The different types of entrepreneurship

As mentioned, entrepreneurship is not tied to being a financial owner of a company and you can work as an entrepreneur in many different settings.

Entrepreneurship through financial ownership

Let’s start with the traditional dimension of entrepreneurship, which is through financial ownership. One thing to point out is that owning a part of a company doesn’t automatically mean that the person is an entrepreneur. The person should also have an operative role in the company or for example be an active board member.

To discuss entrepreneurship through financial ownership we should cover the different types of companies.

  • One-person companies are entities owned by solo entrepreneurs (often called freelancers) who make their living doing projects here and there and have registered a company for billing purposes.

  • Boutiques can be cafes, restaurants, clothing stores, barber shops, and so on. They are often local and it’s common that the owner works as an entrepreneur or is at least very close to operations. These kinds of businesses rarely aim for high growth.

  • Small and medium-sized companies (SMEs) are mostly groups of people who provide services or sell a relatively niche product. SMEs usually aim for moderate growth. In many cases there are entrepreneurs through financial ownership but there can be many variations – for example the entrepreneurs, a wealthy family or a private investor can be the financial owner.

  • Large corporations are often international and have a wide offering. Decision making is dispersed between the owners, the board, the executive team and other governance structures. Financial ownership is divided among shareholders in many cases on the public market and there are often no entrepreneurs based on financial ownership. Even though an employee of a big company could own a tiny fraction of the company shares it doesn’t mean they are entrepreneurs based on that. One needs to own a significant percentage. Sometimes there might be a few individuals like a family who own a major part of the company and are acting as entrepreneurs.

There are many different ways to categorize companies and the listing above is just one example. For instance, you can also categorize companies into service/consulting companies and product companies. For service/consulting companies, the value the company can produce is (in most cases) almost directly tied to the amount of people working there – meaning growth is dependent on the number of employees. Product companies can sell more products without necessarily needing to add a large number of employees.

Entrepreneurship through intrapreneurship

An intrapreneur is an employee acting like an entrepreneur inside of a company, even if the person doesn’t possess significant financial ownership of the company. They take responsibility, are proactive, look for solutions to problems and take calculated risks like other entrepreneurs.

One can be an intrapreneur in any kind of a company if the company creates an environment where that is possible. Often in SMEs, many employees are intrapreneurs because there are no rigid structures and the roles are wider, meaning employees have many responsibilities. As Risto Siilasmaa discussed in the interview above, intrapreneurship is possible at bigger corporations also.

Today, some companies have actual intrapreneur roles, but a critical thing to remember is that these employees are not the only ones who can and should be intrapreneurs. If the company environment allows it, almost any employee can be an intrapreneur. Actually many great employees might not realize it that they can be categorized as intrapreneurs.

Every company needs an entrepreneur to get started, but to grow the business and survive when conditions change, intrapreneurs are needed. Companies need people to take proactive action when unexpected problems and possibilities come up – at some point, the original entrepreneur(s) can’t take care of everything.

Entrepreneurship outside of companies

As entrepreneurship is not tied to financial ownership, you can also work like an entrepreneur outside of companies, including at associations, clubs, or public entities. Many students work like entrepreneurs in student clubs and associations, parents might work like entrepreneurs in their children's sports clubs, and there are countless other places where people can act like an entrepreneur.

Startup entrepreneurship

Startups are a special company type and being a startup entrepreneur is also different from other types of entrepreneurship. In the rest of the course, we will focus on startup entrepreneurship: what it means, what is the impact that startups have on individuals and society, and the guidelines for building startups.

Next section
III. Startup history