MPU 32092 ASAS PEMBUDAYAAN KEUSAHAWANAN CHAPTER 1

CHAPTER 1

INTRODUCTION TO ENTREPRENEURSHIP

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1.1 INTRODUCTION TO ENTREPRENEURSHIP

In a free market economy, entrepreneurs are key players of providers that produce, transport
or sell products and services to consumers. They seek business opportunities by identifying
what is needed, wanted or desired by consumers. Entrepreneurs create or design new
products, take risks in investing money in new business, as well as produce, market and make
the products available to customers.

1.1.1 National Entrepreneurship Policy (NEP)

The National Entrepreneurship Policy (NEP) is a long-term strategy for Malaysia to become an
outstanding entrepreneurial nation by 2030. This policy will be the catalyst for Malaysia to be
a united, prosperous and dignified nation. To become an economic axis in Asia, Malaysia’s
economy must be more equitable and inclusive. The five objectives of the NEP 2030 are as
follows:

1. Creating a holistic and conducive entrepreneurship ecosystem to support Malaysia’s

inclusive, balanced and sustainable socio-economic development agenda.
2. Creating a nation that possesses and enculturates entrepreneurship thinking.
3. Increasing the number of Malaysian entrepreneurs that are of high-quality, viable,
resilient, competitive and possess a global mindset.
4. Improving the capabilities of micro, small and medium enterprises as well as
cooperatives
5. Making entrepreneurship a preferred career choice

The NEP 2030 has outlined 6 Strategic Thrusts by considering the global economic growth,
the current entrepreneurship achievements as well as issues and challenges faced by
entrepreneurs in creating a conducive entrepreneurship ecosystem. The 6 strategic thrusts
are supported by 19 Strategies and 62 Initiatives as the pillar of the mechanism to implement
this policy. The six Strategic Thrusts are as follows:

Figure 1.1: The six Strategic Thrusts of NEP 2030

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1.2 DEFINITION OF ENTREPRENEURSHIP & ENTREPRENEUR

Entrepreneurship refers to the concept of developing and managing a business venture in

order to gain profit by taking several risks in the corporate world. Simply put,
entrepreneurship is the willingness to start a new business. Entrepreneurship has played a
vital role in the economic development of the expanding global marketplace.

An entrepreneur is someone who is willing to work for himself and by himself. The term
entrepreneur refers to individuals who prefer to make their professional careers running
businesses themselves rather than getting employed at another company or organisation.
They assume all the relevant risk factors and profit earning opportunities related to
their business idea and the delivery and manufacture of their products and services.

In the early 1990s, Joseph Schumpeter termed entrepreneur as an innovator who

introduced new innovation to replace old products and old way of doing things. He described
the process as ‘creative destruction’ to signify creativity of new products or services to replace
destruct old ones.

The term entrepreneur was first used by a Frenchman named Richard Cantillon (1775) to
mean ‘a person who undertakes to do a job’. Ibnu Khaldun (Abdul Rahman Mohamed Khaldun)
describes an entrepreneur as a knowledgeable and skilled individual (craftsman) who is
instrumental in the development of a city state where enterprise will emerge.

In brief, entrepreneurs are the prime movers of economic progress. They can be innovators,
they mobilize resources to provide products and services needed, and in the process, they
build business that provide jobs and thereby improve the standard of living and quality of life
of the people. They are the catalysts that contribute to the nation’s economic progress.

1.2.1 Examples of Successful Entrepreneurs

Jeff Bezos, born January 12, 1964 is an American internet

entrepreneur, industrialist, media proprietor, and investor. He is best known
as the founder, CEO, and president of the multi-national technology
company Amazon.

Bernard Arnault, born 5 March 1949 is a French billionaire businessman and

art collector. He is the chairman and chief executive of LVMH Moët Hennessy
– Louis Vuitton SE, the world's largest luxury-goods company.

Bill Gates, born October 28, 1955 is an American business magnate,

software developer, and philanthropist. He is best known as the co-founder
of Microsoft Corporation.

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1.3 ENTREPRENEURIAL PROCESS

Successful high-performance entrepreneurship does not happen by accident. The Timmons

Model of the entrepreneurial process is a good way of explaining how this process occurs.

