A History of Entrepreneurship

Published by EH.Net (April 2012)

Robert F. H?bert and Albert N. Link, A History of Entrepreneurship.? London: Routledge, 2009.? xix + 121 pp. $115 (hardcover), ISBN: 978-0-415-77738-4.

Reviewed for EH.Net by Arthur M. Diamond, Jr., Department of Economics, University of Nebraska at Omaha.

A History of Entrepreneurship is a brief survey of what several well-known, and several less-well-known, economists have had to say about the role of the entrepreneur in the economy. H?bert and Link have collaborated on the history of entrepreneurship before.? Besides some papers, their 1988 monograph is substantially the same as the current monograph and their 2006 monograph appears identical except for new versions of the very brief Preface, Introduction and Conclusion.? (If you decide the monograph is useful to you, you may want to buy the 2006 version available for download through SSRN for a mere $19.) Since this is a very slight revision of their 1988 monograph, it is not surprising that almost all of the literature cited is from the mid-1980s or earlier.? Much recent literature is ignored (e.g., Mark Blaug?s insightful 1998 paper).

Economic writings on entrepreneurship are organized, mainly by time and geography, into ten brief chapters ? Schumpeter is given his own chapter.? Chapters are devoted to French economists, English economists, the neo-classicals, and American economists.? Among twentieth-century economists, besides Schumpeter, significant attention is devoted to Frank Knight, Israel Kirzner, and Ronald Coase.

The monograph does not aim to make a contribution to economic history, and none is made.? Economic historian Arthur Cole’s Harvard workshop on entrepreneurship receives a couple of pages (pp. 78-79) of discussion, but almost entirely in terms of the theoretical stance of the workshop participants.

In the Introduction and Conclusion, the authors try to justify their efforts by claiming that investigation of the history of thought on entrepreneurship will provide insights to current questions on entrepreneurship.? For instance, they are curious ?why is capitalism reviled in Western Europe?? (p. xix).? Their brief answer in the Introduction is:? ?the inability of many intellectuals to escape Marxist patterns of thought? (p. xix).? The question is of interest, and their answer is worth considering, but the body of the monograph holds no elaboration.

Another current question raised by the authors is why ?the entrepreneur was squeezed from economics? (p. 104).? Their answer is the mathematization of the discipline.? This is a plausible conclusion, but one that has been reached by others before, without having to rehearse all of the details of early economic writings on entrepreneurship.?

Mainly what the monograph actually does is to catalog what position a variety of economists took on a few issues that are important to the authors.? The primary issue of interest is to identify which roles the economist emphasized for the entrepreneur.? One of the most useful features of the monograph is a resulting compendium of twelve roles that an entrepreneur can have, with a parenthetical listing of the economists who mentioned each role.? The twelve roles are:? assumer of risk, supplier of capital, innovator, decision-maker, industrial leader, manager, organizer of resources, owner of firm, employer of inputs, contractor, arbitrageur, and allocator of inputs.

The authors give special emphasis and praise to those economists who saw the entrepreneur as a dynamic assumer of risk or innovator.? I share an interest in the entrepreneur as innovator and believe the monograph will be useful for giving credit where credit is due.? For instance, I had never heard of Abb? Nicholas Baudeau, and so was interested to learn (pp. 14-15) that he had anticipated Schumpeter in emphasizing the role of entrepreneurs as innovators.? Bentham is much better known, but I had not known that Bentham (pp. 28-32) also appreciated the role of entrepreneur as innovator.

In concluding, the authors? main prediction is that:? ?In the future … Knight may be more relevant to the subject of entrepreneurship than Schumpeter, at least among management specialists who study entrepreneurship? (p. 103).? They reach this prediction by extrapolating the academic theorizing in an article by Alvarez and Barney (2005).? An alternative approach would be to identify which entrepreneurs have mattered most for achieving the spectacular economic growth of what McCloskey (2010, p. 48) has called the ?Great Fact? of economics; and then to study carefully the history and biography of those innovative entrepreneurs.? Following that approach, Schumpeter?s continued relevance is assured.
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References:

Sharon A. Alvarez and Jay B. Barney, “How Do Entrepreneurs Organize Firms under Conditions of Uncertainty?” Journal of Management 31, no. 5 (Oct. 2005): 776-93.

Mark Blaug, “Entrepreneurship in the History of Economic Thought,” in Advances in Austrian Economics 5 (1998): 217-39.

Robert F. H?bert and Albert N. Link, The Entrepreneur: Mainstream Views and Radical Critiques, second ed. Westport, CT: Praeger, 1988.

Robert F. H?bert and Albert N. Link, “Historical Perspectives on the Entrepreneur,” Foundations and Trends in Entrepreneurship 2, no. 4 (2006): 261-408.

Deirdre N. McCloskey, Bourgeois Dignity: Why Economics Can’t Explain the Modern World, Chicago: University of Chicago Press, 2010.

Arthur M. Diamond, Jr. is Kayser Professor of Economics at the University of Nebraska at Omaha.? His ?Epistemology of Entrepreneurship? is forthcoming.? He also has recently published several papers related to Schumpeter?s process of creative destruction and is at work on a book entitled Openness to Creative Destruction. adiamond@unomaha.edu

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