Defining entrepreneurship and entrepreneurs

The OECD defines entrepreneurship as the dynamic process of identifying economic opportunities and acting upon them by developing, producing and selling goods and services. Entrepreneurship is the willingness to take risks with new or innovative ideas to generate new products or services. MSMEs, especially those in the informal sector, are also driven by necessity and poverty in the Asia-Pacific region. Therefore, governments in their capacity to promote economic growth turn to mechanisms “to enhance entrepreneurial activity in their regions, whether those mechanisms are tax policies, financing subsidies or other tools.”199 In simple terms, entrepreneurship influences economic development.

Entrepreneurs can contribute to economic development by facilitating the reallocation of resources from more minor to more productive uses.200 In simple terms, individuals who start an entrepreneurial venture are known as entrepreneurs, and the common terminology used for small businesses is entrepreneurial businesses. Although MSME’s primary focus may not be on innovation, it ensures the company is self-sustaining to profit. Entrepreneurs can be singled out based on two primary roles: (1) entrepreneur is the founder of a new business, and (2) entrepreneur plays a more general innovative role in economic life.

As a development strategy in today’s changing economic environment, entrepreneurship has become prominent. Entrepreneurship is considered an essential mechanism for economic development through employment, innovation and welfare.201 It is necessary to a growing economy because its innovations create demand for new products and services that were not previously available.202 Entrepreneurship also resembles a process that leads to the growth or creation of start-ups and small and medium-sized enterprises and business projects. It also focuses on generating new value, social, emotional, aesthetic and financial. Entrepreneurship encourages growth for three reasons: (1) it stimulates competition through the establishment of new enterprises, (2) it facilitates knowledge spillovers to spur innovation and leverage new opportunities, and (3) it generates diversity and variety among enterprises in any location. Table 1 summarises the different characteristics of entrepreneurship and MSMEs.

Table 6. Characteristics of Entrepreneurship and MSMEs

Characteristics Entrepreneurship MSMEs
Definition Stresses innovation Stresses on self-sustaining to a profit focus
Size Large to medium and small Micro, small and medium
Purpose Discover, innovate and establish Produce, buy and sell
Sector Private, government and not-for-profit Informal and formal private sector
Key attributes High need for achievement; internal locus of Control; creativity and innovation; growth Organizational skills to manage efficiently, little innovation, moderate growth, moderate need for achievement

Source: Adapted from Osai & Lucky, 2012, p. 350.

Policymakers should consider facilitating and encouraging the growth of entrepreneurship because it is a force for value creation in one domain or another. Here, value covers both monetary and non-monetary returns, and these values are objectives set by policymakers.203 While some countries focus on entrepreneurship‘s contribution to economic growth, others view it as solving environmental problems and social inclusion.

Resources

199 Shane, S. (ed.). (2005). Economic Development through Entrepreneurship. Government, University and Business Linkages”, Edward Elgar, Cheltenham, p. 265.

200 Szirmai, A., Naudé, W., Goedhuys, M. (eds.), (2011).Entrepreneurship, Innovation, and Economic Development”, Oxford University Press, Oxford, p. 256.

201Ács, Z. J., Szerb, L.,2010. The Global Entrepreneurship and Development Index (GEDI), DRUID Conference, London,

202

203 Scott Jeffrey (2010), University of Chicago Graduate School of Business, The Benefits of Tangible Non-Monetary Incentives.