Transcript Chapter 19

Introduction to
Entrepreneurship
 The
Evolution of Entrepreneurship
 Concept of Entrepreneurship




 The
Who are Entrepreneurs?
Entrepreneurship
Intrapreneurship
Social-entrepreneurship
Importance of Entrepreneurship
 The Myths of Entrepreneurship
 Entrepreneurship Development
 The
word ‘entrepreneurship’ comes from the
French verb “entreprendre” and the German
word “unternehmen”, both means ‘one who
undertakes’ – that is, a ‘manager’.
3,000 B.C. – Origin of Organized business activities
Emergence of hierarchy
Property rights
• Emergence of Aristocracy
• A.D. 500 – 1,500
Feudalism
Mercantilism
Capitalism
• Growth of
enterprise –
A.D. 1,600
• Industrial
Revolution –
late A.D. 1,800
 Are
very cautious – never want to make any
risks
 Assume
 Like
that things are the way have to be
to be sure of the next month’s salary –
and the one after…………. until
retirement……….. perhaps the pension even
after!!!!!!!
A self-employed person with uncertain returns
Richard Cantillon, 1730
A leader of men, a manager of resources, an innovator
of ideas, including new scientific ideas, and a risk taker
Abbe nicollas, 1767
A co-ordinator of production with managerial talent
Jean-Baptise Say, 1803
A manager responsible for direction & control, who
bears uncertainty
Frank Knight,
1921/1961
A creative innovator
Joseph Schumpeter,
1934
A moderate risk taker
J.E. Stepanek, 1960
A person with high need for achievement
McClelland, 1961
An arbitrageur
Israel Kirzner, 1973
Internal locus of control
J.B. Rotter, 1976
A person always searches for change, responds to it,
and exploits it as an opportunity
Peter Drucker, 1986
Person who exercises strategic creativity through a
business venture
McMullan and Long,
1990
Person who undertakes a wealth-creating activity and
value-adding process, through incubating ideas,
assembling resources and making things happen
Raymond W.Y. Kao, 1993
A person who creates a new business in the face of
uncertainty for the purpose of achieving profit and
growth by identifying opportunities and assembling the
necessary resources
Scarborough &
Zimmerer, 1998
One who undertakes to organize, manage and assume
the risks of a business
Kuratko & Hodgetts,
2004
An
entrepreneur is a person who is
willing to put his/her career and
financial security on the line and take
risks in the name of an idea, spending
time as well as capital on an
uncertain venture.
Then
Now
Small business founder
True entrepreneur who innovates,
changes to infuse new value
Boss
Leader
Lone-ranger
Networker
Secretive
Open
Self-reliant
Inquisitive
Seat of the pants
Business plans
Snap decisions
Consensus
Male ownership
Mixed ownership
Automate
Innovate
Bearing Uncertainty
Richard Cantillon, 1730
& Frank Knight, 1921
Bringing together factors of production
Jean-Baptise Say, 1803
Innovation through the process of ‘creative destruction’
Joseph Schumpeter,
1934
Responsible decision making
Frank Knight, 1961
Exploration of opportunities- being an arbitrageur and an
equilibrating agent
Israel Kirzner, 1973
Creation of organizations
Gartner, 1988
The dynamic process of creating incremental wealth by
individuals who assume major risks in terms of equity,
time and career commitment or provide value for
product or service
Histrich and Peter, 1998
Is a dynamic process of vision, change, and creation. It
requires an application of energy and passion towards
the creation and implementation of new ideas and
creative solutions
Kuratko & Hodgetts,
2004
 NOT
small business management
 NOT
just business startups
 NOT
just for-profit firms
 IS
……………….
Entrepreneurship
is thus being taken
as a value adding process of
discovering, evaluating, organizing
and exploiting opportunities.
Universality
of principals, rules,
application and contexts in which
entrepreneurship is considered as a
discipline.
Basic Aspects
Creation of
something
new of
value
Devotion of
necessary
time & effort
Assumption of
various forms of
risks
Involvement of rewards
Exploring the
entrepreneurial
context –
‘rules’ of the
game
Identifying
opportunities
& possible
competitive
advantages
Starting
the
venture
Managing
the
venture
Top
Middle
Lowest
USA
Argentina
France
Canada
Belgium
Japan
Australia
Brazil
Korea
Finland
Norway
Israel
Italy
India
Singapore
Spain
UK
Source: based on ‘Economic growth lined to level of business startups”, GEM 2000 report, adapted from Management-7th Ed.
Stephen Robbins & Mary Coulter; Pearson Education, 2002.

