Module 1

Why Entrepreneurship?

The 1987 Philippine Constitution recognizes entrepreneurship as an engine of economic growth. Article
XII Section 1 highlights the role of private enterprises in supporting the equitable distribution of income
and wealth, sustaining the production of goods and services, and expanding productivity, therefore
raising the quality of life.

Entrepreneurship gives birth to new commodities, techniques, and goods, booting human progress
forward and rendering the old obsolete, leading to the extinction of whole branches of industry and the
creation of new ones. It is the use of innovation that makes many of our goods today not only better but
also cheaper than they were even a decade ago. This process is so powerful that many large
corporations are beginning to ask how they can use their employees' talents for innovation (Mellor,
2009).

Evaluation of Entrepreneurship

In the 1960s, uncertainty in the industries led to widespread diversification among large companies. The
strategy was that if you had a finger in many pies, then nothing much could go wrong. This went so far
that many giant corporations ended up with divisions in rubber, in electronics, in chemicals, in steel, in
coal, etc. However, it soon became obvious that quite different sets of skills were needed to run each
division profitably. This led to a process of divestment, where the new mentality dictated 'do what you
are good at'. This shift meant that each industry had quite a narrow focus. It was built on the
assumption that there only are a certain number of industries and that therefore understanding and
controlling these will lead to optimal performance (Mellor, 2003, 2005). Many scholars believe that this
break-up of markets - the so-called 'postFordist era' - was actually the natural result of the downswing in
the last

Kondratieff cycle (Kondratieff, 1935), which introduced a period of 'creative destruction' (Schumpeter,
1942). This process has cast new light on the role of the entrepreneur, the force that rearranges the
market into new and more efficient forms (Drucker, 1985)

The word entrepreneur is derived from the French entrepreneur, meaning 'to take in between', or 'to
undertake'. In English and in most Romance languages , the entrepreneur is someone who undertakes
to organize, management and assume the risk of a business (Frederick et al. 2016). The definition is
broadened so that today an entrepreneur is considered to be a social or business innovator or developer
who recognizes and seizes opportunities; converts those opportunities into workable/marketable ideas;
adds value through time, effort, money or skills; assumes the risk of the competitive marketplace to
implement these ideas; and realises the rewards from those efforts (Ronstadt, 1984).

Early Definitions and Appr

The recognition of entrepreneurs as a class dates back to eighteenth-century France when Irish French
banker and investor Richard Cantillon associated entrepreneurs with 'risk-bearing' activity in the
economy. In England during the same period, the Industrial Revolution was growing and the
entrepreneur played a visible role in risk taking and the transformation of resources (Kirzner, 1979).

Entrepreneurship ... consists in doing things that are not generally done in the ordinary course of
business routine; it is essentially a phenomenon that comes under the wider aspect of leadership
(Schumpeter, 1951).

Entrepreneurship, at least in all no authoritarian societies, constitutes a bridge between society as a

whole, especially the non-economic aspects of that society, and the profit-oriented institutions
established to take advantage of its economic endowments and to satisfy, as best they can, its economic
desires (Cole, 1959).

In ... entrepreneurship, there is agreement that we are talking about a kind of behavior that includes: (1)
initiative taking,(2) the organizing or reorganizing of social economic mechanisms to turn resources and
situations to practical account, and (3) the acceptance of risk of failure (Shapero, 1975).

Entrepreneurship is the dynamic process of creating incremental wealth. This wealth is created by
individuals who assume the major risks in terms of equity, time, and/or career commitment of providing
value for some product or service. The product or service itself may or may not be new or unique but
value must somehow be infused by the entrepreneur by securing and allocating the necessary skills and
resources (Ronstadt, 1984).

Common characteristics of entrepreneurs

An entrepreneur is an enterprising person with enterprising attributes or traits (Gibb 1988). Some
individuals appear to be innately more enterprising than others, whilst some develop enterprising
attributes through education and experience. Some of the key attributes that define enterprising
behavior are initiative, flexibility, strong powers of persuasion, the ability to take acceptable risks,
creativity, autonomy, problem-solving ability, the need for achievement, imagination, leadership, strong
belief in making your destiny, and the capacity for hard work (Gibb 1988).

