Module 1

ENTREPRENEURSHIP

I. Learning Outcomes

● Comprehend the concept of entrepreneurship, its process, its different

typesand the different entrepreneurial contexts;
● Identify the challenges and opportunities of entrepreneurship;
● Differentiate some the roles of entrepreneurs and managers
● Explain how ethics become a key ingredient to their success as
entrepreneurs; and.
● Create a persona.
MODULE OBJECTIVES AND AIMS

Introduce to the students to the notion of entrepreneurship, and offer some insights
about the several opportunities and challenges of entrepreneurship which are faced in
the business world.

II. Learning Content

Topics:

❖ Entrepreneur: Definition, Importance, Skills Required in Entrepreneurs,

Characteristics, Types, Classifications, Role of Entrepreneurship in Economic
Development, Role of Entrepreneurs in the Philippines
❖ Empathy
❖ Business Ideation
Entrepreneurs are action-oriented highly motivated individuals who take risks to achieve
goals. An entrepreneur is an innovator of a new combination in the field of production.

The entrepreneur is the founder of the enterprise who identifies opportunities,

assembles skilled manpower and necessary resources for the operation of the
enterprise, attracts persons and financial Institutions and takes psychological
responsibility for managing the enterprise successfully.
A .1 Concept of Entrepreneur

The person who creates a new enterprise and embraces every challenge for its
development and operation is known as an entrepreneur. And the undertaking or
organisation, typically a start-up company, set up by the entrepreneur is called
enterprise.

The word ‘Entrepreneur’ is derived from the French word “Entreprendre” means, “to
undertake.”

What is an Entrepreneur?

Adam Smith (1776) considers entrepreneur as a proprietary capitalist who supplies

capital and works as a manager intervening between labor and the consumer.

Francis A. Walker (1870) calls the entrepreneurs as engineers of progress and the chief
agents of production.

F. H. Knight (1921) propounds that entrepreneurs are a specialized group of persons

who bear risks and deal with uncertainty.

J-A. Mill (1848) advocates for using the word entrepreneur in the sense of an organizer
who is paid for his non-manual type of work.

J.B. Say (1824) defines an s entrepreneur as “an economic agent who assembles
factors of production, see the s price of produce in such a way that ensures the cost
and profit, re-accumulates capital and possesses administrative and productive
knowledge.”

The definition emphasizes the economic activities of an entrepreneur.

This concept is also supported by Hagen Se Robinson (1942). The emphasis on socio-
economic contributions and characteristics of entrepreneurs.

The innovation here is conceived as the introduction of a new product or new utility of
the old product, new market, new production methods, a new source of raw materials
and new organization.

Herberton G. Evans (I957) defines, “Entrepreneur Is the person or group of persons

who have the task of determining the kind of business to be operated.”

Evan’s entrepreneur only engages m setting the nature of the business, the good to be
produced or the service to be served and the type of customers to be catered.

H. Cole (1959) observes, “The entrepreneur is the individual who initiates, maintains, or
aggrandizes a profit-oriented business salt for the production or distribution of
economic goods and services.”

Cole believes that the person who engages in any economic activity to earn a profit is
the entrepreneur. Therefore, profit earning is the focal point to identify an
entrepreneur.

This definition centers on the concept of managership and implies that an entrepreneur
is a manager too.

The entrepreneur has been understood differently under the contemporary condition in
a seminar held on entrepreneurship in Delhi in 1981.

The consensus was “Entrepreneur is a person who accepts challenges, gives emphasis
on production for development, exercises vigilance about success and failure at the
time of taking standard risks and considers, carefully and significant stove conditions
before arriving at any decision.”

The concept has taken us to the idea of efforts and ventures that contribute to the
advent of facial progress leading to human welfare; it constructs upon physical activities
involved with the generation of products as writ as the psychological aspect associated
with entrepreneurial success.

Their entrepreneurs as strong achievers of goals and risk-takers for any desired action
for attaining the success of the ventures’ John G. Burch (1986) says, “The entrepreneur
is the one who undertakes a venture, organizes it, raises capital to finance it, and
assumes all or a major portion of the risk”.
Burch’s entrepreneur is not only a venture but also a risk-taker and capital provider too.
Entrepreneur brings talents, product -service venture ideas, know-how and usually,
provides finance with taking necessary risks.

There are two popular beliefs about who the person was who used the term
entrepreneur in economics.

It is believed that the word “Entrepreneur” was first used by the Irish banker operating
in Franco Ricardo Cantillon.

Another belief is that the French economist J. B. Say (1824) was first used the word
entrepreneur in economics. It is derived from the French word “Entreprendre” means,
“to undertake”.

Oxford English dictionary has adopted this word in 1897 and meant as “director or
manager of a public musical institution”. The term goes through evolutionary changes
of meaning. Till now, there is no consensual concept of entrepreneurs.

In the early 16th century, it was applied to those who were engaged in military
expeditions. It was extended to cover civil engineering activities Such as construction
and fortification in the 17th century.

