Wednesday, February 11, 2009

Definitions of Entrepreneurship

The article I am reading today (I might write about autonomy tomorrow) has several definitions of the word "entrepreneurship" in it. One such definition from Joseph Schumpeter states that "Entrepreneurship... consists in doing things that are not generally done in the ordinary course of business routine; it is essentially a phenomenon that comes under the wider aspect of leadership." I like that definition because I see a clear link between entrepreneurship and leadership, and I want to study those things in my own research in time. Without a leader driving an idea, it never comes to fruition as a venture, much less a profitable venture. That idea is nicely captured by Agarwal whose knowledge spillover theory of entrepreneurship states that "entrepreneurship is the result of opportunities created through knowledge investments made in one organization, but commercialized through innovative activity in a new venture." More simply put: great ideas require a driving force to become successful ventures. I use the term venture because corporations already in operation can start new product lines, new divisions, or other elements not in their present business model and thereby generate a new venture. That is what researchers call "corporate entrepreneurship."

I thought these ideas would be a great way to explain to people who keep asking me "So you want to research new businesses?" that entrepreneurship does not only mean "new businesses." It more broadly refers to newness, in my mind, newness driven by an individual or team with an interest in developing a new idea or reworking an old one into a profitable venture. In the context of this blog, "profitable" does not have to mean increased bank accounts. Many small business owners find greater personal fulfillment in their endeavors, which would be emotional or spiritual capital. Some do a lot to give back to the community through their business, which would be social capital (there is a branch of growing research called Social Entrepreneurship that studies this idea). More ability to manage one's schedule appeals to many entrepreneurs - especially stay at home moms with online businesses - which might be thought of as "time capital". Simply put, the reason to start something new does not only stem from a desire to be financially wealthy. Dave Ramsey actually points out, I believe accurately so, in his book Total Money Makeover that most people do not start a business to become wealthy. They just want to do something they enjoy doing, and often that turns into a profitable business (passion coupled with effort can have amazing results).

So, not to be too corny, but I believe I have managed to bring my current endeavor full circle and relate it all back to this blog. I am "making that money" by pursuing a dream. Fulfilling that dream will give me tremendous emotional capital that will make me a far richer man than I might otherwise be. Perhaps that even qualifies me to be an "educational" entrepreneur. Whether or not anyone else does, though, this article really helped me highlight my own thoughts on why this field of research fascinates me and draws my attention so much. I look forward to adding to it soon enough.

-- Robert

5 comments:

Great JAJA! said...

when you write about the schools say the names so we'll know which ones you're going to!

Robert said...

I leave them off intentionally because of the slight risk that they'll surf to my blog and read something I write about one school or another and decide not to accept me. In this modern age, stranger things have happened. I'll email you the list, though, JAJA.

Robert said...

Oh, and thanks for commenting. I've heard you're among those who read but never comment. Welcome.

le35 said...

There comes a point where social or time or other capital cannot compensate for other capital that you have to have in the business. If you're losing money, or just plain not making anything, you don't take home any profit, then the business is worse for you than if you were just in it for the money.

In other words, if you can't feed your family, you gotta find another job.

P.S. I understood this. I must not be totally stupid.

Robert said...

I believe your response explains very simply the reason why many entrepreneurial scholars do not like the area of social entrepreneurship. They realize, like many who are involved in business do, that corporations already do a lot for the communities where they operate out of their profit stream. Businesses that dedicate themselves to something unrelated to profitability often end up wearing an "out of business" sign because they fail to grasp the underlying need to make money. It's wonderful to want to do great things for the environment, for the community, and for those in need, but doing so exclusively is not really a business per se, and it will not last as one because it will inevitably require some form of donation to operate. If those businesses instead ran themselves like a "normal" business they could take the profits they consider excess and turn those into the goods and services for the area they care about (e.g., recycled products, help for soup kitchens, etc.).

Basically, you hit the nail on the head as to why social entrepreneurship needs to fall under the general heading of entrepreneurship because businesses need to operate within some level of profit-seeking normalcy if they are to remain in business. I wish, oh how I wish, I could explain this to my socially minded friends. Profit is not evil. Profit is part of business, and it is the oxygen and food and water that keeps the body of the business alive. WIthout it, the body dies.

Re: P.S. I'm glad you understood the post. I fully expected you would. You're a smart woman. That's just one of the many reasons I married you.