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What is Entrepreneurship? A Historical Perspective

The concept of entrepreneurship is a dynamic and ever-evolving force with a rich history that spans centuries. Numerous scholars have acknowledged its pivotal role in propelling economic growth. Initially, entrepreneurship was regarded as a component of the broader economic landscape, but it has since matured into a distinct and independent field of study and research.

The term “entrepreneurship” has roots that reach back three centuries, with its origins attributed to the French classical economist Cantillon. Cantillon initially approached entrepreneurship from an economist’s standpoint, but contemporary perspectives emphasize its role in fostering innovation and creativity.

Cantillon, in his seminal work “Essai Sur la Nature du Commerce en Général” (1732), identified three key economic actors: landowners with financial independence, individuals with fixed incomes, and entrepreneurs. According to Cantillon, entrepreneurs operated by procuring goods at one price and transforming them into products with uncertain market values. This focus on “uncertainty” became a cornerstone of Cantillon’s view on entrepreneurship.

During the early phases of British classical and Neo-classical economic thought, entrepreneurship was marginalized and excluded from the realm of economics. The absence of a strong entrepreneurial perspective in British classical thought contributed to the lack of a corresponding term in the English language.

In contrast, the Austrian and neo-Austrian schools of thought acknowledged the significance of risk and uncertainty within economic systems, aligning with Cantillon’s original views. British-American economist Israel Kirzner recognized this gap in British and Neo-classical thinking and explored entrepreneurship within the neo-Austrian framework. In this perspective, entrepreneurship served as a driving force in the economy, with decision-making driven by entrepreneurs’ alertness to opportunities, inherently entailing risk and uncertainty. This perspective deviated from the idealized conditions of traditional economic theories, focusing instead on the dynamic realities of real-world markets.

The modern definitions of entrepreneurship, with a particular focus on creativity, owe much to Austrian economist Schumpeter. Schumpeter’s work, including his concept of “creative destruction,” shifted the spotlight from how entrepreneurship supports existing markets to how it can generate, nurture, or disrupt markets. This new theory placed a strong emphasis on various forms of innovation.

The separation of entrepreneurship from economics has been instrumental in advancing the field. Contemporary scholars caution against pigeonholing entrepreneurship as a sub-discipline of other fields, such as economics. They view entrepreneurship as a multifaceted process influenced by problem-solving and evolving within a social context, encompassing various policy, pedagogy, and practical dimensions that are still undergoing comprehensive exploration.

In recent years, entrepreneurship has emerged as a complex and unpredictable phenomenon that defies linear explanations. This complexity stems from the constantly evolving business landscape, which triggers changes in the entrepreneurial process.

Some argue that entrepreneurial skills and mindset are not exclusive to entrepreneurs but are also invaluable for managers grappling with the uncertainties of the business environment. The entrepreneurial process, often described using terms like “entrepreneuring,” has gained popularity as a synonym for entrepreneurship. Entrepreneurship’s embeddedness in diverse contexts renders it protean and intricate.

The late distinguished professor of entrepreneurship, Alistair Anderson, viewed entrepreneurship as a dynamic process wherein entrepreneurs construct their self-perception within the framework of their socio-economic surroundings. The institutional context shapes entrepreneurs, and in turn, entrepreneurs’ actions can influence and reshape institutions.

This transformative nature of entrepreneurship makes it challenging to pin down a single, all-encompassing definition, as it is considered both a noun and a state of being. In essence, entrepreneurship is a complex, ever-evolving process rooted in uncertainty, shaped by diverse social contexts and constructs.

In conclusion, entrepreneurship is a multifaceted and ever-evolving force that defies a single, uniform definition. Its multifarious nature underscores the importance of comprehending the behaviours, attributes, and skills of entrepreneurs across diverse organizational levels and contexts. Entrepreneurship is not confined to creating new ventures but can also manifest within existing firms or in the public sector.

Insights by: Dr Jay Wasim