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Keywords
Entrepreneurialism, Small enterprises, Growth regulators, Economic sustainability, Business development
Abstract
Looks at the relationship between small business and entrepreneurship and also the differences between the two. Stresses that both are important separately and, in addition, notes where they overlap. Posits that in the early part of the last century small businesses were both vehicles for entrepreneurship and sources of employment and income but, although still important in the post-war years, large firms made great inroads in the 1960s and 1970s. Concludes that government's central role in entrepreneurialism for the economy is, by its very nature, enabling. Furthermore, entrepreneurship is acknowledged as a driver for economic growth, competitiveness and job creation.
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Entrepreneurship and small business matter in varying ways
Entrepreneurship and small business are related but certainly not synonymous concepts. On the one hand, entrepreneurship is a type of behaviour concentrating on opportunities rather than resources (Stevenson and Gumpert, 1991). This type of behaviour can happen in both small and large businesses but also elsewhere. On the other hand, small businesses can be a vehicle both for Schumpeterian entrepreneurs introducing new products and processes that change the industry and for people who simply run and own a business for a living (Wennekers and Thurik, 1999). The latter group includes many franchisees, shopkeepers and people in professional occupations. They belong to what Kirchhoff (1994) calls "the economic core". That both entrepreneurship and small businesses matter is not a new observation. In particular, they are important where they overlap. This is in the area of new small and often fast-growing businesses. However, the way in which they matter has evolved over time. During the first decades of the last century, small businesses were both a vehicle for entrepreneurship and a source of employment and income. This is the era in which Schumpeter (1912) conceived his Theory of Economic Development. Here Schumpeter (1912) emphasizes the role of the entrepreneur as a prime cause of economic development. He describes how the innovating entrepreneur challenges incumbent firms by introducing new inventions that make current technologies and products obsolete. This process of creative...