ENTREP – PRELIMS - it is a behavior rather than a personality trait

Entrepreneurship – foundation of economic development S – Specific

M – Measurable
Contributors to the definition of entrepreneurship A – Attainable
1. Knight 1921 R – Realistic
- Having profit from risk T – Timely
2. Schumpeter 1934 E – Exciting
- Entrepreneurship is carrying out of new R – Rewarding
combinations of firm organization new products, 10. Gardner 1985
new services, new raw materials - Creation of new organization
2 main goals of business: - Benefits: provide job opportunities
- Generate income ↳ one of the social responsibilities of entrepreneurs
- Satisfy demands and needs of customers 3 types of competitive strategies
*difference between:  cost leadership
Entrepreneur: more on innovation  differentiation strategy
Businessman: more on buying and selling  market segmentation
11. Hisrich & Brush 1985
Types of organizations: - Process of creating something new with value by
1. Sole proprietorship devoting the necessary time and effort; assuming the
2. Partnership accompanying financial, psychic, and social risk and
3. Corporation uncertainties, and receiving the resulting rewards of
4. Cooperative monetary and personal satisfaction
12. Stevenson & Grousebeck 1989
3. Hoselitz 1952 - Pursuit of opportunity without regards to resources
- Uncertainty bearing, coordination of productive currently controlled
resources, introduction of innovation & provision of 13. Hart, Stevenson & Dial 1995
capital - Pursuit of opportunities without regards to
*Internal factors – factors that affect the organization resources currently controlled but constrained by
that are within the organization i.e employees the founder’s previous choices and industry-related
*External factors – factors that affect the organization experiences
that are outside the organization i.e inflation 14. Shane 2003
- Activity that involves the discovery, evaluation &
4. Cole 1959 exploitation of opportunities to introduce new goods
- Purposeful activity to initiate & develop a profit- & services, ways of organizing, market processes and
oriented business raw materials through organizing efforts that
5. McClelland 1961 previously had not existed
- taking moderate risk 15. Curatko 2017
6. Shapero 1975 - Dynamic process of vision changes and creation that
- a kind of behavior that includes: requires an application of energy and passion toward
 initiative taking the creation and implementation of new ideas and
 organizing and reorganizing of social economic creative solutions
mechanisms to turn resources & situations to 16. Dyck & Neubert 2019
practical account - Conceiving an opportunity to offer new or improved
 acceptance of risk failure goods & services, showing the initiative to pursue
that opportunity, making plans, mobilizing resources
opportunity process necessary to convert the opportunity into reality
1. Preconditioning
2. Conception __________________________________________
3. Visioning
4. Assessment
5. Implementation Entrepreneur

