Entrepreneurship

The concept of entrepreneurship has a wide
range of meanings. On the one extreme an
entrepreneur is a person of very high
aptitude who pioneers change, possessing
characteristics found in only a very small
fraction of the population. On the other
extreme of definitions, anyone who wants to
work for himself or herself is considered to be
an entrepreneur.

The word entrepreneur originates from the
French word, entreprendre , which means "to
undertake." In a business context, it means to
start a business. The Merriam-Webster
Dictionary presents the definition of an
entrepreneur as one who organizes, manages,
and assumes the risks of a business or
enterprise.

Schumpeter's View of Entrepreneurship-

Austrian economist Joseph Schumpeter 's
definition of entrepreneurship placed an
emphasis on innovation, such as:
1. new products
2. new production methods
3. new markets
4. new forms of organization

Wealth is created when such innovation results
in new demand. From this viewpoint, one can
define the function of the entrepreneur as one
of combining various input factors in an
innovative manner to generate value to the
customer with the hope that this value will
exceed the cost of the input factors, thus
generating superior returns that result in the
creation of wealth.

Entrepreneurship vs. Small Business-

Many people use the terms "entrepreneur" and
"small business owner" synonymously. While
they may have much in common, there are
significant differences between the
entrepreneurial venture and the small
business. Entrepreneurial ventures differ from
small businesses in these ways:

1. Amount of wealth creation - rather than
simply generating an income stream that
replaces traditional employment, a successful
entrepreneurial venture creates substantial
wealth, typically in excess of several million
dollars of profit.

2. Speed of wealth creation - while a successful
small business can generate several million
dollars of profit over a lifetime,
entrepreneurial wealth creation often is rapid;
for example, within 5 years.

3. Risk - the risk of an entrepreneurial venture
must be high; otherwise, with the incentive of
sure profits many entrepreneurs would be
pursuing the idea and the opportunity no
longer would exist.

4. Innovation - entrepreneurship often involves
substantial innovation beyond what a small
business might exhibit. This innovation gives
the venture the competitive advantage that
results in wealth creation. The innovation may
be in the product or service itself, or in the
business processes used to deliver it.