Entrepreneurship: Resources and Investment

• Entrepreneurship refers to the capacity of an individual to identify, combine, and transform available resources into goods or services for fair profit.

Entrepreneurial Investment

• An entrepreneur's first investment in their business is an idea, which acts as a blueprint in their mind.

Resources in entrepreneurship

• Raw materials are the basic, unprocessed inputs from the environment used to create products.
• Capital includes the buildings, machinery, equipment, and tools used in production.
• Laborers are people directly involved in production.
• A plant is a place where the physical factors of production are located.
• A successful combination of resources allows an entrepreneur to have a business enterprise.
• Inputs, once transformed, become finished products.
• Finished products are brought to the market.
• A market consists of the buyers and users of the entrepreneur's product.
• Customers buy the product.
• Consumers, or end-users, use the product.

Entrepreneurship Thought

• Jeffrey Timmons (1994) defined entrepreneurship as the ability to create and build a vision from practically nothing.
• Robert Hisrich (2001) said entrepreneurship involves the creation process, devotion of time and effort, accepting risks, and gaining rewards like satisfaction and independence.
• Albert Shapiro (1975) described entrepreneurship as taking initiative, organizing resources, recognizing social mechanisms, and accepting risks and failures.

Entrepreneur Traits

• The word 'entrepreneur' is French for “to innovate”.
• An entrepreneur has and acts on ideas.
• An entrepreneur possesses business skills.
• Like other business people, entrepreneurs take risks.
• Entrepreneurs desire to make profit.

Definitions of Entrepreneurship

• Middle Ages: An entrepreneur is an actor and person in charge of large-scale production projects.
• Frank Knight (1921): An entrepreneur is a manager responsible for direction and control who bears uncertainty.
• Peter Drucker (1998): An entrepreneur starts a new and small business.
• Carol Moore (2001): An entrepreneur perceives an opportunity and creates an organization to pursue it.

Drive

• Success in entrepreneurship requires self-motivation to pursue a chosen course without relenting, even during adversity.
• Drive is the tension resulting from unmet needs.
• Richard Branson started growing Christmas trees as a child, published a magazine at 16, and set up a mail order business at 19, eventually owning various diverse businesses.

Thinking Ability

• An entrepreneur's job involves problem-solving and decision-making to achieve goals.
• Jeff Bezos founded Amazon.com and used his thinking ability to generate $1.92 billion in sales for company.

Communication Skills

• Understanding and being understood is essential for transacting business with customers, bankers, and government officials.
• Poor communication from an entrepreneur can lead to staff demoralization, low productivity, and increased employee turnover.

Other Skills

• Operating a business requires performing both major and minor tasks.
• Restaurant entrepreneurs must be familiar with various tasks, such as recruitment, purchasing, bookkeeping, sanitation, cashiering, and cooking.
• Entrepreneurs should have technical knowledge for these tasks.

Risk

• Starting a new venture means accepting the risk of business failure.
• Ventures with zero risks theoretically provide zero benefits.
• Entrepreneurs must calculate a reasonable trade-off between risks and benefits.

Self Confidence

• Sufficient confidence in oneself is essential.
• Belief in one's ability leads to actual performance and success.
• Self-confidence allows a person to perform their job without hesitation.

Goal Setting

• Goals are motivational tools, important for achieving objectives.
• A goal directs attention to a specific target.
• A goal encourages effort toward achieving something specific.
• A goal encourages persistence.
• A goal fosters the creation of strategies and action plans.

Innovation

• A free enterprise economy enables business enterprises to flourish.
• Buyers need persuasion to choose an entrepreneur's firm over competitors.
• Innovative entrepreneurs address this problem effectively.

Innovation Example

• Walter Disney helps new technology & ideas to draw customers.
• Walt Disney created Mickey Mouse, Disneyland and Walt Disney movies (Ros Jay, 2001).

