Entrepreneurship is one of the fastest-growing discipline throughout the world. However, the importance of entrepreneurship in economic theory is not new and consistent interest in this topic can be traced back to almost a century ago. As with any young discipline, the role and content of entrepreneurship education remains controversial. It seems difficult to decide if entrepreneurship is rather “science” than “art”, or if can be divided between teachable and non-teachable elements, or if entrepreneurship courses should focus on the advancement of personal enterprising attributes or on the ability to start, develop and manage a firm. This paper questions the relevance and appropriateness of entrepreneurship education. The results show that there is still in important gap between the prescriptions of entrepreneurship courses and training programs, on the one hand, and the insights of entrepreneurship theory, on the other hand.entrepreneurship education, entrepreneur abilities, innovation, uncertainty, entrepreneurship theory

Bogdan Glăvan

Flavia Anghel

English

Research Papers in Economics

  59 
 
 
ENTREPRENORIAL ACTIVITY VERSUS ENTREPRENEURSHIP 
EDUCATION 
 
Flavia Anghel, Bogdan Glăvan
∗ 
 
Abstract:  Entrepreneurship is one of the fastest-growing discipline 
throughout the world. However, the importance of entrepreneurship in economic 
theory is not new and consistent interest in this topic can be traced back to almost 
a century ago. As with any young discipline, the role and content of 
entrepreneurship education remains controversial. It seems difficult to decide if 
entrepreneurship is rather “science” than “art”, or if can be divided between 
teachable and non-teachable elements, or if entrepreneurship courses should 
focus on the advancement of personal enterprising attributes or on the ability to 
start, develop and manage a firm. This paper questions the relevance and 
appropriateness of entrepreneurship education. The results show that there is still 
in important gap between the prescriptions of entrepreneurship courses and 
training programs, on the one hand, and the insights of entrepreneurship theory, 
on the other hand.  
 
Keywords: entrepreneurship education, entrepreneur abilities, innovation, 
uncertainty, entrepreneurship theory 
JEL Classification: A20, B10, L26 
 
Introduction 
 
Entrepreneurship is considered an essential ingredient for strong innovation 
and economic growth, especially in a knowledge-based society. It is widely 
believed that entrepreneurial activity can be spurred through entrepreneurship 
education. Consequently, entrepreneurship is one of the fastest-growing 
disciplines throughout the world. However, the importance of entrepreneurship in 
economic theory is not new and consistent interest in this topic can be traced back 
to almost a century ago. Economists such as Joseph Schumpeter, Frank Knight 
and Israel Kirzner have emphasized the role of the entrepreneur in the market 
process of resources’ allocation. 
As with any young discipline, the role and content of entrepreneurship 
education remains controversial. It seems difficult to decide if entrepreneurship is 
                                                           
∗ Flavia Anghel is Associate Professor of Economic and Financial Analysis at the Romanian 
American University in Bucharest. 
Bogdan Glăvan is Associate Professor of Economics at the Romanian American University in 
Bucharest. 
Romanian Economic and Business Review – Vol. 4, No. 1   60 
rather science than art or if can be divided between teachable and non-teachable 
elements, or if entrepreneurship courses should focus on the advancement of 
personal enterprising attributes or on the ability to start, develop and manage a 
firm. A growing literature attempts to evaluate the effects of entrepreneurship 
education and so far the results are rather mixed. 
This paper questions the relevance and appropriateness of entrepreneurship 
education. It attempts to clarify if entrepreneurship can be taught, in light of the 
most important theories of entrepreneurship. The results show that there is still in 
important gap between the prescriptions of entrepreneurship courses and training 
programs, on the one hand, and the insights of entrepreneurship theory, on the 
other hand. Therefore, a closer contact between entrepreneurship courses and 
economics should deliver important gains for both disciplines. 
 
Entrepreneurship in economic theory 
 
Entrepreneurship has received much attention in the literature. In what 
follows, we offer a brief overview of the notion of entrepreneurship. 
 
