WEBVTT NOTE Entrepreneurship as a Nexus of Enterprise 1 00:00:00.000 --> 00:00:11.680 Well, I have the idea of this approach of research, in fact, because when I began to work in this business school, the Champagne School of Management, 2 00:00:11.680 --> 00:00:19.240 I noticed that, well, I believe that because I would work with people that would teach about business, 3 00:00:19.240 --> 00:00:23.160 that we would have the same mentality and the same approach to research. 4 00:00:23.160 --> 00:00:29.960 And in fact, I discovered that it wasn't the case, that in fact, well, sociology was well impregnated 5 00:00:29.960 --> 00:00:32.640 in Business Administration Teachings. 6 00:00:32.720 --> 00:00:41.600 And, in fact, they were even resurrecting a lot of, let's say, socialistic theory. 7 00:00:41.680 --> 00:00:44.680 And so I had the idea, well, what was the problem? 8 00:00:44.760 --> 00:00:50.320 Why didn't they, well, you, as Professor Klein said today earlier, 9 00:00:50.400 --> 00:00:55.440 well, you have entrepreneurship theory and a lot of people are talking about entrepreneurship now, 10 00:00:55.440 --> 00:01:00.440 but when you see they aren't really using, for example, the Austrian theory 11 00:01:00.520 --> 00:01:05.280 and I wanted to understand why, and I had to do a mea culpa anyway 12 00:01:05.360 --> 00:01:11.440 because it was true that there are many points that we aren't treating, in fact, 13 00:01:11.520 --> 00:01:14.840 which are related to entrepreneurship theory, 14 00:01:14.920 --> 00:01:20.960 but this doesn't, and so even if the arguments 15 00:01:20.960 --> 00:01:26.240 of these other theorists in, let's say, sociologists and so on, 16 00:01:26.320 --> 00:01:31.480 who are infiltrating business administration, education, 17 00:01:31.560 --> 00:01:35.920 even if they aren't maybe correct in our perspective, 18 00:01:36.000 --> 00:01:39.880 there are certain conceptual tools that we can use, in fact. 19 00:01:39.960 --> 00:01:43.520 We could develop them by ourselves, I believe so, 20 00:01:43.600 --> 00:01:46.000 but why lose time doing that? 21 00:01:46.080 --> 00:01:49.920 And it is much better to do counter-Gramscianism 22 00:01:49.920 --> 00:01:57.120 and use their own concepts for us and to say that we can also explain that. 23 00:01:57.120 --> 00:02:06.560 So, my point of departure is a praxeological model, so typical based on Rothbard and Mises. 24 00:02:06.560 --> 00:02:19.280 Well, we have the entrepreneurial agent who has means, okay, and well, he lives where we're affected by social conditions of action and natural conditions of action. 25 00:02:19.280 --> 00:02:25.040 Well, natural conditions of action, well, they are tackled by science. 26 00:02:25.040 --> 00:02:27.680 But the problem is the social conditions of action. 27 00:02:27.680 --> 00:02:32.560 The fact is that we, in fact, perceive, well, we receive this information 28 00:02:32.560 --> 00:02:36.320 and based on this information, as Menger would say, 29 00:02:36.320 --> 00:02:40.880 the knowledge or the belief of the knowledge that we have of how things work, 30 00:02:40.880 --> 00:02:45.760 well, we will use our means and interact with these social conditions. 31 00:02:45.760 --> 00:02:48.960 Social conditions that, of course, they are people. 32 00:02:48.960 --> 00:02:51.040 and other individuals. 33 00:02:51.120 --> 00:02:54.480 So we invest based on this information, okay? 34 00:02:54.560 --> 00:02:57.160 So we interact, the interaction is this investment, 35 00:02:57.240 --> 00:02:59.480 the engagement of means. 36 00:02:59.560 --> 00:03:02.440 And the problem is this, that the part... 37 00:03:02.520 --> 00:03:05.440 Of course, this takes time, no? 38 00:03:05.520 --> 00:03:08.600 And the fact that it takes time, it means that what? 39 00:03:08.680 --> 00:03:12.640 That when I act, there is always an unperceived information 40 00:03:12.720 --> 00:03:16.520 or misperceived or completely new information 41 00:03:16.600 --> 00:03:18.880 that I didn't have access to before. 