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Entrepreneurship is the act of being an entrepreneur or "one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods". This may result in new organizations or may be part of revitalizing mature organizations in response to a perceived opportunity. The most obvious form of entrepreneurship is that of starting new businesses(referred as Startup Company); however, in recent years, the term has been extended to include social and political forms of entrepreneurial activity. When entrepreneurship is describing activities within a firm or large organization it is referred to as intra-preneurship and may include corporate venturing, when large entities spin-off organizations.
According to Paul Reynolds, entrepreneurship scholar and creator of the Global Entrepreneurship Monitor, "by the time they reach their retirement years, half of all working men in the United States probably have a period of self-employment of one or more years; one in four may have engaged in selfemployment for six or more years. Participating in a new business creation is a common activity among U.S. workers over the course of their careers."
And in recent years has been documented by scholars
such as David Audretsch to be a major driver of economic growth in both the United States and Western Europe. "As well, entrepreneurship may be defined as the pursuit of opportunity without regard to resources currently controlled (Stevenson,1983)"
Entrepreneurial activities are substantially different depending on the type of organization and creativity involved. Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only parttime) to major undertakings creating many job opportunities. Many "high value" entrepreneurial ventures seek venture capital or angel funding (seed money) in order to raise capital to build the business. Angel investors generally seek annualized returns of 20-30% and more, as well as extensive involvement in the business.
Many kinds of organizations now exist to support would-be entrepreneurs including
specialized government agencies, business incubators, science parks, and some NGOs. In more recent times, the term entrepreneurship has been extended to include elements not related necessarily to business formation activity such as conceptualizations of entrepreneurship as a specific mindset (see also entrepreneurial mindset) resulting in entrepreneurial initiatives e.g. in the form of social entrepreneurship, political entrepreneurship, or knowledge entrepreneurship have emerged.
The entrepreneur is a factor in microeconomics, and the study of entrepreneurship reaches back to the work of Richard Cantillon and Adam Smith in the late 17th and early 18th centuries, but was largely ignored theoretically until the late 19th and early 20th centuries and empirically until a profound resurgence in business and economics in the last 40 years.
In the 20th century, the understanding of entrepreneurship owes much to the work of economist Joseph Schumpeter in the 1930s and other Austrian economists such as Carl Menger, Ludwig von Mises and Friedrich von Hayek. In Schumpeter, an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation.
Entrepreneurship employs what
Schumpeter called "the gale of creative destruction" to replace in whole or in part inferior innovations across markets and industries, simultaneously creating new products including newbusiness models. In this way, creative destruction is largely responsible for the dynamism of industries and long-run economic growth. The supposition that entrepreneurship leads to economic growth is an interpretation of the residual in endogenous growth theory and as such is hotly debated in academic economics. An alternate description posited by Israel Kirzner suggests that the majority of innovations may be much more incremental improvements such as the replacement of paper with plastic in the construction of a drinking straw. For Schumpeter, entrepreneurship resulted in new industries but also in new combinations of currently existing inputs. Schumpeter's initial example of this was the combination of a steam engine and then current wagon making technologies to produce the horseless carriage. In this case the innovation, the car, was transformational but did not require the development of a new technology, merely the application of existing technologies in a novel manner. It did not immediately replace the horsedrawn carriage, but in time, incremental improvements which reduced the cost and improved the technology led to the complete practical replacement of beast drawn vehicles in modern transportation. Despite Schumpeter's early 20thcentury contributions, traditionalmicroeconomic theory did not formally consider the entrepreneur in its theoretical frameworks (instead assuming that resources would find each other through a price system). In this treatment the entrepreneur was an implied but unspecified actor, but it is consistent with the concept of the entrepreneur being the agent of x-efficiency. Different scholars have described entrepreneurs as, among other things, bearing risk. For Schumpeter, the entrepreneur did not bear risk: the capitalist did.
Some notable persons and their works in entrepreneurship history.
