BASIC ENTREPRENEURSHIP

Chapter 2 : Nature of Entrepreneurs

2.0 Nature & Development

Stems from French
Means between-taker or go between

2.0 Nature & Development

Middle Ages : Actor and person in charge of large scale production projects

2.0 Nature & Development

17th century : Person bearing risks of profit(loss) in fixed-price

2.0 Nature & Development

1755 : Richard Cantillon(Economist) : Person bearing risks is different from on supplying capital

2.0 Nature & Development

1803 : Jean Baptiste Say-separated profits of entrepreneur from profits of capital

2.0 Nature & Development

1876 : Francis Walker : Distinguished between those who supplied funds and received interest and those who received profit from managerial capabilities

2.0 Nature & Development

1934 : Joseph Schumpeter : Entrepreneur is an innovator and develops untried technology

2.0 Nature & Development

1961 : David McClelland: Entrepreneur is an energetic, moderate risk-taker

2.0 Nature & Development

1964: Peter Drucker: Entrepreneur maximizes opportunities

2.0 Nature & Development

1975: Albert Shapero: Entrepreneur takes initiative, organizes some social and economic mechanisms and accepts risks of failure

2.0 Nature & Development

1980: Karl Vesper: Entrepreneur seen differently by economics, psychologists, business persons and politician

2.0 Nature & Development

1983: Gifford Pinchot: Intrapreneur is an entrepreneur within an established organization

2.0 Nature & Development

1985: Robert Hisrich: Entrepreneurship is the process of creating something different with value by devoting the necessary time and effort, assuming the accompanying financial, psychological, and social risks, and receiving the resulting rewards of monetary and personal satisfaction and independence

2.0 Nature & Development

In almost all of the definitions of entrepreneurship, there is agreement that we are talking about a kind of behavior that includes:
1. 2.

3.

Initiative taking The organizing & reorganizing of social and economic mechanisms to turn resources and situations to practical account, The acceptance of risk or failure.

2.0 Nature & Development

Entrepreneur : Individual who takes risks and starts something new

2.0 Nature & Development

Entrepreneur : A person who destroys the existing economic order by introducing new products and services, creating new form of organization or by exploiting new raw materials. This destruction can be done through forming a new business or by working within an existing business.

This definition stresses FOUR(4) basic aspects of being an entrepreneur that are :

1st, Entrepreneurship involves the creation process; 2nd, Entrepreneurship requires the devotion of the necessary time and effort; 3rd, Assuming the necessary risks; 4th, Rewards of being an entrepreneur

2.1 Nature and DevelopmentIn Malaysia



Entrepreneurship Started ever since the state of Malacca interacting with foreign traders. British colonization practiced divide and rule system
  

Malays administration and agriculture Chinese mining and business Indians rubber plantations

2.1 Nature and DevelopmentIn Malaysia



After independence(1957), Malaysian government realizes the importance of entrepreneurship to individuals, society and the nation s prosperity. Support :
   

National Economic Policy(1971-1990) National Development Policy(1990-2000) Vision 2020 Ministry of Entrepreneurship Development(1995)>Ministry of Entrepreneurship Development and Cooperation

2.2 Entrepreneurship developments among adults

2.2.1 Male Entrepreneur Characteristics

Motivation Departure Point Fund Sources
Occupational Background
Make Things Happen, Role In Corp. Not Important, Desire To Be In Control Dissatisfied With Present Job, Sidelines, Discharged/Laid-Off, Acquisition Opportunity Personal Assets/Savings, Bank, Investors, Family/Friends Loans Experience, Recognized Specialist, Competent In Business Functions Opinionated/Persuasive, Goal-Oriented, Innovative/Idealistic, Self-Confident, Energetic Age = 25-35, Father Self-Employed, College-Educated, Firstborn Child Friends, Professional Acquaintances (Lawyers, Accountants), Associates, Spouse Manufacturing/Construction

Personality Background Support Groups

Business Started

2.2.2 Female Entrepreneur Characteristics

Motivation Departure Point Fund Sources
Occupational Background
Accomplishment Of Goal, Do It Alone Job Frustration, Recognition Of Opportunity, Change In Personal Circumstance Personal Assets/Savings, Personal Loans Experience, Mid-Management/Administrative Experience, Service Occupation Flexible/Tolerant, Goal-Oriented, Creative & Realistic, Self-Confident, Energetic, Social Age = 35-45, Father Self-Employed, College Educated (Liberal Arts), Firstborn Child Friends, Spouse, Family, Women s Prof. Groups, Trade Associations Service-Related

