Entrepreneurship

Entrepreneurship means starting your own enterprise, or creating something new to solve a problem.

An entrepreneur comes up with an idea, takes risks, gathers the other factors of production, and works hard to make the venture succeed.

That third part is key. Land, labour and capital do not put themselves together: somebody has to bring them together and decide how to combine them.

The chapter lists five things an entrepreneur does:

• spots a problem and is determined to solve it with a new idea;
• combines the factors of production;
• takes risks by investing money and time;
• makes key decisions about running the business;
• contributes to society's welfare through the new idea.

Notice 'takes risks'. The other factors get paid whatever happens: wages for labour, rent for land, interest for capital. The entrepreneur may get nothing at all if the venture fails.

In return, the chapter says, they get a deep sense of satisfaction from seeing their dreams come true and serving people. A startup is such a venture with limited resources, aiming at rapid growth while making good use of technology.

J.R.D. Tata is the chapter's example. Born in 1904, he became head of the Tata Group and started India's first airline, Tata Airlines, in 1932 (later Air India). Under him the group grew into steel, cars, power and chemicals.

What the chapter stresses is his belief that businesses should not only make money but also help society. He was known for caring about his workers and giving them good working conditions, and received the Bharat Ratna in 1992.