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Concept of Entrepreneurship & the Emergence of the Entrepreneurial Class

The Concept of Entrepreneurship over the years: Throughout the theoretical history of entrepreneurship, scholars from multiple disciplines in the social sciences have grappled with a diverse set of interpretations and definitions to conceptualize this abstract idea. Over time, "some writers have identified entrepreneurship with the function of uncertainty bearing, others with the coordination of productive resources, others with the introduction of innovation, and still others with the provision of capital" !"oselitz, #$%&'. (ven though certain themes continually resurface throughout the history of entrepreneurship theory, presently there is no single definition of entrepreneurship that is accepted by all economists or that is applicable in every economy. )lthough there is only limited consensus about the defining characteristics of entrepreneurship, the concept is almost as old as the formal discipline of economics itself. The term "entrepreneur" was first introduced by the early #*th century +rench economist Richard Cantillon. ,n his writings, he formally defines the entrepreneur as the "agent who buys means of production at certain prices in order to combine them" into a new product !-chumpeter, #$%#'. -hortly thereafter, the +rench economist J.B. ay added to .antillon/s definition by including the idea that entrepreneurs had to be leaders. -ay claims that an entrepreneur is one who brings other people together in order to build a single productive organism !-chumpeter, #$%#'. Over the ne0t century, 1ritish economists such as !dam mith" #avid Ricardo, and John tuart $ill briefly touched on the concept of entrepreneurship, though they referred to it under the broad (nglish term of "business management." 2hile the writings of -mith and 3icardo suggest that they li4ely undervalued the importance of entrepreneurship, Mill goes out of his way to stress the significance of entrepreneurship for economic growth. ,n his writings, Mill claims that entrepreneurship re5uires "no ordinary s4ill," and he laments the fact that there is no good (nglish e5uivalent word to encompass the specific meaning of the +rench term entrepreneur !-chumpeter, #$%#'. The necessity of entrepreneurship for production was first formally recognized by !lfred $arshall in #*$6. ,n his famous treatise Principles of (conomics, Marshall asserts that there are four factors of production7 land, labor, capital, and organization. Organization is the coordinating factor, which brings the other factors together, and Marshall believed that entrepreneurship is the driving element behind organization. By creatively organizing, entrepreneurs create new commodities or improve "the plan of producing an old commodity" !Marshall, #$$8'. ,n order to do this, Marshall believed that entrepreneurs must have a thorough understanding about their industries, and they must

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Uploaded for ManagementParadise.com be natural leaders. )dditionally, Marshall's entrepreneurs must have the ability to foresee changes in supply and demand and be willing to act on such risky forecasts in the absence of complete information (Marshall, 1 !"# 9i4e Mill, Marshall suggests that the s4ills associated with entrepreneurship are rare and limited in supply. "e claims that the abilities of the entrepreneur are "so great and so numerous that very few people can e0hibit them all in a very high degree" !#$$8'. Marshall, however, implies that people can be taught to ac5uire the abilities that are necessary to be an entrepreneur. Unfortunately, the opportunities for entrepreneurs are often limited by the economic environment, which surrounds them. )dditionally, although entrepreneurs share some common abilities, all entrepreneurs are different, and their successes depend on the economic situations in which they attempt their endeavors !Marshall, #$$8'. -ince the time of Marshall, the concept of entrepreneurship has continued to undergo theoretical evolution. +or e0ample, Marshall believed entrepreneurship was simply the driving force behind organization, many economists today, but certainly not all, believe that entrepreneurship is by itself the fourth factor of production that coordinates the other three !)rnold, #$$:'. Unfortunately, although many economists agree that entrepreneurship is necessary for economic growth, they continue to debate over the actual role that entrepreneurs play in generating economic growth. One school of thought on entrepreneurship suggests that the role of the entrepreneur is that of a ris4 bearer in the face of uncertainty and imperfect information. ;night claims that an entrepreneur will be willing to bear the ris4 of a new venture if he believes that there is a significant chance for profit !-woboda, #$*<'. )lthough many current theories on entrepreneurship agree that there is an inherent component of ris4, the ris4 bearer theory alone cannot e0plain why some individuals become entrepreneurs while others do not. +or e0ample, following from ;night, Mises claims any person who bears the ris4 of losses or any type of uncertainty could be called an entrepreneur under this narrow definition of the entrepreneur as the ris4 bearer !-woboda, #$*<'. Thus, in order to build a development model of entrepreneurship it is necessary to loo4 at some of the other characteristics that help e0plain why some people are entrepreneurs= ris4 may be a factor, but it is not the only one. )nother modern school of thought claims that the role of the entrepreneur is that of an innovator= however, the definition of innovation is still widely debatable. ;irzner suggests that the process of innovation is actually that of spontaneous "undeliberate learning" !;irzner, #$*%, #6'. Thus, the necessary characteristic of the entrepreneur is alertness, and no intrinsic s4ills other than that of recognizing opportunities are necessary. Other economists in the innovation school side more with Mill and Marshall than with ;irzner= they claim that entrepreneurs have special s4ills that enable them to participate in the process of innovation. )long this line, 9eibenstein claims that the dominant, necessary characteristic of entrepreneurs is that they are gap fillers7 they have the ability to perceive where the mar4et fails and to develop new goods or processes that the mar4et demands but which are not currently being supplied. Thus, 9eibenstein posits that entrepreneurs have the special ability to connect different mar4ets and ma4e up for

