The term “entrepreneur” is defined in a variety of ways. Yet no consensus has been arrived at on the precise skills and abilities that make a person a successful entrepreneur. The concept of entrepreneur varies from country to country as well as from period to period and the level of development thoughts and perceptions.

1. Entrepreneurship
CoBE, Dep't of management
(Entrepreneurship)
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2. Chapter One
Entrepreneurship and Free
Enterprise
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CoBE, Dep't of management
(Entrepreneurship)

3. 1.1 Introduction
• Its origin lies in seventieth century France, where
an entrepreneur was an individual commissioned
to undertake a particular commercial project.
Concepts derived from the idea of the entrepreneur
include :
• Entrepreneurial
• Entrepreneurship
• Entrepreneurial process.
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CoBE, Dep't of management
(Entrepreneurship)

4. 1.2 Entrepreneurship – Historical Perspective
• What is entrepreneurship? And who is an
entrepreneur?
• These two questions are asked more frequently
reflecting the increasing demand in the field of
entrepreneurship.
• During the ancient period the word entrepreneur was
used to refer to a person managing large commercial
projects through the resources provided to him.
• In the 17th Century a person who has signed a
contractual agreement with the government to provide
stipulated products or to perform service was
considered as entrepreneur.
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CoBE, Dep't of management
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5. Cont’d……………………
• In the 18th Century the first theory of entrepreneur has
been developed by Richard Cantillon. He said that an
entrepreneur is a risk taker.
• The other development during the 18th Century is the
differentiation of the entrepreneurial role from capital
providing role. The later role is the base for today’s venture
capitalist.
• In the late 19th and early 20th Century an entrepreneur was
viewed from an economic perspective. The entrepreneur
organizes and operates an enterprise for personal gain.
• In the middle of the 20th Century the notion of an
entrepreneur as an inventor has established.
• The concept of innovation and newness are at the heart of
the above definition.
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CoBE, Dep't of management
(Entrepreneurship)

6. 1.3 Definitions and Concepts
The term “entrepreneur” is defined in a
variety of ways.
Yet no consensus has been arrived at on the
precise skills and abilities that make a person a
successful entrepreneur.
The concept of entrepreneur varies from
country to country as well as from period to
period and the level of development thoughts
and perceptions.
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CoBE, Dep't of management
(Entrepreneurship)

7. Cont’d……………………
• Adam smith described entrepreneur as a
person who only provides capital without
taking active part in the leading role in
enterprise.
• Joseph A. Schumpeter: A person who
introduces innovation changes. He treated
entrepreneur as an integral
equilibrium/stability.
• Peter F. Drucker defines an entrepreneur as
one who always searches change, responds to
it and exploits it as an opportunity.
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8. Cont’d……………………
• Similarly, here we will see at least three definition
of entrepreneurship because a single definition is
likely to result, in some cases at least, in a
mismatch without expectations.
1. Entrepreneurship is the process of creating
incremental wealth.
2. Entrepreneurship can also be defined as the
process of creating something different and
better with value by devoting the necessary time
and effort by assuming the accompanying
financial, psychic/mental and social risks and
receiving the resulting monetary reward and
personal satisfaction.
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9. Cont’d……………………
3. Our third definition views the term from three
perspectives; i.e. from the economist,
psychologist and capitalist philosopher’s point
of view.
To an economist an entrepreneur is one who
brings resource, labor, materials, and other
assets into combination that makes their value
greater than before and also one who
introduces changes innovations.
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CoBE, Dep't of management
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10. Cont’d……………………
To a psychologist an entrepreneur is a person
typically driven by certain forces need to
obtain or attain something, to experiment, to
accomplish or perhaps to escape the authority
of others.
For the capitalist philosopher an
entrepreneur is one who creates wealth for
others as well, who finds better way to utilize
resources and reduce waste and who produce
job others are glad to get.
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CoBE, Dep't of management
(Entrepreneurship)

