Scandinavian Working Papers in Economics
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The Economic Research Institute, Stockholm School of Economics SSE/EFI Working Paper Series in Economics and Finance

No 584:
Is Neoclassical Economics still Entrepreneurless?

Milo Bianchi () and Magnus Henrekson ()

Abstract: We review and evaluate some recent contributions on the modeling of entrepreneurship within a neoclassical framework, analyzing how and to what extent the fundamental ingredients suggested in the social science literature were captured. We show how these approaches are important in stressing the main elements of a complex picture without being able to completely describe it. However, each modeling attempt focuses only on one specific feature of entrepreneurship. The entrepreneurial function broadly perceived eludes analytical tractability. As a consequence, the models can be useful in analyzing the effect of entrepreneurial behavior at an aggregate level, but not at explaining individual choices. From these observations we highlight how a simplistic interpretation of the existing mainstream approaches incorporating entrepreneurship runs the risk of leading to distortionary policy interventions.

Keywords: Entrepreneurial Choice; Entrepreneurship; Innovation; Neoclassical Modeling; Uncertainty; (follow links to similar papers)

JEL-Codes: B41; D81; J23; L23; M13; O31; (follow links to similar papers)

24 pages, January 31, 2005, Revised March 29, 2005

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This paper is published as:
Bianchi, Milo and Magnus Henrekson, (2005), 'Is Neoclassical Economics still Entrepreneurless?', Kyklos, Vol. 58, No. 3, pages 353-377

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