Entrepreneurship is the creation or extraction of economic value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values than simply economic ones.
An entrepreneur is an individual who creates and/or invests in one or more businesses, bearing most of the risks and enjoying most of the rewards. The process of setting up a business is known as “entrepreneurship”. The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and business/or procedures.
More narrow definitions have described entrepreneurship as the process of designing, launching and running a new business, which is often similar to a small business, or as the “capacity and willingness to develop, organize and manage a business venture along with any of its risks to make a profit.”[5] The people who create these businesses are often referred to as “entrepreneurs”. While definitions of entrepreneurship typically focus on the launching and running of businesses, due to the high risks involved in launching a start-up, a significant proportion of start-up businesses have to close due to “lack of funding, bad business decisions, government policies, an economic crisis, lack of market demand, or a combination of all of these.”
In the field of economics, the term entrepreneur is used for an entity which has the ability to translate inventions or technologies into products and services. In this sense, entrepreneurship describes activities on the part of both established firms and new businesses.
Entrepreneurship refers to the process of identifying, creating, and pursuing opportunities to develop and manage a business venture. It involves taking risks, organizing resources, and innovating to generate value and achieve business success. Here are the key aspects of entrepreneurship:
Meaning: Entrepreneurship encompasses the activities and mindset of individuals who start new businesses, introduce innovative products or services, and drive economic growth. Entrepreneurs are typically driven by their vision, passion, and willingness to assume risks.
Types of Entrepreneurship:
There are various types of entrepreneurship, including:
a. Small Business Entrepreneurship:
Small Business Entrepreneurship refers to the establishment and operation of small-scale enterprises that serve local markets and provide traditional products or services. It is a type of entrepreneurship that focuses on creating and managing businesses on a smaller scale. Here are key aspects of small business entrepreneurship:
Size and Scope:
Small businesses typically have limited resources, a smaller customer base, and operate within a specific geographical area. They are characterized by their relatively modest size in terms of revenue, assets, and number of employees.
Local Market Focus:
Small business entrepreneurs often cater to the needs of their local community or a specific target market. They aim to provide goods or services that meet the demands of the local population.
Personal Ownership and Management:
Small businesses are usually owned and managed by one or a few individuals, who are responsible for making decisions, managing operations, and ensuring the success of the business.
Customer Relationships:
Small business entrepreneurs prioritize building strong relationships with their customers. They often offer personalized services, understand their customers’ preferences, and provide a more personalized experience compared to larger corporations.
Flexibility and Adaptability:
Small businesses have the advantage of being more flexible and nimble in responding to market changes and customer demands. They can quickly adapt their strategies, offerings, and operations to meet evolving needs.
Local Economic Impact:
Small business entrepreneurship contributes significantly to local economies. These enterprises create employment opportunities, support local suppliers, and contribute to the overall economic development of the community.
Challenges:
Small business entrepreneurs face unique challenges such as limited access to capital, competition from larger corporations, regulatory compliance, and balancing day-to-day operations with strategic planning.
Opportunities for Growth:
While small businesses may start with a local focus, successful entrepreneurs may seek growth opportunities by expanding into new markets, introducing new products or services, or scaling their operations.
Importance:
Small business entrepreneurship plays a vital role in the economy as it stimulates economic growth, fosters innovation, and provides employment opportunities. It contributes to the diversity and vibrancy of local communities, preserves traditional industries, and promotes entrepreneurial skills and values.
Support and Resources:
Governments, organizations, and institutions provide various forms of support and resources to encourage small business entrepreneurship. These may include access to funding, training programs, mentorship, and networking opportunities.
