INTRODUCTION Flashcards
originates from the word ―entreprende‖ which means to undertake.
Entrepreneur
It connotes a business paradigm which signifies the start of a new business.
Entrepreneur
entreprende which means?
to undertake.
a person who organizes,
operates, and assumes the risk of business venture.
Entrepreneur
Comes from the word entrepreneur which refers to a field of practice or process.
The art of observing correct practices in managing and operating a self-owned wealthcreating business enterprise by providing goods and services that are valuable to the
customers.
The capacity and willingness to develop, organize, and manage a business venture
along with any of its risks in order to make profit.
Entrepreneurship:
refers to business venture.
Enterprise
What are the Salient Features of Entrepreneurship?
- It is an art of correct practice.
- It is a wealth creating venture.
- It provides goods and services.
- It entails opening and managing self-owned enterprise
- It is a risk-taking venture
there is an improvement in the quality of life of the owner and
cascade to the development of the local economy and eventually the of the whole country.
Wealth-creating venture
, defined as abundance of money
property and possession
Wealth
The goods and services must have a value to the customer to in order to create wealth.
When the customers are satisfied or delighted with the products and services offered by an
entrepreneur, the customers will patronize the product, there will be repeat purchases, is also its
owner.
It provides goods and services.
The feature highlights the concept of opening-self owned; it is plainly about ownership
The business is considered as self-owned when the person managing its daily activities.
- It entails opening and managing self-owned enterprise
Businesses that are being managed by others for the benefit of the owner do not fall within the
sphere of entrepreneurship. Such business is operating under the concept of
Intrapreneurship
Risk is inherent in an entrepreneurial venture.
Risk cannot be detached from any entrepreneurial venture; the only way to remove the risk is to
close the business venture.
It is a risk-taking venture.
- a generalization that explains a set of facts or phenomena
Theory-
This theory was propounded by Joseph A. Schumpeter. According to Schumpeter,
entrepreneur is basically an innovator and innovator is one who introduces new
combinations.
The main theme is the innovation. He makes a distinction between an innovator and an
inventor. According to him, an inventor discovers new methods and new materials. But
an innovator is one who applies inventions and discoveries in order to make now
combinations. With the help of these new combinations, he produces newer and better
goods which yield satisfaction as well as profits.
An individual is an entrepreneur only when he actually carries out new combinations and
ceases to be an entrepreneur the moment, he settles down to running the established
business.
Entrepreneurial development brings economic development.
. INNOVATION THEORY:
WHAT ARE THE 4 MAIN THEORIES ON ENTREPRENEURSHIP
Theory # 1. INNOVATION THEORY:
Theory # 2: KEYNESIAN THEORY
Theory # 3: ALFRED MARSHAL THEORY
Theory # 4: RISK AND UNCERTAINTY BEARING THEORY
Keynes believed that
expenditure was the key to economic stimulation.
Keynes asserted that aggregate demand was the economy‘s most important driving
force. Aggregate demand consists of the sum of spending by businesses, households
and the government.
This theory suggests that for an economy to expand and be stable, the government
needs to intervene actively. This is especially during a [period of recession or
depression where money is scarce and there is a high rate of unemployment.
He suggests that governments must make a strong intervention in the entrepreneurial
role played by the private sector by pouring more money to the economy and creating
jobs and projects for communities.
Theory # 2: KEYNESIAN THEORY
a product of the Great Depression.
. Keynesian Theory
a British economist
John Maynard Keynes
held that land, labor, capital and
organization as the four factors of production, and considered entrepreneurship as the
driving factor that brings these four factors together.
He regarded the entrepreneurs as the prime movers in the organization.
The characteristics of a successful entrepreneur include:
thorough understanding of the industry
good leadership skill
foresee possible demand and supply changes and
must possess the necessary skills to be an entrepreneur.
Theory # 3: ALFRED MARSHAL THEORY
Frank Hyneman Knight, an American economist at the University of Chicago, developed THIS THEORY According to the theory, bearing business uncertainty creates profit and the more uncertainty taken on, the more profit can be gained. The relationship between
uncertainty and gain may be linear, or even exponential, where there are bigger payoffs
on the right-hand side of the chart.
Theory # 4: RISK AND UNCERTAINTY BEARING THEORY
advocated a
sociological explanation for the growth of entrepreneurship in his theory of social change.
He stressed that social cultures are the primary driving elements of entrepreneurship.
He also pointed out that entrepreneur is expected to perform the role of a good
constituent by executing his/her entrepreneurial activities in line with good customs and
traditions, religious beliefs and morals.
This theory emphasizes religious belief and ethical value associated with the society
plays a vital role in determining the entrepreneurial culture.
Weber’s sociological theory- the proponent of this theory is Max Weber
The theory emphasizes modern technology as an essential factor in production.
Absence of modern technology application in entrepreneurship, economic development
will be slow and growth might not be expected.
Proper application of modern technology will promote efficiency in the production of
goods and service.
The entrepreneur is expected to keep abreast with modern technology and find ways to
apply same in the entrepreneurial endeavor.