1.1.  Schumpeter 
Schumpeter’s (1911; 1939) well-known concept of the entrepreneur as 
innovator is a prime example of an idea that is much cited, but perhaps little used. 
Schumpeter’s entrepreneur introduces “new combinations” – new products, 
production methods, markets, sources of supply, or industrial combinations – 
shaking the economy out of its previous equilibrium through a process 
Schumpeter termed “creative destruction”. 
Perhaps Kirzner best described the market impact of Schumpeter’s 
entrepreneur when he wrote: “…for Schumpeter the essence ofentrepreneurship is 
the ability to break away from routine, to destroy existing structures, to move the 
system away from the even, circular flow of equilibrium” (1973, p. 127). 
 
1.2.  Kirzner 
Another well-known approach in economics is Kirzner’s (1973; 1979; 1992) 
concept of entrepreneurship as “alertness” to profit opportunities. The simplest 
case is that of the arbitrageur, who discovers a discrepancy in present prices that 
can be exploited for financial gain. In a more typical case, the entrepreneur is alert 
to a new product or a superior production process and steps in to fill this market 
gap before others. Success, in this view, comes not from following a well 
specified maximization problem, but from having some insight that no one else 
has. As in Schumpeter’s vision, Kirzner’s entrepreneurs do not own capital; they 
need only be alert to profit opportunities. Because they own no assets, they bear 
no uncertainty, and hence cannot earn losses; the worst that can happen to an 
entrepreneur is the failure to discover an existing profit opportunity. For these   61 
reasons, the link between Kirznerian entrepreneurship and other branches of 
economic analysis, such as industrial organization, innovation, and the theory of 
the firm, is weak. Hence Kirzner’s concept has not generated a large body of 
applications. 
 
1.3.  Cantillon, Knight, and Mises 
An alternative to the foregoing accounts is that entrepreneurship consists of 
judgmental decision-making under conditions of uncertainty. According to 
Cantillon's original formulation, the entrepreneur is a specialist in taking on risk. 
He "insures" workers by buying their products (or their labor services) for resale 
before consumers have indicated how much they are willing to pay for them. This 
idea was refined by the U.S. economist Frank Knight (1921), who distinguished 
between risk, which is insurable, and uncertainty, which is not. Risk relates to 
recurring events whose relative frequency is known from past experience, while 
uncertainty relates to unique events whose probability can only be subjectively 
estimated. Changes affecting the marketing of consumer products generally fall in 
the uncertainty category. Individual tastes, for example, are affected by group 
culture, which, in turn, depends on fashion trends that are essentially unique. 
Entrepreneurs, in Mises’s (1949) understanding of the market, make their 
production plans based on the current prices of factors of production and the 
anticipated future prices of consumer goods. 
Judgment is distinct from boldness, innovation, alertness, and leadership. 
Judgment must be exercised in mundane circumstances, for ongoing operations as 
well as new ventures. Alertness is the ability to react to existing opportunities 
while judgment refers to the creation of new opportunities. Those who specialize 
in judgmental decision-making may be dynamic, charismatic leaders, but they 
need not possess these traits. In short, in this view, decision making under 
uncertainty is entrepreneurial, whether it involves imagination, creativity, 
leadership, and related factors or not. 
 
