Module 1 - The Entrepreneur and His Mind

THE ENTREPRENEUR AND HIS MIND
MA. CRESTIA C. BANARES, MEntrep

Faculty, Entrepreneurship Department
Module 1, The Entrepreneurial Mind
Author
1
Module 1
THE ENTREPRENEUR AND HIS MIND
WHAT IS THIS MODULE ABOUT?

Welcome to the subject Entrepreneurial Mind. This subject will introduce to the concept of
entrepreneurship and how entrepreneurs think, make decisions and take actions. We will also learn about
the importance of entrepreneurship not only for the economy and society but also how it can be used as a
way of thinking and looking at things from a different perspective. So, whether you are an engineering
student, a soon to be programmer, a student of the arts, there is much to be learned from this class.
In Module 1, The Entrepreneur and His Mind, we will explore what entrepreneurship is and who
the entrepreneur is. We will have a look into the history of entrepreneurship as a school of thought as a
means of understanding what entrepreneurship is. What better way to understand something than to learn
about its origins, right?
This module will also introduce you to how entrepreneurs think. It has been said that
entrepreneurs are a class of their own. They are known to be risk-takers and innovators. They are also
known to have better focus and persistence than others. What exactly drives entrepreneurs to be that
way? This module will help us achieve better understanding of that not only by learning about the
distinct characteristics of entrepreneurs but also, undertaking practical activities that will allow us to put
ourselves in the entrepreneur’s shoes.
We will learn all this throughout four sessions namely: Session One – Entrepreneurship and its
Roots, Session Two – Entrepreneurship and its Social Impact, Session Three – The Entrepreneur and his
Journey and Session Four - The Entrepreneur and his Personal Initiative.
WHAT WILL YOU LEARN?

At the end of this module you will acquire the following essential knowledge and skills on how
to:
 Discuss the different characteristics of entrepreneurs,

 Discuss the different types of innovation,
 Identify, screen and evaluate opportunities, and
Module in The Entrepreneurial Mind Bicol University

August 2020 College of Business, Economics, and Management – Entrepreneurship Department
2
 Distinguish pro-active and reactive behaviors of entrepreneurs.
SESSION 1: ENTREPRENEURSHIP AND HIS ROOTS
What Is This Session About?
For the first session of Module 1, we look back in history and try to understand just where the
concept of entrepreneurship originated from. Entrepreneurship has been around since humans started
bartering with one another, but when exactly did it develop into the school of thought that we know it be
today? This is the primary question this session will try to answer.
Along that line, we will also look at the different interpretations, definitions and kinds of
entrepreneurship there is. Another issue to be tackled in this session is the one thing that binds all kinds
definition entrepreneurship has - that is innovation. We will learn about the different types of innovation
and understand how we can use these in our entrepreneurial journey.
Overall, this section of the module will introduce you to the entrepreneur and the characteristics
he has that sets him apart from the average Joe. By learning about the history of entrepreneurship and the
elements around it, we will come to learn about who exactly the entrepreneur is.
What Will You Learn?
At the end of the session, you will learn about the history of the development of entrepreneurship
as a school of thought. We will learn about great minds who have contributed to its development. In the
same vain, we will also begin to understand the characteristics of the entrepreneur.

3
What Do You Already Know?
Let’s begin this session by reflecting on this definition of entrepreneurship:
Let’s Reflect
Now, write down below your own definition or understanding of what entrepreneurship is:
_____________________________________________________________________________________
_____________________________________________________________________________________
______________________________________________________________.

4
Let’s Study:
T h e w o r d e n t r e
th
century French word “entrepredre” which meant to undertake. The
word itself, the term entrepreneur stems from the French literally,
between taker, or go between with early references having been traced
to the eighteenth century economists Richard Cantillon, Anne- Robert
Jacques Turgot, and Francois Quesnay. The term was even used as
early as the Middle Ages to denote an actor with reference to warlike
action or in particular, a person in charge of large-scale construction
projects such as cathedrals, bearing no risks but simply carrying the
task forward until resources were exhausted. It was only in the 16th
century that it was first related to business and took to mean as a person
engaged in business.
The person responsible for the first academic usage of the word entrepreneur was economist
Richard Cantillon in his Essai sur La Nature du Commerce en General. He stated that the bearing of risk
by engaging in business without an assurance of the profits that will be derived is the distinguishing
feature of an entrepreneur. He further identified the entrepreneur as an adventurer.
This was later supported by Daniel Defoe by embodying the

entrepreneur through the protagonist of his novel Robinson Crusoe.
Brann, in her book review The Unexpurgated Robinson Crusoe state
“Alone on the island he is altogether a man of projects, a “projector”
and “adventurer,” as entrepreneurs used to be called. He is a busy man,
a man of business, labors, and accounts…He establishes timetables and
schedules and runs his island like a going concern of one. He is the
ultimate individualist, who does everything by himself and for himself
and sets a world humming, a world that has only a single human
inhabitant, who is, however, all over it. He is indeed the true
individualist, alone singled out by his God and yet representing a
paradoxical archetype: the unique Everyman. This society of one shows Robinson in a humanly novel
aspect: He gives meaning to the term “private enterprise.” He is a culture of one.

5
By the Seventeenth Century towards the Eighteenth Century, the term entreprendre was highly
related to risk taking, the entrepreneur being the risk taker who entered into a contractual relationship
with the government for the performance of a service or the supply of goods. The price at which the
contract was valued was fixed and the entrepreneur bore the risks of profit and loss from the barging.
The 19th century saw three major additions to the growing concept of entrepreneurship. Jean
Baptiste Say portrays that the entrepreneur with his knowledge and judgment as someone who sought
opportunities to earn profits by reallocating resources from areas of low productivity to areas of high
productivity by describing an entrepreneur in terms of behavior. "He is called upon," said Say, "to
estimate, with tolerable accuracy, the importance of a specific product, the probable amount of demand,
and the means of production; sometimes to employ a great number of hands; again to buy or order raw
materials, to combine the workers, find consumers, to exercise a spirit of order and economy. In the
course of such operations there are obstacles to be surmounted, anxieties to be overcome, misfortunes to
be repaired, and expedients to be devised." John Stuart Mill on the other hand describes the entrepreneur
as someone who was more than the venture capitalist but also one who managed the venture. It was
however Alfred Marshall who linked Say’s and Mill’s ideas claiming that the entrepreneur was one who
coordinated the four factors (land, labor, capital and organization) together. It must be noted that at this
point in time, discussions on entrepreneurship were vastly based on the “who” of the concept. In
addition to being dubbed as a risk taker, a projector, and an adventurer, the entrepreneur has evolved such
that he was also identified as an arbitrageur (Say), a manager distinct from a capitalist (Mill) and as a
coordinator (Marshall).
At the dawn of the twentieth century, these “who” concepts of entrepreneurship were further
developed by the likes of Frank H. Knight and Joseph Schumpeter. Their discussions, however, were less
focused on who the entrepreneur was but what his actions were that makes him an entrepreneur.
Frank H. Knight carried forward the notion of risk taking by classifying

two kinds of risks. Two different kinds of risk were distinguished by
Frank Knight (1885-1972): one is capable of being measured (i.e.,
objective probability that an event will happen) and shifted from the
entrepreneur to another party by insurance; the other is un-measurable
(i.e., no objective measure of probability of gain or loss), e.g., the
inability to predict consumer demand. According to Knight, the
entrepreneur takes the latter risk: “true” uncertainty found in situations,
which do not repeat themselves with sufficient conformity to make