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Uploaded for ManagementParadise.com mar4et failures and deficiencies. )dditionally, drawing from the early theories of -ay and .antillon, 9eibenstein suggests that entrepreneurs have the ability to combine various inputs into new innovations in order to satisfy unfulfilled mar4et demand !9eibenstein, #$$%'. )lthough many economists accept the idea that entrepreneurs are innovators, it can be difficult to apply this theory of entrepreneurship to less developed countries !9>.s'. Often in 9>.s, entrepreneurs are not truly innovators in the traditional sense of the word. +or e0ample, entrepreneurs in 9>.s rarely produce brand new products= rather, they imitate the products and production processes that have been invented elsewhere in the world !typically in developed countries'. This process, which occurs in developed countries as well, is called "creative imitation" !>ruc4er, #$*%' The term appears initially parado0ical= however, it is 5uite descriptive of the process of innovation that actually occurs in 9>.s. .reative imitation ta4es place when the imitators better understand how an innovation can be applied, used, or sold in their particular mar4et niche !namely their own countries' than do the people who actually created or discovered the original innovation. Thus, the innovation process in 9>.s is often that of imitating and adapting, instead of the traditional notion of new product or process discovery and development. )s the above discussion demonstrates, throughout the evolution of entrepreneurship theory, different scholars have posited different characteristics that they believe are common among most entrepreneurs. 1y combining the above disparate theories, a generalized set of entrepreneurship 5ualities can be developed. %n general" entrepreneurs are ris&'(earers" coordinators and organi)ers" gap'fillers" leaders" and innovators or creative imitators. )lthough this list of characteristics is by no means fully comprehensive, it can help e0plain why some people become entrepreneurs while others do not. Thus, by encouraging these 5ualities and abilities, governments can theoretically alter their country/s supply of domestic entrepreneurship. )lthough economists have posed many theoretical interpretations of entrepreneurship, there has been very little empirical research conducted on this phenomenon, especially compared to the amount of research conducted on the other three factors of production. ,n particular, growth and development economics has "suffered rather seriously from the neglect of the entrepreneurial role" !;irzner, #$*%, :$'. This neglect has occurred for two main reasons. +irst, entrepreneurship is difficult to measure empirically. -ince few economists can even agree about how to define entrepreneurship, developing the tools to measure it has been especially problematic. -econd, as e0plained in the theories above, entrepreneurship is characterized by uncertainty and typically occurs in the presence of imperfect information, un4nown production functions, and mar4et failure. )s 9eibenstein claims, entrepreneurship arises "to ma4e up for a mar4et deficiency" !#$$%'. "owever, the ma?ority of mainstream economic models assume perfect information and clearly defined production functions. Thus, entrepreneurs typically fall outside of these models !9eibenstein, #$$%'. 9i4e 9eibenstein, ;ilby suggests that entrepreneurship has been largely overloo4ed in economics. ;ilby claims that entrepreneurship e0ists "only in the lower realms, where

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Uploaded for ManagementParadise.com imperfect 4nowledge and mar4et failure are granted an untidy presence=" as a result, many economists disregard this phenomenon, particularly in economic models dealing with developed countries !;ilby, #$*<'. "owever, many models that focus on the underdeveloped economies of 9>.s rela0 their assumptions about perfect information. This more realistic view of economic mar4ets allows entrepreneurship to stand out as one of the leading sources of mar4et transformation and economic growth and development. 9eibenstein maintains that there are two simultaneous steps in the process of economic development for 9>.s7 economic growth and mar4et transformation. ,n order for a country to increase its per capita income, it must have a "shift from less productive to more productive techni5ues per wor4er" !9eibenstein, #$$%'. This shift is the process of mar4et transformation, and it can be manifested in the creation of new goods, new s4ills, and new mar4ets. (ntrepreneurship is the driving force behind both growth and transformation. 2ithout entrepreneurs there would be no new innovation or creative imitation in the mar4etplace= hence, the transformation to new production methods and goods in the country would not ta4e place. )s entrepreneurs transform the mar4et, not only do they provide new goods and services to the domestic mar4et, they also provide a new source of employment to the economy !Praag, #$$%'. )s a result, entrepreneurship is a necessary ingredient in the process of economic development= it both serves as the catalyst for mar4et transformation and provides new opportunities for economic growth, employment, and increased per capita income. )lthough entrepreneurship can directly affect the rate of an economy/s transformation and development, few countries have actively pursued entrepreneurship encouragement programs. )dditionally, many 9>.s have focused more on encouraging entrepreneurship in the form of multi national corporations !M@.s' rather than domestic and indigenous entrepreneurship. M@.s can certainly increase a country/s income, provide mar4et innovations, and serve as the catalyst for mar4et transformations= thus, M@.s can be used as a source of entrepreneurship led development. "owever, -aeed suggests that it is preferred for governments to promote domestic and indigenous entrepreneurship because domestic entrepreneurs are more aware of the mar4et gaps that need to be filled domestically !-aeed, #$$*'. Thus, instead of producing goods that might not be consumed within the country, domestic mar4et forces encourage domestic entrepreneurs to create innovations and creative imitations that fulfill a real mar4et deficiency domestically. "ence, M@.s can be used for entrepreneurship led development, but domestic entrepreneurship is thought to be more effective. Theorists disagree, however, about whether or not informal sector self employment is beneficial for entrepreneurship led development. -aeed suggests that many of the small family enterprises and shop houses that ma4e up the informal sector are indeed entrepreneurial ventures. "e asserts that the close 4nit structure of the small family enterprise is conducive for the incubation of ideas that are tested in the informal sector and later used to transform mar4et products and processes. )dditionally, -aeed claims that women and young people are traditionally e0cluded from the formal sector= thus, their entrepreneurial ideas are loc4ed out of the formal mar4et. "owever, since small family enterprises in the informal sector typically involve women and youth participation,