For Frank H. Knight
(1921) and Peter Drucker (1970) entrepreneurship is about taking risk. The
behavior of the entrepreneur reflects a kind of person willing to put his or her career and financial security on the line and take risks in the name of an idea, spending much time as well ascapital on an uncertain venture. Knight classified three types of uncertainty. Risk, which is measurable statistically (such as the probability of drawing a red color ball from a jar containing 5 red balls and 5 white balls). Ambiguity, which is hard to measure statistically (such as the probability of drawing a red ball from a jar containing 5 red balls but with an unknown number of white balls). True Uncertainty or Knightian Uncertainty, which is impossible to estimate or predict statistically (such as the probability of drawing a red ball from a jar whose number of red balls is unknown as well as the number of other colored balls). The acts of entrepreneurship are often associated with true uncertainty, particularly when it involves bringing something really novel to the world, whose market never exists. However, even if a market already exists, there is no guarantee that a market exists for a particular new player in the cola category. The place of the disharmony-creating and idiosyncratic entrepreneur in traditional economic theory (which describes many efficiency-based ratios assuming uniform outputs) presents theoretic quandaries. William Baumol has added greatly to this area of economic theory and was recently honored for it at the 2006 annual meeting of the American Economic Association.
The entrepreneur is widely regarded as an integral player in the business culture of American life, and particularly as an engine for job creation and economic growth. Robert Sobel published The Entrepreneurs: Explorations Within the American Business Tradition in 1974. Zoltan Acs and David Audretsch have produced an edited volume surveying Entrepreneurship as an academic field of research,
and more than a hundred scholars around the world track entrepreneurial activity, policy and
social influences as part of the Global Entrepreneurship Monitor (GEM) Characteristics
and its associated reports.
of an entrepreneur
This unreferenced section requires citations to ensureverifiability.
Entrepreneurs have many of the same character traits as leaders, similar to the early great man theories of leadership; however trait-based theories of entrepreneurship are increasingly being called into question. Entrepreneurs are often contrasted with managers and administrators who are said to be more methodical and less prone to risk-taking. Such person-centric models of entrepreneurship have shown to
be of questionable validity, not least as many real-life entrepreneurs operate in teams rather than as single individuals. Still, a vast literature studying the entrepreneurial personality found that certain traits seem to be associated with entrepreneurs: David McClelland - primarily motivated by an overwhelming need for achievement and strong urge to build. Collins and Moore - tough, pragmatic people driven by needs of independence and achievement. They seldom are willing to submit to authority. Bird - mercurial, that is, prone to insights, brainstorms, deceptions, ingeniousness and resourcefulness. they are cunning, opportunistic, creative, and unsentimental. Cooper, Woo, & Dunkelberg - argue that entrepreneurs exhibit extreme optimism in their decisionmaking processes. Busenitz and Barney - prone to overconfidence and over generalizations. Cole - found there are four types of entrepreneur: the innovator, the calculating inventor, the overoptimistic promoter, and the organization builder. These types are not related to the personality but to the type of opportunity the entrepreneur faces. John Howkins - focused specifically on creative entrepreneurship. He found that entrepreneurs in the creative industries needed a specific set of traits including the ability to prioritise ideas over data, to be nomadic and to learn endlessly. Concept It has assumed super importance for accelerating economic growth both in developed and developing countries. It promotes capital formation and creates wealth in country. It is hope and dreams of millions of individuals around the world. It reduces unemployment and poverty and it is a pathway to prosper. Entrepreneurship is the process of exploring the opportunities in the market place and arranging resources required to exploit these opportunities for long term gain. It is the process of planning, organising, opportunities and assuming. Thus it is a risk of business enterprise. It may be distinguished as an ability to take risk independently to make utmost earnings in the market. It is a creative and innovative skill and adapting response to environment. Promotion Given entrepreneurship's potential to support economic growth, it is the policy goal of many governments to develop a culture of entrepreneurial thinking. This can be done in a number of ways: by integrating entrepreneurship into education systems, legislating to encourage risk-taking, and national campaigns. An example of the latter is the United Kingdom's Enterprise Week, which launched in 2004 which is one of the essential part of organisation.
Outside of the political world, research has been conducted on the presence of entrepreneurial theories in doctoral economics programs. Dan Johansson, fellow at the Ratio Institute in Sweden, finds such content to be sparse. He fears this will dilute doctoral programs and fail to train young economists to analyze problems in a relevant way.
