What Is Entrepreneurship?

What Is Entrepreneurship?
The word entrepreneur derives from the French words entre, meaning “between,”
and prendre, meaning “to take.” The word was originally used to describe people
who “take on the risk” between buyers and sellers or who “undertake” a task such
as starting a new venture.6 Inventors and entrepreneurs differ from each other. An
inventor creates something new. An entrepreneur assembles and then integrates
all the resources needed—the money, the people, the business model, the strategy,
and the risk-bearing ability—to transform the invention into a viable business.7
Entrepreneurship is defined as the process by which individuals pursue
opportunities without regard to resources they currently control.8 Others such
as venture capitalist Fred Wilson define it more simply, seeing entrepreneurship
as the art of turning an idea into a business. In essence, an entrepreneur’s
behavior finds him or her trying to identify opportunities and putting useful
ideas into practice.9 The tasks called for by this behavior can be accomplished
by either an individual or a group and typically require creativity, drive, and a
willingness to take risks. Sam Hogg, the cofounder of GiftZip.com, exemplifies
all these qualities. Hogg saw an opportunity to create a single place for people to
shop for electronic gift cards, he risked his career by passing up alternatives to
work on GiftZip.com full-time, and he’s now working hard to put GiftZip.com in
a position to deliver a creative and useful service to its customers.
In this book, we focus on entrepreneurship in the context of an entrepreneur
or team of entrepreneurs launching a new business. However, ongoing
firms can also behave entrepreneurially. Typically, established firms with an
entrepreneurial emphasis are proactive, innovative, and risk-taking. For
example, Apple Inc. is widely recognized as a firm in which entrepreneurial
behaviors are clearly evident. Steve Jobs is at the heart of Apple’s entrepreneurial
culture. With his ability to persuade and motivate others’ imaginations,
Jobs continues to inspire Apple’s employees as they develop innovative product
after innovative product. To consider the penetration Apple has with some of
its innovations, think of how many of your friends own an iPhone, iPad, or
Macintosh computer. Similarly, studying Facebook or Zynga’s ability to grow
and succeed reveals a history of entrepreneurial behavior at multiple levels
within the firms.10 In addition, many of the firms traded on the NASDAQ, such
as Intuit, Amazon.com, Google, and Research In Motion are commonly thought
of as entrepreneurial firms. The NASDAQ is the largest U.S. electronic stock
market, with over 2,850 companies listed on the exchange.
We want to note here that established firms with an orientation to acting
entrepreneurially practice corporate entrepreneurship.11 All firms fall along
a conceptual continuum that ranges from highly conservative to highly entrepreneurial.
The position of a firm on this continuum is referred to as its
entrepreneurial intensity.12 As we mentioned previously, entrepreneurial
firms are typically proactive innovators and are not averse to taking calculated
risks. In contrast, conservative firms take a more “wait and see” posture, are
less innovative, and are risk averse.
One of the most persuasive indications of entrepreneurship’s importance to
an individual or to a firm is the degree of effort undertaken to behave in an
entrepreneurial manner. Firms with higher entrepreneurial intensity regularly
look for ways to cut bureaucracy. For example, Virgin Group, the large British
conglomerate, works hard to keep its units small and instill in them an entrepreneurial
spirit. Virgin is one of the most recognized brands in Britain and is
involved in businesses as diverse as airlines and music. In the following quote,
Sir Richard Branson, the founder and CEO of Virgin, describes how his company
operates in an entrepreneurial manner:
Convention . . . dictates that “big is beautiful,” but every time one of our ventures gets
too big we divide it up into smaller units. I go to the deputy managing director, the
deputy sales director, and the deputy marketing director and say, “Congratulations.
You’re now MD [managing director], sales director and marketing director—of a new
company.” Each time we’ve done this, the people involved haven’t had much more
work to do, but necessarily they have a greater incentive to perform and a greater
zeal for their work. The results for us have been terrific. By the time we sold Virgin
Music, we had as many as 50 subsidiary record companies, and not one of them had
more than 60 employees.13