Hostname: page-component-848d4c4894-nmvwc Total loading time: 0 Render date: 2024-06-25T05:48:18.420Z Has data issue: false hasContentIssue false

Prudent Entrepreneurship in Theory of Moral Sentiments

Published online by Cambridge University Press:  06 September 2022

Kacey Reeves West*
Affiliation:
George Mason University, USA

Abstract

Adam Smith writes favorably about innovation in Wealth of Nations while writing unfavorably about a figure associated with innovation: the projector. His criticism of projectors prompts many scholars to claim that Smith disapproves of entrepreneurship. But Smith criticizes the projector not because he acts as an entrepreneur but because he fails to meet Smith’s moral standards for entrepreneurship. In Theory of Moral Sentiments, Smith conceives of a framework for moral entrepreneurship based on prudence. The framework consists of two principles: first, approach everyday matters with the general “tenor of conduct” that governs your life and trade, and second, approach life-changing matters with prudence and justice. Recognizing that Smith is concerned with the total effect that an entrepreneurial venture has on society beyond its immediate profits opens the door to engage with contemporary research that studies the ethical and moral externalities of entrepreneurship.

Type
Article
Copyright
© The Author(s), 2022. Published by Cambridge University Press on behalf of the Society for Business Ethics

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Acs, Zoltan. 2006. “How Is Entrepreneurship Good for Economic Growth?” Innovations: Technology, Governance, Globalization 1 (1): 97107.Google Scholar
Barrier, Michael. 1994. “Innovation as a Way of Life.” Nation’s Business 82 (7): 1825.Google Scholar
Baumol, William J. 1968. “Entrepreneurship in Economic Theory.” American Economic Review 58 (2): 6471.Google Scholar
Baumol, William J. 1990. “Entrepreneurship: Productive, Unproductive, and Destructive.” Journal of Political Economy 98 (5): 893921.10.1086/261712CrossRefGoogle Scholar
Baumol, William J. 2010. The Microtheory of Innovative Entrepreneurship. Princeton, NJ: Princeton University Press.Google Scholar
Begley, Thomas M., and Boyd, David P.. 1987. “Psychological Characteristics Associated with Performance in Entrepreneurial Firms and Small Businesses.” Journal of Business Venturing 1 (2): 7993.10.1016/0883-9026(87)90020-6CrossRefGoogle Scholar
Bentham, Jeremy. (1787) 2008. “Gulphs in Mankind’s Career of Prosperity: A Critique of Adam Smith on Interest Rate Restrictions.” Econ Journal Watch 5 (1): 6677.Google Scholar
Boettke, Peter, and Piano, Ennio. 2016. “Baumol’s Productive and Unproductive Entrepreneurship after 25 Years.” Journal of Entrepreneurship and Public Policy 5 (2): 130–44.10.1108/JEPP-12-2015-0041CrossRefGoogle Scholar
Boyer, George. 1985. “An Economic Model of the English Poor Law circa 1780–1834.” Explorations in Economic History 22 (2): 129–67.10.1016/0014-4983(85)90007-5CrossRefGoogle Scholar
Braunerjhelm, Pontus, Acs, Zoltan J., Audretsch, David B., and Carlsson, Bo. 2010. “The Missing Link: Knowledge Diffusion and Entrepreneurship in Endogenous Growth.” Small Business Economics 34 (2): 105205.10.1007/s11187-009-9235-1CrossRefGoogle Scholar
Brenkert, George G. 2002. “Entrepreneurship, Ethics, and the Good Society.” Ruffin Series 3 (5): 543.10.5840/ruffinx200239CrossRefGoogle Scholar
