Weber, Schumpeter and Knight on entrepreneurship and economic development
Abstract
. This paper interprets the discussion on entrepreneurship and economic development that started off with Weber's papers on
the Protestant Ethic. Weber sought the reason for the relatively rapid growth of the Occident in the rational, Calvinist attitude
to life. Calvinism – in his view – exactly suited a society of free labourers, who were not tied to master and soil by extra-economic
considerations as in tribal and feudal societies. Schumpeter gave an alternative explanation, emphasizing the importance of
innovation and entrepreneurship. Knight, who stressed neither rationality nor innovation but uncertainty and perceptiveness
as the sole source of progress and profits, followed up German language writing on this subject. Only the investor who can
detect hitherto hidden qualities in people can gain. The paper demonstrates how these three authors influenced each other.
The debate between these three authors has raised many issues of governance and organization that feature contemporary thinking.
... The critical viewpoints of two outstanding theorists can interpret these contrasting results. Schumpeter (1978) agreed with the negative impact of uncertainty on innovation but stressed innovation and uncertainty as the preconditions for productivity growth (Brouwer, 2000(Brouwer, , 2002. On the contrary, Knight's (1921) entrepreneurship theory revolves around the positive effects of uncertainty on work outcomes. ...
... On the contrary, Knight's (1921) entrepreneurship theory revolves around the positive effects of uncertainty on work outcomes. Nevertheless, both theorists support the idea that uncertainty spurs diffusion and improves the utilization of human capital (Brouwer, 2000(Brouwer, , 2002. ...
Purpose
In a dynamic and complex environment, employees’ creative performance (CP) can be essential in developing a distinguished and competitive strategy for an organization. Using the lens of competency management, this study aims to examine how employees perceived environmental uncertainty (PEU) and competency formula relate to employee CP, with a focus on the hospitality industry.
Design/methodology/approach
The data was collected from employees in the hospitality sector. Both symmetrical (PLS-SEM) and asymmetrical (fuzzy-set qualitative comparative analysis [fsQCA]) tests were performed to gain in-depth knowledge of how individual, organizational and environmental factors can be configured to explain employees’ CP.
Findings
The symmetrical analysis shows that the competency formula mediates the negative impacts of PEU on two dimensions of creativity – that is, novelty and utility. The fsQCA testing generated contrasting findings and revealed that uncertainty, along with the formula elements, is a unique antecedent condition and opportunity for employees’ CP. The inconsistent findings indicate asymmetrical and complex relationships between the proposed antecedents and outcomes in the case of employee creativity.
Practical implications
A combination of symmetrical and asymmetrical approaches is necessary to uncover the complex relationships among employees, organizations and the environment. This study shows that organizational agility, competency strategies and comprehensive strategic management processes can be configured to explain positive outcomes for organizations during uncertain circumstances. The findings can be used by human resource practitioners to maximize employee creativity and enhance organizational performance.
Originality/value
To the best of the authors’ knowledge, this study is the first to use symmetrical and asymmetrical testing to address the inadequacy of explaining employee CP in complex and uncertain environments, and highlight the crucial role of the competency formula in enhancing novelty and utility dimensions of CP. This research examines the impact of various internal and external factors (i.e. individual, organizational and contextual) on employee creativity within the hospitality industry.
... Uncertainty represents a challenge for entrepreneurs, in particular when environmental conditions display ambiguity, instability and institutional voids (Bylund and McCaffrey, 2017;Kolade et al., 2022;Mair and Marti, 2009). Research on entrepreneurship and uncertainty is abundant (Townsend et al., 2018) but has largely focused on market uncertainty at the early stages of venture creation (Brouwer, 2002;Butler et al., 2010;Freel, 2005). Beyond objective conditions, uncertainty can be understood as a subjective experience, in that "different individuals may experience different doubts in identical situations" (Campbell, 2020;McMullen and Shepherd, 2006, p. 135). ...
Purpose
This article explores how waste collection venture founders in an uncertain sub-Saharan African environment perceive and access resources. More particularly, it investigates why, even in a similar context, different types of resource-mobilizing practices can be observed among venture founders and how these different practices can be related to founders’ diverging perceptions of resource accessibility.
Design/methodology/approach
The study compares seven waste collection ventures in Ouagadougou, Burkina Faso, a particularly uncertain market with shifting public regulation. The comparative case study analysis relies on interviews with venture founders, staff members and sector experts, as well as observations and archival data.
