Entrepreneurial Management Module 1
• Generates profit for the business
A. The Entrepreneurial Development Perspective
Historical Context
Entrepreneurship started in France after the French Revolution. It was the start of capitalism and the end
of Feudalism. The word entrepreneur was coined by Jean Baptiste Say, a renowned French economist,
entreprende, which means “to undertake”. Say argued that the concept of entrepreneurship, though closely
tied with the theory of economics and society, is independent of classical economics and is unable to coexist
with it. Capitalism as propagated by Adam Smith spouses the optimization of what already exists. It focuses
on acquiring the most out of the existing resources and establishing equilibrium or balance.
Entrepreneurship, on the other hand, sees change as normal and healthy. It promotes something different
rather than making the existing better.
Entrepreneurship and the Entrepreneur
What and who is an entrepreneur? This simple question has been answered in different literature with
varying definitions. Hirich, Peters and Sheperd (2009) define an entrepreneur as a risk taker who converts
innovative ideas into a business process for profit through opportunity maximization and organization of
social and economic mechanisms. Innovators in corporate environment (called intrapreneur) are also
considered as entrepreneurs. The European Commission defines entrepreneurship in a broader context:
Entrepreneurship refers to an individual’s ability to turn ideas into action. It includes creativity, innovation,
and taking calculated risks, as well as the ability to plan and manage projects in order to achieve objectives.
This supports everyone in day-to-day life at home and in society; makes employees more aware of their work
and better able to seize opportunities and provides a foundation of entrepreneurs establishing a social or
commercial activity.
Entrepreneurship is a combination of two important factors: (1) the opportunities present in the
environment and (2) the individual who has the innovative spirit to make good use of these opportunities.
Focus on the individuals creates a scenario that gives too much importance to the traits and values required
to be an entrepreneur. It precludes the fact that opportunities and situations for successful entrepreneurial
undertaking can be created not by just individual himself, but by different entities in the environment.
The Roles of the Entrepreneur
An entrepreneur is someone who plans, organizes, and puts together all the resources required to bring a
new enterprise into existence and to run and manage it on a long-term basis. The resources that an
entrepreneur puts together consist of humans’ resources (workers, managers, customers, suppliers) and
non-human resources (land, buildings, machines, materials, and methods).
An entrepreneur is one who:
• Perceive business opportunities
• Takes risks to make use of these business opportunities
• Invests his own or borrows money to use in the business
• Introduce innovations or improvements to make the business better, more efficient and more
profitable
• Makes plans and decisions for the business, and
On the other hand, an entrepreneur is not any of the following:
• He is not the person who gives or lends money to another and sits back and relaxes until his money
is returned with interest earnings. This person is a financer or investor and not exactly an
entrepreneur
• He is not the person who hired and paid big salaries to manage the business fulltime for its owners.
The person is more of a professional or salaried manager
• He is not the inventor of a product who stops working after inventing and developing a product. To
be sure an inventor can be an entrepreneur, but only if he goes on to commercialize his product,
that is, to manufacture it on a commercial volume and the distribute it in the market
• He is not the person who guides or gives advices to the entrepreneur to make his business more
efficient and more profitable. This person is rather the business or management consultant or
counselor.
The Reward and Risk of Being an Entrepreneur
A. The rewards of successful entrepreneurs
1. Make money. When you have a business, you get the chance to earn money. The more time, effort,
and money you put into your business, the more your earnings are likely to be.
2. Be your boss. As an entrepreneur, you win the business, so nobody tells you what to do. If you make
the right decisions, your business gains, if you make the wrong ones, you fail.
3. Express creativity. Creativity serves as the foundation for entrepreneurial growth. These are
innovative ideas like productive innovation, market innovation, and diversification.
4. Gain self-satisfaction.
B. The risks
1. The risk of failure. Small business is prone to risks and possibilities of failure. One bad decision can
cause a small business to bankrupt.
2. Long hours of hard work. Entrepreneurs have to put in long hours of work to develop and produce
a product that can create interest and desire to buy among potential customers.
3. Unwanted responsibilities. Entrepreneurs who have gone into business simply to earn a living
usually find themselves unprepared to take on unexpected management responsibilities.
