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The Study of Entrepreneurship Abstract The discussion in this paper is based on the different concepts and ideas of entrepreneurship which were culled from varying sources written by experts from the time of Cantillon and Jevons (16 th century economy theorists) up to the present. It will also attempt to differentiate the various theories formed by different theorists about what makes an entrepreneur and what is called for in the entrepreneurial process. The explanation of the method and practice of the entrepreneurial process will enhance the readers understanding about the whole entrepreneurship concept Outline Introduction Different Definition of Entrepreneurship conventional definition leading experts definition innovation in and development of the definition Entrepreneurship Process opportunity launch growth harvest Summation The field of entrepreneurship is something that has been indulged in by man since he started to think of his needs and goals as a person in a community. Whether it is delivering pizza or building gizmos for cell phones, the concepts and theories involved in an entrepreneurial activity are the same. The moment a person decides that it is better to engage in an enterprise where there is an opportunity for growth and with the prospect of organizing, owning, and managing the same.
The scope of entrepreneurship is broad and all encompassing. It can be a solo project that might involve the entrepreneur part-time or a major undertaking which can create many job opportunities and involve a variety of business activities. The importance of entrepreneurship can be measured by how society gives its attention to it. The relevance of this field started to gain a sort of discipline ship when Richard Cantillon, an Irishman who has a Spanish name and happens to live in France and wrote his treatise in French.
His treatise (written circa 1732), Essai Sur la Nature de Commerce en General, published twenty years after his death, paved the way to the serious study of entrepreneurship (Murphy 7, 10 - 12). Cantillon's study on the early concepts and theory of entrepreneur open the door to serious and in depth exploration of the field up until the present. The emergence of different schools and institutes primarily focusing on this particular field explicitly mirrors its importance and relevance to man. The study of entrepreneurship is such an extensive area that most often schools and institutes have to teach the introduction to entrepreneurship in two courses. The first part usually comprises the entrepreneurial principles which typically include concepts and theories -- - forms of organization, entrepreneurial behavior, start-up strategies, and the relevance of marketing, accounting, and finance to the start-up. The second course usually focuses on the practice or application of the principles and theories -- -- creating a business plan, launching the business, growing and nurturing the organization and harvesting the fruits of all labors.
Classes on this particular discipline are quite helpful in a sense that it can help conscientious students increase the organizations chances of survival and success. Entrepreneurs who are well versed on the theories as well as the practices and application of entrepreneurship can easily steer the helm of the business into the right course. There are three-fold premise why an entrepreneurial class will succeed. First, entrepreneurship should be taught as a process, not as a person or an entity.
The emphasis should be on the nature of the network that makes up the organization engaged in an entrepreneurial activity. Tremendous weight should be given on the premise that each person involved is part of an ongoing process. What is important is team effort and not the individual capabilities. The second aspect is creating and nurturing the belief within students that they can become entrepreneurs. It is important that each individual who endeavors to create his own organization must have a firm belief in his capacity and ability to be a success. In a smaller scale, it is also vital that to cultivate an entrepreneurial culture, aspiring entrepreneurs must have good role models.
It is also empirical and practical that the role models should be people with whom the students can identify. The third element for an entrepreneurial class to accomplish something is to instill into the students the belief that entrepreneurial triumph is not a simple case of inspiration and good business sense. A lot of hard work is entailed and expected in every entrepreneurial endeavor. Different Definition The anglicized word entrepreneur originates from the French word, entreprendre meaning "to undertake" and in the business context, it is taken as to start a business. The notion of entrepreneurship could be distinguished by understanding the differences between four concepts 1) entrepreneur = the actor in the market, 2) entrepreneurial = the expected behavior in the market, and 3) entrepreneurship = that which results from the combination of the actor (entrepreneur) and the behavior (entrepreneurial) in the market 4) entrepreneurial process = the combination and union of time dimension and behavior in the market. Though this is a very simplistic though universal sketch of the components of entrepreneurship, there seems to be no commonly accepted definitions of the entrepreneur, entrepreneurial or entrepreneurship that exists.
The concept of entrepreneurship is only concerned with the process of creating, starting or seizing an opportunity to establish an organization, particularly a new business, and pursuing it without any regard of the resources and assets controlled by the founder. A leading textbook, New Business Ventures and the Entrepreneur, defines entrepreneurship as the pursuit of opportunity without regard to resources currently controlled (Stevenson 5). An expanded definition formed by Bob Reiss, a leading entrepreneur and an admired lecturer on the subject, includes not just the quest but also the recognition of the opportunity, together with the attitude and certain characteristics of entrepreneurs. His extensive version is the recognition and pursuit of opportunity without regard to the resources you currently control, with confidence that you can succeed, with the flexibility to change course as necessary, and the will to rebound from setbacks (Reiss 6). A latest viewpoint and probably one of the best definitions of entrepreneurship is found in (Ronstadt 28): Entrepreneurship is the dynamic process of creating incremental wealth. The wealth is created by individuals who assume the major risks in terms of equity, time and / or career commitment or provide value for some product or service.
