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Entrepreneurship is the set of activities performed by an entrepreneur. It is the general trend of setting up new enterprises in a society. Entrepreneurship is an important factor for industrial growth and development of a nation. It helps to generate a steady stream of business opportunities.
Entrepreneurship is essentially a creative activity or it is an innovative function. It is an act of initiative, drive, commitment, diligence, perseverance, organized effort and achievement outlook to undertake some specific functions of performing productive activities and the capacity to bear and associate with the investment.
Entrepreneurship is the dynamic process of creating incremental wealth by individuals or groups through use of resources.
According to Joseph Schumepeter, “An Entrepreneur in an advanced economy is an individual who introduces something new in the economy, a method of production not yet tested by experience in the branch of manufacture concerned, a product with which consumers are not yet familiar, a new source of raw material or of new market and the like”.
A dynamic theory of entrepreneurship was first advocated by Schumpeter (1949) who considered entrepreneurship as the catalyst that disrupts the stationary circular flow of the economy and thereby initiates and sustains the process of development. Embarking upon ‘new combinations’ of the factors of production-which he succinctly terms innovation-the entrepreneur activates the economy to a new level of development. The concept of innovation and its corollary development embraces five functions:
- Introduction of a new good,
- Introduction of a new method of production,
- Opening of a new market,
- Conquest of a new source of supply of raw materials and
- Carrying out of a new organization of any industry.
Schumpeter represents a synthesis of different notions of entrepreneurship. His concept of innovation included the elements of risk taking, superintendence and coordination. However, Schumpeter stressed the fact that these attributes unaccompanied by the ability to innovate would not be sufficient to account for entrepreneurship (Gopakumar, 1995).
According to the Harvard School (Cole, 1949) entrepreneurship comprises any purposeful activity that initiate, maintain or develop a profit-oriented business in interaction with internal situation of the business or with the economic, political and social circumstances surrounding the business. This approach emphasized two types of activities: the organization or coordination activity, and the sensitivity to the environmental characteristics that effect decision making.
Despite its stress on the human factor in the production system, the Harvard tradition never explicitly challenged the equilibrium – obsessed orthodox economic theory. This was challenged by the neo-Austrian School, who argued that disequilibrium, rather than equilibrium was the likely scenario and as such, entrepreneurs operate under fairly uncertain circumstances. The essence of entrepreneurship consists in the alertness of market participants to profit opportunities. A typical entrepreneur, according to Kirzner (1979) is the arbitrageur, the person who discovers opportunity at low prices and sells the same items at high prices because of intertemporal and interspatial demands.
To sum up, major theories and expositions from Cantillon to Kirzner view the entrepreneur as performing various functional roles as risk taker, decision maker, organizer or coordinator, innovator, employer of factors of production, gap seeker and input completer, arbitrageur, etc. The most appropriate definition of entrepreneurship that would fit into the rural development context, argued here, is the broader one, the one which defines entrepreneurship as “a force that mobilizes other resources to meet the unmet market demands”, “the ability to create and build something from practically nothing”, “the process of creating value by pulling together a unique package of resources to exploit an opportunity”. Entrepreneurship has been defined in several ways and is considered as:
- A theory of evolution of economic activities
- A continuous process of economic development
- An ingredient to economic development
- Essentially a creative activity or an innovative function
- A risk taking factor which is responsible for an end result.
- Usually understood with reference to individual business
- Name given to the factor of production which performs the functions of an enterprise
- Creates awareness among people about economic activity
- Generates self employment and additional employment.
Requirements to be an entrepreneur
- Innovative
- Creative
- Risk taking
- Organization skills
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Participants