It was only at the beginning of the 18th century that the word was used to refer to
economic aspects. In this way, the evolution of the concept of an entrepreneur is
considered over more than four centuries.

Entrepreneurial Management vs. Corporate Management

In their book, Entrepreneurship, Robert Hisrich and Michael Peters say that managing a
new venture differs from managing an existing operation along five key management
issues:

● strategic orientation
● commitment to opportunity
● commitment of resources
● control of resources
● management structure

The entrepreneurs born with these management skills come from a rare breed of
people with intelligence, great heart, and creative skills. They are visionary and self-
confident, good communicators with unlimited energy, and have a strong passion for
what they do.

Fortunately for those of you who were not born blessed with these skills running
through your blood, we know that the most critical skills in launching and running a
new venture can be learned. We will teach you some of the most important ones.

Entrepreneurs are directly involved in the dynamic, and very complex, interrelationship
between financial management and business strategy. This is the significant difference
that sets entrepreneurial management apart from all business management practices.
In almost all cases, the person making the decisions has personal risk at stake.

The worst-case scenario for folks “at work” is getting fired. The worst case for
entrepreneurs is losing their home, personal credit, and lifestyle, as well as the
destruction of family relationships.

Entrepreneurial Management: Peter Drucker remarked that for the existing large

company, the controlling word in the phrase “entrepreneurial management” is
“entrepreneurial.” In any new business venture, the controlling word is “management.”
Therefore, for the purposes of our discussions we lean toward “management” as a
discipline for entrepreneurs. We define entrepreneurial management as the practice of
taking entrepreneurial knowledge and utilizing it for increasing the effectiveness of new
business venturing as well as small- and medium-sized businesses.

The heart of entrepreneurial management is continually juggling these vital

management issues:

● What is this venture about? (mission and values statement)

● Where should it go? (goals and objectives)
● How will it get there? (growth strategy)
● What does it need to get there? (people and resources)
● What structure is best? (organizational capabilities)
● How much money does it need and when? (financing strategy)
● How will it recognize the final destination? (vision of success)

Entrepreneurial Management seeks to uncover the processes of entrepreneurial

activity from the cross-section of “individual” and “process” studies. It seeks to
understand the ways in which entrepreneurial managers both respond to and shape the
context in which they operate. Finally, it seeks to provide answer to the question of
what professional managers can adopt from entrepreneurial behavior? Based on its
useful

insight, Entrepreneurial Management is recommended not only to managers, but to

policy-makers and researchers as well.

a.2 Importance of Entrepreneurship

Entrepreneurs create jobs: Without entrepreneurs, jobs wouldn’t exist. Entrepreneurs

take on the risk to employ themselves. Their ambition to continue their business’
growth eventually leads to the creation of new jobs. As their business continues to
grow, even more jobs are created. 

Entrepreneurs innovate: Some of the greatest technologies in today’s society have

come from businesses. The technological advances come out of a need to solve a
problem, create efficiencies, or improve the world. In periods where there’s more
advancement in technology, there’s usually an entrepreneur to thank for it.

Entrepreneurs create change: Entrepreneurs dream big. So naturally, some of their

ideas will make worldwide change. They might create a new product that solves a
burning problem or take on the challenge to explore something never explored before.
Many aim to make the world better with their products, ideas, or businesses.

Entrepreneurs give to society: While some have this notion of the rich being evil and
greedy, they often do more for the greater good than the average person. They make
more money and thus pay more in taxes, which helps fund social services.
Entrepreneurs are some of the biggest donors to charities and non-profits for various
causes. Some seek to invest their money in creating solutions to help poorer
communities have access to things we take for granted, like clean drinking water and
good health care.

Entrepreneurs add to national income: Entrepreneurship generates new wealth in an

economy. New ideas and improved products or services from entrepreneurs allow for
the growth of new markets and new wealth. 

Why Do People Become Entrepreneurs

Every entrepreneur has their own ‘why’ that drove them into being their own boss.
Whether entrepreneurs need more freedom or to make an impact, they all take control
of their life by living life on their own terms. 

Here are a few of the reasons why people become entrepreneurs:

To change the world: Many entrepreneurs strive to make the world better. Whether
entrepreneurs believe in space exploration, eliminating poverty, or creating a practical
but game-changing product, they ultimately build a brand in service of others. Some
entrepreneurs use their business as a way to raise capital quickly to funnel into their
noble causes.

They don’t want a boss: Entrepreneurs often struggle with having a boss. They might
feel suffocated and held back. Some entrepreneurs may feel that they have a more
effective way of doing things. Others may dislike the lack of creative freedom.
Ultimately, they become attracted to entrepreneurship to succeed on their own terms..

They want flexible hours: Entrepreneurship is popular with those who need flexible
hours. For example, many people with disabilities often enjoy entrepreneurship, as it
allows them to work when they’re able to. Parents can raise their children at home or
pick them up from school without having to feel guilty about it. Students get the
flexibility to work around their demanding schedules and course loads.

They want to work from anywhere: Along with flexibility in working hours,

entrepreneurship is popular among those who don’t want to be tied down to a specific
location. Entrepreneurs might not want to work from the same place every single day,
as this can get boring fast. 

