Joseph Schumpeter did a pioneering work on entrepreneurship. For him entrepreneurship is essentially a creative activity consisting in doing such things as are generally not done in the common conduct of business. An entrepreneur is one who carries out new combinations or enterprise. Entrepreneurs are highly motivated and talented class of people and key figures in development.
They foresee the potential profitable opportunity and try to capitalize on it. Innovation involves problem-solving and the entrepreneur is a problem solver. He gets satisfaction from using his capabilities in attacking problems.
Innovation may take place in the following ways: 1.A new product is introduced with which consumers are not yet familiar or introduction of a new quality of an existing product. 2. A new method of production is introduced that is not yet tested by experience in the branch of manufacture concerned, which need byno means be founded upon a discovery scientifically new and can also exist in a way of handling a commodity commercially. 3. A new market is opened into which the particular branch of manufacture of the country in question has not previously entered, irrespective of the existence of the market. 4.A fresh source of supply of raw materials or semi manufactured goods is identified, irrespective of whether it already exists or whether it has first to be created. 5. The new organization of any industry is carried out like the creation of monopoly position or the breaking up of monopoly position.
They foresee the potential profitable opportunity and try to capitalize on it. Innovation involves problem-solving and the entrepreneur is a problem solver. He gets satisfaction from using his capabilities in attacking problems.
Innovation may take place in the following ways: 1.A new product is introduced with which consumers are not yet familiar or introduction of a new quality of an existing product. 2. A new method of production is introduced that is not yet tested by experience in the branch of manufacture concerned, which need byno means be founded upon a discovery scientifically new and can also exist in a way of handling a commodity commercially. 3. A new market is opened into which the particular branch of manufacture of the country in question has not previously entered, irrespective of the existence of the market. 4.A fresh source of supply of raw materials or semi manufactured goods is identified, irrespective of whether it already exists or whether it has first to be created. 5. The new organization of any industry is carried out like the creation of monopoly position or the breaking up of monopoly position.
Schumpeter makes a distinction between an innovator and an inventor. An inventor discovers new methods and new materials. On the contrary, an innovator is one who utilizes or applies inventions and discoveries in order to make new combinations and thus produce newer and better goods, which yield both satisfaction and profits. An inventor in concerned with his technical work of invention whereas an entrepreneur converts the technical work into economic performance. An innovator is more than an inventor because he does not only originate as the inventor does but goes much farther in exploiting the invention commercially.
Schumpeter stressed the role or entrepreneurial function in economic development to recognize that development was more than putting money in to the bank and watching it grow. Development requires basic changes. Entrepreneurial growth brings economic development. The entrepreneur leads the means of production into productive channels.
Schumpeter's concept of entrepreneurship is both wide and narrow. It is wide in the sense that it includes not only the independent businessman but also company directors and managers who actually carry out innovative functions. It is narrow to the extent that those individuals who merely operate an established business without performing innovative functions are excluded.
Schumpeter's innovating entrepreneur represents the most vigorous type of enterprise. But this type of entrepreneur is rare found in developing countries. The type of entrepreneur who exploits possibilities as they present themselves within a limited time horizon and mostly on a small scale can only produce limited results. Society must produce innovators with a long time horizon and who arc capable of achieving substantial transformations.
Schumpeter's views are particularly relevant to developing countries where innovations need to be promoted. The transformation of an agrarian economy into an industrial economy requires a great deal of initiative and changes on the part of businessmen and managers. However, Schumpeter puts too much emphasis on innovative functions. It ignores the risk taking and organizing aspects of entrepreneurship. An entrepreneur has not only to innovate but also assemble the resources and put them to optimum use. While stressing upon the innovative function -of entrepreneur Schumpeter ignored the risk taking function that is equally important. It is quite difficult to imagine an enterprise without risk and profit is the main force for undertaking risk. When an entrepreneur develops a new combination of factors of production there is enough risk involved.
Schumpeter's entrepreneur is a large-scale businessman who creates something new. But an entrepreneur cannot have large scale at the very beginning. Moreover in underdeveloped countries people who can adopt the existing technology arc needed. Such countries need more imitators than innovators. They have to launch on small scale due to imperfect market shortage of capital and scarcity of skilled labor.
Schumpeter stressed the role or entrepreneurial function in economic development to recognize that development was more than putting money in to the bank and watching it grow. Development requires basic changes. Entrepreneurial growth brings economic development. The entrepreneur leads the means of production into productive channels.
Schumpeter's concept of entrepreneurship is both wide and narrow. It is wide in the sense that it includes not only the independent businessman but also company directors and managers who actually carry out innovative functions. It is narrow to the extent that those individuals who merely operate an established business without performing innovative functions are excluded.
Schumpeter's innovating entrepreneur represents the most vigorous type of enterprise. But this type of entrepreneur is rare found in developing countries. The type of entrepreneur who exploits possibilities as they present themselves within a limited time horizon and mostly on a small scale can only produce limited results. Society must produce innovators with a long time horizon and who arc capable of achieving substantial transformations.
Schumpeter's views are particularly relevant to developing countries where innovations need to be promoted. The transformation of an agrarian economy into an industrial economy requires a great deal of initiative and changes on the part of businessmen and managers. However, Schumpeter puts too much emphasis on innovative functions. It ignores the risk taking and organizing aspects of entrepreneurship. An entrepreneur has not only to innovate but also assemble the resources and put them to optimum use. While stressing upon the innovative function -of entrepreneur Schumpeter ignored the risk taking function that is equally important. It is quite difficult to imagine an enterprise without risk and profit is the main force for undertaking risk. When an entrepreneur develops a new combination of factors of production there is enough risk involved.
Schumpeter's entrepreneur is a large-scale businessman who creates something new. But an entrepreneur cannot have large scale at the very beginning. Moreover in underdeveloped countries people who can adopt the existing technology arc needed. Such countries need more imitators than innovators. They have to launch on small scale due to imperfect market shortage of capital and scarcity of skilled labor.
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