EVOLUTION OF ENTREPRENEURIAL THOUGHT

1. - B Y S H I VA N I , V I K K U , G I R M A A
THE EVOLUTION OF ENTREPRENEURIAL
THOUGHT

2. INTRODUCTION
CTION
Tasks Performance of tasks Human relations
System
Physical Psychological and Sociological -----
Entrepreneurship

3. INTRODUCTION
• Evolution of The Concepts The word 'entrepreneur' has
been derived from the French verb, 'entreprendre', which
means, "to undertake".
• Adam Smith, founder of the classical school of thought did
not use the word, 'entrepreneur' in his writings. Instead, he
used the words, employer, master, merchant and
undertaker.

4. • 1755-Cantillon was the earliest in the history of Economics
who identified the role of Entrepreneur in economy. He
stated, ‘Entrepreneurs work on uncertain wages, whether
they establish with or without capital.
• Economic agents into three groups:
(1) landowners (2) entrepreneurs and (3) hirelings
• Entrepreneurs play the central part. They play the role of the
coordinator connecting producers and consumers.
• Distinguishing the function of entrepreneur and capitalist
• 1881:Attention to the innovating function of the
entrepreneur

5. • 1928: Concept of Creative Destruction by Entrepreneurship.
• Innovator--an individual who carries out one of the following five tasks:
(1) the creation of a new good or a new quality;
(2) the creation of a new method of production;
(3) the opening of a new market;
(4) the capture of a new source of supply; or
(5) the creation of a new organization or industry (Schumpeter, 1949, p.
66,).
• The agent who initiated the process of economic development was an
'entrepreneur' and what he created was an 'innovation'.
• Distinguishing between uncertainty and risk and relating them to profit
and entrepreneurship.
• Entrepreneurial discovery- Alertness

6. EVOLUTION CONTINUED…..
• Need felt for organization’s adaptation to the fast changing
economic needs and to newer technologies.
• Change in the organization structure for encouraging
internal entrepreneurship- ways identified to keep the
employees motivated to think differently and creatively .
• Rules of the game- Productive and unproductive
entrepreneurship.
• Corporate entrepreneurship= entrepreneurship +
corporate management
• Invention-innovation-diffusion-imitation

8. ROLE OF MODERN ENTREPRENEURSHIP
 Schumpeter’s innovation theory
 Although since the late 1880s there have been reports of the use of the term “innova-tion”
to mean something unusual, none of fiprecursors of innovation have been as
influential as the Schumpeter. According to him, consumer preferences are already given
 And do not undergo spontaneously. It means that they cannot be cause of the economic
change. Moreover, consumers in the process of economic development play a
passive
Theory of economic de- velopment from 1911 (and reformulated edition in
1926). What more can be seen that in the Business Cycles (1939),
Schumpeter put much greater emphasis on innovation in the strict sense,
than on the entrepreneurship.

9. in The Theory of Economic Development,
originally published in 1912[2]), Schumpeter
highlighted the function of entrepreneurs who is
carrying out new combinations.
He viewed the occurrence of discontinuous and
“revolutionary” change as the core of “economic
development” which breaks the economy out of
its static mode (“circular flow”) and sets it on a
dynamic path of fits and starts.

10. • Schumpeter described development as historical
process of structural changes, sub-Statically driven by
innovation He divided the innovation process into four
day Mansions:
• invention,
• innovation,
• diffusion and
• imitation

11. Entrepreneurship is an entrepreneurial process carried
out by daring, imaginative, speculative
• actions of entrepreneurs who discover and exploit
opportunities
• Using gap
Focus on knowledge, Known-to-be-knowable vs.
Unthought-of knowledge Focus on competition leading
towards equilibrium (known for market failure)
• Focus on alertness and discovery of opportunities
(known for arbitrage)

12. An Entrepreneurship and Innovation, overwhelming impact on
entrepreneurship. In my view they took a necessary, but
inadequate step from macro economics to micro level.
However, the macro economic framework is still taken for
granted. ?
Opportunities exist per se Entrepreneurship and Innovation,
 Entrepreneurs are bold and imaginative, and they pursue
opportunities for port Opportunities are discovered through
entrepreneurial alertness,
the nature of knowledge is unthought-of Opportunity
Discovery (through alertness) Better knowledge Competition
Equilibrium