6
possible a computation of probability (what we nowadays term as "unknown and unknowable"). He

further developed the ideas proposed by his predecessors by distinguishing a boundary between
management and entrepreneurship. He sees entrepreneurs in the strict sense as producers; while the great
mass of population furnish them with productive services, placing their persons and property at the
disposal of entrepreneurs who guarantee to them a fixed remuneration. Entrepreneurial profit depends on
whether an entrepreneur can make productive services yield more than the price fixed upon them by those
who furnish productive services think they can make them yield. Therefore, its magnitude is based on a
margin of error in calculation by entrepreneurs and non-entrepreneurs who do not force the entrepreneurs
to pay as much for productive services as they could be forced to pay. It is this margin of error in
judgment that constitutes true uncertainty that is borne by the true entrepreneur and which results in his
profit. In Knight’s view, the function of manager thus does not itself imply entrepreneurship.
It was during this period that the entrepreneur was further

becoming distinguished from the manager, the capitalist and the
businessman. The discussions on entrepreneurship were also shifting
towards the specific actions entrepreneurs take that make them who
they are. This is shown in Joseph Schumpeter’s discussion on
innovation and how it is a vital component of who an entrepreneur is.
His two greatest insights were that innovation is the driving force not
only of capitalism but also of economic progress in general, and that
entrepreneurs are the agents of innovation. These new combinations
or “creative destruction” as they are sometimes called are what he
referred to as innovation. He discussed that the entrepreneur did not
necessarily have to be the inventor, more importantly he had to be the
one to act in an enterprising manner upon the innovation. He also stated that the innovation need not be
new, it was a matter of how it can be used in production or how it can be brought commercially into the
market. As can be seen in Schumpeter’s discourse, entrepreneurship was no longer entirely focused on
the “who” of the concept but more on what the “who’s” actions were.
The Five Types of Innovation according to Joseph Schumpeter:

7
a. Product – The introduction of a new product or quality
An example of this is the combination of the horseless

carriage and the steam engine, which led the way to the invention of
automotive such as trains, steam boats and eventually cars. The
combination of two existing products to create an entirely new
product was an example of an innovation as described by
Schumpeter.
b. Process – The introduction of a new method of production
Another type of innovation that Schumpeter has

identified is the introduction of a new process of production.
An example of this is when Henry Ford introduced the
assembly line, which significantly decreased the amount of time
from twelve hours to two and a half hours it took to create the
Ford T1 Model cars back in 1913. Today his innovation is still
used in various industries around the world.
c. Business Model – Opening of a new market
Have you ever been stuck in traffic in Manila

inside a taxi, bus or a jeepney, wishing that there was a
quicker way for you to reach your destination? You’re
not alone. In fact, there are millions of commuters who
have the same thoughts running through their minds
every day. These millions accounts for the market for
the much disputed two-wheel taxis like Angkas. Angkas
is a a ride-sharing company, and is an example of
Schumpter’s third kind of innovation: the opening of new markets as it has recognized that among
commuters there exist a substantial number who were willing, needed and could afford to avail of the
services of a ride sharing company like theirs.

8
d. Source of Supply - the conquest of a new source of supply of new materials or parts
People these days are on the constant look out for

sustainable and eco-friendly products. One such product is
vegan leather made from cactus. An innovative solution has
been discovered by two entrepreneurs who have developed
a way to create authentic looking leather from cactus. This
is an example of a new source of supply of new materials
or parts.
e. Mergers and Divestments - organization of any industry
The carrying out of the new organization of any industry, like the creation of a monopoly
position (for example through trustification) or the breaking up of a monopoly position is another kind of
innovation according to Schumpeter.
These ideas were further developed by Ludwig Von Misses and Peter Drucker. Ludwig Von
Misses argued that while innovation was an important factor of entrepreneurship it is not entirely what
makes him one. He indicated in his theory of consumer sovereignty that while entrepreneurs were
responsible for production, it is not him nor innovation that determines what is to be produced.
According to him, it is the customers who do that. It would seem that Mises somewhat downplayed
Schumpeter’s noble claim of innovation as an integral mover of the economy by saying: “Innovation is
the whim of an elite before it becomes a need of the public.” This did not however deviate his idea that
the role of an entrepreneur is not limited to discovering and testing new technologies but to choose among
those that may already in fact be in existence in order economist, F.W.Taussig (1859-1940) that although
innovation is one of the activities performed by the entrepreneur, it is not the only one, and perhaps not
even the most important one.
Peter Drucker (1909-2005) notes that entrepreneurship

can be defined as changing the yield of resources (seen in supply
or production terms) or as changing the value and satisfaction
obtained from resources by the consumer (defined in demand

9
terms) and innovation to be the specific instrument of entrepreneurship. Like Taussig and Mises, Drucker
asserts that innovation does not have to be technical and are often social as well. He argued that
management (as ‘a useful knowledge’) is an innovation of the 20th century as it has made possible the
emergence of the entrepreneurial economy in America and converted modern society into something
brand new: a society of organizations. He therefore prescribed a systematic form of entrepreneurship
management, based on systematic innovation: “Systematic innovation consists in the purposeful and
organized search for changes and in the systematic analysis of the opportunities such changes might offer
for economic or social innovations”.
It would be a difficult task to determine the specific point in time when the focus of
entrepreneurship discussions began to shift from the actor to the action. Arguably, however, it may have
begun with Frank H. Knight’s ideas on risks. The point nevertheless is that this shift was what began the
development of the many approaches to the discussion of the concept of entrepreneurship. As the
entrepreneur became more distinguished as a unique individual and the actions he takes as distinct and
out of the ordinary, ideas on the qualities these individuals have also began to take shape.
One can say that, to define entrepreneurship would be to define both the entrepreneur and the
actions he takes. It is then best to use Commission of European Communities’ definition which is:
Entrepreneurship is the mindset and process to create and develop economic activity by blending
risk-taking, creativity and/or innovation with sound management, within a new or an existing
organization. As a mindset and a process, it is then something that can be learned.
Let’s Think About This:

Upon reviewing the history of the development of the concept of entrepreneurship, we now come
to see that it is a combination of the actor and
the action taken. With this in mind, answer the
following questions:
1. Do you think that entrepreneurship is a
mindset or a process?
2. In these present times, what do you think is
the most relevant kind of innovation?
Let’s Reflect:

10
The second section of Session 1 provides an insight of what makes an entrepreneur. This is done
through a discussion of the Personal Entrepreneurial Competencies. Let us begin this section by
reflecting upon this photo.
Now, ask yourself this, what would your own description be for each part of the entrepreneur’s
anatomy?
Let’s Study:
PERSONAL ENTREPRENEURIAL COMPETENCIES
Entrepreneurial Competencies refers to the key characteristics that entrepreneurs ideally possess

in order to perform entrepreneurial functions effectively. Competencies are defined as the combination of
knowledge, abilities, and attitudes needed to accomplish a role efficiently. In adopting this definition,
entrepreneurial competencies to the three components of the PECs which are the planning cluster
(knowledge), achievement cluster (abilities), and power cluster (attitudes). These clusters are further
subdivided in several characteristics.
THE PLANNING CLUSTER
The planning cluster of the personal entrepreneurial competencies covers three characteristics and
they are: goal setting, information seeking and systematic planning and monitoring. One of the more
popular myths about entrepreneurship is that, they grab opportunities without considering the risks. Some
say that they free-dive into new ventures as easily as they cross streets. However, the truth to the matter
is successful entrepreneurs rarely go into any business venture without a plan. In fact, it is innate with
them to set goals when meaning to achieve something, seeking relevant information that would ensure
success. In addition to this, they keep a tight reign over their entrepreneurial ventures, overseeing things
even to the most minute details. This especially happens early on an entrepreneurial venture.
THE ACHIEVEMENT CLUSTER