They can’t get a job: Many find a path into entrepreneurship when they can’t get a job.
Instead of being defeated by their situation, they create new opportunities for
themselves. A new graduate might start an online store the summer after graduation to
build up their resume. A parent who got laid off in the coronavirus economy might start
a business to ensure they can continue feeding their family while keeping a roof over
their heads.

They don’t fit into the corporate environment: Entrepreneurs often say that stuffy
corporate environments  restrict their growth. You can spot an entrepreneur in a
corporate environment as they’re usually trying to gain more control in their role and
better understand how everything fits together.
They’re curious: Entrepreneurs love finding out the answer to the question, ‘what will
happen if…’ They’re experimental and love learning. They regularly read business
books to advance their knowledge. So naturally, entrepreneurship appeals to them
because doing allows them to learn the most in the shortest amount of time. Their
curiosity allows their continued growth.

They’re ambitious: Those who love reaching difficult goals and milestones are made to
be entrepreneurs. Since there’s no limit to what they can achieve, entrepreneurs
constantly find their projects growing bigger and better than they ever imagined. When
obstacles come up, they find the workaround to their goal. They’re unstoppable.

a.3 Skills Required in Entrepreneurship

Technical Skills: Oral Communication, ability to organise, productive ability, technical

business management, coaching, network building, monitoring environment, ability to
spot new trends, active listening, writing and interpersonal skills.

Business Management Skills: Forecasting, planning, budgeting, decision making,

negotiation, goal setting, human relations, marketing, finance, etc.

Personal Skills: Ability to manage change, leadership, persistence, self-reliance,

foresightedness, innovativeness, risk taking, self-reflection, discipline, self-confidence,
honesty, patience, intelligence, tactfulness, emotional stability, etc.

a.4 Characteristics of Entrepreneurs:

a. Entrepreneur as a Risk-Bearer

Richard Cantillon, an Irish man living in France, was the first who introduced the term
‘entrepreneur’ and his unique risk-bearing function in economics in the early 18th
century.

He defined an entrepreneur as an agent who buys factors of production at certain

prices to combine them into a product to sell it at uncertain prices in the future.

He illustrated a farmer who pays out contractual incomes which are certain to the
landlords and laborers and sells at prices that are ‘uncertain’.
He further states that so do merchants also who make certain payments in expectation
of uncertain receipts.

Thus, they too are ‘risk-bearing’ agents of production.

Knight also described an entrepreneur to be a specialized group of persons- who bear

uncertainty.

Uncertainty is defined as a risk that cannot be insured against and is incalculable. He,
thus, distinguishes between ordinary risk and uncertainty.

A risk can be reduced through the insurance principle, where the distribution of the
outcome in a group of instances is known.

On the contrary, uncertainty is the risk that cannot be calculated.

The entrepreneur, according to Knight, is the economic functionary who undertakes

such responsibility of uncertainty which by its very nature cannot be insured, nor
capitalized nor salaried too.

Entrepreneur as Organiser

Jean-Baptiste Say, an aristocratic industrialist, with his unpleasant practical experiences

developed the concept of entrepreneur a little further which survived for almost two
centuries.

His definition associates entrepreneur with the fijHfcons of coordination, organization,

and supervision.

According to him, an entrepreneur combines the land of one, the labor of another and
the capital of yet another, and, thus, produces a product.

By selling the product in the market, he pays interest oh capital, rent on land and
wages to laborers and what remains is his/her profit.

Thus, Say has made a clear distinction between the role of the capitalist as a financer
and the entrepreneur as an organizer.

He further elaborates that in the course of undertaking several complex operations like
obstacles to be surmounted, anxieties to be suppressed, misfortunes to be repaired and
expedients to be devised, three more implicit factors are deemed to be essential.

These are:
Moral qualities for work judgment, perseverance and a piece of knowledge about the
business world.

Command over sufficient capital, and

Uncertainty of profits.

Marshall also advocated the significance of organization among the services of a special
class of business undertakers.

Entrepreneur as an Innovator

Joseph A, Schumpeter, for the first time in 1934, assigned a crucial role of ‘innovation’
to the entrepreneur in his magnum opus ‘Theory of Economic Development’.

Schumpeter considered economic development as a discrete dynamic change brought

by an entrepreneur by instituting new combinations of production, i.e., innovations.

The introduction of a new combination of factors of production, according to him, may

occur in any one of the following five forms:

The introduction of a new product on the market.

The instituting of a new production technology which is not yet tested by experience in
the branch of manufacture concerned.

The opening of a new market into which the specific product has not previously
entered.

The discovery of a new source of supply of raw material.

The carrying out of the new form of organization of any industry by creating a
monopoly position or the breaking up of if.

Schumpeter also made a distinction between an inventor and an innovator. An inventor

is one who discovers new methods and new materials. And, an innovator utilizes
inventions and discoveries to make new combinations.

