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The Nature of Entrepreneurs

CHAPTER 2 ENTREPRENEURSHIP

2.2. The Nature of Entrepreneurs

word itself and its importance has been debated by many scholars and also mentioned as a backbone for the entrepreneurial activities of entrepreneurs. Similarly, supported by Corner and Ho (2010:635) opportunities are positioned within the heart of entrepreneurial activities as well. In this regard, Kirzner (1985) defined entrepreneurship as an awareness of untapped opportunities which have already emerged in market conditions. Moreover, Kao and Stevenson (1985) asserted that entrepreneurship is a value creation process that is accomplished through the recognition of diverse opportunities in the business environment. In a similar manner, Kaish and Gilad (1991) explained entrepreneurship as two-fold process which identified as a process of discovery followed by exploiting the opportunity of lack of balance.

To sum up, entrepreneurship is the unique process of doing something new or creating something fresh to obtain a commercial benefit or commercial value while assuming risks, working under uncertain circumstances, and seeking opportunities. In addition to this, entrepreneurial activity can be described as an; innovative way of determining the gap which emerged among human needs and goods & services (which are available in the marketplace) to create value not only for individuals (e.g. personal gain) but also for society (e.g. employment generation, economic development, or country development).

Figure 2.1. Who is an entrepreneur?

Source: (Defoe, 1727; Cantillon, 1755; Smith, 1766; Stevenson, 1983; Sharma, 2016)

Back in the 18th century, Defoe (1727) defined entrepreneurs as “tradesmen” by profession. As remarked by the same author; tradesmen and entrepreneurs are the same individuals because they show similar features in regards to their nature, definition, and domain. But oppositely, Abu-Saifan (2012:23) claimed that; entrepreneurs and businessmen differ from each other in terms of outputs they create. According to his thoughts; entrepreneurs create needs initially then businessmen try to satisfy these needs which have already been created by entrepreneurs. Besides this, Cantillon (1755;1931;2010) clarified entrepreneur as an “adventurer” who willing to undertake several severe risks and display high tolerance towards uncertainty while investing in a new enterprise (Hisrich and Peters, 1989:7; Hidalgo, 2014; Langroudi and Momayez, 2014). As it has seen through this definition, Cantillon underlined the adventurous feature of entrepreneurs by mentioning the “risk-bearing” and “uncertainty return”

feature of the entrepreneurial activity. According to Cantillon, entrepreneurship is all about acquiring inputs and services before making any sale of a product, which has no pre-designated value in the marketplace with significant uncertainty entailed. In other words, buying a good at a certain price and selling them at an uncertain price is the summary of an entrepreneur’s entrepreneurial activities which enormously involve

Who is an entrepreneur?

Tradesman (Defoe,

1727)

Adventurer (Cantillon,

1755)

Capitalist (Smith,

1766) Gambler

(Stevenson, 1983) Organization

Builder (Sharma,

2016)

adventure. From the similar point of view, Stevenson (1983) also emphasized the risk factor as same as Cantillon and he explained entrepreneurs as a “gambler” by the same reasons that mentioned above broadly. On the other hand, Smith (1776) asserted that entrepreneurs are “capitalist” individuals who create an organization from scratch with an aim to gain commercial benefits by taking some considerable risks as well.

Similarly defined by Sharma (2016), entrepreneurs act as “organization builders” who have the ability to establish a new business or manage a new venture (Mescon and Montanari, 1981:413) which has to be new and not previously established with the same purposes within the borders of competitive marketplace (Hornaday and Bunker, 1970).

In addition to these definitions, the narrow meaning of the term has been improved by other scholars through the addition of new features and make some diversifications.

For instance, similar to previous definitions; Say (1803) recognized entrepreneurs as the people who create an economic value while taking considerable risks within the borders of a business environment. In addition to this, he added that entrepreneurs have an ability to organize and manage the factors of production alongside taking some risks.

According to him, entrepreneurs can easily alter the insufficient structure of capital and resources by using them in more productive and higher efficiency areas (Dees, 2001). Considering this definition, it can be argued that Say added overseeing capabilities of entrepreneurs to the related literature. In a similar vein, McClelland (1976) remarked that an entrepreneur has a leadership role over the means of production and also produces more than he consumes in order to gain personal profit as well. Besides this, Drucker (1985) defined entrepreneur as an individual who performs his roles in order to maximize the opportunities in the market place. In a similar way, Bygrave and Hofer (1992) described entrepreneur as an individual who sees a business opportunity and establish an organization to pursue it. In addition to this, Ireland et al. (2003) melted the words of entrepreneur and opportunity in the same pot and clarified the meaning of entrepreneur as an opportunity seeker who can identify and use opportunities that have never been noticed by anyone before.

Furthermore, Hisrich and Peters (1989) underlined the functional role of entrepreneurs and claimed that the creation of great value, personal gaining, or opportunity recognition becomes possible if an entrepreneur brings essential factors (e.g. labor, raw materials, or assets) together successfully. On the other hand, Schumpeter (1934)

asserted that entrepreneurs play a crucial role in the development process of the current economic environment. In this regard, he introduced them as “innovator” and “change agents” by taking into consideration of their ability to change the current state through the act of making new combinations in a creative-destructive process of capitalism (Schumpeter, 1934; Dees, 2001:2; Rahim and Mohtar, 2015; Scarborough, 2016).

From a broad perspective, Bolton and Thompson (2004) identified entrepreneurs as “a person who habitually creates and innovates to build something of recognized value around perceived opportunities”. The last but not the least, entrepreneurs are defined as “risk takers”, value creators”, and “innovators” (Peredo and McLean, 2006) who develops an idea first, then adopts this idea to the market opportunities, and finally makes a combination between existing resources in order to reduce costs, maximize benefits, generate self-employment, and eventually ensure economic benefits (Gartner, 1990).

The review of the literature demonstrated that there are various types of definitions were specified by scholars about the terms of entrepreneurship and entrepreneur respectively. As mentioned before, these terms are blended terms that are used simultaneously all the time. In this regard, entrepreneurship can be referred to as a whole of activities which performed by entrepreneurs. More precisely, while entrepreneurship is defined as a process, entrepreneurs have been described as the owners of this process. Therefore, in order to create a deep understanding of the topic of entrepreneurship or social entrepreneurship, entrepreneurs' identity, nature, and also their personality traits should be investigated in detail and taken into consideration.