Entreprenuership-Theories

                        The Theories of Entrepreneurship

a)      Richard Cantilon

An entrepreneur as a person with foresight and competence to operate in conditions of uncertainty. Richard was particular about an entrepreneur being a person who performed in uncertain environments because the market demand is not perfectly predictable not necessarily that his products are untested an untried. Cantilon contributed to the contention that an entrepreneur is somebody who has foresight and confidence to operate under conditions of uncertainty.He associated risks and uncertainties with administrative decisions of entrepreneurs. He identified that profit to the entrepreneur arises out of decision making and  risk taking.

b)     John Baptise

Entrepreneurs coordinate and combine the factors of production

John described the entrepreneur as a rare phenomenon who is able to coordinate and combine the factors of production. He places emphasis on the variety of markers and inputs which the entrepreneur has to deal with “ successfully” in effect, the entrepreneur is expected to “ perceive and realize potential arbitrage” in addition to taking risks associated with uncertainty. According to say, the entrepreneur must surmount abundant obstacles, suppress anxieties, repair misfortunes and devise expedients. As a result, the entrepreneur accommodates the unexpected and overcome problems successfully in dealing both the input and consumer market.

A possible conclusion form this contention is that the entrepreneur is a locator of resources in the adjustment process during equilibrium, during equilibrium, towards equilibrium.

c)      Carl Menger,(1950) and the Austrian School

Carl Menger and what is known as the Autrian school in economics emphasizes the locative role in directing that entrepreneurs role is that of risk taker in an uncertain environment. They added that the entrepreneur needs information and has to have the ability to analyze and use this information to make the correct decision in allocating resources.

Other followers of the Austrian school of Thought went on to add that the alertness, superior perception and leadership of the entrepreneur cause factors of production to be allocated and continuously allocated.

d)     Joseph Schumpeter (Innovation)

He in the early 20th  century provided  perhaps one of the most comprehensive analyses     of entrepreneurship within the context of economic development. He introduced the  notion that the entrepreneur is not just an allocate or director of resources, but combines inputs in untried combinations (innovator). Schumpeter asserted that the entrepreneur only remained an entrepreneur for as long as he is innovative, and losses that characteristics   as   soon   as   he   falls   into   the   routine   management   of   the   business.

Schumpeter described this process as discrete rather than constituting  a  gradualism  change  or evolution.

e)      MC Cleland (a function of High Achievement)

According to MC Cleland, the characteristics of entrepreneur have two features- first doing things in a new better way and second making  under  uncertainty.  He emphasizes achievement orientation as most important factor for    entrepreneurs.

•   Individuals with high achievements orientation are not influenced  by  considerations of money or any other  external  incentives.  He  argues  that  profit and incentives are merely yardsticks of measurement of success of entrepreneurs with high achievement orientation. The achievement  orientation  can  be  taught  and increased by deliberate  efforts.

•   He finally observed that the individual with high achievement orientation take calculated risks and can make decisions where there are incomplete information or have tolerance for ambiguity Psychologists call this behavior a type –A- behaviour.