Hunter Hastings
hunterhastings.com mises.org
Some comparative considerations for entrepreneurial businesses.
AUSTRIAN SCHOOL VS.
BUSINESS SCHOOL
Business School Austrian School
Applicable Principles
of Austrian Economics
Business Purpose: Train
managers for large corporations.
Entrepreneurial Purpose:
Understand how markets really
work.
Markets as an
entrepreneuriallydriven
dynamic process.
Academic antecedents: Borrow
from university disciplines
including economics, sociology
and psychology.
Original analysis: Deductive
method, rigorous cause-andeffect
realism.
Praxeology.
Methodologies: Structural
models, strategic frameworks,
after-the-fact case studies.
Methodologies: Individualism,
action, results, emergent
outcomes.
Complex adaptive
systems (agents interact
with other agents,
artifacts and systems,
with dynamically
emergent results).
Value-in-use: Firms create value
by providing customers with
useful products and services.
Value-in-experience: Consumers
discover value within their own
unique context as they design
experiences facilitated by firms or
brands or entrepreneurs.
Subjective value; Value
Learning Processs.
Static models and theories of
industries, firms, positioning
within industries, and consumer
preference and behaviors,
derived from economic theories
of equilibrium.
Dynamic understanding of all
market processes. Consumers,
firms, competitors interact and
adapt in a process of continuous
change.
Economic knowledge
and the concept of
dynamics - continuous
creation and application
of new decentralized
tacit knowledge.
Positioning: Establishing a
position within industry relative
to the pre-existing positions of
other firms.
Contributing and facilitating:
Seeking to understand consumer
preferences and desired
experiences and contributing to
their ability to effectuate their
own experience, ignoring existing
industry boundaries.
Facilitation of value.
Strategy: Creation of new market
inefficiencies (differentiation
from competitors) that can be
exploited for profit.
Creativity and innovation:
Creation of new ways to serve
consumers and customers in the
best possible way.
Austrian Business Model
(value-centric business
model).
Competition: Beat the
competition by exploiting market
gaps based on given consumer
wants and needs.
Discovery: All entrepreneurial
firms are engaged in the discovery
of new ways for the consumer to
do things they want to do and
achieve a new experience.
Competition as a
discovery process.
Substitution within industries:
Goods and services as substitutes
for each other, winning via better
marketing and implementation.
Opportunity Cost: Compete for
consumers' every use of their
dollars with every possible
alternative, including no action.
Consumer sovereignty.
Disruption/Creative Destruction:
New products, services and
firms invade existing markets
and disruptively establish new
cost-benefit terms, displacing
incumbents.
Creative Advancement: Firms
exist to entrepreneurially create
new products, services, solutions
and facilitated experiences that
consumers prefer, making their
lives better.
Preferences revealed via
consumer choice and
behavior.
Management of markets and
businesses: Via the application of
strategies, techniques and rules.
Entrepreneurial Journey:
Entrepreneurs bring different
views and facilitate greater value,
enabling consumers to maximize
their use of cash.
Entrepreneurship as a
process.
Incubation: Defend and insulate
early-stage businesses from
the market until they become
resilient.
Market Interaction: Continuous
market exposure - only market
interactions can indicate whether
consumers perceive value in a
firm's offering.
Consumer as ultimate
decision maker.
Business plans: Formal
preparation of comprehensive
plans of action for resource
assembly and market
presentation.
Consumers create value:
Consumers care only about actual
entrepreneurial offerings and
their subjective perceptions of
value.
Entrepreneurial
judgment, trial-anderror,
act-and-learn.
The "Who" of entrepreneurship:
Heroic and charismatic
entrepreneurs and successful
firms as subjects of study.
The "What" of entrepreneurship:
what entrepreneurs do in the
marketplace.
Entrepreneurship as
action, e.g. BehaviorAction-Results
(BAR)
approach.
Consumer segmentation and
classification: Assemble groups
of like consumers for targeting,
assuming they will behave
consistently as a group and over
time.
Focus on individual consumers:
Establish one instance of mutual
voluntary exchange. Analyze,
understand and expand, while
monitoring continuous change
and individual differences.
Methodological
Individualism.