ECONOMIC THEORY OF

ENTREPRENEURSHIP

PRESENTED BY:
NISHA KUTAR AND MANISHA
VARSHNEY

BBA V SEMESTER
 WHAT IS THEORY?

A well-substantiated explanation acquired through

the scientific method and repeatedly tested and
confirmed through observation and
experimentation.
 ENTREPRENEURSHIP

Entrepreneurship is defined as:

- The act of being an entrepreneur.
That is, an entrepreneur is one
-who undertakes innovations, finance and
business activities.
-in an effort to transform innovations into
economic goods or services.
ECONOMIC THEORY OF ENTREPRENEURSHIP

Entrepreneurship and economic growth take place

when economic conditions are favourable.
Economic incentives are the main motivators.
Economic incentives includes:
-taxation policy
-industrial policy
-sources of finance and raw material
-infrastructure availiability
 ECONOMIC THEORY OF
ENTREPRENEURSHIP

-investment and marketing opportunities

-access to information
a. Market Conditions
b. Technology etc.
Richard Cantillon, an Irish French Economist viewed
- Entrepreneurs as an agent who buys factors of
production at certain prices in order to combine
them with a view to selling it at uncertain prices in
future.
 ECONOMIC THEORY OF
ENTREPRENEURSHIP

He illustrated farmer as an entrepreneur, who pays

out contractual incomes to the landlords and
labourers, which are certain while sells his crops at a
price , which is uncertain.
Entrepreneur as a Risk
Taker.
 CRITICAL EVALUATION

According to William J. Baumol, the economic

theory has failed to provide a satisfactory analysis of
either the role of entrepreneurship or its supply.
 Traditional model treat the entrepreneurial
function like a managerial function.
THANK YOU