Malawi University of Science and

Technology

Understanding Entrepreneurship

Lecture 1:
The Entrepreneurship Perspective

Issa J. Edward
Department of Applied Sciences
The Malawi Institute of Technology
Malawi University of Science and Technology
Intended Learning Outcomes

By the end of this lesson you should be

able to:
 Define an entrepreneur and
entrepreneurship
 State characteristics of entrepreneurs
 Explain the different types of
entrepreneurship
 Explain the importance of
entrepreneurship in an economy and
potential drawbacks of entrepreneurship
Historic Evolution on Entrepreneurship
 Although entrepreneurship study and practice has became
important at the turn of the 21st century, entrepreneurial
strategies are not a twentieth-century phenomenon.
 The word entrepreneur originates from a 13th century French
verb, entreprendre, meaning “to do something” or ‘to
undertake’ (Sobel, 2011, p. 2).
 Marco Polo established trade routes to the Far East, he
demonstrated risk-taking behaviour we associate with
entrepreneurship today (Osborne, 1995, p. 4).
 The ‘fit’ between his (Marco Polo) skills and the environmental
opportunity is a perfect illustration of a true entrepreneurial
strategy, and in particular is more relevant to our understanding
of entrepreneurship, with its increasing global scope (Ibid, p. 4).
What Does it Mean Today?
Dictionary definition
The owner or manager of a business enterprise who, by
risk and initiative, attempts to make profits

Original derivation:
entreprendre’ (French): to undertake
 What Does it Mean Today?
 “Much has been written on the complex subject of
entrepreneurs and entrepreneurship, and many inconsistent
definitions have been brought forth and explored in great
detail. Yet the entrepreneur is still one of the most ‘intriguing
and elusive characters to constitute the subject of analysis”
(Baumol, 1968, p. 64).

 “All who claim to have caught sight of him report he is

enormous, but disagree on his particulars” (A.A. Milne. In
Kirby, 2003, p. 11).
However……………
 “Entrepreneurship is essentially an economic phenomenon, and
‘involves a nexus of two phenomena: the presence of lucrative
opportunities and the presence of enterprising individuals”.
(Venkataraman, 1997)

 “Entrepreneurs are simply those who understand that there is

little difference between obstacle and opportunity and are able to
turn both to their advantage”
(Niccolo Machiavelli)
Who are these Individuals?

“Entrepreneurs are the new rock stars”.

(Cindy Boyd, 2013)
Who is an Entrepreneur?
 Cantillon and Say (from the perspective of an agrarian economy) –
someone who makes buying and selling decisions and in so doing is
the bearer of risk
 ‘Austrian school’: Kirzner – an ‘alert’ middleman who spots
opportunities to facilitate exchange (arbitrage)
 Schumpeter: an innovator – the entrepreneur brings change through
the introduction of new technological processes or products
 Knight: someone who undertakes risk, with profit being the reward
for bearing uncertainty
 Shackle: emphasises the role of creativity in the entrepreneurial
process
 Casson: someone with the skills to organise or reallocate resources
 An Entrepreneur Described
 An entrepreneur can thus be described as someone who:
1. Starts and manages their own business
2. Identifies new opportunities
3. Is creative , initiative and willing to take calculated risk
4. Organises and controls resources to ensure a profit
5. Has the ability and insight to finance, produce and market a
product
 All the above are called entrepreneurial activities
 An entrepreneurs is one who creates a new business in the face of risk
and uncertainties for the purpose of achieving profit and growth by
identifying significant opportunities and assembling the necessary
resources to capitalise on them.
Entrepreneurship Described

