Encyclopaedia Britannica's editors oversee subject areas in which they have extensive knowledge, whether from years of experience gained by working on that content or via study for an advanced degree. They write new content and verify and edit content received from contributors.
Encyclopaedia Britannica's editors oversee subject areas in which they have extensive knowledge, whether from years of experience gained by working on that content or via study for an advanced degree. They write new content and verify and edit content received from contributors.
entrepreneurship, the state of being an entrepreneur, or a person who organizes, manages, and assumes the risk of a business with the goal of generating economic value. The term is derived from the Old French verb entreprendre, âto undertake.â Entrepreneurship is one of the four factors of production (the economic resources, both human and other, that are used to bring about a flow or output of goods and services), the other three being land, capital, and labour. It nowadays plays a significant role in capitalist economies, often involving high-risk ventures that forge innovative commercial strategies to sell existing products and services or that introduce new products and services altogether.
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Adam Smith, paste medallion by James Tassie, 1787; in the Scottish National Portrait Gallery, Edinburgh.
Courtesy of the Scottish National Portrait Gallery, Edinburgh
The roots of the concept of entrepreneurship appear in a seminal work by the Irish economist Richard Cantillon, Essay on the Nature of Trade in General (originally in French, 1755), in which he distinguishes between wage earners with fixed incomes and wage earners without fixed incomes. He places entrepreneurs in the latter category, thereby conveying the adventurous volatile nature inherent in their activities. In The Wealth of Nations (1776) the Scottish economist Adam Smith asserts that the role of entrepreneurs is to serve as intermediaries between other factors of production; entrepreneurs are thus proprietary capitalists whose activities can fuel the division of labour. The French economist Jean-Baptiste Say later underlined entrepreneursâ innovative nature by contending that they are uniquely capable of coordinating economic resources to meet market demands.
The American economist Joseph Schumpeterâs 20th-century contributions shed light on the distinction between an entrepreneur and a capitalist. He introduced the term Unternehmergeist, or âentrepreneur-spirit,â to designate a driving force of innovation, one that revolutionizes economic structures and thereby fosters constant economic change. In his view, a healthy economy depends on the dynamic disequilibrium initiated by entrepreneurs.