Experts in the field of economics, business and sociology have defined entrepreneurs
from various points of view.
a.5 CHARACTERISTICS AND COMPETENCIES OF ENTREPRENEUR

Great entrepreneurs come from all walks of life. In Entrepreneurship Essentials, it’s
noted that “there’s no single personality profile, and it’s important to pay attention to
the entrepreneurial team, rather than focus on the individual.”

There’s no single personality profile that describes every successful entrepreneur;

however, certain characteristics are particularly important when it comes to starting and
leading a venture.

Here are 10 characteristics shared by successful entrepreneurs.

1. Curiosity

Successful entrepreneurs have a sense of curiosity that allows them to continuously

seek new opportunities. Rather than settling for what they think they know, curious
entrepreneurs ask challenging questions and explore different avenues.

In Entrepreneurship Essentials, entrepreneurship is described as a “process of

discovery.”

Without the drive to continuously ask questions and challenge the status quo, valuable
discoveries can easily be overlooked.

2. Structured Experimentation

Along with curiosity comes the need for structured experimentation. With each new
opportunity that arises, an entrepreneur must run tests to determine if it’s worthwhile
to pursue.

For example, if you have an idea for a new product or service that fulfills an
underserved demand, you’ll have to ensure customers are willing to pay for it. To do so,
you’ll need to conduct thorough market research and run meaningful tests to validate
your idea and determine whether it has potential.

3. Adaptability

The nature of business is ever-changing. Entrepreneurship is an iterative process, and

new challenges and opportunities present themselves at every turn. It’s nearly
impossible to be prepared for every scenario. Entrepreneurs need to evaluate situations
and adapt so their business can keep moving forward when unexpected changes occur.

4. Decisiveness

To be successful, an entrepreneur has to make difficult decisions and stand by them. As

a leader, they’re responsible for guiding the trajectory of their business, including every
aspect from funding and strategy to resource allocation.

Being decisive doesn’t always mean having all the answers. If you want to be an
entrepreneur, it means having the confidence to make challenging decisions and see
them through. If the outcome turns out to be less than favorable, the decision to take
corrective action is just as important.

5. Team Building

A great entrepreneur is aware of their strengths and weaknesses. Rather than letting

shortcomings hold them back, they build well-rounded teams that complement their
abilities.

In many cases, it’s the entrepreneurial team, rather than an individual, that drives a
venture toward success. When starting your own business, it’s critical to surround
yourself with teammates who have complementary talents and contribute to a common
goal.

6. Risk Tolerance

Entrepreneurship is often associated with risk. While it’s true that launching a venture
requires an entrepreneur to take risks, they also need to take steps to minimize it.

While many things can go wrong when launching a new venture, many things can go
right. The key, according to Entrepreneurship Essentials, is for entrepreneurs to actively
manage the relationship between risk and reward, and position their companies to
“benefit from the upside.”

Successful entrepreneurs are comfortable with encountering some level of risk to reap
the rewards of their efforts; however, their risk tolerance is tightly related to their
efforts to mitigate it.

7. Comfortable with Failure

In addition to managing risk and making calculated decisions, entrepreneurship requires

a certain level of comfort with failure.
It’s estimated that nearly 75 percent of new startups fail. The reasons for failure are
vast and encompass everything from a flawed business model to a lack of focus or
motivation. While many of these risks can be avoided, some are inevitable.

Successful entrepreneurs prepare themselves for, and are comfortable with, failure.
Rather than let fear hold them back, the possibility of success propels them forward.

8. Persistence

While many successful entrepreneurs are comfortable with the possibility of failing, it
doesn’t mean they give up easily. Rather, they see failures as opportunities to learn and
grow.

Throughout the entrepreneurial process, many hypotheses turn out to be wrong, and
some ventures fail altogether. Part of what makes an entrepreneur successful is their
willingness to learn from mistakes, continue to ask questions, and persist until they
reach their goal.

9. Innovation

Many ascribe to the idea that innovation goes hand-in-hand with entrepreneurship. This

is often true—some of the most successful startups have taken existing products or
services and drastically improved them to meet the changing needs of the market.

Innovation is a characteristic some, but not all, entrepreneurs possess. Fortunately, it’s
a type of strategic mindset that can be cultivated. By developing your strategic thinking
skills, you can be well-equipped to spot innovative opportunities and position your
venture for success.

10. Long-Term Focus

Finally, most people think of entrepreneurship as the process of starting a business.

While the early stages of launching a venture are critical to its success, the process
doesn’t end once the business is operational.

In Entrepreneurship Essentials, it’s stated that “it’s easy to start a business, but hard to
grow a sustainable and substantial one. Some of the greatest opportunities in history
were discovered well after a venture launched.”

Entrepreneurship is a long-term endeavor, and entrepreneurs must focus on the

process from beginning to end to be successful in the long run.
An entrepreneur is a person who is action-oriented and highly motivated to take a risk
and to achieve such a goal dot brings about a change in the process of generating
goods or services or re-initiates progress in the advent of creating new organizations.

