Definition Begging Questions

A recent article in Inc. Magazine discusses what they term “the best entrepreneurship definition ever.” While the promise is perhaps overly cocky, entrepreneurship is a concept desperately in need of a definition. It seems applicable on almost everything, and comes in many shapes and colors and types: structural, occupational, functional or otherwise. This makes entrepreneurship about as suitable for scientific study as the Scarlet Pimpernel (you know, that “damned elusive” guy).

The “best ever” definition reads as follows:

Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled.

While it is stated in the article that “people often need to say it out loud 50 or 100 times before they really understand what it means” – which admittedly this author has not – it seems to be a pseudo-Kirznerian definition, or at least a definition that heavily draws on Kirzner (1973, 1979). But just as Kirzner’s definition, it begs a number of questions about what it really means and how it is relevant to understanding the real economy.

Kirzner’s entrepreneur is not an owner of resources and therefore never puts them at risk, which to Rothbard makes such entrepreneurship “mere parlor games.” While the “best ever” definition is more ambiguous on whether the entrepreneur owns anything – here only the pursuit is made without regard to resources – the implication is the same. Does not an entrepreneur consider what he has at hand, what he might get his hands on, or what can be procured in the market? (Goodbye Frank Knight – your definition doesn’t cut it.)

But then where are all the entrepreneurs pursuing the opportunity to sell cheap 5-minute direct flights to all-inclusive beach resorts on the planet Mars? I, for one, would be a potential customer!

This begs the question of what is meant by “opportunity.” Much of the “opportunity discovery” literature assumes that opportunities, following Kirzner’s not-so-very-clear discussion, are ontological existences, i.e. that profit opportunities – as is the case with Kirzner – are by definition profit opportunities (and, consequently, entrepreneurs do not make losses). But if profit opportunities are bound to be profitable, then where is the risk or uncertainty in the market? In fact, any relevant uncertainty must be in the person acting entrepreneurially: if he or she pursues what is believed to be a profit opportunity, but it later turns out it is not profitable – then there must be something wrong with the person and/or the identification. The opportunity is still objectively profitable, but something must have obscured the entrepreneur’s vision so that it did not provide a clear view.

So entrepreneurship is then something intrinsic to the person rather than a function in/of the market. But think about it for a moment: if opportunities are objective and all you need to do is pursue them after finding them to make a profit, then there is no uncertainty in the market place. The uncertainty is only in whether you have identified an objective opportunity or if you are wrong (in which case, to Kirzner, you are not an entrepreneur anyhow). It follows that failed entrepreneurship is due to your lacking “entrepreneuriality” (or “knowledge of real opportunities”), while the market offers only completely objective [profit] opportunities. So the vision may be tainted, but the market is still straightforward and predictable – there is no uncertainty in the market, only in you!

But this quote postmodern view seems to imply that the market is primarily static, since market change – especially decentralized free markets where all actors act according to their own subjective understanding and toward their own ends – entails uncertainty. If the market is ever changing (which Kirzner also claims), then neither opportunities nor their profitability can be objective in reality. What is deemed an opportunity is necessarily a subjective assessment, depends on the individual’s understanding and imagination, and so on.

This does not simply undermine the view that opportunities are objective, but seems to contradict it. Whether we adopt Kirzner’s or the “best ever” definition of entrepreneurship, we are left with questions that seem fundamentally unanswerable in that the best answers contradict each other. Or entrepreneurship emerges a concept without relevance to the real market. So perhaps we should take a step back, agree that the nature of opportunities poses an interesting philosophical problem that we do not need to deal with at present, and return to studying the real market?

I still need to say the definition out loud another 35 or so times to really understand it. If doing so helps me figure out  why this definition is the “best ever,” you have my word that I will explain this epiphany in another blog post. Stay tuned.

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2 Responses to Definition Begging Questions

  1. Pingback: The Continued Misuse of the “Opportunity” Construct « entrepreneurship@McQuinn

  2. Per, how about: “An entrepreneur is someone who takes initiative and personal risk in trying to organize available resources in a novel way that he/she believes will provide value to others”?

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