Managerial skills and willingness to take risks in the production of goods and services

Entrepreneurship is the process of designing, launching and running a new business, which is often initially a small business. The people who create these businesses are called entrepreneurs. Entrepreneurship has been described as the "capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit".

Articles

Altruism? Bah, Humbug, by Radley Balko, 22 Dec 2004
Contrasts the story of Aaron Feuerstein and Malden Mills with that of Jack Welch and General Electric to argue against activists that believe that corporations that put "altruism" before profits lead to better, more moral results
"... former General Electric CEO Jack Welch ... was considered by many to be the epitome of the ruthless, cold-hearted, profit-minded corporate executive. He laid off thousands of workers in his efforts to streamline and change the focus of the company. ... [He] turned GE from a sleepy home-appliance company into an international mega-corporation that today is a leader in several industries. For every job he slashed, he eventually created dozens of new ones. For all the praise heaped on Feuerstein and scorn heaped on Welch, it is Welch, not Feuerstein, whose 'cold-hearted,' capitalist management style did the most good for the most people."
Related Topics: Capitalism, Isabel Paterson
Biography of Carl Menger: The Founder of the Austrian School, by Joseph Salerno
Biographical and bibliographical essay, discussing his life and work and delving into various aspects of Austrian economic theory as presented by Menger
"... for Menger, the entrepreneur's most important function is anticipating future wants, estimating their relative importance, and acquiring the technological knowledge and knowledge of currently available means. In the absence of such entrepreneurial foresight and knowledge, there could be no imputing of value from satisfactions to higher-order goods, and rational resource allocation would be impossible. ... Entrepreneurial activity comprises a number of additional functions bound up with the praxeological category of property. These include 'economic calculation,' involving the various computations needed to ensure the technical efficiency of the production process, i.e., the most valuable use of property."
Book Review: Perfect Competition and the Transformation of Economics by Frank M. Machovec [PDF], by John B. Egger, Cato Journal, 1995
Review of the subject book, which argues that economics "embracing of perfect competition", over rivalrous competition, was a scientific revolution (as per Thomas Kuhn), but that led the profession down the wrong path
"Lacking the rivalrous-process competition of the classical economists and Austrians that provides the analytical structure for understanding and appreciating entrepreneurship, they also undervalued the institutions required for its implementation. These include the recognition that since entrepreneurship is costless yet can create immense value, gargantuan rewards stemming from little or no effort are not necessarily undeserved (p. 84). Citing writers as diverse as Dostoyevsky and Mises, Machovec concludes that 'entrepreneurship and the process of a private-enterprise market are inseparable phenomena' (p. 94)."
Claiming Paine, by Katherine Mangu-Ward, Reason, Jul 2007
Review of the book Thomas Paine and the Promise of America by Harvey J. Kaye
"Both Edison and Carnegie made their mark in the commercial realm, but Kaye has little appreciation for entrepreneurship. Paine did. He was an inventor who patented a single-span iron bridge and a smokeless candle, and he was involved in the early development of steam engines. He was a businessman who failed many times and always tried again. He was a bridge builder, a freelance schoolteacher, a magazine editor, and a printer."
Do Greedy Spinach Merchants Want To Kill You?, by Lew Rockwell, Mises Daily, 6 Oct 2006
Comments on the September 2006 North American E. coli outbreak in spinach
"These sorts of investigations actually encourage the view that free enterprise is a source of danger and a health hazard rather than our source of service and health enhancement. After all, a century ago, people would have found it to be nothing short of a miracle that greens could survive a cross-country trek and land on your dining table in pretty much the same state as when they were picked."
Related Topics: Business, Free Market, Government
Entrepreneurship and Social Progress, by Lew Rockwell, Mises Daily, 20 Dec 2006
"Philanthropy and entrepreneurship, then, do not stem from opposite impulses, as is commonly thought. They originate from the same source: the intellectual and even spiritual commitment to serve others and make a difference in the world for the good. They are different means of doing the same thing, distinguished from each other only in the method we use to account for them."
Related Topic: Politicians
How Much Do You Know About Liberty? (a quiz), The Freeman, Jun 1996
A 20-question quiz (with answers) on various topics related to liberty in the history of the United States
"What do these cherished pleasures of American life have in common: cowboys, hamburgers, movies, oranges, bowling, frankfurters, tomatoes, swimming, pizza, libraries, peas, onions, railroads, potatoes, salsa, picnics, symphony orchestras, and Christmas trees? ... All these good things which now seem 100 percent American originated elsewhere or owe much to the enterprise of foreign-born people."
