SHS DEPARTMENT

(S.Y. 2022-2023)

Learning Module
in

ENTREPRENEURSHIP

Prepared by:
Miss Reina B. Matanguihan

Noted by:
Vina N. Mendoza
Directress for Academic Affairs

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 ECONOMIC DEVELOPMENT AND ENTREPRENEURSHIP
The Philippine Economy

The national economy is composed of business, households and the government. These are
the major sectors of the economy. The strength or weakness of one sector affects the other sectors
because of their interdependence. However, it is the government which provides the leadership in
improving the economy.
Basically, we have a market economy or free enterprise economy. This means there are
economic freedoms, like free competition, free choice of investments, and prices are determined by
the interaction between demand and supply. The role of the government is to extend financial and
technical assistance, and to formulate policies that are conducive to economic growth.
Unfortunately, our economy has not improved much terms of the interests of the masses,
because of our colonial and primitive agricultural economy. Foreigners control our economy from
production to marketing. Our agricultural outputs are not even sufficient to feed our growing
population. Hence grinding poverty has not left us. Such situation has been aggravated by our
population explosion.
A deeper analysis of the economies of rich countries reveals that most of them are not
endowed with abundant natural resources. Japan, is a very good example. The country imports about
90 percent raw materials for its industries. Yet Japan has excelled, without equal, in trade and
industry.
In economic development, the bottom line is the quality of the people of a given country.
Knowledge, skills and values are the main determinants of economic growth. Needless, to say, values
constitute the key to economic success of any nation. The Japanese are risk takers, hardworking and
self –reliant. Such entrepreneurial qualities have made Japan a prosperous nation. But above all,
Japanese love their country – including its culture, traditions, institutions, and products.
Fundamental Economic Problems
All countries have economic problems. We have economic problems because of our resources
– money, materials, and machines – are limited while our human needs are unlimited. The unfair
distribution of productive resources and population explosion have created more economic problems.
Most people are poor because they depend only their labor resources. In less developed countries
like Philippines, the price of labor is very low. In other words, salaries for employees are generally low.
In more ways than one, salaries are not sufficient to satisfy the basic needs.
The biggest problem of our country is unemployment. Those who are willing and able to work
cannot find jobs. In industrial countries like Japan, Germany, Italy, and the United States, they even
import workers for their factories. Hundreds of thousands of Filipinos like to work in other countries for
lack of job opportunities in our country.
Unemployment creates social problems such as housing, health and sanitation, prostitution,
robbery and other related crimes. Jobless people go to the cities to search jobs. Most of them cannot
get jobs. So they become squatters. Such sudden influx of people in the cities poses tremendous

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social liabilities. They compete with already scarce social services of the government. To survive, they
are most likely to commit social crimes.
The grim faces of poverty are all around us. Dirty individuals, young and old, are begging in all
busy streets. Not a few sleep in empty dilapidated wooden boxes or even in empty tombs. Shanties
grow by leaps and bounds. Barongbarongs proliferate along river banks. The food of the dogs of the
rich is much better that the food of the poor people. Even the houses of the dead rich are far better
than the house of the living poor.
Where is social justice? We may ask. It is the responsibility of the national government to
provide economic opportunities for the poor and powerless. It is also the social responsibility of the
rich to share their extra blessings with the less fortunate. However, given reasonable opportunities,
the poor must be self – reliant, industrious and creative. There are many rags – to – richest stories.
These should inspire them to be hardworking and ambitious.
Fortune Favors the Entrepreneurs
Not a few giant businesses came from micro – businesses. In our country, we have a National
Book Store, Sarao Jeepney and Rufina Patis. Jack Simplot, one of the richest person in the United
States, started his business by selling two copies of newspapers a day. The one who invented the
paper clip became wealthy. Likewise, the one who introduced the chewing gum became prosperous.
Such simple and practical creativity can also be done by others.
Evidently, entrepreneurs like Socorro Ramos of National Book Store get all the rewards of
their efforts. Moreover, they create jobs for people, and hey help the government through tax
payments. On the other hand, employees get only low salaries, and they are not the boss. Employees
do not become rich. It is the business where there is money and economic fortune. In fact, market
vendors have more incomes than office clerks.
Many Filipinos are poor and jobless. Yet our country is rich in natural resources. The
government should train the poor to be entrepreneurs. Then give them the opportunities to transform
our idle natural resources into useful products. Thus, the problem of unemployment is reduced, and
our natural resources are utilized.
All we have to be is to be self – reliant, hardworking, creative and risk takers. These are some
of the traits of successful entrepreneurs. With these tools of human virtues, we can acquire what we
do not have. Many entrepreneurs started from scratch. Now they are rich or prosperous. Their
children study in the best schools.
Our country is a poor country because of the quality of its people. Some countries have poor
natural resources, and yet they are rich. We prefer to be the servants of the rich countries. We build
the roads and buildings of the Middle East. We provide medical services to U.S. hospitals. Such
treasures of human resources should have been utilized for our own economic development.
The real enduring wealth of any country is its people. Their values, skills and knowledge make
the difference. The United States is a great country because the values of the people, not to mention
their skills and knowledge, contribute to its greatness. The same is true in the case of Japan. It is sad
to state that in our country we do not only have colonial mentality, but also crab mentality. We pull

