Introduction to Entrepreneurship

Introduction to Entrepreneurship

• The study of entrepreneurship is crucial in countries practicing free market economies.
• Entrepreneurial development is vital for national building in these countries.
• There's a need to understand entrepreneurship and its key issues.

Objectives

• Introduce students to the nature of entrepreneurship, entrepreneurial activities, and their significance.
• Introduce common characteristics of successful entrepreneurs.
• Discuss various types of entrepreneurship.

Learning Outcomes

• Students should be able to discuss entrepreneurship, entrepreneurial processes, and activities.
• Students should be able to discuss the importance of entrepreneurial activities.
• Students should be able to discuss, adapt, and apply entrepreneurial characteristics and attributes.
• Students should be able to explain types of entrepreneurship.

List of Topics

• Introduction to Entrepreneurship
• Definitions of Entrepreneurship and Entrepreneur
• Entrepreneurial Process
• Characteristics and Attributes of Entrepreneurs
• Types of Entrepreneurship

Introduction

• Entrepreneurship is of significant importance in nations with free market economies.
• Entrepreneurial development is essential for nation-building in these countries.
• Understanding entrepreneurship and its key issues is important.

Introduction to Entrepreneurship (cont.)

• Entrepreneurs are key players in free market economies, producing, transporting, and selling goods and services to consumers.
• They identify consumer needs, wants, and desires to find business opportunities.
• Entrepreneurs create new products, take risks with investments, and make their products accessible to consumers.

Introduction (cont.)

• Consumers benefit from the variety and choice of products/services.
• New products/services improve the quality of life.
• Entrepreneurial activities are essential for national economic progress and prosperity.

Introduction (cont.)

• A society with a strong entrepreneurial culture will be more productive, competitive, and prosperous.
• Entrepreneurs strive to enhance product quality, reduce production costs, and better serve consumer needs.

Introduction (cont.)

• Entrepreneurs efficiently allocate resources based on business opportunities and market demand.
• Successful entrepreneurs can grow their business into large corporations.

Introduction (cont.)

• Careers can be structured around entrepreneurship or salaried employment or various other options.
• Career fields involve department heads, CEOs, professionals, or skilled trades.

Definitions of Entrepreneurship and Entrepreneur

• Entrepreneurship involves setting up and running businesses, taking financial risks to generate profit.
• The study of entrepreneurship encompasses entrepreneurial behavior, business setup dynamics, expansion, and development.

Definitions of Entrepreneurship and Entrepreneur (cont.)

• "Entrepreneur" was first used by Richard Cantillon (1775) to denote an individual undertaking a task.
• Adam Smith (1776) defined an entrepreneur as someone acting to transform demand into supply.
• Jean-Baptiste Say (1803) viewed the entrepreneur as someone shifting resources from low to high productivity areas.

Definitions of Entrepreneurship and Entrepreneur (cont.)

• John Stuart Mill (1848) identified entrepreneurs as the fourth factor of production (after land, labor, and capital) in private enterprise activities.
• Carl Menger (1871) defined entrepreneurs as economic agents transforming resources, adding value, and creating products/services.

Definitions of Entrepreneurship and Entrepreneur (cont.)

• Ibnu Khaldun (Abdul Rahman Mohamed Khaldun) viewed knowledgeable and skilled craftsmen as key to city-state development.
• Joseph Schumpeter (early 1900s) viewed entrepreneurs as innovators who replaced old products/methods ("creative destruction") with new ones.

Definitions of Entrepreneurship and Entrepreneur (cont.)

• Entrepreneurs are the primary drivers of economic progress.
• They can be innovators, mobilize resources, offer products/services, and create jobs to improve the people's quality of life and contribute to national economic progress.

Entrepreneurial Process

• The Timmons Model describes four key components for venture creation: founder (entrepreneur), opportunity, team, and resources.

Entrepreneurial Process (cont.)

• Entrepreneurs identify and capitalize on opportunities with their teams.
• Entrepreneurs use resources to develop profitable and viable products.

Entrepreneurial Process (cont.)

• Figure 1.2 shows the simplified entrepreneurial process, with opportunities, the founder (entrepreneur), resources, and the team leading to business projects that offer products or services.

Characteristics and Attributes of Entrepreneurs

• Successful entrepreneurs have a strong reason or mission, such as promoting values, addressing needs, or influencing industries.
• Steve Jobs, for example, disrupted the computer industry by creating the personal computer for individual use, not just large organizations.

Characteristics and Attributes of Entrepreneurs (cont.)

• Apple's iTunes revolutionized how music was sold and bought.
• McClelland, with McBer & Co, developed a measure of personal entrepreneurial competencies in Malawi, India, and Ecuador (1985).
• Figure 1.3 shows a sample of the PEC instrument.

Characteristics and Attributes of Entrepreneurs (cont.)

• Table shows personal entrepreneurial competencies (PEC) profiles demonstrating initiative, opportunity recognition, persistence, and others.

Characteristics and Attributes of Entrepreneurs (cont.)

• Common characteristics include creativity, innovation, resourcefulness, strong initiative, dedication, determination, perseverance, calculated risk-taking, adaptability, independence, and self-confidence.

Characteristics and Attributes of Entrepreneurs (cont.)

• Entrepreneurs display strong opportunity orientation, organizational skills, problem-solving abilities, and persuasive communication skills.
• While these are common themes, specific entrepreneurship types may demand different characteristics or combinations.

Types of Entrepreneurship

• Figure 1.4 categorizes entrepreneurship based on activities across different organizational forms. This includes digital, franchise, conventional, cooperative, corporate, public sector, and social entrepreneurship.

Summary

• Entrepreneurs seek, identify, evaluate opportunities, develop business plans, mobilize resources, and execute plans with perseverance to achieve objectives.
• Entrepreneurial activity is crucial for a nation's economic progress through product/service provision, job creation, and improved quality of life.