Module 1 - Understanding Entrepreneurship

9/7/2021 Module 1: Understanding Entrepreneurship
Module 1: Understanding Entrepreneurship
Site: New Era University Printed by: Julius Albert D. Ortiz

Course: Entrepreneurship Date: Tuesday, 7 September 2021, 4:58 PM
Book: Module 1: Understanding Entrepreneurship
https://isvle.neu.edu.ph/mod/book/tool/print/index.php?id=5666 1/19
Description
Table of contents
1. Learning Competencies
2. Supplementary activity
3. Discussion
4. Lesson Summary
5. Assessment
6. Performance Task
7. Enrichment Activity
1. Learning Competencies
At the end of this lesson, the student should be able to:
define entrepreneur and entrepreneurship;

describe the salient features of entrepreneurship;
discuss the different theories on entrepreneurship;
distinguish between entrepreneurial venture and ordinary small business activity;
determine factors that contribute to the misconceptions on entrepreneurship;
explain the importance of entrepreneurship and;
identify the sources of entrepreneurial ideas.
2. Supplementary activity
Synchronous Recitation
The government is promoting the use of organic fertilizer instead of inorganic one. What product can you think of because of this new
government’s thrust?
3. Discussion
Take time to read young entrepreneur!
⭕ These are some of the terms that we need to keep in mind for us to be familiar in studying Entrepreneurship:
Entrepreneur – from the French word entreprendre which means to undertake. Also defined as a person who advocates and practices the
concepts and principles of entrepreneurship in operating and managing the self-owned business venture.
Entrepreneurship - comes from the word entrepreneur. It is the art of observing correct practices in managing and operating a self-owned
wealth-creating business enterprise by providing goods and services that are valuable to the customer.
What does this lesson provide for your entrepreneurial journey as a student?
1. This outlines the operational definitions of the terms entrepreneur and entrepreneurship and makes a clear distinction between them.
2. It defines the differences in terms of concepts, beliefs, understanding and approaches adopted by an entrepreneur and an ordinary
businessperson.
3. It also aims to build a strong entrepreneurial foundation to ignite an interest among students to become successful entrepreneurs.
Acquiring basic knowledge of entrepreneurial principles prepare students like you with the necessary tools in handling and maximizing
entrepreneurial activities, but knowing this is not an assurance that you will become a successful entrepreneur in the future. You have to go
through the whole entrepreneurial process and study it by bits.
Why do you have to learn entrepreneurially principles when it cannot provide you the assurance of being a successful entrepreneur in
the future?
Knowing the various concepts and principles in entrepreneurship may not completely guarantee success, but it can help you to be competitive in
making entrepreneurial decisions.
Remember:
There is no universally accepted definition of entrepreneurship. Here are the reasons why:
1. Different views, as well as theories, are being developed in the field of entrepreneurship.
2. The people who provided the definition for entrepreneurship are largely influenced by their individual personal beliefs.
3. The entrepreneurial models introduced by other scholars are influenced by the prevailing economic situations during different periods in
history.
4. The structure and methodologies of research on entrepreneurship is reliant on the theories and the contexts of the research endeavors.
Joseph Schumpeter
The Austrian economist and political scientist Joseph Schumpeter gave much emphasis to the concept of product innovation, marketing, and
production methods, He described an entrepreneur as an individual with distinct social characteristics or attributes. Some scholars agreed with
the concept of Schumpeter, but others opposed his views.
⭕ What is a Small business?
Small business is a business or enterprise that embrace and practice the principles of entrepreneurship. This business is owned by one person
with a workforce of not more than twenty (20) persons.
⭕ What is an Ordinary business?
Ordinary business is a business managed by an owner who is not a proponent and does not practice the concepts and principles of
entrepreneurship. This kind of businesses are found almost everywhere.
Why do you think opening a small or ordinary business trends in the Philippines?
Opening an ordinary or small business is the easiest and convenient way for Filipinos to earn a living and get through their everyday lives.
Another thing is that they don't need a big amount of money to start up a small business (also comes in a form of a stall, pushcart, or even an
online business). However, the mere opening of these kinds of businesses is not entrepreneurship and the person who runs it is not an
entrepreneur, rather a business person. Most of them do not really know what an entrepreneur or even what entrepreneurship is. What is worse
is some of these businesses have gone bankrupt or collapsed after some time.
Remember:
1. Entrepreneur is someone who advocates and also practices the concepts and principles of entrepreneurship in operating and managing the
self-owned entrepreneurial venture correctly.
2. Entrepreneurship is an art of knowing correct practices and ways in managing and operating a self-owned, wealth-creating business
enterprise by providing products and services that are valuable to the target market.
3. Being a businessman doesn't really mean that an individual is an entrepreneur. A businessman is someone who ventures into business
without practicing the concepts and principles of entrepreneurship.
4. Opening a small business or ordinary business does not really mean that the business will get through for long. Some of these businesses
that were opened then bankrupt in a short period of time.
What are the five (5) important features of Entrepreneurship?
1. It is an art of correct practices.

