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The concept of the firm. The objectives and functions of the firm.


Entrepreneurship has a very huge notion; it includes the sum total of economic, juridical, political and historical relations. The notion “entrepreneurship” was firstly included into the scientific lexis by the English economist P. Kantilion. (17-18 c.) He saw the entrepreneurship as a special economic function, the main feature of which is risk. On his point of view the businessman can foresee, aims to get the income, but he is also ready for damages.

Entrepreneurship is a kind of talent. Specialists believe that in any country to such activity only 3-5 % of citizens are capable. As the process of an economic life, entrepreneurship develops in a definite social-economic and historic environment. For its reproduction definite conditions are needed.

1. the freedom of the entrepreneurship ( presence of the total sum of the rights and freedoms of the entrepreneur in a choice of an economic activity)

2. the creation of the legislative and standard base(exclusion of the possibility of the nationalization, expropriation, the provision for the businessmen the insurance of the safety of their property)

3. competitive condition of management of the whole market infrastructure(the system of the pits, commercial banks, firms of wholesale, the free access to recourses, credits, information)

4. presence of definite duties for businessmen and the responsibility for the taken decisions

5. presence of the definite social-economy situation and first of all the market with its structural elements

In the base of the entrepreneurship there is a special mans resource- enterprising capacity that is realized in the following functions:

1. initiative in the organization of the process of the production and realization of goods and services

2. innovation, that is in the ability to make and use in ,the managing activity new combinations, there are 5 types of them: new service, new technology, new markets, new recourses, new organization structure

3. ability to risk

The essence of the entrepreneurship is uncovered by its main functions: resort, managerial, innovative and the function of risk.

Resort function is in that the businessman takes the initiative of combining the economic resources (capital, the work force, information); organize the process of production, division, exchange of goods and services.

Managerial function – is making managerial decisions on all steps of the productive activity, planning, the organization of the control, motivation of the production.

Innovative function means making innovations, mastering of new products, new technologies and forms of labor organization.

Function of risk is combined with the necessity of taking decisions, aimed on success, but not guaranteeing it, taking into consideration the changing economic situation. The entrepreneur always risks with his capital, time, labor, reputation.

Taking into considerations all the functions, it’s possible to make the conclusion that the entrepreneurship is

1. process of creating something new, valuable

2. process that brings not only the income but also the satisfaction

3. process of taking on oneself financial, moral and social responsibility

4. initiative activity of managing subjects, that aims on getting the biggest economic results and that is carried out on ones risk and property responsibility.

It should be noted that the notions entrepreneur, owner and manager are not the same. The entrepreneur may not be the owner of the used recourses, the owner can receive the income not leading the enterprising activity, manager, depending on the object of the managing (chief of the department) may not have the aim of his activity the receiving of the income.


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