Israel M. Kirzner and the Austrian Theory of Competition and Entrepreneurship, by Richard Ebeling, Future of Freedom, Aug 2001
Written on occasion of Kirzner's academic retirement at age 71; begins with biographical summary and then focuses on Kirzner's understanding of entrepreneurs in the market "process" and the detrimental effects of government intervention in the market
"What guides entrepreneurs in this task is the anticipation of profits — revenues in excess of the expenses to bring goods to market — and the avoidance of losses. But one of the insights that Kirzner has highlighted is that while entrepreneurship is crucial to the workings of the market, it cannot be bought and sold like other goods or resources for a certain price. The reason is that the essence of entrepreneurial activity is 'alertness,' an attention to scanning the market horizon for opportunities and innovations that can result in making better goods, or new goods, or bringing less-expensively manufactured goods to the market place."
James Buchanan's Subjectivist Economics, by Sheldon Richman, Apr 2013
Reviews Buchanan's writings in What Should Economists Do?, a collection of several of his essays
"When people act in the market, they are not merely trying to maximize utility, that is, optimally allocate their known resources to a predefined set of ends. Rather, they are entrepreneurs. ... as we know from everyday experience, when we make decisions about an uncertain future, we are speculative, risk-taking entrepreneurs who face the prospect, not only of spontaneously discovering means, but also of spontaneously discovering ends we never imagined were there. Serendipity happens! This possibility of dispelling what Israel Kirzner calls 'utter ignorance' is not captured in the utility-maximizing model."
Jean-Baptiste Say: Neglected Champion of Laissez-Faire, by Larry J. Sechrest
Biographical and bibliographical essay, discussing Say's life, methodology and his writings on money, banking, the law of markets, entrepreneurship, capital, interest, value, utility, taxes and the state
"What do these entrepreneurs do? They use their 'industry' ... to organize and direct the factors of production so as to achieve the 'satisfaction of human wants.' But they are not merely managers. They are forecasters, project appraisers, and risk-takers as well. Out of their own financial capital, or that borrowed from someone else, they advance funds to the owners of labor, natural resources ('land'), and machinery ('tools'). These payments, or 'rents,' are recouped only if the entrepreneurs succeed in selling the product to consumers. Entrepreneurial success is ... essential to the society as a whole."
Jean-Baptiste Say (1767 - 1832), Religion & Liberty, Jun 2002
Highlights Say's contributions on entrepreneurship, his troubles and later vindication in France, and his influence on Jefferson and Madison
"Say was certain that the entrepreneur was 'necessary for the setting in motion of every class of industry whatever; that is to say, the application of acquired knowledge to the creation of a product for human consumption.' ... only the entrepreneur—or the 'master-agent,' as Say sometimes described him—can combine these factors to bring to market products that meet human needs and wants. Further, an entrepreneur 'requires a combination of moral qualities,' such as 'judgement, perseverance, and a knowledge of the world, as well as of business.' He must be a forecaster, project appraiser, and risk-taker."
Related Topics: France, Jean-Baptiste Say
Kirzner, Israel M. (1930-), by Brian Doherty, The Encyclopedia of Libertarianism, 15 Aug 2008
Biographical essay
"Much of his writing concerned the role of the entrepreneur, whom Kirzner noted was not simply a businessman, but any person trying to make the world conform to his hopes and expectations. Humans try to discover opportunities for profit, those areas where people have not yet come to realize they can buy low and sell high. New opportunities for entrepreneurs to profit by their alertness to things others have not noticed always arise. ... The entrepreneurial role is to be alert to the relevant bit of information that will satisfy others' needs better and move toward equilibrating everyone's plans and expectations. "
UpdLetters to Thomas Robert Malthus, on Several Subjects of Political Economy, and on the Cause of the Stagnation of Commerce, by Jean-Baptiste Say, 1821
Series of five letters from Say to Malthus, written in response to the latter's criticisms in Principles of Political Economy (1820); the letters were translated from the French by John Richter
"The profit of the [entrepreneur] on whose account this operation has been effected, deducting the interest of the capital which he may have employed, represents the remuneration for his time and talents; that is to say, his own productive services employed in his own behalf. If his abilities be great, and his calculations well made, his profit will be considerable. If instead of talent he evinces inexperience in his affairs, he may gain nothing; he may very probably be a loser. All the risks attach to the [entrepreneur]; but on the other hand he takes the advantage of all the favourable chances."
