Entrepreneurship Entrepreneurship has no
universal definition like other disciplines as many scholars have defined it
differently according to their own perspective. But the word entrepreneurship
stems from the French word ‘entreprendre‘, which indicates an act in which the
individual attempt, or undertake an act of some sort. In fact there are many
definitions of the concept ‘entrepreneurship’. Entrepreneurship is as
“selfemployment of any sort”.
In 1934, Joseph Schumpeter equated
entrepreneurship with the concept of innovation and applied it to a business
context, while emphasizing the combination of resources. Entrepreneurship is like
the activity that involves identifying opportunities within the economic
system. Entrepreneurship as involving "activities necessary to create or
carry on an enterprise where not all markets are well established or clearly
defined and/or in which relevant parts of the production function are not
completely known”. Entrepreneurship as the creation of new organizations.
It also defines entrepreneurship as the
willingness and ability of an individual to seek out investment opportunities
in an environment and be able to establish and run an enterprise successfully
based on the identifiable opportunities.
In addition, entrepreneurship is a process
of seeing and evaluating business opportunities, gathering the necessary
resources to take advantage of them and initiate appropriate action to ensure
success. After critically studying the above definitions, it can be summarized
by concluding that entrepreneurship is a function which involves the
exploitation of opportunities which exist within a market. Thus, from the
definitions above it could be said that while defining the concept
‘entrepreneurship’, emphasis was laid on a wide spectrum of activities such as:
• Self-employment of any sort.
• Creation of organizations.
• Innovation applied to a business context.
• The combination of resources.
• Identification and exploitation of
opportunities within the economic system or market.
• The bringing together of factors of
production under uncertainty.
It can be concluded that whatever activity that
involves any or all of the above activities can be regarded as
Entrepreneurship. Entrepreneurship refers to all the processes and activities
involved in establishing, nurturing, and sustaining a business enterprise.
Entrepreneur Scholars have also given several definitions of the concept
‘entrepreneur’. For instance in 1816, Putari (2006) quoted Say, who asserts
that the entrepreneur is the agent "who unites all means of production and
who finds in the value of the products ... the reestablishment of the entire
capital he employs, and the value of the wages, the interest, and rent which he
pays, as well as profits belonging to himself." He views entrepreneurs as
change agents (Say, 1816). Knight (1921) views entrepreneurs as individuals who
attempt to predict and act upon change within markets. Schumpeter (1934)
conceives the entrepreneur as the innovator who implements change within
markets through the carrying out of new combinations such as introduction of
new techniques of production, reorganization of an industry and innovation. He
further argues that the entrepreneur is an innovator, one that introduces new
technologies into the workplace or market, increasing efficiency, productivity
or generating new products or services (Deakins and Freel, 2009). Cantillon
(circa 1730) conceptualized the entrepreneur as: the "agent who buys means
of production at certain prices in order to combine them" into a new
product (Schumpeter, 1951).
In Quick MBA (2010), the entrepreneur is
defined as one who combines various input factors in an innovative manner to
generate value to the customer with the hope that this value will exceed the
cost of the input factors, thus generating superior returns that result in the
creation of wealth.
Views
of Entrepreneurship
Economist’s View
Entrepreneur and Entrepreneurship have been
a point of interest to economics as early as 1755. The term Entrepreneur seems
to have been introduced into Economics by Cantillon, but the Entrepreneur was
first accorded prominence by Say. It was variously translated into English as:
• Merchant,
• Adventurer and
• Employer
Though the precise meaning is the
‘undertaker of a project,’ James Stuart Mill popularized the term in England.
The concept was vague, and not clear. Entrepreneurs were looked as adventurer.
Entrepreneurship was looked as speculative activity. The economist sees an
entrepreneur as someone who combines resources such as labour, materials and
other assets, introduces changes, innovations and new orders for profitable and
rewarding ends.
According to economists, entrepreneurship
and economic growth will take place in those situations where particular
economic conditions are most favourable. Economic incentives are the major
drive for the entrepreneurial activities. They firmly believe that a
well-developed market and efficient economic policies foster entrepreneurship.
G.F. Papanek and J.R. Harris are the main advocates of this theory. According
to them, economic incentives are the main drive for the entrepreneurial
activities. In some cases, it is not so evident, but the persons inner drives
have always been associated with economic gains. Therefore, these incentives
and gains are regards as the sufficient conditions for the emergence of
industrial entrepreneurship. When an individual recognizes that the market for
a product or service is out of equilibrium, he may purchase or produce at the
prevailing price and sell to those who are prepared to but at the highest
price. Lack of entrepreneurship is due to various kinds of market imperfections
and inefficient economic policies.
