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How Entrepreneurs Improve the Economy

Written by: Sylvie Colette•edited by: Jean Scheid•updated: 6/24/2011
Self-starters, creative thinkers and service oriented entrepeneurs are a necessary
part of the work force. Business owners deserve respect. Go a step farther and
explore how entrepreneurs improve the economy.
Entrepreneurs are vital to the progress of the a country’s economy. These small
business owners are instrumental to improvement of the nation. Especially in times
of recession, their business activities help spur economic activity and encourage
exchange. Entrepreneurs, therefore, serve an important purpose in our society by
contributing to the improvement of the economy in a number of ways.
5 Reasons Why Entrepreneurs Improve the Economy
1. Entrepreneurs create businesses that hire people. This is the topmost reasons
why entrepreneurs improve the economy. Their businesses require a number of
employees to help them run the business; from accountants to computer
programmers to human resource staffs all businesses have them.
Entrepreneurs provide their employees a steady job and income. The workers’
income puts food on the table and feed their family members. The same income will
be needed to be able to buy necessities such as food, clothing and shelter. This in
turn will help spur the economy and provide necessary jobs and businesses for
people that meet these basic needs.
For those who earn a lot more, they can now afford to spend on luxuries such as
vacation, jewelries and concerts. This will benefit the people working or providing
these kind of businesses.
2. Entrepreneurs pay taxes. The small businesses that the entrepreneurs
established are required to pay necessary local, state, and/or the federal
government taxes. The tax dollars from the businesses will be used by the
government to provide people with basic services such as health care,
transportation, education, construction and so many others.
3. Entrepreneurs create demand for products which in turn create jobs and other
businesses. Entrepreneurs need to buy products in order to produce finished goods.
They need raw materials. Sometimes these raw materials are finished goods
themselves, for instance gold.
Buying raw materials for their businesses will create other businesses which in turn
create more jobs. For example, it is necessary for fashion designers to buy silk
fabrics, so they go to silk fabric suppliers. These suppliers may require workers to
keep tract of their inventories and orders. And the cycle goes on and on, further
stimulating the economy.
4. Entrepreneurs introduce new technologies to the market. This is the disclosive
nature or history-making practices of entrepreneurs. They come up with new
technologies, create new products and provide new services. Steve Jobs, the

founder of Apple Computers, introduce us to Mac and iPod. Bill Gates founded
Microsoft. The works of these two individuals led to the creation of millions of other
software programs that we see today.

5. Entrepreneurs stimulates the economy by instilling confidence in people. The
economic health of a nation generally depends on its GDP (Gross Domestic Product)
performance. Entrepreneurs, through the jobs and businesses they create, are vital
to the GDP equation. Having a health economy makes people confident to invest,
live and work in that place even in times of recession.

Understanding the Timmons Model of Entrepreneurship
Written by: N Nayab•edited by: Jean Scheid•updated: 4/30/2013
According to the Timmons Model of Entrepreneurship the three critical factors of a
successful venture are opportunities, teams, and resources. The successful
entrepreneur is one that can balance these critical factors.
Jeffery Timmons of Babson College in Massachusetts developed the Timmons Model
of Entrepreneurship as his doctorate thesis at Harvard University. Further research
and case studies have since then enhanced this model as a guide for entrepreneurs
to increase their chances of success.
The Timmons model bases itself on the entrepreneur. The entrepreneur searches for
an opportunity, and on finding it, shapes the opportunity into a high-potential
venture by drawing up a team and gathering the required resources to start a
business that capitalizes on the opportunity. In the process of starting the business,
the entrepreneur risks his or her career, personal cash flow and net worth. The
model bases itself on the premise that the entrepreneur earns rewards in
commensuration with the risk and effort involved in starting or financing the

. and timely. or that the market shapes the opportunity. Unlike conventional entrepreneurship models that start with a business plan and identify an opportunity. he or she works to start a business by putting together the team and gathering the required resources. and remains attractive. and come only after identification of a viable opportunity. only a good team can unlock a higher potential with any opportunity and manage the pressure related to growth. The business plan and the financing receive secondary importance. The Timmons model places special importance on the team and considers a good team indispensable for success. An idea becomes viable only when it remains anchored in products or services that create or add value to customers. and identification of the opportunity first makes the business plan failure-proof. durable. the Timmons model starts with a market opportunity. A good idea is not necessarily a good business opportunity and the underlying market demand determines the potential of the idea. Among all resources.The Opportunity Factor The Timmons model of entrepreneurship states that entrepreneurship is opportunity driven. The model holds that a sound business opportunity would readily receive financing. The Team Factor Once the entrepreneur identifies an opportunity. The size and nature of the opportunity determines the size and shape of the team. A bad team can waste a great idea.

The Timmons model holds the entrepreneur’s ability to conjure up a great team as a major factor of business success. Drives down market cost 2. relative to the other critical factors are: 1. The Timmons model of entrepreneurship discounts this notion and holds only three factors as crucial: a market driven opportunity. and resources seldom match. Instills discipline and leanness in the organization 3. working out of a garage instead of rented space. Success of the business venture depends on the ability of the entrepreneur to ensure balance by applying creativity and leadership. availability of a good team and adequate resources. While good resources remain scarce. team. The reality is that opportunity. The Resources Factor The Timmons model discounts the popular notion than extensive resources reduce the risk of starting a venture and encourages bootstrapping or starting with the bare minimal requirements as a way to attain competitive advantages. A Reality Check Many entrepreneurs try to have all resources in place before starting a new venture. The Timmons model considers the major role of the entrepreneur to effect a match of the three critical factors of entrepreneurship at the correct time. Providing leadership to manage the available resources in the most effective manner by interacting with exogenous forces and the capital market context that keeps changing constantly. 2.The two major roles of the team. and by maintaining effective communications. Removing the ambiguity and uncertainty of the opportunity by applying creativity. Encourages creative resources to achieve more with the limited amount of money and other resources available Some of the practical applications of bootstrapping include leasing instead of buying equipment. These three critical factors of entrepreneurship remain interlinked. businesses with high potential opportunities and a good management team will have no problem attracting money and other resources. Great teams. the size and type of opportunity determine the level and extent of resources required. and the like. The entrepreneur works to “minimize and control" rather than “maximize and own. Like the formation of the team. always remain scarce and the responsibility is on the entrepreneur to coach team members to excel. The advantages of bootstrapping include: 1." The role of the entrepreneur in managing resources includes building a good resource base to draw from when required and drawing up a business plan through a “fit and balance" method that balances the available resources with the opportunity and the potential of the team. . with any change in one factor having an impact on the other two. however.

