The idea of entrepreneurship is multifaceted. There are diverse, diverse and considerably contradictory sets of definitions of the term. As a way out the definitional dilemma, this article aims to explain the financial perspective on entrepreneurship.
The financial perspective rests on sure financial variables which embrace innovation, risk bearing, and resource mobilization.
Innovation/Creativity In this approach, entrepreneurs are individuals who carry out 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 seems as essentially the most prevalent form of entrepreneurship, there exist different forms. Entrepreneurship additionally entails the initiation of adjustments within the form of subsequent expansion within the amount of goods produced, and in existing type or structure of organisational relationships.
In the entrepreneurship literature, some scholars have questioned the use of group creation as criterion for entrepreneurship. It has been argued that organizations corresponding to political parties, associations and social groups are always created by people who are not “entrepreneurs.” Interesting as it would possibly sound, the phrases entrepreneurship and entrepreneur have been adopted by different scholars to fulfill the innovation and spirit of the time. This is evidenced by attempts to apply entrepreneurial thinking to modern crew-oriented workplace strategies. Members of such groups – political parties, associations and social groups – subsequently, could be called entrepreneurial teams. Besides, activities inherent in such groups have flourished lately, and 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. Typically, 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 different personal capital resembling fame and the possibility of being more gainfully employed elsewhere.
Resource Mobilization here, entrepreneurship is reflected in alertness to perceived profit opportunities within the economy. This implies the allocation of resources in pursuit of opportunities with the entrepreneur playing the role of an opportunity identifier. This way, entrepreneurs are distinguished by their ability to establish persistent shocks or challenges (of long term opportunities) to the atmosphere, after which to synthesize the information and take decisive actions based upon it.
This article has conceptualized entrepreneurship primarily based on resource mobilization, risk taking, and innovation. Past the above-talked about financial variables, entrepreneurship will also be seen primarily based on a set of personal traits, motives and incentives of the actor within the entrepreneurship act. This is the psychological perspective, the subject of a future article. In addition to the psychological perspective, we will additionally look at the process and small enterprise perspectives.
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