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down our neighbors so that no one succeeds in reaching the top. There should be group cooperation
and social responsibility among us. The individual aspiration to be successful should be admired and
encouraged.
THE ROLE OF ENTREPRENEURSHIP IN ECONOMIC GROWTH
The key concept of entrepreneurship is innovation that refer to new or different ways of doing
things. When an individual creates a new product, it is innovation. When he sells his product in a
different approach, it is also innovation.
A more efficient way of producing goods and services contributes to economic development.
Likewise, a more economical and faster method of distributing goods and services accelerates
economic development. A more appropriate system of utilizing the inputs of production, such as
money, materials, machines and manpower, can favourably contribute to economic development. All
the three aforementioned situations compromise entrepreneurial activities.
In view of the innovative nature of entrepreneurship, it is capable of generating more jobs,
incomes, goods and services. Ultimately, this means better economy and higher standard of living for
the people. However, the real contributions of entrepreneurship are measured in terms of the welfare
of the masses. It should be Filipino entrepreneurship for Filipino economic development – whose
benefits seep down to the level of the masses.
ENTREPRENEURSHIP
According to Professor Nathaniel Left, it is the capacity for innovation, investment and
expansion in new markets, products and techniques. This definition implies that an enterprise is at
work whenever an individual takes the risks and invest resources to make something unique or
something new, designs a new way of making something that are already exists, or creates new
markets.
However, entrepreneurship is not only applicable to business enterprises. It can also be done
in schools, hospitals, and other social services institutions. Entrepreneurship has special or extra-
ordinary features, such as the creation of something new or something different. In short, it is
innovation which is distinguishes entrepreneurship from other activities.
Any person who can create something new or something different has already acquired a
competitive advantage. Because it means an improvement. Consumers like to buy an improved
product or service. Japanese businessmen are successful due to their innovations. If someone can
introduce a better way of public service, it is certainly good for people, especially for the poor masses.
Any new technology that can reduce money, labor, and time is obviously favourable to the company.
Hence, the importance of entrepreneurship for ordinary people, businessmen and the government.

Economic Development and Economic Growth Explained

Development is a process while growth is a product. So, growth is the result of development.
In simple terms, development is input while growth is the output.

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 In economics, development does not only include economic factors like money, machines and
materials, but also other factors which are non-economic, such as culture, values, religion,
government and education. These mixtures of economic and non-economic factors which are applied
in the creation of goods and services constitute economic development. Clearly, it is not effective to
solve economic problems with economic solutions alone. For instance, extravagance is not only an
economic problem. It is also caused by unfavourable culture or social values.
In poor countries which are usually dominated by poverty, illiteracy, unjust distribution of
wealth, income and power, the concept of economic development has a more relevant definition.
Under this socio-economic context, economic development refers to a progressive process of
improving human conditions by eliminating or reducing poverty, unemployment, disease, illiteracy,
injustice and exploitation.
1. Laissez Faire Theory – these are French words introduced by the Physiocrats to mean
economic freedom. This explains that the government should not interfere in economic
activities.
2. Keynesian Theory – this theory contends that during the economic depression the
government should put up massive public works, like construction of roads and bridges, and
other labor intensive projects.
3. Ricardian Theory – this theory of David Ricardo, an English classical economist, he believes
that the key factor in economic growth is land. This means that agriculture plays a major role in
economic growth. People cannot live without food and natural resource. Hence the importance
of land or agriculture.
4. Harrod-Domar Theory – this was conceptualized by Sir Harrod of England and Professor
Domar of the United State, the key factor in economic growth is physical capital like machines.
The theory claims that more products can be produced through the use of machines
5. Kaldor Theory – by Nicholas Kaldor that the key factor is technology. This theory explains
that the application of modern technology in the production of goods and services has been
responsible for the economic success of the highly developed countries.
6. Innovation Theory this was developed by Joseph Schumpeter. He stresses the role of
innovators or entrepreneurs in economic development. He says that it is the innovator who has
the courage and imagination to handle old systems, and be able to transform theory into
reality.
7. Non – economic Theories – their key factors are political stability, efficient public
administration, open society and positive cultural values.
Not a few economists argue that corruption in the government is the No. 1 enemy of
economic development in Asia. Others say that inefficient public administration has resulted to
wasteful and improper use of resources.
The importance of Entrepreneurship
Statistics in both rich and poor countries show that small enterprises are leading in the
generation of jobs and wealth.
Professor Peter Drucker, America’s foremost management specialist, stated that the
entrepreneurial economy had been the most important development in American economy.

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 In the Philippines, most of our economic activities fall under the micro and small business
categories. There are many retailers, vendors, and other small sole proprietors. As long as they
perform some risk-taking ventures, innovations, and creative undertakings, they considered
entrepreneurs.
Because of the proven importance of entrepreneurship, subjects in entrepreneurship have
been included in the curriculum of high schools, colleges, and universities in many countries.
Harvard Former President Derek Bok said:
“The Harvard Business School is beginning to see that its role is not just training general
managers, but also training and providing preparation for people to start their own business.”
Contributions of Entrepreneurs
 Develop new markets – they can create customers or buyers. This makes entrepreneurs
different from ordinary businessmen who only perform traditional functions of management.
 Discover new resources of materials . Entrepreneurs are never satisfied with traditional or
existing sources of materials. Due to their innovative nature, they persist on discovering new
sources or materials to improve their enterprises.
 Mobilize capital resources. Entrepreneurs are the organizers and coordinators of the major
factors of production, such as land, labor, and capital. They properly mix these factors of
production to create goods and services.
 Introduce new technologies, new industries and new products. Aside from being innovators
and reasonable risk – takers, entrepreneurs take advantage of business opportunities, and
transform these opportunities into profits.
 Environmental Scanning is the process where entrepreneurs keenly observe the environment
in searching of ideas and opportunities that can be turned into profit.
 Create employment. The biggest employer is the private business sector. Millions of jobs are
provided by factories, service industries, agricultural enterprises, and the numerous small-
scale business.
One of the top programs of the government is the development and promotion of Filipino
entrepreneurship. There are many government agencies and private organizations which extend
financial and technical assistance to micro and small-scale enterprise.
Claro M. Recto, considered the father of Modern Filipino Nationalism, said that we need
economic nationalism to attain real economic growth.
He defined economic nationalism as the control of the economic resources of the country by
its own people, and their use of such resources for their own benefit and enjoyment. He also claimed
that the cause of our poverty is that we allow foreigners to dominate our economy.
Social and Economic Impact of Entrepreneurship
People have many physical needs. Basically, they need food, clothing, shelter, air, water and
many others.

