Development/History of Entrepreneurship

Earliest period
Earliest example Entrepreneur was Marco Polo who attempted
to establish trade routes to the Far East. Concept of in-
between.
• What Marco Polo would do is to sign a contract with money
person to sell goods and dividing profit 1:3
Middle Ages
• Entrepreneur is somebody who manages large production
projects. In such large production projects, this individual did
not take any risks, but merely managed the project using the
resources provided, usually by the government of the
country.
• A typical entrepreneur in the Middle Ages was the cleric- the
person in charge of great architectural works such as castles,
17th Century
• The concept of Risk was connected with
entrepreneurship in 17th century, with an entrepreneur
being a person who entered into contractual
arrangement with government to perform a service or to
supply stipulated products. Since the contract price was
fixed, any resulting profit or losses were the
entrepreneur’s.
18th Century
• In the 18th century person providing capital was
differentiated from the one who needed capital. In other
words entrepreneur were distinguished from the capital
provider.
• Reason for differentiation was industrialization.
• Many new inventions were coming during that period.
Notable inventors are Edison/ Eli Whitney. They were
funding their project borrowing money. Both Edison and
Whitney were entrepreneur (capital users) not provider
(venture capitalist)
19th and 20th century
• In late 19th century and early 20th centuries,
entrepreneurs were frequently not distinguished from
managers and were viewed mostly from an economic
perspective.
• Entrepreneur organizes and operates an enterprise for
personal gain. Pays current prices for the materials
consumed in the business, for the use of land, for
personal services he employs and for the capital he
requires.
• He uses his skills, ingenuity (inventiveness) in planning,
organizing and administrating the enterprise.
• He assumes the chances of loss or gain consequent to
unforeseen and uncontrollable circumstances.
• In the middle of 20th century, the notion of an
entrepreneur as an innovator was established.
• The function of the entrepreneur is to reform or
revolutionize the pattern of product by exploiting an
invention or generally an untried technological method
of producing a new commodity or producing an old one
in a new way, opening a new source of supply of
materials or a new outlets for products, by organizing a
new industry.
Entrepreneurship refers to all those activities which are to

be carried out by a person to establish and to run the

business enterprises in accordance with the changing

social, political and economic environments.

Entrepreneurship includes activities relating to the

anticipation of the consumers likes and dislikes, feelings

• Entrepreneurship is the dynamic process of
creating incremental wealth. The wealth is
created by individuals who assume the major
risk in terms of equity, time , and /or career
commitment or provide value for some
product or service.
• The product or service may not be new or
unique, but value must somehow be infused
by entrepreneur by receiving and locating the
necessary skills and resources.
Entrepreneurial Process

Identify and Evaluate of the opportunity

Very difficult task.
Alert to possibilities OR
Establishment of mechanism that identify potential
opportunities.
Sources of ideas can be customers, distribution
systems, technical people etc
Once opportunities identified, they must be carefully
screened and evaluated.
• Evaluation helps to find the profitability of the
opportunity as it compares returns against the
resources required.
• Opportunity must fit the personal skills and goals of
entrepreneur.- time and effort entrepreneur is
willing to put to make the new venture succeed.
• Must believe on the opportunity
• Opportunity analysis plan- method for evaluating
of an opportunity.
Develop a Business Plan
• good business plan to be developed to exploit the
opportunity.
• Time consuming phase
• Helps to determine the resources required, how to
obtain those resources.
Determine and Acquire the Resources Required
• Resources needed to address the opportunity is
determined
• Appraisal of the present resources
• Identify the critical resources
• Care- the amount and variety of resources
• Risk associated with insufficient or inappropriate
resources should also be assessed.
Manage the Enterprise
• After resources are acquired, entrepreneur should
make use of it according to the business plan
previously formulated.
• Control system
Ethics and Social Responsibility of Entrepreneur

• Enterprise earn profits for survival, for bearing risks

and prestige of management.
• Profit can’t be sole objective of the management.
• Entrepreneurs tend to depend on their personal
value much more than other managers when
determining their ethically appropriate course of
action.
• It is important that entrepreneur create a culture
of ethics and social responsibility because people
want to conduct business with organization they
trust.
 Reasons why entrepreneurs should practice business ethics

• Customers are more confident when

buying goods and services from an
ethical company.
• An ethical workplace motivates
employee.
• Ethical behavior also prevents legal
problems.
 Establishing an Ethical Workplace
• To deter unethical behavior company try to create
transparency, or openness and accountability
• Use social media, newspaper to enhance
transparency.
• Socially Responsible corporate behavior is ETHICAL
SOURCING which means buying from suppliers who
provide safe working conditions and respect
workers right.
• FAIRTRADE
 Responsibility to Individuals

