The concept of entrepreneurship is multifaceted. There are different, various and considerably contradictory sets of definitions of the term. As a way out the definitional dilemma, this article aims to clarify the economic perspective on entrepreneurship.
The financial perspective rests on sure economic variables which embody innovation, risk bearing, and resource mobilization.
Innovation/Creativity In this approach, entrepreneurs are people who carry out new combination of productive resources. The key ingredient, the carrying out of new combination (or innovation) distinguishes entrepreneurs from non-entrepreneurs. While new venture creation appears as the most prevalent form of entrepreneurship, there exist other forms. Entrepreneurship additionally entails the initiation of changes within the type of subsequent growth in the amount of goods produced, and in current kind or construction of organisational relationships.
In the entrepreneurship literature, some scholars have questioned the usage of organization creation as criterion for entrepreneurship. It has been argued that organizations resembling political parties, associations and social teams are always created by people who find themselves not «entrepreneurs.» Attention-grabbing as it would possibly sound, the terms entrepreneurship and entrepreneur have been adopted by diverse scholars to fulfill the innovation and spirit of the time. This is evidenced by makes an attempt to use entrepreneurial thinking to up to date staff-oriented workplace strategies. Members of such teams — political parties, associations and social groups — subsequently, may very well be called entrepreneurial teams. Besides, activities inherent in such groups have flourished in recent years, and are increasingly being described as social entrepreneurship.
Risk Taking This is one other financial variable upon which the economic perspective revolves. Risk taking distinguishes entrepreneurs from non-entrepreneurs. Typically, entrepreneurs are calculated risk takers. They bear the uncertainty in market dynamics. This notion has its critics and advocates. Entrepreneurs may not essentially risk her own funds but risk other personal capital such as reputation and the possibility of being more gainfully employed elsewhere.
Resource Mobilization here, entrepreneurship is mirrored in alertness to perceived profit opportunities within the economy. This implies the allocation of resources in pursuit of opportunities with the entrepreneur enjoying the role of an opportunity identifier. This way, entrepreneurs are distinguished by their ability to identify persistent shocks or challenges (of long term opportunities) to the setting, and then to synthesize the information and take decisive actions primarily based upon it.
This article has conceptualized entrepreneurship based on resource mobilization, risk taking, and innovation. Past the above-talked about financial variables, entrepreneurship can also be considered primarily based on a set of personal characteristics, motives and incentives of the actor within the entrepreneurship act. This is the psychological perspective, the subject of a future article. In addition to the psychological perspective, we will also look at the process and small enterprise perspectives.
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