Objectivist Ethics in the Information-Age Economy, by Nathaniel Branden, Navigator, Feb 2001
After reviewing human progress, from hunter to farmer to laborer to thinker, argues that what he calls "Objectivist ethics" are more relevant to current society
"In the last two decades there has been an explosion of entrepreneurship, almost entirely in small- and medium-sized businesses. They led the way in showing the path big business must follow if it is to remain competitive. While many companies are still struggling with the problem of balancing traditional administrative management on the one hand and entrepreneurial management on the other--the first focused on protecting and nurturing what already exists, the second on making it obsolete--it is now increasingly obvious that entrepreneurship cannot be the prerogative of small or new business."
On Equality and Inequality, by Ludwig von Mises, Modern Age, 1961
Examines the premise that "all men are created equal" and some possible as well as purported conclusions
"It is hardly possible to misconstrue more thoroughly the state of affairs prevailing in capitalistic society than by calling the capitalists and entrepreneurs a 'ruling' class intent upon 'exploiting' the masses of decent men. ... Under capitalism they are vying with one another in serving the masses of less gifted men."
Pleasing Consumers Isn't Easy, by Sheldon Richman, 12 Jan 2007
Comments on the challenges faced by high tech gadget entrepreneurs, before the release of the first Apple iPhone
"For an entrepreneur, it's a little like stumbling around in the dark. Particularly with cutting-edge hi-tech products, entrepreneurs can't always see the obstacles to success. ... That's where entrepreneurial risk comes in. The daring business people won't know what we consumers want until we are given the choice. Meanwhile, big bucks ride on our decisions."
Robert A. Heinlein's Soaring Spirit of Liberty, by Jim Powell, The Freeman, Jul 1997
Biographical essay, including multiple quotes from fellow authors and significant excerpts from Heinlein's novels and stories
"In January 1940, Astounding Science-Fiction published 'Requiem.' The hero, an entrepreneur named Delos D. Harriman, recalling the nineteenth-century American railroad entrepreneur Edward Harriman, built a company that developed communities on the moon. He fights 'damn persnickety regulations' issued by a government bureaucracy which, because of his frail health, opposes his planned trip to the moon. But he goes anyway and dies happy."
Schumpeter, Joseph (1883-1950), by Thomas M. Humphrey, The Encyclopedia of Libertarianism, 15 Aug 2008
Biographical essay
"Profits (supplemented perhaps with a desire to create a business dynasty) motivate entrepreneurs, who, financed by bank credit, innovate new goods, new technologies, and new methods of management and organization. These innovations fuel growth and generate cycles. Why cycles? Schumpeter maintained that they start with a mass of potential innovations seeking to override the forces of habit, custom, and tradition blocking their realization. When the first successful entrepreneur overcomes the stubborn resistance of incumbent interests and eases the path for other entrepreneurs, the ensuing wave of innovation boosts aggregate investment spending."
Smoking Bans Are Dangerous to a Free Society's Health, by Thomas A. Firey, The Baltimore Sun, 6 Dec 2006
Argues against proposed legislation in the city of Baltimore and the state of Maryland to ban smoking in restaurants and bars
"In fairness, some safety regulations do involve recognized risks, but few of them are outright bans. Coal mining, farming and commercial fishing are all extremely risky jobs and heavily regulated, yet there is no push to ban them. We respect the entrepreneurs' choice to own these businesses and the workers' choice to operate them. If smokers want to smoke in a bar, and an entrepreneur wants to provide that bar, and workers are willing to work there, why shouldn't we accept their choices?"
Related Topics: Health, Society
The Abstract Concept of Human Liberty, by Robert LeFevre, The Freeman, Dec 1982
Discusses how people may be interested in other people, events or things but only a few are interested in ideas, and how each group of people tends to view liberty from those perspectives
"But those who function at the level of people-interest ... do not see into the heart of their neighbor, who, by tireless effort, great personal restraint and long years of rigid self-discipline has brought a business into existence. They do not recognize his loss of freedom when he is set upon by agents, attacked in the press, brought to trial, ridiculed and smeared before his peers for some ex-post-facto failure, such as 'excessive' smoke emission."