Findings
The findings suggest that the diverse approaches to resource accessibility can be associated with different ways in which venture founders perceive three key dimensions: environmental uncertainty (which is not necessarily seen as negative), the venture’s mission (for-profit or not-for-profit) and the founders’ self-perceptions. Three “perception-practice” patterns are identified, which illuminate different avenues for waste collection venture founders to access resources and position themselves in between local traditions and international influences.
Research limitations/implications
The findings contribute to refining the understanding of the links between entrepreneurial perceptions and resource access in uncertain environments, and further illuminate the diversity and complexity of entrepreneurial approaches in sub-Saharan Africa.
Practical implications
The findings of this paper may help waste management entrepreneurs better leverage resources and deal with uncertainty. Moreover, the paper includes recommendations to public authorities in charge of waste policy at the local, national and international levels, urging them to take the diversity of entrepreneurial approaches into consideration and formulate tailored policies to support waste entrepreneurs in accessing the resources they need.
Social implications
Informing the diversity of waste management practices and their effectiveness directly contributes to supporting small venture development and dealing with pollution, thereby addressing, respectively, sustainable development goals 8 (“Economic development and growth”) and 15 (“Life on land”).
Originality/value
As entrepreneurship in sub-Saharan Africa remains relatively underexplored in comparison with Western contexts, in particular from the perspective of entrepreneurial perceptions, the originality of this article is to connect resource access practices with the different perceptions unfolding in a similar context, thereby shedding light on how such diversity informs the understanding of entrepreneurial practices in uncertain contexts.
... Furthermore, they highlight the influence of regional, national, or indigenous cultures on expectations for responsible business behaviour, an aspect often overlooked in research. Also, borrowing a historical business concept would be instrumental to address a contemporary socio-economic problem (Eisenstadt, 1980;Brouwer, 2002;Majidov and Ghosh, 2008;High, 2009;Brooks and Deffains, 2013;Nwankwo, 2013;Neal and Williamson, 2014). In this context, what would be the implications of various traditional values-based philosophies (e.g. ...
... intención emprendedora el emprendimiento es reconocido como un factor crítico en el desarrollo económico, generando de esta manera una contribución sustancial a la sociedad, ya que juega un rol fundamental en la estrategia para el fomento al empleo, la creación de riqueza (Zahra, 2005), a través de procesos de innovación los cuales son generalizados y llevados a cabo por emprendedores, los cuales encuentran maneras creativas de descubrir y explotar oportunidades (nyadu-Addo y Mensah, 2018; Pret y Cogan, 2018). Meyer et al. (2002) afirman que la introducción del campo del emprendimiento comienza con Knight (1921), con su factor de riesgo e incertidumbre, enfatizaba la importancia que tiene el juicio y el compromiso frente a la incertidumbre en el emprendimiento, ya que era la única manera de explicar las ganancias (Long, 1983;Brouwer, 2002). La Tabla 1 muestra algunas de las aportaciones más representativas al emprendimiento. ...
El presente trabajo hace una reflexión sobre el importante rol que desempeña la formación y capacitación del capital humano de los prestadores de servicios para el turismo médico en la región de Bahía de Banderas, México (que comprende los municipios de Puerto Vallarta, Jalisco y Bahía de Banderas, nayarit) como un determinante factor para la competitividad de la oferta turística de la región. La demanda de servicios para el turismo médico en la región se ha incrementado hasta llegar a convertirse en un referente regional y nacional para los turistas que buscan este tipo de servicios en un destino de sol y playa. Sin embargo, en investigación preliminar se logró detectar que las instituciones educativas a nivel medio superior y superior de esta región, tanto públicas como privadas, no cuentan con programas educativos enfocados o especializados para el turismo médico, por lo que se propone una estructura metodológica para realizar estudio a los alumnos de programas académicos relacionados con el turismo médico y a los representantes de los programas académicos de estas instituciones educativas para identificar el nivel de profesionalización de los futuros prestadores de servicios para el turismo médico en la región.
... Schumpeter would work on these ideas throughout his life, in the revised editions of this book, and in other works (Brouwer 2002, Śledzik 2013, Becker & Knudsen 2002. In the more stylized version of his most popular book, Capitalism, Socialism, and Democracy (Schumpeter 1942): ...
Schumpeter considered “creative destruction” the main force of economic progress. During his life, he kept the essential of this idea, but emphasis changed from individual entrepreneurs to big business or even states. In Schumpeter’s time, unemployment and the Great Depression were at the center of the stage. He was on the conservative, “liquidationist” side, which was run over both by the Keynesian revolution and by the Chicago school. But after the economic shocks of the 1970s, technological and organizational innovation proved the key for economic growth and competitiveness in modern economy. Economists from “New-Growth Theory” and “Evolutionary Economics,” working within the neoclassical framework or trying to substitute it, became inspired by Schumpeter’s work and developed it in several ways. As economics moved from short-run economic fluctuations to economic growth, Schumpeter’s influence and fame grew, and the last quarter of the twentieth century can be rightly named the age of Schumpeter.
