Why Entrepreneurship is a Better Solution to Unemployment?

This article discusses the relationship between entrepreneurship and unemployment. It provides opinions of various authors and personal opinion on how entrepreneurship can reduce unemployment and lead to economic growth.

Running Head: ENTREPRENEURSHIP 0
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Why Entrepreneurship is a Better Solution to Unemployment?
(student name)
10-15-2018

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ABSTRACT
For this review, the question selected to conduct study was “Why Entrepreneurship is a
Better Solution to Unemployment?” The relationship between unemployment and
entrepreneurship justify the reason for this selection. For this research, the opinions of authors
from five different articles have been provided. According to most of the authors,
entrepreneurship reduces unemployment rate in the economy, and are responsible for increase in
economic growth and development. Further, personal opinion is also given, according to which
entrepreneurship provides a new opportunity to fight unemployment and gain economic growth.
It also throws light on relevance of entrepreneurship for people suffering from disability and are
unemployed.

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Why Entrepreneurship is a Better
Solution to Unemployment?
Unemployment is one of the severe issues in the economy of any country, especially
among youth (Millan & Roman, 2014). Finding a better solution to unemployment has become
necessary. This discussion will focus on the study of entrepreneurship and innovation. It will
investigate the role of entrepreneurship in unemployment and economic development. The
literature review will consider, “can entrepreneurship reduce unemployment in the economy.”
This topic will be discussed upon the opinion of various authors and their viewpoints and
personal opinion. An entrepreneur is a person who, in place of running as an employee,
originates and runs a small commercial enterprise, assuming all the involved risks and rewards of
the undertaking. The entrepreneur is normally considered as an innovator, a foundation of new
ideas, services, products, and business/or tactics (Dunkelberg, 2013). Entrepreneurs play a
crucial position in any economic system. Entrepreneurs who wish to be successful are ready to
take all types of risk and be rewarded with fame, profits, and growth opportunities (Huggins &
Thompson, 2015). Entrepreneurship refers to act of renewal, organizational creation, and
innovation that occur independently or within an existing organization. An activity of
entrepreneurship that is conducted by individual independently is also said as independent
entrepreneurship (Dunkelberg, 2013).
The relevance of studying this topic can be understood with a real-world example of
“Lynn Zuckerman Gray” who lost her job when the firm, “Lehman Brothers,” collapsed. She

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was facing trouble in competing with a large number of job seekers for a decreasing pool of jobs.
This led her to the direction that she never thought of doing, which is starting an on-campus
recruiting firm name “Campus Scout” (Meece, 2018), This explains the relevance of
entrepreneurship as a solution to unemployment. The unemployment can be due to many
reasons, and for many people, like youth, women who are less educated, immigrants majorly the
case of Australia, disabled people and many more. For such people, entrepreneurship becomes a
hope for livelihood and overcome the financial crisis. Moreover, one can say that
entrepreneurship has a direct relation with economic development because entrepreneurs create a
business, which consequently increases jobs for others and income generation that will increase
GDP of the nation (Seligson, 2018).
Calderon and Huerta in the article, “Does self-employment reduce unemployment? A
contribution from the franchise system,” provides their opinion that includes research of concept
of the franchise in reducing unemployment (Calderon & Huerta-Zavala, 2011). According to the
author, Novel and minor agencies have emerged as the primary way to make entrepreneurship
progress. Small organization sector and, self-employment has to end up more crucial for modern-
day economies when trying to grow financial boom and employment. Taking in mind, that
franchise is another way for entrepreneurs, unemployed, or hired people to create a commercial
enterprise with a less risk than a conventional one. The author from this research paper, analyze
the effect on of some macroeconomic factors as a country’s growth of the economy, and its rate
of unemployment, also franchising definite variables, at the entrepreneur´s choice to franchise an
outlet (Calderon & Huerta-Zavala, 2011). Thus, from the article, we can understand that
entrepreneurship, like franchise business, can help in reducing unemployment.

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Carree, Thurik, And Van in the article, “Does self-employment reduce unemployment?”
explains the relationship between unemployment rate and self-employment (Thurik, Carree, &
van Stel, 2014). According to these authors, higher self-employment rate indicated that the
entrepreneurship is reducing unemployment in the specific periods that is the “entrepreneurial
effect.” On the other hand, the refugee effect was explained, that is the increasing rate of
unemployment may lead to self-employed individuals by startup activities. (Thurik, Carree, &
van Stel, 2014). From this article, we can understand how entrepreneurship, like start up
activities can solve the problem of unemployment.
The integrative model of entrepreneurship; according to this model, an entrepreneur seeks
opportunities from environment. Generate ideas and acquire resources needed, and the
innovation and risk taking capability of entrepreneur will result in value creation. Moreover,
outcomes include revenue growth and employment generation (Haim Faridian & Castrogiovanni,
2017). This is one way to solve the problem of unemployment through entrepreneurship.