11
Ask any successful entrepreneur why they did and rarely would you hear that they did it for
money. Some have done it for the heck of being the first, or for even shallower reasons. Either way, for
successful entrepreneurs, starting an entrepreneurial venture and willingly accepting all the risks
involved, is usually never about the money. More often than not, it’s just that they have a burgeoning
need to overcome a challenge or difficulty or even the stubbornness to accept that something that others
might have said cannot be done.
This is manifested in the achievement cluster of the Personal Entrepreneurial Competencies and
is composed of opportunity seeking, persistence, commitment to work, risk taking and demand for
efficiency and quality.
THE POWER CLUSTER
Entrepreneurs have strong communication skills, and it’s this strength that enables them to
effectively sell their product or service to clients and customers. They’re also natural leaders with
the ability to motivate, inspire and influence those around them.
Passion is perhaps the most important trait of the successful entrepreneur. They genuinely
love their job and are willing to put in those extra hours to make their business grow; they get a
genuine sense of pleasure from their work that goes way beyond just cash.
These traits are manifested under the power cluster of Personal Entrepreneurial Competencies
and is composed of persuasion and negotiation and self-confidence.
We’ve had a look at the different facets of an entrepreneur’s characteristics. Answer the
following questions based on your personal observations on entrepreneurs you know or know of:
1. Do you think that one cluster of the PEC is dependent on another?
2. Do you think that a person can be considered an entrepreneur if he possesses at least one of the
clusters but not the rest?
Let’s Try This:

We have enumerated five kinds of innovations, as qualified by Joseph Schumpeter. Do an online
research of an innovative enterprise in the Philippines. Discuss the specific innovations made on their
businesses and identify which of Schumpeter’s five kinds of innovation they used.

12
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_________.
SESSION 2: ENTREPRENEURSHIP AND ITS SOCIAL IMPACT
Welcome to the second session of Module 1. I hope that the first session has tickled a bit of
your attention and perhaps even your interest in entrepreneurship. I also hope that you have done a bit of
research on your own about entrepreneurship in general and have started reading about the interesting

13
lives of entrepreneurs. If you haven’t, there is no better time to begin but now. Why not take five
minutes to look at – not your latest celebrity crush on Facbook – but rather to look up entrepreneurs like
Richard Branson or Elon Musk. Why don’t we go local! Go and look up Neri Miranda!
As your search will show you, entrepreneurs lead very interesting lives. They also have a lot of
lessons to impart not just about entrepreneurship but about life in general. I hope that throughout this
course, you will continue to take interest and learn from well-known entrepreneurs around the world. But
it would be doubly great, if you could learn about those that are not world-renown just yet.
Back to our lesson! For this session, we will begin to understand the actions taken by
entrepreneurs that set them up for success. We will also discuss how these actions affect the society and
economy. In the same vain, our discussions for this session will revolve around the role of the
entrepreneur and the impact that entrepreneurship makes.
At the end of the session, you will learn about the various what kind of an individual an
entrepreneur is. More importantly, you will also learn about the significant role that entrepreneurship
plays in our society and economy.
Let us start the session with this photo of a

watermelon and what an entrepreneur would do with it.
Now ask yourself this:

14
If you were an entrepreneur, what other product would you come up with to sell other than a
watermelon shake? (Thought of something else? Then you might just be on your way to becoming an
entrepreneur!)
Let’s Reflect:
Now that we’ve had a glimpse of how the concept of entrepreneurship came to be, we can now
start to distinguish the difference between businessmen and entrepreneurs. This illustration clearly
represents that difference. As shown on the photo, entrepreneurs tend to take it a step further. However,
what makes an entrepreneur take that step further?
For this session, we look into what kind of an individual an entrepreneur is, what drives him to
succeed and how that inadvertently impacts the society.
Let’s Study:
THE ENTREPRENEUR AS THE INDIVIDUAL THAT STEERS
Entrepreneurs identify opportunities in the market.
Entrepreneurial ventures are created because opportunities are identified, pursued and exploited.
Economies would not run without entrepreneurial ventures. Without individuals identifying and
exploiting opportunities economic activities would be limited and would not thrive. Entrepreneurs
actively seek our opportunities to pursue and exploit. It is one of the more important skills that
entrepreneurs must have.
Entrepreneurs process market information.
Entrepreneurs identify opportunities by processing market information. At times, it could be a

very technical process using scientifically backed data, but more often that not, most successful
entrepreneurs identify opportunities by merely observing and having and enthusiastic willingness to learn
and understand. Often, they ask themselves questions like: “How can something be made better?” or
“How can the customers’ experience happier?”.
Take the case of Airbnb founders Brian Chesky and Joe Gebbia who have just moved from New
York to San Francisco. Jobless, they were having trouble paying their rent and were looking for a way to
earn some extra cash. They noticed that all hotel rooms in the city were booked, as the local Industrial
Design conference attracted a lot of visitors.

15
The youngsters saw an opportunity. They bought a few airbeds and quickly put up a site called
“Air Bed and Breakfast.” The idea was to offer visitors a place to sleep and breakfast in the morning.
They charged $80 each a night. The idea succeeded and the first Airbnb guests were born: a 30-year-old
Indian man, a 35-year-old woman from Boston and a 45-year-old father of four from Utah sleeping on
their floor. While the company has had its own share of ups and downs before it finally gained traction, it
can safely be said that the rest is history.
The most recent statistics show that Airbnb now has over 2 million listings in over 190 countries
and 34,000 cities. They do not own a chain of hotels but, Airbnb hosts have hosted over 40 million guests.
The company is worth an estimated 25.5 billion, based on the latest round of funding of 1.5 billion.
Entrepreneurs bring innovation.
More important that identifying opportunities is what entrepreneurs actually do about them. This
is when innovation comes in, and this is generally what sets them apart from businessmen and managers.
Entrepreneurs don’t stop at simply creating a product but instead innovate and create more value for
customers.
Entrepreneurs take and accept risks.
There will always be risks involved in starting anything new. As it often is with novel things,
acceptance is hard to come by. People, generally reject new ideas and do not instantly accept what is
being introduced. That is why not a lot of people go on and start a new business. The risks, aside from
the risk of the product not being accepted is numerous! However, entrepreneurs, willingly take and
accept those risks. It is believed that they’d rather fail trying than have someone else try it before them.
Entrepreneurs establish new venture and improve existing ones.
With innovations, entrepreneurs establish new ventures. They usually don’t stop at one. The
most successful entrepreneurs are often known to be serial entrepreneurs, pursuing and exploiting
opportunities and starting new entrepreneurial ventures, one after the other.
At the age of 24, Elon Musk launched his first company Zip2 Corporation. It was an online city
guide which was later in purchased by a division of Compaq Computer Corporation at $307 million in
cash and $34 million in stock options. Using that money, he goes on to establish X.com, which is now
known as PayPal. It was later purchased by Amazon for a whopping amount of $1.5 Billion! Being the
serial entrepreneur, that he is, he goes on to establish his third company, Space Exploration Technologies
Corporation or Space.X with the intention of building spacecraft for commercial space travel. By 2008,

