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Entrepreneurship is the practice of starting new organizations, particularly new businesses generally in response to identified opportunities. Entrepreneurship is often a difficult undertaking, as a majority of new businesses fail. Entrepreneurial activities are substantially different depending on the type of organization that is being started. Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only part-time) to major undertakings creating many job opportunities.

Many "high-profile" entrepreneurial ventures seek venture capital or angel funding in order to raise capital to build the business. Many kinds of organizations now exist to support would-be entrepreneurs, including specialized government agencies, business incubators, science parks, and some NGOs.

Contents 1 History of Entrepreneurship 2 The Entrepreneur 3 Characteristics of entrepreneurship 4 See also 5 References

History of Entrepreneurship

The understanding of entrepreneurship owes a lot to the work of economist Joseph Schumpeter and the Austrian School of economics. In Schumpeter (1950), an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation. Entrepreneurship forces "creative destruction" across markets and industries, simultaneously creating new products and business models others. In this way, creative destruction is largely responsible for the dynamism of industries and long-run economic growth. Despite Schumpeter's early 20th-century contributions, the traditional microeconomic theory of economics has had little room for entrepreneurs in their theoretical frameworks (instead assuming that resources would find each other through a price system). (ref. The Economist Magazine, March 11, 2006, pp 67).

Entrepreneurship received a boost in the formalized creation of so-called incubators and science parks (e.g., those listed at NBIA.org) where businesses can start at a small scale, share services and space while they grow, and eventually move into space of their own when they have achieved a large enough scale to be viable stand-alone businesses. Also, entrepreneurship is being employed to revitalize fading downtowns and inner cities, which may have excellent resources but suffer from a lack of spirited development.

For Frank H. Knight (1967) and Peter Drucker (1970) entrepreneurship is about taking risk. The behavior of the entrepreneur reflects a kind of person willing to put his or her career and financial security on the line and take risks in the name of an idea, spending much time as well as capital on an uncertain venture.

Still another view of entrepreneurship is that it is the process of discovering, evaluating, and exploiting opportunities, which go on to reify themselves in the form of new business ventures. In this model an entrepreneur could be defined as "someone who acts with ambition beyond that supportable by the resources currently under his control, in relentless pursuit of opportunity" (a definition common to entrepreneurship professors Howard Stevenson and Jeffry Timmons). Pinchot (1985) coined the term Intrapreneurship to describe entrepreneurial-like activities inside organizations and government. The concept is commonly referred to as Corporate Entrepreneurship.

The place of the disharmony-creating and idiosyncratic entrepreneur in traditional economic theory (which describes many efficiency-based ratios assuming uniform outputs) presents theoretic quandaries. William Baumol has added greatly to this area of economic theory and was recently honored for it at the 2006 annual meeting of the American Economic Association. (source: The Economist, March 11, 2006, pp 67)

Entrepreneurship is widely regarded as an integral player in the business culture of American life, and particularly as an engine for job creation and economic growth. Robert Sobel published The Entrepreneurs: Explorations Within the American Business Tradition in 1974.

The Entrepreneur

Entrepreneurs have many of the same character traits as leaders. Similarly to the early great man theories of leadership; however trait-based theories of entrepreneurship are increasingly being called into question. Entrepreneurs are often contrasted with managers and administrators who are said to be more methodical and less prone to risk-taking. Although such person-centric models of entrepreneurship have shown to be of questionable validity, a vast but clearly dated literature studying the entrepreneurial personality found that certain traits seem to be associated with entrepreneurs:

• for example, in 1961, David McClelland described the entrepreneur as primarily motivated by an overwhelming need for achievement and strong urge to build.
• Collins and Moore (1970) studied 150 entrepreneurs and concluded that they are tough, pragmatic people driven by needs of independence and achievement. they seldom are willing to submit to authority.
• Bird (1992) sees entrepreneurs as mercurial, that is, prone to insights, brainstorms, deceptions, ingeniousness and resourcefulness. they are cunning, opportunistic, creative, and unsentimental.
• Busenitz and Barney (1997) claim entrepreneurs are prone to overconfidence and over generalisations.
• According to Cole (1959), there are four types of entrepreneur: the innovator, the calculating inventor, the over-optimistic promoter, and the organisation builder. These types are not related to the personality but to the type of opportunity the entrepreneur faces.
• Burton W. Folsom, Jr. distinguishes between what he calls a political entrepreneur and a market entrepreneur. The political entrepreneur uses political influences to gain income through subsidies, protectionism, government-granted monopoly, government contracts, or other such favorable arrangements with government(s) (see crony capitalism and corporate welfare). The market entrepreneur operates without special favors from government.