The Brilliance of Turgot, by Murray Rothbard, 1986
Biography and review of Turgot's major writings; introduction to The Turgot Collection
"... British classicists ... failed to absorb two vital points. One was that Turgot's capitalist was a capitalist-entrepreneur. He not only advanced savings to workers and other factors of production, but he also, as Cantillon had first pointed out, bore the risks of uncertainty of the market. Cantillon's theory of the entrepreneur as a pervasive risk-bearer facing uncertainty, thereby equilibrating market conditions, had lacked one key element: an analysis of capital and the realization that the major driving force of the market economy is not just any entrepreneur but the capitalist-entrepreneur, the man who combines both functions. "
The Challenge to the U.S. Postal Monopoly, 1839-1851 [PDF], by Kelly B. Olds, Cato Journal, 1995
Analysis of the operation of the U.S. Post Office in the 1840s, including estimates of subsidies to various groups, and discussion of the private competitors and the effects they had on the postal service
"The most successful private mail company was that of James W. Hale. Hale first worked for an express company on the Boston-New York route and formed his own post office about the same time as Spooner formed his. Hale, Spooner, and most other private mall carriers charged 6.25 cents per stamp or 20 stamps for $1.00. unlike the Post Office, which did not use stamps, private companies required payment of the sender. ... In January 1845, after a year in business, his company had grown to 84 post offices and had 260 employees (Boston Evening transcript, 10 January 1845)."
The Death of Politics, by Karl Hess, Playboy, Mar 1969
Discusses libertarianism, contrasting it with both conservatism and modern liberalism, including specific policy differences
"In a very poor neighborhood there may be many with the natural ability to open a retail store, but it is much less likely that these people would also have the ability to meet all the state and city regulations ... which very often comprise the marginal difference between going into business or staying out. In a real laissez-faire society, the local entrepreneur, with whom the neighbors might prefer to deal, could go openly into business ... He could forget about ledgers, forms and reports and simply get on with the business of business, rather than the business of bureaucracy."
The Economic Role of Saving and Capital Goods, by Ludwig von Mises, The Freeman, Aug 1963
Explains there is a third factor of production aside from nature's resouces and human labor, and also that entrepreneurial judgement is necessary to attain the desired end of production
"Mind—reason—is the most important equip­ment of man. ... Equally indispensable in the con­duct of affairs is the role played by the human mind. Entrepre­neurial judgment directs the toil of the workers and the employ­ment of the capital goods toward the ultimate end of production, the best possible removal of what causes people to feel discontented and unhappy."
Related Topics: Capital Goods, Technology, Wages
The Economics Lesson Obama Needs to Learn, by Sheldon Richman, 25 Jul 2013
Explains economics in simple terms that even a statist politician ought to understand
"If a private entrepreneur acquires resources in a quest for profit, she must create value for consumers or she will fail. The market's profit-and-loss test will see to that. That test is administered by countless millions of consumers who are free to take or leave what the entrepreneur offers. This test is relayed back to the investors who ... must scrutinize projects in terms of their potential, ultimately, to please free consumers."
Related Topics: Economics, Government
UpdThe Economics of Errant Entrepreneurs, by Israel Kirzner, The Freeman, Aug 1987
Discusses whether entrepreneurial error, that is, unsuccessful, unprofitable entrepreneurs provide some benefits to society, compared to the benefits derived from successful ones
"If an entrepreneur hires productive services for one million dollars and produces consumer goods that are bought for two million dollars, this means that services that might otherwise have produced goods judged to be worth not much more than one million have, in fact, produced goods that are much more valuable to market participants, as measured by money offered. An unprofitable venture, on the other hand, has harmed society insofar as it is likely to mean that it has used valuable, scarce social resources to produce goods worth less than other goods that could have been alternatively produced. "
Related Topic: Capitalism
The Economics of Here to There, by Jeffrey Tucker, Mises Daily, 17 Jan 2007
Discusses the necessity of product advertising, how more people are becoming aware that it is needed and why it is "tacky and unbearable"
"Imagine if you had a book or a tire or an air conditioner part to sell. That presents all sorts of new problems. You must produce something physical. How many? You must have a warehouse. How big? You must be prepared to process credit cards, do the accounts, meet a payroll. And you must do all of this, not after you have the revenue, but before! It all seems like a wild act of faith. It is indeed."
Related Topic: Capitalism
UpdThe Kirznerian Way: An Interview with Israel M. Kirzner, by Israel Kirzner, Austrian Economics Newsletter, 1997
Topics include: Ludwig von Mises, the Austrian School, equilibrium, entrepreneurship, capital, business cycle theory, time preference, Hayek, Lachmann and Rothbard
"Very often people object. 'You say entrepreneurship is coordinating, but surely an entrepreneur who discovers new ways of doing things is putting people out of work and disrupting people's expectations.' Yes, he is, but in a more fundamental sense, he is correcting an already existing discoordination. He is redirecting resources that are already misplaced. People do not have to go on for years and years behaving in ways that are socially inefficient. The person who abruptly draws their attention to this inefficiency is assisting in the process of economic coordination."
