The concept of entrepreneurship is multifaceted. There are different, various and somewhat contradictory sets of definitions of the term. As a way out the definitional dilemma, this article aims to explain the economic perspective on entrepreneurship.
The economic perspective rests on certain financial variables which include innovation, risk bearing, and resource mobilization.
Innovation/Creativity In this approach, entrepreneurs are individuals who perform new mixture of productive resources. The key ingredient, the finishing up of new mixture (or innovation) distinguishes entrepreneurs from non-entrepreneurs. While new venture creation seems as the most prevalent type of entrepreneurship, there exist different forms. Entrepreneurship also involves the initiation of adjustments within the form of subsequent growth within the quantity of products produced, and in present type or structure of organisational relationships.
In the entrepreneurship literature, some scholars have questioned using group creation as criterion for entrepreneurship. It has been argued that organizations reminiscent of political parties, associations and social groups are always created by people who find themselves not «entrepreneurs.» Fascinating as it may sound, the terms entrepreneurship and entrepreneur have been adopted by various scholars to satisfy the innovation and spirit of the time. This is evidenced by makes an attempt to apply entrepreneurial thinking to modern group-oriented workplace strategies. Members of such groups — political events, associations and social groups — therefore, may very well be called entrepreneurial teams. Besides, activities inherent in such groups have flourished in recent times, 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 could not essentially risk her own funds however risk other personal capital equivalent to fame and the possibility of being more gainfully employed elsewhere.
Resource Mobilization here, entrepreneurship is reflected in alertness to perceived profit opportunities in the economy. This implies the allocation of resources in pursuit of opportunities with the entrepreneur taking part in the function of an opportunity identifier. This way, entrepreneurs are distinguished by their ability to identify persistent shocks or challenges (of long run opportunities) to the environment, and then to synthesize the data and take decisive actions based upon it.
This article has conceptualized entrepreneurship based mostly on resource mobilization, risk taking, and innovation. Beyond the above-mentioned financial variables, entrepreneurship can also be viewed primarily based on a set of personal characteristics, motives and incentives of the actor in the entrepreneurship act. This is the psychological perspective, the topic of a future article. In addition to the psychological perspective, we will additionally examine the process and small enterprise perspectives.
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