and adds the dimension of risk-taking. labor. though various entrepreneurship theories have defined the concept. and organization as the four factors of production. and entrepreneurs.References Timmons. Jeffry. and Spinelli. (2006). Business Plans That Work: A Guide For Small Business. . McGraw Hill. ceotactics. Maria. al. A. Alfred Marshall’s Theory of Entrepreneurship Alfred Marshall in his Principles of Economics (1890) held land. Frank Knight's Risk Bearing Theory Frank Knight (1885-1972) first introduced the dimension of risk-taking as a central characteristic of entrepreneurship. Entrepreneurship: The Engine of Growth. hirelings. connecting the producers with customers. This theory considers uncertanity as a factor of production. He classified economic agents into landowners. The entrepreneur earns profit as a reward for taking such risks. (2004). et. He adopts the theory of early economists such as Richard Cantillon and J B Say. Stephen. Andrew. The Entrepreneurial Process – Part 3 The Timmons Model Minniti. Praeger Perspectives Images by the author N Nayab What is Entrepreneurship? A Look at Theory Written by: N Nayab•edited by: Rebecca Scudder•updated: 8/27/2011 People use the terms "entrepreneur" and "entrepreneurship" interchangeably. The entrepreneur is the person who starts his own business.. Zacharakis. and considered the entrepreneur as the most active among these three agents. Jean Baptise Say (1767-1832) improved Cantillion’s definition by adding that the entrepreneur brings people together to build a productive item. The exact definition of "entrepreneurship" still remains a vague concept. and considered entrepreneurship as the driving factor that brings these four factors together. and holds the main function of the entrepreneur as acting in anticipation of future events. Early Theories of Entrepreneurship Richard Cantillon (1680-1734) was the first of the major economic thinkers to define the entrepreneur as an agent who buys means of production at certain prices to combine them into a new product.

Max Weber’s Sociological Theory The sociological theory entrepreneurship holds social cultures as the driving force of entrepreneurship. but on the economic situations in which they attempt their endeavors. The right combination of discipline and an adventurous free-spirit define the successful entrepreneur. and such role expectations base on religious beliefs. and stressed on the spirit of capitalism. Many economists have modified Marshall’s theory to consider the entrepreneur as the fourth factor itself instead of organization. taboos. 3. Max Weber (1864-1920) held religion as the major driver of entrepreneurship. 4. 2. Entrepreneurship takes place when the entrepreneur . Economic factors that encourage or discourage entrepreneurship include: 1. 7. good leadership skills 3.The characteristics of a successful entrepreneur include: 1. and customs. an Economic theory" he states the demand for entrepreneurship arising from the demand for change. 6. 5. foresight on demand and supply changes and the willingness to act on such risky foresights Success of an entrepreneur however depends not on possession of these skills. Mark Casson's Economic Theory Mark Casson (1945-) holds that entrepreneurship is a result of conducive economic conditions. The entrepreneur becomes a role performer in conformity with the role expectations of the society. which highlights economic freedom and private enterprise. foresight. and creativity. In his book "Entrepreneurship. thorough understanding of the industry 2. taxation policy industrial policy easy availability of raw materials easy access to finance on favorable terms access to information about market conditions availability of technology and infrastructure marketing opportunities Joseph Schumpeter’s Innovation Theory Joseph Schumpeter’s innovation theory of entrepreneurship (1949) holds an entrepreneur as one having three major characteristics: innovation. and which coordinates the other three factors. Capitalism thrives under the protestant work ethic that harps on these values.

The entrepreneur subconsciously discovering an opportunity to earn money by buying resources or producing a good.1. including interest. Kirzner considers the alertness to recognize opportunity more characteristic than innovation in defining entrepreneurship. 3. Entrepreneur paying back the capitalist. The three traits of entrepreneurship include: 1. and entrepreneurship is the transformation of spontaneous learning to conscious knowledge. This entails successful imitation by adapting a product to a niche in a better way than the original product innovators innovation Israel Kirtzner’s Theory of Entrepreneurship Israel Kirzner (1935-) hold spontaneous learning and alertness two major characteristics of entrepreneurship. Other economists have added a dimension to imitating and adapting to innovation. McClelland’s Theory of Achievement Motivation ." Leibenstein’s Theory of Entrepreneurship Harvey Leibenstein (1922-1994) consider entrepreneur as gap-fillers. and selling it 2. and place undue importance on innovation. 3. determining profitable activities Entrepreneurs have the special ability to connect different markets and make up for market failures and deficiencies. creates a new product introduces a new way to make a product discovers a new market for a product finds a new source of raw material finds new way of making things or organization Schumpeter’s innovation theory however ignores the entrepreneur’s risk taking ability and organizational skills. recognizing market trends 2. 5. Entrepreneur using the funds for his entrepreneurial venture 4. but economic conditions force small entrepreneurs to imitate rather than innovate. and retaining the "pure entrepreneurial profit. 2. This theory applies to large-scale businesses. develop new goods or processes in demands but not in supply 3. The entrepreneur either remedies ignorance or corrects errors of the customers. Entrepreneur Financing the venture by borrowing money from a capitalist. motivated by the prospects of some gain. His entrepreneurship model holds: 1. 4.

and need for power. increase in value or satisfaction to the customer from the resource Thorley under CC 2. McClelland’s experiment reveled that traditional beliefs do not inhibit an entrepreneur.0 license THE IMPACT OF ENTREPRENEURSHIPON ECONOMIC GROWTH Abstract . and that it is possible to internalize the motivation required for achievement orientation through training. resources. they remain unanimous that entrepreneurship is a distinct concept and a central factor of the economic activity. creation of new values 3. combination of existing materials or resources in a new productive combination What theories do you think explain entrepreneurial drive? An analysis of various entrepreneurship theories reveal while what economists differ on the force that drives entrepreneurs or the central characteristics of entrepreneurship. The dream to achieve big things overpowers monetary or other external incentives. and an entrepreneurial behavior as the keys to entrepreneurship. Need for achievement and need for power drive entrepreneurship.0 license flickr.McClellands Theory of Achievement Motivation hold that people have three motives for accomplishing things: the need for achievement. need for affiliation. According to him entrepreneurship involves 1.ekmekcioglu@gmail. Ercan EKMEKCIOGLU Institution/Affiliation: Kyrgyzstan Turkey Manas UniversityE-mail: under CC 2. Let us know which you think is the theory that best covers entrepreneurial motivation? References Image Credit: David McClelland (1917-1988) considers entrepreneurs as people who do things in a better way and makes decisions in times of uncertainty. Peter Drucker’s Theory of Entrepreneurship Peter Drucker (1909-2005) holds innovation.

