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'Entrepreneurship' is the practice of starting new organizations, particularly new businesses generally in response to identified opportunities. Entrepreneurship is often a difficult undertaking, as a vast majority of new businesses fail. Entrepreneurial activities are substantially different depending on the type of organization that is being started. Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only part-time) to major undertakings creating many job opportunities. Many "high-profile" entrepreneurial ventures seek venture capital or angel funding in order to raise capital to build the business. Many kinds of organizations now exist to support would-be entrepreneurs, including specialized government agencies, business incubators, science parks, and some NGOs.
The understanding of entrepreneurship owes much to the work of economist Joseph Schumpeter and the Austrian School of economics. In Schumpeter (1950), an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation. Entrepreneurship forces "creative destruction" across markets and industries, simultaneously creating new products and business models. In this way, creative destruction is largely responsible for the dynamism of industries and long-run economic growth. Despite Schumpeter's early 20th-century contributions, the traditional microeconomic theory of economics has had little room for entrepreneurs in its theoretical frameworks (instead assuming that resources would find each other through a price system).[1]
Entrepreneurship received a boost in the formalized creation of so-called incubators and science parks (e.g., those listed at NBIA.org), where businesses can start at a small scale, share services and space while they grow, and eventually move into space of their own when they have achieved a large enough scale to be viable stand-alone businesses. It is being encouraged in an effort to revitalize fading downtowns and inner cities in America, which may have excellent resources but suffer from a lack of spirited development.
For Frank H. Knight (1967) and Peter Drucker (1970) entrepreneurship is about taking risk. The behavior of the entrepreneur reflects a kind of person willing to put his or her career and financial security on the line and take risks in the name of an idea, spending much time as well as capital on an uncertain venture.
Still another view of entrepreneurship is that it is the process of discovering, evaluating, and exploiting opportunities, which go on to reify themselves in the form of new business ventures. In this model an entrepreneur could be defined as "someone who acts with ambition beyond that supportable by the resources currently under his control, in relentless pursuit of opportunity" (a definition common to entrepreneurship professors Howard Stevenson and Jeffry Timmons). Pinchot (1985) coined the term Intrapreneurship to describe entrepreneurial-like activities inside organizations and government. The concept is commonly referred to as Corporate Entrepreneurship.
The place of the disharmony-creating and idiosyncratic entrepreneur in traditional economic theory (which describes many efficiency-based ratios assuming uniform outputs) presents theoretic quandaries. William Baumol has added greatly to this area of economic theory and was recently honored for it at the 2006 annual meeting of the American Economic Association.
Entrepreneurship is widely regarded as an integral player in the business culture of American life, and particularly as an engine for job creation and economic growth. Robert Sobel published ''The Entrepreneurs: Explorations Within the American Business Tradition'' in 1974.
Entrepreneurs have many of the same character traits as leaders. Similarly to the early great man theories of leadership; however trait-based theories of entrepreneurship are increasingly being called into question. Entrepreneurs are often contrasted with managers and administrators who are said to be more methodical and less prone to risk-taking. Although such person-centric models of entrepreneurship have shown to be of questionable validity, a vast but clearly dated literature studying the entrepreneurial personality found that certain traits seem to be associated with entrepreneurs:
★ David McClelland (1961) described the entrepreneur as primarily motivated by an overwhelming need for achievement and strong urge to build.
★ Collins and Moore (1970) studied 150 entrepreneurs and concluded that they are tough, pragmatic people driven by needs of independence and achievement. they seldom are willing to submit to authority.
★ Bird (1992) sees entrepreneurs as mercurial, that is, prone to insights, brainstorms, deceptions, ingeniousness and resourcefulness. they are cunning, opportunistic, creative, and unsentimental.
★ Cooper, Woo, & Dunkelberg (1988) argue that entrepreneurs exhibit extreme optimism in their decision-making processes. In a study of 2994 entrepreneurs they report that 81% indicate their personal odds of success as greater then 70% and a remarkable 33% seeing odds of success of 10 out of 10.
★ Busenitz and Barney (1997) claim entrepreneurs are prone to overconfidence and over generalisations.
