Lecture 1_Concept & Theory (DL).pptx

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Fundamentals of Entrepreneurship
© Oxford Fajar Sdn. Bhd. (008974-T), 2013 1– 1
LECTURE 1
CONCEPT & THEORY
OF
ENTREPRENEURSHIP

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CLASS ACTIVITY 1
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Who is an entrepreneur?
 There is no consistent definition of the term
“entrepreneur” and what entrepreneurship is all about
(Kuratko & Hodgetts, 2001).
Functional
approach
what an
entrepreneur
does
Indicative
approach
characteristics
and attributes

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Entrepreneur/Entrepreneurship:
Definition from Research Literatures
 Adam Smith (1776) widened the scope of
entrepreneurship to include the task of forming an
organization for commercial purposes.

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 He described the dynamism of the personality
of an ‘enterpriser’ such as the ability to foresee
potential through changes in the economy and
to take advantage of the opportunities thereby
created.

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 Joseph Schumpeter believed
entrepreneurship plays a
crucial role in triggering
economic development.
Definition from Research Literatures
(cont.)

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CLASS ACTIVITY 2
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 Schumpeter
(1934) defined
development as
the exercising of
new combinations
of productive
factors.

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 Such efforts may result in the introduction of a new
product or a new method of production, the opening
of a new market or the finding of a new source of the
inputs supply or the establishment of a new
organization.

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Definition from Research
Literatures (cont.)
 An entrepreneur is a sociologically distinct individual who is a
creative and resourceful innovator as well as an agent of
change.

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Definition from Research
Literatures (cont.)
 Von Mises defined entrepreneurship as human action ‘seen
from the aspect of the uncertainty inherent in every
action’ (Mises, 1949).
 For Mises (2000), entrepreneurship mainly consists of:
– decision-making activities
– entrepreneur is seen as an active individual
– distinction between entrepreneurship and management
– motivated by the desire to make profits and acquire
wealth.

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Individual Characteristics of an
Entrepreneur
 While some scholars
focus their research on
the economic function of
entrepreneurship, others
have concentrated their
works on the personal
characteristics of
entrepreneurs.

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 Brockhaus (1982) identifies three attributes that
are consistently associated with entrepreneurial
behaviour:
1. The need for achievement
2. The internal locus of control
3. A risk-taking tendency.

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Entrepreneur (cont.)
 The need for achievement is a personal attribute
associated with the expectation of doing something
better over others and/or the individual’s earlier
accomplishment (Hansemark, 2003).
 It is believed that the individuals who score highly on the
need for achievement would have a strong desire for
success and are consequently more likely to behave
entrepreneurially (Othman, Ghazali & Ong, 2005).

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 ‘Locus of control’ is a belief or disbelief that
one can control or influence the
environment in which one is found.
 Rotter (1966) hypothesizes that individuals with
internal locus of control are more likely to strive
for achievement than those with external locus
of control.

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 This is because individuals with internal locus of
control believe that they can make things happen
as they are able to control and influence the
environment around them.
 In contrast, individuals with external locus of control
do not believe they can do this.
 People with internal locus of control are more likely
to be entrepreneurial than those with external locus
of control (Beugelsdijk & Noorderhaven, 2005).

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 Individuals with higher propensities for risk-taking
are believed to be more likely to be involved in
entrepreneurial activities.
 This is not surprising as entrepreneurship has long been
associated with risk-taking (Cantillon, 1755; Knight,
1921).
 Empirical evidence also supports the view that risk-
taking propensity serves as one of the attributes which
influences entrepreneurial success and performance
(Beugelsdijk & Noorderhaven, 2005).

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