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(Source: Haim Faridian & Castrogiovanni, 2017)
According to Rozali, in the article “Challenges faced By People with Disability for
Getting Jobs: Entrepreneurship Solution for Unemployment” (Rozali, 2017), A job is the core of
the difficulty of people with disabilities is unemployed, other than the problem of schooling,
wellbeing, comfort, and help. Entrepreneurship must be regarded as a brand new stepping-stone
for generating jobs for individuals with disabilities. The challenges of this ground and the
entrepreneurial tactic as a proactive step to support those people resolve the employment hassle.
This part does not have a large part to study yet. According to the author, it is a great opportunity
for a person unable to get a job as per his skills, for this entrepreneurship opens up a new gate for
these people. Entrepreneurship sorts this section of individual indirectly keeping away from the
problem of discrimination, inequality, the enterprise perceptions, and employment possibilities.
Entrepreneurship is an expression that is developing a definition and exploration of them, even
within the emergence of new entrepreneurs have a positive impact on the economic system of a
country. The main motive for this growth of entrepreneurship is because there is documented
proof that there is an exceptional correlation between economic growth and entrepreneurship
(Rozali, 2017). From viewpoint of the author, I believe that entrepreneurship can be a solution to
unemployed disables.
From the article “Entrepreneurship and employment stability — Job matching, labor
market value, and personal commitment,” Melillo, Failla, and Reichstein analysis shows that a
transition to entrepreneurship decreases person’s employment turnover. Three factors are
identified and empirically explored: (I) career matching, (II) individual commitment, and (III)
labor market value. Entrepreneurs seem like extra productive and for this reason, higher matched
as compared to wage workers. Nevertheless, they also appear like locked in entrepreneurship due

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to their predicted decrease cost inside the labor marketplace and due to their personal attachment
to the undertaking. The counter-intuitive finding, entrepreneurship yields more employment
balance and best hold with recognizing subsequent transitions to wage work and no longer for
new project founding. The consequences have implications for the author’s knowledge of
entrepreneurial entry and labor market dynamics (Failla, Melillo, & Reichstein, 2017).
According to author’s opinion, propose that people who tend to exchange jobs within the salary
quarter because of a systematic mismatch in phrases of both desire and skills may additionally
remember entrepreneurship as an attractive career option (Failla, Melillo, & Reichstein, 2017).
Considering this article, I believe that there is a positive relationship between entrepreneurship
and employment stability or decrease in unemployment in society.
Silva and Faggio as per the article, “Self-employment, and entrepreneurship in urban and
rural labor markets” (Faggio & Silva, 2014), studies the relationship between self-employment
and various aspects of entrepreneurship like innovation and employment creation in the rural and
urban labor market. In their opinion, self-employment is reducing unemployment in rural and
urban region of Britain. Rather than a rural area, urban area has higher and positive correlation
with innovation and employment creation with self-employment (Faggio & Silva, 2014). From
this article, I observe that unemployment in both urban and rural region is reduced through
entrepreneurship.
Pavlin and Jeraj provided in the article, “Entrepreneurship as a solution to the
unemployment problem,” at the time of worldwide recession and mass layoffs, extraordinary
countries try to stimulate their residents to work on their thoughts and to check themselves on the
open marketplace using diverse kinds of subsidizing. It is vital to point out that entrepreneurship
does not represent this type of social safety as of employment in big agencies (Jeraj & Pavlin,

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2014). Entrepreneurship is not only a combination of ideas, goals for fulfillment and a fashion
far away from employment, integration with the proper business companions and the troubles of
obtaining the preliminary capital, but largely additionally depends at the laws in every country
and the infrastructure provided by the nation. Moreover, the author concludes that the
entrepreneurship is a usually important aspect in every international economy. The same may
also be stated for unemployment, which is not so much a hassle for the economic system
(depending at the social transfers, tax series and tax burden for the economy, and their portion in
countries GDP) as it is a social hassle. In seeking to resolve the unemployment issue is
entrepreneurship one of the alternatives to at the least reduce the rate of unemployment and the
social issues that come from it. The impact is glaringly a greater long time than a short span of
the process (Jeraj & Pavlin, 2014). Considering the viewpoint of the authors, I understand the
problem of unemployment and how it can be reduced through entrepreneurship.
To conclude the opinions of the above authors, it can be said that now numerous
successful individuals with disabilities, with various other abilities involved. Indirectly assign
themselves as efficacious entrepreneurs. Handicapped positive entrepreneurs have verified that
they can do commercial enterprise like a stitching business, breed fish in cages, raise cattle, car
workshop, and the diner. Moreover, the contribution of franchising in resolving the controversy
between unemployment and self-employment was understood. In addition, the author found the
positive correlation of self-employment with the rate of unemployment.
In my opinion, the topic question selected, “Why Entrepreneurship is a Better Solution to
Unemployment?” is relevant to study .Justification of the relevance of the topic, is that
unemployment is one of the painful regions and prickly problems being faced by any economic
system. Unemployment not only lies in uneducated sector but, also has branched its roots inside

