On the Theory of Entrepreneurial Incentives and Alertness

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.

Entrepreneurship Education and Entrepreneurial Intention: Do Female Students Benefit?

“…Debate surrounds whether the entrepreneurial alertness skill can be taught (McCaffrey, 2014). Following Kirzner (1979), Tang et al, (2012) suggest that alertness is a unique skill that can be learnt to discover opportunities in uncertain contexts (Kirzner, 1999).…”

The role of creativity in mediating the relationship between entrepreneurial passion and entrepreneurial alertness

“…The concept of entrepreneurial alertness has contributed to research on opportunity identification since through the development of this concept, a clearer explanation has been obtained as to why only some people are more aware of the information and changes that point towards a possible entrepreneurial opportunity (Tang, Kacmar & Busenitz, 2012). In spite of the relevance entrepreneurial alertness has, very little research has been carried out dealing with its antecedents (McCaffrey, 2013). Alertness requires a creative act, which may influence the further development and improvement of the entrepreneurial opportunity (Baron, 2004;Kirzner, 2009).…”

Extending the Economic Foundations of Entrepreneurship Research

“…This view offers a middle ground between proponents of opportunity‐based theories and their critics (discussed below). By focusing on individual minds, we can analyze opportunities in more realistic ways and avoid further confusing the issue by anthropomorphizing them (McCaffrey, ).…”