INTRODUCTION TO

ENTREPRENEURSHIP
Entrepreneurial Mind 2021
S. Pintor

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Objectives:
❑Definition of Entrepreneurship
❑Definition of Entrepreneur
❑The Evolution of Entrepreneurship Theory
(Theories of Entrepreneurship)

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 Origin of the word Entrepreneur

Entrepreneur
Comes from the French word “ entreprendre “ (ɑ̃tʀəpʀɑ̃dʀ)
- Means to undertake, to set about, 'to undertake or to try’.
- [Richard Cantallion 1775]

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 What is Entrepreneurship?
It is the process of:

Creating Launching Managing Business operation

New Business/ businesses

Idea/s
Goods & Services
Procedures

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 Entrepreneur (contd.)

Develops

Assumes Risks

Setting Up Products

Satisfy Customers
needs (essential)
desires (wants)
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 Entrepreneur (contd.)
◦ Ability to find, act on opportunities, translate the opportunities into products that would satisfy the
market.
◦ Has the capacity to recognize the market potential of creativity and organize the resources needed
(capital, talent and other resources --→ turn into a beautiful market innovation)

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 Entrepreneur
❑ a common: it is someone who establishes a new
entity to offer a new or existing product or service
into a new or existing market, whether it is for a
profitable or non-profitable outcome.
❑ is an individual who is able to perceive an
opportunity for a business and create an
organization to develop and manage that
business successfully.
❑ An entrepreneur is an individual who organizes,
manages and assumes the risks of a business
(Kuratko & Hodgetts,2001)
❑ Adam Smith (1776) - An entrepreneur is a person
who acts as agent in transforming demand into
supply.
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❑ Jean Baptiste Say (1803) - An entrepreneur is a
person who shifts resources from an area of low
productivity to high productivity.
❑ John Stuart Mill (1848) - An entrepreneur is a
prime mover in the private enterprise. The
entrepreneur is the fourth factor of production
after land ,labor and capital.
❑ Carl Menger (1871) - The entrepreneur acts as
an economic agent who transforms resources
into products and services. The entrepreneur
transforms and gives added value.
❑ Alfred Marshall (1936) - The process of
entrepreneurship or business development is
incremental or evolutionary . It evolves from sole
proprietorship to a public company.
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 Entrepreneur (contd.)
- one who undertakes innovations, finance and business acumen in an effort to
transform innovations into economic goods.

Business acumen - keenness and quickness in understanding and dealing with a "business situation" in a manner that is likely to lead to a good
outcome.

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 Theories of Entrepreneurship

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 Concepts of Entrepreneurship
Review:
Entrepreneurship – is a process of creating, launching and
managing business operation.
- the “act” of being an entrepreneur.
Entrepreneur – an individual who, undertakes innovations, finances
and business acumen to transform innovations to
economic goods.

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 Theories of Entrepreneurship
◦ The Economic Theory
◦ The Sociological Theory
◦ Entrepreneurship Innovation Theory
◦ The Psychological Theory
◦ Theory of Achievement Motivation/ Achievement
Theory – The Kakinada Experiment

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 Economic Theory of Entrepreneurship
◦ Entrepreneurship and - Taxation Policy,

economic growth takes - Industrial Policy

place when economic - Sources of Finance & Raw Material,

- Infrastructure availability,
conditions are favorable.
- Investment & Marketing
◦ Economic incentives are the main
Opportunities,
motivators.
- Access to Information
◦ Economic incentives include:
◦ Market Conditions
◦ Technology, etc.

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Economic Theory (contd.)

Richard Cantillon, an Irish

French Economist,
He viewed - Entrepreneurs as
an agent who buys factors of
production at certain prices in
◦ He illustrated farmers, as an
order to combine them into a entrepreneur, who pays out
product with a view to selling contractual incomes to the landlords
it at uncertain prices in the and laborers, which are certain, while
sells their crops at a price, which is
future. uncertain.

Entrepreneur as a risk taker

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 The Sociological Theory
◦ Entrepreneurship is likely to get a boost in
a particular social culture
◦ The (entrepreneurial) behavior of
individuals in a society is influenced by:
- Society’s values,
- Religious beliefs,
- Customs
- Taboos etc.
◦ The entrepreneur merely performs a role
as per the expectations of the society.

