Entrepreneurship and Project Management

Why entrepreneurship education?

Entrepreneurs are not "born" they "become" through the experiences of their lives. Entrepreneurs have a great diversity of personal characteristics, the common one: being willing to take a risk in return for a profit. Anyone can be an entrepreneur at any time of one's life. Entrepreneurship Education enables to understand the operations of a business and the problems of the employers and to be more successful as a result of this understanding. Entrepreneurs are found in every occupation or career cluster.

Foundation for the entrepreneurship education

Although there is no educational degree requirement to become an entrepreneur History has shown that most of the successful entrepreneurs did not hold high degrees or specifically a degree in entrepreneurship. Not every one is born with traits of Entrepreneurs It is helpful to develop good support skills to ensure success including
Communication skills, interpersonal abilities, economic understanding, digital skills, marketing, management, and math/finance skills.
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A Lifelong Learning Process

Solve business problems effectively Expand existing business Become self employed Develop procedures for a new or existing business

Stage V

Stage IV Job Training & Education

Job Experience Stage III

Learn entrepreneurship competencies Apply specific occupational training Learn how to develop new business Discover entrepreneurship competencies Understand problems of employees

Stage II

Stage I

Gain Prerequisite skills Identify career options Understand economics

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Entrepreneurship
Entrepreneurship may be defined as searching and discovering opportunities; innovating new methods / techniques / products /processes / markets; collecting and investing financial resources; mobilising, motivating and coordinating other productive resources; taking ultimate responsibility for management and providing leadership.

Entrepreneurship
Entrepreneurship is an economic, technological and social - cultural phenomenon It is reflection of economic activities in an economy. It shows
Level of investment Employment generation Capacity building Economic growth
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Entrepreneurship
It depends upon technology and it boosts technology
Direct link between technology and innovation and investment Each promotes the other: together they form a virtuous circle and lack of either creates a void in the circle.
Technology

Investment

Innovation
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Entrepreneurship
Significantly affected by social and cultural milieu.
In every society masses seek employment for certain returns and only few dare to create employment. Many societies are entrepreneurial by nature; while some are very risk aversive.

Who can be an entrepreneur?

Risk-taker Achievement oriented Non-conformist Strong leader Tough minded Self-confident
      

Flexible Goal-setter Enthusiastic Optimistic Resourceful Independent Hard working

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Who can be an entrepreneur?

ENTREPRENEURS BEHAVE DIFFERENTLY BECAUSE THEY...
Risk their own money Must find customers to survive Organize their own work Are vulnerable to economic change Have income that varies with market success Make all the final decisions Need a wide range of management skills Handle diverse activities at the same time Depend on their own ability to market and sell Are open to change as a necessity of existence
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What constitutes Entrepreneurship

All Aspects of the Industry
Nature of Business Types of Ownership Global Markets Business Opportunities The Business Plan Financing the Business Legal Issues Location
       

Operations Marketing Analysis Promotion, Selling Pricing Strategy Human Resources Financial Analysis Customer Credit Risk Management

Entrepreneurship: Theoretical Evolution

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Theoretical Evolution
The study of entrepreneurship reaches back to the work of Richard Cantillon and Adam Smith in the mid-16th century, but was largely ignored theoretically until the late 19th and early 20th centuries and empirically until a profound resurgence in business and economics in the last 40 years.

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Early concepts
Richard Cantillon (1755)
First to use the term entrepreneurship Explained entrepreneur as speculative Middlemen

Cantillon, J. B. Say (1803) and Casson say the entrepreneur is an organiser of factors or production that acts as a catalyst for economic change.
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Risk Taking
Frank H. Knight (1921)
Entrepreneurship is about taking risk In an uncertain world entrepreneur provides responsible direction to economic life

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Risk Taking
Knight classified three types of uncertainty.
Risk, which is measurable statistically (such as the probability of
drawing a red colour ball from a jar containing 5 red balls and 5 white balls).

Ambiguity, which is hard to measure statistically (such as the

probability of drawing a red ball from a jar containing 5 red balls but with an unknown number of white balls).

True Uncertainty or Knightian Uncertainty, which is impossible to estimate or predict statistically (such as the
probability of drawing a red ball from a jar whose number of red balls is unknown as well as the number of other coloured balls).
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Risk Taking
According to Knight the acts of entrepreneurship is often associated with true uncertainty, particularly when it involves bringing something really novel to the world, whose market never existed. However, even if a market already exists, there is no guarantee that a market exists for a particular new player in the category.

