Introduction to Entrepreneurship Flashcards
“Entrepreneur” comes from the French word _____, which means to undertake/ to try
Entreprendre
It is the process of creating, launching, and managing a business operation.
New businesses, ideas, goods and services, procedures
Entrepreneurship
- One who undertakes innovations, finance and business acument in an effort to transform innovcations into economic goods
- Individual that perceives business opportunities and successfully creates and develops them
- Has the capacity to recognize market potential and organize resources to create market innovation
Entrepreneur
Other definitions of entrepreneur:
- A person who acts as agent in transforming demand into suppy. (Adam Smith)
- Person who shifts resources from areas of low to high productivity. (Jean Baptiste)
- A prime mover in private enterprise. The fourth factor of production. (John Stuart Mill)
- Economic agent that transforms resources into products and services. (Carl Menger)
According to Alfred Marshall, the process of entrepreneurship / business development is _____.
Evolutionary; it evolves from sole proprietorship to a public company.
It is a keenness and quickness in understanding and dealing with a business situation in a manner that is likely to lead to a good outcome
Business acument
Theory of Entrepreneurship
- Entrepreneurship and economic growth take place when economic conditions are favorable.
- Economic incentives are main motivators
Economic Theory of Entrepreneurship
Economic incentives include:
- Taxation policy
- Industrial policy
- Sources of Finance
- Raw Material
- Infrastructure availability
- Investment & marketing opportunities
- Access to information
- Market conditions
- Technology
- Irish-French economist that viewed entrepreneurs as agents who buy factors of production at certain prices to combine them into a product with a view to selling it an uncertain prices in the future
- Illustrated farmers as entrepreneurs
- Entrepreneurs as a risk taker
Richard Cantillon
Theory of Entrepreneurship
- Entrepreneurship is likely to get a boost in a particular social culture
- Entrepreneurial behavior is influenced by society’s values, religious beliefs, customs, taboos
- Entrepreneur merely performs a role as per society’s expectations
Sociological Theory
According to him:
- Entrepreneur combines land, labor, and capital to produce a product
- By selling the profit, he is paid back and profits
- Combines entrepreneur’s finances and organizer roles
- Entrepreneur as an organizer
Jean Baptiste
3 Factors of Production in the 20th century:
- Land
- Capital
- Labor
Theory of Entrepreneurship
- Entrepreneurship is innovation
- Proponent is Joseph Schumpeter
- Entrepreneurship resulted in new industries through combining existing inputs in a new way
- Ignores risk-taking and organizer abilities
Entrepreneurship Innovation Theory
An entrepreneur innovates when he:
- Introduces a new production
- Introduces a new production method
- Opens up a new market
- Finds out a new source of raw material supply
- Introduces a new organization in any industry
Theory of Entrepreneurship
- Entrepreneurship gets a boost when society has sufficient supply of individuals with necessary psychological characteristics
- Entrepreneurs are formed during the individual’s upbringing
Psychological Theory
Psychological characteristics included:
- Need for achievement
- Vision or foresight
- Ability to face opposition
Theory of Entrepreneurship
Entrepreneurship can be developed and the traditional beliefs do not inhibit entrepreneurs
Achievement Motivation theory
According to David McClelland, achievement motivation fulfills:
Economic and Social development
McClelland identified 3 needs:
- Need for Achievement
- Need for Affiliation
- Need for Power
- Young adults were selected and put through a 3-month training to induce achievement motivation
- Conducted in America, Mexico, India
- It was deducted that traditional beliefs do not inhibit an entrepreneur
Kakinada Experiment
Experiment course content:
- Control thinking, positive self-thoughts
- Imagining challenges and success to plan achievable goals
- Imitating role models
What does an entrepreneur do?
- Develop new ideas
- Assumes risks
- Sets up products
- Satisfy customer needs and desires
McClelland identified 2 characteristics of entrepreneurship:
- Doing things in a new and better way
- Decision making under uncertainty
According to McClelland, people with _____ are more likely to become entrepreneurs
- Not influenced by money or external incentives
- Profits are only a measure of success and competency
High achievement orientation (need to succeed)