★ Cole (1959) found there are four types of entrepreneur: the innovator, the calculating inventor, the over-optimistic promoter, and the organisation builder. These types are not related to the personality but to the type of opportunity the entrepreneur faces.
★ The entrepreneur has an enthusiastic vision, the driving force of an enterprise.
★ The entrepreneur's vision is usually supported by an interlocked collection of specific ideas not available to the marketplace.
★ The overall blueprint to realize the vision is clear, however details may be incomplete, flexible, and evolving.
★ The entrepreneur promotes the vision with enthusiastic passion.
★ With persistence and determination, the entrepreneur develops strategies to change the vision into reality.
★ The entrepreneur takes the initial responsibility to cause a vision to become a success.
★ Entrepreneurs take prudent risks. They assess costs, market/customer needs and persuade others to join and help.
★ An entrepreneur is usually a positive thinker and a decision maker.
1. ''The Economist'', March 11, 2006, pp 67.
;General:Entrepreneur, Entrepreneurial Economics, Political entrepreneur, Internet Entrepreneur, Entrepreneurship education
;Business: Business incubators, Business opportunity, Junior enterprise
;Lists: List of management topics, List of social entrepreneurs
;Other:Bootstrap funding
;Books and publications
★ Bird, B. (1992)"The Roman God Mercury: An Entrepreneurial Archetype", ''Journal of Management Enquiry'', vol 1, no 3, September, 1992.
★ Busenitz, L. and Barney, J. (1997) "Differences between entrepreneurs and managers in large organizations", ''Journal of Business Venturing'', vol 12, 1997.
★ Cantillon, R. ''Essai sur la Nature du Commerce in Général''. 1759 [1]
★ Casson, M. (1982) ''The Entrepreneur: An Economic Theory'' Reprint. 1991.
★ Casson, M. (2003) ''The Entrepreneur: An Economic Theory, second edition", Edward Elgar Publishing 2003.
★ Cole, A. (1959) ''Business Enterprise in its Social Setting'', Harvard University Press, Boston, 1959.
★ Collins, J. and Moore, D. (1970) ''The Organization Makers'', Appleton-Century-Crofts, New York, 1970.
★ Corrigan, S (2005) "The Entrepreneur's Guide to the Business cycle" [2]
★ Drucker, P. (1970) "Entrepreneurship in Business Enterprise", ''Journal of Business Policy'', vol 1, 1970.
★ Florida, R. (2002) The Rise of the Creative Class: And How It's Transforming Work, Leisure, Community and Everyday Life. Perseus Books Group.
★ Folsom Jr., Burton W. (1987) ''The Myth of the Robber Barons'', Young America.
★ Hebert, R.F. and Link, A.N. (1988) The Entrepreneur: Mainstream Views and Radical Critiques. New York: Praeger, 2nd edition.
★ Knight, K. (1967) "A descriptive model of the intra-firm innovation process", ''Journal of Business of the University of Chicago'', vol 40, 1967.
★ McClelland, D. ''The Achieving Society'', Van Nostrand, Princeton NJ, 1961.
★ Murphy, P. J. (2004). ''A logic for entrepreneurial discovery''. UMI/ProQuest Learning and Information Company.
★ Murphy, P. J., Liao, J., & Welsch, H. P. (2006). A conceptual history of entrepreneurial thought. ''Journal of Management History, 12''(1), 12-35.
★ Pinchot, G. (1985) ''Intrapreneuring'', Harper and Row, New York, 1985.
★ Sarasvathy,S. (2001). What makes entrepreneurs entrepreneurial? Working paper, University of Washington. [retrieved from http://www.effectuation.org/ftp/effectua.pdf]
★ Schumpeter, J. (1950) ''Capitalism, Socialism, and Democracy'', 3rd edition, Harper and Row, New York, 1950.
★ Shane S., (2003) ''A general theory of entrepreneurship : the individual-opportunity nexus '' in New Horizons in Entrepreneurship series, Edward Elgar Publishing.
