Text 1 Entrepreneur

Entrepreneur is a loan word from French that refers to a person who undertakes and operates a new venture, and assumes some accountability for the inherent risks. Most commonly, the term entrepreneur applies to someone who establishes a new entity to offer a new or existing product or service into a new or existing market, whether for a profit or not for-profit venture, a business entrepreneur. Business entrepreneurs often have a strong beliefs about a market opportunity and are willing to accept a high level of personal, professional or financial risk to pursue that opportunity.

Research has demonstrated that there is such thing as an “entrepreneurial type”, with certain characteristics linked to the probability of someone being an entrepreneur themselves. There is little good evidence, however, that entrepreneurial type is linked to ultimate success of an entrepreneurial venture. Business entrepreneurs are often highly regarded in US culture as being a critical component of its capitalistic society. Famous entrepreneurs include: Henry Ford (automobiles), J. Pierpont Morgan (banking), Thomas Edison (electricity/ light bulbs), Bill Gates (computer operating systems and applications), Steve Jobs (computer hardware, software), Richard Branson (travel and media) and others.

There is a question: “Are entrepreneurs born or made?” The answer lies in what one author writing in Business Horizons calls “the galaxy of personality traits which characterize individuals who have a propensity to behave entrepreneurially”. He lists nine as being more salient: a desire to achieve: the push to conquer problems, and give birth to a successful venture; hard work: are mostly workaholics; nurturing quality: willing to take charge of, and watch over a venture until it can stand alone; acceptance of responsibility: are morally, legally, and mentally accountable for their ventures; reward orientation: desire to achieve, work hard and take responsibility, but also want to be rewarded handsomely for their efforts, rewards can be in the forms others than money, such as recognition and respect; optimism: live by philosophy that is the best of times, and that anything is possible; orientation to excellence: often desire to achieve something outstanding that they can be proud of; organization: are good at bringing together the components (including people) of a venture; profit orientation: want to make a profit, but the profit serves primarily as a meter to gauge their success and achievement.

The concept of the entrepreneur is intimately associated with three elements: risk bearing, organizing and innovation. Thus, an entrepreneur can be defined as a person who tries to create something new, organizes production and undertakes risks and handles economic uncertainty involved in enterprise.

Entrepreneur as a risk bearer. Richard Cantillon, an Irish man living in France was the first who introduced the term entrepreneur and his unique risk bearing function in the early 18^th century. He defined an entrepreneur as an agent who buys factors of production at certain prices in order to combine them into a product with a view to selling it at uncertain prices in future. Uncertainty is defined as a risk, which cannot be insured against and is incalculable.

Entrepreneur as an organizer. Jean-Baptiste Say, an aristocratic journalist, developed the concept of an entrepreneur a little further. His definition associates an entrepreneur with the functions of co-ordination, organization and supervision. According to him, an entrepreneur is one who combines the land of one, labor of another and the capital of yet another, and, thus, produces a product.

Entrepreneur as an innovator. Joseph A. Schumpeter, for the first time in 1934, assigned a crucial role of innovation to the entrepreneur. Schumpeter considered economic development as a discrete dynamic change brought by an entrepreneur by instituting new combinations of production, i.e. innovation. He also made a distinction between an inventor and an innovator. An inventor is one who discovers new methods and new materials, and an innovator utilizes inventions and discoveries in order to make new combinations.