COURSE TITLE: ENTREPRENEURSHIP

Course Code: MS381

Week 1 : Lecture 2

Course Instructor: Dr. Abid Ullah

School of Management Sciences
Ghulam Ishaq Khan Institute Of Engineering Sciences and Technology
 CHAPTER 1
INTRODUCTION TO ENTREPRENEURSHIP

•1-1. Introduction to Entrepreneurship- Theorising

Entrepreneurship

•1-2. Approaches to Entrepreneurship.

 LEARNING OBJECTIVES

Approaches to Entrepreneurship.
o Understand the key economic theories that have been developed over the years in relation to entrepreneurship.

o Understand the psychological traits approach to the individual entrepreneur.

o Understand the main issues related to personal, family and social status in relation to entrepreneurship.

o Understand other macroeconomic factors that influence entrepreneurship.

o Differentiate between the theoretical approaches to entrepreneurship and critically assess their contribution to the
field.
 THEORISING ENTREPRENEURSHIP

Theories

 Economics
 Psychology
 Sociology
 THEORISING ENTREPRENEURSHIP

Theory

 Theories are formulated to explain, predict, and understand phenomena and, in many

cases, to challenge and extend existing knowledge, within the limits of the critical
bounding assumptions.
Hypothesis
 In science, a hypothesis is an idea or explanation that you then test through study and
experimentation.
 THEORISING ENTREPRENEURSHIP

Economics

 Arbitrage and uncertainty

 Richard Cantillon French scholar (1755).

 Kirzner (1973, 1985) middleman role of the entrepreneur.
 Knight (1921) focused on Cantillon’s entrepreneur in respect to uncertainty
 THEORISING ENTREPRENEURSHIP

Economics

 Co-ordination of the production factors

Jean-Baptiste Say (1828) ( Material, People, information and Capital)

 Hebert and Link (1988). ( Skill worker with managerial Skills)
 THEORISING ENTREPRENEURSHIP

Economics

Innovation
 Josef Schumpeter (1934, 1939). (“creative destruction”)
• new product creation,
• new production method,
• new market opening,
• new source of supply capturing, or
• new industry organising.
 THEORISING ENTREPRENEURSHIP

Economics

Skill Differentiation
 Casson (1982)
 THEORISING ENTREPRENEURSHIP

A final view of Economic Theories

 THEORISING ENTREPRENEURSHIP

Psychology

 Research Focus
Focus on understanding and describing the person that chooses to become one.
 THEORISING ENTREPRENEURSHIP

Psychology

 The need for achievement

 David McClelland (1961).
 THEORISING ENTREPRENEURSHIP

Psychology

 Risk Taking Propensity

Entrepreneurs are considered to be individuals with less risk aversion than the ones that
choose employment.
 THEORISING ENTREPRENEURSHIP

Psychology

 Tolerance of Ambiguity
Can better handle complex and unstable working environments.
 THEORISING ENTREPRENEURSHIP

Psychology

 Type “ A” Behaviour
 Boyd (1984)
 Type A behaviour is exhibited by being ambitious, organised, impatient, and like to be
punctual. 
 Type B personalities are relaxed, not competitive and generally not as ambitious as
their Type A peers.
 THEORISING ENTREPRENEURSHIP

Psychology

 Independence and Job Satisfaction

 Taylor, (1996)
 THEORISING ENTREPRENEURSHIP

Psychology

 Over Optimism
 Taylor, (1996)
 THEORISING ENTREPRENEURSHIP

Criticism on Psychology

 Market factors
 Universal circumstances
Thank You