★ StartupStudio Interviews with entrepreneurs including the founders of Southwest Airlines, FeedBurner, Tazo Tea, Coinstar, blip.tv, Esprit, Ravenswood Winery, Spinner Networks, ZipRealty, WordPress
| Contents |
| History of Entrepreneurship |
| The Entrepreneur |
| Characteristics of entrepreneurship |
| Notes |
| See also |
| References and external articles |
History of Entrepreneurship
The understanding of entrepreneurship owes much to the work of economist Joseph Schumpeter and the Austrian School of economics. In Schumpeter (1950), an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation. Entrepreneurship forces "creative destruction" across markets and industries, simultaneously creating new products and business models. In this way, creative destruction is largely responsible for the dynamism of industries and long-run economic growth. Despite Schumpeter's early 20th-century contributions, the traditional microeconomic theory of economics has had little room for entrepreneurs in its theoretical frameworks (instead assuming that resources would find each other through a price system).[1]
Entrepreneurship received a boost in the formalized creation of so-called incubators and science parks (e.g., those listed at NBIA.org), where businesses can start at a small scale, share services and space while they grow, and eventually move into space of their own when they have achieved a large enough scale to be viable stand-alone businesses. It is being encouraged in an effort to revitalize fading downtowns and inner cities in America, which may have excellent resources but suffer from a lack of spirited development.
Conceptual and theoretic developments in entrepreneurship history. Adapted from Murphy, Liao, & Welsch (2006)
Some notable persons and their works in entrepreneurship history.
For Frank H. Knight (1967) and Peter Drucker (1970) entrepreneurship is about taking risk. The behavior of the entrepreneur reflects a kind of person willing to put his or her career and financial security on the line and take risks in the name of an idea, spending much time as well as capital on an uncertain venture.
Still another view of entrepreneurship is that it is the process of discovering, evaluating, and exploiting opportunities, which go on to reify themselves in the form of new business ventures. In this model an entrepreneur could be defined as "someone who acts with ambition beyond that supportable by the resources currently under his control, in relentless pursuit of opportunity" (a definition common to entrepreneurship professors Howard Stevenson and Jeffry Timmons). Pinchot (1985) coined the term Intrapreneurship to describe entrepreneurial-like activities inside organizations and government. The concept is commonly referred to as Corporate Entrepreneurship.
The place of the disharmony-creating and idiosyncratic entrepreneur in traditional economic theory (which describes many efficiency-based ratios assuming uniform outputs) presents theoretic quandaries. William Baumol has added greatly to this area of economic theory and was recently honored for it at the 2006 annual meeting of the American Economic Association.
Entrepreneurship is widely regarded as an integral player in the business culture of American life, and particularly as an engine for job creation and economic growth. Robert Sobel published ''The Entrepreneurs: Explorations Within the American Business Tradition'' in 1974.
The Entrepreneur
Entrepreneurs have many of the same character traits as leaders. Similarly to the early great man theories of leadership; however trait-based theories of entrepreneurship are increasingly being called into question. Entrepreneurs are often contrasted with managers and administrators who are said to be more methodical and less prone to risk-taking. Although such person-centric models of entrepreneurship have shown to be of questionable validity, a vast but clearly dated literature studying the entrepreneurial personality found that certain traits seem to be associated with entrepreneurs:
★ David McClelland (1961) described the entrepreneur as primarily motivated by an overwhelming need for achievement and strong urge to build.
★ Collins and Moore (1970) studied 150 entrepreneurs and concluded that they are tough, pragmatic people driven by needs of independence and achievement. they seldom are willing to submit to authority.
★ Bird (1992) sees entrepreneurs as mercurial, that is, prone to insights, brainstorms, deceptions, ingeniousness and resourcefulness. they are cunning, opportunistic, creative, and unsentimental.
★ Cooper, Woo, & Dunkelberg (1988) argue that entrepreneurs exhibit extreme optimism in their decision-making processes. In a study of 2994 entrepreneurs they report that 81% indicate their personal odds of success as greater then 70% and a remarkable 33% seeing odds of success of 10 out of 10.
★ Busenitz and Barney (1997) claim entrepreneurs are prone to overconfidence and over generalisations.
★ Cole (1959) found there are four types of entrepreneur: the innovator, the calculating inventor, the over-optimistic promoter, and the organisation builder. These types are not related to the personality but to the type of opportunity the entrepreneur faces.
