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2017 | Buch

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The Entrepreneur in Rule-Based Economics

Theory, Empirical Practice, and Policy Design

verfasst von: Dr. Georg D. Blind

Verlag: Springer International Publishing

Buchreihe : Economic Complexity and Evolution

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

This volume brings together three areas of interest: the rule-based approach, the entrepreneur, and Japan as an empirical application. It highlights the advantages of the rule-based approach for economic analysis by linking different methodological underpinnings. Using these, the author exemplifies how rule-based economics allows a systematic analysis of the entrepreneur as the key figure in bringing about economic change and diversity. The book includes an empirical methodology for applied research in rule-based economics, which it puts to the test in an empirical study of entrepreneurship in contemporary Japan. The choice of entrepreneurship and Japan showcases the integrative power that rule-based economics brings to further breaking a theoretical deadlock and to analytically capturing a very particular economy investigated very little so far. By offering a body of new and original research, the monograph shows how the idea of entrepreneurship as a rule helps to resolve the Schumpeter-Kirzner divide and to develop an empirical approach to the determinants of entrepreneurial activity.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction

Abstract

The nature of the entrepreneurial role can be clarified by raising three central questions: who is an entrepreneur, what does an entrepreneur do and how does an agent eventually become an entrepreneur? This helps to understand of the Schumpeter–Knight distinction of equilibrium-disturbing versus equilibrium-creating entrepreneurs as an empirical question that only can be researched ex post. Building on this, the entrepreneur is defined as a newly self-employed individual. We further explain how the inclusion of matters conventionally associated with disciplines other than economics may increase the explanatory power of analysis. We further introduce the subject matter, motivate the choice of the case study presented in Part III, and conclude with an outline of the structure of the book.

Georg D. Blind

A Theory of Entrepreneurship Through the Rule-Based Approach

Frontmatter

Chapter 2. The Rule-Based Approach in the Analysis of Economic Change

Abstract

While there exist a great many of important cues to the understanding of the phenomenon of entrepreneurship, these are scattered across time and the entire landscape of sub-disciplines in economics. Adding to these, insights from neighbouring disciplines also suggest a wide variety of factors affecting the propensity of agents to eventually become entrepreneurs. In order to integrate these factors into a consistent model, this chapter presents the rule-based approach (RBA) as an umbrella theory of socio-economic change. Centre stage in rule-based economics is Homo sapiens oeconomicus (HSO), a heterogeneous agent open to learning and with the capacity to adapt his decision logic to individual circumstances. HSO is a “rule maker and rule user”. We illustrate how the concept of rules and corresponding operations allows tracking the “life cycle” of an idea across the analytical levels of micro, meso and macro.

Georg D. Blind

Chapter 3. The Rule-Based Economy and the Function of the Entrepreneur

Abstract

Concrete examples are needed to illustrate the concept of rules and corresponding operations as key elements of a rule-based economy. Importantly, we demonstrate how the understanding of rules is a prerequisite for understanding corresponding operations. We then explore the role of the entrepreneur in an evolving rule economy. Taking reference to technological rules, we illustrate the function of the entrepreneur across analytical levels (micro, meso and macro) and then achieve generalisation of the entrepreneurial function for all classes of rules. Building on these insights, we propose a general definition of the entrepreneurial function in terms of a “propagator role”, which involves the diffusion of new rules by linking makers to users.

Georg D. Blind

Chapter 4. The Entrepreneurial Process in Terms of Rules

Abstract

This chapter discusses the rule of entrepreneurship as an object of study in empirical research. It illustrates how agents eventually become carriers of that rule and under what circumstances they use it in the operation of starting a business. First, a definition of the “entrepreneurial process” in terms of rules is developed. In a nutshell, Entrepreneurial Spirit qualifies as a 2nd order rule that moderates the odds of becoming a latent entrepreneur or, in rule terms, of adopting the 1st order rule of Individual Entrepreneurship. Next, we show how this understanding enables an integrated account of latent and actual, necessity- and opportunity-driven entrepreneurship and of entrepreneurial attitudes. Reviewing a number of important earlier theoretical approaches we synthesise these into a series of propositions. Importantly, specific empirical information is required for developing these propositions further into a locally valid theorem.

Georg D. Blind

The Rule-Based Approach in Empirics: A Methodological Sketch

Frontmatter

Chapter 5. Construction of Empirical Models: The System of Factor Rules (SFR)

Abstract

After outlining the key premises of the rule-based approach, we explain how to determine the system of factor rules (SFR) relevant for the analysis of a “response rule” – the explanandum of an empirical study in rule-based economics. Subsequent sections outline how to identify “factor rules” as potential explanantia, how to clear one’s preliminary list of factor rules from prices and quantities, how to organise factor rules by rule class and order, how to determine the nature of their impact on the explanandum and how to infer on interdependencies between factor rules. Having followed these steps, an SFR should embrace all factor rules that have potentially caused change in the response rule during the investigation period.

