CHAPTER 1

INTRODUCTION TO
WHAT IS ENTREPRENEURSHIP?

3
ENTREPRENEURSHIP
vs.
SELF EMPLOYMENT
What is Entrepreneurship
1.1 Introduction

1.2 The importance of entrepreneurship

1.3 Entrepreneurial Characteristics

1.4 Entrepreneurship development in

Malaysia

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 Learning Outcome: Chapter 1
At the end of the session, students should be able to:
Explain the concept of entrepreneurship
Discuss the importance of entrepreneurship
Discuss the characteristics of successful
entrepreneurs
List down the common myths towards
entrepreneurship
Discuss the entrepreneurship development in
Malaysia
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 Definition of an Entrepreneur
Comes from the French word
entreprendre
individuals who undertake
(the risk in starting of new ventures)

introduced and first defined by an Irish economist

named Richard Cantillon

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 Definition of an Entrepreneurship
Entrepreneurship is a process of creating
and expanding businesses that
collectively form a force for national
development and societal prosperity

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ENTREPRENEURSHIP
THEORIES & CONCEPT
Richard Cantillon (French: [kɑ̃tijɔ̃]; 1680s – May
1734) was an Irish-French economist and author
of Essai sur la Nature du Commerce en
Général (Essay on the Nature of Trade in General),
a book considered by William Stanley Jevons to be
the "cradle of political economy".[4] Although little
information exists on Cantillon's life, it is known that
he became a successful banker and merchant at
an early age. His success was largely derived from
the political and business connections he made
through his family and through an early
employer, James Brydges. During the late 1710s
and early 1720s, Cantillon speculated in, and later
helped fund, John Law's Mississippi Company,
from which he acquired great wealth. However, his
success came at a cost to his debtors, who
pursued him with lawsuits, criminal charges, and
even murder plots until his death in 1734.
 DEFINITION

Entrepreneurship
A process of innovation & new-venture creation
through four major dimensions – individual,
organizational, environmental, process – that is
aided by collaborative networks in government,
education, & institutions. All of the macro & micro
positions of entrepreneurial thought must be
considered while recognizing & seizing opportunities
that can be converted into marketable ideas
capable of competing for implementation in today’s
economy.

Source : Entrepreneurship – Kuratko & Hodgetts; 6th edition, Thomson

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 Definition of an Entrepreneur

• Entrepreneur someone who establishes a new

entity to offer a new or existing product or
service into a new or existing market, whether
for a profit or not-for-profit outcome.

• In Malaysia the term “usahawan” is used for

entrepreneur.
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 DEFINITION

Entrepreneur
A catalyst for economic change who uses
purposeful searching, careful planning, & sound
judgment when carrying out the entrepreneurial
process. Uniquely optimistic & committed, the
entrepreneur works creatively to establish new
resources or endow old ones with a new capacity,
all for the purpose of creating wealth.

Source : Entrepreneurship – Kuratko & Hodgetts; 6th edition, Thomson

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 Theories & Concepts (1)
Adam Smith (1776)
An entrepreneur is a
person who acts as
agent in
transforming
demand into supply.

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An Inquiry into the Nature and
Causes of the Wealth of Nations;
generally referred to by its
shortened title The Wealth of
Nations, is the magnum opus of
the Scottish economist and
moral philosopherAdam Smith. First
published in 1776, the book offers
one of the world's first collected
descriptions of what builds
nations' wealth, and is today a
fundamental work in classical
economics. By reflecting upon the
economics at the beginning of
the Industrial Revolution, the book
touches upon such broad topics as
the division of labour, productivity,
and free markets.
It is the second most cited book in
the social sciences published
before 1950, behind Karl
Marx's Capital.[1]
Summary of Wealth of Nations
An important theme that persists
throughout the work is the idea that the
economic system is automatic, and,
when left with substantial freedom,
able to regulate itself. This is often
referred to as the "invisible hand." The
ability to self-regulate and to ensure
maximum efficiency, however, is limited
by externalities, monopolies, tax
preferences, lobbying groups, and
other "privileges" extended to certain
members of the economy at the
expense of others.[2]
 Theories & Concepts (2)
Jean Babtiste Say (1803)
An entrepreneur is a
person who shifts
resources from an area of
low productivity to high
productivity.

