ENTREPRENEURSHIP

MODULE 1. Origin and Nature of Entrepreneurship (Week 1)

I. Introduction:
The concept of Entrepreneurship has gone through an evolution or process that
commenced with providing service in feudalistic society. Even in its early beginning or inception,
there was no indication that Entrepreneurship or Entrepreneurism was not purely business
activity with a profit as the primary motive or purpose. From the service orientation, it has
evolved into a kind of endeavor still without definite bias as to whether an entrepreneur exist in
the business that is purely meant for personal gain (profit) or simply providing service in general.
Entrepreneurship plays an important role in the creation and growth of businesses, as
well as in the growth and prosperity of the nations. These large-scale outcomes can have quite
humble beginnings; entrepreneurial actions begin at the link of a lucrative opportunity and an
enterprising individual. Entrepreneurial opportunities are “those situations in which new goods,
services, raw materials, and organizing methods can be introduced and sold at greater than their
cost of production. For example, an entrepreneurial opportunity could stem from introducing an
existing technological product used in one market to create a new market. Alternatively, an
entrepreneurial opportunity could be creating a new technological product for an existing market
or creating both a new product/service and a new market. The recurring theme is that an
entrepreneurial opportunity represents something new. However, such possibilities require an
enterprising individual or a group of enterprising individuals to recognize, evaluate, and exploit
these situations as possible opportunities. Therefore, entrepreneurship requires action—
entrepreneurial action through the creation of new products/processes and/or the entry into
new markets, which may occur through a newly created organization or within an established
organization.

Entrepreneurs act on what they believe is an opportunity. Because opportunities

exist in (or create and/or generate) high uncertainty, entrepreneurs must use their judgment
about whether or not to act. However, doubt can undermine entrepreneurial action. Therefore,
a key to understanding entrepreneurial action is being able to assess the amount of uncertainty
perceived to surround a potential opportunity and the individual’s willingness to bear that
uncertainty. The individual’s prior knowledge can decrease the amount of uncertainty, and his
or her motivation indicates a willingness to bear uncertainty.
II. Learning Objectives:
At the end of the lesson the student will be able to:

a. Define the origin and nature of Entrepreneurship

b. Analyze the innovation process of Entrepreneurship

c. Explain the impact of Entrepreneurship on the growth of the economy

d. Define the contemporary views on Entrepreneurship

III. Lesson Proper

Origin of Entrepreneurship

 Entrepreneur or Entrepreneurship originated in Europe sometime in the Middle

Ages.
 Entrepreneur originated from the French word Entreprendre which means to
undertake.
 Entrepreneurship is the ability of the individual to determine and come up with
the proper combination of the resources available in his environment and
transform this into an output of either goods or services, and obtain a fair profit
at the price the entrepreneur sets.

Evolution of the term Entrepreneurship

Below is a summary of various economist’s view of entrepreneurship, including

the year they conceptualized this view.

Contributor and Year of Contribution Contribution to Entrepreneurship Thought

Jean Baptiste Say (1800)
Carl Menger (1871)
Joseph Schumpeter (1910)
Harvey Liebenstein (1970)
Israel Kirzner (1975)
Albert Shapiro (1975)
Entrepreneurship refers to the shifting of
economic resources out of an area of lower
and into higher productivity and greater yield
Entrepreneurship involves obtaining
information, calculation, an act of will and
supervision
Entrepreneurship is, in its essence, the
finding and promoting new combinations of
productive factors.
Entrepreneurship is a reduction of
organizational efficiency
Entrepreneurship is the identification of
market arbitrage opportunities.
Entrepreneurship involves a kind of behavior
that includes initiative taking, organizing and
recognizing social mechanism to turn
resources and situation to practical account,
and the acceptance of risks and failures.
Karl Vesper (1980)
W.Ed Mc Mullan and Wayne A. Long
(1990)
Howard Stevenson (1992)
Jeffrey Timmons (1994)
Peter Drucker (1998)
Robert Hisrisch (2001)
Development of the word Entrepreneur
Contributor and Year of Contribution
Earliest Period
Middle Ages
17th Century
Richard Cantillon (1725)
Beaudeau (1797)
Francis Walker (1876)
Frank Knight (1921)
Entrepreneurship is the dynamic process of
creating incremental wealth.
Entrepreneurship is the building of new
growth organization
Entrepreneurship is the pursuit of
opportunity beyond the resources currently
under one’s control.
Entrepreneurship is the ability to create and
build a vision from practically nothing.
Entrepreneurship is the process of starting
one’s own, new and small business. It is also
the process of innovation and new venture
creation through four (4) major dimensions-
individual, organizational, environmental,
process – aided by collaborative networks in
government, education and institution.
Entrepreneurship involves the creation
process, requires the devotion of the
necessary time and effort, assumes the
accompanying financial, psychic and social
risks, and receives the resulting rewards of
monetary and personal satisfaction and
independence.
Contribution to the definition of
Entrepreneurship
An entrepreneur as a go-between, like the
transaction done by Marco Polo.
An entrepreneur is an actor and a person in
charge of a large scale production projects.
A person bearing risks of profits (loss) in a
fixed price contract with the government.
A person bearing risks is different from the
one supplying the capital.
A person bearing risks, planning supervision,
organizing and owning.
An entrepreneur is either one who supplies
funds and receives interest, or one who
received profits from managerial capabilities.
An entrepreneur is a manager responsible for
direction and control who bears uncertainty.
Joseph Schumpeter (1934)
Edith Penrose (1959)
David McClelland (1961)
Peter Drucker (1964)
Albert Shapiro (1975)
Donald Kuratko (1995)
Peter Drucker (1998)
Robert Hisrisch (2001)
Carol Moore
An entrepreneur is an innovator and develop
untried technology.
A person with managerial capabilities
separate from an entrepreneur’s capabilities
and able to identify opportunities and
develop small enterprise.
An entrepreneur is energetic, and a
moderate risk taker.
An entrepreneur is someone who maximize
opportunities.
An entrepreneur takes initiative, organizes
some social economic mechanisms and
accepts risk of failure.
The entrepreneur is one who organizes,
manages and assumes risk of business.
One who starts his own new and small
business.
The entrepreneur is an innovator. His
function is to reform or revolutionize the
pattern of production by exploiting an
invention or more generally an untried
technological possibility for producing a new
commodity or producing an old one in a new
way.
An entrepreneur is someone who perceives
an opportunity and creates an organization
and pursue it.