Approaches to teaching entrepreneurship 
 
It is clear that “entrepreneurship” is a highly elastic term therefore it is not 
surprising that entrepreneurship curricula vary widely in content and approach. 
How are all these aspects of entrepreneurship taught? Let us consider each of 
these elements in turn. 
a.  Managing existing resources. Effective management of existing 
resources, whether in new or established organizations, requires not only technical 
business skills (accounting, marketing, finance, business law), but also leadership 
and strategic decision making. These subjects, of course, constitute the core of 
most undergraduate business programs. Such courses typically employ a   62 
combination of traditional classroom instruction (lectures and discussion), applied 
team projects, and, increasingly, the case method. 
b.  Acquiring new resources. Many undergraduate entrepreneurship 
courses focus on the acquisition of new resources: writing business plans, 
acquiring venture capital, marketing new products, acquiring intellectual property, 
and so on. These skills are usually taught through a combination of basic 
analytical principles, historical case studies and examples, classroom simulations, 
and real-world projects. 
c.  Identifying existing opportunities and creating new ones. An increasing 
number of entrepreneurship courses focus not on the mechanics of running a business 
enterprise, but on identifying opportunities for creating new sources of value. 
Opportunity identification involves not only technical skills like financial analysis and 
market research, but also less tangible forms of creativity, team building, problem 
solving, and leadership. While value can of course be created not only by starting new 
activities, but also by improving the operation of existing activities, courses in 
opportunity identification tend to emphasize the launching of new ventures (firms, 
products, or services). But can the necessary attributes be acquired in the classroom? 
McGrath and MacMillan (2000) argue that particular individuals have an 
“entrepreneurial mindset” that enables and encourages them to find opportunities 
overlooked or ignored by others, and that this mindset is developed through 
experience, rather than formal instruction. Entrepreneurs with experience owning and 
operating small businesses tend to be better at identifying new opportunities than 
those potential entrepreneurs who lack such experience. This suggests that 
opportunities for teaching opportunity identification may be limited. 
d.  Bearing uncertainty, exercising alertness, fostering technological or 
organizational innovation, and adjusting to change. Because these are economic 
functions, rather than attributes of particular individuals, it is less clear how such 
activities can be taught through formal instruction. Mises expresses strong 
skepticism on this point.  entrepreneurship, Mises writes, is a fundamentally 
creative activity: “What distinguishes the successful entrepreneur and promoter 
from other people is precisely the fact that he does not let himself be guided by 
what was and is, but arranges his affairs on the ground of his opinion about the 
future. He sees the past and the present as other people do; but he judges the 
future in a different way” (Mises, 1949, p. 585). It is clear, moreover, in Kirzner’s 
formulation, that “alertness” cannot be learned, that it cannot be acquired through 
investments in education and training or from on-the-job experience. 
 
Entrepreneurship and economics: is there a trade-off? 
 
The foregoing remarks indicate a gulf between economists’ conceptions of 
entrepreneurship, as the driving force behind the market economy, and those 
practical manifestations of entrepreneurship studied in the classroom.   63 
One reason economists neglected the theory of the firm is that they thought 
the internal workings of the business firm were beyond the scope of economic 
analysis. In Pigou’s (1921, p. 463) words: “It is not the business of economists to 
teach woolen manufacturers to make and sell wool, or brewers how to make and 
sell beer, or any other business men how to do their job. If that was what we were 
out for, we should, I imagine, immediately quit our desks and get somebody – 
doubtless at a heavy premium, for we should be thoroughly inefficient – to take us 
into his woolen mill or his brewery”. 
Likewise, the technical arts of managing existing resources, acquiring new 
resources, identifying and creating opportunities, bearing uncertainty, and 
innovating—the subjects of most entrepreneurship courses – are perhaps regarded 
as outside the economist’s legitimate expertise. 
Or, as Harvard Business School professor Howard Stevenson puts it, “if 
people have innate musical talent, you can't necessarily teach them to become 
Beethoven. But if they have that innate talent, then they probably would still 
benefit from piano lessons” (Stevenson et al., 2002). 
 
References 
 
Boettke, P. and Coyne, C. 2005. “Concerting entrepreneurship: an 
international public good”. In Carlo Padoan and Gavin Boyd (eds.). Structural 
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Cantillon, Richard. (1931) Essai sur la nature de commerce en géneral. 
Henry Higgs, ed. London: Macmillan [1755]. 
Casson, M. Entrepreneurship. “The Concise Encyclopedia of Economics”. 
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Kirzner, I.M. (1973) Competition and Entrepreneurship. Chicago: University 
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Kirzner, I.M. (1979) Perception, Opportunity and Profit: Studies in the 
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ENTREPRENORIAL ACTIVITY VERSUS ENTREPRENEURSHIP EDUCATION

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