ENT211 Lect 1 2024 PDF

1.1 Meaning of Entrepreneurship The concept of entrepreneurship is multifaceted and has evolved over time, with various scholars offering differing definitions and perspectives. There is no single agreed-upon definition among experts, and definitions have shifted with changing times. Understandin...

1.1 Meaning of Entrepreneurship The concept of entrepreneurship is multifaceted and has evolved over time, with various scholars offering differing definitions and perspectives. There is no single agreed-upon definition among experts, and definitions have shifted with changing times. Understanding the evolution of these definitions chronologically can provide clarity to readers. Entrepreneurship has been defined in diverse ways. Aruwa (2006) defines it as the willingness and ability of an individual to seek investment opportunities and successfully establish and operate an enterprise. Penrose (1963) sees entrepreneurship as the identification of opportunities within the economic system. Leibenstein (1968, 1979) describes it as activities necessary to create or operate an enterprise where markets are not well-established or clearly defined, or where parts of the production function are unknown. Gartner (1988) views entrepreneurship as the creation of new organizations. Okpara (2000) defines entrepreneurship as the willingness and ability to identify investment opportunities in an environment and successfully establish and manage an enterprise based on those opportunities. Nwachukwu (1990) considers entrepreneurship a process of recognizing and evaluating business opportunities, gathering necessary resources, and taking appropriate action for success. Summarizing the above definitions, entrepreneurship can be understood as the exploitation of opportunities within a market. It encompasses various activities such as self-employment, organizational creation, innovation in a business context, resource combination, and identification and exploitation of market opportunities. Therefore, any activity involving one or more of these elements can be considered entrepreneurship. It encompasses all processes and activities involved in establishing, nurturing, and sustaining a business enterprise. From a broader perspective, entrepreneurship involves the pursuit of opportunities regardless of current resources (Barringer & Ireland, 2012), benefiting the entrepreneur's welfare through innovative functions (Schumpeter, 1934), transforming ideas into businesses (Wilson, 2004), and dynamic processes of vision, change, and creation (Kuratko, 2008). Key aspects include risk- taking, team formation, resource management, planning, and vision. It involves purposeful activity to profit through goods and services (Cole, 1959), combining resources to create new products or services (Stoner et al., 2009), mobilizing resources to meet customer needs (Jones et al., 2000), and seizing lucrative opportunities (Bateman & Snell, 2011). Entrepreneurship encompasses strategic management activities, innovation, value creation, economic development, and opportunity exploitation, ultimately resulting in the establishment and success of enterprises. 1.2 Who is an Entrepreneur? The concept of an entrepreneur has been defined in various ways by scholars, reflecting the diverse nature of entrepreneurial activities. Di-Masi (2010) defines an entrepreneur as someone who identifies market opportunities and possesses the motivation, drive, and ability to mobilize resources to capitalize on them. Wikipedia (2010) describes an entrepreneur as an individual who owns and assumes significant accountability for a new enterprise, venture, or idea. Knight (1921) views entrepreneurs as individuals who attempt to predict and act upon changes within markets. Business Dictionary (2010) defines an entrepreneur as someone who undertakes the conception, organization, and management of a venture while seeking profit as a reward. Similarly, Eze (2010) sees an entrepreneur as someone with the ability to identify opportunities and mobilize resources to transform ideas into viable businesses. Envick and Langford (2000) characterize an entrepreneur as someone who owns and operates their own business, while Bagby (1998) sees entrepreneurs as individuals who utilize instability, turbulence, or lack to create new products or modify existing ones for profit. Scarborough (2013) defines entrepreneurs as individuals who establish new businesses in the face of risk and uncertainty, aiming for profit and growth by identifying significant opportunities and assembling necessary resources. This perspective emphasizes the creativity and innovation of entrepreneurs, who see and exploit business opportunities within their environments. Additionally, entrepreneurs are described as individuals with the zeal to own their businesses and as those who undertake entrepreneurship activities to build business empires. Furthermore, various scholars offer specific attributes and roles of entrepreneurs: - Schumpeter (1934) portrays entrepreneurs as innovators who introduce new products, services, or business models, driving innovation and value creation. - Shane and Venkataraman (2000) define entrepreneurs as individuals who identify and exploit market opportunities by creatively leveraging resources. - Hisrich and Peters (2002) emphasize an entrepreneur's vision, inspiring leadership, and ability to create value by addressing market inefficiencies. - Kirzner (1973) highlights an entrepreneur's skill in efficiently allocating scarce resources to pursue business opportunities. - Casson (1982) emphasizes an entrepreneur's capability to navigate uncertainty and make decisions under imperfect information. - Gartner (1988) depicts entrepreneurs as pioneers who enter new markets or segments, often facing significant challenges and uncertainties. These perspectives collectively illustrate the multifaceted nature of entrepreneurship and the diverse roles and attributes associated with entrepreneurs. 