Theories on

Entrepreneur
ship
At the end of this lesson, the learners
should be able to:

1. Identify some of the theories in

entrepreneurship.

2. Cite the importance of the theories on

entrepreneurship
THEORIES ON ENTREPRENEURSHIP:

1. Innovation Theory
2. Keynesian Theory
3. Alfred Marshall Theory
4. Risk and Uncertainty-
bearing Theory
5. Other theories
INNOVATION THEORY
by Joseph Schumpeter (Austrian Economist and Political Scientist)

Joseph Schumpeter considers

innovation as the primary
factor affecting development.
INNOVATION THEORY
by Joseph Schumpeter (Austrian Economist and Political Scientist)

It becomes the primary role of entrepreneur to

introduce innovation in any of the following forms:
1. New Product
2. New Product Method
3. New Market
4. New Supplier
5. New Industry Structure
KEYNESIAN THEORY
by John Maynard Keynes (British Economist)

Attributes economic growth, especially

during depression, to the government.
ALFRED MARSHALL THEORY
by Alfred Marshall (English Economist)

There are four factors in the production of

goods and services:
• Land
• Labor
• Capital
• Organization
ALFRED MARSHALL THEORY
by Alfred Marshall (English Economist)

Marshall generalizes that the organization

plays the most significant role among the
different factors of production.
RISK AND UNCERTAINTY-BEARING THEORY
by Frank Hyneman Knight (American Economist)

An entrepreneur faces
the risk of uncertainty
in the process of
connecting suppliers
and consumers.
RISK AND UNCERTAINTY-BEARING THEORY
by Frank Hyneman Knight (American Economist)

An entrepreneur faces the

risk of uncertainty in the
process of connecting
suppliers and consumers.
OTHER THEORIES ON
ENTREPRENEURSHIP
1. Weber’s Sociological Theory – asserts that
social cultures have significant contributions
to entrepreneurship. (Max Weber)
2. Kaldor’s Technological Theory – gives
importance to the advancement of technology
as an element of production. (Nicholas Kaldor)
OTHER THEORIES ON
ENTREPRENEURSHIP
3. Leibenstein’s Gap-Filling Theory
advocates that entrepreneurship fills the gap
in any economic activity. (Henry Leibenstein)
4. Kirzner’s Learning-Alertness Theory –
focuses on learning and alertness as the
primary attributes of entrepreneurship. (Israel
Kirzner)
 REMEMBER!
There is no correct or wrong
theory. Regardless of
entrepreneurship theory that
you choose, the most important
thing is that you base your
business decisions not on your
own personal likes and dislikes
but rather on sound reason.