Abstract
This coursework examines the variety of relevant theories regarding the topic of entrepreneurship
development. The analysis includes the earliest considerations including the initial works of
Cantillon (1755), Knight (1921) and Schumpeter (1934). A critical overview of all modern
theories is also included by exploring several entrepreneurship development contexts: economic,
psychological and sociological. A total of 16 authors are included in the current coursework.
1
, Literature is abundant of various theoretical propositions that make sufficient attempts to explain
the concepts of entrepreneurship and innovation and the possible factors that foster them. In
general, three major perspectives for analysing entrepreneurship have gained popularity:
economic, psychological and sociological (Princh et al., 2001).
To start with, the first consideration of the economic perspective dates back to mid-18 th century
where Cantillon (1755) described entrepreneurs as risk takers who buy and sell products on profit
in the same or another state where the profit opportunities exist. Later, Knight (1921) expands the
earliest findings by focusing on the entrepreneurs’ ability to be innovative and initiate change in
an attempt to manage risk and uncertainty. To carry on, the Austrian school provides thorough
insights about the economic perspective of entrepreneurship. Schumpeter (1934) recognizes the
leadership role of entrepreneurs in a free market economy and acknowledges their role as engines
of change and innovation via developing new products and markets. He also focuses on the role
of entrepreneurship as a process of “creative destruction”. Hayek (1948) highlights
entrepreneurs’ ability to adapt fast in an environment which is inherently information imperfect,
thus creating an overall stronger and resilient economic system.
Recent studies emphasize on the role of entrepreneurship as an engine for economic growth,
innovation and competitiveness. Bolton (1971) claims that entrepreneurship plays an essential
role in three distinct domains: market innovation, product and service variety, as well as large
business development. Kirzner (1973) outlines the entrepreneurs’ ability to identify and exploit
market opportunities, thus resulting in high economic growth. Casson (1982) acknowledges that
entrepreneurs are able to best use and relocate resources in an environment of imperfect
information. In this context, Baumol (1993) summarizes that entrepreneurship is a key
prerequisite for productivity and economic prosperity.
Secondly, the psychological perspective of entrepreneurship has been developed recently.
Authors, such as Hornaday and Bunker (1970) focus on the presence of certain psychological
features that are overly presented among entrepreneurs and distinguish them from the rest of the
society. In this context, Brockhaus (1982) also recognizes the crucial role of the psychological
characteristics for entrepreneurship development. In addition, he proposes past experience and
personal traits as potential explanatory factors fostering business development. The idea of “locus
of control” and belief in own destiny has been developed by Rotter (1966) who argues that
2
This coursework examines the variety of relevant theories regarding the topic of entrepreneurship
development. The analysis includes the earliest considerations including the initial works of
Cantillon (1755), Knight (1921) and Schumpeter (1934). A critical overview of all modern
theories is also included by exploring several entrepreneurship development contexts: economic,
psychological and sociological. A total of 16 authors are included in the current coursework.
1
, Literature is abundant of various theoretical propositions that make sufficient attempts to explain
the concepts of entrepreneurship and innovation and the possible factors that foster them. In
general, three major perspectives for analysing entrepreneurship have gained popularity:
economic, psychological and sociological (Princh et al., 2001).
To start with, the first consideration of the economic perspective dates back to mid-18 th century
where Cantillon (1755) described entrepreneurs as risk takers who buy and sell products on profit
in the same or another state where the profit opportunities exist. Later, Knight (1921) expands the
earliest findings by focusing on the entrepreneurs’ ability to be innovative and initiate change in
an attempt to manage risk and uncertainty. To carry on, the Austrian school provides thorough
insights about the economic perspective of entrepreneurship. Schumpeter (1934) recognizes the
leadership role of entrepreneurs in a free market economy and acknowledges their role as engines
of change and innovation via developing new products and markets. He also focuses on the role
of entrepreneurship as a process of “creative destruction”. Hayek (1948) highlights
entrepreneurs’ ability to adapt fast in an environment which is inherently information imperfect,
thus creating an overall stronger and resilient economic system.
Recent studies emphasize on the role of entrepreneurship as an engine for economic growth,
innovation and competitiveness. Bolton (1971) claims that entrepreneurship plays an essential
role in three distinct domains: market innovation, product and service variety, as well as large
business development. Kirzner (1973) outlines the entrepreneurs’ ability to identify and exploit
market opportunities, thus resulting in high economic growth. Casson (1982) acknowledges that
entrepreneurs are able to best use and relocate resources in an environment of imperfect
information. In this context, Baumol (1993) summarizes that entrepreneurship is a key
prerequisite for productivity and economic prosperity.
Secondly, the psychological perspective of entrepreneurship has been developed recently.
Authors, such as Hornaday and Bunker (1970) focus on the presence of certain psychological
features that are overly presented among entrepreneurs and distinguish them from the rest of the
society. In this context, Brockhaus (1982) also recognizes the crucial role of the psychological
characteristics for entrepreneurship development. In addition, he proposes past experience and
personal traits as potential explanatory factors fostering business development. The idea of “locus
of control” and belief in own destiny has been developed by Rotter (1966) who argues that
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