Forms of Entrepreneurship

According to Carree and Thurik 2002, entrepreneurs in history have often been represented in many faces and assume different roles. As identified by scholars such as Schumpeter, Kirzner and Knight, entrepreneurs can be termed as “innovators, profit opportunists and uncertainties and risk takers” respectively.

Schumpeter drew his attention to understand entrepreneur as an innovator. As an innovator, the entrepreneurs performed new combinations which Schumpeter enterprises. An entrepreneur according to Kirzner perceived profit opportunities. This role is what was labeled as Kirznerian entrepreneurship. The last role of an entrepreneur is that of assuming the several risks and uncertainties which may be associated with running a business. This role is labeled as Kinghtian entrepreneurship. As the individual introduce a new product in the market or start a new business, this entrepreneurial role can be described in terms of the three labels. The individuals who launches a new firm or introduces new products may eventually turn up to be a total failure.

Entrepreneurship Effects in the Growth of Economy

To sum up the contribution of entrepreneurship to economic growth, this has provided five strands of empirical evidence to show their involvement. The first evidence mainly deals with the turbulence effect of entrepreneurship on the growth of economy. Turbulence can be viewed as the total entries and exists in regions or industries and can easily be interrupted as one of the powerful indicators of entrepreneurial activities. The effect of and changes in sizes distributions in regions represents the second the strand of evidence. It is believed that the change in size distribution and its ultimate effects can have a significant impact on the growth of economy. Thirdly, the numbers of market participant in any industry will finally have an important effect on economy growth and this recognized as another strand of evidence of the role of entrepreneurship in economic expansion. Empirical literature has also identified the effect of the number of business owners and self-employed individuals in economic growth. This is the fourth strand of evidence that seeks to appreciate the role of self-employment in the growth of economy in any state. Lastly, the economic history of previously centralized and planned economies will also have an influence in economic growth of countries. For instance, in Eastern Europe, small enterprise of development served as the most vital part of the transitional process which has seen economic growth in the area. The turbulence effect of entrepreneurship on economic growth refers to the entry and exits which however appears to have minimal contributions to the growth of the economy in the short run. Nevertheless, the entry-exit turnover will make a significant contribution especially in service industry than in manufacturing industry in the long run as evidence by empirical research done by Bosma and Nieuwen-huijsen. The effect of size distribution changes of firms on growth performance has also been recognized particularly when examining the shares of small firms in the manufacturing industry in the European states. Competition among firms which is a commonplace for entrepreneurs has been shown to have a positive effect in the growth of economy. The increased numbers of participants in the market- compounded with entrepreneurial activity are some of the contributions of the entrepreneurship in economic growth. In particular, local competition which is measured in terms of the relative number of businesses in a region per worker encourages growth of employment in industries thus economic growth.

Entrepreneurship encourages self-employment and this has been found to have an impact in productivity growth. This is however a much contested observation whether countries should adopt the equilibrium or the self-employment model which has largely failed countries such as Italy. According to Chang (2011), the high of self-employment in the country have proved to be inefficient for economic development. Italy has in the past experienced large negative impacts on the growth of economy because of self-employment. Scandinavian countries represent cases of countries which relatively low rates of self-employment than the equilibrium and have often been characterized by extensive public sector and low rates of entry and exit. The contrary is seen when analyzing the business structure in West Germany where they have low rates self-employment. In Germany, there is a total failure in the restructuring the economic policies as the United Kingdom has done. The industrial policy in German as repressed the structural changes by solely supporting large-scale industries with enormous subsidies. This has led to the lack of a vibrant economic growth made of new industries and firms in German and thus a serious barrier to innovative activity.

Future perspectives in Analysis

From various strands of literature, there have been many insights that have inspired a number of frameworks which should be embraced in the analysis of how entrepreneurship plays a critical role in economic development. Career and Thurik (2002), found three different levels of analysis to be evident when associating entrepreneurship to economic growth as this meant the individual level could be linked to the macro- economic sphere. These levels include the individual, firm and the macro levels of the firms and thus require a vehicle which can transform their individual ambitions and qualities into workable actions. In small firms, the entrepreneur usually has the controlling stake which acts as the vehicle for transformations. Larger firms have also been found to mimic small firms in terms of business units, joint ventures and subsidiaries in order to introduced entrepreneurship or corporate entrepreneurship. The results of such entrepreneurial manifestations at the level of the firms must do with how novel processes, products, innovations, and entry to new market or start-ups are. At national, industrial and regional levels, entrepreneurial actions are all composed of new experiments.

Entrepreneurship plays a critical role in the development of the economy as this is the key contributor to innovativeness and product improvement. It is one of the important ingredients to the creation of new employments and in the building of communities in ways of offering them jobs. By contributing to local charities, taking part in local business, investing in projects in communities and creating and participating in different networks in entrepreneurship, they building robust communities which contribute to the community development. Government should develop policies which will enhance entrepreneurship by understanding the critical difference existing between small business owners and entrepreneurship. At the same time, a misconception about entrepreneurs and where entrepreneurs can be found can also help the local people to create the right picture of entrepreneurship and thus become aggressive and contributes to economic development.