Entrepreneur is a loanword from the French language that refers to a person who undertakes and operates a new venture, and assumes some accountability for the inherent risks.
Most commonly, the term entrepreneur applies to someone who establishes a new entity to offer a new or existing product or service into a new or existing market, whether for a profit or not-for-profit outcome in which case he or she is an entredonneur. Business entrepreneurs often have strong beliefs about a market opportunity and are willing to accept a high level of personal, professional or financial risk to pursue that opportunity.
Research has demonstrated that there is such a thing as an "entrepreneurial type," with certain characteristics (such as having a father or a mother who was an entrepreneur) linked to the probability of someone being an entrepreneur themselves. There is little good evidence, however, that entrepreneurial type is linked to ultimate success of an entrepreneurial venture.
Business entrepreneurs are often highly regarded in US culture as being a critical component of its capitalistic society. Famous entrepreneurs include: Henry Ford (automobiles), J. Pierpont Morgan (banking), Thomas Edison (electricity/light bulbs), Bill Gates (computer operating systems and applications), Steve Jobs (computer hardware, software), Richard Branson (travel and media) and others.
Some distinguish business entrepreneurs as either "political entrepreneurs" or "market entrepreneurs."
An entrepreneur is someone who organizes a system to create a product or service in order to gain profit. However though there is a general sense that entrepreneurship involves the establishment of a new venture while adopting some of the risk, there is no common definition as the word has been used many ways in many times. Some scholars of entrepreneurship, such Prof. W. Long have tried to develop a definition by looking at the historical use of the word, as it evolved (Outcalt 2000). Perhaps the first person to create a theory about entreprenurs would be Schumpeter, although instead of using the French word adopted by the American literature, he used the German word "unternehmer".
Entrepreneur as a risk bearer
Richard Cantillon, an Irish man living in France was the first to introduce the term entrepreneur and his unique risk bearing function in economics in the early 18th century. He defined an entrepreneur as an 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. Uncertainty is defined as a risk, which cannot be insured against and is incalculable. There is a distinction between ordinary risk and uncertainty. A risk can be reduced through the insurance principle, where the distribution of the outcome in a group of instances is known. On the contrary, uncertainty is a risk, which cannot be calculated. The entrepreneur, according to Knight, is the economic functionary who undertakes such responsibility of uncertainty, which by its very nature cannot be insured, or capitalized or salaried too. Mark Casson has extended this notion to characterise entrepreneurs as decison makers who improvise solutions to problems which cannot be solved by routine alone.
Entrepreneur as an organizer
Jean–Baptiste Say, an aristocratic industrialist, developed the concept of entrepreneur a little further. His definition associates entrepreneur with the functions of co-ordination, organization and supervision. According to him, an entrepreneur is one who combines the land of one, labour of another and the capital of yet another, and, thus, produces a product.
By selling the product in the market, he pays interest on capital, rent on land and wages to labourers and what remains is his or her profit.
Functional and indicative approach to entrepreneur definition
Mark Casson divides the approach of defining entrepreneur into two parts! Functional approach states that an entrepreneur is what entrepreneur does. The indicative approach provides a description of the entrepreneur by which he may be recognized. The indicative approach maybe more concrete: it can describe entrepreneur in terms of legal status, relation with other parties, position in society, etc. An entrepreneur is an individual whose specialism and economic contribution refer to allocation of factors of production.
Entrepreneur as a person willing to engage uncertainty
Frank Knight, in his seminal contribution to economics Risk, Uncertainty and Profit (1921), defines uncertainty as a primary attribute of his entrepreneurship theory. If there were no uncertainty no losses would be made. Risk is calculable, uncertainty is not. Entrepreneur is a person who is willing to put his career and capital on an uncertain venture.
Entrepreneur as a leader
More recently, researchers such as R. B. Reich have argued that leadership, management ability, and team-building should be added to the definition of entreprenership. Other scholars disagree, viewing management as separate from entrepreneurship.
Nature or Nurture (origins of the entrepreneur)
There are two theories about how entrepreneurs develop, often called the "supply" and "demand" theories. In the supply theory, entrepreneurs are born, not made -- certain people have the personality traits that make a good entrepreneur. Several research studies have shown that entrepreneurs are convinced that they can command their own destinies, or in the jargon of behaviorial scientists, the "locus of control" of the entrepreneur lies within himself. It is this self-belief which stimulates the entreprenuer, according to supply-side theorists. John G. Burch, writing in the September-October 1986 edition of Business Horizons gave a list of in-born traits that make an entrepreneur:
In academic circles, however, the "demand" theory is now generally more prevalent. The demand theory holds that entrepreneurs emerge out of the combination of entrepreneurial opportunities and people who are well-positioned to take advantage of them. Thus, anyone who encounters the right conditions might become an entrepreneur, if they find themselves in a position where they find a valuable problem that they alone can solve. Scholars studying the demand theory try to understand the conditions under which entrepreneurs appear, particularly in understanding how differences in the information various people have (see Austrian School economics) creates entrepreneurial opportunities, and how environmental factors (access to capital, competition, etc.) change the rate of entrepreneurship.
Theories of the Firm
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