E is for entrepreneur

March 28th, 2014 at 4:00 pm by David Farrar

From the :

As George W. Bush allegedly once said, “the problem with the French is that they don’t have a word for entrepreneur.” That may not be entirely correct as the French may be short of business sense but certainly not of words. What is clear though is that most people have no idea what entrepreneurship really means.

So let’s take the word ‘entrepreneur’ and dissect it a little. It was actually coined by (quelle surprise!) a Frenchman (of Irish origin): Richard Cantillon (1680-1734). Quite literally entrepreneur means ‘under-taker’ and this is how it translates into many other languages (e.g. ‘Unternehmer’ in German or ‘imprenditore’ in Italian).

Unfortunately, the connotation with funerals and gravediggers prevented a similar English translation. It might have helped to elucidate what entrepreneurs do because, well, they undertake things.

Undertaking itself is a word with many potential meanings. It is about committing oneself to a task, taking charge and obligating oneself to a project, often while bearing risks. In a nutshell, this is how most economists would describe entrepreneurs.

There are two definitions of entrepreneurship which one can often find in textbooks. One focuses on the risk aspect that is inherent in entrepreneurial activity. While employees do not bear any residual risk for the company they work for, entrepreneurs stand to lose some or all of their investment if things go wrong. Seen from this angle, an entrepreneur is the bearer of insecurity relating to his income. Therefore, a small shareholder is an entrepreneur while a highly paid employee like a CEO is not.

The second way of looking at entrepreneurs focuses not so much on their responsibilities but on their activities. For Austrian economist Joseph Schumpeter, entrepreneurs are people who are always on the lookout for new and better ways of doing things: inventing new products, conquering new markets, finding more efficient production methods. In this way, their actions promote a process of ‘creative destruction’.

US economist Israel M. Kirzner, meanwhile, emphasises that an entrepreneur’s core function is spotting hitherto unexploited opportunities. In a way, this is also what Schumpeter’s entrepreneur does but Kirzner takes it a step further: we all behave as entrepreneurs in this sense, even in our roles as consumers.

So next time you are looking for a better bargain, or a new job, you may feel a little like Gordon Gekko, Citizen Kane or Mr Burns: we are all entrepreneurs now … even the French.

I can relate to the insecurity of income as a small business owner. But the benefits outweigh the risks, which is why we do it.

Looking forward to F for Freedom next week.

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24 Responses to “E is for entrepreneur”

  1. gazzmaniac (2,307 comments) says:

    I can relate to the insecurity of income as a small business owner.

    Except that you have a nice secure major client in the form of the government (via the National Party’s parliamentary budget). You are unlikely to lose that client in the short to medium term unless you really piss somebody off.

    As far as a small business goes, Curia is pretty well secure. A damn sight more secure than most.

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  2. dime (9,972 comments) says:

    “But the benefits outweigh the risks, which is why we do it.”

    are you sure? you do seem to struggle getting time off :D

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  3. thor42 (971 comments) says:

    This is a good series of articles.

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  4. griffith (1,111 comments) says:

    There are two definitions of entrepreneurship which one can often find in economics textbooks. One focuses on the risk aspect that is inherent in entrepreneurial activity. While employees do not bear any residual risk for the company they work for, entrepreneurs stand to lose some or all of their investment if things go wrong.

    This missis the aspect of the smaller entrepreneur effort that is not contained as yet in a mature corporate structure.
    often in is the support as an idea grows that has more impact than the orignal idea. Even a builder and his subbies develop a more sophisticated relationship with an endured cost if the entrepreneural activity of the head contractor collapses.

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  5. nasska (11,525 comments) says:

    No bosses, no employees…..in my case it makes taking the risk all worthwhile.

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  6. tom hunter (4,862 comments) says:

    This is a good series of articles.

    I suppose it’s better than nothing but I don’t think it argues these points with much passion, and it really does not seem to hit, head-on, some of the left-wing objections and/or distortions of what these terms mean in everyday life.

    And as a result what have got in comments? Six – including mine. Six FFS! Meanwhile GD heads towards 200, mostly on the backs of endless, endless discussions about God.

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  7. mikenmild (11,247 comments) says:

    Yes, most of the Nz Initiative stuff is a bit…meh.

