Instructor

O Instructor: Amsalu Keno (Assistant Professor)

O Teaching style: Interactive!
O How to contact me:
[email protected]
O Other availability: Immediately after class
 Chapter one

Introduction to Entrepreneurship
O The words entrepreneur and entrepreneurship have
acquired special significance in the context of economic
growth in rapidly changing socio-economic and socio-
cultural climates both in developed and in developing
countries.

O Entrepreneurship is one of the four mainstream

economic factors:
O land, labor, capital and entrepreneurship.
 The word which is derived from French in 17th century
„entreprendre’, refers to individuals who were
“undertakers”, meaning those who “undertook” the risk
of new enterprise.
 They were “contractors” who bore the risk of profit or loss,
and many early entrepreneurs were soldiers of fortune,
adventurers, builders, merchants etc.
 Earlier references to the entrepreneur in the 14th century
spoke about tax contractors- individuals who paid a fixed
sum of money to a government for the license to collect
taxes in their region.
 The concept of entrepreneurship varies from country to
country as well as from period to period and the level of
economic development thoughts and perceptions; a
concise and universally accepted definition has not yet
emerged.
O Example
o In the earliest period:
o An entrepreneur was viewed as the one who attempt to establish trade
routes and signed contracts with many persons (forerunners of today's
venture capitalist) to sell goods. While the capitalist was a passive risk
bearer, the merchant adventure took the active role in trading, bearing all
the physical and emotional risks.

o In the Middle Ages:

o The term entrepreneur used to describe a person managing large
production projects. In this case, the person would not take any risks but
would merely manage the project using the resource provided.

o In the 18th century,

o The Irishman named Richard Cantillon, who was living in France, credited
to being the first to use the term entrepreneur in the business context.
He viewed the entrepreneur as a risk taker, seeing the merchants,
farmers, crafts men, and other sole proprietors buy products at certain
price –therefore, operating at a risk condition.
O Karl Vesper: has researched entrepreneurship and
explained that its nature is a matter of individual
perception.
O

O
O Fundamentally, entrepreneurship is a human creative
act, involved building a team of people with
complementary skills and talents.
O The concept entrepreneurship has wide ranges of
meanings.
O On one extreme, an entrepreneur is a person of very high
aptitude who pioneers change, possessing
characteristics found in only a very small fraction of
population.

O On the other extreme of definition, any one who wants to

work for is considered an entrepreneur.
O And there have been hundreds of
definitions of entrepreneurs in dozens of
books. Such definitions include:

A decision maker whose entire role arises out

of his alertness to previously unnoticed
opportunities (kirzner-1973).

Who uses available resources in novel ways

(Schumpteter-1934).

Is someone who always searches for change,

responds to it, and exploits it as an
opportunity (Peter Drucker).
Robert Hisrich (1985), for example, defined
entrepreneurship in a relatively comprehensive way
as:
 … a process of creating something different with
value by devoting the necessary time, and effort
assuming the accompanying financial,
psychological, and social risks, and receiving the
resulting rewards of monetary and personal
satisfaction.
In almost all of the recent definitions, there is an
agreement that we are talking about a kind of
behavior that includes:
Initiative taking,

 Organizing and reorganizing resources, and

The acceptance of risk or failure, etc.

 Differences b/n Entrepreneurship and Entrepreneur
Entrepreneurship Entrepreneur
O Entrepreneur is a person
O Entrepreneurship can be
described as a process of who starts an enterprise.
setting up an enterprise.
O Entrepreneurship is a O The entrepreneur is the
creative activity. The process actor and
of creation is called entrepreneurship is the
entrepreneurship. act.
O Entrepreneurship is the
attitude of mind to seek O The outcome of the actor
opportunities, take calculated
risks and derive benefits by and the act is called the
setting up a venture. enterprise.
 Entrepreneurship as a process
O Idea Generation(Opportunity Identification)
O Availability of raw materials and Technology(Feasibility Study)
O Corpus fund Creation (Financing
O Purchase and Establishment of Machinery and Other Resources
(Enterprising)
O Registration of Enterprise (Legal Entity)
O Obtaining of No Objection Certificate (Clearance)
Personality Traits of Successful Entrepreneurs
A). Need for Achievement:
B). Willingness to take risk:
C). Self-Confidence:
D). Innovation and creativity:
E). Total commitment:
F). Effective time management:
G). An Ability of leadership:
H). An ability of decision making:
I). Desire for Independency:
O

O
 “Pull' Influence
 Some individuals are attracted towards business
ownership by positive motives such as:
 Independence:
 Market opportunity:
 Financial incentives:
 Community service:
 "Push" influence
 Many people are pushed into founding a new
enterprise by variety of factors including;
 Unemployment:
 Disagreement with previous employer
 Challenge: Overcoming Challenge gives
psychological satisfaction

O Intra-preneurship: (Entrepreneurship within an
existing business structure).
O “. . . the process whereby an individual or a group of individuals, in
association with an existing organization, create a new
organization, or instigate renewal or innovation within that
organization” (Sharma and Chrisman; 1999:18).

