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The concept of entrepreneurship is multifaceted. You can find varied, diverse and somewhat contradictory sets of definitions of the term. As a way out the definitional dilemma, this article aims to describe the economic perspective on entrepreneurship.
The financial perspective rests on certain economic variables which include innovation, risk bearing, and resource mobilization.
Innovation/Creativity Inside this approach, entrepreneurs are people who perform new combination of productive resources. The key ingredient, the carrying out of new combination (or innovation) distinguishes entrepreneurs from non-entrepreneurs. While new venture creation appears as the most prevalent form of entrepreneurship, there exist other kinds. Entrepreneurship also involves the initiation of changes in the form of subsequent expansion within the quantity of goods produced, and in existing form or structure of organisational relationships.
In the entrepreneurship literature, some scholars have questioned the use of organization creation as criterion for entrepreneurship. It has been argued that organizations such as political parties, associations and social groups tend to be created by individuals who are not "entrepreneurs." Interesting as it might sound, the terms entrepreneurship and entrepreneur have been adopted by varied scholars to meet the innovation and spirit of the time. This really is evidenced by attempts to apply entrepreneurial thinking to contemporary team-oriented workplace strategies. Members of such groups - political parties, associations and social groups - as such, might be called entrepreneurial teams. Besides, activities inherent in such groups have flourished at the present time, and also are increasingly 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. Sometimes, 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 for example reputation as well as 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 a chance identifier. This way, entrepreneurs are distinguished by their capability to identify persistent shocks or challenges (of long term opportunities) to the environment, and after that to synthesize the information and take decisive actions based upon it.
This article has conceptualized entrepreneurship according to resource mobilization, risk taking, and innovation. Beyond the above-mentioned financial variables, entrepreneurship may also be viewed based on a group of personal characteristics, motives and incentives of the actor in the entrepreneurship act. This really is the psychological perspective, the subject of a future article. Together with the psychological perspective, we shall also examine the process and small business perspectives.