TOPIC 2: THE NATURE OF INNOVATION AND

ENTREPRENERSHIP
MODULE CODES: BAG09202 {MBA Gen); PSG09207 (MPSM) & ITG09202
(MBA ITM)

JANETH J. MARWA
 Subtopics
• Relationship between entrepreneurship and
small business
• The Role of Entrepreneurship in society and
Creation of new business venture
• Key elements of Innovation and innovation
process
 Relationship between entrepreneurship and small business

• What is Innovation?
“The purpose of innovation is to continuously
grow and renew an enterprise with new or
better products, more efficient processes, or
enhanced business models,” adds Walter. ...
“Indeed, an entrepreneur is someone who is
willing and able to transform an invention into
an innovation.”
 Small Business Vs Entrepreneurship
• A small business is an organization,
partnership or sole proprietorship that has
fewer resources and annual revenue than a
medium or large company.
An entrepreneurial venture is the concept of
starting a small business to offer a product or
service with the intention of disrupting an
industry or maximizing profit.
 What is Entrepreneurship?

• Entrepreneurship is a dynamic activity which

helps the entrepreneur to bring changes in
the process of production, innovation in
production, new usage of materials, creator of
market etc. It is a metal attitude to foresee risk
and uncertainty and do something new in an
effective manner to achieve certain goals.
 Small Business
• A business which functions on a small scale level involves less
capital investment, less number of labour and fewer machines
to operate is known as a small business.
• Small scale Industries or small business are the type of
industries that produces goods and services on a small scale.
These industries play an important role in the economic
development of a country. The owner invests once on
machinery, industries, and plants, or take is a lease or hire
purchase. Few examples of small-scale industries are paper,
toothpick, pen, bakeries, candles, local chocolate, etc.,
industries and are mostly settled in an urban area as a separate
unit.
 Characteristics of Small scale Industries
• Ownership: They have a single owner. So it is also known as a
sole proprietorship.
• Management: All the management works are controlled by
the owner.
• Limited Reach: They have restricted area of operation. So
they may be a local shop or an industry located in one area.
• Labor Intensive: Their dependency on technology is very little
because they are dependent on labours and manpower.
• Flexibility: Because they are small, they are open and flexible
to sudden changes, unlike large industries.
• Resources: They utilize local and immediately available
resources. They do better utilization of natural resources and
limited wastage
 Categories of Small Business
On the basis of capital invested, small business units can be divided
into the following categories:
(1) Small Scale Industry (Before 2006)
They invest in fixed assets of machinery and plant.
(2) Ancillary Small Industrial Unit
This industry can hold the status of an ancillary small industry if it
supplies a minimum 50 per cent of its product to another business,
i.e. the parent unit.
They can produce machine parts, components, tools or standard
products for the parent unit.
(3) Export Oriented Units
This industry can possess the status of an export-oriented unit if it
exports exceeds 50 per cent of its manufactures.
 Small scale Industries
(4) Micro Business Enterprises
it is a tiny and small business sector, which
begins with very small capital.
(5) Village Industries
The industries which are located in rural areas
and manufacture any product performs any
service with or without the utilization of power
is called village industries.
 The Role of Entrepreneurship in society and Creation of new business venture

• The role of entrepreneurship in any economy is

critical, as it contributes to the socio-economic
development of societies in various ways,
including
• Identifying existing opportunities in the
market - Through production and distribution
of goods and services, entrepreneurial
ventures seek to satisfy client needs and
improve livelihoods.
 The Role of Entrepreneurship in society and
Creation of new business venture
• Creating employment opportunities 
• Contributing to National Income
• Infrastructural Development . Entrepreneurial
ventures open up infrastructural development
in their localities. Starting up businesses often
leads to the development of transport and
communication networks, driven by the need
for infrastructure created by these businesses.
 The Role of Entrepreneurship in society and
Creation of new business venture
• Contributing to Community Development 
Through participation in Corporate Social
Responsibility, entrepreneurs contribute to and
support the development of infrastructure for
education, healthcare, business training &
mentorship and other social needs.
Note: Read on Global Entrepreneurship Index
Global Entrepreneurship Monitor
 Key elements of Innovation and innovation process

• Collaboration
Teamwork is essential to getting things done. In
today's global and digital world, challenges are more
complex; it's becoming increasingly important to bring
more, diverse minds to the table and to break down
silos.
• Ideation
New ideas help your organization stand out. With intense
competition for resources, organizations must differentiate in
order to survive.
Key elements of Innovation and innovation
process
• Implementation
Organizations must engage the best people to
champion their ideas and keep those great ideas
moving forward.
•Value Creation
Organizations must implement ideas and
programs identified as most effective in
delivering valueto stakeholders.
 Discussing Questions
• Differentiate between Start-up and Small
business
• Does indigenous business engage in strategic
orientation?
• What is the current performance of small
business in Tanzania?
• Differentiate between franchise and business
acquisition.
• Discuss the essence of business model in small
business
 Discussing Question
• Describe type of business venture
• Determine Proper mechanism for business
venture