Cultural Factors that contribute to the Emergence of Entrepreneur
Studies show that the interest and later the decision to be an entrepreneur came about from the
combination of several factors. These factors include the culture in which the person was born and raised;
his social, family, educational, and work background; his own psychological traits and qualities; and the
support given by the government and other institutions.
Cultural values are ideals held by a community as standards for social or interpersonal behavior. Values are
upheld because they are viewed to be conducive or necessary for the welfare of the group. A community’s
set of values influences the individual member’s attitudes – the way one sees things, persons, events and
circumstances. Values and attitudes, in turn, influence the way people behave or act in situations. This
behavior is sometimes referred to as practice.
Despite our many positive traits, we have not developed enough faith and pride in ourselves as a people
who can make things happen and who can control our own destiny. Consequently, other nationals have
misguidedly branded Filipinos. According to some foreign Filipinos tend to:
• Be lazy, indulgent, and prone to relax and take things easy (Juan Tamad image)
• Avoid taking risks (segurista, mahina ang loob)
• Go along with the wishes of the group even if, personally, one wants to do something else (sobrang
pakikisama)
• Be oversensitive to criticism so that one stops what he is doing when it does not meet the approval
of others (balat sibuyas)
• Lack perseverance and persistence, that is Filipinos tend to lose interest after an initial burst of
enthusiasm (ningas kugon)
• Be fatalistic or to let fate or destiny decide the outcome of what one does (bahala na)
• Put one over each other (gusto na laging sikat o bida) which in turn leads one to put down fellow
Filipinos who are making it to the top (crab mentality)
• Lack originality and creativity and is apt to imitate what others are doing (gaya gaya)
Filipino Values Favorable to Entrepreneurship
1. Pakikipagkapwa values promote the ideals of entrepreneurship. Pakikipagkapwa is all about how
we treat others and relate to other people. It is very much connected with our concept of pagkatao
or character. An entrepreneur who values pakikipagkapwa does not cheat his customer by
overpricing or shortchanging his customers. He does not compete by underpricing, does not
maltreat employers/workers nor chat the government.
2. Many Filipino values promote risk taking or lakas ng loob. Filipinos by nature are malakas ang loob
(strong hearted), not timid and fearful. Many of us pursue our plans even if we are uncertain of the
outcome. After giving our best and we still doubt that we will succeed, don’t we say “bahala na”?
The nice thing about it is saying bahala na while giving our best because we believe that “nasa
Diyos ang awa, nasa tao ang gawa”.
3. Gaya-gaya (copycat). Our ability to learn and adapt to ne ways of doing things may also be seen in
our talent for imitation. Of course, as one matures in an entrepreneurial career, the habit of gaya-
gaya can be bad for the business.
4. Pakikipagsapalaran (sense of adventure). Filipinos have high sense of adventure
(pakikipagsapalaran), excited by the prospects of new things, new place, new people, or new jobs.
This is related to our bahala na attitude, in our tendency to believe that God or divine Providence
will take care of it.
5. Close family ties. The Filipino family is a source of support to any aspiring entrepreneur. If helacks
capital, the family can pool of resources which he can borrow and pay back without interest.
6. Utang na loob, hiya, amor proprio, awa, bayanihan. Apart from the family, there are others around
us who can provide much needed support. There may be the ninong and ninang, kababayan,
kumpare and kumare, kaeskwela, kapitbahay, kapartido, kasimbahan, and many others who are
willing to help us.
7. Katapatan. Filipinos have been raised with strong spiritual and moral values. Katapatan should
guide the entrepreneur because dishonest or exploitative ways of doing business will harm the
business in the long run.
8. Diligence. One important Filipino characteristic is diligence – an essential quality of the
entrepreneur. We have our ways of to deal with the followers of Juan Tamad (lazy Juan) around us
through sayings like; Ang tamad namamatay sa gutom (the lazy man starves to death).
9. Katipiran (thrifty). We also place high value or katipiran (thrift). Are you familiar with Asyong
Aksaya (asyong, the wastrel), a popular cartoon character of the 1980’s. Frugality and industry go
together like bow and other or like horse and karetela. You would not like to carelessly spend
money that you learned the hard way.