Small business entrepreneurship involves establishing and operating small-scale enterprises that serve local markets. It focuses on meeting the needs of the community, building strong customer relationships, and contributing to local economic development. Small business entrepreneurs face unique challenges but also have the flexibility to adapt and grow. Their ventures play a significant role in fostering economic growth, innovation, and community vitality.
b. Scalable Startup Entrepreneurship:
Scalable Startup Entrepreneurship refers to the pursuit of innovative business ideas with the potential for rapid growth and scalability. It involves creating and managing startup ventures that aim to disrupt industries, introduce new technologies, and capture significant market share. Here are the key aspects of scalable startup entrepreneurship:
Innovation and Disruption:
Scalable startups are driven by innovation and aim to disrupt existing industries or create new markets. They introduce novel ideas, technologies, or business models that offer unique value propositions and have the potential to revolutionize the way products or services are delivered.
High Growth Potential:
Scalable startups focus on achieving rapid and substantial growth in a relatively short period. They aim to capture a significant market share and scale their operations quickly to meet increasing demand. The scalability factor enables exponential growth rather than linear growth.
Technology and Digital Focus:
Many scalable startups are technology-driven and leverage digital platforms and tools to create, deliver, and scale their products or services. They harness emerging technologies such as artificial intelligence, blockchain, or cloud computing to gain a competitive edge and disrupt traditional industries.
Investment and Funding:
Scalable startups often require substantial initial investments to develop and scale their business models. They seek funding from angel investors, venture capital firms, or crowdfunding platforms to finance research and development, product/service launch, marketing, and expansion activities.
Scalability and Replicability:
Scalable startups design their business models and operations in a way that allows for rapid expansion. They focus on scalability by developing systems, processes, and technologies that can be easily replicated, enabling efficient growth and market penetration.
Agility and Adaptability:
Scalable startup entrepreneurs operate in dynamic and competitive environments. They must be agile and adaptable, able to respond quickly to market changes, customer feedback, and emerging trends. This flexibility allows them to pivot their strategies, refine their offerings, and seize new opportunities.
Talent Acquisition:
Scalable startups require a skilled and dedicated workforce to fuel their growth. Entrepreneurs in this space often attract top talent by offering competitive compensation packages, an entrepreneurial work culture, and opportunities for personal and professional growth.
Exit Strategies:
Scalable startup entrepreneurs aim for successful exits that generate substantial returns for themselves and their investors. Exit strategies may include initial public offerings (IPOs), mergers and acquisitions (M&A), or strategic partnerships.
Global Reach:
Scalable startups have the potential to expand beyond their local markets and reach a global audience. They leverage technology and digital platforms to access international markets, scale their operations globally, and tap into a larger customer base.
Economic Impact:
Scalable startup entrepreneurship drives economic growth by creating job opportunities, fostering innovation, attracting investments, and generating tax revenues. These ventures have the potential to disrupt industries, create new market segments, and contribute to overall economic development.
Scalable startup entrepreneurship focuses on innovative ideas with high growth potential and scalability. It leverages technology, attracts investments, and aims for rapid expansion. Scalable startups disrupt industries, create jobs, and contribute to economic growth while seeking successful exits. They operate in dynamic environments, prioritize innovation, and embrace agility and adaptability.
c. Social Entrepreneurship:
Social Entrepreneurship refers to the practice of using entrepreneurial approaches and innovative business models to address social, environmental, or community challenges. Social entrepreneurs aim to create sustainable and impactful solutions that generate positive social change. Here are the key aspects of social entrepreneurship:
Social Impact Focus:
Social entrepreneurship is primarily driven by a desire to address social or environmental issues. It goes beyond traditional profit-making objectives and emphasizes the achievement of social, environmental, or community impact as its core mission.
Triple Bottom Line:
Social entrepreneurs operate with a triple-bottom-line approach, considering not only financial returns but also social and environmental outcomes. They seek to create a balance between people, the planet, and profit, ensuring that their ventures deliver benefits across these three dimensions.
Innovative Solutions:
Social entrepreneurs employ innovative approaches, creative thinking, and entrepreneurial strategies to tackle complex social problems. They develop new products, services, or business models that address unmet needs, drive systemic change, or improve the well-being of marginalized communities.
Sustainability:
Social entrepreneurs focus on creating sustainable solutions that can be maintained and scaled over the long term. They seek to build self-sustaining models that generate ongoing positive impact, rather than relying solely on donations or grants.
