9/27/2023

ENTREPRENEURSHIP
AND HIS ROOTS

WHAT WILL YOU

LEARN?

You will learn about…

 The history of the development of
Entrepreneurship as a school of
thought.
 The great minds who have
contributed to its development.
 Understand the characteristics of
entrepreneur.

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WHAT IS AN ENTREPRENEURSHIP?

If you were to choose a symbol, a

picture or an image that would
represent entrepreneurship for you
what would it be?

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WHAT IS AN ENTREPRENEURSHIP?
 Entrepreneurship is a purposeful activity of an individual or a group to undertake, to
initiate, maintain a profit-oriented unit for the production or distribution of economic
goods and services.
 It is also refers to any kind of innovative functions that would have bearing the welfare
of the enterprise; which may involve production, processing, marketing, organization
and even in industry.
 Is both an art and science of converting ideas into marketable goods and services to
improve man’s quality of life.

 Definition by Commission of European Communities

 Entrepreneurship is the mindset and process to create and
develop economic activity by blending risk-taking, creativity
and/or innovation with sound management, within a new or an
existing organization. As a mindset and a process, it is then
something that can be learned. 5

What is
ENTREPRENEURSHIP?

 The word entrepreneur takes its

humble roots from the 13th century
French word “entrepredre” which
meant to undertake.
 The word itself stems from the
French literally, between taker, or go
between with early references having
been traced to eighteenth century
economists Richard Cantillon, Anne-
Robert Jacques Turgot, and Francois
Quesnay.

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HISTORY OF THE
DEVELOPMENT OF
ENTREPRENEURSHIP

MIDDLE AGES

• The term entrepreneur was

used to denote an actor with
reference to warlike action
or in particular, a person in
charge of large- scale
construction projects such
as cathedrals, bearing no risks
but simply carrying the task
forward until resources was
exhausted

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SIXTEENTH
CENTURY

• It was only in these century

that it was first related to
business and took to mean
as “a person engaged in
business”.

RICHARD CANTILLON

 An economist responsible for the first academic usage

of the word entrepreneur in his Essai sur La Nature du
Commerce en General.

 He stated that the bearing of risk by engaging in

business without an assurance of the profits that will
be derived is the distinguishing feature of an
entrepreneur and identified as an “adventurer”.

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DANIEL DEFOE
 Embodying the entrepreneur through the protagonist
of his novel Robinson Crusoe
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EVA BRANN
 Brann, in her book review The Unexpurgated
Robinson Crusoe state “Alone on the island he is
altogether a man of projects, a “projectors” and
“adventurer,” as entrepreneurs used to be called. He
is a busy man, a man of business, labors, and
accounts…He establishes timetables and schedules
and runs his island like a going concern of one. He is
the ultimate individualist, who does everything by
himself and for himself and sets a world humming, a
world that has only a single human inhabitant, who is,
however, all over it.
 He gives meaning to the term “private enterprise.”
He is a culture of one.
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SEVENTEENTH TO
EIGHTEEN
CENTURY
• the term entreprendre was
highly related to risk taking,
the entrepreneur being the
risk taker who entered into a
contractual relationship with
the government for the
performance of a service or
the supply of goods. The price
at which the contract was
valued was fixed and the
entrepreneur bore the risks of
profit and loss from the
barging.
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NINETEENTH (19TH)
CENTURY

• three major additions to the

growing concept of
entrepreneurship.
• Jean Baptiste Say
• John Stuart Mill
• Alfred Marshall

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JEAN BAPTISTE SAY JOHN STUART MILL

 "to estimate, with tolerable

accuracy, the importance of a
specific product, the probable  describes the
amount of demand, and the means entrepreneur as
of production; sometimes to employ someone who was
a great number of hands; again to more than the venture
buy or order raw materials, to capitalist but also one
combine the workers, find who managed the
consumers, to exercise a spirit of venture.
order and economy.
 The entrepreneur is the rare yet
indispensable individual who actually
makes the economy work.
Distinguished the entrepreneur
from the capitalist.

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ALFRED MARSHALL

 who linked Say’s and Mill’s ideas

claiming that the entrepreneur
was one who coordinated the
four factors (land, labor, capital
and organization) together. It
must be noted that at this point in
time, discussions on
entrepreneurship were vastly based
on the “who” of the concept.

 the entrepreneur has evolved such that he

was also identified as an arbitrageur (Say), a
manager distinct from a capitalist (Mill) and
as a coordinator (Marshall).