Many of these initiatives have been brought together under the umbrella of Global Entrepreneurship Week, a worldwide celebration and promotion of youth entrepreneurship, which started in 2008. Financial
Financial bootstrapping is a term used to cover different methods for avoiding using the financial resources of external investors. Bootstrapping can be defined as “a collection of methods used to minimize the amount of outside debt and equity financing needed from banks and investors”.
of private credit card debt is the most known form of bootstrapping, but a wide variety of methods are available for entrepreneurs. While bootstrapping involves a risk for the founders, the absence of any other stakeholder gives the founders more freedom to develop the company. Many successful companies including Dell Computers and Facebook were founded this way. There are different types of bootstrapping: Owner financing Sweat equity Minimization of the accounts receivable Joint utilization Delaying payment Minimizing inventory Subsidy finance Personal Debt
Many businesses need more capital than can be provided by the owners themselves, and in this case a range of options are available including: Angel Investors Venture capital investors. Crowd funding Hedge Funds Alternative Asset Management
Some of these source provide not only funds, but also financial oversight, accountability for carrying out tasks and meeting milestones, and in some cases business contacts and experience - in many cases in return for an equity stake.
Entrepreneurship is the practice of starting new organizations or revitalizing mature organizations, particularly new businesses generally in response to identified opportunities. Entrepreneurship is often a difficult undertaking, as a vast majority of new businesses fail. Entrepreneurial activities are substantially different depending on the type of organization that is being started. Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only part-time) to major undertakings creating many job opportunities. Many "high-profile" entrepreneurial ventures seek venture capital or angel funding in order to raise capital to build the business. Angel investors generally seek returns of 20-30% and more extensive involvement in the business. Many kinds of organizations now exist to support would-be entrepreneurs, including specialized government agencies, business incubators, science parks, and some NGOs. he Entrepreneur Entrepreneurs have many of the same character traits as leaders. Similarly to the early great man theories of leadership; however trait-based theories of entrepreneurship are increasingly being called into question. Entrepreneurs are often contrasted with managers and administrators who are said to be more methodical and less prone to risk-taking. Such person-centric models of entrepreneurship have shown to be of questionable validity, not least as many real-life entrepreneurs operate in teams rather than as single individuals. Still, a vast but now clearly dated literature studying the entrepreneurial personality found that certain traits seem to be associated with entrepreneurs: David McClelland (1961) described the entrepreneur as primarily motivated by an overwhelming need for achievement and strong urge to build. Collins and Moore (1970) studied 150 entrepreneurs and concluded that they are tough, pragmatic people driven by needs of independence and achievement. They seldom are willing to submit to authority. Bird (1992) sees entrepreneurs as mercurial, that is, prone to insights, brainstorms, deceptions, ingeniousness and resourcefulness. they are cunning, opportunistic, creative, and unsentimental. Cooper, Woo, & Dunkelberg (1988) argue that entrepreneurs exhibit extreme optimism in their decisionmaking processes. In a study of 2994 entrepreneurs they report that 81% indicate their personal odds of success as greater than 70% and a remarkable 33% seeing odds of success of 10 out of 10. Busenitz and Barney (1997) claim entrepreneurs are prone to overconfidence and over generalisations. Cole (1959) found there are four types of entrepreneur: the innovator, the calculating inventor, the overoptimistic promoter, and the organization builder. These types are not related to the personality but to the type of opportunity the entrepreneur faces. Characteristic of Entrepreneurship The entrepreneur has an enthusiastic vision, the driving force of an enterprise. The entrepreneur's vision is usually supported by an interlocked collection of specific ideas not available to the marketplace. The overall blueprint to realize the vision is clear, however details may be incomplete, flexible, and evolving.
The entrepreneur promotes the vision with enthusiastic passion. With persistence and determination, the entrepreneur develops strategies to change the vision into reality. The entrepreneur takes the initial responsibility to cause a vision to become a success. Entrepreneurs take prudent risks. They assess costs, market/customer needs and persuade others to join and help. An entrepreneur is usually a positive thinker and a decision maker.
The Origins of Entrepreneurship
Where do America's fastest-growing private companies and their founders come from? Not where you think.
