Applied Research in Political Economy: Entrepreneurship

The contributions to this edited volume all share in common a focus on this Kirznerian market process perspective. Contributions in Part I focus on theoretical extensions and critiques.

Keith Jakee and Stephen Jones provide a critique of the Kirznerian conception of entrepreneurship based on its reliance on neoclassical, marginal analysis, which, as they argue, is founded on several unreal­istic assumptions and therefore not representative of true entrepreneurial choice. Jakee and Jones suggest that rather than using marginal anal­ysis based on twice-differentiable isoquant and isocost curves, the study of entrepreneurial decision-making requires a focus on total costs and corner-solutions to adequately deal with the problems of indivisibility, static knowledge problems, radical uncertainty, and transaction costs.

Stephane Kouassi's chapter titled Conceptualization of a Kirznerian- Ethnic-Entrepreneur in Market Sociology offers an extension of the Kirznerian framework of entrepreneurship into the domain of culture, taking into consideration insights from contemporar y sociology regarding the “cultural determinants of the process of identification, evaluation and exploitation of entrepreneurial opportunities.” Kouassi's chapter offers a theoretical model for how cultural factors may systematically promote or hinder certain types of entrepreneurial discover y.

In his chapter titled Non-market Competition as a Discovery Proce­dure, David Lucas synthesizes the existing literature applying Austrian market process theor y to non-market contexts. In doing so, Lucas is able to identify shared theoretical insights and shortcomings in this liter­ature and point to potential areas for fruitful future inquiry, as well as potential stumbling blocks for the systematic application of the market process perspective to non-market contexts like politics, institutional development, cultural norms, and crime.

Part II offers various applied perspectives on entrepreneurship. Olga Nicoara provides an analysis of how an understanding of the quality of formal institutions along with cultural attitudes toward entrepreneurship influence the entrepreneurial decisions of immigrants. She argues that immigrants from countries with lower overall institutional quality and cultural attitudes that are less supportive of entrepreneurial ventures will be more likely to become innovative entrepreneurs once they migrate to countries with institutions and cultural attitudes more supportive of entrepreneurship generally.

John Dove's chapter, “Productive Entrepreneurship, Unproductive Entrepreneurship, and Public Sector Economic Development Restric­tions: Understanding the Connections”, offers an empirical analysis of Baumol's (1990) prediction of the institutional variability of the rela­tive prevalence of the types of entrepreneurship that can be obser ved in a particular society at a given point in time. Baumol famously suggests that institutions can change the relative profitability and therefore the relative prevalence of productive market entrepreneurship as compared to unproductive and even destructive types of extractive political (rent­seeking) entrepreneurship. Dove's analysis uses several indices measuring the relative profitability of productive and unproductive entrepreneurship in different states from Sobel (2008) as well as an index measuring the extent to which states provide non-tax economic development incen­tives from Patrick (2014).

Finally, examining the impact of regulatory policy on entrepreneur­ship, Liya Palagashvili, provides a potential theoretical explanation for the variability in new business starts across different industries, and more specifically for the concurrent empirical decline in new firm starts among main-street businesses and increase in new business starts among tech-startups.

Across and between the different contributions to this edited volume, the authors provide a rigorous and thorough assessment of both the limi­tations and the benefits of the entrepreneurial perspective to analysis of markets. We are grateful for their work and the synergies and overlaps that have developed across the different chapters over the last two years since they were first presented at a conference sponsored and organized by the Mercatus Center at George Mason University.