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Uploaded for ManagementParadise.com the informal sector can often serve as the outlet for their entrepreneurial ideas !-aeed, #$$*'. Unli4e -aeed, .arree et. al. suggest that self employment in the informal sector can actually thwart entrepreneurship led growth. They assert that an economy will suffer from lower growth rates both when it has too little and too much domestic business ownership. -ince many enterprises in the informal sector sell goods or services that are already available in the formal sector mar4et, informal sector enterprises are often redundant and fail to provide mar4et transformations. )ccording to .arree et. al., business ownership in the informal sector rarely transforms the structure of the economy or produces new mar4et innovations or creative imitations. Thus the presence of business ownership in the informal sector of a country does not ensure entrepreneurship led growth because simple business ownership is not necessarily mar4et transforming. "ence, business ownership is not synonymous with entrepreneurship !.arree, &666'. -ince entrepreneurship can serve as a positive source of economic growth and development, governments should attempt to increase their supplies of mar4et transforming entrepreneurship. )lthough it is debatable as to whether the informal sector is truly a source of entrepreneurs, governments can insulate themselves from this debate by focusing on the encouragement of mar4et transforming entrepreneurship, and not simply business ownership in both the formal and informal sectors.# ocio'psychological factors influencing Entrepreneurship development 1efore policy ma4ers can increase the supply of entrepreneurship, it is necessary for them to understand what factors affect the supply of entrepreneurs. )t its most basic level, the supply of entrepreneurship is determined by two factors7 opportunity and willingness to become an entrepreneur. )ccording to Praag !#$$%', opportunity is "the possibility to become self employed if one wants to." The primary factors affecting opportunity include one/s intrinsic entrepreneurial ability, starting capital, ease of entry into the mar4et, and the general macroeconomic environment. )lternatively, willingness is the relative valuation of wor4 in self employment compared to one/s other options for employment. ,n terms of opportunity cost, an individual/s willingness is positive whenever self employment is perceived as the best available career option. Thus, willingness is inherently affected by the anticipated mar4et incentives that are available for would be entrepreneurs, namely profit and economic benefits !Praag, #$$%'. The supply of entrepreneurship is thus dependent on both individual level factors and general economic factors. Policyma4ers can improve the economic factors that face potential entrepreneurs by initiating mar4et reforms that both increase the mar4et incentives and the availability of capital that is available to entrepreneurs !2il4en, #$A$'.& ,n terms of the non economic factors that affect entrepreneurship, policyma4ers are more limited in what they can achieve. Many economists such as Marshall and Mill suggest that not ?ust anyone can be an entrepreneur. @onetheless Marshall implies that the s4ills of an entrepreneur can be taught !#$$8'. < Thus, policyma4ers can affect the

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Uploaded for ManagementParadise.com level of entrepreneurship in their countries by crafting policies that reform the mar4et in order to encourage entrepreneurship both economically and educationally. @ot surprisingly, regional variations have been found in the levels of entrepreneurship between countries. ,n their cross national study of entrepreneurship, >avidsson and 2i4lund !#$$%' suggest that regional variations in the levels of entrepreneurship are influenced by the cultural values of the people. They claim that "cultural and economic structural determinants of the new firm formation rate were positively correlated," thus suggesting that cultural differences in both values and beliefs help e0plain regional variances in the supply of entrepreneurship. >espite this relationship, other studies on migrant and ethnic entrepreneurs have found that cultural beliefs and values rarely suppress aspiring entrepreneurs. )lthough cultural hostility towards entrepreneurship may stifle it in a particular region, migrant entrepreneurs fre5uently move to new areas in order to start their enterprises. Thus, cultural hostility may prevent entrepreneurship in a particular region, but some other region will, in part, benefit from the migration of the ethnic entrepreneurs !n>oen, #$$*'. 1asic economics teaches that supply is only a one sided story of mar4et phenomena. Thus, for countries to benefit from increasing their supplies of entrepreneurship, traditional economics suggests that those countries/ would also need to promote the demand for entrepreneurship. "owever, little has been written about the demand side of entrepreneurship because it a calculation of demand is intrinsically built into entrepreneurship. )s 9eibenstein suggests, entrepreneurs are gap fillers who perceive and correct for mar4et deficiencies. Thus, so long as there are mar4et deficiencies, there will naturally be demand for entrepreneurs to correct them. )s a result, when governments promote the supply of entrepreneurship, they are essentially encouraging entrepreneurs to see4 out what parts of the mar4et demand them.8 Role *overnments can play: The supply of entrepreneurship is affected by many factors, not all of which can easily be controlled or changed. @onetheless, policyma4ers can implement certain policies in order to encourage entrepreneurship. 1ased on the above characteristics of entrepreneurs and the factors that affect the supply entrepreneurship, the following policy prescriptions may serve as a general guide for implementing policies that foster economic development through increased levels of entrepreneurship !the recommendations are in no particular order'7
1. Increase the market incentives for entrepreneurs: As stated earlier, one of the primary determinants of the supply of entrepreneurship is the willingness of an individual to become an entrepreneur. Willingness is largely determined by the anticipated economic benefits that will accrue to an entrepreneur if his enterprise is profitable. In many countries market regulations limit the incentives that could encourage would-be entrepreneurs to start their own enterprises. For e ample, price ceilings that are set below market e!uilibrium lower the amount of revenue that an entrepreneur could earn in a certain industry. If the anticipated economics benefits are lower than the opportunity cost, than the would-be entrepreneur will not start his own enterprise. "hus, in many

