History of entrepreneurship
This chapter is dedicated to the history of entrepreneurship, its basic notions of as well the role of entrepreneurship in economic development.
The chapter starts with an insight into the history of entrepreneurship, which is divided into five periods. During the earliest times, the role of entrepreneur lied in signing the contracts with a money person.
The very concept of entrepreneurship dates back to the Medieval era. Though the term appeared first in the seventeenth century, entrepreneurship as a phenomenon emerged in the 13th century as Marco Polo started international trade as the merchant traveler.
Later, in the Middle Ages, entrepreneurs handled large production projects. In the 17th century, the concept of taking a risk returned to the entrepreneurship. Entrepreneurs became the ones to make contractual arrangements with the government to provide a particular type of supplies or services. In the dawn of globalization in the 18th century, the entrepreneur was simply an inventor, unable to find his or her projects, as opposed to the venture capitalist who sought for lucrative investments.
In the 19th and early 20th century, entrepreneurs had virtually the same role as managers. Today entrepreneurship means using available resources to organize them and transform them into something that increases their value, assuming the risks. This is why, to be successful, an entrepreneur should be able to take initiative, be involved in the creative process, and devote a significant amount of time and effort. In addition, a modern entrepreneur should be able to devise a plan of his activities.
Possible reasons for entrepreneurship
Later in the chapter, the author lists possible reasons for starting a new career, then describes the perception of entrepreneurship in different cultures, and how a desire for entrepreneurship may be encouraged. Besides, the several factors were listed, such as finances, government, and background, etc. that define the possibility of starting a new business.
Advantages and disadvantages of entrepreneurship
The next section is devoted to benefits and disadvantages of entrepreneurship. An individual may be driven by such factors as the desire for personal and financial independence, desire to tackle challenges, or even simply for the sake of enjoyment. One needs to be aware of the pitfalls, such as high level of risk and stress. There are also many misconceptions about being an entrepreneur. Many believe that entrepreneurship will allow them to work less, but this is not the case with entrepreneurs. Entrepreneurs should also be aware that they will need to acquire a set of skills that differs entirely from what they imagined. Last, but not least, many entrepreneurs may find themselves struggling with financial difficulties at early stages.
Types of Startups
There are several types of start-ups: cottage companies, lifestyle firms, foundation companies and high-potential ventures. Cottage companies and lifestyle firms are usually held privately. They employ from 10 to 40 employees and are not to likely grow further.
Foundation companies are created from research and development, have better growth potential and used to secure a new business area.
High-potential ventures are companies which have a large number of employees and a yearly revenue of about 10 to 20 million dollars. They attract publicity and investors the most, as opposed to previous three.
Role of Entrepreneurship in Economic Development
The next section is devoted to the role of entrepreneurship in country’s economic development. The startups are important because they facilitate change and contribute to the growth of the market using innovation. Startups create new capital, thus increasing the growth capacity. New capital is then invested in output. Even though the importance of innovation is widely known, the connection between innovation and monetization seems to be understudied. The author names three ways of bridging this gap, namely the government in the role of innovator, intrapreneurship, and entrepreneurship, with the latter being the most effective. The last part of the chapter dedicated to the role of family, government, culture and education in encouraging entrepreneurship.
Works Cited
Hisrich, Robert D. Entrepreneurship. 8th ed. New York: McGraw-Hill/Irwin, 2010. Print.