entrepreneur

entrepreneur [Fr.,=one who undertakes], person who assumes the organization, management, and risks of a business enterprise. It was first used as a technical economic term by the 18th-century economist Richard Cantillon. To the classical economist of the late 18th cent. the term meant an employer in the character of one who assumes the risk and management of business; an undertaker of economic enterprises, in contrast to the ordinary capitalist, who, strictly speaking, merely owns an enterprise and may choose to take no part in its day-to-day operation. In practice, entrepreneurs were not differentiated from regular capitalists until the 19th cent., when their function developed into that of coordinators of processes necessary to large-scale industry and trade. Joseph Schumpeter and other 20th-century economists considered the entrepreneur's competitive drive for innovation and improvement to have been the motive force behind capitalist development. Richard Arkwright in England and William Cockerill on the Continent were prominent examples of the rising class of entrepreneurial manufacturers during the Industrial Revolution. Henry Ford was a 20th-century American example. The entrepreneur's functions and importance have declined with the growth of the corporation .

Bibliography: See J. Schumpeter, The Theory of Economic Development (1934); J. W. Gough, The Rise of the Entrepreneur (1969); O. F. Collins, The Organization Makers (1970).

entrepreneur XIX. — F., f. entreprendre undertake (see ENTERPRISE).

entrepreneur, entrepreneurship There are at least four distinct meanings given to this term, which overlap only in part. At a basic level, an entrepreneur is a person who owns and runs a business—not necessarily a new, small, growing, or successful business. Economists define the entrepreneur as a person who risks capital and other resources in the hope of substantial financial gain, or as someone who specializes in taking judgemental decisions about the use and coordination of scarce resources. The emphasis is on calculated risk-taking. Sociologists define the entrepreneur as a creative innovator in the business sphere, in contrast to the conventional business-owner, capitalist, or professional manager, who conforms more often to established procedures and objectives. This conception originated with Joseph Schumpeter, who defined entrepreneurs as individuals who develop and implement new combinations of the means of production, a function which he described as fundamental to economic development in his book The Theory of Economic Development (1934). Finally, the term is sometimes used more loosely to refer to the owner or creator of a new, small, growing, and successful business, or even to any person who sets up a small business, or changes from an employee job to being self-employed, even though neither need involve any significant degree of innovation or capital investment.

The 1980s saw the development of the concept of intrapreneurs; that is, people working alone or in teams who remained employees within the organization or firm for which they worked, but took responsibility for some innovation, costly exercise or risky development, or even for a routine subset of activities, in the expectation of additional personal financial reward for successful ventures and profitable operations. At the extreme, intrapreneurs shade into employees whose earnings depend heavily on bonus and commission payments, or other incentive payments—such as sales personnel.

Theories about entrepreneurial behaviour concern the relative importance of personality traits, social marginality, the ‘artisan’ or ‘craftsman’ orientation to work, sources of risk capital, the economic environment, and institutions. Theories of economic growth do not always attach importance to entrepreneurs. Sociological interest in entrepreneurship has declined steadily with the emergence of monopoly capitalism and the rise of the modern business corporation. However, the American economic sociologist Ronald S. Burt has conducted a number of analyses of envy and entrepreneurial opportunities in competitive environments, notably via the application of concepts derived from network analysis (see Corporate Profits and Cooptation, 1983, and Social Contagion and Innovation, 1988
).