ABSTRACT. Entrepreneurship is one of the least understood
topics in economics. The rising significance of small compa-
nies and especially of start-ups for the creation of new jobs
has been an intensively discussed subject for nearly one
decade. But there is still no theory of entrepreneurship.
First this paper reviews the role of the entrepreneur in the
history of economic thought and concludes that there is no
agreed upon definition of what an entrepreneur does or is.
The unsolved problem is the non-rational human behavior.
Schumpeter and Kirzner have developed economic models
of the role of the non-maximizing entrepreneur in the price-
mechanism. But they did not develop a theory of entrepre-
In the second part of the paper entrepreneurship is under-
stood as the pursuit of opportunites without regard to resources
currently controlled (Stevenson, Roberts, and Grousbeck).
Based on that definition the contributions of economic
decision theory, sociological system theory, psychoanalytical
research and behavioral studies are reviewed and an interdis-
ciplinary approach to the development of an entrepreneurship
theory is proposed.
1. The importance of entrepreneurship
The consequences of liberalized world trade for
industrialized countries are twofold. On the one
hand are the new export markets which might
strengthen the national economies, and on the
other hand there is the shifting of jobs and whole
industries to locations with lower costs. In the
long run dynamic Asian nations such as Thailand
might gain more importance in the world market.
Germany, one of the export champions of the
past, might loose her leading position (Faltin and
Zimmer, 1995, p. 229).
One reason for this development might be
the lack of innovation within the economy. As
innovation is seen as an important factor for
international competetiveness (e.g., Audretsch,
1995) politicians in Germany have been trying to
encourage entrepreneurship as a tool for innova-
tion. Innovation, especially in high-tech, seemed
to be the target, entrepreneurship only was a tool.
Now, as the problem of unemployment is rising
the relation of entrepreneurship and job generation
becomes the center of interest. This time entre-
preneurship not only is the tool, it becomes the
At the beginning of the 90s some tendencies
had already been obvious. And if there would
not have been the reunification of Germany, the
number of unemployed people in its western part
would be higher now. As in the U.S. during the
80s, German multinationals are now laying off big
numbers of employees. Birch, who analysed the
creation of new jobs in the U.S. in the late 70s
and early 80s, found that between 1981 and 1985
88.1% of the net job gain was created by com-
panies with less than 19 employees (Birch, 1987,
p. 16). The trend continued, and in 1993 small
enterprises created more than 1.7 million jobs,
while multinationals with more than 25,000
employees reduced their number of jobs by
300,000 (Byrne, 1993; see also Loveman and
But these data have also been criticised for their
statistical measures. Some economists even doubt
the trend, or at least come to a different conclu-
sion. For Davis et al. (1996) statistics give another
possibility of interpretation. Although small com-
panies hire at twice the rate, relative to their total
employment, of midsized companies and big ones,
most new U.S. jobs (66%) between 1992 and
March 1994 were created by companies with at
least 10 employees (Nasar, 1994). Davis adds that
Towards an Interdisciplinary Theory
Small Business Economics 10: 103–115, 1998.
1998 Kluwer Academic Publishers. Printed in the Netherlands.
Final version accepted on November 24, 1995
Freie Universität Berlin
The University and Entrepreneurship