Entrepreneurship 

is the creation or extraction of value. With this definition, entrepreneurship is

viewed as change, generally entailing risk beyond what is typically encountered in starting a
business, including other values than simply economic ones. Entrepreneurship is also the process
that creates entrepreneurs who contribute to economic development. Economic development is
the structural transformation of an economy towards a modern, technologically advanced
economy based on services and manufacturing. The process involves qualitative changes and is
also accompanied by quantitative changes to improve welfare. Entrepreneurs contribute
significantly to economic development, both positive and negative in various ways;

Entrepreneurs have enhanced the generation of employment. They provide many employment
opportunities to the people to manage their business activities. They generate direct and indirect
jobs for unemployed persons by setting up more and more production units at trim- and large-
scale levels. Entrepreneurship is one of the best ways to overcome the problem of unemployment
in our country.

They also help in capital formation. Entrepreneurs mobilize the idle savings of the public
through the issues of industrial securities. Investment in public protection in industry results in
the productive utilization of national resources. Rate of capital formation increases which is
essential for rapid economic growth. Thus, an entrepreneur is the creator of wealth.

Entrepreneurs increase annual per capita income. Entrepreneurs locate and exploit opportunities.
They convert the latent and idle resources like land, labor, and capital into national income and
wealth in goods and services. They help increase net national product and per capita income in
the country, which are essential yardsticks for measuring economic growth.

Business executives help in the growth of infrastructure.  Entrepreneurial ventures open up

infrastructural development in their localities. Starting up businesses often leads to the
development of transport and communication networks, driven by the need for infrastructure
created by these businesses. Companies like Keroche and Dominion farms opened up their
localities, enabling thriving enterprises to take root, taking advantage of the excellent transport
and communication channels available.

Entrepreneurial activities aid in the boosting of the economic independence of the country.
Entrepreneurship is essential for national self-reliance. Industrialists help manufacture
indigenous substitutes of imported products, reducing dependence on foreign countries. Business
people also export goods and services on a large scale and earn scarce foreign exchange. Such
import substitution and export promotion help to ensure the country’s economic independence,
without which political independence has little meaning.

Entrepreneurs contribute to community development. Through participation in Corporate Social

Responsibility, entrepreneurs contribute to and support infrastructure development for education,
healthcare, business training & mentorship, and other social needs. In Kenya, initiatives and
organizations such as the Mater Heart Run, the KCB Lion’s Den, Blaze by Safaricom,
and Equity’s Wings to Fly are but a few initiatives by entrepreneurs that are contributing towards
improving access to health services and education and providing financial support and
mentorship to other young entrepreneurs.

Entrepreneurship assists in improving the standards of living of the people. Entrepreneurs set up
industries that remove the scarcity of essential commodities and introduce new products.
Production of goods on a mass scale and manufacture of handicrafts, etc., in the small-scale
sector help to improve the standards of life of an ordinary man. These offer goods at lower costs
and increase variety in consumption.

Entrepreneurs identify existing opportunities in the market. Through the production and
distribution of goods and services, entrepreneurial ventures seek to satisfy client needs and
improve livelihoods. Constant market research provides insights into existing customer needs
that inform decisions to offer goods and services. An example is Jumia Kenya which noticed a
gap in the distribution of goods through online platforms and exploited this opportunity, giving
rise to a very vibrant online business platform.

Business executives contribute to national income. Through taxes, businesses contribute to

government revenue that facilitates development. Entrepreneurial ventures further contribute to
the GDP, indicating their importance in raising revenue, financing government projects, and
economic growth.

Entrepreneurs assist inequitable/balanced regional development. Entrepreneurs in public and

private sectors help remove regional disparities in economic development. They set up industries
in backward areas to avail various concessions and subsidies offered by the central and state
governments. Thus, rural development and reduction to the rural-urban migration.

