Editorial
Recent developments in the economics of entrepreneurship

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Abstract

This paper serves as an introduction to the special issue of JBV on the economics of entrepreneurship. Since the beginning of the 18th century, economics has recognized the importance of entrepreneurship at both the microeconomic and macroeconomic levels. This paper reviews recent developments in the economics of entrepreneurship, discusses the principles behind the emergence of a new heterodoxy in economics, and how these new principles provide fertile grounds to further our understanding of entrepreneurship and entrepreneurial behavior. Finally, the paper reviews the contributions included in this special issue and puts them in the context of recent developments in entrepreneurship research.

Section snippets

Executive summary

In 1732, the Irish economist Richard Cantillon identified entrepreneurship as the willingness of individuals to carry out forms of arbitrage involving the financial risk of a new venture. Since then, economists such as Mill (1870), Say (1857), Knight (1921), Schumpeter (1934), Kirzner, 1973, Kirzner, 1997 and Baumol, 1990, Baumol, 2002 have been among the most influential contributors to our understanding of entrepreneurial behavior and its related processes.

Entrepreneurship matters. It matters

Economics and the study of entrepreneurship

Many aspects of entrepreneurship and its implications have been studied taking the lens of neoclassical economics. Works have spun a variety of micro and macroeconomic topics. In recent years, a significant amount of economics research has focused on entrepreneurship as the result of a maximization process in which individuals have to select between alternative employment options (Parker, 2004). Lazear, 2004, Lazear, 2005 and Wagner (2003), for example, have suggested that entrepreneurs must be

The emergence of a new heterodox mainstream

Works mentioned in the previous section provide recent examples of research that uses well established approaches in the economics literature. The last two decades, however, have seen the emergence of new fields of economic analysis. Economists are somewhat moving from Homo Economicus to Homo Sapiens (Koppl, 2006, Thaler, 2000) and the distance between economics and other social and management sciences is declining. For example, cross disciplinary work in economics and psychology has opened the

New fertile grounds for the economics of entrepreneurship

The five basic principles of bounded rationality, rule following, institutions, cognition, and evolution are at the roots of a significant and growing amount of recent work on entrepreneurship in economics. Among the various fields of economics emerging from the application of one or more of these principles, behavioral economics and new institutional economics have been particularly useful in generating work on entrepreneurship.

Behavioral economics is a branch of economics that, leveraging

This special issue of JBV

A large number of excellent papers were submitted for this special issue of JBV and the selection process forced us to make some very difficult decisions. In the end, after a rigorous double blind process in which each paper was reviewed by at least two reviewers, six papers were selected covering both microeconomic and macroeconomic topics, conceptual and empirical methods, and original as well as established data. They can be divided into three distinct though related pairs. The first

Conclusion

This article provided a brief review of recent advances in the economics of entrepreneurship, put them in the greater contexts of the entrepreneurship literature, and explained how the contributions presented in this special issue of JBV fit and contribute to our knowledge of entrepreneurship. The review does not pretend to be comprehensive. Specifically, given the focus of the special issue, only works with a strong focus in economics and published very recently were included.

Nevertheless, our

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