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SBE Lect 2 Part 1: Ch2 & Ch3.1-3.4-SB- The big picture (Chapter 2:…
SBE Lect 2 Part 1: Ch2 & Ch3.1-3.4-SB- The big picture
Chapter 2
: Understanding entrepreneurship: Who is an entrepreneur?
◦ The role of an entrepreneur in the economy (economic theories)
◦ Are entrepreneurs in some way special persons?
◦ The multidimensionality of entrepreneurship: The occupational and the behavioral notion
◦ Baumol’s classification: Productive, unproductive and destructive entrepreneurship
Case 2
: Entrepreneur (solo self-employed) or employee?
Chapter 3
: Defining the small business (3.1 – 3.4)
◦ Understand the issues involved in defining smaller-sized businesses
◦ Grasp the importance of small businesses for economies
Ch2-Understanding entrepreneurship: Who is an entrepreneur?
Someone running a successful business? -->Success? (in SB even more difficult)
Someone who starts a business?
--> Someone who takes over a (failing) business and turns it around?
Someone running an own business? --> “Entrepreneurial” behavior?
An innovator, a decision-maker, an industrial leader, etc.
See appendix slide 4/28 Entrepreneurship is multidimensional
Entrepreneurs in the economy (theoretical perspectives, highlights T2.1)
Theorists generally agree that arbitrage (difference in prices) is important:
◦
Temporal arbitrage
(differences in prices between two time periods)
◦
Spatial arbitrage
(differences in prices between two locations)
Entrepreneurs exploit arbitrage
◦ Necessary, but not a sufficient condition
---> Costs, finance, information, exploitation
Equilibrium creator:
Kirzner (1973)
◦ Disequilibrium in the market creates the opportunity, so the entrepreneur is moving the market towards equilibrium
◦ Entrepreneur as an arbitrageur who is alert to profitable opportunities
Cantillon 1755
◦ Entrepreneur brings equilibrium in the market
◦ Entrepreneur is not an innovator and does not change demand and supply
◦ Responsible for exchange and circulation in the economy: “Travelling salesman”
◦ An entrepreneurial class involved in pure arbitrage
Schumpeter (1934, 1942)
◦ Entrepreneurs as wild spirits, Unternehmergeist
◦ Innovation, creative destruction
◦ The act of innovating creates new market conditions, so creating disequilibrium in the market