THEORY OF ENTREPRENEURSHIP

Objective
To introduce student to the theory of entrepreneurship
To introduce students to the key dimensions of entrepreneurship namely the need for
achievement, locus of control, risk taking propensity and entrepreneurial
characteristics and traits
Learning outcomes
Understand the principles and theory of entrepreneurship
Adapt and adopt entrepreneurial culture in their live
Gain a better understanding of the concept of the need for achievement , locus of
control and risk taking propensity as key dimensions of entrepreneurship in managing
a business organization.

THEORY OF ENTREPRENEURSHIP

Topics
Introduction
The Entrepreneur
Individual Characteristics of an Entrepreneur
Summary

Introduction

There are several schools of thoughts
regarding what constitutes entrepreneurship
and who is entrepreneur.
This failure is partly due to the disagreement
among scholars
The functional approach describes what an
entrepreneurs does, the indicative approach
describes the entrepreneurs characteristic or
attributes.

The entrepreneur

Entrepreneur originates from French words
entreprendre which means
Swedberg (2000) to do something
Kuratko & Hodgetts (2001) to undertake the
risk of new ventures
Richard Cantillon (1755) - economic agents
who have the foresight and willingness to take
advantage of realized and unrealized profit
opportunities to buy and selling activities.

The entrepreneur

Bluag (2000) acts as a middleman to buy at low
price and sell at a higher price.
Adam Smith (1776) the task of forming an
organization for commercial purposes.
Jean Baptiste (1803) individuals with certain
competencies who can influence society by
forming enterprises and likewise were influence
by society to recognize needs and fulfil them
through skilful management of resources.

The entrepreneur

Schumpeter (1934) a sociologically distinct individual who
is a creative and resourceful innovator as well as an agent
of change.
Frank Knight (1921) willingness to bear the cost of
uncertainty, will be rewarded profit, that is the residual
income left after all necessary payments have been made.
Mises (2000) - performing more crucial role than the
manager, and is motivated by the desire to make profits
and acquire wealth.
Kirzner (1973) an alert individual who responds to the
opportunities that already exist but which are yet to be
organized as businesses.

Individual characteristic of an
entrepreneur

Three attributes that are consistently associated
with entrepreneurial behavior:-
The need for achievement-the expectation of
doing something better over others
Locus of control- belief or disbelief one can
control or influence the environment in which
one is found
Risk taking propensity-attributes which influences
entrepreneurial success and performance

Personal Entrepreneurial
Competencies(PEC)

In 1995, McClelland with McBer & Co, had
develop a measuring instruments to measure
the PEC or inclinations among successful
entrepreneurs in Malawi, India and Ecuador.
There 13 competencies
1. Initiative
2. Sees and act on opportunities
3. Persistence

Personal Entrepreneurial
Competencies(PEC)
4.Information Seeking
5. Concern for high quality of work
6.Commitment to work contract
7.Efficiency orientation
8.Systematic planning
9.Problem solving ability
10.Self confidence
11.Assertiveness
12.Persuasion
13.Use of influence strategies

Summary
Entrepreneurship is:-
associated with risk and uncertainty
has the prescience and willing to take risk
Bearer of risk and uncertainty
Action is always speculative
An alert individual in an uncertain world
Motivated by profit
A special type of individual with gifted abilities such as alertness
Capable of assessing the future
Imaginative and innovative
Has personality traits as the need for achievement, the locus of
control and the risk-taking propensity