Figure 1.2: Timmons Model of the Entrepreneurial Process

According to this model, there are three key elements: opportunity, resources and teams.
Each of these is presented in more detail below.

Opportunity:
The process starts with opportunity, not strategy, resources or planning. Opportunity
recognition results from creativity, which is shared by the entrepreneur and the
entrepreneurial team. Successful entrepreneurs understand that a good idea does not
necessarily equate to a good opportunity. Research suggests that for every 100 ideas
presented to investors, less than four get funded. This would suggest that much time and
effort is wasted by potential entrepreneurs developing and fine-tuning ideas that have little or
no potential. Successful entrepreneurs possess that ability to determine whether serious
potential exists and then decide how much time and effort to invest.

Resources:
The other core component of the process is the resources. Contrary to popular belief, it is
not essential to have all the resources in place from the outset in order to succeed in business.
According to Timmons, money follows high-potential opportunities created and led by a strong
management team. It seems that there is a shortage of quality entrepreneurs with good
opportunities rather than a shortage of money. Successful entrepreneurs are notoriously
prudent when it comes to spending scarce cash. They are also considered to be very creative
in their ability to marshal and gain control of resources.

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Team:
Much has been written about the importance of a grade A entrepreneurial team. A grade A
team will have relevant technical experience and a good track record, and the motivation,
commitment and determination to excel. They will also be creative and adaptive, and possess
good communication and leadership skills.

1.4 CHARACTERISTICS & COMPETENCIES OF ENTREPRENEURSHIP

1.4.1 Characteristic of Entrepreneurship

Successful entrepreneurship always have a strong reason or mission for becoming an

entrepreneur. For example, he likes promoting certain business values, solving specific
problems, addressing some needs or exerting influence within an industry. There are definite
characteristics that make entrepreneurship successful. A few of them are mentioned below:

1. Passion for the Business:

 The number one characteristic shared by successful entrepreneurs is a passion for the
business.
 This passion typically stems from the entrepreneur’s belief that the business will
positively influence people’s lives.

2. Product/Customer Focus:
 A second defining characteristic of successful entrepreneurs is a product/customer
focus.
 An entrepreneur’s keen focus on products and customers typically stems from the fact
that most entrepreneurs are, at heart, craftspeople.

3. Tenacity Despite Failure:

 Because entrepreneurs are typically trying something new, the failure rate is naturally
high.
 A defining characteristic for successful entrepreneurs’ is their ability to persevere
through setbacks and failures.

4. Execution Intelligence:
 The ability to fashion a solid business idea into a viable business is a key characteristic
of successful entrepreneurs.

1.4.2 Entrepreneurship Competencies

Entrepreneurial competencies affect company performance (Man et al., 2002; Camuffo et al.,
2012) and it is important to identify the entrepreneur’s competencies so that both
organizations and institutions of higher education can work in developing them. This way the
quality of entrepreneurship in an economy could be increased.

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Entrepreneurship and entrepreneurial competencies has been extensively studied

(Mitchelmore & Rowley, 2010). Entrepreneurial behaviour is the result of a motivation to
achieve a goal and the competencies necessary to achieve it. Table 1.1 presents a summary
of the literature review, illustrating the 20 competencies that are considered important and
influential for achieving entrepreneurship effectiveness.

Table 1.1: Entrepreneurship Competencies

No. Competencies Definition References
1 Risk assumption Ability to tolerate ambiguity and uncertain situations and
make sound decisions in this situation, while being able to
control own emotions.

2 Autonomy / self- Capacity for making independent decisions based on a clear

determination understanding of the possibilities and the responsibility that
it entails.

3 Search and analysis Ability to find and share useful business information for
of information problem-solving using the full potential of the company.

4 Quality of work Ability to work intensively and tenaciously to achieve the

objectives, seeking continuous improvement.

5 Communication Ability to listen, ask questions, express ideas and concepts

effectively
6 Self-confidence Ability to address new challenges with an attitude of
confidence in their own possibilities, decisions or views.

