Psychological determinants of entrepreneurial alertness

Opportunities rarely present themselves in neat packages. They almost always have to be discovered and packaged. Thus, the nexus of opportunity and enterprising individual is critical to understanding entrepreneurship. P eople are different and these differences matter. These differences give rise to many of the interesting questions in entrepreneurship. (Venkataraman 1997 123 emphasis added)1 Hypotheses about the principal determinants of entrepreneurship are strongly conditioned by the...

Revisiting the cornerstone and convergence hypotheses

As discussed earlier, the cornerstone hypothesis maintains that individualist cultures are inherently more conducive to entrepreneurship than are group-oriented cultures. This hypothesis is often stated in terms that rely upon the notion of 'national culture'. For example, it is predicted that individualist nations, such as the USA, are likely to be more supportive of entrepreneur-ship than are group-oriented nations, such as the People's Republic of China. More robust formulations of this...

Institutions and alertness

The purpose of the following two chapters is to examine the institutional conditions conducive to entrepreneurship. They address the question what does the theory of entrepreneurship imply will foster the creation, discovery and exploitation of entrepreneurial opportunities In dealing with this issue, I draw upon the analysis in the previous chapter on the psychological determinants of entrepreneurial alertness. This chapter considers the comparative effectiveness of alternative institutions...

Freedom of entrepreneurial choice and concrete liberties

In the previous chapter, I examined the principle of freedom embodied in the rule of law. In this section, I investigate the unique character of the freedom of entrepreneurial choice and how it contrasts with the notion of freedom implicit in mainstream economics. The standard conception of choice in economic theory identifies individual freedom with the power to achieve given goals. In mainstream economics, the ends between which the agent can select and the criteria of selection are given, as...

The entrepreneurial power of individualism and cultural convergence

Investigations of culture and entrepreneurship commonly assume or argue that individualism and economic development (itself an entrepreneurially driven process) are intrinsically and ineluctably related to one another. This idea can be decomposed into two additional theses that may or may not be made explicit in any particular study 1 Individualism is more conducive to (or, more strongly, is a necessary condition for) entrepreneurship and economic development in a modern economy. Consequently,...

Analytical distinctions between the entrepreneur and other economic decisionmakers

It is important to distil the most salient features that specifically distinguish the entrepreneurial function from other functions and that are also relevant for institutional analysis and public policy. The unit of analysis throughout most of this book is the individual entrepreneur, not the entrepreneurial team or firm (nor is it the entrepreneurial event or transaction).6 It must be noted that the individual entrepreneur is the personification or embodiment of a particular economic...

Ruleoflaw constitutions

The institutional framework affects the entrepreneurial alertness in which decisions are embedded and determines the incentives for discovering and exploiting profit opportunities. This section focuses upon those higherlevel institutional factors that are conducive to producing people with heightened entrepreneurial alertness. According to the argument developed here, the institutional environment that is most likely to produce entrepreneurs is one that calls for and encourages strong agency...

Political decentralisation

By itself, the rule of law, even in Hayek's thoroughgoing version, does not secure a system of personal liberty and vigorous entrepreneurship. The rule of law, and the formal requirements it imposes certainty, generality and equality , does not guarantee an effective bulwark against the discretionary power of government. It is a mistake to present the rule of law as a sufficient condition for individual freedom and the unimpeded operation of spontaneous market forces, when it is possibly only a...

Kirzners theory of entrepreneurial discovery

In common with much of mainstream economics, Hayek's analysis suffers from one serious problem it assumes that all market participants are price-takers. The question remains how are prices and other elements of the marketing mix determined and how do they move towards their equilibrium levels Kirzner bridges the theoretical deficit left by Hayek by providing a theory of entrepreneurial price adjustment that develops the work of Mises. In Kirzner's theory, the price-adjuster is the entrepreneur....

Characteristics of entrepreneurial alertness

Boldness, impulse, hunch are the raw materials of entrepreneurial success and failure . It is important to examine the unique characteristics of entrepreneurial alertness if we are to appreciate this elusive concept and to understand the types of institutions and economic policies that are likely to be conducive to it. A general point is that entrepreneurship is not a factor of production, not even a special kind of productive factor Kirzner 1979 180-181 . The characteristics of entrepreneurial...

The theory of entrepreneurial discovery

The theory of entrepreneurial discovery is the most widely accepted conception of entrepreneurship among market-process theorists. In line with the broader research programme within which it is embedded, this approach is distinguished by its focus upon the nature of competitive processes, market disequilibria, the role of knowledge, expectations and learning in the operation of markets, the nature and significance of entrepreneurial discovery, and the comparative effectiveness of alternative...