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ENTREPRENEURSHIP CONCEPTS, CLASS & CULTURE

Ms V Thilagam, Faculty, PSG Institute of Management


INTRODUCTION
Industrial Development occurs mainly on account of constant striving of human agencies
that are responsive to business incentives and motivations. In the language of
Economics, this representativenesss of human agencies has been termed as
Entrepreneurship.
Every nation has understood the importance of entrepreneurship as a major determinant
of the rate of economic growth. Industrial revolution has proved that its not the presence
of the factors of production, but rather the pioneering efforts of a special class of
individuals the entrepreneurs which made some nations e!tremely wealthy than
others.
"herefore, it has become obvious to all concerned, that economic growth can be
induced by entrepreneurs, who establish industrial enterprises. #ot surprisingly,
entrepeneurship became the $ey interest of %ess Developed &ountries as well.
'overnments have tried their own models in their countries relevant to their cultural
conte!t.
In India also the (tate has intervened from time to time, in almost all the bac$ward
regions to induce entrepreneurial activity with various programmes so that a balanced
economic growth can be had. It has been almost half a century that the nation went
ahead with several small)scale industrial programmes in order to create economic
development. "he success of these efforts had unfortunately not been satisfactory.
PSG - Science & Technology Entrepreneuril Pr!
PSG College o" Technology
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Entrepreneur - Definition
*ichard &antillon, a +rench economist of Irish descent, is credited with giving the
concept of entrepreneurship a central role in economics. In his Essai sur la nature du
commerce en general, published posthumously in ,-.., &antillon described an
entrepreneur, as a person who pays a certain price for a product to resell it at an
uncertain price, thereby ma$ing decisions about obtaining and using resources while
conse/uently assuming the ris$ of enterprise.
0 critical point in &antillons argument was that entrepreneurs consciously ma$e
decisions about resource allocations. &onse/uently, astute entrepreneurs would always
see$ the best opportunities for using resources for their highest commercial yields.
0dam (mith spo$e of the enterpriser in his ,--1 2ealth of #ations as an individual
who undertoo$ the formation of an organi3ation for commercial purposes. 4e thereby
ascribed to the entrepreneur the role of industrialist, but he also viewed the entrepreneur
as a person with unusual foresight who could recogni3e potential demand for goods and
services. In (mith5s view, entrepreneurs reacted to economic change, thereby becoming
the economic agents who transformed demand into supply.
+rench economist 6ean 7aptiste (ay, in his, ,89: "raite d economic politi/ue
;translated into English in ,8<. as 0 "reatise on =olitical Economy>, described an
entrepreneur as one who possessed certain arts and s$ills of creating new economic
enterprises, yet a person who had e!ceptional insight into societys needs and was able
to fulfill them. (ay, therefore, combined the economic ris$ ta$er of &antillon and the
industrial manager of (mith into an unusual character. (ays entrepreneur influenced
society by creating new enterprises and at the same time was influenced by society to
recogni3e needs and fulfill them through astute management of resources.
In ,8<8, 7ritish economist 6ohn (tuart ?ill elaborated on the necessity of
entrepreneurship in private enterprise. "he term entrepreneur subse/uently became
common as a description of business founders, and the fourth factor of economic
endeavor was entrenched in economic literature in encompassing the ultimate
ownership of a commercial enterprise.
In 0ustria, &arl ?enger ;,8<9),@A,> established the subjectivist perspective of
economics in his ,8-, =rinciples of Economics. In ?engers view, economic change
does not arise from circumstances but from an individuals awareness and
understanding of those circumstances. "he entrepreneur becomes, therefore, the
change agent who transforms resources into useful goods and services, often creating
the circumstances that lead to industrial growth.
+ran$ Bnight ;,@A,> called him a manager of uncertainty and e!plained that the profit
was a residual share arising because of uncertainty and accruing to the entrepreneurs
for underta$ing that ultimate responsibility which by its very nature cannot be insured.
0 significant contribution towards the understanding of the term entrepreneur was made
by 6oseph 0 (chumpeter ;,@<->. "he conte!t of (chumpeters analysis was a perfectly
competitive mar$et in which with the given consumer tastes and technologies there
e!isted a state of perfect e/uilibrium. (chumpeter saw the entrepreneur as one who
upset this state of e/uilibrium by introducing new products or services, new method of
production, new way of mar$eting or a new way of organi3ing. 0ccording to him an
entrepreneur was the one who made new combinations of the means of production.
0s against the assumption of perfectly rational and competitive mar$ets by classical
economists, (chumpeter assumed a political economy which included routine business
practices, sun$ costs, relatively fi!ed consumer habits, laws, and social conventions
operating often against the entrepreneur. In order to overcome all these, the
entrepreneur in the (chumpeteterian sense had to be the one who possessed unusual
traits of character and was also motivated by non)economic incentives such as the job of
