Economic Perspective on Entrepreneurship

The concept of entrepreneurship is multifaceted. There are varied, diverse and somewhat contradictory sets of definitions of the term. As a way out the definitional dilemma, this article goals to clarify the financial perspective on entrepreneurship.

The economic perspective rests on certain economic variables which embody innovation, risk bearing, and resource mobilization.

Innovation/Creativity In this approach, entrepreneurs are people who perform new combination of productive resources. The key ingredient, the carrying out of new mixture (or innovation) distinguishes entrepreneurs from non-entrepreneurs. While new venture creation seems as essentially the most prevalent type of entrepreneurship, there exist different forms. Entrepreneurship also involves the initiation of modifications within the type of subsequent growth within the quantity of products produced, and in present kind or structure of organisational relationships.

Within the entrepreneurship literature, some scholars have questioned using group creation as criterion for entrepreneurship. It has been argued that organizations akin to political parties, associations and social teams are always created by people who are not “entrepreneurs.” Attention-grabbing as it may sound, the phrases entrepreneurship and entrepreneur have been adopted by various scholars to fulfill the innovation and spirit of the time. This is evidenced by makes an attempt to use entrepreneurial thinking to contemporary group-oriented workplace strategies. Members of such groups – political events, associations and social groups – therefore, could be called entrepreneurial teams. Besides, activities inherent in such groups have flourished in recent years, and are more and more being described as social entrepreneurship.

Risk Taking This is another economic variable upon which the economic perspective revolves. Risk taking distinguishes entrepreneurs from non-entrepreneurs. Usually, entrepreneurs are calculated risk takers. They bear the uncertainty in market dynamics. This notion has its critics and advocates. Entrepreneurs might not necessarily risk her own funds but risk other personal capital resembling reputation and the possibility of being more gainfully employed elsewhere.

Resource Mobilization right here, entrepreneurship is mirrored in alertness to perceived profit opportunities within the economy. This implies the allocation of resources in pursuit of opportunities with the entrepreneur taking part in the function of an opportunity identifier. This way, entrepreneurs are distinguished by their ability to establish persistent shocks or challenges (of long term opportunities) to the surroundings, after which to synthesize the knowledge and take decisive actions based upon it.

This article has conceptualized entrepreneurship based mostly on resource mobilization, risk taking, and innovation. Beyond the above-mentioned financial variables, entrepreneurship can also be seen based on a set of personal traits, motives and incentives of the actor within the entrepreneurship act. This is the psychological perspective, the subject of a future article. In addition to the psychological perspective, we will also look at the process and small enterprise perspectives.

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