O
O Entrepreneurship:
O


O Entrepreneur:
O The entrepreneur combines various factors of production,
processes the raw material, creates utility in the product, and
converts the raw material in to a finished product, organizes the
marketing function and sells the product in the market in order
to earn profit.
O Decision-making and calculated risk bearing:
 While organizing the production function, an entrepreneur plays
a significant role in decision making. Every decision may result in
success or failure. However, the risk is limited and calculated.
O An entrepreneur has an all-round personality:
 An entrepreneur possesses knowledge and insight about the
quality and type of raw materials, machinery, work force and
their behavioral pattern, government machinery, labor laws,
taxation, production process and marketing network.
O


O The entrepreneurs have been broadly classified
according to:



 Entrepreneur according to the type of
business
1). Business entrepreneur;
─ are individuals who conceive an idea for a
new product or services and then create a
business to materialize their idea in to reality.
2). Trading entrepreneur:
─ is one who undertakes trading activities and
is not concerned with the manufacturing.
3). Industrial entrepreneur:
─ is essentially a manufacturer who identifies
the potential needs of the customers and
tailors a product or service to meet the
marketing needs.
4). Corporate entrepreneur:
─ is a person who demonstrates his innovative
skill in organizing and managing corporate
undertaking.

5). Agricultural entrepreneur:

─ is the entrepreneur who undertakes agricultural
activities such as raising and marketing of crops,
fertilizers and other inputs of agriculture through
mechanization, irrigation and application of
technologies for dry land agricultural products.
1.Technical entrepreneur
 is a "Crafts man" with skill in production
techniques.
2. Non-technical entrepreneur
 is a person who is concerned with developing
alternative marketing and distribution strategies
to promote his business.
3. Professional entrepreneur
 is a person who is interested in establishing a
business but does not have interest in
managerial or operating it once it is established.
1. Pure entrepreneur
 is an individual who is motivated by psychological and
economic rewards/personal satisfaction.
2. Induced entrepreneur
 is one who is induced to take up an entrepreneurial
task due to the policy measures of the government
that provides assistance, incentives, concessions and
necessary overhead facilities to start a venture.
3. Spontaneous entrepreneurs
 are persons with initiative, boldness, natural talents
and confidences in their ability, which motivate them
to undertake entrepreneurial activity.
1. First-generation entrepreneur
- starts an industrial unit by innovative skill and
combining different technologies to produce a
marketable product or service.
2. Modern entrepreneur
– is a person who undertakes ventures that go well
along with the changing demand in the market which
suit the current marketing need.
3. Classical entrepreneur
- is a person concerned with customers and
marketing needs through the development of a self-
supporting venture/without an element of growth.
Based on source of capital
1. Private entrepreneurs
─ is when an individual on the basis
of his or her own property start up
a new venture.
2. Collective entrepreneurs
─ when a venture is created in a
grouped based on collective
property or contribution.
─

─
 Given by Danhof
Innovating entrepreneur:
o Innovative entrepreneurs are generally aggressive and
possess the art of cleverly putting the attractive possibilities
into practice.
Imitative entrepreneurs:
o Imitative entrepreneurs are characterized by readiness to
adopt successful innovations inaugurated by successful
innovating entrepreneurs.
Fabian entrepreneur:
o Fabian entrepreneurs are cautions and skeptical in
experimenting change in their enterprises. Such
entrepreneurs are shy, lazy and lethargic.
Drone entrepreneur:
o Drone entrepreneurs are characterized by a refusal to adopt
opportunities to make changes in production formulae even
at the cost of severely reduced returns.
 People start their own business for a variety of reasons:
 Some have a bright idea that they think will
make them rich,
 Others find themselves unemployed and start
their own business to survive;
 Some others are happy when they are their own
boss;
 Others want to make a particular contribution to
their community and can see no other way of
doing it except by setting upon their own
business.
 Generally, even though people start business for various
reasons, the following are considered as the benefits and
limitations of being entrepreneur:
 Role of entrepreneurship in economic
development

O Capital formation:

O Improvement in per capita income:

O Generation of employment

O Balanced regional development

O Improvement in living standards

O Economic independence

O Backward and forward linkages

 Entrepreneurship, creativity, and
innovation
O The entrepreneurial manger is constantly looking for innovations,
not by waiting for a flash of inspirations, but through an organized
and continuous search for new ideas.

O Entrepreneurship is not so much an art that you either have, or

you do not, but rather a practice, which you constantly follow or
you choose to ignore. It thus can be developed and learned;
O its core activity is innovation and a continuous, purposeful search
for new ideas, and their practical applications.
O Innovative activity is a hallmark of entrepreneurship but not
necessarily of the owner-manager.
O Doing things differently is part of entrepreneurs‟ nature. It is how
they create a market opportunity and differentiate themselves
from the competition. Innovation can be based upon many factors
from marketing to technology.
 o There is a great deal of confusion about whether a person is
an entrepreneur or an inventor or if there is any difference
between the two.
O An inventor is an individual;
O who creates something for the first time, highly creative and well-
educated individual with college or often postgraduate degrees;

O having family, education, and occupational experiences that

contribute to creative development and free thinking;

O being a problem solver able to reduce complex problems to simple

ones; having a very high level of self-confidence; being willing to
take risks; and having the ability to tolerate ambiguity and
uncertainty.

O A typical inventor places a high premium on being an achiever,

measuring achievement by the number of inventions developed
and the number of patents granted. An inventor is not likely to view
monetary benefits as a measure of success.
 As indicated in the above profile,
O The inventor differs considerably from an entrepreneur:
O While an entrepreneur falls in love with the organization (the
new venture) and will do anything, including mortgaging
house, spouse, dog, or cat,
O An inventor falls in love with the invention and will reluctantly
(If at all) modify the invention to make it more commercially
feasible.
O To establish a new venture with an inventor, an
entrepreneur often must be brought in, thereby using
the team approach to new venture creation.
THANK YOU