16
SpaceX was well established, and NASA awarded the company the contract to handle cargo transport for
the International Space Station—with plans for astronaut transport in the future—in a move to replace
NASA’s own space shuttle missions.
His more down to earth entrepreneurial venture is Tesla Motors, makers of affordable, mass-
market electric cars as well as battery products and solar roofs. Musk oversees all product development,
engineering and design of the company's products. In April 2017, Tesla announced that it surpassed
General Motors to become the most valuable U.S. car maker. Big car makers such as GM, Volkswagen
and Nissan have shifted gears in planning bigger production of plug-in cars. There is no doubt that Tesla
Motors has disrupted the automobile industry.
Entrepreneurs are managers as well as leaders.
Entrepreneurs are known to know even the tiniest details of their ventures. A prime example of
this is Sir Richard Branson. An article by Business Insider reports that Sir Richard Branson wakes up at 5
a.m. every day. "Getting up and at it early gives me time to get on top of things, and chart my day
effectively," as written in a 2014 blog post, by the Billionaire founder of Virgin Group. The article goes on
to describe the rest of his day saying he carves out plenty of time to spend with his family and eat breakfast.
"Not only does this help them know how important they are to me, but it also grounds me before I start my
day," he wrote. Once he's up, he's ready to move. Some of his favorite activities include kite-surfing,
swimming, cycling, and tennis. Virgin's website says the founder has a "mean tennis serve." In 2010, he ran
a marathon in London while dressed as a butterfly. In 2009, he kite-surfed with a naked model on his back.
In February, he hit the waves to compete against former US President Barack Obama.
Getting an early start to the day isn't only about exercising. Branson lives on Necker Island in the
British Virgin Islands, which he bought for about $320,000 in 1979. "Living in the BVI, I like to be online
early, so that I am accessible and available to our offices in other time zones," he wrote., saying he can work
through his emails before most of the world logs on. He spends his workdays staying on top of business,
checking his various social media platforms, reading the news, and keeping in touch with his employees,
divulging that his biggest life hack is carrying a notebook to keep him on track.
"Being a modern business leader is all about having your finger on the pulse and knowing what you're talking
about. I'm always checking in with our Virgin teams," Branson wrote on his blog.
He, ladies and gentlemen is 70 years old and has been an entrepreneur on top, in, out and through his
vast entrepreneurial ventures since he was 16 years old.

17
What a life these entrepreneurs lead, right? I hope that you are inspired with the kind of life they
lead and the impact they are making. With this in mind, let’s motivate ourselves a little bit more with
these questions:
1. Do you think that entrepreneurs are born with these characters?
2. Do you think that it is a matter of nature or nurture?
3. Are entrepreneurs born or made?
Let’s Reflect:
Before we gin the last section if Session Two, I’d like you to take a look at this infographic that
represents the impact that entrepreneurship has on our society. Discuss what your thoughts are about this
photo.

18
Let’s Study:
THE IMPACT OF ENTREPRENEURSHIP

The impact that entrepreneurship has made in the world as we know it today is undeniable. In the
first part of this module, we discussed how entrepreneurship has evolved over time. Along that line, we
have also seen how that development has contributed to the world we live in today. Let us discuss one by
one how entrepreneurship has contributed to the economy and our society.
Entrepreneurship Spurs Economic Growth

Entrepreneurs create new products and services and this in turn spurs on the creation of other
economic activities that would support the new business venture. These economic activities could be job
creation, the production of supplementary products and services and other activities that would stimulate
economic development.
Take for example, a few information technology companies made up the IT industry in in
different parts of the world in the ‘90s. The industry soon grew affecting various other sectors. New
businesses were also established in support of the industry such as BPOs (Business Process Outsourcing),
network service and maintenance providers, hardware and software providers, etc. Even companies that
support the lifestyles of those in the IT industries came to be. Restaurants, food delivery services and
even fitness centers started operating for 24 hours to cater to employees who worked at different
timelines. This entailed more manpower and created more jobs.
Entrepreneurship Creates Jobs

As new businesses are made, jobs are also created. Starting an entrepreneurial venture, no matter
how small it is, requires an entrepreneur to hire people. As the business expands, more jobs are created
and would require hiring even more. Inadvertently jobs are also created by entrepreneurs who previously
had jobs before opening their business. Leaving their day jobs creates a vacancy. Sometimes, these
vacancies require more than one person to fill in the gap left by the entrepreneurs.
Entrepreneurships Bring Innovations

Necessity is the mother of invention, as the saying goes, and so perhaps its older sibling
is innovation. We have come to learn that entrepreneurs succeed because of the innovation they bring in.
It could be innovation that come in the form of the products and service they offer, or the way they get the
products and services to the market or even how the products and services are made.

19
More often than not, entrepreneurs find solutions to problems and by doing so, an entrepreneur
brings in innovation in the market and inevitably creates competition. This results to better and often
more affordable products and services for customers to purchase. Steve Jobs of Apple invented the
iPhone which spurred on innovations on the mobile phone industry. The mobile phone industry today is
among the most vibrant and dynamic with us seeing innovations on smart phone almost every day. More
importantly, with the competition being so diverse, with smart phone choices ranging to the thousands,
who stand to benefit from all this? No other than us, the buying public.
Entrepreneurship Creates Wealth

Entrepreneurial ventures help generate new wealth not only for the entrepreneur but for the nation
as well. Existing businesses may remain focused to serve their current market and may hit the glass
ceiling in terms of income. By introducing new and improved products and services entrepreneurs are
able to serve new markets and thereby creating new wealth.
As previously stated, entrepreneurship creates jobs which in turn provides earnings or higher
earnings. This in turn contributes to better national income in the form of higher tax revenue and higher
government spending. The government can then use the revenue in struggling sectors and more
importantly on human capital.

We now understand the different roles that entrepreneurship makes and how it impacts the shape
of the world. Let us continue to explore the other possibilities of entrepreneurship by answering these
questions:
1. How is entrepreneurship important to society and the economy?
2. How does entrepreneurship drive societal and economic change?
3. Can too much entrepreneurship be detrimental to economic development?
Let’s Try This:

At this point, I think that we now have a clear understanding of who the entrepreneur is. Do a
little bit of research and find a person in your locality whom you can qualify as an entrepreneur. Write an
essay about this person explaining what traits this person possesses and what actions he has taken that
makes him/her an entrepreneur. Also include a discussion on the impact he has made in your community.
And don’t forget to include what his/her entrepreneurial venture is as well as the kind of innovation
introduced.

20
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
________________________.

21
SESSION 3: THE ENTREPRENEUR AND HIS JOURNEY
Welcome to the third session of Module 1. This session will allow us to put ourselves in the
shoes of the entrepreneur and begin to understand what the entrepreneur begins his journey, and that is
identifying opportunities to exploit and turn into an entrepreneurial venture.
This will be done by discussing your personal strengths, abilities and talents that you can build on
to identify business opportunities. We will also be using metaphors and brain-writing as techniques to
“think outside the box”.
Towards the end of this session, we will learn how to evaluate the opportunities that we have
identified on the basis of criteria considered to be important by successful entrepreneurs.

