To date, the phenomenon of entrepreneurship has lacked a conceptual framework. In this note we draw upon previous research conducted in the different social science disciplines and applied fields of business to create a conceptual framework for the field. With this framework we explain a set of empirical phenomena and predict a set of outcomes not explained or predicted by conceptual frameworks already in existence in other fields.

The Promise of Entrepreneurship as a Field of Research

This paper draws on the social and behavioral sciences in an endeavor to specify the nature and microfoundations of the capabilities necessary to sustain superior enterprise performance in an open economy with rapid innovation and globally dispersed sources of invention, innovation, and manufacturing capability. Dynamic capabilities enable business enterprises to create, deploy, and protect the intangible assets that support superior long- run business performance. The microfoundations of dynamic capabilities—the distinct skills, processes, procedures, organizational structures, decision rules, and disciplines—which undergird enterprise-level sensing, seizing, and reconfiguring capacities are difficult to develop and deploy. Enterprises with strong dynamic capabilities are intensely entrepreneurial. They not only adapt to business ecosystems, but also shape them through innovation and through collaboration with other enterprises, entities, and institutions. The framework advanced can help scholars understand the foundations of long-run enterprise success while helping managers delineate relevant strategic considerations and the priorities they must adopt to enhance enterprise performance and escape the zero profit tendency associated with operating in markets open to global competition. Copyright  2007 John Wiley & Sons, Ltd.

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Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance

Before technological change leads to new processes, products, markets, or ways of organizing, entrepreneurs must discover opportunities in which to exploit the new technology. To date, research has not explained adequately why entrepreneurs discover these opportunities, which creates several conceptual problems in the entrepreneurship literature. Drawing on Austrian economics, I argue that opportunity discovery is a function of the distribution of information in society (Hayek 1945). Through in-depth case studies of eight sets of entrepreneurs who exploit a single MIT invention, I show that entrepreneurs discover opportunities related to the information that they already possess. I use these findings to draw several implications that differ from those prevailing in the entrepreneurship literature, including: (1) entrepreneurs do not always select between alternative market opportunities for new technologies; (2) the source of entrepreneurship lies in differences in information about opportunities; (3) the results of prior studies of entrepreneurial exploitation may suffer from bias; and (4) individual differences influence the opportunities that people discover, how their entrepreneurial efforts are organized, and how the government can influence this process.

Prior Knowledge and the Discovery of Entrepreneurial Opportunities

The Uppsala internationalization process model is revisited in the light of changes in business practices and theoretical advances that have been made since 1977. Now the business environment is viewed as a web of relationships, a network, rather than as a neoclassical market with many independent suppliers and customers. Outsidership, in relation to the relevant network, more than psychic distance, is the root of uncertainty. The change mechanisms in the revised model are essentially the same as those in the original version, although we add trust-building and knowledge creation, the latter to recognize the fact that new knowledge is developed in relationships.

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The Uppsala Internationalization Process Model Revisited: From Liability of Foreignness to Liability of Outsidership

This article is intended to enhance the position of stakeholder theory as an integrating theme for the business and society field. It offers an instrumental theory of stakeholder management based on a synthesis of the stakeholder concept, economic theory, behavioral science, and ethics. The core theory—that a subset of ethical principles (trust, trustworthiness, and cooperativeness) can result in significant competitive advantage—is supplemented by nine research propositions along with some research and policy implications.

