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Economic Perspective On Entrepreneurship

Economic Perspective On Entrepreneurship

The idea of entrepreneurship is multifaceted. There are diversified, numerous and considerably contradictory sets of definitions of the term. As a way out the definitional dilemma, this article goals to elucidate the economic perspective on entrepreneurship.

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

Innovation/Creativity In this approach, entrepreneurs are people who perform new mixture 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 probably the most prevalent type of entrepreneurship, there exist other forms. Entrepreneurship additionally includes the initiation of adjustments in the form of subsequent growth in the amount of products produced, and in present type or construction 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 groups are always created by people who are not "entrepreneurs." Interesting as it might sound, the terms entrepreneurship and entrepreneur have been adopted by diverse scholars to meet the innovation and spirit of the time. This is evidenced by attempts to use entrepreneurial thinking to modern group-oriented workplace strategies. Members of such groups - political parties, associations and social teams - subsequently, could possibly be called entrepreneurial teams. Besides, activities inherent in such teams have flourished in recent years, and are more and more being described as social entrepreneurship.

Risk Taking This is another economic 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 may not necessarily risk her own funds but risk other personal capital such as 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 taking part in the role of an opportunity identifier. This way, entrepreneurs are distinguished by their ability to determine persistent shocks or challenges (of long term opportunities) to the surroundings, and then to synthesize the information and take decisive actions based upon it.

This article has conceptualized entrepreneurship based on resource mobilization, risk taking, and innovation. Beyond the above-mentioned economic variables, entrepreneurship may also be viewed primarily based on a set of personal characteristics, motives and incentives of the actor in the entrepreneurship act. This is the psychological perspective, the subject of a future article. In addition to the psychological perspective, we will also look at the process and small business perspectives.

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