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To-date, there is no generally agreed upon definition of entrepreneurship. However a number of important definitions have been put forward by leading thinkers in the discipline. This include: 1) the creation of new enterprises (Low and MacMillan, 1988), 2) the discovery of entrepreneurial opportunities (Kirzner, 1977, 1997), 3) the study of what, how and why entrepreneurs act (Stevenson and Jarillo, 1990), 4) new entry (Lumpkin and Dess, 1996). More recently, in their seminal article that has sparked new interest in research in entrepreneurship worldwide, Shane and Venkataraman (2000) defined it as the study of how and why entrepreneurial opportunities are discovered, evaluated and exploited and who does this.

There has been a paradigm shift in entrepreneurship research, from the psychological school and economic school (that emphasises the role of specific human attributes and assumption of perfect economic rationality approach) to the one that focuses on processes of entrepreneurship. This stems from researchers dissatisfaction with the limitations of both schools to explain the determinants of successful entrepreneurship. For example, the risk taking dimension differ widely among very successful to less successful entrepreneurs hence it is not a powerful factor that determines success. Need for achievement (n-Arch), locus of control and other personality constructs face similar problems. The economic rationalist approach (read Khilstrom and Laffont, 1979) assumes everyone has the same access to information hence those who take the 'plunge' are those who are risk takers. This shift means that the role of learning, social networks, logic of entrepreneurship such as entrepreneurial bricolage and effectual reasoning, how opportunities are discovered-evaluated and exploited etc become the center of attention.

Entrepreneurship is often a difficult undertaking, as a vast majority of new businesses fail. This makes entrepreneurship a different subject from that of strategic management. Entrepreneurship is akin to paediatrics, the medical practice related to the conception, delivery and development of healthy babies rather than adults which is what strategic management. Empirical research shows that the skills and logic of being an entrepreneur can be radically different from that of a manager. The differences between entrepreneurs and managers are well illustrated by a number of articles written by Sarasvathy, a professor of entrepreneurship in Darden Business School.

Entrepreneurial activities are substantially different depending on the type of organization that is being started. Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only part-time) to major undertakings creating many job opportunities. Many "high-profile" entrepreneurial ventures seek venture capital or angel investors in order to raise capital (economics) to build the business. Many kinds of organizations now exist to support would-be entrepreneurs, including specialized government agencies, business incubators, science parks, and some Non-governmental organizations.

History of Entrepreneurship The understanding of entrepreneurship owes much to the work of economist Joseph Schumpeter and the Austrian School of economics. In Schumpeter (1950), an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation. Entrepreneurship forces "creative destruction" across markets and industries, simultaneously creating new products and business models. In this way, creative destruction is largely responsible for the dynamism of industries and long-run economic growth. Despite Schumpeter's early 20th-century contributions, the traditional microeconomic theory of economics has had little room for entrepreneurs in its theoretical frameworks (instead assuming that resources would find each other through a price system).The Economist, March 11, 2006, pp 67.

]For Frank H. Knight (1967) and Peter Drucker (1970) entrepreneurship is about taking risk. The behavior of the entrepreneur reflects a kind of person willing to put his or her career and financial security on the line and take risks in the name of an idea, spending much time as well as capital (economics) on an uncertain venture.

The place of the disharmony-creating and idiosyncratic entrepreneur in traditional economic theory (which describes many efficiency-based ratios assuming uniform outputs) presents theoretic quandaries. William Baumol has added greatly to this area of economic theory and was recently honored for it at the 2006 annual meeting of the American Economic Association.

Entrepreneurship is widely regarded as an integral player in the business culture of American life, and particularly as an engine for job creation and economic growth. Robert Sobel published The Entrepreneurs: Explorations Within the American Business Tradition in 1974.

