Austrian theories of entrepreneurship: Insights from complexity theory

This paper examines various Austrian theories of entrepreneurship through the lens of complexity theory, more specifically via the concept of a dancing fitness landscape. Problems in many fields (including economics) can be characterized as attempting to find the highest peak on a fitness landscape (which corresponds to an efficient or optimal resource allocation). A rugged fitness landscape is one characterized by many peaks and troughs, while a dancing fitness landscape is one where the peaks and troughs change over time due either to exogenous or endogenous activity. I argue that several key disagreements among Austrian economists can be better understood through the metaphor of a fitness landscape. The implications of this insight for various branches of Austrian economics are also considered. This study is timely as radical Austrian views are starting to percolate into business schools leading to increased debate among management scholars about the precise nature of the entrepreneurial process (Chiles et al. 2007; Sarasvathy and Dew 2008; Alvarez et al. 2010).