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Theories On Entrepreneurship

The document discusses several theories of entrepreneurship, including: 1) Schumpeter's innovation theory which sees entrepreneurs as drivers of innovation and creative destruction. 2) Keynesian theory which emphasizes the government's role in entrepreneurship, especially during economic downturns. 3) Alfred Marshall's theory which views entrepreneurs as the coordinating element of the four factors of production. 4) Knight's risk and uncertainty-bearing theory which defines entrepreneurs as agents who connect producers and consumers.

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Wendie Llagas
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33 views21 pages

Theories On Entrepreneurship

The document discusses several theories of entrepreneurship, including: 1) Schumpeter's innovation theory which sees entrepreneurs as drivers of innovation and creative destruction. 2) Keynesian theory which emphasizes the government's role in entrepreneurship, especially during economic downturns. 3) Alfred Marshall's theory which views entrepreneurs as the coordinating element of the four factors of production. 4) Knight's risk and uncertainty-bearing theory which defines entrepreneurs as agents who connect producers and consumers.

Uploaded by

Wendie Llagas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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THEORIES ON

ENTREPRENEURSHIP
LEARNING OBJECTIVES
◦Identify the related theories on
entrepreneurship.
◦Cite the importance of the theories on
entrepreneurship.
INTRODUCTION
◦A theory is a generalization that explains a set
of facts or phenomena. It is not an absolute
truth. It can be supported by another
observation or proven to be otherwise.
INTRODUCTION
◦In the process of evaluating the soundless
and logic of various entrepreneurship
theories, remember that the scholars who
developed or contributed them mostly
anchored their concepts on the economic
events which are happening at that time.
ENTREPRENEURIAL THEORIES
INNOVATION THEORY
◦Contributed by Joseph
Schumpeter and wrote it
in his book, The Theory of
Economic Development.
INNOVATION THEORY
◦The innovation theory regards economic
development as the product of structural
change or innovation. He argued that the
chances for economic development to take
place would be slim unless revolutionary
changes in the circular flow of the economy
would happen.
INNOVATION THEORY
◦Schumpeter believed that
innovation is the force that will
propel the revolutionary
change. It will cause the
creative destruction of the
static mode of the economy,
stir the entrepreneurial activity
and encourage competition.
KEYNESIAN THEORY
◦Developed by John
Maynard Keynes and wrote
it in his book, The General
Theory of Employment,
Interest and Money which
was published during the
Great Depression in 1936.
KEYNESIAN THEORY
◦The theory put so much emphasis on the role
of the government in entrepreneurial and
economic development, most specially when
the economy was experiencing depression.
Economic depression is a steep and sustained
drop in the economic activity featuring high
unemployment and negative GDP growth.
KEYNESIAN THEORY
◦It suggests that entrepreneurial activities may
not be favorable in the future unless the short-
term problem of economic disequilibrium is
finally resolved through the active participation
of the government.
ALFRED MARSHAL THEORY

◦Developed by Alfred
Marshall and wrote it in
his book, Principles of
Economics.
ALFRED MARSHAL THEORY
◦As he strongly asserted that there are four
factors in the production of goods and services
in the economy, he considered organization as
the coordinating element.
ALFRED MARSHAL THEORY
◦Without the active participation of
organization, the other factors of
production will remain inactive in their role
for economic development.
ALFRED MARSHAL THEORY
◦Without the active participation of entrepreneurs
in the economy, development will surely be slow
and limited.
RISK AND UNCERTAINTY-BEARING
THEORY

◦Conceptualized by
Frank Hyneman Knight
and wrote it in his book,
Risk, Uncertainty and
Profit.
RISK AND UNCERTAINTY-BEARING
THEORY
◦By adopting some concepts of
the early economists, Knight
viewed an entrepreneur as an
agent of the production process
where he/she connects the
producers and consumers.
WEBER’S SOCIOLOGICAL THEORY
◦ In sociological theory, Max Weber
stressed that social cultures are the
primary driving elements of
entrepreneurship. The entrepreneur is
expected to perform the role of a
good constituent by executing
his/her entrepreneurial activities in life
with good customs and traditions,
religious beliefs and morals.
KALDOR’S TECHNOLOGICAL THEORY
◦ Nicholas Kaldor considered modern
technology as an essential factor in
production. Economic development
might be slow in the absence of
modern technology. The entrepreneur
is expected to keep abreast with
modern technology and proper
application with promote efficiency in
production.
THEORIES ON ENTREPRENEURSHIP
◦Remember that there is no correct or
wrong theory.
THEORIES ON ENTREPRENEURSHIP
◦Regardless of the entrepreneurship theory
that you choose, the most important thing
is that you base your business decisions not
on your personal likes and dislikes but
rather on sound reason.

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