Importance of entrepreneurship

Now let us go in depth of the reasons why entrepreneurship holds a dominant position in the society?
The following reasons are responsible for the same;-

1) Provides employment to huge mass of people; - people often hold a view that all those who do not
get employed anywhere jump into entrepreneurship, a real contrast to this is that 76% of
establishments of new business in the year 2003 were due to an aspiration to chase openings. This
emphasizes the fact that entrepreneurship is not at all an encumbrance to an economy. What’s
more is that approximately 34 million of fresh employment opportunities were created by
entrepreneurs from the period of 1980. This data makes it clear that entrepreneurship heads nation
towards better opportunities, which is a significant input to an economy.

2) Contributed towards research and development system; - almost 2/3% of all innovations are due to
the entrepreneurs. Without the boom of inventions the world would have been a much dry place to live
in. Inventions provide an easier way of getting things done through better and standardized
technology.

3) Creates wealth for nation and for individuals as well; - all individuals who search business
opportunities usually, create wealth by entering into entrepreneurship. The wealth created by the
same play a considerable role in the development of nation. The business as well as the entrepreneur
contributes in some or other way to the economy, may be in the form of products or services or
boosting the GDP rates or tax contributions. Their ideas, thoughts, and inventions are also a great help
to the nation.

4) Sky-scraping heights of apparent prospects; - the individual gets maximum scope for growth and
opportunity if he enters into entrepreneurship. He not only earns, the right term would be he learns
while he earns. This is a real motivating factor for any entrepreneur as the knowledge and skills he
develops while owning his enterprise are his assets for life time which usually, lacks when a person is
under employment. The individual goes through a grooming process when he becomes an
entrepreneur. In this way it not only benefits him but also the economy as a whole.

5) It is a challenging opportunity for the people: - although entrepreneurship is a challenging task but
in most of the cases the rewards it gives are much more than what one anticipates. It does not only
reward an entrepreneur at financial levels but also on individual level. It provides self satisfaction to
the entrepreneur.

6) Entrepreneurship provides self sufficiency; - the entrepreneur not only become self sufficient but
also provide great standards of living to its employees. It provides opportunity to a number of people
working in the organization. The basic factors which become a cause of happiness may be liberty,
monetary rewards, and the feeling of contentment that one gets after doing the job. Therefore the
contribution of entrepreneurs makes the economy an improved place to live in.

Now as we are through with the importance of entrepreneurship let us become a bit more specific and
enter into individual country details. The importance of entrepreneurship for some countries is given
as under; - a) What role does entrepreneurship play in America: - American economy is well known for
its flexibility, adaptability, and grasping of opportunity and it is all because of prevalence of
entrepreneurial culture in the economy. The above statement can be well supported with the help of
factual data given; taking into account the period 2003 to 2007 the generation of employment has
reached 7.2 millions which is more than the total jobs being generated in Japan and Europe. For this
the economy had to work upon the same for 41 months without any postponement. For these jobs the
American workforces are taking back home hefty amounts. Post tax earnings have gone up by 9.6%
that is $2,840 from the time when the president has taken oven the charge. The growth of America is
in leaps and bounds and that is all because of the insistence and efficiency of American entrepreneurs.
b) Importance of entrepreneurship in European economy: - The importance of entrepreneurial
activities was realized by the European economy in the year 1980. Recently a number of fresh
opportunities for entrepreneurial proposals are being dug up in European economy. The entrepreneurs
are today seen as the catalyst which speeds up the process of creating wealth for the economy,
providing jobs, and providing an assorted range of goods and services to the consumers.
Entrepreneurial undertakings are now being introduced to college going students which could give
them an idea of creating and managing firms, relevance of entrepreneurship firms to European
financial system, uniqueness of monetary ventures, managing human resources, pecuniary
transactions, legality in dealings, and learning entrepreneurial skills. Summation After reading all the
details, facts, and figures regarding the importance of entrepreneurship globally, and in specific
nations we can conclude the higher the levels of entrepreneurship is in the nation the higher is its level
of development. In the earlier decades the importance of entrepreneurship was more than often under
rated and now over a span of time it has become apparent. The crux motive of entrepreneurship is to
transform the dreams into a profitable truth. Lastly, one can wind up by saying that entrepreneurship
strengthens the economic growth of a nation, as well as give power to society, speeds up
modernization and transforms way of thinking of the common man.

ntroduction:

In a world where ideas drive economies, it is no wonder that innovation and entrepreneurship are often
seen as inseparable bedfellows. The governments around the world are starting to realize that in order to
sustain progress and improve a country’s economy, the people have to be encouraged and trained to
think out-of-the-box and be constantly developing innovative products and services. The once feasible
ways of doing business are no longer guarantees for future economic success!