Stakeholder Engagement:
Social entrepreneurs actively engage with various stakeholders, including communities, beneficiaries, governments, nonprofits, and businesses. They collaborate and build partnerships to leverage collective resources, expertise, and networks to maximize their impact.
Measurement and Evaluation:
Social entrepreneurs employ rigorous measurement and evaluation methodologies to assess the effectiveness and impact of their initiatives. They use data-driven insights to continuously improve their interventions, demonstrate accountability, and attract funding and support.
Financial Models:
Social entrepreneurs utilize diverse financial models to sustain their ventures. These models may include revenue-generating activities, cross-subsidization, impact investments, social impact bonds, crowdfunding, or partnerships with traditional businesses or philanthropic organizations.
Systems Change:
Social entrepreneurs often aim to drive systemic change and address the root causes of social issues rather than merely treating symptoms. They challenge existing norms, policies, and practices and work towards transforming the underlying systems that perpetuate social challenges.
Ethical Business Practices:
Social entrepreneurs prioritize ethical business practices and strive for transparency, fairness, and social responsibility. They aim to be role models by demonstrating ethical behaviour, fair labour practices, environmental sustainability, and social equity within their organizations.
Global Movement:
Social entrepreneurship has gained significant momentum worldwide and has become a global movement. Governments, nonprofits, corporations, and individuals are increasingly recognizing the power of social entrepreneurship to address pressing social issues and achieve sustainable development goals.
Social entrepreneurship combines entrepreneurial principles with a social impact focus. It aims to address social and environmental challenges through innovative solutions, sustainable models, and stakeholder engagement. Social entrepreneurs strive for systemic change, operate with a triple-bottom-line approach, and contribute to a global movement for positive social transformation.
d. Corporate Entrepreneurship:
Corporate Entrepreneurship, also known as intrapreneurship, refers to the promotion and cultivation of entrepreneurial activities and behaviours within established large organizations. It involves fostering an entrepreneurial mindset, encouraging innovation, and driving change from within. Here are the key aspects of corporate entrepreneurship:
Innovation and New Ventures:
Corporate entrepreneurship focuses on generating new ideas, products, services, or business models within the framework of an existing organization. It encourages employees to think creatively, identify opportunities, and develop innovative solutions to drive growth and competitiveness.
Entrepreneurial Culture:
Successful corporate entrepreneurship requires fostering an entrepreneurial culture within the organization. This involves creating an environment that values risk-taking, encourages experimentation, rewards initiative, and embraces a tolerance for failure as a learning experience.
Intrapreneurs:
Intrapreneurs are individuals within the organization who exhibit entrepreneurial characteristics and behaviors. They demonstrate initiative, take ownership of their projects, and drive innovation. Intrapreneurs are empowered to pursue their ideas, challenge the status quo, and contribute to the organization’s success.
Resource Allocation:
Corporate entrepreneurship involves allocating resources, including funds, talent, and time, to support and nurture innovative projects and initiatives. This may require a dedicated budget, cross-functional teams, and a flexible organizational structure to facilitate the development and execution of entrepreneurial ideas.
Collaboration and Partnerships:
Corporate entrepreneurship often entails collaboration and partnerships, both internally and externally. It involves cross-functional collaboration, where employees from different departments or divisions work together to foster innovation. External partnerships, such as collaborations with startups, universities, or research institutions, can bring fresh perspectives and access to new technologies.
Strategic Alignment:
Corporate entrepreneurship should align with the organization’s overall strategic goals and objectives. It requires a clear understanding of the company’s vision, mission, and core competencies. By aligning entrepreneurial initiatives with the strategic direction, organizations can leverage their existing resources, capabilities, and market presence for successful innovation.
Risk Management:
Like traditional entrepreneurship, corporate entrepreneurship involves taking risks. However, managing and mitigating risks within an established organization is crucial. Effective risk management practices, such as thorough analysis, prototyping, and testing, help identify potential pitfalls and minimize potential negative impacts on the organization.
