Entrepreneurship is the immense force and human spirit that has made possible the great geographical discoveries of the world. Entrepreneurship is a vital activity to bring changes in the economy and society not only of a country but also of the whole world.
It is at the origin of the launching of all types of human activities in the society.
Entrepreneurship is the immense force and spirit of mankind that has made possible the great geographical discoveries of the world.
It is the astounding forces of mankind that have enabled our civilization to have a wide variety of revolutionary products, technologies and thoughts.
It affects all aspects of the political, legal, socio-cultural, technological, economic and demographic environment of life and society. Entrepreneurship is the pioneering force that has linked societies around the world through its exchange activity since the beginning of human history.
It is also a fundamental force of business organizations. The provocation of change towards the future prosperity of businesses is the result of the entrepreneurial zeal of people. Therefore, entrepreneurship is a basic discipline for the business student to learn.
Definition of entrepreneurship
The concept of entrepreneurship is understood in different ways by different researchers and authors. There is no consensus definition of the term among experts.
Different dimensions have been used to explain the term. Definitions also vary over time.
Therefore, a chronological description of the trajectory of changes in the definition of entrepreneurship would make understanding clearer.
“Entrepreneurship is about bearing the risk of buying at a certain price and selling at uncertain prices” – Ricardo Cantillon.
The concept focuses on the exchange of goods and bearing the risk associated with the act of entrepreneurship.
“Entrepreneurship is any type of innovative function that can affect 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 emphasizes the social orientation of entrepreneurship as it is involved in social good and welfare.
“Entrepreneurship is the voluntary activity of an individual or a group of associated individuals, undertaken to initiate, maintain or enlarge profit through the production or distribution of economic goods and services.” – A.H.Cole (1959).
This definition recognizes entrepreneurship as a deliberate human activity aimed at achieving profit through economic activities of production and/or distribution of goods and services.
It can be an individual or collective activity. But the central objective is the pursuit of profit. In other words, entrepreneurship is undertaken to create, maintain or increase profit.
“Entrepreneurship is the dynamic process of creating additional wealth.” – Robert C. Ronstadt (1984)
Ronstadt explains that wealth is created by individuals who assume major risks in terms of capital, time, and/or career commitment or who provide value for a certain product or service.
The product or service may or may not be new or unique, but the entrepreneur must somehow provide value by receiving and locating the necessary skills and resources.
According to Robert D. Hisrich and Michael P. Peters (1998),
“Entrepreneurship is the process of creating something new of value by devoting the necessary time and effort, assuming the accompanying financial, psychological, and social risks, and receiving the resulting rewards of monetary and personal satisfaction and independence.”
The authors conceive of entrepreneurship as the dedicated efforts of individuals to create something of value for people in society. They also believe that entrepreneurship is a rewarding activity.
It brings not only financial rewards, but also freedom and personal satisfaction, which is a huge reinforcement for pursuing entrepreneurial action. Entrepreneurship, they say, is also a risky business.
Three types of risks are associated with it: financial, psychological and social risks. Entrepreneurship takes these risks and devotes its efforts to obtaining rewards by giving humanity something of value.
Therefore, entrepreneurship involves missionary efforts that involve risk to innovate something of value from which the entrepreneur will reap financial and psychic rewards.
The Irish banker operating in France, Ricardo Cantillon (Kent, 1984) is believed to have been the first person to use the word “entrepreneur” in economics as “an agent who gathers materials/inputs to produce goods at a specific price and who, through the coordination of these inputs, produces goods whose selling price is uncertain relative to the cost of production.”
It is also believed that the Frenchman J.B. Say (1824) was the first to use the term “entrepreneur” as an economic agent who brings together factors of production in order to create new wealth.
The Oxford English Dictionary adopted the word “undertake” as “entrepreneur” in 1897 and meant;
“director or manager of a public musical institution; a person who organizes entertainment, especially musical performances.”
Webster’s Third New International Dictionary (1961) takes it as follows;
An organizer of an economic enterprise, especially one who organizes, owns, manages, and assumes the risks of an enterprise.
The Oxford English Dictionary revised the meaning of the word “entrepreneur” in 1933 and defined it as an intermediary between capital and labor.
Today, entrepreneurship is used with different meanings such as innovation, risk taking, adventurism, wealth creation, thrill seeking, etc.
Concept of entrepreneurship
Like other economic concepts, entrepreneurship has been the subject of much debate and discussion. It is an elusive concept.
That is why it is defined differently by different authors. While some refer to entrepreneurship as “risk-taking”, others consider it innovation and still others as “thrill-seeking”. Let’s look at some important definitions of entrepreneurship to understand what entrepreneurship is.
At an entrepreneurship conference in the United States, the term “entrepreneurship” was defined as follows:
“Entrepreneurship is the attempt to create value through the recognition of a business opportunity, the management of risk-taking appropriate to the opportunity, and the communication and management skills to mobilize the human, financial, and material resources necessary to complete a project.”
According to A.H. Cole, “entrepreneurship is the voluntary activity of an individual or group of associated individuals undertaken to initiate, maintain, or increase profit through the production or distribution of economic goods and services.
According to Schumpeter, “entrepreneurship is based on voluntary and systematic innovation. It includes not only the independent businessman but also entrepreneurs and managers who perform innovative functions”.
In all of the above definitions, entrepreneurship refers to the functions performed by an entrepreneur in setting up a business. Just as management is considered what managers do, entrepreneurship can be considered what entrepreneurs do. In other words, entrepreneurship is being an entrepreneur.
Entrepreneurship is a process involving various actions to be taken to create a business. It is the process of creating a ‘new business.
Innovation and risk taking are considered the two fundamental elements of entrepreneurship. Let’s understand what these two terms mean.
Innovation, or doing something new or different, is a necessary condition to be considered an entrepreneur.
Entrepreneurs are constantly looking for something different and unique to meet changing customer demands.
They may or may not be the inventors of new products or production methods, but they possess the ability to foresee the possibility of using these inventions for their businesses. Let the facts speak for themselves.
Taking the risk
Starting a new business always involves risk, and the temptation to do something new and different is also risky.
The reason for this is not hard to find. The business may make profits or suffer losses due to various factors such as increased competition, changing customer preferences, shortage of raw materials, etc.
An entrepreneur must therefore be bold enough to take on the risk of the business.
He must be able to take risks, not avoid them. His ability to bear risk allows him, even if he fails once or in a venture, to persevere, which ultimately helps him succeed.
Entrepreneurship is important because it has the ability to improve the standard of living and create wealth, not only for entrepreneurs but also for related businesses. Entrepreneurs also help drive change through innovation, where new and improved products help develop new markets.