Rodel M.

Sescon, MM
Instructor
 Module on The Entrepreneurial Mind

Course No. AST 315

Course Code
Descriptive Title The Entrepreneurial Mind
School Year/Term AY 2020 – 2021 First Semester
Mode of Delivery Modular Instruction (self – Paced Approach)
Name of Instructor/ RODEL M. SESCON, MM
Professor REGINALD A. GACASAN, MM
BERNADITH A. RADAZA
Course Description The students in this course will learn about the basic
concepts of entrepreneurship and its role in the
economy. It also includes developing their skills and
competencies as an entrepreneur in line with their
specific discipline.
Course Outcomes CO1: Discuss about Entrepreneurship (Micro, Small,
and Medium Enterprise) being the micro-economic
contributors of our country.
CO2: Develop a business plan utilizing the
entrepreneurial skills and competencies.
SLSU Vision A high quality Corporate University of Science,
Technology and Innovations.
SLSU Mission SLSU will
 Develop Science, Technology and Innovation
leaders and professionals;
 Produce high – impact technologies from research
and innovations;
 Contribute to sustainable development through
responsive community engagement programs;`
 Generate revenues to be self – sufficient and
financially – viable;

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Module Guide

This module will help the student define and understand the concept of entrepreneurship. Thus,
students will learn to appreciate the importance of entrepreneurship being the micro economic
contributor of our country. As we go along the succeeding modules, students will also learn the
marketing, financial and legal considerations in creating an enterprise. At the end of the module,
students will be asked to conduct an interview with the entrepreneur in their community in relation
to the topic.

This module is divided into three (3) sub topics: Who is an Entrepreneur?, The Role of the
Entrepreneur in the Economy, and The Role of the Entrepreneurship in the Economic Growth.

Key to remember

MSME – Small, Micro, Medium Enterprise

DTI – Department of Trade and Industry
Republic Act 9501 – an Act to Promote Entrepreneurship by strengthening development and
assistance programs to Micro, Small, Medium Enterprises.
MSMED – Micro, Small, Medium Enterprise Development Council
PICPA – Philippine Institute of Certified Public Accountants
GEM – Global Entrepreneurship Monitor
BSMBD – Bureau of Small and Medium Business Development

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Pre Test

1. Why is entrepreneurship an important component of economic development?

2. What is entrepreneurship? Who is the entrepreneur?
3. Why is innovation an important entrepreneurship activity?
4. Is entrepreneurship applicable only to small business? Why or why not?

Intended Learning Outcomes

1. Define entrepreneurship in the context of micro, small and medium enterprise (MSME) as
well as its importance in the economic growth.
2. Describe the different entrepreneurial competencies in relation to the individual’s discipline.

INTRODUCTION

Poverty incidence in the Philippines remains above 20 percent of the population and the Philippine
government addresses this issue through entrepreneurship. Entrepreneurship can provide the
solution by creating wealth, jobs, and social empowerment. As the Philippine government is very
supportive of micro, small and medium enterprises as exemplified by the Magna Carta for Micro,
Small and Medium Enterprises the legal framework, which was enacted way back in 1991 as (RA
6897) then amended in 1997 as RA 8289. In 2007, the law was once again amended as RA 9501. This
law created the Small Enterprises Development Council to discuss and prepare the policies and
programs for implementation by various agencies involved in MSME development.

Meanwhile, many developed countries became developed mainly because of the concerted efforts of
the small business proprietors called entrepreneurs. Taken together, their efforts gave rise to
countries like the United States of America, the United Kingdom and many countries in Europe. Their
economies grew because of the contribution of the entrepreneurs in employment, income,
government taxes and availability of goods and services.

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Being an entrepreneur is an alternative to employment – by being a the owner. You are the boss.
Capital is not important because you can start small or by financing. What is important is your
wiliness to take action. (Banastao & Frias, Entrepreneurship 2008)

LESSON 1: Who is an Entrepreneur

Who is an Entrepreneur?

The concept of entrepreneurship was first established in the 1700s, and the meaning has
evolved ever since.
In the 20th century, economist Joseph Schumpeter (1883-1950) focused on how the
entrepreneur’s drive for innovation and improvement creates upheaval and change. Schumpeter
viewed entrepreneurship as a force of “creative destruction.” The entrepreneur carries out “creative
destruction” or making a “new combination,” thereby helping render “old ways” obsolete. The
established ways of doing business are destroyed by the creation of new and better way to do them.
Business expert Peter Drucker (1909-2005) took this idea further describing the
entrepreneur as someone who actually searches for change, responds to it and exploits change as an
opportunity.
Textbook writers have also defined Entrepreneurship as the process of creating something
new with value by devoting the necessary time and effort, assuming accompanying financial, psychic,
and social risks, and receiving the resulting rewards of monetary and personal satisfaction and
independence. Actually, this is an old concept with a new flavor. Countries, have developed through
time, one term for producer, seller and service provider, all lumped into one – “merchants”.