10. Pagkamatiisin (patient, with endurance). Filipinos as a rule are matiisin (enduring) in the face of
suffering or adversity. Note for example, how, for centuries, our ancestors were exploited, abused,
and discriminated against during the Spanish era.
11. Pagtitimpi or self-control is another manifestation of our endurance. The “rope” or pisi of our
patience and tolerance is long. It takes much for us to explode and get angry. We like to wait until
mapuno na ang gatungan (the cup overflows).
12. Values promoting harmonious labor management relations. Since the Filipinos try to be sincere
and well-intentioned in dealing with people, he will also tend to be a good manager or employer.
He is likely to treat his people with concern or malasakit. He ees to it that there is damayan (mutual
help) and samahan (camaderie) in his shop, plant, or office. The Filipino tries to very hard to be
madaling makagaanan ng loob (easy to like) and to be maawain (compassionate) when dealing
with his workers.
13. Values promoting social mobility. Mobility means movement. Thus, social mobility refers to the
degree of difficulty or easiness a society or group of people allows a member to go up or climb one
social level to another.
Filipino Values deter Entrepreneurship
Values, as we have learned, are held and cherished by society in the belief that they promote individual and
group welfare. However, these values may have been useful and desirable for some time, but changes in the
political, economic, or social or physical environments are bound to happen. These developments tend to
alter or change some of these values or the ways through which people express them.
1. Traditional child-rearing practices hinder the development of an independent entrepreneurial
spirit. Many parents still practice the authoritarian way of raising their children. Young sons and
daughters are discouraged from taking initiatives, exploring their surroundings and taking risks.
This can dampen the independent spirit among the young.
2. Belief in the existence of all-powerful forces that control a person’s destiny may destroy
entrepreneurial initiatives. Many of us sill believe that “Ang kapalaran kung hindi mo hanapin,
dudulot at lalapit kung talagang akin”. This leads us to complacent and lazy, trusting that we do not
have to work for something that has been destined to ours. Conversely, there’s another popular
saying that goes, “Kung di ukol, di bubukol” which tells us that “what is not destined to be, won’t
be.”
3. Amor propio makes the Filipino refuse to take full responsibility for his actions when he fails. Amor
propio (self-esteem or sense of pride) can have positive as well as negative effects on our
entrepreneurial drive, depending on how it is used. As we have seen, amor propio can inspire us
to give our best in any undertaking. There is nothing that boosts amor propio better than deserved
 success. On the other hand, it can cause us to disown our failings. As we succeeded, we feel good
and take full credit for it. But as we fail, we tend to pass the responsibility to someone else or
something else.
4. The bahala na attitude, if not tempered by intelligent judgement and planning may lead to
imprudent decision making. There is danger that bahala na may be carried to extremes. Some
entrepreneurs may be misled to take up projects and plans on the basis of bahala na rather than
on a sound planning and analytical process. The result may be disastrous to the business.
Entrepreneurs should have a dose of the courageous bahala na spirit but this should not prevent
them from assessing the risks involved.
5. Our family and relatives may be a very supportive group, but they can also do harm to the business
enterprise. Close family ties are a potent source of support to the new entrepreneur. At the same
time, the family can also be a problem, if we don’t watch out. For example, there is a joke in the
Philippines that says, success is “relative”, the more successful you are the more relatives you have.
6. Colonial mentality impedes the development of a self-reliant entrepreneurship. “Colonial
mentality” is the opposite of being nationalistic. A manifestation of this is the view that anything
imported-especially those coming from the former colonizing countries like America, Japan,
England- is always better than those “made in the Philippines”. This mentality springs from a lack
of appreciation for what our countrymen can do in terms of products, fashion, lifestyle, and
technology.
7. Crab mentality is particularly destructive to entrepreneurship. What about the kanya-kanya
attitude which produces the “crab mentality?” are we guilty as charged? Are we really envious of
fellow Filipinos who are making it to the top? Do we really tend to pull each other down? If we
indeed, pull each other down, this attitude can be harmful to entrepreneurship. It goes against the
grain of pakikipagkapwa, pakikisama, and malasakit.
