Entrepreneurs and the Entrepreneurial Function: A Commentary

Posted: 4 Nov 2009

See all articles by Israel M. Kirzner

Israel M. Kirzner

New York University (NYU) - Department of Economics

Date Written: 1983


Investigates why economic theory has avoided the topic of entrepreneurship and proposes a framework for classifying analytic approaches to entrepreneurship. The absence of the entrepreneur in modern economic theory is explained by the fact that the marketplace agitation brought about by entrepreneurial activity is precisely the element from which it is necessary for economic analysis to abstract. Walrasian equilibrium analysis is compared to the work of Schumpeter to illustrate the possibility of an analytical approach that includes entrepreneurship. Four levels of entrepreneurship analysis are identified: the entrepreneur as a profit-maximizing decision-maker with full relevant information; the entrepreneur as one who possesses certain personal characteristics such as boldness or acumen; a market consequences approach that superimposes entrepreneurial activity on an equilibrium market model; and a market consequences approach that does not presume a background equilibrium market model. The first and second levels are rejected as being viable avenues for theoretical economic explanation and the author suggests that economists should pursue the implications, within market processes, of entrepreneurial activity, which entails developing theory at the third and fourth levels. (CAR)

Keywords: Entrepreneurial activity, Entrepreneurship research, Economic theory, Profit strategies, Behavior (individual), Individual traits, Market risks

Suggested Citation

Kirzner, Israel M., Entrepreneurs and the Entrepreneurial Function: A Commentary (1983). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1497768

Israel M. Kirzner (Contact Author)

New York University (NYU) - Department of Economics

269 Mercer Street, 7th Floor
New York, NY 10011
United States

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