BPM 320

ENTREPRENEURSHIP FOR SMALL BUSINESSES/PROJECTS

The concept of entrepreneurship

The concept of entrepreneurship was first established in the 1700s and its meaning has since
evolved. The concept has a wide range of meaning and hence is a multidimensional in nature. on
one extreme it talks about an entrepreneur (a person of very high aptitude who pioneers change
and who posses’ characteristics found in only a small fraction of the population. on the other
extreme it refers to a person who wants to work for self.
At its roots, the word “entrepreneurship” derived from the French word meaning “to undertake”.
The French economist, Jean-Baptiste Say, who lived at the time of the French Revolution,
invented the term “entrepreneur” to describe someone who unlocks capital tied up in land and
redirects it to ‘change the future’. He was one of the first economists, in fact, to introduce the
idea of change and uncertainty as something normal and even positive.

There is no single definition of term, it all depends on the focus of the one defining it and from
which perspective one looks at it. Some scholars look at entrepreneurship from the economics
view, sociology and psychology; others look at it from the management perspective, while others
look at it from the social perspective, with many equating it to starting one’s own business.

Many definitions of “entrepreneur” and “entrepreneurship” have been put forth over the
years. Here are a few of the more popular ones:
 “Entrepreneurship is the process of bearing the risk of buying at certain prices and selling
at uncertain prices,” (Richard Cantillon, 18th century);

 “Entrepreneurs attempt to predict and act upon change within markets, taking the role in
bearing the uncertainty of market dynamics. Entrepreneurs are required to perform such
fundamental managerial functions as direction and control,” (Frank Knight, 1921); to
knight entrepreneurship is about risk taking and uncertainty bearing.

 “The entrepreneur is the innovator who implements change within markets through the
carrying out of new combinations. The role of entrepreneurship is to assemble and deploy
resources in new combinations that disrupt the otherwise static nature of the market,”
(Joseph Schumpter, 1934);
o to Shumpeter entrepreneurship is a behavior that involves introduction of “ New
Combinations” through:
i. introduction of new products or services
ii. introduction of new methods of production
iii. the opening of new markets
iv. the identification of new sources of supply
v. the creation of new organizations of any industry
“Entrepreneurs innovate. Innovation is the specific instrument of entrepreneurship. It is
the act that endows resources with a new capacity to create wealth. Innovation, indeed,
creates a resource,” (Peter Drucker, 1985).

1
  Entrepreneurship is a kind of behavior that includes initiative taking, the organizing and
reorganizing of social and economic mechanisms (Shapero, 197511)

 Entrepreneurship is the process of doing something new or different so as to create

wealth for one self and to add value to the society (Kao,1995)

 Entrepreneurship is the process of creating something new with value by devoting the
necessary time and effort, assuming the accompanying financial, psychic and social
risks, and receiving the resulting rewards of monetary, personal satisfaction and
independence (Hisrich, Peters and Shepherd, 2005).

These classic definitions give us a sense of the attitudes and skill set of the entrepreneur: risk-
taker, opportunity-discoverer, manager, value-creator, innovator, market disruptor, creative
coordinator

As there are many different definitions of entrepreneurship we can usefully categorize them
according to THREE MAIN ‘DIMENSIONS OF ENTREPRENEURSHIP’, which focus
attention on behaviours, processes and outcomes (see Figure 1-1)

1. Processes undertaken by entrepreneurs

2. Behaviours required of entrepreneurs
3. Outcomes of entrepreneurship

1. Entrepreneurship as Process
These definitions all focus in the first instance on the process of entrepreneurship – what is
involved and why it matters to individuals, organisations and society as a whole.
For example:
 Entrepreneurship is ‘the process of creating something new of value by devoting the
necessary time and effort, assuming the accompanying financial, psychic and social risks,
and receiving the resulting rewards of monetary and personal satisfaction and
independence’ (Hisrich and Peters, 2005).
 Entrepreneurship is ‘the process by which individuals – either on their own or inside
organisations – pursue opportunities without regard to the resources they currently
control’(Stevenson and Jarillo, 1990).
The process dimension centres on the development of a new business or innovation strategy and
the writing of a business plan, activities that are sometimes viewed as surrogate for the
entrepreneurship process itself.

2. Entrepreneurship as Behaviours
These definitions highlight the role of particular individuals (the entrepreneurs) with specific
behaviours which set them apart from others.
For example:
 Entrepreneurship is ‘the manifest ability and willingness of individuals, on their own,
in teams, within and outside existing organizations, to perceive and create new economic
opportunities (new products, new production methods, new organizational schemes and

2
 new product–market combinations) and to introduce their ideas in the market, in the face
of uncertainty and other obstacles, by making decisions on location, form and the use of
resources and institutions’ (Wennekers and Thurik, 1999)
.
3. Entrepreneurship as Outcomes
These definitions focus on the results of entrepreneurship (as a process or set of behaviours).
Outcomes are usually understood in terms of new products and services, innovation, new
ventures and/ or the creation of value for society.
For example:
 Entrepreneurship is ‘the introduction of new economic activity that leads to change in
the market place’ (Simon in Sarasvathy, 1999).
 Entrepreneurship is ‘the creation of new organisations’ (Gartner, 1988).
 Entrepreneurship ‘results in the creation, enhancement, realisation and renewal of value
not just for the owners but for all participants and stakeholders’ (Timmons and Spinelli,
2004)

