Schumpeter's Work Research Articles

A Person-Issue Approach to Explaining Entrepreneurs' Propensity to Engage in Political Corruption

Since Schumpeter's early work on economic growth, entrepreneurs have been characterized as the heroes of human development. Lauded for their creativity, risk-taking, and passion, entrepreneurs are rightfully praised; however, a more nuanced picture of the entrepreneur may be needed, as these traits may also lead to certain unethical behaviors. Political corruption is a millennia-old phenomenon with well- documented and wide ranging negative effects, especially at the macroeconomic level. However, the nature of politically corrupt behaviors may lead to perceptions of low moral intensity. Here, we propose a person-issue focused model of entrepreneurs' propensity to engage in political corruption. Building heavily on ethical decision making and entrepreneurial passion literatures, this paper suggests a dark side for entrepreneurs.

Schumpeter, Kirzner, and the Field of Social Entrepreneurship

Joseph Schumpeter's and Israel Kirzner's ‘classical’ theories of entrepreneurship have contributed much to the field of entrepreneurship but have been underutilized in the emerging field of social entrepreneurship. The argument of this paper is that the utilization of Schumpeterian and Kirznerian theories of entrepreneurship can advance the field of social entrepreneurship in two ways. The first potential contribution from utilizing their classical theories is to guide theory-building for social entrepreneurship. In this paper, a close reading and interpretation of Schumpeter's and Kirzner's work is undertaken alongside a critique of current theories of social entrepreneurship. Five essential theoretical components of Schumpeterian and Kirznerian classical entrepreneurship theories are distilled with respect to social entrepreneurship theory-building: (1) the distinction between entrepreneurial thinking and rational models of decision making; (2) the distinction between entrepreneurship and leadership, capitalism, and management; (3) the ubiquity of entrepreneurship in all human endeavors; (4) the causal functionality of entrepreneurship; and (5) the priority of the process of entrepreneurship over the instrumentality of the entrepreneur. A research proposition is then constructed on each essential theoretical component. The research propositions point to possible research directions for the field of social entrepreneurship, thus representing the second potential contribution of the paper.

Technology and economic fluctuations in the US food sector (1958‐2006)

PurposeThe purpose of this paper is to deal with questions of instability and economic crises, deriving theoretical arguments from Marx's and Schumpeter's works and presenting relevant empirical evidence for the case of the US food manufacturing sector.Design/methodology/approachThe paper attempts to interpret the economic fluctuations in the US food sector and find causal relationships between the crucial variables dictated by Schumpeterian and Marxian theory, such as technological change, output and profitability. In this context, a number of relevant techniques have been used, such as de‐trending, cointegration analysis, white noise tests, periodograms, cross‐correlations and Granger causality tests.FindingsMost economic variables in the food manufacturing sector exhibit a similar pattern characterized by periodicities exhibiting a short‐term cycle, a mid‐term cycle and a long‐term cycle. Also, the economic variables investigated follow patterns which are consistent with the total economy. Furthermore, a relatively rapid transmission of technology in the economy takes place along with bidirectional causality between technology and output/profitability, which can be interpreted as indicating an ambivalent relationship in the flow of cause and effect. These findings give credit to certain aspects of the Schumpeterian and Marxist theories of economic crises, respectively.Originality/valueThis paper contributes to the literature in the following ways: first, it introduces a relevant methodological framework building on Schumpeterian and Marxist insights. Second, it uses several variables to study the economic fluctuations instead of delimiting its analysis, for instance, to industrial output. Third, the results are discussed in a broader political economy context, related to the US economy, as a whole.

The Evolution of Emerging Economies and Equity Markets in the Bullish Period Between 2003 and 2007: A Descriptive Study

