Salient Features and Theories of Entrepreneurship

Vocabulary flashcards covering key terms, features and theories discussed in Entrepreneurship Lessons 2 and 3.

Entrepreneurship

The dynamic art of applying correct practices to create wealth by providing valuable goods and services through a self-owned, risk-bearing venture.

Art of Correct Practices

View of entrepreneurship as flexible, creative actions rather than fixed scientific rules, constantly adapting to economic, political and social change.

Wealth-Creating Venture

An entrepreneurial activity whose goal is to generate surplus value (profit) beyond costs and expenses, enhancing overall economic wealth.

Valuable Goods and Services

Products offered by entrepreneurs that highly satisfy customers in quality and price, giving buyers more benefits than the amount paid.

Opening a Self-Owned Enterprise

The act of establishing a business in which the founder is also the owner responsible for day-to-day operations.

Managing a Self-Owned Enterprise

Directly overseeing and controlling the daily activities of one’s own business to ensure its success.

Risk-Taking Venture

An enterprise that inherently faces business risk as new ideas or opportunities are pursued under uncertainty.

Business Risk

The uncertainty of returns and potential for loss that accompanies every entrepreneurial venture.

Intrapreneurship

A situation in which a business is managed by individuals other than the owners for the owners’ benefit.

Profit (Accounting)

The excess of revenue over costs and expenses; the commonly perceived measure of wealth in small businesses.

Theory (Economic)

A generalization used to explain facts or phenomena; not an absolute truth and open to further proof or rebuttal.

Innovation Theory

Joseph Schumpeter’s idea that revolutionary economic change is driven by entrepreneurial innovation in products, methods, markets, suppliers or industry structure.

Joseph Schumpeter

Austrian economist who emphasized innovation as the primary force of entrepreneurial and economic development.

Keynesian Theory

John Maynard Keynes’s view stressing government’s vital role in stimulating entrepreneurial activity and the economy during downturns.

John Maynard Keynes

British economist whose 1936 work highlighted government intervention to revive investment and employment in depressions.

Alfred Marshall Theory

Framework identifying land, labor, capital and organization as the four production factors, with organization (entrepreneurship) coordinating them.

Factors of Production (Marshall)

Land, labor, capital and organization—the resources combined by entrepreneurs to create goods and services.

Risk and Uncertainty-Bearing Theory

Frank H. Knight’s concept portraying the entrepreneur as the agent who connects producers and consumers while shouldering uncertainty for profit.

Frank Hyneman Knight

American economist who linked profit to the entrepreneur’s willingness to bear uninsurable uncertainty.

Weber’s Sociological Theory

Max Weber’s assertion that cultural and social norms significantly influence entrepreneurial development.

Kaldor’s Technological Theory

Nicholas Kaldor’s focus on technological advancement as a central driver of entrepreneurial production and growth.

Leibenstein’s Gap-Filling Theory

Harvey Leibenstein’s idea that entrepreneurs identify and fill gaps in market or production inefficiencies.

Kirzner’s Learning-Alertness Theory

Israel Kirzner’s emphasis on alertness and continuous learning as key entrepreneurial attributes for discovering opportunities.

Creativity in Entrepreneurship

The continuous generation of new ideas and adaptations that propel enterprise growth and differentiate offerings.