The Entrepreneur Entrepreneurs have many of the same character traits as leadership. Similarly to the early great man theory of leadership; however trait-based theories of entrepreneurship are increasingly being called into question. Entrepreneurs are often contrasted with managers and administrators who are said to be more methodical and less prone to risk-taking. Although such person-centric models of entrepreneurship have shown to be of questionable validity, a vast but clearly dated literature studying the entrepreneurial personality found that certain traits seem to be associated with entrepreneurs:

David McClelland (1961) described the entrepreneur as primarily motivated by an overwhelming need for achievement and strong urge to build.
Collins and Moore (1970) studied 150 entrepreneurs and concluded that they are tough, pragmatic people driven by needs of independence and achievement. they seldom are willing to submit to authority.
Bird (1992) sees entrepreneurs as mercurial, that is, prone to insights, brainstorms, deceptions, ingeniousness and resourcefulness. they are cunning, opportunistic, creative, and unsentimental.
Cooper, Woo, & Dunkelberg (1988) argue that entrepreneurs exhibit extreme optimism in their decision-making processes. In a study of 2994 entrepreneurs they report that 81% indicate their personal odds of success as greater than 70% and a remarkable 33% seeing odds of success of 10 out of 10.
Busenitz and Barney (1997) claim entrepreneurs are prone to overconfidence and over generalisations.
Cole (1959) found there are four types of entrepreneur: the innovator, the calculating inventor, the over-optimistic promoter, and the organisation builder. These types are not related to the personality but to the type of opportunity the entrepreneur faces.

Characteristics of entrepreneurship

The entrepreneur has an enthusiastic vision, the driving force of an enterprise.
The entrepreneur's vision is usually supported by an interlocked collection of specific ideas not available to the marketplace.
The overall blueprint to realize the vision is clear, however details may be incomplete, flexible, and evolving.
The entrepreneur promotes the vision with enthusiastic passion.
With persistence and determination, the entrepreneur develops strategies to change the vision into reality.
The entrepreneur takes the initial responsibility to cause a vision to become a success.
Risks;Entrepreneurs take prudent risks. They assess costs, market/customer needs and persuade others to join and help.
An entrepreneur is usually a positive thinker and a decision maker.

Contributions of Entrepreneurs

Develop new markets. Under the modern concept of marketing, markets are people who are willing and able to satisfy their needs. In Economics, this is called effective demand. Entrepreneurs are resourceful and creative. They can create customers or buyers. This makes entrepreneurs different from ordinary businessmen who only perform traditional functions of management like planning, organization, and coordination.

Discover new sources of materials. Entrepreneurs are never satisfied with traditional or existing sources of materials. Due to their innovative nature, they persist on discovering new sources of materials to improve their enterprises. In business, those who can develop new sources of materials enjoy a comparative advantage in terms of supply, cost and quality.

Mobilize capital resources. Entrepreneurs are the organizers and coordinators of the major factors of production, such as land labor and capital. They properly mix these factors of production to create goods and service. Capital resources, from a layman's view, refer to money. However, in economics, capital resources represent machines, buildings, and other physical productive resources. Entrepreneurs have initiative and self-confidence in accumulating and mobilizing capital resources for new business or business expansion.

Introduce new technologies, new industries and new products. Aside from being innovators and reasonable risk-takers, entrepreneurs take advantage of business opportunities, and transform these into profits. So, they introduce something new or something different. Such entrepreneurial spirit has greatly contributed to the modernization of our economy. Every year, there are new technologies and new products. All of these are intended to satisfy human needs in more convenient and pleasant way.

Create employment. The biggest employer is the private business sector. Millions of jobs are provided by the factories, service industries, agricultural enterprises, and the numerous small-scale businesses. For instance, the super department stores like SM, Uniwide, Robinson and others employ thousands of workers. Likewise giant corporations like SMC, Ayala and Soriano group of companies are great job creators. Such massive employment has multiplier and accelerator effects in the whole economy. More jobs mean more incomes. This increases demand for goods and services. This stimulates production. Again, more production requires more employment.