11. Cont’d……………………
• In general, the process of entrepreneurship
includes five critical elements. They are:
1) The ability to perceive an opportunity.
2) The ability to commercialize the perceived
opportunity i.e. innovation
3) The ability to pursue it on a sustainable basis.
4) The ability to pursue it through systematic
means.
5) The acceptance of risk or failure.
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CoBE, Dep't of management
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12. 1.4 Characteristics of an Entrepreneur
• Commitment(promise), Determination, and perseverance
• Drive to achieve
• Opportunity Orientation
• Initiative/creativity and Responsibility
• Persistent Problem solving
• Seeking feedback
• Pervasiveness/universality
• Internal Locus of Control (LC is how much individuals perceive
that they themselves have control over their own actions)
• Calculated Risk Taking
• Tolerance for Failure
• Creativity and Innovativeness
• Vision
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CoBE, Dep't of management
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13. 1.5 Types of Entrepreneurs
1.5.1 Entrepreneurs According to the Type of Business
i. Business Entrepreneurs
• Are individuals who conceive/perceive/consider an idea for a new
product or service and then create a business to materialize their
idea into reality
ii. Trading Entrepreneurs
• Is one who undertakes trading activities and is not concerned with
the manufacturing work
• He identifies potential markets, stimulates demand for his product
line and creates a desire and interest among buyers to go in for his
product
• engaged in both domestic and overseas trade.
iii. Industrial Entrepreneur
• Is essentially a manufacturer who identifies the potential needs of
customers and tailors/modifies a product or services to meet the
marketing needs.
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CoBE, Dep't of management
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14. Cont’d……………………
iv. Corporate Entrepreneur
• Is an individual who plans, develop and manages
a corporate body
• Corporate –separate legal entity
v. Agricultural entrepreneur-
• Are those entrepreneurs who undertake
agricultural activities as raising and marketing of
crops, fertilizers and other inputs of agriculture
• They are motivated to raise agriculture through
mechanization, irrigation and application of
technologies for dry land agricultural products.
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15. Cont’d……………………
1.5.2 Entrepreneurs and Motivation
• Motivation is the force that influences the efforts of the
entrepreneur to achieve his objectives.
• Based on motivation entrepreneurs can be classified as:
i. Pure Entrepreneur
• is an individual who is motivated by psychological and
economic rewards.
• The entrepreneur undertakes an entrepreneurial activity
for his personal satisfaction in work, ego or status.
ii. Induced Entrepreneur
• Is one who is induced/encouraged to take up an
entrepreneurial task due to the policy measures of the
government that provides assistance, incentives,
concessions/discount and secessions/withdrawals and
necessary over head facilities to start a venture
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CoBE, Dep't of management
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16. Cont’d……………………
iii. Motivated Entrepreneur
• New entrepreneurs are motivated by the desire for self
fulfillment.
• They come into being because of the possibility of
making and marketing some new product for the use
of consumers.
• If the product is developed to a saleable/marketable
stage, the entrepreneur is further motivated by
reward in terms of profit.
iv. Spontaneous Entrepreneur
• These entrepreneurs start their business by their
natural talents
• Such entrepreneurs have a strong conviction/belief and
confidence inborn ability
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CoBE, Dep't of management
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17. 1.6 The Role of an Entrepreneur
• Entrepreneurs play a critical role in
maintaining/sustaining and developing the
economic order we live under.
• Some important economic effects of
entrepreneurial activity are listed below.
i. Combination of economic factors
• All the products bought and sold in an economy
are a mix of three primary economic factors (the
raw materials, nature offers up, the physical and
mental labor people provide and capital (money).
• Now value is created by combing these three
things together in a way which satisfies human
needs.
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CoBE, Dep't of management
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18. …… Role of an Entrepreneur
ii. Providing Market efficiency
• Efficient means resources are distributed in an optimal way
that is the satisfaction that people can gain from them is
maximized.
• An economic system can only reach this state if there is
competition between different suppliers.
• If a supplier is not using competition then they will tend to
demand profit in excess of what the market would allow
and reduce the overall efficiency of the system.
iii. Accepting Risk
• Risk is the potential variation in terms of future outcomes.
• We do not know exactly what the future will bring.
