A Definition of Entrepreneurship

A Definition of Entrepreneurship

The concept of entrepreneurship has a wide range of meanings. On the one extreme an entrepreneur is a person of very high aptitude who pioneers change, possessing characteristics found in only a very small fraction of the population. On the other extreme of definitions, anyone who wants to work for himself or herself is considered to be an entrepreneur.

The word entrepreneur originates from the French word, entreprendre, which means "to undertake." In a business context, it means to start a business. The Merriam-Webster Dictionary presents the definition of an entrepreneur as one who organizes, manages, and assumes the risks of a business or enterprise.

Schumpeter's View of Entrepreneurship

Austrian economist Joseph Schumpeter 's definition of entrepreneurship placed an emphasis on innovation, such as:

• new products
• new production methods
• new markets
• new forms of organization

Wealth is created when such innovation results in new demand. From this viewpoint, one can define the function of the entrepreneur as one of combining various input factors in an innovative manner to generate value to the customer with the hope that this value will exceed the cost of the input factors, thus generating superior returns that result in the creation of wealth.

Entrepreneurship vs. Small Business

Many people use the terms "entrepreneur" and "small business owner" synonymously. While they may have much in common, there are significant differences between the entrepreneurial venture and the small business. Entrepreneurial ventures differ from small businesses in these ways:

1. Amount of wealth creation - rather than simply generating an income stream that replaces traditional employment, a successful entrepreneurial venture creates substantial wealth, typically in excess of several million dollars of profit.

2. Speed of wealth creation - while a successful small business can generate several million dollars of profit over a lifetime, entrepreneurial wealth creation often is rapid; for example, within 5 years.

3. Risk - the risk of an entrepreneurial venture must be high; otherwise, with the incentive of sure profits many entrepreneurs would be pursuing the idea and the opportunity no longer would exist.

4. Innovation - entrepreneurship often involves substantial innovation beyond what a small business might exhibit. This innovation gives the venture the competitive advantage that results in wealth creation. The innovation may be in the product or service itself, or in the business processes used to deliver it.

Recommended Reading

Peter F. Drucker, Innovation and Entrepreneurship

Defining Technopreneurship

Entrepreneurship
In his book titled “Innovation and Entrepreneurship”, Peter F. Drucker describes an entrepreneur as not just someone who starts his own, new and small business: You can be a corporate employee and still be entrepreneurial. He further states that not every new small business is entrepreneurial because entrepreneurship is the practice of consistently converting good ideas into profitable commercial ventures. This excludes that umpteenth lechon manok restaurant that opened downtown or that new sari-sari store that’s the 25th to open within a 200-meter radius but includes McDonald’s for (profitably) transforming fast food into what it is today.

Innovation
In the same book, Prof. Drucker challenges common knowledge by showing, through real-world examples, that innovation does not have to be technical, and does not have to be a “thing” altogether. Rather, he defines innovation as the systematic act of turning “something” (product, idea, information, technology, etc.) into a resource that is of high value to its target market. He cites the example of transforming bauxite–formerly considered a nuisance because it did nothing but make land infertile–to aluminum which is now considered important to the world economy because of its many applications.

Technology
Technology is not necessarily “hi-tech”, indeed does not always have to be technical. Technology is simply defined as applications of knowledge to human work. Thus accounting, Economic Order Quantity, word-of-mouth marketing, and well-defined mentoring programs are all technologies.

What is technopreneurship then?
As I understand it, technopreneurship is, by a large part, still entrepreneurship. The difference is that technopreneurship is either involved in delivering an innovative hi-tech product (e.g. Intel) or makes use of hi-tech in an innovative way to deliver its product to the consumer (e.g. eBay), or both (e.g. most pharmaceutical companies).