Economic Perspective on Entrepreneurship

The idea of entrepreneurship is multifaceted. There are assorted, diverse and somewhat contradictory sets of definitions of the term. As a way out the definitional dilemma, this article aims to explain the economic perspective on entrepreneurship.

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

Innovation/Creativity In this approach, entrepreneurs are individuals who perform new combination of productive resources. The key ingredient, the finishing up of new combination (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 includes the initiation of modifications within the type of subsequent enlargement in the quantity of goods produced, and in present type or structure of organisational relationships.

In the entrepreneurship literature, some scholars have questioned using group creation as criterion for entrepreneurship. It has been argued that organizations equivalent to political parties, associations and social teams are always created by people who find themselves not "entrepreneurs." Attention-grabbing as it might sound, the phrases entrepreneurship and entrepreneur have been adopted by assorted scholars to fulfill the innovation and spirit of the time. This is evidenced by makes an attempt to use entrepreneurial thinking to modern group-oriented workplace strategies. Members of such groups - political parties, associations and social teams - therefore, could possibly be called entrepreneurial teams. Besides, activities inherent in such teams have flourished in recent years, and are increasingly being described as social entrepreneurship.

Risk Taking This is another financial variable upon which the financial 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 however risk other personal capital resembling status and the possibility of being more gainfully employed elsewhere.

Resource Mobilization here, entrepreneurship is reflected in alertness to perceived profit opportunities in the economy. This implies the allocation of resources in pursuit of opportunities with the entrepreneur playing the role of an opportunity identifier. This way, entrepreneurs are distinguished by their ability to determine persistent shocks or challenges (of long run opportunities) to the atmosphere, after which to synthesize the information and take decisive actions based upon it.

This article has conceptualized entrepreneurship primarily based on resource mobilization, risk taking, and innovation. Beyond the above-talked about economic variables, entrepreneurship may also be viewed based mostly on a set of personal traits, motives and incentives of the actor in the entrepreneurship act. This is the psychological perspective, the topic of a future article. In addition to the psychological perspective, we shall additionally study the process and small enterprise perspectives.

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