Entrepreneurship is the immense strength and human spirit of which made possible the great geographical discoveries of the world. Entrepreneurship is a vital activity to bring about changes in the economy and society not only in a country but also of those in the world.
It causes the initiation of all types of human activities in the society.
Entrepreneurship is the immense strength and spirit of humanity which made possible the great geographical discoveries of the world.
It is the astounding forces of man that indebted our civilization with varieties of products, among technologies, and breakthrough thoughts.
It affects all aspects of political-legal, sociocultural, technological, economic and demographical environment of life and society. Entrepreneurship is the pioneering force that connects the world societies with its activity of exchange from the early period of our human history.
It is a basic strength of business organizations too. The provocation of change toward future business prosperity is the result of the entrepreneurial zeal of the people. Therefore entrepreneurship is a basic discipline to learn for the student of business.
Definition of Entrepreneurship
The concept of entrepreneurship is understood in different manners by different scholars and authors. There is no one consensual definition of the term among the experts.
Different dimensions have been used to explain the term. The definitions also vary with the passes of time.
Therefore, a chronological description of the movement path of the definitional changes of the entrepreneurship would make the understanding clear to the readers.
So, look at and read carefully the following description.
“Entrepreneurship entails bearing the risk of buying at a certain price and selling at uncertain prices.”- Ricardo Cantillon.
The concept focuses on the trading of goods and bearing of its associated risk as to the act of entrepreneurship.
“Entrepreneurship is any kind of innovative function that could have a bearing on the welfare of an entrepreneur.”-Joseph A. Schumpeter (1934).
Schumpeter recognizes entrepreneurship as a rewarding activity that involves any form of innovation. Innovation is doing things in a new and better way. It adds utility to existing operations or products.
“Entrepreneurship is that form of social decision making performed by economic innovators.” -Robert K. Lamb (1952).
Lamb describes entrepreneurship as an act of economic activity engaged in innovation He also points out the social orientation of entrepreneurship as it is involved with social good and welfare.
“Entrepreneurship is the purposeful activity of an individual or a group of associated individuals, undertaken to initiate, maintain or aggrandize profit by production or distribution of economic goods and services.” – A.H.Cole (1959).
The definition recognizes entrepreneurship as a deliberate human activity for earning profit through economic activities of production and or distribution of goods and services.
It may be an individual or a group activity. But the central focus is profit-making. That is. to initiate, maintain or increase profit, entrepreneurship is undertaken
“Entrepreneurship is the dynamic process of creating incremental wealth.” – Robert C. Ronstadt (1984)
Ronstadt explains that wealth is c.eated by individuals who assume the major risks in terms of equity, time, and/or career commitment or provide value for some product or service.
The product or service may or may not be new or unique but the entrepreneur must somehow infuse value by receiving and locating the necessary skills and resources.
The Robert D. Hisrich and Michael P. Peters (1998) said,
“Entrepreneurship is the process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychic and social risks and receiving the resulting rewards of monetary and personal satisfaction and independence.”
The writers conceive entrepreneurship as the devoted efforts of individuals for creating something of value to the people of society. They also believe that entrepreneurship is a rewarding activity.
It gives not only financial rewards but also freedom and personal satisfaction that are of immense reinforcement for the furtherance of entrepreneurial action. Entrepreneurship, in their view, is also a risk hearing activity.
Three types of risks are involved with it the financial, psychic and social risks. Entrepreneurship takes these risks and devoted efforts to having rewards by giving mankind something of value.
Therefore, entrepreneurship entails missionary efforts that involve risks to innovate something of value from which the entrepreneur will get financial and psychic rewards.
Origin of Entrepreneurship
The term entrepreneurship is derived from a French word ‘Entreprendre’ which means ‘to undertake’, ‘to pursue opportunities’, or ‘to fulfill needs and wants through innovation and starring businesses’. The word first appeared in the French dictionary in 1723.
It is believed that the Irish Banker operating in France, Ricardo Cantillon (Kent, 1984) was the first person who used the word ‘entreprendre’ in economics as “an agent who assembles material/inputs for producing goods at a specific price and through coordination of those inputs produces goods whose sales price is uncertain in comparison with production cost”.