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countries policies should be implemented to increase and improve the incentives for entrepreneurs. Additional policy possibilities include ta incentives for entrepreneurs. #. Improve the availability of credit and capital: "he second ma$or determinant of the supply of entrepreneurship is opportunity. In order for an individual to start his own enterprise, it is necessary for him to have the credit or capital to finance the initial start-up costs. %ne of the primary problems facing would-be entrepreneurs in &'(s is a lack of such capital. Without initial capital, many entrepreneurs do not have the funds to start enterprises of their own. )overnments could attempt to correct for this problem by encouraging the development of venture capital companies and by implementing microcredit programs. "he specific type of capital programs that are implemented would need to be crafted specifically for each country, depending on where the country is along its course of development. In the poorest of &'(s, the focus would most likely be on microcredit programs, like the )rameen *ank in *angladesh. +owever, in countries with higher levels of human capital, entrepreneurial firms would derive greater use from venture capital. ,. Develop entrepreneurship encouragement programs: *y passing legislation that is friendly towards entrepreneurs, countries can make it more culturally acceptable and less risky to be an entrepreneur. Additionally, entrepreneurship encouragement programs, like the "echnopreneurship #1 Initiative in -ingapore ., can assist entrepreneurs in finding capital, setting up a business plan, and complying with the various business and ta regulations. /. Initiate entrepreneurship educational programs: 0ew education initiatives should be created to teach entrepreneurship. *y e!uipping more people with the skills to become entrepreneurs, a country can effectively increase its supply of competent entrepreneurs. 1conomists disagree as to whether entrepreneurial skills can be taught or whether they are intrinsic. 0onetheless, there have been successful results from such educational programs. %ne e ample of such a policy is the 2alaysian 1ntrepreneurship 'evelopment (enters in the rural, indigenous areas of 2alaysia. "hese centers teach the indigenous people entrepreneurial skills and assist aspiring entrepreneurs with the development of their business plans. .. Reform market regulations to facilitate entry into the market: (ountries can increase their supply of entrepreneurship by improving the ease of entry into the formal sector. 2any &'(s use licenses and permits to regulate who can participate in the formal sector. Although these policies may earn government revenue or protect state-owned enterprises, they effectively make the markets inefficient 3by limiting competition4 and prevent would-be entrepreneurs from starting their enterprises. *y reforming their marketentry laws, some countries will be able to increase their supplies of entrepreneurs. As an e ample, 0igeria5s abolition of its marketing boards provided new opening for a large number of small entrepreneurs to enter the market with creative imitations. 6 6. Increase entrepreneurial opportunities available to women and young persons: As -aeed suggests, many women and young persons are e cluded from the formal sector in &'(s because of cultural values or legal restrictions. *y preventing these groups from participating in the formal market, these countries are essentially limiting the si7e of their pool of would-be entrepreneurs. *y eliminating discriminatory employment and licensing policies, countries could create an influ of possible entrepreneurs. 8nfortunately, such polices may not be culturally popular in some countries 3-aeed, 199:4.

)ll of the above recommendations are general policy suggestions that governments can pursue. The specific policies that a country implements, however, must be made appropriate for the specific circumstances that the country faces. +or e0ample, in a country where the ma?ority of entrepreneurship ta4es the form of small family owned enterprises, there is initially little need for venture capitalists= instead it would be more appropriate for this country to implement micro credit programs to assist potential

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Uploaded for ManagementParadise.com entrepreneurs. Thus, the policies that an 9>. implements to increase its supply of entrepreneurship must be crafted individually for the country/s specific case and stage of development. )dditionally, li4e most development policies, many of the above recommendations re5uire government e0penditure. "owever, since entrepreneurship is necessary for economic development, e0penditure on encouragement policies is as ?ustified as much as e0penditure on any other development policy.

The above article is not fully original its pic4ed up from www.technopreneurial.comBarticlesBsupply.asp ,t is important that , mention that the article is one of the best , found on the above topic. Please do not duplicate andB or circulate it. Use it as reference to get your answers ready. Other suggested alternate readings http7BBwww.econlib.orgBlibraryB(ncB(ntrepreneurship.html http7BBgrowthconf.ec.unipi.itBsessionsBaccepted)bstractsP>+B3ima)bs.pdf
http;<<www.me.psu.edu<lamancusa<1ntrepn<2odule1<&ecture<1ntre.doc

+. ,hat does the term -Entrepreneur. mean/ !CnDDtr pr nErD' !;(F' G+r.,Hone who underta4esI, person who assumes the organization, management, and ris4s of a business enterprise. ,t was first used as a technical economic term by the #*th century economist Richard Cantillon. To the classical economist of the late #*th century the term meant an employer in the character of one who assumes the ris4 and management of business= an underta4er of economic enterprises, in contrast to the ordinary capitalist, who, strictly spea4ing, merely owns an enterprise and may choose to ta4e no part in its day to day operation. ,n practice, entrepreneurs were not differentiated from regular capitalists until the #$th cent., when their function developed into that of coordinators of processes necessary to large scale industry and trade. Joseph chumpeter and other &6th century economists considered the entrepreneurJs competitive drive for innovation and improvement to have been the motive force behind capitalist development. The emergence of the entrepreneurial class Richard !r&0right in (ngland and ,illiam Coc&erill on the .ontinent !of (urope' were prominent e0amples of the rising class of entrepreneurial manufacturers during the ,ndustrial 3evolution. 1enry 2ord was a &6th century )merican e0ample. The

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Uploaded for ManagementParadise.com entrepreneurJs functions and importance have declined with the growth of the corporation. Richard Arkwright the youngest of thirteen children was born in =reston in 1>,#. ?ichard5s parents were very poor and could not afford to send him to school and instead arranged for him to be taught to read and write by his cousin 1llen. ?ichard became a barber5s apprentice. +owever, he was an ambitious young man and had a strong desire to run his own company. In 1>6# Arkwright started a wig-making business. "his involved him traveling the country collecting people5s discarded hair. While on his travels, Arkwright heard about the attempts being made to produce new machines for the te tile industry. Arkwright also met @ohn Aay, a clockmaker from Warrington, who had been busy for some time trying to produce a new spinning-machine with another man, "homas +ighs of &eigh. Aay and +ighs had run out of money and had been forced to abandon the pro$ect. Arkwright was impressed by Aay and offered to employ him to make this new machine. Arkwright also recruited other local craftsman to help, and it was not long before the team produced the -pinning-Frame. Arkwright5s machine involved three sets of paired rollers that turned at different speeds. While these rollers produced yarn of the correct thickness, a set of spindles twisted the fibres firmly together. "he machine was able to produce a thread that was far stronger than that made by the -pinning-@enny produced by @ames +argreaves. In 1>69 Arkwright went to Ichabod Wright, a banker from 0ottingham, in search of funds to e pand his business. Wright introduced Arkwright to @edediah -trutt and -amuel 0eed. -trutt and 0eed were impressed with Arkwright5s water-frame and agreed to form a partnership. Arkwright5s -pinning-Frame was too large to be operated by hand and so the men had to find another method of working the machine. After e perimenting with horses, it was decided to employ the power of the water-wheel. In 1>>1 the three men set up a large factory ne t to the ?iver 'erwent in (romford, 'erbyshire. Arkwright5s machine now became known as the Water-Frame. "he invention of the -pinning @enny and the -pinning Frame caused an increase in demand for cardings and rovings. &ewis =aul had invented a machine for carding in 1>/:. ?ichard Arkwright made improvements in this machine and in 1>>. took out a patent for a new (arding 1ngine. In (romford there were not enough local people to supply Arkwright with the workers he needed. After building a large number of cottages close to the factory, he imported workers from all over 'erbyshire. Arkwright preferred

