1.3.5—Entrepreneurship

An entrepreneur combines land, labour and capital, makes decisions and bears the uncertainty of whether the business will succeed. Profit is the potential reward for this role.

Entrepreneurship includes identifying an opportunity, coordinating production, innovating and responding to risk. The entrepreneur may also supply labour or capital, but the functions are distinct.

A founder hires staff, leases equipment and chooses a product before knowing whether customers will buy it; the residual profit or loss reflects that uncertainty.

Risk can sometimes be insured, but uncertainty about outcomes and entrepreneurial judgement are not the same as simply owning money.