Entrepreneurship

Topic: The History and the study of the Entrepreneurship in the Historical logic

Serial no content

1 Entrepreneurship, what is entrepreneurship, approaches, and basic history

2 Kinds of approaches, the neo classic approach and the classic approach.

3 School of thoughts and the different ways its is defined

4 Era’s of entrepreneurship, the different decision of entrepreneurship

Entrepreneur

• The starter of the business

• The initiator

• The launcher

• The risk taker

• The renewal

• The economic developer

• The country driver

Entrepreneur

• An entrepreneur (i/ˌɒntrəprəˈnɜr) is an owner or manager of a business enterprise who makes money through risk and initiative. The term was originally a loan word from French and was first defined by the Irish-French economist Richard Cantillon.

Cont’d

• Jean-Baptiste Says, a French economist, is believed to have coined the word "entrepreneur" in the 19th century - he defined an entrepreneur as "one who undertakes an enterprise, especially a contractor, acting as intermediately between capital and labor

Cont’d

• Cantillon recognizes in his economic system three types of agents:

• Landowners (capitalists)

• entrepreneurs (initiators)

• hirelings (wage workers)

some great entrepreneurs

The micro soft entrepreneur earning the highest money in the world Bill Gates

Ingvar Kamprad one of the leading brands in the wood ply's his business is now all over the world and is a MNB

Steve Jobs the initiator of the apple I-phones etc

The Entrepreneurship

• 18th century French writer, Bernard F. de Belidor, who defines entrepreneurship as buying labour and materials at uncertain prices and selling the resultant product at contracted prices.

Cont’d

• Entrepreneurship as a concept entered the economic literature mainly through the writings of Richard Cantillon (1680-1734) whose Essai Sur la Naiuredu Commerce en General, published in 1755

Cont’d

• According to Cantillon, it is the entrepreneur’s reaction to price movements that continuously brings about a tentative balance between supply and demand in specific markets. A distinguishing feature of Cantillon’s analysis was his emphasis on ’risk’

Cont’d

• For a long time, there was no equivalent to the term ’entrepreneur’ in the English language. Three words were commonly used to connote the sense the French term carried: adventurer, undertaker and projector. They were used interchangeably and lacked the precision and characteristic of a scientific expression.

approaches

The are two approaches.

1. Classic Economic approach

2. Neo classic Economic approach

Classic economic approaches

• By the middle of the l8th century new forms of production, social relations, governance and social thought began to emerge.

• it is commonly believed to have coincided with the publication of Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations ( 1776) which set the trend for economic analysis and theorizing in the 18th century

• Smith strangely silent about the entrepreneurial function in the economy.

Cont’d

• Smith simply fails to distinguish the entrepreneur from other industrious people of economy

• This non treatment of entrepreneurship by smith set the trend for later economists.

• Like ricardo who assumed that capitalist act rationally in seeking to maximize profits but fail to explain the risk involved in investing

Cont’d

• The break with the smithian tradition came about with the publication of his “defence of usuary” by jeremy bentham.

• Bentham point out that how laws against usury limit the overall capital for investment and how these laws move away foreign money from domestic capital markets

• Jean Beptiste Say , a french economist also made some important contribution.

• Writers in Germany, too, made a theoretical distinction between the entrepreneur and the capitalist

• Thunen came to the limelight following his seminal contribution to location theory in his celebrated work The Isolated State (1850). He clearly distinguished the return to the entrepreneur from that to the capitalist. ’Entrepreneurial gain’ in Thunen’s view is profit less (i) interest on invested capital, (ii) insurance against business losses and (iii) the wages of management.

Cont’d

• Thunen also highlighted the differences between management and entrepreneurship.

Neo classic economic approach

• This new era focuses its attention on equilibrium results rather than economic processes

• Casson (1982/2003, p. 23) the entrepreneur is someone who “specializes in taking judgmental decisions about the coordination of scarce resources”. because of the characteristics of the real world listed above,

• entrepreneurs will differ in decisions and actions. The essence of entrepreneurship is therefore about doing things differently.

Cont’d

• As long as opportunities for improved coordination and innovation exist entrepreneurial services will be socially valuable.

• Trying to synthesize all this, we will settle on the following definition of entrepreneurship (partly adapted from Wennekers and Thurik 1999): the ability and willingness of individuals, both on their own and within organizations to:

• (i) innovate, i.e. perceive and create new economic opportunities;

• (ii) face uncertainty, i.e. introduce their ideas in the market, by making decisions on location, form and use of the resources and institutions.

Austrian school of thought

(iii) manage their business by competing with others for a share of that market.

SCHUMPETERIAN MODEL• The man who brought the entrepreneur to center

stage was Schumpeter• He was born in austria• Schumpeter expresses his views in his “theory of

economic development” which was publish in 1911.• Schumpeter succeded in integrating the dynamics of

technology with business enterprise.

• He conceptualized the equilibrium process, where the production is invariant and factors substitution possible within the limits of known technological horizen.

• The agent who disturb this stationary system and lead the economic system to new direction is entrepreneur

• Schumpeter refined the role of the entrepreneur in economic theory as an endogenous force in the economy.

Neo austrian school

• ISRAEL KIRZNER• Kirzner has emerged in recent years as the most brilliant

exponent of neo Austrian school.• He says that equilibrium is a state in which each decision

correctly anticipate all other decisions.• He says that the essence of entrepreneurship consist of the

alertness in market participants to market opportunities.• According to kirzner , the entrepreneur is a person who

discover the opportunity at low prices and sell them at high prices.

• By ignoring and concept of risk , kirzner theory cannot explain entrepreneur losses.

• Here we will not attempt to account for every author that has somehow addressed the issue, but rather to provide a systematic survey of the more representative contributions of a given idea of entrepreneurship

• In our survey we have identified three crucial attributes of entrepreneurs

• that have been stressed in the more substantive modeling efforts:

(i) they are (generally speaking) “more talented”, (ii) they have greater tolerance towards risk-bearing and (iii) they are innovators (either as individuals or as firms

involved in R&D activities).

The era of the entrepreneurship

Prehistoric Era

Economics base era

Multidisciplinary era

The Prehistoric Era

Prehistoric era

From 1740 to 1900

Discouragement of innovative

Ideas

Product Oriented, No new Market

adventure

Not attractive Era, No customer satisfaction

Cont’d

Small Scale Production

Only Get Profit Orientation

Law & Order effect customerAnd Product

Economic era

from 1910 to 1950’s , starting of entrepreneur eraWorking Ideas changed the concept

People got advanced, Industry formed, large scale production

Entrepreneurs got efficient way to make profit, Every person took interest

Economic era

Cont’d

• Non Customer oriented product

• Great importance on customer

• Entrepreneurs excel knowledge to make profit

• Efficiency

Multidisciplinary era

Multidisciplinary era

•customer took command

•making of the economies.

•This era is more customer orientated rather then product or profit.

•The era started in 1960 till now

•welfare and profit was affected by the customer

•this hypothesis was realized and used and this produced the real profit

Cont’d

• The factories production was made according to the will of the customer and that really worked efficiently

• Large Scale Production

• Technological Advancement

Example

The charsadawal chapal:

1. Pre historic era: They were first produced in a small amount by some shoe maker and used to make the 6 to 20 pairs per month.

2. Economic Era: Then it was used to do some production in later times and started to produce the 20 to 40 pairs

Cont’d

Now its taking a whole some of manufacturing concept and now started to make 200 to 300 pairs

Presenters

Sami Ur Rehman

Sikandar Wadood

Hashim Khan