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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
business.

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

The two major roles of the team. 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. These three critical factors of entrepreneurship remain interlinked. the size and type of opportunity determine the level and extent of resources required. however. The Timmons model of entrepreneurship discounts this notion and holds only three factors as crucial: a market driven opportunity. The reality is that opportunity. always remain scarce and the responsibility is on the entrepreneur to coach team members to excel. with any change in one factor having an impact on the other two. While good resources remain scarce. and the like. Success of the business venture depends on the ability of the entrepreneur to ensure balance by applying creativity and leadership. relative to the other critical factors are: 1. A Reality Check Many entrepreneurs try to have all resources in place before starting a new venture. businesses with high potential opportunities and a good management team will have no problem attracting money and other resources. Like the formation of the team. The advantages of bootstrapping include: 1. The Timmons model holds the entrepreneur’s ability to conjure up a great team as a major factor of business success. and resources seldom match. 2. 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. . working out of a garage instead of rented space. Drives down market cost 2. 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. team." 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. Great teams. Instills discipline and leanness in the organization 3. Removing the ambiguity and uncertainty of the opportunity by applying creativity. The entrepreneur works to “minimize and control" rather than “maximize and own. availability of a good team and adequate resources. 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. and by maintaining effective communications.

Zacharakis.. (2006). hirelings. Jean Baptise Say (1767-1832) improved Cantillion’s definition by adding that the entrepreneur brings people together to build a productive item. connecting the producers with customers. Andrew. though various entrepreneurship theories have defined the concept. Maria. Frank Knight's Risk Bearing Theory Frank Knight (1885-1972) first introduced the dimension of risk-taking as a central characteristic of entrepreneurship. McGraw Hill. A. and adds the dimension of risk-taking. (2004). Stephen. and entrepreneurs. and holds the main function of the entrepreneur as acting in anticipation of future events. Jeffry. . Alfred Marshall’s Theory of Entrepreneurship Alfred Marshall in his Principles of Economics (1890) held land. labor. The entrepreneur earns profit as a reward for taking such risks. Entrepreneurship: The Engine of Growth. ceotactics. He classified economic agents into landowners. 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. al. 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. He adopts the theory of early economists such as Richard Cantillon and J B Say.net. et. and considered the entrepreneur as the most active among these three agents. capital. This theory considers uncertanity as a factor of production. Business Plans That Work: A Guide For Small Business. and organization as the four factors of production. The exact definition of "entrepreneurship" still remains a vague concept. The Entrepreneurial Process – Part 3 The Timmons Model Minniti. and Spinelli. The entrepreneur is the person who starts his own business.References Timmons. and considered entrepreneurship as the driving factor that brings these four factors together.

thorough understanding of the industry 2. Entrepreneurship takes place when the entrepreneur . 4. which highlights economic freedom and private enterprise. 3. but on the economic situations in which they attempt their endeavors. and such role expectations base on religious beliefs. 6. 7. taboos. and which coordinates the other three factors. foresight. Many economists have modified Marshall’s theory to consider the entrepreneur as the fourth factor itself instead of organization. Economic factors that encourage or discourage entrepreneurship include: 1. 2. The entrepreneur becomes a role performer in conformity with the role expectations of the society. Max Weber’s Sociological Theory The sociological theory entrepreneurship holds social cultures as the driving force of entrepreneurship. In his book "Entrepreneurship. and stressed on the spirit of capitalism. Capitalism thrives under the protestant work ethic that harps on these values. 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. and customs. 5. Max Weber (1864-1920) held religion as the major driver of entrepreneurship. good leadership skills 3. an Economic theory" he states the demand for entrepreneurship arising from the demand for change. The right combination of discipline and an adventurous free-spirit define the successful entrepreneur. Mark Casson's Economic Theory Mark Casson (1945-) holds that entrepreneurship is a result of conducive economic conditions. 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 creativity.The characteristics of a successful entrepreneur include: 1.

