The reactive groups crop up whenever a group experiences low status recognition, limited or no access to social networks and have better institutional resources as compared to other groups in the society at the same level. The assumptions are:1. The Uncertainty-Bearing Theory of Knight: According to the theory, the entrepreneur earns pure profits for bearing the uncertainty. Mark Casson has presented his book on Entrepreneur- An economic theory in fifteen chapters. The demand structure of an economy can be enlarged by rewarding the entrepreneurs with material rewards for their entrepreneurial activities. The theory is of the view that everyone who is a conducting a particular business gets a particular profit margin which is line with his or her levels of labor. Entrepreneurship is a multidisciplinary area. There are six chapters. Theories of Entrepreneurship November 21, 2020 November 27, 2020 KNEC notes and Past Papers These refer to the various approaches, which have been advanced to give an explanation as to why entrepreneurs behave the way they do. X-inefficiency occurs when technical-efficiency is not achieved. The multiple roles associated with the entrepreneur have not been focused in the theory. It is a psychological concept and should be treated in a different manner. Document Information. Kunkel’s Theory (Emphasis on Entrepreneurial Supply): The theory is based on unrealistic postulates. Another associated concept was that of adventurous spirit which refers to the impulsive force that influences and promotes entrepreneurism. 4. The entrepreneur expects to earn profit from the difference in perception by ‘taking a position’ vis-a-vis other people. Harvey Leibenstein was a Ukrainian-born American Jewish economist. click to expand document information. In an economy, the supply of entrepreneurship depends on the following structures existing in the economy: This refers to the demand situation prevailing in the economy. The individual entrepreneurs enjoy the confidence of their association with the solidarity groups which help the individual entrepreneurs to overcome any sort of economic problems. Further, Kirzner calls the state of mind that enables spontaneous learning to occur alertness. The entrepreneur is the prime mover in economic development; his function, to innovate or carry out new combinations. There four possible reactions to the withdrawal of status respect which relates to four different personality types: (i) The retreatist – An individual who works in the society but is indifferent to the work and position. Many of the predictions of the economic theory of entrepreneurship come from considering the tactical aspects of the strategy of the entrepreneur. Joshep a Schumpeter describe entrepreneurship is the force of creative destruction whereby established way of doing things are destroyed by the creating of new and better … He was of the opinion that the sociological and psychological factors influence the emergence of entrepreneurs. I don't ordinarily comment but I gotta state thanks for the post on this perfect... Just wanted to say this website is extremely good. I am glad I have taken the time to see this.... Free MBA Notes/Free BBA Notes/ MBA Study Material/ MBA Notes. Prof. Hawley, an American economist in 1907, propounded the risk-bearing theory of profit. PDF. 3. There is no scope for analyzing the issues related to like inventiveness, cleverness, ambition of the entrepreneur in the models. These factors have not been taken into consideration. The uncertainty-bearing theory discussed the concept of profit in a vague way. Shailendra Singh. Takes pleasure of creativity and earning experiences of skills for doing various tasks. Mark Casson felt that there was no established economic theory of the entrepreneur. Frank Young opined that the entrepreneurial characteristics are observed in clusters, ethnic groups, occupational groups and groups with political orientation. Leibenstein’s Theory (Emphasis on X-Efficiency): The exact influence which the X-efficiency has on output of an organisation cannot be determined. This personality reflects the personality of an entrepreneur. Supply of entrepreneurs has a functional relationship with the social, political and economic structure. 1. The marginal groups are the minorities in the society and they yearn to elevate their conditions and in the process promote economic development. Schumpeter had differentiated between invention and innovation. First, dislodgment of a traditional elite group from its prior status, Second, defamation of valued symbols through some change in the attitude of the superior group. Weber was of the opinion that the Protestant ethic provided the mental attitude in a society that promotes spirit of capitalism and favours entrepreneurship. The basis of Kirzner’s idea of entrepreneurship is spontaneous learning. Psychological Theories. We shall try to understand the basics features enshrined in his ideas. The entrepreneur considers that the totality of the information available to him/her with respect to some decision is unique. In a state of economy (competitive) where there is no risk, every entrepreneur will have a minimum supply price. Important contributions to economics was the concept of innovation as key factor in any entrepreneur ’ s to! Not seen and is of a society that favours capitalism Allocative efficiency vs. x-efficiency ” brings products. Drucker introduces systematic innovation as key factor in entrepreneurship in his theory of supply of raw materials to! 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