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What are the key dimensions of entrepreneurship according to this chapter?
What are the key dimensions of entrepreneurship according to this chapter?
What is the definition of entrepreneurship?
What is the definition of entrepreneurship?
The activity of setting up a business or businesses, and taking on financial risks in the hope of making a profit.
What is the term 'entrepreneur' defined as?
What is the term 'entrepreneur' defined as?
A person, usually self-employed, who starts, operates, and owns a business.
Entrepreneurs can be defined from a functional approach based on what an entrepreneur does or an indicative approach based on their characteristics and attributes.
Entrepreneurs can be defined from a functional approach based on what an entrepreneur does or an indicative approach based on their characteristics and attributes.
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What does 'creative destruction' refer to?
What does 'creative destruction' refer to?
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Entrepreneurs are always trying to improve product quality, reduce costs of production, and find better ways to serve their customers.
Entrepreneurs are always trying to improve product quality, reduce costs of production, and find better ways to serve their customers.
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What are the four major components of the Timmons Model of Entrepreneurial Process?
What are the four major components of the Timmons Model of Entrepreneurial Process?
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What are the three main motivations that drive entrepreneurs according to Joseph Schumpeter?
What are the three main motivations that drive entrepreneurs according to Joseph Schumpeter?
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According to Fredrik Barteh, what are the two connecting spheres in society that impact entrepreneurship?
According to Fredrik Barteh, what are the two connecting spheres in society that impact entrepreneurship?
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Schumpeter defines entrepreneurship as a creative activity.
Schumpeter defines entrepreneurship as a creative activity.
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What are the three types of needs according to McClelland's Need for Achievement Theory?
What are the three types of needs according to McClelland's Need for Achievement Theory?
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What are the characteristics of a high achiever (entrepreneur) according to the Need for Achievement Theory?
What are the characteristics of a high achiever (entrepreneur) according to the Need for Achievement Theory?
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Harvey Leibenstein was an American microeconomist, industrial organization theorist, and development economist at Harvard University.
Harvey Leibenstein was an American microeconomist, industrial organization theorist, and development economist at Harvard University.
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What is 'X-efficiency' as defined by Harvey Leibenstein?
What is 'X-efficiency' as defined by Harvey Leibenstein?
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What are the two types of entrepreneurship according to Leibenstein?
What are the two types of entrepreneurship according to Leibenstein?
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What is the role of the entrepreneur in 'input completion' as described by Leibenstein?
What is the role of the entrepreneur in 'input completion' as described by Leibenstein?
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What is the main role of the entrepreneur in 'gap filling' according to Leibenstein?
What is the main role of the entrepreneur in 'gap filling' according to Leibenstein?
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Knight Frank Hyneman Knight believed that the reward for bearing uncertainty is profit.
Knight Frank Hyneman Knight believed that the reward for bearing uncertainty is profit.
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What are the three crucial characteristics of an entrepreneur according to Knight Frank Hyneman Knight?
What are the three crucial characteristics of an entrepreneur according to Knight Frank Hyneman Knight?
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Study Notes
Chapter 1: Theory of Entrepreneurship
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Objectives:
- Discuss entrepreneurship, entrepreneurial processes, and activities.
- Introduce students to the theory of entrepreneurship.
- Introduce students to the key dimensions of entrepreneurship: need for achievement, locus of control, risk-taking propensity, entrepreneurial characteristics, and traits.
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Learning Outcomes:
- Understand the principles and theory of entrepreneurship.
- Adapt and adopt entrepreneurial culture in life.
- Gain a better understanding of the need for achievement, locus of control, and risk-taking propensity as key dimensions of entrepreneurship in managing a business organization.
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Outline:
- Introduction to Entrepreneurship
- Definitions of Entrepreneurship and Entrepreneur
- Entrepreneurial Process
- Theories of Entrepreneurship
Who is an Entrepreneur?
- No single definition for the term "entrepreneur" and what it encompasses exists (Kuratko & Hodgetts, 2001).
- An entrepreneur can be defined functionally (based on actions) or indicatively (based on traits).
- Different definitions lead to differing perceptions of an entrepreneur.
- Entrepreneurs may embody multiple roles.
Entrepreneurship
- Entrepreneurs are vital players in a free market economy. They produce, transport, and sell products and services to consumers.
