Concepts and Definitions of Entrepreneurship

CONCEPTS OF ENTREPRENEURSHIP : 

Various economists, sociologists and psychologists have used different approaches to explain the concept of entrepreneurship. These approaches are summarized below :

1. Economic Approach : Economists like Richard Cantillon, Adam Smith, J.B. Say, Carl Menger, Joseph Schumpeter have explained the concept of entrepreneurship from the economic point of view. According to the economic approach entrepreneurship is the process of initiating a new venture by organizing the resources required and accepting the risk involved therein. Entrepreneurship and ultimately economic development takes place when the economic condition is favourable. An entrepreneur buys the factors of production at a certain price, converts them into products and sells them at an uncertain price. Thus, economists have emphasized two main aspects, viz. innovation and risk bearing. The entrepreneurs create new things, use new technology, find new sources of raw material, source of new markets and so on. By the innovation function entrepreneurs make available new products to the people and help to raise their standard of living.

2. Sociological Approach : Sociologists have emphasized the impact of social system, ethics, values, customs, and perception on entrepreneurship. They hold that entrepreneurship flourishes in those societies, which recognize the services of entrepreneurs, respect them and give approval to the business and wealth creation. According to them entrepreneur represents society’s model personality.

3. Psychological Approach : According to the psychological approach entrepreneurship is influenced by factors like high achievement, motive, self-reliance, creativity, desire to regain the lost status. The psychological approach is developed by Macmilan and Hansen.

4. Modern Approach : The modern approach states that entrepreneurs have to function under adverse conditions. There is a scarcity of labour, shortage of capital and uncertain market. Hence they require to possess organizing skills, innovative ability, decision making ability, risk bearing capacity .

Definition of Entrepreneurship :

Let us now study select definitions of entrepreneurship

 :1. Higgins B : Entrepreneurship is the function of seeking investment and production opportunity, organizing an enterprise to undertake a new production, process, raising capital, hiring labour, arranging the supply of raw materials, finding site, introducing new techniques and commodities, discovering new sources of raw materials, and selecting top managers of day-to-day operations of the enterprise.

2. Joseph Schumpeter : Entrepreneurship essentially consists in doing things that are not generally done in the ordinary course of business routine.

3. Peter Drucker : Entrepreneurship occurs when resources are redirected to progressive opportunities not used to ensure administrative efficiency. Entrepreneurship is not natural; it is not creative. It is work. Entrepreneurship requires entrepreneurial management.

4. John Kao : Entrepreneurship is an attempt to create value through recognition of business opportunity, the management of risk taking appropriate to the opportunity and through the communicative and managerial skills to mobilize human, financial and material resources