Entrepreneurship and human development: A capability approach

We provide a formal model of entrepreneurship in human development. The framework is provided by the capabilities approach (CA). Hence we extend not only the conceptualisation of entrepreneurship in development, but the reach of the CA into entrepreneurship. From a CA view, entrepreneurship is not only a production factor, or a means to an end, as is often taken to be the case by economists, but also an end in itself. Entrepreneurship can be a human functioning and can contribute towards expanding the set of human capabilities through being both a resource and a process. Our model shows, however, that entrepreneurship is not automatically a functioning. Where it is a necessity it stops being a valued functioning. The model also shows that even when entrepreneurship is valued, entrepreneurs may often not match their ideas with suitable opportunities. Policy implications are discussed.

Research Highlights
► A formal model of entrepreneurship and human development is provided.
► The Capabilities Approach is used to explain entrepreneurship as a human functioning.
► Entrepreneurship is not however, always valued, and it can cease to be a functioning under certain conditions.
► A start-up Beveridge curve is derived to analyze the policy implications.