ENTREPRENEURSHIP

LEARNING OBJECTIVES

a.Define entrepreneur and entrepreneurship

b.Describe the salient features of entrepreneurship
c.Discuss the different theories on
entrepreneurship
d.Distinguish between entrepreneurial venture
and ordinary small business activity
MOTIVATION
IRKS
 `
RISK
RETEENENRURP
ENTREPRENEUR
VEUTNER
VENTURE
 ACTIVITY
Word Cloud: The illustration below is called a word cloud which
consists of a number of words related to “Entrepreneurs” and
“Entrepreneurship”. After studying those words, learners will
select three words or three groups of words from the illustration
and for each word or group of words learners will write a
sentence to describe what those words have to do with
entrepreneurship or entrepreneurs.
 ANALYSIS
Learners will be tasked to present their ideas orally using the
following guiding questions: bb
1. What does the illustration tell us about entrepreneurship and
entrepreneurs?
2. How would you define the term entrepreneurship based on
the illustration?
3. What did you write for the activity related to the given
illustration?
 UNDERSTANDING
ENTREPRENEURSHIP
Entrepreneur – originates from the French
word entreprendre which means “to
undertake”. It connotes a business paradigm
which signifies the start of a new business
undertaking.
 UNDERSTANDING
ENTREPRENEURSHIP
Entrepreneurship – is an art of observing
correct practices in managing and operating a
self-owned wealth creating business
enterprise by providing goods and services
that are valuable to the customers.
 UNDERSTANDING
ENTREPRENEURSHIP
Entrepreneurship
It is the capacity for innovation,
investment and expansion in new
markets, products and techniques.
 UNDERSTANDING
ENTREPRENEURSHIP
Small Business – refers to a business or enterprise that
correctly adopts and practices the principles of
entrepreneurship. It is owned by one person with a limited
workforce of not more than 20 persons. The term also includes
the small and medium enterprises that have been strongly
promoted by both government and non- government
organizations in their desire to improve the lives of the Filipino
people through entrepreneurship.
 UNDERSTANDING
ENTREPRENEURSHIP
Ordinary Small Business – pertains to a
business enterprise managed and operated
by an owner who is not an advocate of and
does not practice the concepts and
principles of entrepreneurship.
 SALIENT FEATURES OF
ENTREPRENEURSHIP
1.It is an art of correct practices.
2.It is a wealth-creating venture.
3.It provides valuable goods and services.
4.It entails opening and managing the self-owned
enterprise.
5.It is a risk-taking venture.
 THEORIES OF
ENTREPRENEURSHIP
1. Innovation Theory – was contributed by
Joseph Schumpeter, an Austrian economist
and political scientist. He wrote about it in
his book, The theory of Economic
Development.
 THEORIES OF
ENTREPRENEURSHIP

The Innovation Theory regards economic

development as the product of structural change
or innovation.
 THEORIES OF
ENTREPRENEURSHIP
2. Keynesian Theory – was developed by John
Maynard Keynes, a British economist. The
General Theory of Employment, Interest and
Money, which was published during the Great
Depression in 1936.
 THEORIES OF
ENTREPRENEURSHIP
The theory put so much emphasis on the role of the
government in entrepreneurial and economic development,
most especially when the economy was experiencing
depression. It suggests that entrepreneurial activities may not
be favorable in the future unless the short-term problem of
economic disequilibrium is finally resolved through the active
participation of the government.
 THEORIES OF
ENTREPRENEURSHIP
3. Alfred Marshal Theory - Alfred Marshall an English
economist strongly asserted that there are four factors in the
production (land, labor, capital and organization) of goods and
services in the economy, he considered organization as the
coordinating element. Without the active participation of
organization, the other factors of production will remain
inactive in their role for economic development.
 THEORIES OF
ENTREPRENEURSHIP
4. Risk and Uncertainty-Bearing Theory – Frank
Hyneman Knight, an American economist,
conceptualized the risk and uncertainty bearing
theory of entrepreneurship in his book, Risk,
Uncertainty and Profit.
 THEORIES OF
ENTREPRENEURSHIP
By adopting some concepts of the early economist,
Knight viewed an entrepreneur as an agent of the
production process where he/she connects the
producers and the consumers. Knight, however,
added risk-taking as an important dimension that
will differentiate an entrepreneur from a worker.
 THEORIES OF
ENTREPRENEURSHIP
Knight considered uncertainty an important factor in the
production of goods and services. He believed that the
entrepreneur must anticipate possible random events
to happen while shouldering the risk at the same time.
The entrepreneur would be eventually rewarded with
high profits.
 Other Theories of
Entrepreneurship
1. Weber’s Sociological Theory – In sociological theory,
Max Weber stressed that social cultures are the primary
driving elements of entrepreneurship. The entrepreneur
is expected to perform the role of a good constituent by
executing his/her entrepreneurial activities in line with
good customs and traditions, religious beliefs and morals.
 Other Theories of
Entrepreneurship
2. Kaldor’s Technological Theory – The technological
theory was developed by Nicholas Kaldor who
considered modern technology as an essential factor in
production. In the absence of modern technology
application in entrepreneurship, economic development
would be slow and growth might not be expected.
 Other Theories of
Entrepreneurship
The entrepreneur is expected to keep abreast
with modern technology and find ways to apply
the same in the entrepreneurial endeavor. Proper
application of modern technology will promote
efficiency in the production of goods and services.
 Other Theories of
Entrepreneurship
3. Leibenstein’s Gap-Filling Theory - In this theory
on entrepreneurship, Henry Leibenstein proposed
that the primary role of entrepreneurship in any
economic activity is to fill the existing gap.
Entrepreneurship is responsible for recognizing
trends in the market.
 Other Theories of
Entrepreneurship
The entrepreneur is expected to possess
abilities that will connect the different
markets. He/She must extend assistance to
entrepreneurial ventures experiencing failures
and deficiencies.
 Other Theories of
Entrepreneurship
4. Kirzner’s Learning-Alertness Theory –
Israel Kirzner was the main proponent of this
theory. He pointed out spontaneous learning
and alertness as the two major attributes of
entrepreneurship in any given economy.
 Other Theories of
Entrepreneurship
The entrepreneur must be alert in recognizing
entrepreneurial opportunities and the
ignorance of consumers as well. He/She must
immediately find appropriate remedy to correct
the error or wrong perception.
 Entrepreneurship and
Ordinary Small Business
Activity

