Theories of entrepreneurship, which are an integral part of economic science, in the old days certainly reflected both positive and critical approaches to the very fact of the existence of this phenomenon. Some researchers have argued that this is a necessary evil. They viewed entrepreneurship as a negative phenomenon. This was explained by the fact that such activities went beyond the boundaries of moral norms, ethical attitudes and the dominant ideology. Researchers who spoke about the positive direction of this phenomenon saw it as a guarantee of the economic and political freedom of society. This concept is currently considered the dominant one.
Origination
From ancient times, primary accounting documents in the form of clay tablets have come down to us. They reflected loan agreements, sales contracts, as well as lawsrelating to property rights.
The earliest works on the problems of entrepreneurship were the works of the philosophers of Ancient Greece. One of the first to consider this phenomenon was Xenophon (456 BC). In his work Domostroy, housekeeping was described, or, as he called it, oiconomia. Hence the name of science - "economics". Already Xenophon drew attention to the fact that the main purpose of entrepreneurial activity is to increase the value of property. The price of land will increase significantly if it is properly maintained. This approach reflected the attitude to their site as capital.
The economic theory of entrepreneurship was also considered in ancient Greece. Plato (347 BC) condemned such a phenomenon. He believed that in an ideal state, the veneration of gold and silver violates the order and tranquility of citizens. And even the authors of the modern theory of entrepreneurship, who are followers of Platonic ethics, continue to view private business as a necessary evil. They are convinced that the state itself should provide people with everything necessary for life.
Aristotle (384-322 BC), being a student of Plato, idealized a family semi-subsistence slave economy. This philosopher welcomed trade, but at the same time condemned financial entrepreneurship, which in those years took the form of usury.
Philosophers and writers of Ancient Rome (Cicero, Varro, Seneca andother). They paid much attention to the most rational ways of economic life.
Described entrepreneurship and thinkers of Ancient China. All their works were based on the teachings of Confucius (551-479 BC). The thinkers of the Celestial Empire were well aware of how the market mechanism works. This allowed them to describe ways to regulate it, for example through the use of public procurement and sales.
Despite the emergence of the beginnings of the theory of entrepreneurship, in those days the royal power was still too strong. She considered her main task to increase the efficiency of public administration only. The activities of individuals in the field of buying and selling were not at all the focus of such rulers.
Entrepreneurship in Medieval Europe
States and churches on this continent saw only the defense of the faith as their main task. The position that a person occupied in society, from his very birth, was determined by belonging to one or another class. Any social mobility in medieval Europe was completely absent.
Artisans, usurers and merchants flourished at this time. They worked only to order, while having a lower status compared to the spiritual and feudal estates. Of course, private enterprise also took place during that period. However, it was mainly considered as an object of taxation, as well as a source of loans and credits.
But gradually the critical attitude of society towards entrepreneurship began to weaken. Thiscontributed to the development of urban crafts, the emergence of fairs, the emergence of an education system in the form of universities, as well as the expansion of consumer demand. However, until the 16th c. all the facts relating to economic life have not received the necessary scientific and philosophical assessment.
Nevertheless, the first banks appeared in medieval Europe, guilds and associations of merchants appeared. Entrepreneurial character began to wear typography.
All of these events necessitated the birth of accounting. The work of Luca Pacioli (Italian mathematician) "Treatise on Records and Accounts" has been used for more than 500 years to record business results.
Reformation Age
Revision of attitudes towards private business began in Europe only in the 16th century. In the Protestant ethic, the entrepreneur was viewed from the point of view of an honest person, faithful to his duties. These teachings were entirely consistent with Christian thought. In the same period, the entrepreneurial ethic was born, which was seen as a thrifty and modest person. A striking example of this direction were the works of B. Franklin (1708-1790). It was this scientist who proclaimed the slogan, which is now considered an entrepreneurial creed. It sounds like this: "Time is money." What did Franklin mean in this case? The fact that a businessman needs to spend his time earning money only by honest work, strengthening his image of an honest, thrifty and hardworking owner in the eyes of creditors.
The ideological justification of entrepreneurship is reflected in the works of the English thinkers J. Locke and T. Hobbes. They separated state property from private property, and justified the freedom of a businessman to make a decision under risk, as well as the freedom of choice of a buyer.
