The document traces the development of entrepreneurship from early periods through modern times. It discusses how entrepreneurs have evolved from signing contracts to taking on risks and rewards of new ventures. The key aspects of entrepreneurship discussed include identifying opportunities, developing business plans, obtaining resources, and managing new enterprises. Different types of startups like lifestyle firms and high-potential ventures are also outlined. Finally, the document examines the role of entrepreneurship in economic development and innovation.

2. 1-2
The Nature and Importance
of Entrepreneurship
McGraw-Hill/Irwin
Entrepreneurship, 7/e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 1

3. 1-3
Development of Entrepreneurship (1 of 2)
 Earliest Period
 Entrepreneurs would sign contracts with a money person.
 Example: Marco Polo
 Middle Ages
 Entrepreneurs were actors and people who managed large
production projects.
 17th Century
 Entrepreneurs entered into contractual arrangements with the
government.
 Example: Mississippi Company

4. 1-4
Development of Entrepreneurship (2 of 2)
 18th Century
 With global industrialization taking place, entrepreneurs were
distinguished from capital providers.
 Inventions developed during this time were reactions to
the changing world.
 Example: Edison & Whitney
 19th and 20th Centuries
 Entrepreneurs were not distinguished from managers.
 They were viewed mostly from an economic perspective.
 Concept of innovation and newness was an integral part.
 Example: Andrew Carnegie

5. 1-5
Definition of Entrepreneurs Today
 Entrepreneurship is the process of creating something new
and assuming the risks and rewards.
 Four aspects of being an entrepreneur today:
 Involves creation process.
 Requires devotion of time and effort.
 Involves rewards of being an entrepreneur.
 Requires assumption of necessary risks.

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Entrepreneurs Versus Inventors
 Inventor: Creates something for the first time; highly
driven and motivated by his or her own work and
personal ideas.
 Differentiating characteristics of an inventor:
 Education.
 Level of experience.
 Problem-solving skills.
 Level of self-confidence.
 Willingness to take risks.
 Ability to tolerate ambiguity and uncertainty.
 View of monetary benefits in measuring success.

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The Entrepreneurial Process
 Four distinct phases:
 Identify and evaluate the opportunity.
 Window of opportunity.
 Develop a business plan.
 Determine the resource requirement.
 Manage the resulting enterprise.

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Aspects of the Entrepreneurial Process
Table 1.1
<<Insert Table 1.1>>

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Types of Start-Ups
 Lifestyle firm
 Privately held; usually achieves only modest growth.
 Foundation company
 Created from research and development.
 Lays the foundation for a new business area.
 High-potential venture
 Receives the greatest investment interest and publicity.
 Starts out like a foundation company, but attains rapid growth.
 Also called gazelles, is integral to the economic development
of an area.

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Role of Entrepreneurship in
Economic Development
 Innovation is depicted as a key to economic
development.
 Product-evolution process: Process through which
innovation is developed and commercialized.
 Iterative synthesis: Critical point in the product-evolution
process.
 Three types of innovation:
 Ordinary
 Technological
 Breakthrough

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Product Evolution
Need RecognitionNeed Recognition
Initiate InnovationInitiate Innovation DevelopmentDevelopment
IndustrialIndustrial
Press to InventPress to Invent

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Government as an Innovator
 One channel for commercializing the results of the
synthesis of social need and technology.
 Frequently called technology transfer.
 Relatively few innovations reach commercial markets.
 Lacks business skills necessary for successful
commercialization.
 Government bureaucracy and red tape act as inhibitors.

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Corporate Entrepreneurship
 Strengths of an existing business:
 Financial resources.
 Business skills.
 Marketing and distribution systems.
 Factors that inhibit successful commercialization:
 Bureaucratic structure.
 Emphasis on short-term profits.
 A highly structured organization.
 In the current era of hypercompetition, strategic
business units (SBUs) are emerging.

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Independent Entrepreneurship
 Factors that inhibit commercialization:
 Managerial skills.
 Marketing capabilities.
 Financial resources.
 Unrealistic inventions.
 Lack of awareness on interfacing with necessary entities
(banks, suppliers, customers, venture capitalists,
distributors, and advertising agencies).

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Ethics and Social Responsibility
 Entrepreneurs usually develop an internal ethical code.

 Personal value systems tend to be influenced by:
 Peer pressure.
 General social norms in the community.
 Pressures from their competitors.

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Future
 Entrepreneurship has gained mileage through a number of
ways:
 Entrepreneurial education.
 Increase in academic research.
 Societal support (media coverage).
 Corporate entrepreneurship.

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Entrepreneurial Universities
 Activities
 Seminars
 Consulting
 Research
 Case Development
 Technology Development &
Transfer
 Joint Ventures & Strategic
Alliances
 Structures
 Business Assistance Centers
 Incubators
 Innovation Centers
 Industrial Parks
 Enterprise Development
Centers
 Venture Capital Exchanges
 Inputs
 Guest Lectures
 Board of Advisors/Trustees
 Internships
 Student Projects
 Source of Funds