Nature of Entrepreneurship Flashcards
Describe the term entrepreneur
Entrepreneur is someone who specializes in taking responsibility and making judgmental decisions that affect the location, form and use of goods,resources, or institutions
Describe the term entrepreneurship
Entrepreneurship is the process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychological and social risks and receiving the resulting rewards of monetary and personal satisfaction and independence.
Describe the term entrepreneurial
The term entrepreneurial refers to the qualities, mindset, and actions associated with entrepreneurship. It involves being innovative, proactive, and willing to take risks to identify and seize opportunities, often in uncertain or dynamic environments.
Research aimed at defining entrepreneurship has been done in various disciplines. What are some of the things the various disciplines agree on?
Risk-taking: Entrepreneurs often assume significant risks when launching new ventures, investing resources with no guarantee of returns.
Uncertainty: Entrepreneurship involves navigating unpredictable market conditions and unforeseen challenges, making decision-making difficult.
Creativity and innovation: Entrepreneurs use creative thinking to introduce new products, services, or processes that disrupt or enhance the market.
Perception of opportunities: Entrepreneurs are skilled at identifying market gaps or emerging trends, which others may overlook, and turning them into profitable ventures.
Change: Entrepreneurs embrace and drive change, adapting to or creating shifts in markets, technologies, or consumer behavior to achieve success.
Describe entrepreneurship as a multidimensional concept
Entrepreneurship as a multidimensional concept integrates various social, economic, and psychological aspects. It drives both societal transformation and economic development by identifying and exploiting opportunities to create value.
Describe entrepreneurship as a philosophy of life
Entrepreneurship as a philosophy of life is a way of thinking and acting that applies not only to professional contexts but also to personal, family, and community matters. It emphasizes opportunity recognition, problem-solving, and innovation across all areas of life. Entrepreneurs use this mindset to navigate various challenges, create value, and drive progress, whether in business or personal relationships, showing adaptability and proactive engagement in all aspects of life.
Describe entrepreneurship as an attitude
Entrepreneurship as an attitude is a proactive and resilient mindset focused on innovation, opportunity-seeking, and overcoming challenges. It involves taking initiative, embracing calculated risks, and maintaining a positive, solution-oriented approach to achieving goals, regardless of obstacles.
Describe entrepreneurship as an behavior
Entrepreneurship as a behavior involves actively pursuing opportunities, driving innovation, and showing perseverance in the face of challenges. It includes taking bold, guerrilla-style actions to overcome obstacles and effectively managing risks to achieve success and growth in both business and life.
What are the three classes of economic agents according to Richard Cantillon
land owners, entrepreneurs and labourers.
How did Richard Cantillon define an entrepreneur
He defined an entrepreneur as one who engages in market exchange in order to make a profit assuming the accompanying risk.
Cantillon views the origin of entrepreneurship as being that there is no perfect foresight.
He emphasized the function and not the personality of the entrepreneur
How did J.B Say conceptualise entrepreneurship
He distinguished between profits of those who provide capital and the profits of the entrepreneur who use it.
He defined an entrepreneur as someone who consciously moves economic resources from an area of lower into an area of higher productivity and greater yield.
He views entrepreneurs as change agents in the society.
How does Joseph Schumpeter define entrepreneurs
Views entrepreneurs against the background of economic development.
He defines entrepreneurs as extraordinary persons who promote new combinations or innovations to reform or revolutionalize the patterns of production.
How does Theodore Schultz describe entrepreneurship
Describes entrepreneurship in the perspective of the theory of human capital (which he pioneered)
He defines entrepreneurship as ability to deal with disequilibria that is caused by economic growth.
He views entrepreneurship as ability to deal with disequilibria and not ability to deal with uncertainty.
Use the concept of equilibrium and the circular flow of economic life to explain the role of entrepreneurs according to Joseph Schumpeter
Entrepreneurs create and destroy the structures of the equilibrium through a process defined by carrying out new combinations in production.
According to Schumpeter, entrepreneurs promote new combinations or innovations to reform or revolutionalize the patterns of production by exploiting inventions or untried technological possibilities for producing new commodities or old ones in a new way.
Entrepreneurs create monopolistic positions through these innovations.
