PMGR 546:Innovation and

Entrepreneurship for Africa’s

Development

M.Sc. Governance & Regional

integration

Dr. Fridah Simba, PhD

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 Introduction
The concept of entrepreneurship was first established in the
1700s, and the meaning has evolved ever since.
 Many simply equate it with starting one's own
business.
 Economists, the entrepreneur is one who is willing to
bear the risk of a new venture if there is a significant
chance for profit.
 Innovators; developing new goods and processes that
the market demands and are not currently being
supplied. 2
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  In the 20th century,
economist; Joseph
Who is an Schumpeter (1883-
Entrepreneur? 1950) entrepreneurs
drive for innovation
and improvement
creates change.
 It’s a force of “creative
destruction”-coming up
with new things thereby
rendering old industries
obsolete
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 Who is an Entrepreneur?

• Entrepreneurs:- individuals who exploit market

opportunity through technical and/or organizational
innovation (Schumpeter ,1965).
• An entrepreneur is a person who searches for
change, responds to it and exploits it an
opportunity (Peter Drucker).
• A person who attempts to make profit by initiative
and risk taking (Oxford English Dictionary)
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 What is Entrepreneurship?

• A way of thinking, reasoning and acting that is

opportunity based, holistic in approach and leadership
balanced for the purpose of wealth creation not just for
the owner but for all stakeholders (Timmons &
Spinelli,2004)
• The process by which individuals either on their own
or inside organizations pursue opportunities without
regard to the resources they currently control
(Stevenson & Javillo, 1990)
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 Entrepreneurship from
various perspectives
• Entrepreneurship as a term came into use in 1755
by Richard Cantillon, a French Economist.
• The term was derived from French entreprendre
(to undertake)- meaning those who undertook risk
of new enterprises.
• Entrepreneurship borrows concepts from various
disciplines; economics, sociology, psychology,
management, religion etc.

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• Economists see entrepreneurs
as agents of economic growth
• Ely & Hess (1893), saw
entrepreneurs as people who
combine factors of production
for economic growth.
• Kal Vester (1980), described
an entrepreneur “as a person
who combines factors of
production in optimum
proportions in order to
maximize returns as well as
taking tentative risks”
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 Cont.’

• Schumpeter (1911-1949):– “Entrepreneurs as

movers of society who had the joy of creating
private industries and as means of transforming
and improving society”
• Adam Smith (1776):- described entrepreneur
as “an individual who undertook the formation
of an organization for commercial purposes”.

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 Psychological perspective

Studies the human individual behaviors and

considers personality characteristics which
differentiate entrepreneurs from other people.
o High need for achievement
o Propensity to take risk
o Internal locus for control
o Autonomy
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• What do people do in
society?
• Marx Weber (1905)
noted: “Entrepreneurs are
influenced by
environment.”
• Sociological theories
explain the social
condition and social
factors in which
entrepreneurs emerge.
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 Entrepreneurs are born not
Myths of made.
Entrepreneurshi
Entrepreneurs are doers
p not thinkers
All entrepreneurs need is
money
Entrepreneurs are
academic and social
misfits.
Entrepreneurs must fail.
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Part Two…

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 The Entrepreneurial
Environment
The business environment:- the surrounding of a
business. It includes all those things that lie outside
the business but can greatly affect its operations
and people’s decision to buy or not buy products.
The 3 key environments include :-
• The macro environment
• The micro environment
• The enterprise’s immediate environment
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 Churchill and Lewis Growth
Model
• The Churchill and Lewis Growth Model is a model
designed for small businesses. By recognizing the
"stage" the company is at, the managers are better
able to predict problems in the future and anticipate
solutions.
• This will allow you to better understand where
resources should be focused on and plan the overall
growth of a small company.

