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Common themes when defining entrepreneurship:
1. The entrepreneur
2. Innovation
3. Creative organization
4. Value creation
5. Profit or non-profit
6. Growth
7. Uniqueness
8. Process
1) The narrow view (American view): Entrepreneurship is an economics phenomenon and is a matter of tracing and exploiting opportunities and creating something new, thereby satisfying demand in different markets,new or not.
2) The broad view (Scandinavian view): Entrepreneurship belongs to the whole society, and is a question of creating something new (not necessarily in a business) and thereby satisfying meaningful needs, new or not.
- Most entrepreneurship theories are of the narrow type and are market based. Most are not positioning themselves in place or in time; they are ahistorical and not specified in terms of what culture they are valid.
Three things become natural with these types of theories:
1. Growth is primary
2. Opportunity recognition is distinct and fundamental in entrepreneurial behavior
3. Entrepreneurship is a “special” type of management.
Characteristics of the Narrow View:
• Wickham (2006) claims that the entrepreneur is a manager.
• Entrepreneurial management according to him is characterized by 3 things: a focus on change/ a focus on opportunity/ and a solid stress on management in all situations.
• Drucker (1985) entrepreneurship is a behavior and not any personal characteristics. It is based on concepts and theories rather than on intuition.
• Successful entrepreneurship starts with a good business plan.
• Entrepreneurs are key people in an economy (Allen 2010): Generate economic growth, build new industries, and create new jobs.
Criticisms of the broad view:
• The broad view unlike the narrow one, does not find necessity in specifying which behaviors generally are associated with successful entrepreneurs.
• A result Is normally not very radical (constructive imitations of what exists already, and do not have major effects on citizens). Maker instead of creator.
• Entrepreneurs do not need to be extraordinary people.
Weaknesses in existing entrepreneurship research (narrow view):
• Suggests that entrepreneurship can be measured, predicted, and stimulated in an objective and natural way. This leads to problems as the phenomenon characteristically complex.
• Lets individuals embody entrepreneurship even though entrepreneurial acts are performed by people in cooperation.
• Entrepreneurship is operationalized , or lacking better data, as freshly registered new firms do not lead to the start of traditional companies
• Focus is too narrow at times, excludes female entrepreneurs, ethnic minorities, and cultural sectors.
Is it possible to combine the narrow and the broad views of entrepreneurship?
Some scholars recommend a broad view on entrepreneurship without completely neglecting the narrow view.
What should be kept in mind in a broad view is:
1. Entrepreneurship is as much a matter of improving imitation as genuine creation of what is new.
2. Is it too simple to claim that entrepreneurship needs freedom to prosper. It needs in the highest degree resistance to be triggered to achieve great things.
3. There is a risk in claiming that entrepreneurship needs spectacular behavior and that it excludes more mundane activities close to reality.
- Donald Schon (1930); champions in all technological development
1)Dynamic Conservatism: social system's resistance
2)Selling the idea is then vital
3) To begin with, informal organization is used
4) Champion of the idea arises
-David McClelland (1961); Behavioral sciences as Entrepreneurs are driven by the need for achievement.
Three principle needs are:
1) the need to achieve. 2) the need for power, 3) the need for belonging.
Also pointed out that societies where the need to achieve is norm develop dramatically than others.
-Jean Baptist Say (1855); made a distinction between three economics activities in a
society:-
1) research that generates new knowledge 2) entrepreneurship that applies it 3) workers involved in the production.
- Entrepreneurial function is to build production units ( bring them together) and the reward is profit (different from capitalists return on investments).
- No difference between an entrepreneur and a business man.
-Carl Menger (1871); established 'the subjective perspective in economics' - economics change does not depend on circumstances in themselves, but on specific individuals' awareness and understanding of these circumstances. Entrepreneurs are change agents who transform resources to value added goods and services
- Made the distinction between the entrepreneur and the business leader (capital provider.
- David Birch (1979); Small business research. Pioneering work in the importance and magnitude SMEs have in creating new jobs.
- David Storey ( 1980); Small business research.
1) Whether a small firm is growing is up to the entrepreneur/founder
2) Government is important in the development of SMEs
3)There are major differences in the frequencies in establishment of new firms in a society.
2000's
Broad View
First half of 1900's
1800's
1700's
Second half of 1900's
Narrow View
-Richard Cantillon (1755); First to give Entrepreneurship an analytical thought/economical meaning
- Concept comes from the french word " entreprendre", the middleman between the person who has financial means and wants a mission to be done and, those production resources which are necessary for this mission.
- Interested in the entrepreneurial function and not the entrepreneur as a person.
-Entrepreneurial function: to take risks; buying without knowing what prices will prevail later on.
-Joseph Schumpeter (1934); critical function of the entrepreneur is innovation.
1)Creative Destruction; what is new will voluntarily destroy existing market mechanisms to build new ones 2) People stop being entrepreneurs when hey introduce an innovation ( may continue as just leaders or owners). 3) Entrepreneurs do not consist of any social class. 4) They tend to appear in swarms that lead to rises in the economy (imp for economic cycles).
- Israel Kirzner (1973); clearly stated that entrepreneurs are opportunists. ( look for unbalances in economic systems that can be exploited to start entrepreneurial activities).
- Gifford Pinchot III (1985); Entrepreneur: a person who takes hands-on responsibility to create an innovation of some kind within an organization. He is always the dreamer who figures out how to turn an idea into a profitable reality.
- William Gartner ( 1988); Entrepreneurship: the creation and establishment of new organizations. Importance in asking how are organization created?
"An Entrepreneur is one who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities the necessary resources to capitalize on them. Although many people come up with great business ideas, most of them never act on their ideas. Entrepreneurs do. (Zimmerer and Scarborough,2004) ".
"Entrepreneurial processes are about identifying, challenging and breaking institutional patterns, to depart temporarily from norms and values in the society. (Lindgern and Packendoff,2007) ".