Therefore, experts have nine characteristics for the entrepreneur from different
conceptual viewpoints. (from other source)

Nine characteristics of an entrepreneur are;

1. Entrepreneur is an agent.
2. Entrepreneur is a risk-taker.
3. Entrepreneur is a profit maker.
4. Entrepreneur is an achievement motivator.
5. Entrepreneur is a capital provider.
6. Entrepreneur is the determinant of the nature of the business.
7. Entrepreneur is an innovator.
8. Entrepreneur is a reward receiver.
9. Entrepreneur is a challenge taker.
The characteristics that encompass the concept of the entrepreneur are discussed
below:

1. Entrepreneur is an agent

An entrepreneur is perceived as an economic agent who assembles materials for

producing goods at a cost that ensures profits and re-accumulation of capital.

He is also understood as a change agent who brings about changes in the structure and
formation of the organization, market and the arena of goods and services.

2. Entrepreneur is a risk-taker

Many experts – old and new, have emphasized this characteristic. Back I955, Redlich
pointed out that an entrepreneur is a person who identifies the nature of risk and takes
a decision.

Later on, Burch, Meredith and other experts have agreed that an entrepreneur is a risk-
taker while undertaking a venture.
3. Entrepreneur is a profit maker

An entrepreneur is an individual who establishes and manages the business for the
principal purpose of profit and growth.

4. Entrepreneur is an achievement motivator

David C. McClelland has initiated this concept of the entrepreneur by calling him “as per
sun with a strong desire for achievement.”

Later on, Meredith and others have expressed the same concept while they termed
“entrepreneurs are action-oriented, highly’ motivated individuals.”

Therefore, entrepreneurs have to have a deep-rooted need for achieving their goals.

5. Entrepreneur is a capital provider

Entrepreneur a person who operates a business by investing his or her capital. Abbett
first pointed out this characteristic in 1967.

It supported by Nadkami (l97S) and Sharma (1981). They perceived entrepreneur as

the founder of an enterprise who assembles necessary resources for the operation of
the enterprise.

6. Entrepreneur is the determinant of the nature of the business

This characteristic /concept of the entrepreneur was promoted by Evans in 1957 It says
that an entrepreneur is the person or group of persons who perform the task of
determining the kind of business to the operated.

Therefore, entrepreneurs promote diversified and distinct types of business in society.

7. Entrepreneur is an innovator

Joseph A. Schumpeter {1934) characterized entrepreneur as an innovator of a new

combination in the field of production Later on Robinson (1962) and Hagen (1962) have
described entrepreneurs as a person who lakes a small venture to the edge of success
by his efforts, innovation and motivation.

Innovation is perceived by Schumpeter as an action that introduces a product, a new

quality, a new method of production, a new market and a new organization.
Therefore, an entrepreneur innovates something that brings about disequilibria in the
industry.

8. Entrepreneur is a reward receiver

An entrepreneur is a person who creates something new of value by devoting time and
efforts and in tum receives monetary and personal rewards. Max Weber, Hartman,
Hisrich and Peters have recognized this distinct phenomenon of entrepreneurs.

9. Entrepreneur is a challenge taker

It perceives an entrepreneur as a person who accepts challenges for developing and

exercising vigilance about success and failure to take a risk and to generate products.

The above-mentioned characterizes an entrepreneur show’ that an entrepreneur is a

dynamic person who promotes society and civilization by taking ventures that give an
enormous variety of goods and organizations to bring about changes in the arena of
industrial activity.

a.6 Types of Entrepreneurs

There is a long list of entrepreneurs in our civilization who were instrumental in

introducing new methods, products, new markets, and new forms of industrial
organization.

Such people were drawn from all strata of society.

They were the person who valued business as a means and sign of achievement, they
were that people who appreciated the possibility of innovations and they were people
who tried to overcome the resistances and obstacles standing in the way of doing new
things.

They were the great figures of the Industrial Revolution in England who earned their
reputation as innovators and organizers.

Entrepreneurs take various initiatives with various motives that direct them to various
functional areas.
 Here are five types of entrepreneurs with real-world examples to help you get an idea
of which route you should pursue.

1. Social entrepreneurship

A socially conscious business is focused on solving social problems, such as access to

food, money, and education. The stated goal of these companies is to make the world
better (although, for most, the ultimate purpose is still to make money). Such
companies develop products and services with the goal of achieving these lofty goals.
This model sometimes describes non-profit organizations as well.

Real-world example: Seventh Generation, which sells eco-friendly cleaning and personal

care products, was launched in 1988 in response to growing societal concerns about the
environment since many household products of the day included harsh chemicals. The
firm donates 10% of pre-tax profits to community- and environment-focused non-
profits and businesses. Despite lower profit margins, the company reportedly managed
to pull in $200 million in 2015 — proving that creating a responsible corporate image
can also make money.

2. Innovation entrepreneurship

Innovation entrepreneurship is rooted in new inventions and ideas, which are then
transformed into ventures. These firms aim to change how people live and seek ways to
make products and services stand out, thereby accomplishing something that other
companies haven’t.

