ENTREPRENEURSHIP (THEORY, PROCESS, AND PRACTICE)

Professors: Carmencita Boquerente and Reggie Sta.Maria

Transcribed by: Sharon C. Tavares (BSMLS)
UNIT 1: THE ENTREPRENEURIAL MIND
TRUE ENTREPRENEURS EVOLUTION OF ENTREPRENEURSHIP
Table 1. Entrepreneurs
NOTABLE ECONOMISTS
ENTREPRENEUR BUSINESS / ENTERPRISE
Henry Ford Automobile RICHARD CANTILLON (1725) ________________________
Louis Francois Cartier Jewelry • French economist: “Entrepreneurs assume and organize
Coco Chanel Perfumerie the risk of a business in return for profits.”
Gianni & Donatella Versace Fashion JEAN BAPTISTE SAY (1803) ________________________
Fred Smith FedEx • French economist; the Law of Markets: “Supply creates
Bill Gates Microsoft its own demand.”
Howard Schultz Starbucks
Amancio Ortega Zara JOSEPH SCHUMPETER (1932)_______________________
Steve Jobs Apple • Austrian political economist; dynamic economic growth
Andy Grove & Gordon Moore Intel known as “creative destruction.”
Larry Page & Sergey Brin Google
ENTREPRENEURSHIP
Mark Zuckerberg Facebook
• Discussion and analysis was introduced by the 18th
Je Bezos Amazon
century economists
Henry Sy SM Malls & Properties, BDO
• In the 20th century, it is synonymous or closely linked
Zobel de Ayalas Ayala Conglomerate, BPI
to free enterprise and capitalism
Lucio Tan PAL, Fortune Tobacco
• In the 21st century, entrepreneurs are considered
John Gokongwei Robinsons, URC heroes of free enterprise. Many of them have used
George Ty Federal Land, Metrobank innovation and creativity to build multimillion -dollar
enterprises from fledgling businesses in less than a
decade

SMALL BUSINESS OWNERS VS. ENTREPRENEURS

Table 2. Small Business Owners vs. Entrepreneurs
SMALL BUSINESS OWNER ENTREPRENEUR
• independently own and • recognize opportunities where
operate a small business others see chaos,
• not dominant in their fields contradiction, and confusion
• do not engage in many new • aggressive catalysts for
or innovative practices change within a marketplace
• simply expect stable sales • break new barriers, challenge
and profits the unknown, create
• include those who purchase breakthroughs
already established business • create jobs in a breathtaking
as well as franchises pace
• are all about innovation,
profitability and growth, thus,
• their businesses are
characterized by innovative
practices and sustainable
growth
• their mind-set revolutionizes
the way business is
conducted at every level in
every country

INTEGRATED DEFINITION OF ENTREPRENEURSHIP

• a dynamic process of vision, change, and creation
• requires an application of energy and passion toward the creation
and implementation of innovative ideas and creative solutions
• Essential ingredients include
Figure 1. Logos of the Enterprise o the willingness to take calculated risks in terms of time, equity
or career;

