Common Theories Of Entrepreneurship Proposed Commerce Essay

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It was not entrepreneurial history but the history that contained entrepreneurs. The term first appeared in the writings of Richard Cantillon in 1755 who used the term to describe " someone who exercises business judgment in the face of uncertainty" .

John Sawyer argued entrepreneurship "as the purely innovative to the purely routine" not only in the business but in other organizations where " significant decisions involving change are made affecting the combinations and commitment of resources under conditions of uncertainty ".

Some common theories of entrepreneurship proposed entrepreneurs provided the indispensable driving force that powered capitalist economic growth, others proposed it as a form of art more than its economic activity and as such difficult as any other artistic activity to explain in terms of origin, method or environmental influence. Since so many different meanings had been assigned some authors wondered whether scholars should not discard the term " entrepreneur " .

Entrepreneurship not only touches upon history and economics, but also areas such as sociology, anthropology ,psychology and many more , some common assumptions were entrepreneurs were only successful businessperson, his success was proof enough of his abilities ,his motivations were obvious: material prosperity, public recognition and esteem, the welfare of the society and there were some who related the individual business executive to the management of the firm .

But as more energy was spent on this widely characterized term many questions like how does an entrepreneur gets in to business or what sort of people tend to be attracted towards the entrepreneurial role come up, the fact was that in dealing with entrepreneurs we were dealing with human beings not blanks or interchangeable economic units. Despite the potential for richness and texture that such a diverse mix of disciplines brings a major weakness was researchers from one field have tended to ignore the entrepreneurship studies by researchers in other discipline. ( Wortman 1992) [1] 

No generally accepted theory of entrepreneurship has emerged so far but on the other side with such diverse perspectives each can help us to understand various aspects of entrepreneurship, yet definitions remain important because they make further research manageable.

This supposed lack of articulate theory turned out to be one of the first issues seized by economists when they invaded in to the history of economics. Since the term has been used for more than a century in the fields of commerce, media and by ordinary people in conversation so it is unlikely an entirely new definition would be acceptable.

Entrepreneurship

"Entrepreneurship is a journey of trial and error, there is no shortcut to success"

Richard A Bendis

CEO Innovation Philadelphia

The term entrepreneurship and entrepreneur are used interchangeably. Entrepreneur always precedes entrepreneurship. The process of development and co-ordination of functions of entrepreneur is termed as entrepreneurship.

Webster Third New International Dictionary (1961) [2] defines the entrepreneur as " an organizer of an economic venture ,especially one who organizes , owns, manages and assumes the risk of a business and Wagnalls standard Dictionary [3] (1958) offers " One who undertakes to start and conduct an enterprise or business, assuming full control and risk".

The entrepreneur is not defined by the formal rank or title but retrospectively after successful practice of innovation. A creative person in the literary, artistic or dramatic sense is not necessarily an entrepreneur but the one who recognizes the value of his ideas and exploits them differently than the rest.

Some primary prerequisites for the entrepreneurial climate [4] :

Freedom to put an idea in to effect if the resources can be procured, subject only to the laws of orderly society.

Freedom to enjoy the fruits of success or the punishment of failure.

Freedom from interposition by the government of its sovereign power to encourage an enterprise.

Entrepreneurship creates additional entrepreneurial activities, like the initiation of computers opened up a vast computer software market. A business of any kind generates the need for thousands of new businesses impacting growth of society. Entrepreneurship makes an important contribution to the economic development by providing a platform for the pool of knowledge that otherwise would have remained trapped.

The essence of entrepreneurship is the initiation of change and once this change is initiated management takes charge of the production and distribution. Like developing a human intelligent computer requires an innovative change involving entrepreneurship but once the production begins, the management takes over and organizes a framework for its continuing production. The entrepreneur is the change agent, the source of innovation but still it remains a partly charted universe and cannot be fully defined.

Entrepreneur as an Innovator and strategist

Entrepreneurship is a creative force, somebody who can think differently and create new opportunities. Society's primary interest in entrepreneurship seems creating new possibilities that improve our economic life. Entrepreneur is considered as a source of change in society and the economy.

Strategic rules of conduct are based on ideas to have a competitive edge within a set of market structures , therefore task is optimizing within given boundaries conducted through thorough analysis by mechanistic system and framework to support a brimming idea.

Gartner (1988) [5] suggests that "entrepreneurship is to do with creating new business ventures , regardless of whether they are high growth oriented or not .The focus is upon looking at the process of creating the organization rather than on the individual person".

The activity of entrepreneurship is about taking risk at the same time initiative in pursuit of profit, the basic test for an entrepreneur would be whether his idea will serve its full purpose and if he is able to make money (profit) out of it. A well refined entrepreneur is very careful to calculate the risk they take , they possess both creative and management skills and these skills differentiate them from inventors, managers and government administrators.

Schumpter [6] in 1995 argued that the innovations made by the entrepreneurs are the strategic factors in economic development and a contributing factor in trade. He made a clear and strong distinction between invention and innovation.