Products such as the iPhone show how innovation can completely alter how people go
about their daily routines. This kind of entrepreneurship is ambitious and often requires
significant investment to get off the ground.

Real-world example: Founded in 2003, Tesla sought to innovate the automobile market

by launching a line of affordably priced cars that were entirely electric, which hadn't
been done successfully on a large scale until then. By 2019, Tesla had reportedly sold
367,849 units globally, a 50% increase over the year before. Because of how early
Tesla was to the market, the company enjoys massive market share in a rapidly
growing industry.

While Teslas are still largely unaffordable to working-class families — prices start at
around $36,000 — the market is expanding, and continued innovation may bring prices
down to where it becomes a more widely available mode of transportation.

3. Big business entrepreneurship

One major disadvantage for a business when it gets larger is that it starts to move
slowly. As a result, big businesses often try to jump-start entrepreneurship by snatching
up a smaller company and delegating innovation to the new acquisition.

The larger company may leverage limited product or service life cycles and have
experienced professionals take the reins of new projects. Massive tech firms such as
Google and Microsoft often do this by buying out a small developer with promising
technology as part of its long-term focus.

Real-world example: After being partners for years, Disney finally purchased animation
studio Pixar in 2006. Rather than create its own studio to compete with Pixar, Disney
decided it would simply buy the up-and-coming studio behind Toy Story and other hit
movies. It has proven to be quite the lucrative arrangement for Disney, which has
cashed in on other blockbuster successes from Pixar since the acquisition,
including WALL-E, Coco, Up, Brave, and sequels to Toy Story.

4. Small business entrepreneurship

When you don’t have the resources of a big business and have to be more conservative
in your accounting, your entrepreneurship has to be more dependent on good, old-
fashioned elbow grease.

In small business entrepreneurship, innovation is typically more modest and based on a

new twist on currently available products and services — or simply on doing a job well
— while profits are used to support the company’s family rather than being poured into
more expansion. These small businesses are often made up of family members and
friends. Local restaurants, dry cleaners, and mom-and-pop stores are good examples.

Real-world example: Chances are you don’t have to go far to find a good example of
small business entrepreneurship. Many local businesses represent a family that decided
to put its hard-earned cash into launching a store to serve the surrounding community.
Restaurants are typical examples, with hard-working families serving delicious meals
day in and day out. Many fail, some succeed, and a few others go on to expand to
additional locations. Some even create regional empires.

5. Scalable start-up business entrepreneurship

As defined by Steve Blank, the father of the lean startup concept, scalable startup
business entrepreneurship begins with a founder’s belief that they can change the
world. Venture capitalists often swoop in to fund these sorts of startups in the hope of
landing massive returns. They then hire highly skilled and educated professionals to run
them, seeking to address market holes or disrupt entire industries.
Real-world example: Uber started as an idea to revolutionize the taxi industry and, after
attracting investment, the company exploded and grabbed massive market share in a
very short time. Critics have since questioned the company’s business practices — did
Uber skirt taxi regulations and pay its “independent contractor” drivers artificially low
wages to create an unsustainable business model in order to grab an early foothold in a
growing market? But no one can argue that the company hasn’t dramatically changed
how people get around.

An entrepreneur is perceived as a person or a group of persons who holds multiple

mental strengths and takes manifold efforts to generate and to make a venture
successful.

In sum, the concept of the entrepreneur is intimately associated with the 3 elements;
risk-bearing, organizing and innovating. Thus, an entrepreneur can be defined as a
person who tries to create something new, organizes production and undertakes risks
and handles economic uncertainty involved in the enterprise.

a.7 Classifications of Entrepreneurs

1: Solo-Service Entrepreneur

Usually a sole proprietorship (just him/herself) with friends as customers. It’s most
often a service that requires time but little or no investment. There are few opportunity
costs as Solo-Service Entrepreneur sare mostly students who are selling gum or mowing
someone’s lawn. The tasks are usually generally not original. Needless to say, they have
limited experiences in entrepreneurship.

2: Commodity Entrepreneur

These are entrepreneurs who make healthy investments to start something that is
somewhat saturated in the market. This means you can find many similar businesses
that do the same thing. Most restaurants and coffee shops, as well as common
commodity businesses are within this category. They usually follow what the
Opportunity Entrepreneur does after it becomes common and adapted. When asked
why they started that business, it is usually not because they see a special demand or a
better way to do things in the market, but simply because they think it would be
interesting (“I always wanted to open a flower shop”), or they are good at the technical
work of that business and want to open a business with that skill. Real Estate would be
categorized as Commodity Entrepreneurship.

3: Network Marketing & Franchise Entrepreneur

For those who don’t know, network marketing is the pyramid way of doing business,
where you do business, and you recruit other people to run divisions under you. They
do the same, and you get some commission from those under. It’s legit business as
they truly create some value, as long as they are actually selling a valuable product or
service. I feel like the initialization process for this type of entrepreneur is too easy, and
the opportunity often comes to search for you with full force, not the other way around
(entrepreneurs create opportunities themselves). I feel this is more of a
salesman/manager than an entrepreneur, as even though one needs to make
entrepreneurial tactical decisions, nothing truly new is created. You just follow
someone’s model, use someone’s equipment, and have relatively small investment and
risk. 80% of the business is worked out for you. Most people can start without any past
experience

(as a Starting Entrepreneur). However, it is true that the same problems with stress and
creativity runs in Network Marketing, so it is still considered entrepreneurial.

