Entrepreneurship - Research Paper Example

 Entrepreneurship The word “entrepreneurship”, as per the oxford dictionary, has its origin in the nineteenth century French term “entreprendre”, which means “undertake”. It is the “capacity  and willingness to undertake conception, organization, and  management  of a  productive  venture  with all attendant  risks, while seeking profit  as a  reward. In  economics, entrepreneurship is regarded as a factor of  production  together with  land, labor, natural resources, and  capital. Entrepreneurial spirit is characterized by  innovation  and risk-taking, and an essential  component  of a  nation’s ability  to succeed in an ever changing and more  competitive  global  marketplace.” (businessdictionary.com) From the above the definition of entrepreneurship one can understand the significance of the role that entrepreneurs play in any economy. This requires them to have certain qualities that define a successful entrepreneur, which include the ability to take risks and to innovate. Both these traits have been observed in a number of entrepreneurs in America, right since the nineteenth century industrial revolution. Perhaps, given the fact that a significant portion of the growth in the American economy is contributed by the newly established companies and industries, it would not be wrong to say that the current age is the “age of entrepreneurship”. While talking about the impact that entrepreneurs can have on an economy, Mr. Gunil Chung, the founding CEO of Empact Solutions, and the president of the East Coast Chapter of KASE, the Korean-American Society of Entrepreneurs, as well as a volunteer with NFTE, the National Foundation for Teaching Entrepreneurship, once said in an interview, “ --- people like (Steve) Jobs and (Richard) Branson are absolutely my modern-day inspiration. I admire them for creating new things in the face of severe doubt and opposition, and in doing so, for making the lives of people that much better. Same for HP in their beginning days and SGI when they first started. I admire Bill Joy for coming up with Java, and Sun for maintaining a culture of innovation and entrepreneurship. I also draw inspiration and encouragement from the lesser known entrepreneurs, some of whom I'm fortunate to meet from time to time in my work: Joseph Park of Kozmo.com, Woo Song of Intrasphere.com, etc.” The work done by entrepreneurs has positive consequences both, at the micro-economic level as well as at the macro-economic level. One of such most important contributions is seen in the area of job-creation. The rapidly increasing number of small and medium businesses (SMBs) in the last few decades has resulted in a number of new employment opportunities that were unheard of some years ago. According to a white paper “Embracing Innovation : Entrepreneurship and American Economic Growth”, since 1980 till around 2002-03, the United States has added 34 million new jobs despite the fact that Fortune 500 companies lost more than 5 million jobs in that period. This clearly signifies the growing importance of SMBs for the American economy. Another important area of contribution is consumer-satisfaction. This is particularly important in case of the American economy, which has majorly been a consumer-driven economy. It is said that in today’s world, ” Consumer is the King”. A successful entrepreneur is able to realize that the consumer is not just the King in today’s world, but he is actually the Dictator. This fact is not only taken as a challenge by today’s entrepreneurs, but it is also used as an opportunity to compete with the already existing players in the market in order to try and get an edge over them by resorting to a completely consumer-oriented approach. This is quite evidently seen in the airways industry. New players entering the industry have been creating some grave issues for the already existing players, who have been redesigning their processes to keep up with the competition, the ultimate benefit of which has been enjoyed by the consumers. Thus, the entrepreneurs have given a new meaning to the proverbial “survival of the fittest” and have largely benefitted the ultimate consumers in the process. At a macro-economic level, the entrepreneurs help in starting and sustaining “wealth creation cycles” by ensuring that the resources are well directed towards productive processes. This results in efficiency in resource allocation and usage and thereby generates profits, accompanied by increased job opportunities in the economy. Thus a wealth cycle is started, which is then sustained by reinvestment of a part of the profits generated in the process. One has to appreciate the fact that in case of small and medium start-up ventures, the resources available at hand are very limited and this leaves these risk-takers with no other option than to use their innovative abilities to their maximum. This, in turn, results in highly positive consequences for the economy. This makes one think about the widely discussed concept of entrepreneurs as innovators. One has to understand the fact that, although an invention or a new idea is often the first step towards building a successful enterprise, invention in itself is not sufficient. It is only when an entrepreneur converts that invention or idea into a valuable product or a service by leveraging highly on the available, often very limited, resources, is when an actual contribution to the success of that particular business and thereby to the economy is made. Thus, the role played by an entrepreneur as an innovator is very crucial for the economy. Particularly in the present scenario, when the world is said to have become “flat” due to the constant exchange of products and information between countries, there is a greater need for innovation for any economy in order to perform well and to be recognised in the global market. Having said that, one has to understand that although entrepreneurship is very rewarding for an individual as well as for an economy, it is one of the most challenging activities. Although a start-up entrepreneur invariably faces difficulties in terms of finances and a life full of uncertainties, other issues like government policies and external factors that may not be under the control of the entrepreneur do pose a very big challenge as well. The most recent example of this is the US economic recession. According to the “Global Entrepreneurship Monitor (GEM) 2009 National Entrepreneurial Assessment for the United States of America,” the U.S. entrepreneurial activity fell significantly from 10.6% in 2005 to 6.9% in 2009. The steep decline in US entrepreneurial activity translated also to established businesses, as those declined by about 26%. This was accompanied by a fall in entrepreneurial activities of early-stage entrepreneurs and opportunity-driven entrepreneurs as well. However, an important thing to note is that the necessity-driven entrepreneurial activity increased during the deepest phase of the crisis in 2008-09. This is due to the fact that as the jobs become fewer in number, more and more individuals start their own businesses to susutain themselves. It was also observed that although the formal and informal routes of funding had decreased, the U.S. still managed to be amongst the economies with the highest rate of emerging entrepreneurial activity. An interesting and important observation showed that there was a rising interest in social entrepreneurship as an approach to business start-up and growth during this period. This clearly shows how external factors that may not be under the control of an entrepreneur, impact his / her course of action. But it also shows that in the face of a grave situation such as a country-wide economic crisis, entrepreneurship and innovation can be the most effective solutions and can go a long way in improving the conditions of an individual and of the economy at large. Thus, in conclusion, it can be said that in spite of numerous challenges facing them, the entrepreneurs, with their innovative and risk-taking capabilities, have always successfully played their role in the shaping of the economy. Given the right support in terms of resource availability and accessibility, coupled with favourable government policies, entrepreneurship can prove to be one of the most effective tools in handling the problems the economy is facing today. Works Cited BusinessDictionary, WebFinance, n.d. Web. 15 November 2010 < http://www.businessdictionary.com/definition/entrepreneurship.html>. Chung, Gunil. Interviews with Entrepreneurs. Entrepreneurs.about.com. The New York Times Company, n.d. Web. 17 November 2010 < http://entrepreneurs.about.com/cs/interviews/a/gunilchung.htm>. Embracing Innovation : Entrepreneurship and American Economic Growth, The Public Forum Institute, n.d. Web. 17 November 2010 . GEM United States 2009 Executive Report, GEMConsortium, 15 September 2010. Web. 18 November 2010 . Oxforddictionariesonline, US English Version, Oxford University Press, n.d. Web. 15 November 2010 < http://oxforddictionaries.com/view/entry/m_en_gb0268460#m_en_gb0268460.009>. Read More