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Let me start by thanking Markus Becker and Thorbjørn Knudsen for making this important article available to us all and for providing such a careful translation. “Entrepreneur” is a central piece in Schumpeter’s production, and it is a sad fact that it has not been available in English till now. This article, to be more precise, is one of Schumpeter’s key writings on entrepreneurship. It is only rivaled, in this respect, by Chapter 2 in Theory of Economic Development (1911, 1926, 1934), some passages in Capitalism, Socialism and Democracy (1942), and a few articles from the late 1940s. The sections on entrepreneurship in the two books I just mentioned are subordinate to the wider themes of these books and integrated into these; and the articles from the late 1940s represent primarily an attempt from Schumpeter’s side to forge a union between the economic theory of entrepreneurship and the economic history of entrepreneurship. When it comes to a single, comprehensive work that is exclusively devoted to entrepreneurship, “Entrepreneur” is unique and alone.

Markus Becker and Thorbjørn Knudsen have rendered a valuable service by bringing the attention of the English-speaking academic world to Joseph Schumpeter’s important 1928 article on the entrepreneur.

In this study, the authors unpack the micro-level processes of knowledge accumulation (experiential learning) and knowledge application (problem solving) to examine how task allocation structures influence organizational learning. The authors draw on untapped potential of the classical garbage can model (GCM), and extend it to analyze how restrictions on project participation influence differentiation and integration of organizational members’ knowledge and consequently organizational efficiency in solving the diverse, changing problems from an uncertain task environment. To isolate the effects of problem or knowledge diversity and experiential learning, the authors designed three simulation experiments to identify the most efficient task allocation structure in conditions of (1) knowledge homogeneity, (2) knowledge heterogeneity, and (3) experiential learning. The authors find that free project participation is superior when the members’ knowledge and the problems they solve are homogenous. When problems and knowledge are heterogeneous, the design requirement is on matching specialists to problem types. Finally, the authors found that experiential learning creates a dynamic problem where the double duty of adapting the members’ specialization and matching the specialists to problem types is best solved by a hierarchic structure (if problems are challenging). Underlying the efficiency of the hierarchical structure is an adaptive role of specialized members in organizational learning and problem solving: their narrow but deep knowledge helps the organization to adapt the knowledge of its members while efficiently dealing with the problems at hand. This happens because highly specialized members reduce the necessary scope of knowledge and learning for other members during a certain period of time. And this makes it easier for the generalists and for the organization as a whole, to adapt to unforeseen shifts in knowledge demand because they need to learn less. From this nuanced perspective, differentiation and integration may have a complementary, rather than contradictory, relation under environmental uncertainty and problem diversity.

The purpose of this paper is to meet the challenge of modeling knowledge organization by introducing a new, unifying, way of thinking about the organization of knowledge. Building on ideas set forth in the behavioral theory of the firm we present a modeling framework in which the central idea is to represent the organization of knowledge as a structure that defines the flow of information among members with limited levels of cognitive skill. Such a structure is referred to as an architecture. The need to design architectures that help their members make less errors by rejecting bad alternatives and accepting good ones is an important but largely overlooked issue in knowledge management. The present article offers an approach to think about this issue in a systematic way. The use of the proposed modeling framework is illustrated through examples. The article omits a treatment of the technical details of the proposed modeling framework. A useful way of designing organizations that make less error is outlined. This paper advances a new way of thinking about knowledge organizations that may be relevant for both researchers and practitioners.

This essay introduces the first translation of Schumpeter’s article Entrepreneur, originally published in 1928. We describe the background of Entrepreneur and use new archival sources to situate the article in time. Entrepreneur marks a transition of Schumpeter’s conception of entrepreneurship that took place between 1911 and 1926. Entrepreneur also contains Schumpeter’s most profound vision on economic selection, a vision that Schumpeter never elaborated further. We consider the most important implications of the new material in Entrepreneur and the reasons for the apparent shift in Schumpeter’s thought.

The authors argue that organization design needs to play a more active role in the explanation of differential performance and outline a set of ideas for achieving this both in theoretical and empirical research. Firms are heterogeneous in terms of (1) how well they do things, capturing persistent productivity differences, and (2) how they do things – and both reflect firms’ organization design choices. Both types of heterogeneity can be persistent, and are interdependent, although they have typically been studied separately. The authors propose a simple formal framework – the “aggregation function framework” – that aligns organization design thinking with the emphasis on performance heterogeneity among firms that is characteristic of the strategy field. This framework allows for a more precise identification of how exactly organization design may contribute to persistent performance differences, and therefore what exactly are the assumptions that strategy and organization design scholars need to be attentive to.

We extend the classical garbage can model to examine how individual differences in ability and motivation will influence organizational performance. We find that spontaneous coordination provided by an organized anarchy is superior when agents are equally competent. The Weberian bureaucracy of planned coordination is effective when problems require specialist knowledge. However, errors in matching problems to specialized agents are a central challenge for bureaucracies. Actual organizations, therefore, combine elements of organized anarchies and bureaucracies. Heterogeneous motivation compounds coordination problems, but is usually less important than competence. Our findings point to matching and interactive learning as fruitful areas for further study.

This essay charts an intellectual journey. Geoffrey M. Hodgson became an institutional economist in the 1980s. He explains how he discovered institutional economics and what strains of institutional thought were attractive for him. Another issue raised in this essay is how institutional researchers organize and move forward. Hodgson argues for an interdisciplinary approach, but this is not without its problems.

We develop an experimental setting where the assumptions and predictions of the garbage can model can be tested. A careful reconstruction of the original simulation model let us select parameters that leave room for potential variations in individual behavior. Our experimental design replicates these parameters and thereby facilitates comparison of human behavior with the original model. We find that the majority strategy of human subjects is consistent with the original model, but exhibits some behavioral diversity. Human subjects exhibit fluid diverse behaviors that improve coordination in the face of uncertainty, but hinder collective learning that can improve group performance.