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 Case study
Amsterdam Craft
Beer

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 Existence Stage
• In Amsterdam there are
many small breweries that
started with a single idea of
creating a crafts beer that
they really like to drink as
friends.
• As with many of these
stories, the craftsmen
started in their house. They
set-up the equipment and
experimented relentlessly
with their brews.
• The first good batch was
made. They bottled it
and they are ready to
share with their
friends. After testing it
with friends and the
positive feedback they
get hyped.
• They start to believe
they can actually make
some money with it. 25
 Survival stage
• The craftsmen have decided
to quit their day job to work
full-time at making beer at
home.  There is some cash
reserved and there is some
profit to be made from the
sold beer.
• Working at home making
beer may not seem very
glamorous, but the
craftsmen are happy.  26
• However, while looking at the
finance, they realize that they
barely make enough money to
survive
• As a matter of fact, they realize
they are working for under the
minimum wage.
• The craftsmen need to either
decide to be happy with what
they have, or perhaps nurture
growth by renting the
overcapacity of a bigger brewery.
 Success stage
•The craftsmen decided to rent
overcapacity of a competing
brewery.  brewery is making the beer
•They made a financial assessment
and they realize it is distressing to
start a brewery on their
own. Quickly they realize they are
at the mercy of the brewery they
are renting the capacity from.
•They are making enough profit
that it is not an immediate
problem
•They stopped making beer
themselves, instead the
according to their recipe. 
•Sales seem stable and the
market share is stable as well.
•Do they expand or just reap
the benefits that came from a
few years of hardship?
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 Expansion (take -off) stage
• The owners have been offered a substantial amount of money by the
brewery it was working with for they see potential in crafts beer. The
brewery have all the systems in place to be able to expand the business. In
return the brewery wants to be majority shareholder.
• The owner agrees to it as it sees it as a way for his initial vision of sharing
a drink with friends to multiply. But with this deal, they will not be
majority shareholder hence Losing control of the company. 
• Because of the deal the company has grown so fast that it is hard for the
founders to fill in the different positions.
• One founder has entered the actual role of CEO and has to negotiate and
justify the strategy and approach the company wants to take.
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 • The company that
started once as a crafts
Resource beer has become an
Maturity household name.
• There is nothing
magical anymore about
the beer, it can be
acquired anywhere and
there is abundance in its
consumption. It has
become a commodity.
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 Ossification stage

• It has stopped developing new crafts beer since the

survival stage. It has lost touch with what made them
special at the beginning.
• In order to change the tide, they try to do the same trick as
they went through: buying out a company in the success
stage. However, the market has spoken, and the brewery is
seen as obsolete and no new business wants to work
with them.
• The brewery will enter the survive stage. 30
 Factors that shape
entrepreneurial firms

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Part Three…

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 • Its conceptualizing,
What is visualizing or bringing
into being something
creativity? which does not yet
exist.
• It’s the generation of
ideas that results in the
improved efficiency or
effectiveness of a
system.
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 Creativity through personality
theories
• The oldest way of conceptualizing creativity is
through personality theories.
• What is personality? It’s a default behavior
pattern on how we usually behave when external
restraints are less relevant.
• Personality maybe innate, change through years
as we interact with others and environment and
this shapes our perception. 34
 Characteristics of the ‘perfect
creative person’
1. Need for cognition – people who like thinking
more tend to be more creative.
2. Curiosity – asking ?s, probing and proposing
solutions.
3. Risk taking – risk in new taking new ideas
4. Infantile personality – playing with the child
within, what if, playfulness, tell stories –
creative ideas. 35
 5. Rejecting authority –
creative people don’t like
being ordered what to do,
Other they want to do things
characteristics ... differently.
6. Attention to Emotions-
numerous studies have shown
a link between high
emotional arousal and
creativity. / volatile emotions.
7. Critical Tendency- not
accepting things at face value.
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 • Creativity is not only a
personality predisposition
Creativity from but a way of thinking.
cognitive
researchers • A skill that can be taught
and acquired and if done
effectively can lead to
creative outcomes.
• Two patterns of
reasoning or thinking:-
• Convergent thinking
• Divergent thinking
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 • Convergent
thinking:- Focus on a
Convergent vs.
certain problem , you
Divergent thinking
try again and again to
get a solution.
• Divergent thinking:-
accessing a problem
from different angles or
point of views
• Divergent thinking has
higher outcome of
creativity. 38
Creative outcomes are defined
in three different criteria
1. Flow:- how many good ideas regarding
one single problem can somebody come
up with?
2. Originality:- how unique are these ideas?
3. Flexibility :- how different or varied are
the basic ideas presented.

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 • This is a veteran test
suggested by renowned
Veteran test ‘Brick test’
scientist Torrance.
– Ellis Paul Torrance • He was a psychologist
(1915-2003) who looked at the nature
of creativity and creative
reasoning.
• Uses for a brick. Come
up with many creative
ideas on how the bricks
can be used.
• Activity: personality test
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The end !!!
Thank you!! 11/19/2022

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