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St. Mary’s University CollegeFaculty of BusinessDepartment of ManagementEntrepreneurship and Small Business Management
Starting and operating one’s own business has been becoming an interest area for individualsfrom different stock of life. It may be a man or woman, someone from reach or poor family background, a technologist or someone without sophisticated technological background, acollege graduate or high school dropout. It is a fact that entrepreneurship is the key to solvewhat is known as
dependency syndrome
on salaried employment and unemployment. Increating and growing a new business, any individual (entrepreneur) needs to understand howto create and manage a new venture and its risk and efforts to overcome the inertia againstcreating something new.This material is designed to help you understand different concepts of entrepreneurship andcompetencies in entrepreneurial development and small business management. It also provides you the desired knowledge, skills, and competencies that would enable you to become confident entrepreneurs who are capable to create and innovate important businessideas.The words entrepreneur and entrepreneurship have acquired special significance in thecontext of economic growth in rapidly changing socio-economic and socio-cultural climates both in developed and developing countries. The unpredictable ability of entrepreneurs to turnleads into gold or coal into diamond, which governments have always been excited about the possibility of creating more entrepreneurs in their societies, has made the fieldentrepreneurship and small business promotion as one of the most consistently popular interventions funded by donors and governments alike.With unemployment frightening as the most challenging socio-economic problem of the nextcentury, a renewed focus has been placed on the major part which small business play inemployment creation. The dramatic change in the global political economy in the last decadehas also sharpened governments' interest in small enterprise and entrepreneurs. Seldom hasthere been greater unanimity among countries on the need to use market forces in thesimulation of economic growth. Weather in developing, under developed or developednations, everyone recognizes the need to expand the private sector as the major instrument for increasing income. Entrepreneurs are now held up to be role models and one of the fastestgrowing business has become entrepreneurship education the art of starting and running a business.
 
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Definition and Historical Background of Entrepreneurship or Entrepreneur
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,universally accepted definition has not yet emerged. Not only different people have differentviews of what entrepreneurship is, but also the same people may use different definitionswhen researching entrepreneurship in different economic and social context. The developmentof the theory of entrepreneurship parallels to a great extent the development of the term itself.So, let us discuss the concept of entrepreneurship given at different times by different writerson the subject. The word entrepreneur is derived from the French verb enter prendre, whichmeans to undertake
Earliest period
At the earlier period an entrepreneur was viewed as a go-between, who attempted to establishcontracts with trade routes and signed money persons/forerunners of today's venture capitalist,to sell goods. A common contract during this time provided a loan to the merchant-adventureat a relatively greater interest rate, including insurance. While the capitalist was a passive risk  bearer, the merchant adventure took the active role in trading, bearing all the physical andemotional risks. When the merchant-adventure successfully sold the goods and completed thetrip, the profits were divided with the capitalist taking most of them (up to 75 percent), whilethe merchant-adventure settled for the remaining 25 percent through passage of time.
Middle Ages
In the middle ages, the term entrepreneur was used to describe a person managing large production projects. In the case of large production projects, the person would not take anyrisks but would merely manage the project using the resources provided. A typicalentrepreneur in the middle ages was the cleric - the person in charge of greater architecturalworks, such as castles and fortifications, public buildings, abbeys and cathedrals.
17th Century
The concept of risk in the notion of entrepreneurship had developed in the 17th century, withan entrepreneur being viewed as a person who entered into a contractual agreement withgovernment to perform a service or supply stipulated products. Since the contract price tosupply was fixed, any resulting profits or losses (since the price of raw materials and other cost of production are uncertain) reflected that the entrepreneur was risk taker.
18th Century
An 18th century Irishman named Richard Cantillon who was living in France at the time, iscredited with being the first to use the term "entrepreneur" in a business context. He is alsoregarded as the founder/the father of the term entrepreneurship. Cantillon viewed theentrepreneur as a risk taker, seeing the merchants, farmers, crafts man and other sole proprietors buy products at certain price and sell at uncertain price-therefore, operating at arisk condition
 
3Further more, in the 18th century the entrepreneur role was distinguished from the capital- providing role. A venture capitalist is a professional money manager who invests in a riskyinvestment from pool of equity capital to obtain a high rate of return on the investment.Whereas, an entrepreneur is one who creates and manages his own enterprise as well as onewho assumes all risks related to running the venture.
In the late 19th and early 20th Centuries
In the late 19th and early 20th centuries, entrepreneurs were frequently not distinguished frommanagers and were viewed mostly from an economic perspective. Hess and Ely defined theterm entrepreneur as the one who organizes and operates an enterprise for personal gain. Theentrepreneur contributes his/her own initiative, skill and integrity in planning, organizing andadministering the enterprise. He/she pays prices for the materials consumed in the business,for the use of the land, for personal service he/ she employs, and for the capital he/ sherequires. He/ she also assume the chance of loss and gain consequent to unforeseen anduncontrollable circumstances. Thus, an entrepreneur is both a risk taker and a manger.
In the Middle of 20th Century
According to Joseph Schumpeter, the function of an entrepreneur is to reform or revolutionizethe patter- of production by exploiting an invention, or more generally, an untriedtechnological possibility for producing a new commodity or producing an old one in a newway, opening a new source of supply of materials or a new outlet for products, by organizinga new industry. The concept of innovation and newness are integral part of entrepreneurshipin this definition. Briefly, an entrepreneur is one who innovates, raises money, assemblesinputs, chooses managers and sets the organization going with his ability. But theentrepreneur differs from the mere innovator since he/she innovates something new andconverts into business by investing his/her money and devoting time and& energy.According to this definition, innovation can occur through:i.
 
Introduction of new quality in a product,ii.
 
Development of a new product,iii.
 
Discovery of a fresh demand and a fresh source of supply and,iv.
 
Changes in the organization and managementThe concept of entrepreneurship is further refined when principles and terms from a business,managerial and personnel perspective are considered. In particular the concept of entrepreneurship has been explored in this century.Relatively Recent Definitions
 
In almost all of the definitions of entrepreneurship, there is agreement that we aretalking about a kind of behavior that includes:i.
 
Initiative taking,ii.
 
The organizing and reorganizing of social/economic mechanisms to turn resourcesto practical account, andiii.
 
The acceptance of risk or failure. ... Albert Shapero
 
Karl Vesper has researched entrepreneurship and explained that its nature is amatter of individual perception:
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