The Link Between Family and Entrepreneurship
It is sometimes said that the best entrepreneurship institutions are the family and that best business
training is family upbringing. Do you know why? This is because the early, formative years are the most
influential in the life individual. What happens during the first five years or so of one’s life will have a lasting
effect on one’s attitudes, behavior, and character traits. This is the time when the family or home exerts the
greatest influence in shaping the adult person that the child will do become.
1. Entrepreneurs were brought up in an atmosphere of self-reliant. He was encouraged to feed
himself, wash, and dress himself, and to cross the streets on his own. As he grew a bit older, he was
given the freedom to buy his own clothes, choose his own friends, and spend his money the way he
wanted to.
2. Entrepreneurs learned an early craft or trade at home. Entrepreneurs grew up in a home that
emphasized the importance of hard work.
3. Entrepreneurs had an early exposure to business. Children learn by an example and by doing. Thus,
children who have parents and relatives engaged in business are likely to established business
themselves when they become adults. This is why it is said that the family is the best
entrepreneurial development program.
4. Many entrepreneurs come from migrant families. There are so many entrepreneurs who come
from families who migrated to a place where they eventually settled (Management systems
International, 1998). Note that the Ilocanos are the entrepreneurs in Mindanao; the Ilocanos are
the entrepreneurs in Samar and the Pompanos are the entrepreneurs in Manila. The same is true
around the world: the Chinese are the entrepreneurs in the Philippines and in Malaysia; the Jewish
in Europe; the Indians in Fiji and Singapore; and Italians in Australia. Why is this so? The families
who migrated often found difficulty landing conventional jobs compared to the natives of the
locality. The looked-for ways that native people hardly ever see.
5. Many entrepreneurs are the firs-born in the family. Studies show tat firs-born children are more
likely to become entrepreneurs than the youngest or middle children. Why is this so? Well, the
oldest learn early to be responsible for other people.
Developing your PECs
Opportunity Seeking. A successful entrepreneur actively seeks opportunities. It is actively looking and going
after ideas which can be turned into opportunities. If you will go into business, opportunity-seeking is very
important. It will help you in many ways. Here are some examples:
• If you actively seek opportunities, you will find customers or markets where other people fine
none;
• If you actively seek opportunities, you will find new uses for old products, including waste
products.
Persistence. Trying and trying again until you succeed is what persistence all about. Persistence is also
trying to do something even if other people say that you are likely to fail. It means not being afraid of hard
work. It also means not being afraid to fail because you can try again. If you feel that being persistent is
difficult, you must realize three things:
• Do not give in quickly when someone disagrees with you. If you are sure of your stand, do not give
in to what the other person says without thinking about it.
• If you get angry at someone who stubbornly disagrees with you, your persistence will wear off
quickly because you will be concentrating on your anger. On the other hand, if you stay cool and
composed, you will be more persuasive, convincing and credible;
• Face the opposition squarely and openly. Avoid “behind the back” tactics. Do not criticize or bad
mouth those who oppose you in their absence. These are not the weapons of those who are not
negotiating with confidence. A truly persistent person will be strong enough to change what needs
to be changed and do what needs to be done even if others disapprove.
Commitment to the work contact. You can practice behavior that leads to the strong commitment to a work
contract. You need to do this is you are to succeed as an entrepreneur. Keeping your promises and
commitments is at the very heart of entrepreneurship. You cannot be a committed person overnight. You
must deliberately work at it and practice it with persistence. Here are some guidelines that may help in
building up your commitment to work contract:
• Have strength of character. Entrepreneurs have ‘palabra de honor.’ Their words are their honor.
People with strong character will honor what they say – come what may;
• Make only promises you can keep. Think carefully before saying “Yes, I will deliver the good at the
end of the month.” If you think of something that will prevent you from keeping this deadline, say
so immediately. Entrepreneurs who do not deliver orders on time find to their regret that there is
no next time. Customers can always take their business elsewhere;
 • Know what to do when you cannot keep a promise. It may happen that something unexpected Information Seeking. Knowledge or information is power. You need information to get wind of business
comes up that makes it possible for you to keep your commitment.; ideas and opportunities. You need information to determine whether your business idea will be profitable
• Cultivate the trust of others. Keeping promises, giving honest explanations for broken promises, or not, to find out whether there are people who will buy your products and at what price.
