CHAPTER 1: The nature and development of

entrepreneurship
C. Nieuwenhuizen and Gideon Nieman

Part A: Entrepreneurship and

Entrepreneurs

Chapter 1:
The nature and
development of
entrepreneurship
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 LEARNING OUTCOMES

 identify the contribution of entrepreneurs to the economy

 describe the development of entrepreneurship theory
 identify the research trends in entrepreneurship
 determine what is involved in the orientation of
entrepreneurs
 discuss and define the concept of
entrepreneurship
 differentiate between entrepreneurial and small business
ventures
 describe the entrepreneurial process explain the domains
of entrepreneurship, leadership and management
 evaluate the impetus of entrepreneurship in the
economy.
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 ENTREPRENEURSHIP
IN PERSPECTIVE

 Role of entrepreneurship in the economy

 Examples of South African entrepreneurs

 Role of entrepreneurs as shareholders,

employees and consumers.

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 THE DEVELOPMENT OF
ENTREPRENEURSHIP THEORY

 The economists

 The behaviourists

 The explosion of the field of entrepreneurship

– Management science perspective
– Social science perspective
– Entrepreneurship perspective

 The development of entreprenology

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 THE DEVELOPMENT OF
ENTREPRENEURSHIP THEORY

Table 1.1 Research trends in

entrepreneurship
(Textbook page 8)
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 DEFINITION OF THE ENTREPRENEUR

 An entrepreneur is a person who sees an opportunity in

the market, gathers resources and creates and grows a
business venture to satisfy these needs. He/she
takes the risk of the venture and is rewarded with profit if it
succeeds.
– Entrepreneur and entrepreneurship
– Small business
– Entrepreneurial ventures

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A MODEL FOR ENTREPRENEURIAL
DEVELOPMENT

Figure 1.1 A
model for
entrepreneurship
development
(Textbook
page 12)

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 A MODEL FOR ENTREPRENEURIAL DEVELOPMENT

 The entrepreneurial orientation

– Culture
– Family and role models
– Education
– Work experience
– Personal orientation
– Creativity and innovation
– Autonomy
– Risk taking
– Proactiveness
– Competitive aggressiveness

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 A MODEL FOR ENTREPRENEURIAL DEVELOPMENT

 The supportive environment

– Elements need to create a favourable climate
for entrepreneurs
 Infrastructure
 Business development services

 The cooperative environment

– Institutions promoting entrepreneurship
 Universities and other educational
institutions
 School and educational programmes
– Social responsibility and funds
 Large firms
 NGOs © VAN SCHAIK PUBLISHERS
THE DOMAINS OF ENTREPRENEURSHIP,
MANAGEMENT AND LEADERSHIP
Figure 1.2 The domains of entrepreneurship, management and
leadership (Textbook page 14)

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 THE DOMAINS OF ENTREPRENEURSHIP, MANAGEMENT AND
LEADERSHIP

 Differences between entrepreneurship, management, and

leadership
– Entrepreneurial process
– Entrepreneurial functions
 Entrepreneurship education versus traditional business
management programmes

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 THE ENTREPRENEURIAL PROCESS

 Identify and evaluate the opportunity

– Techniques to generate ideas
– Feasibility study
– Viability study
– Market size
– Window of opportunity

 Develop the business plan

– Important for managing the resources required
– Essential if one needs funding (finance)
– Helps reduce risk

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 THE ENTREPRENEURIAL PROCESS

 Determine the resources required

– Capital
– People
– Physical and intangible assets
– Resources determined by the cash flow projection in
the business plan

 Start and manage the enterprise

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 IMPACT OF ENTREPRENEURSHIP
ON THE ECONOMY
 GDP

 Employment

 SMME sector

 Role of entrepreneurs in the formation of new

businesses

 Global Entrepreneurship Monitor (GEM)

 Low entrepreneurial rate in South Africa

 Role of entrepreneurs in job creation

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 LOOKING BACK
1. What do high-potential entrepreneurs do? 
2. Describe what entrepreneurs do. 
3. Distinguish between small-business owners and
entrepreneurs. 
4. What determines an entrepreneurial
orientation? 
5. Name the four distinct phases of the
entrepreneurial process.

6. Name the five perspectives of entrepreneurship
research. 
7. Describe the impetus entrepreneurship gives
the economy.  © VAN SCHAIK PUBLISHERS
 KEY TERMS

 Business plan
 Commitment
 Creativity and innovation
 Economic impetus
 Entrepreneur
 Entrepreneurial orientation
 Entrepreneurial process
 Entrepreneurial success factors
 Feasibility study
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 KEY TERMS

 Gross domestic product (GDP)

 High-potential entrepreneurs
 Independent ownership
 Recognition of opportunities
 Resources
 Risk orientation
 Small-business owner
 Small, medium and micro enterprises (SMMEs)
 Viability study

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 LOOKING BACK - ANSWERS

1. What do high-potential entrepreneurs do?

– They establish and grow their businesses.
– They create jobs.

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2. Describe what entrepreneurs do.
– They identify opportunities in the market.
– They are willing to take calculated risks.
– They gather and apply resources appropriately to make
profit.
– They establish and grow their own businesses alone or
with a team.
– Their motive is to make profits.
– They create value for themselves and society.
– They are creative and innovative in various ways.

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3. Distinguish between small-business owners
andentrepreneurs.
– They also own their businesses and are of
critical importance to the economy, but they
 Are not engaged in any new or innovative
practices.
 Stabilise at a certain stage.
 Only grow with inflation.
 See their principal purpose as being to further their
personal goals, for example to be autonomous
and to ensure their security.


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4. What determines an entrepreneurial
orientation?
– Personal characteristics.
– The culture of the society.
– Education.
– Work experience.
– The entrepreneurial inclination of the family.

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5. Name the four distinct phases of the
entrepreneurial
process.
– Identify and evaluate the opportunity.
– Develop the business plan.
– Determine the resources required.
– Start ad manage the enterprise.

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6. Name the five perspectives of entrepreneurship
research.
– Economic
– Behaviourist
– Management science
– Social science
– Entrepreneurship

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7. Describe the impetus entrepreneurship gives
the economy.
– SMMEs are the only growth sector in the economies
of all leading countries.
– SMMEs contribute to the economies of the country
in various ways, such as economic growth, wealth
generation, creation of employment opportunities,
and
increased flow of capital.

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8. List the main components of the model
for entrepreneurship development.
– Entrepreneurial orientation
– Supportive environment
– Cooperative environment

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