Lecture 3: Entrepreneurship Process & Importance of Entrepreneurship
Lecture 3: Entrepreneurship Process & Importance of Entrepreneurship
Importance of Entrepreneurship
FUNCTIONS OF AN ENTREPRENEUR
There has been a great deal of confusion and contradiction in literature on the
functions of an entrepreneur.
FUNCTIONS
1. Innovations: J.Schumpeter has made substantial contribution to the
literature of entrepreneurship. The process of innovations may be in the
form of:
a) Introduction of a new product.
b) Use of new methods of production.
c) Opening of a new market.
d) The conquest of new source of supply of raw material.
e) A new form of organisation.
2. Risk-taking: Richard cantillon states that entrepreneur is an agent who buys means
of production at certain prices and sells them at uncertain prices.
The entrepreneur performs the function of reducing uncertainty in his plan of investment
and expansion of the enterprise.
J.b. Say also stresses risk-taking as the specific function of an entrepreneur.
3. Decision Maker: Entrepreneur as a decision maker describes the following functions
of an entrepreneur.
a) The determination of objectives of an enterprise and the change of those objectives
as conditions required or made advantageous,
b) The development of an organisation including efficient relations with subordinates
and all employees,
c) Securing adequate financial resources,the relations with existing and
potential
Investors,
d) The acquisition of efficient technological equipment and the revision of it
as new machinery appears,
e)The development of a market for the products and the devising of new
products to meet or anticipate consumer’s demand,
f) The maintenance of good relations with public authorities and with society
at large.
4. Organisation and Management: Marshall recognised organisation and
management of the enterprise as the important functions of an entrepreneur.
When the organisation grows bigger, the entrepreneur effectively delegates
authority and finds responsibility at various levels of management. The
network of decision making becomes more complex.
The functions of organisation and management includes:
a) Planning of an enterprise,
b) Co-ordination, administration and control,
c) Routine type of supervision.
Importance of Entrepreneurship
• Promotes Capital Formation
• Create Large Scale Employment Opportunities
• Promotes Balanced Regional Development
• Reduces Concentration of Economic Power
• Wealth Creation and Distribution
• Increasing Gross National Product and Per Capita Income
• Improvement in the Standard of Living
• Promotes Country's Export Trade
• Induces Backward and Forward Linkages
• Facilitates Overall Development
• Creating Innovation
• Entrepreneurs Create New Businesses
• Entrepreneurs also Create Social Change
• Personal Growth
• Entrepreneurship puts New Business Ideas into Practice