42 00:03:18.960 --> 00:03:25.680 And this is what will imply either success and gain, or failure and loss. 43 00:03:25.680 --> 00:03:33.360 But it doesn't end there, because, well, we have then the concept that the sociologists use a lot, of reflexivity. 44 00:03:33.360 --> 00:03:40.760 No, whatever we do will then reflect on the social conditions in nature, well, nature maybe, 45 00:03:40.760 --> 00:03:44.240 well, earth is avenging itself against us, yeah. 46 00:03:44.240 --> 00:03:54.240 Well, our failure or success will then be reflected, will be assimilated by other agents, okay? 47 00:03:54.240 --> 00:04:02.240 And we will have to renew the cycle. In fact, we will always have this continuous feedback process going on. 48 00:04:02.240 --> 00:04:09.240 So, based on this, I refer to the conclusion that we have three dimensions defining entrepreneurial action, 49 00:04:09.240 --> 00:04:25.240 which are profit-seeking, we look for some gain, maybe let's say social, political, pecuniary and so on, but they are always economic gains. 50 00:04:25.240 --> 00:04:31.240 We have uncertainty bearing, the charge of losses, and the ultimate power of decision-making. 51 00:04:31.240 --> 00:04:35.960 decision-making. Are we concentrating on the first two? The ultimate power of decision-making 52 00:04:35.960 --> 00:04:44.000 is the one given by night, the power to stop everything. We have the power. Since I am 53 00:04:44.000 --> 00:04:50.360 the owner of this investment, my real power isn't just to combine things. No, the real 54 00:04:50.360 --> 00:04:57.960 power is to say, no, stop. I won't go on. Only the entrepreneur has this power, not 55 00:04:57.960 --> 00:05:00.040 and not even the manager has it. 56 00:05:00.040 --> 00:05:04.720 And, well, I begin them all with profit seeking them. 57 00:05:04.720 --> 00:05:09.960 And with this analysis, I will be concluding that, in fact, 58 00:05:09.960 --> 00:05:14.720 we must, in order to identify the entrepreneur, 59 00:05:14.720 --> 00:05:20.200 in order to use it to explain other, let's say, 60 00:05:20.200 --> 00:05:24.720 more social consequences of action, 61 00:05:24.720 --> 00:05:27.040 and in order to identify the entrepreneur to know what, 62 00:05:27.040 --> 00:05:31.520 How policy-making actually impacts enterprise-building? 63 00:05:31.600 --> 00:05:37.040 Well, we have to understand first how it works, how these dimensions work. 64 00:05:37.120 --> 00:05:39.720 So, I believe that, first of all, we have this, 65 00:05:39.800 --> 00:05:42.520 the non-entrepreneur and the entrepreneur. 66 00:05:42.600 --> 00:05:46.600 The non-entrepreneur, well, he gives initial or intermediate goods 67 00:05:46.680 --> 00:05:49.960 or higher-order goods, if you want, 68 00:05:50.040 --> 00:05:53.360 and the entrepreneur, well, pays him with capital funds. 69 00:05:53.440 --> 00:05:54.880 This will imply what? 70 00:05:54.880 --> 00:05:59.360 a symmetric and a synchronic price determination. 71 00:05:59.360 --> 00:06:05.400 It is synchronic because, well, they are determining the price within the exchange, 72 00:06:05.400 --> 00:06:09.600 and it is symmetric because they agree on the price, okay? 73 00:06:09.600 --> 00:06:13.920 Well, the thing is that while the entrepreneur will have his demand, 74 00:06:13.920 --> 00:06:20.200 it will be the same thing. The entrepreneur will sell intermediate or final goods or lower-order goods, 75 00:06:20.200 --> 00:06:25.360 and the demand will pay with money, which will be the revenue of the entrepreneur. 76 00:06:25.440 --> 00:06:29.600 The same thing again, synchronic and symmetric price determination. 77 00:06:29.680 --> 00:06:34.640 But the entrepreneur actually derives his net revenue 78 00:06:34.720 --> 00:06:37.760 from a diachronic asymmetry of utility, 79 00:06:37.840 --> 00:06:42.480 which will be the basis of a diachronic asymmetry of prices. 80 00:06:42.560 --> 00:06:49.280 So the entrepreneur is characterised by this diachronic profit-seeking or gain-seeking, 81 00:06:49.280 --> 00:06:58.880 not like a non-entrepreneur integrated in the entrepreneur's enterprise. 