This paper discourses the impact of entrepreneurship on economic growth. establishments and regions in terms of their economic performance. This therefore means that when there is more entrepreneurship in an economy more growth is expected. Creation of new business opportunities through entrepreneurship. an entrepreneur is someone who is willing to bear the risk of a business venture where there is a significant chance for making profit. It is through entrepreneurship that important innovations enter the market leading to new products or production process which eventually increases efficiency through bringing competition in the market. Entrepreneurship affects economic growth in various ways. Entrepreneurship is a challenging task as many businesses which start fail to take off.3). Entrepreneurship leads to introduction of new goods with new quality and value. Economic Growth. p. Entrepreneurship has many uncertainties especially when new products are created for which there is no existing market. It important to note that a significant amount of existing literature has been based on the observation of firms. Keywords: Entrepreneurship.2004.According to Chell & Ozkan. Innovativeness 1. Carree and Thurik (2005). Entrepreneurship is basically the practice of starting a business in order to earn profit on new found opportunities. Scholars have also been keen in investigating the impact of entrepreneurship in relation to economic growth which has further led to the explosion of extensive literature in this field (Van Stel. productivity and innovation leads to economic growth. The connection between entrepreneurship and economic growth measured in terms of performance of the firm has been extended even beyond observing the establishment to accommodate geographic regions. growth and survival. It is through entrepreneurship that new source of supply are discovered and creation of new business organisations that directly affect the economy. These findings have been found to hold in the modern industrialized economies as well as across time periods (Karlsson. Ideas and concepts that emerge from entrepreneurs increase our knowledge and what consumers may prefer through introducing variations of existing products and services in the market. . Although studies bringing forth this knowledge have rather been based on theoretical grounds. According to Van Stel. The facts that can be derived from these studies link economic growth with the size and age of the firm or an establishment. This speeds up innovation of new products in the market as a result of the longer working hours and more efficient nature of entrepreneurs as their income is directly linked with their working input. others have been drawn from empirical evidence.0 Introduction There has been a wealth of knowledge on the determinants of entrepreneurship over the last few decades. Their innovativeness introduces new ways of production and new markets that have not been exploited. Friis & Paulsson. This paper discourses how entrepreneurship can be related directly economic growth and how entrepreneurship is at the heart of economic growth of any nation.2005). (2010). newly established firms and very small firms experience systematically faster growth compared to the already established larger firms. Carree & Thurik.

manifest their willingness and abilities to create new opportunities in economy (Todtling & Wanzanbock. competition mainly characterized by exit and entry of firms. Pantuosso. 2000). there exist enormous discussions and debates but it is however eminent to realize the importance of constant innovations and rivalry enhancement (Todtling & Wanzanbock. industrial. According to Carree and Thurik (2002). This implies that linking entrepreneurship to economic growth will be to amalgamate individual to aggregate levels.The best examples of these intermediate variables include innovation. novel products.1 Understanding Entrepreneurship and Economic Growth In terms of how entrepreneurship has been a stimulant in economic growth. Parker & Fuller. the concept of economic growth has often been relevant at firm level. Understanding the role of entrepreneurship in the process of economic growth will therefore require a framework because of the nature of intermediate variables and connections which exist (Bygrave & Minniti. the concept of entrepreneurship is multidimensional and largely ill-defined. Pantuosso. production modalities. 2000). variety of supply and particular energy and efforts of invested by entrepreneurs.1.2 Extended Definition of Entrepreneurship in Relation to Economic Growth While entrepreneurship is all about the activities carried out by individuals. national and regional levels (Robbins. Considering this linkage however requires revisiting the definition of entrepreneurship. There has been a problem in defining and measuring entrepreneurial factors and this has further complicated the exact contributions to economic growth. These conditions include personal traits. Figure 1: Appreciating Entrepreneurship 1. cultural and institutional factors as shown in Fig 1 below. 2000). In this manner. Other conditions of entrepreneurship also add up when it comes to their contributions to economic growth (Robbins. They also make critical decisions in terms . whereby entrepreneurs. Parker & Fuller. either as individuals or a team. 2003). The entrepreneurs seek to introduce their newly crafted ideas in the existing market in the face of obstacles and uncertainties. organizational schemes and product-market combinations are created. 2003).

Empirical literature has also identified the effect of the number of business owners and self-employed individuals in economic growth. As identified by scholars such as Schumpeter. This is the fourth strand of evidence that seeks to appreciate the role of self-employment in the growth of economy in any state. This role is what was labeled Kirznerian entrepreneurship. Van Stel.0 Forms of Entrepreneurship According to Carree and Thurik (2002). In a nutshell. This role is labeled Knightian entrepreneurship.of business location. entrepreneurs in history have often been represented in many faces and assumed different roles. Van Stel. the individual who launches a new firm or introduces new products can be termed as the innovator and he assumes that he has perceived a previously uncertain profit opportunity. For instance. 2004). The effect of and changes in size distributions in regions represents the second strand of evidence as identified by the two researchers (Lloyd-Ellis & Bernhardt. this entrepreneurial role can be described in terms of the three labels. the entrepreneur performs new combinations which Schumpeter called enterprises (Karlsson. The last role of an entrepreneur is that of assuming the several risks and uncertainties which may be associated with running a business. forms and the utilization of available resources and institutions (Acs & Armington. As posted by Audretsch & Lehman (2005). 2002). the number of market participants in any industry will finally have an important effect on economic growth and this is recognized as another strand of evidence of the role of entrepreneurship in economy expansion (Chell & Ozkan. 2000). 2002). Turbulence can be viewed as the total entries and exits in regions or industries and can easily be interpreted as one of the powerful indicators of entrepreneurial activities. 2004). It is believed that the change in size distribution and its ultimate effects can have a significant impact on the growth of economy (Carree. entrepreneurship refers to the behavioral attributes of individuals and should not be confused with well-defined professional persons (Lloyd-Ellis & Bernhardt. Kirzner and Knight. Schumpeter drew his attention to understanding an entrepreneur as an innovator. 2003). An entrepreneur according to Kirzner perceived profit opportunities. The first evidence mainly deals with the turbulence effect of entrepreneurship on the growth of economy. Friis & Paulsson. entrepreneurs can be termed as innovators. profit opportunists and uncertainties and risk takers respectively. The turbulence effect of entrepreneurship on economic growth . Thurik & Wennekers. in Eastern Europe. the economic history of previously centralized and planned economies will also have an influence in economic growth of countries (Carree. 2. The innovator also takes risks that the venture or the new product may eventually turn out to be atotal failure (Todtling & Wanzanbock. Thurik & Wennekers. 2010). Lastly. 2. small enterprise development served as the most vital part of the transitional process which has seen economic growth in the area. As the individual introduces a new product in the market or starts a new business. Thirdly. As an innovator.1 Entrepreneurial Effects in the Growth of Economy To sum up the contributions of entrepreneurship to economic growth Carree and Thurik (2002) have provided five strands of empirical evidence to show their involvement. 2000).

