UTU3012

Entrepreneurship

Introduction to Entrepreneurship

Dr. Suhaida Herni Suffarruddin

 Learning Outcomes
At the end of this chapter, students should be able to:
❑ Define the terms “Entrepreneur” and “Entrepreneurship”
❑ Explain the differences between an entrepreneur and a small businessman
❑ Discuss the theory of entrepreneurship
❑ Discuss the types of entrepreneurs
❑ Discuss the personal traits of entrepreneurs
❑ Describe the characteristics of successful entrepreneurs
❑ Elaborate the importance of entrepreneurship
 Entrepreneur and Entrepreneurship
Entrepreneurs:

Richard Cantillon, 1775: “to undertake or to try” – refer to

individuals who were undertakers or who undertook the
risks of a new enterprise. In Malaysia – widely used in 1970s after
NEP:
Carland, 1984: Individual who establishes a business and
manages it to obtain profit and to become successful. Entrepreneur is someone who establishes
a new entity to offer a new or existing
product or service into a new or existing
Kuratko & Hodgetts, 2001: Individual who organizes,
manages and assumes the risks of the business. market whether it is for a profitable or
non-profitable outcome.

Zimmerer & Scarborough, 2008: Individual who creates a

new venture in the face of uncertainty for the purpose of
achieving profit and growth by identifying opportunities
and assembling the necessary resources.
 Entrepreneur and Entrepreneurship
Entrepreneurship:

Process of seeking business opportunities under

conditions of risk

Process of creating soothing new of value by

devoting time and effort, assuming financial, physical
and social risks and receiving monetary reward,
satisfaction and independence.

The success of business venture depends on several

aspects which are required by an entrepreneur, that
include attitude, skills and knowledge.
 Entrepreneur and Entrepreneurship
Entrepreneurship:

Identify business opportunities.

Entrepreneurship is the
ability, capability and
tendency to perform Manage a business effort which bring profit.
this activities:
Obtain success and richness by fulfilling the society’s
need and taking calculated risks.

Manage and utilize the factors of production to bring

economical development and enhance social welfare.

Work hard and be prepared to make new changes that

can increase production quantity and quality.
Differences between an Entrepreneur and a
Small Businessman
 Theories of Entrepreneurship
The term ‘entrepreneur’ was first used by a Frenchman named Richard Cantillon
Economic Perspective
(1775) to mean ‘a person who undertakes to do a job’.

Entrepreneur as a person who pays a certain price for a product to resell it, value is added by
transforming the goods.
— Richard Cantillon (1775)

Entrepreneur as a person who acts as an agent in transforming demand into supply.

— Adam Smith (1776)

Entrepreneurship is an evolution in which it will expand through time – from sole proprietorship to a
public company.
— Alfred Marshall (1776)

Entrepreneur as a person who shifts resources from an area of low productivity to high productivity.
— Jean-Baptiste Say (1803)
 Theories of Entrepreneurship
Economic Perspective

Entrepreneur is a prime mover in private enterprise economic activities, where an entrepreneur is the
fourth factor of production, after land, labour and capital.
— John Stuart Mill (1848)

The entrepreneur acts as an economic agent who transforms resources into products and services and
gives added value.
— Carl Menger (1871)

Entrepreneur as an innovator who introduced new innovation to replace old products or old ways of
doing things.
— Joseph Schumpeter (1934)

Entrepreneur is the one who identifies an opportunity that has been overlooked by others and
resources that are unexploited by most people around.
— Israel Kirzner (1978)
 Theories of Entrepreneurship
The physiologists viewed the entrepreneur as a person
Psychological Perspective who has a unique personality and behaviours – having
initiative and ability to plan and sense opportunity

A high need for achievement drives people to become entrepreneurs.

