Edited by Hans Landström and Franz T. Lohrke
Chapter 5: Entrepreneurial Alertness and Opportunity Discovery: Origins, Attributes, Critique
Nicolai J. Foss and Peter G. Klein INTRODUCTION Israel Kirzner’s concept of entrepreneurship as alertness to profit opportunities is one of the most influential modern interpretations of the entrepreneurial function. Shane and Venkataraman’s (2000, p. 218) important assessment defines entrepreneurship research as ‘the scholarly examination of how, by whom, and with what effects opportunities to create future goods and services are discovered, evaluated, and exploited.’ As such, ‘the field involves the study of sources of opportunities; the processes of discovery, evaluation, and exploitation of opportunities; and the set of individuals who discover, evaluate, and exploit them.’ Shane’s A General Theory of Entrepreneurship (2003) cites Kirzner more than any writer except Joseph Schumpeter. More generally, the entrepreneurial opportunity, rather than the individual entrepreneur, the startup company, or the new product, has become the centerpiece of the academic study of entrepreneurship (Gaglio and Katz, 2001; Shane, 2003; Shane and Venkataraman, 2000). Kirzner’s framework builds on the market-process approach associated with the Austrian school of economics and can trace its roots further back to Richard Cantillon, J.B. Clark, Frank A. Fetter, and other writers. Kirzner himself sees his contribution as primarily an extension of the work of Mises and F.A. Hayek, in effect bridging Mises’s (1949) emphasis on the entrepreneur with Hayek’s (1946; 1968) concept of market competition as an unfolding process of discovery and learning.1 Among mainstream economists, Kirzner has been cited in the literature on occupational choice, and there have been a few attempts to formalize his model of the market...
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