2 Future Perspective in Analysis From various strands of literature. Carree & Thurik. 2004a). In particular. Carree and Thurik (2002) found three different levels of analysis to be evident when associating entrepreneurship to economic growth as this meant that the individual level could be linked to the macro-economic sphere.refers to the entry and exist which however appears to have minimal contributions to the growth of the economy in the short run (Bathelt. Scandinavian countries represent cases of countries with 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. 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. 2001). Entrepreneurship encourages self-employment and this has been found to have an impact in productivity growth (Chang. joint ventures and subsidiaries in order to introduced entrepreneurship or corporate . The effect of size distribution changes of firms on growth performances has also been recognized particularly when examining the share of small firms in the manufacturing industry in the European states. In small firms. there is a total failure in the restructuring the economic policies as the United Kingdom has done. Competition among firms which is a commonplace for entrepreneurs has been shown to have a positive effect in the growth of economy (Carree. The contrary is seen when analyzing the business structure in West Germany where they have low rates of self-employment (Van Stel. 2011). 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. 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 (Chang. According to Chang (2011). According to Bruce. the entrepreneur usually has the controlling stake which acts as the vehicle for transformations. 2011). The industrial policy in German has repressed the structural changes by solely supporting large-scale industries with enormous subsidies (Van Stel. (2009). The increased numbers of participants in the market compounded with entrepreneurial activity are some of the contributions of entrepreneurship in economic growth (Chell & Ozkan. In Germany. This is however a much contested observation whether countries should adopt the equilibrium or the elf-employment model which has largely failed counties such as Italy. 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. These levels include the individual. 2. 2003). 2004b). the high levels of self-employment in the country have proved to be inefficient for economic development. Deskins. 2010). Hill and Rork. Nevertheless. Carree & Thurik. entrepreneurial actions usually take place at the level of the firm and thus require a vehicle which can transform their individual ambitions and qualities into workable actions (Todtling & Wanzanbock. Italy has in the past experienced large negative impacts on the growth of its economy because of self-employment. firm and the macro levels of analysis. Larger firms have also been found to mimic smaller firms in terms of business units. 2002).

3. At the same time. By contributing to local charities. n. taking part in local business.0 Conclusion and Further Recommendations Entrepreneurship play a critical role in the development of the economy as this is the key contributor to innovativeness and product improvement. . Governments should develop policies which will enhance entrepreneurship by understanding the critical difference existing between small business owners and entrepreneurship. investing in projects in communities and creating and participating in different networks in entrepreneurship. The results of such entrepreneurial manifestations at the level of the firm must do with how novel processes. At national. products. 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 contribute to economic development. they buildup robust communities which contribute to the community development. industrial and regional levels. and entry to new markets or start-ups are (Tesreau & Gielazauska.entrepreneurship. entrepreneurial actions are all composed of new experiments.d). innovations. 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.

2012. 13(4): 287-314 Bruce. & Wanzenbock. K. (2002).J & Armington. Thurik. D. B. Retrieved 24 th March. 43(2):229-245 Bygrave. Small Business Economics. & Lehman. D. Exploring the effects of entrepreneurship capital on the private economic impact of American counties. 15:293-302 Tesreau. inequality and economic development.. Small Business Economics. from: http://papers.. Industrial restricting and economic growth. Z. V (n. 18:243-255 Carree.. C.. & Minniti. from: http://www.K (2000). Entrepreneurship & Regional Development. E (2005).missourieconomy. Friis C.. M. from: http://usasbe.. 2012. K. J. M (2000). Entrepreneurship & Regional Development.pdf Chell E. D (2000).. 67: 147-168 Robbins.. Employment growth and entrepreneurial activities in cities. Does the knowledge spill over theory of entrepreneurship hold for regions? Research Policy.d). Small business activity and state economic growth: Does Size matter? Regional Studies. Enterprise.P (2011). L. W. M (2010). Parker. J. M..F & The social dynamics of entrepreneurship. Website <http://people. Regional differences in structural characteristics of start-ups.cesis. Entrepreneurship Theory and Practice. & Bernhardt. Van Stel. H (2003). H. R.pdf> 22 nd March. & Rork. Retrieved 24 th March.REFERENCES Acs.D. Hill. 34: 1191-1202 Bathelt.R (2002).pdf Todtling. Regional Studies. F. 2012. 38(8):911-927 Audretsch. Small Business Economics. An empirical assessment of the contribution of small business employment to D. & Ozkan. 2012 Chang.A (2002).eur. Retrieved 24th March. Entrepreneurship: a driving force in the new economy. A.. 19: 271-290 Carree. The impact of entrepreneurship on economic growth. D. Lloyd-Ellis... & Wennekers.J. Relating Entrepreneurship to Economic Growth. & Gielazauskas. Review of Economic Studies.. H (2001). & Paulsson T (2004).S state economic performance. B.C.K. (2004). 15: 351-370 . Pantuosco.. S. Northampton: Edward Elgar Karlsson C.. & Regional competence and economic recovery: divergent growth paths in Boston’s high technology economy. M. Economic development and business ownership: an analysis using data of 23 OECD countries in the period 1976-1996. A. Deskins. Nascent Entrepreneurship and Learning..A. 24(3)25-36 Carree.C (2009).

M. he hires people to work with him. governments of many countries support entrepreneurs..ondernemerschap. For this purpose. 2012. forests etc. So he starts a huge business. I will name a few reasons why entrepreneurship is important: Entrepreneurship creates job opportunities When an entrepreneur starts a business using his financial assets. Retrieved 24 th March. The effect of entrepreneurship on national economic growth: An analysis using the GEM database. Carree. Entrepreneurship cause economic growth By creating job opportunities for people. As the time passes.. just like Væksthuset in Denmark. . The effect of entrepreneurial activity on national economic Such activities of the entrepreneurs provide strength to the small business. They tend to start a new business with innovation like providing the best quality product within low price so that people can save their money and get the best product. So the niche markets flourish providing strength to the economy of the country. I believe entrepreneurship is very important.from http://www. But first. When I started my first project/business idea I got this money as a help by the danish government to get started. and during the next couple of months I will write about this subject and how it is being an entrepreneur in Denmark. Small Business Economics. but it is also a key role in the growth of a country. Entrepreneurship provides strength to small business Most of the time. 23:311-321 3 REASONS WHY ENTREPRENEURSHIP IS IMPORTANT I have always loved to create stuff which obviously has led me the life of an entrepreneur. So entrepreneurship can be categorized as investment and it is very important for a country to flourish its economy.. This strengthens the economy of a country. Which I believe is one of the best countries in the world to start a company in.pdf Van Stel. R (2004a). Especially in Denmark since we don’t have any mountains. M.000 DKK. A. For this purpose Government also welcomes entrepreneurs to start their business. For this purpose. he must need some time to share his work load. Carree. to create “natural” jobs other countries have because of their geography. hence creating more job opportunities for people.Van Stel. & Thurik. If you have a good business idea that is scalable you have the opportunity to be rewarded with up to 20. Entrepreneurship is not only important for a single business. A. Some more than others of course. an entrepreneur provides wealth to the people. the entrepreneur gets satisfied that he is investing his money in the right place. I love it and believe that every human has this passion. & Thurik. rivers. entrepreneurs prefer to invest their money in small businesses. R (2005)..

