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Posted on March 19th, 2013, by

The topic of role of entrepreneurship in modern economy is an interesting and very important nowadays, due to the fact that it is a powerful engine for economic and social development. Being the main part of market economic system, entrepreneurship has brought welfare and prosperity in many modern countries. As international experience shows that without freedom of entrepreneurship in the market economy, prosperity is impossible.

Entrepreneurship is associated with the concepts of “dynamism”¯, “initiative”¯, “courage”¯, “innovation”¯, it draws in reality many interesting ideas and brings progress. The entrepreneur takes the risk, initiative, brings innovations and has full responsibility for results. The most important thing for entrepreneur is to understand the state of the market and its needs, and always feel perspective. Entrepreneurship brings great contribution to the economy.

This work considers the essence of entrepreneurship and its important role in the market economy. The relevance of the work is due to the fact that modern market economy can’t function without business, entrepreneurial activity, the interaction of business and government at the macro and micro levels.

The concept of the entrepreneur
Entrepreneurship has a long history, but only during the period the emergence of capitalism appeared the modern understanding of this type of activity. Englishman Richard Cantillon was the first in the XVIII century, who introduced an economic analysis of the concept of “entrepreneur”¯. According to the definition of R. Cantillon, an entrepreneur is a man with vague non-fixed income who buys foreign goods at a certain price, and then sells at a different price. The main distinguishing feature of the entrepreneur is the risk, and his main function is balancing the supply and the demand at various commodity markets. The same view had famous economists Adam Smith and J.-B. Say, defining an entrepreneur as an owner. Also, for a long time the concepts of entrepreneurship and businessman were associated with the concepts of “capital”¯ and “capitalist”¯. (Casson, 1982)

The first attempt to give a detailed description of entrepreneurship carried out Western theorist Joseph Schumpeter (1883-1950), who published his famous work “Theory of Economic Development”¯ in 1912. “Entrepreneurs – wrote Joseph Schumpeter, – are considered not only “independent”¯ economic entities in the market economy, but all those who actually perform the fundamental function, even if they are not “independent”¯ and are employees of any company”¯. The underlying function of the entrepreneur Joseph Schumpeter considered innovation, as the activities of the new combination of production factors and social factors with the aim to produce real economic benefits, including in the form of increased profits of the company. (Casson, 1982)

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