WEEK & TOPIC In Chapter 2, Foss et al. (2019)
list key elements that
distinghuisj ..
1. Role Entrepreneurship - Foss et. Al (2019) Foss et al. (2019) chapter 2, 3
in Society chapters 2&3 Elert et al. Wennekers & Thurik (1999)
(2019) Elert et al. 2019
- Wennerkers & Thunk
(1999)
2. The Individual - Sorgner & Fritsch (2018) Sorgner & Fritsch 2018
Entrepreneur - Kautonene et. al. (2013) Kautonen et al. 2015
- Dencker et al. (2021) Dencker et al. 2021
3. Institutions & - Foss et al (2019) Foss et al. 2019 chapter 4
Entrepreneurship chapter 4 Stenholm et al. (2013)
- Stenholm et al. (2013)
4. The Organization - Alvarez & Barney (2007) Alvarez & Barnety (2007)
Theory of the Firm - Dew et al. (2004) Dew et al. (2004)
- Parker (2009) Parket (2009)
5. Enabling envirionment - O’connor 2018 O’Connor et. Al (2018)
for entrepnreuship - Stam 2020 Stam et al. (2020)
6. Venture Strategy & - Foss et al 2010 chaper 5 Foss et al. 2010 chapter 5 &6
Growth &6 Massa et al. (2020)
- Massa et al 2020 Coad & Roa (2008)
- Coad & Roa 2008
7. Imapct & - Santos (2012) Santos (2012)
Enrepreneuship - Muñoz et al. (2015) Muñoz et al. (2015)
- Financial Times (2018)
- Sheppart et al. 2016
- Scheepers et al. 2012
1. Role of Enrepreneuship in Society
- 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
- Capital as homogenous mass of inputs - if homogenous then combining and organizing
resources is trivial - cooperation problems are also unlikely to emerge - hard to imagine that
asymmetric information is a major issue if resources are similar
- Realistic picture of economic process presupposes a notion of capital heterogeneity
Conclusion
- Austrian economics strives for a realistic analysis of economic and social relations beginning
with the basic facts of human choice
Chapter 3: Entrepreneurship: the Domain of Entrepreneurship Theory
- Mises: entrepreneurs as the “driving force” of the market economy
- No “one” Austrian view of the Entrepeneur, instead, opinions on the subject are diverse, can
vary widely on many issues
Occupational theories: entrepreneurship as self-employment and treat the individual as the unit of
analysis
Structural approaches: treat the firm or industry as the unit of analysis, defining the “entrepreneurial
firm” as a new or small firm or a particularly innovative firm (Mises)
Functional theories: view entrepreneurship as a series of action, or as a process rather than an outcome
like launching a start-up company
, Austrian Contributions to Entrepreneurship Theory
Entrepreneurship in a contestable society
- Karl Popper’s Open society based on contestable knowledge and validation of knowledge
through falsification
- Baumol on the role of Entrepreneurship in economics: “It is as if the price of Denmark was
expunged out of the discussion of Hamlet”
- Schumpeterian Entrepreneurship: Mark I; creative destruction, new product market
combinations, Mark II: Large businesses spur innovation, as heavy R&D investments required
(am industrial hero who constantly reshapes the economy through innovation and “creative
destruction”
Misels: stressed the necessity of bearing uncertainty- which is the special function of entrepreneurs-
also stressed the vital social role of entrepreneurship and of the profit and loss system in coordinating
economic action and increasing public welfare
- Entrepeneur's may govern their own enterprises, but they are ultimately beholden to
consumers, whose decisions make them rich or poor
- The profit And loss system this functions as a selection mechanism that rewards those
entrepreneurs who excel at improving the welfare of their customers
- Entrepreneurship is a defining characteristic of the market economy however entrepreneurs
require specific institutional conditions if they hope to successfully use the resources at their
disposal to satisfy consumers
- Without market prices there is no way for the planners to assess the costs and benefits of their
production decisions, much less choose the most beneficial ones
Elert et al. (2019)
Wennekers & Thurik (1999)
Linking Entrepreneurship and Economic Growth
- There is ample evidence that economic activity 1970s and 1980s moved away from large firms
to small firms Carlsson advances two explanations for the shift towards smallness 1.
fundamental changes in the world economy from the 1970s onwards (intensification of global
competition, increase in the degree of uncertainty and the growth in market fragmentation 2.
