Entrepreneurs the Kirznerian Entrepreneur vs. The Schumpeterian

¶ … Entrepreneurs

The Kirznerian Entrepreneur vs. The Schumpeterian Entrepreneur

The following brief essay will discuss two kinds of entrepreneurs, as evidenced in the title above. These two kinds of entrepreneurs, Kirznerian and Schumpeterian, will be theoretically and practically espoused, in order to see which of the two is more common in business life. The essay will also speak as to which type of entrepreneur is more important in today's business world, thereby linking theory and practicality prior to concluding.

First, it is important to define each entrepreneurial theory. The Kirznerian Entrepreneur, for instance, derives from economist Israel Kirzner's theory. Kirzner utilizes an analogy between what he names "the entrepreneurial element in individual decision -- making" and "entrepreneurship in the market interaction." (Kirzner, 1967) According to the economist, a first step in establishing the roots of the theory is to discuss an individual's 'action.' Kirzner thus isolates the first step of the entrepreneurial element by "contrasting routine optimizing behavior with what he claims [a person] can know about the true individual action by means of a closer inspection." (Kirzner, 1967) This means that Kirzner believes the entrepreneurial element has deep roots in an individual's personality and what he/she wishes to accomplish through his/her endeavors. This 'individualized' part can also refer, according to the theorist, to an individual's conscious or subconscious desires.

The author also utilizes his theory to espouse much more market-centric, discovery-type, balanced processes. Though there are many different elements to both theories, this balance-imbalance attribute is very important in distinguishing Kirzner from Schumpeter. Thus, whereas Kirzner stresses balance, Schumpeter stresses disruptive forces. In other words, the latter author states that "the role of the entrepreneur as an innovator who implements change in an economy by introducing new goods or new methods of production [is] a disruptive force in an economy." (Schumpeter, 1934) The process of imbalance, or destruction that Schumpeter references has to do with a creative way through which to bring new products into the marketplace. Thus, whereas Kirzner stresses new technologies, for instance, as processes of discovery, Schumpeter sees these as destructive forces.