— McClelland (1951)

Entrepreneur tend to have a strong internal locus of control and strongly believe in their own ability to
control consequences of their attempts and efforts by influencing social economic development.
— Julian Rotter (1954)
 Theories of Entrepreneurship
Sociological Perspective

Entrepreneurs are the one who have incentives for maximum efficiency, and greater production
through trade and specialization to gain profit.
— Ibnu Khaldun (Abdul Rahman Mohamed Khaldun) (1406)

Entrepreneur as the beholder of an instrumental rationality which make him capable of linking
systematically certain goals.
— Max Weber (1917)

Entrepreneur emerge from a low-income group makes the effort to improve the situation with involve
in various economic activities and venture in business to earn profit.
— Everett Hagen (1957)
 Theories of Entrepreneurship
Management
Perspective

Entrepreneur always search for change, respond and exploit these changes as an opportunity .
— Peter F. Drucker (1985)

Entrepreneurship is an approach to general management that begin with opportunity recognition and
culminates with the exploitation.
— Donald L. Sexton & Nancy Bowman-Upton (1991)

Entrepreneur as a strategist and an opportunist.

— Dylan Jones-Evans (1995)

Entrepreneur as one who undertakes to organize, manage and assume the risk of a business.
— Donald F. Kuratko & Richard M. Hodgetts (2004)

Entrepreneurship as a dynamic process of creating something new with value.

— Robert D. Hisrich, Michael P. Peters & Dean A. Shepherd (2005)
 Types of Entrepreneurs
• An entrepreneur within a large organization, has a strong desire
Intrapreneur to create something using his own initiative and creativity.

• An entrepreneur who involves himself in technological changes

Technopreneur in producing goods and services for his organization.

• An individual or a group in association that creates a new

Copreneurs organization or doing innovation within organization

• Someone who recognize a social problem and often works

Social Entrepreneurs through a nonprofit organization, citizen group or private or
governmental sectors.

• Someone who is starting or running a business in cyberspace by

Cyberpreneur using the internet (online based business).
 Personal Traits of Entrepreneurs

Persistence and
Independence Self-confidence Creativity
determination

Organized and goal- Risk-taking and Perseverance and

Visionary
oriented tolerance for failure hard work

Commitment Honesty and honour

Characteristics of Successful Entrepreneurs

Able to identify opportunities Able to tolerate tedium

Action-oriented
Able to rebound from
disappointments
Always seeking to improve
Risk-takers
Orient themselves to customer needs

Locus of control
Value their employees

Able to face reality Independent and in control

 Importance of Entrepreneurship

Self-Development Family Development

• Freedom & flexibility, maximizing • Part-time business – does not have to

Opportunity to depend entirely on monthly salaries
benefit and resources, full responsibility, Increase family
control direction
performance target, no restrictions by income • Full-time business – get profit, freedom
in life
system and regulation to manage the household

• Can maximize skills and capabilities • Able to afford better homes, quality
Opportunity to education, health services
• Able to overcome obstacles Raise living
maximize self-
• Work hard to be much better position in standards • Stable environment for physical,
potential
future emotional and spiritual growth

Opportunity to • Aims to obtain profit – benchmark of • Success in business raise the honour
obtain unlimited success entrepreneur Improves social and prestige of a family
financial • Profit can increase the confidence of status • Will serve as an example to others and
rewards employee, creditors and suppliers. gain respect from the society
 Importance of Entrepreneurship
Society / Community Development National Development

Improves the Produces new

• Produce innovative products helps • Encourages the creation of a broader
standard of products of high
society raise standard of living range of new products and services
living and quality
lifestyle • Increase quality product at lower prices
Creates large- • Venture into global market to enhance
scale job economic performance, provide large
Opportunity to opportunities scale employment
contribute to the • Financial reward can be utilized
society
Catalyst to • Increasing national income through tax
national revenue, import and export,
Fulfils the • Able to identify needs and wants, make development diversification of products
society’s needs improvement existing products and
and wants develop new products – fulfil demands Generates
• Contributing to pay customs duty and
income for the
income tax to the government
Creates choices economy
through • Identify opportunities and increase
innovative and activities that benefit to the society – • Support heavy industries when become
creative growth of the economy. Backbone of
suppliers of raw materials or component
technique heavy industries
parts
Importance of Entrepreneurship

Spiritual Development

• Entrepreneur who strongly follows religious

Opportunity to put teaching will try to avoid exploitation,
religious faith into discrimination, fraud and injustice to the society.
practice • Entrepreneurship inculcates patience, gratitude
and generosity.

Opportunity to • Provides an opportunity for entrepreneur to

continuously perform welfare and religious obligation, charity
perform religious and donation, help eradicate poverty and
obligations improve social status od a community.