INTRO TO ENTREPRENEURSHIP

Entrepreneurship - are the person who undertake entrepreneurial activities; recognizes an economic
need, thinks of a business solution, undertake to assemble the required resources,
- Known to be humankind’s most powerful economic force and assumes the risk of either failing or succeeding.
- Empowers individuals to seek opportunity - are innovators, willing to take risks and generate new ideas to create unique and
- A symbol of achievement and business tenacity potentially profitable solutions to modern-day problems.
- A fundamental source of change in all facets of society and a key to economic
development Entrepreneurship

Objectives - the process of creating something new, be it a product or a service, and assuming
the risks and rewards.
1. Understand the relevance of entrepreneurship - It also refers to economic activity of a person or an organization who starts,
2. Concept of entrepreneur and entrepreneurship manages and assumes the risk of business enterprise.
3. Identify the factors affecting entrepreneurship - ranges in scale from solo projects (even involving the part-time entrepreneur) to
4. Explain the core competencies in entrepreneurship major undertakings that create many job opportunities (De Guzman,2018).
Vocabulary list - employs what Schumpeter called the “gale of creative destruction” to replace
wholly or partly inferior innovation across markets and industries. This
1. Intrapreneurship – activities that occur within a firm or large organization which destruction simultaneously creates new products and new business models.
includes corporate venturing, when large entities spin off organizations - A process of actions of an entrepreneur who is always in search of something new
2. Entrepreneur to exploit new ideas into gainful opportunities by accepting the risk and
a. From the French word entre prendre means “to undertake” uncertainty of the enterprise.
b. Refers to an individual or group of individuals that act independently, or - It is the process involving various actions to be undertaken by the entrepreneur in
as part of a corporate system, that create organizations or instigate establishing a new enterprise.
renewal or innovation within an existing one - Employs the “Gale of Creative Destruction” by Schumpeter. It creates new
c. Also, refers to those innovators who “undertake” the risk of new products and few business models.
enterprises and generate new ideas to create unique and potentially
profitable solutions to modern-day problems Factors Affecting Entrepreneurship
3. Entrepreneurship - An economic activity of an entrepreneur who is always in - 2 factors: Environmental & Personality Factors
search of something new to exploit new ideas into gainful opportunities by
accepting the risk and uncertainty of the enterprise. 1. Environmental factors
4. Enterprise - A business or an establishment created by an entrepreneur. 2. Personality Factors
Entrepreneurship in relevance a. Drive
b. Critical thinking
1. Development of managerial capabilities c. Human relations ability
2. Creation of organizations d. Ability to communicate
3. Improving standard of living e. Technical knowledge
4. Means of economic development f. Reasonable risk taker
g. Self-confident
Learning the Concepts
h. Goal setter
Entrepreneurs i. Accountable
j. Innovative
INTRO TO ENTREPRENEURSHIP

3. Biological factor o In present day, entrepreneur has become closely linked with free
enterprise and capitalism
Core Competencies in Entrepreneurship
o Entrepreneurs serve as agents for change, provide creative,
1. Economic and dynamic activity innovative ideas for business enterprise, and help businesses grow
2. Innovation and become profitable
3. Profit potential  The necessity of entrepreneurship for production was first formally
4. Risk bearing recognized by Alfred Marshall in 1890. In his famous treatise Principles of
Economics, Marshall asserts that there are four factors of production:
Gale of creative destruction land, labor, capital, and organization.
- New productive unit o Organization is the coordinating factor, which brings the other
- New combination factors together, and Marshall believed that entrepreneurship is the
- Joseph Schumpeter's gales of creative destruction’ shows how innovation is driving element behind organization. By creatively organizing,
creative and beneficial, bringing new industries, wealth, and employment, and at entrepreneurs create new commodities or improve "the plan of
the same time is destructive of some established firms, many products and jobs, producing an old commodity" (Marshall, 1994). In order to do this,
and the dreams of failed entrepreneurs. Innovation is essential for competitive Marshall believed that entrepreneurs must have a thorough
survival. Most innovations are incremental improvements — ideas used in new understanding about their industries, and they must be natural
models of existing products and services, or adjustments to organizational leaders. Additionally, Marshall's entrepreneurs must have the ability
processes, but most attempts at innovation fail. Organizations rarely innovate to foresee changes in supply and demand and be willing to act on
alone: they do so in association with others, including their suppliers and such risky forecasts in the absence of complete information
customers. The various models and theories of innovation are discussed, (Marshall, 1994).
concluding that understanding the time dimension in innovation is critical.