1.3 Intrapreneurs/Corporate Entrepreneurship Intrapreneurs, also known as corporate entrepreneurs, are individuals who exhibit entrepreneurial behavior and drive within established organizations. When entrepreneurs find themselves unable to establish their own businesses, they may work within organizations as intrapreneurs. These individuals actively seek out and exploit business opportunities within the organization, demonstrating visionary leadership in their roles. Jones, George, and Hill (2000) define an intrapreneur as a manager within an existing organization who identifies opportunities for product improvements and oversees the product development process. This definition is supported by Pinchot (1985), who coined the term intrapreneur to describe innovative employees within businesses. Intrapreneurs perceive new market opportunities, secure resources, and initiate projects to capitalize on these opportunities, contributing to the competitiveness and profitability of the organization. Intrapreneurship, or corporate entrepreneurship, involves fostering an entrepreneurial mindset and activities within organizations. Covin & Slevin (1986) and Burgelman (1983) have contributed to this concept, which emphasizes empowering employees to take initiative, think creatively, and pursue innovative projects to drive organizational growth and competitiveness. Intrapreneurship enables organizations to adapt to change, seize opportunities, and maintain a competitive edge in the market. 1.2 How is Entrepreneur differ from Intrapreneur An entrepreneur is an individual who creates a new venture or starts a business from scratch. They take on the risks associated with bringing together resources to meet society's needs and aim to generate a profit. Entrepreneurs typically operate independently and are responsible for all aspects of their business, from idea generation to execution. On the other hand, an intrapreneur works within an existing organization. While they also pursue the exploitation of business opportunities, they do so within the framework of the organization they work for. Intrapreneurs identify opportunities for innovation and improvement within the organization and take initiative to pursue them, often without the same level of risk or autonomy as entrepreneurs. They contribute to the organization's growth and competitiveness by driving innovation and implementing new ideas within the existing structure. In summary, the main difference lies in the context and scope of their activities: entrepreneurs create new ventures independently, while intrapreneurs innovate and drive change within established organizations. 1.4 Entrepreneurship – Origin The concept of entrepreneurship originates from the French word ‘Entreprendre,’ meaning ‘to undertake,’ ‘to pursue opportunities,’ or ‘to fulfill needs and wants through innovative business ventures.’ This term first emerged in the French lexicon in 1723. It is attributed to Ricardo Cantillon, an Irish banker operating in France, who used ‘Entreprendre’ to describe an economic agent coordinating inputs to produce goods whose sales price was uncertain compared to production costs. J. B. Say, a French economist, later coined the term ‘entrepreneur’ to describe an individual who brought together factors of production to create new wealth. The Oxford English Dictionary officially adopted ‘entrepreneur’ in 1897, defining it as “director or manager of a public musical institution” or someone who organizes entertainments, particularly musical performances. In essence, the term entrepreneur derives from the French notion of “entreprendre,” akin to the English concept of “undertaking,” which, from a business perspective, denotes starting a business. Historically, Schumpeter (1951) suggested that Richard Cantillon was the first to introduce the concept of the entrepreneur in 1755, portraying them as risk-takers. Notably, most scholars delving into the origin of entrepreneurship are economists or historians. However, some argue that Jean-Baptiste Say, an economist, offered a more refined analysis of entrepreneurship in 1821, identifying the entrepreneur as a novel economic phenomenon. 1.5 The Development of Entrepreneurship in Nigeria The development of entrepreneurship in Nigeria has a rich historical background, spanning from pre-colonial times to the post-colonial era. 1.5.1 Pre-Colonial Era: Even before colonization, Nigeria had a thriving entrepreneurial culture. Indigenous people engaged in various economic activities such as farming and craft trades to meet their needs. They cultivated crops like cotton, groundnut, cocoa, cashew, maize, and kola nuts, while also practicing craft trades like pottery making, dyeing, goldsmithing, blacksmithing, and leatherwork. These endeavors highlight the industrious nature of Nigerians even in ancient times. 1.5.2 Colonial Era: During colonial rule, Nigerian entrepreneurs faced challenges as they were often relegated to serving as intermediaries for the colonial masters. They were tasked with collecting and processing cash crops for British companies, which were then exported at low prices. The colonial administration prioritized the interests of expatriates over indigenous entrepreneurship, hindering the development of local industries. Lack of expertise, capital, and fear of competition with foreign products further discouraged entrepreneurship among Nigerians during this period. 1.5.3 Post-Colonial Era: After gaining independence, Nigeria recognized the need to promote indigenous entrepreneurship for economic development. Various policies and initiatives were introduced to support local entrepreneurs and foster the growth of indigenous enterprises. - The Nigerian Enterprise Promotional Act of 1977 reserved certain industries exclusively for Nigerians and mandated minimum levels of indigenous equity participation in others. This legislation aimed to create an enabling environment for local entrepreneurship by providing technical and managerial assistance, as well as access to capital. - Government agencies such as the Nigeria Bank for Commerce and Industry (NBCI), later merged with the Nigerian Industrial Development Bank (NIDB) to form the Bank of Industry (BOI), were established to facilitate the implementation of entrepreneurship development programs and provide financial support to aspiring entrepreneurs. These efforts by the government encouraged Nigerian entrepreneurs to venture into business and explore opportunities within the country. The promotion of indigenous entrepreneurship became a cornerstone of Nigeria's economic development strategy, reflecting a shift towards self-reliance and empowerment of local communities.