Entrepreneurship: By incorporating economic development into the idea of entrepreneurship,

An Overview
Jean-Baptiste Say (1807) expanded the meaning of the term entrepreneurship.
He proposed that an entrepreneur's role is to coordinate and manage the
factors of production. The entrepreneur also assumes the risk of the business
through this job, while at the same time making profit and building wealth.
According to Say, entrepreneurial functions include “coordination,
organisation and supervision” and the entrepreneurs must have the skills of
superintendence and administration. Additionally, an entrepreneur can
recognise society’s fundamental requirements and problems, and is capable
of satisfying those needs.
Before Schumpeter (1934) proposed his Theory of Innovation and Economic
Development, entrepreneurship was not envisaged as a dynamic force
capable of transforming and expanding the economic activity of a nation. In
the view of Schumpeter, creation of new undertaking involves exploring
pioneering innovations and using novel combinations of resources & actions
by the entrepreneurs. The entrepreneur can help a new business thrive by
creating new demand, expanding into new markets, exploring new
technology or supply chain etc. According to Schumpeter, an entrepreneur
destroys or disrupts an equilibrium-state market. According to this
equilibrium, market economies operate in a situation where individuals are
unwilling to alter their current behaviour because there aren't enough
incentives. Schumpeter argued that an entrepreneur is essentially an
innovator:

“The function of entrepreneurs is to reform or revolutionize the pattern of

production by exploiting an invention or, more generally, an untried
technological possibility for producing a new commodity or producing an old
one in a new way, opening a new source of supply of materials or a new
outlet for products, by reorganizing a new industry”.
According to Cole (1942), Entrepreneurship is an “integrated sequence of
actions taken by an individual or by a group operating for individual business
units in a world characterized by a large degree of uncertainty”.

Low & MacMillan (1988) argued that entrepreneurship entails formation of

new organisation and it plays vital role in the advancement of the economy.
Entrepreneurship, according to Davidsson et al. (2006), is “the creation of
new economic activity” which includes the development of new businesses
as well as the expansion of already existing ones.

Entrepreneurship is defined by Gartner (1988, 1990, 1993, and 2001) as the

creation of new organisations. According to Katz & Gartner (1988), the
emergence of a new business venture is the result of the dynamic interplay
between agents like individuals, groups, parent company and external
business environment. Katz and Gartner (1988) are one of the earliest
entrepreneurship scholars to emphasize that behavioural dispositions of the
entrepreneurs play a crucial role in venture development. According to them,
for entrepreneurial venture to exist it must have resources, and extra
organizational place of exchange and the intentionality of the founders.

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Entrepreneurship was defined by Shane & Venkataraman (2000) as “the Introduction to
Entrepreneurship
process by which opportunities to develop or create new goods & services are
discovered, evaluated and exploited”. The concept acknowledges that
“creativity” is the foundation of entrepreneurship, which can entail not just
discovering novel insights and knowledge but also allocating resources in
novel ways. According to Stevenson & Mossi (1990) entrepreneurship is the
process of making changes and it is the pursuit of opportunity seeking
beyond the resources under current control.

1.2 EVOLUTION OF ENTREPRENEURSHIP

The present academic discipline of entrepreneurship has evolved from
various schools of thoughts. One of the most widely accepted approaches
with respect to analysis of venture formation was proposed by Gartner (1985)
who identified the following four different perspectives namely 1) individuals
or persons (i.e., the founder) 2) activities undertaken by the founder during
venture creation process, 3) the external environment and 4) structure and
strategy of the organization. Alvarez & Urbano (2011) recognised three
primary entrepreneurship approaches: 1) “The economic approach” 2) “The
psychological approach” and 3) “The sociological or institutional approach”
(i.e. influence of socio-cultural factors on business and entrepreneurial
decisions of an individual). Six schools of entrepreneurship were advocated
by Bridge, O'Neil, & Cromie (2012): personality theories, behavioural
theories, economic school, sociological perspective, and integrated
perspectives. Cunningham and Lischeron (1991) categorized entrepreneur-
related knowledge into six categories: 1) The Great Person School, which is
centred on the biographies of prosperous business people 2) The school of
psychological traits, which examines how entrepreneurs act in accordance
with their values as they look to satisfy demands; 3) The classical school,
which incorporates the notion of innovation propounded by the economists;
4) School of administration, 5) school of leadership, and 6) School
of intrapreneurship. Nevertheless, the evolution of the concept of
entrepreneurship can be classified into following phases:

Entrepreneur as a Rational Agent

Following Cantillón's heritage, a group of economists has defined
entrepreneur as rational actor with respect his economic environment.
According to this school, an entrepreneur was distinguished from a traditional
investor or capitalist by virtue of being a risk-seeker (Cantillon, Baudeau,
Thunen, Bentham, Say, Knight), an efficient and superior worker (Say,
Smith), an individual possessing highest intellectual capabilities (Cantillón,
Quesnay, Baudeau, Turgot), an efficient coordinator who skilfully
manipulates factors and resources, builds teams and makes effective business
decisions (Marshall, Casson), a passionate information seeker who can
recognize and explore opportunities (Hayek, Kirzner), and the innovator or
promoter of new combinations (Smith, Schumpeter,). The economics
school concentrated on how businesses were developed, how resources were
managed, and how they interacted with the external environment. Most
theorists, except Schumpeter and Kirzner, visualized entrepreneurs as
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Entrepreneurship: performing reactive functions in response to changes in external business
An Overview
environment. Nevertheless, the idea of an entrepreneur lacked clarity and
consensus.

