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Entrepreneurship - A Brief Introduction


Entrepreneurship is the practice of designing, starting and running a new company, which is often initially a small business. The people who create these companies are called entrepreneurs.

Entrepreneurship was described as the "capability and willingness to grow, arrange and manage a company enterprise alongside any of its risks so as to make a profit". While definitions of entrepreneurship normally revolve around the start and running of businesses, due to the high risks involved with launching a start-up, an important proportion of start-up companies have to close due to "lack of financing, poor business decisions, an economic crisis, lack of market demand--or a mixture of all them.

Entrepreneurship is the act of becoming an entrepreneur, or even "an owner or director of a business enterprise who makes money through danger and initiative". Entrepreneurs act as supervisors and oversee the launch and expansion of a venture. Entrepreneurship is the process by which an individual or a staff identifies a business opportunity and acquires and deploys the necessary resources needed for its exploitation.

Early 19th century French economist Jean-Baptiste Say provided a broad definition of entrepreneurship, saying that it "shifts economic resources out of an area of lower and into a place of higher productivity and higher yield". Entrepreneurs create something fresh, something different--they change or transmute values. Irrespective of the firm size, big or small, they could partake in entrepreneurship opportunities. Four criteria are required by the opportunity.

First, there needs to be opportunities or situations to recombine tools to create profit. Second, entrepreneurship requires differences between individuals, such as accessibility to certain people or the capability to comprehend details regarding opportunities. Third, taking on risk is a necessary. The entrepreneurial process requires the organization of people and resources.

The entrepreneur is a element in microeconomics and also the analysis of entrepreneurship reaches into the work of Richard Cantillon and Adam Smith in the late 17th and early 18th centuries. However, entrepreneurship was mostly ignored theoretically until the late 19th and early 20th centuries and empirically before a profound resurgence in business and economics since the late 1970s. In the 20th century, the understanding of entrepreneurship owes much to the work of economist Joseph Schumpeter in the 1930s and other Austrian economists such as Carl Menger, Ludwig von Mises and Friedrich von Hayek.

According to Schumpeter, an entrepreneur is someone who's willing and ready to convert a brand new idea or innovation into a successful innovation. Entrepreneurship employs what Schumpeter called "the gale of creative destruction" to replace in whole or part poor innovations across markets and industries, simultaneously producing new products including new business models. In this way, creative destruction is largely responsible for its dynamism of businesses and long-run financial development.

The supposition that entrepreneurship leads to economic growth is an interpretation of the residual in endogenous growth theory and as this is hotly debated in academic economics. An alternative explanation typified by Israel Kirzner suggests that the majority of innovations may be more incremental improvements such as the replacement of paper using plastic in the making of drinking straws.

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