entreprenuer definition

8/7/2019 Entreprenuer Definition

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2007 John Wiley & Sons Australia, Ltd


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Chapter 1

Entrepreneurship:

definition and evolution


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Chapter outline

Defining entrepreneurship

The role of entrepreneurship in economic

growth and development

Common features of entrepreneurship in

the Pacific Rim region


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Learning objectives

Provide a definition of entrepreneurship

State the key elements of

entrepreneurship

Explain the process of new venture

creation


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Learning objectives

Explain the role of entrepreneurship in

economic growth

Discuss the common features ofentrepreneurship in the Pacific Rim region


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Entrepreneurship as a term was first used

during the Industrial Revolution.

It described the new phenomenon of theindividual who formulated a venture idea,

developed it, assembled resources and

created a new business venture.


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The entrepreneur has thus emerged as

a pivotal figure who operates within a

market.


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Towards a definition of

entrepreneurship

Entrepreneurship:

The process brought about by individuals

of identifying new opportunities andconverting them into marketable products

or services.


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The key elements of

entrepreneurship

There are five generally agreed

conditions that are necessary for

entrepreneurship to occur:1) an individual (the entrepreneur)

2) a market opportunity

3) adequate resources4) a business organisation

5) a favourable environment


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The key elements of

entrepreneurship

The entrepreneur is responsible for

bringing these contingencies together to

create new value


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The key elements of

entrepreneurship


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The key elements of

entrepreneurship

Entrepreneurial opportunities:

Those situations in which new products,

services and processes can beintroduced and sold at greater than their

cost of production.


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The process of new venture

creation

Not all individuals have the potential to

launch a business venture ...

And of those of do, not all will attempt afounding ...


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The process of new venture

creation

Of those who attempt, not all will succeed

in founding ...

Finally, among the newly establishedbusiness ventures, only a small

proportion will survive


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Model of new venture creation


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The role of entrepreneurship in

economic growth and development

At a macro level, entrepreneurship is a

process of creative destruction

(Schumpeter). This means the simultaneously

destructive and constructive

consequences of entrepreneurship.


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Values, politics & economic

institutions

Values:

A readiness for change is essential if a

society is to get richer. Politics:

Provide a framework for

entrepreneurship.


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Values, politics and economic

institutions

Economic institutions:

Institutions like property rights, stock

exchanges and banks allow differenttypes of economic enterprises to flourish.


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A model of entrepreneurial and

economic growth

At a macro-level entrepreneurship is the

process of creative destruction.

Creative destruction is the process ofsimultaneous emergence and

disappearance of technologies, products

and firms in the marketplace as result of

innovation.


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A model of entrepreneurial process

and economic growth

Entrepreneurs are central to this process

of destruction.


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A model of entrepreneurship

process and economic growth

Source: Adapted from P. D. Reynolds,S. M. Camp, W. D. Bygrave, E. Autio &

M. Hay, Global EntrepreneurshipMonitor, 2001 Executive Report,

Kauffman Center for Entrepreneurial

Leadership, 2001, p. 53.


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Measuring entrepreneurial activity

The level of entrepreneurial activity is a

function of the degree to which people

recognise the opportunities available andthat they have the capacity to exploit.

At a broader level, there is a relationship

between national conditions and the

performance of established firms.


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Measuring entrepreneurial activity


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Common features of entrepreneurship in

the Pacific Rim region

Key role played by the state in the

development of entrepreneurship

Presence of ethnic entrepreneurs such asethnic Chinese and ethnic Indians


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Sociocultural features of ethnic

Chinese

The rules forverticalrelationships are

taught via Confucian concepts, often

leadership with a paternalistic flavour isdeveloped.

The rules forhorizontalorder have similar

conditions, however, different types of

relationships do apply.


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Sociocultural features of ethnic

Chinese

Hardship of migration cultivated values for

economic survival, such as pragmatism or

work ethic.


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Ethnic Indians

A vast majority adhere to some form of

the caste system and Hindu mythology.

They are highly skilled and educatedprofessionals and entrepreneurs due to

an exceptional education system.


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Ethnic Indians

They created social and professional

networks to mobilise information, skill,

know-how and capital to start technologyfirms.


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The role of the state

Dual influence on entrepreneurship:

Strong promoter

(e.g. SME Master Plan in Singapore)and entrepreneur itself

(state entrepreneurship, deregulation)

Establishment of restrictive practices

(ethnic and foreign entrepreneurs)


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Emerging trends

Deregulation and privatisation

Adoption of Western ideas

Emergence of rule-based systems

Increased disclosure and employment of

outsiders


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Summary

Entrepreneurship is the process brought

about by individuals of identifying new

opportunities and converting them into

marketable products or services.

There are many possible outcomes to the

entrepreneurial process, e.g. independent

start-ups, corporate ventures, franchisesand business acquisitions.


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Summary

At a macro-level, entrepreneurs create

new business ventures, jobs and wealth,

but they also force out of the marketplacethe enterprises which failed to innovate.


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