Entrepreneurship | What, Why and Types.

The word “entrepreneurship” originates from a French word “entreprendre” which means “one who undertakes an endeavor.”

Can be simply defined as starting a new business

Entrepreneurship is a process of identifying opportunities, allocating resources and creating value, bearing in mind the financial, social and psychological risks associated with it.

The ability to create something from practically nothing

Many economists have defined entrepreneurship in their own way.

Some view it as a risk taking ability, while others define it as a process of innovation where entrepreneurs provide new goods and services to market which are currently not being supplied.

Most economists agree to the fact that entrepreneurship is a key ingredient for stimulating economic growth and employment opportunities in all societies.

One of the four mainstream economic factors – capital, land, labor and entrepreneurship, which are briefly defined below:

Capital can be represented by both, monetary resources which are used by companies to purchase land, natural resources and other capital goods, and physical assets used to produce goods and services

Land includes natural resources like farms, fisheries, timber, etc.

These natural resources are turned into consumer goods by various companies

The human capital is termed as labor which plays a quintessential role in converting raw and natural resources into consumer goods

Entrepreneurship, as a concept, existed way back in the 17th century and was also a major topic in economic essays throughout the 18th and 19th century.

Various cultural factors and the government regulatory policies play a crucial role in influencing entrepreneurship in a society.

A society that accords higher status to self-made individuals is very likely to encourage entrepreneurship.

The term “entrepreneurship” was earlier associated with activities like launching a new business or a company, also termed as a startup company.

In recent years, however, the term has acquired a much broader meaning with political, social and knowledge entrepreneurship also falling under the purview of its definition.

Political entrepreneurship

The practice of acquiring income by exploiting rent-seeking activities by politicians and political beneficiaries

An act of policy creation to appease the public in general and in turn further one’s political career

Social entrepreneurship

The application of entrepreneurial principles to create and manage an enterprise to bring about social changes

Often seen as an alternative to mainstream capitalism so as to tackle the problems that the profit driven businesses and government have failed to find an answer to

Knowledge entrepreneurship

The ability to recognize or create an opportunity and take action aimed at realizing the innovative knowledge practice or product

Does not concentrate on monetary profit.

The focus is on the throughput of knowledge and the research aspect

Suitable for educational institutions, educators and researchers

Who Is an Entrepreneur?

A person who takes the risk of converting new ideas into reality

He not only assumes the role of a risk taker but also that of an innovator and resource assembler.

In the words of Peter F. Drucker, an entrepreneur is:

One who considers the changes that take place in the market place to do business

Innovation is his tool

Changes in the form of communications from typewriters to personal computers to internet – validate his ideas

A risk taker, monopolist, capitalist employer seeking profit and coordinator are some of the terms commonly associated with entrepreneurs.

Why Do People Become Entrepreneurs?

More and more people are setting up their own businesses and venturing into the world of entrepreneurship, even in these turbulent times as far as economy is concerned.

There are a few reasons why people choose to become entrepreneurs:

Own boss:

One of the most common answers that people come up with to start their own venture

Wanting to be one’s own boss has got nothing to do with being a bad or an incapable employee

It is basically the desire to start one’s own company or simply a frustration of working for others who do not care

Financial independence:

The other reason why people pursue entrepreneurship

Many people are lured into it for the want of financial independence and the desire to be rich

Can prove to be a very profitable thing, but also involves a lot of uncertainty

Pursue one’s idea:

Also one of the major reasons behind people getting into this field

A lot of people feel the need of recognition, which they could not get while working for somebody else

They might be having a solution to a problem they face every day and the vision to turn that solution into a profitable venture

They might be having the vision, which instills a feeling of turning their vision into reality

Also, having one’s business brings a lot of satisfaction and a deep sense of achievement