Entrepreneurial Action, Public Policy, and Economic Outcomes

Entrepreneurial Action, Public Policy, and Economic Outcomes

New Thinking in Political Economy series

Edited by Robert F. Salvino Jr., Michael T. Tasto and Gregory M. Randolph

Examining the economics of entrepreneurship from the perspectives of productive versus unproductive entrepreneurial behavior and the role of institutions in economic outcomes, the authors in this book seek to advance the research on institutions by providing a simple framework to analyze the broader, long-term consequences of economic policies. They examine the relationship between economic freedom and economic outcomes and summarize empirical evidence and theory. The book also provides practical policy solutions that are based on the authors' cogent analyses.

Chapter 5: Entrepreneurial starts: nature or nurture?

Bradley K. Hobbs and Mushfiq Swaleheen

Subjects: business and management, entrepreneurship, economics and finance, austrian economics, politics and public policy, public policy


Entrepreneurship does not render itself to a single or simple definition. At the broadest level entrepreneurs “identify and act upon opportunity” (Kirzner, 1997) by organizing resources in such a way as to increase the potential for entrepreneurial profit. Entrepreneurs are individuals who excel at the identification of profit opportunities and then have the capabilities to identify and draw upon the resources required to establish and grow a business. Entrepreneurs must also act by employing those resources required to solve the problem or fulfill the opportunity. Cole (1968) outlines the process of entrepreneurship as purposeful activity to initiate, maintain and develop a profit-oriented business. Entrepreneurship is nascent and ubiquitous. It emerges spontaneously as enterprising individuals within a wide range of settings envision and seize upon discrete profit opportunities that they deem potentially profitable. This is true for nearly all modern societies. Even in countries that provide little political or economic freedom, such as Zimbabwe, Myanmar, Venezuela, Angola, the Democratic Republic of the Congo, and the old Soviet Union, entrepreneurs emerge and act. The extent and scope of entrepreneurial action is, of course, greatly influenced by many factors including current technology, rates of change in technology, infrastructure, tax and subsidy policies, attitudes towards wealth creation and entrepreneurs, and a wide range of other cultural and institutional factors. The literature has established that entrepreneurial development is fostered by income, employment, and education (Lucas, 1986; Mathur, 1999; Glaeser et al., 2004a, 2004b).

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