes markets and helps generate economic and social value while recognising the range and depth of economic analysis which illuminates and explains the practice of entrepreneurship and innovation. The chapter reflects on the foundations, the opportunities and limitations of economic theories of entrepreneurship and innovation.