Brockhaus, Robert H. 1980. “Risk Taking Propensity of Entrepreneurs.” Academy of Management Journal 23 (3): 509–20.10.2307/255515CrossRefGoogle Scholar
Brockhaus, Robert H., and Horwitz, Pamela S.. 1986. “The Psychology of the Entrepreneur.” In The Art and Science of Entrepreneurship, edited by Smilor, R. W., 2548. Cambridge: Ballinger.Google Scholar
Brockhaus, Robert H., and Nord, Walter R.. 1979. “An Exploration of Factors Affecting the Entrepreneurial Decision: Personal Characteristics vs. Environmental Conditions.” Proceedings of the Annual Meeting of the Academy of Management 8 (1): 364–68.Google Scholar
Buchanan, James M. 2005. “Natural Equality, Increasing Returns, and Economic Progress: A Reinterpretation of Adam Smith’s System.” Division of Labor and Transaction Costs 1 (1): 5766.10.1142/S0219871105000062CrossRefGoogle Scholar
Buchanan, James M., and Yoon, Yong J.. 2000. “A Smithean Perspective on Increasing Returns.” Journal of the History of Economic Thought 22 (1): 4348.10.1080/104277100112545CrossRefGoogle Scholar
Campbell, Roy H., and Skinner, Andrew S.. 1981. “General Introduction.” In An Inquiry into the Nature and Causes of the Wealth of Nations by Smith, Adam, 160. Indianapolis, IN: Liberty Fund.Google Scholar
Candela, Rosolino, Jacobsen, Peter, and Reeves, Kacey. 2020. “Malcom McLean, Containerization, and Entrepreneurship.Review of Austrian Economics. DOI: 10.1007/s11138-020-00529-2Google Scholar
Cantillon, Richard. 1755. Essai sur la nature du commerce en général. Paris: Chez Fletcher Gyles.Google Scholar
Cardon, Melissa S., Wincent, Joakim, Singh, Jagdip, and Drnovsek, Mateja. 2009. “The Nature and Experience of Entrepreneurial Passion.” Academy of Management Review 34 (3): 511–32.10.5465/amr.2009.40633190CrossRefGoogle Scholar
Catherine, Sylvain. 2022. “Keeping Options Open: What Motivates Entrepreneurs?Journal of Financial Economics 144 (1): 121.10.1016/j.jfineco.2022.01.001CrossRefGoogle Scholar
Clark, J. R., and Lee, Dwight R.. 2006. “Freedom, Entrepreneurship and Economic Progress.” Journal of Entrepreneurship 15 (1): 117.10.1177/097135570501500101CrossRefGoogle Scholar
Coase, Ronald H. 1976. “Adam Smith’s View of Man.” Journal of Law and Economics 19 (3): 529–46.10.1086/466886CrossRefGoogle Scholar
Cornwall, Jeffrey R., and Naughton, Michael J.. 2003. “Who Is the Good Entrepreneur? An Exploration within the Catholic Social Tradition.” Journal of Business Ethics 44 (1): 6175.10.1023/A:1023294626341CrossRefGoogle Scholar
Decarlo, James F., and Lyons, Paul R.. 1979. “A Comparison of Selected Personal Characteristics of Minority and Non-minority Female Entrepreneurs.” Journal of Small Business Management 17 (1): 2229.Google Scholar
Dees, J. Gregory, and Starr, Jennifer A.. 1992. “Entrepreneurship through an Ethical Lens: Dilemmas and Issues for Research and Practice.” In The State of the Art of Entrepreneurship, edited by Sexton, Donald L. and Kasarda, John D., 89116. Boston: PWS-Kent.Google Scholar
DelliSanti, Dylan. 2021. “The Dynamism of Liberalism: An Esoteric Interpretation of Adam Smith.” Journal of Economic Behavior and Organization 184 (1): 717–26.10.1016/j.jebo.2020.08.030CrossRefGoogle Scholar
Den Uyl, Douglas J. 1991. The Virtue of Prudence. New York: Peter Lang.Google Scholar
Evensky, Jerry. 2005. “Adam Smith’s Theory of Moral Sentiments: On Morals and Why They Matter to a Liberal Society of Free People and Free Markets.” Journal of Economic Perspectives 19 (3): 109–30.10.1257/089533005774357806CrossRefGoogle Scholar
