Measuring Historical Entrepreneurship

Measuring entrepreneurship, assigning numbers to the concept, requires identification of who is or is not an entrepreneur, and therefore what entrepreneurs do.1 One approach represents entrepreneurs as identifying and exploiting profit opportunities resulting from market disequilibria, so eliminating this profit and balancing the market (Kirzner, 1973). Another links entrepreneurship with innovation (Schumpeter, 1961). Entrepreneurship might then perhaps be measured by profit stemming from innovation. Profit corresponds with the ‘adding value’ indicator of entrepreneurial performance (Kay, 1993, ch. 2). But actual profits may be as much a symptom of lack of competition (as in the ‘persistence of profits’ literature: for example, Geroski and Jacquemin, 1988) as of successful innovation. Ideally the profits should be rewards for successfully bearing uncertainty, rather than for the exercise of monopoly power (cf. Knight, 1921).