Question

In: Economics

Consider the following four individuals, discuss whether they fit the three classic definitions of entrepreneur and...

Consider the following four individuals, discuss whether they fit the three classic definitions of entrepreneur and whether they could be described as a necessity or opportunity entrepreneur?

1. Jane is a YouTube content creator who produces and publishes her show on youtube and other platforms, using her own equipment at her home.

2. Alex is attending university. He is an experienced gamer of a popular online role-playing game, and he sometimes offers help to other players for a fee. He also sells virtual items gathered in the game through eBay and other online trading platforms.

3. A lawyer is operating his own law office.

4. Mike was a sous-chef, but the restaurant he worked shut down a few months ago. He is considering opening a food truck.

Expert Solution

Classic definitions of entrepreneur

Classical view of entrepreneurs were made initially by three economic thinkers. They are Frank Knight, Joseph Schumpeter and Israel Kirzner. According to Knight, entrepreneurs should be able to bear risk factors in their business and always expect uncertainties. As per Schumpeter, Entrepreneurs should innovate new things along with profit-making. Kirzner says entrepreneurs should discover something new.

Necessity Entrepreneur

They will be single entrepreneurs usually operating in both rural as well as urban areas. They will not have much skills and less educated. They become entrepreneurs only for making money and there will not be any personal passion. Hence, their level of growth as an entrepreneur will be very limited. Their availability of funds will be very limited. They can provide local and unskilled services.

Opportunity Entrepreneur

They will not be single entrepreneurs and may work as a group. They choose only urban areas for their business. They will be very skilled and well educated. They become entrepreneurs not only for making money. They will be working for personal satisfaction. Hence, their level of growth as an entrepreneur and availability of funds will be very high. They can make export and import services and only skilled services.

Now, let us consider each options:-

Option (1)

Jane is a YouTube content creator and creates her own shows and post such works on social medias. She is making all such arrangements in her home itself. She works as a single person. These shows will be arranged only on a local basis and the main aim behind such a channel will be money rather than personal desire. Here, funds availability will be also very limited.

Thus, Jane will not fit to the classic definitions of entrepreneurs.

Hence, Jane is a necessity entrepreneur

Option (2)

Alex is an experienced gamer of an online game. It is not a basis of any particular skill to become an entrepreneur. His income is by playing this online game for some other players and by selling some game items via online. This is not at all features of a perfect entrepreneur. Alex does not have any passion to become entrepreneur. For making some pocket money, he is doing this selling and buying, online play etc. He is a single person doing the same for his own economic needs only.

Thus, Alex will not fit to the classic definitions of entrepreneurs.

Hence, Alex is a necessity entrepreneur.

Option (3)

A lawyer self-employed and starts his own law office is definitely a skilled person. Such a lawyer definitely have some staffs too. He will not be operating as a single person. He is skilled and has a qualification of his profession. A professional and skilled lawyer starting his own law office definitely have great passion towards the same.

Thus, this lawyer will definitely fit to the classic definitions of entrepreneurs.

Hence, this lawyer is an opportunity entrepreneur.

Option (4)

Mike who had been working as a sous-chef of a restaurant. But, unfortunately, it was shut down and thus he wishes to start a food truck. Sous-chef is the second positioned chef in a restaurant having all skills to be the executive chef. So, it is sure that Mike is a skilled person in this field. If he needs to start a self-business, it means he has much more passion and self-satisfaction towards the same. In a food-truck, there will be staffs. So, it will definitely be a group attempt.

Thus, Mike will definitely fit to the classic definitions of entrepreneurs.

Hence, Mike is an opportunity entrepreneur.

Rahul Sunny answered 1 year ago

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