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An Outline of the Concept of Entrepreneur: Introduction

An Outline of the Concept of Entrepreneur: IntroductionThe concept related to entrepreneur has been widely used since the oldest times up to present times, as it is encountered in the specialized literature under different aspects. The notion of entrepreneur originates from the French word “entreprendre”, which means to carry on, to get involved in the creation of a thing, to engage into something. Payday Loans Online

In the older times, the typical entrepreneur could be encountered among the militaries and merchants, since wars were often carried out due to economic reasons. The military leaders, assuming considerable risks, could obtain consistent gains if they had a successful strategy, and the merchants used to risk their fortunes in this context too. Often, the merchant and the fortune hunter were the same person. Marco Polo, for example, was a fortune hunter who wanted to settle trade routes to the Far East. The merchant – fortune hunter assumed the physical and emotional risk of such an action, and the capitalist assumed the economic risk. At the end of the mission, the capitalist received 75% of the gain, and the merchant received the difference.
Further, due to the fact that in the Middle Ages the trade was considered a degrading activity and because of the restrictions imposed by the Church over the capital offer, the typical entrepreneur was a clerk. He was in charge, for example, of the construction of great architectural works, such as castles, fortresses, public buildings, monasteries or cathedrals. Being engaged in such extensive projects, the entrepreneur did not assume any risk; moreover, he was a project leader that used the resources supplied by the commanding party most of the times. Although their main concern was deontology, the medieval writers asserted nevertheless that a good merchant must be balanced when it comes to risks and well informed in terms of the merchandise quality, price and costs, but also must carefully consider details and be emotionally prepared in case of failure.
The 17th century entrepreneur was the person that concluded a contractual arrangement with the government in order to provide a service or to purchase a certain product, assuming the risk related to such transactions. Although the contractual price was fixed, the entrepreneur could gain or lose following to such transaction, according to his purchase: at a lower or higher price. In England, the land speculators and the farmers were also considered as entrepreneurs.
In the 18th century, the role of the entrepreneur in the economic theory is recognized for the first time. Among the authors that approached the issue of the entrepreneur, one may mention Richard Cantillon, Adam Smith, Jean Baptiste Say, Johann Heinrich von Thunen, J. M. Keynes, Joseph Schumpeter, Peter Drucker, Leon Walras, and others. Richard Cantillon, a French economist, associated the economic risk assumption with the entrepreneur. For Cantillon, the entrepreneur was a person that assumes risks, since he/she buys at a fixed price, he/she sells at a doubtful price, and in consequence, he/she acts in risky conditions. He considered the entrepreneur as the main figure in the economy.
The term “fortune hunter”, which is associated to the entrepreneur, was slowly replaced by “undertaker”, entrepreneur, about whom Adam Smith wrote first that it became synonym with the common businessman. That period was associated to the industrial revolution in England, process by which the entrepreneur had a visible role in assuming the risk and transforming the resources. At the same time, the entrepreneur proved to have a special capitalist spirit. The many inventions during the industrial revolution had not been possible without the support of those persons that held capital, but they did not possess the skills of an entrepreneur.
In the 19th century, the entrepreneur was better identified from an economic point of view. As a rule, he/she was not different from the manager. For the first time in the economic literature, the entrepreneurial activity becomes synonymous with management, in the contemporary sense of the word.
The lack of importance granted to the entrepreneurial management was seriously discussed on two notorious occasions in the 20th century. The first occasion was the publishing of Frank Knight’s work entitled “Risk, uncertainness and profit”, a famous work at its time, but less read afterwards. 10 years before the advent of Knight’s book, the young Joseph Schumpeter manifested a very different opinion over the economic issue in the “Theory of economic development”. Did one reach an accurate understanding of the entrepreneur’s characteristics, functions and importance by the 21st century?