Characteristics of entrepreneurship

• The entrepreneur has an enthusiastic vision, the driving force of an enterprise.
• The entrepreneur's vision is usually supported by an interlocked collection of specific ideas not available to the marketplace.
• The overall blueprint to realize the vision is clear, however details may be incomplete, flexible, and evolving.
• The entrepreneur promotes the vision with enthusiastic passion.
• With persistence and determination, the entrepreneur develops strategies to change the vision into reality.
• The entrepreneur takes the initial responsibility to cause a vision to become a success.
• Entrepreneurs take prudent risks. They assess costs, market/customer needs and persuade others to join and help.
• An entrepreneur is usually a positive thinker and a decision maker.

See also

• Entrepreneur
• Entrepreneurial Economics
• Entrepreneurship Education
• List of management topics
• Political entrepreneur
• List of social entrepreneurs
• Junior enterprise
• Business incubators
• Business opportunity
• Bootstrap funding
• Internet Entrepreneur

References

• Bird, B. (1992)"The Roman God Mercury: An Entrepreneurial Archetype", Journal of Management Enquiry, vol 1, no 3, September, 1992.
• Busenitz, L. and Barney, J. (1997) "Differences between entrepreneurs and managers in large organizations", Journal of Business Venturing, vol 12, 1997.
• Cantillon, R. Essai sur la Nature du Commerce in Général. 1759 [1]
• Casson, M. (1982) The Entrepreneur: An Economic Theory Reprint. 1991.
• Casson, M. (2003) The Entrepreneur: An Economic Theory, second edition", Edward Elgar Publishing 2003.
• Cole, A. (1959) Business Enterprise in its Social Setting, Harvard University Press, Boston, 1959.
• Collins, J. and Moore, D. (1970) The Organization Makers, Appleton-Century-Crofts, New York, 1970.
• Corrigan, S (2005) "The Entrepreneur's Guide to the Business cycle" [2]
• Drucker, P. (1970) "Entrepreneurship in Business Enterprise", Journal of Business Policy, vol 1, 1970.
• Florida, R. (2002) The Rise of the Creative Class: And How It's Transforming Work, Leisure, Community and Everyday Life. Perseus Books Group.
• Folsom Jr., Burton W. (1987) The Myth of the Robber Barons, Young America.
• Hebert, R.F. and Link, A.N. (1988) The Entrepreneur: Mainstream Views and Radical Critiques. New York: Praeger, 2nd edition.
• Knight, K. (1967) "A descriptive model of the intra-firm innovation process", Journal of Business of the University of Chicago, vol 40, 1967.
• McClelland, D. The Achieving Society, Van Nostrand, Princeton NJ, 1961.
• Murphy, P. J. (2004). A logic for entrepreneurial discovery. UMI/ProQuest Learning and Information Company.
• Murphy, P. J., Liao, J., & Welsch, H. P. (2006). A conceptual history of entrepreneurial thought. Journal of Management History, 12(1), 12-35.
• Pinchot, G. (1985) Intrapreneuring, Harper and Row, New York, 1985.
• Sarasvathy,S. (2001). What makes entrepreneurs entrepreneurial? Working paper, University of Washington. [retrieved from http://www.effectuation.org/ftp/effectua.pdf]
• Schumpeter, J. (1950) Capitalism, Socialism, and Democracy, 3rd edition, Harper and Row, New York, 1950.
• Shane S., (2003) A general theory of entrepreneurship : the individual-opportunity nexus in New Horizons in Entrepreneurship series, Edward Elgar Publishing.