Topics: Joseph Schumpeter, Richard Branson, Entrepreneurship Pages: 46 (11815 words) Published: December 4, 2013
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What do
entrepreneurs do?

Learning outcomes
If you study this chapter carefully, it may help you to understand: ◆

the personal and cognitive qualities that can help an entrepreneur to succeed in business

why the entrepreneur has a rather limited role in mainstream economics

what is meant by ‘X-inefficiency’, and the role of the entrepreneur in combating it by getting staff to work harder or smarter

why some economists see entrepreneurs as people who help steer the economy towards equilibrium, while other economists see
entrepreneurs as disruptive agents of change

the kinds of mental connections that successful entrepreneurs are particularly skilled at making.

To the extent that you develop such understanding, you should be better able to develop a more complete picture of the nature and role of entrepreneurship than the populist understanding by drawing together the different theories discussed here.

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Woolworths, the pyramids and the Internet have one thing in common: they started out as nothing but an idea. Guy Claxton (2001)

3.1 Introduction
Without doubt the entrepreneur holds a special place in the collective consciousness of society; indeed some entrepreneurs have achieved fame or notoriety that is on a par with Hollywood superstars. The business exploits of a number of high profile entrepreneurs such as Richard Branson (Virgin), Anita Roddick (The Body Shop), James Dyson (Dyson) and Stelios Haji-Ioannu (EasyJet) are reported regularly in the media. These people, and others like them, are famous because they are successful in business.

But what does an entrepreneur do? In this chapter we look beyond the populist conception of the entrepreneur and introduce a more rigorous analysis of this key actor on the economic stage. In particular we are interested here in identifying the economic role of the entrepreneur, because entrepreneurship lies at the heart of business economics and a better understanding of it will provide us with important clues about the sources of business success and failure. These are big issues. It will probably not have escaped your attention that we have started our discussion of the entrepreneur on the assumption that we all know one when we see one. It is not straightforward to define who or what an entrepreneur is, but by the end of this chapter you should be able to construct your own definition based upon the functions and activities that we identify as being entrepreneurial. To help us get started, we will take a look at the story of Richard Branson. We will then move on to examine what economists have said about entrepreneurship.

3.2 An entrepreneur’s story: the early years of

Sir Richard Branson
Sir Richard Branson is a household name but this hasn’t always been the case, so, rather than focusing upon his most recent exploits, we will take a look at his early years because these provide us with important clues about the activities of entrepreneurs more generally. It is useful also because it suggests that certain personal qualities can help turn an original entrepreneurial vision into a successful reality. The start of the path which leads to the multi-business Virgin empire of today can be found back in Branson’s schooldays when he first thought of producing

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a national magazine dealing with issues relating to youth culture. This magazine, Student, was originally conceived in 1966 when Branson was just 15 years old. The initial spur to create the magazine came from Branson’s belief that various school activities such as corporal punishment, games, chapel and the school meal system were either organized inefficiently or were simply wrong,...
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