Profit and Entrepreneurial Functions

Provides a theoretical basis for understanding profit in relation to the entrepreneur. Profit is defined as the residual income accruing to the owner of a business or enterprise. This owner, whether an individual or a group - such as in the case of the corporation - is the entrepreneur, or the responsible controller of the business. The entrepreneur's right to pure profit is justified through the functions of the entrepreneur, which include economic pioneering through innovation, problem-solving, market adaptation, and risk-bearing. Though this establishes the theoretical basis for understanding entrepreneurial profit, further classification systems need to be conceptualized that clearly differentiate entrepreneurs from managers, inventors, and creative scientists. Further, it is the historian's job to study specific cases of entrepreneurs, since the generalizations inherent in theories cannot take into account a number of factors, including personality, environment, and cultural context. (CJC)