The Austrian School of Economics and the Theories of the Firm: The Inseparable Trio of the Entrepreneur, the Firm, and the Market Process

Abstract

Over the past 50 years, in the process frequently referred to as a “quiet revolution,” various theories of the firm have emerged. In this context, the present inquiry examines the contributions of the Austrian School of Economics to the understanding of the theory of the firm integrated with entrepreneurship and market processes. Until the 1990s, debates within the Austrian School questioned the existence of a distinct theory of the firm. However, since 2000, previous research has led to the development of a unique Austrian theory of the entrepreneurial firm that integrates market-process analysis. While transaction-cost, resource-based, evolutionary, or behavioral theories are widely recognized, the Austrian entrepreneurial theory of firms offers a new perspective connecting market dynamics, entrepreneurship, firms, and competition. Furthermore, this Austrian perspective creates promising opportunities for interdisciplinary collaboration across economics, organizational theory, and strategic management, thereby enhancing our understanding of these crucial areas. 

JEL: B53, D21, D23, L14, L22, L26