Austrian Economics & Entrepreneurship
Introduction (Via Alan Meyer)
Technological innovations are usually thorught to create business opportunities that are unequivocal and readily apparent to any knowledgeable observer. Drawing on Austrian economics, this article portrays the recognition of such opportunities as distinctive cognitive feats whose accomplishment is conditioned by an entrepreneur’s prior experience and education. In-depth case studies demonstrate the multiple opportunities that can arise from a single innovation.
Abstract (Via Scott Shane)
Before technological change leads to new processes, products, markets, or ways of organizing, entrepreneurs must discover opportunities in which to exploit the new technology. To date research has not explained adequately why entrepreneurs discover these opportunities, Which creates several conceptual problems in the entrepreneurship literature. Drawing on Austrian economics, I argue that opportunity discovery is a function of the distribution of information in society (Hayek 1945) . Through in depth case studies of eight sets of entrepreneurs who exploit a single MIT innovation, I show that entrepreneurs discover opportunities related to the information that they already possess. I use these findings in the entrepreneurship literature: (1) entrepreneurs do not always select between alternative market opportunities for new technologies: (2) the source of entrepreneurship lies in differences in information about opportunities: (3) the results of prior studies of entrepreneurial exploitation may suffer from bias; and (4) individual differences influence the opportunities that people discover, how their entrepreneurial efforts are organized, and how the government can influence this process.