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Jean-Baptiste Say (French: [ʒãbatist sɛ]; 5 January 1767 – 15 November
1832) was a French economist and businessman. He had classically
liberal views and argued in favor of competition, free trade, and lifting
restraints on business. He is best known for Say's Law, also known as the
law of markets, which he popularized. Scholars disagree on the surprisingly
subtle question of whether it was Say who first stated what we now call
Say's Law.

What is the 'Say's Law Of Markets'

The Say's law of markets is an economic rule that says that production is the source
of demand. According to Say's Law, when an individual produces a product or
service, he or she gets paid for that work, and is then able to use that pay to demand
other goods and services.

BREAKING DOWN 'Say's Law Of Markets'

Say's Law is named after the 18th-century French classical liberal economist Jean-
Baptiste Say, who popularized the notion. Say was an advocate of laissez-faire
economics and was heavily influenced by Adam Smith.

Say's Law is frequently misinterpreted as "supply creates its own demand," which
is evidently false. If it were true, anyone could do whatever they wanted for a living
and be successful at it.
 Theories & Concepts (3)
John Stuart Mill (1848)
An entrepreneur is a
prime mover in the
private enterprise. The
entrepreneur is the
fourth factor of
production after land,
labor and capital.

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 Theories & Concepts (4)
Carl Menger (1871)
The entrepreneur acts
as an economic agent
who transforms
resources into
products and
services. The
entrepreneur
transforms and gives
added value. 25
 Theories & Concepts (5)
Joseph Aloysius Schumpeter (1934)
An entrepreneur is an innovator. The economy
moves through leap and bounds and the prime
mover is the entrepreneur through the process of
creative destruction.
Joseph Alois Schumpeter (German: [ˈʃʊmpeːtɐ]; 8 February 1883 –
8 January 1950) was an Austrian-born American political economist.
He briefly served as Finance Minister of Austria in 1919. In 1932 he
became a professor at Harvard University where he remained until
the end of his career. One of the most influential economists of the
20th century, Schumpeter popularized the term "creative destruction"
in economics. 26
 Theories & Concepts (6)
Alfred Marshall (1936)
The process of
entrepreneurship or
business development
is incremental or
evolutionary . It evolves
from sole
proprietorship to a
public company.
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 Theories & Concepts (7)
Ibnu Khaldun (Abdul
Rahman Mohamed
Khaldun)
The entrepreneur is seen
as a knowledgeable
individual and is
instrumental in the
development of a city-
state where enterprise
will emerge. 28
 Theories & Concepts (8)
David McClelland
The entrepreneur is
a person with a high
need for
achievement. This
need for
achievement is
directly related to
the process of
entrepreneurship. 29
 THE IMPORTANCE OF
ENTREPRENEURSHIP

30
 WHAT IS SEEN

WHAT IS UNSEEN
You need to gather information on “The importance of entrepreneurship” which will
warrant your consideration & help you decide how to establish the venture.
1. Growth of Entrepreneurship THE IMPORTANCE OF
2. A Creation of job opportunities ENTREPRENEURSHIP
3. Innovation

4. Impact on community development

5. Consequence of business failure

6. Political and economic integration of outsiders

7. Spawns entrepreneurship

8. Enhances standard of living

9. Promotes research and development

 WORK GROUP

In a group of FIVE (5)

Discuss at least three (3) importance of entrepreneurship
to:
 Individual (entrepreneur)
 Community
 Company
 Country
Present your findings to the class.

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 Why is “income generation”
rated as only the initial level of
entrepreneurial activity?
Income-generation refers to
activities which are often taken up
on part time or casual basis and are
practiced for the purpose of raising
additional-income.

Why is “income generation” rated as only the initial level of

entrepreneurial activity?
Income-generation refers to activities which are often taken up on part time or casual
basis and are practiced for the purpose of raising additional-income.

