Using Kirzner's theory as the starting point and unifying theme, this paper provides a survey of the literature on entrepreneurship in various disciplines.
Who is the entrepreneur? According to Kirzner, the entrepreneur is an alert individual. Entrepreneurship is a change in the ends-means framework of this individual. Such change happens because the potential entrepreneur is "alert" to new possibilities for action. Kirzner argues that the differences between alert and non-alert individuals lay in the alternative evaluations they make about their circumstances. Similarly, cognitive psychology suggests the existence of schema. That is, evolving mental models of entrepreneurial alertness. Alert individuals have more complex schema about change than non-alert individuals. The phenomenological psychology view is consistent with this interpretation and adds systems of typification and relevancy. Any act of entrepreneurship has its meaning for the entrepreneur within his system of relevancy. Systems of typification and schema differ across individuals and, in some cases, prompt alertness.
Why do systems of typification and entrepreneurial schema vary across individuals? This question is addressed, in both the psychology and economics literature, by looking at intentionality and locus of control. Individuals with an internal locus of control believe that events are contingent upon their own behavior. Thus, an internal locus of control increases entrepreneurial alertness and, as a result, leads to more entrepreneurship. The locus of control literature draws attention to the fact that the entrepreneurial process is a multi-layered and complex phenomenon.
What does the entrepreneur do? The entrepreneur innovates and, by doing so, creates new ventures of some sort. The sociology literature addresses this issue by distinguishing between nascent entrepreneurs and entrepreneurial cycles. The entrepreneurial cycle is the sequence of stages necessary for the transition from an individual with an opportunity to an established new firm. The establishment of a new venture requires the choice and the commitment to a specific set of actions.
What determines the specific sequence of entrepreneurial actions selected by the entrepreneur? The actions required by the entrepreneurial cycle are contingent upon the context in which they are taken. Understanding the entrepreneurial context requires the understanding of what socio-economic variables provide incentives for individuals to become entrepreneurs, and, most important, what knowledge entrepreneurs possess of their environment. The Austrian literature suggests that the knowledge problem is that of coordinating dispersed knowledge. Entrepreneurial knowledge is just a specific case of the Austrian knowledge problem. To complement the Austrian view, the strategic adaptation literature emphasizes the pro-active behavior of individuals whom, after having identified opportunities, gather the resources necessary to exploit these opportunities. The population ecology approach, instead, emphasizes external factors such as the sources of opportunities and the availability of social capital.
Is social capital relevant to entrepreneurial decisions? The sociology literature stresses that social capital is important because it allows individuals to obtain resources that are otherwise unavailable to them. The role played by social capital in entrepreneurial decisions is best understood in the context of embeddedness and social networks. Embeddedness is relevant to entrepreneurship because it helps the entrepreneur to identify resources and constraints when committing to founding a new organization. Social networks, instead, improve the entreprenur's ability to pursue and exploit commercial opportunities.
But what happens after the initial stages of the entrepreneurial process have taken place? Does entrepreneurship cease to exist or does it become irrelevant? The study of the entrepreneurial context leads organically to research into firm-level entrepreneurial activities. In this context, the literature on strategy and corporate entrepreneurship identifies organizational and environmental factors that affect a firm's entrepreneurial behavior. For example, the resource-based approach views entrepreneurship as one of the possible resources upon which the competitive advantage of the firm is built. The transaction costs approach, instead, analyzes the relationship between entrepreneurial behavior and firm profitability and identifies entrepreneurial actions as the source of coordination activities that result in superior performance.
As the discussion about entrepreneurship progresses and moves from the individual to the firm level, the question of the aggregate effects of entrepreneurial behavior arises. Is more entrepreneurship desirable? Is there a relationship between entrepreneurial behavior and economic growth? Recent empirical studies show that the amount of entrepreneurial activity differs significantly across countries and across different regions of the same country with potentially significant effects on business activity and development. The neo-classical economics approach argues that, as a result of entry and innovativeness, the channel through which entrepreneurship influences growth is productivity. Complementary models exploit the insight of complexity and evolutionary theory to add social and cultural circumstances to the allocational and distributional issues raised by endogenous growth studies.
Finally, is there a connection between entrepreneurship, governments, and institutions? Government actions and political events certainly create institutional structures that may encourage or thwart entrepreneurial action. Those institutions and policies that improve transparency and entitlement tend to increase the subjective perception of the link between actions and outcome. This is so because they ultimately increase the number of individuals who have an internal locus of control.
Overall, and in spite of so many different approaches, there seems to be a movement towards agreeing that entrepreneurship is about emergence. Low and MacMillan (1988) suggest that research on entrepreneurship should focus on new firm creation and its role in promoting economic progress. Shane and Venkataraman (2000), on the other hand, suggest that the field of entrepreneurship should study the discovery and exploitation of entrepreneurial opportunities, the individuals involved, and the modes of action used to exploit the opportunities. Both views focus on the creation of new economic activity. In contrast, Gartner (1985, 1990, 2001) takes the position that entrepreneurship is about organizing and that it has a greater likelihood of being understood through the study of firm creation. Importantly, both Low and MacMillan (1988) and Shane and Venkataraman (2000) also include in the stated purpose of entrepreneurship a clear interest in societal-level outcomes. Aldrich and Martinez (2001), while applying a view similar to Gartner's on entrepreneurship as "the creation of new organizations," start from the more aggregate-level interest of sociology and hence find it natural for entrepreneurship to consider societal-level outcomes.
The review of topic and approaches presented in this paper shows clearly that entrepreneurship is a multi-faceted phenomenon. Further research is needed in all areas to understand the motivations and logic behind entrepreneurial behavior and its impact on individuals, firms, and macroeconomic activity. If we take entrepreneurship seriously, we recognize its complexity. The rules and practices of the entrepreneurial processes are complex. They are embedded in the socioeconomic environment of the entrepreneur and include past experiences, culture and institutions, and random accidents. Hopefully, we are on our way to studying better entrepreneurial behavior and to find new ways to understand the complex.
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