Historical Development of Entrepreneurship - Over the next century, British economists such as Adam Smith, David Ricardo,
 Earliest usage of the term was in 17th century and John Stuart Mill briefly touched on the concept of entrepreneurship, though
o Used in military to mean the one who leads military missions they referred to it under the broad English term of "business management."
- Whereas the writings of Smith and Ricardo suggest that they likely undervalued
o No single definition of entrepreneur exists
the importance of entrepreneurship, Mill goes out of his way to stress the
 Recognition of entrepreneurs dates back to 18th century France
significance of entrepreneurship for economic growth. In his writings, Mill claims
o Introduced by French economist Richard Cantillon, he defined the
that entrepreneurship requires "no ordinary skill," and he laments the fact that
entrepreneur as “the agent who buys means of production at certain there is no good English equivalent word to encompass the specific meaning of
prices in order to combine them” into a new product. the French term entrepreneur (Schumpeter, 1951).
o French economist J.B. Say added to Cantillon's definition by - Like Mill, Marshall suggests that the skills associated with entrepreneurship are
including the idea that entrepreneurs had to be leaders. Say claims rare and limited in supply. He claims that the abilities of the entrepreneur are "so
that an entrepreneur is one who brings other people together in order great and so numerous that very few people can exhibit them all in a very high
to build a single productive organism degree" (1994).
 Until 1950, the majority of definitions and references came from economists - Marshall, however, implies that people can be taught to acquire the abilities that
 Robert C. Ronstadt: Entrepreneurship is the dynamic process of creating are necessary to be an entrepreneur. Unfortunately, the opportunities for
incremental wealth entrepreneurs are often limited by the economic environment which surrounds
them. Additionally, although entrepreneurs share some common abilities, all
INTRO TO ENTREPRENEURSHIP

entrepreneurs are different, and their successes depend on the economic situations Although many economists accept the idea that entrepreneurs are innovators, it can be
in which they attempt their endeavors (Marshall, 1994). difficult to apply this theory of entrepreneurship to less developed countries (LDCs). Often
- Since the time of Marshall, the concept of entrepreneurship has continued to in LDCs, entrepreneurs are not truly innovators in the traditional sense of the word. For
undergo theoretical evolution. For example, whereas Marshall believed example, entrepreneurs in LDCs rarely produce brand new products; rather, they imitate
entrepreneurship was simply the driving force behind organization, many the products and production processes that have been invented elsewhere in the world
economists today, but certainly not all, believe that entrepreneurship is by itself (typically in developed countries). This process, which occurs in developed countries as
the fourth factor of production that coordinates the other three (Arnold, 1996). well, is called "creative imitation" (Drucker, 1985) The term appears initially paradoxical;
Unfortunately, although many economists agree that entrepreneurship is necessary however, it is quite descriptive of the process of innovation that actually occurs in LDCs.
for economic growth, they continue to debate over the actual role that Creative imitation takes place when the imitators better understand how an innovation can
entrepreneurs play in generating economic growth. One school of thought on be applied, used, or sold in their particular market niche (namely their own countries) than
entrepreneurship suggests that the role of the entrepreneur is that of a risk-bearer do the people who actually created or discovered the original innovation. Thus, the
in the face of uncertainty and imperfect information. Knight claims that an innovation process in LDCs is often that of imitating and adapting, instead of the
entrepreneur will be willing to bear the risk of a new venture if he believes that traditional notion of new product or process discovery and development.
there is a significant chance for profit (Swoboda, 1983).
- Although many current theories on entrepreneurship agree that there is an inherent
component of risk, the risk-bearer theory alone cannot explain why some As the above discussion demonstrates, throughout the evolution of entrepreneurship theory,
individuals become entrepreneurs while others do not. For example, following different scholars have posited different characteristics that they believe are common
from Knight, Mises claims any person who bears the risk of losses or any type of among most entrepreneurs. By combining the above disparate theories, a generalized set of
uncertainty could be called an entrepreneur under this narrow-definition of the entrepreneurship qualities can be developed. In general, entrepreneurs are risk-bearers,
entrepreneur as the risk-bearer (Swoboda, 1983). Thus, in order to build a coordinators and organizers, gap-fillers, leaders, and innovators or creative imitators.
development model of entrepreneurship it is necessary to look at some of the other Although this list of characteristics is by no means fully comprehensive, it can help explain
characteristics that help explain why some people are entrepreneurs; risk may be a why some people become entrepreneurs while others do not. Thus, by encouraging these
factor, but it is not the only one. qualities and abilities, governments can theoretically alter their country's supply of
- Another modern school of thought claims that the role of the entrepreneur is that domestic entrepreneurship.
of an innovator; however, the definition of innovation is still widely debatable.
Kirzner suggests that the process of innovation is actually that of spontaneous
"undeliberate learning" (Kirzner, 1985, 10). Thus, the necessary characteristic of
the entrepreneur is alertness, and no intrinsic skills-other than that of recognizing
opportunities-are necessary.
- Other economists in the innovation school side more with Mill and Marshall than
with Kirzner; they claim that entrepreneurs have special skills that enable them to
participate in the process of innovation. Along this line, Leibenstein claims that
the dominant, necessary characteristic of entrepreneurs is that they are gap-fillers:
they have the ability to perceive where the market fails and to develop new goods
or processes that the market demands but which are not currently being supplied.
Thus, Leibenstein posits that entrepreneurs have the special ability to connect
different markets and make up for market failures and deficiencies. Additionally,
drawing from the early theories of Say and Cantillon, Leibenstein suggests that
entrepreneurs have the ability to combine various inputs into new innovations in
order to satisfy unfulfilled market demand (Leibenstein, 1995).