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

McClelland’s experiment reveled that traditional beliefs do not inhibit an entrepreneur. Let us know which you think is the theory that best covers entrepreneurial motivation? References Image Credit: geograph.uk/Dennis Thorley under CC 2. and that it is possible to internalize the motivation required for achievement orientation through training. Peter Drucker’s Theory of Entrepreneurship Peter Drucker (1909-2005) holds innovation.com/-Xv under CC 2. Need for achievement and need for power drive entrepreneurship. need for affiliation. creation of new values 3.0 license flickr. and an entrepreneurial behavior as the keys to entrepreneurship. and need for power.McClellands Theory of Achievement Motivation hold that people have three motives for accomplishing things: the need for achievement. resources. increase in value or satisfaction to the customer from the resource 2. Ercan EKMEKCIOGLU Institution/Affiliation: Kyrgyzstan Turkey Manas UniversityE-mail: ercan.0 license THE IMPACT OF ENTREPRENEURSHIPON ECONOMIC GROWTH Dr. 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.com Abstract .ekmekcioglu@gmail. The dream to achieve big things overpowers monetary or other external incentives. they remain unanimous that entrepreneurship is a distinct concept and a central factor of the economic activity.org. According to him entrepreneurship involves 1. David McClelland (1917-1988) considers entrepreneurs as people who do things in a better way and makes decisions in times of uncertainty.

Entrepreneurship leads to introduction of new goods with new quality and value. These findings have been found to hold in the modern industrialized economies as well as across time periods (Karlsson. 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. The facts that can be derived from these studies link economic growth with the size and age of the firm or an establishment.2005). others have been drawn from empirical evidence. an entrepreneur is someone who is willing to bear the risk of a business venture where there is a significant chance for making profit. p. (2010). 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. . Innovativeness 1. Entrepreneurship is a challenging task as many businesses which start fail to take off. establishments and regions in terms of their economic performance. 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.0 Introduction There has been a wealth of knowledge on the determinants of entrepreneurship over the last few decades. It is through entrepreneurship that new source of supply are discovered and creation of new business organisations that directly affect the economy. Friis & Paulsson. Although studies bringing forth this knowledge have rather been based on theoretical grounds. Carree & Thurik. This paper discourses the impact of entrepreneurship on economic growth. newly established firms and very small firms experience systematically faster growth compared to the already established larger firms. This therefore means that when there is more entrepreneurship in an economy more growth is expected. Entrepreneurship affects economic growth in various ways. Entrepreneurship has many uncertainties especially when new products are created for which there is no existing market. Keywords: Entrepreneurship. Economic Growth.According to Chell & Ozkan. 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. Carree and Thurik (2005). growth and survival. Their innovativeness introduces new ways of production and new markets that have not been exploited. Creation of new business opportunities through entrepreneurship. According to Van Stel. Entrepreneurship is basically the practice of starting a business in order to earn profit on new found opportunities.2004. It important to note that a significant amount of existing literature has been based on the observation of firms. 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. This paper discourses how entrepreneurship can be related directly economic growth and how entrepreneurship is at the heart of economic growth of any nation. productivity and innovation leads to economic growth.3).

Pantuosso. Figure 1: Appreciating Entrepreneurship 1. organizational schemes and product-market combinations are created. According to Carree and Thurik (2002). 2000). cultural and institutional factors as shown in Fig 1 below. national and regional levels (Robbins. the concept of economic growth has often been relevant at firm level. The entrepreneurs seek to introduce their newly crafted ideas in the existing market in the face of obstacles and uncertainties. They also make critical decisions in terms . Considering this linkage however requires revisiting the definition of entrepreneurship. Parker & Fuller. Parker & Fuller. manifest their willingness and abilities to create new opportunities in economy (Todtling & Wanzanbock. There has been a problem in defining and measuring entrepreneurial factors and this has further complicated the exact contributions to economic growth. industrial. 2000). there exist enormous discussions and debates but it is however eminent to realize the importance of constant innovations and rivalry enhancement (Todtling & Wanzanbock. 2003). either as individuals or a team.2 Extended Definition of Entrepreneurship in Relation to Economic Growth While entrepreneurship is all about the activities carried out by individuals. whereby entrepreneurs. novel products.1 Understanding Entrepreneurship and Economic Growth In terms of how entrepreneurship has been a stimulant in economic growth. Pantuosso.1. production modalities. Other conditions of entrepreneurship also add up when it comes to their contributions to economic growth (Robbins. 2003). 2000). competition mainly characterized by exit and entry of firms. variety of supply and particular energy and efforts of invested by entrepreneurs. In this manner. These conditions include personal traits. This implies that linking entrepreneurship to economic growth will be to amalgamate individual to aggregate levels. 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 best examples of these intermediate variables include innovation. the concept of entrepreneurship is multidimensional and largely ill-defined.