82 00:06:59.600 --> 00:07:04.120 So what this means in fact, the profit opportunity then, 83 00:07:04.440 --> 00:07:08.880 it isn't, well, obviously, the problem is what? 84 00:07:08.960 --> 00:07:13.200 Well, we have social conditions of action that are always mutating 85 00:07:13.280 --> 00:07:16.960 and we are reacting to them and we have to take into consideration demand, 86 00:07:17.040 --> 00:07:18.680 but it isn't just that. 87 00:07:18.680 --> 00:07:23.680 In fact, I believe that the profit-seeking question is socially situated, 88 00:07:23.680 --> 00:07:30.680 in which sense that, okay, entrepreneur is the guy doing this diachronic profit-seeking, 89 00:07:30.680 --> 00:07:35.680 but everybody does that at any moment in time. 90 00:07:35.680 --> 00:07:39.680 We are all entrepreneurs. Well, this is the conclusion of Mises and Human Action. 91 00:07:39.680 --> 00:07:47.680 But then, okay, it won't serve us to know how policy-making may impact this kind of enterprise 92 00:07:47.680 --> 00:07:50.680 or the other one, or about enterprise building. 93 00:07:50.680 --> 00:07:55.680 So the problem is who, under a given context, 94 00:07:55.720 --> 00:08:00.720 a given enterprise is the diachronic profit-seeking. 95 00:08:02.480 --> 00:08:06.880 And so the question then is to talk about opportunities. 96 00:08:07.800 --> 00:08:10.200 And the problem is, well, if we are going to see that, 97 00:08:10.200 --> 00:08:12.600 well, okay, everything is changing all the time 98 00:08:12.600 --> 00:08:17.200 and I act by the accordance 99 00:08:17.200 --> 00:08:24.400 To the knowledge I believe I have of reality, the thing is that opportunities will not be created, 100 00:08:24.400 --> 00:08:31.600 they will not be discovered, but they will be formed by interactions. 101 00:08:31.600 --> 00:08:43.200 Of what? Of demand preferences, of competitive supply, of the unintended consequences of contiguous actions. 102 00:08:43.200 --> 00:08:48.920 that is actions that aren't really aiming at our opportunity 103 00:08:49.000 --> 00:08:53.560 but they can in any way affect it. 104 00:08:55.320 --> 00:09:00.840 They are unintended because, for example, I am a researcher, 105 00:09:00.920 --> 00:09:07.080 let's say I am an oil producer and there was this residue I was not using. 106 00:09:07.760 --> 00:09:12.440 Then there is this other guy who was working in the textile industry, 107 00:09:12.440 --> 00:09:19.320 and, well, he discovered that this residue could be used as micro, you know, 108 00:09:19.320 --> 00:09:25.440 and, well, you see, and he began to imagine, well, this could be another, a new opportunity. 109 00:09:25.440 --> 00:09:34.440 So this unintended consequence of the residual production of oil refination 110 00:09:34.440 --> 00:09:38.440 will impact the apparition of opportunities. 111 00:09:38.440 --> 00:09:45.080 Then you also have intended consequences of contiguous actions, government action, for example, 112 00:09:45.080 --> 00:09:51.840 or even grassroots actions, grassroots organisations then changing things, 113 00:09:51.840 --> 00:10:01.040 or opinion formators changing things, the way people think, and, of course, entrepreneurial action. 114 00:10:01.040 --> 00:10:09.040 So, the next problem then, okay, so opportunities, they are social events, in fact. 115 00:10:09.040 --> 00:10:17.040 And why will they be the social events? What's the relationship with the entrepreneur? 116 00:10:17.040 --> 00:10:25.040 The fact will be, first, why we don't discover them or create them, because that would imply certain profits. 117 00:10:25.040 --> 00:10:31.320 Well, the problem is uncertainty, of course, and what is this socially situated uncertainty 118 00:10:31.320 --> 00:10:33.960 that will eventually characterize the entrepreneur? 119 00:10:33.960 --> 00:10:37.240 First, this is a problem of imperfect rationality. 120 00:10:37.240 --> 00:10:43.240 That is, we don't just have limited access to information. 