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Entrepreneurs these days play a mythical role in American culture. They're our risk-taking adventurers. Heroes of the new economy. And the Inc. 500 -- the nation's fastest-growing privately held companies -- are entrepreneurship incarnate, themselves the stuff of myth. You want life on the leading edge? Daring leaps into the unknown? Ask the founders of Inc. 500 companies how they got their start. Or so we figured. We certainly posed the questions. By way of an eight-page survey and dozens of follow-up phone calls, we asked Inc. 500 CEOs to recall for us how they came to create a company. We probed their background and experience. We asked them where they got the idea for their business, how they implemented it, and of course how they financed the whole thing. Given the mythology of entrepreneurship, we expected tales of inspiration and imagination, of boldly going where no man (or woman) had gone before. So much for expectations. Instead of swashbucklers, we found hardworking, experienced businesspeople -- people such as Jim Hanahan, Bobby N. Frost, and the many others you'll
meet on the pages that follow. Instead of life on the edge, we found them pursuing their fastgrowing ventures in everyday industries, from insurance admin-istration to mirror manufacture. And instead of iconoclastic individualists, the cowboy capitalists of America's dreams, we found people enmeshed and embedded in industries, with rich networks of contacts and colleagues they could draw on to help them build a business. For most, the secret of successful entrepreneurship seemed to lie not just in individual inspiration but in knitting a dozen different interests into one cooperative endeavor. Creating a company was a matter of knowing customers, suppliers, partners, and sources of capital. It was a matter of knowing a marketplace well enough to notice tiny fault lines of change -- fault lines that would one day become sizable niches in the business landscape. For us -- we'd better admit it -- this discovery was a little unsettling. Like the rest of the press, we're constantly on the lookout for heroes. In our case, that means entrepreneurs who are somehow larger than life, who have seemingly inborn traits that allow them to succeed -- and sometimes fail -- in spectacular fashion. We paint verbal portraits of these men and women, hailing them as entrepreneurs of the year or the decade, holding them up as exemplars. The rocketing growth of Inc. 500 companies fits naturally into this scheme of things. We know that somewhere among each year's list will be CEOs who can tell us truly astonishing stories, stories of breathtaking risk and soul-satisfying reward. But the unemotional numbers of the survey teach a different lesson: that these characters are the exception, not the rule, and that the creators of the Inc. 500 companies are down-toearth, practical-minded people for whom, more often than not, building a business was simply the next logical step in a career. Jim Hanahan spent 23 years with an insurance company. Then the market shifted ever so slightly, threatening to undercut a small part of his employer's business. Hanahan decided he'd rather switch than fight and set up a company of his own to capitalize on the new environment. Other stories are similar. After 22 years in the industry, Bobby Frost started a mirror-manufacturing company to take advantage of technology that his employer was ignoring. Tom Scholl spent 13 years with Young & Rubicam in Detroit before setting up his own ad agency, seeking out clients he thought Y&R was overlooking. Risk? Sure -- any of these businesses might have failed. Hard work? That too. "We'd all be president or whatever during the day and work in the plant at night," remembers Frost, who began his business with his brother. Entrepreneurship is never easy. But all these people, like many others we talked to, were venturing into familiar territory with well-delineated
risks. If they failed, well, jobs would have been waiting for them elsewhere in their industries. And the steps they took in the earliest stages -- steps you'll hear more about in subsequent sections -- kept the chances of failure to a minimum. The inescapable conclusion: entrepreneurs are made, not born. Made by their experience. Made by the changing marketplaces in which they find themselves. Granted, maybe there's some quirk of personality, some subtlety of background, that separates these Inc. 500 CEOs from their erstwhile counterparts who kept climbing the corporate ladders. But we don't know how to describe that difference, and we doubt it's the same for everyone. What is the same -- what crops up over and over in the stories we heard -- is what you might call situational entrepreneurship. As individuals, the people aren't so different from the rest of us. But they were working in situations where, thanks to their experience, they knew exactly how to go about building a business. They were smart enough to spot the opportunity and knowledgeable enough to take the right first steps. It's always tempting to glamorize the dramatic adventurers in the business world; like movie stars and major-league ball players they lend a little pizzazz to everything they touch. But maybe it's not so discouraging to find that entrepreneurship is a more mundane matter than it's sometimes portrayed. As the stories and statistics of our survey show, you don't need to be a person of mythical proportions to be very, very successful in building a company.
