Computational modeling of entrepreneurship grounded in Austrian economics: Insights for strategic entrepreneurship and the opportunity debate
Strategic Entrepreneurship Journal · 2019 · Volume 13 · Issue 2
Abstract
This paper makes three key arguments: (a) that computational modeling is a key methodological tool that can aid in the development of formal economic foundations for entrepreneurship that are grounded in Austrian economics; (b) that computational modeling grounded in Austrian economics can serve to integrate models of competitive advantage in equilibrium (economic foundations of strategy) with models of the entrepreneurial function in disequilibrium (economic foundations of entrepreneurship), thereby providing an economic foundation for strategic entrepreneurship; and (c) that the mathematical precision of computational modeling grounded in Austrian economics can serve to clarify the logic behind differing perspectives that have led to debates fueled by the imprecision of natural languages, such as the opportunity debate in the entrepreneurship literature. This paper asks: what are the implications for strategic entrepreneurship if we model it on the foundations of an economic logic developed by the Austrian economics school of thought in a way that integrates into existing economic logics of strategy and competitive advantage? The Austrian economics logic highlights the role of disequilibrium, creative imagination, time and uncertainty, while the traditional economic logic emphasizes the importance of structural sustainable advantages in equilibrium. In this integrative view, even if a firm does not enjoy any competitive advantage over rivals, opportunities for profit or development of competitive advantage still exist through entrepreneurial action. An entrepreneur adopting this view in practice would recognize their own agency, but also the limits to it and the role of external factors.
Keywords
Austrian economics, computational modeling, entrepreneurial opportunities, market process theory, value capture theory
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