Entrepreneurship as a Process and Approach

Entrepreneurship is also described by renowned scholars as a dynamic process

and approach.

Approach

The entrepreneur considers the business opportunity as a chance to solve the problem
rather than solving the problem itself. A striking difference between a traditional
manager and entrepreneurial manager is the bias towards growth and expansion
scenario.
 Process

Albert Shapero pointed out that entrepreneurship is a dynamic process of innovation

and new venture creation through the five major dimensions individuals, organizations,
environment, process and institutions.

Socio-economic benefits of Entrepreneurship

Early economists recognized the essential role of the entrepreneur in ensuring the
welfare of free enterprise economic system.
Today, entrepreneurs play a major role as a provider of employment for the
entrepreneur himself and his immediate environment.
The following are the socio-economic benefits of entrepreneurship:

1. Promotes self-help and unemployment

2. Mobilizes capital
3. Provides taxes to economy
4. Empower individuals
5. Enhance national identity and pride
6. Enhance competitive consciousness
7. Improves quality of life

Entrepreneurs and their impact on jobs and economic growth

https://wol.iza.org/articles/entrepreneurs-and-their-impact-on-jobs-and-economic-
growth/long#:~:text=Entrepreneurs%20create%20employment%20opportunities%20not,produ
ctivity%20and%20competition%20more%20broadly.

Entrepreneurs are a rare species. Even in innovation-driven economies, only 1–2% of the work
force starts a business in any given year. Yet entrepreneurs, particularly innovative
entrepreneurs, are vital to the competitiveness of the economy. The gains of entrepreneurship
are only realized, however, if the business environment is receptive to innovation. In addition,
policymakers need to prepare for the potential job losses that can occur in the medium term
through “creative destruction” as entrepreneurs strive for increased productivity.

Pros

Entrepreneurs boost economic growth by introducing innovative technologies, products, and

services.

Increased competition from entrepreneurs challenges existing firms to become more

competitive.

Entrepreneurs provide new job opportunities in the short and long term.
Entrepreneurial activity raises the productivity of firms and economies.

Entrepreneurs accelerate structural change by replacing established, sclerotic firms.

Cons

Only a few people have the drive to become entrepreneurs.

Entrepreneurs face a substantial risk of failure, and the costs are sometimes borne by
taxpayers.

In the medium term, entrepreneurial activities may lead to layoffs if existing firms close.

A high level of self-employment is not necessarily a good indicator of entrepreneurial activity.

Entrepreneurship cannot flourish in an over-regulated economy.

Entrepreneurship is important to economic development. The benefits to society will be

greater in economies where entrepreneurs can operate flexibly, develop their ideas, and reap
the rewards. Entrepreneurs respond to high regulatory barriers by moving to more innovation-
friendly countries or by turning from productive activities to non-wealth-creating activities. To
attract productive entrepreneurs, governments need to cut red tape, streamline regulations,
and prepare for the negative effects of layoffs in incumbent firms that fail because of the new
competition.

Entrepreneurship in the Philippines: Opportunities and Challenges for Inclusive Growth

https://www.cipe.org/resources/entrepreneurship-philippines-opportunities-challenges-
inclusive-growth/
Addressing widespread poverty is the single most important policy challenge facing the
Philippines. Not only is poverty high when benchmarked against countries in Asia, but also the
rate of poverty reduction has been slow. While the Philippine economy has grown at an
average of 6 percent for the last five consecutive quarters (since 2012), poverty incidence
remains above 20 percent of the population. The critical challenge is to spread the payback of
this huge economic turnaround among the people, especially the poorest of the poor. They
should feel the benefits of the growing Philippine economy.
Entrepreneurship can provide the solution by creating wealth, jobs, and social
empowerment. If we are to address the issue of poverty with some degree of success, history
tells us we have no choice but to actively encourage entrepreneurial ventures.
Entrepreneurship in the Philippines
In the Philippines, entrepreneurship is viewed as important to empowering the poor,
enhancing production, and as an impetus to innovation. The 1987 Philippine Constitution
recognizes entrepreneurship as an engine of economic growth. Article XII Section 1 highlights
the role of private enterprises in supporting equitable distribution of income and wealth,
sustaining production of goods and services and expanding productivity, therefore raising the
quality of life.
The Philippine Development Plan (PDP) further reinforces the thrust on
entrepreneurship through trade and investment to achieve the government’s goal of economic
development and job creation. Based on the plan, measures for macro-economic stability,
employment, trade and investment, agribusiness, power-sector reforms, infrastructure,
competition, science and technology, and anti-corruption are being pursued to strengthen
Philippines’s competitiveness and contribute to job creation.
In 2011, there were approximately 830,000 business enterprises in the Philippines. Of
these, 99.6 percent are classified as micro, small, and medium-sized enterprises (MSME) which
are responsible for 38 percent of total job growth.