Entrepreneurship and the activities of

ordinary small businesses differ in the
following areas:
 Entrepreneurship and
Ordinary Small Business
Activity
1. Motive in opening a business – an
entrepreneur starts a business venture based on
entrepreneurial concepts and principles and the
aspiration to become successful. He/She is
constantly on the lookout for new and fresh ideas,
which can be found in the business environment.
 Entrepreneurship and
Ordinary Small Business
Activity
Owner of an ordinary small business opens a business with the
primary goal of making it his/her source of livelihood. The
business becomes a major provider of the family for their
financial requirements. The owner of an ordinary small business
operates with a basic motive of earning profit. However, the
level of profitability is sometimes neglected. The profitability
aspect and the level of profitability are two distinct important
issues.
 Entrepreneurship and
Ordinary Small Business
Activity
2. Perception of risk in the business – The entrepreneur
takes and faces the business risk squarely. He/She considers it
inherent in the business venture, prepares the business for it,
and finds ways to minimize its effects. The owner of an
ordinary small business, on the other hand, believes that the
business risk is a deterrent to the operation of the business
and must be avoided.
 Entrepreneurship and
Ordinary Small Business
Activity
3. Reactions to changes in the environment – The
entrepreneur reacts positively to the changes in the
environment. Changes in the business environment bring new
ideas for entrepreneurial opportunities. The entrepreneur
considers changes in the environment a creative mechanism
for development and growth in the entrepreneurial activities.
They become a new source of possible entrepreneurial
venture.
 Entrepreneurship and
Ordinary Small Business
Activity
4. View on competition – For the entrepreneur the presence
of competition is a sign of a healthy economic environment. The
environment where the venture operates can be considered
neutral of free-trade because of healthy competition.
Competition will undoubtedly force entrepreneurs to
continuously improve their present products or services. It will
be one of the factors that will make them creative in their
endeavor.
 Entrepreneurship and
Ordinary Small Business
Activity
The owner of an ordinary small business, however,
views competition as an unhealthy element in the
business environment and tries to avoid it. He/She
is very uncomfortable working in a competitive
environment and strongly discourages competition
in the business community.
 Entrepreneurship and
Ordinary Small Business
Activity
5. Vision for development and growth – The
entrepreneur usually outlines the course of his/her
entrepreneurial venture in terms of short-term,
medium-term and long-term plans of action.
He/She makes sure that the vision and mission of
his/her business is clear.
 Entrepreneurship and
Ordinary Small Business
Activity
The entrepreneur aligns the daily business
activities toward the attainment of the plans.
He/She properly manages the venture in such
a way that the operations will provide
development and growth to the venture.
 Entrepreneurship and
Ordinary Small Business
Activity
The owner of an ordinary small business, on the
other hand, relies upon chance or luck in
maintaining the status quo of his/her business.
He/She is not so much concerned about its
development and growth as long as he/she is
satisfied with its earnings.
 Entrepreneurship and
Ordinary Small Business
Activity
6. Horizon of business operation – An entrepreneur
thinks globally but acts locally. His/Her sight is always
focused on the stars above, while his/her feet are firmly
anchored on the ground. He/She is primarily concerned
with the major economic events not only in the local
environment but also in the global business market.
 Entrepreneurship and
Ordinary Small Business
Activity
The entrepreneur has a strong notion that the
business venture will be going out of the local
market and will soon face healthy competition
in the international market. The entrepreneur
has both local and global perspectives.
 Entrepreneurship and
Ordinary Small Business
Activity
7. Sources of business funds – When the entrepreneur finds
that the proposed business endeavor is a wealth-creating
venture, he/she explores ways to generate the much-needed
funds from both internal and external resources. He/She strongly
believes that the wealth that the venture may create is external
resources. He/She strongly believes that the wealth that the
venture may create is more than enough to compensate for the
sourced funds.
 Entrepreneurship and
Ordinary Small Business
Activity
On the contrary, the owner of an ordinary small business tends to
limit the funding of his/her business enterprise to personal
resources. Loans from external resources can be a risky undertaking
for him/her. He/She fears that financial institutions will not be
willing to extend financial assistance to the business. In other words,
he/she is already fully convinced that he/she is pursuing the
unprogressive type of business endeavor.
1. In your own words, what is
Entrepreneur? Entrepreneurship?
and Small Business?
2. Differentiate wealth-creating
venture from an income-generating
venture.
3. What is your view about
competition?
THANK YOU! 
GOD BLESS YOU!