Friis & Paulsson. 2010). An entrepreneur according to Kirzner perceived profit opportunities. Thurik & Wennekers. This role is labeled Knightian entrepreneurship. Lastly.of business location. 2. 2004). 2003). 2002). small enterprise 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 . the economic history of previously centralized and planned economies will also have an influence in economic growth of countries (Carree. Empirical literature has also identified the effect of the number of business owners and self-employed individuals in economic growth. Van Stel. 2002). The last role of an entrepreneur is that of assuming the several risks and uncertainties which may be associated with running a business. 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. This is the fourth strand of evidence that seeks to appreciate the role of self-employment in the growth of economy in any state.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. 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. 2. profit opportunists and uncertainties and risk takers respectively. entrepreneurs can be termed as innovators. 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. Thirdly. In a nutshell. forms and the utilization of available resources and institutions (Acs & Armington. As the individual introduces a new product in the market or starts a new business. It is believed that the change in size distribution and its ultimate effects can have a significant impact on the growth of economy (Carree. Kirzner and Knight. 2000). Thurik & Wennekers. As posted by Audretsch & Lehman (2005). 2004). this entrepreneurial role can be described in terms of the three labels. entrepreneurship refers to the behavioral attributes of individuals and should not be confused with well-defined professional persons (Lloyd-Ellis & Bernhardt. This role is what was labeled Kirznerian entrepreneurship.0 Forms of Entrepreneurship According to Carree and Thurik (2002). entrepreneurs in history have often been represented in many faces and assumed different roles. Van Stel. As identified by scholars such as Schumpeter. 2000). The innovator also takes risks that the venture or the new product may eventually turn out to be atotal failure (Todtling & Wanzanbock. Schumpeter drew his attention to understanding an entrepreneur as an innovator. 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. the entrepreneur performs new combinations which Schumpeter called enterprises (Karlsson. The first evidence mainly deals with the turbulence effect of entrepreneurship on the growth of economy. As an innovator. in Eastern Europe.

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. 2010). In Germany. firm and the macro levels of analysis. Nevertheless. These levels include the individual. Carree & Thurik.refers to the entry and exist which however appears to have minimal contributions to the growth of the economy in the short run (Bathelt. the high levels of self-employment in the country have proved to be inefficient for economic development. the entrepreneur usually has the controlling stake which acts as the vehicle for transformations. According to Chang (2011). 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. 2003). 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. 2. 2004a). 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. According to Bruce. 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 small firms. Competition among firms which is a commonplace for entrepreneurs has been shown to have a positive effect in the growth of economy (Carree.2 Future Perspective in Analysis From various strands of literature. joint ventures and subsidiaries in order to introduced entrepreneurship or corporate . (2009). Carree & Thurik. The industrial policy in German has repressed the structural changes by solely supporting large-scale industries with enormous subsidies (Van Stel. 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. there is a total failure in the restructuring the economic policies as the United Kingdom has done. Larger firms have also been found to mimic smaller firms in terms of business units. 2004b). 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. 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. 2011). 2011). The contrary is seen when analyzing the business structure in West Germany where they have low rates of self-employment (Van Stel. 2001). 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. In particular. 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. Deskins. Hill and Rork. Entrepreneurship encourages self-employment and this has been found to have an impact in productivity growth (Chang. 2002).

