The topic of entrepreneurship is a very popular one among students of business and administration but it has not always been so. During the time before 1960, many economists had understood the importance of entrepreneurship yet tended to underrate it. To start off, they laid their attention on big companies not realizing the fact that it is actually the newer and smaller firms that generate most of the new jobs. Additionally, the role of the entrepreneur to organize new productive resources to increase the supply seemed not to be important among the dominant school of economies, which were only interested in managing consumer demand by promoting product purchase from customers.
During the 1970s, everything about the previous concept of entrepreneurialism has changed because economies primarily concerned with demand have failed to prevent constant inflation. The economists during that time have begun to worry about the fact that productivity was increasing much less faster than before. This has made them more interested in the supply of goods and services and this is where the entrepreneurs earned their break.
The importance of entrepreneurship has been realized and understood during this time and after because it holds at least four social benefits: it fosters economic growth, increases productivity, creates new technology and it rejuvenates the competition in the market.
One of the main reasons why the economists of that time started placing their eyes on the small new firms is that they seem to have provided the most jobs within their economy. In the United States alone, more than four fifths of all new employment comes from small firms. Out of all these openings, more than 30 percent are provided by businesses that have been around no less than 5 years. Yet not all small businesses are job creators but only those that are relatively young and expand rapidly during their early stages.
Being able to produce more goods and services with lesser labor and having other input increased much less rapidly especially in the US in the 1970s compared to 1950s to 1960s. Many of the economists conclude and still believe that this is the most fundamental problem that is plaguing the country. The greater reason why interest in entrepreneurship has increased is that they have recognized its role of raising the productivity of the country.
Also, a major impetus that has propelled their drive to research about productivity measures is the international competition during that time. The conclusion as to why people should take the importance of entrepreneurship seriously is that in order for countries to maintain a high standard in living, they should be productive in their business sector.