Entrepreneurship is one of the fastest growing fields within economics, management, finance, and even law. Surprisingly, however, while the entrepreneur is fundamentally an economic agent—the driving force of the market, in Mises’s (1949, p. 249) phrase—modern theories of economic organization and strategy maintain an ambivalent relationship with entrepreneurship.

In a recent paper, “The Limits of Numerical Probability: Frank H. Knight and Ludwig von Mises and the Frequency Interpretation,” Hans-Hermann Hoppe (2007) explores Mises’s approach to probability and its implications for economic forecasting. Hoppe argues that Mises, like Frank Knight, subscribed to the “frequency interpretation” developed by Mises’s brother, Richard von Mises (1939), along with others such as Ronald Fisher, Jerzy Neyman, and Egon Pearson.

The Austrian approach underlies all the chapters in this volume. Austrian economics, I have argued, provides unique insight into the emergence, boundaries, and internal organization of the firm. Likewise, firms operate within a particular institutional context—they are the “islands of conscious power in [the] ocean of unconscious cooperation like lumps of butter coagulating in a pail of buttermilk” (D. H. Robertson, quoted in Coase 1937, p. 388).

A Government Did Invent the Internet, But the Market Made it Glorious†

Libertarians often cite the Internet as a case in point that liberty is the mother of innovation. Opponents quickly counter that the Internet was a government program, proving once again that markets must be guided by the steady hand of the state. In one sense, the critics are correct, though not in ways they understand.

Abell, P., Teppo Felin, and Nicolai J. Foss. 2008. “Building microfoundations for the routines, capabilities, and performance links.” Managerial and Decision Economics 29: 489–502.

Acs, Zoltan J., and D. B. Audretsch. 1990. Innovation and Small Firms. Cambridge, MA: MIT Press.

Acs, Zoltan J., and Daniel A. Gerlowski. 1996. Managerial Economics and Organization. Englewood Cliffs, N.J.: Prentice-Hall.

1 Economic Calculation and the Limits of Organization

2 Entrepreneurship and Corporate Governance

Fuqua’s strategy is to allocate resources into business segments having prospects of the highest return on investment and to extract resources from areas where the future return on investment does not meet our ongoing requirements.... The same principle of expanding areas of high return and shrinking areas of low return is constantly extended to product lines and markets within individual Fuqua operations.

A  |  B  |  C  |  D  |  E
F  |  G  |  H  |  I  |  J
K  |  L  |  M  |  N  |  O
P  |  R  |  S  |  T  |  U
V  |  W

A

agency theory, about, 35, 45

alertness, in entrepreneurship, 96, 102

Peter G. Klein is an Associate Professor in the Division of Applied Social Sciences at the University of Missouri, Adjunct Professor at the Norwegian School of Economics and Business Administration, and Senior Scholar of the Ludwig von Mises Institute. His research focuses on the boundaries and internal organization of the firm, with applications to diversification, innovation, entrepreneurship, and financial institutions. He is author or editor of four books and author of over fifty scholarly articles. Klein holds a Ph.D.

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