2. It is a wealth-creating venture.
3. Furthermore, it provides valuable goods and services.
4. It entails opening and managing the self-owned enterprise.
5. It is a risk-taking venture.
These features provide a better understanding of the whole concept of Entrepreneurship. These also acts as the point of reference in
determining whether a particular business endeavor is operating within the realm of entrepreneurship.
Figure 1.2 Salient Features of Entrepreneurship
Now, let us all study these features one-by-one.
♀️ENTREPRENEURSHIP IS AN ART OF CORRECT PRACTICES
Entrepreneurship is not governed by any fixed or absolute rules. There is a change which indicates movement and innovation. Therefore, it
is not static or stagnant. It continuously grows and develops and promptly responds to the changing needs of the people. By the moment the
economic activity changes, the political, social, and entrepreneurial activities will change.
Creativity also plays a huge role in entrepreneurship. Creativity results in better and new ideas, which are the backbone of entrepreneurship.
Entrepreneurs are not stuck with one idea, rather they keep on searching for ways on how their business will be successful.
This aspect makes an entrepreneur different from an ordinary small businessperson. An entrepreneur transforms feasible new ideas into an
entrepreneurial venture, while an ordinary small businessperson only builds upon existing ideas to gain immediate earnings from his/her
business.
⭕ Remember:
Nothing is permanent in the field of Entrepreneurship. What is applicable to a certain business is also applicable to
another. Entrepreneurship should be practiced not a science but as an art. An entrepreneur should be creative in a sense that he/she
knows the trend and how to adjust to the present preferences of the market.
Art in entrepreneurship is related to the correct ways of carrying out entrepreneurial activities. The owner of an ordinary small business
has the freedom to manage and operate his/her business according to what pleases him/her. Ideally, they prefer business activities
which are done easily. The entrepreneur, however, has to perform entrepreneurial activities correctly, regardless of whether they are
undertaken easily or not. What is important in entrepreneurship is that the business activities are performed correctly.
♀️ENTREPRENEURSHIP IS A WEALTH-CREATING VENTURE
We often hear the old maxims "Health is wealth" or "Knowledge is wealth." However, this is not applicable in the concept of wealth in
entrepreneurship.
In most instances, ordinary small business people equate wealth with the term profit wherein in accounting profit represents the excess
income or revenue from the cost and expenses. Although profit may be a good indicator of wealth, it can be measured in different ways.
For example, let us assume that your product is ₱150, and you sell this product for ₱180, as a result, you have a mark-up or profited ₱30. The
question is, "Is one enriched by twenty-pesos?".
Entrepreneurship is operating within the concept of wealth rather than the generation of profit.
According to Random House Webster's Dictionary, wealth is defined as the abundance of money, property, or possession. This definition of
wealth, does not even refer to business profit. This definition strongly underscores "abundance" in the conceptual definition of wealth. The
concept of abundance and not of accounting profit is the very sense of wealth in entrepreneurial endeavor. As an entrepreneur, you should open
your own business as a wealth-creating venture and not solely as an income-generating plan, which is the mindset of an ordinary
businessperson. It shouldn't be the approach and way of an entrepreneur.
The creation of wealth must gradually benefit both the owner and the community. The adoption of the wrong concept of wealth-creation is the
primary reason why most of the small business ventures here in the Philippines do not prosper. Wealth-creation is not merely the selling of the
