The unintended consequences of entrepreneurship

Entrepreneurship breeds entrepreneurship. This insight is developed within the context of Austrian economics. We view Kirznerian entrepreneurs as Hayekian learners. Entrepreneurship breeds entrepreneurship two ways. First, the founding of a new venture (“new-venture entrepreneurship”) creates new opportunities for other new ventures. Second, each act of Kirznerian entrepreneurship is a favorable example for others to follow. We concentrate on the second point. Each act of newventure entrepreneurship changes the perceptions of others about how new ventures are founded, what sort of person might do it, and so on. It makes people more alert. Thus, entrepreneurship creates a network externality. This externality explains the fact that otherwise similar communities produce dissimilar levels of new-venture entrepreneurship.