There are four factors of production namely land, labor, capital and entrepreneurship. Among these factors, it is entrepreneurship which is often left behind. This is because some economists consider entrepreneurship as either as part of labor or capital, that is, human capital. However, a closer look at entrepreneurs will reveal that they are the people who bring together the other three factors of production. Entrepreneurs are needed in order that companies can make a profit. Entrepreneurs are also considered as innovators because they develop new techniques to produce and new products.
Another probable reason why entrepreneurship was left out as a factor or production is because maybe it is not considered a scarce resource, unlike land, labor and capital. It should be noted though that entrepreneurs take on an essential role in the process of production. They are the ones who manage the other factors of production. They take risks and create opportunities. They are the ones who makes vital decisions for the business.
One does not think that entrepreneurship should be left out in the factors of production. Without the entrepreneur to manage land, labor and capital, the production process cannot be successful. Another key role of the entrepreneur which differentiates him from the other factors or production is that he is responsible in income distribution. He pays the rent for the land, the wages for the laborers and the interest for the capital invested on the business. This makes him a notch higher than the other factors of production which is why it is not really considered a factor of production by other economists. Entrepreneurs can be thought of as a special type of human resource.
Works Cited
Grebel, Thomas. Entrepreneurship: A New Perspective. New York: Routledge, 2005.
Worldlibrary.org. "Factors of production." 2016. World Public Library. 2 March 2016.