product or services for a price. Nevertheless, selling products does not necessarily mean creating wealth. This is the misconception of some
ordinary businesspeople.
❓ Ask yourself:
Is your business a wealth-creating venture or an income-generating one? Why do you say so?
Does your business help improve your life? How?
‍♀️ENTREPRENEURSHIP PROVIDES VALUABLE GOODS AND SERVICES
Products and services must have value in order to generate wealth.
Entrepreneurship creates economic wealth by providing goods and services to consumers. These products and services must have value in
order to generate wealth. Anything that has no value to anybody is a waste. We have mentioned that both the community and the owner should
benefit from entrepreneurship, so the products should be beneficial also to the consumer.
Valuable products and services highly satisfy target buyers in terms of quality as well as price. The entrepreneur should also ask for
feedback from the consumers such as suggestions, areas for improvements, and ask if they are satisfied. Valuing the customer's feedback can
help the business to grow and improve but not all customers consider the same things as valuable.
When consumers are satisfied with the products and services that were received, they could be the asset that your business is looking for. They
may patronize and even endorse your products to others. Let us not forget that "word of mouth" is very influential. This may be reversed in a
way that the consumer is not satisfied with your product, and next time they will buy somewhere else. In this case, wealth is lost.
When the production cost increases the selling price of the product or the services, its price also increases. This will put you in an unfavorable
position, since your competitors may be selling a similar product at a lower price. As a future entrepreneur, it is a must to ascertain first whether
the additional value that will be placed on your product is valuable to the consumers. It is important that you know your target consumers in the
field of entrepreneurship. You should study everything, as well as their interests since everyone can become your potential customer.
❓ Ask yourself the following questions:
Is your product or service valuable? Why do you say so?
Which consumer will find your product or service valuable?
How will you make your product or service valuable to your target customers or market?
ENTREPRENEURSHIP ENTAILS OPENING AND MANAGING THE SELF-OWNED ENTERPRISE
This feature highlights two very important elements which is the concept of opening a self-owned enterprise and the concept of managing
it.
A business should be self-owned in order to qualify as an entrepreneurial endeavor. A business is considered self-owned when the person
behind its daily activities is also its owner, who oversees everything.
Businesses that are managed by other people for the benefit of the owners do not fall within entrepreneurship. These businesses are operating
under the concept of intrapreneurship.
The concept of intrapreneurship may include business practices of franchising as well as a buyout.
⭕ Entrepreneurship is not about the size of the business, but rather about its sole ownership. It could include small, medium, and multimillion
businesses that are managed by their respective owner.
❓ Why do NGOs (Non-governmental organizations) focuses on small businesses?
- it could be because the owners of small businesses lack the necessary knowledge training and budget for their entrepreneurial activities.
⭕ Planning - refers to the process of setting the goals of the business. Without planning, the possibility of failure is great.
?‍? As entrepreneurs in the future, you have to plan for the course of your entrepreneurial venture. Planning doesn't cost anything, but the
benefit that you will gain from exercising can be rewarding.
❓ Ask yourself the following questions:
Do you know someone who owns a business?

