Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 678: Israel M. Kirzner: An Outstanding Austrian Contributor to the Economics of Entrepreneurship

Robin Douhan (), Magnus Henrekson () and Gunnar Eliasson
Additional contact information
Robin Douhan: Uppsala University, Postal: P.O. Box 513, SE-751 20 Uppsala, Sweden
Magnus Henrekson: Research Institute of Industrial Economics, Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden
Gunnar Eliasson: Royal Institute of Technology, Postal: SE-100 40 Stockholm, Sweden

Abstract: Israel M. Kirzner is the 2006 winner of The International Award for Entrepreneurship and Small Business Research. In this essay, we present and evaluate his main contributions to the economics of entrepreneurship. The focus is on how Kirzner defines the entrepreneurial function. In order to better understand his theory, we posit Kirzner’s notion of an entrepreneur in the Austrian tradition. In so doing we emphasize that this concept opens up different perspectives as compared to the neoclassical theoretical framework. The three areas of economic policy, justice and freedom and economic growth are discussed. We also show why the Kirznerian entrepreneur makes these issues relevant. Perhaps most importantly, Kirzner has made the Austrian School intelligible for non-Austrians. By bridging the chasm between Austrian and mainstream thinking, the crucial role of entrepreneurship and the individual entrepreneur has become visible to a much broader audience.

Keywords: Austrian economics; Economic development; Entrepreneurship; Small business economics

JEL-codes: B49; B52; B53; O31

19 pages, October 26, 2006

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