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 Sociological Theory (Contd.)
Factors of Production – 20th Century
◦ As per Jean Baptiste Say, an
aristocratic industrialist,

- Entrepreneur is one who combines

the land of one, the labor of another
and the capital of yet another to
produce a product.
- By selling the product in the market
he pays interest on the capital, rent
on land and wages to laborers and
what remains is his profit.
Capital
Labor
Land
This was for the first time that a
distinction was made between the
capitalist as the financer and the
entrepreneur as the organizer.

Entrepreneur as an Organizer
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 Entrepreneurship Innovation Theory
◦ Theory was propounded by Joseph Schumpeter.
◦ As per this theory, Entrepreneurship is Innovation.
◦ This theory ignores the earlier two abilities, which were till then considered key for an
entrepreneur
- Organizing Abilities
- Risk Taking Abilities

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 Entrepreneur as an Innovator
◦ According to Joseph Schumpeter, a
20th Century Austrian Economist,
- An entrepreneur is a person who is
willing and able to convert a new idea
or invention into a successful innovation.
- Entrepreneurship resulted in new
industries, even though it entailed
combining the existing inputs, in a new
way.
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Schumpeter’s example of Innovation
was the combination of a steam
engine with a wagon – cart, to
produce horseless carriage. In this
case the innovation, the car was
transformational. It did not require
the development of a new
technology. Merely, the application
of existing technologies in a novel
manner was entrepreneurial.
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 Entrepreneurship and Innovation
◦ An entrepreneur innovates when he:
- Introduces a new production
e.g: Virgin Galactic
- Introduces a new production method
eg. Line production system in food by McDonalds (speedy-system)
- Opens up a new market
e.g The Blue Ocean Strategy
- Finds out a new source of raw material supply
e.g Moving from coal to petroleum to nuclear energy sources
- Introduces a new organization in any industry

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 Psychological Theory

◦ Entrepreneurship gets a boost when ◦ These characteristics are formed

society has sufficient supply of - during the individual’s upbringing
individuals with necessary
psychological characteristics - by high standards of excellence

◦ The psychological characteristics - self reliance and

include: - Low father dominance.
- Need for Achievement,
- A Vision or Foresight,
- Ability to face opposition, etc.

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 Theory of Achievement Motivation
◦ David McClelland identified
- Need for Achievement
- Need for Affiliation
- Need for Power
◦ As the basis of entrepreneurial personality, he emphasized
- The importance of achievement motivation
- Through which, entrepreneur fulfills:
* Economic and Social Development
◦ The Need for Achievement was found highest among Entrepreneurs through an experiment.

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 The Kakinada Experiment
◦ Conducted by McClelland in America, Mexico and India (Kakinada)
◦ Young adults were selected and put through a 3 month training to induce achievement
motivation
◦ In the course content:
- Trainees were asked to control their thinking and talk about themselves positively
- Trainees imagined themselves in need of challenges and success for which they were
made to set planned achievable goals.
- They tried to imitate their role models.
◦ The achievement motivation had a positive impact on the performance of the participants.
◦ It was deducted that traditional beliefs do not inhibit an entrepreneur.

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 Theory of Achievement Motivation

◦ McClelland identified two characteristics of entrepreneurship.

- Doing things in a new and better way
- Decision making under uncertainty
◦ Stressed that people with High Achievement Orientation (Need to Succeed) are more
likely to become entrepreneurs.
- People are not influenced by money or external incentives.
- Profits are only a measure of success and competency

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 Theories of Entrepreneurship
◦ The Economic Theory
- Entrepreneur as a Risk Taker
◦ The Sociological Theory
- Entrepreneur as an organizer
◦ Entrepreneurship Innovation
Theory
-Entrepreneur as an innovator
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◦ The Psychological Theory
-Entrepreneurs are formed during the
individual’s upbringing
◦ Achievement Motivation Theory
-Entrepreneurship can be developed
and the traditional beliefs do not inhibit
entrepreneurs.
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◦ http://www.punditcafe.com/science/the-firsts-of-things-a-sneak-peek-into-the-history-of-inventions/

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