Invention is an act of creating an idea or vision whereas Innovation is making use of invention to make new things or to make things differently. Innovation is associated with research, development, demonstration and commercialization. Innovation is a crucial factor for meeting the changing needs of the society. It is about doing something different from the herd and in doing so analyzing both production and market innovation.

In a free environment there is a propensity for discovering opportunities and thus expanding them to profitable ventures. The existence of a soccer field does not guarantees soccer games in the same way existence of favorable conditions will not itself create entrepreneurial activity. Fritz Machlup [7] describes this situation as "the fertility of freedom".

Illustration:

The successful international chain Body Shop international started out in 1970 as a single shop in a small Southern English town selling cosmetics and related products based on natural ingredients. Anita Roddick the founder had an idea which see implemented with a single shop in the beginning and later with her business experience, development and commercialization it grew internationally.

Post Second World War there has been burgeoning growth in the activities involving Science and Technology. Yet within the past few years there has been significant paradigm shift from process of creating new scientific and technological advances towards greater emphasis on effective utilization of discoveries and development .The difference between invention and innovation has been attributed to the role of innovator who is responsible for translation of science and technology in to common day use. [8] 

Innovation can be further categorized as evolutionary and revolutionary innovations. Generally innovations occurring within a firm, making a steady firm with adjustment to small changes is referred to as evolutionary changes. Evolutionary innovation advance over time, allowing firms to adopt improved methods and remain competitive. They occur often and are a process of change in virtually all major industries. Fuel efficient transmissions, electronic ignition in the automobile industry are examples of evolutionary changes.

On the other hand Revolutionary innovations are not part of the normal process and are a source of major change within a organization. These innovations create new industries , have major upheavals within the existing industry and make some industries obsolete leading them to extent of failure.

Most common example of revolutionary innovation is the development and realignment of computers ; rise of automotive industry is also an revolutionary innovation.

Bridging of these two innovations is important for firms to stay competitive as the coming of the two creates major upheavals across many industries, if firms are adapting to changes through evolutionary change it thereby opens a vast opportunity of revolutionary innovations making current methodology obsolete.

Entrepreneurship and Economic Development

Societies differ in their capacity to achieve economic growth. Little over two centuries ago there was little difference in the economic wellbeing of the majority of the World's population but as the transition towards industrial revolution was made the economic growth rate began to increase. Significantly the level of per capita income and the standard of living improved. Entrepreneurship has been regarded as the significant factor in the process of economic growth and development, as the economic growth and development occurs the conditions favoring entrepreneurship also improves. It is not possible to have development without growth, therefore failing to understand entrepreneurship is failing to recognize the policies of growing economy.

Nelson and Winter (1982) [9] and Winter (1984) [10] suggested that more diversity would be generated under the "entrepreneurial regime than the routinized regime, Under the routinized technological regime innovation will tend to be less diverse and in contrast under the entrepreneurial regime innovation is characterized by more diversity." Therefore in conclusion chances of new enterprises to be started should be associated with greater degree of diversity.

Economic growth and entrepreneurship are likely to flourish in favorable economic conditions ,if the economic conditions are favorable then given the maximum utilization of an idea ,entrepreneurship will emerge and result will be the economic development. On the contrary if the conditions are not favorable entrepreneurship will not rise thereby stagnating the economy. Entrepreneurship is a dependent entity; it acts as the catalyst providing spark for the economic growth. Entrepreneurship has become a critical policy issue especially for the developing economies as, firstly as it helps in creating self employment which provides flexibility and productivity to the economy. Secondly the rise of innovative entrepreneurship is a tool to remain competitive and for other job creations.

Capital which entrepreneurs generates exerts an upward influence through increased competition via increased number of firms, not only more number of firms provide greater competition for new ideas rather facilitates opening of new businesses with different ideas thereby increasing the growth and development of the economy. Therefore this in a way indicates regions with high amount of entrepreneurial activity are likely to have wide business diversity which results in higher rates of economic growth. In a developing or a developed economy chances of new enterprises to be started should be associated with greater degree of diversity.

Entrepreneurship and its relation with Engineering

As entrepreneurs fill the void between technical advances and economics so therefore for human kind to gain benefits from engineering developments , entrepreneurs must recognize the value of economics in the technological advancement and help create business ventures for social-economic stability.

Technology is important, one way to build a business around capabilities that others cannot copy, but itself technology remains incomplete, so an entrepreneur's main job is to find the business value that technology can create and find a path to convert that into a business. So understanding of the two cannot be ignored.

Sony walkman was the portable tape player which came in to being after the engineering expertise fully understood the related technical issues, once this product was available lots of other firms took this opportunity to fill the gaps in this emerging market with their own players or to extend this idea from tape recorder to cd player. Hence a little technological advancement with entrepreneurial skills can be seen to play a specific role in the economic stability.

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