Chapter 1

Entrepreneurship:
evolution and revolution
 Objectives
1. To begin our exploration of entrepreneurship and the
environment
2. To distinguish between business and social entrepreneurs
3. To distinguish between entrepreneurs and small-business
owners
4. To explain the importance of entrepreneurs to economic growth
5. To examine the historical development of entrepreneurs and of
entrepreneurship
6. To define entrepreneurship and explore the major schools of
entrepreneurial thought
7. To realise that entrepreneurship is a pathway to freedom
Entrepreneurs facing the unknown

Shawn Perez

Famous roller-coaster entrepreneur Carl Miler’s brilliant innovation

swept away by global warming.

4
 What do entrepreneurs care
about climate change and global warming?
• For centuries, entrepreneurs
exploited the environment
without any thought for
sustainability.
• Henry Ford and Thomas
Edison accelerated global
Elon Musk
warming. Tesla Model S
• Will modern entrepreneurs Henry Ford, Maurizio Pesce, licensed under
CC Attribution 2.0
reverse the toxic trend? Model A creativecommons.org/licenses/b
y/2.0, cropped & desaturated
© 2008 Ford Motor Company, licensed from original
under CC Attribution 2.0
creativecommons.org/licenses/by/2.0,
cropped from original
 Enterprising human beings have changed the world’s
climate and entrepreneurs must share some of the blame.

Adapted from ‘Global Analysis

– Annual 2014, Various Global
Temperature Time Series’,
National Climate Data Center,
NASA Goddard Institute for
Space Studies.
 Why we are hopeful

• How can we as entrepreneurs • Entrepreneurs recognise

stop this global environmental opportunities where others see
catastrophe? chaos or confusion.
• Who is best positioned to • Entrepreneurs could well be the
commercialise existing saviours of our planet.
innovations and create new • ‘Entrepreneurs who respond to
technologies? the challenge will reap
• Entrepreneurs never waste a commercial success’.
good crisis.
Various types of entrepreneurs

Driven by a profit
Business motive – constantly
entrepreneurs innovating for
market share

Driven by a mission
Social to fill gaps left by
entrepreneurs the market and
public sector
Entrepreneurs are different from
small-business owners

• Prefer a more stable

and less aggressive
Small- approach
business • Would rather exploit
owners existing opportunities
• Operate in existing
markets
Enterprising mind-set
• Entrepreneurs have an enterprising mind-set.
• Enterprising:
– ‘marked by imagination, initiative and readiness to
undertake new projects’.
• Entrepreneurial:
– ‘willing to take risks in order to create value’.
• Anyone can be enterprising.
 Entrepreneurs as the Starship Enterprise
• ‘Boldly go where no [one] has
gone before’
• ‘Space … the final frontier’
• ‘To explore strange new worlds, to seek
out new life and new civilisations’
• Enterprising is an ‘attitude of exploring,
of developing, of leading and of taking
initiatives’.
 • What does the word

?
‘entrepreneur’ mean to you?
• In your language or culture, what
is the word for entrepreneur?
• What is its ‘root meaning’ in your
language?
• Write it down on a sheet of paper
for use later.
 Derivation and definition
• The word ‘entrepreneur’ is derived from the French verb
entreprendre, meaning ‘to take in between’, or ‘to undertake’
(someone who undertakes).
• Today it means a social or business innovator
– who recognises and seizes opportunities
– converts those opportunities into workable/marketable ideas
– adds value through time, effort, money or skills
– assumes the risks of the competitive marketplace to implement these
ideas
– realises the rewards from these efforts.
In other languages and cultures
• Usahawan (Malay) − someone who does a commercial
activity at some financial risk.
• Pupagongan (Thai) − ‘someone who assembles other
people together’.
• Māori of New Zealand:
– ngira tuitui − the ‘needle that binds things together’
– tinihanga − the ‘tricks of Māui’ (a Polynesian demigod
famous for his entrepreneurial spirit, heroism, altruism and
brashness). His innovative hook pulled New Zealand out
of the ocean. Māori demigods
Entrepreneurship
through the ages
• Primitive hunter-gatherers sought Orin Zebest,
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CC Attribution
niche advantage in the wild 2.0
creativecomm
ons.org/licens
marketplace. es/by/2.0,
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• Ancient Assyrians had innovation

original

and a corps of knowledge workers.

• Phoenician traders peacefully
connected cultures through trade.
• Roman nobles let slaves run their ‘He [who] lends at usury and takes excessive
enterprises. interest. Will such a man live? He will not!
Because he has done all these detestable
things, he will surely be put to death and his
blood will be on his own head’.
 Entrepreneurship
through the ages

