WHAT IS ENTREPRENEURSHIP?
What is meant by entrepreneurship? The concept of entrepreneurship
was first established in the 1700s, and the meaning has evolved ever since.
Many simply equate it with starting one’s own business. Most economists believe
it is more than that.
To some economists, the entrepreneur is one who is willing to bear
the risk of a new venture if there is a significant chance for profit. Others
emphasize the entrepreneur’s role as an innovator who markets his innovation.
Still other economists say that entrepreneurs develop new goods or processes
that the market demands and are not currently being supplied.
In the 20th century, economist Joseph Schumpeter (1883-1950)
focused on how the entrepreneur’s drive for innovation and improvement creates
upheaval and change. Schumpeter viewed entrepreneurship as a force of “creative
destruction.” The entrepreneur carries out “new combinations,” thereby helping
render old industries obsolete. Established ways of doing business are
destroyed by the creation of new and better ways to do them.
Business expert Peter Drucker (1909-2005) took this idea further,
describing the entrepreneur as someone who actually searches for change,
responds to it, and exploits change as an opportunity. A quick look at changes
in communications—from typewriters to personal computers to the Internet—illustrates
these ideas.
Most economists today agree that entrepreneurship is a necessary
ingredient for stimulating economic growth and employment opportunities in all
societies. In the developing world, successful small businesses are the
primary engines of job creation, income growth, and poverty reduction.
Therefore, government support for entrepreneurship is a crucial strategy for
economic development.
As the Business and Industry Advisory Committee to the
Organization for Economic Cooperation and Development (OECD) said in 2003,
“Policies to foster entrepreneurship are essential to job creation and
economic growth.” Government officials can provide incentives that encourage
entrepreneurs to risk attempting new ventures. Among these are laws to enforce
property rights and to encourage a competitive market system.
The culture of a community also may influence how much
entrepreneurship there is within it. Different levels of entrepreneurship may
stem from cultural differences that make entrepreneurship more or less
rewarding personally. A community that accords the highest status to those at
the top of hierarchical organizations or those with professional expertise may
discourage entrepreneurship. A culture or policy that accords high status to
the “self-made” individual is more likely to encourage entrepreneurship.
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