ENTREPRENEURIAL ABILITY

We shall give the term a specific meaning by assigning four related functions to the entrepreneur:

1. The entrepreneur takes the initiative in combining the resources of land, capital, and labor in the production of a good or services. Both a sparkplug and a catalyst, the entrepreneur is at once the driving force behind production and the agent who combines the other resources in what is hoped will be a profitable venture.

2. The entrepreneur undertakes the chore of making basic business-policy decisions, that is, those non-routine decisions which set the course of a business enterprise.

3. The entrepreneur is an innovator – the person who attempts to introduce on a commercial basis new products, new productive techniques, or even new forms of business organization.

4. The entrepreneur is obviously a risk bearer. This is apparent from a close examination of the other three entrepreneurial functions. The entrepreneur in a capitalistic system has no guarantee or profits. The reward for his or her time, efforts, and abilities may be attractive profits or losses and eventual bankruptcy. In short, the entrepreneur risks not only time, effort, and business reputation, but his or her invested funds and those of associates or stockholders.

The art of competition is known as entrepreneurship.

Adapted from: Campbell R. McConnell, ECONOMICS 10th edition, p.20