The alert and creative entrepreneur: a clarification

Abstract

Israel M. Kirzner is the 2006 winner of The International Award for Entrepreneurship and Small Business Research (the FSF-Nutek Award). In this Prize Lecture he argues that a number of those who have commented on his work have misunderstood certain aspects of his theoretical system, and as a result the common distinction in the literature between “Schumpeterian” and “Kirznerian” entrepreneurs is flawed. He also argues that his understanding of the market process (set in motion by entrepreneurial decisions) provides a theoretical underpinning for public policy vis-à-vis entrepreneurship. Professor Kirzner’s main contributions to the economics of entrepreneurship were also presented and evaluated by Douhan et al. [Small Business Economics 29(1–2):213–223, 2007].

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Notes

  1. 1.

    For the purpose of this paper, “my work” refers primary to Kirzner (1973), but also secondarily to papers included in Kirzner (1979, 1985, 1992, 2000).

  2. 2.

    See Kirzner (1982, 1999).

  3. 3.

    For a candid, sophisticated recognition of this failure, see Fisher (1983).

  4. 4.

    For some of those who challenge the sharpness of the contrast (which they read me as maintaining) between a “Schumpeterian” understanding of the real-world entrepreneurial-capitalist process and the “Kirznerian” understanding — and who challenge, in particular, the claim (which they believed me to have made) that only one of these two understandings corresponds to reality — see Hébert and Link (1982, p. 99) and Boudreaux(1994). See also Loasby (1982, p. 224; 1989, p. 178). Holcombe (1998, p. 57) has argued that Schumpeter’s views reflect his interest in economic growth, while my view reflects a focus on (short-run?) resource allocation. In several important papers, Holcombe (1999, 2003) has perceptively explored the interface between Schumpeter’s view and my own. He has valuably argued for an extension of my own approach that might show how an “alertness” understanding of entrepreneurship can lead to the recognition that it is entrepreneurship itself (responding to discovered opportunities) that, by creating market possibilities, generates yet further entrepreneurial opportunities. The capitalist process can thus be seen as an entrepreneurially driven series of opportunity creations. In this section of this paper, in referring to the unhappiness of critics [with the sharp distinction (held to be claimed by myself) between Schumpeterian creativity and entrepreneurial alertness to existing opportunities], I have in mind an underlying theme that, I believe, pervades the literature cited in this footnote. Important contributions to this literature also have been made by Fu-Lai Yu (1998, 2001).

  5. 5.

    I have been criticized by other Austrian economists for failing to emphasize (as Mises himself emphasized) the speculative element in entrepreneurship. The present discussion should help dispel the misunderstanding that underlies this criticism. See also Kirzner (1985, p. 44).

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Correspondence to Israel M. Kirzner.

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Kirzner, I.M. The alert and creative entrepreneur: a clarification. Small Bus Econ 32, 145–152 (2009). https://doi.org/10.1007/s11187-008-9153-7

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Keywords

  • Austrian economics
  • Economic development
  • Entrepreneurship
  • Small business economics

JEL Classifications

  • B49
  • B52
  • B53
  • O31