Professional Documents
Culture Documents
Module 1
UNIVERSITY OF ST. LA SALLE BACOLOD
COLLEGE OF BUSINESS AND ACCOUNTANCY
1st Semester
A.Y. 2020-2021
Entrep101
Entrepreneurial Behavior/Foundation
Economic Growth
◦ Is the increase in value of goods and services
produced by an economy.
◦ It is measured as the percent rate of increase in real
gross domestic product or GDP.
◦ In economics, economic growth refers to growth of
potential output (production) at full employment,
which is caused by growth in demand, or output.
I. Contributions of Entrepreneurship to the
Economy
◦ Entrepreneurship employs the various resources present in
the economy.
◦ Entrepreneurs need manpower for the business operations.
◦ It is said that Entrepreneurship is the backbone of the
economy.
◦ An entrepreneur is in their ability to innovate goods and
services.
◦ An entrepreneur is their ability to gain international
popularity and prestige for their country.
◦ Their willingness to take risk, risk that society will otherwise
be hesitant to take.
◦ Although many people do not recognize it, entrepreneurs also
profoundly inspire budding and potential entrepreneurs.
Theories that Explain how Economies
Grow
Theories of economic growth maybe classify
into three broad groups:
◦ Consists of theories viewing economic growth as a natural and
inevitable process.
◦ Explains economic development as a rational process brought
about when men respond to opportunities in the environment to
promote their own self-interest or material welfare.
◦ Views economic development as a result of economically
irrational yet psychologically and sociologically satisfying
activities of enterprising men.
Theories on Entrepreneurship as a natural and
inevitable process.
GENERAL EXPLANATIONS:
1. Law of nature - in 1932, Spengler explained economic development
by likening a culture or society to a living organism that grows, lives, and
dies; it is a part of life and is something to be expected.
2. Invisible Hand – 18th century, Adam Smith advanced the principle.
According to Smith, any society including a very under developed one
can be made to prosper with little or no intervention from government
because economic is brought about as a natural course of things.
3. Cultural Diffusion – Anthropologist introduced the idea that over the
ages and across the years, societies have been involved in different
social experiments in various economic, political, religious or social
aspects of life.
Theories on Entrepreneurship as a natural and
inevitable process.
ECONOMIC EXPLANATIONS:
1. Technology improvements and division of labor – Adam Smith, believed
that the intervention of better machines and equipments brought about
increased productivity, which together with specialization or division of
labor made economic growth possible.
2. Neo-classical growth model – develop by Robert Solo and Paul
Samuelson in the 1950’s, this model assumes that countries use their
resources efficiently and that there are diminishing returns to capital and
labor increases.
3. Endogenous Growth Theory – included a theory of technological
advancement. These models also incorporated a new concept of human
capital, the skills and knowledge that make workers productive.
Economic Development as a rational
process
4. Big Push Theory – one popular theory in the 70’s was that of the “Big Push”
which suggested that countries needed to jump from one stage to another
through a virtuous cycle in which large investments in infrastructure and
education coupled to private investment would move the economy to a
more productive stage.
5. Population Changes – according to David Ricardo, population increases
eventually lead to stagnation or a final stationary state o the economy.
However, according to John Maynard Keynes, the capitalist or
entrepreneurs are most likely to invest their resources when there is
demand for the commodity.
6. Entrepreneurship – economist recognized that for production to take place,
someone had to mobilize all resources ( land, labor and capital ).
Economic Development as a result of economically
irrational yet psychologically and sociologically
satisfying
Creates employment
X
Risks of Entrepreneurship
Risk of failure
LAUNCH
GROWTH
HARVEST