Role of Enterprise Networks

In addressing the above mentioned challenges, there is a need to rally behind national
advocacy to push entrepreneurship to the next level. This means nurturing micro-
entrepreneurs from purely “survival” into “opportunity and innovation driven” enterprise
owners. This puts a premium on the role of enterprise organizations such as chambers of
commerce, industry associations and dedicated enterprise networks.
In the Philippines, apart from institutions like chambers of commerce and industry
clubs, entrepreneurship advocacy is mainstreamed by the creation of enterprise networks like
the Philippine Center for Entrepreneurship (PCE). PCE’s concrete goal is to spawn the creation
of so-called “Go Negosyo Communities” everywhere. These are communities where the
academic, business and government sectors are drawn into a triangle of almost seamless
collaboration. In such an ecosystem, there is constant networking, mentoring and cooperation
among professors, entrepreneurs, industry experts and venture capitalists, with the
government providing support through a viable policy infrastructure. Every “Go Negosyo”
community is distinguished by its ability to produce a continuous stream of start-up ventures.
PCE also seeks to embed strong entrepreneurship lessons into the school curriculum. If
the goal is to develop a culture of enterprise and cultivate tomorrow’s competitive
entrepreneurs, they must start at a young age. Primary and secondary schools can teach the
values and develop the mindsets of an entrepreneur. At the college level, enterprise networks
are looking at how to assist in the area of curriculum enhancement, providing manuals, training
the teachers, and involving real entrepreneurs in the learning process.
Nurturing the Entrepreneurship Paradigm
Entrepreneurship is more than just an economic term — it is a way of thinking. Creating
jobs, empowering people, and giving individuals access to better lives for themselves and their
children is a wonderful gift. Today, it has become a dynamic, developing part of the economy
promoting inclusive growth. Entrepreneurship is a way of inspiring creative individuals to
pursue opportunities despite its risks.
In closing, the challenge for countries like the Philippines is to accelerate both the
political and economic leadership that can muster social reforms through entrepreneurship.
Entrepreneurs have the power to achieve great things. Entrepreneurs will emerge as the well-
oiled wheels that will keep the economy going and the society efficiently running.
Ryan Patrick G. Evangelista is former Executive Director of Universal Access to Competitiveness
and Trade (U-ACT). Research inputs were provided by Marlon Min and Jin Hyuk Kim of U-ACT.

Assessment and Reflection:

Reflection for Activity No.1: Why study entrepreneurship? What is your definition
of entrepreneur? List the strengths and weaknesses of the
various definitions highlighted in the module.

Reflection for Activity No. 2: What are pros and cons of entrepreneurs on the
growth of economy?

Reflection for Activity No. 3: Why does the economy need entrepreneurs?

Self-Test:
Test I: Multiple Choice. Choose the correct answer.

1. The place where the entrepreneur or entrepreneurship was originated sometime in the
Middle Ages.
a. America c. Europe
b. Asia d. India

2. A period where entrepreneurs was used to describe both an actor and a person who
managed large production projects.
a. 17th Century b. 18th Century c. 19th Century d. Middle Ages

3. It is a period where entrepreneur was a person who entered into a contract with the
government to perform a service or to supply stipulated products.
a. 17th Century b. 18th Century c. 19th Century d. Middle Ages

4. A person who define entrepreneur as an innovator and develops untried technologies

a. Joseph Schumpeter c. Peter Drucker
b. Robert Hisrich d. Richard Cantillon
 5. It is a person who define entrepreneur as one who bear the risks is different from one
supplying capital.
a. Joseph Schumpeter c. Peter Drucker
b. Robert Hisrich d. Richard Cantillon

Post-Test
All post-tests shall be given by the instructor.
Resources:

https://wol.iza.org/articles/entrepreneurs-and-their-impact-on-jobs-and-economic-
growth/long#:~:text=Entrepreneurs%20create%20employment%20opportunities%20not,produ
ctivity%20and%20competition%20more%20broadly.

https://www.cipe.org/resources/entrepreneurship-philippines-opportunities-challenges-
inclusive-growth/

Entrepreneurship in the Philippine Setting, Winefreda T. Asor, Ph.D. (2009)

Entrepreneurship Principles and Practices (A Modular Approach) 2nd Edition, Ernie Roy S.
Asarcon, et. al (2008)
 ENTREPRENEURSHIP
MODULE 2. The Philippine Economy (Week 3)
I. Introduction:
Addressing widespread poverty is the single most important policy challenge facing
the Philippines. Not only is poverty high when benchmarked against countries in Asia, but
also the rate of poverty reduction has been slow. While the Philippine economy has grown at
an average of 6 percent for the last five consecutive quarters (since 2012), poverty incidence
remains above 20 percent of the population. The critical challenge is to spread the payback
of this huge economic turnaround among the people, especially the poorest of the poor. They
should feel the benefits of the growing Philippine economy.
Entrepreneurship can provide the solution by creating wealth, jobs, and social
empowerment. If we are to address the issue of poverty with some degree of success,
history tells us we have no choice but to actively encourage entrepreneurial ventures.
In the Philippines, entrepreneurship is viewed as important to empowering the poor,
enhancing production, and as an impetus to innovation. The 1987 Philippine Constitution
recognizes entrepreneurship as an engine of economic growth. Article XII Section 1
highlights the role of private enterprises in supporting equitable distribution of income and
wealth, sustaining production of goods and services and expanding productivity, therefore
raising the quality of life.
The Philippine Development Plan (PDP) further reinforces the thrust on
entrepreneurship through trade and investment to achieve the government’s goal of
economic development and job creation. Based on the plan, measures for macro-economic
stability, employment, trade and investment, agribusiness, power-sector reforms,
infrastructure, competition, science and technology, and anti-corruption are being pursued
to strengthen Philippines’s competitiveness and contribute to job creation.
In 2011, there were approximately 830,000 business enterprises in the Philippines. Of
these, 99.6 percent are classified as micro, small, and medium-sized enterprises (MSME)
which are responsible for 38 percent of total job growth.
Entrepreneurship is more than just an economic term — it is a way of thinking.
Creating jobs, empowering people, and giving individuals access to better lives for themselves
and their children is a wonderful gift. Today, it has become a dynamic, developing part of the
economy promoting inclusive growth. Entrepreneurship is a way of inspiring creative
individuals to pursue opportunities despite its risks.
In closing, the challenge for countries like the Philippines is to accelerate both the
political and economic leadership that can muster social reforms through entrepreneurship.
Entrepreneurs have the power to achieve great things. Entrepreneurs will emerge as the
well-oiled wheels that will keep the economy going and the society efficiently running.
Ryan Patrick G. Evangelista is former Executive Director of Universal Access to Competitiveness
and Trade (U-ACT). Research inputs were provided by Marlon Min and Jin Hyuk Kim of U-ACT.
II. Learning Objectives:
At the end of the lesson the student will be able to:

1. Interpret the status of Philippine economy

2. Describe the economic growth of the Philippines

3. Compare the Philippine economy today and before the boom of entrepreneurship in the
country

4. Create a chart on how entrepreneurs will improve the quality of life, surrounding the
business

III. Lesson Proper

The Philippine Economy: How does an economy grow

1. The Philippine economy is composed of business enterprises, household, and the

government.
2. There are economic freedoms, like free competition, free choice of investments and the
prices, which are determined by the interaction between demand and supply.
3. In economic development, knowledge, skills, values and the quality of people are the
main determinants of economic growth.
4. The Philippine was slave of three (3) colonial masters: The United States, Japan and
Spain, the Chinese dominated the retail trade even before the Spanish time.
5. The Philippine government got its political independence from the U.S. but not on
economy.
6. Under the martial law, the friends of dictator controlled the Philippine business.
7. Democracy was restored finally upon the assumption of Corazon Aquino as President
having the private business sector as engine of economic development.
8. The national government provide financial and technical assistance programs for the
poor who are interested in putting up their micro businesses. NGOs are actively involved
in the said entrepreneurial projects.

ECONOMIC AND POLICY DEVELOPMENTS

https://www.worldbank.org/en/country/philippines/publication/philippines-economic-update-
investing-in-the-future
 In 2017, the Philippines was among the top three growth performers in the region. Only
Vietnam and China did better. The Philippine economy grew from 6.9 percent year-on-year in
2016 to 6.7 percent year-on-year in 2017. Growth was anchored in strong exports, while
investment growth significantly slowed and consumption growth moderated. The Philippines’
annual exports rose sharply in 2017 and became the main engine of economic growth, while
imports continued to grow by double-digits. Investment growth slowed in 2017, following two
consecutive years of rapid expansion, and climbing inflation slowed real wage growth and
contributed to a moderation in private consumption growth.

Sustained economic growth is likely to continue to contribute to poverty

reduction. Under the assumption that the responsiveness of the poverty rate to economic
growth follows historical trends, the poverty rate, based on the lower middle-income poverty
line of US$3.20/day, is projected to decline from 27.0 percent in 2015 to 22.9 percent and 21.7
percent in 2018 and 2019, respectively, as economic growth remains robust. These projections
would imply a continuing trend of one million Filipinos being lifted out of poverty each year.
Factors that have been driving poverty reduction in the Philippines include the movement of
employment out of agriculture, a sustained inflow of remittances, and the government’s
conditional cash-transfer program.

PROSPECTS AND RISKS

The country’s medium-term growth outlook remains positive. The Philippine economy
is projected to continue on its expansionary path and grow at an annual rate of 6.7 percent in
both 2018 and 2019. In 2020, growth is expected to level at 6.6 percent. The economy is
currently growing at its potential, making productive investment in physical and human capital
essential so that the economy can continue to grow along its current growth trajectory.
Investment growth hinges on the government’s ability to effectively and timely implement its
ambitious public investment program. Moreover, the government needs to clarify the role of
the private sector in its investment program.

Domestic risks are becoming more prominent. Inflationary pressure is expected to

intensify in 2018 due to both domestic and external factors. The Philippine economy is also at
risk of overheating. The implementation of the public infrastructure program is vital to the
country’s growth outlook, as private investment is expected to weaken. Prudent fiscal
management and the implementation of the government’s tax reform agenda could help
secure the country’s fiscal sustainability. External risks remain present, especially a faster-than-
expected policy normalization in advanced economies that could trigger financial volatility and
increase capital outflows from the Philippines. Renewed protectionist sentiments in several
advanced economies will also elevate policy uncertainty, which may disrupt trade and
investments.

Higher real wages are essential to achieve shared prosperity and inclusive growth. In
recent years, the Philippine economy has made great strides in delivering inclusive growth,
evidenced by the declining poverty rates and a falling Gini coefficient. Unemployment has
reached historic low rates, but underemployment remains high, near its 18-20 percent decade-
long average. More importantly, unlike its high-performing East Asian neighbors with booming
manufacturing sectors that provide large numbers of labor-intensive jobs, a majority of Filipino
workers that transition out of agriculture generally end up in low-end service jobs. Thus, while
employment increased between 2006 and 2015, mean wages remained stagnant, with only a
four percent increase in real terms over the same period. Low job quality and slow growth of
real wages are the missing links to higher shared prosperity.

Need for Entrepreneurship Development

file:///C:/Users/Neil09/Downloads/354-Article%20Text-593-1-10-20171225%20(1).pdf

Development essentially means a process of upward change whereby the real per capita
income of a country increases over a period of time. Entrepreneurship has an important role to
play in the development of a country. It is one of the most important inputs in economic
development. The number and competence of entrepreneurs affect the economic growth of
the country. The economic history of the presently advanced countries like USA, Russia and
Japan supports the fact that economic development is the outcome for which entrepreneurship
is an inevitable cause. The crucial and significant role played by the entrepreneurs in the
economic development of advanced countries has made the people of developing and under
developed countries conscious of the importance of entrepreneurship for economic
development.