Following the 2008 credit crunch, the fact that the G20 (group of rich and emerging economies) instead of the G8 (group of the 7 most powerful rich economies plus Russia) was chosen as the forum for discussion and proposition of solutions regarding world's financial markets represents the consolidation of emerging economies as central players in the new 21st century world governance. Although this can be considered an important historical fact, the rise of emerging economies has been noticed much before in the economic world and academia (see for instance Demirguc-Kunt and Levine, 1996). To understand how stock markets have evolved in a certain period of time is particularly important given the impact financial markets have on economic growth. Studies relating financial markets to economic growth have probably started with the work of Schumpeter (1959), followed by others like Robinson (1952) and Patrick (1966). More recent literature (i.e. Demetriades and Hussein, 1996 and Levine et al., 2000; Beck and Levine, 2004) seems to have agreed that there is a positive relation between the development and growth of financial (and stock) markets growth in a certain country/region and its economic growth, although there is no consensus regarding the causal relation between them. Using a sample of 102 countries that covers 97% of world's GDP, 98% of its total market cap and 92% of all listed companies, this work intends to describe in quantitative terms the development of emerging economies and stock markets during the bullish period between 2003 and 2007, assessing their performance against developed markets and also comparing the various emerging regions among themselves, in an attempt to provide a better picture of the depth of the changes in the global economic scenario and to measure how different regions have been part of these changes. Data shows that from 2003 to 2007 emerging markets have presented an increase in their importance in terms of GDP (19% to 26% of the world) and stock market cap (9% to 25% of the world), while developed markets have presented a decrease in their importance (GDP from 78% to 71% and market cap from 88% to 74%). Emerging markets' evolution is also impressive in terms of equity markets development measured by market capitalization to GDP (coming from 41% in 2003 to 110% in 2007), quickly catching up with developed countries (98% in 2003 to 122% in 2007). Regarding the number of listed companies, developed countries are still far ahead with an average of 30 companies per million inhabitants in 2007 against 4 in emerging markets, and the evolution of this variable in the period is also higher in developed countries, which might be explained by the strengthening of stock exchanges standards in several emerging regions (leading to numerous delistings) and the consolidation in some industries (through mergers and acquisitions). In addition, data show that all emerging regions have significantly developed their equity markets in the period, and in general Asia has shown even more impressive numbers while assessed against other regions.

The Influence of the Actor Network on the Innovative Process of Transgenic Soybean in Rio Grande Do Sul, Brazil

Rio Grande do Sul was the first Brazilian state to plant genetically modified soybean. The sowing occurred in 1998 with Roundup Ready soybean seeds from Monsanto smuggled from Argentina. The aim of this study is to investigate how this innovative process of planting transgenic soybean came about in Rio Grande do Sul based on the actor network involved in the period 1998 to 2003. Although the innovative process has been discussed in the literature on innovation management since the work of Schumpeter, there is still no clear understanding of the issues of interests and power that involve the innovative process. Given this, from within the literature we have sought a perspective that would understand the innovative process as being political. We adopted Actor Network Theory as a base for the discussion of the primary and secondary data obtained regarding the controversy surrounding transgenic soybean in RS. The results point to the existence of two translation chains that contribute towards the formation of actor networks.

Economic theorist and ‘entrepreneur of popularisation’: Schumpeter as Finance Minister and journalist

Modern theory of popularisation suggests that the production and the popularisation of scientific knowledge are interlinked and interactive processes. This perspective offers new insights into Joseph A. Schumpeter's main work in public finance, The Crisis of the Tax State, and into his later endeavours as Finance Minister and journalist to popularise two central economic ideas of this work, the once-and-for-all capital levy and the reform of the tax system. We demonstrate that Schumpeter's Crisis contains popularising features and was written with a popularising intention. Furthermore, we show that in his journalistic works popularisation went hand in hand with the development of innovative economic ideas.

Joseph Schumpeter and the German Historical School

So far Schumpeter's affinities with the German Historical School (GHS) have been inadequately acknowledged or even unexplored in major accounts of Schumpeter's work. This essay argues that Schumpeter's principal theses are consistent with the GHS. Schumpeter's affinity with the GHS is established by examining his writings and his relationship with Schmoller, Max Weber and Sombart. It is demonstrated that Schumpeter's works built heavily on the GHS. However, some obvious differences between Schumpeter and the GHS are observed. Clearly future and more extended research on the GHS would be of great interest.

