ENTREPRENEURSHIP

Rolando S. Artates
Common Themes in Definition of
Entrepreneurship

The Entrepreneur
The word entrepreneur originated with the French
word entreprendre, which means to undertake.

The Merriam Webster Dictionary defines an

entrepreneur as one who organizes, manages, and
assumes the risks of a business or enterprise.
 Common Themes in Definition of
Entrepreneurship

Joseph Schumpeter, a noted 20th

century economist expanded on this
when he wrote that an entrepreneur is
an innovator who implements
change in an economy by introducing
new goods or new methods of
productionSchumpeter emphasized
the beneficial process of creative
destruction, in which the introduction
of new products results in the
obsolescence or failure of others.
Common Themes in Definition of
Entrepreneurship

NACCEs proposed definition of an entrepreneur is:

An individual that develops a new or improved

product, service or way of doing things that can exist
independent of the creator, and bears the financial
responsibility for risks in bringing their development to
market
Common Themes in Definition of
Entrepreneurship

Innovation
Involves changing, revolutionizing, transforming
and Introducing new approaches.

Organization Creation
To pursue the perceived opportunities for
innovation organized efforts and actions are required
- whether as an individual or as a team of individuals
 Common Themes in Definition of
Entrepreneurship

Creating value
Through entrepreneurship new products, services,
transactions, approaches, resources, technologies and markets
are created that contribute some value to a community or
marketplace. Value is created because The entrepreneur is
fashioning something worthwhile and useful.
Value is also created through the financial exchange as
customers purchase the entrepreneurial organizations products
or services.
Profit or Not- for- Profit
Entrepreneurship can take place in both profit and not-for-
profit organizations. It can occur in social service agencies, and
similar organizations.
.
 Common Themes in Definition of
Entrepreneurship

Growth
It is about growing a business and pursuing opportunities as
they arise not content with staying in one market or with one
product. Entrepreneurship implies growth.
Uniqueness
It involves new combinations and new approaches with
which entrepreneurs are willing to experiment. It infers
differences and not norms-new products are created and unique
approaches are tired.
Process
It is a process-a set of on going decisions and actions.
Entrepreneurship is not a one time phenomenon, it-occurs
overtime involving series of decisions and actions from start to
manage to even exiting it
 Definition of Entrepreneurship

For NACCEs definition, entrepreneurship involves consistently

thinking and acting in ways designed to uncover new
opportunities that are then applied to provide value

According to an ECONOMIST
According to a PSYCHOLOGIST
According to a BUSINESSMAN
According to Another definition;
Entrepreneurship is the dynamic process of creating incremental
wealth. The wealth is created by individuals who assume the
major risks is terms of equity, time, and or career commitment or
provide value for some product or service.
 Development of
Entrepreneurship

Entrepreneurship is a French word

meaning Go-between or Between-
taker.

The term coined by an economist

Richard Cantillon in early 1700.
 Development of
Entrepreneurship

Earlier Period.
Middle Ages. Actor and person in charge of large scale production
projects with the resources provided, usually by the Govt.
 Development of
Entrepreneurship

Earlier Period.
17Th Century. Person bearing risks of profit
(loss) in a fixed-price contract with the Govt.
The connection of the risk with the
entrepreneurship developed in the 17th
century.

An entrepreneur was a person who entered

into a contract with the government to
perform a service or to supply stipulated
products.

John Law, A frenchman was one of the

entrepreneur in this period.
 Development of Entrepreneurship

18th Century. Richard Cantillon- Person bearing risks is different from

one supplying capital.
Entrepreneur bears risks and plans, supervises, organizes and also
owns factors of production.
19th Century. Jean Baptist Say, an economist- The profits of
entrepreneurship were separate from profits of capital ownership.
Francis walker -Distinctions made between those who supplied
funds and earned Interest (venture capitalist) and those who profited
from entrepreneurial (managerial) activities (entrepreneur).
 Development of Entrepreneurship

20th Century. Joseph Schumpeter (economist) described

entrepreneur is someone who is an inventor and someone
who creatively destructs.
Peter Drucker (management author) described the entrepreneur as
someone who maximizes opportunity.
Albert Shapiro- Entrepreneur takes initiative, organizes some social
and economic mechanisms and accepts risks of failure.
Robert Hisrich defined entrepreneurship as the process of creating
something different with value of devoting the necessary time and
effort, assuming the accompanying financial, psychological, and
social risks, and receiving the resulting rewards of monitory and
personal satisfaction.
Misconception of Entrepreneurship

Successful entrepreneurship needs only great idea.

Entrepreneurship is easy.

Entrepreneurship is a risky gamble.

Entrepreneurship is found only in small businesses.

Entrepreneurship ventures and small businesses are the same thing.

Differences Between Small Business
and Entrepreneurial Venture

Small Business
Independently owned.
Fewer than 100 employees.
Doesnt emphasize new or Innovative practices.
Little Impact on industry.

