What is Entrepreneurship?
Entrepreneurship is a concept that’s been studied extensively over the years by numerous scholars. This term typically refers to the process of creating or starting and operating a business, including all the risks and rewards that come with it. Despite that, the definition of entrepreneurship remains a topic of debate. In this article, we will explore 20 different definitions put forward by scholars to get a comprehensive understanding of this term.
1. Joseph Schumpeter – Innovation
Joseph Schumpeter defines entrepreneurship as the ‘carrying out of new combinations’ involving the production of new goods or new methods of production, launching a new market, new sources of supply, and the creation of new organizations.
Schumpeter believed that entrepreneurs were the driving force behind economic growth, with innovations creating new opportunities for businesses to profit.
2. Peter Drucker – Innovation and Risk-Taking
Peter Drucker defined entrepreneurship as a practice of “innovation and practice that creates a new dimension of performance” while taking risks. Drucker emphasizes the importance of entrepreneurs’ ability to identify new opportunities, innovate, and make decisions despite uncertainty.
3. Jean-Baptiste Say – Production
Jean-Baptiste Say defined entrepreneurship as the production of things deemed worthy of value in the marketplace.
Say believed that entrepreneurs provided a valuable service by organizing and directing production through their innovative ideas and efforts.
4. Howard Stevenson – Opportunity Pursuit
Howard Stevenson defines entrepreneurship as “the pursuit of opportunity beyond the resources you currently control.” Stevenson emphasizes the notion of taking advantage of opportunities, not just creating them but also pursuing them.
For Stevenson, this pursuit of opportunity often led to the creation of new businesses, eventually leading to wealth generation.
5. William Baumol – Resource Allocation
William Baumol defines entrepreneurship as “an allocation of resources”. Baumol believes that entrepreneurs play a crucial role in society by determining how to use resources such as labor, capital, and natural resources to create value and economic growth.
6. Richard Cantillon – Risk-Taking and Profit Maximization
Richard Cantillon defines entrepreneurship as a process of risk-taking and profit maximization. Cantillon believed that entrepreneurs took on a risk that others were unwilling to take and sought to maximize their returns through their innovations, often leading to a cycle of growth and development.
7. Israel Kirzner – Opportunity Discovery
Israel Kirzner defines entrepreneurship as the process of discovering market opportunities that haven’t been identified yet.
Kirzner argues that entrepreneurs are individuals who have a unique ability to identify gaps in markets and create value by developing creative solutions to fill them.
8. Frank Hyneman Knight – Risk and Uncertainty
Frank Knight believes that entrepreneurship involves taking on risk and uncertainty that arises in both production and markets.
For Knight, entrepreneurs are those who operate in a world of unknowns, making decisions and implementing strategies based on their perception of the future, and their ability to take on risks that others are unwilling to bear.
9. Saras Sarasvathy – Effectual Reasoning
Saras Sarasvathy defines entrepreneurship as a process of reasoning that involves identifying and exploiting available opportunities.
Sarasvathy argues that entrepreneurs use effectual reasoning to develop solutions, leveraging available resources to advance their business goals.
10. Martin Ruef – Social Embeddedness
Martin Ruef believes that entrepreneurship is a socially embedded phenomenon that requires context-specific analysis.
For Ruef, entrepreneurship is influenced by social networks, cultural norms, and institutional factors, where entrepreneurs operate in conjunction with larger institutional forces.
11. Hébert and Link – The Pursuit of Profit
Hébert and Link define entrepreneurship as a function that aims to create, identify and expand profitable opportunities.
For them, entrepreneurs are those who seek to generate profits and create value through their entrepreneurial activities.
12. Mark Casson – Entrepreneurial Functions
Mark Casson defines entrepreneurship as a process involving several functions, such as identifying opportunities, innovating, and bringing about change.
For Casson, entrepreneurship is more than just the creation of new ventures but performing a variety of functions that are crucial for organizational growth.
13. Shane and Venkataraman – Newness
Shane and Venkataraman define entrepreneurship as a process of new value creation through the identification and exploitation of opportunities that are novel and challenging.
For them, entrepreneurs create new markets that did not previously exist, reshaping existing technologies and disrupting the status quo.
14. Greg Fisher – Actionable Steps
According to Greg Fisher, entrepreneurship involves taking actionable steps to achieve specific goals within a given time frame.
For Fisher, entrepreneurs must take responsibility, assess and manage risks, and execute their plans amidst uncertainty.
15. Paul Reynolds – Entrepreneurial Mindset
Paul Reynolds defines entrepreneurship as the “ability to develop an idea into a venture that brings a product or service to the market.”
Reynolds believes that entrepreneurs must possess the mindset of an entrepreneur, which includes qualities such as opportunity-seeking, risk-taking, innovation, and perseverance.
16. Keith Sawyer – Creativity and Collaboration
Keith Sawyer defines entrepreneurship as an act of creativity and collaboration, where entrepreneurs co-create new markets and products.
For Sawyer, entrepreneurship often involves collaborating with others to generate ideas and work together towards creating something new and innovative.
17. R. Zachary Finney – Self-Sufficient and Growth-Oriented
R. Zachary Finney defines entrepreneurship as the development of self-sufficient individuals who drive economic growth by growing businesses.
Finney believes that entrepreneurship involves more than just creating new ventures, but also building organizations that can survive and grow in the long term.
18. William B. Gartner – Action and Empowerment
William B. Gartner defines entrepreneurship as a process of action and empowerment, where entrepreneurs create opportunities for themselves and others.
For Gartner, entrepreneurship requires action, and entrepreneurs must be empowered to act in ways that foster creativity and innovation.
19. Julio De Castro – Creativity and Opportunity Identification
Julio De Castro defines entrepreneurship as a process of creativity and opportunity identification, where the entrepreneur creates value by identifying and exploiting market gaps through innovative ideas.
For De Castro, entrepreneurship requires creativity, and entrepreneurs must strive to identify opportunities that have not yet been identified.
20. Fred Phillips – Problem Solving
Fred Phillips defines entrepreneurship as a problem-solving activity, where entrepreneurs identify problems and create innovative solutions.
According to Phillips, entrepreneurship requires a proactive approach to identifying and addressing problems, with entrepreneurs striving to create solutions that are both practical and innovative.
Entrepreneurship is a widely studied and debated concept that has attracted the attention of several scholars over the years. The definitions discussed above suggest that entrepreneurship involves a variety of functions, including innovation, risk-taking, opportunity pursuit, and problem-solving, to create value and promote economic growth. By understanding the various definitions of entrepreneurship, we can reflect on the qualities necessary to succeed as an entrepreneur, and entrepreneurs can apply these principles to their business ventures.