Continuous Learning and Adaptation:
Corporate entrepreneurship promotes a culture of continuous learning, adaptation, and agility. Organizations encourage employees to seek feedback, learn from failures, and embrace a growth mindset. This fosters a culture of resilience, adaptability, and ongoing improvement.
Competitive Advantage:
Corporate entrepreneurship provides a competitive advantage by enabling organizations to stay ahead of the curve, adapt to market changes, and seize new opportunities. It allows large organizations to foster innovation, disrupt their industries, and explore new markets without relying solely on their existing business lines.
Employee Engagement and Retention:
Corporate entrepreneurship can enhance employee engagement, job satisfaction, and retention. By empowering employees to be intrapreneurs, organizations tap into their creative potential, provide opportunities for personal and professional growth, and foster a sense of ownership and fulfilment.
Corporate entrepreneurship encourages innovation, intrapreneurial behaviours, and the pursuit of new ventures within established organizations. It requires a supportive culture, resource allocation, strategic alignment, risk management, and continuous learning. Corporate entrepreneurship enables organizations to drive innovation, maintain a competitive edge, and engage employees in entrepreneurial activities to achieve long-term growth and success.
Characteristics of Entrepreneurs:
Successful entrepreneurs often possess certain characteristics, such as:
a. Visionary and Creative:
Entrepreneurs have a clear vision of their goals and are adept at thinking creatively to identify opportunities and develop innovative solutions.
b. Risk-Taker:
They are comfortable with uncertainty and are willing to take calculated risks to pursue their business ideas.
c. Persistence and Resilience:
Entrepreneurs face numerous challenges and setbacks, but they display determination and the ability to bounce back from failures.
d. Opportunity-Oriented:
They have a keen eye for identifying market gaps, unmet needs, and emerging trends that can be leveraged for business success.
e. Resourceful and Adaptable:
Entrepreneurs are resourceful in leveraging their networks, skills, and available resources effectively. They can adapt quickly to changing circumstances.
Importance of Entrepreneurship:
Entrepreneurship plays a vital role in the economy and society at large due to the following reasons:
a. Economic Growth:
Entrepreneurs drive economic growth by creating new businesses, generating employment opportunities, and fostering innovation, which leads to increased productivity and wealth creation.
b. Innovation and Advancement:
Entrepreneurs introduce new products, services, and business models that drive technological advancements, disrupt existing industries, and improve the quality of life.
c. Wealth Creation:
Entrepreneurship allows individuals to create wealth for themselves, their employees, and their stakeholders. It enables social mobility and reduces income inequality.
d. Community Development:
Entrepreneurs contribute to the development of local communities by revitalizing neighbourhoods, supporting local suppliers, and investing in infrastructure and social initiatives.
e. Global Competitiveness:
Entrepreneurial ventures contribute to a nation’s competitiveness by fostering a culture of innovation, attracting investments, and creating a favourable business environment.
Entrepreneurship involves identifying and pursuing business opportunities, taking risks, and driving innovation. It encompasses various types of entrepreneurial endeavours and requires certain characteristics for success. Entrepreneurship is crucial for economic growth, innovation, wealth creation, and community development, playing a significant role in shaping societies and driving progress.
Perspectives on entrepreneurship:
As an academic field, entrepreneurship accommodates different schools of thought. It has been studied within disciplines such as management, economics, sociology, and economic history. Some view entrepreneurship as allocated to the entrepreneur. These scholars tend to focus on what the entrepreneur does and what traits that an entrepreneur has (see for example the text under the headings Elements below). This is sometimes referred to as the functionalistic approach to entrepreneurship. Others deviate from the individualistic perspective to turn the spotlight on the entrepreneurial process and immerse in the interplay between agency and context. This approach is sometimes referred to as the processual approach or the contextual turn/approach to entrepreneurship.
