An entrepreneur (a loanword from french introduced and first defined by the Irish economist Richard Cantillon) is a person who undertakes and operates a new enterprise or venture and assumes some accountability for the inherent risks. A female entrepreneur is sometimes referred to as an entrepreneuse.
The newly and modern view on entrepreneurial talent is a person who takes the risks involved to undertake a business venture. In doing so, they are said to efficiently and effectively use the factors of production. That is land (natural resources), labour (human input into production using available resources) and capital (any type of equipment used in production i.e. machinery). A business that can efficiently manage this and in the long-run hopefully expand (future prospects of larger firms and businesses), will become successful.
Entrepreneurship is often difficult, as many new ventures fail. In the context of the creation of for-profit enterprises, entrepreneur is often synonymous with founder. Most commonly, the term entrepreneur applies to someone who creates system to offer a product or service in order to obtain certain profit. Business entrepreneurs often have strong beliefs about a market opportunity and are willing to accept a high level of personal, professional or financial risk to pursue that opportunity. Business entrepreneurs are viewed as fundamentally important in the capitalistic society. Some distinguish business entrepreneurs as either "political entrepreneurs" or "market entrepreneurs."
David Gladstone in his book: Venture Capital Investing, provides the following descriptive answer:
“The term entrepreneur has undergone a change in meaning since the late 1800s, when it was used to refer to the “director or manager of a public musical institution” (see The Oxford Universal Dictionary). Entrepreneur derives the French verb entreprendre (to undertake), which, however, had already entered English many years earlier in the form of enterprise, from enterpris, the past participle of entreprendre. Enterprise first appeared around 1430 and was commonly used to refer to an undertaking of bold and arduous nature, The person carrying out the enterprise was known as the enterpriser but eventually lost ground to entrepreneur, the primary meaning of which became “one who organizes, manages and assumes the risk of a business or enterprises” (see Webster’s).”
His further explanation illustrates that one of the many outstanding characteristics of every entrepreneur is a drive to be independent. The entrepreneur wants to be autonomous. They need to dominate the situation, need to be in control and to direct others.
Gladstone argues that most entrepreneurs are very confident about what they are doing and, at times, confused with self-centredness. However most often their high self-esteem is merely an outward manifestation of their personal self-confidence. Because of this, according to Gladstone, most entrepreneurs exhibit good leadership and have the ability to set goals and work towards them.
Definition and terminology
An entrepreneur is someone who seeks to capitalize on new and profitable endeavors or business; usually with considerable initiative and risk.
Entrepreneur as a risk taker
An entrepreneur can be an agent who buys factors of production at certain prices in order to combine them into a product with a view to selling it at uncertain prices in the future. Uncertainty is defined as a risk, which cannot be insured against and is incalculable. There is a distinction between ordinary risk and uncertainty. A risk can be reduced through the insurance principle, where the distribution of the outcome in a group of instances is known. On the contrary, uncertainty is a risk, which cannot be calculated. The entrepreneur, according to Knight, is the economic functionary who undertakes such responsibility of uncertainty, which by its very nature cannot be insured, or capitalized or salaried to. Mark Casson has extended this notion to characterize entrepreneurs as decision makers who improvise solutions to problems which cannot be solved by routine alone.
Various definition of "entrepreneur" have been constructed. An entrepreneur can be a decision-maker whose entire role arises out of his alertness to hitherto unnoticed opportunities. An entrepreneur is one who combines the land of one, labor of another and the capital of yet another, and, produces a product. By selling the product in the market, he pays interest on capital, rent on land and wages to laborers. What remains is his or her profit. Around 90 percent of entrepreneurs fail with their business enterprise.
Most entrepreneurs get paid depending on their business' success. Entrepreneur is sometimes mistakenly equated with "opportunist". An entrepreneur may be considered one who creates an opportunity rather than merely exploits it, though that distinction is difficult to make precisely. Joseph Schumpeter (1934) and William Baumol (1980) consider more opportunistic behavior such as arbitrage one role of the entrepreneur as he helps to generate innovation or mobilize resources to address inefficiencies in the marketplace.
Entrepreneur as a leader
Scholar R. B. Reich considers leadership, management ability, and team-building as essential qualities of an entrepreneur. This concept has its origins in the work of Richard Cantillon in his Essai sur la Nature du Commerce en Général (1755) and Jean-Baptiste Say (1803) in his Treatise on Political Economy.
A more generally held theory is that entrepreneurs emerge from the population on demand, from the combination of opportunities and people well-positioned to take advantage of them. The entrepreneur may perceive that they are among the few to recognize or be able to solve a problem. In this view, one studies on one side the distribution of information available to would-be entrepreneurs (see Austrian School economics) and on the other, how environmental factors (access to capital, competition, etc.) change the rate of a society's production of entrepreneurs.
