Definition of Entrepreneurship

Entrepreneurship and innovation are often concepts that overlap. Schumpeter (1934) defines entrepreneurs as individuals that carry out new combinations. He distinguishes four roles in the process of innovation, the inventor who invents a new idea; the entrepreneur who commercializes this new idea; the capitalist, who provides the financial resources to the entrepreneur; the manager, who takes care of the routing day-to-day corporate management. However the roles of entrepreneurs whatever they may be usually contain positive connotations.

A business entrepreneur is a person who operates a new enterprise or venture and assumes some accountability for the inherent risks (Casson M. 2005). Entrepreneurs are people that are not opposed to taking risks that are necessary to undertake a business venture. Often times the success is contributed to how well they utilize the factors of

13The definition of Innovation http://innovationzen.com/blog/2006/11/17/the-definition-of-innovation/

production available. Factors of production include land or natural resources, labor how well available resources can be utilized using human efforts, and capital including any type of equipment used in production.

Entrepreneurship is difficult and many new ventures fail, in order to find success a good entrepreneur is defined as the founder and involved in creating a for-profit enterprise.

Usually the objective is for profit to be made and an entrepreneur’s role is to create value by offering a service or product to obtain profit.

Definitions of entrepreneurship:

Creation of new organizations (Garntner 1988)

The carrying out of new combinations (Schumpeter 1934) The exploration of opportunities (Kirzner 1973)

The bearing of uncertainty (Knight 1921)

The bringing together of factors of production (Say 1803)

2.4.1 Other views of Entrepreneurshipinclude:

Richard Cantillon (circa 1730); Entrepreneurship is defined as self-employment of any sort. Entrepreneurs buy at certain prices in the present and sell at uncertain prices in the future. The entrepreneur is a bearer of uncertainty.

Jean Baptiste Say (1816); The entrepreneur is the agent "who unites all means of production and who finds in the value of the products...the reestablishment of the entire capital he employs, and the value of the wages, the interest, and rent which he pays, as well as profits belonging to himself."

Frank Knight (1921); Entrepreneurs attempt to predict and act upon change within markets. Knight emphasizes the entrepreneur's role in bearing the uncertainty of market dynamics. Entrepreneurs are required to perform such fundamental managerial functions as direction and control.

Joseph Schumpeter (1934); The entrepreneur is the innovator who implements change within markets through the carrying out of new combinations. The carrying out of new combinations can take several forms; 1) the introduction of a new good or quality thereof, 2) the introduction of a new method of production, 3) the opening of a new market, 4) the conquest of a new source of supply of new materials or parts, 5) the carrying out of the new organization of any industry. Schumpeter equated entrepreneurship with the concept of innovation applied to a business context. As such, the entrepreneur moves the market away from equilibrium. Schumpter's definition also emphasized the combination of resources. Yet, the managers of already established business are not entrepreneurs to Schumpeter.

Penrose (1963); Entrepreneurial activity involves identifying opportunities within the economic system. Managerial capacities are different from entrepreneurial capacities Harvey Leibenstein (1968, 1979); the entrepreneur fills market deficiencies through

input-completing activities. Entrepreneurship involves "activities necessary to create or carry on an enterprise where not all markets are well established or clearly defined and/or in which relevant parts of the production function are not completely known.

Israel Kirzner (1979); The entrepreneur recognizes and acts upon market opportunities. The entrepreneur is essentially an arbitrageur. In contrast to Schumpeter's viewpoint, the entrepreneur moves the market toward equilibrium.

The Entrepreneurship Center at Miami University of Ohio: "Entrepreneurship is the process of identifying, developing, and bringing a vision to life. The vision may be an innovative idea, an opportunity, or simply a better way to do something. The end result of this process is the creation of a new venture, formed under conditions of risk and considerable uncertainty."

Entrepreneurship can be viewed as the exploitation of opportunities that exist within a market. The exploitation of these opportunities can be most commonly associated with the combination of productive inputs. Entrepreneurs are usually seen as innovative or creative and are seen to be risk-takers, usually they must fulfill this perception in order to exploit the opportunities. Entrepreneurs are seen to be natural managers as they must manage the activities of an endeavor. An individual may act as an entrepreneur in

creating an organization but later may step into a more managerial role. So because of this small business owners would not be considered entrepreneurs. Therefore individuals within an organization may be considered entrepreneurs, even if they are not the founders, as an entrepreneur is classified as someone who pursues the exploitation of opportunities.

In the context of this paper to narrow down the discussion of entrepreneurship, I will use the working definition of entrepreneurship as ‘the introduction of new economic activity by an individual that leads to change in the marketplace (Sarasvathy 2000; Davidsson 2004).