It is also believed that the Frenchman J.B. Say (1824) first used the term ‘entrepreneur’ as an economic agent who brought together the factors of production in such a way that new wealth can be created.
Oxford English dictionary adopted the word ‘entreprendre’ as “entrepreneur” in 1897 and meant;
“director or manager of a public musical institution; one who gets up entertainments, especially musical performance”.
Webster’s Third New International Dictionary (1961) takes it as;
‘an organizer of an economic venture, especially one who organizes, owns, manages, and assumes the risk of a business’.
The Oxford English dictionary has revised the meaning of entrepreneur in / 1933 and meant ‘a contractor acting as an intermediary between capital and labor”.
Today, entrepreneurship is used with different meanings such as innovating, risk-bearing, adventurism, wealth creation, thrill-seeking, etc.
Concept of Entrepreneurship
Like other economic concepts, entrepreneurship has been a subject of much debate and discussions. It is an elusive concept.
Hence, it is defined differently by different authors. While some call entrepreneurship as ‘risk-bearing’, others view it innovation and yet others consider it ‘thrill-seeking’. Let us consider some important definitions of entrepreneurship to understand what entrepreneurship is all about.
In a Conference on Entrepreneurship held in the United States, the term ‘entrepreneurship’ was defined as follows:
“Entrepreneurship is the attempt to create value through recognition of business opportunity, the management of risk-taking appropriate to the opportunity, and through the communicative and management skills to mobilize human, financial and material resources necessary to bring a project to fruition”.’
In the opinion ‘of A.H. Cole, “Entrepreneurship is the purposeful activity of an individual or a group of associated individuals, undertaken to initiate, maintain or aggrandize profit by production or distribution of economic goods and services”.
According to Schumpeter, “Entrepreneurship is based on purposeful and systematic innovation. It included not only the independent businessman but also company directors and managers who carry out innovative functions”.
In all the above definitions, entrepreneurship refers to the functions performed by an entrepreneur in establishing an enterprise. Just as management is regarded as What managers do, entrepreneurship may be regarded as what entrepreneurs do. In other words, entrepreneurship is the act of being an entrepreneur.
Entrepreneurship is a process involving various actions to be undertaken to establish an enterprise. It is, thus, the process of giving birth to *new enterprise. ‘
Innovation and risk-bearing are regarded as the two basic elements involved in entrepreneurship. Let us understand what these two terms mean.
Innovation, i.e., doing something new or something different is a necessary condition to be called a person as an entrepreneur.
The entrepreneurs are constantly on the lookout to do something different and unique to meet the changing requirements of the customers.
They may or may not be inventors of new products or new methods of production, but they possess the ability to foresee the possibility of making use of the inventions for their enterprises. Let some facts speak.
To satisfy the changing preference of customers, nowadays fruit juice is sold in small cartons (Mango Fruity) instead of bottles so that customers can carry it and throw away the container after drinking the juice. Let us take another example.
Lipton offers its tea in small packs known as ‘PUDIYAS’ to meet the requirements of its rural customers.
You may have heard of Henry Ford, the founder of the Ford Motor Company in the United States.
Remember, Henry Ford himself did not invent the automobile. Foreseeing the people’s desire to have passenger cars at somewhat lower rates, he applied new methods of mass production to offer passenger cars to the customers at an affordable price.
Since customers’ tastes and preferences always keep on changing, hence the entrepreneur needs to apply invention after invention continuously to meet the customers’ changing demands for products.
Starting a new enterprise always involves risk and trying to do something new and different is also risky.
The reason is not difficult to seek. The enterprise may earn profits or incur losses because of various factors like increasing competition, changes in customer preferences, shortage of raw material and so on.
An entrepreneur, therefore, needs to be bold enough to assume the risk involved in the enterprise.
He needs to be a risk-taker, not a risk avoider. His risk-bearing ability enables him even if he fails in one time or one venture to persist on and on which ultimately helps him succeed.
The Japanese proverb applies to him; “Fall seven times, stand up eight.”