Building a skill set can be achieved through learning and trying new tasks in realworld settings. it is important to build a diverse set of skills and then apply those skills in the real world.having strong financial stability can only help an entrepreneur. giving him the ability to build a business around a specific industry. with the high stress of becoming an entrepreneur. he can move into a sales role at his existing company to learn the soft skills necessary to be successful. a person should always familiarize himself with the world around him so he can look at industries with a fresh perspective. Unlike a traditional career path where there is a defined path to the next step. This is because as an aspiring entrepreneur.5 Steps to Become an Entrepreneur By Evan Tarver | August 5. if an aspiring entrepreneur has a background in finance. so is the need to consume a diverse array of content. That said. 2015 — 10:45 AM EDT Entrepreneurship has been romanticized over the better half of the 21st century. The beauty of step two is it can be done concurrently with step one. What works for one entrepreneur might not work for the next and vice versa. Once a diverse skill set is built. For example. books. With the rise of companies such as Google and Facebook. 3. there are five general steps that most. Consume Content Across Multiple Channels As important as building a diverse skill set is for an aspiring entrepreneur. no matter the channel. successful entrepreneurs have followed: 1. Build a Diverse Skill Set Once a person has strong personal finances in the form of a cash runway.think of Mark Zuckerberg as a college student . This content can be in the form of podcasts. 2. if not all. the path to entrepreneurship is mystifying to most. should be diverse in what it covers. it gives an aspiring entrepreneur a toolkit that he can rely on when he is faced with the inevitability of tough situations. The important thing is that the content. Ensure Financial Stability This first step is not a strict requirement but is definitely recommended. having a personal runway of capital allows an aspiring entrepreneur to focus on building a business rather than worrying about making quick money. articles or lectures. In addition. both of which made the founders wildly successful. This is due to the fact that strong personal finances allow an aspiring entrepreneur to increase his personal runway and give him more time to work on creating a successful business. . While entrepreneurs have built successful businesses while being less than financially stable . people are enamored with the idea of becoming entrepreneurs.

the value could be to build an online appointment system that makes it easier for patients to book appointments. Identify a Problem to Solve Through the consumption of content across multiple channels. They reach out to mentors to seek valuable advice. Profitability takes time. They’ve found something they can work on over and over again without growing bored -. If.4. Only through adding value to solve a specific problem or pain point.a job they want to do for the rest of their life. They plan as much as possible. they do this by adding value to those businesses or consumers. . they will risk time and money. but keep some dry powder in reserve. an aspiring entrepreneur is able to identify various problems to solve. This provides an aspiring entrepreneur with a fresh perspective and allows him to see a problem others might not. but they preserve resources for dealing with “unknown unknowns. for example. and until then capital is limited and must be used wisely. Sometimes they come across as stubborn. Entrepreneurs plan appropriately. Entrepreneurs are adaptable and flexible.” They are confident and enjoy what they do. successful entrepreneurs have passion and motivation. The adage of business is a company's product or service needs to solve a specific pain point. Entrepreneurs understand their offering and the market. it is identified the process for booking a dentist appointment is complicated for patients and dentists are losing customers. It is important to combine steps three and four so it is possible to identify a problem to solve by looking at various industries as an outsider. They have networking abilities. Second. Stated previously. the lifeblood of any business. does an entrepreneur become successful. 10 Characteristics Of Successful Entrepreneurs First. Entrepreneurs manage their money. and handle the unexpected with the right mindset. Successful entrepreneurs keep a complete handle on cash flows. but that demonstrates their discipline and dedication. Through the identification of a problem. They welcome any suggestion that can optimize their offerings and satisfy their customers. either for another business or for a consumer group. 5. an aspiring entrepreneur is able to build a business around solving that problem. Add Value in That Problem Area The fifth and final step to becoming an entrepreneur is to add value within the problem that was identified in step four. successful businesses solve a specific pain point for other businesses or consumer groups. They keep up with the competition and consider external factors that can lead to failure.

While there are successful businesses that have been built to reduce an entrepreneur's work time. social and emotional areas. And lastly. a product manager. mental. Consistent Self-Improvement Every successful entrepreneur is constantly seeking opportunities to expand his skill set. Understand the Responsibility: Control Your Emotions . and sometimes it’s best to follow a practical route into a new venture instead of sinking resources into a lost cause. in an attempt to strengthen the business and to instigate your selfimprovement. achievable. As an entrepreneur. Failure is not unusual. an operational expert. an effective manager. the goals you set as an entrepreneur should be specific. perseverance or conviction. Practicing new skills in each of these areas and attempting to implement them in the real world can help you achieve success in your business. a financial analyst – and maybe even an engineer. but not too much. Follow the SMART acronym to set your goals. entrepreneurs doubt themselves. No matter what your background is. check your gut. but a strong work ethic is the number one habit that every entrepreneur needs – and that every successful entrepreneur already has. realistic and trackable. Work towards consistent self-improvement in physical. Only after the entrepreneur has invested sweat equity in a business is it possible to reduce work time. spiritual. 2015 — 8:55 AM EDT A Strong Work Ethic It can also be referred to as grit. 5 Good Habits Every Entrepreneur Needs By Evan Tarver | August 6.They are prepared to take the exit. it's impossible to focus on every possible area. Limit your goals to the key drivers of the business. While it's important to try to improve or fix each one of these flaws. measurable. It takes a focused and dedicated work ethic to make any entrepreneurial venture possible. can I do this? Do I want to do this? Instead of worrying about fitting in with someone else’s image. any business that a person starts is likely to require long hours on the front end. The goals should be of the highest priority. you must be a salesperson. That should tell you a lot. Setting Realistic but Challenging Goals When you are starting a business. This lack of focus will result in a failed business. there will inevitably be a multitude of things to improve upon or fix. cultivate a habit of setting consistent and realistic goals. Ask yourself. To mitigate this potential for failure. you will need to employ every skill imaginable to make your company successful.