22
At the end of this session, we will have identified abilities useful for opportunity identification.
We will also have learned creativity techniques to come up with original ideas as well as learned basic
criteria to evaluate business opportunities
Let’s begin this session, by looking at and reflecting on the quote below:
Let’s Reflect:
Why do you think that identifying and evaluating

business opportunities is the basis and starting point
for entrepreneurship?
Let’s Study:
Opportunity has been acknowledged as the key component of entrepreneurship. This partially
explains the growing interest in opportunity identification, which resulted into well thought out
definitions, processes and evaluations of opportunities (Alsos & Rasmussen, 2007; Fiet, 1996; Gartner et
al., 2003; Shane & Venkatara- man, 2000).
The growing interest in entrepreneurial opportunity has lead to the emergence of several
definitions of the concept, which are to a high degree similar. Scholars defined it as situations in which
new goods, services, raw materials, markets, and organizing methods can be introduced through the
formation of new means, ends, or means-ends relationships (cf., Alsos & Rasmussen, 2007; Casson, 1982;
Eckhardt & Shane, 2003). Opportunities vary largely in complexity and characteristics and so do the
processes through which they are identified (Alsos & Ras- mussen, 2007).
Other researchers like Smith, Matthews and Schenkel (2006) were more specific by identifying
two types of opportunities that is tacit and codified, they defined a codified opportunity as a situation that
is well-documented, articulated or communicated, in which a person can create a new means-ends
framework for recombining resources. As pointed out by other researches, this recombination can include

23
new goods, services, raw materials, markets and organizing methods. For example, a codified opportunity
may be illustrated by a franchise in which the opportunity is clearly documented. By comparison, a tacit
opportunity is a situation that is difficult to codify, articulate or communicate, in which a person can
create a new means-ends framework for recombining resources.
In broad terms, an opportunity may be the chance to meet a market need (or interest or want)
through a creative combination of resources to deliver superior value (Casson, 1982; Kirzner, 1973;
Schumpeter, 1934). Hansen (2006) points out that what most literature in entrepreneurship calls
“opportunity recognition” appears to include three distinct processes: (1) sensing or perceiving market
needs and/or underemployed resources, (2) recognizing or discovering a “fit” between particular market
needs and specified resources, and (3) creating a new “fit” between heretofore separate needs and
resources in the form of a business concept (De Koning, 1999; Hills,1995).
The identification of opportunities that initiate entrepreneurial ventures is the key to the engine
that starts new businesses; opportunity recognition is the progenitor of both personal and societal wealth
(Venkataraman, 1997). Venkataraman (1997) and Gaglio and Katz (2001) argue that understanding the
opportunity identification process is one of the primary questions within the province of entrepreneurship.
This awareness of the importance of opportunity to entrepreneurship has spurred numerous investigations
of one's ability to identify opportunities.
It is important to emphasize during the training that opportunity Identification is a continuous

process throughout the entrepreneurial process.
Personal Evaluation
Smith, Matthews and Schenkel (2006) and Shane (2003) realized in their work that if different
types of opportunities are identified, it is necessary to bring the entrepreneur back into the picture to
understand the relationship between the type of opportunity and the entrepreneurial process. Other
researcher like Baum, Locke, and Smith (2001) and Rauch and Frese (2000) have pointed out that
personality remains an important general predictor of entrepreneurial behavior, once specific mediating
factors are considered. This can be achieved by people evaluating themselves thus knowing what they are
good at that is their strength and for them to think around these strengths (personal abilities) and also what
they love doing, likes, interests and hobbies.

24
This exercise is important because you get a good rate of one’s strength and this helps you to
achieve your goals and also excel in whatever you decide to do. With this, answer the following
questions:
1. How can you use your personal abilities in entrepreneurship?
2. Can hobbies be turned into a business venture?
3. Do you know anyone who has started a business out of their talents, skills, hobbies or interests?
Let’s Try This:
Write down your personal strengths, hobbies and interests:
What am I good at: What are my hobbies: What are my interests:
Understanding your hobbies, and interest well will allow you to know the business ideas that
you can pursue. Always focus on your strength because they help you know which business ideas to
pursue to achieve your goals. This is the starting point on how to get a good business idea. Now, list
down all the possible business ideas that come to mind based on your strengths, hobbies and interests.
1. _________________________________________________________
2. _________________________________________________________
3. _________________________________________________________
4. _________________________________________________________
5. _________________________________________________________
Personal Goals
Brunstein and Gollwitzer (1996), in their research pointed out the importance of self-defining
goals as they do motivate some people. That is why it is important for any entrepreneur to set goals that
may act as motivators in the opportunity identification process and their businesses. It is important to
differentiate between wishes and goals. Wishes are imagined future states. In contrast to wishes, goals are

25
objects or aims of actions (Locke & Latham, 2002). So, goals indicate the steps to take to make the
wishes come true.
A goal is something that we want to achieve. It is also a specific, measurable occurrence, object,
or accomplishment that one would like to achieve, or obtain in the future. One where you develop
concrete action plans to take you to where and what you want in the future. A goal statement is an
investment in yourself; it clearly identifies what you want, how you will get it, and when you will get it.
The goal should be SMART (Specific, Measurable, Achievable, Realistic, Time bound).
While looking at your strengths, hobbies and interests as a source of ideas for business
opportunities, it is equally important to check if the opportunities identified are in line your personal
goals. Now that we understand that setting goals is also important, answer these questions:
1. What kind of goals should we make?

2. Is it important that our business ideas are in line with the goals we want to achieve in life?
Let’s Try This:
Write down your personal goals and categorized them into short (up to one year), medium (1-3
years) and long term (3 years plus). The goals should be achievable and realistic in comparison with the
resources you have and type of business. They should be easy to assess within a given time period.
Short term Goals:
1. ___________________________________________________________________________.
2. ___________________________________________________________________________.
3. ___________________________________________________________________________.
Medium term Goals:
1. ___________________________________________________________________________.
2. ___________________________________________________________________________.
3. ___________________________________________________________________________.
Long term Goals:

26
1. ___________________________________________________________________________.
2. ___________________________________________________________________________.
3. ___________________________________________________________________________.
One of the secrets to achieving your goals is knowing how to ask for help from people who have
those skills you don’t possess. In return, you offer them the skills you have, which will often turn out to
be just what they need to achieve their goals. Complementary skills serve everyone involved. Goals
motivate you to turn your vision of the future into reality.
Creativity
Creativity is a key to the development of both new and existing businesses, especially for those
who want to grow towards a profitable business. Creativity is typically used to refer to the act of
producing new ideas, approaches or actions, while innovation is the process of both generating and
applying such creative ideas in some specific context. Definitions of creativity are typically descriptive of
activity that results in:
 producing or bringing about something partly or wholly new;

 investing an existing object with new properties or characteristics; imagining new
possibilities that were not conceived of before and;
 seeing or performing something in a manner different from what was thought possible
or normal previously.
Including creativity skills in venture development team allowing for creativity to emerge in both
the early and later stages of the development process would likely contribute to more effective
opportunity recognition and successful launches of new ventures.

We now understand that creativity plays an extremely important part in entrepreneurship. In fact,
it comes hand in hand with innovation. With this, answer the following questions:
1. Do you think that it is important for entrepreneurs to be creative?
2. Can an entrepreneur succeed even without creativity?
3. Is creativity needed only in the beginning of a business venture or should it be maintained all
throughout the entrepreneurial journey.