What is entrepreneurship? Entrepreneurship is the carrying out of a fresh organization or restructuring an organization, which has already been into existence. It is often a complicated enterprise so consequently numerous enterprises find loads of difficulties in survival. This is an entirely different field involving unique personality traits on the part of the entrepreneur, such as good communication skills, patience, foresightedness, and many more traits, which heads his personality to a brighter side. Entrepreneurship has various forms such as sole trading, partnership, etc. The funding of these firms is now easily done by government agencies, science parks, and NGOs. Entrepreneurship firms are now getting enough funds to establish themselves but earlier it was not so. These firms faced a number of difficulties in establishing themselves. Now let us peep into the history of entrepreneurship and the scenario which was prevalent then to understand it better. History of Entrepreneurship Hirsch, Peter and Shepherd revealed that first entrepreneur definition took Marco Polo as an example of an upcoming entrepreneur who made the greatest attempt of establishing the trade routes. The strategy he followed was that he made a contract with a good and dependable venture capitalist on a 25% - 75% basis to get his ventures financed. This was it! From here entrepreneurship got its origin. According to Hisrich, Peter and Shepherd, any person running huge production projects without any kind of threat, but with the aid of economic funds usually, provided by the government was known as an entrepreneur. In other words their work was clerical in nature, as neither did they own the enterprise nor did they finance. The risk factor was attached to the entrepreneurs in the 17th century as the government financed the activities and made it a fixed source of its revenue. The process was like the franchise business, whether the firm goes in profit or
loss the fixed percentage of the government was compulsory to pay. In the 17th century itself, it was the well known author and economist Cantillon, who in his theory regarded entrepreneur as a risk taker. By the 18th century three of them evolved an entirely new theory in which, he made clear cut distinctions amidst entrepreneur and capital provider. He did this distinction due to the outcome of industrialization, which had geared up in the globe. This was the period of Thomas Edison's financial crunch. He wanted to add on to technological advancements but could not do so because of financial constraints. Later he got a way out by generating capital from private sources to finance his experiments in the fields of chemistry and electricity as well. Hisrich, Peter and Shepherd regarded him as an entrepreneur and not as finance provider (venture capitalist). A venture capitalist was supposed to be a person who is the 'Manager' of capital and along with it he also needs to bear the risk factor of business and lately share a high rate of return. As we moved ahead to the late19th and 20th century the entire global scenario changed. There was not much difference in entrepreneurs and managers, both were often regarded as the same. Now in the late 20th century according to Merriam-Webster's online dictionary, "An entrepreneur is one who organizes, manages, and assumes the risk of a business or an enterprise". In the year 2005 Hisrich, Peter and Shepherd regarded entrepreneur as an organizer who controls, systematize, purchases raw materials, arranges infrastructure, throw in his own inventiveness, expertise, plans and administers the venture. Now as we know all about the history of entrepreneurship as a whole let us switch over to the origin of the same in the various economies. 1) Nigerian history of entrepreneurship: Entrepreneurship originated in Nigeria when the production exceeded the consumption levels, which resulted in barter system or double coincidence of wants. This is what made producers realize that if they have surplus, the people will not have to wait for double coincident of wants. Now the exchange of products and services was done freely in the Nigerian market. Lately, total commercialization of the act was done. 2) Evolution of Canadian history of student entrepreneurs: The founder of Canadian association of university student entrepreneurs (C.A.U.S.E.) in 1986 was Ian Aitken, whose main objective was development of student entrepreneurs. (C.A.U.S.E.) was changed to (C.A.S.E) Canadian association of student entrepreneurs in 1987, which also included the college campuses as well. Again the name was changed in 1988 and finally it was the association of collegiate entrepreneurs- Canada (A.C.E.-Canada). Now twenty years from the origin the association is known as "advancing Canadian entrepreneurs Inc." 3) History of entrepreneurship in India: Several entrepreneurial phases in India have passed since independence. A slow pace of development was reflected in the late 1950s and early 1960s, as the entire economy was changing from an agro based economy to an industrialized economy. Soon after that the upcoming entrepreneurs got support from the government as well. A number of SSI sprouted up in late 1960s and 1970s. Here an intensive movement was initialized for further promotion of entrepreneurship. Finally, in 1980 India was able to liberalize imports and began with small and medium scale entrepreneurs. Further, the economic reforms were introduced in 1990. It was a kind of disillusion for the budding Indian entrepreneurs and now in the 2000 the entrepreneurial scenario has undergone a vast change. Now India is taking part in global entrepreneurship as well. 4) Entrepreneurship in Greece: The pillars of ancient Greece history of entrepreneurship are based on few points give by the great historian Peter Connolly. The points are mentioned below: a) The positive aspect of entrepreneurial activities for autonomy was realized, which would enhance liberty and strength of the city.
b) The only bet before entering into entrepreneurial activities was that the people practicing it shall keep within the ethical, social, as well as the moral margins. c) Furthermore, to promote such activities a reward on the city level was to be awarded in the presence of various honors. d) Certain socio-political perks were also announced for such entrepreneurs such as social advancements, liberalization etc. Conclusion: In this era of globalization, the pace of growth of entrepreneurship has increased in leaps and bounds and it has sky as its limit. Entrepreneurship has shown drastic changes in almost all economies of the world providing the mankind with new domains of globalization. It has turned the world into a global village and has made the world a better place to live in.