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 People living in a community are dependent on each other for the products and services each
of them needs every day. This is so because as the community grows, individual roles become more
distinct and specialized. It is difficult for everyone to provide everything he needs
A need for a product or service is an economic opportunity. When people need something they
are willing to pay someone who is able to provide it to them.
The ability of individual is to perceive the kind of products or services that others need and to
deliver these at the right time, to the right place, to the right price is what is generally referred to as
entrepreneurship.
 Entrepreneurship creates employment
 Entrepreneurship improves the quality of life
 Entrepreneurship contributes to more equitable distribution of income and therefore eases
social unrest.
 Entrepreneurship utilizes and mobilizes resources to make the country productive
 Entrepreneurship brings social benefits through the government
THE GOVERNMENT AND ENTREPRENEURSHIP
The government plays a major and active role in economic development. However, when the
economy has developed the government has to phase out its economic activities in favor of
entrepreneurs. At this stage, it is the private business sectors that become the engine of economic
growth.
There is a very strong and direct relationship between the government and entrepreneurship.
It is the government that provides the basic incentives to entrepreneurship.
In return, entrepreneurship accelerates economic development through more employment,
production and consumption. Precisely this is the role of the government for the people. Hence the
great interest of the government in the promotion of entrepreneurship.
Determinants of Investment
Profit is the first consideration of investment. It is profit that stimulates businessmen to go into
business. Only the government can possibly engage in business without profit.
The entrepreneur has control or influence in the operations of the internal economies of scale.
In the case of external economies, the entrepreneur is greatly dependent on what the government can
perform. Only the government has the resources to maintain peace and order.
The Role of the Government
In a democracy, the fundamental function of the government is to serve the best interests of
the people. Those who run the government are called public servants. Their salaries come from the
people through their tax payments. Hence they should serve the people well.
The role of the government is to promote the welfare of all sectors – producers, consumers,
employees, businessmen, and the rest of society and the economy.

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 It is, of course, difficult to strike a happy balance of support among all members of society. But
a good government always considers social justice as the basic yardstick in public administration.
The welfare of the poor and powerless must always get the first attention and assistance from
the government. As long as a stick and weak society exists, a healthy economy and stable
government cannot be achieved. Hungry people obey no laws.
Support for Entrepreneurs
Entrepreneurs play a very important role in economic development. They are ones who create
goods, services and jobs. Considering our poor economy, there is clearly a great need for more
entrepreneurs in our country.
Prices are high because their supply is scarce. Jobs are few because economic activities are
also few.
The key factor of development of the Ramos government is people empowerment. Actually,
in a truly democratic society this is the essence of government.
With the proper and adequate assistance programs, our government can develop a larger
entrepreneurial economy. Priorities should be focused on micro and small enterprises. Such mass
and community based projects utilize local labor, material, management and technology. Hence the
poor masses are benefitted.
As Lincoln said, a government is for the people, of the people and by the people. The best
way to empower the people is to improve their knowledge, skills and values. Then give them a
reasonable financial and technical support to organize their enterprises.
Government Assistance Program
 Peace and order
 Political Stability
 Price Stability
 Taxes
 Infrastructures
 Education and training
 Public administration
 Production Technology
 Marketing Assistance
 Financial assistance
Government Program for Entrepreneurs
 Magna Carta for Small Enterprises or R.A. 6977
 Kalakalan 20
 Micro –Enterprise Development Program
 Self – Employment Loan Assistance Program
 Training Programs for Small and Medium Enterprises

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 BUSINESS OPPORTUNITIES IN SMALL BUSINESS
The following steps should be taken in assessing any career option:
- find out the general nature of the job or task being considered.
- Determine the requirements of the job in terms of skills or abilities, interests or attitudes
- Determine the extent to which you fit into those requirements.

What exactly does entrepreneur do?

Characteristics of Entrepreneurs
Some people think that the entrepreneur is someone who is engaged in selling, while others
that he is a middleman who stands between buyer and seller. The entrepreneur is, in fact, much more
than either of these. As you shall see, selling is only one among the many functions that sets him
apart from men of other occupations and have earned for him the distinction of being the key to the
country’s bid to progress. Indeed, without the entrepreneur there can be no development.
The entrepreneurial way of life combines creativity, challenge, hard work and satisfaction.
Entrepreneurship is a creative activity in much the same way as artistic or scientific creativity is. An
entrepreneur must, like the artist or the scientist, conceive an idea out of his own imagination. Once
the idea is born, he is faced with the challenge of translating that idea into reality. To accomplish this,
he puts in long and unremitting hours of work and takes financial risks. All these require a lot of
energy and self-discipline.
The successful entrepreneur enjoys a position of prestige in the community because of his
many contributions to society especially in terms of providing jobs to people and providing needed
goods and services. These services are equally, if not more, important than those performed by
lawyers, doctors, teachers or accountants.
What does entrepreneur do? Broadly speaking, there are eight entrepreneurial function: The
entrepreneur:
1. perceives opportunities in the environment.
2. takes risks to make use of these opportunities.
3. mobilizes capital for a business
4. introduces innovations.
5. Organizes labor and production
6. Makes decision
7. Plans ahead
8. Sells his products at a profit
Entrepreneurs are certainly not a superman. Neither do they perform miracles. They are just
human beings. But they are different from many of us.
They possess several positive characteristics which are responsible for their business
success. For instance, they have self – confidence, leadership and creativity. Not many of us have
these qualities. Most of us shy away from business. We prefer to be employees doing jobs which do