27
Let’s Try This:
Let’s play a game! The rule is to connect the three dots with three straight lines in as many ways
as you can.
● ●
● ● ● ●
● ●
●
Did you do this? ● ● ●
● ●
What about this?
● ●

28
The thing is, there are numerous ways to connect the dots, but the way the dots were arranged
compelled us to connect them in a certain way. However, if you look at it from another angle, you
figure it can be connected in many other different ways. Remember the movie Big Hero Six - when
Hero was stuck in trying to look for an idea for the competition he was joining? He only got out of his
mental block when his big brother carried him upside down and he saw his robot from a different angle.
Creativity allows us to look at things from a different perspective. In the same way using creativity in
identifying opportunities compels us to look at things from a different angle. Keep this in mind!
Always look at things from several angles and you never know that a negative situation may turn out to
be an opportunity.
Brainwriting
Another technique that entrepreneurs use is brainwriting. It is a method where a person writes
whatever comes to mind. At times, metaphors can also be in the process. When doing brainwriting the
rules are ideas should not be evaluated. You should not be too critical, all ideas are allowed, even absurd
or foolish ones. Come up with ideas that are as funny or as silly as possible as all ideas will not be
evaluated. Do not judge any idea and you should not be too detailed or complicated. Brainwriting
literally involves writing what comes to mind.
Let’s Try This:
Let’s practice a bit of brainwriting, shall we? Write the first thing that comes to mind after each
question. In this exercise, use as many metaphors as you can because that is what makes you most
creative.
1. If you were a foreigner in your country, what would you need?

_______________________________________________________________________
2. If you were a baby, what would you need?
_______________________________________________________________________
3. If you were an old man, what would you need?
_______________________________________________________________________
4. If you were a street kid, what would you need?
_______________________________________________________________________
5. If you were a fish, what would you need?
_______________________________________________________________________

29
6. If you were living on the moon, what would you need?

_______________________________________________________________________
Problem Solving
The role of prior knowledge has been identified as an important individual difference in the
identification of entrepreneurial opportunities. Prior knowledge creates a knowledge corridor that allows
people to recognize certain opportunities (Venkataraman, 1997; Hayek, 1945).
Through qualitative research, Shane (2000) provided evidence that people’s prior knowledge of
markets, how to serve markets and customer problems were related to their prior knowledge. It was
argued, however, that in the case when the opportunity is tacit, and no prior knowledge existed, the
opportunity would tend to be overlooked as suggested by Austrian economists (Kirzner, 1997). Without
the prior knowledge and associated knowledge corridor, the potential entrepreneur would not recognize
the opportunity. In the case when prior knowledge existed and the opportunity was codified, the search
could be more focused on opportunities within the field of experience.
Needs
People will always have needs; a human need is a basic requirement that a person wishes to
satisfy. Needs are basic parts of human life, and are therefore not created by businesses. Businesses only
try to influence demand by designing products and services that are attractive, affordable, available and
work well for the customer.
Identifying people’s needs is one of the better strategies that entrepreneurs use when looking out
for opportunities. To do this, look out for peoples’ needs like; what exists is too ex- pensive need
something cheaper, what exists is not easy to use so need a user friendly one, quality of existing product
or service is not good enough and many others. Opportunities can be identified through other ways like;
 Existing product/service provider weaknesses
 Application of existing products or new functions
 Cross-border limitations

30
Identifying problems and figuring out how to turn that into opportunities is a good entrepreneurial
practice. In the same manner, so is identifying what people need, even if they haven’t figured it out
themselves. With this, answer the following questions:
1. How can identifying problems lead to entrepreneurship?
2. Can problems be turned into a business venture?
3. Do you know anyone who has started a business out of a problem they identified?
Let’s Try This:
Case Study:
Mrs. Grace Casitas of Malinao Albay has been in business for over 20 years. She sews
uniform jackets from organic wool thread for over 10 primary and secondary schools in Albay.
During the production process of these jackets there are off-cuts (waste material). These off cuts
have accumulated over the years. Presently, she has no more space for these off cuts.
What would you advise Mrs. Casitas to do with these sweaters’ off cuts? Come up with
ideas that are viable and feasible in the community that you live in.
1. ______________________________________________________________________
2. ______________________________________________________________________
3. ______________________________________________________________________
4. ______________________________________________________________________
5. ______________________________________________________________________

31
SESSION 4: THE ENTREPRENEUR AND HIS PERSONAL INITIATIVE
Congratulations! You are now on the last session of Module 1. Now that we have learned about
the characteristics that set entrepreneurs apart, we will now learn how they actually do so. We have
learned that opportunity identification is a skill that is really important for entrepreneurs to have as it is
used not only in the beginning of an entrepreneurial venture but also throughout the entrepreneurial
process.
Another aspect that an entrepreneur needs to develop is personal initiative and that is what our
discussion will be focused on for this session. We will learn that being self-starting, pro-active and
persistent are behaviors that must be developed in order to succeed in any entrepreneurial venture.

32
At the end of this session, we will have learned about what personal initiative and its relevance to
our entrepreneurial journey. We will also learn about action principles which is the framework from
which entrepreneurial actions are made.

For this session, we will start our discussion in a different manner. Try to remember what you
did throughout the day yesterday, from the moment you woke up to the time you went to bed. List them
down, and be as detailed as possible. The first one has been done for you as an example.
MY DAY:
Time Activity
6:00 AM Woke up to my alarm clock.
Let’s Reflect:
Take a look at your day and ask yourself the following questions:
1. What was not good? Where have you been passive and reactive? Where have you not acted in
a self-starting way?
2. Write down alternative good and self-starting behavior you could have shown.

33
Let’s Study:
Entrepreneurship requires action. In all phases of the entrepreneurial process (opportunity
identification, preparing the start-up, running the business), the entrepreneur has to act to successfully
accomplish each phase. For example, in the first phase of opportunity identification, the entrepreneur has
to actively search for information to get ideas. In the second phase, the entrepreneur has to organize
equipment, funding, and establish the production process. In the third phase, the entrepreneur has to
manage customers, employees and plan the development of the business.
Yet, being active and initiating action is not always easy. Internal barriers like perseveration and
procrastination inhibits action. Similarly, external barriers like unfavorable circumstances and lack of
resources also impede action.
This Session deals with Planning and Implementing Plans vis-à-vis Personal Initiative and Self-
Motivation. Personal Initiative and Self-Motivation help the entrepreneur to initiate action and to achieve
goals. Personal Initiative is a behavior by an individual that is characterized by:
1. Being self-starting;
2. Being proactive; and
3. Being persistent in the pursuit of a goal.
The contrary behavior is being passive and doing only what one is told, giving up in the face of
difficulties and reacting to environmental demands rather than actively shaping one’s environment. Self-
regulatory techniques help the entrepreneur achieving his or her goals by guiding his or her thoughts,
affect, and behavior over time and across changing circumstances.
To demonstrate the importance of action the module starts with the following statement:
“There are three types of people in the world: those who make things happen,
those who watch things happen, and those who wonder what happened.”
- Mary Kay Ash
Entrepreneurship is making things happen. Therefore, it is important that the students adopt a
mindset of taking initiative and of making things happen.
PERSONAL INITIATIVE
In the past, Personal Initiative has been consistently linked to performance in various work
domains and particularly in the domain of entrepreneurship in Africa. In future, Personal Initiative will