Entrepreneurship in Russia
On the territory of our state, private business has existed since ancient times. In the form of crafts and in the form of trade, entrepreneurship was born in Kievan Rus. The first representatives of this direction are merchants and small traders.
The heyday of entrepreneurship in Russia occurred during the time of Peter I. Manufactories began to be created throughout the country, linen, cloth, weapons and mining industries began to flourish. Entrepreneurial dynasties began to emerge. The most famous of them was the Demidov family. The ancestor of this dynasty was an ordinary Tula blacksmith.
After the abolition of serfdom, entrepreneurship began to develop even more rapidly. The construction of the railway began, heavy industry was reorganized, and joint-stock activities were revived.
The industrial base of entrepreneurship finally took shape in Russia in the 1890s of the 19th century.
The emergence of a theory
For the first time, the term "entrepreneur" in the interpretation closest to the modern one was used by the French banker and financier R. Cantillon (1680-1741) in his Essay on the Nature of Trade. The author of this theory of entrepreneurship pointed out the existence of three groups of economic agents. Among them are landowners (capitalists), entrepreneurs and hired workers. In his theory of entrepreneurship, Cantillon for the first time emphasized the significant role of the businessman that he plays in the economy of the state. At the same time, the author proposed the very term for this phenomenon. He introduced the definition of "entrepreneur" into economics. At the same time, Cantillon emphasized that this term means the possibility of making a profit in the market under a certain situation.
An entrepreneur, according to this theory, is an intermediary trader who responds to the existing difference between supply and demand. At the same time, he buys goods at a known price, and will sell at an unknown price. That is, there is always a risk in such an operation. This is the essence of the theory of entrepreneurship developed by Cantillon. The remaining two agents are passive.
Refining the theory
In the scheme proposed by Cantillon, it was not clear what the participation of capital and its owner in entrepreneurial activity was. This caused the need for the evolution of the theory of entrepreneurship. Cantillon's scheme was refined by the French physiocrat, politician and economist A. R. J. Turgot. According to his theory of business and entrepreneurship, the owner of capital is able to take the following actions:
- become a capitalist by lending money;
- become a landowner by buying a plot and renting it out;
- become an entrepreneur by purchasing goods for sale.
Adam Smith Theory
Thisthe scientist considered the economy as a self-regulating mechanism. At present, his arguments about the role of competition, as well as those market processes that lead a businessman to make a profit, are considered classic. However, Smith paid no attention to the constructive, creative side of entrepreneurship. He believed that the mechanism of competition arises and operates automatically.
Like all physiocrats, Smith identified the entrepreneur with the owner of capital. At the same time, he tried not to use the term introduced by Cantillon at all. Smith called an entrepreneur either a "manufacturer" or a "commercial" or "industrial entrepreneur." But in general, the founder of economic theory was very negative about such activities, arguing that the interests of these people never coincide with the interests of the country.
Follower of A. Smith
The development of the theories of entrepreneurship was reflected in the writings of the Frenchman Say. He saw an excellent capitalist in the businessman. As a participant in the economic process, the entrepreneur plays a key role in the development of the economy, and also ensures the redistribution of capital, labor and land as the main factors of production between various areas of economic activity.
Say pointed to the creative and active role of the businessman. At the same time, the theory of entrepreneurship was brought to the macroeconomic level. This made it possible to formulate the law that supply creates demand.
It was Sei who founded the tradition of scientific research into suchphenomena like entrepreneurship.
Works of J. Mill
The economic theory of entrepreneurship continued its evolution. In the published work “Principles of Political Economy” (1848), the English economist J. Miller considered a person who takes on not only the risk that exists in a transaction, but also business management (management). This person is the entrepreneur. Mill also identified the difference that exists between a businessman and shareholders. The latter also take risks, but at the same time they do not take any part in organizing the case.
Proceedings of Mangoldt
This German economist is also one of the classics of entrepreneurial theory. Mangoldt put forward the concept of income. Under it, the German economist understood the profit that is obtained after subtracting from it the remuneration for the work of the entrepreneur and the amount of repayment of loans. The main factor that determines the final amount, according to Mangoldt, is the ability of a businessman and his risk.
