Evolution of the Term Entrepreneurship

ENTREPRENEURSHIP: AN EVOLVING CONCEPT

Entrepreneurship can be define as the economic function that is carried out by individuals acting either independently or within an organization, to identify and create new opportunities, introduce their ideas to the market, under uncertainty by making decisions about product design, location and resource use. Entrepreneurship has become an important component in the process of economic growth. As such this essay discusses the evolution of the term entrepreneurship, the development major concepts and theories that affect entrepreneurship and finally the concept of entrepreneurial strategy.

The word “entrepreneur” is derived from the French “entre prendre,” which means “to undertake.”  Thus, it began as a concept to identify one who undertakes to organize, manage, and assume the risks of business as seen in the works of Richard Cantillon. In his posthumously published work "Essai sur la nature du commerce en general" Richard Cantillon was the first economist to note the entrepreneur as a key economic factor. In Cantillon’s view in contrast to wage workers who have a fixed amount of income, the entrepreneur’s profits are not pre-determined and therefore plays an important role as they facilitate exchange and circulation in the economy. Entrepreneurs serve to maintain a balance between supply and demand in an economy and this role exposes them to risk and uncertainty.

There is a consistency in the close tie between entrepreneurship and economics. Over the years, other prominent economists have also written about the subject of entrepreneurship and how it impacts the economy. Schumpeter also defines the concept of entrepreneurship from an economics point of view. He defines it as a management style where an individual pursues opportunities regardless of the resources that they have. His definition focuses on the perception of new economic opportunities and the subsequent introduction of new ideas in the market (Cuervo García, Ribeiro and Roig, 2007, p.39). Entrepreneurs identify opportunities, assemble required resources, implement a practical action plan, and harvest the reward in a timely, flexible way (Audretsch, Keilbach and Lehmann, 2006, p. 6). Another economist Say, however, interpreted the entrepreneurial role differently. According to Say an entrepreneur serves as the manager of a firm; an input in the production process. Being the main agent of production in the economy, the entrepreneur must possess the quality of a good judgment as opposed to being a risk taker (Iversen, Jørgensen and Malchow-Møller, 2008, p.4).

In these modern times, the term “entrepreneurship” is closely associated with free enterprise and capitalism. The main activities that have been identified to be performed by entrepreneurs are serving as an agent for change; providing creative innovative ideas for the enterprise; and helping business grow and become profitable.

The different schools of thought in macro and micro views of entrepreneurship form the basis for entrepreneurial theories (Kuratko, 2016, p. 8). There is the macro view of entrepreneurship involves processes that are beyond the control of the entrepreneur and can be broken down into three categories. The first is the environmental school of thought that includes the external factors that influence the lifestyle of an entrepreneur. The factors could have a positive or negative effect on the desire of an individual to become an entrepreneur. The main focus of this school of thought is institutions, societal values and influences that when combined form a socio political environment that has an effect on the development of an entrepreneur (Shane, 2003, p. 62). An example is when support from family members influences the desire of an individual to be an entrepreneur.

The financial school of thought deals with the process of an entrepreneur in looking for the initial startup capital and capital for growth of their business. Access to capital by an entrepreneur is important as affects their growth (Lounsbury and Glynn, 2001, p. 549). This school of thought views the entrepreneur from a financial management point. The displacement of school thought is the last in macro view of entrepreneurship.  This school of thought focuses on negative effects of the group on an entrepreneur where they might feel out of place in a group. It posits that the group can have the effect of slowing down an individual’s development or eliminating certain characteristics that make it easier to succeed as an entrepreneur. This may result in a frustrated individual who becomes motivated to succeed thus becoming an exceptional entrepreneur. There are three major types of displacement in life. Political displacement can be government regulations that limit free enterprise or investment in certain industries. Cultural displacement can be in the form of discrimination due to ones gender, race or religion. Economic displacement can be in the form of an individual losing their job or any other aspect of life that is influenced by bad economic times (Hellmann, 2007, p. 920).

The micro view of entrepreneurship focuses on internal factors that an entrepreneur can influence. It includes the entrepreneurial trait school of thought that focuses on researching on successful entrepreneurs to identify their traits that could be emulated to increase chances of success. The basic assumption is that all successful entrepreneurs exhibit certain attributes like creativity and determination. Also examined is the influence of family on a successful entrepreneur. Some researchers have even suggested that education limits creativity thus discourages entrepreneurship (Crittenden et al., 2015, p. 261). Certain traits that are instilled in childhood are important factors in entrepreneurial success and thus family development is vital in an entrepreneur. In the venture school of thought, the main focus is the search for idea sources, the development of concepts, and the importance of venture opportunities. Being creative and market aware are vital in entrepreneurship. These two can influence the ability of an individual to develop the right idea at the opportune moment and targeted at the right market niche.