ENTREPRENEURSHIP

Various organizations and writers define "entrepreneurship" and "entrepreneur" in

different ways. Nevertheless, these definitions of "entrepreneurship" tend to have some
common features and suggest that entrepreneurship involves planning and starting a
business, taking advantage of a business opportunity, assuming the risks of a business
venture, and providing some kind of innovation. These characteristics are commonly
associated with entrepreneursthe people who engage in entrepreneurshipand their
business ventures. While early discussion of entrepreneurs depicted them as business
mavericks who started their own businesses for self-satisfaction and self-sufficiency,
contemporary discussion views them as businesspeople who launch an innovative
business to establish a major company that will earn profits for them and for investors.
Moreover, entrepreneurship has became professionalized after business schools began
offering many a course on entrepreneurship and entrepreneurial skills.
Entrepreneurship is generally a source of more entrepreneurship, as one entrepreneur's
innovations pave the way for another's. The U.S. economy has always been fueled by the
innovations and new products entrepreneurs bring to the market. Big businesses started
out small, usually as one man or woman with a good idea and the willingness to work
hard and risk everything. While it is true that about half of all new businesses fail, the
ones that succeed contribute a great deal to the creation of other new ventures which
leads, in turn, to a dynamic national economy.
Successful entrepreneurship depends on many factors, including the characteristics of
the entrepreneur and the entrepreneur's economic environment. Of primary importance
is a dedicated, talented, creative entrepreneur. The person who has the ideas, the
energy, and the vision to create a new business is the cornerstone of any start-up. But
the individual must have ready access to a variety of important resources in order to
make the new venture more than just a good idea. He or she needs to develop a plan of
action, a road map that will take the venture from the idea stage to a state of growth and
institutionalization. He or she needs to put together a team of talented, experienced
individuals to help manage the new venture's operations. Entrepreneurship also
depends on access to capital, whether it be human, technological, or financial and on a
liberal business environment that enables innovative people to implement their ideas.
In short, entrepreneurship is a process that involves planning, implementation, and
management as well as the cooperation of others in order to exploit an opportunity for
profit.
THE EVOLVING DEFINITION OF
ENTREPRENEURSHIP
One of the biggest problems among those who are interested in entrepreneurship is
defining it. The multiplicity of the entrepreneur's motivations and goals leads to
questions aimed at distilling the essence of entrepreneurship. To what or to whom does
one refer when one uses the word? Is there any difference between a person who opens
yet another dry cleaning establishment, sandwich shop, or bookstore and an
entrepreneur? If so, what is it that separates the two? What characteristics define an
entrepreneur and entrepreneurship itself? Historians and business writers have
struggled with providing the answers. Even today, there is no widely accepted definition,
but the variety of possibilities provides important clues as to what makes
entrepreneurship special.
One of the first American writers to investigate the work of the entrepreneur in the
national economy was Joseph Schumpeter. The famed Harvard economist argued that
the defining characteristic of entrepreneurial ventures was innovation. By finding a new
"production function" in an existing resource, a previously unknown means through
which a resource could produce value, the entrepreneur was innovating. Innovation was
broadly conceived; an innovation could take place in product design, organization of the
firm, marketing devices, or process design. Nevertheless, innovation was what separated
the entrepreneur from others who undertook closely related endeavors.
Arthur Cole, another Harvard professor, defined entrepreneurship as purposeful activity
to initiate, maintain, and develop a profit-oriented business. The important part of this
definition is that creating a new business organization is considered entrepreneurial.
Cole's entrepreneur was a builder of profit-minded organizations and sought financial
gain.' Whereas Cole's definition was concerned primarily with the monetary profits of
the business world, Schumpeter made room for all organizational activities by broadly
defining profits. That is, according to Schumpeter, profits do not have to come in dollars
and cents.
Shapero and Sokol (1982) argued that all organizations and individuals have the
potential to be entrepreneurial. They are at odds with those who try to describe
entrepreneurship in terms of what makes an entrepreneurial organization different than
others. Rather than focusing on the nature of an entrepreneurial organization, the object
of Shapero and Sokol's study was the range of entrepreneurial activities themselves.