Advantages of Entrepreneurship Every successful entrepreneur brings about benefits not only for himself/ herself but for the municipality, region or country as a whole. The benefits that can be derived from entrepreneurial activities are as follows:

Self-employment, offering more job satisfaction and flexibility of the work force

Employment for others, often in better jobs

Development of more industries, especially in rural areas or regions disadvantaged by economic changes, for example due to globalisation effects

Encouragement of the processing of local materials into finished goods for domestic consumption as well as for export

Income generation and increased economic growth

Healthy competition thus encourages higher quality products

More goods and services available

Development of new markets

Promotion of the use of modern technology in small-scale manufacturing to enhance higher productivity

Encouragement of more researches/ studies and development of modern machines and equipment for domestic consumption

Development of entrepreneurial qualities and attitudes among potential entrepreneurs to bring about significancant changes in the rural areas

Freedom from the dependency on the jobs offered by others

The ability to have great accomplishments

Reduction of the informal economy

Emigration of talent may be stopped by a better domestic entrepreneurship climate

Notes See also General:Entrepreneur, Entrepreneurial Economics, Political entrepreneur, Internet Entrepreneur, Entrepreneurship educationBusiness: Business incubators, Business opportunity, Junior enterpriseLists: List of management topics, List of social entrepreneursOther:Bootstrap funding

References and external articles Books and publications

Baumol, W. J., Litan, R. E., Schramm, C. J. (2007) Good Capitalism, Bad Capitalism, Yale University Press
Bird, B. (1992)"The Roman God Mercury: An Entrepreneurial Archetype", Journal of Management Enquiry, vol 1, no 3, September, 1992.
Busenitz, L. and Barney, J. (1997) "Differences between entrepreneurs and managers in large organizations", Journal of Business Venturing, vol 12, 1997.
Cantillon, R. Essai sur la Nature du Commerce in Général. 1759
Casson, M. (1982) The Entrepreneur: An Economic Theory Reprint. 1991.
Casson, M. (2003) The Entrepreneur: An Economic Theory, second edition", Edward Elgar Publishing 2003.

Cole, A. (1959) Business Enterprise in its Social Setting, Harvard University Press, Boston, 1959.

Collins, J. and Moore, D. (1970) The Organization Makers, Appleton-Century-Crofts, New York, 1970.

Corrigan, S (2005) "The Entrepreneur's Guide to the Business cycle"

Drucker, P. (1970) "Entrepreneurship in Business Enterprise", Journal of Business Policy, vol 1, 1970.

Florida, R. (2002) The Rise of the Creative Class: And How It's Transforming Work, Leisure, Community and Everyday Life. Perseus Books Group.

Folsom Jr., Burton W. (1987) The Myth of the Robber Barons, Young America.

Hebert, R.F. and Link, A.N. (1988) The Entrepreneur: Mainstream Views and Radical Critiques. New York: Praeger, 2nd edition.

Knight, K. (1967) "A descriptive model of the intra-firm innovation process", Journal of Business of the University of Chicago, vol 40, 1967.

Kirzner, I (1997) 'Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach', Journal of Economic Literature 35: 60-85

Lumpkin, GT and Dess, GG (1996) 'Clarifying the Entrepreneurial Orientation Construct and Linking it to Performance', Academy of Management Review 21(1): 135-172

McClelland, D. The Achieving Society, Van Nostrand, Princeton NJ, 1961.

Murphy, P. J. (2004). A logic for entrepreneurial discovery. UMI/ProQuest Learning and Information Company.

Murphy, P. J., Liao, J., & Welsch, H. P. (2006). A conceptual history of entrepreneurial thought. Journal of Management History, 12(1), 12–35.

Pinchot, G. (1985) Intrapreneuring, Harper and Row, New York, 1985.

Sarasvathy,S. (2001). What makes entrepreneurs entrepreneurial? Working paper, University of Washington. from http://www.effectuation.org/ftp/effectua.pdf

Schumpeter, J. (1950) Capitalism, Socialism, and Democracy, 3rd edition, Harper and Row, New York, 1950.

Shane S., (2003) A general theory of entrepreneurship : the individual-opportunity nexus in New Horizons in Entrepreneurship series, Edward Elgar Publishing.

Shane, S and Venkataraman, S (2000), 'The Promise of Entrepreneurship as a Field of Research', Academy of Management Review 25(1): 217-226

Stevenson, HH and Jarillo, JC (1990) 'A Paradigm of Entrepreneurship: Entrepreneurial Management', Strategic Management Journal 11: 17-27

StartupStudio Interviews with entrepreneurs including the founders of Southwest Airlines, FeedBurner, Tazo Tea, Coinstar, blip.tv, Esprit, Ravenswood Winery, Spinner Networks, ZipRealty, WordPress

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

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