What Is Entrepreneurship?

Entrepreneurship is the foundation of capitalism, and is generally known as the process of creating a business to bring a product or service to the market, managing, assuming risk, but also bearing the financial rewards. While business owners can be considered as entrepreneurs, the concept has various meanings attached to it including creation of value, innovation or creativity, and being an agent of change. Most commonly an entrepreneur creates a firm to bring their idea into fruition, aggregate capital and labor in order to produce goods or services (Hayes, 2021). Entrepreneurs are seen as innovators to their respective industries, bringing new ideas or goods, or potentially changing or reinventing the industry or business processes as whole.

The word ‘entrepreneur’ originates from 13th-century French verb entreprendre, meaning ‘to undertake.’ By the 16th century, it was used to describe someone who undertakes a business venture. It has been since defined as someone who takes on personal financial risk, creates value by moving resources, and a person who assumes risk and management of a business. In the 20th century, economists Joseph Schumpeter and Israel Kirzner redefined the understanding of an entrepreneur by emphasizing the individual’s role an innovator, a disruptive force in the economy (Sobel. n.d.). It can be done through various paths: by introducing completely new products or creating new industry (Netflix with online streaming), drastically improving existing products to push the industry further (Steve Jobs and Apple with both computers and smartphones) or changing management or production processes drastically (Ford with his motor vehicle assembly line).

Entrepreneurs seek to exploit a commercial opportunity through bringing a new product to the market or sustainably improving an existing good, service, method of product. It has been in recent years especially strongly associated with the American identity, as the country and its capitalistic society is based on entrepreneurial undertaking in the spirit of freedom, self-reliance, and commitment to values of fairness, innovation, and cooperation. That is why entrepreneurs, both currently and in the past, have played a strong role in driving the economy while also being a part of popular culture as the concept of ‘making it on your own’ has been highly respected in the nation’s social fabric.

Cunningham & Lischeron (1991) present six approaches for describing entrepreneurship. The first is the ‘Great Person’ approach which suggests entrepreneurs have inborn intuition and vital traits to succeed in the industry and be good businessmen. The ‘psychological characteristics’ approach argues that in order to be an entrepreneur one needs to have unique skills, values, and attitudes which drive one’s character and decision-making. The ‘classical perspective’ emphasises innovation, focusing on progress and doing rather than owning and attempting to money, which are secondary to discovery and creativity. The ‘management’ model presents entrepreneurs as great managers, organizers, and evaluators of risk, which can be trained in technical functions of management, planning, and budgeting. The ‘leadership’ model emphasises entrepreneurs as leaders which can easily adapt to the needs of the people and motivate others to support their ideas. Finally, there is the ‘intrapreneurship’ approach that suggests entrepreneurship can be used in complex organization and organizational building in to create markets and expand services (Cunningham & Lischeron, 1991).

While definitions of entrepreneurship can be broad, there are four key elements to each one which are innovation, organization, risk, and vision. Innovation describes how the entrepreneurship contributes to the economy in terms of variation and uniqueness and the extent that these ensure success of the business. Entrepreneurs implement innovative ideas based on available opportunities to bring something new such as product, service, technology, manufacturing process, or even marketing strategy (Lounsbury et al., 2018). Organization is absolutely vital in entrepreneurship, not just from the perspective of running a business, but the entrepreneur typically has to manage multiple channels of communication, employees and stakeholders, and supply chains simultaneously. Organization is necessary to achieve strong output and efficiency, validate one’s product, and develop a solid business model to set the firm up for success (Hjorth et al., 2015). The common adage is that entrepreneurs work 24/7 and based on the accounts of many, especially at starting stages of the business, it requires maximum output and organization.

Risk is also an expected element of entrepreneurship, as it consists of building something new. Opening a new business in itself is usually considered risky due to the many economic factors at play, but building firm around an idea which is inherently innovative, presents an even greater risk since nobody has done it before with that specific product (Antoncic et al., 2018). Finally, there is the prospect of vision, which is generally expected in all modern organizations, but takes on a different meaning in entrepreneurship. The entrepreneur and their firm must have a strong vision, with a direct purpose and objectives, with the foresight on how the business and industry will move forward. It is around this vision that the organizational culture is formed, and business decisions are made (Kreiser et al., 2019).

There are a range of factors both internal and external that can either contribute to or inhibit entrepreneurial success. Business sustainability is a critical aspect for society, so creation of new business ventures must consider the four key domains of environment, behavior, human relations, and business activity that can serve as drivers or barriers to sustainable entrepreneurship. The environmental and business factors typically cover the three eleemnts of economic prosperity, environmental integrity, and social sustainability. Economic prosperity focuses on financial strength and differentiation, as well as an environment that is beneficial for new businesses. Environmental integrity encompasses protections to safeguard the environment and protect needs of future generations while social sustainability focuses on ensuring social and organizational wellbeing (Tur-Porcar et al., 2018). These elements are regulated by external aspects such as policies, regulations, social awareness, business-friendly environment but also internal elements of profit, business management, sustainable practices, and CSR.