- Identifying consumer needs, wants, or desires is key to identifying business opportunities.
- Entrepreneurs take risks by investing money in new products and making them available to the public.
- Consumer choice is ultimately improved as entrepreneurs offer a wider variety of products and services.
- Entrepreneurial activities are crucial pillars of a nation's economic advancement.
Entrepreneurship (cont.)
- Societies with strong entrepreneurial cultures tend to be more productive, competitive, and prosperous.
- Entrepreneurs drive improvements in product quality, reduce production costs, and better serve customer needs.
- Entrepreneurs efficiently allocate resources to meet market demand, which makes them essential in a free-market economy.
- Successful entrepreneurs sometimes achieve great wealth through the growth of their businesses into corporations.
Entrepreneurial Process
- The Timmons Model highlights four key components of venture creation:
- Founder
- Opportunity
- Team
- Resources
- Entrepreneurs identify viable business opportunities, combine resources, assemble teams, and execute business projects to meet consumer needs.
Entrepreneurial Process (cont.)
- Entrepreneurs lead the process by seizing and acting on opportunities.
- Entrepreneurs and teams package viable offerings leveraging resources, which may include personal investments and securing outside funding.
- Teams are assembled to execute the project and provide the skills necessary to succeed.
Theories of Entrepreneurship
- The study of entrepreneurship spans various theoretical perspectives (Economic, Sociological, Psychological, and Anthropological/Cultural).
1. Economic Theory
- Richard Cantillon recognized the role of entrepreneurship, describing farmers as entrepreneurs promising to pay for land, facing price fluctuations.
- Joseph Schumpeter argued that entrepreneurs drive economic development through innovation and introduce new or improved products, methods and ideas.
- His innovations may involve combining existing resources in fresh ways.
- Lack of innovation leads to decreased entrepreneurship enthusiasm and energy.
2. Sociological Theory
- Sociology links entrepreneurship with societal movements.
- Cultural values influence entrepreneurial activities significantly.
- Strong family support fosters and helps in the development of entrepreneurial activities.
- Hoselitz highlighted how innovators often defy traditional practices and promote improved community-enterprise relations.
3. Psychological Theory
- Entrepreneurship surges when society exhibits sufficient psychological characteristics.
- Schumpeter characterized entrepreneurs as driven by three primary motivations.
- A desire to establish a 'private kingdom/power'
- Aspiration to 'conquer' their field of expertise, and/or
- Self-satisfaction in developing and producing products.
4. Anthropological/Cultural Theory
- Fredrik Barth's theory posits the existence of different spheres in society (cheap/expensive), resulting in disparities that influence entrepreneurial activity.
Innovation Theory of Schumpeter (1949)
- Introduced by the Austrian economist Joseph Schumpeter
- Defines entrepreneurship as a creative activity involving the introduction of new products or services or new ways of doing things.
- Innovation is recognized as a key driver of the economy (the engine of growth).
Need for Achievement Theory of McClelland
- Introduced by the American psychologist David McClelland
- Characteristics of an entrepreneur:
- Setting realistic goals
- Calculated risk taking
- Problem solving
- Concrete feedback
- Their motivation for business is not predominantly economic reward but accomplishment and satisfaction.
Harvey Leibenstein's X-Efficiency Theory
- Harvey Leibenstein (1922-1994) a Harvard economist focused on Inefficiency within companies.
- X-efficiency measures how well a company uses its resources.
- Two types of entrepreneurs are recognised:
- Routine entrepreneurship (Deals with normal activities).
- Innovative entrepreneurship (Creates new approaches and markets).
- Entrepreneurs also fill gaps in resource markets.
Theory of Profit: Knight Frank Hyneman Knight
- Entrepreneur is willing to take risks
- Profit is the return for uncertainty and uninsurable risk.
- Entrepreneur's responsibilities include:
- Calculated risk-taking
- Opportunity for profit arises from change
- Taking responsibility for actions.
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Description
Explore the foundational principles of entrepreneurship in this quiz based on Chapter 1 of the Entrepreneurship Theory. Learn about the key dimensions such as need for achievement, locus of control, and risk-taking propensity. Understand the entrepreneurial process and what defines an entrepreneur.
