entrepreneur

 

(än'trəprənûr') [Fr.,=one who undertakes], person who assumes the organization, management, and risks of a business enterprise. It was first used as a technical economic term by the 18th-century economist Richard Cantillon. To the classical economist of the late 18th cent. the term meant an employer in the character of one who assumes the risk and management of business; an undertaker of economic enterprises, in contrast to the ordinary capitalist, who, strictly speaking, merely owns an enterprise and may choose to take no part in its day-to-day operation. In practice, entrepreneurs were not differentiated from regular capitalists until the 19th cent., when their function developed into that of coordinators of processes necessary to large-scale industry and trade. Joseph Schumpeter and other 20th-century economists considered the entrepreneur's competitive drive for innovation and improvement to have been the motive force behind capitalist development. Richard Arkwright in England and William Cockerill on the Continent were prominent examples of the rising class of entrepreneurial manufacturers during the Industrial Revolution. Henry Ford was a 20th-century American example. The entrepreneur's functions and importance have declined with the growth of the corporation.

Bibliography

See J. Schumpeter, The Theory of Economic Development (1934); J. W. Gough, The Rise of the Entrepreneur (1969); O. F. Collins, The Organization Makers (1970).

An entrepreneur (a loanword from French introduced and first defined by the Irish economist Richard Cantillon) is a person who operates a new enterprise or venture and assumes some accountability for the inherent risks. A female entrepreneur is sometimes referred to as an entrepreneuse.

The newly and modern view on entrepreneurial talent is a person who takes the risks involved to undertake a business venture. In doing so, they are said to efficiently and effectively use the factors of production. That is land (natural resources), labor (human input into production using available resources) and capital (any type of equipment used in production i.e. machinery). A business that can efficiently manage this and in the long-run hopefully expand (future prospects of larger firms and businesses), will become successful.

Entrepreneurship is often difficult and tricky, as many new ventures fail. In the context of the creation of for-profit enterprises, entrepreneur is often synonymous with founder. Most commonly, the term entrepreneur applies to someone who creates system to offer a product or service in order to obtain certain profit. Business entrepreneurs often have strong beliefs about a market opportunity and are willing to accept a high level of personal, professional or financial risk to pursue that opportunity. Business entrepreneurs are viewed as fundamentally important in the capitalistic society. Some distinguish business entrepreneurs as either "political entrepreneurs" or "market entrepreneurs."

Definition and terminology

An entrepreneur is someone who seeks to capitalize on new and profitable endeavors or business; usually with considerable initiative and risk.

Etymology

The word "entrepreneur" is a loanword from French. In french the verb "entreprendre" means "to undertake", with "entre" coming from the latin word meaning "between". In French a person who performs a verb, has the ending of the verb changed to "eur", comparable to the "er" ending in English. Therefore, an entrepreneur is an undertaker, a person who undertakes a task.

Enterprise is similar to and has roots in, the French word "entreprise", which is the past particple of "entreprendre".

Entrepreneuse is simply the French feminine word for "entrepreneur".

Entrepreneur as a leader

Scholar R. B. Reich considers leadership, management ability, and team-building as essential qualities of an entrepreneur. This concept has its origins in the work of Richard Cantillon in his Essai sur la Nature du Commerce en Général (1755) and Jean-Baptiste Say (1803) in his Treatise on Political Economy.

A more generally held theory is that entrepreneurs emerge from the population on demand, from the combination of opportunities and people well-positioned to take advantage of them. The entrepreneur may perceive that they are among the few to recognize or be able to solve a problem. In this view, one studies on one side the distribution of information available to would-be entrepreneurs (see Austrian School economics) and on the other, how environmental factors (access to capital, competition, etc.) change the rate of a society's production of entrepreneurs.

A prominent theorist of the Austrian School in this regard is Joseph Schumpeter who sees the entrepreneur as innovator.

See also

General

Independent contractor, Internet Entrepreneur, Consultant, E-Myth

Entrepreneurship education

Master of Enterprise, Junior Enterprise, Young Enterprise, Business and Enterprise College

References and external articles

General information

• Baumol, W.J., Litan, R.E., Schramm, C.J. (2007). Good capitalism, bad capitalism, and the economics of growth and prosperity. Yale University Press.
• Binks, M. and Vale, P. (1990). Entrepreneurship and Economic Change. Maidenhead: McGraw-Hill.
• Brouwer, M.T. (2002). 'Weber, Schumpeter and Knight on entrepreneurship and economic development'. Journal of Evolutionary Economics, vol. 12(1-2), p. 83.
• Cantillon, R. (1755). Essai sur la Nature du Commerce en Général
• Casson, M. (2005). 'Entrepreneurship and the theory of the firm'. Journal of Economic Behavior & Organization, 58 (2) , 327-348
• Hebert, R.F. and Link, A.N. (1988). The Entrepreneur: Mainstream Views and Radical Critiques. New York: Praeger, 2nd edition.
• Kirzner, I. (1973). Competition and Entrepreneurship.
• Knight, F.H. (1921/61). Risk uncertainty and profit. Kelley, 2nd edition.
• Schumpeter, J.A. (1934). The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle
• Spengler, J.J. (1954).
• Schramm, Carl (2006). The Entrepreneurial Imperative. Harper Collins

Theories of the Firm

• Long, W. (1983). The meaning of entrepreneurship. American Journal of Small Business, 8(2), 47-59. (c971086)
• Outcalt, Charles, (2000). 'The Notion of Entrepreneurship: Historical and Emerging Issues'. Cellcee digest. Kauffman Center for Entrepreneurial Leadership.
• Reich, R. B. (1987, May/June). Entrepreneurship reconsidered: The team as hero. Harvard Business Review. (c96187)

Popular Literature

• "The E-Myth Revisited", Harper Collins Press, 1995. ISBN 9780887307287
• "The Monk and the Riddle", Harvard Business School Press, 2000. ISBN 1578511402

External links

• The Foundation of Entrepreneurship The online resource for building entrepreneurial economies.
• Joint OECD / Eurostat Programme on Entrepreneurship Indicators International effort on a harmonization of entrepreneurship indicators and determinants
• U.S. Small Business Administration
• Starting a Business - from U.S. Internal Revenue Service
• Ernst and Young - Entrepreneur of the Year Awards
• The Entrepreneurs' Organization - a membership-based networking organization that connects entrepreneurs with thousands of their peers around the world
• YEuth.org - Young Entrepreneur Non-Profit Organization

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