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Uploaded for ManagementParadise.com weavers with large families. While the women and children worked in his spinning-factory, the weavers worked at home turning the yarn into cloth. When -amuel 0eed died on 1/th April, 1>:1. Arkwright and @edediah -trutt decided to dissolve their partnership. -trutt was disturbed by Arkwright5s plans to build mills in 2anchester, Winkworth, 2atlock *ath and *akewell. -trutt believed that Arkwright was e panding too fast and without the support of 0eed, his longtime partner, he was unwilling to take the risk of further investments. Arkwright5ste tile factories were very profitable. +e now built factories in &ancashire, -taffordshire and -cotland. In these factories he used the new steam-engine that had recently been developed by @ames Watt and 2atthew *oulton. When businessmen heard about Arkwright5s success, they sent spies to find out what was going on in his factories. In e change for money, some of Arkwright5s employees were willing to e plain how the factory was organised. *usinessmen then used this information to build their own water-powered te tile factories. ?ichard Arkwright5s employees worked from si in the morning to seven at night. Although some of the factory owners employed children as young as five, Arkwright5s policy was to wait until they reached the age of si . "wo-thirds of Arkwright5s 1,9BB workers were children. &ike most factory owners, Arkwright was unwilling to employ people over the age of forty. Richard Arkwright died in 1>9#. The Gentleman's Magazine claimed that on his death, Arkwright was worth over C.BB,BBB. Cockerill, William 31>.9-1:,#4 1nglish engineer who is generally regarded as the founder of the 1uropean te tile-machinery industry. +e was mainly active in ?ussia and *elgium. (ockerill was born in &ancashire. +is working career began with the building of spinning $ennies and flying shuttles. In 1>9/ he went to -t =etersburg, ?ussia, and en$oyed the patronage of (atherine II. +er successor, however, imprisoned (ockerill for failing to complete a contract within the given time. 1ventually he escaped via -weden to *elgium 1>99, where he established himself as a manufacturer of te tile machinery, first in Derviers and from 1:B> in nearby &iEge. "here, together with his three sons William, (harles, and @ohn, he made rotary carding machines, spinning frames, and looms for the French woollen industry. As most of his work is done in *elgium, it is difficult to find stuff on him in 1nglish. +owever a reading of the following sites will help; http;<<www.s$su.edu<faculty<watkins<belgium.htm http;<<stabi.hs-bremerhaven.de<whkmla<region<lowcountries<belgnap.html

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Uploaded for ManagementParadise.com http: www!ekh!lu!se ekhmdr papers eapbelg!rtf The "ageWise, Inc! (ncyclopedia further adds C3C4ER%55" ,%55%!$ !#A%$K#*<&', )nglo +rench inventor and machinist, was born in (ngland in #A%$. "e went to 1elgium as a simple mechanic, and in #A$$ constructed at Lerviers the first wool carding and wool spinning machines on the continent. ,n #*6A he established a large machine wor4shop at 9iege. Orders soon poured in on him from all over (urope, and he amassed a large fortune. ,n #*#6 he was granted the rights of naturalization by @apoleon ,., and in #*#& handed over the management of his business to his youngest son, Mo"@ .O.;(3,99 !#A$6K#*86'. Than4s to his oNn energy and ability, aided by the influence of ;ing 2illiam ,. of the @etherlands, Mohn .oc4erill largely e0tended his fatherJs business. ;ing 2illiam secured him a site at -eraing, where he built large wor4s, including an iron foundry and blast furnace. The construction of the 1elgian railways in #*<8 gave a great impetus to these wor4s, branches of which had already been opened in +rance, Oermany and Poland. ,n #*<* .oc4erill met with a carriage accident which nearly proved fatal, and the prospect of his loss resulted in the credit of the firm being so badly sha4en that in #*<$ it was compelled to go into li5uidation, the liabilities being estimated at &: millions of francs, the assets at #* millions. This reverse, however, was only temporary. Mohn .oc4erill had practically concluded negotiations to construct the 3ussian government railways, when his constitution, undermined by overwor4, bro4e down. "e died at 2arsaw on the ,$th of Mune #*86. The iron wor4s, among the largest in (urope, are still carried on under the name of 9a -ociPtP .oc4erill at -eraing !5.v.'.

#enry $ord, the son of farmer, was born in )reenfield, 2ichigan on ,Bth @uly, 1:6,. +e left school at 1. to work on his father5s farm but in 1:>9 he moved to 'etroit where he became an apprentice in a machine shop. "o help him survive on his low wages he spent his evenings repairing clocks and watches. Ford returned to )reenfield after his father gave him /B acres to start his own farm. +e disliked farming and spent much of the time trying to build a steam road carriage and a farm locomotive. 8nable to settle at )reenfield, Ford returned to 'etroit to work as an engineer for the 1dison Illuminating (ompany. 'uring this period Ford read an article in the World of Science about how the )erman engineer, 0icholas %tto, had built a internal combustion engine. Ford now spent his spare time trying to build a petrol-driven motor car. +is first car, finished in 1:96, was built in a little brick shed in his garden. 'riven by a twocylinder, four-cycle motor, it was mounted on bicycle wheels. 0amed the "hin &i77ie, the car had no reverse gear or brakes.

