Entrepreneurship, its types and forms. Concept, essence and signs of entrepreneurship

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

In the modern world of a developed market economy, the concept of "entrepreneurship" can often be heard in everyday life. The privatization of property has led to a huge growth of small and medium businesses in the Russian Federation. The relevance of entrepreneurship among young people is especially observed, as well as the departure from wage labor. Entrepreneurial activity is closely related to financial well-being and is associated by many with the starting point on the path to success. That is why various works on the topic of entrepreneurial activity and types of entrepreneurship are so popular today.

Different approaches to the concept of entrepreneurship

The scientific term "entrepreneurship" was first mentioned by the British economist R. Cantillon back in the 18th century and was understood as the activity of buying and selling certain goods under risk. Later, the concept became widespread in various fields of science. Based on this, today there are a large number of different interpretations.term.

French scientist A. Turgot considered the main factor in the successful existence of business capital, as it is one of the types of small and medium-sized businesses. Its task is profit as the initial principle of economic development.

In the understanding of the American economist R. Hisrich, entrepreneurship is a kind of production of a new product, endowed with value and aimed at further profit.

According to the law of the Russian Federation, entrepreneurship is a branch of a market economy, understood as a free activity of citizens, focused on making a profit and realized under their own responsibility. At the same time, the entrepreneur is not a legal entity.

Essence of Entrepreneurship

In the scientific literature, entrepreneurship and its types are considered as a materially directed activity of an individual to meet the needs of society, carried out under conditions of risk. The entrepreneur assumes the risk of financial loss in the event of an unsuccessfully formed business or a drop in demand for the goods and/or services provided.

So entrepreneurship:

• The process of developing something unique and meaningful;
• Process involving the economic and social responsibility of the entrepreneur;
• Process resulting in financial income.

Entrepreneur concept

Any business activity has a subject, and one of the types of small business entitiesentrepreneurship is the entrepreneur. But it is important to distinguish an entrepreneur from a business owner. In the latter case, this is any person in the company who has taken responsibility for managing and organizing the business, and is also willing to risk both the company's property and his own. The goals of the owner and the entrepreneur can be polar. So, the task of the owner is to increase capital, and the entrepreneur is to succeed in the market, to develop a company that will bring positive systematic income.

Entrepreneurs carry out economic activities, entering into market interaction with other entities. The current state of affairs in the market obliges the entrepreneur to have not only knowledge of economic science, but also other industries. In addition, he must be armed with some character traits. Thus, an entrepreneur can be described as an active, enterprising, independent, responsible, intellectual risk-taker.

Austrian economist I. Schumpeter believed that an entrepreneur is not just a profession, but a mindset, a property of character. This is the person who is driven by the desire to fight, the desire to win, creativity. But the intellectual abilities of the entrepreneur, according to him, are limited, but inventive. And, despite the fact that the entrepreneur is able to analyze a sufficiently large number of possible consequences of the risk, he cannot look wider, looking for many options for achieving the goal.

However, this is not enough. An entrepreneur can be either an individual,or a legal entity. It is worth considering that there are a lot of types of legal entities in entrepreneurship. If he works as an individual (private) entrepreneur (IP), he may not own his own property, but attract loans or rent space and equipment for profit. If an entrepreneur belongs to collective entrepreneurship, then he carries out his activities as a legal entity. In this case, he is the owner of the capital invested in the property put into circulation, and has the right to dispose of it, attracting labor and material and technical resources.

Signs of entrepreneurship

Entrepreneurship is a kind of economic activity that has a number of distinctive features due to its economic nature.

Among the signs and characteristics of types of entrepreneurship, there are:

• Initiative;
• Return risk;
• Commercial liability;
• Active search;
• Combining factors of production.

Initiative is the desire to look for alternatives to benefit by meeting the needs of consumers. Any entrepreneur starting a business is confident in their success due to some advantages. Any initiative requires a high level of freedom, otherwise, when the actions of subjects are regulated, activity is reduced.

Uncertainty in the activity of an entrepreneur is generated by market changes: demand,prices and consumer response to the goods or services offered. Changing market conditions beyond the control of the entrepreneur create risk. His desire to increase income is a decisive factor in his decision-making. Consequently, the amount of risk that an entrepreneur takes on directly depends on the further financial well-being of the business.

