The Philosophical Foundations of a Radical Austrian Approach to Entrepreneurship

The equilibrium-based approaches that dominate entrepreneurship research offer useful insights into some aspects of entrepreneurship, but they ignore or downplay many fundamental entrepreneurial phenomena such as individuals’ creative imaginations, firms’ resource (re)combinations, and markets’ disequilibrating tendencies—and the genu ine uncertainty and widespread heterogeneity these imply. To overcome these limitations, scholars have recently introduced a nonequilibrium approach to entrepreneurship based on Ludwig Lachmann’s “radical subjectivist” brand of Austrian economics. Here, this radical Austrian approach is extended beyond Lachmann to include the work of radical subjectivism’s other noted theorist: George Shackle. More important, the article extends entrepreneurship research by systematically comparing and contrasting the nascent, radical Austrian approach to entrepreneurship with three dominant equilibrium-based approaches: neoclassical, Kirznerian, and Schumpeterian economics. Specifically, the article (a) explicates the paradigmatic philosophical assumptions about the nature of individuals, firms, and markets that underlie these approaches; (b) demonstrates how metaphor is employed as a device to concretize these assumptions; (c) examines the research questions that arise from the assumptions these metaphors reflect; and (d) uses the Jap anese “beer wars” of the 1980s and 1990s to illustrate one methodological approach (hermeneutics) researchers can adopt to apply these assumptions, metaphors, and questions to study entrepreneurial phenomena from a radical subjectivist perspective.