• During the Dark Ages, wealth creation came

through conquest; innovation was separate to
wealth creation.
• With the Industrial Revolution came a strong link
between entrepreneurial activity and wealth.
Contemporary definitions
• Rugged individualists cherish
individual liberty and self-reliance
• Closely linked with free enterprise
and capitalism.
• Definition has broadened beyond
financial or business value to
creating social value.
• Entrepreneurs are seen as
innovators, non-conformist,
pioneers on the frontier of business
and enterprise.
Dolly Parton is a classic entrepreneur.
 Contemporary definitions+
• Essential ingredients:
– willingness to take calculated risks (time, equity, career)
– ability to formulate an effective venture team
– creative skill to marshal resources
– skill of building a solid business plan
– vision to recognise opportunity among chaos, contradiction and
confusion.
• Entrepreneurs are considered heroes of free enterprise
and social venturing.
• Many people now regard entrepreneurship as pioneership.
 Entrepreneurship theory
• A theory can predict future activity, or at
least prescribe the right action in particular
circumstances.
• A theory of entrepreneurship is defined as
– a coherent formulation of relationships
– or underlying principles that explain
entrepreneurship.
• Entrepreneurship is interdisciplinary.
• Let’s examine the ‘schools of thought’
Theory: schools of thought
 • Social and cultural
Macro schools of thought – focus on external factors and
conditions shaping the
entrepreneur.
Social Financial/ • Financial/capital
– focus on how to seek seed
and cultural capital capital and growth funds.
• Displacement
– factors that prevent a person
from doing other activities
due to group membership.
Displacement Ecological • Ecological
– focus on natural systems
College of DuPage, licencsd and constraints; includes
under CC Attribution 2.0
Generic
creativecommons.org/licen
‘green economics’.
ses/by/2.0
 • Entrepreneurial trait
Micro schools of thought – Traits common to successful
entrepreneurs: self-efficacy,
proactive personality, tenacity, need
for achievement and stress
Entrepreneur Venture tolerance.
ial trait opportunity • Venture opportunity
– Right idea/right time/right market
niche: the importance of
preparation and awareness.
College of DuPage, licenced
under CC Attribution 2.0
Generic
creativecommons.org/licen
• Strategic formulation
ses/by/2.0
– The importance of planning a
Strategic successful enterprise: leveraging
formulation unique, identifiable elements to
form a venture.
 ‘Your’ school of thought

?
• Earlier you were asked to write down ‘What
does the word “entrepreneurship” mean to
you?’
• Go back to what you wrote and identify which
school(s) of thought is demonstrated in your
response.
 Our entrepreneurial economy
• Global Entrepreneurship Monitor
(GEM) report is the world’s
benchmark.
• GEM’s most famous measure is
total early-stage entrepreneurial
activity (TEA).
• Two kinds of entrepreneurship:
necessity and opportunity.
• More in Chapters 2 and 12.
 Are all entrepreneurs gazelles?

• Myths about gazelles:

− All entrepreneurs should be
gazelles.
− Only gazelles get venture capital.
− Gazelles were never mice.
− Gazelles are high-tech.
− Gazelles are global.
 **Generations of
entrepreneurs
• Gen X and baby boomers are more
entrepreneurial than Gen Y.
• Gen Ys are less risk averse.
• Boomers have everything needed to
make a business successful.
• Generation Z (1995–2009) never knew
the pre-internet world.
• Generation Alpha (2010+) – for them,
smartphones have always existed.
 -Which pathways to
freedom for you?
• This book is about finding your own personal
pathway to entrepreneurship.
• Entrepreneurs have the dream and will to found a private
kingdom.
• You are the ‘proprietor of the rest of your life’. Will you become:
– a corporate entrepreneur or a family businessperson?
– a bootstrapper or a mini-entrepreneur?
– an existing business or franchisee?
– involved in social venturing?
– a lifestyle entrepreneur?
– a high-tech, high-growth, self-maximising pioneer entrepreneur?
 Entrepreneurship as a
pathway to freedom
• Economic activity is the objective
and the primary means of
enhancing human freedom.
• ‘The usefulness of wealth lies in
the things that it allows us to do –
Entrepreneurship
the substantive freedoms it helps
is a mode of self-
us to achieve.’
actualisation.
 The circle of life: Modern professions that
Which pathway for you? are self-employed
Farmers 73%
Writers and authors 67%
Photographers 60%
Fishers 57%
Multimedia artists 57%
Artists 50%
Musicians and singers 36%
Jewellers 33%
Psychologists 33%
Interior designers 26%
Animal carers 25%
Bureau of Labor Statistics
and US Department of
Labor, ‘Occupational
Fashion designers 25%
Outlook Handbook 2014-15
Edition’, Optometrists 25%
http://www.bls.gov/oco
**Entrepreneurial ecosystems
 University-based entrepreneurship
ecosystems (U-BEE)
• Schools • Labour
• Private sector • Students
• Family businesses • Lawyers
• Investors • Cooperatives
• Banks • Councils
• Social leaders • Multinationals
• Research centres • Foundations
• Military • Aid agencies
 ‘University-based entrepreneurship ecosystem’
Does your university have …?
• Links to angel and venture funds
• Business plan competitions
• Entrepreneurship student club(s)
• Business incubator
• Networking events for entrepreneurs
• Entrepreneurship activities centre
• Entrepreneurship research activities
• Student venture investment fund
 Key concepts

? (Close your books.)

1. Provide a short definition of the word
‘entrepreneur’.
2. What will influence your likelihood of
becoming an entrepreneur?
 Key concepts
• An entrepreneur:
– recognises and seizes opportunities and converts
them into marketable ideas
– adds value through time, effort, money and skills
– assumes risks in a competitive marketplace.
• A range of perspectives (schools of thought)
• Choice to be an entrepreneur is influenced by
culture, education and situation