1.3 APPROACH OF ENTREPRENUERSHIP

In general, entrepreneurship if often regarded as a multidisciplinary or interdisciplinary field. It involves such fields as economics, psychology, sociology and religious aspect of Islam. In relation to that, approaches of entrepreneurship can be seen in many different perspectives.

The following will discuss on the approaches of entrepreneurship according to different perspectives; economical, psychological, sociological and from the perspective of Islam.

Economical Perspective on Entrepreneurship

The entrepreneurship discipline starts from the perspective of the exchange of goods that takes place to the production in industry. The early theory of entrepreneurship touched on the function and role of entrepreneurs and entrepreneurship in economic development. This is because the concept of entrepreneurship was introduced by economists in the early 18^th century. Most definitions and references of entrepreneurship are from economists such as Richard Cantillon (1725), Adam Smith (1776), JB Say (1803), Joseph Schumpeter (1934) and others who touched on entrepreneurship and its impact on economic development of a community.

Orchard Cantillon, a member of the French company sees entrepreneurship as agents who purchase production equipment’s to produce marketable products that involve speculation and risk. He considers entrepreneurs as economy risk takers. On the other hand, Adam Smith in his book entitled; ‘Wealth Nation’ says that a business owner is seen as a person who builds an organization for commercial purposes. Entrepreneurs are individuals who are able to foresee and identify and peruse business opportunities and respond to economic change. This idea is extended further by an economist from France, Jean Baptiste Say in 1803. According to Say in Armanurah (2014), an entrepreneur is the manager of a business form and plays an important role in the process of production and distribution. Say emphasizes that an entrepreneur is able to influence the society by trying to provide the needs and desires of a community.

Carl Menger, who is also an economist, argues that an entrepreneur is an agent of economy that changes sources to useful products, which leads to the development of the company/ meanwhile, Kirzner links entrepreneurship with uncertainty and explains the benefits that can gained in the economy. According to Kirzner, entrepreneurs act as a middleman in which they will take full advantage of all the opportunities that are presented.

Among the economists, Schumpeter was identified as an economic expert who contributes the most in the field of entrepreneurship. Entrepreneurship model brought by Schumpeter in 1934 sees innovation as the core of entrepreneurial activities where innovation is undertaken by the individual entrepreneur. Schumpeter emphasized that entrepreneurial activities include all activities or operations that led to reforms, including the introduction of new technological processes or new products. He sees entrepreneurs as individuals who are responsible for bringing changes to the economy.

In summary, based on the understanding of entrepreneurship from economic figures, entrepreneurship is the process of creating something different and valuable, while focusing on effort and required energy; enduring the financial risks; psychological and social as well as excepting rewards in the form of wealth and personal satisfaction.

Sociological Perspectives on Entrepreneurship

Entrepreneurship form the sociological perspective explains the social conditions that affect the appearance of an entrepreneur and social factors that influence a person’s decision to become an entrepreneur. From the sociological perspective, it is not necessarily become an entrepreneur. There are many things that can cause a person to be interested in the business world. this is because in the world business, anyone can do whatever he or she wants and acquire anything they desire. Thus there are a variety of reasons and experiences that can encourage someone to venture into the business field. Some of the reasons can be categorized as follows:

·         Family background

Someone who has been involved with the family business or self-employed would be more motivated in the field of entrepreneurship. For example, Bannock and Stanworth (1990) state that; our literature survey and the new data presented here enable us to conclude with confidence that a significantly higher proportion of small business proprietors have self-employed parent compared to other members of the employed population.

·         Religious belief

Encouragement can be found in some religions. For example, Islam encourage its followers to take part in business. This is stated in the saying of the holy prophet (p.b.u.h); “9/10 of the rizq comes from business”. Similarly, the success of the Protestants in economy is due to the teachings of their religion. Another example is the Jews. They are people who have the spirit of entrepreneurship naturally. This nation has been the founders of the economy in some countries like the United States and Britain. Some examples of the companies founded by the Jews are Cadbury, Rowntree, Barclays in Britain.