Furthermore, there are also behavioral and human relations factors of entrepreneurship. There are also three categories of cognitive and motivational factors, values and ethics, and emotional factors. Based on the social cognitive theory, entrepreneurs are active contributors to the development of circumstances surrounding their lives and business. Based on this belief, motivation and self-efficacy are formed which regulated cognitive, motivational, and decisional processes, it is what allows entrepreneurs to initiate and fulfill innovative actions. Another aspect to consider are value and ethics, particularly when it comes to sustainability, these are factors which contribute to the development of necessary behaviors in the entrepreneur, which is then reflected in the firm’s actions. Finally, there is the element of emotions, which can be both a powerful drive and inspiration for the entrepreneur, but also create instances of helplessness, anger and despair, emphasizing the need to cope with both types of emotions and failure, as entrepreneurship rarely succeeds immediately or on the first attempt (Tur-Porcar et al., 2018). Based on these human and emotional factors, the concepts of organizational motivation and leadership emerge. A business needs strong but transformative leadership with a congruence and dependable reputation to achieve business success.

Elon Musk is most likely the name that is synonymous with entrepreneur in the modern-day. He is an engineer, business magnate, and entrepreneur that has played a role in creating or growing several highly successful and innovative companies across a variety of industries, most associated with technology in some form. Elon Musk was born in South Africa and immigrated to the US to attend college. He was able to come up from being poor, to now being the richest individual on the planet by net worth. Musk is well-known not only as the creator and business genius of the various companies, but as a highly charismatic, intelligent, and eccentric individual that has a unique way of approaching problems and generating ideas.

In the early 2000s, Musk both started a company called SpaceX and joined one at the early stages called Tesla. SpaceX was inspired by the vision that Musk had for space exploration and Mars colonization, given how expensive space flight was, he wanted to develop affordable and reusable spacecraft. After years of failures, Musk and his team were able to develop and then perfect the technology, now being a primary partner for NASA, developing new spacecraft, pioneering space tourism, and being essentially at the forefront of human space exploration. Meanwhile, Tesla, perhaps Musk’s most famous entity, is known for the production of fully electric vehicles. Starting as a small company, with bare capital, hindered production, and underdeveloped technology, Tesla is now the most expensive car brand by valuation and has transformed the automotive market by pushing it towards fully electric vehicles, not only by making the technology viable and affordable, but also creating an infrastructure (charging network) to support it (Wong, 2021). Musk is also involved in a series of other ventures such as the Boring Company by attempting to create new transportation networks via underground tunnels, Starlink which is attempting to provide high-speed internet from space, and even highly improbable technologies such as Neuralink that is attempting to develop methods to control technology using just brain signals.

A combination of factors makes Elon Musk a successful entrepreneur, ranging from personality traits to the way that he creates and manages his companies. In itself, Musk is a strong and charismatic leader. His intelligence combined with a unique quirkiness is appealing to many, he is both self-confident but also demonstrates humanity. However, his most admired traits as an entrepreneur are his work ethic and perseverance (Garn, 2021). Musk has faced failure and denial many times, starting with his first ventures when he was attempting to become CEO, eventually achieved the position at PayPal but was quickly ousted due to difference of opinion and lack of strategy. While he did make significant amounts of money from those sales, the time at the companies brought many valuable lessons to Musk as a manager and leader, which he did not have before due to lack of experience (Lazatin, 2020).

Musk is highly focused, often driven by a specific vision for each of his companies, as key trait as emphasized earlier for entrepreneurs. This is what allowed him to succeed with Tesla and SpaceX, developing technologies that no one thought were remotely possible in the near future. To support his vision, Musk also puts in the work, known for working everyday of the week, at times 16 or more hours per day, especially in times of crisis. An example of this is when starting Zip2, he would sleep in the office, and code at night until the website was built. Similarly, as Tesla was facing multiple production issues, he would notoriously sleep in the factory offices, spending all his waking hours to manage the crisis, until Tesla reached a point of profitability (Matousek, 2018). Throughout his ventures, Musk and his entrepreneurship are not only innovative, but adaptable. Musk does seem to recognize niches in the market and create or improve innovative solutions to solve them, driven by humanitarian and sustainable vision as can be applied to virtually every one of his companies.

Musk is a highly admired entrepreneur because he is a visionary. He creates entrepreneurships when there is a need. Online systems need a payment system, he helped co-found PayPal. Space launches were extremely expensive, he created technologies to reduce the costs multiple times over and popularize commercial investment in the industry. Recognizing that climate change is a serious issue, but understanding that people need cars, he developed Tesla which not only produces electric cars but also invests heavily into developing various solar panel and renewable technology (i.e. his other ventures such as SolarCity and solar roof panels for private households). Musk is the example of the American dream, by coming from zero wealth, creating his own, and pushing the status quo to achieve the best potential outcomes based on his vision (Clifford, 2017. Some have succeeded, some failed, and others have only seen moderate progress, but entrepreneurship is at the core of Musk’s approach, and he is adamant that instead of settling down, one should push the boundaries of what is possible.

References

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