A Literature Review Of Schumpeter And Kirzner

Today we will look at an important entrepreneur which I would consider a legend. First we will define what an entrepreneur is. We will look at who I choose as the person to research and why. We will also see what economic decision she made that was significant to her success with a detailed example. There are several areas to look into also, such as examples of her managerial economics, her social responsibility and her ethics.

History has shown that entrepreneurs have changed the way America conducts businesses decade after decade. In addition, they have continuously changed how businesses are operated and contributed to the general good of the country. Undoubtedly, entrepreneurs are important segments of the United States and the world have grown because of their creativity. Generally speaking, entrepreneurs have managed to help the nation during the economy downturns. For example, the machine called the reaper put a major boost in the United States economy during the 1831 (Greene, 2000). According to the author,

Steve Jobs for example, was a successful entrepreneur because he was able to spot opportunities in the market, and with his technical skills and creative abilities he was able to produce a successful product to fill the gap.

An Entrepreneur is someone who makes decisions on what products will be produced and who will produce those products and how that certain person will produce the required products. An Entrepreneur is also defined as someone who is capable for initialising a business full of intentions and imaginations to make profit and is always aware of the risks of losing his or her resource products that he or she produced. An Entrepreneur’s aspects should be for someone working capable, risk taking and having all entrepreneurial resources required for a business.

Explain and critically analyze unique traits of an Entrepreneur, discuss these related to personal strengths and weaknesses

The term “entrepreneurship” was brought up by Joseph Schumpeter (1910) after he surveyed related literature about entrepreneurs. According to him, entrepreneurship is the cause for discovering, introducing innovative formulations of production factors leading to social economy. Since then, academic communities has started to give more interest to entrepreneurship. The enterprise that holds entrepreneurship should have three characteristics: the first is innovation including both product and process innovation; the second is risk-taking which means the main decision maker of an enterprise should have the capability to take risk; and finally the third is proactiveness, i.e., an enterprise should be able to passionately explore the difference of the environment and accept strategy to respond in advance (Miller, 1983).

Beside Schumpeterian entrepreneurship theory, William Baumol (1990) also gave us a viewpoint that entrepreneur’s job is to making innovation, which would means the technological progress and growth. And entrepreneur would heavily influence the dissemination of a new technology. The economy will more productive if the new technology is used worldwide. He insisted that entrepreneurial talent and motivational mechanisms are important in successful economy, and entrepreneur can be trained. Moreover, in his point, entrepreneurs and the market mechanism with its pricing process helps each other to run in the economy.

The main hypothesis of the economic theory of entrepreneurship is that in the economy entrepreneurship contributes to production through the combination of the existing productive factors. Innovation and entrepreneurship are found to have positive economic effects mainly in terms of employment opportunities, taxation revenues and economic output. The measurements of these positive effects provide the basis of international comparisons. The contemporary theories on firm entrepreneurship built on the contributions of Schumpeter (see Appendix 1 on definitions of entrepreneur and entrepreneurship) who focused on the significance of the innovative entrepreneur being the main force moving the economy forward based on exiting

According to the Richard Cantillon (1680-1734), entrepreneur is risk-taker who has the foresight and willingness to assume risk and take the require action to make profit or loss. His entrepreneur is kind of forward-looking and risk-taking. Risks were distinguished by Frank Knight (1885-1972) as capable of being measured and un-measurable. According to Knight, entrepreneur takes the latter risk which is no objective measure of probability of gain or loss. According to Burke (2006), entrepreneur can be defined as a person who habitually creates and innovates to build something of recognized value around perceived opportunities. Joseph Schumpeter (1883-1950) said that entrepreneur is innovator who is the central figure in advancing the wealth of nations and creating dynamics disequilibrium in the global economy. He pointed out that knowledge underlying the innovation need not be newly discovered and may be existing knowledge that has never been utilized in