Personality Background Support Groups

Business Started

3-4

2.2.3 Men Vs. Women Entrepreneurs

motivated to achieve independence and make things happen. Departure point: job dissatisfaction, layoff. Support group: friends, professional acquaintances. Initiates between ages 2535. More likely to start a business in manufacturing, construction or high tech.

motivated to accomplish a goal and achieve independence. Departure point: job frustration, change in personal circumstances. Support group: spouse, family, close friends. Initiates between ages 3545. More likely to start a service business.

Most other dimensions show no differences.

(Hisrich & Peters, p. 76)

2.3 ENTREPRENEURIAL MOTIVATION

2.3 Entrepreneurial Motivation

What make people responsive to opportunity? What drive them to entrepreneurship? Answering these question entail the examination of entrepreneurial motivation Motivation is defined as a drive that cause a person to take some goal oriented action.

Entrepreneurial Motivation
Motivational theories are based on the idea that behavior is essentially purposeful and directed towards the attainment of certain goal. Thus entrepreneurial motivation is viewed as the willingness of an entrepreneur to sustain his or her entrepreneurial behavior.

Entrepreneurial Motivation
Motivation theorists have pointed out that at least three general categories of social motives as important determinant of human behavior: The need for achievement (n Ach) The need for Power (n Pow) The need for affiliation (n Aff)

Entrepreneurial Motivation
The need for achievement (n Ach)


Achievement motive - drive to do well, strive for excellence and overcome challenges and obstacles in the pursuit of goal. Power motive - drive to control, influence and to have impact on others and change the situations. Affiliation motive - drive to establish, maintain or renew affective relationship with others.

The need for Power (n Pow)



The need for affiliation (n Aff)



Entrepreneurial Motivation


All three motives may exist together in a person But one usually more dominant than the other motives for most of the individual s actions.

High need for achievement (high n Ach)



High need for achievement (high n Ach) has been identified as the critical motive that influence for most of venture creation and entrepreneurship. Individual with high need for achievement found in most good business founder. Need for achievement also known as urge to improve.

High need for power (high n Pow)



Individual with High need for power (high n Pow) normally seek position of leadership. They potentially to be good managers, executive or supervisors.

High need for affiliation (n Aff)



 

High need for affiliation (n Aff) has mostly been associated with individual whose desire in life is to establish, maintain or renew affective relationship with others. They potentially to be good social workers As an entrepreneur the need for affiliation to certain extent may contribute to the drive for maintaining effective business networking.

2.3.1 Common characteristics associated with achievement oriented entrepreneurs 1. Drive to achieve
Internally driven self starter with strong desire to: To compete with others To excel with self imposed standard To pursue and attain challenging goal

Common characteristics associated with achievement oriented entrepreneurs 2. Calculated risk taking


High achiever tend to take moderated or calculated risk  Examining the situation and determine how to increase the chance of winning a business situation  They make their effort to get the odds in their favor  They do not take unnecessary risks

Common characteristics associated with achievement oriented entrepreneurs

3. Internal locus of control

They belief that success or failure is determined by their own effort. They belief in themselves They do not belief that success or failure of their ventures were determined by fate or luck This behavior is consistent with self confidence and desire to take personal responsibility

Common characteristics associated with achievement oriented entrepreneurs

4. Tolerance for failure



High achievers take failure as a learning experience. Do not easily become disappointed, distress or discouraged by any setback or difficulties faced in the mist of business competition. Many successful entrepreneurs belief that they learn more from their earlier failure than from their earlier success.

Common characteristics associated with achievement oriented entrepreneurs

5. Seeking Feedback
They have strong desire to actively seek and used feed back to know how well they are doing and how to improve their performance. Most successful entrepreneurs are quick learners

Common characteristics associated with achievement oriented entrepreneurs

6. Integrity and reliability

Integrity and reliability help to build and sustain trust and confidence This helps to endure the relationship between entrepreneurs, partners, customers, suppliers and stakeholders.