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not require great risks like bankruptcy. The optimism and positive thinking of entrepreneurs make a
great difference between success and failure. Positive thinking produces favorable results. We get
what we deeply think and believe.
Being hardworking and opportunity seekers, entrepreneurs acquire more profits. Moreover, in
the process, they also create better goods and services for the consumers. Through their innovations,
they contribute to the improvement of the standard of living. So, they do not only help the economy,
they also help society.
Entrepreneur Defined
There are several definitions or meanings of entrepreneur. Here are some of them:
1. To Schumpeter, an entrepreneur is an innovator. He does new things or does things in a new
way. He supplies new products; makes new techniques of production; discovers new markets;
and develops new sources of raw materials.
2. Peter Drucker says that an entrepreneur always searches for change, responds to it and
exploits it as an opportunity.
3. The pure entrepreneurs are those who launch their own ventures from scratch. They develop
scarce resources into successful business by their instinct for opportunity, sense of timing,
hard work, and idea-producing activity. They accelerate the development of our economy.
4. According to Geoffrey Meredeth, author of The Practice of Entrepreneurship, entrepreneurs
are people who have the ability to see and evaluate business opportunities, to gather the
necessary resources and to take advantage of them, and to initiate appropriate action to
ensure success.
Characteristics of Entrepreneurs
Characteristics are distinguishing traits or qualities, like honesty, courage, integrity or
punctuality. Entrepreneurs have many favorable interdependent characteristics which make them
successful and extra ordinary persons. However, their business success depends on realistic goals
and hard work. Usually, goals are achievable if these are based on the abilities, interests, and
resources of individuals. Here are the most important characteristics of entrepreneurs.
Reasonable risk – takers. Entrepreneurs enjoy challenges. But they are careful and
calculating. So, they shy away from high – risk situations, because these may not be attainable.
However, entrepreneurs also avoid low – risk situations, because there are no challenges. A risk
situation exists when results are not certain. Either it is success or failure. In business, it is profit or
loss.
As a matter of fact, life has many risks. Whether we like it or not, we make decisions the
results of which are not certain. We are lucky if we make the right decisions. But entrepreneurs are
different. They gather complete data about the situation, analyse the data, and make their decisions.
Since they are confident in their abilities and optimistic in the results of their decisions, they are not
afraid to make difficult decisions. In view of the risk taking abilities of entrepreneurs, they make things
happen rather than let them happen.

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 Self – confident. Entrepreneurs have strong faith in their abilities. They believe they can be
the best in their field. They do not accept things as they are, because they believe they can do things
better.
Belief, affirmative thinking, enhances self – confidence. It has been said that we succeed when
we think success. Faith moves mountains. Entrepreneurs are optimistic individuals or positive
thinkers. They always think of success. Such deep faith drives them to work with more enthusiasm
and perseverance to reach their goals.
Hardworking. Successful people always attribute their success to hard work. Thomas A.
Edison said that success is 99 percent perspiration and 1 percent inspiration. We can easily confirm
this by observing top executives in government and non – governmental organizations. They work far
beyond the 8 – hour scale.
It is very seldom that lazy people succeed in life through their own efforts and resources. On
the other hand, success smiles on hardworking people. A Chinese, called Chiiquito in Tayug,
Pangasinan, used to walk 5 to 10 kilometers every day in buying empty bottles. That time, he is the
richest Chinese in Tayug. There are many others who are like Chiquito. They started with practically
nothing – except hard work and determination – and now they are rich.
Entrepreneurs, although they are hardworking, enjoy challenges and difficult tasks, they love
their work. Thus, their being hardworking is not really a sacrifice. When people love their work, it is no
longer work. It becomes a joy. In fact, people who are always busy forget their worries or problems.
Innovative. Entrepreneurs are creative. They do things in new and different ways. For
example, they create new products or services, new methods of production, new markets, and new
sources of raw materials. They love to explore the unknown, and to blaze new paths of progress.
Innovations are introduced to benefit both the economy and society. Changes are made in
response to the needs of people. For instance, the high costs of production serve as an opportunity
for entrepreneurs to introduce a technology that can reduce costs of production. Much better, they
should introduce an innovation which creates job for the jobless masses. According to the legendary
Mohandas Gandhi, the progress of a country depends not on mass production, but on the production
of the masses.
Innovations have provided us the products and services of modern civilization. We have
wonder drugs, colored TV, computers, robots, cellular phones, cars, airplanes, home appliances and
many more trappings of modern life. Without innovations, we would still remain in our primitive stage
of development. However, on the negatives side, innovations have given us pollution and diseases.
Entrepreneurs therefore should not only innovate for profit, but also ensure the protection of our
environment.
Leadership. Entrepreneurs are leaders by the very nature of their functions. They are people
who are task – oriented. They are effective planners, organizers and implementers. And they are
achievers. Here are the essential leadership qualities.
 Selfless dedication
 Purpose and vision
 Courage

