It is widely recognized that entrepreneurs make an important contribution to economic growth and overall well-being, but until recently entrepreneurship itself has not been a subject of serious economic study.

Until now, microeconomics and standard theoretical models of the firm have ignored entrepreneurship. This paper proposes an approach that incorporates entrepreneurship and the activities of entrepreneurs, inventors, and managers into standard models of the firm. The author distinguishes between the innovative entrepreneur, who comes up with new ideas and puts them into practice, and the replicative entrepreneur, who can create new ventures regardless of the existence of similar ventures. This book lays the foundations for a new micro theory that reflects the importance of the innovative entrepreneur for economic growth and prosperity.