On the Theory of Entrepreneurial Incentives and Alertness. (July 2014)

• Record Type: Journal Article
• Authors: McCaffrey, Matthew
• Is Part Of: Entrepreneurship theory and practice. Volume 38:Number 4(2014:Jul.)
• Page Start: 891
• Page End: 911
• Publication Date: 2014-07
• Subjects: Small business -- Periodicals; New business enterprises -- Periodicals; Entrepreneurship -- Periodicals; 658.421
• DOI: 10.1111/etap.12013
• Languages: English
• ISSNs: 1042-2587

Abstract

This paper analyzes the theory of "entrepreneurial incentives" in the work of Israel Kirzner. It argues that there is a logical problem with the notion of profit opportunities as exogenous causal agents: Without additional assumptions, the existence of opportunities alone does not sufficiently explain the alertness of entrepreneurs. The paper considers both stronger and weaker versions of this problem. It also questions the relation between entrepreneurial incentives and the tendency toward entrepreneurial success. Finally, it provides some commentary on the relevance of entrepreneurial incentives for an overall theory of the entrepreneur, and identifies several potential solutions to the problems discussed.