“Entrepreneur” (/ˌɒ̃trəprəˈnɜːr, -ˈnjʊər/ (About this soundlisten), UK also /-prɛ-/) is a loanword from French……
The word first
appeared in the French dictionary entitled Dictionnaire Universel de
Commerce compiled by Jacques des Bruslons and published in 1723.
Especially in Britain, the term “adventurer” was often used to denote
the same meaning.The study of entrepreneurship reaches back to the work
in the late 17th and early 18th centuries of Irish-French economist
Richard Cantillon, which was foundational to classical economics.
Cantillon
defined the term first in his Essai sur la Nature du Commerce en
Général, or Essay on the Nature of Trade in General, a book William
Stanley Jevons considered the “cradle of political economy”. Cantillon
defined the term as a person who pays a certain price for a product and
resells it at an uncertain price, “making decisions about obtaining and
using the resources while consequently admitting the risk of
enterprise”. Cantillon considered the entrepreneur to be a risk taker
who deliberately allocates resources to exploit opportunities in order
to maximize the financial return.
Cantillon
emphasized the willingness of the entrepreneur to assume the risk and
to deal with uncertainty, thus he drew attention to the function of the
entrepreneur and distinguished between the function of the entrepreneur
and the owner who provided the money.
Jean-Baptiste Say also
identified entrepreneurs as a driver for economic development,
emphasizing their role as one of the collecting factors of production
allocating resources from less to fields that are more productive. Both
Say and Cantillon belonged to French school of thought and known as the
physiocrats.
Dating
back to the time of the medieval guilds in Germany, a craftsperson
required special permission to operate as an entrepreneur, the small
proof of competence (Kleiner Befähigungsnachweis), which restricted
training of apprentices to craftspeople who held a Meister certificate.
This institution was introduced in 1908 after a period of so-called
freedom of trade (Gewerbefreiheit, introduced in 1871) in the German
Reich. However, proof of competence was not required to start a
business. In 1935 and in 1953, greater proof of competence was
reintroduced (Großer Befähigungsnachweis Kuhlenbeck), which required
craftspeople to obtain a Meister apprentice-training certificate before
being permitted to set up a new business.
20th century
In
the 20th century, entrepreneurship was studied by Joseph Schumpeter in
the 1930s and other Austrian economists such as Carl Menger, Ludwig von
Mises and Friedrich von Hayek. While the loan from French of the word
“entrepreneur” dates to the 1850, the term “entrepreneurship” was coined
around the 1920s. According to Schumpeter, an entrepreneur is willing
and able to convert a new idea or invention into a successful
innovation.
Entrepreneurship
employs what Schumpeter called “the gale of creative destruction” to
replace in whole or in part inferior offerings across markets and
industries, simultaneously creating new products and new business
models, thus creative destruction is largely responsible for long-term
economic growth. The idea that entrepreneurship leads to economic growth
is an interpretation of the residual in endogenous growth theory and as
such continues to be debated in academic economics. An alternative
description by Israel Kirzner suggests that the majority of innovations
may be incremental improvements such as the replacement of paper with
plastic in the construction of a drinking straw that require no special
qualities.
For Schumpeter, entrepreneurship resulted in new
industries and in new combinations of currently existing inputs.
Schumpeter’s initial example of this was the combination of a steam
engine and then current wagon making technologies to produce the
horseless carriage. In this case, the innovation (i.e. the car) was
transformational, but did not require the development of dramatic new
technology. It did not immediately replace the horse-drawn carriage, but
in time incremental improvements reduced the cost and improved the
technology, leading to the modern auto industry.
Despite
Schumpeter’s early 20th-century contributions, the traditional
microeconomic theory did not formally consider the entrepreneur in its
theoretical frameworks (instead of assuming that resources would find
each other through a price system). In this treatment, the entrepreneur
was an implied but unspecified actor, consistent with the concept of the
entrepreneur being the agent of x-efficiency.
For Schumpeter, the entrepreneur did not bear risk: the capitalist did. Schumpeter believed that the equilibrium was imperfect. Schumpeter (1934) demonstrated that the changing environment continuously provides new information about the optimum allocation of resources to enhance profitability. Some individuals acquire the new information before others and recombine the resources to gain an entrepreneurial profit. Schumpeter was of the opinion that entrepreneurs shift the production possibility curve to a higher level using innovations.
Initially,
economists made the first attempt to study the entrepreneurship concept
in depth. Alfred Marshall viewed the entrepreneur as a multi-tasking
capitalist and observed that in the equilibrium of a completely
competitive market there was no spot for “entrepreneurs” as an economic
activity creator.
21st century
In
2012, Ambassador-at-Large for Global Women’s Issues Melanne Verveer
greets participants in an African Women’s Entrepreneurship Program at
the State Department in Washington, D.C.
In the 2000s, entrepreneurship has been extended from its origins in for-profit businesses to include social entrepreneurship, in which business goals are sought alongside social, environmental or humanitarian goals and even the concept of the political entrepreneur. Entrepreneurship within an existing firm or large organization has been referred to as intrapreneurship and may include corporate ventures where large entities “spin-off” subsidiary organizations.
Entrepreneurs are leaders willing to take risk and exercise initiative, taking advantage of market opportunities by planning, organizing and deploying resources,[34] often by innovating to create new or improving existing products or services. In the 2000s, the term “entrepreneurship” has been extended to include a specific mindset resulting in entrepreneurial initiatives, e.g. in the form of social entrepreneurship, political entrepreneurship or knowledge entrepreneurship.
According to Paul Reynolds, founder of the Global Entrepreneurship Monitor, “by the time they reach their retirement years, half of all working men in the United States probably have a period of self-employment of one or more years; one in four may have engaged in self-employment for six or more years. Participating in a new business creation is a common activity among U.S. workers over the course of their careers”. In recent years, entrepreneurship has been claimed as a major driver of economic growth in both the United States and Western Europe.
Entrepreneurial
activities differ substantially depending on the type of organization
and creativity involved. Entrepreneurship ranges in scale from solo,
part-time projects to large-scale undertakings that involve a team and
which may create many jobs. Many “high value” entrepreneurial ventures
seek venture capital or angel funding (seed money) in order to raise
capital for building and expanding the business.
Many
organizations exist to support would-be entrepreneurs, including
specialized government agencies, business incubators (which may be
for-profit, non-profit, or operated by a college or university), science
parks and non-governmental organizations, which include a range of
organizations including not-for-profits, charities, foundations and
business advocacy groups (e.g. Chambers of commerce). Beginning in 2008,
an annual “Global Entrepreneurship Week” event aimed at “exposing
people to the benefits of entrepreneurship” and getting them to
“participate in entrepreneurial-related activities” was launched.
Globe Chamber Business Times 