Role of Entrepreneurship in Economic Development

The role of entrepreneurs is not identical in the various economies. Depending on the
material resources, industry climate and responsiveness of the political system, it varies from
economy to economy. The contribution of entrepreneurs may be more in favorable opportunity
conditions than in economies with relatively less favorable opportunity conditions.

Adam Smith, the foremost classical economist, assigned no significance to

entrepreneurial role in economic development in his monumental work‟ An Enquiry into the
Nature and Causes of the Wealth of Nations‟, published in 1776. Smith extolled the rate of
capital formation as an important determinant of economic development. The problem of
economic development was ergo largely the ability of the people to save more and invest more
in any country. According to him, ability to save is governed by improvement in productivity to
the increase in the dexterity of every worker due to division of labor. Smith regarded every
person as the best judge of his own interest who should be left to pursue his own advantage.
According to him, each individual is led by an “invisible hand” in pursuing his/her interest. He
always advocated the policy of laissez-faire in economic affairs.

In his theory of economic development, David Ricardo identified only three factors of
production, namely, machinery, capital and labor, among whom the entire produce is
distributed as rent, profit and wages respectively. Ricardo appreciated the virtues of profit in
capital accumulation. According to him, profit leads to saving of wealth which ultimately goes
to capital formation. Thus, in both the classical theories of economic development, there is no
room for entrepreneurship. And, economic development seems to be automatic and self-
regulated. Thus, the attitude of classical economists was very cold towards the role of
entrepreneurship in economic development.

The important role that entrepreneurship plays in the economic development of an

economy can now be put in a more systematic and orderly manner as follows:

Promotes Capital Formation:- Entrepreneurs promote capital formation by mobilizing the idle
savings of public. They employ their own as well as borrowed resources for setting up their
enterprises. Such type of entrepreneurial activities lead to value addition and creation of
wealth, which is very essential for the industrial and economic development of the country.

Creates Large-Scale Employment Opportunities:-Entrepreneurs provide immediate large-scale

employment to the unemployed which is a chronic problem of underdeveloped nations. With
the setting up of more and more units by entrepreneurs, both on small and largescale
numerous job opportunities are created for others. As time passes, these enterprises grow,
providing direct and indirect employment opportunities to many more. In this way,
entrepreneurs play an effective role in reducing the problem of unemployment in the country
which in turn clears the path towards economic development of the nation.

Promotes Balanced Regional Development:- Entrepreneurs help to remove regional disparities

through setting up of industries in less developed and backward areas. The growth of industries
and business in these areas lead to a large number of public benefits like road transport, health,
education, entertainment, etc. Setting up of more industries lead to more development of
backward regions and thereby promotes balanced regional development.

Reduces Concentration of Economic Power:-Economic power is the natural outcome of

industrial and business activity. Industrial development normally lead to concentration of
economic power in the hands of a few individuals which results in the growth of monopolies. In
order to redress this problem a large number of entrepreneurs need to be developed, which
will help reduce the concentration of economic power amongst the population.

Wealth Creation and Distribution:-It stimulates equitable redistribution of wealth and income
in the interest of the country to more people and geographic areas, thus giving benefit to larger
sections of the society. Entrepreneurial activities also generate more activities and give a
multiplier effect in the economy.

Increasing Gross National Product and Per Capita Income:-Entrepreneurs are always on the
look out for opportunities. They explore and exploit opportunities, encourage effective
resource mobilization of capital and skill, bring in new products and services and develops
markets for growth of the economy. In this way, they help increasing gross national product as
well as per capita income of the people in a country. Increase in gross national product and per
capita income of the people in a country, is a sign of economic growth. . An increasing number
of entrepreneurs are required to meet this increasing demand for goods and services. Thus
entrepreneurship increases the national income

Improvement in the Standard of Living:-Increase in the standard of living of the people is a

characteristic feature of economic development of the country. Entrepreneurs play a key role in
increasing the standard of living of the people by adopting latest innovations in the production
of wide variety of goods and services in large scale that too at a lower cost. This enables the
people to avail better quality goods at lower prices which results in the improvement of their
standard of living.

Promotes Country's Export Trade:- Entrepreneurs help in promoting a country's export-trade,

which is an important ingredient of economic development. They produce goods and services
in large scale for the purpose earning huge amount of foreign exchange from export in order to
combat the import dues requirement. Hence import substitution and export promotion ensure
economic independence and development.

Induces Backward and Forward Linkages:-Entrepreneurs like to work in an environment of

change and try to maximize profits by innovation. When an enterprise is established in
accordance with the changing technology, it induces backward and forward linkages which
stimulate the process of economic development in the country.

Facilitates Overall Development:- Entrepreneurs act as catalytic agent for change which results
in chain reaction. Once an enterprise is established, the process of industrialization is set in
motion. This unit will generate demand for various types of units required by it and there will
be so many other units which require the output of this unit. This leads to overall development
of an area due to increase in demand and setting up of more and more units. In this way, the
entrepreneurs multiply their entrepreneurial activities, thus creating an environment of
enthusiasm and conveying an impetus for overall development of the area.

Creating innovation :-An entrepreneur is a person who always look for changes. apart from
combining the factors of production, he also introduces new ideas and new combination of
factors. He always try to introduce newer and newer technique of production of goods and
services. An entrepreneur brings economic development through innovation.

