What is meant by entrepreneurship? The concept of entrepreneurship was first established in
the 1700s, and the meaning has evolved ever since. Many simply equate it with starting one's
own business. Most economists believe it is more than that.
To some economists, the entrepreneur is one who is willing to bear the risk of a new venture if
there is a significant chance for profit. Others emphasize the entrepreneur's role as an
innovator who markets his innovation. Still other economists say that entrepreneurs develop
new goods or processes that the market demands and are not currently being supplied.
In the 20th century, economist Joseph Schumpeter (1883-1950) focused on how the
entrepreneur's drive for innovation and improvement creates upheaval and change.
Schumpeter viewed entrepreneurship as a force of "creative destruction." The entrepreneur
carries out "new combinations," thereby helping render old industries obsolete. Established
ways of doing business are destroyed by the creation of new and better ways to do them.
Business expert Peter Drucker (1909-2005) took this idea further, describing the entrepreneur
as someone who actually searches for change, responds to it, and exploits change as an
opportunity. A quick look at changes in communications – from typewriters to personal
computers to the Internet – illustrates these ideas.
Most economists today agree that entrepreneurship is a necessary ingredient for stimulating
economic growth and employment opportunities in all societies. In the developing world,
successful small businesses are the primary engines of job creation, income growth, and
poverty reduction. Therefore, government support for entrepreneurship is a crucial strategy for
economic development.
As the Business and Industry Advisory Committee to the Organization for Economic Cooperation
and Development (OECD) said in 2003, "Policies to foster entrepreneurship are essential to job
creation and economic growth." Government officials can provide incentives that encourage
entrepreneurs to risk attempting new ventures. Among these are laws to enforce property
rights and to encourage a competitive market system.
The culture of a community also may influence how much entrepreneurship there is within it.
Different levels of entrepreneurship may stem from cultural differences that make
entrepreneurship more or less rewarding personally. A community that accords the highest
status to those at the top of hierarchical organizations or those with professional expertise may
discourage entrepreneurship. A culture or policy that accords high status to the "self-made"
individual is more likely to encourage entrepreneurship.
This overview is the first in a series of one-page essays about the fundamental elements of
entrepreneurship. Each paper combines the thinking of mainstream economic theorists with
examples of practices that are common to entrepreneurship in many countries. The series
attempts to answer: Why and how do people become entrepreneurs? Why is entrepreneurship beneficial to an economy? How can governments encourage entrepreneurship, and, with it,
economic growth?
Coming Next: What Makes Someone an Entrepreneur?
Please feel free to share this article in your favorite social media sites.
the 1700s, and the meaning has evolved ever since. Many simply equate it with starting one's
own business. Most economists believe it is more than that.
To some economists, the entrepreneur is one who is willing to bear the risk of a new venture if
there is a significant chance for profit. Others emphasize the entrepreneur's role as an
innovator who markets his innovation. Still other economists say that entrepreneurs develop
new goods or processes that the market demands and are not currently being supplied.
In the 20th century, economist Joseph Schumpeter (1883-1950) focused on how the
entrepreneur's drive for innovation and improvement creates upheaval and change.
Schumpeter viewed entrepreneurship as a force of "creative destruction." The entrepreneur
carries out "new combinations," thereby helping render old industries obsolete. Established
ways of doing business are destroyed by the creation of new and better ways to do them.
Business expert Peter Drucker (1909-2005) took this idea further, describing the entrepreneur
as someone who actually searches for change, responds to it, and exploits change as an
opportunity. A quick look at changes in communications – from typewriters to personal
computers to the Internet – illustrates these ideas.
Most economists today agree that entrepreneurship is a necessary ingredient for stimulating
economic growth and employment opportunities in all societies. In the developing world,
successful small businesses are the primary engines of job creation, income growth, and
poverty reduction. Therefore, government support for entrepreneurship is a crucial strategy for
economic development.
As the Business and Industry Advisory Committee to the Organization for Economic Cooperation
and Development (OECD) said in 2003, "Policies to foster entrepreneurship are essential to job
creation and economic growth." Government officials can provide incentives that encourage
entrepreneurs to risk attempting new ventures. Among these are laws to enforce property
rights and to encourage a competitive market system.
The culture of a community also may influence how much entrepreneurship there is within it.
Different levels of entrepreneurship may stem from cultural differences that make
entrepreneurship more or less rewarding personally. A community that accords the highest
status to those at the top of hierarchical organizations or those with professional expertise may
discourage entrepreneurship. A culture or policy that accords high status to the "self-made"
individual is more likely to encourage entrepreneurship.
This overview is the first in a series of one-page essays about the fundamental elements of
entrepreneurship. Each paper combines the thinking of mainstream economic theorists with
examples of practices that are common to entrepreneurship in many countries. The series
attempts to answer: Why and how do people become entrepreneurs? Why is entrepreneurship beneficial to an economy? How can governments encourage entrepreneurship, and, with it,
economic growth?
Coming Next: What Makes Someone an Entrepreneur?
Please feel free to share this article in your favorite social media sites.