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Uploaded for ManagementParadise.com *y August, 1:99, Ford had raised enough money to start his own company. +is first group of investors withdrew after Ford had spent F:6,BBB without producing a car that could be sold. 1ventually he produced a car that appeared at the )rosse =ointe *lue ?ibbon track at 'etroit. Its performance helped him to sell 6,BBB F1B dollar shares in his new company. "his also ended in failure and in @une, 19B,, he found twelve more people willing to invest a total of F#:,BBB in another motor company. Ford now began production of the 2odel A car. "he car sold well and the company flourished and by 19B> the profits reached F1,1BB,BBB. In 19B9 Ford took the decision to manufacture only one type of car, the 2odel ". Initially it took 1/ hours to assemble a 2odel " car. *y improving his mass production methods, Ford reduced this to 1 hour ,, minutes. "his lowered the overall cost of each car and enabled Ford to undercut the price of other cars on the market. *etween 19B: and 1916 the selling price of the 2odel " fell from F1,BBB to F,6B. %n the outbreak of the First World War in 1urope, Ford soon made it clear he opposed the war and supported the decision of the Woman5s =eace =arty to organi7e a peace conference in +olland. After the conference Ford was contacted by America5s three leading anti-war campaigners, @ane Addams, %swald )arrison Dillard, and =aul Aellogg. "hey suggested that Ford should sponsor an international conference in -tockholm to discuss ways that the conflict could be brought to an end. Ford came up with the idea of sending a boat of pacifists to 1urope to see if they could negotiate an agreement that would end the war. +e chartered the ship Oskar II, and it sailed from +oboken, 0ew @ersey on /th 'ecember, 191.. "he Ford =eace -hip reached -tockholm in @anuary, 1916, and a conference was organi7ed with representatives from 'enmark, +olland, 0orway, -weden and the 8nited -tates. +owever, unable to persuade representatives from the warring nations to take part, the conference was unable to negotiate an Armistice. After the war Ford became increasingly interested in politics. +e $oined the 'emocratic =arty and in 191: was narrowly defeated when he failed to win a seat in the 8.-. -enate. In the 19#Bs the Ford 2otor (ompany continued to grow rapidly. In 19#. Ford was producing 1B,BBB cars every #/ hours. "his was 6B per cent of America5s total output of cars. +owever, his decision not to bring out new models allowed other companies to challenge his dominance. *y 19#> Ford had sold over 1.,BBB,BBB 2odel " cars. +owever, sales were on the decline and the )eneral 2otors5s (hevrolet was the current best-selling car.

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Uploaded for ManagementParadise.com In the 19,Bs Ford opposed Franklin '. ?oosevelt and the 0ew 'eal. +e refused to recogni7e the 8nited Automobile Workers 8nion and used armed police to deal with industrial unrest. Ford had a stroke in 19,: but returned to run the company after his son, 1dsel Ford, died in 19/,. Although initially an opponent of the 8-A becoming involved in the -econd World War, after =earl +arbour, Ford turned over his vast production resources to his country. For e ample, the Ford plant at Willow ?un produced over :,BBB &iberator bombers during the war. +enry Ford died on >th April, 19/>. Eli ,hitney and his Cotton gin The third best 4nown )merican inventor of the pre atomic age, after Thomas (dison and )le0ander Oraham 1ell, is probably (li 2hitney. 2hitney certainly transformed the economies of the antebellum @orth and -outh. 1ut among invention aficionados, his invention of the cotton gin is a matter of some dispute. 2hitney was born in 2estboro, Massachusetts in #A:%. )s a child, he showed an instinct and talent for machinery. "e wor4ed as a blac4smith, and invented a nail ma4ing machine. 2hitney/s dream of attending Fale .ollege was frustrated for some years, because no college then taught or much appreciated the "useful arts." 1ut 2hitney did attend Fale, and graduated at the age of &A, only to find that there were no ?obs for engineers either. -o he accepted a teaching position in -outh .arolina. (n route, in early #A$<, 2hitney was befriended by ;atherine Oreene, the widow of a 3evolutionary 2ar general. 2hen 2hitney/s teaching ?ob later fell through, Oreene invited him to stay at her plantation, Mulberry Orove, where she thought he might ma4e himself helpful. )s 2hitney soon discovered, most cotton plantations were then on the brin4 of insolvency, because "green seed" cotton, the only strain that would grow inland, too4 too long to cull from its seeds. To sift out a single "point" of cotton lint from its surrounding seeds re5uired ten hard hours of hand labor. (veryone agreed that the solution was a machine to do this wor4= but no one had been able to ma4e one. )ccording to legend, within ten days of his arrival 2hitney had observed the manual process and built a machine that did the same thing much faster. ,t is clear that his very first model did not wor4. ,n it, the bul4 cotton was pressed against a wire screen, which held bac4 the seeds while wooden teeth ?utting out from an ad?acent rotating drum teased the cotton fibers out through the mesh. This model invariably ?ammed. The ne0t version was a complete success, than4s to thin wire hoo4s replacing the wooden teeth, and a moving brush that constantly cleared away the collected fibers. 1y all accounts, Oreene encouraged 2hitney. The ve0ed 5uestion is whether the 4ey element, the wire hoo4s, was his idea or hers. Oreene supporters cite the claim of a friend of a friend of her plantation foreman, that Oreene invo4ed "a woman/s wit" and told 2hitney to replace his wooden pegs with the wires of a fireplace cleaning brush.

