This article focuses on the concept of entrepreneurship from its nascent beginnings to the present day. First, we shall review the various definitions applied to entrepreneurship, concluding with a fundamental definition of the term. Next, we'll consider entrepreneurial trait characteristics associated with successful entrepreneurship, highlighting a real-life entrepreneur as a prime example. Also, we'll explore entrepreneurship in its global context, examining the findings of a global survey that focused on entrepreneurship traits, motivations, demographics, and types of ventures undertaken.
Keywords Economic Development; Entrepreneur; Entrepreneurship; Innovation; Small Business
As a global economic driver, entrepreneurship adds real value through the creation of new jobs and the production of innovative products and services. In short, entrepreneurship promotes the generation of wealth. Yet, a review of the literature indicates many definitions of entrepreneurship have been conceived over the years by researchers in the field. A single, commonly accepted definition of the term is simply nonexistent, though common elements tend to meet across the spectrum. Given this conundrum, a functional definition of entrepreneurship upon which to base our discussion is necessary.
The origin of the word entrepreneurship is derived from the French word "entreprende," which means "to undertake," as in undertaking a particular activity. Likewise, some researchers give credit for the word entrepreneur (in a business context) to eighteenth-century French businessman Richard Cantillon, who, in his published work Essai Sur la Nature du Commerce en General, "described entrepreneurs as 'undertakers' engaged in market exchanges at their own risk for the purpose of making a profit" (Roberts and Woods, 2005, p.46).
Definitions of entrepreneurship are generally situated within three broad categories: the occupational notion of entrepreneurship, the behavioral notion, and entrepreneurship on the basis of new venture creation. The occupational notion of entrepreneurship refers to owning and managing one's own business enterprise. "Its 'practitioners' are called entrepreneurs, self-employed or business owners" (Sternberg & Wennekers, 2005 p.193). An early nineteenth-century pioneer of the occupational notion (and behavioral notion) was French economist Jean Baptiste Say. According to Say, the entrepreneur is a business owner who creates value by transforming economic resources from areas of low productivity into areas of higher productivity, which in turn provide greater yields (Say, 1855). In essence, the entrepreneur is a creator of value.
The behavioral notion on the other hand, emphasizes the act of entrepreneurs recognizing and seizing economic opportunity, engaging in innovative practices, or assuming entrepreneurial risk —that is, pursuing new untapped markets, developing product innovations, etc. In fact, according to this behavioral notion, entrepreneurs need not be business owners — they may be what are referred to as intrapreneurs(Sterner and Wennekers, 2005). Contextually situated in ongoing businesses, intrapreneurship (also known as corporate entrepreneurship) encourages organizations' employees to engage in innovative entrepreneurial behavior. According to Pinchot (1985) — originator of the intrapreneurship concept — the intrapreneurial employee is an opportunistic innovator, engaging in creative business practices within his or her organization and introducing new products and services, production processes, and methods of distribution, all of which are pursued in the hope of achieving greater organizational growth and profits. However, in our present context, entrepreneurship should not to be substituted for or confused with the term intrapreneurship.
Cantillon’s work provided the intellectual foundation for three prominent twentieth-century economic theorists. Joseph Schumpeter emphasized the role of the entrepreneur as an innovator, Frank Knight stressed entrepreneurs' willingness to assume risk, and Israel Kirzner highlighted the pursuit of entrepreneurial opportunity (Roberts and Woods, 2005).
Schumpeter, a noted University of Chicago economist, identifies entrepreneurial innovation as a key driver in economic development. His definition of entrepreneurship focuses on new combinations of innovative behaviors felt to embody entrepreneurial behavior:
- Developing new and innovative products;
- Proposing new forms of organization;
- Exploring new markets;
- Introducing new production methods;
- Searching for new sources of supplies and materials (Schumpeter, 1975).
Frank H. Knight, another notable University of Chicago economist, offers that it is the willingness to assume risks in the face of uncertainty that distinguishes entrepreneurship. Such risks may include a possible loss of business capital or the personal financial security risk associated with the uncertain outcome of an entrepreneurial undertaking (Knight, 1921). On the other hand, leading economist Israel Kirzner's theory of entrepreneurship focuses on the detection of entrepreneurial opportunities for profit, which requires an alertness of opportunity. It is this alertness which allows the entrepreneur to exploit market arbitrage opportunities that have been overlooked or gone undiscovered by others—arbitrage being the identification of undervalued factors of production and the sale of them for an amount higher than the purchase price (Kirzner, 1973).
Similarly, acclaimed management theorist Peter Drucker states: "Entrepreneurs see change as the norm and as healthy. Usually, they do not bring about the change themselves. But, and this defines the entrepreneur and entrepreneurship — the entrepreneur always searches for change, responds to it and exploits it as an opportunity" (Drucker, 1985, p.28). In defining entrepreneurship, the general public most often associates entrepreneurship with small business ownership. According to Drucker, the act of starting or owning a small business does not in itself make one an entrepreneur, so much as the ability to innovate and exploit opportunity.
Carland (1984) follows a similar track, pointing out that one may be a small business owner but not necessarily engaged in entrepreneurship. He posits that while an entrepreneur and small business owner may establish and manage a business for profit, what sets the entrepreneur apart is the ability and willingness to employ innovative techniques and ways of thinking, as well as strategic management practices in the enterprise.
Another conception of entrepreneurship focuses on a more direct approach, defining entrepreneurship as new venture creation. Gartner (1988) believes entrepreneurship to be the act of creating Organizations: “What differentiates entrepreneurs from non-entrepreneurs is that entrepreneurs create organizations, while non-entrepreneurs do not" (Gartner, 1988, p.11). In simple terms, this concept of entrepreneurship focuses on the establishment of new business enterprises which create value.
Clearly, definitions for entrepreneurship are far from uniform, and each has its own merits. However, for the present dialogue, the most appropriate definition is that devised by the Global Entrepreneurship Monitor (GEM). Similar to Gartner (1988), GEM defines...
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