1. Entrepreneurship is the process of identifying opportunities for

which marketable needs exist and assuming the risk of creating an
organization to satisfy them
2. Entrepreneur and Entrepreneurship are two sides of the same coin;
while an entrepreneur is an individual who creates and establishes a
business, entrepreneurship is the process adopted by the
entrepreneur to do so
Entrepreneurship Redefined
 “An entrepreneur is a problem seeker, a problem solver, and an innovator,”
says Greenberg. “I don’t think entrepreneurship is limited to those who start
organizations or ventures. More than anything, an entrepreneur is a person
that can add value, whether they create something themselves or work for a
company.”
 Under that definition, the path towards entrepreneurship and an
entrepreneurial mindset can be pursued by anyone, including a teen.
 Greenberg lays our three core components for attaining entrepreneurial
success.
 Identify the opportunity. This usually means finding a problem to be solved or a
need to be filled.
 Create value. Solving the problem or filling the need in a unique way.
 Capture that value.
Which Entrepreneurs Can You Name?
Characteristics of an Entrepreneur
 Many people come up with great business ideas, but most of them
never act on their ideas. Why? – they are not entrepreneurs
 Researchers have invested a great deal of money over the years to try
and put a picture of “the entrepreneur personality”
 Here is a summary of entrepreneurial profile Persistence
 Desire for Responsibility Initiative
 Preference for moderate risk Knowledge
 Confidence in the ability to succeed Assertiveness
 High levels of energy Communication Skills
 Future orientation Problem Solving
 Skills at organizing Decision Making
 Value of achievement over money-
 Characteristics of an Entrepreneur -Abraham Lincoln
 “People are always blaming their circumstances for what they are. I don’t believe
in circumstances. The people who succeed are the people who look for
circumstances they want. And if they can’t find them, they make them.”— George
Bernard Shaw.
 Below is the resume, and remarkable story of Abraham Lincoln, former President
of the United States.
Age Significant Life Event Age Significant Life Event
Age 22 Failed in Business Age 23 Defeated for Legislature
Age 24 Failed again in Business Age 25 Elected to Legislature
Age 26 Sweetheart died Age 27 Had a nervous breakdown
Age 29 Lost election for Speaker Age 31 Lost election to elector
Age 34 Lost Election to Congress Age 37 Elected to Congress
Age 39 Lost Election to Congress Age 46 Lost Election to Senate
Age 47 Lost VP election Age 49 Lost Elections to the Senate
Age 51 Won US Presidency
The above resume of Abraham Lincoln demonstrates that even repeated failures
cannot deter a man who is motivated and determined to succeed. Abraham Lincoln
surely exhibits entrepreneurial traits
Why Do They Do What They Do?
So Why Choose to be an Entrepreneur?
 Luke Johnson (FT 25/4/07)
Freedom: “starting and running a business is the best way of
controlling your destiny”
Changing the world: “creating an enterprise is perhaps the most
effective way of making a positive difference to society that has
ever been devised.” “What could be more important than
creating jobs?”
Progress: “new business is about upsetting the status quo, thereby
leading to progress. I think that is a virtuous mission”
Social mobility; “business is a fantastic way for someone from a
modest background … to improve their life and get ahead
So Why Choose to be an Entrepreneur?
Creative destruction: inefficient and loss making companies die
… but productive companies tend to create a virtuous circle: …
attract talent, pay more, make investors good returns, and can
afford to launch better products. This is called progress.”
Creating a better future: “the inventive ability of entrepreneurs
to find solutions to … problems” such as global warming and so
forth.
Entrepreneurship is about striving for a better future – not just
dreaming.
The Benefits of Entrepreneurship
 there are endless reasons why people start own businesses which include the
following::
1. You have full control over your destiny.
2. You control who represents your brand
3. Opportunity to Make a Difference
4. Opportunity to reap impressive profits
5. Opportunity to reach your Full Potential
6. Eliminate downsizing or layoff fears.
7. You become an expert problem solver
8. Create your own corporate culture.
9. Opportunity to contribute to society and be recognised for your efforts
10. Opportunity to do what you enjoy and have fun at it.
In Economic Terms….

“There has never been a better time

to practice the art and science of
entrepreneurship”.
(Bygrave and Zacharakis)
Reasons People Go into Business for Themselves
 The Potential Drawbacks of Entrepreneurship
 Self-employment entails a lot more than just being able to choose your hours
and follow your passions. It carries huge responsibilities not only to yourself but
to your family, clients and even your community, with challenges you would
never face in a regular job.
1. Personal liability – even though you are your own boss, you are still
answerable to many masters: You must respond to customer demands and
complaints, keep your employees happy, obey government regulations, and
grapple with competitive pressures
2. Uncertain Income- Your income is uncertain as there is no guaranteed pay
check at the end of the pay period
3. Family and Lifestyle - You will most likely be working long hours, including
evenings, weekends and holidays, so your work-life balance is going to be
changed entirely. Married couples going into business together face a volatile
mix of business and marital pressures that do not always lead to happy
endings..
 The Potential Drawbacks of Entrepreneurship
4. Lower Quality of Life Until the Business Gets - the hours and hard work
needed to launch a new business can take their toll on the other aspects
of an entrepreneurs life.
5. High Levels of Stress – Starting and managing a business can be an
incredibly rewarding experience: but it also can be a highly stressful one.
6. Complete Responsibility – its great to be the boss, but many
entrepreneurs find that they must make decisions on issues about which
they have little or no knowledge at all
7. Discouragement – launching new business requires a great deal of
dedication, discipline and tenacity. Along the way to success, u will run
headlong into many difficulties – which appear insurmountable. In the
face of these discourage and disillusionments are common emotions
The Potential Drawbacks of Entrepreneurship
8. Risk of Losing Your Entire Investment –business failure can lead
to financial ruin for an entrepreneur and small business failure
rate is high: 35% of new businesses fail within 2 years; 54% shut
down within 4 years. In 6 years 64% of new ventures would
have folded. Before “reaching for the gold ring” ask urself if you
can cope psychologically with the failure?
What is the worst that can happen? How likely is this going to
happen? What can I do to avert? Plan B? - Scenario Planning
The Cultural Diversity of Entrepreneurship
 Virtually everyone has the potential to become an entrepreneur
 Diversity is the hallmark of entrepreneurship
 The entrepreneurship fabric is rich and made of a diverse mix of people”
 Young entrepreneurs
 Women entrepreneurs
 Immigrant enterprises
 Part time entrepreneurs
 Home based Businesses
 Family Businesses
 Copreneurs
 Corporate castoffs
 Corporate Dropouts
 Social Entrepreneurs