Toward To A Heterodox Microeconomic Theory: Technological Development Approach Of Evolutionary Economics And Nature Of Firm

This paper deals with the theories of evolutionary economics and the evolutionary nature of the firm. Although mainstream economics, which is influenced by equilibrium-based Newtonian mechanics, dominates the academic-world we have seen a revival of interest in evolutionary ideas in heterodox economics more generally over the last two decades. Contemporary evolutionary economics, which mainly stems from works of Schumpeter, focuses on entrepreneurship and technological change in the capitalist economy and criticizes the static framework of neoclassic economics. The main aim of this paper is to summarize evolutionary approaches in economics and to investigate the source of technological change at the firm level. Main presumptions of evolutionary economics can be summarized as the consideration of dynamics, the acceptance of heterogeneity among agents and the view of interaction among agents as a selection mechanism and finally the recognition of source of continuous novelty in society. Moreover, this paper presents an assessment of emergent topics in the evolutionary literature, namely self-organization and complexity theory.

The Myth of Bryson and Economic Thought in Islam

The inspiration for the present note comes primarily from a statement in the old edition of the Encyclopaedia of Islam. In its volume four on page number 595, Heffening (1934) states that to Helmut Ritter 'the whole economic literature of Islam can be traced to economics of Neo- pythagorean Bryson' (emphasis added). In 1917 the German writer Ritter edited and translated Abu Jafar al-Dimashqi's treatise Kitab al-Isharah ila Mahasin al-Tijarah. In his introduction of the book he noted the said remark. It is this unqualified statement that we dispute here. Later in 1928 another German author Plessner tried to show Bryson's influence on Islamic economic thought by making a review of all the Arab-Muslim literary works that concerned themselves even remotely with Bryson's text (Heffening 1934, Vol.4, p. 595). His assertion of Bryson's influence was later taken up by many other writers. Now who is this Bryson? It is said that he was a Greek philosopher whose personality was 'unidentified' and 'whose work was unknown to the West' (Spengler, 1964, p. 276 footnote). It may be noted that there is no mention of Bryson in Schumpeter's encyclopedic work History of Economics Analysis which presents minute details of the history of the intellectual efforts 'from the earliest discernible beginning' (Schumpeter, 1997, p. 3). Bryson's name came from an Arabic translation of an unknown manuscript entitled Kitab Tadbir al-Manzil (the book of household management). Its author and the translator both are obscure. There is no consensus on the correct form of his name. It is guessed to be a Latin or Greek name such as 'Barses', 'Brasius', 'Beresius', 'Bersius',

The Entrepreneurial Theory of the Firm and the Theory of the Entrepreneurial Firm*

abstract The entrepreneurial theory of the firm argues that entrepreneurship, properly understood, is a crucial but neglected element in explaining the nature and boundaries of the firm. By contrast, the theory of the entrepreneurial firm presumably seeks not to understand the nature and boundaries of ‘the firm’ in general but rather to understand a particular type of firm: one that is entrepreneurial. This paper is an attempt to reconcile the two. After briefly delving for the concept of entrepreneurship in the work of Schumpeter, Kirzner, and (especially) Knight, the paper makes the case for the entrepreneurial theory of the firm. In such a theory, the firm exists as the solution to a coordination problem in a world of change and uncertainty, including Knightian or structural uncertainty.

EVOLUTIONARY AND NEW GROWTH THEORIES. ARE THEY CONVERGING?

AbstractThis paper presents a critical review of evolutionary and new growth theories. The purpose is to discuss the often‐made claim that the two approaches, both inspired by Schumpeter's seminal work, are becoming more and more similar in terms of the sources and mechanisms of the growth process on which they focus. According to this argument, some kind oftheoretical convergencebetween the two paradigms is taking place. Differently from previous surveys of the field, this paper compares evolutionary and new growth theories by focusing on their major theoretical foundations. The discussion leads to the conclusion that the two approaches greatly differ with respect to all of their main theoretical building blocks, and that no convergence between the two paradigms is therefore taking place. This finding should be welcomed by both evolutionary and new growth scholars, because it is the process of interaction and the fruitful exchange of ideas between different approaches that lead to advances in growth theory, not their convergence to a common paradigm.

The interdependence between economic analysis and methodology in the work of Joseph A. Schumpeter*

This paper offers an overview of Schumpeter's entire economic work from a methodological perspective. Only from this ‘birds-eye’ view do all the well-known parts of his work become part of a mosaic which – from a distance – forms a picture of logical succession: It tells the story of an intensive search for an appropriate analytical understanding of the phenomenon of economic change. As a result, this paper argues that, from a methodological perspective, Schumpeter's work appears to be anything but a monolithic unit.

