In political economics, entrepreneurship is the quality of being an entrepreneur, i.e. one who "undertakes an enterprise".

[1]

The term puts emphasis on the risk and effort of individuals who own and

manage a business, and on the innovations that result from their pursuit of economic success.

This bicycle repair shop in China was operated by an entrepreneur in 1984. Photo by George Garrigues

Dell Women's Entrepreneur Networkevent in New York City, May 2013

In 2012, Ambassador-at-Large for Global Women's Issues Melanne Verveer greeted participants in an African Women's Entrepreneurship Program at the State Department in Washington, D.C.

"Entrepreneurship" may result in new organizations or revitalize mature organizations in response to a perceived business opportunity. A new business started by an entrepreneur is referred to as a startup company. In recent years, the term has been extended to include social and political forms of entrepreneurial activity.
[according to whom?]

Entrepreneurship within a firm or large organization has been

referred to as intra-preneurship and may include corporate ventures where large entities spin off subsidiary organizations.
[2]

According to Paul Reynolds, an entrepreneurship scholar

[clarification needed]

who created 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 a new business creation is a common activity among U.S. workers over the course of their careers."
[3]

In recent years entrepreneurship has

been documented by scholars such as David Audretsch as a major driver of economic growth in both the United States and Western Europe. "As well, entrepreneurship may be defined as the pursuit of opportunity without regard to resources currently controlled (Stevenson,1983)"
[4]

Entrepreneurial activities differ substantially depending on the type of organization and creativity involved. Entrepreneurship ranges in scale from solo projects, and even just part-time projects, to major undertakings that create many job opportunities. Many "high value" entrepreneurial ventures seek venture capital or angel funding (seed money) in order to raise capital for building the business. Angel investors generally seek annualized returns of 2030% and more, as well as extensive involvement in the business.
[5]

Many organizations exist to support would-be entrepreneurs including specialized

government agencies, business incubators, science parks, and someNGOs. More recently, the term entrepreneurship has been extended to include conceptualizations of entrepreneurship as a specificmindset (see also entrepreneurial mindset) resulting in entrepreneurial initiatives e.g. in the form of social entrepreneurship, political entrepreneurship, or knowledge entrepreneurship. Since 2008, an annual "Global Entrepreneurship Week" has been announced, with the aim of "exposing people to the benefits of entrepreneurship" and getting them to "participate in entrepreneurial-related activities"
[who?]

.
Contents
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1 History

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1.1 Schumpeter on Entrepreneurship 1.2 Knight and Drucker

2 Financial Bootstrapping 3 External financing 4 See also 5 References 6 Further reading

History[edit]
The entrepreneur is a factor in microeconomics, and the study of entrepreneurship reaches back to the work in the late 17th and early 18th centuries of Richard Cantillon and Adam Smith, which was foundational to classical economics. In the 20th century, entrepreneurship was studied by Joseph Schumpeter in the 1930s and other Austrian economists such as Carl Menger, Ludwig von Mises and Friedrich von Hayek. The term "entrepreneurship" was coined around the 1920s, while the loan from French of the word entrepreneur itself dates to the 1850s. It became something of a buzzword beginning about 2010, in the context of disputes which have erupted surrounding the wake of the Great Recession.
[clarification needed]

Schumpeter on Entrepreneurship[edit]
According to Schumpeter, an entrepreneur is willing and able to convert a new idea or invention into a successful innovation.
[6]

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. Thus, creative destruction is largely responsible for the dynamism of industry and 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 is hotly

debated in academic economics. An alternate description posited by Israel Kirznersuggests that the majority of innovations may be much more incremental improvements such as the replacement of paper with plastic in the construction of a drinking straw. For Schumpeter, entrepreneurship resulted in new industries but also 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, the car, was transformational but did not require the development of a new technology, merely the application of existing technologies in a novel manner. It did not immediately replace the horsedrawn carriage, but in time, incremental improvements which reduced the cost and improved the technology led to the complete practical replacement of beast drawn vehicles in modern transportation. Despite Schumpeter's early 20thcentury contributions, traditional microeconomic theory did not formally consider the entrepreneur in its theoretical frameworks (instead assuming that resources would find each other through a price system). In this treatment the entrepreneur was an implied but unspecified actor, but it is consistent with the concept of the entrepreneur being the agent of x-efficiency. Different scholars have described entrepreneurs as, among other things, bearing risk. For Schumpeter, the entrepreneur did not bear risk: the capitalist did.

