CHAPTER 1

ORIGIN AND NATURE OF ENTREPRENEURSHIP

Objectives

 Identify the origin and nature of Entrepreneurship

 Determine the task of entrepreneurs
 Discuss entrepreneurship and innovation
 Expound entrepreneurship and economic development
 Identify the four stages of venture

Evolution of Entrepreneurship
13th century
16th Century
18th Century
19th Century- 3 famous Economists describe ENTREPRENEUR.
o Jean Baptiste Say
o John Stuart Mill
o Alfred Marshall

Contemporary Views on Entrepreneurship

1. Lloyd Shefsky in his book entitled, Entrepreneurs are made not born, defined
entrepreneur by dissecting the word entrepreneur into 3 parts as follows:
Entre means to enter
Pre means before; and
Neur means nerve center

2. Karl Vesper
He describes an entrepreneur in a broader perspective by postulating that
entrepreneurship is now a concern of various professions.
 Economist
 Psychologist
 Businessman
 Capitalist philosopher

3. Professor Robert Nelson

He defines entrepreneur as “a person who is able to look at the environment,
identify opportunities to improve the environment, marshal resources, and
implement action to maximize those opportunities.”
 4. Joseph Schumpeter
In his essay entitled Change and Entrepreneur, he described entrepreneurship as
doing things that are not generally done in ordinary course of business routine.

5. Jeffry Timmons
In his book entitled New Venture Creation, he described entrepreneurship as “the
ability to create and build vision from practically nothing.”

6. Albert Shapero who has studied other works on entrepreneurship has opined that
in all the definitions of entrepreneurship, there is an agreement that we are talking
about a kind of behavior that includes the following:
 Initiative taking
 The acceptance of risk and failure

7. Dr. Norberto A. Orcullo Jr

In his book CONTEMPORARY ENTREPRENEURSHIP, his idea of entrepreneurship
revolves around the notion that:

First, an entrepreneur is someone who perceives an opportunities and creates an

organization to pursue it.

Second, the entrepreneurial process involves the functions, activities and actions
associated with perceiving opportunities and creating an organization to pursue
them.

THE ENTREPRENEUR’S TASK

1. Products and services for customers and producers;
2. Employment;
3. Taxes;
4. Demand for suppliers’ products and services; and
5. Training facilities for future entrepreneurs.

In the attempt to make profits, the entrepreneur performs the following specific functions:
1. To supply the necessary capital;
2. To organize production by buying and combining inputs like materials and labors;
3. To decide on the rate of output, in the light of his expectation about demand;
and
4. To bear the risk inherent to the venture.
ENTREPRENEURSHIP AND INNOVATION
Innovation may be defined as the introduction of a new method, procedure, custom,
device among others. Innovation could be any of the following:
1. New product
2. New process of the production
3. Substitution of a cheaper material in an unaltered product
4. Reorganization of production, internal function, or distribution arrangement
leading to increased efficiency, better support for a given product, or lower costs;
and
5. Improvement in instruments or methods of doing innovation. Innovation may also
be viewed as the last stage in an important process consisting of the following:
a. Invention- refers to the discovery or devising of new products and processes;
b. Development- refers to the process by which the ideas and principles
generated from the stage of invention are embodied in concrete products
and techniques; and
c. Innovation- refers to the actual introduction of a new products or process.

ENTREPRENEURSHIP AND ECONOMIC DEVELOPMENT

Economic development is a scheme aimed at improving the living standards of the

nation’s citizenry. To achieve economic development goals, proper management of the
following elements is necessary:

1. Human resources (labor supply, education, discipline, motivation)

2. Natural resources (land, minerals, fuel, climate)
3. Capital formation (machines, factories, roads)
4. Technology (science, engineering, management, entrepreneurship)

NEW VENTURES AND LONG-TERM ENTERPRISES

The transition from a new venture to a successful long-term enterprise consists of at least
four major stages. The stages are as follows:
1. Prestart-up stage;
2. Start-up stage;
3. Early growth stage; and
4. Late growth stage.