German School of Economics
The nature of the theories about entrepreneurship has been particularly scrutinized in Germany. At the beginning of the 19th century the so-called historical school of economics was created in this country. Its supporters considered together the economic theories of entrepreneurship and the theory of personality. For example, W. Sombart in his work "Capitalism", by which he understood a specific business, considered it as the results of the actions of individual individuals. They are entrepreneurs who have talent, tirelessness, perseverance andcaution. Sombart was the first to create a psychological portrait of such a person. According to the author, the spirit of entrepreneurship is one of the constituent parts of capitalism. According to Sombart, a businessman is considered an "organizer", a "conqueror" and a "merchant". At the same time, he is characterized by a desire for risk, spiritual freedom, perseverance and a we alth of ideas.
Thunen's Works
After economists began to consider the businessman as a person, innovative theories of entrepreneurship began to appear. One of them was the one proposed by the German economist I. Tyunen. He considered the entrepreneur's income as a payment for risk, which is an unpredictable value. Thünen defined that the amount of income-remuneration is considered the difference between the profit received in the conduct of business activities and the interest on invested capital, insurance against losses and losses, as well as the salary of managers.
Effective Competition Theory
In his attempts to answer the question about the causes of market disruption, the Austrian economist J. Schumpeter (1883-1950) came to the conclusion that the dynamics of the development of the manufacturing sector directly depends on entrepreneurs. They form a kind of innovative environment. It represents new combinations of factors of production.
Schumpeter's theory of effective competition indicates that the entrepreneur does not want to realize his abilities in the traditional economy. He is not at all satisfied with the routine and monotonous business. AtIn this case, the entrepreneur may not be a capitalist or an owner. He can be a manager or a top manager. Thus, a connection was found between the theory of entrepreneurship and firms in which people work. The author called them innovators. In his opinion, the function of an entrepreneur is available only to those people who have the ability and flair for innovation. At the same time, they can realize their plans. Entrepreneurs are a special type of business entities. Schumpeter defined their work as qualitatively new. And this fact becomes especially obvious if we compare their activities with ordinary economic entities. Schumpeter called it the work of an innovator. According to this Austrian economist, the process of entrepreneurship itself is not limited to making ordinary profits. It should be a super profit achieved by applying new combinations in the production process.
Theory of John. M. Keynes
The development of the main theories of entrepreneurship was continued in the future. One of the new works was the work of the father of macroeconomic theory, J. M. Keynes. He published a "Treatise on the Monetary Reform", in which he analyzed the impact on the standard of living of the population of shifts in the price factor. At the same time, they identified three categories of social groups:
- rentier;
- functioning entrepreneurs;
- payroll workers.
In the general scheme of economic relations, the author determined the place of the entrepreneur. He called it the operating element of macroeconomics. However, Keynes emphasized that an important factoris the solvency of the population, which arises on the basis of their income and available savings. Favorable for the entrepreneur situation is the reduction of salaries of the population. The fact is that in this case, consumers' propensity to save decreases.
Noted Keynes and the relationship that should develop between the entrepreneur and the state. They involve active lending and financing of businessmen. Keynes called this policy the socialization of investment.
The modern stage of the theory of entrepreneurship
In the last quarter of the 20th c. in countries with a high level of economic development, the role of knowledge-intensive business has increased significantly. This led to an entrepreneurial boom. This phenomenon has resulted in a significant increase in the number of small enterprises.
Entrepreneurship theory and practice began to go hand in hand. Economists' research has shifted mainly to management. At the same time, the modern theory of entrepreneurship by Michael Porter, as well as Peter Drucker, has acquired great importance. The authors of these developments pointed to the positive impact of innovative entrepreneurial management on maintaining the competitiveness of the company.
In connection with the increasing importance of large corporations, entrepreneurship has been forced to solve new problems. The well-known American economist J. Galbraith put forward the thesis that in such companies, power, by and large,belongs to top managers. But at the same time, they do not seek to maximize profits, but to increase bonus payments and wages.
Professor of the Harvard Business School H. Stevenson analyzed the relationship between the power of the administrator and the entrepreneur. He noted that entrepreneurship is the science of management, the essence of which lies in the pursuit of opportunities without any regard for the resources currently under control. This is the difference between a businessman and an administrator.