• This lack of knowledge creates uncertainty.
• Here the primary function of the entrepreneur is to accept
risk on behalf of other people.
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CoBE, Dep't of management
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19. ……..Role of an Entrepreneur
iv. Maximizing investor’s return
• Entrepreneurs create and run organizations which
maximize long-term profit on behalf of the
investors which in turn generates overall economic
efficiency.
v. Processing of market information
• The entrepreneur keeps an eye out for information
that is not being exploited or misused.
• This information is information about
opportunities.
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20. • Create a demand for the product by creating
employing opportunity i.e. give economic capacity
to buy
• Introduce new and technological development
• Bridging the gap between science and technology
and the market place
• Satisfying the unsatisfying need of the consumer
CoBE, Dep't of management
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21. • Contribute the development of the country as whole
• To keep the motivation to your employees by making
your organization entrepreneurial organization
• Facilitate change and development through innovation
• initiate economic development of the country by
increasing per capital income and create changes in
business and society structure
CoBE, Dep't of management
(Entrepreneurship)
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22. 1.7 Entrepreneurial Innovation
• Innovation lies at the heart of the entrepreneurial
process and is a means to the exploitation (taking
advantage) of opportunity.
• It may be viewed economically or entrepreneurial.
• Economically: - Innovation is the combining of
resources in a new and original way.
• Entrepreneurially: - it is the discovery of a new and
better way of doing things.
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23. Cont’d……………………
• Innovation goes beyond invention.
• Innovation is not something that happens at some points in
time.
• It will create new value if it offers customers an improved way
to approach tasks and to solve problems.
It is a process with certain steps/stages. They are:
i. Identification of a new Opportunity
• This opportunity must be evaluated both qualitatively and
quantitatively.
• Qualitative aspects: -
• Who are the potential customers?
• What needs do they have?
• Why are existing products not meeting these needs?
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CoBE, Dep't of management
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24. Cont’d……………………
• Quantitative aspects: -
• How much would exploiting the opportunity be worth?
• What level of investment is appropriate?
ii. Designing an innovation that will fulfill customer needs
• This may involve invention, the creation of a new product
or service.
• How a new product can be delivered to customers and
• How it might be promoted to them. Eg. Through social
media, like email, tv, radio, facebook or others.
iii. Actual delivery of the innovation to customers
• This involves delivering products where customers are at
the right time place and price and transfer a
possession/ownership utility.
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CoBE, Dep't of management
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25. Cont’d……………………
Established New
Potential impact
in market
High New insight
innovation
New world
innovation
Low Incremental
innovation
Specialist
Innovation
Types of Entrepreneurial innovation
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CoBE, Dep't of management
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26. Types of Entrepreneurial innovation
• Incremental innovation: - Is concerned with minor
improvements to an existing technology with limited
market ambitions/desires.
• New Insight innovation: - If market ambitions are
higher, but still based on modifications to existing
technology and competitions will be dependent on a
new way of using the technology.
• Specialist innovation: - If the innovation is based on a
new technology, but with limited market ambitions and
competition will be based on an appeal to a narrow
group of consumers.
• New world innovation: - An innovation founded based
on a new technology with high market impact
ambitions.
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CoBE, Dep't of management
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27. Cont’d……………………
Innovation is a knowledge-based process.
Successful innovation is founded on knowledge in
three areas.
• Market Knowledge: - Is concerned with
customers, their needs, demands, likely demand
growth and what competitions are supplying.
• Technological Knowledge: - Relates to the
effective development and production of the
product or service aimed at the customers.
• Capability Knowledge: - The venture’s
understanding of what it does and why it does it
well.
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CoBE, Dep't of management
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28. Thank you!!!
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CoBE, Dep't of management
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