Towards a theory of the entrepreneurial state

This paper attempts to develop a model of the “entrepreneurial state” based on Schutz’s theory of human action. It aims to improve the understanding of the nature of state action and of entrepreneurial processes in the public sector. From the subjectivist paradigm, this paper argues that the state, like private enterprises, has purposes and public sector agents engage in conscious actions toward chosen goals which can be attended only in the future. In terms of mental constructs, the public entrepreneur’s opportunity identification activities involve four major stages. Using their imagination, they project, select, elaborate on and eventually implement the opportunity ideas. Given structural uncertainty, public sector agents will unavoidably make errors in trying to plan and implement a new project. Over time, with learning and the growth of knowledge, errors are then eliminated. The revision of plans by state agents – the source of policy change – is thus portrayed as a continuous process of learning and experimentation oriented towards the future. Since entrepreneurship implies strategic planning, and the nation needs to formulate development strategies with the aim of building competitive advantage, the last part of the paper discusses entrepreneurial intervention in association with the state’s resource base and capabilities. By referring to the Asian newly industrialised economies, this paper suggests a new approach to understanding state action and government intervention.