New ideas and inventions are developed and this enables
continual improvement of societies and their organizations

Sky-scraping heights of apparent prospects; - the individual
gets maximum scope for growth and opportunity

It is a challenging opportunity for the people

Entrepreneurship provides self sufficiency

Creates wealth for nation and for individuals as well

Provides employment to huge mass of people

Contributed towards research and development system
Percentage, Control
over my working
life, 17%
Percentage, Spotted
an opportunity, 16%
Percentage, Building
on experience as
employer, 15%
Percentage, More
redundant, 9%
Percentage, To
make money, 6%
Percentage, Could
not find a job, 2%
Source: Adapted from material published by NatWest bank, IFF research, May 2007.
An entrepreneur is a person who is ready
to supply enterprise necessary to;

take advantage of business opportunities

acquire productive resources


Combine them & use them effectively &
efficiently
create value in goods & services that customers
want to buy which creates profits
 ‘Train
your self to see vacuum or gaps in the
market and fill them’
- William Heinecke
 ‘If
something makes you angry, you have
uncovered a gap in the market’
- Anita Roddick
 Isaac
Singer
 Henry
Ford
 George
 Ray
Eastman
Kroc
 Stephen
 And
Jobs
Dewitt and Lila Wallace
 Your
job
 Hobbies
or interests outside work
 ‘Pedestrian
observation’ – spotting an
opportunity through a casual encounter or an
incident in your daily life



The idea for a Diners Club struck Ralph Schneider
when he went out for dinner & discovered he had
no cash!!!!!!!!
Leo Gerstenzag invented Q-tips (cotton buds) when
he saw his wife using cotton wool wrapped around a
toothpick to clean their baby daughter’s ears.
King C. Gillette got the idea of a disposable razor
when he became annoyed that his razor blade was
dull in one morning!!!!!
 ‘The
process drives ineffective companies
out of business as they are replaced by new,
more efficient ones’
- Joseph Schumpeter

Small businesses, lifestyle and family
entrepreneurs

Franchise entrepreneurs

Professional fast growth and serial
entrepreneurs

Corporate entrepreneurship or intrapreneurs

Creative disruptors or innovators

Extreme entrepreneurs

Social and non-profit entrepreneur
Intrapreneurship or corporate entrepreneurship
involves the developing of new business ideas and
the birthing of a new business activity within the
context of large and established companies.
 A learning organization encourages employees to
act as intrapreneurs to help, form:




Product Champions: person that takes ownership of a product from
concept to market.
New Venture Division: allows a division to act as its own smaller
company.
Rewards for Innovation: link innovation by workers to valued
rewards.
 Social
A
entrepreneurs combine the passion of;
social mission (explicit and central)
 With business-like discipline, innovation, and
determination
1.
Entrepreneurs are does, not thinkers
2.
Entrepreneurs are born, not made
3.
Entrepreneurs are always inventors
4.
Entrepreneurs are academic and social misfits
5.
Entrepreneurs must fit the profile
6.
All entrepreneurs need is money
7.
All entrepreneurs need luck
8.
Ignorance is bliss for entrepreneurs
9.
Entrepreneurs seek success but experience
high failure rates
10. Entrepreneurs
gambles
are extreme risk takers, i.e.
People who aren’t
entrepreneurs
Bad entrepreneurs
Good entrepreneurs
Are very cautious – never
want to make any risks
Ignore risks – assume
Take calculated risks –
their own charisma/skill weighing up to potential
will guarantee success
risks & resources
Assume that things are
the way have to be
Rush to bring in
something new or made
huge changes
Launch new ideas in
response to change in
consumer’s tastes &
attitudes
Like to be sure of the
next month’s salary – and
the one after………….
until retirement………..
perhaps the pension even
after!!!!!!!
Trust that things will go
as planned, spend freely
at the start as they are
sure of cash will start
flowing tomorrow
Accept that the early days
of a new business may be
very tough, so try to spend
as little as possible
 Overestimation
of their ability to create new
products that customers desire
 Underestimate
how difficult it is to actually
reach prospective customers & get them to
try their products
 Do
not realize how much ready cash is
needed to see a business through its critical,
initial ‘birth’ period.
 Privatization
 Loan
schemes for SME’s
 Entrepreneurship
education
1. Competitive environment with a level playing field
2. Free and flexible markets that will enable the closing
down of business that have run their course and be
replaced by more efficient firms
3. Rule of Law: Protection of property rights & Contract
enforcement
4. Availability of a financial system that provides the
entrepreneurs with an easy access to capital
5. A quality educational system
 Creating
a national sense of mission
 Creating
customer / product competitiveness
 Creating
a nation of self-inspired people
 Creating
a national urgency to improve
- Larry C. Farrell, ‘The Entrepreneurial age’ (2001)
 Ethical
 Social
issues
responsibility