121 00:10:43.240 --> 00:10:46.100 We are prone to error interpreting it. 122 00:10:46.100 --> 00:10:52.820 So we have the social and natural conditions of action where we find the real profit opportunity 123 00:10:52.820 --> 00:10:58.860 which is forming, okay, it doesn't exist per se, and we have the mind, we have our 124 00:10:58.860 --> 00:11:05.580 legged perception, our subjective knowledge, so here we have the Bergsonian concept of 125 00:11:05.580 --> 00:11:13.580 time perception and imagination, so we perceive the information imperfectly and we estimate 126 00:11:13.580 --> 00:11:18.900 then the profit opportunity, which will be the basis of our decision making. 127 00:11:18.900 --> 00:11:24.900 Another problem here is reflexivity. Yes, the same concept used by sociologists. 128 00:11:24.900 --> 00:11:31.900 Well, we have time and entrepreneurial action is what? Imperfect mind plus dispersed knowledge. 129 00:11:31.900 --> 00:11:39.900 And the other human agency occurring in our social environment is also about imperfect mind and dispersed knowledge. 130 00:11:39.900 --> 00:11:47.900 And when we act, we are generating information which feedbacks in other people's actions and the same thing is happening with us. 131 00:11:47.900 --> 00:11:58.900 And this results in what? Creation and obsolescence of information, a continuous and eternal process of creation and obsolescence of information. 132 00:11:58.900 --> 00:12:01.900 And that is uncertainty. 133 00:12:01.900 --> 00:12:10.900 So, entrepreneurial success and failure will depend then on what? On a presence and sufficiency of convergence between what? 134 00:12:10.900 --> 00:12:18.180 But the four factors which will form the real opportunity, if it will exist or not, 135 00:12:18.180 --> 00:12:25.620 so this is why I'm talking about presence, and the estimation made by the entrepreneur. 136 00:12:25.620 --> 00:12:32.820 He will invest based on his estimations, and if the convergence is sufficient, 137 00:12:32.820 --> 00:12:38.980 I'm not saying great, big or small, sufficient only, maybe he will have success, 138 00:12:38.980 --> 00:12:45.540 This also implies that we have two kinds of uncertainty affecting action. 139 00:12:45.540 --> 00:12:49.060 This is how we were going to talk about the nexus. 140 00:12:49.060 --> 00:12:55.060 We have general uncertainty environment and we have this. 141 00:12:55.060 --> 00:13:01.540 I believe that every enterprise has a specific uncertainty of convergence. 142 00:13:01.540 --> 00:13:04.580 What does this mean? 143 00:13:04.580 --> 00:13:07.740 The general environmental uncertainty is caused by what? 144 00:13:07.740 --> 00:13:11.980 The intended consequences of all actions in the general social structure. 145 00:13:11.980 --> 00:13:17.740 When I say social structure, I'm not meaning a body, a shmoo, college society. 146 00:13:17.740 --> 00:13:22.620 I'm talking about a network of individual actions, just that. 147 00:13:22.620 --> 00:13:30.180 And also organized according to institutions, customs, conventions, organizations, and so on. 148 00:13:30.180 --> 00:13:33.020 But it is a structure that we see. 149 00:13:33.020 --> 00:13:38.260 We consider it as entities and we act in regard to them. 150 00:13:38.260 --> 00:13:42.740 Well, we also have an intended one and they affect all enterprises and opportunities. 151 00:13:42.740 --> 00:13:48.380 But moreover, we also have this specific uncertainty affecting convergence. 152 00:13:48.380 --> 00:13:51.860 Caused by what? Well, exactly the four factors I talked about, 153 00:13:51.860 --> 00:13:58.540 but they are all specific to the social segment on which we are creating 154 00:13:58.540 --> 00:14:03.740 or creating our enterprise or our entrepreneurial projects. 155 00:14:03.740 --> 00:14:06.780 And it affects only the specific enterprise 156 00:14:06.780 --> 00:14:09.620 and the associated opportunity to it. 157 00:14:09.620 --> 00:14:11.500 So what are the uncertainty charges? 158 00:14:11.500 --> 00:14:13.740 Well, the entrepreneurial ones are 159 00:14:13.740 --> 00:14:16.020 the charge of the enterprise's specific losses 160 00:14:16.020 --> 00:14:18.260 and the integration of other agents 161 00:14:18.260 --> 00:14:20.780 into the entrepreneurial structure. 