Knight and Drucker[edit]

For Frank H. Knight

[7]

(1921) and Peter Drucker (1970) entrepreneurship is about taking risk. The

behavior of the entrepreneur reflects a kind of person willing to put his or her career and financial security on the line and take risks in the name of an idea, spending much time as well as capital on an uncertain venture. Knight classified three types of uncertainty. Risk, which is measurable statistically (such as the probability of drawing a red color ball from a jar containing 5 red balls and 5 white balls). Ambiguity, which is hard to measure statistically (such as the probability of drawing a red ball from a jar containing 5 red balls but with an unknown number of white balls). True Uncertainty or Knightian Uncertainty, which is impossible to estimate or predict statistically (such as the probability of drawing a red ball from a jar whose number of red balls is unknown as well as the number of other colored balls. The acts of entrepreneurship are often associated with true uncertainty, particularly when it involves bringing something really novel to the world, whose market never exists. However, even if a market already exists, there is no guarantee that a market exists for a particular new player in the cola category. The place of the disharmony-creating and idiosyncratic entrepreneur in traditional economic theory (which describes many efficiency-based ratios assuming uniform outputs) presents theoretic quandaries. William Baumol has added greatly to this area of economic theory and was recently honored for it at the 2006 annual meeting of the American Economic Association.
[8]

Financial Bootstrapping[edit]
Financial bootstrapping is a term used to cover different methods for avoiding using the financial resources of external investors. Bootstrapping can be defined as a collection of methods used to minimize the amount of outside debt and equity financing needed from banks and investors.
[9]

The use of

private credit card debt is the most known form of bootstrapping, but a wide variety of methods are available for entrepreneurs. While bootstrapping involves a risk for the founders, the absence of any other stakeholder gives the founders more freedom to develop the company. Many successful companies including Dell Computers and Facebook were founded this way. There are different types of bootstrapping: Owner financing Sweat equity Minimization of the accounts payable Joint utilization

Delaying payment Minimizing inventory Subsidy finance Personal Debt

External financing[edit]
Many businesses need more capital than can be provided by the owners themselves, and in this case, a range of options is available including: Angel investors Venture capital investors. Crowd funding Hedge funds Alternative Asset Management

Some of these sources provide not only funds, but also financial oversight, accountability for carrying out tasks and meeting milestones, and in some cases business contacts and experience in many cases in return for an equity stake.

See also[edit]
Economics portal

Book: Entrepreneurship

Entrepreneur Business opportunity Business plan Corporate Social Entrepreneurship Entrepreneurship Ecosystem Entrepreneurship education Junior enterprise University spin-off

References[edit]
1. Jump up^ OED: "Polit. Econ. who undertakes an enterprise; one who owns and manages a business; a person who takes the risk of profit or loss."

2.

Jump up^ Scott Andrew Shane (2003). A General Theory of Entrepreneurship: the Individual-Opportunity Nexus. Edward Elgar Publishing. ISBN 1843769964.

3.

Jump up^ Paul D. Reynolds (2010). Entrepreneurship in the United States: The Future Is Now. Springer. ISBN 1441942750.

4.

Jump up^ Paul D. Reynolds (1997). "LEVERAGING RESOURCES: BUILDING AN ORGANIZATION ON AN ENTREPRENEURIAL RESOURCE BASE". Frontiers of Entrepreneurship Research, 1997. Babson College. ISBN 0910897182.

5.

Jump up^ Mark Van Osnabrugge, Robert J. Robinson (2000). Angel Investing. John Wiley & Sons. ISBN 0787952028.

6.

Jump up^ Joseph A. Schumpeter (2012). Capitalism, Socialism and Democracy. Routledge. ISBN 0415107628.

7.

Jump up^ Frank Hyneman Knight (2002). Risk, Uncertainty and Profit. Beard Books. ISBN 1587981262.
[year needed][page needed]

8.

Jump up^ "Searching for the invisible man". The Economist. Mar 9 2006. p. 67. Retrieved 23 December 2012.

9.

Jump up^ Ebbena, Jay; Johnson, Alec (November 2006). "Bootstrapping in small firms: An empirical analysis of change over time". Journal of Business Venturing 21 (6): 851 865.doi:10.1016/j.jbusvent.2005.06.007. Retrieved 23 December 2012.