Filion, Louis Jacques. 2021. “Defining the Entrepreneur.” In World Encyclopedia of Entrepreneurship, edited by Dana, Léo-Paul, 7283. Cheltenham, UK: Edward Elgar.Google Scholar
Forman-Barzilai, Fonna. 2010. Adam Smith and the Circles of Sympathy: Cosmopolitanism and Moral Theory. Cambridge: Cambridge University Press.10.1017/CBO9780511676352CrossRefGoogle Scholar
Gartner, William B. 1988. “‘Who Is an Entrepreneur?’ Is the Wrong Question.” American Journal of Small Business 13 (2): 1132.10.1177/104225878801200401CrossRefGoogle Scholar
Griswold, Charles L. 1999. Adam Smith and the Virtues of Enlightenment. New York: Cambridge University Press.Google Scholar
Hanley, Ryan. 2009. Adam Smith and the Character of Virtue. New York: Cambridge University Press.10.1017/CBO9780511581212CrossRefGoogle Scholar
Hannafey, Francis T. 2003. “Entrepreneurship and Ethics: A Literature Review.” Journal of Business Ethics 46 (2): 99110.10.1023/A:1025054220365CrossRefGoogle Scholar
Hayek, Friedrich August. 1979. “The Atavism of Social Justice.” In Social Justice, Socialism, and Democracy: Three Australian Lectures by F. A. Hayek, 316. Sydney, Australia: Centre for Independent Studies.Google Scholar
Henrekson, Magnus, and Sanandaji, Tino. 2014. “Small Business Activity Does Not Measure Entrepreneurship.” Proceedings of the National Academy of Sciences of the United States of America 111 (5): 1760–65.10.1073/pnas.1307204111CrossRefGoogle ScholarPubMed
Howell, Richard P. 1972. “Comparative Profiles: Entrepreneurs versus the Hired Executive: San Francisco Peninsula Semiconductor Industry.” In Technical Entrepreneurship: A Symposium, edited by Cooper, Arnold C. and Komives, John L., 4762. Milwaukee, WI: Center for Venture Management.Google Scholar
Hühn, Matthias P. 2018. “Responsible Innovation: A Smithian Perspective.” Philosophy of Management 17 (1): 4157.10.1007/s40926-017-0057-yCrossRefGoogle Scholar
Hühn, Matthias P., and Dierksmeier, Claus. 2016. “Will the Real A. Smith Please Stand Up!Journal of Business Ethics 136 (1): 119–32.10.1007/s10551-014-2506-zCrossRefGoogle Scholar
Hurst, Erik, and Pugsley, Benjamin Wild. 2011. “What Do Small Businesses Do?Brookings Papers on Economic Activity 43 (2): 73142.10.1353/eca.2011.0017CrossRefGoogle Scholar
Jovanovic, Boyan. 1982. “Selection and the Evolution of Industry.” Econometrica 50 (3): 649–70.10.2307/1912606CrossRefGoogle Scholar
Kamineni, Rajeev. 2002. “Who Is an Entrepreneur? A Review.” Small Enterprise Research 10 (1): 8899.10.5172/ser.10.1.88CrossRefGoogle Scholar
Kirzner, Israel. (1973) 2013. Competition and Entrepreneurship. Indianapolis, IN: Liberty Fund.Google Scholar
Klein, Daniel B. 2012. Knowledge and Coordination: A Liberal Interpretation. Oxford: Oxford University Press.Google Scholar
Klein, Daniel B., Matson, Erik W., and Doran, Colin. 2018. “The Man within the Breast, the Supreme Impartial Spectator, and Other Impartial Spectators in Adam Smith’s The Theory of Moral Sentiments.” History of Ideas 44 (8): 1153–68.10.1080/01916599.2018.1485001CrossRefGoogle Scholar
Knight, Frank H. 1921. Risk, Uncertainty, and Profit. Boston: Houghton Mifflin.Google Scholar
Kobia, Margaret, and Sikalieh, Damary. 2010. “Towards a Search for the Meaning of Entrepreneurship.” Journal of European Industrial Training 34 (2): 110–27.10.1108/03090591011023970CrossRefGoogle Scholar