4: Opportunity Entrepreneur

Opportunity Entrepreneurs look at the newest trends, figure out what works, and do it.
They usually identify some competitive advantage and start something that exists,
except better. The scale is usually decent and initial investment is usually pretty large.
Starting is difficult because one needs to go through all regulations and registrations as
well as obtain decent capital. Risk is relatively high because it is hard to rightly evaluate
which market trends can be followed and have the technical abilities and timing to do it
well. Creativity/Originality is based on how the entrepreneur picks the business and the
creative processes to get a solid edge, but it is not completely innovative. In an
Economics graph of supply and demand, these are the people that “shift the supply
curve forward” when there seems to be profit in an industry. Finally, Opportunity
Entrepreneurs often have some past experience as a Solo-Service Entrepreneur.

5: Innovation Entrepreneur

These people create something new, something no one else has ever done in an
industry. They identify something that does not exist yet is missing, and they do what it
takes to make it happen. The scale usually would be pretty big in order to bring
something completely new into the market. The difficulty in initiation is extremely high,
especially in some industries. However, the strongest characteristic about an Innovation
Entrepreneur is that they think outside the box, and are willing to take huge risks, as
nothing has indicated this business would work at all!
6: High Tech Entrepreneur

The High Tech Entrepreneur can be some of the most respectable in terms of being
entrepreneurial. Instead of creating improvements or introducing something good in an
industry, they create industries. These guys invented computers and start the entire
computer industry. They invented automobiles and started the automobile industry with
all its parts and accessories. As you can tell, it is incredibly hard to initiate such a
business. Investments, creativity level, and risk are all extremely high. You are investing
for something that might not even be created! (let along being tested and proven)
These companies usually need to be backed up by Venture Capitalists, and it also has a
high chance of failing due to technology competition (someone might be already almost
done with what you are trying to make when you are still mindlessly inventing).

It takes a true Entrepreneur to spend this much time, money, money forfeited
elsewhere, and energy for this huge a risk. However, there must not be a mix-up
between Inventors and Entrepreneurs. There are cases where the Inventor is also an
Entrepreneur (or Entrepreneurial), but many times simply knowing the technological
work of making a new product does not make one an Entrepreneur. Inventors create
new great products, but entrepreneurs create new great businesses.

7: Escape Entrepreneur

Some people go on their ventures because they simply want to make a lot of money
and/or want to be their own boss. In essence, they are entrepreneurs because they
want to “escape” from something else. These are wrong motives and usually result in a
failing business (unfortunately, this is the majority of people who start businesses, and
is part of why so many businesses fail.) Often times, these entrepreneurs fail because
they realize that being an entrepreneur means working twice as much as having a job,
and getting paid 1/3 of it, especially in early years. The “grind” will often make them
lose motivation and “escape” back to their former career.

a.8 Role of Entrepreneurship in Economic Development

The entrepreneur who is a business leader looks for ideas and puts them into effect in
fostering economic growth and development. Entrepreneurship is one of the most
important inputs in the economic development of a country. The entrepreneur acts as a
trigger head to give spark to economic activities by his entrepreneurial decisions. He
plays a pivotal role not only in the development of industrial sector of a country but also
in the development of farm and service sector. The major roles played by an
entrepreneur in the economic development of an economy are discussed in a
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 leads 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 large-scale 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 leads 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 leads 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.

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.

a.9 ETHICS IN ENTREPRENEURSHIP

In real life, entrepreneurs encounter ethical problems all the time. This is why it is good
to discuss ethics early on in the budding entrepreneur's life. Entrepreneurs are faced
with complex moral problems related to basic fairness, costing and pricing dilemmas,
distribution choices, and even personal relationships. Although it is difficult to give
clear-cut and outright answers to these ethical questions, airing these ethical dilemmas
would be a good first step to making the students aware of what they will encounter in
real life.

The importance of ethics in business

David McClelland (McClelland, D. C.: 1961, The Achieving Society, D. Van Nostrand,
New York) was among the first contemporary scholars to ask serious ethical questions
about entrepreneurship issuing a call for more study. McClelland observed, "We do not
know at the present time what makes an entrepreneur more or less ethical in his
dealings but obviously there are few problems of greater importance for future
research."

Entrepreneurs are today urged to look seriously into ethics because more and more
people realize that the saying "We are our brother's keeper" is true. Capital and money
in the enterprise becomes depleted but the character of the entrepreneur outlasts these
material resources.

Ethics is internally imposed by the character of the entrepreneur. Honesty cannot be

imposed from outside the person; honesty is part of the person's character, carried over
from the person's upbringing and character development.

Without ethics the person will fall under the weight of corruption, which in some
readings, is termed lack of conscience or lack of character.