Further reading[edit]
Thomas N. Duening, Robert D. Hisrich, Michael A Lechter. (2009). Technology Entrepreneurship: Value Creation, Protection, and Capture. Academic Press. ISBN 0123745020. Anders Lundstrom, Lois A. Stevenson (2005). Entrepreneurship Policy: Theory and Practice. Springer. ISBN 038724140X. Richard Swedberg (2000). Entrepreneurship: The Social Science View. Oxford University Press. ISBN 019829462X. Joo Leito, Rui Baptista (2009). Public Policies for Fostering Entrepreneurship. Springer. ISBN 9781-4419-0248-1. Sobel, Russell S. (2008). "Entrepreneurship". In David R. Henderson (ed.). Concise Encyclopedia of Economics (2nd ed.). Indianapolis: Library of Economics and Liberty.ISBN 9780865976658. OCLC 237794267. Erik N Bowman, (2011). Entrepreneur Training Manual, Third Edition. Guanzi Institute Press. ISBN 978-0982673393.

Entrepreneur
From Wikipedia, the free encyclopedia

For the magazine, see Entrepreneur (magazine).

It has been suggested that Entrepreneurship be merged into this article. (Discuss) Proposed since October 2013.

Mark Zuckerberg, founder ofFacebook, is one of the world's foremost entrepreneurs

An entrepreneur (

/ntrprnr/, a loanword from French) is an individual who organizes and operates a

business or businesses, taking on financial risk to do so. Its first known usage, by economist Richard Cantillon, was in 1723. Today, an entrepreneur is defined as someone having the qualities of leadership and, additionally, is an innovator of ideas regarding manufacturing, delivery, or service needs (or any combination of these).
Contents
[hide]

1 Etymology and historical usage 2 Influences and entrepreneurial behavior

o o o

2.1 Entrepreneur types 2.2 Psychological make-up of the entrepreneur 2.3 Innate ability vs. public perception

3 See also 4 References 5 Further reading

Etymology and historical usage[edit]

The term entrepreneur, was first defined by the Irish-French economist, Richard Cantillon. He defined the term as a person who pays a certain price for a product, only to resell it at an uncertain price, thereby: "making decisions about obtaining and using the resources while consequently admitting the risk of enterprise." [citation
needed]

The word first appeared in the French Dictionary "Dictionnaire Universel de Commerce" of Jacques des

Bruslons, published in 1723. A Chronological List of the Definition of 'Entrepreneur'

1734: Richard Cantillon: Entrepreneurs are non-fixed income earners who pay known costs of production but earn uncertain incomes,[1]

1803: Jean-Baptiste Say: An entrepreneur is an economic agent who unites all means of production- land of one, the labour of another and the capital of yet another and thus produces a product. By selling the product in the market he pays rent of land, wages to labour, interest on capital and what remains is his profit. He shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.[citation needed]

1934: Schumpeter: Entrepreneurs are innovators who use a process of shattering the status quo of the existing products and services, to set up new products, new services.[citation needed]

1961: David McClelland: An entrepreneur is a person with a high need for achievement [N-Ach]. He is energetic and a moderate risk taker.[citation needed]

1964: Peter Drucker: An entrepreneur searches for change, responds to it and exploits opportunities. Innovation is a specific tool of an entrepreneur hence an effective entrepreneur converts a source into a resource.[citation needed]

1971: Kilby: Emphasizes the role of an imitator entrepreneur who does not innovate but imitates technologies innovated by others. Are very important in developing economies.[citation needed]

1975: Albert Shapero: Entrepreneurs take initiative, accept risk of failure and have an internal locus of control.[citation needed]

Influences and entrepreneurial behavior[edit]

British entrepreneur Karren Brady has an estimated net worth of 82 million [2]

The entrepreneur is commonly seen as an innovator a generator of new ideas and business processes.[3] Management skill and strong team building abilities are often perceived as essential leadership attributes for successful entrepreneurs.[4] Political economistRobert Reich considers leadership, management ability, and team-building to be essential qualities of an entrepreneur.[5][6]

Entrepreneur types[edit]
Differences in entrepreneurial organizations and the heterogeneity in their founders' behaviors can be traced back to the founder's identity. Fauchart and Gruber have utilized social identity theory to illustrate that individual entrepreneurs can be identified as one of three main types: Darwinians, Communitarians and Missionaries. These types of entrepreneurs not only diverge in fundamental ways in terms of their self-views and their social motivations in entrepreneurship, but also engage fairly differently in new firm creation. [7]

Psychological make-up of the entrepreneur[edit]