Entrepreneurs provide forward and backward linkages. An entrepreneur initiates change which
has a chain reaction. The setting up of an enterprise has several backward and forward linkages.
For example, establishing a steel plant generates several ancillary units and expands the demand
for iron ore, coal, etc. These are backward linkages. By increasing the supply of steel, the plant
facilitates the growth of machine building, tube making, utensil manufacturing, and other units.
Entrepreneurs create an atmosphere of enthusiasm and convey a sense of purpose. They give an
organization its momentum. Entrepreneurial behavior is critical to the long-term vitality of every
economy. The practice of entrepreneurship is as vital to established firms as it is to new ones.

Entrepreneurs raise the economic productivity level. Competition between new and existing
firms ideally leads to the survival of the fittest. Even though overall employment may decline,
new firms can foster productivity. The productivity-enhancing effect of business formation
occurs in the medium term when the displacement of existing firms dominates the employment
effect. This happens for two reasons. First, new firms increase competition in the market and
thus diminish the market power of incumbent firms, forcing them to become more efficient or go
out of business. Second, only firms with a competitive advantage or more efficient than
incumbents will enter the market. The subsequent selection process forces less efficient firms
(both entrants and incumbents) to drop out of the market.

Business executives/entrepreneurs boost economic growth by introducing innovative

technologies, products, and services. Radical innovations often lead to economic growth.
Entrepreneurs who bring innovations to the market offer an essential value-generating
contribution to economic progress. New firms invest more in searching for new opportunities
than incumbent firms. Existing firms might be less likely to innovate because of organizational
inertia, which numbs their responsiveness to market changes, or because new goods would
compete with their established range of products. Incumbent firms often miss out, sometimes
intentionally, on opportunities to adopt new ideas because of the fear of cannibalizing their
markets. For inventors and innovators (who sometimes come from established firms), setting up
their own business often appears to be the only way to commercialize their ideas.
Entrepreneurs ensure the effective utilization of resources. Entrepreneurship is all about using
the resources considered to be of low value to earn income. An entrepreneur comes up with ideas
of using what others may consider waste. This improves a country’s economy through taxes and
creating jobs, improving the beneficiaries' living standards. The Kenyan sisal plant is, for
example, being used by small-scale entrepreneurs to weave quality bags such as “ciondo,” table
mats, lampshades, etc. These items sell internationally. Also, The biogas promotion, pioneered
by the Promotion of Private Sector Development in Agriculture (PSDA), enables dairy farmers
to get better value from the dung produced by their cows, as it was first used to produce energy
before it is used as manure. Biogas can replace energy sources like LPG, firewood, charcoal, and
electricity.

Entrepreneurs lead to the promotion of indigenous or local technology. A few years ago, the Jua
Kali sector in Kenya came up with new technology for making gas burners (jikos) that use
biofuel from cow dung. These jikos are made from locally available materials that are genuinely
affordable to the low-income earners, even at the village level. The gas is produced through a
simple, straightforward process. This has improved many homes since fuel has become
affordable for them. A particularly recent innovation in the same line is the solar-powered LED
lantern by a young 2010 CNN Kenyan nominee, Evans Wadongo, rated among the 2010 top 10
CNN Heroes. The thinking behind this lantern is to help light Kenyan rural homes and save on
fuel costs, keep eye problems caused by smoke from tin or bottle lanterns at bay and conserve
the environment.

Business executives aid in creating wealth and distributing income. By establishing the business
entity, entrepreneurs invest their resources and attract capital (in debt, equity, etc.) from
investors, lenders, and the public. This mobilizes public wealth and allows people to benefit from
the success of entrepreneurs and growing businesses. This kind of pooled capital that results in
wealth creation and distribution is one of the economy’s fundamental imperatives and goals.

Entrepreneurs increase regional business activities through exports.  Any growing business will
eventually want to get started with exports to expand their business to foreign markets. This is an
essential ingredient of economic development. It provides access to more significant markets and
leads to currency inflows and access to the latest cutting-edge technologies and processes being
used in more developed foreign markets. Another key benefit is that this expansion leads to more
stable business revenue during economic downturns in the local economy.