34
become even more important. To succeed in the face of global competition, faster rates of ‘/innovation,
and new product/service concepts, entrepreneurs must take the initiative to develop their knowledge and
skills, to come up with creative ideas for new products/services and to bring these new product/services
faster to the market. Additionally, an entrepreneur has to deal with all the daily issues of a business
owner. The entrepreneur has to raise capital, develop short- and long-term plans, operate and market the
business, and lead the employees. All these tasks require that the entrepreneur becomes active and
remains active until the goal is achieved. Finally, the entrepreneur is the only person in a business
without a supervisor and therefore the entrepreneur has to set goals and define tasks without being told.
For the entrepreneur, there are no explicit instructions, assigned tasks or specified role requirements.
Therefore, the entrepreneur has to show Personal Initiative to initiate all the essential actions and
steps to successfully start and run a business.
Showing Personal Initiative per se is not an entrepreneur’s task but it promotes successful
accomplishment of all the necessary tasks like opportunity identification, preparing the start-up, and
running the business.
Therefore, the action principles of this module will also be integrated into the other modules that
relate to specific entrepreneurial tasks.
The Aspects of Personal Initiative
Being Self-Starting
Being self-starting implies that an entrepeneurs starts doing something without being told. The
entrepreneur sets goals he or she would like to achieve and starts the action necessary to achieve the goal.
That is, entrepreneurs who show Personal Initiative initiate action on their own accord. Another
important in this context is the level of the goal set by the entrepreneur. Self-starting goals are not the
obvious paths that everybody is taking but they are qualitatively different. Self-set goals imply that an
entrepreneur does something different, unusual or something that goes “beyond”. This means that an
entrepreneur does not copy from competitors but goes the extra mile and pursues a goal that leads to
something new or innovative.
Being Pro-Active
Proactivity is to have a long-term focus. A long-term focus allows anticipating future problems
or opportunities. With a long-term focus, and individual can prepare for those problems or opportunities
and do something proactively about them. An entrepreneur who is proactive anticipates the future and

35
does not wait until he or she can only react environmental challenges. In that way, a proactive
entrepreneur can deal with threats immediately or exploit opportunities when they arise.
Being Persistent
Being persistent implies that an entrepreneur does not give up when facing obstacles or problems
but finds other ways to achieve the goal. These problems or obstacles can have many reasons: technical
problems, resistance, other people’s inertia, lack of resources, or regulations. The important thing is that
an entrepreneur accepts that things usually do not work out perfectly from the very beginning and that the
entrepreneur overcomes the setbacks. Overcoming setbacks and barriers can take different forms: either
trying again the same approach when dealing with a problem, trying out a new approach, or finding a
completely different way to solve the problem. For example, if an entrepreneur is turned down by a
venture capitalist, he or she can either call again (probably with a better strategy) or find a different way
of acquiring capital for the business.
Personal Initiative When Accomplishing Tasks

Every entrepreneur has to accomplish manifold tasks from various areas. However, all the tasks
from the different areas are alike in terms of the general action steps the entrepreneur has to take. The
four general actions steps to accomplish a task are to:
1. Set a goal to define what the entrepreneur wants to achieve;
2. Collect information to orient and to carry out informed actions;
3. Plan which actions to take, to define sub-goals that are essential to achieve the actual goal, and to
eventually execute the planned actions; and
4. Get feedback and to monitor whether the actions led to goal achievement.
The entrepreneur can show Personal Initiative in each of the general action steps. Table 1
illustrates the facets of Personal Initiative along the general steps of action.
Table 1. The facets of Personal Initiative along the steps of action
Step in action Self-Starting Pro-Active Persistent

sequence
Goals  Self-set goals  Anticipate future  Protect goals when

36
 Active goals problems / opportunities frustrated or taxed by

and convert into goal complexity
 Active search /  Consider potential  Maintain search in
Information
scanning problem areas before they spite of setbacks
collection
occur
 Active plan  Back-up plans  Overcome barriers
Plan and
 Have plans for  Return to plan when
Execution
opportunities ready disturbed
 Self-developed  Develop pre-signals for  Protect feedback
Monitoring
feedback potential problems and search
and
 Active search for opportunities
Feedback
feedback
Being Self-Starting
Being self-starting implies that the entrepreneur sets goals on his own and that these goals go
beyond the usual goals. In the next steps, the entrepreneur seeks actively information that are relevant to
accomplish the task. The entrepreneur contacts various sources to get to know the environment and does
not wait until relevant information just “hit” him or her. Self-starting information seeking is related to an
active exploration of the environment. The more the entrepreneur explores, the more whites spots from
his or her business map disappear which might otherwise be potential pitfalls for the entrepreneur. Being
self-starting regarding planning and execution implies that the entrepreneur develops a plan that is
elaborate and detailed. A detailed and elaborate plan provides the steps necessary to achieve the goal.
However, this does not mean that an entrepreneur should stick to the plan at all events. If opportunities
arise, the entrepreneur should flexibly adapt the plan to exploit them. A combination of detailed planning
and an opportunistic approach should be best for the entrepreneurs. However, this refers only to the
entrepreneur’s planning. Regarding the goals, the entrepreneur should keep them even when problems
occur.
The simple formula is: Be stable on goals but flexible on the plans to reach the goal! Being self-
starting regarding feedback is straightforward. The entrepreneur should actively seek feedback from
different sources to monitor whether he or she achieved the goal. This also includes that the entrepreneur

37
develops ways of getting feedback automatically, like regular customer surveys or a performance
measurement system of various business success indicators.
The opposite of self-starting behavior is reactive behavior. The following table provides an
overview of the difference between self-starting and reactive behavior.
Table 2. Self-Starting vs. Reactive Behavior
Self-Starting Behaviour Reactive Behaviour

start an action yourself wait until people tell you; doing nothing
change your environment and unfavorable react to environmental changes; complain, wait,
circumstances and hope that things get better
act first – be ahead of your competitors react and only copy what competitors are doing
be new – actively look for new ideas, wait until you have to react
implement new ideas only sticking to old routines, wait until ideas
come from alone, ideas only remain thoughts
and dreams
be different – be different from your offer the same as your competitors
competitors
look for information and possibilities to learn wait until people give you information and not
actively extending knowledge
Being Self-Starting also means extra effort. In the context of this entrepreneurship training it
means that the students have to accomplish tasks in addition to their normal duties (e.g., studies). For
example, developing a product, assembling resources, getting partners, and finding customers requires
spending extra energy, facing uncertainties, and taking risks. However, only those students who are
willing to spend this extra effort will be successful eventually.
From the research on Personal Initiative and its facet of self-starting behavior the following
action principle is derived:
Be Self-Starting!
1. Strive for the non-obvious! Do something that is new, different, unusual, something that adds a
new quality and that goes beyond!
2. Be willing to spend extra energy and to go the extra mile!
3. Seek information that helps you carrying out your plan!
4. Develop a detailed and elaborate plan how you will achieve your goal!
5. Seek feedback to monitor the progress in your goal attainment!