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 o the ability to formulate an effective venture team;
o the creative skill to marshal resources;
o the fundamental skill of building a solid business plan; and,
o finally, the vision to recognize opportunity where others see
chaos, contradiction, and confusion
MYTHS ABOUT ENTREPRENEURSHIP
MYTH 1: ENTREPRENEURS ARE DOERS, NOT THINKERS
• Indeed, they are often very methodical people who plan their moves
carefully
MYTH 2: ENTREPRENEURS ARE BORN, NOT MADE
• Entrepreneurship is a discipline — it has models, processes, and case
studies — that can be studied
MYTH 3: ENTREPRENEURS ARE ALWAYS INVENTORS
• although many inventors are entrepreneurs, entrepreneurs encompass
all sorts of innovative activity
MYTH 4: ENTREPRENEURS ARE ACADEMIC AND SOCIAL MISFITS
• today, the entrepreneur is considered a hero socially, economically and
academically — viewed as a professional role model
MYTH 5: ENTREPRENEURS MUST FIT THE PROFILE
• the environment, the venture, and the individual have interactive effects
that result to many different profiles
MYTH 6: ALL ENTREPRENEURS NEED IS MONEY
• to be successful, money is important, but more so is managerial
competence, adequate financial understanding, careful planning, and
many more
MYTH 7: ALL ENTREPRENEURS NEED IS LUCK
• luck happens when preparation meets opportunity. They are simply
better prepared to deal with situations and turn them into successes
• what appears to be luck is actually preparation, determination, desire,
knowledge, and innovativeness
MYTH 8: ENTREPRENEURS IS UNSTRUCTURED AND CHAOTIC
• Entrepreneurs are heavily involved in all facets of their ventures. As a
result, they are typically well-organized individuals. They tend to have
a system, elaborate or not
MYTH 9: MOST ENTREPRENEURIAL INITIATIVES FAIL
• the statistics of entrepreneurial failure rates have been misleading over
the years
• According to a research by Bruce A. Kirchhoff, where he traced
814,000 business in the US started in 1977, more than 50% survive
today, only 28% voluntarily closed down, and only 18% failed due to
outstanding liabilities
MYTH 10: ENTREPRENEURS ARE EXTREME RISK TAKERS
• although it may appear that an entrepreneur is gambling on a wild
chance, the entrepreneur is usually working on a moderate or
calculated risk
• most successful entrepreneurs work hard through planning and
preparation
ENTREPRENEURSHIP REVOLUTION
• increase in entrepreneurs having significant impact in local and global
economies.
• entrepreneurs are critical contributors to economic growth, through
their:
o Leadership
o Management
o Innovation
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o R&D Effectiveness
o Job Creation
o Competitiveness
o Productivity
o Formation of New Industry
IMPACT OF ENTREPRENEURIAL VENTURES
• entrepreneurship provides job options for those who see
opportunities and those who need a source of income
• minority groups are provided an avenue to contribute to the
mainstream market
• in the U.S. many baby boomers use entrepreneurship for second
career
• entrepreneurs continue to be the answer to any economic
downturn
• entrepreneurs enter and expand existing markets, thereby
increasing competition and economic efficiency
• entrepreneurs create entirely new markets by offering innovative
products — new ventures having no direct competition
• large existing firms in mature markets, who have downsized,
restructured, and reinvented themselves after becoming more
entrepreneurial in the early 2000s are now thriving
• the U.S. is the leader in entrepreneurship education at both the
undergraduate and graduate levels
• individuals with professional, technological, or business degrees
exhibit the highest entrepreneurial activity rate
RESEARCH THEMES AND ASPECTS
• Venture financing and other innovative financing techniques
• Corporate entrepreneurship — entrepreneurial activity within large
organizations
• Social entrepreneurship — seeking innovative solutions to world
problems.
• Entrepreneurial cognition — examining the ways that entrepreneurs
think and act
• Women and minority entrepreneurs — learning from the unique
obstacles they face and have to overcome
• The global entrepreneurial movement — WEF research shows
significant entrepreneurial success (2000–2009) in the following
countries: U.S., Canada, U.K., Germany, France, Sweden, Norway,
Israel, China, India, Japan, Australia and New Zealand
• Family businesses have shown significant impact on job creation,
innovation and economic renewal
• Entrepreneurship education — hottest topics in business and
engineering schools throughout the world; and has expanded to
include almost every major discipline
ENTREPRENEURSHIP______ _______________________
• dynamic process of vision, change and innovation
• individuals who possess the passion, energy and skills to innovate
and sustain
ENTREPRENEURIAL LEADERSHIP______ ______________
• symbol of business tenacity and achievement — opening up new
horizons, combining resources in new ways, inspiring people
ENTREPRENEURIAL DISCIPLINE_______ ______________
• Same techniques & principles whether in a large organization or a
new venture, business or nonbusiness, government or NGO
ENTREPRENEURSHIP EDUCATION
• Theory Development of Entrepreneurship
o verifiable and coherent formulation of relationships, or underlying
principles, that either explain entrepreneurship, predict
entrepreneurial activity, or provide normative guidance
 APPROACHES TO THE THEORY OF ENTREPRENEURSHIP
• Economic recession or
• School of Thought Approach
depression, job loss, capital
o Theory development focuses more on the concept of entrepre-
Economic Displacement shrinkage, etc., can push
neurship
individuals to entrepreneurial
• Process Approach
pursuits
o Theory development focuses more on the flow of the entrepreneurial
process Table 3.3. School of Thought Approach
MICRO VIEW (has the ability to control or direct the outcomes)
• Grounded on the study of
successful entrepreneurs and
ENTREPRENEURAL TRAIT their traits
• Entrepreneurial families
• Educational development
• Developing the right idea at
the right time for the right
market niche
• Corridor principle: new
VENTURE OPPORTUNITY
opportunities arise, veering
away from the original pursuit
• Interdisciplinary education
leads to new ventures
Table 3. School of Thought Approach • Emphasizes the planning
MACRO VIEW (external factors influence the actions of the process in successful venture
entrepreneur) development
• Entrepreneurs are developed by STRATEGIC FORMULATION
• Leveraging of unique
the sociopolitical environment: elements… requiring an
ENVIRONMENTAL colleagues, friends, relatives, etc. interdisciplinary approach
• Focus is on institutions, values,
norms Table 3.4. School of Thought Approach (Micro View)
• The entrepreneurial venture is STRATEGIC FORMULATION
FINANCIAL/CAPITAL viewed from a financial • Mountain gap strategies
management standpoint • Identifying major market
• The feeling of being out of place UNIQUE MARKETS segments and interstice
or displaced and the frustration markets arising from larger
DISPLACEMENT
arising from such motivates an markets
individual to be entrepreneurial • Great chef strategies
• The venture is built around
Table 3.1. Financial/Capital (Macro View) UNIQUE PEOPLE
the skills and talents of one or
VENTURE STAGE FINANCIAL FOCUS DECISION more individuals
Seed Capital Proceed or • Better widget strategies
Start-up or Acquisition UNIQUE PRODUCTS • Innovations that encompass
Venture Capital Sources abandon
new or existing markets
Cash Management • Water well strategies
Maintain,
Investments • The ability to gather or
Ongoing increase or
Financial Analysis & UNIQUE RESOURCES harness special resources
reduce size
Evaluation (land, labor, capital, raw
Profit Question Sell, retire, materials) over the long term
Decline or Succession Corporate Buyout or dissolve
Succession Question operations

Table 3.2. Displacement (Macro View)

TYPES OF DISPLACEMENT
• Political regimes, governmental
regulations and policies push an
Political Displacement
individual to entrepreneurial
pursuits
• Discrimination (ethnic
background, religion, race, sex)
Cultural Displacement
pushes individuals to
entrepreneurial pursuits
Figure 2. Process Approach (Integrative)

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 Figure 2.1. Process Approach (Dynamic States)

Figure 2.2. Process Approach (Framework of Frameworks)

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