Entrepreneurship, Ethics of

Entrepreneurship

Entrepreneurship research has been categorized into at least three literature streams: economic, characteristics of the entrepreneur, and new venture performance. The first of these explores the role of the entrepreneur as the creator of new enterprise, the second attempts to describe entrepreneurs according to psychological attributes, and the last focuses on how the performance of the venture itself is influenced by the entrepreneur.

Definitions matter. Venkataraman identifies an entrepreneur as one who realizes or conjectures, whether through insight or luck, that some resources are underutilized in their current occupation and recombines them into a potentially more useful and fruitful combination. This focus on economic values is a consistent theme throughout much of the literature on entrepreneurship.

Numerous writers suggest that entrepreneurship is the exercise of individual freedom with a view to creating value, whether economic or social (or, less commonly, both). This focus on personal liberty offers one perspective as to what an ethical justification for entrepreneurial activity might begin to look like. Milton Friedman is chief among the writers who argue that an individual's right to personal freedom provides the strongest possible moral defense for free market activity. Such personal freedoms extend to both the consumer (as to consumer choice) and the producer (as to autonomy and independence). No activity better epitomizes the free market than entrepreneurship.

Entrepreneurship has also been defined as the process of converting a private idea into a social idea—or as intelligence in the service of greed. Kirzner bridges the gap between these two perspectives by conceiving of entrepreneurship as the seeing of a profit opportunity—often misinterpreted as merely an opportunity for personal gain—and the taking of necessary actions to realize that opportunity.

Drucker consistently argues that the defining characteristic of entrepreneurial activity is innovation, seeing innovation as the means by which entrepreneurs exploit change as an opportunity for a different business or a different service. One important implication of this perspective is that entrepreneurship can be both learned and practiced. Given this formulation, entrepreneurs search in a deliberate manner for sources of innovation, paying particular attention to societal changes that signal opportunities for successful innovation. Venkataraman similarly identifies organizational creativity as the raw material of both innovation and entrepreneurship, seeing the latter as the essential ingredient for corporate survival in a world of increasing competition and rapid, discontinuous change.

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