·         Gender and Birth Order

Sex and birth order said to be linked with the involvement of a person in the field of entrepreneurship. A study by The Times found that 76 percent of the respondents are the only daughter or the eldest child in the family. Same goes with the report by Curran and Burrow (1989) who showed that “self employed females without employees, and to a lesser extent those with employees, tend to come from more privileged social background than their male counterparts.” (M: 376-385)

·         Social Status Hierarchy

Individuals with a low social status often experience rebellious attitude from within their families. Thus, this intrinsically motivated them to venture in entrepreneurship to improve their social status economically and socially. According to the psychodynamic model introduces by De Vries, individuals who did not have the opportunity to enjoy certain facilities during their childhood will be encouraged to rebel and find new alternatives to improve their future.

Psychological Perspectives on Entrepreneurship

From the psychological perspective, entrepreneurship can be seen based on the characteristics and personality traits of an individual who is starting a business. Psychological studies have identified personality and character traits business. Psychological studies have identified personality and character traits that can distinguish between entrepreneurs and non-entrepreneurs.

Some of the traits of entrepreneurs are the need to excel, have locus of control, tendency to take risks, being a leader, being a resource manager, the pioneer of innovative ideas including scientific ideas, an innovator that can apply knowledge to practice (action) through technical and managerial innovations.

A famous psychologist, Mc Clleland (1961) in his theory of “Need of Achievement”, believes that entrepreneurs are motivated people and have high desires to achieve certain goals and prefer working alone to achieve success. This definition is also derived from Schumpter (1934) and Weber’s theory (1965). Schumpter’s theory (1934) stated that an entrepreneur is a leader and they can be developed from within any society. They have certain traits like having an instinctive ability to see what is happening around,, the capacity of mind ability and the will to overcome the conservative way of thinking and the ability to counter social resistance.

Rotter (1966) stated that there are individuals who have the advantage of controlling a situation. He believes that an individual’s success can be achieved if and only if that person trusts his or her own ability and always work hard to acquire greatness. These individuals have a high internal desire to succeed.

Meanwhile, according to Drucker (1986), an entrepreneur is known as a person who is a low risk-taker. This means that the person only considers moderate risks and avoid risks that are irritational. In a nutshell, from the perspective of psychology, entrepreneurs are someone special. They have the ability and desire to achieve a higher goal than other who often failed to obtain that goal.

Islamic Perspectives on Entrepreneurship

Islam is a way of life that recognized entrepreneurship as one of ‘ibadah’ (worship) and it is stated that 90 percent of the rizq comes from the profits of business (Mohd Salleh et al. 2005). From the Islamic views entrepreneurship is highly regarded and a noble field as long as it does nit violate the principles laid down by Islamic legislation (syarak). Business in terms of fiqh is called ‘jual beli’ and in Arabic is calles ‘Al-Buyu’ which is encouraged in Islam as in Surah Al-Baqarah, verse 275 which means “And Allah has permitted trading and forbidden usury (riba)”.

Entrepreneurship is special in Islam as Islam provides a complete and comprehensive model with regard to business. The model provides encouragement for entrepreneurship in business by providing facilities, outlining the rules and guidelines and promising rewards. The encouragement of doing business is being touched in some of the Surahs from the Quran such as Surah Al-Baqarah, verse 198, as well as Surah al-Muzammil verse 20, which have been enelyzed by al-Qardhawi. Al-Qardhawi stated that Allah has provided facilities for humans to be involved in business and trades, and this has been shown by Him in the Quran. Islam also outlines the regulations and changes to ensure that the business is properly run and be beneficial to all. In addition, Allah also promises eternal rewards to entrepreneurs who oblige His Guidelines (Surah al-Faatir verses 29-30).

In general, the concept emphasizes on the faith, aqidah, personal development and does not violate the limits stated by syarak. It is considered as a pursuit of wealth or in general, to find rizq (to make a living).