They focused on what happens when an individual or an organization acts like an
entrepreneur. Shapero and Sokol contend entrepreneurship is characterized by an
individual or group's initiative taking, resource gathering, autonomy, and risk taking.
Their definition could theoretically include all types and sizes of organizations with a
wide variety of functions and goals. By defining an "entrepreneurial event" instead of
entrepreneurship itself, Shapero and Sokol avoid the pitfalls inherent in trying to
delineate what types of organizations can or cannot be entrepreneurial.
In his book Innovation and Entrepreneurship, Peter F. Drucker took the ideas set forth
by Schumpeter one step further. He argued that Schumpeter's type of innovation can
be systematically undertaken by managers to revitalize business as well as nonbusiness
organizations. By combining managerial practices with the acts of innovation, Drucker
argued, business can create a methodology of entrepreneurship that will institutionalize
entrepreneurial values and practice. Drucker's definition of entrepreneurshipa
systematic, professional discipline available to anyone in an organizationbrings our
understanding of the topic to a new level. He demystified the topic, contending that
entrepreneurship is something that can be strategically employed by any organization at
any point in its existence, whether it be a startup or a 200-year-old business. Drucker
understood entrepreneurship as a tool to be implemented by managers and
organizational leaders as a means of growing a business.
Following Shapero and Sokol, and Drucker, a variety of business scholars in the late
1990s expanded on these ideas, viewing entrepreneurship no longer as an individual
enterprise alone and acknowledging the potential collaborative nature of
entrepreneurship. That is, entrepreneurship has begun to be viewed as a team effort and
many new, innovative businesses are launched by teams of entrepreneurs. In addition,
innovative workers within existing companies are often thought of as entrepreneurs and
are sometimes called "intrapreneurs."
A DETAILED LOOK AT
ENTREPRENEURSHIP
As mentioned at the outset, most conceptions of entrepreneurship ascribe one or more
of the following attributes to it: creating a new business, introducing innovations, and
taking risks. While launching a new business is commonly held to be a central element
of entrepreneurship, it is not an indispensable characteristic. While many entrepreneurs
start new businesses, many others have acquired existing companies and thereby
undertaken entrepreneurial enterprises by introducing innovations and taking risks.
Ray Kroc, for example, obtained exclusive franchising rights from the McDonald
brothers and went on to build the McDonald's franchise empire. Kroc expanded the fast-
food chain by the innovative method of franchising, or granting the rights to
independent business owners to use the McDonald's name and trademark and offer the
company's products in exchange for fees and royalties. This method enabled Kroc to
expand the company without investing a lot of his company's money or workers, since
the franchise owners provided them.
Furthermore, Kroc applied other innovations to his hamburger restaurants. He
standardized production and training, and focused on high quality and consistency in
his products. Because of Kroc's innovations, none of his competitors were able to
completely match McDonald's prices and quality. He introduced a new way of doing
business that laid the groundwork for vast expansion and growth for his company. In
addition, he provided an example of a new way of doing an old business, opening up
opportunities for competitors interested in trying to match his success.
Entrepreneurs also face risks with their business ventureswhether they start a
business from scratch or buy an existing one. Entrepreneurs assume the risks because
they make significant investments in their ventures; hence, they experience gains or
losses depending on the outcome of their endeavors. The risks stem from the
unpredictability or variability of running a business. These risks include market
uncertainties (whether customers will actually buy a new product or service),
production uncertainties, and resource uncertainties. Entrepreneurs make assumptions
about the business environment or market, usually based on market research and
other market evidence, and they must make decisions based on these assumptions. For
example, Kroc made assumptions about customer demand for standardized fast-food
restaurants, which paid off, but they might not have.
In addition, entrepreneurship depends on an economic and business structure that
allows businesspeople to launch start-up ventures and to be creative and innovative with
these ventures. Furthermore, entrepreneurship needs positive economic conditions in
order for entrepreneurial ventures to grow and produce profits. As Marc J. Dollinger
points out in Entrepreneurship: Strategies and Resources, restrictive economies inhibit
entrepreneurship, because businesspeople must negotiate layers of bureaucracy and red