Four basic aspects of being an entrepreneur:

1. Creation of something of value – this means entrepreneurs create products or services that
can be offered for a price.
2. Devotion of necessary time and effort – entrepreneurs devote their time and effort towards
the attainment if their personal goals. In business, some if these goals are to earn profits, to
make products/services available in the community, to provide employment and income for
their family and other reasons.
3. Assumption of necessary risks – in the pursuit of their goals, entrepreneurs assume risks on
the possibility of losing whatever they put in. In business there is the possibility to fail and
lose everything. But the possibility of earning big is even greater.
4. Getting rewards – many entrepreneurs reap the rewards of their efforts through the
generation of profits and business expansion. Moreover, the prestige of being owner provides
intrinsic satisfaction.

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An entrepreneur is a person who starts and or operates a business. An entrepreneur is

creative and innovative. He is a person who starts something new. An entrepreneur maybe male
or female, young or old, professional, college graduate or school dropout, comes from A, B, C D or
E economic group. He is an owner-manager and willing to take risks. Usually, also his kind of
business is single proprietorship because he does everything from production to selling.

LESSON 2: The Role of the Entrepreneur in the

Economy

Role of Entrepreneurs in the Economy

Entrepreneurs are vital in the economic development of the country. They provide
employment and income that moves the economy forward, as shown in the vicious cycle of
development below:

Employment and Income

Entrepreneurs Investment Savings and Taxes

Figure 1-1. Vicious Cycle of Development

Thus, the cycle results to economic development as more people are employed and enjoy an
income through the investment of an entrepreneur. The government likewise benefits in the process
because entrepreneurs, as businessmen, pay taxes, hence, the government has the funds to provide
services to the people.
It should be remembered that the activity of one entrepreneur provides a multiplier effect.
For example, Jose decided to manufacture T-shirts and buys his materials from Mr. Santos. Hence,

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Mr. Santos hires his workers to meet the requirements of Jose and Jose hires workers to produce the
T-shirts. If Jose will close his business, eventually, Mr. Santos will also close his shop unless he has a
lot of customers. This cycle is, the opposite of the cycle above, called the cycle of regression.

The previous cycle also shows that entrepreneurs are:

Mobilizers of Capital

Service Providers Tax Payers

Employers Suppliers of products

Figure 1-2. The Entrepreneur

1. Mobilizers of capital. Entrepreneurs sometimes use their own savings as capital doe their
business ventures. However, if they do not have the capital, money can be borrowed from
banks to finance their intended business.
2. Service providers. Business ventures of entrepreneurs could be along the line of service like
parlor, spas or coffee shops.
3. Employers. Usually, entrepreneurs hire people to help them in their business. A restaurant
owner for example, will hire cooks and kitchen helpers while he, the owner, does the
purchasing and attending to the customers.
4. Tax payers. Business establishments pay taxes to the government. Thus, more business
would mean more taxes and better government services.
5. Suppliers of products. Products and services are available through the efforts of the
entrepreneurs. Without them, a scarcity of certain products and services will be felt.

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The business in the community, if taken as a whole, become a sort of huge basket that
supports all the lives of the people there. These businesses provide the people with all the goods
they need to carry on with their lives while making their money circulate and grow within the
community as well as within the country, or region, and the whole world. Entrepreneurship helps the
following:
o Products and necessities that sustain life
o Freedom from servitude, ignorance, social deprivation and misery; and
o Self-esteem for the entrepreneur: to be a person with a sense of self-worth and self-
respect, and being of service to the community

Enterprises and communities need each other to survive. Enterprises in the community often
help each other too. For example, the products of one enterprise can be the raw material needed by
another enterprise. Thus, money circulates. The combined efforts and cooperation of everyone in the
community create more opportunities for citizens to work and earn.
National well-being brings about development because people assured of having the
necessary goods on time, within reach, as needed, even as money circulates and entrepreneurs can
make a profit. Enterprises are a big factor in any country’s development and national wellbeing.
People get to have jobs, pay taxes, improve the circulation of money and have goods to buy and share.

The following are indicators providing that a country has reached national well-being and
true development.
1. Owners live within the community where their enterprise is loated
2. Enterprises served the needs of the residents for products and services and make a living
from doing this.
3. The community has an adequate supply of raw materials that the enterprise would need.
4. The community offers the enterprise a steady source of labor and in turn, is provided
gainful employment by the business.
5. The community willingly patronizes the enterprises and its products and services.
6. Local government executives are supportive of the business enterprise.
7. Local government executives are considerate and friendly to business owners.
8. Local government executives assure the business peace and order at all times.
9. There is an abundance of water and power supply.