Gone are the days where an entrepreneur can make a gimmicky business that doesn't add any value but still manages to earn a lot of money. is that a balanced approach to nurturing entrepreneurship can have a positive impact on an economy. resulting in employment. entrepreneurs create new business. Due to this fact. Businesses in associated industries. But new products or technologies create new markets. There is research that shows high levels of self-employment can stall economic development. like call center operations and hardware providers. While this is habit number five. and new wealth. it's important to control all of your emotional responses to stressful situations. further developing ventures beyond their own. have revolutionized work and play across the globe. It doesn't matter if the company that you are starting manufactures a product or provides a service. for example. For example. Entrepreneurs add to national income. resulting in more and more development." However. flourished. The bottom line is that your company has to add value to its clients or customers. Entrepreneurs create social change. but that you control your ability to respond in all situations. Bill Gates. Existing businesses may remain confined to their markets and hit a glass ceiling when it comes to building income.Steven R. It doesn't matter if it's a business-to-business company or a business-to-consumer company. rather than the other way around. "The 7 Habits of Highly Effective People. Covey doesn't mean that you need to cultivate a habit of responsibility (which entrepreneurs do). Covey outlines this habit in his book. Why Are Entrepreneurs Important? For starters. . It's easy to let your emotions control you. has used his money to boost education and public health. though. Entrepreneurs invest in community projects and help charities and other good causes. They invent goods and services. for example. The path to entrepreneurship is an up-and-down roller-coaster ride. you need to have an ultimate focus on adding value. a few IT companies founded the Indian IT industry in the 1990s. and too many entrepreneurs can create income inequalities. And increased employment and higher earnings contribute to a nation’s taxes and spending. They break tradition with unique inventions that reduce dependence on obsolete systems. and it is emotionally draining. Entrepreneurship without regulation can lead to unfair market practices and corruption. Smartphones and their apps. The bottom line. Focus on Adding Value To be a successful entrepreneur. it might be closer to habit number one in terms of importance.

This revenue can be used by the government to invest in other. flourished. they also create jobs and the conditions for a prosperous society. But more importantly. The following are six reasons why entrepreneurs are important to the economy. in addition to creating wealth from their entrepreneurial ventures. their innovations may improve our standard of living. a few IT companies founded the Indian IT industry in the 1990s as a backend programmers' hub. 2015 — 2:02 PM EST Entrepreneurs are frequently thought of as national assets to be cultivated. the entrepreneur enables benefits across a broad spectrum of the economy. In short. (For more. The stimulation of related businesses or sectors that support the new venture add to further economic development. result in new employment. Entrepreneurs Create New Businesses Path breaking offerings by entrepreneurs. Entrepreneurs can change the way we live and work. products or technologies from entrepreneurs enable new markets to be developed and new wealth created. which can produce a cascading effect or virtuous circle in the economy. Entrepreneurs Add to National Income Entrepreneurial ventures literally generate new wealth. Soon the industry gathered pace in its own programmers’ domain. For example. like call center operations. future development efforts in underdeveloped countries will require robust logistics support. the cascading effect of increased employment and higher earnings contribute to better national income in form of higher tax revenue and higher government spending. Existing businesses may remain confined to the scope of existing markets and may hit the glass ceiling in terms of income. Infrastructure development organizations and even real estate companies capitalized on this growth as workers migrated to employment hubs seeking new improved lives. see: Top Indian Billionaires And How They Made Their Money. Additionally. motivated and remunerated to the greatest possible extent. . capital investment from buildings to paper clips and a qualified workforce. From the highly qualified programmer to the construction worker. millions from other sectors benefited from it. Education and training institutes nurtured a new class of IT workers offering better.) Businesses in associated industries. in the form of new goods & services. struggling sectors and human capital. high-paying jobs. If successful. network maintenance companies and hardware providers.Why Entrepreneurs Are Important for the Economy By Shobhit Seth | Updated December 29. New and improved offerings. Similarly.

Smartphones are not exclusive to rich countries or rich people either. Research reveals that Italy has in the past experienced large negative impacts on the growth of its economy . long lasting impacts on the entire human race.) Entrepreneurs Also Create Social Change Through their unique offerings of new goods and services. the water supply in a water-scarce region will. For example.) The Other Side of Entrepreneurs Are there any drawbacks to cultivating entrepreneurs and entrepreneurship? Is there an “upper limit” for the number of entrepreneurs a society can hold? Italy may provide an example of a place where high levels of self-employment have proved to be inefficient for economic development. As the growth of China's smartphone market and its smartphone industry show. force people to stop working to collect water.Although it may make a few existing players redundant. Overall. entrepreneurs break away from tradition and indirectly support freedom by reducing dependence on obsolete systems and technologies. This enables further development beyond their own ventures. (For more. (For more. low-cost.) Community Development Entrepreneurs regularly nurture entrepreneurial ventures by other like-minded individuals. productivity and income. from education to public health. like Bill Gates. The qualities that make one an entrepreneur are the same qualities that motivate entrepreneurs to pay it forward. They also invest in community projects and provide financial support to local charities. (For more. at times. Moreover. Such an installation will ensure people are able to focus on their core jobs without worrying about a basic necessity like carrying water. see: Time For China’s Smartphone Revolution. have used their money to finance good causes. smartphones and their smart apps have revolutionized work and play across the globe. Imagine an innovative. Some famous entrepreneurs. technological entrepreneurship will have profound. see: Encouraging Good Habits With An Incentive Trust. More time to devote to work means economic growth. the government can soften soften the blow by redirecting surplus wealth to retrain workers. the globalization of tech means entrepreneurs in lesser-developed countries have access to the same tools as their counterparts in richer countries. For a more contemporary example. This will impact their business. this results in an improved quality of life. They also have the advantage of a lower cost of living. so a young individual entrepreneur from an underdeveloped country can take on the might of the multimillion dollar existing product from a developed country. greater morale and economic freedom. see: Starting A Small Business In Tough Economic Times. flow-based pump that can fill in people's home water containers automatically. automatic.