Entrepreneurs Create New Businesses:- Path breaking offerings by entrepreneurs, in the form
of new goods & services, result in new employment, which can produce a cascading effect or
virtuous circle in the economy. The stimulation of related businesses or sectors that support the
new venture add to further economic development. For example, a few IT companies founded
the Indian IT industry in the 1990s as a backend programmers' hub.
Entrepreneurs Also Create Social Change:-Through their unique offerings of new goods and
services, entrepreneurs break away from tradition and indirectly support freedom by reducing
dependence on obsolete systems and technologies. Overall, this results in an improved quality
of life, greater morale and economic freedom. For a more contemporary example, smart
phones and their smart apps have revolutionized work and play across the globe. Smart phones
are not exclusive to rich countries or rich people either. As the growth of China's smart phone
market and its smartphone industry show, technological entrepreneurship will have profound,
long lasting impacts on the entire human race.

Personal Growth:-Entrepreneurship has created millions of good jobs. In a startup workplace,

jobs often call for creativity and collaboration, leading to personal development. Those exposed
to entrepreneurship have higher confidence and greater independence. Not bound by the
hierarchy and restrictions of large corporations, young entrepreneurs can take on greater
responsibility, work flexible schedules and use creative solutions to problem solve. The freedom
associated with entrepreneurship comes with certain challenges. Entrepreneurs often work
long hours and risk their personal assets in developing their business.

Entrepreneurship puts new business ideas into practice.:-In doing so, it creates jobs that
facilitate personal development. With their innovative and disruptive ideas, entrepreneurs can
tackle social problems too. It’s a worthy pursuit to consider, but if it’s not for you, see how to
pass down its principles to the next generation and enroll in How to Encourage and Teach Our
Children Thus, it is clear that entrepreneurship serves as a catalyst of economic development.
On the whole, the role of entrepreneurship in economic development of a country can best be
put as “an economy is the effect for which entrepreneurship is the cause”

Paradoxically, a significantly high number of entrepreneurs may lead to fierce

competition and loss of career choices for individuals. With too many entrepreneurs, levels of
aspirations usually rise. Owning to the variability of success in entrepreneurial ventures, the
scenario of having too many entrepreneurs may also lead to income inequalities, making
citizens more – not less – unhappy. However, entrepreneurship and economic development has
vital inputs and inferences for policy makers, development institutes, business owners, change
agents and charitable donors. If we understand the benefits and drawbacks, a balanced
approach to nurturing entrepreneurship will definitely result in a positive impact on economy
and society. Entrepreneurship puts new business ideas into practice. In doing so, it creates jobs
that facilitate personal development. With their innovative and disruptive ideas, entrepreneurs
can tackle social problems too. It’s a worthy pursuit to consider, but if it’s not for you, see how
to pass down its principles to the next generation and enroll in How to Encourage and Teach
Our Children Thus, it is clear that entrepreneurship serves as a catalyst of economic
development. On the whole, the role of entrepreneurship in economic development of a
country can best be put as “an economy is the effect for which entrepreneurship is the cause”
Assessment and Reflection:

Reflection for Activity No.1: How do you assess the status of Philippine economy
considering that we are in the midst of pandemic Covid
19?

Reflection for Activity No. 2: What are the important role that entrepreneurship plays
in the economic development of a country?

Reflection for Activity No. 3: How does the economy grow in the Philippines?

Self-Test:

Test I: Multiple Choice. Choose the correct answer.

1. The growth of the Philippine economy associated to strong exports on 2016.

a. 6.6 percent b. 6.7 c. 6.8 d. 6.9

2. The business enterprises that is responsible for 38 percent of total job growth of the
Philippine economy.
a. Corporation b. MSME c. Medium sized d. Small-sized

3. The growth of the Philippine economy projected in 2020.

b. 6.6 percent b. 6.7 c. 6.8 d. 6.9

4. The economist that regarded every person as the best judge of his own interest who should
be left to pursue his own advantage.

a. Adam Smith c. David Ricardo

b. C. W. Arthur Lewis d. Milton Friedman

5. The economist that identified only 3 factors of production namely, machinery, capital and
labor, among whom the entire produce is distributed as rent, profit and wages
respectively.

c. Adam Smith c. David Ricardo

d. C. W. Arthur Lewis d. Milton Friedman
Post-Test
All post-tests shall be given by the instructor.
Resources:
file:///C:/Users/Neil09/Downloads/354-Article%20Text-593-1-10-20171225%20(1).pdf

https://www.worldbank.org/en/country/philippines/publication/philippines-economic-
update-investing-in-the-future

Entrepreneurship in the Philippine Setting, Winefreda T. Asor, Ph.D. (2009)

 ENTREPRENEURSHIP
MODULE 3. Attributes, Qualities and Characteristics of Entrepreneur (Week 4)
I. Introduction:
Entrepreneurs are optimistic, hard-driving, committed individuals who derive great
satisfaction from being independent. Starting a new business requires more than just an idea;
it requires sound judgement and planning along with an approach that reduces risk to provide
the best chance of ensuring the survival and success of a new venture. In current times, as
the Economist explains, the entrepreneur’s job is like zeroing in on a target: first, you have to
identify customer needs, then you build something that responds to those needs. You
observe and assess the extent to which the new product/service addresses those needs
successfully and continue to repeat the process until you achieve the right ‘product-market
fit’. There is no pay-off until you find the right combination of product (and/or service),
customer need and market with sufficient potential to sustain a business.

Bolton and Thompson define an entrepreneur as ‘a person who habitually creates and
innovates to build something of recognized value around perceived opportunities’. A
person can also be a group of people, since it is possible to describe teams and even
organizations as entrepreneurial. The word ‘person’ though suggests that a personality, or
personalities are involved that cannot be replaced by a system. Habitualness is an
important characteristic of entrepreneurs that distinguishes them from business owner-
managers or people who build a business simply to achieve a comfortable lifestyle.

Entrepreneurs are driven by an intense commitment and determined perseverance.