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TWENTIETH (20TH) CENTURY

these “who” concepts of entrepreneurship were further developed by the likes of Frank H. Knight and
Joseph Schumpeter. Their discussions, however, were less focused on who the entrepreneur was but what
his actions were that makes him an entrepreneur.
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FRANK H. KNIGHT
 carried forward the notion of risk taking
by classifying two kinds of risks.
1. is capable of being measured (i.e.,
objective probability that an event
will happen) and shifted from the
entrepreneur to another party by
insurance
2. is un-measurable (i.e., no objective
measure of probability of gain or
loss), e.g., the inability to predict
consumer demand.
FRANK H. KNIGHT
 further developed the ideas
 carried forward the notion of risk taking
by classifying two kinds of risks.
1. is capable of being measured (i.e.,
objective probability that an event
will happen) and shifted from the
entrepreneur to another party by
insurance
2. is un-measurable (i.e., no objective
measure of probability of gain or
loss), e.g., the inability to predict
consumer demand.
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 In Knight’s view, the function of
manager thus does not itself imply
entrepreneurship.
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proposed by his predecessors by
distinguishing a boundary between
management and entrepreneurship.
He sees entrepreneurs in the strict
sense as producers; while the great
mass of population furnish them
with productive services, placing
their persons and property at the
disposal of entrepreneurs who  In Knight’s view, the function of
guarantee to them a fixed manager thus does not itself imply
remuneration. Entrepreneurial entrepreneurship.
profit depends on whether an
entrepreneur can make productive
services yield more than the price
fixed upon them by those who
furnish productive services think
they can make them yield.
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It was during this period that the entrepreneur was further

becoming distinguished from the manager, the capitalist and the
JOSEPH SCHUMPETER businessman.The discussions on entrepreneurship were also
shifting towards the specific actions entrepreneurs take that
make them who you are.
 He discussed on innovation and how it is
a vital component of who an
 As can be seen in Schumpeter’s discourse,
entrepreneur is.
entrepreneurship was no longer entirely
 These new combinations or “creative focused on the “who” of the concept but
destruction” as they are sometimes called more on what the “who’s” actions were.
are what he referred to as innovation.
 He discussed that the entrepreneur did
not necessarily have to be the inventor,
more importantly he had to be the one
to act in an enterprising manner upon the
innovation.
 He also stated that the innovation need
not be new, it was a matter of how it can
be used in production or how it can be
brought commercially into the market

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FIVE TYPES OF
INNOVATION
- Joseph Schumpeter

1. Product
2. Process
3. Business Model
4. Source of Supply
5. Mergers and
Divestments

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1. PRODUCT - THE INTRODUCTION OF A NEW PRODUCT OR

QUALITY

 An example of this is the combination of the

horseless carriage and the steam engine, which led
the way to the invention of automotive such as
trains, steam boats and eventually cars. The
combination of two existing products to create an
entirely new product was an example of an
innovation as described by Schumpeter.

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2. PROCESS – THE INTRODUCTION OF A NEW METHOD OF

PRODUCTION

 An example of this is when Henry Ford introduced

the assembly line, which significantly decreased the
amount of time from twelve hours to two and a half
hours it took to create the Ford T1 Model cars back
in 1913. Today his innovation is still used in various
industries around the world.

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3. BUSINESS MODEL – OPENING OF A NEW MARKET

 Angkas is a a ride-sharing company, and is an example

of Schumpter’s third kind of innovation: the opening
of new markets as it has recognized that among
commuters there exist a substantial number who
were willing, needed and could afford to avail of the
services of a ride sharing company like theirs.
 Angkas known as the two-wheel taxi

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4. SOURCE OF SUPPLY - THE CONQUEST OF A NEW SOURCE OF

SUPPLY OF NEW MATERIALS OR PARTS

 People these days are on the constant look out for

sustainable and eco-friendly products. One such
product is vegan leather made from cactus. An
innovative solution has been discovered by two
entrepreneurs who have developed a way to create
authentic looking leather from cactus. This is an
example of a new source of supply of new materials
or parts.