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  Conviction
 Enthusiasm
 Integrity
 Tact
 Hard work
Leaders treat their fellowmen like human beings. They respect human dignity, and are aware
of other human needs like belongingness, security, fulfilment and love. Entrepreneurs do not exploit
their workers or employees. Instead, entrepreneurs promote the welfare of their employees. When
Jose Yulo, owner of the sprawling Canlubang Estate (about 7,000 hectares), was still alive, he gave
numerous benefits to his farm workers, like free housing, free water, free electricity, free rice and
sugar, free hospitalization and free education. He even installed TV sets in street corners of the
residential community of his hacienda for his workers. At that time, TV sets were still scarce and
expensive for ordinary employees. Thus, his workers lived him. They did not even like to be under the
land reform program of the government. They preferred Yulo’s program.
Positive thinkers. Entrepreneurs are positive thinkers. They think of success and bright sides.
Such success consciousness leads entrepreneurs to success. Success begets success. Dr. Charles
Flory, a noted American psychologist, said that wealth does not always come to the most intelligent or
to the most ambitious individuals, but to those individuals who think money.
There is nothing wrong with thinking and acquiring money and more money if it is used
properly. Those who have plenty of money can satisfy their legitimate human needs, and be able to
help others, especially the poor. There are many rich entrepreneurs who are actively engaged in civic
and humanitarian projects.
Individuals who always think of failures and other negative thoughts get exactly what they
think. Their failure consciousness or defeatist attitude gives them failure after failure. The poor
became poorer because they think of poverty. While the rich become richer because they think of
wealth.
Decision – makers. Entrepreneurs make decisions. They cannot avoid this. Being creative or
innovative, they always make decisions on how to improve their products, how to create new markets,
how to increase consumer’s satisfaction, or how to maximize profits. The success of their business
depends on their ability to make the right decisions.
Concept of the Filipino Entrepreneurs

The Development Bank of the Philippines defines the qualities of an entrepreneur:

1. Self – reliant. An entrepreneur counts mainly on his own efforts, and succeeds mainly by doing a
good job. He relies principally on his own merit and work. His self – reliance is founded on hard
work.
2. Risk – taker. He rises to a challenge and transfers problems into opportunities. His daring is built
on his competence which is marked by openness to new ideas, new skills and new developments.
Despite his seatbacks and mistakes, he is willing to start all over again.

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3. Industrious. He has strong sense of pride in the workmanship of his product. He is quality
conscious in all components of his business. He is also precise in counting costs and in ensuring
the value of money for his product and services.
4. Humble. The true entrepreneur has the humility and single – mindedness of purpose. Where
there is a chance to earn, no matter how lowly the task, he is at work patiently, unmindful of his
social status. To him rolling up his sleeves, getting his hands dirty is nothing to be ashamed of.
Patience is his badge of security. Humility is the quality that enables him to build a business from
resources or opportunities, simple needs and humble beginnings.
5. Helpful. He learns how to work with others from different fields, conscious that with their help,
effectiveness can be multiplied. He thinks of others, especially those working for him, and of the
opportunities for advancement he can provide for them. Through appropriate words and works, he
shows that he truly cares for their personal welfare and development.
6. Creative. He has sense of perseverance and spirit of initiative. Never satisfied with things as they
are, he continues to improve, trying new and better ways of doing things. And when difficulties,
frustrations and failures come, he is never discouraged. Often, out of these, come something new
– another success, another problem solved, another opportunity opened, another “first”.
7. Happy. The joy of this entrepreneur lies in the satisfaction of a customer, whom he puts first over
everybody else. He therefore attends to the real needs of his customers with dispatch, efficiency,
and graciousness. A service-oriented person, he is happy man for he has discovered that joy of
giving is its own reward.
Determinants of Successful Entrepreneurship
Business enterprise failed due to poor management. Being industrious is not enough. It is
efficient management that counts most in business success. The entrepreneur must possess the
following managerial skills:
Ability to conceptualize and plan. The entrepreneur must view all the aspects of the business, such
as product, price, cost, inventory, etc. in a related and coordinated manner. He must be able to plan
for the total operation of the business. His ability to foresee future problems of his business is an
excellent asset.
Ability to manage others. Management is getting things done by others. As the business grows,
more people are needed. The entrepreneur must be able to organize work properly so that his
employees can perform their jobs efficiently and effectively. Good human relations and
communications are very important for the entrepreneur. By letting others achieve the objectives of
the enterprise, the entrepreneur has more time for conceptualizing and planning.
Ability to manage time and to learn. The entrepreneur is a generalist. Especially when the business
is still small, the owner does everything: clerk, salesman, and manager. In view of the various
functions of the entrepreneur, he should be an expert on time management and specialized courses
in accounting, finance, marketing and personnel relations. A real entrepreneur does not actually stop
learning. He can do this by reading, attending seminars, or enrolling in college.
Ability to adapt to change. Not a few individuals resist change. They stick to traditional or
established practices. This is the culture of many Filipinos, particularly the unschooled. A
businessman who refuses to adapt his operations to changing needs and tastes of consumers is most

