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DATE: 24, FEB 2013

GMAG 412


Assignment # 1

Introduction to Entrepreneurship


They explore seven different conceptions of entrepreneurship. thinking entrepreneur to establish their definition of entrepreneurship. 1. entrepreneurship is strictly linked with firms that qualify as small businesses. Entrepreneurship as small business management: In this approach. However it is argued that there is still much work to be done in defining entrepreneurship and clarifying how it relates to the firm. while excluding the identical tasks that may not be performed by large or established business. This GMAG 412 INTRODUCTION TO ENTREPRENEURSHIP .Entrepreneurship Entrepreneurship is one of the fastest growing fields in colleges and universities around the world. discussing each and how they connect entrepreneurship with the firm. In economics and strategic-management literature. It deems with all aspects of small or new business. In real life. Following are the seven different approaches to entrepreneurship given by the new theory of entrepreneurship by the Austrian school of economics. a realistic understanding of entrepreneurship has been given by the neoclassical economics with the assumptions of perfect competition and production functions.UMAIR ZIA (BS37 3174) 2|Page . they must take actions that they feel will lead to the best outcomes for the firm. The Austrian School of economics' draws view of heterogeneous capital goods and an active. entrepreneurs within different firms are not in perfect competition and do not have accurate production curves that they can passively follow. Rather. however much work is focused on understanding the relationship between entrepreneur and the firm.

" The entrepreneur is the source of economic change. The firm's nature and structure has no effect on the level of entrepreneurship. entrepreneurship is only demonstrated within the firm when it introduces new products. The services of imaginative or creative people could be purchased when necessary by the firm. "Opportunities" have come to be defined as situations in which resources can be redeployed to create value GMAG 412 INTRODUCTION TO ENTREPRENEURSHIP . psychological characteristics such as imagination and creativity. Thus the connection between entrepreneur and firm is weak. 3. entrepreneurship has no observable connection to the theory of the firm. processes. The regular day-to-day operation of the firm has nothing to do with entrepreneurship. Entrepreneurship as alertness to opportunity: This conception is most attributed to economist Israel Kirzner. 2. entrepreneurship becomes a specialized activity or a skill that some individuals are particularly well-equipped to perform. Using this conception. or strategies. 4. Entrepreneurship as innovation: This conception of entrepreneurship was championed by economist Joseph Schumpeter. He argued the entrepreneur introduces "new combinations" of ideas and resources and dynamically shakes up the economy out of its previous equilibrium state.UMAIR ZIA (BS37 3174) 3|Page .structural approach to entrepreneurship is one of the weakest yet still holds influence among colleges and universities today. Schumpeter called this process "creative destruction. In this conception. Entrepreneurship as imagination and creativity: When defined by personal.

In Kirzner's formulation. They need intuition and power of observation to make a hypothesis and conduct lean experimentation to check the viability scenario. Entrepreneurs use their skilled knowledge to create something new. entrepreneurs do not need a firm to be entrepreneurs. there is no real connection between the entrepreneur and the firm. Entrepreneurship is defined as "the ability to reallocate one's resources in response to changing circumstances. entrepreneurs only need to be aware of profit opportunities. According to the conception. Entrepreneurs are characterized as having special knowledge or insight that no one else has. 5. Since they are merely exercising privileged knowledge.through various forms of arbitrage. it is not only implied but overtly asserted that entrepreneurship could simply be purchased by firm management. This approach assumes that innovation is occurring in the economy and measures entrepreneurship by how people adjust to large changes in the economy. In this conception. Beyond that." Schultz argued that entrepreneurial ability is a resource with an actual market price and quantity.UMAIR ZIA (BS37 3174) 4|Page . They do not need to own assets. GMAG 412 INTRODUCTION TO ENTREPRENEURSHIP . Entrepreneurship as the ability to adjust: This is the approach of Nobel Prize–winning economist Theodore Schultz. they are neither facing uncertainty nor necessarily bearing any risk. By this conception. the worst that can happen to an entrepreneur is the failure to discover and capitalize on an existing profit opportunity. Management could purchase the services of entrepreneurs during times of great change.

and impose it on others." Judgment is defined as "decisive action about the deployment of economic resources when outcomes cannot be predicted according to known probabilities. and leadership or not. but rather creating new opportunities by his judgment.UMAIR ZIA (BS37 3174) 5|Page . Entrepreneurship as charismatic leadership: This conception is heavily influenced by Max Weber. or a broader vision." Successful entrepreneurs must be excellent communicators and generate a following. Entrepreneurship as judgment: Entrepreneurship is defined as "judgmental decision-making under conditions of uncertainty. The definition of judgment implies that entrepreneurs own and manage assets to grow. Critique of this conception is that it only speaks of one’s personal characteristic and says nothing about the physical assets that an entrepreneur controls. He is not passively identifying opportunities that he is aware of. It is argued that there is no market for this judgment and therefore entrepreneurs must create markets to function in the economy. GMAG 412 INTRODUCTION TO ENTREPRENEURSHIP .6. the entrepreneur is an active." In this conception. Decision-making under uncertainty is the qualifying function of entrepreneurship whether it involves imagination. creativity. creative agent. It says nothing of how he makes decisions about those assets. 7. a set of rules. Entrepreneurship is defined as "the ability to articulate a plan.