7 Develop social Ability to create and maintain a network of contacts with

networks/ generation agents that are or will be useful in achieving the goals. Pereira (2007)
of support networks Borjas (2003)
8 Dynamism Ability to work hard and continuously in changing situations, Sarasvanthy
with many different partners. (2001) Kirby
(2004) Gibb &
9 Change management Ability to adapt to different contexts, situations, people and Hannon (2006)
media quickly and appropriately. Vainrub (2004)
Shumpeter
10 Initiative Willingness to take action, create opportunities and improve (1934) Begley &
outcomes without an external requirement. Boyd (1988)
Pleitner (1986)
11 Innovation Ability to produce an original, unexpected and appropriate Shapero (1982)
(timely, useful) new work according to the needs of the
context.

12 Integrity Ability to act in accordance with what is said or considered

important.

13 Leadership Ability to guide the action of human groups in a certain

direction by creating an atmosphere of energy and
commitment, setting goals, following up these goals and
giving feedback that integrates the views of others.

14 Self-control Ability to regulate themselves and know their own

limitations.

15 Results orientation Ability to promote, guide and select behaviour in order to

achieve the goals.

16 Social mobility Ability to raise or lower position in the scale of economic

well-being.

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17 Negotiation Ability to lead or control a discussion creating an

environment for collaboration and making lasting
commitments to strengthen the relationship.

18 Troubleshooting Ability to flexibly assume boundary situations and overcome

them and ability to handle contradictions.

19 Responsibility Ability to maintain consistency between actions, behaviours

and words, taking responsibility for their own mistakes.

20 Teamwork Ability to actively participate in the achievement of a

common goal, subordinating personal interests to team
objectives.

Source: Lorena Robles and Marta Zárraga-Rodríguez (2015, p. 830)

1.5 TYPES OF ENTREPRENEURSHIP

Broad categorization of the types of entrepreneurship can be seen in Figure 1.3 where the
entrepreneurial activities are carried out in different forms of organizations.

Figure 1.3: Types of Entrepreneurship

1.5.1 Conventional Entrepreneurship (Private or Independent Entrepreneurship)

Private or independent entrepreneurship refers to the entrepreneurial activities of private or

independent firms where entrepreneurship process is most prevalent. The entrepreneurship
process begins with identifying a business opportunity, setting up the business entity, growing
the business to a higher level and planning the harvest strategy. The majority of the small-
and medium-sized enterprises in this country belong to this type of entrepreneurship.

1.5.2 Corporate Entrepreneurship

Corporate entrepreneurship refers to the entrepreneurial activities carried out in large

corporation. Large companies have to continually expand and diversify their entrepreneurial

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activities by creating new products and services in order to sustain existence. They also have
to intensify research and development in order to develop commercially-viable products and
services.

1.5.3 Social Entrepreneurship

Social entrepreneurship refers to entrepreneurial activities carried out by social enterprise,

NGOs and charitable organizations. Basically these organizations apply entrepreneurial
approach to organise, create and manage a venture to achieve social problem, especially
those that are not addresses by the government or met by the commercial enterprises. There
is no concrete definition of social entrepreneurship, as people from diverse fields are
associated with it- philosophers, social activists, environmentalists and socially oriented
professionals. Social entrepreneurs have different strategies for bringing about change in the
society, some provide contracted work to public establishments; others provide social
entrepreneurship funding in the form of grants and donations, develop social and economic
assets and resources for the community as a whole.

1.5.4 Public Sector Entrepreneurship

The public sector is one of the largest sectors in the country. Public sector entrepreneurship
refers to entrepreneurial activities carried out by government-linked companies (GLCs) or
state-owned enterprises. The majority of these companies were formed as part of the nation’s
privatization programme, aimed at providing more efficient services to the people. State-
owned enterprises such as the State Development Corporations (SEDCs) are engaged in
certain entrepreneurial activities through joint-ventures, equity participation, as well as
management buyouts. They are also entrusted with the task of entrepreneurship development
in their respective states.

1.5.5 Cooperative Entrepreneurship

Cooperative movement was started by Robert Owen during the industrial revolution where
workers pool their resources to start a consumers cooperative to achieve common economic
goals. In Malaysia, cooperatives are considered as business entities registered under the
Malaysian Co-operative Societies Commission Act (Amendment) Act 2014 (Act 1470). They
are supervised by the Malaysian Co-operative Societies Commission, an agency under the
Ministry of Domestic Trade and Consumer Affairs.

