WHAT IS ENTREPRENUERSHIP?
The definition of Entrepreneurship is as diverse as the different functions of the Entrepreneur. A largely held view of the term is that an Entrepreneur is the person who brings about a change and possesses characteristics to implement ideas to benefit the society as a whole. Only a few people are talented enough to manage this change. Apart from this definition, a simple explanation of the term? Entrepreneurship is that it is the person who wants to work for himself.
The Austrian economist Schumpeter defines Entrepreneurship as an event that introduces a new product, a new product method, new markets or a new form of organization. According to Schumpeter, in a perfect scenario, these actions will help generate wealth by creating a demand
in the market from a newly introduced innovation. Thus, a true Entrepreneur is one who combines the input factors in such a manner that will generate a greater output. This greater output from the various input factors will result in creating wealth for the society.
ENTREPRENEURSHIP AND SOCIETY
Entrepreneurship helps the society as well as the entrepreneur, itself. The benefits of an entrepreneurship may be divided into three distinct categories that include the benefits to the nation, benefit to the society and the benefit to the individual.
As already discussed, an effective entrepreneurship venture fosters the production of wealth for a nation. When many of the entrepreneurship produce an output greater than the input, the economy of the nation is directly bolstered. Another advantage to the nation is the creation of jobs for its people. Such a job creation utilizes the human resources of that particular country and helps the natural talent materialize. With the new inventions and development in the new technology a nation can use its resources more effectively. Since, a majority of the entrepreneurship projects are private; it provides an environment of competitiveness which further increases the quality of the products in the national markets. By privatizing the local economy, entrepreneurship ventures help attract eager foreign firms who are otherwise reluctant to do business with the government subsidized economy.
The income level of the average person and the standard of living of a society increase with every successful entrepreneurship project that is undertaken. There is an increase in the employment level on the regional scale. It is also noticeable that an entrepreneurship helps
develop other entrepreneur businesses because of the extra incentives that it can provide to a new entrepreneur in the shape of capital, knowledge and technology. Entrepreneurship helps the societies to fulfill its basic needs in the world that calls for the ?survival of the fittest?. Entrepreneurs lead by example in assisting the society and therefore boost the moral of the public.
An entrepreneur helps himself while creating opportunities for others. It is a fact that by doing so an entrepreneur fulfills his creative urge. Each successful project carried out by the entrepreneur leads to self satisfaction. The greatest satisfaction is derived from the fact that the individual is his own boss and therefore can use its creativity without any fear of repercussion. The quality of every good entrepreneur project is the profit and the fame that such a career provides. Infect, entrepreneurs always enjoy respect and high status in their communities.
FUNCTIONS AND FEATURES OF ENTREPRENUERSHIP
Ever since the French economist Richard Cantillon tired to define the entrepreneurship, there has been a debate on the exact role and functions of an entrepreneur. Apart from the differences in defining the term, all of the economist from Adam Smith, David Ricardo to the modern economist like Mill and Marshall agree that entrepreneurship plays an important role in developing the economy by generating wealth.
Early economist agreed that among the four factors of production, (land, labor, capital and organization) organization is the factor that is the coordinating factor that brings together the other three factors and the entrepreneurship is the element that powers and strengthens the organization. These economists approved that the entrepreneur has a vast understanding of the workings of the industry in which he determines to undertake the venture. Also, the entrepreneurship is a skill that not everyone possesses. The ability to be an entrepreneur is inherited and is displayed by a minority in a population.
A few modern economists believe that entrepreneurship is itself the fourth factor of production that is the most important in driving a successful economy. These experts are of the view that entrepreneur are defined by their risk taking abilities and their intentions to fill in the void because of the existing lack of knowledge about a product. According to them the entrepreneur ventures are carried out where there is a gap in the development of a product. The entrepreneurs work to fill the gap by introducing something that increases the effectiveness of the already existing product.
Still, many recent theories of entrepreneurship stress that it is not only the inherent and risk taking abilities of a person that can define an entrepreneur but also the ability to predict where the opportunity for growth exist. By grasping these favorable opportunities, an entrepreneur works to create a new product by using innovation. The new entrepreneurs are able to track the deficiencies in the demand and supply of the market and provide a new improved product, for which there will be a demand. It is true that a great amount of entrepreneurship projects in the developing countries can be attributed to inventing a new product, very few of the entrepreneurs
can innovate a new product in less developed countries due to limited resources. Therefore, in the third world countries the definition of the entrepreneur can be modified to include those people who try to improve on the existing technology which is already present in the developing countries.
ENTREPRENUERSHIP AND BUSINESS ENVIRONMENT
The state of the society and the government are interdependent on the many entrepreneur projects being undertaken around the world. The role of each entrepreneurship projects differs widely on a global scale due to the disparities in the local business environment. In developing
countries, the process of privatization has helped to eliminate restrictions on the kind of opportunities that exist in the market. Whereas, socialist countries have historically helped entrepreneurs who have shown keen interest in optimizing the plans of the government. On the other side, less developed counties have rarely provided the entrepreneur a thriving atmosphere.
