b) Managers, if they take risks on behalf of their companies and if they are responsible for innovation. A manager of a company may have no shares in the company for which he works, so he does not risk own capital. He takes decisions which involves an uncertain outcome. For example if a firm start to produce a new flavour of yoghurt. The flavour might be very successful or not, so the outcome of a decision is uncertain. Managers of large companies can be as entrepreneurial as owner-managers of
small companies if they are responsible for pushing their companies into new areas. If managers work together as a team and innovate or take risks, then the group is entrepreneurial.

c) Shareholders because risk their capital. They are backing change and may give advice to the person setting up the company. If the company fails, shareholders lose their money. On the other hand, they are unlikely to be involved in organizing production or innovation in the firm. So some economists argue that capitalists are in some senses entrepreneurs, others disagree.


 What is the reward for entrepreneurship?

Profit is the revenue left over after the other factors of production have been paid. If the entrepreneur is successful, there will be a large residue after wages, interest and rents have been paid. If the entrepreneur is unsuccessful, profits will be negative and the firm could go bankrupt. But not all profit is the reward for entrepreneurship. Only abnormal or pure profit  can be seen as the payment which entrepreneurs receive. In normal profit is opportunity cost of factors such as labour and capital which receive no money payment for their use.


What is Economic and entrepreneuship welfare?

Welfare - practical or financial help that is provided, often by the government, for people.

The role of entrepreneurship and an entrepreneurial culture in economic and social development has often been underestimated. Over the years, however, it has become increasingly apparent that entrepreneurship does indeed contribute to economic
development. A number of arguments have been put forward as to why entrepreneurs play such an important role in the economy:

Innovation: Without innovation, the economy would stagnate. There would be no improvements in living standarts. Innovation is therefore vital if economic welfare is to increase.

Job creation: Sucessful entrepreneurs create jobs. Also small firms can help ease the unemployment problems.

Wealth creation: Entrepreneurs create wealth by their activities. The small firms of today will become the large successful firms tomorrow.

But innovation can lead to failure as well as success. For example in UK and USA, small firms entrepreneurs has been seen as
a folk hero, have had lower economic growth rates than economies such as Japan and Germany where greater stress is placed on team work and co-operation.


Creating an enterprise culture

It is common to equate entrepreneurship with the small business sector ofthe economy. Many of the claimed advantages of the entrepreneurial spirit are in fact the possible advantages of having an active small business sector in economy. On this view, the
entrepreneur is the owner manager of a small company. So government can best support the creation of an entreprise culture 
by measures which will support the creation and expansion of small firms in the economy. Economic theory, however, need have nothing to do with small firms. Both innovation and risk taking can be as much if not more the concern of large firms as small firms. 

How can an entrepreneurial spirit be created in large firms?

In recent years, there has been a move towards paying managers by results. Some managing directors, for instance, are paid a basic salary but can earn far more if their company achieves a ange of objectives. These include increases in sales, increases in profits, increases in the share price of the company or reductions in the form of cash or shares in the company. The idea is to make managers who are employees of the firm accept more risk. If the firm does well, the managers will do well. If the firm does badly, so too do the managers.