Elements:
Entrepreneurship is the act of being an entrepreneur, or “the owner or manager of a business enterprise who, by risk and initiative, attempts to make profits”.[14] Entrepreneurs act as managers and oversee the launch and growth of an enterprise. Entrepreneurship is the process by which either an individual or a team identifies a business opportunity and acquires and deploys the necessary resources required for its exploitation.
Early-19th-century French economist Jean-Baptiste Say provided a broad definition of entrepreneurship, saying that it “shifts economic resources out of an area of lower and into an area of higher productivity and greater yield”. Entrepreneurs create something new and unique—they change or transmute value.[15] Regardless of the firm size, big or small, it can take part in entrepreneurship opportunities.
There are four criteria for becoming an entrepreneur. First, there must be opportunities or situations to recombine resources to generate profit. Second, entrepreneurship requires differences between people, such as preferential access to certain individuals or the ability to recognize information about opportunities. Third, taking on a level of risk is a necessity. Fourth, the entrepreneurial process requires the organization of people and resources.[16]
Entrepreneurs use their time, energy, and resources to create value for others. They are rewarded for this effort monetarily and therefore both the consumer of the value created and the entrepreneur benefit.
The entrepreneur is a factor in and the study of entrepreneurship reaches back to the work of Richard Cantillon and Adam Smith in the late 17th and early 18th centuries. However, entrepreneurship was largely ignored theoretically until the late 19th and early 20th centuries and empirically until a profound resurgence in business and economics since the late 1970s.
In the 20th century, the understanding of entrepreneurship owes much to the work of economist Joseph Schumpeter in the 1930s and other Austrian economists such as Carl Menger, Ludwig von Mises and Friedrich von Hayek. According to Schumpeter, an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation.
Entrepreneurship employs what Schumpeter called “the gale of creative destruction” to replace in whole or in part inferior innovations across markets and industries, simultaneously creating new products, including new business models. In this way, creative destruction is largely responsible for the dynamism of industries and long-run economic growth.
The supposition that entrepreneurship leads to economic growth is an interpretation of the residual in endogenous growth theory and as such is debated in academic economics. An alternative description posited by Israel Kirzner suggests that the majority of innovations may be much more incremental improvements such as the replacement of paper with plastic in the making of drinking straws.
The exploitation of entrepreneurial opportunities may include:
- Developing a business plan
- Hiring human resources
- Acquiring financial and material resources
- Providing leadership
- Being responsible for both the venture’s success or failure
- Risk aversion
Economist Joseph Schumpeter (1883–1950) saw the role of the entrepreneur in the economy as “creative destruction”—launching innovations that simultaneously destroy old industries while ushering in new industries and approaches. For Schumpeter, the changes and “dynamic disequilibrium brought on by the innovating entrepreneur [were] the norm of a healthy economy”.
While entrepreneurship is often associated with new, small, for-profit start-ups, entrepreneurial behaviour can be seen in small-, medium- and large-sized firms, new and established firms and in for-profit and not-for-profit organizations, including voluntary-sector groups, charitable organizations and government.
Entrepreneurship may operate within an entrepreneurship ecosystem which often includes:
- Government programs and services that promote entrepreneurship and support entrepreneurs and start-ups
- Non-governmental organizations such as small-business associations and organizations that offer advice and mentoring to
- entrepreneurs (e.g. through entrepreneurship centers or websites)
- Small-business advocacy organizations that lobby governments for increased support for entrepreneurship programs and more
- small business-friendly laws and regulations
- Entrepreneurship resources and facilities (e.g. business incubators and seed accelerators)
- Entrepreneurship education and training programs offered by schools, colleges and universities
- Financing (e.g. bank loans, venture capital financing, angel investing and government and private foundation grants).
In the 2000s, usage of the term “entrepreneurship” expanded to include how and why some individuals (or teams) identify opportunities, evaluate them as viable, and then decide to exploit them. The term has also been used to discuss how people might use these opportunities to develop new products or services, launch new firms or industries, and create wealth. The entrepreneurial process is uncertain because opportunities can only be identified after they have been exploited.
