ENTREPRENEURSHIP

LEARNING OBJECTIVES

•Define entrepreneurship

•Describe the historical perspectives of entrepreneurship

•Explain how entrepreneurial ventures differ from small businesses

•Explain the difference between megaentrepreneur and microentrepreneur

•Characteristics of Entrepreneurs

WHAT IS ENTREPRENEURSHIP?

The process whereby an individual or group of individuals use organized efforts to pursue
opportunities

To create value and grow by fulfilling wants and needs through innovation and uniqueness

The process of designing, launching and running a new business, which typically begins as a
small business, such as start-up company offering a product, process or service for sale or hire.
The people created these businesses are called entrepreneurs.

COMMON THEMES IN DEFINITIONS OF ENTREPRENEURSHIP

•The role of the entrepreneur

•Innovation
•Organization creation
•Creating value
•Profit or Not-for-Profit
•Growth
•Uniqueness
•Process

CURRENT IMPORTANCE OF ENTREPRENEURSHIP

1.Innovation - Process of creating, changing, experimenting, transforming, and revolutionizing

2. Number of New Start-ups - Important because new firms contribute to economic development
through benefits such as product-process innovation

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3. Job Creation - Vital to the overall long-term economic health of communities, regions, and
nations

SMALL BUSINESS AND ENTREPRENEURIAL VENTURES –THE DIFFERENCES

Small Business

•Independently owned, operated, and financed

•has fewer than 100 employees
•doesn’t engage in new or innovative practices
•Has relatively little impact on its industry

Entrepreneurial Ventures

•An organization pursuing opportunities

•Characterized by innovative practices
•Main goals are profitability and growth

ENTREPRENEUR

•Comes from the word “entreprendre” which means “to undertake”

HISTORICAL PERSPECTIVES ON ENTREPRENEURSHIP

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JOSEPH SCHUMPETER

He describe entrepreneur as individuals who have generated substantial value and profits from
innovation in a very short period of time.

MEGAENTREPRENEUR

•Entrepreneurs that are willing to absorb huge risk of using enormous amount of capital in their
business ventures.

•They create a big amount of value added.

•Contributed much in economic progress.

MICROENTREPRENEUR

•Introduces innovation in the form of changes in their production and distribution process, but
their contribution are minimal and attract few competitors and imitators.

•Short in fund and inadequate skills, they cannot undertake projects that involves huge capital,
sophisticated technology and extensive risk.

PETER DRUCKER

•Being an agent of rapid economic progress or being an avenue for exclusive growth.

ENTREPRENEURIAL PROCESS

1. Discovery

2. Development of concept

3. Organizing resources

4. Implementation

5. Reaping the returns

1. DISCOVERY

•Refers to the recognition of a business idea or the detection of opportunities that could make
money for entrepreneur.

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 2. DEVELOPMENT OF BUSINESS CONCEPT

•This gives more details on how general business idea can be realized. It suggest the preparation
of business plan (from production to distribution)

3. ORGANIZING RESOURCES

Describes to process of identifying, sourcing and financing human, non-human and other
resources needed for the conduct of the business
4. IMPLEMENTATION

•The process of carrying out the business plan.

•Includes mechanism for confronting actual and potential rivals as well as for responding to the
various opportunities, challenges and developments.

5. REAPING THE RETURNS

•Pertains to the strategies related to the expansion of the business firm.

CHARACTERISTICS OF ENTREPRENEUR

1. Entrepreneurial traits and Creation of value-added

2. Entrepreneurial traits and Entrepreneurial Intentions

1. ENTREPRENEURIAL TRAITS AND CREATION OF VALUE-ADDED

•Level of Education – seize the opportunities presented by inventions, innovations, and other
technical developments.

•Employment Status – Industrializations

•Entrepreneurs Wealth-Source of Fund

•Risk Appetite –willingness to take risk

2. ENTREPRENEURIAL TRAITS AND ENTREPRENEURIAL INTENTIONS

•Internal Factors-quality of individual such as demographics, personal traits, physical

characteristics, individual skills, prior knowledge, and social ties.

•External Factors–environmental support and environmental influence.