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likely to fail. Entrepreneurs, being innovative or creative, quickly respond to changes for comparative
advantage.
Philippine Culture and Entrepreneurship
Since we all know that the emergence of entrepreneurs is related to the values held by a
culture, it is worthwhile to examine in greater detail how our own culture favors the thriving and growth
of entrepreneurial potentials. As you will see, there is enough stimulation in our life experiences as
Filipinos that can enable us to meet the demands, excitement and challenge of entrepreneurship.
If only more of us Filipinos took advantage of this “heritage!” Only few years back, young boys
and girls, when asked of their ambitions in life, seldom spoke of becoming an entrepreneur. As a
result, it took foreign entrepreneurs to take advantage of the most promising business opportunities in
the country.
And how did our countrymen end up? They ended up, paradoxically, as employees and
workers of those foreign – owned enterprise in their country!
We are potentially capable of eliminating poverty from our midst through our own initiative.
The reason why our efforts to attain economic prosperity failed in the past is perhaps because we did
not appreciate enough the contribution which each one of us – whether as a manual laborer, mayor,
student or housewife – we can make towards development.
Even the role of entrepreneurs has been taken for granted until recently. Happily, today times
are changing. More and more Filipinos are becoming aware that a college diploma does not assure
one of a successful life and that it is more important to take up a career or vocation that answers
people’s needs and corresponds to one’s own interest.
For a long time, we have allowed people from other countries to judge us and interpret our
way of life. As a result, many of us have not developed enough faith and pride in ourselves, as a
matters of our own destiny.
For example, we were made to believe that as Filipinos, we were tamad (lazy), segurista (one
who doesn’t take risks), mahilig makisama (one who likes to go along with the group), gaya-gaya
(copy cut), ningas kugon (one who loses steam after a burst of enthusiasm), balat sibuyas (over-
sensitive) and given to a fatalistic bahala na (let faith decide) attitude.
All these traits were seen negatively, and were cited as the reasons for the underdeveloped
state of our country. But as we shall see later, our culture has much more in it than just these
“negative” traits. In fact, these very “negative” traits have a positive side to them unknown to the
foreigners who observed them.
Understandably, as foreigners, they had probably different sets of values and so little
familiarity with our own to be able to make a sound judgement of our way of life. What is hard to
understand, however, is that Filipinos not only listen but also believed and agreed with them – with all
their heart?

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 Many of us feel a misplaced sense of inferiority just because we are different from the
Americans or Europeans. The Japanese people are an exemplary people who have attained
economic success by capitalizing on their own way of life.
Japanese did not copy Western ways blindly but rather selectively and prudently adapted
those which can enhance their own culture and economy.
Our forebears were not lacking in prudent judgement. They left us a proverb which goes:

“Pulutin ang mabuti, ang masama ay iwaksi.” (Pick up the good and cast the bad away.)
This old Filipino saying implies that we mainly decide what is good and bad for us, according
to our own cultural standards.
FILIPINO VALUES FAVORABLE TO ENTREPRENEURSHIP
1. “Pakikipagkapwa” values promote ideals of entrepreneurship.
In many ways, our cultural values are favorable to entrepreneurship. Take for instance our
value for pakikipagkapwa (human relation) which encompasses our concern of hiya (loss of face),
pakikisama (togetherness), pakikibagay (adjusting or adapting to other people.)
At the root of this value lies all our standards of interaction with others. Pakikipagkapwa tells
us to treat others as fellow human beings – every bit God’s creature as we are. This value is very
much connected with our concept of pagkatao or character.
Pakikipagkapwa favors entrepreneurship because it is against any form of exploitation against
another. In fact, the role of the entrepreneur is a practical translation of one’s pakikipagkapwatao
because his work is to provide things and services of value to others, he raises their standards of
living and improves their lives.
The entrepreneur that has pakikipagkapwa does not cheat his customers by overpricing or
under weighing his goods; nor undercut his competitors by under-pricing or maligning them; nor
maltreat his workers by underpaying or overworking them; nor cheat the government by avoiding or
evading taxes.
2. Many values promote risk – taking or “lakas ng loob”

Individuals who are without “guts” or who shrink before challenges do not become
entrepreneurs.
a. Bahala na. As Filipinos we are by nature malakas ang loob (strong hearted), and not timid
and fearful as we were made to believe in the past. In situations where we are uncertain of our ability
to accomplish things, we say “bahala na” (let fate decide the outcome) and do the best we can,
believing that, “Nasa Diyos ang awa, nasa tao ang gawa.” (Look to GOD for compassion, and to man
for action.) Perhaps our lakas ng loob stems from our tremendous capacity to tolerate ambiguity, and
to make improvisations or remedyo.

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 b. Pakikipagsapalaran (adventure). The saying “Ang taong talagang duwag, tumatakbo’y
walang sugat” (a coward run away from the fight even before he is wounded) tells us that we as a
people do not consider it honorable to retreat before uncertainty or challenge.
c. Gaya gaya. Our ability to learn and adapt to new ways of doing things may also be seen in
our talent for gaya gaya or imitation. Of course as one matures in an entrepreneurial career, the habit
of gaya gaya can backfire because one really has to be more creative and innovative to make one’s
products and services more appealing to customers.
d. Close family ties. We generally have no reason to be overly fearful because we are always
surrounded by others who care enough about us to support us in whatever way they can. The
emphasis on “togetherness” provides plenty of support to any aspiring entrepreneur.
e. Utang na loob,hiya, awa, bayanihan.
utang na loob (expectation of some of some future time when they in need our assistance.
Hiya (loss of face)
awa (compassion)
bayanihan
We also have cultural values which somehow ensure that we do not take risks too high for us
to overcome. In the main, we have amor propio or self – esteem. In any venture we take, our whole
pagkatao (humanity or sense of shame) is at stake. We therefore strive to give of our best to assure
success.
3. Other values drive us to succeed in enterprise
a. Kasipagan. One such value has to do with industriousness or kasipagan which is an
essential characteristics of an entrepreneur. We have our ways to deal with the Juan Tamad around
us, through banters and proverbs such as:
Ang tamad namamatay sa gutom.
(The lazy man starves to death)

Ang hipong tulog tinatangay ng agos.

(The sleeping shrimp is carried away by the current.)

Pag hangin ang tinanim, bagyo ang aanihin. (He who sows the wind shall reap a storm.)
b. Pagtitipid. We also place a high value on pagtitipid (thrift). You are familiar with Asyong
Aksaya
Kung may isinuksok ,may madurukot.
(Put aside something today so that you may draw upon it tomorrow)

Ubos – ubos biyaya, pagkaubos tutungatunganga. (Splurge today and woe unto you on the
morrow)

habang maiksi and kumot, magtiis na mamaluktot. (Flex yourself smaller underneath a short
blanket.)

