1.

0
Theories and Concepts of
Entrepreneurship
CO1:
Explain the fundamentals of entrepreneurship using verbal
and non verbal communication.
 1.0
Theories and Concepts of
Entrepreneurship
Learning Outcome
At the end of the session, students should
be able to:

1. understand the various theories and concepts on

entrepreneurship
2. have a deeper understanding of the discipline of
entrepreneurship
 1.1 EVALUATION OF
ENTREPRENEURSHIP THEORY

Definition of an Entrepreneur :
• “ An entrepreneur is a person who
undertakes to do a job ” Richard Cantillon
(1755). The term entrepreneur is a French
word first coined by Richard Cantillon.

In Malaysia the term “usahawan” is used

for entrepreneur.
 EVALUATION OF
ENTREPRENEURSHIP THEORY

• Adam Smith (1776) - An entrepreneur is

a person who acts as agent in
transforming demand into supply.
• Jean Babtiste Say (1803) - An
entrepreneur is a person who shifts
resources from an area of low
productivity to high productivity.
 EVALUATION OF
ENTREPRENEURSHIP THEORY

• John Stuart Mill (1848) - An entrepreneur is a

prime mover in the private [Link]
entrepreneur is the fourth factor of production
after land ,labor and capital.
• Carl Menger (1871) - The entrepreneur acts
as an economic agent who transforms
resources into products and [Link]
entrepreneur transforms and gives added
value.
 EVALUATION OF
ENTREPRENEURSHIP THEORY

• Joseph Aloysius Schumpeter (1934) - An

entrepreneur is an innovator. The economy
moves through leaps and bounds and the
prime mover is the entrepreneur through the
process of creative destruction.
• Alfred Marshall (1936) - The process of
entrepreneurship or business development is
incremental or evolutionary . It evolves from
sole proprietorship to a public company.
 EVALUATION OF
ENTREPRENEURSHIP THEORY
• Ibnu Khaldun (Abdul Rahman Mohamed
Khaldun) - The entrepreneur is seen as a
knowledgeable individual and is instrumental
in the development of a city-state where
enterprise will emerge.
• David McClelland - The entrepreneur is a
person with a high need for achievement.
This need for achievement is directly related
to the process of entrepreneurship.
 1.2 ISLAMIC VIEW ON ENTREPRENEURSHIP

ISLAMIC ENTREPRENEURSHIP FOCUS ON

EIGHT PRINCIPLES OF THOUGHTS :-

[Link] is an integral parts of Islamic religion.

[Link] virtue of human nature , the Moslem entrepreneurs
are ‘khalifah’ and have the reponsibilities develop
prosperity and sees business as part of ibadah or good
deed.
[Link] – success in Islam is not merely measured
by the end result but also the way and means of
achieving them.
[Link] – business activity is part of ibadah or “good
deed”
 ISLAMIC ENTREPRENEURSHIP

5. Position of Entrepreneurship and business in Islam

– Islam encouraged its ummah to venture into
business . Prophet Muhammad S.A.W expounded
that 9 out 10 source of rizque (reski) can be found in
business.
6. Islamic Economic System - Islamic
Entrepreneurship should operate within the domain
of Islamic Economic system and act as the vehicle
towards global acceptance of Islamic Economic
System.
 ISLAMIC ENTREPRENEURSHIP

7. Guiding Principles of Islamic Entrepreneurship is by

the al-Quran and al-Hadith
8. Entrepreneurial Ethics based on exemplary
conducts of Prophet Muhammad S.A.W
 ISLAMIC ENTREPRENEURSHIP AS AS
INTEGRAL PART OF THE RELIGION

Islam is a complete way of life. There is no

separation between business and religion.
Islam has its own entrepreneurship culture
and guiding principles based on the Al-Quran
and Hadith to guide business operation .
 HUMAN NATURE
(The fitrah of human being)

By virtue of the human nature, the person must

firstly be a Muslim, then an entrepreneur. He
has the responsibility to perform ‘ibadah’ and be
a ‘khalifah’. Muslim entrepreneur should search
for God’s blessings above all other factors. A
Muslim entrepreneur perform business not
solely for profit, but above all, to fulfill the
‘fardhu kifayah’.
 MOTIVATION
• Most entrepreneurs have the desire to
achieve successful business venture.
• The successful path and means for
achieving success for Muslim
entrepreneurs are unique.
• Success in Islam is not merely
measured by the end result, but also
the means and ways of achieving them.
 SUCCESS FORMULA BY AL-QURTUBI