Change in the character of technological progress
list key elements that
distinghuisj ..
1. Role Entrepreneurship - Foss et. Al (2019) Foss et al. (2019) chapter 2, 3
in Society chapters 2&3 Elert et al. Wennekers & Thurik (1999)
(2019) Elert et al. 2019
- Wennerkers & Thunk
(1999)
2. The Individual - Sorgner & Fritsch (2018) Sorgner & Fritsch 2018
Entrepreneur - Kautonene et. al. (2013) Kautonen et al. 2015
- Dencker et al. (2021) Dencker et al. 2021
3. Institutions & - Foss et al (2019) Foss et al. 2019 chapter 4
Entrepreneurship chapter 4 Stenholm et al. (2013)
- Stenholm et al. (2013)
4. The Organization - Alvarez & Barney (2007) Alvarez & Barnety (2007)
Theory of the Firm - Dew et al. (2004) Dew et al. (2004)
- Parker (2009) Parket (2009)
5. Enabling envirionment - O’connor 2018 O’Connor et. Al (2018)
for entrepnreuship - Stam 2020 Stam et al. (2020)
6. Venture Strategy & - Foss et al 2010 chaper 5 Foss et al. 2010 chapter 5 &6
Growth &6 Massa et al. (2020)
- Massa et al 2020 Coad & Roa (2008)
- Coad & Roa 2008
7. Imapct & - Santos (2012) Santos (2012)
Enrepreneuship - Muñoz et al. (2015) Muñoz et al. (2015)
- Financial Times (2018)
- Sheppart et al. 2016
- Scheepers et al. 2012
1. Role of Enrepreneuship in Society
- 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
- Capital as homogenous mass of inputs - if homogenous then combining and organizing
resources is trivial - cooperation problems are also unlikely to emerge - hard to imagine that
asymmetric information is a major issue if resources are similar
- Realistic picture of economic process presupposes a notion of capital heterogeneity
Conclusion
- Austrian economics strives for a realistic analysis of economic and social relations beginning
with the basic facts of human choice
Chapter 3: Entrepreneurship: the Domain of Entrepreneurship Theory
- Mises: entrepreneurs as the “driving force” of the market economy
- No “one” Austrian view of the Entrepeneur, instead, opinions on the subject are diverse, can
vary widely on many issues
Occupational theories: entrepreneurship as self-employment and treat the individual as the unit of
analysis
Structural approaches: treat the firm or industry as the unit of analysis, defining the “entrepreneurial
firm” as a new or small firm or a particularly innovative firm (Mises)
Functional theories: view entrepreneurship as a series of action, or as a process rather than an outcome
like launching a start-up company
, Austrian Contributions to Entrepreneurship Theory
Entrepreneurship in a contestable society
- Karl Popper’s Open society based on contestable knowledge and validation of knowledge
through falsification
- Baumol on the role of Entrepreneurship in economics: “It is as if the price of Denmark was
expunged out of the discussion of Hamlet”
- Schumpeterian Entrepreneurship: Mark I; creative destruction, new product market
combinations, Mark II: Large businesses spur innovation, as heavy R&D investments required
(am industrial hero who constantly reshapes the economy through innovation and “creative
destruction”
Misels: stressed the necessity of bearing uncertainty- which is the special function of entrepreneurs-
also stressed the vital social role of entrepreneurship and of the profit and loss system in coordinating
economic action and increasing public welfare
- Entrepeneur's may govern their own enterprises, but they are ultimately beholden to
consumers, whose decisions make them rich or poor
- The profit And loss system this functions as a selection mechanism that rewards those
entrepreneurs who excel at improving the welfare of their customers
- Entrepreneurship is a defining characteristic of the market economy however entrepreneurs
require specific institutional conditions if they hope to successfully use the resources at their
disposal to satisfy consumers
- Without market prices there is no way for the planners to assess the costs and benefits of their
production decisions, much less choose the most beneficial ones
Elert et al. (2019)
Wennekers & Thurik (1999)
Linking Entrepreneurship and Economic Growth
- There is ample evidence that economic activity 1970s and 1980s moved away from large firms
to small firms Carlsson advances two explanations for the shift towards smallness 1.
fundamental changes in the world economy from the 1970s onwards (intensification of global
competition, increase in the degree of uncertainty and the growth in market fragmentation 2.
Change in the character of technological progress