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DEMOGRAPHY

•Refers to the gender, marital status, age, and employment status of individuals who are likely to
form entrepreneurial intentions.

PERSONAL TRAITS

•There are theoretical bases for the contributions of self-confidence, determination and
enthusiasm and other positive human qualities in influencing entrepreneurial intentions.

PSYCHOLOGICAL TRAITS
•Include a host of qualities, including need for achievement, risk appetite, acceptance for
vagueness, self-efficacy, and goal setting.

KNOWLEDGE AND SKILLS

•The knowledge and skills learned from prior employment are valuable in setting up a business.

SOCIAL TIES

•Social connections are also important in building networks that can complement the
productivity of human and non-human resources of business

EXTERNAL FACTORS

1. Environmental support

2. Environmental influence

ENVIRONMENTAL SUPPORT

•Many studies have confirmed the positive effects of government, financial institutions, and
training institutions in setting up business. An individual will be inclined to pursue
entrepreneurship if support from various government agencies are forthcoming.

ENVIRONMENTAL INFLUENCE

•This includes the regulatory structure, patents, protection of property rights, and competitive
environment.

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CHARACTERISTICS OF FILIPINO ENTREPRENEURS

•Filipino engage in entrepreneurship because they see it as an opportunity for income creation
and employment. Likewise they get into business enterprise because of their apparent
capabilities to undertake entrepreneurial activities.

Female are more interested to engage in the early stage of entrepreneurial activities in the
Philippines.

In more advanced stages of entrepreneurial activity, the gender proportion of entrepreneurs
and managers become more even. This implies that the male tend to be more resilient in staying
in business, as female withdraw at the intermediate stage.

In terms of age, entrepreneurship in the country attracts more young individuals.

Entrepreneurship becomes a viable employment option for the young.

In terms of educational attainment, almost half of entrepreneurs in the early stage development
have finished secondary school. However, entrepreneurs that own firms at the mature stage of
entrepreneurship have higher levels of education.

Young Entrepreneurs are interested in consumer services including retail, food, personal beauty
care, appliance and electronic repair, cleaning services, and laundry services.

•A number of Filipino entrepreneurs are also engaged in manufacturing, extractive enterprises

and business services. Business services that include advertising, architecture, consultancy,
microfinance, and others.

ENTREPRENEURIAL DECISION-MAKING

•Types of mental processes that will affect the entrepreneurial decision-making include Critical
thinking, Creative thinking, and Strategic thinking.

CRITICAL THINKING

•Refers to the systematic and rational way of providing an answer to a question. Just like a
scientific inquiry, an answer to a question is preceded by an understanding of the problem,
providing possible answers, and reflecting on the validity of theses tentative answer. It is rational
because it adheres to the rules of logic in connecting the relationships of variables and in making
conclusions.

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CREATIVE THINKING

•Refers to the thought processes that bring about discovery of new ideas. Sometimes, creative
ideas start from a dream, an insight or from a mere observation. The intent of creative thinking is
not to provide an answer but to ask questions that can lead to discovery and change.

STRATEGIC THINKING

•Involves thought processes that assess current situation that can be useful in the formulation of
plans for the future. It is similar to critical thinking since it uses an orderly and logical system in
its assessment but it also resembles creative thinking in its growth and future orientation

RISK, COGNITIVE, ADAPTABILITY, AND ENTREPRENEURIAL DECISIONS

RISK
• Can be describe as uncertain situations and development that can increase the probability of
loss or business failures.

Types of risk: Internal risk and external risk

1. INTERNAL RISK
•Pertain to the danger coming from the management of sources of a business enterprise that may
imperil its operations. For example. Liquidity and financial risks, failure to hire the best talents,
failure to innovate.

2. EXTERNAL RISK

•Threats coming from various environments outside the business firm. These can endanger the
operations and profitability of a firm. Ex. Lethargic economy, increase competition, commodity
price risk, regulatory risk, business interruptions, political risk.

COGNITIVE ADAPTABILITY

•Refers to the ability of individuals to be involve in the process of producing several ways of
decision-making based on the identification and management of changes in their environment. It
requires flexibility and self-control.