... As such, the entrepreneur is the individual who makes plans, assumes risk, and adapts to uncertainty (i.e., innovates) to acquire wealth (Hébert & Link, 2009). In Austria, Joseph Schumpeter (1883Schumpeter ( -1950) devised a theory known as "creative destruction" in which he believed innovations in business could cause surges within the capitalist system, destroying obsolete firms earlier and yielding new ones faster (Brouwer, 2002). Businessmen who could create new combinations through innovative action disrupted market equilibrium and created new wealth, leading to the belief that an entrepreneur created something original and innovative (Bull & Willard, 1993;Wadhwani & Jones, 2006): Seen in this light, the entrepreneur and his function are not difficult to conceptualize: the defining characteristic is simply the doing of new things or the doing of things that are already being done in a new way (innovation). ...
The use of innovation to address our social or environmental needs is now critical. Globally, we are faced with numerous challenges which require novel, robust solutions that consider multiple scenarios and stakeholders. Innovation education has often been siloed into enterprise, business, and engineering programs to bolster the innovative potency of startup ventures and internal corporate processes. However, social innovation education (SIE) has merit in all disciplines, and for all citizens, to address these emergent global challenges. Social innovation as a concept and field is related but independent from the concept of innovation, and the pedagogies currently in use in these domains are in early development and practice. Social innovation relates to the creation of new ideas displaying a positive impact on the quality and duration of life. Theories of significance to SIE are rooted in the fields of design, creativity, and education while continuing to expand and evolve. A fitting pedagogy for social innovation should foster socially aware students who have both critical- and systems-thinking skills, empathy and an appreciation for human behavior, and who can leverage innovative competencies to develop solutions for positive social impact. In order to successfully create effective learning spaces, we contend that the curricula elements of (a) empathy, (b) locus of control, and (c) speculative thinking, should be embedded into all SIE learning designs.
The rapid expansion of the digital economy, driven by advancements in technology, is reshaping global markets, making digital skills essential for workforce success. This study examines how well-prepared students are to navigate this evolving landscape and identifies gaps in their readiness. Factors such as outdated curricula, the digital divide, and inadequate infrastructure hinder students' ability to acquire necessary skills like coding, AI, and data analysis. To bridge these gaps, education systems must update curricula, provide equitable access to digital tools, and promote continuous learning. By fostering digital literacy and adaptability, institutions can better equip students for success in the digital economy and future job markets.
Over the course of 2024, the Carnegie Endowment for International Peace and the City of Los Angeles convened more than a dozen listening sessions in support of the city's development of its first-ever Africa Trade and Investment Strategy. The listening sessions brought new voices, perspectives, and geographies directly into the policymaking process. In support of these sessions, select scholars developed exploratory essays on California-Africa connections. These essays are meant to inform policymaking considerations and to identify potential questions for future consideration in developing and examining California-Africa connections. They are at once expert and experimental and attempt not only to shape policy but also to provoke additional scholarship.
Examines the role played by true uncertainty, defined as the possibility of alternative outcomes whose probabilities are not capable of measurement, in an economic system, and distinguishes uncertainty from risk. Classical economic theory teaches that perfect competition ought to drive an economy into equilibrium and eliminate opportunities for economic profit. Nevertheless, economic profit persists in the real world. The introductory sections of the book provide a historical and critical review of early attempts to reconcile theory and observation. Then, beginning with a simplified model economy of individuals as producers-and-consumers, the author derives familiar features of static economics. The model goes through further refinements of joint production, and changes with uncertainty absent with similar results. The final model is one that demonstrates how perfect competition tends to eliminate profit. The author then takes up the question of how risk and uncertainty may upset the equilibrium. Risk is the possibility of alternative outcomes whose probabilities are capable of measurement; uncertainty is the possibility of alternative outcome whose probabilities are not capable of measurement. When probabilities are known, adverse outcomes may be insured against. Uncertainty is handled by judgment, an unequally distributed ability. The successful entrepreneur is one who has the sound judgment, either in the direction of the enterprise itself or in the selection of its managers (as shareholders do). The recompense for this talent is profit. (CAR)
