Organizations and Markets

Public Entrepreneurship

27 March 2009 at 5:05 am Peter G. Klein 1 comment

| Peter Klein |

A surprising aspect of the recent growth in the entrepreneurship literature is the number of papers, projects, courses, centers, etc. studying entrepreneurship in non-market settings: “social entrepreneurship,” “cultural entrepreneurship,” “environmental entrepreneurship,” and so on. At my own university students can take entrepreneurship courses not only in the Colleges of Business or Engineering but in the College of Agriculture, the School of Natural Resources, the College of Journalism, and even the School of Social Work. (One of my colleagues organized a conference last year aimed at cattle ranchers seeking to market their, um, byproducts as fertilizer, with the classic title: “Manure Entrepreneurship: Turning Brown into Green.”

Translating concepts, theories, and research methods from the entrepreneurship literature to non-market settings raises challenging issue, however. How is entrepreneurship defined? What corresponds to entrepreneurial profit and loss? What is the entrepreneur’s objective function? Are there competitive processes that select for the better entrepreneurs? None of the classic writers on entrepreneurship — Cantillon, Say, Schumpeter, Knight, Mises, Kirzner — wrote explicitly on entrepreneurship in non-market settings, as far as I am aware. Mises, in fact, distinguishes sharply between “profit management” (or entrepreneurial management) and “bureaucratic management,” identifying the former with initiative, responsibility, creativity, and novelty and the latter with rule-following within strict guidelines (see Bureaucracy, 1944, and chapter 15, section 10 of Human Action, 1949).

At the same time, we often speak colloquially of innovators in the political area acting “entrepreneurially” — Howard Jarvis taking his property-tax initiative directly to the people in a ballot measure, Barack Obama and, especially, Ron Paul raising large amounts of campaign funds through the internet, etc. Political scientists have written extensively on political or policy entrepreneurs. Can these phenomena be analyzed usefully using the language of entrepreneurship theory? Or are we simply putting new labels on old concepts?

Joe Mahoney, Anita McGahan, Christos Pitelis, and I have written a paper, “The Economic Organization of Public Entreprenership,” that reviews this literature and asks how concepts of political or public entrepreneurship might be useful in understanding firm behavior and public policy debates. Comments are welcome! Here’s the abstract:

This paper explores how management theories can be extended and applied to innovation, experimentation, and creativity in the public domain. Researchers in various disciplines have studied public entrepreneurship, but there is little research specifically on the management of organizations to innovate in the public interest. We begin by extending concepts of the entrepreneur to the public domain, and then turn to the role of the entrepreneur in fostering institutional change. The conclusion refines the institutional theory of the state to incorporate the role of entrepreneurs in organizing public and private institutions.

Entry filed under: - Klein -, Entrepreneurship, Innovation, Institutions, Law and Economics, Management Theory, Public Policy / Political Economy, Strategic Management.