The State of Entrepreneurship Study

For a very deep, impressive and broad-ranging discussion of entrepreneurship, you must read Peter Klein's new interview with Niaz Uddin is the Founder and Curator  of eTalks. Here.

Peter hits this one out of the park. I particularly liked this:

Unfortunately, most people see economics as a dry, technical subject that involves poring over charts and graphs and writing equations to describe the “equilibrium” behavior of hypothetical actors. But economics is a logical, deductive, human science about real people acting in the real world, with all the dynamism, unpredictability, and creativity that entails. Markets aren’t static, lifeless mathematical constructs but lively, vigorous spaces where people interact and coordinate. Firms, markets, and industries don’t just come into existence by themselves, they have to be created and operated by real people with real responsibility. These people are entrepreneurs, what Mises called the “driving force” of the market economy. That’sone reason I’m attracted to the “Austrian” approach to economics, which has always placed the entrepreneur at the front and center of production and exchange—not an incidental actor who steps in to introduce novelty then fades into the background as the “normal” market process resumes. Entrepreneurship, as decisive action under uncertain conditions, is at the very heart of a market economy.

And this:

If we think of entrepreneurship is the broad sense of judgment under uncertainty, then economic development and growth can not exist without entrepreneurship! It is the entrepreneurs who invest the capital necessary for productivity growth, who organize production into firms and industries, who compete and cooperate to create and distribute goods and services to consumers in the most efficient and profitable manner. If we think of entrepreneurship more narrowly, as small business or startups or venture funding, then the story is more complex. To be sure, smaller and newer firms are often disproportionately responsible for employment growth and, in some contexts, the introduction of new products and new technologies. At the same time, large enterprises can also be innovative, and capital accumulation is often critical to achieving economies of scale and scope, even in today’s “knowledge economy.” And not every individual wants to be responsible for owning and operating a small business. Unfortunately, large firms are typically more adept at securing for themselves special political privileges and protection against competitors, though small firms play this game as well. Ultimately, I am agnostic about what mix of small and large, new and mature, and high-tech and low-tech firms is best for economic growth; I prefer to let competition in free markets sort it out.