Schumpeter first reviews the basic economic concepts that describe the recurring economic processes of a commercially organized state in which private property, division of labor, and free competition prevail. These constitute what Schumpeter calls "the circular flow of economic life," such as consumption, factors and means of production, labor, value, prices, cost, exchange, money as a circulating medium, and exchange value of money. The principal focus of the book is advancing the idea that change (economic development) is the key to explaining the features of a modern economy. Schumpeter emphasizes that his work deals with economic dynamics or economic development, not with theories of equilibrium or "circular flow" of a static economy, which have formed the basis of traditional economics. Interest, profit, productive interest, and business fluctuations, capital, credit, and entrepreneurs can better be explained by reference to processes of development. A static economy would know no productive interest, which has its source in the profits that arise from the process of development (successful execution of new combinations). The principal changes in a dynamic economy are due to technical innovations in the production process. Schumpeter elaborates on the role of credit in economic development; credit expansion affects the distribution of income and capital formation. Bank credit detaches productive resources from their place in circular flow to new productive combinations and innovations. Capitalism inherently depends upon economic progress, development, innovation, and expansive activity, which would be suppressed by inflexible monetary policy. The essence of development consists in the introduction of innovations into the system of production. This period of incorporation or adsorption is a period of readjustment, which is the essence of depression. Both profits of booms and losses from depression are part of the process of development. There is a distinction between the processes of creating a new productive apparatus and the process of merely operating it once it is created. Development is effected by the entrepreneur, who guides the diversion of the factors of production into new combinations for better use; by recasting the productive process, including the introduction of new machinery, and producing products at less expense, the entrepreneur creates a surplus, which he claims as profit. The entrepreneur requires capital, which is found in the money market, and for which the entrepreneur pays interest. The entrepreneur creates a model for others to follow, and the appearance of numerous new entrepreneurs causes depressions as the system struggles to achieve a new equilibrium. The entrepreneurial profit then vanishes in the vortex of competition; the stage is set for new combinations. Risk is not part of the entrepreneurial function; risk falls on the provider of capital. (TNM)
First published in 1973, this is a radical interpretation, offering a unified explanation for the growth of Western Europe between 900 A. D. and 1700, providing a general theoretical framework for institutional change geared to the general reader.
Capitalism, Socialism and Democracy remains one of the greatest works of social theory written in the twentieth Century. Schumpeter's contention that the seeds of capitalism's decline were internal, and his equal and opposite hostility to centralist socialism have perplexed, engaged and infuriated readers since the book's first publication in 1943. By refusing to become an advocate for either position, Schumpeter was able both to make his own great and original contribution and to clear the way for a more balanced consideration of the most important social movements of his and our time.
The Rise of the West, winner of the National Book Award for history in 1964, is famous for its ambitious scope and intellectual rigor. In it, McNeill challenges the Spengler-Toynbee view that a number of separate civilizations pursued essentially independent careers, and argues instead that human cultures interacted at every stage of their history. The author suggests that from the Neolithic beginnings of grain agriculture to the present major social changes in all parts of the world were triggered by new or newly important foreign stimuli, and he presents a persuasive narrative of world history to support this claim. In a retrospective essay titled "The Rise of the West after Twenty-five Years," McNeill shows how his book was shaped by the time and place in which it was written (1954-63). He discusses how historiography subsequently developed and suggests how his portrait of the world's past in The Rise of the West should be revised to reflect these changes. "This is not only the most learned and the most intelligent, it is also the most stimulating and fascinating book that has ever set out to recount and explain the whole history of mankind. . . . To read it is a great experience. It leaves echoes to reverberate, and seeds to germinate in the mind."âH. R. Trevor-Roper, New York Times Book Review
Schumpeter stressed innovation and Knight uncertainty as preconditions for entrepreneurship and productivity growth. Schumpeter emphasized entry in his early work but came to consider incumbent innovation the dominant mode in his later work. Modern growth theory emphasizes dissemination of knowledge to explain progress in the steady state. The paper analyzes the effects of entry, market structures and uncertainty on the incidence and diffusion of innovation. The insertion of Knightian uncertainty in Schumpeter's model can explain why innovators are numerous and arrive unexpectedly. Uncertainty spurs diffusion and improves the utilization of human capital. Combining the ideas of Schumpeter and Knight also elucidates several stylized facts of entrepreneurship, such as small entry size; low chances of survival and high growth rates. Copyright 2000 by Kluwer Academic Publishers
The authors present a model suggesting that innovative output is influenced by R&D and market struc ture characteristics. Using a new and direct measure of innovation in a cross-section regression model estimating the total number of inno vations and large- and small-firm innovations, they find that: (1) th e total number of innovations is negatively related to concentration and unionization, and positively related to R&D, skilled labor, and t he degree to which large firms comprise the industry; and (2) these d eterminants have disparate effects on large and small firms. Copyright 1988 by American Economic Association.