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 Frugality and being industrious usually come together like twin brothers. It is difficult to
unwisely spend money which is hard-earned. Individuals who save eventually save enough to set up
their own business; and as entrepreneurs, they do not carelessly spend on things that do not pay
back in terms of profit.
c. Pagtitiis (endurance). We are likewise persistent, persevering people. We do not easily
give up in the face of adversity.
Even the poorest of the poor believe that by dint of hard work, they face a brighter future.
d. Pagtitimpi. Another manifestation or our endurance is our emphasis on pagtitimpi (self-
control). We do not allow ourselves to display, verbally or otherwise, our emotion at the slightest
provocation. We like to wait until “mapuno na ang gatangan” (we reach our limit)
4. “Katapatan” as a value promotes ethical business practices.
We do not like to exploit others, otherwise we are tagged “masamang tao” (worthless
persons). Rather we emphasize katapatan (sincerity) or kalinisan ng loob (purity of heart).
5. Our values promote harmonious labor-management relations.
For his emphasis on katapatan and kalinisan ng kalooban, the Filipino cannot be a good
manager of his workers. He treats his people with concern or malasakit. He sees to it that there is
damayan (mutual help) and samahan (camaraderie) in his company, and that his workers find him to
be personal, madaling makagaanan ng loob and may awa.
6. Our values promote social mobility. We are fortunate to live in a culture where there is respect
for people who rise from the bottom through hard work.
Small Business is Beautiful
In the book Small is Beautiful by E. F. Schumacher, argued that in poor or developing
countries small projects are much better than a big project. Schumacher defended his
recommendation by stating the advantages of a small project in every village compared with a few big
projects scattered throughout the country. The author further said that such small projects utilize local
labor, local materials and local management, together with intermediate technology and primitive
technology.
In the same manner, small business is better than big business, especially in a poor country.
The poor masses cannot start with a big business. Obviously, their business opportunities ae found in
micro and small businesses. Furthermore, the advantages and disadvantages, it is most relevant to
poor or developing economies like the Philippines.
Small Business Defined
Business is defined as organized effort of an individual to produce and sell goods and services
in order to satisfy the needs of society. The primary objective of business is to acquire profit. The
individual who takes the risks in organizing and operating a business is the entrepreneur. To organize
a business, the entrepreneur must combine four types of productive resources: human, financial,
material and informational.

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 What then is a small business? There are two kinds of small business. The very small
business where the owner is the principal worker, and he employs one or more assistants. This is the
micro business. The other one is the bigger small business where the owner mainly directs the work
of the employees. This is not the only definition of small business. There are many others. However,
these are the common characteristics of small business:
1. It is privately owned.
2. It has few or no layers of management
3. Generally, it has insufficient resources to dominate its field of business.
Features of a Small Business
1. A small business is low in capital but high in labor intensity. Most small business does
not have sufficient financial resources. So they cannot purchase big machines or modern
equipment. What is only possible for them to do is to use labor instead of machine in their
business operations. These are usually in retailing and service industries.
2. A small business is efficient in specialized skill or service. It can well produce goods or
services that are designed to the particular needs of an individual or a few clients. For
instance, repair works on cars and appliances require individualized service. Also, tailors,
barbers, real estate agents and others provide services that require specialized knowledge for
specific needs.
3. A small business succeeds in small, isolated or overlooked markets. In rural
communities where markets are small due to the few residents, a small business is viable. For
example, sari-sari stores, tailoring shops, small restaurants, and grocery stores are profitable
enterprise. Clearly, giant corporations cannot survive in small towns where demand is limited.
4. A small business often operates in unstable markets. Big corporations are careful in their
investments. To be sure or safe in their business ventures, they conduct market feasibility
studies to determine viability. This is actually the standard procedure in putting up a business
which involves huge resources in terms of money, machines and materials. Such feasibility
studies do not apply in most small businesses. With little capital, they are not afraid to
experiment or test the market. They can easily respond to changing economic conditions. If
these are not favorable, they can quickly get out. Unlike big corporations, they have big
buildings or large factories. It is not easy for them to retreat from business without suffering
from hug losses.
5. A small business is closer to the market place. Not a few small businesses conduct their
operations right inside the market place. Being closer to the buyers, compared with
corporations, they get first-hand information about consumer tastes and preferences. Such
advantage enables the small business to respond quickly to the needs of the consumers. It is
not possible for big business to act as quickly to satisfy new demand.
6. Generally, the owner of small businesses are also the managers. Most of our small
enterprises in the Philippines are like these. The owner-manager employs his wife and
children. If the business grows, the owner hires more employees, usually relatives and town
mates