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5. MERGERS AND DIVESTMENTS - ORGANIZATION OF ANY

INDUSTRY

 The carrying out of the new organization of any

industry, like the creation of a monopoly position
(for example through trustification) or the breaking
up of a monopoly position is another kind of
innovation according to Schumpeter.

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LUDWIG VON MISSES

 Argued that while  The role of an
innovation was an entrepreneur is not
important factor of limited to discovering and
entrepreneurship it is not testing new technologies
entirely what makes him but to choose among
one. those that may already in
fact be in existence in
 He indicated in his theory
order economist that
of consumer sovereignty
although innovation is one
that while entrepreneurs
of the activities performed
were responsible for
by the entrepreneur, it is
production, it is not him
not the only one, and
nor innovation that
perhaps not even the
determines what is to be
most important one.
produce rather it is the
customers.

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PETER DRUCKER

• Entrepreneurship can be defined as changing the yield of

resources (seen in supply or production terms) or as
changing the value and satisfaction obtained from
resources by the consumer (defined in demand terms) and
innovation to be the specific instrument of
entrepreneurship.
• He argued that management (as ‘a useful knowledge’) is an
innovation of the 20th century as it has made possible the
emergence of the entrepreneurial economy in America
and converted modern society into something brand new:
a society of organizations.
• Systematic innovation consists in the purposeful and
organized search for changes and in the systematic analysis
of the opportunities such changes might offer for
economic or social innovations.
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DO YOU THINK THAT ENTREPRENEURSHIP

IS A MINDSET OR A PROCESS?
TEACH A COURSE 28

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WHAT WOULD BE YOUR OWN

DESCRIPTION FOR EACH PART
OF THE ENTREPRENEUR’S
ANATOMY?

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PERSONAL ENTREPRENEURIAL
COMPETENCIES
 Entrepreneurial Competencies refers to the
key characteristics that entrepreneurs ideally
possess in order to perform entrepreneurial
functions effectively. Competencies are
defined as the combination of knowledge,
abilities, and attitudes needed to accomplish a
role efficiently.
 These are entrepreneurial qualities that are
translated into action, demonstrated and
exhibited by an individual.
 In adopting this definition, entrepreneurial
competencies to the three components of
the PECs which are the planning cluster
(knowledge), achievement cluster (abilities),
and power cluster (attitudes)
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THE THREE COMPONENTS OF
THE PECS
1. PLANNING
CLUSTER
(KNOWLEDGE)
ocovers three
characteristics and they
are: goal setting,
information seeking
and systematic
planning and
monitoring.
oIn fact, it is innate with
them to set goals when
meaning to achieve
something, seeking
relevant information that
would ensure success.
, and quality.
THE THREE COMPONENTS OF
THE PECS
2. ACHIEVEMENT
CLUSTER
(ABILITIES)
ofor successful
entrepreneurs, starting an
entrepreneurial venture
and willingly accepting all
the risks involved, is
usually never about the
money
oIt is composed of
opportunity seeking,
persistence,
commitment to work,
risk taking and
demand for efficiency
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3. POWER CLUSTER
(ATTITUDES)
• Entrepreneurs have strong
communication skills, and it’s
this strength that enables them
to effectively sell their product
or service to clients and
customers.
• They’re also natural leaders
with the ability to motivate,
inspire and influence those
around them.
• It is composed of persuasion
and negotiation and self-
confidence
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THE THREE COMPONENTS OF

THE PECS

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THE THREE COMPONENTS OF

THE PECS

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DO YOU THINK THAT A PERSON CAN BE

CONSIDERED AN ENTREPRENEUR IF HE POSSESSES AT
LEAST ONE OF THE CLUSTERS BUT NOT THE REST?
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WE HAVE ENUMERATED FIVE KINDS OF INNOVATIONS, AS QUALIFIED BY

JOSEPH SCHUMPETER. AS A GROUP, DO AN ONLINE RESEARCH OF AN
INNOVATIVE ENTERPRISE/S IN THE PHILIPPINES. DISCUSS THE SPECIFIC
INNOVATIONS MADE ON THEIR BUSINESSES AND IDENTIFY WHICH OF
SCHUMPETER’S FIVE KINDS OF INNOVATION THEY USED.
(MINIMUM OF THREE, MAXIMUM OF FIVE)

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THANK YOU!

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