They are optimists who see the cup as half full rather than half empty. They strive for
integrity. They burn with the competitive desire to excel. They use failure as a tool for
learning. They have enough confidence in themselves to believe they personally can make a
major difference in the final outcome of their ventures.

II. Learning Objectives:

At the end of the lesson the student will be able to:

1. State and demonstrate attributes of an entrepreneur

2. Write and interpret the attributes an entrepreneur

3. Compare and contrast the different qualities of an entrepreneur

 III. Lesson Proper

ENTREPRENEURIAL COGNITION
One of the hottest topics in the research literature is entrepreneurial cognition:
entrepreneurs actually think differently from other people. In science, cognition refers to
mental processes, including attention, remembering, producing and understanding language,
solving problems and making decisions. It means the ability to process information, apply
knowledge and change preferences. Social cognition theory looks at situation-based mental
models (cognitions) that optimize personal effectiveness. Mitchell et al. define entrepreneurial
cognition as the knowledge structures that people use to make assessments, judgements, or
decisions involving opportunity evaluation, venture creation, and growth. Entrepreneurs use
simplifying mental models to piece together previously unconnected information that helps
them to identify and invent new products or services, and to assemble the necessary resources
to start and grow businesses. Consider the entrepreneur challenged to give a sound explanation
for a new venture to a venture capitalist. Even before evaluating alternative strategies, the
entrepreneur must first formulate a strategy to frame how he or she will ‘think’ about this task.
Many people believe that entrepreneurs ‘think’ differently than other individuals.
Entrepreneurship is a function of the entrepreneur, a real individual with passions, experiences
and knowledge living in a particular culture and time period. Looking at the characteristics of
these real individuals helps us understand entrepreneurship.
Entrepreneurs typically have skills like inner control, planning and goal setting, risk
taking, innovation, reality perception, use of feedback, decision making, human relations and
independence. They are also not afraid to come back from failure.
Entrepreneurship in the twenty-first century Research continues to expand our
understanding of the entrepreneurial mind. Here we are looking at how entrepreneurs
perceive, recognize, conceive, judge, sense, reason, remember and imagine. Gartner examined
the literature and found a diversity of reported characteristics. Psychologists have put together
a set of profile dimensions that characterize entrepreneurs.
CHARACTERISTICS OF ENTREPRENEUR
1. DETERMINATION AND PERSEVERANCE
More than any other factor, total dedication to success and focus on advantage can
overcome obstacles and setbacks. Sheer determination and a stubborn, unwavering
commitment to succeed often wins out against odds that many people would consider
insurmountable. These characteristics can also compensate for personal shortcomings although
when a venture faces adversity, entrepreneurs who value such things as openness to change
and the non-financial benefits of a business (rather than money) are also prone to making
decisions to persist, ignoring objective data, ultimately leading to failure. Potential investors or
angels take the measure of entrepreneurial determination. Is the entrepreneur willing to
mortgage their own house, take a pay-cut, sacrifice family time and reduce their standard of
living for long-term gain?
2. DRIVE TO ACHIEVE

Entrepreneurs are self-starters who appear to others to be internally driven by a strong

desire to compete, to excel against self-imposed standards and to pursue and attain challenging
goals. This drive to achieve has been well documented in the entrepreneurial literature
beginning with David McClelland’s pioneering work on motivation in the 1950s and 1960s.17
McClelland suggested that the key to entrepreneurial behavior lies in the need to achieve. High
achievers take calculated risks. They examine a situation, determine how to increase the odds
of winning and then push ahead. A high-risk decision for the average businessperson is often
perceived as a moderate risk decision for the well-prepared high achiever.
3. OPPORTUNITY ORIENTATION
One clear pattern among successful, growth-minded entrepreneurs is their focus on
opportunity rather than on resources, structure or strategy. Opportunity orientation is the
constant awareness of the opportunities that exist in everyday life. Successful entrepreneurs
start with the opportunity and let their understanding of it guide other important issues. They
are goal-oriented in their relentless pursuit of opportunities. Setting high but attainable goals
enables them to focus their energies selectively to sort out opportunities and to know when to
say ‘no’. Their goal orientation also helps them to define priorities and provides them with
measures of how well they are performing.
4. PERSISTENT PROBLEM SOLVING
Entrepreneurs are not intimidated by difficult situations. In fact, their self-confidence
and general optimism seem to translate into a view that the impossible just takes a little longer.
Yet they are neither aimless nor foolhardy in their relentless attack on a problem or an obstacle
that is impeding business operations. If the task is extremely easy or is unsolvable,
entrepreneurs often will give up sooner than others. Simple problems bore them; unsolvable
ones do not warrant their time. Moreover, although entrepreneurs are extremely persistent
they are realistic in recognizing what they can and cannot do and where they can get help in
solving difficult but unavoidable tasks.
5. SEEKING FEEDBACK
Effective entrepreneurs are often described as quick learners. Unlike many people,
however, they also have a strong desire to know how well they are doing and how they might
improve their performance. In attempting to make these determinations, they actively seek out
mentors and use their feedback. Feedback is also central to their learning from their mistakes
and setbacks.
 6. INTERNAL LOCUS OF CONTROL
Successful entrepreneurs believe in themselves. They do not believe the success or
failure of their venture will be governed by fate, luck or similar forces. They believe their
accomplishments and setbacks are within their own control and influence and that they can
affect the outcome of their actions. This attribute is consistent with a high-achievement
motivational drive, the desire to take personal responsibility and self-confidence.
7. TOLERANCE FOR AMBIGUITY
Start-up entrepreneurs face uncertainty multiplied by constant change. This introduces
ambiguity and stress into every aspect of the enterprise. Setbacks and surprises are inevitable;
lack of organization, structure and order is a way of life. Yet successful entrepreneurs thrive on
the fluidity and excitement of such an ambiguous existence and generally have a high tolerance
for ambiguity. Job security and retirement generally are of no concern to them.