38
We now know the behaviors important to entrepreneurial success. Now, let’s ask ourselves this:
1. How can we become self-starting with our daily activities?
2. How is being pro-active different from being reactive?
3. Why is persistence important in the entrepreneurial process?
Let’s Try This:
Case 1 – The Case of Eden:
Eden is in the carpentry business and produces wardrobes and chairs. Eden was formerly
employed in a big furniture manufacturing company. For getting business knowledge she had joined a
bookkeeping course. Eden’s business has grown a lot within the past two years. She has recently set
herself the goal: “double the size of the business within another two years”.
To reach her goal, she went to a larger furniture sales company in her neighborhood and offered
her products. After being rejected first, she made another try and offered chairs of a special design she
had seen on Pinterest. Finally, she got a contract. In addition, Eden sends out an employee once a month
to distribute flyers announcing special offers. She also rents a van every second Saturday for delivery
service. Moreover, she regularly meets people in carpentry business to exchange on problems and new
designs.
Instruction: Identify self-starting behavior and its consequences.
What self-starting behavior did Eden show? What are the consequences?
Case 2 –The Case of Martha:

39
Martha started her carpentry business 10 years ago. She had acquired her business knowledge
during her time as delivery driver for one of the furniture manufacturers in town. So far, she has not taken
part in training. Since she has no ideas for new designs, she sticks to the same designs for many years
now. Her workshop is located in a suburb of the city so that access is one of her biggest problems. She
has no own vehicle what forces her to sell her products at the roadside. She thinks that gaining access to
her customers would be necessary but until now she has not tried anything new.
Instruction: Identify reactive behavior and its consequences.
What reactive behavior did Martha show? What are the consequences?

40
HOW MUCH HAVE YOU LEARNED?

Answer the following questions:
A. Write T if the statement is True and F if the statement is False.
______________1. Frank H. Knight classified risks into four categories.

______________2. Joseph Schumpeter posited that innovation can come in the form of how products are
made.
______________3. The opening of a new market is not a form of innovation.
______________4. Entrepreneurship is both a mindset and a process.
______________5. The Personal Entrepreneurial Competencies are divided into three clusters.
______________6. Creativity is a key to the development of both new and existing businesses, especially
for those who want to grow towards a profitable business.
______________7. Personal Initiative entails a self-starting behavior, persistence and knowing when to
quit.
______________8. Identifying solutions to existing societal problems can lead to opportunity
identification.
______________9. Opportunity identification should only happen in the beginning of an entrepreneurial
venture.
______________10. The entrepreneur is someone who manages a business without brining in innovation.
B. Encircle the correct answer.
1. The achievement cluster of the personal Entrepreneurial Competencies does not include:
a. Persistence
b. Risk taking
c. Self-confidence
d. Demand for efficiency and quality
2. Personal initiative includes:

a. Negotiation
b. Overcoming barriers
c. Identifying opportunities
d. Brainwriting
3. Abby is the owner of a bakery. Her business is doing well, but when the Covid-19 pandemic hit her
town and her business becomes greatly affected. Sales go down as movement becomes limited. Abby

41
decides to take matters into her own hands and starts delivering baked goods to her customers instead of
waiting for customers to come to her. Which of the following personal initiative has she shown?
a. Opportunity identification
b. Product innovation
c. Self-starting behavior and persistence
d. Problem solving
4. Company X is the number 1 producer of toothpaste. So is Company Y, who hopes to one day
dominate the toothpaste market. After careful research Company Y finds out that a big number of
toothpaste users used mouthwash after. Using this information, Company Y develops and introduces to
the market a toothpaste with mouthwash in order to respond to the need of toothpaste users who use
mouthwash as well. What kind of innovation did Company Y do?
a. The introduction of a new product or quality.
b. The introduction of a new process of production.
b. The opening of a new market.
c. The conquest of a new source of supply of raw materials or parts.
5. The social impact of entrepreneurship does not include:

a. Creation of jobs.
b. Creation of wealth.
c. Creation of healthcare systems.
d. Introduction of innovation to the market.

42
DEFINITION OF TERMS:
Entrepreneurship - the mindset and process to create and develop economic activity by blending risk-
taking, creativity and/or innovation with sound management, within a new or an existing organization
Entrepreneur - a person who organizes and operates a business or businesses, taking on greater than
normal financial risks in order to do so.
Personal Initiative - can be defined as a behavior syndrome that results in an individual taking an active
and self-starting approach to work goals and tasks and persisting in overcoming barriers and setbacks.
Opportunity Identification – a continuous process that entrepreneurs make as it initiates entrepreneurial
ventures and is the key to the engine that starts new businesses.
Creativity - is a key to the development of both new and existing businesses, especially for those who
want to grow towards a profitable business and is typically used to refer to the act of producing new
ideas, approaches or actions, while innovation is the process of both generating and applying such
creative ideas in some specific context
Innovation - is "a new idea, creative thoughts, new imaginations in form of device or method". It is often
also viewed as the application of better solutions that meet new requirements, unarticulated needs, or
existing market needs.


Module 1 - The Entrepreneur and His Mind

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Module 1 - The Entrepreneur and His Mind

Uploaded by

Copyright:

Available Formats

THE ENTREPRENEUR AND HIS MIND

MA. CRESTIA C. BANARES, MEntrep

WHAT IS THIS MODULE ABOUT?

WHAT WILL YOU LEARN?

 Discuss the different characteristics of entrepreneurs,

Module in The Entrepreneurial Mind Bicol University

 Distinguish pro-active and reactive behaviors of entrepreneurs.

SESSION 1: ENTREPRENEURSHIP AND HIS ROOTS

What Is This Session About?

What Will You Learn?

Module in The Entrepreneurial Mind Bicol University

What Do You Already Know?

Let’s begin this session by reflecting on this definition of entrepreneurship:

Module in The Entrepreneurial Mind Bicol University

This was later supported by Daniel Defoe by embodying the

Module in The Entrepreneurial Mind Bicol University

Frank H. Knight carried forward the notion of risk taking by classifying

Module in The Entrepreneurial Mind Bicol University

possible a computation of probability (what we nowadays term as "unknown and unknowable"). He

It was during this period that the entrepreneur was further

The Five Types of Innovation according to Joseph Schumpeter:

Module in The Entrepreneurial Mind Bicol University

a. Product – The introduction of a new product or quality

An example of this is the combination of the horseless

b. Process – The introduction of a new method of production

Another type of innovation that Schumpeter has

c. Business Model – Opening of a new market

Have you ever been stuck in traffic in Manila

Module in The Entrepreneurial Mind Bicol University

People these days are on the constant look out for

e. Mergers and Divestments - organization of any industry

Peter Drucker (1909-2005) notes that entrepreneurship

Module in The Entrepreneurial Mind Bicol University

Let’s Think About This:

Module in The Entrepreneurial Mind Bicol University

PERSONAL ENTREPRENEURIAL COMPETENCIES

Entrepreneurial Competencies refers to the key characteristics that entrepreneurs ideally possess

THE PLANNING CLUSTER

THE ACHIEVEMENT CLUSTER

Module in The Entrepreneurial Mind Bicol University

THE POWER CLUSTER

Let’s Think About This:

1. Do you think that one cluster of the PEC is dependent on another?

Let’s Try This:

Module in The Entrepreneurial Mind Bicol University

SESSION 2: ENTREPRENEURSHIP AND ITS SOCIAL IMPACT

What Is This Session About?

Module in The Entrepreneurial Mind Bicol University

What Will You Learn?

What Do You Already Know?

Let us start the session with this photo of a

Module in The Entrepreneurial Mind Bicol University

THE ENTREPRENEUR AS THE INDIVIDUAL THAT STEERS

Entrepreneurs identify opportunities in the market.

Entrepreneurs process market information.

Entrepreneurs identify opportunities by processing market information. At times, it could be a

Module in The Entrepreneurial Mind Bicol University

Entrepreneurs bring innovation.

Entrepreneurs take and accept risks.

Entrepreneurs establish new venture and improve existing ones.

Module in The Entrepreneurial Mind Bicol University

Entrepreneurs are managers as well as leaders.

Let’s Think About This: