This chapter discusses various concepts and theories related to entrepreneurship. It defines entrepreneurship in multiple ways and notes there is no single accepted definition. Entrepreneurs are classified into different types, such as innovative vs imitative. Traits of successful entrepreneurs are identified as self-confidence, risk-taking ability, flexibility, and more. The entrepreneurial process involves identifying opportunities, developing business plans, acquiring resources, and managing the enterprise. Entrepreneurship benefits the economy by creating new opportunities, jobs, and stimulating local economies through small businesses.

1. CHAPTER ONE
Theories and Concept of
Entrepreneurship

2. Concept of Entrepreneurship
• The concept of entrepreneurship has a wide
range of definitions. A concise and universally
accepted definition has not yet emerged.
– On one extreme an entrepreneur is a person of
very high aptitude who pioneers (inventor /
innovator) change
– On the other extreme, anyone who wants to work
for himself/herself is considered to be an
entrepreneur
• Due to this fact different scholars have given different
definition for it.

3. Concept of Entrepreneurship
• Entrepreneurship is:
– a process undertaken by an entrepreneur to
augment (increase) his/her business interests
– a way of thinking, reasoning and acting that is
opportunity obsessed (never stop thinking about
something), holistic in approach and leadership
balanced.
– In Druckers view, entrepreneurship occurs when
resources are redirected to wards progressive
opportunities, not used to ensure administrative
efficiency.
– a dynamic process of vision, change and creation.

4. Concept of Entrepreneurship
– Is a dynamic process of creating incremental
wealth.
– This wealth is created by individuals who assume
the major risks in terms of equity, time and career
commitment of providing value for some product
or service. The product or service itself may not be
new or unique, but value must somehow infused
by the entrepreneur by securing and allocating
skills and resources

5. Concept of Entrepreneurship
• Entrepreneurship is:
–a process of creating something new with
value by devoting the necessary time and
effort, assuming the accompanying
financial, psychic and social risks and
receiving the resulting rewards.
–This definition stresses four basic aspects of
being an entrepreneur:

6. Cont…
– First it involves the creation process – creating
something new of value
– Second, it requires the devotion of the necessary
time and effort
– Third, it involves the rewards of being an
entrepreneur
– The final aspect of entrepreneurship is taking risks
in a very calculated fashion:
• To constantly shift the odds of success and
• To balance the risk with the potential reward

7. Concept of Entrepreneurship
• Entrepreneurship is:
–A multi-dimensional concept
–A purposeful economic activity
–A dynamic and risky process.
–A fusion of capital, technology and human
intellect.

8. What does an Entrepreneur mean?
• Richard Cantillon, (1755)
• The term entrepreneur is a French word coined by Richard
Cantilon for the first time.
• It comes from a French word “Entreprender” which means
“go between”, or “undertaker”- one who organizes,
manages and assumes the risks of a business
• Thus according to him - an entrepreneur is some one who
takes the risk of running an enterprise by paying a certain
price for securing and using resources to make a product
and reselling the product for an uncertain price .

9. What does an Entrepreneur mean?
• Adam Smith(1776) – an entrepreneurs is a person
who acts as an economic change agent in
transforming demand into supply.
• Jean Baptist Say (1803) – an entrepreneur is a person
who shift resources from an area of low productivity
to high productivity
• John Struat Mill(1848) – an entrepreneur is a prime
mover in the private enterprise. The entrepreneur is
the fourth factor of production after land, labor and
capital

10. What does an Entrepreneur mean?
• Carl Menger (1871) - an entrepreneur acts as an
economic agent who transforms resources into
products and services. The entrepreneur transforms
and gives added value
• Joseph Schumpeter(1934)- an entrepreneur is an
innovator. The economy moves through leaps and
bounds and the prime mover is the entrepreneur
through creative destruction

11. Historical Development of Entrepreneurship
• Entrepreneurship is not a one-time phenomenon. It is not a
twentieth or twenty first century phenomena
• Earliest period
– An example of the earliest definition of an entrepreneur as
a go between is Marco Polo. He signed a contract with a
money person:
• The money person is a passive risk taker
• The merchant adventurer took the active role in trading,
bearing all the physical and emotional risks

12. Historical Development of
Entrepreneurship
• Middle Ages:-the term entrepreneur was used to
describe a person managing large production projects
using the resources provided. But there is no risk
taking propensity
• The concept of risk in the notion of entrepreneurship
developed in the 17th century

13. Historical Development of Entrepreneurship
• In the 17th Century – an entrepreneur being a person who
entered into contractual agreement with the government to
perform a service or supply stipulated products
– The contract price was fixed so any resulting profits or
losses were the entrepreneurs
– Thus Cantilon viewed the entrepreneur as a risk taker –
buy at a certain price and sell at an uncertain price

14. Historical Development of Entrepreneurship
• In the 18th century the person with capital is
differentiated from the one who needed capital
• In the 19th and 20th century, the notion of an
entrepreneur as an innovator was established.
• Entrepreneurs were not frequently distinguished from
managers and were mainly viewed from an economic
perspective

15. Types of Entrepreneurs
• CLARENCE DANHOF classifies as:
– Innovative Entrepreneur :
• Introduces new products, new methods, new
methods of production, opens new markets and
reorganizes the enterprise.
– Imitative or Adoptive Entrepreneur : imitates
innovations done by others.

16. Types of Entrepreneurs
• CLARENCE DANHOF classifies as:
– Fabian Entrepreneur –
• is skeptical, shy and lazy
• has no will or desire.
• has no risk taking propensity but follows the
footsteps of predecessors,
• is guided by custom, tradition, and past practices.
– Drone Entrepreneur : Laggard- refuses to adopt and
use opportunities. He may even be pushed out of
market when product marketability is too low.

17. Other Types of Entrepreneurs
• Nascent Entrepreneur: An individual who is in the process of
starting a new business.
• Novice Entrepreneur: An individual who has no previous
business experience as a founder or inheritor.
• Habitual Entrepreneur: An individual who has prior ownership
experience.
• Serial Entrepreneur: An individual who has sold or closed an
original business, established another new business, sold and
closed it, and continues that cycle of entrepreneurial behavior.
• Portfolio Entrepreneur: An individual who retains an original
business and builds a portfolio of additional businesses
through inheriting, establishing or purchasing them.

18. Types of Entrepreneurs based on
personalities:
There are four types of entrepreneurial
personalities:
– The personal achiever
– The Super Sales Person
– The Real Manager
– The Expert Idea Generator

19. The personal achiever
• They are the classic entrepreneurs.
• They posses’ seven interconnected characteristics.
1. Need to achieve (rational, careful analyzer,
competitive, hate being idle and etc)
2. Desire for feedback (about profitability, productivity)
3. Desire to plan and set goals
4. Strong personal Initiative (act independently)
5. Strong personal commitment to their organization
6. Believe that one person can make a difference
7. Belief that work should be guided by personal goals,
not those of others

20. The Super Sales Person
The most distinctive thing about Super Sales Person is
their approach to selling.
• They posses’ five overlapping characteristics:
1. Capacity to understand and feel with another
(good social interactions)
1. Desire to help others
2. Believe that social processes are very important
3. ( they like making contributions to the society
4. Need to have strong positive relationship with
others
5. Believe that a sales force is crucial to carrying
out company strategy

21. The Real Manager entrepreneur:
The Real Manager entrepreneur:
1. Desire to be corporate leader
2. Decisiveness
3. Positive attitude to authority
4. Desire to compete
5. Desire for power
6. Desire to stand out of the crowd

22. The expert idea generator:
1. Desire to innovate ( enjoy coming up with
new ideas)
2. Love of ideas - show concern for others’
views )
3. Believe that new product development is
crucial to carrying out company strategy
4. Good intelligence (insightfulness, the ability
to learn, and a capacity to analyze)
5. Desire to avoid taking risks (reduce risk)

23. Entrepreneurs traits
• Self-confident and optimistic
• Able to take calculated risk
• Respond positively to changes
• Flexible and able to adapt
• Knowledgeable of markets
• Able to get along well with others
• Independent minded

24. Entrepreneurs traits…
• Energetic and diligent or attentive, or careful or
hardworking
• Creative, need to achieve
• Dynamic Leader
• Responsive to suggestions
• Take initiatives
• Resourceful and persevering
• Perceptive with foresight

25. Entrepreneurs traits
• Responsive to criticism
• Who have internal locus of control
• In general entrepreneurs are risk bearers,
coordinators and organizers, gap fillers, leaders,
innovators or creative initiators. Although these list
of characteristics are by no means comprehensive, it
can explain why some people become entrepreneurs

26. Entrepreneur Vs Manager
• E- innovator where as M- keeps on an established
business rules
• E- focuses on Opportunity where as M- focuses on
handling Problems
• E- Independent where as M- is under the supervision of
his/ her employer
• E- earns huge profit where as M- earns a fixed salary
with fixed time period

27. Entrepreneurial Process
• The process has four distinct phases
– identification and evaluation of the opportunity
– development of the business plan
– determination of the required resources
– management of the resulting enterprise

28. Entrepreneurial Process
• Identification and evaluation of opportunities
– Sources of business opportunities
• Internal sources
• External sources
– The evaluation process involves looking at
• The length of the opportunity/window of opportunity
• Its real and perceived value
• Its risks and returns
• Its fits with personal skills and goals of the entrepreneur
• Its uniqueness or differential advantage in the
competitive environment

29. Entrepreneurial Process
• Develop a business plan
– A good business plan must be developed in order
to exploit the defined opportunity. This is a very
time consuming phase of the entrepreneurial
process.
• Determining the required resources
• Manage the enterprise

30. Importance of entrepreneurship to the
economy
• Entrepreneurship is the symbol of business steadfastness and
achievement. Entrepreneurial revolution is critical to economic
growth
• Entrepreneurship may affect our future in many ways:
– Innovative creation of opportunity
– Represent the working future for many of us due to large
number of lay offs and shrinkage of job opportunities in
large business firms
– It is synonymous to small business. And small business
enterprises have been important contributors of the growth
of local economies

31. Importance of entrepreneurship to the
economy
– For instance SME provide goods and services in areas
where by large corporations have neglected due to
lack of economy of scale for large corporations to
serve
• Entrepreneurship helps develop other entrepreneur
businesses because of the extra incentives that it can
provide to a new entrepreneur in the form of capital,
knowledge and technology

32. Entrepreneur, intrapreneur and ultrapreneur
• Intraprneur:
– is a process whereby an individual or a
group of individual, in association with an
existing organization, creates a new
organization or instigates renewal or
innovation within the organization.

33. Entrepreneur, intrapreneur and ultrapreneur
The need for entrepreneurship:
–Sense of distrust in the traditional methods
of corporate management
– An exodus of some of the best and brightest
people from corporation to become small
business entrepreneurs
–International competition
– Overall desire to improve efficiency

34. Entrepreneur, intrapreneur and ultrapreneur
• Ultrapreneurs:
– is an entrepreneur who needs to have a different
mind set about establishing and operating a business
entity in line with the ever changing environment
– The path of successful entrepreneur is ever changing
as the art and science of entrepreneurship is taking
new colors.

35. Charms(attractions) of being an entrepreneur:
• Salary – can make a higher salary that he could ever
earn working for someone- enjoy profits from your effort
• Security- can earn consistently a big salary for many
years running. S/He can accumulate huge capital for the
future so there is no fear in the issue of job security.
• Asset building- if the company grows and become more
profitable, you can build huge amount of assets.

36. Charms (attractions) of being an entrepreneur:
• Independence – allows you independence and
freedom from boss and supervision- you are your
own boss
• Satisfaction/ fulfillment or sense of pride in your
business
• Flexibility in your work schedules

37. Entrepreneurship vs small business
• Amount of wealth creation
• Speed of wealth creation
• Risk
• Innovation

38. Entrepreneurship, Creativity and
Innovation
• Creativity - is the ability to bring something new
into existence, but not emphasis on the activity.
• Innovation - is the transformation of creative ideas
into useful applications, but creativity is a
prerequisite to innovation.

39. Entrepreneurship, Creativity and
Innovation
 Creativity is the ability to develop new ideas and to discover
new ways of looking at problems and opportunities.
Innovation is the ability to apply creative solutions to those
problems and opportunities in order to enhance people’s lives
or to enrich society.
 Creativity is thinking new things, and innovation is doing
new things.

40. The Creative Process
The creative process involves five steps
1. Idea Germination (Seeding stage of new ideas)/ Recognition
2. Preparation (Conscious search for new ideas)/ Rationalization
3. Incubation (Subconscious assimilation information)/
Fantasizing
4. Illumination (Recognition of ideas as being feasible) /
Realization
5. -Verification (Application or test to prove ideas has
value)/Validation

41. Innovation
Types of innovation
1. Invention
2. Extension
3. Duplication
4. Synthesis

42. Entrepreneurship = creativity + innovation

43. End of Chapter
One