The product or service may or may not be new or unique but value must somehow be infused by the entrepreneur by receiving and allocating the necessary skills and resources. The definition of how it defines incremental wealth of value creation as a result or goal of the process is the most essential part of this particular definition. This aggregated version has added a parallel need of an entrepreneur for achievement including other trait theoretic characteristics of entrepreneurship as risk taking propensity and responsibility. The inclusion of the need for achievement makes the definition a more complete view of what is entrepreneurship at this point in time.
One can easily discern from the development of the entrepreneurial concepts that as human and societal situation diversifies, the entrepreneurial practice and culture evolves, and so with the theories and concepts involved. Everything is dynamic -- - changing and developing alongside human history. The concept of entrepreneurship has started with the simplistic idea of anyone who wants to work for himself or herself creating, starting and managing his own business venture to its development into anyone with very high aptitude pioneering change, possessing characteristics found in only a very small fraction of the population wanting to gain profit and benefits from the starting, organizing and managing a business endeavor. Leading economic theorists starting with Cantillon and Jevons in France and England in the 16 th century to Say, Schumpeter, Knight, Killer, Casson, Drucker to the present, have varying definition of the discipline yet at closer look, one can find that most of these are but innovations and scaffold of ideas which actually enhances the definition given before it. From the basic concept developed by the early theorists, Schumpeter's View of entrepreneurship was developed to place more emphasis on innovations not on the actor and the behavior but on other things like, new products, new production methods, new markets, new forms of organization.
Frank Knight and Peter Drucker, added to the innovation the idea of taking risks. The behavior of risk-taking has given the idea of entrepreneurship as anyone who has put a lot of time and effort studying how he can create the opportunity and gain benefits even as he engage in taking calculated risk in the name of an idea, an uncertain venture as he starts and manage his own business. More recent view of entrepreneurship has evolved into anyone engaged in building up a business who in the process of discovering, evaluating, and exploiting opportunities, acts with ambition beyond that supportable by the resources currently under his control. Various dictionaries have a diverse meaning for the concept though when analyzed closely, one can discriminate the underlying sameness of the words worth and implication. The Merriam-Webster Dictionary presents the definition of an entrepreneur as one who organizes, manages, and assumes the risks of a business or enterprise. While the American Heritage Dictionary defines an entrepreneur to be "a person who organizes, operates, and assumes the risk for business ventures. " When one talks about an entrepreneur, one is referring to an individual who decides to create and start a business enterprise; whether this particular endeavor will flourish or decline, succeed or fail is immaterial because the focus is on the establishment of the business.
Individuals who opt to become entrepreneurs believe that the best career opportunity for them is the starting, managing, and owning all or part of a company rather than working for others; now whether this is something rewarding is another concern and not a part of the entrepreneurship concepts. Cantillon's description of the role of an entrepreneur as noted in Murphy 1986 book complements the definition shared by most theorists (255): The entrepreneur scouts around, he sniffs out potentially profitable ventures, he forms hunches, and he reacts quickly if his hunches prove incorrect - otherwise he goes out of business. He is the highly visible hand that ensures co-ordination between producers and consumers. The classification of an entrepreneurs role points out the meaning of environmental context (scouting around) even in this early 16 th century description of Cantillon's. The link between the modern and the past concept about entrepreneurship seems to paint a picture of unchanging concept yet a dynamic one at that. The constancy in the concept is in the fact that there is no need to take out anything from the notion but rather augment it with new and dynamic perception brought about by the development of new views.
Entrepreneurs have almost the same character traits as leaders. Both are expected to be in command of the situation where they find themselves; both have the ability to start and effect change for the attainment of any goal they have envisioned. Later study on this topic however seem to find more contrast between entrepreneurs and managers or administrators. The study shows that leaders are more methodical and less prone to risk-taking. Further studies seem to validate the theory that there are certain traits that can be associated with the entrepreneurial personality. In various studies conducted in the 1960 s to the present generated results that seem to give a unified picture of what an entrepreneur is -- -- a strong, individualistic and utterly independent person with the desire to achieve the goals he has set for himself and his team.
David McClelland (34) noted that the primary motivation of an entrepreneur is the overwhelming need for achievement and success with the strong urge to create and develop. A study conducted to 150 entrepreneurs resulted with the supposition that entrepreneurs are tough, pragmatic people unwilling to yield to authority and driven by the needs to be independent and to achieve (Collins and Moore 197). The result of Birds (1: 3 67) investigation leads to the assumption that entrepreneurs have mercurial personality, basically prone to insights, deceptions, ingeniousness and resourcefulness. They are cunning, opportunistic, creative, and unsentimental. A similar study in 1997, (Busenitz and Barney 12: 23, 24) claims that entrepreneurs are prone to making fast and hasty generalizations and are often overconfident in their ability to do things and succeed.