The lessons of Indonesia, by Thomas Sowell, 22 May 1998
Highlights the plight of Chinese minorities in the 1998 Indonesian riots (that led to the fall of Suharto) and blames both Suharto's regime and the IMF bailout for the economic crisis leading to the riots
"... the Chinese, who are just 5 percent of the population of Indonesia own an estimated 80 percent of the capital of the country. ... People from India once had a similar predominance in the businesses of much of East Africa ... because they created them. So did the Jews in prewar Poland, the Germans in southern Brazil, the Ibos in northern Nigeria, the Italians in Buenos Aires, the Lebanese in West Africa ... and on and on. If we want to understand why the majority populations of these various places did not have the same entrepreneurship as these minorities, then we can talk about history and culture."
Related Topic: Indonesia
The Origin of Economic Theory: A Portrait of Richard Cantillon (1680-1734), by Mark Thornton, 3 Aug 2007
Examines the sections of Cantillon's Essai relating them to episodes in the author's life, then delving into several Austrian economics insights that can be found in the work
"The role of the entrepreneur is one of Cantillon's great contributions to economic understanding. He speaks of the entrepreneur in the classic sense of the undertaker of great business adventures, but Cantillon also has a theoretical distinction between those who work for a fixed return or wages and those who face uncertain returns, including farmers, independent craftsmen, merchants, and manufacturers. These entrepreneurs purchase inputs at a given price to produce and sell later at an uncertain price. In the pursuit of profit, the entrepreneur must bear risks as he faces the pervasive uncertainty of the market."
The Role of Venture Capital: Turning Science into Money, by Bill Frezza, MRS Bulletin, Aug 2002
"In general, venture capitalists look at hundreds of business plans for every one that they finance, so getting their attention is an exercise in itself. ... Start early and be prepared to be turned down many times before you get a nibble. Do your homework and understand the strategy and prior investments of a target venture capitalist before you make your approach."
UpdThe Undiscountable Professor Kirzner, by Roger W. Garrison, The Freeman, Aug 1997
Review of Kirzner's 1996 Essays on Capital and Interest, a collection of three previously published essays
"If interest is to be understood in terms of time preferences, capital is to be understood in terms of multiperiod plans. An Austrian subjectivist perspective on capital features the plans of individual entrepreneurs—plans that are subject to revision as the attempts to carry them out reveal conflicts with reality and with the unfolding plans of other entrepreneurs. ... the process that Professor Kirzner elucidates, the ongoing attempts on the part of many entrepreneurs to carry out their individual multiperiod plans (as guided by market rates of interest or as misguided by the central bank's rate of interest) ..."
The Yin Yang of Value Creation and Value Capture, by Bill Frezza, 18 May 2009
Contrasts collectivist vs. laissez-faire ideologues and their views on the relationship between value creation and capture
"A scientist can create enormous value by publishing a breakthrough paper even if he never captures a penny of it. ... A risk-taking entrepreneur can both create and capture value by bringing a new product or service to market, charging willing customers top dollar. Take away a shot at riches and the entrepreneur decamps to another clime."
Related Topic: Taxation
Wages, by Ludwig von Mises, Human Action, 1949
Chapter 21 "Work and Wages", section 3; discusses labor, wages, how are wages determined and erroneus attacks on that explanation
"As with all other sectors of the market, the labor market is actuated by the entrepreneurs intent upon making profits. Each entrepreneur is eager to buy all the kinds of specific labor he needs for the realization of his plans at the cheapest price. But the wages he offers must be high enough to take the workers away from competing entrepreneurs."
Related Topics: Labor, Wages
What Makes Entrepreneurs Tick?, by Gary Williams, The Freeman, Oct 1994

Books

UpdCompetition and Entrepreneurship
    by Israel Kirzner, 1978
Contents: Market Process versus Market Equilibrium - The Entrepreneur - Competition and Monopoly - Selling Costs, Quality, and Competition - The Long Run and the Short - Competition, Welfare, and Coordination

Videos


Let's raise kids to be entrepreneurs, by Cameron Herold, TED Talks, Mar 2010
Cameron recounts his own childhood entrepreneurial stories and encourages others to nurture the same spirit in children
Related Topic: Children
The Entrepreneur as a Hero, by Peter G. Klein, 6 Sep 2011
Video interview conducted by Mónica de Zelaya, Director of the Kirzner Entrepreneurship Center at the Universidad Francisco Marroquín

The introductory paragraph uses material from the Wikipedia article "Entrepreneurship" as of 26 Nov 2018, which is released under the Creative Commons Attribution-Share-Alike License 3.0.