DEVELOPMENT OF

ENTREPRENEURSHIP
LESSON 2
 DEVELOPMENT OF ENTREPRENEURSHIP
Traders and merchants are thought to have
been the first entrepreneurs.
Around 17,000 BCE, inhabitants in New
Guinea exchanged obsidian, a black
volcanic glass used to produce hunting
arrowheads, for other essential products,
and this is the oldest known instance of
humans bartering.
 DEVELOPMENT OF ENTREPRENEURSHIP

As more individuals settled into these stable communities, specialization became

one of the most essential advancements.
Instead of each tribe hunting and gathering its own food, different members of
each tribe specialize in different jobs, such as farming, hunting, gathering, fishing,
cooking, tool-making, shelter-building, and clothing-making.
 EVOLUTION OF ENTREPRENEURSHIP
The Earliest Period
Based on idea that entrepreneur is a
person who sells goods on behalf of the
goods’ owner, entrepreneur was
exhibited by Marco Polo (1254- 1324),
the merchant from Venice who travelled
to many places in Asia to trade.
 EVOLUTION OF ENTREPRENEURSHIP

He would enter into a formal

agreement with a capitalist to sell his
goods. He bore all the risks of possible
damage or loss of the goods.
After everything was sold, profits were
divided between the capitalist and
trader as agreed.
 EVOLUTION OF ENTREPRENEURSHIP

The Middle Ages

The term entrepreneur was used to describe both an actor and a person who was in
charge of and managed large production projects.
This person merely managed large production projects using the resources
provided by the government. In this case, he did not assume any risks.
’’The entrepreneur in this age who was in charge of great architectural works such
as public buildings and cathedrals.”
 EVOLUTION OF ENTREPRENEURSHIP

The 17th Century

Entrepreneurship has become associated with risk. The entrepreneur was someone
who would enter into a formal agreement with the government to provide products
or services, it was common practice to agree on the price as part of the terms in the
agreement.
In effect, the entrepreneur either reaps profits or bear losses.
EVOLUTION OF ENTREPRENEURSHIP

A prominent theorist during this

period was Richard Cantillon (1680-
1734), an economist who viewed the
entrepreneur as a risk taker and a
bearer of uncertainty.
 EVOLUTION OF ENTREPRENEURSHIP

The 18th Century

The entrepreneur was distinguished from the capitalist who simply
provides money for the creation of products to be sold.
 EVOLUTION OF ENTREPRENEURSHIP

Jean-Baptiste Say (1767-1832), a French

economist and businessman, described the
entrepreneur as a person who plays a central
coordinating role both in producing and
selling goods.
He (the entrepreneur ) was someone who
coordinates, leads, and manages all the
activities of the firm.
 EVOLUTION OF ENTREPRENEURSHIP

19th and 20th Century

There was a little distinction between entrepreneur and a manager.
However, towards the middle of the 20th Century, Joseph Schumpeter (1883-
1950), an Australian Hungarian American economist and Political Scientist,
refuted the idea of entrepreneurship as a manager of the firm, and espoused the
concept of the entrepreneur as an innovator who seeks opportunities and leads
“existing means of production into new channels”.
EVOLUTION OF ENTREPRENEURSHIP

” The Entrepreneur is neither a risk–

bearer nor a manager or capitalist”
-- Joseph Schumpeter (1883-1950)
 EVOLUTION OF ENTREPRENEURSHIP

19th and 20th Century

During this period, business expert Peter
Drucker (1990-2005) came up with a
behavioral concept of the entrepreneur-
one who actually searches for change,
respond to it, and exploits change as an
opportunity.
 EVOLUTION OF ENTREPRENEURSHIP

21st Century
Hailed as the Dotcom era, entrepreneurs in the 21st century are considered the
heroes of free enterprise.
“Today, many people regard entrepreneurship as ’pioneership’ on the frontiers of
business” (Kuratko & Hodgetts, 2004)
 DEFINITION OF ENTREPRENEUR AND
ENTREPRENEURSHIP
CONTRIBUTOR DEFINITION

Knight (1921) Having profits from bearing uncertainty

and risk.