Characteristics of entrepreneurship
★ The entrepreneur has an enthusiastic vision, the driving force of an enterprise.
★ The entrepreneur's vision is usually supported by an interlocked collection of specific ideas not available to the marketplace.
★ The overall blueprint to realize the vision is clear, however details may be incomplete, flexible, and evolving.
★ The entrepreneur promotes the vision with enthusiastic passion.
★ With persistence and determination, the entrepreneur develops strategies to change the vision into reality.
★ The entrepreneur takes the initial responsibility to cause a vision to become a success.
★ Entrepreneurs take prudent risks. They assess costs, market/customer needs and persuade others to join and help.
★ An entrepreneur is usually a positive thinker and a decision maker.
Notes
1. ''The Economist'', March 11, 2006, pp 67.
See also
;General:Entrepreneur, Entrepreneurial Economics, Political entrepreneur, Internet Entrepreneur, Entrepreneurship education
;Business: Business incubators, Business opportunity, Junior enterprise
;Lists: List of management topics, List of social entrepreneurs
;Other:Bootstrap funding
References and external articles
;Books and publications
★ Bird, B. (1992)"The Roman God Mercury: An Entrepreneurial Archetype", ''Journal of Management Enquiry'', vol 1, no 3, September, 1992.
★ Busenitz, L. and Barney, J. (1997) "Differences between entrepreneurs and managers in large organizations", ''Journal of Business Venturing'', vol 12, 1997.
★ Cantillon, R. ''Essai sur la Nature du Commerce in Général''. 1759 [1]
★ Casson, M. (1982) ''The Entrepreneur: An Economic Theory'' Reprint. 1991.
★ Casson, M. (2003) ''The Entrepreneur: An Economic Theory, second edition", Edward Elgar Publishing 2003.
★ Cole, A. (1959) ''Business Enterprise in its Social Setting'', Harvard University Press, Boston, 1959.
★ Collins, J. and Moore, D. (1970) ''The Organization Makers'', Appleton-Century-Crofts, New York, 1970.
★ Corrigan, S (2005) "The Entrepreneur's Guide to the Business cycle" [2]
★ Drucker, P. (1970) "Entrepreneurship in Business Enterprise", ''Journal of Business Policy'', vol 1, 1970.
★ Florida, R. (2002) The Rise of the Creative Class: And How It's Transforming Work, Leisure, Community and Everyday Life. Perseus Books Group.
★ Folsom Jr., Burton W. (1987) ''The Myth of the Robber Barons'', Young America.
★ Hebert, R.F. and Link, A.N. (1988) The Entrepreneur: Mainstream Views and Radical Critiques. New York: Praeger, 2nd edition.
★ Knight, K. (1967) "A descriptive model of the intra-firm innovation process", ''Journal of Business of the University of Chicago'', vol 40, 1967.
★ McClelland, D. ''The Achieving Society'', Van Nostrand, Princeton NJ, 1961.
★ Murphy, P. J. (2004). ''A logic for entrepreneurial discovery''. UMI/ProQuest Learning and Information Company.
★ Murphy, P. J., Liao, J., & Welsch, H. P. (2006). A conceptual history of entrepreneurial thought. ''Journal of Management History, 12''(1), 12-35.
★ Pinchot, G. (1985) ''Intrapreneuring'', Harper and Row, New York, 1985.
★ Sarasvathy,S. (2001). What makes entrepreneurs entrepreneurial? Working paper, University of Washington. [retrieved from http://www.effectuation.org/ftp/effectua.pdf]
★ Schumpeter, J. (1950) ''Capitalism, Socialism, and Democracy'', 3rd edition, Harper and Row, New York, 1950.
★ Shane S., (2003) ''A general theory of entrepreneurship : the individual-opportunity nexus '' in New Horizons in Entrepreneurship series, Edward Elgar Publishing.
★ StartupStudio Interviews with entrepreneurs including the founders of Southwest Airlines, FeedBurner, Tazo Tea, Coinstar, blip.tv, Esprit, Ravenswood Winery, Spinner Networks, ZipRealty, WordPress
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