creating something, of getting things done, or simply e!ercising ones energy and
ingenuity.
0ccording to him an entrepreneur was a multi)role character performing the roles of
owner, manager, financier and promoter. ?erely becoming the head of a firm, in his
opinion, did not ma$e one entrepreneur, as it need not involve a new combination of
means of production.
(chumpeter made another point of great importance when he pointed out the
entrepreneurial profit comes specifically from innovation. It is bound to be temporary and
will ine!orably diminish under the eroding forces of competition. "he implication here is
that no enterprise can rest on its laurels. Innovation must be a continual process if the
enterprise is to achieve longevity.
Entrepreneurs, in the modern sense, are the self)starters and doers who have organi3ed
and built successful enterprises since the Industrial revolution.
(chumpeter did not e/uate entrepreneurs with inventors, suggesting instead that an
inventor might only create a new product, whereas an entrepreneur will gather
resources, organi3e talent, and provide leadership to ma$e it a commercial success.
"his viewpoint was mirrored by =eter Druc$er, who described the entrepreneurial role as
one of gathering and using resources, but he added that resources, to produce results,
must be allocated to opportunities rather than to problems. In Druc$ers view,
entrepreneurship occurs when resources are redirected to progressive opportunities, not
used to ensure administrative efficiency. "his redirection of resources distinguishes the
entrepreneurial role from that of the traditional management role.
"he evolution of the concept has generated many definitions, but perhaps a recent one
by writer *obert *onstadt captures its essence.
Entrepreneurship is the dynamic process of creating incremental wealth. "his wealth is
created by individuals who assume the major ris$s in terms of e/uity, time, andCor career
commitment of providing value for some product or service. "he product or service itself
may or may not be new or uni/ue but value must somehow be infused by the
entrepreneur by securing and allocating the necessary s$ills and resources.
"he definition of *obert *onstadt, reflects the definition of 6 7 (ay, Dcreating new
enterprises, influenced by society to recogni3e its needs and fulfill the same, which itself
is a combination of &antillons and 0dam (imths definitions.
It also reflects 6 ( ?ills view of Dultimate ownership of a commercial enterprise in the
words ris$s in terms of e/uity.
+ran$ Bnights Duncertainty is termed as ris$s in e/uity, time and career commitment by
*obert *onstadt.
"he (chumpeteterian concept of DInnovation is reflected by the words providing value
for some product or service. "he product or service may or may not be new or uni/ue
"he (chumpeterian definition which insists on innovativeness cannot as such be applied
to Indian conditions due to the technological bac$wardness, which again, had its own
reasons of being under the colonial rule for centuries which hindered the economic,
social and cultural growth of the nation. (o the use of the above definition is
recommended and entrepreneurs can be defined on the following basis E
Entrepreneurs are I#DIFIDG0%(
0> 2ho have ta$en ris$Cmoderate ris$ in terms of E/uity, time andCor career
commitment.
7> "o provide value for some product or service which may or may not be new or uni/ue
&> 0nd in such a process create incremental wealth.
&haracteristics of an Entrepreneur
"he history of entrepreneurship indicates that entrepreneurs share common origins and
common characteristics. "he originators of industrial enterprise in England came from
lower)and middle ) class origins. In 0merican history of the late nineteenth century
enterprises, 4eilbroner points out that the average entrepreneur was the son of parents
in comfortable financial circumstances, neither very wealthy nor very poor. (chumpeter
wrote that entrepreneurs do not form a social class but have their origins in all classes.
?a! 2eber stressed the view that creative and entrepreneurial energies are generated
by the adoption of e!ogeneously supplied beliefs which in turn produce intense efforts in
occupational pursuits and the accumulation of productive assets leading to manufacture
of goods and services. 0ccording to him, entrepreneurs are a product of the particular
social conditions in which they live and it is the society which shapes the personality of
individuals as entrepreneurs.
In recent times, three psychological theories put forward by David ?c&lelland, Everret
4agen and 6ohn Bun$el and the sociological theories by "homas &ochran and +ran$
Houng are worthnoting. 2hile ?c&lelland emphasised the importance of achievement
motivation as the basis of entrepreneurial personality and a cause of economic and
social development, the emergence of a group of creative individuals conse/uent on
withdrawal of status in society is identified by 4agen as the factor causing the
development of entrepreneurs and the starting point of economic development. 6ohn
Bun$el believes that the behavior pattern of individuals is important for development and
such a pattern can be influenced by e!ternal stimulus so as to alter it in the manner we
want it.
%i$e 2eber, &ochran and Houng underscore the importance of society in shaping the
entrepreneurial personality and consider that the $ey ingredient in the emergence of
entrepreneurs are agricultural values, role e!pectations, social sanctions and inter)group
relations in society.

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