Who is an entrepreneur and what is entrepreneurship?
An entrepreneur is an individual who organises and operates a business or businesses, taking on financial risk to do so.
An entrepreneur is an agent of change. Entrepreneurship is the process of discovering new ways of combining resources.
Entrepreneurship is also consistently equated with the establishment and management of small business enterprises.
An entrepreneur is a person while entrepreneurship is the process of its actual working.
Entrepreneurship is a human activity which plays a major role in economic development; its history is as old as human history as it indicates to the spirit of enterprise.
Such a spirit transform the man “from a nomad to a cattle rearer, to a settled agriculturist, to a trader and an industrialist” (Murthy, N. (1989a) Entrepreneurship in Small Towns, in Samuddin (ed) Entrepreneurship Development in India, Mittal Publication, Delhi Pp4.)
The word “entrepreneur” originates from a 13th century French verb, entreprendre, meaning “to do something” or “to undertake.”
By the 16th century, the noun form, entrepreneur, was being used to refer to someone who undertakes a business venture.
The first academic use of the word by an economist was likely in 1730 by Richard Cantillon, who identified the willingness to bear the personal financial risk of a business venture as the defining characteristic of an entrepreneur.
In the early 1800s, economists Jean-Baptiste Say and John Stuart Mill further popularised the academic usage of the word “entrepreneur.”
Say stressed the role of the entrepreneur in creating value by moving resources out of less productive areas and into more productive ones.
Mill used the term “entrepreneur” in his popular 1848 book, Principles of Political Economy, to refer to a person who assumes both the risk and the management of a business.
In this manner, Mill provided a clearer distinction than Cantillon between an entrepreneur and other business owners (such as shareholders of a corporation) who assume financial risk but do not actively participate in the day-to-day operations or management of the firm.
Entrepreneurs as change agents
In the 20th century, economist Joseph Schumpeter (1883-1950) focused on how the entrepreneur’s drive for innovation and improvement creates upheaval and change.
Schumpeter viewed entrepreneurship as a force of “creative destruction.”
The entrepreneur carries out “new combinations,” thereby helping render old industries obsolete. Established ways of doing business are destroyed by the creation of new and better ways to do them.
Business expert, Peter Drucker (1909-2005), took this idea further, describing the entrepreneur as someone who actually searches for change, responds to it, and exploits change as an opportunity.
A quick look at changes in communications – from typewriters to personal computers to the Internet – illustrates these ideas.
Examples include Bill Gates, who as an undergraduate at Harvard developed BASIC (a computer programme) for the first microcomputer and went on to help found Microsoft in 1975.
During the 1980s, IBM contracted with Gates to provide the operating system for its computers, a system known as MS-DOS. Gates procured the software from another firm.
Microsoft’s Office and Windows operating software now run on about 90 per cent of the world’s computers.
By making software that increases human productivity, Gates expanded our ability to generate output (and income), resulting in a higher standard of living for all.
Sam Walton, the founder of Wal-Mart, was another entrepreneur who touched millions of lives in a positive way.
His innovations in distribution warehouse centres and inventory control allowed Wal-Mart to grow, in less than 30 years, from a single store in Arkansas to the largest retail chain in the United States.
Shoppers benefit from the low prices and convenient locations that Walton’s Wal-Marts provide.
Along with other entrepreneurs such as Ted Turner (CNN), Henry Ford (Ford automobiles), and Ray Kroc (McDonalds),, Walton significantly improved the everyday life of billions of people all over the world.
Importance of entrepreneurship
Most economists and business managers agree that entrepreneurship is vital for stimulating economic growth and employment opportunities in all societies.
This is particularly true in the developing world, where successful small businesses are the primary engines of job creation and poverty reduction.
Wealth and a high majority of jobs are created by small businesses started by entrepreneurially minded individuals, many of whom go on to create big businesses.
People exposed to entrepreneurship frequently express that they have more opportunity to exercise creative freedoms, higher self esteem, and an overall greater sense of control over their own lives.
As a result, many experienced business people political leaders, economists, and educators believe that fostering a robust entrepreneurial culture will maximise individual and collective economic and social success on a local, national, and global scale.
• Entrepreneurs create businesses that hire people. Their businesses require a number of hands to help them translate their vision into reality.
It all starts of with one persons’ vision that turns into a shared vision for the rest of his/her team.
• Entrepreneurs create wealth for nation and for individuals as well. All individuals who search business opportunities usually, create wealth by entering into entrepreneurship.
The wealth created by the same play a considerable role in the development of nation.
The business as well as the entrepreneur contributes in some or other way to the economy, may be in the form of products or services or boosting the GDP (Gross Domestic Product) rates or tax contributions.
Their ideas, thoughts, and inventions are also a great help to the nation.
• Entrepreneurs create demand for products which in turn creates jobs for other businesses. Buying raw materials for their businesses will in return create other businesses and more jobs will be created as well.
• Entrepreneurs introduce new technologies in the market. There is always a fresh angle and a new way of doing things/providing services. They create new products and provide new services to the market.
Almost 66 per cent of all innovations are due to the entrepreneurs. Without the boom of inventions the world would have been a much dry place to live in.
Inventions provide an easier way of getting things done through better and standardised technology.
• Entrepreneurs stimulate the economy by instilling confidence in people. Entrepreneurs, through the jobs and businesses they create, are vital to the GDP equation.