Entrepreneurs exhibit positive biases towards finding new possibilities and seeing unmet market needs, and a tendency towards risk-taking that makes them more likely to exploit business opportunities.
History:
Historical usage:
“Entrepreneur” is a loanword from French. The word first appeared in the French dictionary entitled Dictionnaire Universel de Commerce compiled by Jacques des Bruslons and published in 1723. Especially in Britain, the term “adventurerer” was often used to denote the same meaning. The study of entrepreneurship reaches back to the work in the late 17th and early 18th centuries of Irish-French economist Richard Cantillon, which was foundational to classical economics.
Cantillon defined the term first in his Essai sur la Nature du Commerce en Général, or Essay on the Nature of Trade in General, a book William Stanley Jevons considered the “cradle of political economy”. Cantillon defined the term as a person who pays a certain price for a product and resells it at an uncertain price, “making decisions about obtaining and using the resources while consequently admitting the risk of enterprise”.
Cantillon considered the entrepreneur to be a risk taker who deliberately allocates resources to exploit opportunities to maximize the financial return.Cantillon emphasized the willingness of the entrepreneur to assume the risk and to deal with uncertainty, thus he drew attention to the function of the entrepreneur and distinguished between the function of the entrepreneur and the owner who provided the money.
Jean-Baptiste Say also identified entrepreneurs as a driver for economic development, emphasizing their role as one of the collecting factors of production allocating resources from less to fields that are more productive. Both Say and Cantillon belonged to French school of thought and known as the physiocrats.
Dating back to the time of the medieval guilds in Germany, a craftsperson required special permission to operate as an entrepreneur, the small proof of competence (Kleiner Befähigungsnachweis), which restricted training of apprentices to craftspeople who held a Meister certificate. This institution was introduced in 1908 after a period of so-called freedom of trade (Gewerbefreiheit, introduced in 1871) in the German Reich. However, proof of competence was not required to start a business. In 1935 and in 1953, greater proof of competence was reintroduced (Großer Befähigungsnachweis Kuhlenbeck), which required craftspeople to obtain a Meister apprentice-training certificate before being permitted to set up a new business.
In the Ashanti Empire, successful entrepreneurs who accumulated large wealth and men as well as distinguished themselves through heroic deeds were awarded social and political recognition by being called “Abirempon” which means big men. By the eighteenth and nineteenth centuries AD, the appellation “Abirempon” had formalized and politicized to embrace those who conducted trade from which the whole state benefited. The state rewarded entrepreneurs who attained such accomplishments with Mena(elephant tail) which was the “heraldic badge”.
20th century:
In the 20th century, entrepreneurship was studied by Joseph Schumpeter in the 1930s and by other Austrian economists such as Carl Menger (1840-1921), Ludwig von Mises (1881-1973) and Friedrich von Hayek (1899-1992). While the loan from French of the English-language word “entrepreneur” dates to 1762, the word “entrepreneurism” dates from 1902 and the term “entrepreneurship” also first appeared in 1902. According to Schumpeter, an entrepreneur is willing and able to convert a new idea or invention into a successful innovation.
Entrepreneurship employs what Schumpeter called the “gale of creative destruction” to replace in whole or in part inferior offerings across markets and industries, simultaneously creating new products and new business models,[citation needed] thus creative destruction is largely[quantify] responsible for long-term economic growth. The idea that entrepreneurship leads to economic growth is an interpretation of the residual in endogenous growth theory[clarification needed] and as such continues to be debated in academic economics. An alternative description by Israel Kirzner (1930- ) suggests that the majority of innovations may be incremental improvements – such as the replacement of paper with plastic in the construction of a drinking straw – that require no special qualities.
For Schumpeter, entrepreneurship resulted in new industries and in new combinations of currently existing inputs. Schumpeter’s initial example of this was the combination of a steam engine and then current wagon-making technologies to produce the horseless carriage. In this case, the innovation (i.e. the car) was transformational but did not require the development of dramatic new technology. It did not immediately replace the horse-drawn carriage, but in time incremental improvements reduced the cost and improved the technology, leading to the modern auto industry.
