Soc (2012) 49:223–229 DOI 10.1007/s12115-012-9535-y SYMPOSIUM: THE FORTUNES OF CAPITALISM How Entrepreneurship Forgot Capitalism: Entrepreneurship Teaching and Research in Business Schools R. Daniel Wadhwani Published online: 20 March 2012 # Springer Science+Business Media, LLC 2012 Abstract By most measures, entrepreneurship education firms; students learn and faculty study how new business ideas and research is flourishing in business schools today. Clas- can be generated, how resources (such as people and capital) ses abound and students are keen to take them. The number are acquired, how teams and organizations are formed and of business school professors identifying themselves as fo- developed, and how to use the institutional mechanisms avail- cused on the study of entrepreneurship has also soared. Yet, able for converting these forms of value and wealth into liquid the meaning and scope of entrepreneurship as it has come to assets such as cash. Largely lost in this professional research be defined, taught, and studied in business schools over the and education, however, is the relationship of entrepreneurial last three decades is remarkably narrow, largely divorcing processes to the economic and social contexts in which they entrepreneurship from its economic and social context and occur, and to the nature of economic change more broadly. If from its relationship to processes of change in the market we conceive of capitalism as partly defined by its dynamism economy. In short, entrepreneurship as it is understood in and ongoing processes of structural change, as Joseph Schum- business schools today has largely lost its raison d’etre as peter did, then we must accept the fact that entrepreneurship the engine of change in capitalist economies. This paper research and education as practiced in business schools has examines the origins of the splintering of entrepreneurship become largely divorced from its intellectual roots as a way of education from the study of capitalism and highlights a set inquiring into the nature of capitalism as an economic system. of intellectual and educational problems this has created. Two indicators highlight how far entrepreneurship, as it is actually studied and taught, has drifted from inquiry into the Keywords Entrepreneurship research . Entrepreneurship nature of capitalism and the process of economic change. First, education . Capitalism a survey of articles on entrepreneurship published in leading business and management journals found that only 7% en- gaged in longitudinal research of any kind, and only 9% By most measures, entrepreneurship education and research considered the relationship between entrepreneurs and their seems to be thriving in business schools today. The number firms and developments in the market, industry, or economy of schools offering classes on entrepreneurship and small in which these firms operated. The study did not report the business has grown from just a handful in the 1970s to over percentage of articles that were both longitudinal and dealt 1,600. The journals devoted to the field have mushroomed. with system-level developments, but a perusal of most entre- And the number of endowed positions in entrepreneurship preneurship journals makes it clear that such studies are rare. exceeds 400 (Katz, 2004; Kuratko, 2005). Instead, the vast majority of research engaged in cross- Yet, the scope of this education and research on entrepre- sectional studies of entrepreneurs and the characteristics of neurship has been defined in remarkably narrow terms, focus- their startup firms (Chandler and Lyon 2001). Second, a brief ing as it has on the development, growth, and sale of startup survey of ten widely used entrepreneurship textbooks found that none engaged in any kind of a sustained discussion about R. D. Wadhwani (*) the underlying relationship between entrepreneurship and cap- Eberhardt School of Business, University of the Pacific, italism. Those that discussed the context for entrepreneurship Weber Hall Room 209, 3601 Pacific Avenue, Stockton, CA 95211, USA at all, cursorily asserted that entrepreneurial activity promoted e-mail: [email protected] job creation or economic growth. The concepts of “creative 224 Soc (2012) 49:223–229 destruction” or economic change were mentioned in only one, Throughout much of the twentieth century, it was this and this was done only in passing. link between entrepreneurship and economic change in cap- Apologists may respond that, fundamentally, it is not the italist systems that motivated research and education on job of our professional schools of business to teach about entrepreneurship, including in business schools. The main the economic system but about the technical and profession- proponent of this view of entrepreneurship and its role in al skills needed to thrive within it. In some limited ways, it is capitalism was, of course, Joseph Schumpeter. Influenced in perfectly reasonable to make career-focused claims about large part by economic history (McCraw 2006, 2007), the scope of professional schools. But, I will argue here, the Schumpeter made the case more clearly and fully than those nature of entrepreneurship demands an understanding of its before him for placing entrepreneurship at the center of our relationship to capitalism, both for intellectual reasons and understanding of capitalism as an economic system defined for very practical ones. Severing research and teaching on by endogenous economic change. “Capitalism … is by entrepreneurship from capitalism has costs this paper seeks nature a form or method of economic change and not only to highlight. I begin by briefly discussing the origins of the never is but never can be stationary,” he (1950, 82–3) construct of entrepreneurship within intellectual thought on insisted. Entrepreneurship was important not only because capitalism, and by locating the development of the current it helped us understand how markets worked, but even more separation of entrepreneurship and capitalism in education importantly because it helped us account for how economies and scholarship. Second, I discuss some of the problems this change. “[T]he problem that is usually being visualized is separation creates. I conclude by discussing some of the how capitalism administers existing structures, whereas the steps required for a meaningful reintegration of inquiry into relevant problem is how it creates and destroys them,” he capitalism in entrepreneurship teaching and research. explained. “In capitalist reality as distinguished from its text- book picture, it is not [price] competition which counts, but competition from the new commodity, the new technology, the new source of supply, and the new type of organization. Origins of the Split (1950,84)” Schumpeter’s was not the only conceptualization of entre- The intellectual origins of entrepreneurship as a construct preneurship to develop in the twentieth century; the Austrian are closely tied to the development of thought about capi- economic notion of the role of the entrepreneur is identifying talism as a dynamic economic system, subject to ongoing arbitrage opportunities and Frank Knight’s focus on uncertain- structural change. Though there were earlier efforts to define ty bearing point to at least a couple of other streams of thought entrepreneurship and the role of the entrepreneur within the of entrepreneurship and its relationship to market processes economic system (Cantillon 1755; Say, 1855), it was not (Herbert and Link 2006). But, in large part because it offered until the concept of the entrepreneur was linked to the an account of change and development in economies and contention that entrepreneurship propelled the process of societies, the Schumpeterian notion of entrepreneurship was economic change in capitalist economies that sustained in- especially influential in Western (particularly American) social tellectual attention to the topic developed. science. In the post-World War II period it spurred considerable This view of entrepreneurship as a dynamic and disrup- empirical research into entrepreneurship and its historical role tive force in markets originated, in large part, in the work of in economic and social change and became an important nineteenth and early twentieth century economic historians, element of social theories focused on understanding modern- particularly Gustav Schmoller, Werber Sombart, and Max ization. Scholars from across a broad range of social scientific Weber, whose critique of classical economics rested in part disciplines embraced comparative and historical approaches to on its lack of attention to entrepreneurial agents and their understanding the historical role of entrepreneurship in the role in propelling the changes reshaping the industrializing economic development of countries and economies, and con- regions of Europe and North America (Ebner 2000;Reinert sidered the economic, social, and cultural factors that shaped 2002; Wadhwani 2010; Macdonald 1965). The central the supply of entrepreneurial talent. The hub for this wide contention of this position – that through their ideas and ranging and interdisciplinary research on the relationship be- efforts entrepreneurs introduced products, services, and tween entrepreneurship and capitalism was the Center for changes in organizations that transformed markets – made Entrepreneurial History at Harvard Business School, which it distinct from both classical economics and its focus on was founded in 1948 with a grant from the Rockefeller