Does he/she personally manage his/her own business? How?
Do you think that person is an entrepreneur or a businessperson? Why or why not?
‍♀️ ENTREPRENEURSHIP IS A RISK-TAKING VENTURE
"Risk is inherent in an entrepreneurial venture."
Once an entrepreneurial venture starts because of new ideas or opportunities, risk comes simultaneously with it. Risk cannot be avoided from
any entrepreneurial venture and the only way to remove it is to close the venture or business.
Business risk- risk in entrepreneurship
❓ How does a businessperson handle risk?
- Shuns or avoids it which indicates he/she only favors operating under a favorable condition.
❓ How does an entrepreneur face the business risk?
- Faces and think of away wherein he/she can manage and overcome the risk.
An entrepreneur face business risk intelligently. He/she must find ways on how to minimize the effects of the risks.
All eyes here, young entrepreneurs!
⭕ Theory
is a generalization that explains set of facts.

can be supported by another observation.
⭕ There are several theories on entrepreneurship. Here are some of them:
1. Innovation theory
2. Keynesian theory
3. Alfred Marshall theory
4. Risk and uncertainty-bearing theory
5. Other theories on entrepreneurship
Innovation theory
- contributed by Joseph Schumpeter.
- regards development in economy as the product of structural change or innovation.
- an economy without any change is static and cannot expect any development.
- He strongly believed that innovation is the force that will drive the revolutionary change. It will cause the destruction of the economy, stir the
entrepreneurial activity, and encourage competition. Unless transformation takes place, economic equilibrium or existing situation will remain.
⭕ Five (5) forms of Innovation theory
1. new product
2. new production method
3. new market
4. new supplier
5. new industry structure
❓ Ask yourself:
Will you consider the innovation theory as one of your guiding post in your journey as an entrepreneur?
Keynesian theory
- This theory was developed by John Maynard Keynes, which is a British economist.
- this theory puts so much emphasis on the role of the government in entrepreneurial and economic development, most especially when the
economy was experiencing depression.
- suggests that activities for entrepreneurs may not be favorable in the future unless the problem of economic disequilibrium is finally resolved
through the participation of the government.
⭕ The private sector may perform well in their entrepreneurial ventures only when the people have enough money. However, during a period
of depression in the economy, money becomes sparse, and the population of unemployed workers is high. It is the time that the government
must make a strong intervention in the entrepreneurial role played by the private sector.
ALFRED MARSHAL THEORY
- in this theory, he strongly argued that there are four factors in the production (land, labor, capital, and organization) of goods and services
in the economy, he also considered organization, the other factors of production will remain sluggish in their role for economic development.
- he also regarded the entrepreneurs as the prime movers in the organization in which they are expected to create new ideas or improve the
existing ones.
- he also believed that entrepreneurs can do well and meet the standards only if they had a deep understanding of the industry, where they are
operating.
- he also suggested that an entrepreneur must foresee possible changes in the future supply and demand pattern. They must also possess the
needed skills to be an entrepreneur.
- Marshal also perceived that skills and abilities required of an entrepreneur are numerous, wherein only a few exhibited a high level of
proficiency.
RISK AND UNCERTAINTY- BEARING THEORY
- Frank Hyneman Knight who is an American economist, conceptualized this theory of entrepreneurship in his book which is Risk, Uncertainty
and Profit.
- he viewed entrepreneur as an asset of the production process where he/she connects the producers as well as the consumers.
-he added risk-taking as an important thing that will differentiate an entrepreneur from a worker.
- he considered uncertainty as an important factor in the production of goods and services. He also believed that the entrepreneur must foresee
possible events to happen while shouldering the risk at the same time.
OTHER THEORIES ON ENTREPRENEURSHIP
There are other theories on entrepreneurship. This does not mean that they are inferior to the previously listed theories above.
1. Kaldor's technological theory
- This theory was studied by Nicholas Kaldor who considered modern technology as an essential factor in the production.
- he also believed that without the presence of technology, application in entrepreneurship and economic growth will be slow and not expected.
The entrepreneur should find ways to be updated on modern technology. Proper usage and application of modern technology will promote
efficiency in the production of products and services.
2. Weber's sociological theory
- - he emphasizes that social cultures are the primary driving elements of entrepreneurship. An entrepreneur is expected to do and fulfill the role
of a good constituent by executing his/her activities in line with good customs, and traditions, religious, beliefs, and morals.
3. Leibenstein's gap-filling theory
- Harvey Leibenstein proposed that the primary role of entrepreneurship in any economic activity is to fill the existing gap. Entrepreneurship is
also responsible for knowing and recognizing trends in the market.
- he also mentioned that an entrepreneur is expected to possess abilities that will connect the different markets. An entrepreneur must also
extend assistance to entrepreneurial ventures experiencing failures and deficiencies.
4. Kirzner's learning-alertness theory
-Kirzner pointed out learning as well as alertness as the two major attributes of entrepreneurship in any given economy. He/she must also be
alert in recognizing opportunities and the ignorance
of consumers as well. He/she must immediately find appropriate remedy to correct the mistake or wrong perception.
⭕ Differences of the activities between ordinary and small businesses:
1. Motive in opening a business