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that the knowledgeable sectors. Entrepreneurship is the utmost weapon to counteract this
difficulty and to empower the teenagers or youth. Young people are more energized, and
empowered by default, they may be inclined to explore new grounds and take up new demanding
situations, challenges, and risks. At the same time as operating as an entrepreneur, a person
receives to paintings on multiple matters, juggle exclusive roles, and flip them into higher leaders
and better people (Aubry & Bonnet, 2015). Positioned aside the reality that Entrepreneurship
brings large cash from traders and even foreign customers, it additionally has a key function to
play in creating a personality. Whilst combating unemployment, entrepreneurship is an answer,
entrepreneurs open doorways to new business, new commercial enterprise, and new alliances
(Audretsch, Desai, & Beltiski, 2015). When an individual invests money into a startup or an
undertaking, the entrepreneur automatically receives to enlarge its group to scale the mission and
consequently providing jobs to more humans. At that time, entrepreneurs are inclined to employ
human resource as assets who do not have a diploma; instead have the right mindsets, skillset,
positive attitude towards learning and willingness to analyze. The entrepreneurship can be
encouraged through various organizations and government. Government can help entrepreneurs
in the financial problem, for initial investment by providing low interest-rate loans. Various
authors, who conducted research on this topic, have also agreed on the relevance of this topic and
with my opinion (Lukes & Dvoulety, 2016).
The relevance of the study influences me to become an entrepreneur, being a fresher, and
trying to find new job opportunities has become a challenge due to increase in completion among
the applicants for jobs in large corporates. In the saturated job scenario and an increase in the
unemployment rate in the economy, entrepreneurship has open new areas to cover. With a
personality, which includes innovation and creativity, entrepreneurship will be more preferable

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by me to become an entrepreneur (Kritikos, Pijnenburg, & Fritsch, 2015). After the study, my
opinion has changed completely, now I believe that instead of running for jobs at large
corporates, it is better to search for the more innovative venture and provide employment to the
society. This will not only be beneficial for me, but also for the economy as a whole. Because the
venture will provide job to others, and due to an increase in sales and attainable profits, the
national income will also be affected that will affect the overall growth of the economy. The
relevance for me to change opinions as to become an entrepreneur is that we need to locate
resolutions to tackle unemployment and close the skills mismatch that needs to be pooled,
replicated, and scaled to resolve the employment and abilities equation. Traditional schooling
systems may be rearranged to safely foster skills for the needs of the market and the procedure of
mastering have to preserve at some point of employment (Hombert, Schoar, Sraer, & Thesmar,
2016).
To summarize the findings from the research, the study can conclude that the
entrepreneurship is not only about money-driven business but also a “passion-pushed,” one that
enables advantageous alternate in the society. The government role in entrepreneurship must be
that of an organizer and no longer a controller. The notable impact of the internet in commercial
work, which has demolished geographical obstacles, has made the enterprise a beneficial career
choice. Various younger minds now recognize the importance of searching at a steady
commercial enterprise boom, forming the right group, and empowering it to result in that
increase or growth. The connection between entrepreneurship and unemployment become a
thrilling getting to know the problem to pupils now for some time. An alternative view suggested
that entrepreneurship, by distinguishing feature of building a brand new challenge, underwrites
to the drop in unemployment. The unemployed have a tendency to retain decrease endowments

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of human capital and entrepreneurial aptitude required to initiate and maintain a new firm,
suggesting that high unemployment is allied with a low diploma of entrepreneurial happenings.
The research was conducted to study if entrepreneurship can reduce unemployment. For
this, various author’s viewpoint was reviewed. Unemployment is a severe issue in an economy
these days, which can hamper economic development. Entrepreneurship provides an opportunity
for people who are not employed, and can start up their own business as per their skills, and
abilities. This may lead to employment generation in the economy; increase GDP of nation,
which will foster economic growth and development. After studying various authors viewpoint,
it can be said that according to them entrepreneurship is a solution to unemployment.
Government also plays a vital role in reducing unemployment through encouraging
entrepreneurship. The unemployment is major concern for youth, disable people, immigrants in
Australia, and women. Another reason for unemployment is education, uneducated people
unable to get job according to their capability, this can be solved by starting up their own venture
and become an entrepreneur. In addition, the study variables included economic growth, self-
employment, unemployment rate, and various economic sector, which are correlated aspect of
this research. Therefore, entrepreneurship will not only reduce unemployment but will also foster
economic growth of the country.

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