Kaldor’s technological theory- the theory was developed by Nicholas Kaldor
The theory emphasizes the primary role of entrepreneurship in any economic activity is
to fill the existing gap.
The entrepreneur is responsible for recognizing trends in the market. In other word the
entrepreneur needs to determine what the gap is / what is lacking.
Leibenstein’s gap-filling theory- the proponent of this theory was Henry Leibenstein
The theory pointed out spontaneous learning and alertness as the two major attributes of
entrepreneurship in any given economy.
The entrepreneur must be alert in recognizing entrepreneurial opportunities and the
ignorance of the consumers as well.
Kirzner’s learning-alertness theory
the main proponent of this theory was Israel Kirzner.
He first introduced the dimension of risk-taking as a central characteristic of
entrepreneurship.
This theory considers uncertainty as a factor of production, and holds the main function
of the entrepreneur as acting in anticipation of future events.
The entrepreneur earns profit as a reward for taking such risks
Frank Knight’sRisk BearingTheory-the proponent of this theorywasFrankKnight
Importance of entrepreneurship:
- Entrepreneurship affects the lives of the individual.
- Makes significant contribution to the local community
- Make significant contributions to the Philippine economy
There are a few simple principles we can learn from the principle of entrepreneurship.
One of the most basic principles we can take from the person who has succeeded in
many facets of entrepreneurship is the importance of failure. Failure is not something
that you should fear, but instead you should embrace it and accept it as an important
part of learning the lessons of entrepreneurship. Failure is the opportunity to learn. As
important as failure is, we need to understand that to truly be successful; we must
continually risk doing what we do not know to learn.
It teaches us patience, confidence, maturity and many more which is very important for
an individual.
Entrepreneurship improves the financial and social aspect of an individual.
Provides guidelines in their wealth creating venture.
Broaden creativity.
Allow individual to become better leaders while nourishing their business ideas.
Improves the quality of life.
- Entrepreneurship affects the lives of the individual.
Provides employment opportunity to those unemployed in the community.
Entrepreneurship is important to other institutions such as banks and other finance
institutions, as they earn because of funding entrepreneurs.
Entrepreneurship creates and satisfies demands in the market. Provides more
alternative for consumers.
Facilitates the movement of the factors of production. Utilizes and mobilizes indigenous
resources.
Factors of production are: land, labor, capital and entrepreneurship.
Creates new business opportunities.
Promotes peaceful and loving community.
It increases constructive competition.
Introduces innovation.
- Makes significant contribution to the local community
Entrepreneurs pay taxes used for the development of country. Brings social benefit to
the people.
It encourages competitiveness and thereby challenges entrepreneurs to keep improving
their product and services.
Helps hasten the economic recovery process during financial turmoil or crackdown.
Facilitates the smooth flow of money in the local market.
Assists the government in its desire to have favorable economic ratings in the world.
- Make significant contributions to the Philippine economy
Sources of entrepreneurial ideas
- Changes in the environment
A. Physical environment
B. Societal environment
C. Industry environment
People‘s interest- - Past experiences-
Affects the
i. Government- the government thrust towards solid waste management. An
entrepreneurial idea could be producing eco-friendly and biodegradable and
sustainable packaging.
ii. Competitors
iii. Suppliers
iv. Customers
v. Creditors
vi. Employees
Industry environment
Affects the i.
Economic forcesii. Sociocultural forces
iii. Political forcesiv. Technological environment- a person with entrepreneurial interest looks at
the possibility of business opportunities in any new discovery or advancement
in technology.
B. Societal environment
Affects the Climate- changing season can also give birth to an entrepreneurial idea for
example: a café that would adapt to the changing climate.
ii. Natural resources:
A. Physical environment
refers to the individual characteristics and qualities. They are words used
to describe how entrepreneurs act during certain situations or what kind of people they are.
Character traits are sometimes described as good or bad, and everyone has them
Character trait-
consists of entrepreneurial character traits that are directly related to
the entrepreneur‘s desire to be an achiever in the field of entrepreneurship. Entrepreneurs
are achievers by nature and they strive to achieve.
- Achievement Cluster
What cluster should this person be in ?
Opportunity seeker
Committed
c. Persistent-
Risk-taker
e. Efficient and quality oriented
Achievement cluster
What cluster should this person be in ?
a goal setter-
an information seeker
Systematic in planning and monitoring
Planning Cluster
Three types of risk-takers?
i. Aggressive risk-taker- is not scared to any risk in business.
ii. Moderate risk-taker- is more calculative in taking risk. He/she analyzes situation
before taking the leap.
iii. Conservative risk-taker- is not very eager to take any king of risk. He/she is
satisfied with managing the business and a regular customer.
a set of characteristics of successful entrepreneurs that basically supports
the character traits in the achievement cluster
Planning Cluster
- includes a set of character traits that reflects the interpersonal relations
maintained by successful entrepreneurs in the community. It refers to the relationship and
image of the entrepreneur in the community
Power Cluster-
What cluster should this person be in?
A persuasive and positive networker
Self-confident
Power Cluster