Promotion of happiness is increasingly seen as an essential goal. but regulation requires a fine balancing act on the part of the regulating authority.2 America is losing its entrepreneurial edge. making citizens more – not less – unhappy. Entrepreneurship Is the Key to Growth By David B. Even in the depths of the Great Recession. business owners. There may be truth in the old saying. The Bottom Line The interesting interaction of entrepreneurship and economic development has vital inputs and inferences for policy makers.) The Role of States Regulations play a crucial role in nurturing entrepreneurship. The Economist gushed. pervasive corruption. America remains a beacon of entrepreneurialism. "too many chefs and not enough cooks spoil the soup." (For more. occurred—a number of other countries. Unregulated entrepreneurship may lead to unwanted social outcomes including unfair market practices. What might have seemed unimaginable as recently as fifteen years ago has now. “For all its current economic woes.”1 However. levels of aspirations usually rise. the facts suggest something else. such as Taiwan in Asia and Denmark in Europe. a balanced approach to nurturing entrepreneurship will definitely result in a positive impact on economy and society. a significantly high number of entrepreneurs may lead to fierce competition and loss of career choices for individuals. With too many entrepreneurs. development institutes. There are three important ways that American entrepreneurship needs to be reinvigorated.because of self-employment. Audretsch. financial crisis and even criminal activity. see: The Real Risks Of Entrepreneurship. have surpassed the United States in entrepreneurial vigor. in fact.3 Reinvigorating American entrepreneurship provides an opportunity to revive American economic growth and prosperity as well as restore the role of the United States as the undisputed economic leader in the world. The first is as a . Wim Naudé argues that “while entrepreneurship may raise economic growth and material welfare. the scenario of having too many entrepreneurs may also lead to income inequalities. Owning to the variability of success in entrepreneurial ventures. If we understand the benefits and drawbacks. November 2014 Americans typically assume that their country leads the world in entrepreneurship.” Paradoxically. Findings from United Nations University also indicate the possible implications of “over nurturing" entrepreneurship. change agents and charitable donors. it may not always result in improvements in non-material welfare (or happiness).

which the company itself did not think were actually worth pursuing. knowledge-spillover counterparts. We have to make it as easy as possible for talented and creative people to take the leap into entrepreneurship. The second involves what we will term here as main street entrepreneurship. with their IPOs. It is the German Mittelstand that is the key to the unique apprentice system providing young workers with high levels of training. independent of what their current occupational status is right now. To spur more knowledge-spillover entrepreneurship. and thousands of other entrepreneurial startups that ensure that ideas and inventions which are costly to create actually end up being commercialized and transformed into the innovations that not only revolutionize their industries. states. The third way is through the identification and commercialization of opportunities across the globe. typically measured in terms of economic growth. but also fuel economic growth. to launch his new startup? It is not just Apple Computer. But it remains underutilized and performs way below its potential. but also the compelling source of global competitive advantage in key product niches. This type of entrepreneurship consists of small and medium-sized enterprises that typically exhibit considerably less volatility and more stability than their high-profile. and entire countries with vibrant entrepreneurship generally exhibit a superior economic performance. but also Microsoft.conduit for knowledge spillovers. America needs to rediscover its longstanding . headline-grabbing. productivity or unemployment. And they could matter a lot more. Main street entrepreneurship provides the bulk of jobs in this country. venture capital backing.5 But they matter. job creation and competitiveness in global markets. and know-how.4 The reason why entrepreneurship drives economic growth is because it serves as one of the most important conduits for facilitating knowledge created in one organizational context to spill over and become commercialized through innovative activity in a new startup. The glamor is in the adrenalin-fueled high technology startups. A minor army of scholars has provided compelling evidence showing that those cities. resulting in an unrivaled level of job skills. America needs to remain vigilant that people with important ideas. The high technology counterparts grab not just the headlines. Google and Facebook. but also the policy priority. The second aspect of entrepreneurship involves the seemingly mundane world of main street entrepreneurship. and spectacular new product introductions. or small and medium-sized businesses. have access to the key entrepreneurial resources required to launch a new business — money. with their boom-and-bust mentality and performance. which in turn fuels productivity. But one of the reasons that the German economy has performed better than the American economy over the last decade is not just the bedrock stability it gets from its Mittelstand. talent. By contrast. The problem confronting America’s underperforming small business sector begins with image. The reason is that small business has become the forgotten man of entrepreneurship. small business seems boring and staid. Where would the country be had Steven Jobs not taken the ideas and inventions created at Xerox PARC.

it is perhaps not surprising that Americans have developed the habit of looking for those opportunities predominately at home. Germany has equipped its citizens and companies with the skills required to go out into the world to discover and reap global opportunities. suggests scanning not just the domestic economy for opportunities. “What astonishes me in the United States is not so much the marvelous grandeur of some undertakings as the innumerable multitude of small ones. it is perhaps understandable that when confronted by the recent economic crisis. May 12. however. but throughout the world. jobs and competitiveness. Thus. This global entrepreneurial orientation has paid dividends in terms of growth. orientation. was at negligible levels. it makes sense to search for and discover opportunities not only at home but throughout the world. Germany has been able to fend off the Great Recession with its strong export performance. Americans need to be equipped with the attitudes. such as Bavaria and Baden-Wuerttemberg. and act upon those opportunities. Through a careful development of a global orientation. Germany looks for. 2009. It is not enough just to be comfortable and proficient in the context at home in the United States. By equipping its citizens and businesses with an orientation and the skills to understand. This involves acquiring the so-called soft skills of cultural and language competencies and feeling at home not just at home but also in other countries and cultures as well. so that spending had to be increased. skills. estimates placed half of the world’s wealth and twothirds of the physical capital in the United States as World War II came to an end. create.7 The perception was a lack of opportunities for American businesses to sell their products. As the Frenchman Alexis de Tocqueville reflected in 1835. one way or another. and competencies to go out into the world to discover. In a globalized economy. The entrepreneurial view. along with its historical isolationist tendencies. opportunities not just at home. This is exactly what Germany has done in its astonishing economic resilience even while its European neighbors and other leading developed countries have affair with small business as both the bedrock of local communities and national economic vitality. comprehend. . in the United States. and finds. the drop in aggregate demand triggered calls for stimulating the economy from political parties of all persuasion. Notes: 1 “The United States of Entrepreneurs. Through a global entrepreneurial orientation.” The Economist. to restore those opportunities. After all. interact. Given the American predominance and preeminence following World War II. The unemployment rate fell below six percent and in several Bundeslaender. America needs to develop a similar entrepreneurial spirit and attitude. and ultimately thrive in other cultural and national contexts. albeit one side advocated increases in government spending while the other side argued for tax cuts.”6 The third role involves the fundamental feature of entrepreneurial thinking — discovering opportunities and then acting upon those opportunities.

