WEEK & TOPIC
1. Role Entrepreneurship in Society - Foss et. Al (2019) chapters 2&3
- Elert et al. (2019)
- Wennerkers & Thunk (1999)
2. The Individual Entrepreneur - Sorgner & Fritsch (2018)
- Kautonene et. al. (2013)
- Dencker et al. (2021)
3. Institutions & Entrepreneurship - Foss et al (2019) chapter 4
- Stenholm et al. (2013)
4. The Organization Theory of the Firm - Alvarez & Barney (2007)
- Dew et al. (2004)
- Parker (2009)
- Foss et. Al (2019) chapters 2&3
1 Introduction: The Uniqueness of the Austrian School
- Pioneered the analysis of the entrepreneurial market economy
- Subjectivity of decision-making
- Tacit and dispersed knowledge
- Heterogeneity of capital
- Importance of uncertainty and entrepreneurial decision-making (over time and across places)
- The need to provide a realistic, casually-informed understanding of economic processes
- Relaxing strong (classical) economic assumptions (unconcerned about equilibria)
- Market as a “dynamic process in which individuals use the price system to coordinate their
actions and improve welfare over time”
• “the division of knowledge”- a way to emphasize the point that the division of labor is usually
accompanied by a corresponding specialization in terms of knowledge - division of knowledge
has enormous implications for organization (F.A. Hayek) -> division of knowledge requires
decentralization
• Carl Menger: emphasized that many of society’s most valued and important institutions are
products of partly “blind” social processes-have not been explicitly designed by anyone, but
nevertheless serve a useful social purpose (of course politicians also intervened in the process of
social evolution, but much of what is fundamental in the fabric of social life has emerges
spontaneously)
• Austrian economics: consider CSR - Austrian economics warns that much of CSR thinking may
rest on shallow foundations - if companies are to make rational decisions concerning CSR
, actions, they need a way to compare different actions (common metric is required) - Mises: if
markets were eliminated, prices would also cease to exist, without prices decision-makers
would not know how to make the best use of productive resources because there would be no
uniform signals that could be relied on to steer resources to their most valued ends
Chapter 2: WHAT IS AUSTRIAN ECONOMICS?
- Most famous name among economists associated with the Austrian school: Joseph Schumpeter
- emphasis on the entrepreneurs and historical process, skepticism of macroeconomics and his
insightful analysis of the role of politics and ideology
- The scope: wide-ranging but integrated account of economic relations, with focus on realistic
explanations of the causal relationships between economic phenomena
KEY CONCEPTS
Methodological individualism: “wertfrei” - value free, neutral and not prescribing any political stance
- Ontological individualism: the position that ultimately only individuals can truly care
- Microfoundations approach- highlight the plans individuals form in order to pursue their goals
Subjectivism: value is subjective
- Describes a relation between a valuing person and an object being valued”
- Cost and benefits, and the incentives they offer
- Places individual consumer at the center of economics: prices of all consumer goods and
services, as well as all factors of production can be traced back to individual preferences and to
marginal decision-making
Tacit and Dispersed Knowledge
- Not only is knowledge dispersed across the multitude of individuals that make up the division of
labor, it is also “tacit” and “subjectively held”
- The knowledge that matters for economic decision is mostly idiosyncratic “knowledge of the
particular circumstances of time and place” - so difficult to transmit a central planning board
Uncertainty
- Provides a constant barrier to successful action
- Natural implication of two facts: 1> the existence of tacit and dispersed knowledge 2. action
takes place in time (possibility of incomplete information and error)
- Risks: homogenous, unique and inherently unpredictable- can be mitigated using insurance
contracts and similar devices
- Uncertainties defy attempts at control “unknown unknown” - requires entrepreneurial
judgement -> special role of entrepreneur is to use good judgement to overcome uncertainty
Heterogenous capital: indispensable
- One of the basic factors of production familiar to economists
1. Role Entrepreneurship in Society - Foss et. Al (2019) chapters 2&3
- Elert et al. (2019)
- Wennerkers & Thunk (1999)
2. The Individual Entrepreneur - Sorgner & Fritsch (2018)
- Kautonene et. al. (2013)
- Dencker et al. (2021)
3. Institutions & Entrepreneurship - Foss et al (2019) chapter 4
- Stenholm et al. (2013)
4. The Organization Theory of the Firm - Alvarez & Barney (2007)
- Dew et al. (2004)
- Parker (2009)
- Foss et. Al (2019) chapters 2&3
1 Introduction: The Uniqueness of the Austrian School
- Pioneered the analysis of the entrepreneurial market economy
- Subjectivity of decision-making
- Tacit and dispersed knowledge
- Heterogeneity of capital
- Importance of uncertainty and entrepreneurial decision-making (over time and across places)
- The need to provide a realistic, casually-informed understanding of economic processes
- Relaxing strong (classical) economic assumptions (unconcerned about equilibria)
- Market as a “dynamic process in which individuals use the price system to coordinate their
actions and improve welfare over time”
• “the division of knowledge”- a way to emphasize the point that the division of labor is usually
accompanied by a corresponding specialization in terms of knowledge - division of knowledge
has enormous implications for organization (F.A. Hayek) -> division of knowledge requires
decentralization
• Carl Menger: emphasized that many of society’s most valued and important institutions are
products of partly “blind” social processes-have not been explicitly designed by anyone, but
nevertheless serve a useful social purpose (of course politicians also intervened in the process of
social evolution, but much of what is fundamental in the fabric of social life has emerges
spontaneously)
• Austrian economics: consider CSR - Austrian economics warns that much of CSR thinking may
rest on shallow foundations - if companies are to make rational decisions concerning CSR
, actions, they need a way to compare different actions (common metric is required) - Mises: if
markets were eliminated, prices would also cease to exist, without prices decision-makers
would not know how to make the best use of productive resources because there would be no
uniform signals that could be relied on to steer resources to their most valued ends
Chapter 2: WHAT IS AUSTRIAN ECONOMICS?
- Most famous name among economists associated with the Austrian school: Joseph Schumpeter
- emphasis on the entrepreneurs and historical process, skepticism of macroeconomics and his
insightful analysis of the role of politics and ideology
- The scope: wide-ranging but integrated account of economic relations, with focus on realistic
explanations of the causal relationships between economic phenomena
KEY CONCEPTS
Methodological individualism: “wertfrei” - value free, neutral and not prescribing any political stance
- Ontological individualism: the position that ultimately only individuals can truly care
- Microfoundations approach- highlight the plans individuals form in order to pursue their goals
Subjectivism: value is subjective
- Describes a relation between a valuing person and an object being valued”
- Cost and benefits, and the incentives they offer
- Places individual consumer at the center of economics: prices of all consumer goods and
services, as well as all factors of production can be traced back to individual preferences and to
marginal decision-making
Tacit and Dispersed Knowledge
- Not only is knowledge dispersed across the multitude of individuals that make up the division of
labor, it is also “tacit” and “subjectively held”
- The knowledge that matters for economic decision is mostly idiosyncratic “knowledge of the
particular circumstances of time and place” - so difficult to transmit a central planning board
Uncertainty
- Provides a constant barrier to successful action
- Natural implication of two facts: 1> the existence of tacit and dispersed knowledge 2. action
takes place in time (possibility of incomplete information and error)
- Risks: homogenous, unique and inherently unpredictable- can be mitigated using insurance
contracts and similar devices
- Uncertainties defy attempts at control “unknown unknown” - requires entrepreneurial
judgement -> special role of entrepreneur is to use good judgement to overcome uncertainty
Heterogenous capital: indispensable
- One of the basic factors of production familiar to economists