Schumpeter (1934) Carrying out of new combinations of

firm organization-new products, new
services, new sources of raw materials,
new methods of production, new
markets, new forms of organization.
 DEFINITION OF ENTREPRENEUR AND
ENTREPRENEURSHIP
CONTRIBUTOR DEFINITION

Hoselitz (1952) Uncertainty bearing…. coordination

of productive resources…
introduction of innovations and
provision of capital.

Cole (1959)
Purposeful activity to initiate and
develop a profit-oriented business.
 DEFINITION OF ENTREPRENEUR AND
ENTREPRENEURSHIP
CONTRIBUTOR DEFINITION

McClelland (1961) Taking moderate risk

Shapero (1975) A kind of behavior that includes: (1)
initiative taking, (2) the organizing or
reorganizing of social mechanisms to
turn resources and situations to
practical account, and the acceptance of
(3) risk failure.
 DEFINITION OF ENTREPRENEUR AND
ENTREPRENEURSHIP
CONTRIBUTOR DEFINITION
Casson (1982) Decisions and judgements about the coordination of scarce resources.
Dynamic process of creating incremental wealth. This wealth is created
Ronstadt (1984) by individuals who assume the major risks in terms of equity, time,
and/or career commitment of providing value or some product or
service.
The product or service itself may or may not be new or unique, but
value must somehow be infused by the entrepreneur by securing and
allocating the necessary skills and resources.
 DEFINITION OF ENTREPRENEUR AND
ENTREPRENEURSHIP
CONTRIBUTOR DEFINITION

Drucker (1985) Behavior rather than personality trait.

Its foundation lies in concept and
theory rather in intuition.

Gartner (1985 )
Creation of new organizations.
 DEFINITION OF ENTREPRENEUR AND
ENTREPRENEURSHIP
CONTRIBUTOR DEFINITION

Hisrich and Brush (1985) Process of creating something new with

value by devoting the necessary time
and effort; assuming the accompanying
financial, psychic, and social risk and
uncertainties; and receiving the
resulting rewards of monetary and
personal satisfaction.
 DEFINITION OF ENTREPRENEUR AND
ENTREPRENEURSHIP
CONTRIBUTOR DEFINITION

Kuratko (2009) Dynamic process of vision, change and

creation that requires an application of
energy and passion toward the creation
and implementation of new ideas and
creative solutions
 DEFINITION OF ENTREPRENEUR AND
ENTREPRENEURSHIP
CONTRIBUTOR DEFINITION

Dyck and Neubert (2012) Conceiving the opportunity to offer

new or improved goods or services,
showing the initiative to pursue that
opportunity, making plans, mobilizing
the resources necessary to convert the
opportunity into reality.
ENTREPRENEURS AND ENTREPRENEURIAL
COMPETENCIES

Entrepreneurs Are More Intuitive Than Non-Entrepreneur.

INTUITIVE also means they tend to be relatively non-conformist,

preferring an open minded approach to problem solving and preferring
less structured, more ambiguous, and random methods of exploration.
(Armstrong And Hird)
 ENTREPRENEURS AND ENTREPRENEURIAL
COMPETENCIES

Entrepreneurial Mindset
“The ability to rapidly serve, act and mobilize, even under uncertain conditions.”
(Hisrich, Peters, And Shepherd)
Given the nature of the entrepreneurs’ decision-making environment, they would
oftentimes think this way:
1. ACTUATE SELF-ASSESSMENT AND CHOOSE COURSE OF ACTION
2. GENERAL MULTIPLE DECISION MODELS
3. LEARN FROM FAILURE
 ENTREPRENEURIAL MINDSET
ACTUATE SELF-
ASSESSMENT AND CHOOSE GENERAL MULTIPLE
COURSE OF ACTION DECISION MODELS LEARN FROM FAILURE
 Capacity to think of In business, failure refers to a company ceasing
different plan that could be operations following its expenses.
part of their success. A profitable business can fail if it does not
 More plan/ choices, more generate adequate cash flow to meet expenses.
chances of attaining victory Failure is one of the realities of life but it
doesn’t mean that you will stop if you’re on
this phase.
Despite of many mistakes and failures,
perhaps, you’re on your way to success.