Concept of Entrepreneurship
The term ‘Entrepreneurship’ has been defined in many ways and various senses. It also defined
differently by different authors. While some call entrepreneurship as ‘risk-bearing’, others view it
‘innovating’ and yet others consider it ‘thrill-seeking’. These views are now for the convenience of
understanding broadly classified into three groups, namely, risk-bearer, organizer, and innovator.
In a Conference on Entrepreneurship held in United States, the term ‘entrepreneurship’ was defined as
“Entrepreneurship is the attempt to create value through recognition of business opportunity, the
management of risk-taking appropriate to the opportunity, and through the communicative and
management skills to mobilize human, financial and material resources necessary to bring a project to
According to Joseph A. Schumpeter (1939), “Entrepreneurship is based on purposeful and systematic
innovation. It includes not only the independent businessman but also company directors and managers
who actually carry out innovative functions”.
He defined entrepreneur as an agent who buys factors of production at certain
prices in order to combine them into a product with a view to selling it at uncertain
prices in future. A farmer who pays out contractual incomes which are ‘certain’ to the
landlords and labourers and sells at prices that are ‘uncertain’.
Here, uncertainty is defined as a risk which cannot be insured and is
The entrepreneurship is for earning profits or incurring losses because of
various factors like increasing competition, changes in customer preferences, and
shortage of raw materials and so on.
Japanese proverb applies to him: “Fall seven times, stand up eight.”
Innovation that is doing something new
The ‘innovation’, i.e. introduction of new combination of factors of production,
according to Schumpeter, may occur in any one of the following five norms:
a. Introduction of a new product;
b. Introduction of a new method of production;
c. Opening of a new market;
d. Discovery of a new source of supply of raw materials; and
e. Carrying out of the new form of organization of any industry.