An interesting study by Cole in 1959 gave him a substantial result that enabled him to categorize entrepreneurs into four types according to the kind of opportunities they are facing. These are: (1) the innovator, someone who will work on whatever is on hand and create something out of it; (2) the calculating inventor, this person will do whatever is needed to achieve his goal; (3) the over-optimistic promoter, a person who will encourage and motivate himself and his team by giving pep-talks that are somewhat over or more than the truth and (4) the organization builder, is someone who makes sure that all aspects of his endeavor is at-shape and in running condition. Facts and results culled from these various studies have established a certain characteristic traits of an entrepreneur across time. A successful entrepreneur is not just someone engaged in making a business grow but also an individual with a clear vision supported by interlocking collection of ideas and created opportunities which serve as the pillar for achieving the goal. He also has the foresight to accept the inadequacy of his vision and the strength and flexibility to face challenges from an incomplete idea which is always changing and evolving. The entrepreneur must have the enthusiasm and passion to promote his dreams and takes the responsibility to cause that vision to become a success.
The Entrepreneurial Process This process consists of four main phases with each level having several components all integral to the entrepreneurial system. The first stage is OPPORTUNITY which is the first phase of the process. This is the level where the break and prospect either created or faced by the entrepreneur is defined and the economics of the new business -- - the commodity, service, proprietary organization and technology is assessed. Opportunity also includes the decision making process required of an entrepreneur before he can go on to the next phase of the process which is called LAUNCH.
This stage is the formal start-up of a particular economic endeavor where the founding entrepreneur starts to look for resources and attract possible stakeholders. This is also the level where all paper preparations as well as all legal documentations needed before opening is accomplished. All governmental and other licenses are also prepared and approved by all concerned agencies during this phase. All the researches and study called for in a business plan with the corresponding results should be finished before one can go on to the next phase. The bulk of the physical work is concentrated in this particular stage but this is also the shortest step in the process.
The next stage consists of less labor in terms of physical work but needs a lot of efforts exerted to develop and nurture the business. The GROWTH stage is the most crucial stage in the whole entrepreneurial process for this constitutes the expansion and the progress of the business. All actions and decisions of people involved in the business venture must be carefully concluded to ensure the progression and expansion of the business. The final stage is HARVEST which can actually be another entrepreneurial process for it can also mean an opportunity for another entrepreneur to create and establish a new business enterprise. Sound decisions and progressive outlook are the main requirements needed from an entrepreneur to be able to arrive at a judicious choice or option about the future of his business.
There are only four options from which the entrepreneur can choose regarding the future: (1) pursue the management of the company to develop it into a cash cow, (2) sell the business to gain more revenues, (3) the company can go public and open their door to other people, and (4) liquidate the business. From the above discussion of different theories and concepts of entrepreneurship it is clear that some notions may overlap but as a whole, entrepreneurship involves a high level of creativity and innovation combined with high level of management skills and business know-how. Though it will be very hard to generalize about the entrepreneurial development, it may be justified to say that different theories are applicable in different phases of entrepreneurial development even across time. One sure thing about all the discussion is that the safest way to go about it is to use the different theories as well as different definitions in different contexts.
Works Cited Bird, B. "The Roman God Mercury: An Entrepreneurial Archetype. " Journal of Management Enquiry 1. 3 (1992): 59 - 67. Busenitz, L. and Barney, J. "Differences between Entrepreneurs and Managers in Large Organizations. " Journal of Business Venturing 12 (1997): 23 - 26. Casson, M. The Entrepreneur: An Economic Theory. 2 nd ed. New York: Edward Elgar Publishing, 2003.
Cole, A. Business Enterprise in its Social Setting. Boston: Harvard University Press, 1959. Collins, J.
and D. Moore. The Organization Makers. New York: Appleton-Century-Crofts, 1970. Drucker, P. "Entrepreneurship in Business Enterprise. " Journal of Business Policy 1 (1970) 16 - 20. Hebert, R.
F. and A. N. Link, A. N. The Entrepreneur: Mainstream Views and Radical Critiques. 2 nd ed.
New York: Praeger, 1988. McClelland, D. The Achieving Society. Princeton NJ: Van Nostrand, 1961. Media-Webster, Inc. Websters Third New International Dictionary.
Springfield, MA: Merriam-Webster Inc. , 1981. Murphy, Anti E. Richard Cantillon: Entrepreneur and Economist. Oxford: Oxford UP, 1986. Murphy, P.
J. , et al. , A Conceptual History of Entrepreneurial Thought. Journal of Management History 12: 1 (2006) 12 - 35. Reiss, B. , and J. L. Cruikshank.
Low Risk, High Reward: Starting and Growing Your Business with Minimal Risk. New York: The Free Press, 2000. Ronstadt, R. The Corridor Principle. Journal of Business Venturing. 3 (1988) 31 - 40.
Stevenson, Howard, et. al. , eds. New Business Ventures and the Entrepreneur. 5 th ed. Boston: Irwin/McGraw-Hill, 1999.
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