Quadragesimo Anno: Schumpeter's alternative to the omnipotent state*

This article published in 1951 is Solterer's presidential address to Association for Social Economics. In it Solterer sets forth two tasks. First he shows that Schumpeterian economics is in harmony with teachings of Catholic church. Second he calls attention to some methods for furthering social in workplace. As to first, Solterer points to Schumpeter's embrace of vocational group ideas set forth in 1931 papal encyclical Quadragesimo as viable alternative to collective state in face of decomposition of market system in Great Depression. Schumpeter warns, however, that vocational group system calls for new sense of social responsibility. As to second task, Solterer advocates in particular profit sharing as way to reconcile differences between labor and management and to encourage industrial peace. His article ends with warning economic stability is rooted not in price stability or full employment but in business enterprises wherein everyone instructed and motivated by the ways of justice shares in both good and bad fortunes of enterprise. Keywords: Schumpeter, Catholic social teaching, subsidiarity, social justice, vocational group, Quadragesimo ********** I Among great economic theorists of our generation, only Joseph Alois Schumpeter explicitly recognized that a reorganization of society along lines of Quadragesima Anno is practical alternative to march into centralist socialism an alternative to development of an omnipotent, bureaucratic state (Schumpeter 1950). It is true that others have arrived at essentially similar conclusions, as for example Professor J. M. Clark with his formula of responsible individuals in responsible groups, but these others give no indication of familiarity with Catholic social philosophy. I shall not concern myself on this occasion with Schumpeter's prognosis of future. His reasons for believing that economic control--the making of decisions will continue to be transferred from private individuals and privately owned firms to public authority are well known. So also is his realization that such development of bureaucratic control is not at all inconsistent with labor capitalism, standing between syndicalism on one hand and new feudalism on other. In common with others, Schumpeter saw that general inflation would be instrument by which new order would come to pass although inflation would be engendered by policies having quite different intentions. In forecasting future, Schumpter predicted that reorganization of society along non-socialist lines is not unlikely alternative in Catholic countries, or in countries where position of Church is sufficiently strong. II My main concern this morning is not with such matters of forecasting most likely future form of society. In keeping with purposes of our Association, I shall rather turn to an examination of Schumpeter's work with respect to relation between ethics and economics. As you all realize, this is very difficult field. There is always dangerous temptation to deny validity either to ethics or to economics, and thus to fall into error of pan-economics--the denial that moral law is involved in economic relations at all; or on other hand (and may I observe that this is more common error among Catholics), to fall into error of pan-ethics, to assert that there is no economic Pius XI warned us against both these errors when he wrote in Quadragesima Anno, ([section]41), the Church can in no wise renounce duty which God entrusted to her authority, not of course in matters of technique for which she is neither suitably equipped nor endowed by office, but in all things that are connected with moral law. This morning I propose to show that Professor Schumpeter's view of relationship between economics and ethics is in harmony with Catholic teaching. …

Schumpeter's Legacy? Interaction and Emotions in the Sociology of Entrepreneurship

Joseph Schumpeter's work has long been regarded as a seminal contribution to entrepreneurship theory. However, relatively little attention has been given to exploring the sociological implications of his insights. This article examines Schumpeter's early writings on the entrepreneur and focuses on the apparent contradiction between his understanding of the inhibitory effect of social control and the entrepreneur's strength of will. This tension is resolved by recourse to contemporary social theory of interaction and emotion. A synthesis of these works produces two hypothetical modes of entrepreneurial action. These are elaborated and their implications for the understanding of entrepreneurship discussed.

The Entrepreneurial Theory of the Firm and the Theory of the Entrepreneurial Firm