Komives, John L. 1972. “A Preliminary Study of the Personal Values of High Technology Entrepreneurs.” In Technical Entrepreneurship: A Symposium, edited by Cooper, Arnold C. and Komives, John L., 231–42. Milwaukee, WI: Center for Venture Management.Google Scholar
Levinson, Marc. 2006. The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger. Princeton, NJ: Princeton University Press.Google Scholar
Lewin, Peter. 2005. “The Firm in Disequilibrium: A Market Process View of Firm Organization and Strategy.” In Explorations in Austrian Economics, edited by Koppl, Roger, 167–92. Bingley, UK: Emerald Group.Google Scholar
Lipka, David. 2013. “The Max U Approach: Prudence Only, or Not Even Prudence? A Smithian Perspective.” Econ Journal Watch 10 (1): 214.Google Scholar
Matson, Erik W. 2021. “A Dialectical Reading of Adam Smith on Wealth and Happiness.” Journal of Economic Behavior and Organization 184 (1): 826–36.10.1016/j.jebo.2020.08.037CrossRefGoogle Scholar
McCloskey, Deirdre. 2006. The Bourgeois Virtues: Ethics for an Age of Commerce. Chicago: University of Chicago Press.10.7208/chicago/9780226556673.001.0001CrossRefGoogle Scholar
McCloskey, Deirdre. 2008. “Adam Smith, the Last of the Former Virtue Ethicists.” History of Political Economy 40 (1): 4371.10.1215/00182702-2007-046CrossRefGoogle Scholar
McCloskey, Deirdre. 2016. Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World. Chicago: University of Chicago Press.Google Scholar
Melzer, Arthur M. 2014. Philosophy between the Lines. Chicago: University of Chicago Press.10.7208/chicago/9780226175126.001.0001CrossRefGoogle Scholar
Moore, Geoff. 2005. “Humanizing Business: A Modern Virtue Ethics Approach.” Business Ethics Quarterly 15 (2): 237–55.10.5840/beq200515212CrossRefGoogle Scholar
Murphy, Ryan H., and Weber, Rick. 2016. “Immigration Causes American Businesses to Fail and That Is a Good Thing.” Journal of Entrepreneurship and Public Policy 5 (1): 6372.10.1108/JEPP-01-2015-0002CrossRefGoogle Scholar
Naughton, Michael, and Cornwall, Jeffrey R.. 2010. “Culture as the Basis of the Good Entrepreneur.” Journal of Religion and Business Ethics 1 (1): 113.Google Scholar
Paganelli, Maria Pia. 2008. “The Adam Smith Problem in Reverse: Self-Interest in The Wealth of Nations and The Theory of Moral Sentiments.” History of Political Economy 40 (2): 365–82.10.1215/00182702-2008-006CrossRefGoogle Scholar
Palich, Leslie E., and Bagby, D. Ray. 1995. “Using Cognitive Theory to Explain Entrepreneurial Risk-Taking: Challenging Conventional Wisdom.” Journal of Business Venturing 10 (6): 425–38.10.1016/0883-9026(95)00082-JCrossRefGoogle Scholar
Peroni, Chiara, Riillo, Cesare A. F., and Sarracino, Francesco. 2016. “Entrepreneurship and Immigration: Evidence from GEM Luxembourg.” Small Business Economics 46 (4): 639–56.10.1007/s11187-016-9708-yCrossRefGoogle Scholar
Rashid, Salim. 1998. The Myth of Adam Smith. Cheltenham, UK: Edward Elgar.Google Scholar
Reynolds, Paul D., Hay, Michael, Bygrave, Willian D., and Camp, Michael. 2000. Global Entrepreneurship Monitor: 2000 Executive Report. Kansas City, MO: Kauffman Center for Entrepreneurial Leadership.Google Scholar
Richardson, G. B. 1975. “Adam Smith on Competition and Increasing Returns.” In Essays on Adam Smith, edited by Skinner, Andrew S. and Wilson, Thomas, 350–60. Oxford: Clarendon Press.Google Scholar
Rothbard, Murray. 1995. Economic Thought before Adam Smith: An Austrian Perspective on the History of Economic Thought. Vol. 1. Auburn, AL: Ludwig von Mises Institute.Google Scholar
