------ EH.NET BOOK REVIEW ------
Title: A History of Entrepreneurship

Published by EH.Net (April 2012)

Robert F. Hébert and Albert N. Link, A History of Entrepreneurship.
London: Routledge, 2009.  xix + 121 pp. $115 (hardcover), ISBN:
978-0-415-77738-4.

Reviewed for EH.Net by Arthur M. Diamond, Jr., Department of
Economics, University of Nebraska at Omaha.

A History of Entrepreneurship is a brief survey of what several
well-known, and several less-well-known, economists have had to say
about the role of the entrepreneur in the economy. Hébert and Link
have collaborated on the history of entrepreneurship before.  Besides
some papers, their 1988 monograph is substantially the same as the
current monograph and their 2006 monograph appears identical except
for new versions of the very brief Preface, Introduction and
Conclusion.  (If you decide the monograph is useful to you, you may
want to buy the 2006 version available for download through SSRN for a
mere $19.) Since this is a very slight revision of their 1988
monograph, it is not surprising that almost all of the literature
cited is from the mid-1980s or earlier.  Much recent literature is
ignored (e.g., Mark Blaug’s insightful 1998 paper).

Economic writings on entrepreneurship are organized, mainly by time
and geography, into ten brief chapters – Schumpeter is given his own
chapter.  Chapters are devoted to French economists, English
economists, the neo-classicals, and American economists.  Among
twentieth-century economists, besides Schumpeter, significant
attention is devoted to Frank Knight, Israel Kirzner, and Ronald
Coase.

The monograph does not aim to make a contribution to economic history,
and none is made.  Economic historian Arthur Cole's Harvard workshop
on entrepreneurship receives a couple of pages (pp. 78-79) of
discussion, but almost entirely in terms of the theoretical stance of
the workshop participants.

In the Introduction and Conclusion, the authors try to justify their
efforts by claiming that investigation of the history of thought on
entrepreneurship will provide insights to current questions on
entrepreneurship.  For instance, they are curious “why is capitalism
reviled in Western Europe?” (p. xix).  Their brief answer in the
Introduction is:  “the inability of many intellectuals to escape
Marxist patterns of thought” (p. xix).  The question is of interest,
and their answer is worth considering, but the body of the monograph
holds no elaboration.

Another current question raised by the authors is why “the
entrepreneur was squeezed from economics” (p. 104).  Their answer is
the mathematization of the discipline.  This is a plausible
conclusion, but one that has been reached by others before, without
having to rehearse all of the details of early economic writings on
entrepreneurship.

Mainly what the monograph actually does is to catalog what position a
variety of economists took on a few issues that are important to the
authors.  The primary issue of interest is to identify which roles the
economist emphasized for the entrepreneur.  One of the most useful
features of the monograph is a resulting compendium of twelve roles
that an entrepreneur can have, with a parenthetical listing of the
economists who mentioned each role.  The twelve roles are:  assumer of
risk, supplier of capital, innovator, decision-maker, industrial
leader, manager, organizer of resources, owner of firm, employer of
inputs, contractor, arbitrageur, and allocator of inputs.

The authors give special emphasis and praise to those economists who
saw the entrepreneur as a dynamic assumer of risk or innovator.  I
share an interest in the entrepreneur as innovator and believe the
monograph will be useful for giving credit where credit is due.  For
instance, I had never heard of Abbé Nicholas Baudeau, and so was
interested to learn (pp. 14-15) that he had anticipated Schumpeter in
emphasizing the role of entrepreneurs as innovators.  Bentham is much
better known, but I had not known that Bentham (pp. 28-32) also
appreciated the role of entrepreneur as innovator.

In concluding, the authors’ main prediction is that:  “In the future
... Knight may be more relevant to the subject of entrepreneurship
than Schumpeter, at least among management specialists who study
entrepreneurship” (p. 103).  They reach this prediction by
extrapolating the academic theorizing in an article by Alvarez and
Barney (2005).  An alternative approach would be to identify which
entrepreneurs have mattered most for achieving the spectacular
economic growth of what McCloskey (2010, p. 48) has called the “Great
Fact” of economics; and then to study carefully the history and
biography of those innovative entrepreneurs.  Following that approach,
Schumpeter’s continued relevance is assured.

References:

Sharon A. Alvarez and Jay B. Barney, "How Do Entrepreneurs Organize
Firms under Conditions of Uncertainty?" Journal of Management 31, no.
5 (Oct. 2005): 776-93.

Mark Blaug, "Entrepreneurship in the History of Economic Thought," in
Advances in Austrian Economics 5 (1998): 217-39.

Robert F. Hébert and Albert N. Link, The Entrepreneur: Mainstream
Views and Radical Critiques, second ed. Westport, CT: Praeger, 1988.

Robert F. Hébert and Albert N. Link, "Historical Perspectives on the
Entrepreneur," Foundations and Trends in Entrepreneurship 2, no. 4
(2006): 261-408.

Deirdre N. McCloskey, Bourgeois Dignity: Why Economics Can't Explain
the Modern World, Chicago: University of Chicago Press, 2010.

Arthur M. Diamond, Jr. is Kayser Professor of Economics at the
University of Nebraska at Omaha.  His “Epistemology of
Entrepreneurship” is forthcoming.  He also has recently published
several papers related to Schumpeter’s process of creative destruction
and is at work on a book entitled Openness to Creative Destruction.
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Geographic Location: General, International, or Comparative
Subject: Business History, History of Economic Thought; Methodology
Time: 18th Century, 19th Century, 20th Century: Pre WWII, 20th
Century: WWII and post-WWII