Entrepreneurship – Meaning, Definitions, and 11 Characteristics

Introduction to Entrepreneurship

Entrepreneurship is riding a total wave of popularity. More and more men and women are embracing entrepreneurship as their lifestyle. It plays a vital role in the growth of our economy. Besides being the vehicle of industrial development, entrepreneurship can solve acute problems like unemployment, the concentration of economic power in the hands of a very few, imbalanced regional development, the increasing wastage of youth power in destructive activities, etc. In recent years, economists’ focus has turned from capital growth to the expansion of high-level people, such as entrepreneurship, as a key factor affecting a nation’s pace of economic growth. Entrepreneurs are starting their enterprises to make more profits by producing or marketing goods and services to cater to the needs of customers.

Meaning of Entrepreneurship

Entrepreneurship is the ability to identify an investment opportunity and organize an enterprise to contribute to real economic growth. Entrepreneurship combines many qualities, such as innovation, risk-taking, combining factors of production, etc. It lies more in the ability to minimize the use of factors of production and exploit them to maximum advantage. It largely depends on personal qualities like accepting the challenge and bearing the risk. This is the reason why entrepreneurship is a complex subject. It is the function of handling economic activity, undertaking risk, creating something new, and organizing and coordinating human and non-human resources.

Definitions of Entrepreneurship

The concept of entrepreneurship has long been debated. It has been used in various ways and senses. It is a multi-dimensional task defined differently by different experts, authors, and entrepreneurs. Somehow, the term is redefined as follows:

According to Jaffrey A. Timmons, “Entrepreneurship is a process by which individuals, either on their own or inside organizations, pursue opportunities without regard to the sources they currently control.”

According to A.H. Cole, ‘Entrepreneurship is the purposeful activity of an individual or a group of associated individuals undertaken to initiate, maintain, or earn profit by the production or distribution of economic goods and services.”

According to H.W. Pathak, “Entrepreneurship refers to the perception of an opportunity, organizing an industrial unit, and running the industrial unit as a profitable, going, and growing concern.”

Thus, entrepreneurship is a practice based on the knowledge base and experience of an entrepreneur. It contributes significantly to the growth of a society. It serves as the primary indicator of general growth in the economy, society, and industry. Entrepreneurship has facilitated large-scale production and distribution. It has widened the area and scope of marketing goods and services.

Characteristics of Entrepreneurship

Entrepreneurship is a complex and multi-dimensional subject. The following are some of the important features of entrepreneurship:

• Innovation
• Decision-making
• Building the organization
• Managerial skills
• Resource mobilization
• Risk-taking
• Accepting challenges
• Earns profit
• Effective utilization of resources
• Teamwork

1. Innovation: The entrepreneur does things in a new and better way. This makes an entrepreneur innovate new things and new methods and look for new markets. Entrepreneurship is a creative activity. Innovation is problem-solving; an entrepreneur is a problem-solver; and entrepreneurship is the process of putting innovation into use.
2. Decision-making: Doing things in a new and better manner leads to innovation. In addition to innovation, the entrepreneur has to make decisions in the face of uncertainty. This decision-making activity is one of the important features of entrepreneurship. It is a function of high achievement. The goals for achievement can be considerably increased by deliberate efforts.
3. Building the organization: According to Frederick Harbison, entrepreneurship implies the skill of building an organization. Building an organization requires a lot of skills, and one can build an organization effectively by delegating responsibility to others. Here, the entrepreneurs should be good leaders. Entrepreneurship places more emphasis on skills and creativity.
4. Managerial skills: Managerial skills and leadership are the most important characteristics of entrepreneurship. B.F. Hoselitz maintains that a person who is to become an industrial entrepreneur must have more than the drive to earn profits and amass wealth. They must have the ability to lead and manage.
5. Resource mobilization: An entrepreneur’s job is to fill the gaps. Through the mobilization of resources, an entrepreneur has to marshal all the inputs to realize the final product. Entrepreneurship is a function of input, completion, and filling the gap. According to H. Libenstein, input-completion capacity governs the supply of entrepreneurship.
6. Risk-taking: Risk-taking is the reward that enables the entrepreneur to maximize his profits. The performance of the enterprise is the outcome of the risk-bearing capacity of the entrepreneur. Hence, the essential aspect of entrepreneurship is risk-taking in business activities.
7. Accepting challenges: Another important characteristic of entrepreneurship is accepting the challenges of the market in a competitive economy. Entrepreneurship has to be exposed in response to changes in economic reforms, disinvestment policies, the importance of foreign direct investment, appropriate portfolio selection, etc.
8. Success of enterprise: The continuity of any enterprise depends upon the efficiency, skills, and effectiveness of the entrepreneur’s traits. Entrepreneurship will operate with more of these traits, which results in increased production capacities and effective utilization of the resources available. Hence, entrepreneurship assures the success of the enterprise.
9. Earns profit: Entrepreneurship enables one to accept the high rate of risk with more profits. It helps the enterprise exhibit the traits required to undertake the risk. The performance and existence of entrepreneurship are always measured in terms of profit earned. Entrepreneurship leads to timely and appropriate business decisions, which help the enterprise earn sufficient profits.
10. Effective utilization of resources: Entrepreneurship enables the enterprise to create economic goods and services. It is the ability to create and build something from practically nothing. Through entrepreneurship, the entrepreneur is needed to expose the utilization of resources effectively to create economic goods and services needed by society.
11. Teamwork: Entrepreneurship helps to develop teamwork, which is an important aspect of the success of an enterprise. Teamwork develops cooperation and coordination among the members of the organization. It is the contribution of a group of individuals working collectively in the enterprise for the attainment of specific objectives.

Thus, the characteristics of entrepreneurship reveal that it is a dynamic and multi-dimensional activity. It is the lifeblood of any economy, particularly in developing economies like India. Effective entrepreneurial management will provide the expected results for the enterprise.