by Gene Denardo

Created on: April 30, 2009   Last Updated: May 03, 2009

The word, "Entrepreneur," is said to have been first used by French economist Jean-Baptiste Say. The literal French definition would be "one who undertakes." It has come to mean in common usage a business person with the leadership and foresight necessary to risk the production and promotion of a new good or service. One who chooses to compete in a relatively untested field with a relatively untested product.

There is, of course, an amount of risk in all areas of Economics. This is not unique to Economics, but in fact reflects the risks we face everyday in our lives. Life itself is vulnerable and risk is an inherent quality of being alive. What varies is not risk itself, but degree of risk.

Most of us seem to prefer to avoid risk if possible. We tend to take the safer route and spend energy in avoidance of actions that might endanger ourselves or our livelihood. The entrepreneur, on the other hand, seems to thrive on risk and the compensation for a successful risky venture; higher relative reward. This higher reward is directly a result of less competition, due to the risk factor, for the reward itself. The other side of the high risk coin is higher liability. There is also more to lose in a risky endeavor.

In a Free Market system, the entrepreneur serves the function of pushing the "envelope" or in economics terms; the "margin". He will attempt endeavors and businesses that the majority will shy away from. Products and services that would not be realized without the entrepreneur become possibilities with his actions. He is in a sense the "economic scientist". In his lab, experiments are carried out, some are great successes and others could be disasters. In fact, many entrepreneurs were also great scientists, such as Thomas Edison.

Unless the entrepreneur can convince workers to "donate" their labor and material providers to do the same for the good of his project, the entrepreneur is always in need of Capital. Because of this fact, the entrepreneur often also acts as the Capitalist. If not, he must find a Capitalist who is also willing to take on the higher risk that incurs with the marketing of an innovative product or service. In uncharted waters, there is no guarantee of a "safe harbor". Complete loss is a distinct possibility as is great gain. The Capitalist himself is acting very "entrepreneurial" with his money and expects a greater reward along with the possibility or even probability of loss.

It is this greater risk of failure that eliminates the bulk

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