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Uploaded for ManagementParadise.com 2hitney supporters cite a letter to the editor of $outhern %griculturalist magazine, whose author heard from admittedly shadowy sources that 2hitney had e0plicitly as4ed Oreene for a pin to e0periment with at the start of his efforts. !@ote that for some time during his Massachusetts days, 2hitney had been the @ew 2orld/s sole manufacturer of hatpins.' 2hatever the comparative contributions, the cotton gin !"gin" is simply short for "engine"' was a stupendous success. )fter 2hitney gave a one hour demonstration, in which the machine did the day/s wor4 of many men, farmers raced to sow their fields with green seed cotton. )s the cotton grew, 2hitney/s wor4shop was bro4en into and his machine was e0amined in detail7 soon, copies were everywhere. 2hitney could not possibly have manufactured one tenth of the gins that that first crop would re5uire= but it is nonetheless unfair that his patent !granted in #A$8' guaranteed him only ten years of legal battles, which ended in penury. ,n #*68, 2hitney left the -outh forever, disappointed and disgusted. ,n his words, ")n invention can be so valuable as to be worthless to the inventor." ,n fact, 2hitney never attempted to patent any of his later inventions !for e0ample, a milling machine'. 1ut after settling in @ew "aven, .onnecticut, 2hitney re invented )merican manufacturing as a whole, through mass production. 2hitney wanted to enable uns4illed laborers to ma4e comple0 products. "e managed this by designing products !his test case was rifles' with interchangeable parts. These were cut and shaped by machines that each performed one precise function over and over again. The wor4ers would merely put each machine through its motions. Mass production is not a romantic notion. 1ut it allowed for an unprecedented boom in )merican industry, and eventually provided employment for thousands of wor4ers who were unwilling or unable to ac5uire apprenticeships in s4illed crafts. )nd by all accounts, (li 2hitney himself treated his "manufactory" wor4ers with appreciation and respect7 the awful abuses of laborers that came about after his death in #*&% were a perversion of his system. )lso read http:66000.inventorsmuseum.com60hitney.htm Thomas Edison 2ithout a doubt, the greatest inventor of the modern era has been Thomas (dison. Many of his over one thousand inventions have profoundly changed the lives of nearly everyone in the world. Thomas )lva (dison was born in Milan, Ohio on +ebruary ##, #*8A. ,n #*%8, his family moved to Port "uron, Michigan. There, ")l/s" favorite hobbies were reading, and performing chemistry e0periments in his basement lab. 1ut his teachers considered young (dison a failure= and his mother soon decided to home school him.

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Uploaded for ManagementParadise.com (dison/s first ?ob !#*%$' was operating a newstand on the railroad that ran from Port "uron to >etroit. To ma4e the trips more interesting, (dison installed a printing press and chemistry lab in a bo0car. ,n #*:&, he learned to use a railroad telegraph. (dison then spent many years traveling around .anada and the U-, wor4ing as a telegraph operator and doing scientific e0periments in his free time. +inally, in #*:$, he decided to become a full time inventor. On Mune #st of that year, (dison was granted his first patent !Q$6,:8:', for an electric voting machine. 1ut no one wanted to use the machine, and (dison resolved never again to invent what would not sell. "is ne0t invention fared much better7 an improved stoc4 mar4et tic4ertape machine !#*:$', which earned him an instant R86,666 Gabout RA66,666 todayI. 2ith his friend +ran4lin T. Pope, (dison formed an electrical engineering firm, based in @ewar4, @ew Mersey. 2ith Pope, and later alone, (dison eventually earned about &66 patents for telegraph systems and devices. ,n #*A:, in Menlo Par4, @ew Mersey, (dison founded his famous "invention factory." "The 2izard of Menlo Par4" was a wor4aholic and a demanding employer, but he did not resent failures in the lab7 "That/s one more way it won/t wor4, so we/re closer to a solution." (dison/s first great Menlo Par4 invention was the phonograph !#*AA', although he did not bring it to mar4et for ten years. "e was busy with his greatest pro?ect7 a wor4able electric light system that would replace candles and gaslight forever, at home and in public. ,n #*A*, (dison created his prototype incandescent light bulb7 a thin strip of paper, attached to wires, enclosed in a vacuum inside a glass bulb. 2hen electricity flowed into the paper "filament," it heated up, and glowed. The only problem was that the paper burnt out very 5uic4ly. )fter thousands of tests, an "(dison Pioneer," 5e0is 1. 5atimer, found the optimal filament material7 carbonized cotton thread !#*$A'. (dison installed the first reliable, durable electric lights in his own labs, and later built the first public po0er station, in Manhattan/s financial district !#**&'. "owever, (dison/s >. current system had only a three mile range, and was later superseded by ,estinghouse7s and Tesla7s ). current system. 1y that time, (dison had built a new and much bigger research comple0 !now a @ational Monument' in 2est Orange, @ew Mersey. There his first pro?ect was to redesign his phonograph, in light of recent improvements by others. (dison soon mar4eted a wa0 cylinder phonograph as a dictation machine !#***', and later, as a musical home entertainment system !#*$:'. These commercial efforts were, by and large, failures, but (dison continued to refine his favorite invention into the #$&6s. ,n #**$, an associate, 2illiam >ic4son, wor4ing at (dison/s direction, invented the celluloid strip motion picture camera and pro?ector !#**$' whose silent movies were viewed inside the machine, through a peephole. )lthough (dison later bro4e with >ic4son, *eorge Eastman and others helped (dison to establish the basis of the motion picture industry.

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Uploaded for ManagementParadise.com )fter #$##, (dison was mainly dissatisfied in his wor4, feeling that many of his ideas were being ignored or worse yet, stolen. Throughout the /&6s, he also had poor health. "e died on October #*, #$<#, at the age of *8. ,n total, (dison accumulated 8"9:; < patents. Only a few inventors have earned half as many. (dison inventions not mentioned above include7 the printing telegraph, the electric "stencil pen," a magnetic mining process, an electrical torpedo, a synthetic rubber, and improved al4aline batteries, cement mi0ers, and microphones. ,t must be said that (dison used other inventors7 ideas much more freely than he shared his own. +or e0ample, the wa0 cylinder phonograph was first patented by .hichester ). 1ell and .harles -umner Tainter !#**:', whose offer of a ?oint venture (dison re?ected= the disc "gramophone" was first patented by Emile Berliner !#**A'= and even the so called "(dison (ffect," the observed emission of electrons from a hot filament, was actually discovered by an (dison engineer named 2illiam M. "ammer !#**<'. 1ut nothing can gainsay the tremendous effect that (dison/s career as a whole has had on our everyday lives. 1y the volume, variety and spectacularity of his inventions, (dison more than any other person made it seem li4e no miracle was beyond the reach of modern )merican technology. )s an inspiration to aspiring engineers and inventors, then as now, (dison is peerless. ,ndeed, above all others, as his .ongressional Medal of "onor certificate declared7 ""e illuminated the path of progress by his inventions."
1iographies of (dison can be found on line at7 http7BBweb.mit.eduBinventBwwwBinventors) "Bedison&.html Glin4ed aboveI http7BBlearning.loc.govBammemBedhtmlBedbiohm.html http7BBwww.minot.4#&.nd.usBmpsBedisonBedisonBedison.html

