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    Theories in Entrepreneur

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    Ruthdel Kazumi
    Joseph Schumpeter's innovation theory defines entrepreneurs as innovative, forward-thinking, and creative individuals who create new products, production processes, markets, materials, or organizations. Frank Knight's risk bearing theory sees entrepreneurs as risk-takers who earn profits by anticipating future events. Alfred Marshall viewed entrepreneurs as the driving force that brings together land, labor, capital, and organization. Max Weber argued that social and religious cultures influence entrepreneurial roles and expectations. Israel Kirzner's learning-alertness theory described entrepreneurs as spontaneously recognizing opportunities through learning and alertness. Henry Leibenstein saw entrepreneurs as gap-fillers who identify market trends and deficiencies.

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    Theories in Entrepreneur

    Uploaded by

    Ruthdel Kazumi
    315 views2 pages
    Joseph Schumpeter's innovation theory defines entrepreneurs as innovative, forward-thinking, and creative individuals who create new products, production processes, markets, materials, or organizations. Frank Knight's risk bearing theory sees entrepreneurs as risk-takers who earn profits by anticipating future events. Alfred Marshall viewed entrepreneurs as the driving force that brings together land, labor, capital, and organization. Max Weber argued that social and religious cultures influence entrepreneurial roles and expectations. Israel Kirzner's learning-alertness theory described entrepreneurs as spontaneously recognizing opportunities through learning and alertness. Henry Leibenstein saw entrepreneurs as gap-fillers who identify market trends and deficiencies.

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    Joseph Schumpeter's innovation theory defines entrepreneurs as innovative, forward-thinking, and creative individuals who create new products, production processes, markets, materials, or organizations. Frank Knight's risk bearing theory sees entrepreneurs as risk-takers who earn profits by anticipating future events. Alfred Marshall viewed entrepreneurs as the driving force that brings together land, labor, capital, and organization. Max Weber argued that social and religious cultures influence entrepreneurial roles and expectations. Israel Kirzner's learning-alertness theory described entrepreneurs as spontaneously recognizing opportunities through learning and alertness. Henry Leibenstein saw entrepreneurs as gap-fillers who identify market trends and deficiencies.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    315 views2 pages

    Theories in Entrepreneur

    Uploaded by

    Ruthdel Kazumi
    Joseph Schumpeter's innovation theory defines entrepreneurs as innovative, forward-thinking, and creative individuals who create new products, production processes, markets, materials, or organizations. Frank Knight's risk bearing theory sees entrepreneurs as risk-takers who earn profits by anticipating future events. Alfred Marshall viewed entrepreneurs as the driving force that brings together land, labor, capital, and organization. Max Weber argued that social and religious cultures influence entrepreneurial roles and expectations. Israel Kirzner's learning-alertness theory described entrepreneurs as spontaneously recognizing opportunities through learning and alertness. Henry Leibenstein saw entrepreneurs as gap-fillers who identify market trends and deficiencies.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Joseph Schumpeter’s Innovation Theory

    Joseph Schumpeter’s innovation theory of entrepreneurship (1949) holds an entrepreneur as one


    having three major characteristics: innovation, foresight, and creativity. Entrepreneurship takes
    place when the entrepreneur
     creates a new product
     introduces a new way to make a product
     discovers a new market for a product
     finds a new source of raw material
     finds new way of making things or organization

    Frank Knight's Risk Bearing Theory


    Frank Knight (1885-1972) first introduced the dimension of risk-taking as a central
    characteristic of entrepreneurship.
    This theory considers uncertanity as a factor of production, and holds the main function of
    the entrepreneur as acting in anticipation of future events. The entrepreneur earns profit as a
    reward for taking such risks.

    Alfred Marshall’s Economic Theory


    Alfred Marshall in his Principles of Economics (1890) held land, labor, capital, and organization
    as the four factors of production, and considered entrepreneurship as the driving factor that
    brings these four factors together.
    The characteristics of a successful entrepreneur include:
     thorough understanding of the industry
     good leadership skills
     foresight on demand and supply changes and the willingness to act on such risky foresights

    Max Weber’s Sociological Theory


    The sociological theory entrepreneurship holds social cultures as the driving force of
    entrepreneurship. The entrepreneur becomes a role performer in conformity with the role
    expectations of the society, and such role expectations base on religious beliefs, taboos, and
    customs.

    Max Weber (1864-1920) held religion as the major driver of entrepreneurship, and stressed on
    the spirit of capitalism, which highlights economic freedom and private enterprise. Capitalism
    thrives under the protestant work ethic that harps on these values. The right combination of
    discipline and an adventurous free-spirit define the successful entrepreneur.

    Israel Kirtzner’s Learning-alertness Theory


    Israel Kirzner (1935-) hold spontaneous learning and alertness two major characteristics of
    entrepreneurship, and entrepreneurship is the transformation of spontaneous learning to
    conscious knowledge, motivated by the prospects of some gain.
    Kirzner considers the alertness to recognize opportunity more characteristic than innovation in
    defining entrepreneurship. The entrepreneur either remedies ignorance or corrects errors of the
    customers.
    His entrepreneurship model holds:
    1. The entrepreneur subconsciously discovering an opportunity to earn money by buying
    resources or producing a good, and selling it
    2. Entrepreneur Financing the venture by borrowing money from a capitalist.
    3. Entrepreneur using the funds for his entrepreneurial venture
    4. Entrepreneur paying back the capitalist, including interest, and retaining the "pure
    entrepreneurial profit."

    Henrry Leibenstein’s Gap-filling Theory


    Harvey Leibenstein (1922-1994) consider entrepreneur as gap-fillers. The three traits of
    entrepreneurship include:
    1. recognizing market trends
    2. develop new goods or processes in demands but not in supply
    3. determining profitable activities
    Entrepreneurs have the special ability to connect different markets and make up for market
    failures and deficiencies.

    John Keynes’ Employment, Interest and Money Theory (Keynesian Theory)


    In a less developed country, it is the role of the government to play the important role in
    economic development.
    It explains that during economic depression the government should put up massive employment
    through public works in resulting more jobs and income for people.

    Nicholas Kaldor’s Technological Theory

    This explains that the economic success of the highly develop countries was due to the
    application of modern technology in the production of goods and services.

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