Entrepreneurship, knowledge and employment

The Evolving Role of the Entrepreneur: Veblen and Schumpeter

Araz Bahar, Baskent university
Guler Aydin Derya, Hacettepe University

The aim of this study is to analyse the evolving role of the entrepreneur in the economic and institutional structure based on the analyses of Veblen and Schumpeter. Veblen considers the change in the concept of entrepreneurship from captains of industry to captains of finance in line with the evolution of the capitalist system and follows the developments starting from the industrial revolution until the beginning of the 20th century. Schumpeter relates the concepts of entrepreneur and economic development process and analyzes them together with respect to the creative and routinised roles of the entrepreneur. In both Veblen and Schumpeter, the historical evolution of the entrepreneur is crucial in understanding economic and social change. Besides, technological change and the entrepreneur as the creator of this change are the determining factors of not only economic but also institutional change. Hence, clues for institutional transformation should be searched within institutions, entrepreneurs and habits. The importance of the entrepreneur in economic and social change is acknowledged by many economists and behavioral scientists. Although the concept of entrepreneurship has gained different meanings during the historical process, it is Joseph A. Schumpeter who created an analytical relationship between entrepreneurship and economic development. Such technological changes that result from radical innovations cause economic and institutional changes. While Schumpeter mainly emphasises the determining role of the entrepreneur in economic and institutional change, Thorstein B. Veblen also takes into account technology as the motor of social change.

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Keywords: Captains of industry, captains of finance, entrepreneur in Schumpeter, technological change, institutional transformation.

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