True development takes care of the whole person, enabling the person to find the richest
possible expression of self. The lives of the entrepreneur and those of the people around the
entrepreneur are improved by proper development by proper development. Entrepreneurship
makes development possible.

The Department of Trade and Industry’s Bureau of Small and Medium Business Development
(BSMBD) describes the following factors that affect entrepreneurship in the Philippines:

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1. Top global executives believe that the growing number of consumers in emerging
markets will be the most important factor for global business during the next five years.
2. With the AFTA and tariffs near zero, the Filipino entrepreneur’s market has grown from
92 million Filipinos to half a billion Southeast Asians. A huge market opens many
opportunities.
3. Filipino enterprises will be exposed to intensive competition from lower-cost imports
\and locally based foreign firms.
4. With trade liberalization, there is no such thing as domestic market alone. Either an
enterprise has to rise up and complete or it dies.
5. Competitiveness depends on two major factors:
a. The business environment in the country (which is beyond the entrepreneur’s
control) and
b. The controllable condition within the enterprise.
6. Entrepreneurs must do something to improve the conditions under their control.
7. Entrepreneurs must be more focused on building their niche markets.
8. Entrepreneurs must ne more adaptive than their competitors are.
9. Entrepreneurs must be able to use appropriate technology. All of these lead to
productivity, which helps the Filipino enterprise to compete in the global market.

LESSON 3: The Role of the Entrepreneur in the

Economic Growth

Role of the Entrepreneurs in the Economic Growth

Entrepreneurism has been found to be a vital part of the economy. In a Kauffman Foundation
study, then countries were analyzed to measure the activity of entrepreneurs and the effect they were
having in the economy. These studies consisted of in-depth interviews with over 300 experts in each
country and surveys of 1,000 adults in each country. Countries ranking high entrepreneurial activity
had higher growth rates than countries with lower entrepreneurial activity. One-third of this
difference could be traced directly back to entrepreneurs.
The most important reason why entrepreneurs help the economy is due to the creation new
jobs. It has been estimated that entrepreneurs have created 34 million new jobs since 1980. Also, 70
percent of new start-ups were found to already employ at least one person, and 80 percent planned
to hire within the next year. This data provides significant evidence that entrepreneurism leads to
new jobs.
Another way that entrepreneurs help the economy is by innovation, research and
development. According to one study, two-thirds of all invention come from entrepreneurs. New

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inventions can improve the economy because they can provide better ways of doing tasks, and can
also lead to new business.
Entrepreneurism also helps the economy by creating wealth for many individuals seeking
business opportunities. Although this is not the number one reason individuals pursue entrepreneur
activities, it plays a major role in our economy. Both a new business and the wealth the owner can
obtain will boost the economy by providing new products as well as the spending power created for
the entrepreneur.

The Philippine MSME Defined

The Philippines, through the Small Medium Enterprises Development Council,, has
categorized enterprises according to size in terms of assets and employment as follows:

Category Asset Size Number of Percentage of Percentage of Value

Employees Total Registered Employment Added
Firms in 2008 Generated
Micro PHP 3 million and below Below 10 91.77%
Small PHP 3,000,001 to PHP 15 10 to 99 7.50 70% 32%
million
Medium PHP 15,000,001 to PHP 100 to 199 0.36
100 million
Large PHP 100,000,001 and 200 above .037 30% 68%
above

In terms of employment, the large firms contribute about 30% to employment whereas the
combined firms of micro, small and medium contribute 70% of total employment. In terms of value
added, the combined firms of micro, small and medium enterprises contribute only 32% compared
to the 68% of the large firms.

The Philippine Government is very supportive of micro, small and medium enterprises as
exemplified by the Magna Carta for Micro, Small and Medium Enterprises the legal fromawork, which
was enacted way back in 1991 as (RA 6897) then amended in 1997 as RA 8289. In 2007, the law was
once more again amended as RA 9501. This law created the Small Enterprises Development Council
to discuss and prepare the policies and programs for implementation by various agencies involved
in MSME development.

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Learning Activity

Instructions: Interview three entrepreneurs in your local community and write a profile of no more
than one page, describing how that person got into his current business, his greatest achievement,
his greatest challenge and the business goals he would most like to achieve before retiring.

Guide questions:
1. Type of business
2. Year/s in the business
3. Age
4. Sex
5. Marital status
6. Goals for the business
7. Prior experience in business
8. Greatest achievement
9. Greatest challenge
10. What would you like to achieve before retiring?

References
Banastao, Cristina and Frias, Solita (2008). Entrepreneurship: KATHA Publishing Co., Inc.

Areola, E., Gonzales, E., Siggaoat, Janine (2017). Entrepreneurship: JFS Publishing Services

Medina, Roberto (2014). Entrepreneurship and Small Business Management: REX Printing Co.

Pinson, Linda and Jerry Jinnett (2006). Steps to Small Business Start-Up: Chicago, Illinois: Kaplan
Publishing

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