Weber's theory of entrepreneurship
Max Weber was a German sociologist writing in the early 1900s who theorized that religious beliefs are a key determinant of entrepreneurial development.
He argued that entrepreneurial energies are driven by beliefs about causes and consequences. In particular, he emphasized how religions encourage investment in economic growth, development, and compound interest. A religious belief in saving for the future was key, he believed, to the capitalistic spirit.
Religion and Economic Behavior
Weber distinguished between religions that encourage capitalism from those that do not.
- Non-Conducive: Weber noted that Hinduism, Buddhism, and Islam might not be conducive to entrepreneurship. He argued that Hinduism and Buddhism have a focus on the present moment and shun materialism, while Islam’s focus on the rewards of the afterlife makes material accumulation problematic.
- Conducive (The Protestant Ethic): By contrast, he argued that the Protestant work ethic prevalent in Northern Europe at the time was highly compatible with entrepreneurial development.
For example, among Quakers, cultural frugality and savings were hallmarks of the good life, acting as a means of gaining the power to do God’s work through enterprise.
Critiques and Modern Context
Weber’s theory is not widely accepted by modern sociologists, who argue that it was used as a tool to justify colonial rule in India. One of the propositions implied by the theory was that "pre-capitalist labor" should not be offered higher wages, as their religion would guide them to work less and enjoy more leisure in response.
The theory also dismisses the variety of sub-traditions within major religions that come along with different views on materialism, and it ignores the local innovations of religious workers.
Finally, the usefulness of the theory is challenged by numerous counter-examples. The modern phenomenon of emerging market multinationals (in India, China, and the Middle East) seems to put the main tenets of the theory in dispute.