!ndre0 Carnegie: The Richest $an in The ,orld http:66000.p(s.org60g(h6ame=6carnegie6 Emergence of the Entrepreneurial Class in the 5C#s (ntrepreneurship led development strategies have been successful in several countries. The following case studies provide a glimpse at some of the policies that have been used to increase the supply of entrepreneurship.
%ntrepreneurship in &igeria

)frica is the poorest, less developed continent in the world. ,n most countries in )frica, the governments have typically played a significant role in determining the course of development. Many state owned enterprises in )frica were created when it was believed that the fastest route to development occurred when the state too4 on the role of the entrepreneur. Unfortunately, in many countries, the performance of these state owned firms, or parasatals, has been substandard. Part of the problem with the state owned enterprises is that they are run by bureaucrats and are plagued with red tape. Thus, these

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Uploaded for ManagementParadise.com firms are typically run according to state procedures, instead of according to cost cutting and profit ma0imizing concerns. The typical result is rampant inefficiency !(l4an, #$**'. )lthough @igeria was at one time characterized by such inefficiencies, it has recently has pursued entrepreneurship encouragement policies, and the initial indicators suggest that the policies have been successful. ,n @igeria the state owned enterprises traditionally clogged business opportunities and state restrictions prevented entrepreneurs from entering the mar4et. "owever, in the mid #$*6s, @igeria abolished its mar4eting board, which prevented entry into certain industries, and opened up its mar4ets to competition from domestic entrepreneurs. )dditionally, lower ta0es and increased price ceilings have increased the incentives to entrepreneurs. )lthough @igeria is still plagued by many development problems, "preliminary evidence suggests a favorable response by the private sector to the new entrepreneurial opportunities thus created" !(l4an, #$**'.
'echnopreneurship in (outh and (outh %ast Asia

(ntrepreneurship in parts of -outh and -outh (ast )sia has recently undergone rapid revitalization. The term "technopreneur" arose from within -ingaporean culture to describe an individual whose entrepreneurial endeavors focus on a technology centered enterprise. The government of -ingapore has embraced technopreneurship and has launched several initiatives to promote technopreneurship as a means of economic development. ,n the past three years, -ingapore has restructured the focus of many of its economic policies to fully support the growth and development of domestic technopreneurial firms. -ingapore is a small island city state and has few natural resources that it can e0ploit in order to promote economic development. Thus, -ingapore has had to largely rely on its people and human capital for the sustainment of development. ,nitially, the government improved the country/s human capital by dedicating a large amount of the annual budget to education e0penditure. "owever, now that the country can boast high literacy rates, traditional human capital development is no longer sufficient to sustain economic growth. 3ecognizing the need for a new strategy for economic growth, -ingapore/s government turned towards the technology sector. 2ith the creation of the Technopreneurship &# ,nitiative and Ministerial .ommittee, -ingapore began promoting technopreneurship encouragement policies. +or e0ample, the government now sponsors university courses on technopreneurship and helps connect venture capital companies with budding technopreneurs. This greater openness has encouraged many new start ups to form, and the country is well on its way to fully integrating itself into the @ew (conomy. -ingapore/s success with technopreneurship policies has influenced other )sian countries to begin such initiatives. +or e0ample, Malaysia recently launched its Multimedia -uper .orridor to encourage domestic technology development, and "ong ;ong recently completed the construction of its .yberPort, a technopreneurship friendly business district. +inally, technopreneurship encouragement has also ta4en place in certain cities in ,ndia.

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Uploaded for ManagementParadise.com India )s a whole, ,ndia is still one of the most underdeveloped countries in the world. >espite the grim situation that faces much of the country, several technology focused cities have recently had impressive success with technology driven development. ,n #$$#, the ,ndian government introduced numerous mar4et reforms to overhaul the ,ndian economy. The information technology industry is probably that which has benefited most from the reforms. +or the educated urban class, information technology businesses have provided a new source of income. To utilize the educated youth, who have been trained in engineering and computer programming, international ,T companies began locating in ,ndia, particularly in 1angalore. The result is that 1angalore has become a powerhouse for software production. )lthough ,ndian technopreneurs were not originally at the center of 1angalore/s technology development, they are now beginning to pop up throughout southern ,ndia, largely due to the government/s help in creating "the right climate to encourage this sunrise industry" !-oota, #$$*'. The government created policies to boost technopreneurial education and to encourage the creation of domestic software par4s. )dditionally, domestic entrepreneurship is encouraged in 1angalore with ta0 incentives and a relatively advanced communications infrastructure !-oota, #$$*'. 1angalore/s localized success is gaining great praise for its rapid development. )lthough 1angalore was the first ma?or technology center in ,ndia, "yderabad is now following its e0ample. )lthough smaller in scale, the success of "yderabad suggests that the 1angalore model of technology led development may be applied in other parts of the country. -ince much of ,ndia is still far behind 1angalore and "yderabad in terms of human capital development, it is unreasonable to suggest that all of ,ndia should adopt policies to promote technopreneurship. @onetheless, the rest of the country could li4ely benefit from the implementation of policies that encourage entrepreneurs to fill the mar4et/s deficiencies, whatever they may be in the local mar4ets and specific regions of ,ndia.

Besides these a good amount of material for 0riting your ans0ers 0ill (e availa(le on http:66ye.entre0orld.org6>'?9986mentmess.cfm !lso don.t forget to ta&e the @ui) on the site its helpful to understand the chapter on Entrepreneurial s&ills.

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