Classical Theories
Classical Theories of Entrepreneurship: A Historical Guide
Understanding the history of entrepreneurship requires looking at the classical theories that shaped modern business thought. Below is an overview of the foundational theories developed before 1950.
Pre-1900: The Foundations of Entrepreneurial Thought
The Great Man Theory of Entrepreneurship
One of the oldest historical perspectives, this theory posits that entrepreneurs are born, not made. It suggests that a select few individuals possess inherent, exceptional traits and the ability to effectuate massive change in the world.
Weber's Sociological Theory of Entrepreneurship
Max Weber's theory looks to the different types of incentives provided by religious beliefs to explain varying rates of entrepreneurial entry. It is often associated with the Protestant Work Ethic and how culture influences business activity.
Machiavellian Theory of Entrepreneurship
Written originally for medieval institutional conditions, this theory implies that entrepreneurs must sometimes resort to cunning or unethical behaviors to navigate political obstacles and win against competitors.
Cantillon Theory of Entrepreneurship
Richard Cantillon was among the first writers to formally use the word "entrepreneur." His theory distinguishes individuals who bear uncertainty for a chance at a return from those who work for fixed wages.
Between 1900 and 1950: Psychological and Economic Shifts
Birth Order Theory of Entrepreneurship
This psychological perspective suggests that one’s birth order (firstborn, middle, or youngest) affects their personality traits and their subsequent propensity toward starting a business.
Schumpeter's Creative Destruction Theory
Joseph Schumpeter proposed the notion that entrepreneurs act as innovators. They pursue new possibilities through Creative Destruction—the dismantling of old certainties to create new economic growth.