7. Casson 1982 - comes from the word “entreprendre” which means to

- Decision or judgement about coordination of scarce undertake.
resources - A reference to individuals who have initiated the
8. Ronstadt 1984 establishment of business enterprise.
- Dynamic process of creating incremental wealth - Through their business ventures, entrepreneurs
9. Drucker 1985 introduce to the market, innovations in the form of new
 products, new processes, new market, and new
organizations.
Shumpeter
- Entrepreneurs are individuals who have generated
substantial value of profits from innovations in a very
short period of time. These individuals are also willing to
absorb huge risks of using enormous amounts of capital
in their business ventures.
- Megaentrepreneurs - these entrepreneurs were cited by
Schumpeter as having contributed much to the economic
progress of the developed countries in the West.
- Microentrepreneurs - Although they also initiate business
enterprise, the ‘value-added’ and profits they make are
limited. Because they are short in funds and inadequate
in skills, they cannot undertake projects that involve
huge capital, sophisticated technology, and extensive
risks.
↳ Unlike mega entrepreneurs, they engage micro and
small businesses as an alternative to formal employment.
Although they are not crucial in bringing rapid economic
prosperity to a country, they nevertheless contribute to
inclusive growth.
Entrepreneurial Process
I. Discovery
II. Development of concepts
III. Organizing resources
IV. Implementation
V. Reaping the returns
I. DISCOVERY
- refers to the recognition of a business idea or the
detection of opportunities that could make money
for the entrepreneur.
- Discover the needs and wants of consumers
II. DEVELOPMENT OF CONCEPT
- Make concept around discovery
- gives more details on how the general business idea
can be realized.
- It suggests the preparation of a business plan, which
must spell out the various activities that must be
done from production to the distribution of the
product or service.
III. ORGANIZING RESOURCES
- process of identifying, sourcing, and financing
human, nonhuman, and other resources (financial)
needed for the conduct of business.
IV. IMPLEMENTATION
- process of carrying out the business plan.
- Make business concept a reality
V. REAPING THE RETURNS
- pertains to strategies related to the expansion of the
business firm.
CHARACTERISTICS OF AN ENTREPRENEUR
A. Entrepreneurial traits and creation of value-added
1. Level of education
- Studies have shown that entrepreneurs need some
formal education to be able to seize the
opportunities presented by inventios, innovations,
and other technological developments.
- Need formal education to:
 Understand the situation of the market
 Identify problems
2. Employment status
- Individuals who become entrepreneurs in developed
countries are usually former employees of
companies in the formal sector.
- These entrepreneurs usually get their business ideas
and concepts from the operations of companies they
formerly worked for.
3. Entrepreneur’s wealth
- Important factor in entrepreneurial intentions
4. Risk appetite
- Risks are associated with uncertainties in the
business operations. These uncertainties can
threaten the survival and stability of a business
enterprise. Usually, entrepreneurs are risk-takers.
Otherwise, they will not engage in business and will
just be comfortable with the certainties of being
formally employed.
B. Entrepreneurial traits and entrepreneurial
intentions
B.1 Internal Factors – controllable
B.2 External Factors
B.1 Internal Factors
a. Demographic - refer to gender, marital status, age,
and employment status of individuals who are likely
to form entrepreneurial intentions.
b. Personal traits - contributions of self-confidence,
determination, and enthusiasm and other positive
human qualities in influencing entrepreneurial
intentions.
c. Psychological traits - include a host of qualities,
including need for achievement, risk appetite,
acceptance for vagueness, self-efficacy, and goal
setting.
d. Individual skills – knowledge and skills learned from
school and previous employment
e. Prior knowledge – knowledge on how a certain
business is being operated
f. Social ties – network and connections. Since a
business enterprise is a socio-economic institution,
its operation will require the entrepreneur to deal
with a lot of people.
B.2 External Factors
a. Envornmental support - effects of government,
financial institutions, and training institutions in
setting up businesses.
 b. Environmental influence - includes regulatory
structure, patents, protection of property rights, and
competitive environment.

ENTREPRENEURIAL DECISION-MAKING

3 types of thinking that influence entrepreneurial decision

making:

a. Critical thinking
b. Creative thinking
c. Strategic thinking

Critical thinking – systematic and rational way of providing

answer to a question.

Tools in business analysis that make use of analytical thinking:

 SWOT analysis (strength, weakness, opportunities,

threats)
- used to show how businesses can use their strength
to take advantage of opportunities, how they can
improve on their weaknesses, and how they can
guard themselves against threats.
 Porter’s 5 competitive forces model of competition
- uses critical thinking in determining the impacts of
various forms of competition brought about by:
1) threat of new entrants
2) bargaining power of buyers
3) bargaining power of suppliers
4) rivalry among existing firms
5) threat of substitute products

Creative thinking – refers to thought processes that bring

about discovery of new ideas. Unlike critical thinking; it does
not follow a systematic or analytical process since it looks at
things from different perspectives.

Strategic thinking – involves thought processes that assess

current situation that can be useful in formulation of plans for
the future.

Risks - uncertain situations and developments that can

increase the probability of loss or business failure.

Internal risks - dangers coming from the management of

resources of a business enterprise that may imperil its
operations.

External risks - threats coming from various environments

outside the business firm.

Risk management - The process of identifying, assessing, and

responding to these risks

Cognitive adaptability - the ability of individuals to be

involved in the process of producing several ways of decision-
making based on the identification and management of
changes in their environment. it requires qualities, dynamism,
and self-control on the part of the entrepreneur.