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Theory, Networks, History

Mark Casson

In this important new book, Mark Casson argues that the fundamental significance of entrepreneurship requires it be fully integrated into core social science disciplines such as economics and sociology, as well as into economic and business history. This book shows how this can be done. It formalises the role of the entrepreneur as innovator, risk-taker and judgemental decision-maker, and relates these functions to the size and growth of the firm. Mark Casson discusses entrepreneurship as a form of strategic networking, showing how entrepreneurs gain access to established networks in order to source information, and then create their own networks to exploit this information. Applying these insights to historical evidence leads to a radical re-interpretation of key issues in economic and business history, including the emergence of trading companies, the spread of empires, the rise of the modern corporation and the globalisation of the firm.
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Chapter 3: Entrepreneurship and Macroeconomic Performance with Nigel Wadeson

Nigel Wadeson


This chapter develops a formal model of the impact of entrepreneurship on macroeconomic performance. It examines the role of entrepreneurs in creating markets for novel products. Entrepreneurs specialize in collecting information that permits them to make judgemental decisions about innovation. The quality of their judgement determines the success of innovations, and thereby impacts on the long-run performance of the economy. The model demonstrates rigorously that constraints on the supply of entrepreneurship reduce economic performance, and serves to identify the policy instruments that can improve performance by alleviating these constraints. 3.1 INTRODUCTION In response to the industrial depression of the 1970s and the rise of ‘supply-side economics’ many Western governments began to promote entrepreneurship and enterprise culture as a means of improving macroeconomic performance (see Chapter 1). By 2000 the budgets for supporting small-business start-ups, strengthening university–business linkages and promoting high-technology industrial districts had become very substantial. Recently, policymakers have begun to question whether the benefits of these policy interventions outweigh their costs. For example, while small firms have undoubtedly created new jobs for workers made redundant by large firms in ‘sunset’ industries, many of these new start-up firms have failed to grow as quickly as expected (Storey, 2006). Economic theories of entrepreneurship suggest that entrepreneurship brings wide-ranging benefits, including greater innovation, more risktaking and a general improvement in the coordination of the economy (Harper, 1996). In principle, these theories should provide a simple framework for evaluating the contribution of entrepreneurship to the macroeconomy. But in practice these theories are...

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