Despite Schumpeter’s early 20th-century contributions, traditional microeconomic theory did not formally consider the entrepreneur in its theoretical frameworks (instead of assuming that resources would find each other through a price system). In this treatment, the entrepreneur was an implied but unspecified actor, consistent with the concept of the entrepreneur being the agent of x-efficiency.
For Schumpeter, the entrepreneur did not bear risk: the capitalist did. Schumpeter believed that the equilibrium was imperfect. Schumpeter (1934) demonstrated that the changing environment continuously provides new information about the optimum allocation of resources to enhance profitability. Some individuals acquire new information before others and recombine the resources to gain an entrepreneurial profit. Schumpeter was of the opinion that entrepreneurs shift the production-possibility curve to a higher level using innovations.
Initially, economists made the first attempt[when?] to study the entrepreneurship concept in depth. Alfred Marshall viewed the entrepreneur as a multi-tasking capitalist and observed that in the equilibrium of a completely competitive market, there was no spot for “entrepreneurs” as economic activity creators.
Changes in politics and society in Russia and China in the late-20th century saw a flowering of entrepreneurial activity, producing Russian oligarchs and Chinese millionaires.
21st century:
In the 2000s, entrepreneurship was extended from its origins in for-profit businesses to include social entrepreneurship, in which business goals are sought alongside social, environmental or humanitarian goals and even the concept of the political entrepreneur. Entrepreneurship within an existing firm or large organization has been referred to as intrapreneurship and may include corporate ventures where large entities “spin-off” subsidiary organizations.
Entrepreneurs are leaders willing to take risks and exercise initiative, taking advantage of market opportunities by planning, organizing and deploying resources, often by innovating to create new or improving existing products or services. In the 2000s, the term “entrepreneurship” has been extended to include a specific mindset resulting in entrepreneurial initiatives, e.g. in the form of social entrepreneurship, political entrepreneurship or knowledge entrepreneurship.
According to Paul Reynolds, founder of the Global Entrepreneurship Monitor, “By the time they reach their retirement years, half of all working men in the United States probably have a period of self-employment of one or more years; one in four may have engaged in self-employment for six or more years. Participating in new business creation is a common activity among U.S. workers over the course of their careers”. In recent years, entrepreneurship has been claimed as a major driver of economic growth in both the United States and Western Europe.[citation needed]
Entrepreneurial activities differ substantially depending on the type of organization and creativity involved. Entrepreneurship ranges in scale from solo, part-time projects to large-scale undertakings that involve a team and which may create many jobs. Many “high value” entrepreneurial ventures seek venture capital or angel funding (seed money) to raise capital for building and expanding the business.
Many organizations exist to support would-be entrepreneurs, including specialized government agencies, business incubators (which may be for-profit, non-profit, or operated by a college or university), science parks and non-governmental organizations, which include a range of organizations including not-for-profits, charities, foundations and business advocacy groups (e.g. Chambers of commerce). Beginning in 2008, an annual “Global Entrepreneurship Week” event aimed at “exposing people to the benefits of entrepreneurship” and getting them to “participate in entrepreneurial-related activities” was launched.
Relationship between small business and entrepreneurship:
The term “entrepreneur” is often conflated with the term “small business” or used interchangeably with this term. While most entrepreneurial ventures start out as a small business, not all small businesses are entrepreneurial in the strict sense of the term.
Many small businesses are sole proprietor operations consisting solely of the owner—or they have a small number of employees—and many of these small businesses offer an existing product, process or service and they do not aim at growth. In contrast, entrepreneurial ventures offer an innovative product, process or service and the entrepreneur typically aims to scale up the company by adding employees, seeking international sales and so on, a process which is financed by venture capital and angel investments. In this way, the term “entrepreneur” may be more closely associated with the term “startup”.
Successful entrepreneurs have the ability to lead a business in a positive direction by proper planning, adapting to changing environments and understanding their own strengths and weaknesses.
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