Entrepreneurship

• Entrepreneurship


  A practice and a process that results in creativity, innovation and enterprise development and growth. It refers to an individual's ability to turn ideas into action involving and engaging in socially-useful wealth creation through application of innovative thinking and execution to meet consumer needs, using one's own labour, time and ideas.
• Entrepreneur


  A person who creates and develops a business idea and takes the risk of setting up an enterprise to produce a product or service which satisfies customer needs.
• Entrepreneurship


  The assumption of risk and responsibility in designing and implementing a business strategy or starting a business.
• Examples of wage-employment


  • A teacher teaching in a school
  • A worker working in a factory
  • A doctor practicing in a government hospital
  • A clerk serving in a bank
  • A manager working in a business concern
• Examples of self-employment


  • A shopkeeper
  • A factory owner
  • A businessman
  • A doctor having his own clinic
• There are several self-employed individuals who not only create jobs for themselves but also generate jobs for many others. They may be termed as 'entrepreneurs'.
• Definitions of entrepreneurship


  • The process of identifying opportunities in the marketplace, arranging the resources required to pursue these opportunities and investing the resources to exploit the opportunities for long term gains
  • The processes through which individuals become aware of business ownership then develop ideas for, and initiate a business
  • The art of identifying viable business opportunities and mobilising resources to convert those opportunities into a successful enterprise through creativity, innovation, risk taking and progressive imagination
  • The ability to identify business opportunities which can be transformed into successful businesses through creative and innovative process
  • A practice and a process that results in creativity, innovation and enterprise development and growth. It refers to an individual's ability to turn ideas into action involving and engaging in socially-useful wealth creation through application of innovative thinking and execution to meet consumer needs, using one's own labour, time and ideas
• Definitions of an entrepreneur

  • A person who creates and develops a business idea and takes the risk of setting up an enterprise to produce a product or service which satisfies customer needs
  • A person who has the ability to identify and pursue a business opportunity, undertakes a business venture, raises the capital to finance it, gathers the necessary physical, financial and human resources needed to operate the business venture, sets goals for him/herself and others, initiates appropriate action to ensure success, and assumes all or a major portion of the risk
  • A person who has a dream, has a vision, is willing to take the risk, and makes something out of nothing
  • A person who identifies successful business opportunities, risks time and money to start and operate the business, bringing resources together with the intention of generating wealth
• An entrepreneur is a job-creator not a job-seeker.
• Timeline of entrepreneurship development

  • Eighteenth Century: (Early 1700s) Richard Cantillon coined the term entrepreneur ("go-between" or "between-taker"), (late 1700s) Entrepreneur bears risks and plans, supervises, organizes and owns factors of Production
  • Nineteenth Century: (1803) Jean Baptiste Say proposed that the profits of entrepreneurship were separate from profits of capital ownership, (Late 1800s) Distinction made between those who supplied funds and earned interest and those who profited from entrepreneurial abilities
  • Twentieth Century: (1934) Joseph Schumpeter described entrepreneur as someone who is an innovator and someone who "creatively destructs", (1964) Peter Drucker took this idea further, describing the entrepreneur as someone who maximizes opportunity, actually searches for change, responds to it, and exploits change as an opportunity
  • Twenty-first Century: (2004-2010) As technology changes and global connectivity improves, entrepreneurship means that the entrepreneur not only has to ensure profits for all stakeholders, he has to fix problems, tap new markets, bring cutting edge ideas to the table, and lead cross-cultural teams. Entrepreneurship has taken on new meaning and greater challenges in the last decades. The real skill is learning how to influence through commitment, loyalty and trust.
• Definitions of entrepreneurs


  • 1734: Richard Cantillon - Entrepreneurs are non-fixed income earners who pay known costs of production but earn uncertain incomes
  • 1803: Jean-Baptiste Say - An entrepreneur is an economic agent who unites all means of production- land of one, the labour of another and the capital of yet another and thus produces a product. By selling the product in the market he pays rent of land, wages to labour, interest on capital and what remains is his profit. He shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.
  • 1934: Schumpeter - Entrepreneurs are innovators who use a process of shattering the status quo of the existing products and services, to set up new products, new services.
  • 1961: David McClelland - An entrepreneur is a person with a high need for achievement. He is energetic and a moderate risk taker.
  • 1964: Peter Drucker - An entrepreneur searches for change, responds to it and exploits opportunities. Innovation is a specific tool of an entrepreneur hence an effective entrepreneur converts a source into a resource.
  • 1975: Howard H. Stevenson - Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled.
  • 1975: Albert Shapero - Entrepreneurs take initiative, accept risk of failure and have an internal locus of control.
  • 2013: Ronald May - An Entrepreneur is someone who commercializes his or her innovation.
• Think like an entrepreneur Task 1

