Entrepreneurship & Small Business Management – Entrepreneurship is a powerful force and human spirit that has made possible the world’s great geographical discoveries. Entrepreneurship is an important activity for bringing about changes in the economy and society not only in a country but also in the world.
Entrepreneurship is the immense strength and spirit of humanity that has made possible the world’s great geographical discoveries.
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It is the amazing powers of man that have infused our civilization with various products, technologies and pioneering ideas.
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It affects all aspects of life and society’s politico-legal, socio-cultural, technological, economic and demographic environment. Entrepreneurship is an epoch-making force that has bound global societies with its exchange activity since the earliest periods of our human history.
It is also a fundamental strength of business organizations. The impetus for change towards future commercial prosperity is the result of the entrepreneurial spirit of the people. Entrepreneurship is therefore a fundamental discipline for business administration students to learn.
The concept of entrepreneurship is understood in different ways by different scholars and writers. There is no agreed definition of the term among experts.
Several dimensions have been used to explain the term. Definitions also change over time.
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Therefore, a chronological description of the movement path of entrepreneurship definition changes will clarify the understanding for the readers.
“Entrepreneurship means taking the risk of buying at a fixed price and selling at an uncertain price.” -Ricardo Cantillon
The concept focuses on trading goods and bearing the risk associated with the act of entrepreneurship.
“Entrepreneurship is any kind of innovative situation that can affect the welfare of an entrepreneur.” -Joseph A. Schumpeter (1934).
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Schumpeter recognizes entrepreneurship as a profitable activity that involves any form of innovation. Innovation is doing things in a new and better way. It adds utility to existing operations or products.
Lamb describes entrepreneurship as a function of economic activity engaged in innovation. He also shows the social orientation of entrepreneurship as it is involved in social welfare and well-being.
“Entrepreneurship is the purposeful activity of an individual or group of related individuals, undertaken to initiate, maintain or increase profits through the production or distribution of economic goods and services.” – AH Cole (1959).
The definition recognizes entrepreneurship as an intentional human activity to make a profit through the economic activities of production and/or distribution of goods and services.
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This can be an individual or group activity. But the central focus is making a profit. That is. To initiate, maintain or increase profits, entrepreneurship is practiced
Ronstadt points out that wealth is consumed by individuals who take the most risk in terms of equity, time and/or career commitment or who provide value for a particular product or service.
The product or service may or may not be new or unique, but the entrepreneur must add value somehow by acquiring and finding the necessary skills and resources.
“Entrepreneurship is the process of creating something new with value by devoting the necessary time and effort, assuming the associated financial, psychological and social risks, and obtaining monetary and personal satisfaction and freedom as a result.”
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The authors see entrepreneurship as the dedicated efforts of individuals to create something of value to the people of society. They also believe that entrepreneurship is a worthwhile pursuit.
It not only gives financial rewards but also freedom and personal satisfaction which is a great incentive to encourage entrepreneurial action. They say that entrepreneurship is also a risk taking activity.
It includes three types of risk: financial, psychological and social risk. Entrepreneurship takes this risk and does everything to reap the rewards by providing something of value to humanity.
Entrepreneurship, therefore, involves missionary endeavors that involve the risk of innovating something of value from which the entrepreneur will reap financial and psychological rewards.
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The term entrepreneurship is derived from a French word ‘Entreprendre’ which means ‘venture’, ‘pursuing opportunities’ or ‘meeting needs and aspirations through companies in innovation and leadership’. The word first appeared in a French dictionary in 1723.
Ricardo Cantillon, an Irish banker active in France (Kent, 1984), is believed to have been the first to use the term ‘entrepreneur’ in economics as “an agent who acquires the materials to produce goods at a certain price and through /collects inputs.Coordinating those inputs produces goods whose selling price is uncertain relative to the cost of production.
It is also believed that the French JB. Say (1824) first used the term “entrepreneur” to refer to an economic agent who brings together the factors of production in such a way as to create new wealth.
‘A manager of an economic enterprise, especially one who organizes, owns, manages and assumes the risk of a business’.
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The Oxford English Dictionary revised the meaning of entrepreneur in /1933 to mean ‘a contractor who acts as an intermediary between capital and labour’.
Like other economic concepts, entrepreneurship has been the subject of much debate and discussion. This is an incomplete concept.
Hence, it has been defined differently by different authors. Some call entrepreneurship ‘risk-tolerant’, others see it as innovation and still others see it as ‘thrill-seeking’. Let’s look at some key definitions of entrepreneurship to understand what entrepreneurship is.
“Entrepreneurship is the effort to create value by identifying business opportunities, taking risks appropriate to the opportunities, and using communication and managerial skills to mobilize the human, financial, and material resources necessary to make a project successful.”
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In the opinion of A.H. has “Entrepreneurship is the purposeful activity of an individual or group of related individuals to initiate, maintain or increase profits through the production or distribution of economic goods and services”.
According to Schumpeter: “Entrepreneurship is based on purposeful and planned innovation. It included not only self-employed entrepreneurs, but also business leaders and managers who carry out innovative tasks.
In all the above definitions, entrepreneurship refers to the activities that an entrepreneur performs in setting up an enterprise. As management is thought of as what managers do, entrepreneurship can be thought of as what entrepreneurs do. In other words, entrepreneurship is entrepreneurship.
Entrepreneurship is a process that involves several actions to establish a venture. So this is the process of birthing a new venture. ‘
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Innovation and risk taking are considered two basic elements of entrepreneurship. Let us understand what these two words mean.
Innovation means doing something new or different is a necessary condition for a person to be called an entrepreneur.
Entrepreneurs are constantly looking for something different and unique to meet the changing demands of customers.
They may or may not be inventors of new products or new methods of production, but they have the ability to anticipate the potential of using the inventions for their businesses. Let some facts speak.
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Nowadays, to meet the changing preferences of customers, fruit juice is sold in small containers (mango fruti) instead of bottles, so that customers can carry it and throw away the juice after drinking it. Let’s take another example.
Lipton offers its tea in small packages known as ‘pudias’ to meet the demands of its rural customers.
You may have heard of Henry Ford, the founder of the Ford Motor Company in the United States.
Remember that Henry Ford did not invent the car himself. He saw the people’s desire for passenger cars at slightly lower rates and adopted new methods of mass production to offer passengers cars at cheaper prices.
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Since customer tastes and preferences are always changing, the entrepreneur must apply continuous research after innovation to meet changing customer demand for products.
Starting a new venture always involves risks and trying something new and different is also risky.
The reason is not hard to find. The company may make profit or loss due to various factors like increased competition, changes in customer preferences, scarcity of raw materials etc.
He should be a risk taker, not a risk avoider. His ability to take risks allows him to persevere even when he fails in an endeavor or a venture, and this ultimately helps him succeed.