Israel M. Kirzner is the 2006 winner of
The International Award for Entrepreneurship and Small Business Research. In this essay, we present and evaluate his main contributions to the economics of entrepreneurship.
The focus is on how Kirzner defines the entrepreneurial function. In order to better understand his theory, we posit Kirzner’s
notion of an entrepreneur in the Austrian tradition. In so doing we emphasize that this concept opens up different perspectives
as compared to the neoclassical theoretical framework. The three areas of economic policy, justice and freedom, and economic
growth are discussed. We also show why the Kirznerian entrepreneur makes these issues relevant.
Perhaps most importantly, Kirzner has made the Austrian School intelligible for non-Austrians. By bridging the chasm between
Austrian and mainstream thinking, the crucial role of entrepreneurship and the individual entrepreneur has become visible
to a much broader audience.
Key words Austrian economics - economic development - entrepreneurship - small business economics
JEL codes B49 - B52 - B53 - O31 - L26
Gunnar Eliasson and Magnus Henrekson are members of the Prize Committee for The International Award for Entrepreneurship and Small Business Research. The Prize is awarded by the Swedish Foundation for Small Business Research (FSF) and the Swedish Board of Industrial and
Technical Development (NUTEK). An important aim with this prize is to attract broader attention to this research field. A
precondition for choosing the winner of the award is that the research for which the award has been granted is a significant
contribution to the theory and empirical understanding of entrepreneurship and the importance of entrepreneurship, new firm
formation and small businesses in economic development. Besides the honor, the Prize consists of USD 50,000. It has been awarded
annually since 1996. Previous winners include Zoltan Acs, Howard Aldrich, David Audretsch, William Baumol, Paul Reynolds and
David Storey. More information about the Prize and previous winners is available at http://www.fsf.se/intaward.html. We are grateful for useful comments and suggestions from Johan Almenberg, Mikael Stenkula and Anders Nordberg on an earlier
version of this essay.