What do you understand to be the concept of entrepreneurship and why has it become such an important area of focus?

Q2) What do you understand to be the concept of entrepreneurship and why has it become such an important area of focus?

The concept of entrepreneurship is often viewed as a function, which involves the exploitation of opportunities, which exist within a market. Such exploitation is most commonly associated with the direction and/or combination of productive inputs. Entrepreneurs usually are considered to bear risk while pursuing opportunities, and often are associated with creative and innovative actions. In addition, entrepreneurs undertake a managerial role in their activities, but routine management of an ongoing operation is not considered to be entrepreneurship. In this sense entrepreneurial activity is fleeting. An individual may perform an entrepreneurial function in creating an organization, but later is relegated to the role of managing it without performing an entrepreneurial role. In this sense, many small-business owners would not be considered to be entrepreneurs. Individuals within organizations (i.e. non-founders) can be classified as entrepreneurs since they pursue the exploitation of opportunities. Thus intrepreneurship is appropriately considered to be a form of entrepreneurship.

The concept of an entrepreneur is further refined when principles and terms from a business, managerial, and personal perspective are considered. In particular, the concept of entrepreneurship from a personal perspective has been thoroughly explored in this century. Third exploration is reflected in the following three definitions of an entrepreneur: In almost all of the definitions of entrepreneurship, there is agreement that we are talking about a kind of behavior that includes: initiative taking, the organizing and reorganising of social and economic mechanisms to turn resources and situations to practical account, and the acceptance of risk or failure.

To an economist, an entrepreneur is one who brings resources, labor, materials, and other assets into combinations that make their value greater than before, and also one who introduces changes, innovations, and a new order. To a psychologist, certain forces typically drive such a person: the need to obtain or attain something, to experiment, to accomplish, or perhaps to escape the authority of others. To one businessman, an entrepreneur appears as a threat, an aggressive competitor, whereas to another businessman the same entrepreneur may be an ally, a source of supply, a customer, or someone who creates wealth for others, as well as finds better ways to utilize resources, reduce waste, and produce jobs others are glad to get.

Entrepreneurship is the dynamic process of creating incremental wealth. Individuals who assume the major risks in terms of equity, time and/or career commitment or provide value for some product or service create the wealth. The product or service may or may not be new or unique, but the entrepreneur must somehow infuse value by receiving and locating the necessary skills and resources. Although each of these definitions views entrepreneurs from a slightly different perspective, they all contain similar notions, such as newness, organizing, creating, wealth, and risk taking. Yet each definition is somewhat restrictive, since entrepreneurs are ...

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Entrepreneurship is the process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychic, and social risks, and receiving the resulting rewards of monetary and personal satisfaction and independence. Four basic aspects of being an entrepreneur regardless of the field: first, entrepreneurship involves the creation process—creating something new of value. The creation has to have value to the entrepreneur and value to the audience for which it is developed. This audience can be either the market of organizational buyers for business innovation, or the hospital’s administration for a new admitting procedure and software, possibly prospective students for a new course or even college of entrepreneurship, or the constituency for a new service provided by a nonprofit agency. Second, entrepreneurship requires the devotion of the necessary time and effort. Only those going through the entrepreneurial process appreciate the significant amount of time and effort it takes to create something new and make it operational. As one new entrepreneur so succinctly stated, “While I may have worked as many hours in the office while I was in industry, as an entrepreneur I never stop thinking about the business.” (www.1000ventures.com) Assuming the necessary risks is the third aspect of entrepreneurship. These risks take a variety of forms, depending on the field of effort of the entrepreneur, but usually center around financial, psychological, and social areas. The final part involved is the rewards of being an entrepreneur. The most important of these rewards is independence, followed by personal satisfaction. For profit entrepreneurs, money becomes the indicator of the degree of success. For the person who actually starts his or her own business, the experience is filled with enthusiasm, frustration, anxiety, and hard work. There is a high failure rate due to such things as poor sales, intense competition, lack of capital, or lack of managerial ability. “A new organization is fragile because it lacks a formal structure to give its value-creation processes and actions stability and certainty” (Jones, R, Gareth, 2004, p340) the financial and emotional risk can also be very high

The population ecology theory seeks to explain the factors that affect the rate at which new organizations are born (and die) in a population of existing organizations. According to this theory the availability of resources determines the number of organizations in a population. The amount of resources in an environment limits population density (the number of organizations that can compete for the same resources in a particular environment). In respect of this theory, theorists assume that growth in the number of organizational births in a new environment is rapid at first as new organizations are founded to take advantage of new environmental resources, such as money that people are willing to spend on personal computing. The two factors that account for the rapid birth rate in new businesses over the past couple of years: first, is that as new organizations are founded, there is an increase in the knowledge and skills available to generate similar new organizations. Many new organizations were founded by entrepreneurs who leave existing companies to set up their own companies for example, many new computer companies where founded by people who left pioneering organizations such as Hewlett-Packard and IBM (Gareth, R, Jones, 2004, p342)

The second factor accounting for today’s rapid birth rate in a new environment is that when a new kind of organization is founded and survives, it provides a role model. The success of a new organization makes it relatively easy for entrepreneurs to found similar new organizations, because success confers legitimacy, which will attract stakeholders. There are also a number of reasons why small business is such a dynamic part of today’s world, including: “economy and economic changes, globalization and increased competition, advancing technology and new market niches” (Daft, L, Richard, 2003, p172)

Entrepreneurship is such an important area of focus for many different reasons: first, entrepreneurship contributes to job creation and growth. Small businesses generate jobs/careers for individuals as there are no longer large industrious firms in the U.K and individuals rely on new jobs from these new businesses created, due to niches in the market place. Secondly, the government rely upon and try to encourage new businesses as research suggests that entrepreneurship provides a positive contribution to economic growth (http://entrepreneurship.mit.edu ) fostering social and economic cohesion for regions whose development is lagging, to stimulating economic activity or to integrating unemployed or disadvantaged people into work. Thirdly entrepreneurship is crucial to competitiveness as increased competition forces other firms to react by improving efficiency, or introducing innovation. This process will offer consumers benefits through greater choice and lower prices. Fourthly entrepreneurship unlocks personal potential, as an occupation is not just a way to earn money. People have other criteria in their career choices, such as security, level of independence, variety of tasks and interest in their work. Job satisfaction among entrepreneurs is higher than the employed. All together entrepreneurs are the drivers of the market economy and their achievements provide societies with wealth, jobs and diversity of choice for consumers. It can also play a positive role in delivering health, education and welfare services efficiently.

As governments realise the potential of small businesses, there is a major focus being brought about on this area by introducing new businesses like Business Gateway and/or Scottish Enterprise, to try and encourage individuals to start up and make a success of a new business. Not only are government agencies being set up for such cases, but schools, colleges and universities all see this particular area of business as very promising and have began an extensive teaching programme, such courses available include, Law and Entrepreneur, Accountancy and Entrepreneurship. Although at the moment many individuals realise the potential of owning there own business, entrepreneurship is said to be a fad and will more than likely become dated in a way, possibly within the next ten years. However, the overall concept of entrepreneurship -according to Austrian Economist Joseph Schumpeter- is innovation (www.quickmba.com) as wealth is created when such innovation results in new demand. From this viewpoint one can define the function of the entrepreneur as one of combining various input factors in an innovative manner to generate value to the customer with the hope that this value will exceed the cost of the input factors, thus generating superior returns that result in the creation of wealth and this wealth also leads on to how entrepreneurial is an important area of focus because the wealth generated helps the economy, creating jobs, a better state and a better life for all of us.

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