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The codifying function of the entrepreneur

Editor: Jan Horst Keppler

Deadline for submission: September 15th, 2011.

Planed publication of the issue: 2012.

The entrepreneur and the entrepreneurial function have been widely studied in economic history and history of economic thought. Well-known examples are the works by Say, Knight, Schumpeter, Coase, Hayek, Penrose. Most of these approaches focus on the entrepreneur’s ability to navigate risk in an uncertain environment. An emphasis on the personal abilities of the entrepreneur as the key to success of the firm is also widespread in business history and in sociological literature.

However, another important feature of the entrepreneur has received more uneven attention. This is the ability of the entrepreneur to introduce codes, norms, categories (division of labor, products, inputs, human capital, prices, costs, organizational structures, routines) into a complex environment thus breaking down the messiness and complexity of human life into well defined modules that will serve in making decisions of production and organization. In this sense, the entrepreneur, throughout the history of capitalism, is not simply making use of pre-existing norms and categories; he also participates in defining and modifying the relevant codes, norms and categories at each period. This includes the transformation of uncodified “uncertainty” into quantifiable and hence marketable “risk”. Those categories, in turn, enter into general economic theory in an already formalized way. So much so that the image of the entrepreneur tends to disappear behind the codified structure of the static system based on – as of now – generally, accepted collective norms. By focusing on the result of the entrepreneurial function rather than the process of its construction and application, mainstream economic theory is increasingly sidelining the figure of the entrepreneur and the entrepreneurial function.

In an historical context where production, products, norms, are largely dependent upon the use of an exponential amount of knowledge in a globalized world, the issue of codification is of utmost importance and has recently gained momentum through the debate on codified and tacit knowledge. One of the questions that pose themselves is the following: What is the function of the entrepreneur in an interconnected world with ever decreasing transaction costs that drive partly self- organizing processes of the codification of information but go hand-in-hand with an ever-increasing personalization of business success? The answer no doubt calls for a variety of complementary inquiries. Œconomia therefore plans to publish a section or a special issue on this topic and proposes four (non-exclusive) lines for research:

First, a comparative history on the role of the entrepreneur as a codifying entity may help understand the differences between the forms of codification that characterised the successive industrial revolutions that have punctuated economic history. It calls also for a comparative analysis of the interactions between top-down institutional and legal norms and bottom-up codification processes.

Second, in a more specific context, current debates might want to revisit a crucial but so far neglected episode in the history of economic thought. The theories of imperfect and monopolistic competition have been subject to intense research. However, little attention has been paid to the fact that the inability to formalise the nature of indivisibilities in an alternative way ended in the late 1930s in a debate between Kaldor, Chamberlin and Hayek about the entrepreneurial function as the primary reason for monopolistic competition. Coase’s celebrated article on the “Nature of the Firm” has its origins firmly in this debate between the two Cambridges. A fact testified to by numerous textual references: The size of the firm depends ultimately on the organising abilities of the entrepreneur.

Third, the current transformations of capitalism toward knowledge-capitalism call for a better understanding of codification processes. From the viewpoint of a theory of the entrepreneur, the issue of codification lends itself to a strategic understanding in the context of network economies with their winner-takes-all structure that seems increasingly the defining structure of our information-based economies. The ability of entrepreneurs to take part in a codification process is certainly a key to explaining the quality of resource allocation, macroeconomic performances, business cycles, as well as income distribution.

Fourth, no individual entrepreneur by himself can pretend to create codes for products, preferences and production procedures all on his own. The creation of widely shared codes is partly, and to some extent inevitably, a collective enterprise. To some extent, the figure of the entrepreneur is thus in itself a myth that associates broader processes of transformation with a single, identifiable persona. In order to put into sharper focus the codification abilities of the entrepreneur, it is necessary to figure out its abilities to create collective norms of representation and decision. In turn, the issue of codification may contribute to enlightening the debates on the ontology of the firm.

Authors interested are invited to submit an article at

http://www.editorialmanager.com/oec/

For any complementary question, please contact us at info@weboeconomia.org

Editors should retain the right not to go ahead with the special issue if they do not receive enough papers of sufficient quality. If there are some strong papers, but not enough, then they could be published as stand-alone papers.

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