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Risk Taking
Knight divided economically active population on basis of specialised income and nature of income.
Category
Entrepreneurs (few in number)


Function
Buys inputs at fixed price Sells output at uncertain price


Income
Residual income Uncertain profit

Labour (Masses)

Provides Guaranteed fixed productive services income/wages to entrepreneur

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Innovator and Change Agent

Joseph Schumpeter (1934)
Macro economic perspective Entrepreneur is an innovator, one that introduces new technologies into the workplace or market, increasing efficiency, productivity or generating new products or services Innovator reaps supernormal profits until imitators enter and force price-cost conformity

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Innovator and Change Agent

Joseph Schumpeter, saw the entrepreneur as innovators An entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation. He popularized the uses of the phrase Creative Destruction to describe his view of the role of entrepreneurs in changing business norms. Creative destruction deals with the changes entrepreneurial activity makes every time a new process, product or company enters the market. Disturbs economy s circular flow of income and establishes new equilibrium.
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Innovator and Change Agent

Entrepreneur employs Creative destruction to replace in whole or in part inferior innovations across markets and industries, simultaneously creating new products including new business models. In this way, creative destruction is largely responsible for the dynamism of industries and long-run economic growth. Entrepreneurship results in new industries but also in new combinations of currently existing inputs.

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Innovator and Change Agent

Schumpeter's initial example was the combination of a steam engine followed by wagon making technologies to produce the horseless carriage. In this case the innovation, the car, was transformational but did not require the development of a new technology, merely the application of existing technologies in a novel manner. It did not immediately replace the horsedrawn carriage, but in time, incremental improvements which reduced the cost and improved the technology led to the complete practical replacement of beast drawn vehicles in modern transportation.
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Change Agent
Peter Drucker (1970)
Combined the views of Knight and Schumpeter Entrepreneurs create some thing new, something different Change or translate values for uncertain returns The behavior of the entrepreneur reflects a kind of person willing to put his or her career and financial security on the line and take risks in the name of an idea, spending much time as well as capital on an uncertain venture.

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Market facilitator
Casson (1982, 1990)
Entrepreneur is one who specialises in judgmental decisions about the coordination of scarce resources.
Either by being better informed Or by having greater insight

There are obstacles associated with introduction of any form of innovation and the corresponding market making activities require to overcome them. These market making activities need considerable efforts while payoffs are uncertain.

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Market facilitator
The term entrepreneur applies to someone who creates value by offering a product or service, by carving out a niche in the market that may not exist currently. Entrepreneurs tend to identify a market opportunity and exploit it by organizing their resources effectively to accomplish an outcome that changes existing interactions within a given sector.

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Market facilitator
Obstacles to market
No contact between buyer and seller No knowledge of reciprocal wants No agreement over price No confidence that goods correspond to specifications No confidence that restitution will be made for default

Market making activities

Contact making via search and advertisement Communication of specification of trade to each party Negotiation Monitoring (screening quality, measuring quantity, timing delivery) Enforcement
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Market facilitator
Realistic possibilities of entrepreneurship when:
Individuals have least risk averse attitude Have access to highly specialised information Access to financial, human and other resources Market credibility/family support Adequate technical and negotiating skills

All these not randomly distributed or found in many individuals Not necessarily owner-manager (small scale) firm.
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Governance structure
Coase (1937)
High transaction costs involved in making markets hence firm could act as least cost coordinator of factor inputs.

Williamson (1979, 1981, 1985)

Certain types of transactions offer greater scope of opportunism than others. Efficiency in terms of nature and costs of organising transactions vary with different organisational arrangements.

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Governance structure
Scope of opportunism and the most appropriate organisational forms for controlling it related to three attributes:
Asset specificity Uncertainty frequency

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Asset specificity
Highly specialised: no alternative use available
Thinly traded Investment locked in; irreversible

Owner of the asset gains additional advantage by being first mover

Market opportunity created

Entrepreneur requires to internalise the asset to minimise opportunism

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Uncertainty
Due to bounded rationality Inability to make detailed plans Difficulty in drawing, implementing and monitoring a contingency plan Flexible and evolving structure to control opportunism

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Frequency
Greater the frequency of transaction greater the need for monitoring Investment in sophisticated monitoring and control system Objective is to reduce bargaining cost

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Individual characteristics
McClelland (1961):
Need for achievement (nAch)
drive to excel, to succeed.

Need for power (nPow)

desire to command people

Need for affiliation (nAff)

need for friendship and closeness

Entrepreneurs have high score on all of the three needs

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Individual characteristics
Chell (1991)
Entrepreneur is an opportunistic, adventurous, ideas person, innovator with a tendency to adopt a broad financial strategy

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Socio-economic Background
Burrows and Curran (1991): many background
factors responsible Findings show following results
Age groups of 35-44 and post 65 more likely to be entrepreneur Family background Ethnic origin Social marginalisation Impact of education not certain as it works with many other factors, like employment alternatives and industrial sector needs.
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Situational factors
Mason (1991); Storey and Strange (1992)
Personal characteristics and socio-economic background determine latent entrepreneurship Environment opportunities/constraints critical in turning this latency into reality Basic economy of a region is important creating pull and push factors Labour market prospects Public policy measures Industrialisation Unemployed workers are pushed into self employment due to need for survival Prosperous persons are pulled into self employment by opportunities

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Types of Entrepreneurs
Self-Employed: owner-manager type Inventors: first movers/trend setters Pattern Multipliers: imitators, late entry Economy of Scale Operators: serving masses, cost leaders Acquirers: strategists Speculators: windfall gainers
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New concepts
Intrapreneur Technopreneur E-entrepreneur Social entrepreneur Edupreneur Academic Entrepreneur Serial entrepreneur
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