Exam 14: The Future of International Management

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The role of entrepreneurs is critical not only to the prosperity of the global economy but also, increasingly, for the creation of needed innovations. Some people have the mistaken perception that entrepreneurs are confined to niches in domestic economies, with the real economic impact coming from large multinational companies that produce a majority of the world's wealth and products. The reality is much more complicated in that multinational enterprises produce a little more than half of the world's output. That leaves room for family business and entrepreneurial firms to generate substantial economic value. Moreover, evidence suggests that entrepreneurial firms excel at creating new jobs. Entrepreneurs have demonstrated their importance creating important new goods and services that have aided in the global economy's development. Interestingly, though, most classical economics does not concern itself with entrepreneurs. Many economists see entrepreneurs as a nonessential issue to business. In this view, entrepreneurs and entrepreneurial firms will develop if the economy and its institutions are strong enough; entrepreneurship happens naturally as a result of institutions and is not an economic factor to focus on. Some economists now state that entrepreneurs are observable and valuable, and can be encouraged by society's institutions. Entrepreneurship is more broadly conceptualized by management scholars as value-creation activities and the seizing of economic opportunities and efficiencies. As opposed to the occupational definition of entrepreneurship that refers to business owners only, this is called the behavioral notion of entrepreneurship. Entrepreneurs in this behavioral sense do not necessarily need to be business owners-they can create significant value within a large organization, including government agencies and nonprofits. A new focus has arisen at the crossroads of behavioral entrepreneurship and the dynamic perspective of occupational entrepreneurship, one that considers venture creation and innovation to be the hallmark of entrepreneurship. The entrepreneur, therefore, is someone who specializes in making judgmental decisions about the coordination and deployment of scarce resources. The term emphasizes that the entrepreneur is an individual and that entrepreneurial decisions are not simply a routine application of standard rules and production functions. Entrepreneurship's importance to the growth of firms and economies is well expressed in recent work on this topic.