Many of these cooperatives are formed to serve specific economic goals of its members-
farmers, fishermen, teachers, government servants, policemen, soldiers, etc. In the early
development of the cooperative movement in Malaysia, many started with offering loans and
savings facilities to members. However, many have expanded into other business and now
have business revenues running into hundred million ringgit.

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1.5.6 Digital Entrepreneurship (Online Entrepreneurship)

The growth of the internet has opened up new business opportunities, and many have
grabbed the opportunity to become digital entrepreneurs, enabling them to grab the ‘first
mover’ advantage. Examples are Mudah.com, online marketing (through social media), Uber
taxi services, Trivago, booking.com, etc. There are also opportunities for the development of
smartphone applications.

Internet development has opened up new opportunities and has enabled business activities
to become so diverse and geographically borderless, as business information can be made
available and accessible online.

Setting up an online business is becoming more popular in recent years due to some of the
following reasons:

 A very lean business model that can be operated from home requiring very minimum
manpower and a small inventory.
 Rapid and wide product recognition with reasonably low advertising and promotional costs,
compared to considerably high expenditure of mainstream media such as television, radio
and hard-printed media.
 A much focused online marketing campaign directly targeted to specific market segments
utilizing customers’ databases, extracted from a variety of social media applications.
 Business can be operated without being constrained by time, as entrepreneurs can choose
part-time or full-time basis.
 Timeless access, i.e. 24 hours a day, 7 days a week.
 Borderless access, i.e. opportunities to manage the business from anywhere in the world.
 Cost savings.
 Improved delivery of products.
 Improved customer service via greater flexibility and access.

1.5.7 Franchise Entrepreneurship

Students will get an idea on franchise business by looking at famous food franchise business
such as McDonalds, KFC, Subway, etc. A franchise business consists of the franchisor who is
the original owner, and the franchisee, who is the local owner who will run the franchise. The
franchisee must run the business according to standard operating procedures (SOP) as
outlined by the franchisor. He will have to pay the franchisor franchise fees and a royalty
commission, based on monthly sales. On the franchisor’s part, he will provide technical help,
staff training and other support such as advertising, etc.

1.6 Importance of Entrepreneurship

Entrepreneurship plays a vital role in today’s society for various reasons. The entrepreneur is
often the source of innovation, providing the market place with new and improved products
and services. A successful entrepreneur who is able to start and grow business also contributes
to the overall growth and welfare of the economy. Currently, the study of entrepreneurship is

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relevant, not only because it helps an entrepreneur to fulfil his or her personal needs better,
but also helps to enhance the economy and society. Below are five main importance of
entrepreneurship:

1. Self-development:
o Opportunity to control direction in life
o Opportunity to maximize self-potential
o Opportunity to obtain unlimited financial rewards
2. Family Development:
o Increase family income
o Raises living standard
o Improves social status
3. Society/Community Development:
o Opportunity to contribute to society
o Fulfils society’s needs and wants
o Creates choices through innovative and creative production techniques
4. National Development:
o Produces new products of high quality
o Creates large-scale job opportunities
o Generates income for the economy
5. Spiritual Development:
o Opportunity to put religious/spiritual faith into practice
o Opportunity to continuously perform religious obligations

REFERENCES

1. https://entrepreneurhandbook.co.uk/entrepreneurship/
2. https://www.businessnewsdaily.com/7275-entrepreneurship-defined.html
3. https://kimberlymoises.wordpress.com/2012/08/28/timmons-model-of-the-
entrepreneurial-process/
4. https://www.napstart.co.za/entrepreneurial-process/
5. Ardichvili, A., & Cardozo, R. (2000). A Model of the Entrepreneurial Opportunity
Recognition Process. Journal of Enterprising Culture, 08 (02), 103-119.
6. Bhave, M. (1994). A process model of entrepreneurial venture creation. Journal of
Business Venturing, 9 (3), 223-242.
7. Zeng, F., Bu, X., & Su, L. (2011). Study on entrepreneurial process model for SIFE student
team based on Timmons model. Journal of Chinese Entrepreneurship, 3 (3), 204-214.
8. Robles, L., & Zárraga-Rodríguez, M. (2015). Key competencies for
entrepreneurship. Procedia Economics and Finance, 23, 828-832.

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