2. Perception of risk in the business
3. Reactions to changes in the environment
4. View on competition
5. Vision for development and growth
6. Horizon of business operation
7. Sources of business funds
MOTIVE IN OPENING A BUSINESS
- an entrepreneur should think deeply what his/her intention is in opening a business. Opening a business requires being creative, involves
innovation, and also keeping in mind that it constantly changes and continues.
- An entrepreneur should not be stuck with a certain idea, but rather always comes up with a new and fresh ideas.
- The owner of the business also opens a business with the primary goal of making it as his/her source of livelihood. However, sometimes the
level of profitability is neglected. The profitability aspect as well as the level of profitability are two important issues.
PERCEPTION OF RISK IN THE BUSINESS
- As discussed on the previous lessons, an entrepreneur always allows challenges and risks on his/her business. An entrepreneur faces it
squarely and finds a way to minimize the effects on the business itself. An entrepreneur acknowledges, accept, prepare and solves the
challenges that he/she may face along the business venture.
REACTIONS TO CHANGES IN THE ENVIRONMENT
- We can absolutely differentiate an entrepreneur to a simple business owner. An entrepreneur reacts positively to changes in the business
environment. A change in the business environment allows new ideas to enter the game. He/she develops a creative mechanism for
development and growth.
- Entrepreneurs never stops planning for alternative actions and not just wait for everything to fall on its place. On the other hand, an ordinary
business owner
remains passive and static to changes in the environment where he/she operates. He/she usually believes that a change in the environment
delivers negative impact on the business and will bring negative consequences.
VIEW ON COMPETITION
- An entrepreneur sees the presence of competition as a sign of a healthy economic environment. This competition will allow a certain
entrepreneur to continuously improve the products and think of ways and strategies to maintain the good standing of his/her business.
- An ordinary business owner views competition as an unhealthy element in the business and tries to avoid it. He/she sees it as a major risk for
the business, so he/she stops to think of way to eliminate the competition and worse, gives up on his business.
VISION FOR DEVELOPMENT AND GROWTH
- An entrepreneur usually outlines his/her entrepreneurial venture in terms of short-term, medium-term and long term plans of actions. He/she
makes sure that the vision as well as the mission of the business is clear. An entrepreneur properly manages the venture in such a way that the
operations will provide development and growth to the business.
- An ordinary business owner will usually rely upon chance or luck in maintaining his/her business. This is where the famous "Bahala na." line
enters the business. He/she is not much concerned about its development and growth as long as he/she satisfied with its earnings.
HORIZON OF BUSINESS OPERATION
- An entrepreneur thinks globally but acts locally. He/she is primarily focused and concerned with the major economic events. He/she
believes that the business will soon face a healthy competition in the international market. The entrepreneur has both local and global
perspectives.
- An ordinary business owner focuses only on the local environment. He/she does not want to get involved in a much bigger environment.
He/she has no plans of expanding the business.
SOURCES OF BUSINESS FUNDS
- He strongly believes that the wealth the business may create is more than enough to compensate for the sourced funds. He/she also explores
for more opportunities to generate funds from both internal and external resources.
- On the contrary, the owner of an ordinary business, tends to limit the funding of his/her business enterprise to personal resources. He fears
that financial institutions will not be willing to extend financial help to the business. That certain individual is fully convinced that he/she is
pursuing the unprogressive type of business endeavor.
Misconception or disbelief - a view or opinion that is incorrect because based on faulty thinking or understanding. (Oxford languages)
Knowing the misconceptions in entrepreneurship will allow us to understand the concept of entrepreneurship and differentiate it from the
activities of ordinary small businesses. Listed below are some misconceptions on entrepreneurship:
1. Entrepreneurship applies only to manufacturing businesses.

