Definition of Entrepreneurship

Posted: May 19, 2016 in Uncategorized

Although entrepreneurship definition and development, as said earlier, stemmed from the theory of “laissez-faire capitalism” propounded by Adam Smith (1776), its theoretical studies and formulation was only conceptualised in the sixties and seventies by different famous researchers such as Max Weber, David McClelland, Joseph Schumpeter, Peter Kilby, among others. Let us now look at the various definitions of entrepreneurship by each of these theories as well as their development of entrepreneurship.

Max Weber:

Max weber in his theoretical studies and formulation was of the views that religious ideas can stimulate economic development, which leads to the development of the entrepreneurial spirit. Although his view is sociological, he maintained that certain teachings and attitudes prevalent in the society are crucial prescription for economic growth.

Weber used protestant ethics in his days to support his claims and this was substantiated with a practical example taken from two Mexican villages. An investigation was conducted to find out the changes that occurred as a result of the introduction of a new church (protestant) in one of the villages. It was apparently discovered that the settlement of a protestant reformation in that village brought a lot of changes and development such that the establishment of missions, schools and clinics through which the village became more enlightened. Children became more ambitious and parents more enlightened and they demonstrated this by taking their illness to clinic, their children to school, their savings to the bank, forsaking witchcraft, drinking and marrying of many wives.

This notwithstanding hard work, thrift, exploitation of economic opportunities and planned living were seen as the service of God. Thus the businessmen faced risks and challenges, resulting in economic growth and evolution of capitalist entrepreneurs.

According to Max weber, entrepreneurship definition and development arises only within a social group, which holds values similar to the Protestant ethic as seen above. This consecrated life demanded specialisation in one’s calling. Diligent labour and an ascetic self-denial which discourages the personal use of business profit, rather more investment in new ventures was encouraged.

The ethical rationalisation, according to Weber, is therefore a reflection and justification of economic changes because individuals cannot manipulate their values at will but must draw them from stronger authority.

To justify this Max Weber (1930) said: “the modern man is in general, even with the best will unable to give religion, ideas etc. the significance for culture and national character which they deserve. But it is, of course not an attempt to substitute for a one-sided materialistic affair with an equal one-sided spiritualistic affair for casual interpretation of culture and history.”

In conclusion, he argued that the system of value facilitates entrepreneurship in the following ways:

  • Value, embodied in an institution, defines groups with social cohesion and brings economic advantage.
  • A system of value can also provide a coherent moral argument for entrepreneurial behaviour.
  • Moral beliefs act autonomously on men’s mind, forming character which conceives entrepreneurship as a duty.

            ENTREPRENEURSHIP DEFINITION

That’s pretty much it on max weber’s definition regarding entrepreneurship and I hope you understood the whole concept and just in case you didn’t get all of it, here’s a brief summary of what I’ve said so far.

  1. Weber argued that entrepreneurship arises from and within a social group as a result of their beliefs, culture and values which motivated them into the practice of entrepreneurship

That’s that for that. Do you agree with Weber on this one? If not, I would like to know what you think so feel free to drop a comment below.

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