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

R.A (2002).pdf> 22 nd March.K.P (2011). Retrieved 24 th March. V (n. D (2000).. M. E (2005). D.se/CESISWP13.. 43(2):229-245 Bygrave. 2012 Chang. Exploring the effects of entrepreneurship capital on the private economic impact of American counties. Regional Studies. A. L. M (2010). Retrieved 24th March.REFERENCES Acs.F & Fuller. J.S state economic performance. Review of Economic Studies.. Friis C. A. & Bernhardt. M... 34: 1191-1202 Bathelt.pdf Todtling. Thurik. Regional competence and economic recovery: divergent growth paths in Boston’s high technology economy. 24(3)25-36 Carree. Nascent Entrepreneurship and Learning. Industrial restricting and economic growth.R (2002). & Ozkan. The impact of entrepreneurship on economic growth. 19: 271-290 Carree. inequality and economic development. 38(8):911-927 Audretsch. (2002).pdf Chell E. K.. D. Entrepreneurship & Regional Development. Regional differences in structural characteristics of start-ups. 15: 351-370 .J.nl/thurik/Research/Books/Thurikf. M. Retrieved 24 th March. Website <http://people.C.. Hill. D... Northampton: Edward Elgar Karlsson C.. W.org/community/econ_policy/pdf/entrepreneurship. & Paulsson T (2004). Employment growth and entrepreneurial activities in cities. 67: 147-168 Robbins. D.. & Wanzenbock. Economic development and business ownership: an analysis using data of 23 OECD countries in the period 1976-1996. E. Relating Entrepreneurship to Economic Growth.missourieconomy.A. 2012.. from: http://papers. from: http://www. Small Business Economics. Z.org/knowledge/proceedings/proceedingsDocs/2011/PaperID99. B. 2012. & Thurik.eur. C. H (2001). & Gielazauskas. B.A. An empirical assessment of the contribution of small business employment to U. The social dynamics of entrepreneurship. Deskins. Parker. K.. H (2003). Pantuosco.J & Armington.d).K (2000). Van Stel. 15:293-302 Tesreau. Small business activity and state economic growth: Does Size matter? Regional Studies. Entrepreneurship Theory and Practice.cesis. & Wennekers. Entrepreneurship & Regional Development. F. M (2000). 18:243-255 Carree. 13(4): 287-314 Bruce.C (2009). H. from: http://usasbe. & Minniti.few. J. Does the knowledge spill over theory of entrepreneurship hold for regions? Research Policy. & Rork... (2004). & Lehman. Entrepreneurship: a driving force in the new economy... S.pdf Lloyd-Ellis. Small Business Economics.D. Small Business Economics. Enterprise. 2012.

Entrepreneurship provides strength to small business Most of the time.000 DKK. The effect of entrepreneurship on national economic growth: An analysis using the GEM database. Entrepreneurship is not only important for a single business. he hires people to work with him. For this purpose Government also welcomes entrepreneurs to start their business.Van Stel. just like Væksthuset in Denmark.. I believe entrepreneurship is very important. Small Business Economics. When I started my first project/business idea I got this money as a help by the danish government to get started. A. This strengthens the economy of a country. Retrieved 24 th March. . M.ondernemerschap. & Thurik. forests etc. I love it and believe that every human has this passion. R (2004a). The effect of entrepreneurial activity on national economic growth. For this purpose.from http://www. to create “natural” jobs other countries have because of their geography. I will name a few reasons why entrepreneurship is important: Entrepreneurship creates job opportunities When an entrepreneur starts a business using his financial assets. As the time passes. but it is also a key role in the growth of a country.. So entrepreneurship can be categorized as investment and it is very important for a country to flourish its economy. Which I believe is one of the best countries in the world to start a company in. But first.. 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. the entrepreneur gets satisfied that he is investing his money in the right place. R (2005).. Carree. 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. Such activities of the entrepreneurs provide strength to the small business. Entrepreneurship cause economic growth By creating job opportunities for people. Especially in Denmark since we don’t have any mountains. governments of many countries support entrepreneurs.pdf Van Stel. 2012. So he starts a huge business. Carree.nl/pdf-ez/N200320. rivers. Some more than others of course. A. For this purpose. If you have a good business idea that is scalable you have the opportunity to be rewarded with up to 20. M. So the niche markets flourish providing strength to the economy of the country. hence creating more job opportunities for people. and during the next couple of months I will write about this subject and how it is being an entrepreneur in Denmark. entrepreneurs prefer to invest their money in small businesses. he must need some time to share his work load. & Thurik. an entrepreneur provides wealth to the people.