Sanandaji, Tino. 2011. “Essays in Entrepreneurship Policy.” PhD diss., University of Chicago.Google Scholar
Sarasvathy, Saras D. 2001. “Causation and Effectuation: Toward a Theoretical Shift from Economic Inevitability to Entrepreneurial Contingency.” Academy of Management Review 26 (2): 243–63.10.2307/259121CrossRefGoogle Scholar
Sarasvathy, Saras D. 2008. Effectuation: Elements of Entrepreneurial Expertise. Cheltenham, UK: Edward Elgar.10.4337/9781848440197CrossRefGoogle Scholar
Schere, Jean L. 1982. “Tolerance of Ambiguity as a Discriminating Variable between Entrepreneurs and Managers.” Academy of Management Proceedings 8 (1): 4048.10.5465/ambpp.1982.4976860CrossRefGoogle Scholar
Schumpeter, Joseph A. 1934. The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle. Translated by Opie, Redvers. Cambridge, MA: Harvard University Press.Google Scholar
Schumpeter, Joseph. 1962. Capitalism, Socialism and Democracy. New York: Harper and Row.Google Scholar
Sen, Amartya. 1986. “Adam Smith’s Prudence.” In Theory and Reality in Development: Essays in Honour of Paul Streeten, edited by Lall, Sanjaya and Steward, Frances, 2837. London: Macmillan.10.1007/978-1-349-18128-5_2CrossRefGoogle Scholar
Sexton, Donald L., and Kent, Calvin A.. 1981. “Female Executives versus Female Entrepreneurs.” In Frontiers of Entrepreneurship Research: The Proceedings of the 1981 Babson Conference on Entrepreneurship Research, edited by Vesper, Karl H., 4045. Wellesley, MA: Babson College.Google Scholar
Simon, Herbert. 1957. Models of Man. New York: John Wiley.Google Scholar
Smith, Adam. (1759) 1982. The Theory of Moral Sentiments. Edited by Raphael, D. D. and Macfie, A. L.. Indianapolis, IN: Liberty Fund.Google Scholar
Smith, Adam. (1776) 1982. An Inquiry into the Nature and Causes of the Wealth of Nations. Edited by Campbell, Roy H. and Skinner, Andrew S.. 2 vols. Indianapolis, IN: Liberty Fund.Google Scholar
Smith, Adam. 1982. Lectures on Jurisprudence. Edited by Meek, R. L., Raphael, D. D., and Stein, P. G.. Indianapolis, IN: Liberty Fund.Google Scholar
Sobel, Russell. 2008. “Testing Baumol: Institutional Quality and the Productivity of Entrepreneurship.” Journal of Business Venturing 23 (6): 641–55.10.1016/j.jbusvent.2008.01.004CrossRefGoogle Scholar
Stigler, George. 1971. “Smith’s Travels on the Ship of the State.” History of Political Economy 3 (2): 265–77.10.1215/00182702-3-2-265CrossRefGoogle Scholar
Sullivan, Sherry E., Forret, Monica L., Mainiero, Lisa A., and Terjesen, Siri. 2007. “What Motivates Entrepreneurs? An Exploratory Study of the Kaleidoscope Career Model and Entrepreneurship.” Journal of Applied Management and Entrepreneurship 12 (4): 419.Google Scholar
Webb, Sidney, and Webb, Beatrice. 1927. English Poor Law History. Part 1, The Old Poor Law. London: Frank Cass.Google Scholar
Wennekers, Sander, and Thurik, Roy. 1999. “Linking Entrepreneurship and Economic Growth.” Small Business Economics 13 (1): 2756.10.1023/A:1008063200484CrossRefGoogle Scholar
Xie, Chuanyin. 2014. “Why Do Some People Choose to Become Entrepreneurs? An Integrative Approach.” Journal of Management Policy and Practice 15 (1): 2538.Google Scholar
Yamakawa, Yasushiro, Peng, Mike W., and Deeds, David L.. 2010. “Revitalizing and Learning from Failure for Future Entrepreneurial Growth.” Frontiers of Entrepreneurship Research 30 (6): 111.Google Scholar