It is worth emphasizing that riskiness, as a character trait, has nothing to do with commercial risk, which is a feature of types of entrepreneurship. A good entrepreneur takes all possible options to minimize risk and, as an option, turns to an insurance agency. Another way to reduce risk is to share responsibility with other entrepreneurs, but in this case profits are also shared, which undermines initiative.

Active search, as a sign of entrepreneurial activity, means that the entrepreneur, under conditions of risk, carefully analyzes all possible alternatives, choosing the most profitable, which leads to progressive shifts in the productive forces and an increase in the efficiency of social production.

In pursuit of material benefits from resources, the entrepreneur resorts to increasing the rationality of their use. The combination of factors of production makes it possible to increase the efficiency of resources, which consists in finding the most rational combination of factors by replacing one factor with another.

Organizational forms of business activity

As aboveIt was mentioned that an entrepreneur can be both an individual and a legal entity. According to the Civil Code of the Russian Federation of January 1, 1995, the structure of organizational forms of entrepreneurial activity by legal status for individuals and legal entities, and by purpose of activity - for commercial and non-profit organizations.

An individual is an entrepreneur who carries out his activities under his own responsibility. In other words, he is a sole trader.

A legal entity is an organization that has its own property, which they manage according to the law. Legal entities are further categorized into commercial and non-profit.

Commercial entrepreneurship and its types

This type of entrepreneurship is driven by commodity exchange, i.e. purchase and sale of goods. It follows from the definition that an organization purchases a product, transports it, advertises it, and then sells it at the best price (20-30% of net profit). Commercial activity is the basis of shops, markets, exchanges, exhibitions, trading bases, etc.

Commercial organizations include:

• Business partnerships and companies;
• Unitary enterprises;
• Production cooperatives.

The most common type of commercial activity is the work of business partnerships and companies. Such activity is characterized by equity participation, i.e. each entrepreneur has his share of ownership. However, there is a difference between partnerships and societies. The first are based onon the basis of membership and the association of capital, while the latter - only on the association of capital. The entrepreneurs of the partnership bear the general responsibility, while the members of the society risk only their contribution.

Non-profit businesses

What types of business are non-profit? The main ones are shown below:

• Industrial;
• Financial and credit;
• Intermediary;
• Insurance.

Based on the term itself, non-commercial entrepreneurship has nothing to do with the exchange of goods. Non-profit organizations generate income by producing or offering services. Next, each of the subspecies is considered.

Manufacturing Entrepreneurship

The main task of manufacturing activity is the production of goods for subsequent sale to commercial organizations or directly to consumers. It is worth considering that the manufacturing business rarely belongs to the types of small business. Recently, there has been a high increase in production volumes, which in turn leads to an increase in the quality of goods and a reduction in costs.

Financial and credit entrepreneurship

This business and its types are characterized by a special means of sale and purchase - securities, currency or national money. Securities include stocks, bonds, etc.

The meaning of financial business is the purchase and sale, but not of goods, but of material resources andvaluable papers. The entrepreneur's income is the difference between the actual value of a particular monetary asset (deposit) or security and the value at which he sells it to the consumer (credit).

A whole system of institutions is the basis of financial and credit entrepreneurship and its types. These include: commercial banks, currency exchanges, stock exchanges, financial and credit companies.

Intermediary business

Unlike commercial, industrial and financial-credit businesses, an intermediary entrepreneur does not manufacture, resell goods, currency or securities, and does not provide credit. However, he is a procurer of the two parties interested in these operations. Most often it is one of the types of small business. It helps to negotiate and conclude a deal, speeds up the process of buying and selling, selling services and financial resources.

Insurance business

In this case, the type of business entity is risk.

A person who insures life, property and more, provides a contribution and receives payment if the circumstances described in the contract that was concluded with the insurance company occur. If the insured event does not occur, the financial contribution is not reimbursed to the insured.

Other businesses

Today, two more types of small and medium-sized businesses are gaining popularity: advisory and venture. Both types are associated withintellectual capital. In the case of a consultative business, the buyer acquires advice or recommendations in any field of activity, while the venture business sells R&D for implementation.