Without innovations, no entrepreneurs and without entrepreneurial achievements, no capitalist returns.
Discuss entrepreneurship from the perspective of human capital as described by Theodore Schultz
Theodore Schultz was a critic of the economists’ ideas on entrepreneurship.
Theodore Schultz recognized that the number of entrepreneurs can grow in response to the rewards generated from their skills and abilities. He argued that entrepreneurship is a form of human capital, emphasizing the importance of individual talents and knowledge in driving economic success. Education plays a crucial role in enhancing this stock of human capital by equipping individuals with the skills and knowledge needed to become effective entrepreneurs.
How did Casson define an entrepreneur
Advanced the rational actor model
Defines entrepreneur as someone who specializes in making judgemental decisions about the coordination of scarce resources
Describe entrepreneurship from the perspective of Israel Kirzner
He defines the essence of entrepreneurship as alertness to profit opportunities
Entrepreneurial activities are creative acts of discovery
He emphasized arbitraging as an aspect of entrepreneurship (Arbitraging refers to the practice of taking advantage of price differences in different markets to make a profit.)
Advanced the idea of a penniless entrepreneur.
What are the 5 arguments advanced by Casson
Entrepreneurship as a personality quality which enables certain persons to make decisions
Entrepreneurs have better information than others
Motivated by self interest (rationality)
Different perception of situation from other people
Creates an institution to make markets between himself and other transactors.
Describe Steven Howard and Salman’s approach to entrepreneurs and entrepreneurship
Behavioral approach
Views entrepreneurs in the central function of recognizing and responding to opportunities
Argues that entrepreneurship is a situational phenomenon
Views entrepreneurship as a perspective from which to consider ability of individuals and organizations of all types to adapt and survive in conditions of rapid environmental changes.
Distinguish between entrepreneurs and administrators/managers according to Steven Howard and Salman
STRATEGIC ORIENTATION
Entrepreneur: Driven by perception of opportunities
Manager: Driven by resources currently controlled
COMMITMENT TO OPPORTUNITY
Entrepreneur: Entrepreneurs are often seen as revolutionary because they actively seek out and pursue new opportunities, driving innovation and change.
Manager: In contrast, managers typically take an evolutionary approach to opportunity. They focus on optimizing and improving existing processes, products, and services over the long term.
COMMITMENT TO RESOURCES
Entrepreneur: Entrepreneurs typically adopt a multi-staged approach to resource commitment, meaning they invest resources in small increments as opportunities develop. This strategy allows them to test ideas, gather feedback, and pivot as needed without fully committing significant resources upfront.
Manager: In contrast, managers usually take a single-staged approach to resource commitment, where they make substantial investments once a decision is reached.
CONTROL OF CONTRACTUAL RESOURCES- DECISION TO OWN OR RENT/LEASE
Entrepreneur: Entrepreneurs often prefer to rent or lease resources rather than fully owning them, particularly during the initial stages of their ventures. hey may also opt for episodic ownership, where they purchase assets only when they become essential for scaling or when there is a clear and immediate need.
Manager: managers typically favor full ownership or employment of resources necessary for operations.
MANAGEMENT STRUCTURE
Entrepreneur: Flat with multiple informal networks
Manager: Formalized hierarchy
Define the entrepreneur as defined by Peter Drucker
He defined an entrepreneur as someone who always searches for change, responds to it, and exploits it as an opportunity.
He advocated for innovation as a central building block in entrepreneurship
Define the entrepreneurship as defined by Peter Drucker
Entrepreneurship as a process, an action oriented management style which takes innovation and change as the focus of thinking and behaviour.
What are some of the key research questions for the study of entrepreneurship that are focused on the entrepreneur
- Who become entrepreneurs?
- Why do people become
entrepreneurs? - What are the characteristics of
successful entrepreneurs? - What are the characteristics of
unsuccessful entrepreneurs?
What are some of the key research questions for the study of entrepreneurship that are focused on the entrepreneurial process
- What’s involved in perceiving opportunities
effectively and efficiently? - What are the key tasks in successfully
establishing new organisations? - How are these tasks different from those
involved in successfully managing ongoing
organisations? - What are the entrepreneur’s unique
contributions to this process?