Instrumental stakeholder theory: a synthesis of ethics and economics

Kirzner, writing from a neo-Austrian economic perspective that is inherently dynamic with an emphasis on action over time, offers a critique of the prevailing positivistic, value freedom of orthodox microeconomics and price theory, focusing on what he believes is its unrealistic emphasis on static equilibrium analysis. Kirzner criticizes the methodology of Robbinsian equililbrium analysis in which a competitive market is a situation in which buyers and sellers have perfect knowledge and in which decision-making is mechanical and its solutions given. This analysis, according to Kirzner, eliminates all consideration of the competitive process and of entrepreneurship (which is synonymous, for him, with competitive activity); the assumption of perfect knowledge is unrealistic. He offers a full elaboration of the Mises-Hayek view of entrepreneurship and competition as a process based on von Mises' idea of "human action" rather than Marshall's idea of economizing. Kirzner sees the entrepreneur as always alert to information and propelling the system forward by seeking out price discrepancies as opportunities for profit. This process depends not on impulses from technology or genius; rather every market participant is a potential entrepreneur who can exploit a situation, which depends on a lack of perfect knowledge among the market participants. Entrepreneurial activity is always competitive; and competitive activity is always entrepreneurial. Kirzner is thus also a critique of the Schumpeterian view of entrepreneurship as disrupter of equilibrium; rather the entrepreneur removes disequilibrium in a short-run movement to an equilibrium position. A Kirznerian entrepreneur is a decision-maker whose entire role arises from alertness to unnoticed opportunities or knowledge about market data. Within the context of entrepreneurial activity, he offers a neo-Austrian redefinition of the concept of monopoly and competition. Since for Kirzner entrepreneurship involves no element of resource ownership, monopoly is defined as the impact of input ownership on the competitive process, and not the shape of the demand curve facing a firm. A monopoly position can be won by an alert entrepreneur. In the light of his theory of competition, Kirzner provides a new theoretical place for advertising and selling costs. Advertising, which promotes and calls attention to product differentiation, is the "weapon" of competition, which allows competitive-entrepreneurial adjustments in the type of products placed in the market in disequilibrium. Kirzner's revaluation of advertising is thus opposed to the idea of advertising as a social waste. Kirzner also offers a new conception of economic welfare based on the "coordination-of-knowledge-and-actions" instead of the orthodox "allocation of social resources" standard. (TNM)

Competition and Entrepreneurship

The aiithlor is deeply grateful to Mario Rizzo, Peter Boettke, andc1 Yat Nyarko, for exte.tsive and helpful comm7ents o an earlier draft Firther helpful coniiiiienit.s were provided by Joseph T Salernio, and by othier iaiemiibers of the Aiustriani Economizics Colloquiumi71 at New York UniverOity. Several anioniymtouis referee.s provided m1anzy additionial valiuable suggestions. The auithlor is gr-atefiul to the Sarah Scaife Foundation for researchi support. I THE AUSTRIAN TRADITION is represented in modern economics by a "very vocal, feisty and dedicated subset of the economics profession" (Karen Vaughn 1994, p. xi). Much of the work of this group of scholars is devoted to the most fundamental problems of microeconomics.1 This Austrian work, therefore, differs in character and content from a good deal of neoclassical theory which, despite widespread and growing awareness of its limitations, continues to serve as the analytical core of main

http://sobelrs.people.cofc.edu/Readings/1B-3.%20Kirzner%20-%20Entrepreneurial%20Discovery%20and%20the%20Competitive%20Market%20Process%20An%20Austrian%20Approach.pdf

Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach

Perception, opportunity, and profit

Perception, opportunity, and profit : studies in the theory of entrepreneurship

Stressing verbal logic rather than mathematics, Israel M. Kirzner provides at once a thorough critique of contemporary price theory, an essay on the theory of entrepreneurship, and an essay on the theory of competition. "Competition and Entrepreneurship" offers a new appraisal of quality competition, of selling effort, and of the fundamental weaknesses of contemporary welfare economics. Kirzner's book establishes a theory of the market and the price system which differs from orthodox price theory. He sees orthodox price theory as explaining the configuration of prices and quantities that satisfied the conditions for equilibrium. Mr. Kirzner argues that "it is "more" useful to look to price theory to help understand how the decisions of individual participants in the market interact to generate the market forces which compel changes in prices, outputs, and methods of production and in the allocation of resources." Although "Competition and Entrepreneurship" is primarily concerned with the operation of the market economy, Kirzner's insights can be applied to crucial aspects of centrally planned economic systems as well. In the analysis of these processes, Kirzner clearly shows that the rediscovery of the entrepreneur must emerge as a step of major importance.

Israel M. Kirzner

Papers

Competition and Entrepreneurship

Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach

Perception, opportunity, and profit

Perception, opportunity, and profit : studies in the theory of entrepreneurship

Competition and Entrepreneurship