Religious theory of entrepreneurship

What is Weber's theory of entrepreneurship?

Max Weber was a German sociologist writing in the early 1900s who theorized that religion is a key determinant of entrepreneurial development. He argued that entrepreneurial energies are driven by religious beliefs about causes and consequences. In particular, he emphasized how religions can encourage growing capital for investment through the virtues of compound interest. A religious belief in saving for the future was key, he believed, to the capitalistic spirit.

He distinguished between religions that encourage acquiring and accumulating capital from those that do not. In particular, Weber noted that Hinduism, Buddhism and Islam are not conducive to entrepreneurship. Hinduism and Buddhism purportedly have a focus on the present moment and tend to shun materialism, making them problematic to the pursuit of entrepreneurial goals. Islam’s focus on the rewards of the afterlife make material accumulation problematic. By contrast, the protestant work ethic prevalent in Northern Europe at the time was seen as highly compatible with entrepreneurial development. For example, among Quakers, cultural frugality and savings were hallmarks of the good life, and as a means of gaining the power to do God’s work. God’s work, could be interpreted as spreading religious beliefs.

Weber’s theory is not widely accepted by sociologists, who argue that it was used as a tool to justify colonial rule in India. One of the arguments from the theory was that pre-capitalist laborers should not be offered higher wages with the expectation that they will produce more work because these folks are likely to work less and enjoy more leisure as a response.

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Weber, M. (1904). Die protestantische Ethik und der Geist des Kapitalismus.