dealing with people fairly and justly – these are ways to win people’s trust;
Systematic planning and monitoring. It is not enough to set your goals. You have to plan activities leading to
• Clarify expectations. Keeping people’s trust includes thinking about what can and can’t be done so
these goals. With planning comes monitoring, which is necessary to check how far and how well you have
that expectations are laid on the table before any promises are made.
done. In planning, you think of the many small activities you will have to carry out to accomplish bigger or
• Apologize sincerely – when you are unable to keep your promise, apologize sincerely to your
more complicated ones. You put these individual activities in proper or logical order so that in the end you
customers. Be sure that you have made your side understood completely so that no doubts remain.
can say that you have accomplished what you planned for.
Demand for quality and efficiency. The good entrepreneur demand quality and efficiency not only from his
Persuasion and networking. Do you think that to make another person do what you want to do is a tall order?
or her workers and suppliers but also for herself. She sets an example of excellence that expects the people
Well, Burton Kaplan doesn’t think so. He provides the following suggestions to, develop your
who work with her to follow. This means good business. Here are behaviors that can help you achieve
persuasiveness:
quality and efficiency in business and other aspects of your life:
• To win people completely, you must appeal to their heart as well their mind. They need to be
• Consistency is important. Don’t turn out superior output today and wishy-washy products
persuaded at these two levels to go along with you;
tomorrow. Your quality must be steady and reliable. Consistency will give you the competitive
• Present your idea in a way that is logical from the other person’s viewpoint. Start by pointing out
edge;
the benefit that they will enjoy related to their need, problem, desire, value or difficulty. End with
• A neglected and dissatisfied customer might never return. Worse, he might spread the word
a specific reference to your product, idea or service in ways that will provide them satisfaction or
around regarding your lousy product or service. Be careful even if you’re dealing with only one
answer;
customer;
• Ask questions that will give you more information about their needs;
• You and your workers. Commit yourself to quality not only when doing business but also in
• Agree with their remark and build on it to push your product, service or idea;
everyday things, including your personal life;
• “Close” the deal by assuming a mutual agreement arrived at. You may say “I’ll prepare the order
• Use appropriate technology to help you. This includes new machines, new processes, and new
form now. When do you want the item to be delivered?”
skills. Don’t persist on doing things the old way if this is no longer efficient.
Related with persuasiveness is networking. An entrepreneur needs other people to succeed in business –
Risk taking. In many life situations, including business stations, risks are involved; The successful
customers, suppliers, bankers, business advisors, government officers, etc. The process of linking up with
entrepreneur takes risks, but before doing so he is able to recognize, assess and minimize these risks. This
others, either formally or informally is called networking.
is known as calculating, moderating or controlling the risks. In business, calculating the risks is checking if
you will make or lose money in the process of doing business. Self-confidence. Entrepreneurs are rather self-confident people. They believe that they can achieve their
goals. So must you. If you do not have faith in yourself, no one else will. For you to be able to make things
What must you do to be a moderate risk taker? Here are some suggestions:
happen, you must first recognize that you can do so, and nobody else. Here are ways to develop your self-
• Assess the situation carefully; confidence:
• Find out if your actions will have negative side-effects;
• Know as much pf yourself as you can. What are your strengths? What are your weaknesses? Take
• Ask for advice from knowledgeable people;
time out regularly to reflect on your knowledge regarding your strengths and weaknesses;
• Plan for contingencies.
• Look at your qualities in a realistic manner. Neither underestimate nor exaggerates your own
Goal setting. In setting your goals, remember the following: abilities and talents. Compare your idea about yourself with what others say about you;
• Emphasize your strengths and play down your weaknesses by choosing activities and goals where
• Be realistic. Know your strengths and weaknesses as well as the support and obstacles present in you do best;
your environment; • Take care of yourself physically so that you look good to yourself and to others. If you look good,
• Be self-reliant. Do not aim for something which depends on many other people and circumstances you will feel good about yourself.
for its attainment;
• Select those goals which are important to you and which allow you to perform your best;
• Focus on positive objectives. In other words, try to think of goals which will make you become, do
or attain something rather than those which call for you to stop or avoid doing things.