8. CALCULATED RISK TAKING

Successful entrepreneurs are not gamblers – if they decide to participate in a venture,

they do so in a very calculated, carefully thought-out manner. They do everything possible to
get the odds in their favor and they often avoid taking unnecessary risks. These strategies
include getting others to share inherent financial and business risks with them – for example, by
persuading partners and investors to put up money, creditors to offer special terms and
suppliers to advance merchandise.
9. TOLERANCE FOR FAILURE
Entrepreneurs use failure as a learning experience and generally have a high tolerance
for failure. The iterative, trial-and-error nature of becoming a successful entrepreneur makes
serious setbacks and disappointments an integral part of the learning process. They do not
become disappointed, discouraged or depressed by a setback or failure. Many believe they
learn more from their early failures than from their early successes. Entrepreneurs differentiate
between noble failure and stupid failure. Although failure can be an important source of
information for learning, this learning is not automatic or instantaneous. The emotions
generated by failure (i.e. grief) can interfere with the learning process.
10. HIGH ENERGY LEVEL
The extraordinary workloads and the stressful demands faced by entrepreneurs place a
premium on energy. Many entrepreneurs fine-tune their energy levels by carefully monitoring
what they eat and drink, establishing exercise routines and knowing when to get away for
relaxation.
 11. CREATIVITY AND INNOVATIVENESS
Creativity was once regarded as an exclusively inherited trait. Looking around the world
we see that cultures differ very much in terms of creativity and innovation. Some, like
Singapore, are known less Best known for his bold failures, one entrepreneur bets on the Yugo,
Zastrava, and Chery automobiles.
Four (4) characteristics that may hold destructive implications for entrepreneurs.
1. AN OVERBEARING NEED FOR CONTROL

Entrepreneurs are driven by a strong need to control both their venture and their
destiny. This internal locus of control spills over into a preoccupation with controlling
everything. An obsession for autonomy and control may cause entrepreneurs to work in
structured situations only when they have created the structure on their terms. This, of course,
has serious implications for networking in an entrepreneurial team since entrepreneurs can
visualize others as a threat or infringement of their will. Thus the same characteristic that
entrepreneurs need for successful venture creation also contains a destructive side.
2. SENSE OF DISTRUST
To remain alert to competition, customers and government regulations, entrepreneurs
are continually scanning the environment. They try to anticipate and act on developments that
others might recognize too late. This distrustful state can result in their focusing on trivialities,
causing them to lose sight of reality, to distort reasoning and logic and to take destructive
actions. Again, distrust is a dual-edged characteristic.

3. OVERRIDING DESIRE FOR SUCCESS

The entrepreneur’s ego is involved in the desire for success. Although many of today’s
entrepreneurs believe they are living on the edge of existence, constantly stirring within them is
a strong desire to succeed in spite of the odds. Therefore, the entrepreneur rises up as a defiant
person who creatively acts to deny any feelings of insignificance. The individual is driven to
succeed and takes pride in demonstrating that success. Therein lie the seeds of possible
destructiveness. If the entrepreneur seeks to demonstrate achievement through the erection of
a monument – such as a huge office building, an imposing factory or a plush office – then the
danger exists that the individual will become more important than the venture itself. Losing
perspective like this can be the destructive side of the desire to succeed.
4. UNREALISTIC OPTIMISM
The ceaseless optimism that emanates from entrepreneurs (even through the bleak
times) is a key factor in the drive towards success. Entrepreneurs maintain a high enthusiasm
level that becomes an external optimism, which allows others to believe in them during rough
periods. However, when taken to its extreme, this optimistic attitude can lead to a fantasy
approach to the business. A self-deceptive state may arise in which entrepreneurs ignore
trends, facts and reports and delude themselves into thinking everything will turn out fine. This
type of behavior can lead to an inability to handle the reality of the business world. These
examples do not imply that all entrepreneurs fall prey to these scenarios, nor that each of the
characteristics presented always gives way to the ‘destructive’ side. Nevertheless, all potential
entrepreneurs need to know that the dark side of entrepreneurship exists.
Assessment and Reflection:

Reflection for Activity No.1: Is it true that most successful entrepreneurs have failed at
some point in their business careers? Explain.

Reflection for Activity No. 2: How do the following traits relate to entrepreneurs: desire
to achieve, opportunity orientation, initiative and responsibility?

Reflection for Activity No. 3: What are the four (4) characteristics that may hold
destructive implications for entrepreneurs?

Self-Test:
Test I: Multiple Choice. Choose the correct answer.

1. Characteristic of entrepreneurs as self-starters who appear to others to be internally

driven by a strong desire to compete.
a. drive to achieve c. calculated risk taking
b. Internal locus of control d. seeking feed back

2. Entrepreneurs believe fate, chance or similar factors can control the success or
failure of their company.
a. drive to achieve c. calculated risk taking
b. Internal locus of control d. seeking feed back

3. Successful entrepreneurs are not gamblers – if they decide to take part in a venture,
they do so in a very calculated, carefully thought-out manner.
a. drive to achieve c. calculated risk taking
b. Internal locus of control d. seeking feed back

4. Entrepreneurship has a strong desire to know how well they are doing and how they
could improve their performance.
a. drive to achieve c. calculated risk taking
b. Internal locus of control d. seeking feed back
 5. Entrepreneurs are not overwhelmed by tough circumstances, but their self-
confidence and general optimism tend to turn into a perception that the impossible
takes a little longer.
a. persistent problem solving c. calculated risk taking
b. unrealistic optimism d. sense of distrust

Post-Test

All post-tests shall be given by the instructor.

Resources:

Entrepreneurship Theory Process Practice 4th edition , Howard Frederick, Allan O’Connor,
Donald F. Kuratko (2016)