Definition of Entrepreneurship
The idea of entrepreneurship has a broad range of meanings. On the one side of the discussion, an entrepreneur is an individual of incredibly high aptitude who invokes change, possessing traits observed in only a minuscule portion of the population. On the other extreme of the definition, anyone who desires to work for himself or herself is considered to be an entrepreneur.
The word entrepreneur originates from the French word, entreprendre, which implies “to undertake.” In a business context, it means to begin a business. The Merriam-Webster Dictionary presents the description of an entrepreneur as one who organizes, manages, and assumes the risks of a business or enterprise.
Schumpeter’s Opinion of Entrepreneurship
Austrian economist Joseph Schumpeter’s definition of entrepreneurship placed an emphasis on innovation, such as:
- new products
- new manufacturing procedures
- new markets
- new forms of organization
Entrepreneurship versus Small Business
Many people use the phrases “entrepreneur” and “small business owner” synonymously. Although they may have a lot in common, there are substantial variations among the entrepreneurial enterprise and the small business. Entrepreneurial ventures vary from small businesses in these points:
- Amount of Wealth Creation – rather than merely producing an income stream that displaces regular employment, an effective entrepreneurial venture produces substantial wealth, normally in excess of several million dollars profit.
- Speed of Wealth Creation – although a successful small business can produce several million dollars of profit over a lifetime, entrepreneurial wealth creation often is rapid; for instance, within 5 years.
- Risk – the risk of an entrepreneurial venture has to be high; otherwise, with the incentive of sure earnings many entrepreneurs would be pursuing the idea and the opportunity would be flooded.
- Innovation – entrepreneurship frequently involves substantial innovation beyond what a small business may show. This innovation provides the venture with the competitive advantage that results in wealth creation. The innovation might be in the product or service itself, on in the business processes used to supply it.
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