Government can impose laws and organizations can draw up a code of conduct for the
employees. But these are intended for people who violate them. Those who have
integrity obey these laws and ordinances as part of their character, of who they are.

Doing the right thing works from an internal core and forms as an upright character.
External codes and laws can force people to do right but fail to change the internal core
of one’s character.

Reasons why ethical entrepreneurs are important for the right and sustainable
development of a country.

We do not only want to grow and develop; but to grow and develop in the right way,
which is the sustainable way. Sustainable development is centered not on science, not
on technology but on man. Human beings (employees, customers, suppliers, the
members of the community where the business is located) need to live healthy,
dignified, and productive lives in harmony with nature.
 a.10 Role of Entrepreneurs in the Philippines

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.

Enterprise development and competitiveness

 Enterprise development in the context of competitiveness not only entails the
ability to produce products that can be accepted globally but also the level of support
given to enterprises to help them produce, innovate, and gain market access.

While relatively mature and free, enterprise development in the Philippines is

beset with critical challenges. These challenges are found within the context of pillars
identified by the United Nations Development Programme in its report Unleashing
Entrepreneurship: rule of law, physical and social infrastructure, domestic macro
environment, and global macro environment; a level playing field, access to financing,
and access to skill development and knowledge.

If the challenges remain unresolved, gaps in enterprise development have the

potential to thwart the country’s competitiveness and ability to effectively function
within global production networks.

Rule of Law

Rule of law, which encompasses regulatory structures, policy environment, and

enforcement of regulations, is one of the more important dimensions in assessing the
competitiveness of Philippine enterprises. According to the World Bank’s 2013 Doing
Business Survey, the Philippines ranks 138 of 185 economies with regards to the ease
of doing business. Except for the indicator “trading across borders” where the
Philippines fared in the top third of the rankings (#53), the country sits at the bottom
third in all other enterprise development indicators such as starting a business (#161),
dealing with construction permits (#100), registering property (#122), getting credit
(#129), protecting investors (#128), paying taxes (#143), enforcing contracts (#111),
and resolving insolvency (#165). Along these lines, it can be clearly noted that the
Philippines’ regulatory environment for enterprise development is still weak and needs
further reform, harmonization and standardization.

Taking the case of business start-ups for instance, when entrepreneurs draw up
a business plan and try to get under way, the first hurdle they face is complying with
the procedures required to incorporate and register the new firm before they can legally
operate. The Philippines requires at least 15 procedures and takes some 30 or more
days to start a business. Malaysia requires nine procedures and 24 days while Taiwan
requires eight procedures and 48 days. The rest of the Southeast Asian region averaged
8.7 procedures and 46.8 days to start a business.
Access to credit

Another important dimension is access to financing. While specific laws such as

the MSME Magna Carta and Barangay Micro Business Enterprises (BMBE) development
specifically mandate financing for enterprises, obtaining said funds is a different story.
Most lending portfolios require collateral accompanied by tedious documentation and
other technical requirements that are difficult for MSMEs to comply with.

An enterprise survey conducted by the Universal Access to Competitiveness and

Trade (U-ACT) in 2008 revealed that access to capital and financing are two of the most
problematic issues for enterprises, primarily MSMEs. Seventy-two percent of the total
respondents, or nearly three out of four, observed that investment and/or capital are
currently difficult to obtain. On the other hand, five out of 10 surveyed MSMEs regarded
access to and cost of credit as problematic, in relation to their businesses. In fact, 14
percent strongly stressed that credit availability and cost pose a serious problem to the
operation of their businesses.
Internationalization and global production networks

The rapid integration of economies and globalization of markets has influenced

the evolution of entrepreneurship over the years. Thus, from the traditional concept of
supporting the various factors of production, entrepreneurship now entails the capacity
to see an opportunity, come up with an idea, and organize the capital, knowledge,
partners and managerial skill needed to develop and sustain business activities through
internationalized value chains.

Taking advantage of liberalized trading environments is an emerging challenge

for Philippine enterprises. This is compounded by the reality of limited opportunities for
productivity and innovation. The World Economic Forum (WEF) Global Competitiveness
Index identified infrastructure, labor market efficiency, innovation, technological
readiness, intellectual property protection, R&D spending by private companies, and
availability of scientists as key areas in business and enterprise development where the
Philippines is lagging.

Enterprises need to be supported by strong social and physical infrastructure,

which include among others, labor productivity, laboratories, business incubators,
business planning, marketing and branding, and conformance to international
standards. All these should be linked to the supply chain while at the same time
economic clusters found in local economies need to be developed to allow specialization
and product complementarity.

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.

The OECD Working Party on SMEs and Entrepreneurship in its 2009 study on “Barriers
and Drivers to SMEs Internationalization” undertaken by Kocker and Buhl points out
that institutionalization of networks/social ties and supply chains is a key driver of SME
international competitiveness. The study noted “the importance of network/social ties
and supply chain links in triggering an SME’s first internationalization step and
extending internationalization processes.”

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.