2. Entrepreneurship applies only to small businesses.
3. Entrepreneurship applies only to persons with good educational background and a graduate in business courses.
4. Entrepreneurship applies only to a good economy.
5. Entrepreneurship is simply opening a small business.
ENTREPRENEURSHIP APPLIES ONLY TO MANUFACTURING BUSINESSE
- It is a misconception that entrepreneurship is only for manufacturing but not to merchandising and service. We should remember that
merchandising, as well as providing services are also business ventures.
- creativity and innovation may appear limited in merchandising, because there is no transformation in the appearance, as well as in the content
of the product. The appearance of the product in merchandising does not change from the time it is bought from the manufacturer until it is
finally sold to the consumer.
- the major merchandising activities that were involved are buying and selling only. Creativity and innovation are not merely a thing in
merchandising and service. In case there will be creativity it is easily imitated by the competitors.
ENTREPRENEURSHIP APPLIES ONLY TO SMALL BUSINESSES.
- The amount of the business capital does not serve as a reckoning ground for classifying whether the venture is operating within the concept of
entrepreneurship or ordinary small businesses.
The programs of the NGOs(Non-governmental organization) are noticed to focuses on giving programs for the development of small
businesses, which led to the belief that entrepreneurship is for small businesses only. This perception is definitely wrong because the concepts
and principles of entrepreneurship is applicable to all types of businesses regardless of their sizes.
- when the business venture expands its operations, or opens other branches locally or abroad, the owner usually employs a qualified manager
to run the day-to-day operations of the business branches. The owner may relinquish to the manager the certain functions, such as decision-
making and marketing. As a result, entrepreneurship then becomes corporate entrepreneurship.
CORPORATE ENTREPRENEURSHIP - process that goes on inside an existing business venture and may lead to new ones and the
development of new products and services. (ex. franchising)
ENTREPRENEURSHIP APPLIES MOSTLY TO PERSONS WITH A GOOD EDUCATIONAL BACKGROUND IN BUSINESS COURSE.
One of the most believed misconception is that you have to be a degree holder in business courses to be an entrepreneur, not knowing that with
or without a business background knowledge you can be one.
- an entrepreneur should keep in mind the concepts and principles of entrepreneurship and apply it to their chosen business.
- the practice of entrepreneurship does not even require an entrance examination in business courses. Successful entrepreneurs come from all
types of life status and educational background, and yet some of these individual manages to reach the top. This just proves that, it is your inner
driving force that carries you towards becoming a dynamic entrepreneur.
ENTREPRENEURSHIP APPLIES ONLY TO A GOOD ECONOMY.
- An entrepreneur finds a way for his/her business to take flight in the midst of distressed economies. It is also an example of coping up with a
business environment. In this way, creativity and innovation will be useful. Even during a financial downfall, new ideas can be created, and new
business opportunities can be identified.
ENTREPRENEURSHIP IS SIMPLY OPENING A SMALL BUSINESS.
- Entrepreneurship doesn't simply mean opening a small business. This is simply the first step in actualizing the whole entrepreneurial venture.
Before that, the business must have already passed through the preliminary stages of scanning the environment and preparation of the
feasibility study and business plan. Entrepreneurship does not start and finish with opening a small business. It is a long, continuing process that
entrepreneurs should hold on to and manage to overcome.
🌼IMPORTANCE TO THE FILIPINO PEOPLE
1. It provides guidelines in their wealth-creating ventures.
2. It helps improve a certain individual's finances and way of life.
3. Furthermore, it helps bring out creativity to a certain entrepreneur.
4. It helps to improve the lifestyle and makes it a happy and fruitful one.
🌼IMPORTANCE TO THE LOCAL COMMUNITY
1. It provides additional job opportunities to the local community.