The major hurdles that the new entrepreneurs face are the availability of resources to carry out such a business. The most important is the allocation of funds that comes in the form of money to research and development. Another largely ignored factor is the availability of knowledgeable partners who can run a successful entrepreneurship after its initial stage. This is so because there is a great tendency for the entrepreneur to move from one project to another. The lack of
knowledge on part of the management can halt the development process, if adequate training is not provided. Historically, women owned businesses have not been successful even in the developing countries due to the lack of government support. It remains the most significant
problem in mainly the theoretical and male dominated societies.
Governments can help improvise the entrepreneurial spirit by not only removing the hurdles described above but by creating an industrial atmosphere that is favorable to the structural change. If the resources are allocated from the losers to gainers by purchasing the sales of assets, the entry and exist of the firms and rise and fall of the industries, the governments can effectively allocate resources to the successful entrepreneurs. Experts agree that the most effective method of managing the entrepreneurship industry is to foster the start-ups. Among other techniques, this can be achieved by minimizing the paper work and formalities for the new starter. A single identification number should be issued to every new entrepreneurial project to track down each
case. The authorization process should not take long and the case decisions should be made by a fixed date. Tax treatment of the new subsidiaries and the policies on induction of new employees should be simplified.
TYPES OF ENTREPRENUERSHIP
According to Schumpeter, there are five basic types of entrepreneurship projects. The introduction of a new good in the market is the first of these. By new product, it means something that has been invented and has never been available in the market. In simple terms, whenever a new invention is made, it is seen as an act of entrepreneurship. The second is the introduction of the new method of production. As we know that it is production of goods that forms the pillar of the economy. By new method, it is assumed that the method that is effective and efficient and is able to improve on an existing production method. The third type of entrepreneurship is the opening of a new market. Whenever, such resources are provided that
enables the population to benefit, whether it is an economic, education or any other benefit, it establishes a new opportunity that is known as a new market for using that particular resource. The fourth factor is the conquest of a new source of supply. Economist believes that a new supply source allows the industry to increase its productivity. This new source can be in many forms including the discovery of a natural resource (oil, steel etc) or attracting a labor force that hasn’t been exposed to that industry. The last but not least is the carrying out the new organization of industry that will increase human welfare.
Although, all of the five types of entrepreneurship are important but according to Schumpeter, the most influential is the introduction of the new product in the market (invention) that will directly increase the human welfare. The remaining four factors indirectly affect the human welfare by reducing the cost. Therefore, in order for the remaining four factors to contribute, it is important that the first factor be present and it can only be done with the invention of a new product.
These days rural entrepreneurship is seen as the largest force in the development of the rural areas. Infect, many of the developing countries in the world have use the concept of rural entrepreneurship as a very successful method of deterring rural unrest. The greatest asset that the rural areas have in not the natural resource but it is the vast uncultivated land. Due to the ever growing population of the world and the expansion of the metropolitan areas, governments
reliance on the rural land has significantly increased. These lands are used in the development of industry and establishing manufacturing base. Many countries have used these lands to establish recreational and educational facilities. This is one of the primary reasons that most new institutions of higher education are opening in suburbs and small towns.
Another great advantage in the rural entrepreneurial projects is the availability of cheap labor that can reduce the cost of production. It is also well known that the less technical projects have a chance of success in rural communities because of the closely knit together communities that can carry out the communication much better than the workforce in the cities. The production plants of many large entrepreneur projects are always located in these rural communities because not only does these projects provide employment opportunities but also prosper on behalf of the hard working labor force. Governments and companies are promoting rural entrepreneurship by
providing extra incentives to women who have been allocated to the traditional feminine jobs. Many companies have established training centers in order to educate the rural workforce on technical matters. Historically, governments have eliminated many of the requirements for
the rural entrepreneurs who want to set up an industry in their regional areas. Similarly, many of the entrepreneurs, who want to set up rural industries, are exempt from strict laws that govern the urban development.
PROBLEMS OF RURAL ENTREPRENUERSHIP
Rural entrepreneurship has its own drawbacks. Policies such as keeping of land in protection when there is already an over production and pricing subsidy policies that helps to retain the minimum income are two of the greatest threats to rural development. Due to the remote
access and unavailability of knowledgeable labor, it is difficult to advise the local entrepreneurs who are willing to take risk. Access to capital labor, commercial markets and the managerial staff are hindered due to the remote locations.
In order to alleviate the problems of rural agriculture, a competitive agriculture entrepreneurship under the government supported resources in needed. The government should set aside a quota for the rural entrepreneurship projects and select only the very best ideas that directly benefits not only the community but can compete on a global scale. It is also vital for the success of the rural communities that the development of each rural project remains in the hand of the local
agencies which in return cooperate with the government to oversee the entire project. Entrepreneurship education is the leading factor that can help develop the rural areas. Governments should encourage the foundation of a local network that can communicate with the rural population and try to bridge the gap between the extended and remote communities.