Common Characteristics of Entrepreneurs

Kuratko and Hodgetts (1998) identified common characteristics likely either to be found among
entrepreneurs or at least to be associated with the process of the enterprise. The details of these
elements are explained by Mazzarol and Reboud (2010) in the following ways:

1. Commitment, determination, and perseverance. New ventures and their sustained growth require
commitment and a willingness to persist in the face of obstacles. Entrepreneurs are often willing to take
on challenges and find ways to overcome problems - even when others have decided to give up.

2. Drive to achieve. A major characteristic of entrepreneurs is their ability to set goals and strive to
achieve them. The sense of satisfaction that comes from seeing their goals achieved and dream fulfilled
is often a major motivator for entrepreneurial people.

3. Opportunity orientation. Identifying potential opportunities for new ventures, innovations or

initiatives is a hallmark of entrepreneurs. The entrepreneur is recognized as being good at
environmental scanning and screening potential opportunities (Bhide 1994).

Persistent problem-solving.

Entrepreneurs are typically faced with new problems in which they are learning how to do things for the
first time, or actually doing things that have not previously been done. . This means that they are
continuously faced with problems to solve and must possess or develop skills in this area.

5. Internal locus of control. An internal locus of control suggests that the person believes they are
responsible for their own destiny and not dependent upon others or in the hands of fate.

6. Calculated risk-taking. The launch of a new business venture or the development of new innovation is
frequently associated with risk. For entrepreneurs, the need to accept and learn to deal with risk is a
major attribute. However, entrepreneurs are calculated in their risk-taking rather than simply being risk-
taking gamblers, and should be viewed as able to successfully manage risk

7. Tolerance for failure. Risk-taking implies that there is the chance of failure, and many new ventures
and innovations do not succeed. The entrepreneurial person is likely to be ready to accept failure as a
process of learning and to accept a trial and error approach to their life.

8. Creativity and Innovativeness. The desire to create has been found to be a major motivating factor in
the formation of new business ventures. Creativity is also the key source of innovation, and it is not
uncommon to find that many entrepreneurs are also creative individuals.

9. Self-confidence and optimism. A strong belief in oneself and a positive or optimistic outlook is an
important quality for entrepreneurs to possess. In difficult times when risks are high and there is a high
level of uncertainty, such optimism and self-confidence are a valued way of maintaining focus and
motivation.

10. Team building. A key capability of the entrepreneur is the ability to build and lead teams. Few
successful business ventures and new innovations have been developed by single individuals working
alone.

11. Integrity and reliability. Some of the issues that have blighted the image of the entrepreneur are of
integrity and honesty. While there have been examples of so-called 'entrepreneurs' who used their
business ventures to build their own wealth at the expense of investors, these cases are still a minority.

12. Vision. A common feature among many entrepreneurs is their strong sense of vision, i.e. having a
focus and direction for their venture and for their own personal ambitions.

The Role of Entrepreneurs

Entrepreneurial companies make two indispensable contributions to the economy. First, they are an
integral part of the renewal process that pervades and defines market economies.

Entrepreneurial companies play a crucial role in the innovations that lead to technological change and
productivity growth. Second, entrepreneurial companies are an essential mechanism by which millions
enter the economic and social mainstream of society. Small business entrepreneurs enable millions of
people, including women, ethnic minorities, Indigenous peoples, and immigrants, to find prosperity for
themselves and their families. Entrepreneurial companies focus on prospects for the future, not on the
inheritance of the past (Kuratko, 2008).

According to The Organization for

Economic Co-operation and Development (OECD), an international organization that works to build
better policies for better lives. Entrepreneurs have been identified as playing at least five key roles in an
economy.

1. Disruptor. Entrepreneurs seek opportunities to disrupt market equilibrium through the introduction
of new products, processes, and marketing techniques they are a key agent of innovation and a 'creative
destroyer' (Schumpeter 1934).

2. Opportunity identification.

Entrepreneurs possess the alertness, noted by Kirzner (1997), to spot commercial opportunities and
then take on the challenge of bringing them to market.

3. Risk-taker. Entrepreneurs assume a willingness to launch new ventures and engage in the
commercialization of innovations which by their nature are risky. However, their ability to deal with
uncertainty and ambiguity allows them to take on risks that might not enable innovations to proceed
(Knight 1933).

4. Resource shifter. Entrepreneurs enhance the productivity within the economy by finding new ways
to configure resources to achieve superior growth and wealth creation (Drucker 1985).

5. Breakthrough innovator. Finally, entrepreneurs who engage in market disruptive innovation can lead
to a process of achieving new breakthrough's in technology, business, or marketing approaches (Baumol
1968).