Entrepreneurial Venture
Innovative practices
Goals are profitability and growth.
Seeks out new opportunities.
willingness to take risks.
 Types of Entrepreneurs

Entrepreneur
A person who initiates and actively operates an
entrepreneurial venture.
Types of Entrepreneurs
Nascent, Novice, Habitual, Serial and Portfolio.
Nascent Entrepreneur: A person who is in the
process of starting a new business.
Novice Entrepreneur: A person who has no
prior ownership experience as a business founder,
inheritor of a business or a purchaser of a business.
 Types of Entrepreneurs

Habitual Entrepreneur: A person who has prior

business ownership experience. The nascent entrepreneur
can either be a novice or a habitual entrepreneur.
Serial Entrepreneur: An individual who has sold or
closed an original business, established another new
business, sold or closed-that business and continues this
cycle.
Portfolio Entrepreneur: A person who retains an
original business and builds a portfolio of additional
businesses through inheriting, establishing or purchasing
them.
Characteristics of Entrepreneurs

Demographic profile, personality characteristics or intentions profile.

Demographic Profile
Family birth order.
Gender.
Work experience.
Education.
Entrepreneurial family.
Personality profile of Entrepreneurs
High level of motivation.
Abundance of self confidence.
Ability to be involved for the long term.
High Energy level.
Characteristics of Entrepreneurs
Persistent problem solver.
High degree of initiative.
Ability to set goals.
Moderate risk taker.
Resourceful.
Desire and ability to be self directed.
Higher need for autonomy.
Use of Proactive Personality Scale: A Proactive Personality a more
prone to take actions to influence his/her environment.
Intentions profiles of Entrepreneurs.
Decision to become entrepreneur is not accidental but
represents planned intentional behavior influenced by both
contextual factors (social, political, economic opportunities) and
personal factors (history, personality. abilities). The Person and the
processes an individual goes through.
Characteristics of Entrepreneurs

Appropriateness- Consistency- Effectiveness (ACE)

Model.
It is another approach to determine entrepreneurial intentions;
this model is taken from communication theory. ACE model
suggests that mass media and interpersonal messages can
influence an individuals perception of appropriateness,
consistency and effectiveness of starting a business. These
perceptions then influence an individuals intentions to become
an entrepreneur.
This model also recognizes the interplay of personal and
contextual factors in being an entrepreneur.
 http://www.investopedia.com/terms/j/joseph-
schumpeter.asp
https://mises.org/library/richard-cantillon-founding-
father-modern-economics
http://c.ymcdn.com/sites/www.nacce.com/resource/r
esmgr/journals/spring_summer_2010.pdf
ENTREPRENEURSHIP
Rolando S. Artates
HOW ENTREPRENEURSHIP IMPACTS
ECONOMY

As economies continue to integrate due to globalization

and formally closed economies like India and China march
toward total liberalization, entrepreneurship is on the
increase.

A close analysis of developed and industrialized economies

indicates a common denominator that stands out amongst
all of them.

This is the most important role played by entrepreneurship

and entrepreneurs in such economies.
 Innovation
Individuals often resort to entrepreneurship for one of the
following reasons; they find a market niche and have the
solution to profit from such niche; they have been unable to
find suitable employment or a suitable means of income and
therefore have resorted to using their creativity to generate
an income for themselves; or they have the technological
know-how and the financial resources (or able to source all of
the above) necessary to generate income by satisfying a need
in the marketplace.
 Job Creation
The main reasons that individuals tend to become
entrepreneurs is because they are unable to find suitable jobs.

As a result, by being enterprising, creative and finding a market

niche, not only are they able to generate an income for
themselves but also to employ other individuals in their
business operations.
 Increased Competition
Another positive impact of entrepreneurship on an economy is
the increasing level of competition as new entrepreneurs join
the fray in existing domestic markets.

While one may venture to say that this will only lead to market
saturation, the upside of such a phenomenon is that it causes all
the players in the market to re-evaluate their operational
capabilities, increase value addition, lower costs and become
more efficient.
 Increased Productivity
One of the advantages of increased competition in an economy
is that individuals and firms continue to source methods that
can better improve their operations, use resources more
efficiently and most importantly reduce costs while adding
value.

All this often results in an increase in productivity in an

economy and an increase in the gross domestic product (GDP),
which is indeed a benefit for the economy.
 New Markets
As integration of economies continues due to globalisation,
entrepreneurs often tend to look for markets that are outside
of their domestic sphere thus generating foreign revenue and
increasing the prosperity of the economy as a whole.
While this may be a very simplistic explanation of the impact
that entrepreneurs make on an economy, it is also safe to say
that the employment generation, increased competition,
market expansion, market penetration and sourcing new
markets all result in income generation that ultimately help an
economy to become more prosperous, drawing millions out of
poverty and generating funds for social welfare activities that
ultimately uplift the living standards of its citizenry.
 Negative Impacts of Entrepreneurs
The single largest negative impact of entrepreneurs on an
economy is the plundering of resources, which can have a
disastrous effect on the environment.

While such negative impacts are mitigated to some extent in

developed economies due to the enforcement of
environmental protection standards and regulations, this is not
the case in developing economies.

Further entrepreneurship requires a certain degree of business

knowledge and know how, without which entrepreneurial
ventures can often fail, which can also cause many financial
hardship that in extreme cases can even lead to destitution.