Georg D. Blind

Chapter 6. Changing and Meta-stable Sub-systems (CSS and MSSS)

Abstract

The methodological considerations proposed here build on the system of factor rules (SFR) as presented earlier. Specifically, this chapter shows how the causal core of an SFR can be extracted. To that end we develop two criteria for an assessment of factor rules: (1) change in population size and (2) change in strength of influence on the response rule. These criteria suffice to identify causal influence during the observation period. Where neither of the two criteria tests positively, the corresponding factor rules can be excluded from further analysis. Importantly, these criteria allow for excluding false positives.

As an overwhelming share of contemporary data collection efforts still concentrate on prices and quantities, the data required for an SFR assessment is often not readily available. Therefore, Sect. 6.2 provides considerations and suggestions on how to obtain or substitute the data required to assess causality.

Georg D. Blind

Chapter 7. Analysis of the Changing Sub-sytem (CSS): Developing and Testing of Hypotheses

Abstract

Developing and testing of hypotheses in a rule-based economic inquiry consists of four steps: specification of the CSS for the two analytical levels of rules and operations, identification of carrier subgroups, formulation of hypotheses and choice of technique for hypothesis testing.

As the choice of technique is critical to conduct valid hypothesis tests, we examine how existing techniques may be employed in rule-based inquiries. In doing so, the sections distinguish hermeneutic from statistical approaches and agent-based simulations. Guidance focuses on the merits and challenges of the said techniques as they apply to rule-based analysis and provides references to detailed accounts of the respective methods.

Georg D. Blind

Chapter 8. Rule-Based Economics in Empirical Practice: An Exemplar

Abstract

We present a detailed didactical case study to illustrate how the empirical methodology presented can be employed to develop an empirical research design in rule-based economic inquiry. The case builds on the example of the classical problem of investigating the determinants of savings. The chosen example helps to clarify the distinction between a rule perspective on savings and the notion of aggregate savings: the former refers to the willingness of agents to save, and the latter addresses the outcomes of saving operations conducted by agents in applying their savings rule.

Georg D. Blind

Entrepreneurship in Japan: 1992–2012

Frontmatter

Chapter 9. Assembling the Model of Entrepreneurship in Japan: The System of Factor Rules (SFR)

Abstract

We provide an exhaustive review of empirical research conducted for identifying the system of factor rules (SFR) for entrepreneurship in Japan between 1992 and 2012. It corresponds to the investigation stage of the methodology for rule-based economic analysis outlined earlier. The review covers a broad variety of sources including academic work from different disciplines as well as original research building on testimonials from rule adopters, i.e. entrepreneurs, and from rule rejecters, as well as from practitioners in finance and government. Reviewing the interrelationship between some 16 potentially relevant factor rules we achieve a first reduction of complexity by excluding factors that exert indirect influences only.

Georg D. Blind

Chapter 10. Reducing the Model of Entrepreneurship in Japan: Extraction of its Changing Sub-system (CSS)

Abstract

Various factors grouped into the system of factor rules (SFR) are related to the level of entrepreneurship in Japan. Here, we reduce the SFR to the changing sub-system (CSS) as its causative core. The CSS embraces the subset of factor rules that have been impacting on the rule complex of entrepreneurship in Japan during the investigation period. This reduction of complexity is achieved by excluding “false positives” through systematic assessment against two criteria of change.

Upon a discussion of factor rules that are part of the economic environment in which business formation takes place, we assesse factor rules relevant to the position of business founders in society as well as the role of government in fostering self-employment and entrepreneurship. We close by discussing changes in those factor rules that represent or refer to economic alternatives to self-employment. In summary, private and public venture support and protective bankruptcy law have an insignificant influence on entrepreneurship in Japan. Similarly, there is insignificant change in labour unions, lending practices and HR management.

Georg D. Blind

Chapter 11. Putting to Work the Model of Entrepreneurship in Japan

Abstract

In order to optimise inferences on the changing sub-system (CSS) of entrepreneurship in Japan, we split the system of factor rules (SFR) into its changing and meta-stable parts: CSS and MSSS (changing and meta-stable sub-systems). Minimum capital requirements, perceived cost of capital, fear of unemployment, business sentiment, the rise of non-regular employment, and demographic change (via an indirect mechanism) are part of the CSS as the causative core of the SFR.

We next identify subgroups of agents by comparing the socio-economic profile of the Japanese “founder force” with that of the general workforce. We then uses susceptibility to CSS rules as the differentiating criterion for the identification of subgroups of agents, which—in turn—enables the formulation of subgroup-specific hypotheses.