• Halal – livelihood that are in accordance to

what is being outlined by Allah SWT and
syariah.
• Qanaah – be pleased and thankful with one’s
earning
• Taufiq - Asking for the blessing of Allah in
proportion to one’s expectation
• Sa’adah- Spiritual happiness
• Jannah – Worldly success should act as the
bridge to the ultimate success in the life
hereafter (paradise).
SEVEN STEPS TOWARDS A SUCCESS IN LIFE
ACCORDING TO IMAM AL-GHAZALI

 Level of Knowledge
 Level of Taubat or repentence
 Level of Temptation
 Level of Obstacles
 Level of Motivation
 Level of Handicap
 Level of Praise and Thankfulness
POSSESSION OF WEALTH IS ALLOWED BASED
ON THE FOLLOWING PRINCIPLES:-

• Allah s.w.t is the absolute owner of

wealth
• Allah created wealth in
abundance and sufficient for all
• Wealth is created for mankind
• Wealth is entrusted to mankind
 IBADAH

In Islam, involving in business

is part of ibadah through the
fulfilment of fardhu kifayah.
POSITION OF BUSINESS AND ENTREPRENEUR
ISLAMIC ENTREPRENEURSHIP MODEL
Islam Proposed
(Business Venture)
E E
X X
A Allah Prepared
A
M (Facilities)
M
P P
L Islam Outlined
L
E (Rules and Regulation)
E
Allah Promised
(Reward)
ISLAMIC ECONOMIC SYSTEM

Islamic Entrepreneurship should

be in the framework of Islamic
Economic System and should
assist in establishing the Islamic
Economic System
GUIDING PRINCIPLES OF ISLAMIC
ENTREPRENEURSHIP

Guidelines for Islamic

Entrepreneurship and business
activities are wide and
comprehensive based on Al-
Quran and Al-Hadith.
MUSLIM ENTREPRENEURSHIP ETHICS
 To prevent laziness
 To eradicate fear
 To search for legitimate ventures
 To avoid forbidden sources of income
and property
 To show gratitude and thankfulness of
whatever has been acquired
 To grow and develop capital and profit
 To diversify business ventures
 To avoid greediness
THE ETHICAL BEHAVIOR OF MUSLIM
ENTREPRENEURSHIP

 To avoid malicious behavior

 To avoid squandering
 To avoid stinginess
 To pay alms (zakat)
 Trustworthy
 To pray consistently
 Tawakkal
 Patience
 Qana’ah
EXEMPLARY CONDUCTS OF GOOD MUSLIM
ENTREPRENEURS DURING THE PROPHET
MUHAMMAD S.A.W REIGN

 Business is secondary when being called

for other form of crusade
 Avoid using influence for self interest
 Afraid of accumulated wealth
 Leadership qualities in all aspects
 Practice moderate way of life
 1.3.1 DEFINITION OF
ENTREPRENEURS

• Functional definition of entrepreneurs offers the

following definition:

Entrepreneurs are individuals who actively

form or lead their own business and nurture
them for growth and prosperity.
 1.3.2 DEFINITION OF
ENTREPRENEURSHIP
 It is more than mere creation of business

Entrepreneurship is a process of innovation and

new venture creation through four major
dimensions – individual, organizational,
environmental and process.

The entrepreneurship process is aided by

collaborative networks in government, education
and institutions.
1.4 ENTREPRENEURSHIP AND SMIs
IN MALAYSIA

• Entrepreneurship involves not only the

process that leads to the setting up of a
business entity but also the expansion and
development of an on going concern.
• The study of entrepreneurship is concerned
with the entrepreneurial behavior, the
dynamics of business set up and expansion
and development.
Detailed definition of category, namely micro, small and medium is as
follows:

Source: SME Corp. Malaysia

 1.5 THE ROLE OF ENTREPRENEURSHIP IN
MALAYSIAN ECONOMY DEVELOPMENT

1. Entreprenuership is the symbol of business

steadfastness and achievement. Entrepreneurial
revolution is critical to economic growth.
Entrepreneurship may affect our future in many
ways:
a. Innovative creation of opportunity
Example: Portable phones linked to faxes and
laptop will turns cars, train, and airport terminal
into offices.
 THE ROLE OF ENTREPRENEURSHIP IN
MALAYSIAN ECONOMY DEVELOPMENT

b. Entrepreneurship not only affect our lives

through innovation but represent the
working future for many of us due to lays
off by large organization and shrinking of
job opportunities for graduates
c. Entrepreneurship is synonymous to
creation of new venture and small
businesses. SMIs have been important
contributors to local economic growth.
 THE ROLE OF ENTREPRENEURSHIP IN
MALAYSIAN ECONOMY DEVELOPMENT

d. The entrepreneurial SMIs provide services

that the large corporation has neglected or
lack of economy of scale for the large
corporation to serve.
e. Contribution of SMIs to Malaysian
Economy