Chapter 2

Entrepreneurship's Backround and Human Capital

COMPILED BY : Andile Mdluli

Learning objectives:

1. Identify the importance of the individual in entrepreneurship.

2. Discuss different entrepreneurial intention models.

3. Identify an entrepreneurial mind-set.

4. Explain entrepreneurial cognitions.

5. Discuss different kinds of intelligence as it relates to entrepreneurs.

6. Identify typical backgroud characteristics of entrepreneurs.

7. Discuss human capital variables which lead to entrepreneurial success.

8. Explain each of the 'Big Five'dimensions linked entrepreneurial

behaviour.

9. Broadly interpret the concept of entrepreneurial risk.

The entreprenership's Background and Human Capital

• Age

• Gender
 • Ethnic/Race Ground

Human capital variables

• Human capital is knowledge and skill acquired by individuals from

investment in education , on the job training and other experiment

• Knowledge - Tacit knowledge - Explict knowledge

• Business types of Knowledge - Management , Technical and financial

Knowledge

Entrepreneurial intelligence and creativity

Intelligence -

• Analytical intelligence

• Creative intelligence

• Practical intelligence

• Social intelligence

Skills

• Self-awareness - is the experience of ones own personality or

individuality.

• Self-regulation -is the ability to understand and manage your

behaviour and your reactions to feelings and things and things
happening around you .

• Self-motivation - is encouraging yourself to continue making progress

towards a goal even when it feels challenging.

• Empathy - is the ability to understand and share the feelings of

another.
 • Social skills - are skills used everyday to interact and communicate with
others .

Creativity

Resources needed for creativity -

• Knowledge in the field

• intellctual abilities to recognize connections

• Inventive thinking about the problem

• Opportunity - oriented personality

• Contexual understanding

Stages of creative thoughts

1. Preparation

2. Incubation

3. Insight

4. Verivication

Creative techniques

1. Focus group

2. Brainstorming

3. Value analysis

4. Attribute listing
Unit 1 -The individual in entrepreneurship

1. Identify the importance of the individual in entrepreneurship

• Individuals are first - order forces in describing entrepreneurship.

• New ventures are far from accidental they are , instead , a result of
intentional and resultant behaviours of individuals.

• Entrepreneurs do not pre -exist , they emerge as a function of the

venture creation process.

• Venture creation transcends rational thoughts.

• The entire entrpreneurial process unfolds because individuals

entrepreneurs act and are motivated to pursue opportunties

• Thherefore entrepreneuership

2-Discuss different entrepreneurial intentions models

• intention is defined as dedication to beginning a new business .

• intent precedes action.

• Two intentions Models - Ajzens Theory of planned behaviours (TPB)

and Shaperos Model of the Entrepreneurial Event (SEE).

3-Identify an entrepreneurial mind-set

• Entrepreurial mindset is the way an entrepreneur thinks . it is the

source of creativity and basis of ideas .

• Entrepreneurial mindset is the ability to be dynamic , flexible , and self

 regulating in uncertain environments.

4- Explain entrepreneurial cognitions

• it is all about understanding how entrepreneurs use simplifying mental

models to piece together previously unconnected information that
helps them to identify and invent new products or services.

• Cognition also helps entrepreneurs to assemble the necessary

resources to start and grow businesses as well as pursuing
opportunities or not .

5-Discuss different kinds of intelligence as it relates to entrepreneurs

Five stages in metacognitive awareness :

1. Goal orientation

2. Metacognitive knowledge

3. Metacognitive experience

4. Metacognitive choice

5. Monitoring

6- Identify typical backround characteristics of entrepreneurs

• Age

• Gender

• Ethnic Group
7- Discuss Human Capital variables which lead to entrepreneurial success

Human capital variables which lead to entrepreneurial success are -

1. Knowledge

2. Education

3. Work Experience

8- Explain each of the 'Big Five' dimensions linked to enterpreneurial

behaviour

The Big Five factors of personality are :

1. Extraversion

2. Emotional stability

3. Agreebleness

4. Consciousness

5. Openness to experience

9-Broadly interpret the concept of entrepreneurial risk

• Risk is loosely defined as the probability of unwanted outcomes

• Becoming an entrepreneur is fraught with risks like financial risks ,

career risks , family and social risks and psychological risk
The Big Five dimension

• Self-efficacy

• Need for achievement

• Need for autonomy

• Locus of control

• Risk -taking