2. It creates a new demand in the market.
3. Likewise, it makes contribution to raising and to the collection of taxes.
4. It facilitates the movement of the factors of production.
5. It opens new business opportunities.
6. Furthermore, it promotes a peaceful and loving community.
7. It increases constructive competition.
🌼IMPORTANCE TO THE PHILIPPINE ECONOMY
1. It adds a little challenge to the entrepreneurs to level up their creativity and innovation for the products and services.
2. It helps find an entrepreneurial function in the world market.
3. It speeds up recovery of the Philippines during financial crackdown.
4. It facilitates the smooth flow of finances in the local market.
5. It assists the national government to have favorable economic ratings in the local and international market.
The following are good sources of entrepreneurial ideas:
changes in the environment

technological discovery and advancement
government's thrust, programs, and policies
people's interests
past experiences
☘️Following the entrepreneurial process, a business venture is opened or created based on existing business opportunities, which arise from
business ideas.
4. Lesson Summary
😀Remember
1. Entrepreneur refers to person who strongly advocates and correctly practices the concepts and principles of entrepreneurship in
operating and managing the self-owned entrepreneurial venture.
2. Entrepreneurship is the art of observing correct practices in managing and operating a self-owned, wealth-creating business enterprise by
providing goods and services that are valuable to the customers.
3. Being a businessman doesn't really mean that an individual is an entrepreneur. A businessman is someone who ventures into business
without practicing the concepts and principles of entrepreneurship.
4. Opening a small business or ordinary business does not really mean that the business will get through for long. Some of these businesses
that was opened was bankrupt in a short period of time.
Entrepreneurial concepts and principles are not fixed. They constantly change and and are highly-influenced by the changes in the
environment. The evolutionary processes happening in entrepreneurship are mainly due to the creativity and innovation born or created from
business opportunities. As new ideas are created, new entrepreneurial ventures open.
A wealth-creating venture is an entrepreneurial undertaking wherein wealth is created. It is a business-endeavor where the resources of the
enterprise have been utilized fully to maximize the investment of the entrepreneur. The venture improves the life of the entrepreneur in terms
of economic, financial, social, moral, and psychological aspects.
Value is basically the opposite of waste. Products and services are considered valuable when they benefit the buyers and users.
All businesses whether big or small, are operating within the concept of risk-taking because of uncertainty. Business risks cannot be
eliminated. They are inherent in the venture. Entrepreneurs should face risks and find ways on how to minimize the effects of the business
risks.
A theory is a generalization that explains a set of facts or phenomena. It is not an absolute truth. It can be supported by another observation
or proven to be otherwise.
Some theories on entrepreneurship include the following:
a. Innovation Theory - considers innovation as the primary factor affecting development.
b. Keynesian Theory- attributes economic growth , especially during depression, to the government.
c. Alfred Marshall Theory- generalizes that the organization plays the most significant role among the different factors of production.
d. Risk and uncertainty-bearing theory - states that an entrepreneur faces the risk of uncertainty in the process of connecting the supplier and
buyer.
e. Weber's Sociological Theory -asserts that social cultures have significant contributions to entrepreneurship.
f. Kaldor's Technological Theory- this theory gives importance to the advancement of technology as an element of production.
g. Leibenstein's gap-filling theory - this theory advocates that entrepreneurship fills the gap in any economic activity.
h. Kirzner's learning- alertness theory - this focuses on learning and alertness as the primary attributes of entrepreneurship.
The entrepreneur and the owner of an ordinary small business are different in the following areas:
Motive in opening a business

Perception of risk in the business
Reactions to changes in the environment
View on competition
Vision for development and growth
Horizon of business operation
Sources of business funds
Knowing the differences between an ordinary business owner and an entrepreneur can help you to assess yourself further. Such knowledge will
enable you to avoid completely the perceptions or behavior similar to the latter and focus more on the perceptions or behavior of the former.
There are many misconceptions when it comes to Entrepreneurship. Some of these are as listed below:
1. Entrepreneurship applies only to manufacturing businesses.