people employed by business ventures produce “real” goods and services. 5 David B. business creates job opportunities. 2008). the authors conclude that. 1995). and Javier Miranda. First and foremost. 2014.” 3 Jose Ernesto Amoros and Niels Bosma. They generally believe that their greedy neighbours embark on business enterprises driven mostly by insatiable passion for money and other selfish aspirations and they refuse to see the role business plays in modern society. 7 Paul Krugman.. importance of entrepreneurship to individual. but few common people share this opinion. importance of entrepreneurship in economic development and importance of entrepreneurship in developing countries – the role that makes business not selfish at all.2 See for example. most jobs business helps create are productive jobs. p. 2015). To fulfill this task. 2010 Economists and businessmen have no doubts that private sector is in a lot of ways much more efficient and effective than the public one. In particular. “Evidence along a number of dimensions and a variety of sources points to a US economy that is becoming less dynamic. Everything in its Place: Entrepreneurship and the Strategic Management of Cities. States and Regions (New York: Oxford University Press. “The Role of Entrepreneurship in US Job Creation and Economic Dynamism. Innovation and Industry Evolution (Cambridge: MIT Press. The Return of Depression Economics and the Crisis of 2008 (New York: W.e. 4 David B. October 10.W. Of particular interest are declining business startup rates and the resulting diminished role for dynamic young businesses in the economy. the recent study by Ryan Decker. .gemconsortium. “Global Entrepreneurship Monitor 2013 Global Report” http://www. 6 Cited from Audretsch. business produces and distributes goods and services to satisfy certain public needs.” Journal of Economic Perspectives. i. Norton. More than that. John Haltiwanger. Audretsch. 185. Innovation and Industry Evolution. Ron Jarmin. business has to be very flexible and constantly research consumer demands: what’s the point producing something that nobody wants to buy? Second . Audretsch. Role and Importance of Business Entrepreneurship in Society Olufisayo.

Third . capital and natural resources -and use these resources efficiently. A second major goal is Stable Growth. We want the economy to become bigger and better through the years. by investing money in developing science and technology and constructing new enterprises. communication skills and vision for new business opportunities. It does it in several ways: by means of taxes it pays which make it possible for the government to maintain all kinds of public and social institutions and services. For this reason. So. So you see. it means they are not making a productive contribution to the country and they are not earning an income. What goals have people set for themselves in their economic life? And how well are these goals being achieved? These are the questions discussed in this handout. Fifth . business helps enlighten and educate people and encourages their further personal growth. and then working to achieve them. In fact. and to make our life comfortable. Goals Of Individuals And Society Setting goals. One important goal that the people have set for their economy is Full Production in order to achieve full employment. bear it in mind that it is a way to serve society. that despite public opinion on this matter. and this way. its function is to satisfy in the long run the consumer demands – our demands. is a sign of maturity and responsibility in a society. There will always be some unemployment – roughly 2 to 5% of the labour force. business is not all that selfish. Economic growth is a . just as it is a sign of maturity in an individual. it is much more unselfish than a lot of public institutions � It does not exist to satisfy its own needs – that is a way to business failure. It pays salaries and wages to its employees. On the contrary. But when millions of people are unnecessarily unemployed. We measure the amount of our national output of goods and services by looking at statistics of Gross National Product. business provides income – here we come at last to the money matter � But don’t forget: income that business provides is by no means restricted to the profit its owners get. makes the whole business world go round: they spend the money they earn buying all kinds of goods and favour further development of business ventures. by full use of local recourses. Forth . business contributes to national well-being. How well are we achieving the goal of full employment and full production? The nation can’t realistically expect to provide jobs continuously for 100% of the-men and women who are able and willing to work. the goal of full production -which requires both full employment and efficiency – is one of the most important in our economy. including those located in remote rural areas. and in a number of other ways. We want to make full use of the productive resources that are available -labour. when you make this crucial decision to embark on a business enterprise. determination. High level of competition makes it vital for both businessmen and their employees to be involved in the constant process of learning and developing their personal qualities such as creativity.

but it goal that nearly everyone feels is important to define and work toward. Much of the current economic system is built on the foundation of this particular freedom. there is much talk about the importance of “free enterprise”. according to individual needs and preferences. We want to maintain a strong and balanced relationship in foreign trade and international payments. Finally. We want GNP to increase more or less at a steady rate – about 4 or 5% each year (informal sector estimate) – without having business recessions or rapidly rising prices (inflation). When we come to certain other economic goals. Not everyone agrees on the meaning of fairness and justice in economic life. however. shelter and other necessities. Failure to achieve this goal not only causes serious economic problems at home and abroad. and for business. Finally. Freedom of Choice is a goal that practically everyone would include high on the list. This is the goal of International Balance. The goal of Economic Security means that we want the members of economic society to have enough money to be able to buy adequate food. for workers. This is important aspect of freedom of choice.steady increase in GNP per person (total GNP divided by the nation’s population). Widespread poverty not only means failure to achieve the goal of economic security for these people. but also increases international tensions threaten world peace. because it says that all people should approximately the same degree of freedom – to exercise their rights as consul workers and enterprises. But what does it mean in concrete terms? Economists have pointed out that freedom of choice is important for consumers. It is closely related to freedom of choice. Men and women want to be able to choose the kind of work they will enjoy doing and that will provide adequate wages and personal satisfaction. but it also raises serious questions about whether we are achieving the goal of Economic Justice in society. or increases in unemployment. Equality of Opportunity for men and women in the society is another goal. we have to talk about them in more general terms. It gives people the freedom to start their business and use the factors of production in such a way as to make a profit. Freedom of consumer choice means that consumers will be able to select the goods they want to buy from a fairly wide range of alternatives. Production. employment and growth of GNP are all pretty easy to measure. We are not satisfied with a system where the consumer is told: “You can have any size and colour hat you want – as long as it’s medium and black!” Freedom of occupational choice is an important area of economic freedom. there is one economic goal that is not limited to the boundaries of the country. clothing. but spreads overseas to other countries. .

Most men and women have a certain amount of knowledge. entrepreneurs: SHOULD: – be consistent – be fair and honest – build enthusiasm – encourage questions – encourage employees to make their own decisions – instil confidence in them – keep an open door – listen actively _ recognize individual differences – set a personal example – show consideration for the feelings of others SHOULD NOT – be argumentative – be autocratic – be overly demanding – be unreasonable – conceal the truth – discourage initiative – discourage ideas – do the thinking for employees – fail to clarify instructions – Play favorites . DEVELOPING MANAGERIAL SKILLS When managing employees.Basic Life Skills Needed By An Entrepreneur Enterprising men and women have the ability or know-how that enables them to undertake and complete activities. attitudes and practical skills that can be useful when realizing an enterprise.

– reprimand an employee in front of others – think small .