Entrepreneur

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Andrew Carnegie - a famous entrepreneur

An entrepreneur is a person who exercises initiative by organising a venture to benefit from an opportunity rather than working as an employee. Entrepreneurs play a key role in any economy. These are the people who have the skills and initiative necessary to anticipate current and future needs and bring good new ideas to market. Entrepreneurs who prove to be successful in taking on the risks of a startup are rewarded with profits, fame and continued growth opportunities. Those who fail suffer losses and become less prevalent in the markets. Many fail, lose money, and close the business.[1] [2] The entrepreneur assumes all the risks and rewards of the venture and is usually the sole proprietary, a partner or the owner of the majority of shares in an incorporated venture. As the main decision maker the entrepreneur monitors and controls the business activities.

According to Joseph Alois Schumpeter (1883 - 1950) entrepreneurs regard profit as a standard for measuring achievement or success and discovered that they:

  • Value self-reliance;
  • Strive for distinction through excellence;
  • Are highly optimistic;
  • Favor challenges of medium risk.

Entrepreneurship[3] is one of the resources economists categorize as integral to production, the other three being land/natural resources, labor and capital. An entrepreneur combines the first three of these to manufacture goods or provide services. He or she typically creates a business plan, hires labor, acquires resources andfinancing, and provides leadership and management for the business.

Entrepreneurs commonly face many obstacles when building their companies.

Given the riskiness of a new venture, the acquisition of capital funding is particularly challenging, and many entrepreneurs deal with it via bootstrapping.

While some entrepreneurs are lone players struggling to get small businesses off the ground on a shoestring, others take on partners armed with greater access to capital and other resources.

Definitions of Entrepreneurship[change | change source]

Economists have never had a consistent definition of "entrepreneur" or "entrepreneurship" (the word "entrepreneur" comes from the French verb entreprendre, meaning "to undertake"). Though the concept of an entrepreneur existed and was known for centuries, the classical and neoclassical economists left entrepreneurs out of their formal models:

They assumed that perfect information would be known to fully rational actors, leaving no room for risk-taking or discovery. It wasn't until the middle of the 20th century that economists seriously attempted to incorporate entrepreneurship into their models.

Three thinkers were central to the inclusion of entrepreneurs: Joseph Schumpeter, Frank Knight and Israel Kirzner. Schumpeter suggested that entrepreneurs – not just companies – were responsible for the creation of new things in the search of profit. Knight focused on entrepreneurs as the bearers of uncertainty and believed they were responsible for risk premiums in financial markets. Kirzner thought of entrepreneurship as a process that led to discovery.[4]

References[change | change source]

  1. "Check if you are an entrepreneur. - Untamed Potential" (in en-GB). Untamed Potential. 2017-08-28. http://untamedpotential.com/check-if-you-are-an-entrepreneur/.
  2. Black, Ervin L. et al 2010. Entrepreneurial success: differing perceptions of entrepreneurs and venture capitalists. The International Journal of Entrepreneurship and Innovation. 11 (3): 189–198. [1]
  3. "Entrepreneurship" (in en). Wikipedia. 2017-11-21. https://en.wikipedia.org/w/index.php?title=Entrepreneurship&oldid=811386542.
  4. Staff, Investopedia (2006-05-01). "Entrepreneur" (in en-US). Investopedia. https://www.investopedia.com/terms/e/entrepreneur.asp.