Entrepreneurship, knowledge and employment

The nature of entrepreneurship – An analysis of the entrepreneur from a historical economist's perspective

Störring Matthias, Universität Siegen
Goldschmidt Nils, Universität Siegen

The entrepreneur as an individual and his importance for the economic process has been underemphasized in economic research. True, there were some early efforts but they were mostly driven by the attempt to define the entrepreneur in context of capital accumulation. The works of Schumpeter, who focused quite more on the economic functions of entrepreneurship, formed the peak but also the temporary end of that analysis. Especially in the predominant theory of neoclassical economics with its assumptions of perfect competition, the entrepreneur came to be a static and rational economic agent. In this abstract definition, the entrepreneur disappears behind his capital or at best behind a rough sector of “firms”. In the current rise of behavioral economics and the more realistic view on economic agents and their interactions, this is no longer a satisfactory approach. A more realistic analysis of entrepreneurs, of their psychological and ethical nature, and their formal and informal responsibility for the economy is necessary. One approach to this effort is to look at economists’ works of the 19th century. Gustav Schmoller the leader of the Younger German Historical School of Economics described entrepreneurship from its very beginning and collected data on institutional change arising during the industrial revolution. Basing on his preliminary work, this paper draws on an initial definition of entrepreneurship, with special interest on the entrepreneur as a psychological and ethical human being. Schmoller’s historical and inductive method of analysing the economy without an abstraction of real world phenomena can significantly improve the understanding of entrepreneurs’ motives, even in terms of contemporary behavioral economics. This is important not only for the analysis of economic processes but also for neighboring fields, such as institutional economics or industrial relations.

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Keywords: entrepreneur; entrepreneurship; enterprise; German Historical School of Economics; Gustav Schmoller; industrial relations; institutional economics

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