  1. Identify the entrepreneur's opportunity and resources

  2. Explain what you would have done if faced with this situation
• Drivers of contemporary entrepreneurship

  • Information and Communication Technology (ICT)
  • Globalization
  • Changing demands
  • Changing demographics
  • Unemployment
  • Institutional support
  • Ease of entry in the informal sector
• Information and Communication Technology (ICT)


  All technologies that combined allow people and organizations to interact in the digital world. Its elements include cloud computing, internet access, computer hardware and software, communications technology eg. telephone and transactions.
• The development and rapid growth in the availability and use of ICT has created many opportunities for entrepreneurs.
• Globalization


  The worldwide movement toward economic, financial, trade, and communications integration. The 'global village' is a phenomenon created by the speed of modern travel and communication as well as by the level of integration in business, governance and culture.
• Entrepreneurs are able to access more information, resources and markets in today's world than was previously possible. They have access to global markets but face global competition.
• Changing demands


  The pace of life in today's world is fast and markets are always changing. Businesses must continuously adapt. Entrepreneurs can exploit opportunities that arise from unanticipated and unsatisfied needs that result from changes in the social and business environment.
• Changing demographics


  Change in the vital statistics of a population such as gender, age, income level, education, location and ethnic composition. There are trends such as rate of growth in population and change in ethnic statistics, perhaps due to the inward migration of people. These statistics provide important information for entrepreneurs who are pursuing opportunities for innovating and creating value.
• Understanding the demographics of your target customers is critical for the success of your business.
• Factors to consider in understanding demographics

  • Purchasing power
  • Residences
  • Means of transportation
  • Age ranges
  • Family status
  • Leisure activities
• Unemployment changes in the local and global economy result in changing levels of unemployment. Many entrepreneurial ventures are born out of the entrepreneur's need for income.
• Many governments have recognized that entrepreneurship adds value to an economy. New businesses create new jobs and add to the country's GDP. As a result, there are initiatives and agencies set up to provide training and support to entrepreneurs.
• Informal sector


  That part of an economy that is not taxed, monitored by any form of government or included in any gross national product (GNP), unlike the formal economy.
• Due to the fact that there are hardly any regulations governing the informal sector, it is easier to engage in and set up entrepreneurial ventures.
• Emerging areas for enterprise development


  • The creative and cultural industries
  • Renewable energy
  • Agro-preneurship
  • ICT (Information and Communication Technology)
• Richard Cantillon


  An Irish economist and author of Essai Sur La Nature Du Commerce En Général (Essay on the Nature of Trade in General), who coined the term "entrepreneur".
• Underground economy


  Also known as the agora or System D, associated with idioms like "under the table", "off the books" and "working for cash"
• Underground economy


  • Easier to engage in and set up entrepreneurial ventures due to lack of regulations
• Barriers to entry


  Challenges faced by entrepreneurs when entering a particular sector or market
• High barriers to entry markets

  • Require high capital costs, e.g. enterprises involving high level technologies, telecommunications and manufacturing
  • Have higher profit margins
  • Harder for entrepreneurs to get into
  • More likely to have intrapreneurship
• Emerging areas for enterprise development


  • Creative and cultural industries
  • Renewable energy
  • Agro-preneurship
  • ICT (Information and Communication Technology)
• Entrepreneur


  An individual who organizes or operates a business or businesses
• The word "entrepreneur" first appeared in the French dictionary "Dictionnaire Universel de Commerce"


  1723
• Entrepreneur (Cantillon's definition)


  A person who pays a certain price for a product and resells it at an uncertain price, making decisions about obtaining and using the resources while consequently admitting the risk of enterprise
• Entrepreneur (Schumpeter's definition)


  A person who is willing and able to convert a new idea or invention into a successful innovation
• Entrepreneurship (Schumpeter's view)

  • Employs "the gale of creative destruction" to replace in whole or in part inferior offerings across markets and industries, simultaneously creating new products and new business models
  • Largely responsible for long-term economic growth
• Creative destruction (Schumpeter)


  The process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one
• Entrepreneur (Drucker's view)


  One who takes risks in the name of an idea, spending time as well as capital on an uncertain venture
• Entrepreneur (Say's definition)

  One who shifts economic resources out of an area of lower and into an area of higher productivity and greater yield