How Entrepreneurship Is A Factor Of Production
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While the conventional perspective on the role of entrepreneurship differs between economists and sociologists, a new study from the National Bureau of Economic Research (NBER) tries to offer a more comprehensive view of the impacts of entrepreneurship and companies on the overall economy.
The NBER study by David Dunning of Cornell University and Justin Wolfers of the University of Michigan looked at some 200 corporate bankruptcies and found that a lack of experience in the corporate world can pose a greater risk to an entrepreneur than a bad business model or lacking a competitive advantage.
Entrepreneurship makes individuals much more vulnerable than business owners with experience at business firms
The researchers point out that entrepreneurs often fail because they lack the experience in a corporate setting or because they are just not familiar with an industry. Dunning and Wolfers believe this misses the most important factor: experience breeds competence and competency breeds entrepreneurship.
"The [NBER] paper reflects one of the most hotly debated issues in our research," Wolfers told Fast Company. "We really do believe that experience and competency is not as important as having ideas and grit."
In a press release, Dunning notes that economists are divided over whether entrepreneurship makes for a riskier and less secure workforce, but Wolfers notes that they don't disagree that entrepreneurship can serve as a "drain on the productive workforce."
But they disagree over the underlying driver of entrepreneurship.
While economists are inclined to lean toward the "ideas" side of the argument, Wolfers and Dunning's view is that "startups are often launched to address a specific market failure or a unique opportunity. They can disrupt an existing market or they can create new markets."
That said, Wolfers does concede that this is the main driver behind the recent boom in the e-commerce sector.
"If there is a disincentive for entrepreneurs to launch, for lack of risk-taking entrepreneurs, then why not just go into retirement?"
If you're considering launching your own business, either on your own or as a partner in a venture-backed company, consider your areas of expertise and education. Will they serve you better as an entrepreneur or as a corporate employee? Your experiences as a team member may serve you better in a startup than as an entrepreneur. For some, having a diverse skill set serves you better as an entrepreneur.
Whether you are a blue collar worker or a corporate executive, startups are everywhere. And they bring with them risks. But unlike a corporate restructuring, startups never cease to innovate.
Let's do a little experiment
First of all, give yourself a three day weekend. Don't go to work at all on Friday, Saturday or Sunday.
You might start getting a feeling of being a bum, and you might even think you're in a recession, but you're not. You're just having a three day weekend.
A really long one, in fact. Don't use that weekend to get a job, you're having a long weekend.
Secondly, and this is crucial, stop using the word "productivity." Stop using it to justify being a bum, a loser and someone who can't think for himself.
Productivity is not an excuse to be a bad person. Productivity is a tool, just like any other tool.
You need to think about ways you can maximize your productivity. Stop defining yourself by productivity; define yourself by your values, your beliefs, your passions, your ethics, and whatever your true self is.
Being productive means being smart and effective, but that's not who you are.
What are the benefits of entrepreneurship?
Starting a business is not easy, however there are many benefits associated with starting a business, for entrepreneurs and those who are looking to start a business. The benefits are as follows:
Builds a portfolio.
As an entrepreneur, the more businesses you start, the better portfolio you will have. This is because some businesses are just not going to be a success and you will need to start another to sustain.
But in this situation, it’s better to start several businesses rather than just one.
Helps to build a reputation.
The more profitable you are, the more you build a reputation for yourself. This allows you to gain a lot of business and be much more successful as an entrepreneur.
Helps you to get financing.
Entrepreneurship helps to secure the financing that is required to start and maintain a business. This means that more investment money will be available for entrepreneurs that are worth investing in.
Allows you to network and create a strong network of other entrepreneurs.
An entrepreneur, with a good portfolio and reputation, will be able to network with other entrepreneurs and with people that will help grow and expand their business.
What are the drawbacks of entrepreneurship?
Entrepreneurship is a great strategy for the formation and growth of a business, however there are some disadvantages that come with entrepreneurship. Entrepreneurship is a very risky and risky business to do, so there are a number of drawbacks that come with this.
The likelihood of entrepreneurs being successful depends largely on whether they will be able to pay for their expenses as well as be successful in the market.
In order to overcome the risk associated with entrepreneurship, entrepreneurs need to calculate how much capital they need in order to establish a profitable business and how much money they will need to live and work, while in business. This will determine how many jobs they are likely to create and how many business opportunities they are likely to capitalize on.