The Review of Austrian Economics, 18:2, 219–221, 2005.
2005 Springer Science + Business Media, Inc. Manufactured in The Netherlands.
(2003) Foundations of Entrepreneurship and Economic Development,
New York: Routledge, 267 pp.
The notion of entrepreneurship has been one of the central constructs of Austrian theory since
its beginnings. Menger emphasized the information element and the act of will involved in
entrepreneurship although he viewed it as a special labor service (1871:160). While there
has been debate regarding Menger’s inﬂuence on Schumpeter’s notion of entrepreneurship,
there is little doubt that Austrian elements are clearly present in his theoretical rendering
(see Kirzner 1979: Ch. 4). The entrepreneurial function was also recognized as a critical
element of the market process by later Austrians, including Mises (1949:251–256, 289–
301, 303–311) and Rothbard (1962:56, 463–501). Kirzner, building on Mises’ work in
this area, dedicated most of his research program to developing a complete rendering of
the entrepreneurial function. David Harper’s new book, Foundations of Entrepreneurship
and Economic Development, continues this tradition of recognizing the entrepreneur as the
prime mover of economic change.
Harper seeks to extend the work of Kirzner and those who preceded him to the realm
of economic growth and development. Harper does so in an interesting fashion. He sur-
veys and incorporates the relevant literature from both the Austrian School and the New
Institutionalists with a focus on how that literature can assist us in understanding the le-
gal, political, economic and social institutions which inﬂuence entrepreneurship. The most
unique and interesting theoretical contributions are the inclusion of social psychology and
cultural considerations into the already existing entrepreneurial framework.
In his consideration of the psychological determinants of entrepreneurship, Harper ana-
lyzes the cognitive factors which inﬂuence alertness. He focuses on two key determinants
of alertness. The ﬁrst is the individual’s locus of control or belief that a behavior will lead
to an outcome. The second determinant is one’s self-efﬁcacy belief, the belief that one can
or cannot produce the relevant actions. The key point of Harper’s analysis is that an en-
trepreneur’s alertness will be heightened the more convinced he is that proﬁt opportunities
are dependent upon certain actions in a speciﬁc setting and that he is capable of undertaking
the necessary steps to obtain proﬁt.
Harper rejects the cornerstone hypothesis that individualist societies are more conducive
to entrepreneurship than group-oriented societies. This rejection is in line with Mises’
original rendering of the notion of entrepreneurship, which he saw as an omnipresent
aspect of human action (1949:252–253). Part of this rejection stems from the fact that
the cornerstone hypothesis is grounded in a neutral, one-dimensional scale for measuring
and comparing entrepreneurship across cultures. As Harper points out, entrepreneurship
is a “complex perceptual faculty” and there is no suitable scale for measuring it across