B.
Sociologist’s View
Entrepreneurship is inhibited by the social
system, which denies opportunities for creative facilities: The forces of
custom, value system, the rigidity of status, district of new ideas and the exercise
of intellectual curiosity, combined together creates an atmosphere inimical to
experiment and innovation. Sociologists argue that Entrepreneurship is most
likely to emerge under a specific social culture. The sociologist sees the
Entrepreneur as goal-oriented and has the capacity to adapt to changing
environment. According to the sociologist, social sanctions, cultural values
and role expectations are responsible for the emergence of entrepreneurship.
Social-cultural values channel economic action that gives birth to
entrepreneurship.
C.
Psychologist’s View
The psychologist sees an entrepreneur as
someone who is being driven by certain forces that are mainly internal,
personal attributes and traits. The phenomenon of entrepreneurship development
has been viewed, explained and interpreted differently. Among those who
stressed the psychological aspects as contributing to entrepreneurial success
are Joseph Schumpeter, McClelland, Hagen and Kunkal. The main centre of
attention of these theories includes: Schumpeter believes that entrepreneurs
are primarily motivated by an atavistic will to power, will to find a private
kingdom or will to conquer. According to McClelland, it is the high need for
achievement which drives people towards entrepreneurial activities. This
achievement motive is inculcated through child rearing practices, which stress
standards of excellence, material warmth, self-reliance training and low father
dominance. Individuals with high achievement motive tend to take keen interest
in situations of high rest, desire for responsibility and a desire for a
concrete measure of task performance. Hagen considers withdrawal of status respect
as the trigger mechanism for changes in personality formation. Status
withdrawal is the perception on the part of the members of some social group
that their purposes and values on life are not respected by groups in the
society whom they respect. Hagen identifies four types of events that cover
produce status withdrawal:
(a) Displacement by force,
(b) Denigration of valued symbols;
(c) Inconsistency of status symbols with a
changing distribution of economic power, and
(d) Non acceptance of expected status on
migration to a new society. According to Psychologists, entrepreneurship is
most likely to emerge when a society has sufficient supply of individuals
possessing particular psychological characteristics.
The main characteristics are:
• An institutional capacity to see things in
a new way (vision),
• Energy of will and mind to overcome fixed
habits of thought,
• An urge to do something,
• To fulfil a dream,
• The capacity to withstand social
opposition; and
• The high need for achievement.
Who
is an Entrepreneur?
The word "Entrepreneur" is derived
from the French verb 'entrepredre'. It means 'to undertake'. In the early 16th
century the Frenchmen who organized and led military expeditions were referred
to as 'Entrepreneurs'. In the early 18th century French economist Richard
Cantillon used the term entrepreneur to business. Since that time the word
entrepreneur means one who takes the risk of starting a new organization or
introducing a new idea, product or service to society.
• Having a vision you want to pursue.
• Creation of venture.
• Innovation
• The combination of resources.
• Identification and exploitation of
opportunities within the economic system.
• The bringing together the factors of
production
• Taking risk for profit purposes.
According to J.B. Say, An entrepreneur is the economic agent who unites all means of production; land of one, the labour of another and the capital of yet another and thus produces a product. By selling the product in the market the pays rent of land, wages to labour, interest on capital and what remains is his profit. Thus an Entrepreneur is an organizer who combines various factors of production to produce a socially viable product. An entrepreneur can be regarded as a person who has the initiative skill and motivation to set up a business or enterprise of his own and who always looks for high achievements. He is the catalyst for social change and works for the common good. They look for opportunities, identify them and seize them mainly for economic gains. An action oriented entrepreneur is a highly calculative individual who is always willing to undertake risks in order to achieve their goals. According to Joseph Schumpeter, An entrepreneur in an advanced economy is an individual who introduces something new in the economy, a method of production not yet tested by experience in the branch of manufacturing concerned, a product with which consumers are not yet familiar, a new source of raw material or of new market and the likes.
According to Cantillon, An entrepreneur is
the agent who buys factors of production at certain prices in order to combine
them into a product with a view to selling it at uncertain prices in future. An
entrepreneur is the person who bears risk, unites various factors of
production; to exploit the perceived opportunities in order to evoke demand,
create wealth and employment. Pinson (2010) visualized the entrepreneur as a
person who starts a business to follow a vision, to make money, to be the
master of his/her own soul (both financially and spiritually) and is an
"educated" risk taker. Pickle and Abrahamson (1990) sees an
entrepreneur as someone who organizes and manages a business, undertakes and
assumes the risks for the sake of profit making.
