The Origins of Entrepreneurial Opportunities

The Origins of Entrepreneurial Opportunities Kirzner's (1973) theory of entrepreneurship emphasizes the equilibrating role of entrepreneurship. When the market is not in equilibrium, profit opportunities exist, and entrepreneurs discover and act on these profit opportunities to equilibrate the market. Because Kirzner focuses on entrepreneurial actions when profit opportunities exist, and does not describe where they come from, one could imagine a fixed stock of profit opportunities that get used up as entrepreneurs discover them. But new profit opportunities are being created constantly. A taxonomy of the origins of entrepreneurial opportunities includes factors that disequilibrate the market, factors that enhance production possibilities, and most notably, opportunities created from previous acts of entrepreneurship. Entrepreneurial actions do not use up profit opportunities, but create them, and the critical role of entrepreneurship in the creation of new profit opportunities is emphasized. This line of reasoning leads directly to policy implications regarding the economic environment conducive to entrepreneurial discovery and the role of government in research and development. This paper enhances Kirzner's theory of entrepreneurship by illustrating how entrepreneurship enlarges the stock of future entrepreneurial opportunities, and points to entrepreneurship as the engine of economic progress. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Review of Austrian Economics Springer Journals

The Origins of Entrepreneurial Opportunities

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Publisher
Springer Journals
Copyright
Copyright © 2003 by Kluwer Academic Publishers
Subject
Economics; Public Finance; Political Science; History of Economic Thought/Methodology
ISSN
0889-3047
eISSN
1573-7128
D.O.I.
10.1023/A:1022953123111
Publisher site
See Article on Publisher Site

Abstract

Kirzner's (1973) theory of entrepreneurship emphasizes the equilibrating role of entrepreneurship. When the market is not in equilibrium, profit opportunities exist, and entrepreneurs discover and act on these profit opportunities to equilibrate the market. Because Kirzner focuses on entrepreneurial actions when profit opportunities exist, and does not describe where they come from, one could imagine a fixed stock of profit opportunities that get used up as entrepreneurs discover them. But new profit opportunities are being created constantly. A taxonomy of the origins of entrepreneurial opportunities includes factors that disequilibrate the market, factors that enhance production possibilities, and most notably, opportunities created from previous acts of entrepreneurship. Entrepreneurial actions do not use up profit opportunities, but create them, and the critical role of entrepreneurship in the creation of new profit opportunities is emphasized. This line of reasoning leads directly to policy implications regarding the economic environment conducive to entrepreneurial discovery and the role of government in research and development. This paper enhances Kirzner's theory of entrepreneurship by illustrating how entrepreneurship enlarges the stock of future entrepreneurial opportunities, and points to entrepreneurship as the engine of economic progress.

Journal

The Review of Austrian EconomicsSpringer Journals

Published: Oct 4, 2004

References

  • The Nature of the Firm
    Coase, R. H.

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