Studies show that the psychological propensities for male and female entrepreneurs are more similar than different. Empirical studiessuggest that male entrepreneurs possess strong negotiating skills and consensusforming abilities.[citation needed] Jesper Srensen[who?] wrote that significant influences on an individual's decision to become an entrepreneur are workplace peers and the social composition of the workplace. Srensen discovered a correlation between working with former entrepreneurs and how often these individuals become entrepreneurs themselves, compared to those who did not work with entrepreneurs.[8] The social composition of the workplace can influence entrepreneurism in workplace peers by proving a possibility for success, causing a He can do it, why cant I? attitude. As Srensen stated, When you meet others who have gone out on their own, it doesnt seem that crazy.[9]

Innate ability vs. public perception[edit]

The ability of entrepreneurs to innovate relates to innate traits, including extroversion and a proclivity for risktaking.[citation needed] According to Joseph Schumpeter, the capabilities of innovating, introducing new technologies, increasing efficiency and productivity, or generating new products or services, are characteristic qualities of entrepreneurs.[citation needed] It has, however, been argued that entrepreneurs are not that distinctive; and that "non-entrepreneurs" maintain laudatory portraits of "entrepreneurs" [10][11]

See also[edit]

List of entrepreneurs Entrepreneurship Investor Venture capitalist

References[edit]
1. Jump up^ Tarascio, Vincent J. (Fall 1985). "Cantillon's Essai: A Current Perspective". Journal of Libertarian Studies (Ludwig von Mises Institute) 29 (2): 251. Retrieved 23 September 2010. 2. 3. 4. Jump up^ http://www.therichest.com/celebnetworth/celebrity-business/women/karren-brady-net-worth/ Jump up^ Terms; Investopedia.com; access date. Jump up^ Prive, Tanya (19 December 2012). "Top 10 Qualities That Make A Great Leader".Forbes. Retrieved 1 August 2013. 5. 6. Jump up^ Cantillon, Richard (1755). Essai sur la Nature du Commerce en Gnral. Jump up^ Drucker, Peter F. (1985). Innovation and Entrepreneurship. attributes the coining and defining of entrepreneur to Jean-Baptiste Say in his A Treatise on Political Economy; (1834). 7. Jump up^ Fauchart, E; Gruber, M. (2011). "Darwinians, Communitarians, and Missionaries: The Role of Founder Identify in Entrepreneurship". Academy of Management Journal 54 (5): 935957. 8. Jump up^ Srensen, J.; Nanda, R. (July 2010). "Workplace Peers and Entrepreneurship".Management Science 56 (7). Retrieved 30 June 2013. 9. Jump up^ "Peers Influence Decision to Become an Entrepreneur". Stanford Graduate School of Business; News. 1 September 2009. Retrieved 30 June 2013. 10. Jump up^ Ramoglou, S. (2013). "Who is a 'non-entrepreneur'? Taking the 'others' of entrepreneurship seriously". International Small Business Journal 31 (4): 432453. 11. Jump up^ Gartner, William B. (2001). "Is There an Elephant in Entrepreneurship? Blind Assumptions in Theory Development; Business research". Entrepreneurship Theory and Practice 25 (4): 2739.

Further reading[edit]

Wikibooks has a book on the topic of: Entrepreneurship

Look up entrepreneur in Wiktionary, the free dictionary.

Acs, Z. and Audretsch, D. B. (2010). Handbook of Entrepreneurship Research: An Interdisciplinary Survey and Introduction. New York: Springer.

Deakins, D.; Freel, M. (2009). Entrepreneurship and Small Firms, 5th Edition. McGraw Hill. Minniti, M. and Moren, L. (2010). "Entrepreneurial types and economic growth", Journal of Business Venturing, 25 (3): 305-314.

Shane, S. and Venkataraman, S. (2000). "The Promise of Entrepreneurship as A Field of Research", Academy of Management Review, 25(1), 217-226.

Shane, S. and Nicolaou, N. (2013). The genetics of entrepreneurial performance. International Small Business Journal, 31(5): 473-495.

Ucbasaran, D., Westhead, P., and Wright, M., (2001). "The Focus of Entrepreneurial Research: Contextual and Process Issues", Entrepreneurship Theory and Practice, 25(4): 57-80.

Gedajlovic, Neubaum and Shulman (2009). "A typology of social entrepreneurs: Motives, search processes and ethical challenges", Journal of Business Venturing, 24 (5): 519-532.