Business Commons^™

How Do Principles Textbooks Treat The Return To Entrepreneurship? The Missing Factor, John Estill, Tom Means

Faculty Publications

Principles textbooks have improved in incorporating entrepreneurship intheory. However, they still generally lack simple demonstrations of theentrepreneurial input, particularly when teaching the theory of a normal rateof return. Many texts are unclear over the definition of a normal return andits constituent parts. Our paper (1) reviews the theory of the entrepreneurialinput; (2) sorts how popular textbooks calculate a normal rate of returnconsistent with their definition of the entrepreneurial input; and (3)provides a simple numerical example that incorporates the entrepreneurialinput, which can be more fully developed in intermediate texts.