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  8. griffith (1,111 comments) says:

    Edit ….missing…

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  9. Ben Dover (526 comments) says:

    Business is about
    IDEAS
    and nothing else

    “Ideas Rule the World”
    Napoleon

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  10. Jim (398 comments) says:

    Odd that they try to make a point with one of Bush’s many displays of ignorance.

    My French dictionary entry for entrepreneur/entrepreneure has the definition:

    Personne qui, à ses risques, crée, développe et implante des entreprises. Translate

    Which captures it pretty well.

    I’m not sure if I agree with the second ‘creative’ definition as that kind of person can be hired by an entrepreneur, or even by a large business at minimal risk to themselves.

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  11. dave53 (91 comments) says:

    “the problem with the French is that they don’t have a word for entrepreneur.”

    Er, the very word “entrepreneur” is French, a French word long incorporated into the English language.

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  12. Ben Dover (526 comments) says:

    Come on Mate

    How much do National Hand you for running a blog

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  13. Martin Gibson (246 comments) says:

    Come on Ben Dover

    How much do National hand you for being Phil U?

    Eh?

    Dave: thanks, I didn’t think the author got that either, which kind of made them sound a bit slow from the first paragraph.

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  14. Dave Mann (1,222 comments) says:

    The writer is trying to be clever with words but he is off the mark because ‘entre preneur’ means ‘a taker from amongst (stuff)’…. in other words, someone who literally ‘gets into it’. Similar end result, but faulty logic path.

    If you’re trying to get cute with language it would be a good idea to actually know what you’re taking about.

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  15. hj (7,023 comments) says:

    F is for Failure

    World headed for irreversible climate change in five years, IEA warns
    If fossil fuel infrastructure is not rapidly changed, the world will ‘lose for ever’ the chance to avoid dangerous climate change
    http://www.theguardian.com/environment/2011/nov/09/fossil-fuel-infrastructure-climate-change
    Entrepreneurs are acting according to the dumb laws of ecology. Find use increase use up die.

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  16. hj (7,023 comments) says:

    “The door is closing,” Fatih Birol, chief economist at the International Energy Agency, said. “I am very worried –
    ….
    needs to talk to NZ Initiative (Deluded/Super Smart).

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  17. wat dabney (3,769 comments) says:

    In fact even the worthless IPCC is gradually conceding that the sceptics were right all along about global warming:

    ‘Climate Forecast: Muting the Alarm
    Even while it exaggerates the amount of warming, the IPCC is becoming more cautious about its effects.’

    http://online.wsj.com/news/articles/SB10001424052702303725404579460973643962840?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303725404579460973643962840.html

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  18. griffith (1,111 comments) says:

    Any organism given the ideal conditions will grow exponentially.

    given finite resource.

    It will grow until it exceeds its available inputs then die in the resulting poisons and ecological collapse .

    Future eating.

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  19. griffith (1,111 comments) says:

    Mr. Ridley

    :lol:

    Watwat and his nutter friends.

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  20. wat dabney (3,769 comments) says:

    Griff,

    The IPCC report, actually.

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  21. griffith (1,111 comments) says:

    No wat wat

    another piece of rubbish from your little buddy Mat the failed banker Ridley

    The man destroyed a bank due to his failure to understand risk .
    and wat wat thinks he is the go to man for risk projections :lol:

    http://www.skepticalscience.com/lessons-ridley-ipcc-hansen.html

    could have been David Rose or James Delingpole

    The same old rubbish rehashed wat

    pathetic.

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  22. wat dabney (3,769 comments) says:

    Again, Griff, this is the IPCC report you are trashing.

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  23. griffith (1,111 comments) says:

    No wat it is the writer of your posted story I am trashing.

    Mat Ridley was chairman of the UK bank Northern Rock from 2004 to 2007, during which period Northern Rock experienced the first run on a British bank in 150 years. Ridley chose to resign, and the bank had to be bailed out by the UK government leading to the nationalisation of Northern Rock

    The man has proven he has no idea about risk.

    or science. As proven by his pathetic attempt at climate science linked above.

    same as you. buddies in stupidity

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  24. wat dabney (3,769 comments) says:

    Griff, this is the IPCC report you are trashing.

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