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 7. Capital comes from the owner or small group. In our country, a small business is usually
financed by the family through its own savings and/or loans. If ever the business is funded by
a small group, it comes from relatives and close friends.
8. The area of operation is small. This means the business is community-based. The owner
and the employees live in the community where the enterprise is located.
9. The size of the enterprise is small in relation to the industry. For example, the shoe
industry is a large one. But there are very many stores of shoes. Clearly, one shoe store
cannot dominate the market for shoes. In case of big businesses, there are only few
enterprises like the bear industry, OPEC, car manufacturers, etc.
Differences between Big and Small Enterprises
1. Small businesses as a group change through a cycle of births and deaths. In the case of big
enterprises, change is through expansion or contraction.
2. Small business risk or reward estimate is done by the individual owner who either gets profit or
loss, while in large corporation, the risk or reward calculation is done by employee-managers.
Such judgement has no direct stake in the livelihood of the managers. However, in the case of
small business, the loss can ruin the livelihood of the owner and his family.
3. Small business has little or no economic power. On the other hand, big business has
tremendous influence on the economy, including the political sector. For example,
transnational corporations control our global economy. In many poor countries, transnational
or multinational corporations can have their men elected to top government positions. They
have enormous funds to influence the results of the elections in their favour.
4. Small business serves markets which big business does not like to serve or cannot serve
effectively.
Advantages of the Small Business
1. Personalized relationships with customers and employees. Retailers and shop owners
deal with their customers on personalized service. The owners know many of their customers
by name. The small business owners are involved in social, cultural and political affairs in the
community. Such personalized services or relationships with customers are a big economic
advantage which big corporations do not have. There is also a close relationship between
owners and employees. Because of this good and informal relationship, efficient employees
give their loyalty to their employers.
2. Flexibility in management. The owners being the boss and the manager, he can easily
introduce changes in his products or services, experiment on price strategies, or change store
hours to fit market conditions. Furthermore, small business owners are quick to learn changes
in the needs and interests of their customers, and also the activities of their competitors. So,
they can immediately respond to such situations.
3. Government incentives. The national government has been promoting the organization of
small enterprise. It extends both financial and technical assistance, particularly production and
marketing, to small entrepreneurs. Such programs of the government are relevant t the nature
of our economy. The business is possible for them through government guidance and
assistance.

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 4. Simple record keeping. Small enterprises require few and simple sets of records. They may
consist only of a cash receipt journal which records all sales, and a cash disbursement journal
which records all expenses or payments.
5. Independence. Small business owners are the masters of their own destinies. They are not
employees. They make their own decisions. They do not apply for vacation or sick leaves.
They do not worry about being late, absent or laid off. To many individuals, this is the kind of
life they enjoy.
Disadvantages of the Small Business
1. Difficulty of raising capital. Without financial assistance from the government, a small
business has limited liability to obtain funds from others. Initially, it is the owner who provides
capital for his business. If additional funds are needed, these can be obtained from relatives,
friends or banks. In many cases, such loans are not enough. The bank can only extend a loan
which is equivalent to about 60-70 percent of the value of the property used as a collateral. In
the case of big corporations, they can sell shares of stock to the public to raise funds. Banks
are more willing to give loans to big business.
2. Risk of failure. A small business does not have enough financial resources to survive bad
economic conditions. Its inability to absorb losses and unforeseen events forces the owner to
go out of business.
3. Limited management skills. Owners of small businesses generally lack management skills.
They have no formal education of training in management and marketing. They just manage
their enterprises through intuitions or practical business techniques. In the case of big
corporations, professional managers are hired to do the job.
4. Lack of opportunities for employees. Most of the employees of a small business are sales
staff. Only very few of them become supervisors. In the Philippines, small enterprises are
family-owned. Those who are holding managerial and supervisory belong to the family or
relatives in most cases.
Why Small Businesses Fail
 Lack of experience
 Lack of money
 Wrong location
 Mismanagement of inventory
 Poor credit practices
 Poorly planned expansion
 Unsound or too little analysis in choosing the business
Economic Contributions of Small Businesses
Statistics on economic conditions favourably contributed by small businesses are based on
U.S setting. There are no available data on the specific economic contributions of small businesses in
the Philippines. Nevertheless, it is obvious that in our country, micro and small enterprises are
numerous and rampant. Market vendors, sari-sari stores, groceries, bakeries, restaurants, repair
shops and many others dominate our communities.

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 In all village and towns, there are micro enterprises. Only very few communities have big
enterprises. Most of them are located in the cities. Even without statistics, small businesses greatly
contribute to the generation of jobs and incomes for many Filipinos. Hence, the thrust of the national
government in the promotion of small enterprises throughout the country. Such business opportunities
are accessible to the poor masses.
They introduce innovation
Invention and innovations are key factors in economic development. These are responsible in
reducing time, labor and cost of production. Based on the U.S study, small firms produce about four
times as many innovations as medium-sized firms, and about twenty-four times as many as the
largest firms. More than 50 percent of the major technological advances come from individual small
companies. Here are examples of innovations contributed by small individual enterprises:
Ball-point pen penicillin
FM radio Xerox
Instant camera zipper
Disposable razor paper clip

They create employment

Small businesses are the main providers of jobs. Almost all non-governmental employees
come from small businesses. In the United States, 97 percent of business activities, and 43 percent of
GNP are contributed by small businesses. They constitute the building block in U.S economic
development and other industrial countries. What is remarkable about small businesses is that they
perform activities which big businesses do not or cannot do.
They provide competition
Small businesses, as a group, challenges big businesses in many ways. Thus, small
businesses tend to be more efficient and responsive to the needs of the consumers. In their own
particular fields and ways, small businesses have a combined competitive force against bigger firms.
In like manner, this is the concept of cooperatives. By pooling their small resources, they acquire
economies of scale. Therefore, they can compete with big enterprise.
They fill needs of society and big businesses
Big enterprises, because of their large-scale and mass production, are not willing or not able to
satisfy the special needs of smaller groups of consumers, while small producers or sellers can
profitably fit their products and services to the needs of smaller groups of consumers. In addition,
small businesses supply the needs of big businesses. For instance, many of the goods sold by
National Book Store come from small businesses, such as bags, toys, decors, etc. Big corporations in
Japan purchase spare parts and assemblies from small family enterprises. In fact, parts of radios, T
sets and watches are being assembled by families in rural Japan. This is more economical for the big
corporations.

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