The scope of income generation is very narrow. All income generating persons may
or may not be entrepreneurs. However, income-generation will become the initial-
stage of entrepreneurial growth when it acts as an encouragement for the person to
become self-employed and there by ultimately leading them to entrepreneurship.
Thus we can say rate "income generation" as only the initial level of entrepreneurial
activity.
Why are entrepreneurs called creative destroyers of
tradition?

Entrepreneurs are called creative destroyers of tradition due to

the following factors:

Entrepreneurship is inextricably linked to innovation and growth.

And entrepreneurs are agents of change and they use innovation as
a tool.

They are always looking for an opportunity to offer a better product,

a better service, a better process and a better programme.

Once they accomplish this the existing product or service or process

or programme becomes obsolete.

Thus they act as creative destroyers of tradition

What steps should the entrepreneur take before launching a venture?

The entrepreneur should take the following steps before launching a

venture:

 Acquire in-depth economic insight.

 Build the capacity to scan the environment.
 Clearly sense the opportunity.
 Decide to select a venture suitable to the individual entrepreneur.
 Establishing a plan to execute the project.
 Facilitate the assessment and mobilization of the resources.
 Go for the final launch of the entrepreneur
 Common Myths toward
Entrepreneurship in Malaysia
1) Entrepreneurs are Born, Not Made – No one is born to be an
entrepreneurship but everyone has the equal chance to become an
entrepreneur.

2) Entrepreneurs are Gamblers – Risk Taker – insecure job and strong to

achieve challenging job

3) Entrepreneurs should be young and Energetic – commonly range

age between 25 – 34 years old. Decided to invest – have to look into
strength as an entrepreneurs – such as experience, reputation, skills,
abilities and passion.

4) Entrepreneurs Love the Spotlight – 3,200 companies listed in

NASDAQ, a few only actively involved in their firms

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 Entrepreneurship
Development in Malaysia
Activity
3 1.1 Introduction
1.2 The importance of entrepreneurship
1.3 Entrepreneurial Characteristics
1.4 Entrepreneurship development in Malaysia

• In a group of Six (6)

–Discuss & compile Information on
“Entrepreneurship Development in Malaysia”

• Lets share & present your findings in the next

class

46
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Beyond 2015… - Center of

Excellence

More Higher
International Post
Partnerships Graduates

Global &
Greater
Borderless
R&D
Ventures
Focus

Greater Innovative
Technopreneur & High
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Products
Beyond 2015…
47
 Overview

• “entrepreneur” become popular when

the government implemented The New
Economic Policy in 1970.

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 Historical Background
• British segregated the society
economically and racially with Malays at
the bottom.
• The launching of the New Economic
Policy (NEP) in 1971 was a watershed in
the Malaysian economic policy history.

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 NEP
Strategies:
• To reduce absolute poverty irrespective of race
through raising income levels and increasing
employment opportunities for all Malaysians;
and
• To restructure society to correct economic
imbalances so as to reduce and eventually
eliminate the identification of race with
economic function.
The aim
• to attain at least 30 percent Bumiputera equity
ownership by 2000,
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Agencies in charge of
Entrepreneurship

SME Corporation Malaysia

(SME Corp. Malaysia)

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 Government Programmes

• Financial Assistance – MOSTI, PUNB

(SISWAZAH & RUNCIT) & TEKUN
• Business Support Services
• MARA + UniKL

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 The Study of Entrepreneurship

The Kauffman Foundation's research initiatives are contributing to a more robust

and nuanced understanding of entrepreneurship.
Years of work in this area have taught us a great deal about entrepreneurship as an
important driver of growth and innovation in our society.
But our work in this field also has taught us much about what we have left to learn
and explore. At the Kauffman Foundation, we continue to seek out what we know,
commit to finding the answers to what we don't, and then apply that knowledge
to how we operate as a foundation.
In addition to research that answers specific questions, we are making long-term
investments to bring bright, young scholars into the study of entrepreneurship.

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 Conclusion
What is Entrepreneurship

1.1 Introduction

1.2 The importance of entrepreneurship

1.3 Entrepreneurial Characteristics

1.4 Entrepreneurship development in Malaysia

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