Homo Economicus: Rationality & Entrepreneurship.
Research Paper Title:
“From homo economicus to homo agens: Toward a subjective rationality for entrepreneurship”
Authors:
Background:
Is the standard 'rationality' construct in economic theory faulty? The authors think so. If the authors use 'optimization' as the metric for entrepreneurial rationality, then no entrepreneur is rational because entrepreneurship is innately a learning/discovery process. Simon's local optimization concept of "bounded rationality" is only marginally better. The authors propose an alternative conception of rationality for entrepreneurship theory based on subjectivist/ interpretivist meta-theory: rationality is intentionality toward betterment. An actor (e.g., an entrepreneur) is 'rational' if and to the extent that s/he is trying to improve her/his lot. This means that rationality is a process and is temporally sensitive. Actions based on subjective beliefs and preferences at one time but are later regretted are not 'irrational.' Instead, beliefs and preferences changed. From the outside, then, The authors can't know what an entrepreneur wants or believes--The authors can only assume one is always acting rationally. So scholars should avoid making what amounts to value claims about 'better' or 'worse' entrepreneurial actions. Value is subjective!
Highlights:
Traditional (positivist) rationality is problematic.