There has been a great deal of confusion and contradiction in literature on the functions of entrepreneur. Carl Menger considers the entrepreneur as the change agent who transforms resources into useful goods and services, often creating the circumstance that lead to industrial growth. John Stuart Mill viewed the word entrepreneur as organiser who is paid for his non manual type of work. Mark Casoons opines that an entrepreneur is a person who specialises in taking judgemental decisions about the coordination of scarce resources. According to some writers, the functions of an entrepreneur are coordination of the business management of the enterprise, risk-taking, controlling the enterprise, innovating for change, motivation and other related activities. In a nut shell, he is a person who performs many useful functions. He undertakes a venture, assumes risk and earns profits. So, an entrepreneur is expected to perform a large number of functions. Some of the most important functions are as under:
Functions of Entrepreneur
(1) Assumption of Risk – Risk taking or uncertainty bearing implies assuming the responsibility for loss that may occur due to unforeseen contingencies of the future. A business risk also involves the risk due to possibility of change in the tastes of consumers, technique of nd production, new inventions etc. Such risks are not inseparable. The entrepreneur has to bear these high degree of risks. He assumes all possible risks of the business. Thus, risk assumption and risk bearing remain the most important function of an entrepreneur. He tries to reduce this risk with his initiatives, knowledge and skill and good decisions.
(2) Business Decision – Entrepreneur has been stated as a decision maker also. He has to decide the nature and type of goods to be produced or services to be rendered in the society. He decides the specific industry into which he will work and get a reasonable return. He has to decide the best possible method of production. He makes suitable changes in the size of business, its location, technique of production and does everything that is needed for the maintenance and development of the business.
(3) Managerial Functions – Entrepreneur has to perform a lot of managerial functions in his enterprise. There are different types of managerial functions that an entrepreneur has to perform and these are based on the size and activities of the enterprises. These functions include formulation of production plan, arrangement of finance, purchase of raw material, on procurement of production facilities, organisation of sales, personnel management and so on. Further administrative functions of recruitment, selection, etc. This is considered to be very tough job. However, in a large establishment, these managerial functions can be delegated to the paid subordinates.
(4) Functions of Innovation – According to Schumpeter, an entrepreneur is basically an innovator who introduces new combinations of means of production. It is the entrepreneur who conceives the idea for the improvement in the quality of product line. He considers the economic viability and technological feasibility of the total project. It is this function of the entrepreneur which injects the elements of dynamism into the economic system.