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

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

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

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

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

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

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

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

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

5 David B. Of particular interest are declining business startup rates and the resulting diminished role for dynamic young businesses in the economy. people employed by business ventures produce “real” goods and services. Everything in its Place: Entrepreneurship and the Strategic Management of Cities. First and foremost. and Javier Miranda. “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. 4 David B.. Norton. Innovation and Industry Evolution. business has to be very flexible and constantly research consumer demands: what’s the point producing something that nobody wants to buy? Second . October 10. 2015). More than that. In particular. business creates job opportunities. 1995). 2014. i. “Evidence along a number of dimensions and a variety of sources points to a US economy that is becoming less dynamic. Role and Importance of Business Entrepreneurship in Society Olufisayo. 2008).” Journal of Economic Perspectives. .2 See for example. p. Audretsch.” 3 Jose Ernesto Amoros and Niels Bosma. John Haltiwanger.W. Summer. 6 Cited from Audretsch. the authors conclude that.org/docs/download/3106. States and Regions (New York: Oxford University Press. importance of entrepreneurship in economic development and importance of entrepreneurship in developing countries – the role that makes business not selfish at all. but few common people share this opinion. 7 Paul Krugman. Audretsch. Ron Jarmin. 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. most jobs business helps create are productive jobs. business produces and distributes goods and services to satisfy certain public needs.e. importance of entrepreneurship to individual.gemconsortium. 185. To fulfill this task. 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. “Global Entrepreneurship Monitor 2013 Global Report” http://www. the recent study by Ryan Decker.

So you see. In fact. just as it is a sign of maturity in an individual. business is not all that selfish. and then working to achieve them. One important goal that the people have set for their economy is Full Production in order to achieve full employment. 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. Forth . On the contrary. We measure the amount of our national output of goods and services by looking at statistics of Gross National Product. But when millions of people are unnecessarily unemployed. when you make this crucial decision to embark on a business enterprise.Third . It pays salaries and wages to its employees. business helps enlighten and educate people and encourages their further personal growth. bear it in mind that it is a way to serve society. 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. A second major goal is Stable Growth. 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. and this way. 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. Goals Of Individuals And Society Setting goals. it means they are not making a productive contribution to the country and they are not earning an income. the goal of full production -which requires both full employment and efficiency – is one of the most important in our economy. business contributes to national well-being. communication skills and vision for new business opportunities. its function is to satisfy in the long run the consumer demands – our demands. and to make our life comfortable. For this reason. that despite public opinion on this matter. We want the economy to become bigger and better through the years. and in a number of other ways. So. 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. There will always be some unemployment – roughly 2 to 5% of the labour force. Fifth . capital and natural resources -and use these resources efficiently. including those located in remote rural areas. Economic growth is a . 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. 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. We want to make full use of the productive resources that are available -labour. by full use of local recourses. is a sign of maturity and responsibility in a society. by investing money in developing science and technology and constructing new enterprises. determination.

But what does it mean in concrete terms? Economists have pointed out that freedom of choice is important for consumers. 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. Failure to achieve this goal not only causes serious economic problems at home and abroad. clothing. It is closely related to freedom of choice. 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. 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. because it says that all people should approximately the same degree of freedom – to exercise their rights as consul workers and enterprises. Widespread poverty not only means failure to achieve the goal of economic security for these people. employment and growth of GNP are all pretty easy to measure. but also increases international tensions threaten world peace. 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). there is much talk about the importance of “free enterprise”. This is the goal of International Balance. however. but it goal that nearly everyone feels is important to define and work toward. Equality of Opportunity for men and women in the society is another goal.steady increase in GNP per person (total GNP divided by the nation’s population). When we come to certain other economic goals. for workers. or increases in unemployment. Not everyone agrees on the meaning of fairness and justice in economic life. Finally. there is one economic goal that is not limited to the boundaries of the country. . Production. We want to maintain a strong and balanced relationship in foreign trade and international payments. 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. Freedom of Choice is a goal that practically everyone would include high on the list. It gives people the freedom to start their business and use the factors of production in such a way as to make a profit. This is important aspect of freedom of choice. we have to talk about them in more general terms. but spreads overseas to other countries. Finally. Much of the current economic system is built on the foundation of this particular freedom. according to individual needs and preferences. shelter and other necessities. and for business. but it also raises serious questions about whether we are achieving the goal of Economic Justice in society.

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. 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 . attitudes and practical skills that can be useful when realizing an enterprise. DEVELOPING MANAGERIAL SKILLS When managing employees.

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