• Legal obligation to provide a safe workplace and fair

employment policy
• Treat customers fairly
• Acting responsibly towards suppliers or vendors
results in making the best choices of materials and
using them.
• Investors and creditors who provide money to start
and run a business. They must believe in both the
idea behind business and entrepreneur.
 Responsibility to Environment

• An organization has a responsibility to conduct business in manner that is not

destructive to the environment which in turns affects the populace (consumers). This
kind of unethical business practice can have devastating effects on a company’s
success. Take for example an exposé/disclosure that revealed in the mid-1980s that
Burger King, in an effort to meet growing consumer demands, engaged in practices
that led to the deforestation of an enormous portion of the Amazon rainforest to
raise cattle for beef import. Consumers and environmentalists were in an uproar.
Armed with scientific evidence to support the importance of rain forests on our
ecosystem, a movement was created to boycott the corporation. As a result, Burger
King suffered great losses reflecting a 12% decrease in revenue. This urged them to
cancel their $35 million contract with Costa Rican beef suppliers agreeing to use US
domestic cattle only. This demonstrated Burger King’s ability to conduct their
business affairs more ethically (Aronoff, 2011). Burger King’s strategy embraced an
ethical culture by finding a solution to create a business culture that displayed a
concern for the environment as well, a tactic that helped them regain their status in
the marketplace. In conclusion, entrepreneurs that are concerned with ethics and
social responsibility create a foundation for success and sustainable business
practices that consumers can trust.

References:
 Responsibility to Community
• Sponsorship- Business sponsors a community event
or service in exchange for advertising.
• Philanthropy(Generous donation of money to good
cause)
• Cause-related Marketing- A partnership of business
with a non profit group for the benefit of both. It
increases sales for the business and raises money
and awareness for the non profit group.
Warby Parker: Buy One Give
One
 How entrepreneur help in economic
development
• Most economists agree that entrepreneurship is
essential to the vitality/strength of any economy,
developed or developing.
• Entrepreneurs create new businesses, generating
jobs for themselves and those they employ. In
many cases, entrepreneurial activity increases
competition and, with technological or operational
changes, it can increase productivity as well.
• Entrepreneurs Create New Businesses
• Through the establishment of new businesses, results
in employment, which can produce a cascading effect
or virtuous circle in the economy.
• The simulation of related businesses or sectors that
support the new venture add to further economic
development.
• E.g.: Indian IT industry boomed in 1990s as a backend
programmers’ hub. People form other sectors like call
center operations, network maintenance companies,
hardware providers, education and training institute
also benefitted from the flourishing IT industry..
• Entrepreneurs Add to National Income
• Entrepreneurial ventures literally generate new
wealth. Existing businesses may remain confined to
the scope of existing markets and may hit the glass
ceiling in terms of income. New and improved
offerings, products or technologies from
entrepreneurs enable new markets to be developed
and new wealth created.
• Additionally, the cascading effect of increased
employment and higher earnings contribute to
better national income in form of higher tax
revenue and higher government spending. This
revenue can be used by the government to invest in
• Employment Creation
• Create employment opportunity to self and others.
• Unemployment decreases.
• In the United States, for example, small businesses
provide approximately 75 percent of the net new
jobs added to the American economy each year.
The small businesses in the United States are often
ones created by self-employed entrepreneurs.
• Balanced Regional Development

• Operate business in different parts of the country

based on the availability of resources.
• Helps to achieve objectives of balanced regional
development.
• Regional disparity
• Reducing rural-urban migration
• Eventually rising the living standard of the people.
• Promotes Foreign Trade
• FT- regarded as engine of development.
• Produces new products and services and hence
increase foreign trade.
• Helps in improving balance of payment by bringing
in foreign currency.
• Optimum utilization of resources
• Helps in optimum utilization of natural resources
like land, labor and capital.
• Increases the production and productivity of the
country.
• In turn increases the rate of economic growth.
• Reduction of the Poverty
• According to Professor Reuben Abraham,
“Entrepreneurship is key to escaping poverty”.
(CNN, January 23, 2012)
• China since 1970 lifted 600 million people out of
absolute poverty.
• S. Korea per capita income- $291 (1970) to $20000
in 2012.
• Brazil
• India
Problems of Entrepreneurship in Nepal
• Political instability
• Banking system- high credit processing costs,
neglect the small industries to provide loans, collateral (no
sufficient assets for collateral)
• Lack of low-cost appropriate technology is not available to
the small business entrepreneur to promote cottage and
small enterprises.
• May need amendment of Nepal Industrial Enterprise act
1992
• Maintaining online presence
• Social media management tool
• Getting and retaining customers
• Money management