Confusing Definitions of Entrepreneurship

30 March 2011 at 3:55 pm Peter G. Klein 9 comments

| Peter Klein |

Some of you have heard me complain before about the confusing ways “entrepreneur” and its cognates are used in the literature. Sometimes entrepreneurship refers to an outcome or phenomenon (startups, self-employment, high-growth firms), other times to a behavior or attribute (creativity, alertness, innovation, judgment, adaptation). I find the occupational, structural, and functional taxonomy useful, but other organizing schemes may be useful too. In any case, reading the entrepreneurship literature can be a frustrating experience.

I’m glad I’m not the only one who thinks so:

[T]he book’s diversity of approaches and styles is both a strength and also an inherent weakness. Some chapters offer comprehensive descriptions over long periods of time (e.g., Hudson, Hau, Wengenroth, Chan), while others focus on narrow aspects of entrepreneurship (e.g., Yonekura and Shimizu, Mokyr, Wolcott). The first kind appears to be written for a broad audience of noneconomic historians, whereas the second type tends to be drier and more technical. Some authors follow Baumol and distinguish between productive and redistributive entrepreneurship (e.g., Hudson, Mokyr, Cain, Lamoreaux), while others use very broad definitions of entrepreneurship (e.g., Kuran, Casson and Godley, Gelderblom), and yet another group of authors associates entrepreneurship with innovation (e.g., Yonekura and Shimizu, Graham). This extreme diversity of definitions and approaches can overwhelm the reader. As a result, the volume’s ambition of tracing “the history of entrepreneurship throughout the world since antiquity” (p. vii) ends up being an interesting patchwork of insights drawn from different times and places rather than a unifying and synthetic history.

That’s from Michaël Bikard and Scott Stern’s Journal of Economic Literature review of The Invention of Enterprise: Entrepreneurship from Ancient Mesopotamia to Modern Times (ed. David S. Landes, Joel Mokyr, and William J. Baumol, Princeton, 2010), which we blogged about earlier. Obviously in a work of this scope, a common definition of entrepreneurship is likely to be elusive. But the wide variety of meanings in this lone volume give you a sense of the challenge in making sense of the wider literature.

Entry filed under: - Klein -, Business/Economic History, Entrepreneurship, Recommended Reading.

FAIL Recycling an Old Post

9 Comments Add your own

1. SkepticProf | 30 March 2011 at 7:52 pm

There’s a p*ssing contest going on on at least one entrepreneurship blog about this right now. The blog owner claimed that people who start “napkin companies” [low-risk, exploratory ventures] aren’t real entrepreneurs and aren’t entitled to be called “founders.” Many commenters (including I) disagreed!
2. srp | 31 March 2011 at 1:44 pm

Why should “entrepreneurship” be well defined when “strategy,” “organization,” “market,” and “competitive advantage” aren’t? There’s a long agenda if we want to stabilize our concepts and terms.

BTW, both links to book reviews in your earlier post on The Invention of Enterprise are broken.
3. Peter Klein | 31 March 2011 at 1:56 pm

Touché!
4. Peter Klein | 31 March 2011 at 2:04 pm

Those links should work now. Thanks for letting me know.
5. Michael Marotta | 1 April 2011 at 11:01 am

I agree with srp above because his post is consonant with my own opinion from Feb. 25 under The Forgotten: “Alternative Views of Mengerian Entrepreneurship” On several grounds, it is clear that definitions of entrepreneurship are problematic.

First, we have an Orwellian problem The idea that a dictionary definition, short and easy to remember, is always sufficient discourages thought. We grew up in public schools that gave high marks for “quiz bowl” replies to the teacher’s questions. In college, the professor gets 55 minutes to make a point (or no point) but a student gets maybe 20 seconds. So, we value neat definitions of complexities.

Subsidiary to that, we have a fallacy that the social sciences must mimic physics. E=mc^2, F=ma. We want nice neat statements to show that we are rigorous. But people are more complicated than billiard balls. What is religion? What is a doctor? What is art? Who is an athlete? We write whole books to define these because we can. Indeed, we must.

Second, the essential argument of the Austrians is that “orders emerge.” You cannot pre-define money – or as srp notes “market” etc – but can only examine what it is after it exists. Thus, we can look at many entrepreneurial, commercial, mercantile, or agoric activities and include or exclude them in our definitions, but we cannot preclude them.

Third, from above: A person gets up every day and goes to work operating a machine or selling notebook computers and comes home and you ask, “What do you do for a living?” and they reply, “I am an entrepreneur.” They are in the machine-operating or computer-selling business. They lease out laborers (quantity one) who are skilled at this. Perhaps the machine operator “sells parts” to an OEM who provides raw materials, production tools, and locale. The operator bills for his time by the hour and being highly valued also nicks his hapless client for pre-payment of income tax, contribution to healthcare, etc., Those definitions also must be valid. The computer seller is likewise a computer entrepreneur no less than Steve Jobs and Bill Gates — if that person so defines their activity. Ideally, everyone would do so.
6. srp | 4 April 2011 at 2:57 am

Michael:

I’m afraid you may have misconstrued my point. I actually think we do need more precise and stable concepts of strategy and competitive advantage. I even have notions of what those could be.

You could make a case for inventing new terms for these concepts and leaving the traditional words as loose “orienting” terms, but I think we already proliferate too many overlapping words in strategy. Now we have “business model” rearing its head in scholarly work after a long gestation among practitioners. In a few more years we’ll probably start using “space” for “market” or “business” (just like real managers!) so as to sound more with-it. It seems to take about ten years for the practitioner jargon to seep into the academic literature.
7. Michael E. Marotta | 10 April 2011 at 9:25 am

Thanks for the suggestion of The Invention of Enterprise. I am about one-third through it.

A friend of mine is suffering through a Human Resources class. He asked for help with these. The Numbers are the target phrases followed by my Lettered suggestions for meaning from a list

5. release of resources l. infanticide or o. bribe
12. psychologically impacted d. haunted
15. self-sufficiency participants j. welfare recipients
14. expedite progress toward alternate life pursuits u. recession
16. reality augmentation g. TV commercials
17. giving the baby a bath o. bribe or l. infanticide
18. normal gratitude o. bribe
21. monitored retrievable storage v. spent nuclear fuel dump
22. spatial anchorling i. standing still
24. value minutes g. TV commercials

I thanked him for the numbered phrases, telling him that such clauses come in handy when you want to speak without being understood. Enterprise might be like that. For decades, we avoided the word “capitalism” calling it free enterprise or the free market or private enterprise, etc., etc. Now, we can call it capitalism again, even though the word remains problematic. In Tolkein’s LOTR, the Ents took hours to say “good morning.” There might be value in that approach. Mere labels can be Orwellian thought-stoppers.
8. What is an entrepreneur? « Andrew Smith's Blog | 23 April 2011 at 4:01 pm

[…] This is a question I’ve been thinking about recently, as I’m working on the intro to an edited collection on historical Canadian entrepreneurs. It is, therefore, with some interest that I saw that the blog Organizations and Markets had a recent post about competing definitions of “entrepreneurship”. See here. […]
9. andrewdsmith | 9 May 2014 at 1:55 am

Reblogged this on The Past Speaks and commented:
This post by Peter Klein has some interesting ideas about the problems involved in defining “entrepreneurship”.