The entrepreneur is the figure responsible for creating these new channels by introducing innovations that disturb the status quo. Schumpeter defines innovation “as the carrying out of new combinations of the means of production” (Elster 116; emphasis in original). An individual whose function is to carry out new combinations is called an entrepreneur (75). Schumpeter goes on to explain the five main cases of new combinations—a new good, a new method, a new market, a new supply, a new organization. The power of his explanation lies in its simplicity; he

The economist Joseph Schumpeter focused on the transformation of the work of entrepreneurs in innovation and evolution generation. He highlighted entrepreneurship as vital for 'creative destruction'. Peter Drucker, the most renowned contemporary management thinker on the topic of business and management, brought this perception further, characterizing the entrepreneur as a person who is very ambitious for changing, reacting to and analyzing the possible opportunities inside an environment. Entrepreneurship is the principal idea for increasing economic activity and employment probabilities in all societies. Entrepreneurship is understood as a particular surrounding, depending not on a single dominant factor but rather on 'a group of factors' on individual, societal and national levels (Nandamuri at all,

Entrepreneurship is the readiness to take risks and improve, establish and be able to a business project in a modest world-wide market that is continuously developing. Entrepreneurs are innovators, leaders and creators. They are at the front of technical and communal actions – in their fields, in their advancing philosophy, in their wish to drive the cover. (Davidrubin, 2013).

Entrepreneurship is important to the society as it contributes to the economy in several ways. It contributes by adding changes to the supply and demand side of the market. This change (innovation) brought about by entrepreneurs was observed by an economist J.A. Schumpeter (1934), who, in his The Theory of Economic Development has mentioned it as a form of 'creative destruction '. Apart from their adding economic benefits, SMEs can also save economies from great depression. According to David Birch (1987), there were about 7 million companies, close to 90 percent of which employ fewer than 20 workers. When taken together, these companies provide more jobs than the giants in the list of fortune 500.

In the modern world, where countries compete extensively, shaping the market towards dynamism, the government began to realise and acknowledge the vital existence of small and medium sized enterprises (SMEs) to maintain a healthy dynamic market economy. In 1911, Joseph Schumpeter, an influential economist, published In the Theory of Economic Development and highlighted that small entrepreneurial firms act as the seedbed of innovation and technology discovery, however in Capitalism, Socailism and Democracy, published by Schumpeter in 1942, contradict the statement and form the current accustomed concept that large corporations are the engine to the progression of economic development and possess the ability to accelerate innovation through the process of creative destruction (Nicholas, 2003). By the 1980s, the economy gradually evolved from production-based into knowledge-based and the government recognises and emphasised the prospective contributions of SMEs on economic performances (Doh and Kim, 2014). Though a consensus agreement that SMEs as a whole can have an impact on a nation’s economy was constructed, the subsequent measurement to support this understanding is difficult to attain. Nevertheless, the contribution and impact of SMEs to the economy cannot be disregarded and government should continue promoting this sector in order to maintain its position in the competitive global market context.

He further states that it always has to do with bringing about a different use of resources in that they are withdrawn from their traditional employ and subjected to new combinations. Schumpeter relates entrepreneurship to be influenced by entrepreneurs who are innovative and these people have to be extra-ordinary as they have to come up with extra-ordinary events. They come up with new technological possibilities hence are able to establish large businesses from these. Carland etal. (1984) confirms that an entrepreneur is someone innovative and further says that he or she employs strategic management practices in the business. Timmons (2000) believes entrepreneurship as the process of creating and seizing an opportunity and pursuing it, regardless of resources currently controlled. Nieman and Nieuwenhuizen (2009) define an entrepreneur as the person who sees an opportunity in the market, gathers resources and creates and grows a business venture to meet these needs. They also further states that he or she bears risk of the venture and is rewarded with profit if it succeed. With different definitions of entrepreneurship defined by different authors through the way they define an entrepreneur, the researcher generally defines entrepreneurship as the act of being an entrepreneur who establishes business through the organisation of resources taking risk with the aim of realising profit.