Murphy (2010) conceives an entrepreneur as a
person who is dynamic and continues to seek opportunities and/or different
methods of operation and will do whatever it takes to be successful in
business.
Reiss (2010), views the entrepreneur as the
person that recognizes and pursues opportunities without regard to the resources
he/she is currently controlling, with confidence that he/she can succeed, with
the flexibility to change course as necessary, and with the will to rebound
from setbacks.
Envick and Langford (2000) define an
entrepreneur as someone who owns and operates his/her own business. Bagby
(1998) sees an entrepreneur as a person that utilizes the opportunity of
instability, turbulence, lack to produce something new or modifies an existing
one for profit motive.
In other words, Entrepreneur perceives the
market opportunity and then has the motivation, drive and ability to mobilize
resources to meet it. An entrepreneur has possession of a new enterprise,
venture or idea and assumes significant accountability for the inherent risks
and the outcome (Wikipedia, 2010).
He or she has the capacity and willingness
to undertake conception, organization, and management of a productive venture
with all attendant risks, while seeking profit as a reward (Business
Dictionary, 2010). Interestingly, small business experts also have their
definitions of the concept ‘entrepreneur’ (Thinking like, 2010) for instance:
Reiss (2010), views the entrepreneur as the person that recognizes and pursues
opportunities without regard to the resources he/she is currently controlling,
with confidence that he/she can succeed, with the flexibility to change course
as necessary, and with the will to rebound from setbacks.
Murphy (2010) conceives an entrepreneur as a
person who is dynamic and continues to seek opportunities and/or different
methods of operation and will do whatever it takes to be successful in
business. Given the above wide range of factors and behaviour which are used to
define the concept ‘entrepreneur’, we can see the difficulty and impossibility
of finding a unified definition of the ‘entrepreneur’.
Hence, to Di-Masi (2010), the concept
‘entrepreneur’ can be best used in the past tense to describe a successful
business person. Thus, Entrepreneurs are business persons who identify the
existence of business opportunities and based on this they create businesses
thereby creating new products, new production methods, new markets and new
forms of organization to satisfy human needs and wants mostly at a profit. It
should also be noted that though most entrepreneurial businesses start small,
entrepreneurs are not only small business owners; they can also be big business
owners. This is because successful entrepreneurs, unlike small business owners,
are innovative and, when operating in an enabling business environment, can
rapidly create a large amount of wealth while bearing very high risk. In fact,
innovation is considered to be the strategic tool of entrepreneurs; this is one
of the tools that enable them gain strategic advantage over competitors (Quick
MBA, 2010).
Entrepreneurs are individuals or group of
individuals who carryout entrepreneurship activities to build business empires.
Who
is an Intrapreneur?
There are given situations where an
Entrepreneur is not able to establish his or her own business and as such has
to work in an organization. In this case they are referred to as
‘Intrepreneurs’ i.e. Entrepreneurs within an organization. These individuals
are entrepreneurs in their own right because they pursue the exploitation of
business opportunities as they emerge and are also visionaries within a given
organization. Thus, once identified, these individuals should be encouraged to
manifest their entrepreneurial abilities to the benefit of the organization
otherwise they will be frustrated and may leave the organization or start their
own businesses. Entrepreneurship is the processes and activities by which
corporate organization behave entrepreneurially.
According to Jones, George and Hill (2000),
an intrapreneur is a manager, scientist, or researcher who works inside an
existing organization and notices opportunities for product improvements and is
responsible for managing the product development process. The above definition
was corroborated by Pinchot (1985), when he coined the term intrapreneur to
represent an innovative individual (employee) in an existing business
organization who perceives new 17 market opportunities, secures resources and
initiates the realization of the opportunity. Rather than perform the roles of
an entrepreneur as an independent unit and for private economic gains, the
intrapreneur performs the same roles within an existing large organization to
enhance the competitiveness and profitability of the organization.
Intrapreneurship
Stoner et al., (2009) opined that in today’s
faced-paced economy, companies that do not keep up may go the way of the
dinosaur. According to them, a large number of companies have lost their
entrepreneurial spirit that they started with. As they have grown larger, their
ability to be innovative and flexible may have been stifled by the very size
and success of the organization. Many concepts have been used to describe how
managers can keep organizations from stagnating, make organizations adaptive,
and promote organizational climates that support creative learning. Perhaps,
the most widely used term for this process is intrapreneurship.
Intrapreneurship or corporate entrepreneurship is the process whereby an
organization seeks to expand by exploring new opportunities through new
combinations of its existing resources. Intrapreneurship requires special
attention from managers, because by design it cuts against the grain of
established organizational activities.
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