2. Entrepreneurship applies only to small businesses.
3. Entrepreneurship applies mostly to persons with good educational background in business courses.
4. Entrepreneurship applies only to a good economy.
5. Entrepreneurship is simply opening a small business.
Knowing and clarifying these misconceptions will help certain entrepreneurs to have a clear perspective of entrepreneurship to provide you
with good foundation in the study of this field.
5. Assessment
Click the image to continue with the assessment. Please type your answers using CAPITAL LETTERS for Identification.
6. Performance Task
Entrep: Module 1: Performance Task (neu.edu.ph)
7. Enrichment Activity
Self-Evaluation: Now ask yourself the following questions
1. Is your small business a wealth-creating venture or an income-generating enterprise? Why do you say so?
2. Does your business help improve your life? How?
3. In sales, would you be willing to sell your product to a prospect who is willing to buy but who you don't believe is a good fit? Why or why
not?

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9/7/2021 Module 1: Understanding Entrepreneurship

Module 1: Understanding Entrepreneurship

Site: New Era University Printed by: Julius Albert D. Ortiz

At the end of this lesson, the student should be able to:

define entrepreneur and entrepreneurship;

Take time to read young entrepreneur!

⭕ What is a Small business?

⭕ What is an Ordinary business?

What are the five (5) important features of Entrepreneurship?

1. It is an art of correct practices.

Figure 1.2 Salient Features of Entrepreneurship

Now, let us all study these features one-by-one.

♀️ENTREPRENEURSHIP IS AN ART OF CORRECT PRACTICES

♀️ENTREPRENEURSHIP IS A WEALTH-CREATING VENTURE

‍♀️ENTREPRENEURSHIP PROVIDES VALUABLE GOODS AND SERVICES

Products and services must have value in order to generate wealth.

❓ Ask yourself the following questions:

ENTREPRENEURSHIP ENTAILS OPENING AND MANAGING THE SELF-OWNED ENTERPRISE

The concept of intrapreneurship may include business practices of franchising as well as a buyout.

❓ Why do NGOs (Non-governmental organizations) focuses on small businesses?

❓ Ask yourself the following questions:

Do you know someone who owns a business?

‍♀️ ENTREPRENEURSHIP IS A RISK-TAKING VENTURE

"Risk is inherent in an entrepreneurial venture."

Business risk- risk in entrepreneurship

❓ How does a businessperson handle risk?

❓ How does an entrepreneur face the business risk?

All eyes here, young entrepreneurs!

is a generalization that explains set of facts.

- contributed by Joseph Schumpeter.

- regards development in economy as the product of structural change or innovation.

⭕ Five (5) forms of Innovation theory

ALFRED MARSHAL THEORY

RISK AND UNCERTAINTY- BEARING THEORY

OTHER THEORIES ON ENTREPRENEURSHIP

1. Kaldor's technological theory

2. Weber's sociological theory

3. Leibenstein's gap-filling theory

4. Kirzner's learning-alertness theory

⭕ Differences of the activities between ordinary and small businesses:

1. Motive in opening a business

MOTIVE IN OPENING A BUSINESS

PERCEPTION OF RISK IN THE BUSINESS

REACTIONS TO CHANGES IN THE ENVIRONMENT

VISION FOR DEVELOPMENT AND GROWTH

HORIZON OF BUSINESS OPERATION

SOURCES OF BUSINESS FUNDS

1. Entrepreneurship applies only to manufacturing businesses.

ENTREPRENEURSHIP APPLIES ONLY TO MANUFACTURING BUSINESSE

ENTREPRENEURSHIP APPLIES ONLY TO SMALL BUSINESSES.

ENTREPRENEURSHIP APPLIES ONLY TO A GOOD ECONOMY.

ENTREPRENEURSHIP IS SIMPLY OPENING A SMALL BUSINESS.

1. It provides guidelines in their wealth-creating ventures.

2. It helps improve a certain individual's finances and way of life.

3. Furthermore, it helps bring out creativity to a certain entrepreneur.

🌼IMPORTANCE TO THE LOCAL COMMUNITY

1. It provides additional job opportunities to the local community.

3. Likewise, it makes contribution to raising and to the collection of taxes.

4. It facilitates the movement of the factors of production.

5. It opens new business opportunities.

6. Furthermore, it promotes a peaceful and loving community.

7. It increases constructive competition.