In response to this inevitable change, some governments are rethinking the way the young are educated
by infusing creative thinking and innovation in their nation’s educational curriculum. In the same vein, they
are putting much emphasis on the need to train future entrepreneurs through infusing entrepreneurship
components within the educational system, espec! ially at the tertiary level. Some countries have taken
this initiative to a higher level by introducing entrepreneurship education at elementary schools and
encouraging them to be future entrepreneurs when they are of age. In a series of survey funded by
Kauffman Center for Entrepreneurial Leadership, it was found that nearly seven out of 10 youths (aged
14-19) were interested in becoming entrepreneurs. Being an entrepreneur is now the choice of the new
generation as compared to the preferred career choices of yesteryears such as being a doctor, lawyer or
a fighter pilot. In a recent visit to the bustling city of Shanghai in China, an informal survey was carried out
among Chinese youths by the author. The results of the survey showed that being an entrepreneur,
especially in the field of computer and e-commerce, is perceived as a ‘cool’ career and is an aspiration for
many Chinese youths Prior to the ‘opening up’ of modern China, being an entrepreneur was perceived as
the ou! tcome of one’s inability to hold a good government job and those who dared to venture, were often
scorned at by their peers. Times have indeed changed.

With this change in mindset and the relative knowledge that entrepreneurs bring forth increased job
creations, the awareness and academic studies of entrepreneurship have also heightened. In many
tertiary institutes, many courses of entrepreneurship and innovation are being developed and offered to
cater to the increasing demand. The term "entrepreneurship" has also evolved with numerous variations.
The proliferation of jargons such as netpreneur, biotechpreneur, technopreneur and multipreneur are
coined to keep up with the ever-changing times and business conditions that surround us.

In view of these changes, it is important that the definition of entrepreneurship be refined or redefined to
enable its application in this 21st century. To put it succinctly, "Good science has to begin with good
definitions (Bygra! ve & Hofer, 1991, p13)." Without the proper definition, it will be laborious for
policymakers to develop successful programs to inculcate entrepreneurial qualities in their people and
organizations within their country.
The paper will provide a summary of the definitions of entrepreneurship provided by scholars in this
subject area. The author will also expand on one of the definitions by Joseph Schumpeter to create a
better understanding of the definition of the term "entrepreneurship" as applied in today’s business world.

Entrepreneurship through the Years:

It was discovered that the term ‘entrepreneurship’ could be found from the French verb ‘entreprende’ in
the twelfth century though the meaning may not be that applicable today. This meaning of the word then
was to do something without any link to economic profits, which is the antithesis of what entrepreneurship
is all about today. It was only in the early 1700’s, when French economist, Richard ! Cantillon, described
an entrepreneur as one who bears risks by buying at certain prices and selling at uncertain prices
(Barreto, 1989, Casson 1982) which is probably closer to the term as applied today.

In the 1776 thought-provoking book ‘The Wealth of Nations’, Adam Smith explained clearly that it was not
the benevolence of the baker but self-interest that motivated him to provide bread. From Smith’s
standpoint, entrepreneurs were the economic agents who transformed demand into supply for profits.

In 1848, the famous economist John Stuart Mill described entrepreneurship as the founding of a private
enterprise. This encompassed the risk takers, the decision makers, and the individuals who desire wealth
by managing limited resources to create new business ventures.

One of the definitions that the author feels best exemplifies entrepreneurship was coined by Joseph
Schumpeter (1934). He stated that the entrepreneur is one who applies "innovation" within th! e context of
the business to satisfy unfulfilled market demand (Liebenstein, 1995). In elaboration, he saw an
entrepreneur as an innovator who implements change within markets through the carrying out of new
combinations. The carrying out of new combinations can take several forms:

The introduction of a new good or standard of quality;

-The introduction of a novel method of production;

-The opening of a new market;

-The acquisition of a new source of new materials supply; and

-The carrying out of the new organization in any industry.

Though the term ‘innovation’ has different meanings to different people, several writers tended to see
"innovation" in the form of entrepreneurship as one not of incremental change but quantum change in the
new business start-ups and the goods/services that they provide (egs, Bygrave, 1995; Bygrave & Hofer,
1991).

In the view of Drucker (1985), he perceived entrepreneurship as the creation! of a new organization,
regardless of its ability to sustain itself, let alone make a profit. The notion of an individual who starts a
new business venture would be sufficient for him/her to be labeled as an entrepreneur. It is this
characteristic that distinguishes entrepreneurship from the routine management tasks of allocating
resources in an already established business organization. Though the definition tends to be somewhat
simplistic in nature, it firmly attaches the nature of entrepreneurial action with risk-taking and the bearing
of uncertainty by the individual (Swoboda, 1983)

In a Delphi study, Gartner (1990) found eight themes expressed by the participants that constitute the
nature of entrepreneurship. They were the entrepreneur, innovation, organization creation, creating value,
profit or non-profit, growth, uniqueness, and the owner-manager. The themes could be seen as a
derivative and expansion of Schumpter’s earlier concept.
Expanding on Schump! ! eter’s Definition:

After digesting the numerous definitions of entrepreneurship, one would tend to see a strong link between
these two terms: entrepreneurship and innovation. In retrospect, most of the definitions tended to be, to
some extent, a re-work and expansion of Schumpeter’s definition of entrepreneurship (which is that of
innovation being applied in a business context). As defining the term of ‘innovation’ is highly debatable
and would merit a paper on its own, the author has thus, for convenience, summarised the definition of
innovation. Innovation can be perceived simply as the transformation of creative ideas into useful
applications by combining resources in new or unusual ways to provide value to society for or improved
products, technology, or services.

In the author’s opinion, the difficulties of defining "innovation" could be the reason for the quandary one
finds in attempting to arrive at a clear-cut definition of the term " Entrepreneurship".!

Take for example, if someone starts another run-of-the-mill hot dog stand in the streets of New York, will
he termed as an entrepreneur? According to Drucker’s definition, he will be seen as one. However, if the
above definition by Schumpeter was used as a guideline, the answer is probably ‘NO’. Why? The core of
the matter lies in what is so innovative about setting up another hot-dog stand which are in abundance in
New York. On the contrary, if he is the first one to start a stand selling hot-dogs with Oriental Sweet and
Sour sauce topping; he could be termed as an entrepreneur (even based on Schumpeter’s requirement)
as he has done what others have not done before. In the context of entrepreneurship, creativity and
innovation are key points in the whole scheme of things.

In this manner, by adding "innovative" features to a product or services and setting up a business based
on these additional features to compete in the existing market, new entrants may be ! able to gain this
competitive advantage over existing market players.

In the case of the hot-dog seller, it may be argued that his addition of Oriental Sweet and Sour sauce
toppings may be seen as nondescript. This runs in contrary to some scholars’ definition of
entrepreneurship as requiring quantum changes in the products/ services to be justified as being
entrepreneurial (Bygrave, 1985; Bygrave & Hofer, 1991).

Consistent with creating new products for sale, someone who starts a business by providing a totally new
way of serving his customers/ clients is considered to be entrepreneurial too. Though, it is often argued
that there are no real new products or services in a case where one does not look to the past products
and services for ideas for improvements. Thus, the notion of incremental improvements should be
accepted as being innovative too.

Innovation in the business sense may not necessarily involve, in the physical sense, the introduction o! f a
new product or service. It can be in the form of what is commonly known as creative imitations. For
example, if an individual starts selling a product that is already common in his area or country, he will not
be seen as being entrepreneurial. However, if he is the first to sell the same product in a virgin locale or to
an untouched market segment, he will be seen as an entrepreneur in his own rights.

Take Muhammad Yunus, for example. Yunus became an entrepreneur when he started a micro-loan
program for the poor villagers in a rural part of Bangladesh named Grameen, with only US$26. The loan
was divided among 42 villagers to assist them to buy small items such as combs, scissors, needles and
other necessities to start their own home businesses. In the past 22 years, Grameen Bank has grown with
over $2 billion loans granted. It has now become a model for several micro-loan facilities.

From the following example, Yunus created banking and lending facilities i! n Grameen specifically for the
poor villagers. Banking and lending money activities are not new but Yunus was the first to provide such
facilities in a rural part of Bangladesh and that is definitely innovation and risk-bearing on his part as a
social entrepreneur. In short, innovation need not arise mainly from a new product or service but it could
be an old product or service finding a new market for penetration.
An individual could be termed as an entrepreneur if he or she sells a product or service using new
systems and/ or mediums of marketing, distribution or production methods as a basis for a new business
venture. A good example will be Jeff Bezos, the founder of Amazon, the successful Web-based
bookstore. He was one of the first to sell books on a large scale using an online store and also patented
the one-click system for online buying. Though selling books is not an innovation in itself, Jeff Bezos was
innovative in the use of the Internet then as a viable ! marketing and sales channel for selling books.

Another example from the field of e-commerce is Stuart Skorman, the founder of Reel.com. Reel.com is
essentially one of the first cyber movie store with a very large inventory of over a 100 000 videos. Though
setting a movie store was revolutionary then, Reel.com main distinction was being known as the first
online store to expand by opening an offline store. The founder felt that by doing so, the online store could
be an advertisement for the offline store and vice versa, thus strengthening this click and mortar business
venture- an example of creativity and innovation applied in a profitable business context.

Conclusion:

This paper has started as an attempt to redefine the term of entrepreneurship but ended up ‘updating’ the
wheel, based on the definition as proposed by Schumpeter. The paper expanded on this influential work
by giving examples to illustrate what innovation in entrepreneurship was and hope ! that along the way,
new insights were unearthed in the study of defining entrepreneurship.

In summary, the author hopes that this paper would further encourage the infusion of creative thinking
and innovation within the educational system to nurture future entrepreneurs with a competitive edge. In
the author’s view, the characteristics and capabilities to set up a new business venture based on doing
things that have not done before should be encouraged. Innovation needs to be the cornerstone of
entrepreneurship as opposed to the mere setting up of another new enterprise without implementing
changes or adding features of improvements to the products and services provided and/ or its business
processes.

Read more: Entrepreneurship: What does it REALLY mean?

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