162 00:14:20.780 --> 00:14:24.020 So what this means that, in fact, who is the entrepreneur? 163 00:14:24.020 --> 00:14:26.580 Who is the diachronic profit seeker 164 00:14:26.580 --> 00:14:29.940 in a given social context or enterprise. 165 00:14:30.020 --> 00:14:31.020 It is simple. 166 00:14:31.100 --> 00:14:35.620 It is the guy who is integrating other people's actions, 167 00:14:35.700 --> 00:14:38.140 how, contractual revenues, 168 00:14:38.220 --> 00:14:45.340 and facing the specific charge of uncertainty of that enterprise. 169 00:14:45.420 --> 00:14:50.420 The other guy, since they are just integrated by contracts, 170 00:14:50.500 --> 00:14:53.380 so they aren't really facing that uncertainty. 171 00:14:53.380 --> 00:14:57.100 This doesn't mean that they aren't entrepreneurs in general. 172 00:14:57.180 --> 00:15:03.340 Yes, they still are, but in regard of this specific enterprise, they aren't. 173 00:15:03.420 --> 00:15:07.500 So they are still affected by general uncertainty 174 00:15:07.580 --> 00:15:14.420 and they also face a specific uncertainty related to their own enterprises. 175 00:15:14.500 --> 00:15:22.620 For example, as a wage earner, I have to face the uncertainty as a consumer. 176 00:15:23.380 --> 00:15:29.620 So what is the entrepreneurial nexus? So we have this environmental uncertainty 177 00:15:29.620 --> 00:15:34.660 which is caused by society in general, by individuals in the social network, 178 00:15:34.660 --> 00:15:39.780 and we have for example this enterprise, which has its specific uncertainty. 179 00:15:39.780 --> 00:15:48.860 We have the capital which is invested and affected by uncertainty in order to capture the opportunity. 180 00:15:48.860 --> 00:15:52.900 We have these other entrepreneurs too, they are doing the same thing. 181 00:15:52.900 --> 00:16:02.900 And the thing is this, I integrate them in my capital, I pay them, and I integrate now their services in my capital structure. 182 00:16:02.900 --> 00:16:07.900 The same thing, and how, by contractual revenue, the same thing with this guy here, okay? 183 00:16:07.900 --> 00:16:13.900 And so now, they aren't really facing my uncertainty, they are facing theirs. 184 00:16:13.900 --> 00:16:17.900 But they are still affected by general uncertainty anyway. 185 00:16:17.900 --> 00:16:28.900 And here you have this other guy, and again I integrate my enterprise in his enterprise by selling a product perhaps, I don't know, or services. 186 00:16:28.900 --> 00:16:36.900 And he pays me my contract. This contract may mean that it isn't necessarily long term, it can be immediate term. 187 00:16:36.900 --> 00:16:40.900 For example, a provider giving me his services or goods. 188 00:16:40.900 --> 00:16:55.900 And, well, we can have opportunity dependence. This is just to show that, in fact, the other enterprises, being, let's say, a demander, will, in fact, mold the opportunity of an enterprise. 189 00:16:55.900 --> 00:17:09.900 And so we can see that entrepreneurship acts as a nexus of enterprises. Just to finish, oh, time's up. Just to finish, then, what for? Simple. 190 00:17:09.900 --> 00:17:12.340 If we can identify the entrepreneur, 191 00:17:12.420 --> 00:17:15.060 if we can know who is the diachronic profit-seeker, 192 00:17:15.140 --> 00:17:18.540 uncertainty bearer and ultimate decision-maker in an enterprise, 193 00:17:18.620 --> 00:17:22.660 we can then answer, well, will policy-making, 194 00:17:22.740 --> 00:17:24.820 will this policy affect it or not? 195 00:17:24.900 --> 00:17:27.740 And the fact is, if we use this praxeological theory, 196 00:17:27.820 --> 00:17:34.020 which is compatible, I believe, with Gideon's, Bourdieu, Coleman's theory, 197 00:17:34.100 --> 00:17:39.300 well, we can know that, in fact, maybe this policy-making, 198 00:17:39.300 --> 00:17:47.100 and active intervention policy making will affect it negatively. 199 00:17:47.100 --> 00:17:48.100 Thank you very much.