The entrepreneurial theory of the firm argues that entrepreneurship, properly understood, is a crucial but neglected element in explaining the nature and boundaries of the firm. By contrast, the theory of the entrepreneurial firm presumably seeks not to understand the nature and boundaries of the firm in general but rather to understand a particular type of firm: one that is entrepreneurial. This paper is an attempt to reconcile the two. After briefly delving for the concept of entrepreneurship in the work of Schumpeter, Kirzner, and (especially) Knight, the paper makes the case for the entrepreneurial theory of the firm. In such a theory, the firm exists as the solution to a coordination problem in a world of change and uncertainty, including Knightian or structural uncertainty. Taking a historical or developmental perspective, the paper then examines the changing nature of the entrepreneurial coordination problem over the life-cycle. In this formulation, the entrepreneurial firm is a nascent firm or proto-firm facing a problem of coordinating systemic change in economic capabilities. Lacking (by definition) adequate guidance from existing systems of rules of conduct embedded in markets or organizations, the entrepreneurial firm typically relies on a form of organization Max Weber called charismatic authority. In the end, although there is no such thing as a non-entrepreneurial firm, firms that must solve coordination problems in a world of novelty and systemic change (entrepreneurial firms) are perhaps the purest case of the entrepreneurial theory of the firm.

O empresário na teoria econômica

RESUMO Este artigo discute os papéis do empreendedor na teoria econômica. As deficiências da teoria mainstream são apontadas e as contribuições precursoras de Cantillon e Bentham são analisadas, bem como as diferentes abordagens de Marx, Veblen e Sombart. A mudança do papel do empreendedor após a emergência das corporações modernas é discutida, seguindo os trabalhos de Schumpeter, Penrose e Chandler.

SCHUMPETER'S "LOST" SEVENTH CHAPTER: A CRITICAL OVERVIEW

The "lost" seventh chapter to Schumpeter's first edition of The Theory of Economic Development was planned as a synthesis of the results and as presenting the overall configuration of the economy, as the title of the chapter "The economy as a whole" indicates. The article discusses Schumpeter's exposition of the core process, external data changes and his reception of the classics. Further the article discusses Schumpeter's views on the notion of the organic unity of the economy, the welfare problem, his synthesis of statics and dynamics, the "greatness" of entrepreneurs and their role in culture. The conclusion is that an elaborated systems approach comparable to that of Sombart is (still) missing. The plan of a general theory of culture, society and economy, following the insight of Chapter 7 that the social process is one indivisible whole, was formulated but not realized. It is argued that Schumpeter's later work Capitalism, Socialism and Democracy (1942) comes closest to this program. Chapter 7 is not only an important document in the history of economic thought but is also one of the first explicit claims to develop a holistic, evolutionary and dynamic approach to economy and society.

Economic Theory, Entrepreneurs and the Transformations of the Industrial Enterprises

This paper discusses the roles of the entrepreneur in the economic theory. The deficiencies of mainstream theory are pointed out and the forerunner contributions of Cantillon and Bentham are analyzed, as well as the different approaches of Marx, Veblen and Sombart. The changing role of the entrepreneur after the emergency of the modern corporations is discussed, following the works of Schumpeter, Penrose and Chandler.

Entrepreneurs and technology diffusion: How diffusion research can benefit from a greater understanding of entrepreneurship

This study builds on the work of Schumpeter and others who have recognised the role of entrepreneurs in the formation of entirely new industries around technological innovation. With this in mind, it critically reviews diffusion research, finding this work to be lacking in its treatment of entrepreneurship and its ability to integrate the wide range of factors that affect the diffusion process. In an effort to address these theoretical gaps, this study draws on management literature on the growth of the entrepreneurial firm, which puts entrepreneurs at the centre of analysis, and serves to integrate many of the traditional concerns of diffusion research. The authors hope that the proposed analytical framework will be applied to future case studies of technology diffusion in order that we might continue to better understand and explain the rate of technological advance in society.

A survey on entrepreneurship and innovation

This article attempts to use the early works of Joseph A. Schumpeter to more clearly functionally define both entrepreneurship and innovation in their current usage. The case is made that much of the more recent literature concerning entrepreneurship and innovation can be traced in origin to Schumpeter’s works in the zx1930s. Much of the literature on innovation of the 1960s and 1970s either resembles or builds on the works of Schumpeter and the impending debate by economic scholars about his criteria for innovation and its relevance to economics. The article also separates the concepts of capitalist and entrepreneur as did Schumpeter and, therefore, attempts to dispel the current notion that an entrepreneur is synonymous with the small business owner or capitalist. Innovation is used as the key, and therefore function, of a sociological type of individual known as the entrepreneur. Currently accepted concepts of technology change and technology development are discussed within the framework of economics and are linked to Schumpeter’s view of innovation as economic activity that changes the production function.