Entrepreneurship is one of the fastest-growing fields within economics, management, organization theory, finance, and even law. Surprisingly, however, while the entrepreneur is fundamentally an economic agent—the “driving force of the market,” in Mises’s (1949, p. 249) phrase—modern theories of economic organization and strategy maintain an ambivalent relationship with entrepreneurship. It is widely recognized that entrepreneurship is somehow important, but there is little consensus about how the entrepreneurial role should be modeled and incorporated into economics and strategy. Indeed, the most important works in the economic literature on entrepreneurship—Schumpeter’s account of innovation, Knight’s theory of profit, and Kirzner’s analysis of entrepreneurial discovery—are viewed as interesting, but idiosyncratic insights that do not easily generalize to other contexts and problems.

This lecture reviews the place of entrepreneurship in economic theory, with a special focus on applications to institutions, organizations, strategy, economic development, and related fields. It begins by distinguishing among "occupational," "structural," and "functional" approaches to entrepreneurship, turns next to different interpretations of the entrepreneurial function, and concludes with ideas about integrating entrepreneurship into the new institutional economics.