Ethics

• Ethics is the study of moral obligation, which involves distinguishing between right and wrong.
• Business ethics refers to the rules guiding how entrepreneurs should behave.
• Adhering to ethical standards facilitates business exchanges and builds trust.

Encouraging Ethical Behavior

• Adaption of a code of ethics, acting as a reference, guides employees big or small.
• The code of ethics can be made effective if they refer to specific unethical practices.
• The code of ethics can be made effective if top management supports it.

Ethical Rewards

• A system of reward and punishment must be instituted to control the behavior of personnel.
• Punishments may include dismissal, demotion, suspension, or reprimand.
• Rewards may include cash gifts, promotion, or citation.

Encouraging Ethical Behavior

• A code of ethics should be established.
• Systems should be set up for rewards and punishments relating to ethical behavior.
• Internal programs for resolving conflicts should be adapted.
• Ethics review committees should be created.
• Ethics training should be provided for employees.
• There should be Top Management Support

Ethical Influences

• Factors influencing ethical behavior include the situation, the reward system, individual differences, and other factors.
• Competition can drive individuals to behave unethically.
• An example of this is a trader spreading rumors to discredit competitors.

Ethical Issues Facing Entrepreneurships

• Ethical questions spring from relationships between the company and customers.
• Entrepreneurs support consumer rights, including safety, information, choice, and the right to be heard.
• Ethical questions spring from relationships between the company and its personnel and employees.
• Awareness of responsibilities to employees like workplace safety, quality of life issues, non-discrimination, and preventing sexual harassment is important.
• Some ethical questions spring from relationships between the company and its business associates.
• Some ethical questions spring from relationships between the company and the investors and the financial community.
• Maintaining a high degree of trust is based on the business firms practice good business ethics.

Economic Development

• In poor countries, economic development refers to improving human conditions by reducing poverty, unemployment, disease, illiteracy, injustice, and exploitation.
• More economic activities involving factories, agricultural production, trade, and service industries are needed in poor countries.
• Economic activities multiply jobs and incomes.
• Social justice is important for a fair distribution of wealth, income, and power.

Laissez Faire Theory

• These are French words introduced by the Physiocrats to mean economic freedom.
• The government should not interfere in economic activities (free-enterprise economy).
• The government's role is confined to education, justice, and public works.
• Economic freedoms and free competition leads to efficiency and benefits the economy.

Keynesian Theory

• The government should play the key role in economic development, particularly in less developed countries.
• During an economic depression the government should put up massive public works to have labor-intensive projects.
• These projects help to increase employment, income, and demand for goods and services for economic development.

Ricardian Theory

• David Ricardo believed that land is the key factor in economic growth, making agriculture important in economic development.
• Physiocrats previously supported this theory.
• Claimed that all wealth comes from the land.

Harrod-Domar Theory

• Sir Harrod of England and Professor Domar of the United States conceptualized this theory.
• The key factor in economic growth is physical capital like machines.
• More products can be produced through the use of machines, supporting industrial success.

Kaldor Theory

• Nicholas Kaldor maintains that the key factor is technology.
• The application of modern technology is important in the production of goods and services which supports economic success.

Innovation Theory

• Joseph Schumpeter developed this theory. Innovation and entrepreneurs are important.
• Innovators show courage for old systems, and transform society into reality leading to a better change.

Non-Economic Theories

• Political stability, efficient public administration, an open society, and positive cultural values are all key factors.

Negative Impacts

• Corruption in the government is the top enemy of economic development in Asia.
• Inefficient public administration and social close mindedness results to wasteful use of resources and impacts to economic growth.

Solutions

• Honest and efficient governments help economic growth.
• Values such as punctuality, industry, & dedication, and good entrepreneurs help the economy.

Contribution of Entrepreneurs

• Developing new markets.
• Discovering new sources of materials.
• Mobilizing capital resources.
• Introducing new technologies, industries, and products.
• Creating employment.