The essence and functions of entrepreneurship

Entrepreneurship acts as a way of managing, which in the course of centuries of evolution has been established in the economies of developed countries. Today it is considered the most important socio-political institution.

general characteristics

At first, the subjects of this sphere included people who participated in market turnover or who were gambling and prone to risky actions. Over time, the social function of entrepreneurship has increased. It began to include any activity of citizens that was aimed at generating income and is not prohibited by law. The formation of the official institute took place in the 17th century. Its development was quite complicated. Even at present, this process is accompanied by the emergence and resolution of various contradictions. Let us further consider in detail what constitutes entrepreneurship: the nature, functions, types of this activity.

general characteristics

The essence and functions of entrepreneurship distinguish it from other activities. In particular, one of the characteristic features of this institution is the presence of such motivation as the desire to achieve success. This need is focused on solving various problems, materializing many new and often risky ideas. Entrepreneurial motivation differs significantly from the incentive of administrators or ordinary specialists. The latter direct their efforts to the accumulation of knowledge and professional growth.

For this, the assessment of his qualifications by professionals is of particular importance. The activities of the administrator are aimed at job growth. Such entities are prone to management activities. Not every administrator or specialist can become an entrepreneur. This requires special abilities and certain motives. The functions of entrepreneurship in the economy include many tasks related to economic life. People involved in this activity seek to profit by satisfying the needs of other citizens. The basis of entrepreneurship is laid skills, the ability to realize ideas, predict. At the same time, activities involve a certain degree of risk. However, those who go for it, having correctly made a forecast, as a rule, get the expected effect.

Hezrich's Theory

The owner of a small shop, a large banker, the owner of a controlling block of securities, a farmer, a dealer, the owner of the company - all these people are united by belonging to one category - entrepreneurs. Today in world practice there is no single definition of this activity. According to Khizrich, an American scientist, entrepreneurship should be considered the process of creating any new object that has its own value. At the same time, the author of the idea calls the actor himself a man spending all his time and energy on this. It is he who takes on social, psychological, financial risk, receiving a reward for this in the form of cash income and satisfaction.

Smith's definition

In the XVIII century, the concept of "entrepreneur" was associated with the word "owner". In particular, Smith adhered to this idea. He talked about the entrepreneur as an owner who takes a certain economic risk when implementing a commercial idea for profit. According to Smith, such a figure independently plans, organizes his production, sells the product, manages the income.Later in economic life there was a separation of the capital-function of entrepreneurship and capital-property.

The view of modern authors

In the literature, entrepreneurship is seen as economic organizational creativity, innovation, free manifestation of initiative, willingness to take risks to generate income. In domestic publications, this institution is considered as an independent activity of citizens and associations. It is aimed at making a profit and is carried out at the personal risk of the figures and under their property responsibility.

Entrepreneurship Functions for McConnell and Bru

These authors disclose the meaning of the category in question in their book. Describing the concept, they distinguish 4 functions of entrepreneurship:

1. The activity provides a link between land, labor and capital in a single production process. Acting as an activator, entrepreneurship simultaneously acts as a driving force and intermediary. It connects all resources to implement a process that involves making a profit.
2. In the process of conducting business affairs, the functions of entrepreneurship are expressed in the adoption of significant decisions that determine the direction of the enterprise.
3. An entrepreneur acts as an innovator, a person seeking to introduce new products on a commercial basis, production technologies, and even innovative organizational forms of business.
4. The subject of the activity in question is at increased risk. This is indicated by a thorough analysis of each previous function of entrepreneurship. None of the leaders in the capitalist system is guaranteed profit. As a reward for the spent efforts, time and abilities, tempting incomes, as well as losses and even bankruptcy, appear. Thus, the leader risks not only his own labor, business reputation, but also the capital (his own and his companions) invested in the business.

Entrepreneurship acts as one of the specific forms of the emergence of social relations. It contributes not only to the expansion of material potential, but also forms a favorable soil for the practical implementation of the talents and abilities of each individual, and leads to national unity. This expresses the social function of entrepreneurship.

Specificity

Entrepreneurship is considered the art of doing business. In this regard, like other creative directions, it has a strictly subjective coloring, acting in real life as a personified phenomenon. The content of the activity acts as a complex of production factors or as the introduction of an innovative element in the manufacturing process, promotion of products. This helps to increase the efficiency of the enterprise and meets the interests of consumers to the maximum. Entrepreneurship is primarily a thought process. But due to the fact that each person has his own apparatus and stereotype of thinking, directly in the implementation of ideas, the success of individuals is different. Mental abilities are manifested in the form of design, the starting point of reference for any planned activity.

The necessary conditions

Entrepreneurship development is based on a number of principles. These, in particular, include the presence of:

1. Ownership of production assets, manufactured goods and income received from its sale.
2. A certain economic environment and socio-political climate that would contribute, and not only declare self-government, the possibility of investing profit, freedom of choice. In other words, a competitive market management regime is required to do business.Only in such conditions can the functions of small business, which is currently of particular importance for the development of the economic system of many countries, be fully realized.
3. A specific set of rights and freedoms that allows you to choose the appropriate type of activity, source of financing, marketing of products, access to resources, form a production program and prices, a way to manage income.
4. Varieties of types, categories, forms of ownership (private-corporate, private, collective, state) and methods of their assignment.

The main functions of entrepreneurship

There are three main categories. These include:

1. Resource function. Its implementation is carried out through the mobilization of information, material, labor, financial and other means for use in production. The businessman’s focus on dynamic efficiency requires him to constantly search for new resources. Many of them would not be in demand by society if no one was involved in their mobilization.
2. Organizational function. Mobilized resources benefit the actor only if used properly. In this regard, the businessman assumes the organization of production, sales of products, market research, scientific developments and so on.
3. Creative task. Above, the predominantly economic functions of entrepreneurship are considered. However, as you know, a businessman is aimed at the constant search for new ideas. He seeks to maximize income or other effect that he recognizes as the goal of his work. This does not allow him to be satisfied with the existing situation. The entrepreneur is constantly looking for ways to improve his business. The manifestation of creative abilities leads to the emergence of many different scientific, technical, organizational and other solutions.

The nature of entrepreneurial potential in the Russian Federation is determined by the transitional state of the domestic economy. One of the key points is the consciousness of citizens involved in this activity, their responsibility in the implementation of the tasks.