Radical Subjectivism as the Epistemological Foundation of Novel Entrepreneurial Action

Explaining change has always been one of the greatest challenges in social sciences. With a particular focus on economic change, Schumpeter introduced novelty as the key to fundamental changes and subsequent economic development. Recognizing the corresponding epistemological foundations of a novel phenomenon is the starting point for understanding itself, its process, conditions, and prerequisites. Hence, in this paper, first we discuss the assumptions governing novelty and novel phenomena. Then, we compare the three major approaches used to explain entrepreneurial phenomena in the literature, namely neoclassic, neo-Austrian, and radical subjectivism, and we explain the appropriate novelty-based epistemological foundation of entrepreneurship. To better understand radical subjectivism, we discuss its five fundamental assumptions, namely “imaginative choice,” “plans based on past experiences and future expectations”, “heterogeneity and in equilibrium”, “the metaphor of the world as a kaleidoscope” and “the creation of order”. finally, the implications of these assumptions are set forth for future research on economics and entrepreneurship.