The idea of entrepreneurship is multifaceted. There are various, diverse and considerably contradictory sets of definitions of the term. As a way out the definitional dilemma, this article goals to elucidate the financial perspective on entrepreneurship.
The economic perspective rests on sure 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 carrying out of new mixture (or innovation) distinguishes entrepreneurs from non-entrepreneurs. While new venture creation seems as the most prevalent type of entrepreneurship, there exist different forms. Entrepreneurship additionally involves the initiation of modifications in the form of subsequent growth in the amount of products produced, and in current form or structure of organisational relationships.
Within the entrepreneurship literature, some scholars have questioned the use of organization creation as criterion for entrepreneurship. It has been argued that organizations reminiscent of political parties, associations and social teams are always created by people who find themselves not “entrepreneurs.” Interesting as it may sound, the terms entrepreneurship and entrepreneur have been adopted by various scholars to satisfy the innovation and spirit of the time. This is evidenced by makes an attempt to use entrepreneurial thinking to up to date staff-oriented workplace strategies. Members of such teams – political parties, associations and social teams – due to this fact, could be called entrepreneurial teams. Besides, activities inherent in such groups have flourished in recent years, and are increasingly being described as social entrepreneurship.
Risk Taking This is one other financial variable upon which the financial perspective revolves. Risk taking distinguishes entrepreneurs from non-entrepreneurs. Generally, entrepreneurs are calculated risk takers. They bear the uncertainty in market dynamics. This notion has its critics and advocates. Entrepreneurs might not essentially risk her own funds but risk other personal capital equivalent to fame 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 enjoying the role of an opportunity identifier. This way, entrepreneurs are distinguished by their ability to establish persistent shocks or challenges (of long run opportunities) to the environment, after which to synthesize the information and take decisive actions based mostly upon it.
This article has conceptualized entrepreneurship primarily based on resource mobilization, risk taking, and innovation. Beyond the above-mentioned financial variables, entrepreneurship may also be seen based 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 look at the process and small business perspectives.