PERSPECTIVES OF ENTREPRENEURSHIP
The perspectives reflect the three (3) dimensions of
entrepreneurship already introduced. They include;
1. The functional perspective
This is explained by the activities and behaviors/characteristics
of entrepreneurs. It conceptualizes entrepreneurship in terms of
the entrepreneur interaction with his or her environment.
Entrepreneurs are agents of change who change the existing
way of doing things in order to create new and novel items
2. The personality perspective
This perspective holds that certain individual possesses
distinctive range of personality characteristics or constellation
of traits which predisposes them towards entrepreneurial
activities.
These characteristics include:
o High need for achievement
o Internal locus of control
o Risk taking propensity
o Self efficacy
3. The behavioral perspective
This perspective emphasizes the process-based view of new
venture creation. It explains the functions, activities and actions
3
 associated with the perceiving of opportunities and the creation
of an organization to pursue the opportunities. It focuses on
what entrepreneurs do endorsing the view that the most
important drivers of value creation is the enterprise, the
creativity of individuals and the assets which the individuals
own.The dynamic learning perspective
This perspective considers the complex way in which
entrepreneurs learn to adapt as their enterprises grow. It focuses
on the role of entrepreneurship in established and larger firms.
It considers the theory of entrepreneurship as one that requires
learning because the entrepreneur requires knowledge to detect
and correct errors posed as the venture grows.
4. Entrepreneurship as new venture creation
Entrepreneurship is associated with setting up new businesses.
New venture creation is seen as an outcome of
entrepreneurship. It involves alertness and able to make creative
judgments that bring about the preferred outcomes.
5. Entrepreneurship as opportunity identification, evaluation
and exploitation
This leads to new goods & services, new methods of doing
things, and new systems. The perspective sees entrepreneurship
as a mind-set for bringing about sustainable change.
6. The Dynamic Learning Perspective
The dynamic learning perspective goes beyond the start-up phase to
consider the complex ways in which entrepreneurs learn to adapt as their
enterprises grow
Entrepreneurship as a discipline and a field of study
- Entrepreneurship as an emerging enquiry is interrogated and the rationale
for engaging in entrepreneurial studies discussed through several
consolidated findings.
- it has its own body of theories, principles that guide it and its research
leads to creation of new knowledge
As an emerging discipline
 its field of academic inquiry has grown to feature substantive curricula filled
with rigorous courses that have been refined over years

4
  it has incorporated the best teaching practices and even PhD programmes are
being offered on the field
 it has a solid foundation deeply rooted in entrepreneurship education
 it is benefiting from an improved educational infrastructure consisting of an
increased educational centres and innovation hubs
 it has a body in charge of research work eg journal of entrepreneurship and
innovation
 there is increase in the number of institutions and organizations engaged in delivering
meaningful entrepreneurial outcomes in different contexts

Criteria for determining what constitutes a high quality

entrepreneurship programme
i. Education Pilot Criteria for Malcom quality awards
1. leadership, information and analysis
2. strategic & operational planning
3. human resource development & management
4. Educational & business process management
5. School performance results
6. Student focus
7. Student & stakeholder participation
ii. ranking University Entrepreneurship programme criteria
1. course offered
2. faculty publications
3. impact on community
4. alumni exploits
5. innovations
6. alumni start-ups
7. outreach to scholars

Rational for engaging in entrepreneurial studies

1. universities as facilitators of an entrepreneurial culture
A strong focus on entrepreneurship will spill-over to even non
business students and help foster an entrepreneurial culture. This is
relevant where students with a core set of skill in different
disciplines like engineering, art, design and tourism etc are now

5
 able to appreciate entrepreneurial opportunities within their
domain of expertise

2. universities as mediators of skills

Entrepreneurship students pursuing an entrepreneurial career are
equipped with a set of skills that will help them identify viable
business ideas and provide them with practical approach to
entrepreneurship
3. entrepreneurial course
Courses in entrepreneurship may compliment general education for
a broad range of students or serve as a specialist course for group
of entrepreneurship students

4. universities as Locomotives of regional business development

Strong focuses on entrepreneurship will likely boost university
relations with other stakeholders in the entrepreneurial field and
facilitate creation of regional policies and favorable
entrepreneurship infrastructure

Entrepreneurship as an established discipline

Criteria used to judge a field as an established discipline
1. the field must be distinguishable
McClelland introduced the concept of need for achievement to
distinguish and give identity to entrepreneurship
2. the field must have a systematic theory and an established body of
literature
ie it should involve scholarly examination of how, by whom and
with what effect opportunities to create future goods/services are
discovered , evaluated and exploited
3. the field must have and established authority and professional
association formal disciplines are characterized by professional
associations operating through networks of formal and informal
groups.
NATIONAL BENEFITS OF ENTREPRENEURSHIP
EDUCATION
6
The socio-economic status of self- employment as acareer alternative
will be upgraded.