John G. Burch (Business Horizons, September 1986) lists traits typical of entrepreneurs:
- A desire to achieve: The push to conquer problems, and give birth to a successful venture.
- Hard work: It is often suggested that many entrepreneurs are workaholics.
- Desire to work for themselves: Entrepreneurs like to work for themselves rather than working for an organization or any other individual. They may work for someone to gain the knowledge of the product or service that they may want to produce.
- Nurturing quality: Willing to take charge of, and watch over a venture until it can stand alone.
- Acceptance of responsibility: Are morally, legally, and mentally accountable for their ventures. Some entrepreneurs may be driven more by altruism than by self-interest.
- Reward orientation: Desire to achieve, work hard, and take responsibility, but also with a commensurate desire to be rewarded handsomely for their efforts; rewards can be in forms other than money, such as recognition and respect.
- Optimism: Live by the philosophy that this is the best of times, and that anything is possible.
- Orientation to excellence: Often desire to achieve something outstanding that they can be proud of.
- Organization: Are good at bringing together the components (including people) of a venture.
- Profit orientation: Want to make a profit; but the profit serves primarily as a meter to gauge their success and achievement.
Examples of Entrepreneurs
Recent American entrepreneurs include Leslie Wexner, CEO and founder of The Limited, a $9 billion retail empire. In other parts of the world, Nick Hayek, of Switzerland, is the man who brought the Swiss watchmaking industry back from the dead with his Swatch watch.
In recent times, within the United Kingdom, notable entrepreneurs include James Dyson (inventor of the bagless vacuum cleaner and managing director of Dyson), Paul Beckett (founder of KJ Beckett), and Richard Branson, owner of the Virgin brand. In addition, an excellent example of British entrepreneuse is Anita Roddick who founded The Body Shop.
In the US, a notable modern entrepreneur is Pharrell Williams, co-founder of the clothing brand Billionaire Boys Club and Ice Cream Footwear. A noted USA based entrepreneuse is Franny Martin (who founded Cookies on Call).
- Baumol, W. (1980).
- Binks, M. and Vale, P. (1990). Entrepreneurship and Economic Change. Maidenhead: McGraw-Hill.
- Brouwer, M.T. (2002). 'Weber, Schumpeter and Knight on entrepreneurship and economic development'. Journal of Evolutionary Economics, vol. 12(1-2), p. 83.
- Cantillon, R. (1755). Essai sur la Nature du Commerce en Général
- Casson, M. (2005). 'Entrepreneurship and the theory of the firm'. Journal of Economic Behavior & Organization, 58 (2) , 327-348
- Hebert, R.F. and Link, A.N. (1988). The Entrepreneur: Mainstream Views and Radical Critiques. New York: Praeger, 2nd edition.
- Kirzner, I. (1973). Competition and Entrepreneurship.
- Knight, F.H. (1921/61). Risk uncertainty and profit. Kelley, 2nd edition.
- Schumpeter, J.A. (1934). The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle
- Spengler, J.J. (1954).
- Schramm, Carl (2006). The Entrepreneurial Imperative. Harper Collins
Theories of the Firm
- Long, W. (1983). The meaning of entrepreneurship. American Journal of Small Business, 8(2), 47-59. (c971086)
- Outcalt, Charles, (2000). 'The Notion of Entrepreneurship: Historical and Emerging Issues'. Cellcee digest. Kauffman Center for Entrepreneurial Leadership.
- Reich, R. B. (1987, May/June). Entrepreneurship reconsidered: The team as hero. Harvard Business Review. (c96187)
- "The E-Myth Revisited", Harper Collins Press, 1995. ISBN 9780887307287
- "The Monk and the Riddle", Harvard Business School Press, 2000. ISBN 1578511402
- The Foundation of Entrepreneurship The online resource for building entrepreneurial economies.
- Real Business Website and magazine for entrepreneurs. Includes interviews, guides and in-depth features.
- StartupStudio Interviews with entrepreneurs spotlighting their challenges and successes
- Kevin Fleming - Internet Entrepreneur Articles and information for entrepreneurs.
- Inc.com: The Daily Resource for Entrepreneur
- U.S. Small Business Administration
- Starting a Business - from U.S. Internal Revenue Service
- Ernst and Young - Entrepreneur of the Year Awards
- The Entrepreneurs' Organization - a membership-based networking organization that connects entrepreneurs with thousands of their peers around the world
- Entrepreneur.com - many articles about entrepreneurship
- The Entrepreneur's Credo - Inspirational Piece by Thomas Paine
- The Call of the Entrepreneur, an Acton Institute documentary
- Emprendedores.cl - many latin articles and motivational information
- E-Myth.com - the entrepreneurial myth explained
An exellent example of an Entreprenuer is Ryan Walters, owner of:
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