From rational agent to entrepreneurial personality traits:

Research on entrepreneurship then advanced to focus on the individual
characteristics of an entrepreneur and his or her persona instead of merely
categorizing entrepreneurs as a rational economic actor. In particular, trait
theories, personality, and cognitive processes in psychology were used to
identify characteristics and psychological attributes of the entrepreneurs
relevant to business venturing. According to McClelland (1965), an
entrepreneur's personality is defined by their need for success or self-
realization. Several other traits were thought to influence entrepreneurial
behaviour including internal locus of control, self-confidence, inclination
towards risk taking, need for power and achievement as well as drive for
independence. Although numerous studies on personality traits of the
entrepreneurs were conducted, their results were not highly successful. The
findings of these investigations were occasionally inconclusive, and it is
always difficult to identify specific entrepreneur's traits that can lead to
success in business creation and development. Fonrouge (2002) developed
the behavioural school of entrepreneurship which argues that specific
competencies act as the antecedent of entrepreneurial behaviour which
eventually helps in formation of successful business entity.

From Personality Trait to Opportunity Recognition:

In the late 1990s, the study of entrepreneurship turned its emphasis to
recognition and discovery of opportunities with an attempt to comprehend
how they are found, created, and utilised. The information available in the
market is asymmetrically distributed and individuals having specialized
information, knowledge, skills and behavioral attributes are better suited to
decode the opportunities in the market and develop sustainable business plan.
An opportunity may be described as an unfulfilled market need or spotting
any new technological invention that may be further developed as business
idea. According to Kirzner (1997) an opportunity may represent itself as an
“imprecisely defined market need, or un- or under-employed resources or
capabilities”. These market needs or novel technological innovations or under
employed resource and capabilities are transformed into a viable business
opportunity by an entrepreneur through his individual capabilities such as
skills, knowledge, personality traits and distinctive cognitive attributes.
According to Shane & Venkataraman (2000), the discovery of business
opportunities and their exploitation are two connected processes that
constitute entrepreneurship. Ardichvilli et al., (2003) argued that opportunity
recognition and development is not a chance discovery of any existing
opportunity in the market. Rather opportunity development is a continuous
process that requires proactive creation and development of an opportunity
from perceiving an idea to development of complete business plan.
Ardichvilli et al., (2003) also opined that the process of opportunity
development involves three distinct phases namely perception, discovery and
10 creation.
From the opportunity to institutions and network: Introduction to
Entrepreneurship
These theories contend that a collection of environmental, institutional and
cultural factors, as opposed to the capacity or choice to launch a firm,
determine how a business is initiated. As a result, the development of
organisations is dependent on the sociocultural environment. Sociocultural
values are a crucial component of entrepreneurial actions because they foster
an environment where taking risks, innovating, and being self-reliant are
supported and encouraged. This approach of entrepreneurship was developed
using theories from the network, marginalisation, role, population ecology,
and institutional theories. According to institutional theory, a society's
institutions provide the incentive structure and offer the necessary
infrastructure to sustain economic progress. Institutions precede the
behaviour of the entrepreneurs and provide conditions favourable for the
formation of business ventures. Five institutional factors that affect
entrepreneurial activity have been highlighted by Gnyawali & Fogel (1994),
these are i) government policies, law, rules and regulations ii) existing socio-
economic conditions iii) entrepreneurial capabilities and knowledge iv)
availability of financial support to start a new business and v) non-financial
supports.

According to Aldrich (1987) and Zimmer (1986), the entrepreneurs are part
of a larger social network that is essential for the flow of vital resources for
the entrepreneurial process. According to Cimadevilla & Sánchez (2001),
network is envisioned as a coordinated system of “exchange relationships”
set up by the agents. A network can also be described as an integrated system
comprised of a group of actors, either people or organisations, and the
connections and ties that link them together. The pioneering works of Birley
(1986) and Aldrich et al. (1987) highlight that distinctive connections and
chain reactions which arise from the interactions of different groups or actors
lead to the dissemination of knowledge and ideas which eventually promote
the formation of businesses. Entrepreneurs particularly benefit from social
networks because these ties help in accessing new resources, act as source of
pertinent business information, promote opportunity identification and
exploitation, encourage competitiveness, innovation and growth of business.

Emergence of Constructivist and Integrating approach:

Busenitz et al. (2003) highlighted the importance of examining the unique
connections among environment, people, organisational capacity, and
entrepreneurial opportunity. According to Watson (2013), integration of
social sciences disciplines like history, philosophy and sociology would
encourage the diversification of the field of entrepreneurship to focus more
broadly on a phenomenon like business in socio-institutional contexts. A
constructivist framework calls for understanding the relationship between
creation of new value (like innovation or formation of new venture) with the
individual or entrepreneur. To comprehend a business venture in totality, one
must comprehend the person and the project and the connections between
them, strategies for survival, development processes, and ultimately, the
effects of the environment and various resources available therein.
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