Georg D. Blind

Chapter 12. Evolution of Entrepreneurship in Japan: Analysis of its Changing Sub-system

Abstract

We document results of hypothesis testing for the determinants of entrepreneurial attitudes, as well as for latent and actual entrepreneurship in Japan from 1992 to 2012.

For entrepreneurial attitudes we find both, the rule of Business Sentiment in the self-employed subgroup and the rule Fear of Unemployment in the dependently employed subgroup since 1998, with significant negative influence. We further identify a significant impact of smaller families via the 2nd order social rule of Filial Piety as well as a negative influence of Perceived Cost of Capital (nominal interest rates).

For latent entrepreneurship we evidence a push hypothesis for two subgroups: dependently employed (via business sentiment) and economically inactive (via the job-to-applicant ratio). The same finding also holds for actual entrepreneurship in the dependently employed subgroup. Filial Piety again has a negative impact on latent and actual entrepreneurship in both subgroups as evidenced from a significant negative impact of cohabitation ratios. These results are robust even after controlling for urban–rural differences and labour market structure.

Georg D. Blind

Chapter 13. Entrepreneurship in Japan: Interpretation of Findings

Abstract

We present an overview of findings on entrepreneurial attitudes, latent and actual entrepreneurship in Japan between 1992 and 2012. Drawing on micro-data from the Japanese edition of Global Entrepreneurship Monitor we further triangulate the results pertaining to the relevance of cultural factors. Importantly, age shows a negative correlation to the perceived status of entrepreneurs and to fear of failure, which corroborates the finding that Fear of Failure and Traditional Class Order are reinforced through the transmission mechanism of Filial Piety.

A direct comparison to two earlier studies on the same dependent variables evidences the superior explanatory power originating from the integrated empirical design of a rule-based inquiry. By amending our earlier theoretical propositions with evidence specific to Japan and to the observation period we achieve inductive closure.

Georg D. Blind

Conclusion

Frontmatter

Chapter 14. The Entrepreneur in Rule-Based Economics: Summary of Findings and Research Outlook

Abstract

Summarising major findings on the theory of entrepreneurs and entrepreneurship in rule-based economics, on empirical methodology and on the study of entrepreneurship in Japan between 1992 and 2012, we sketch an agenda for future research.

Starting from the empirical case, two theoretically derived forms of entrepreneurship, namely, “time-lagged opportunity entrepreneurship” and “necessity-induced opportunity entrepreneurship”, may be explored in future inquiries. Similarly, the effect of demographic change on latent and actual entrepreneurship encourages empirical tests for other economies.

Georg D. Blind

Chapter 15. Policy Design in Rule-Based Economics: Implications for Entrepreneurship in Japan

Abstract

This chapter sketches the development of policies in rule-based economics. Importantly, focusing on interventions at the rule level enables to achieve more long-term, and more sustainable improvements than traditional policy which continues to target mainly the operational level. As is shown with concrete examples, rule-based policy comes with a trade-off between the potential of self-sustainability and immediacy.

Policy targeting 2nd order rules has the highest potential for self-sustainability but comes with important time lags, whereas policy measures targeting 1st order rules have smaller potential for sustainability but come with smaller time lags. At the other extreme of this trade-off, operational policy has no potential for self-sustainability but comes with almost immediate effect. We exemplify these considerations by sketching policy measures aimed at fostering entrepreneurial activity in Japan.

Georg D. Blind

Chapter 16. Rule-Based Economics in Empirical Practice: Effective Tool for Theory Building

Abstract

We assess the benefits and challenges that rule-based economics implies for theory building and empirical research. Benchmarking empirical results drawn from an original study presented earlier against evidence from inquiries relying on more traditional approaches it can be shown that rule-based analysis implies four important advantages: (1) the distinction of rules from operations enables a more clear-cut analysis and helps to exclude false positives, (2) the distinction of sub-groups of agents allows conducting more profound analysis, (3) the transdisciplinary nature of rule-based economics enables the testing of a more complete set of influencing factors, and (4) the evolutionary perspective secures the inclusion of dynamic phenomena.

At the same time, rule-based economics implies a number of challenges such as intricacies linked to the distinction of rules from operations, data availability issues and a considerably larger workload. In spite of these challenges, rule-based economics offers potential for superior research outcomes if the methodological guidance is duly followed.

Georg D. Blind

Chapter 17. Appendices

Georg D. Blind

Backmatter

Titel: The Entrepreneur in Rule-Based Economics
verfasst von: Dr. Georg D. Blind
Verlag: Springer International Publishing
Electronic ISBN: 978-3-319-62779-3
Print ISBN: 978-3-319-62778-6
DOI: https://doi.org/10.1007/978-3-319-62779-3