CHAPTER ONE
INTRODUCTION TO
ENTREPRENEURSHIP AND
ENTREPRENEURIAL TRAITS
Definitions
Entrepreneurship
A process undertaken by an entrepreneur to augment his
business interest.
The process of creating value by devoting resources.
The process of starting a new business in response to
identified opportunities.
Entrepreneur Entrepreneurship Enterprise
Person Process Object
Entrepreneurship is both science & art?
Entrepreneur
Is an individual who undertook the formation of an
organization for commercial purposes,.. A person who
could recognize unusual demand for goods &
services.(Adam Smith)
A change agent who transforms resources in to useful
goods and services, often creating circumstances that lead
to industrial growth. (Carl)
A person who allocate resources in to opportunities rather
than problems. ( peter Drucker)
Someone who perceives an opportunity and creates an
organization to pursue it with the intention of being
The Four Key Elements in Entrepreneurship
1. Vision -Identifying emerging opportunities.
2. Innovation -Doing something new
3. Risk taking -Assuming different types of risks: financial,
psychological, social
4. Organizing - Coordinating resources & creating enterprise.
The Process of Entrepreneurship
It has four phases:
1) Identifying and evaluating business opportunity
2) Developing business plan
3) Determining the resources required for business and
4) Managing the enterprise
Classifications of Entrepreneurs
According to Types of Business
Classification According to Motivation
Classification by Danhof
Classification According to Use of Technology
According to Types of Business
Business entrepreneur: is an individual who conceive an idea for
a new product or service.
Trading entrepreneur: is one who undertakes trading activities
and is not concerned with the manufacturing.
Industrial entrepreneur: is essentially a manufacturer who
identifies the potential needs of customers and tailors product or
service to meet the marketing needs.
Corporate entrepreneur: is a person who demonstrate his
innovative skill in organizing and managing a corporate
undertaking.
Agricultural entrepreneur: those who undertake agricultural
activities as raising & marketing of crops, fertilizers, & other inputs
According to Motivation
1. Pure Entrepreneur:- an individual motivated by
psychological & economic reward.
2. Induced Entrepreneur:- the one who is induced by an
opportunity (incentives, govt. assistance) to take up
entrepreneurial task
3. Motivated Entrepreneur:- persons coming with the
possibility of making and marketing some new product.
4. Spontaneous Entrepreneur:- is one who is motivated
by his/her natural talent/blessings from God to begin a
business.
Classification by Danhof
Innovative entrepreneurs
Imitative entrepreneurs
Fabian entrepreneurs
Drone entrepreneurs
According to Use of Technology
1. Technical entrepreneurs
2. Non – technical entrepreneurs
3. Professional entrepreneurs
Entrepreneurial Traits
Mental ability
Clear objectives
Business secrecy
Human relation/Communication ability
Technical knowledge
Risk taking (Financial Risk, Career Risk, Psychic Risk, Family Risk, Social
Risk)
Innovative and action oriented
High need for achievement
High self determination (internal locus of control)
Are optimists
Persistent
Self – directed
Have total commitment
Entrepreneurs Vs Managers
Similarities
Both make decisions
Both are visionary
Both are accountable for their actions
Both work under constraints
Both are organizers
Both perform management functions
Differences
Primary Motive
Focus
Risk taking
Reward
Skills
Status
Why do People Want to Become Entrepreneurs?
Pull factor
Opportunity to gain control over your own destiny
Opportunity to reach your full potential
Opportunity to reap unlimited profit
Opportunity to contribute to the society
Opportunity to turn previous work experience into
business for self and family.
Financial incentive
Push factor
Redundancy
Unemployment
Disagreement with the previous employer.
Role of Entrepreneurship in Economic
Development
Speed up industrialization
Creation of employment opportunity.
Income generation
Development of backward and tribal areas.
Better social changes
Better standard of living
Reduction of brain drain
Tax contribution
Economic growth etc…
Entrepreneurship, Creativity & Innovation
Entrepreneurship:- is adding or creating value.
Creativity
is the ability to bring something new into
existence, whether a new solution to a problem,
a new method, or device or a new artistic
objects or form.
is the seed that inspires entrepreneurship
is the prerequisite to innovation.
Is thinking what no one else has thought before.
Invention:- is the transformation of these new
thoughts in to tangible ideas.
The Creative Process
Innovation
is the transition of creative idea into a useful
application.
is the process of entrepreneurship.
Is commercialization of an invention.
Elements in the innovative process
Analytical planning – organizing resources –
implementation – commercial application
Entrepreneurial Mind
Successful entrepreneur needs to have both creative
aptitude and management skills
The four categories of business people on these two
scales:
Entrepreneur
Inventor
Manager/Administrator
Promoter .
Many graduate students with science and engineering
backgrounds may become to be inventors, while
graduate students from management and administration
departments may become managers or administrators.
The four categories of
business people
C
r
e Inventor Entrepreneur
a
t
i
v
i
t
y Promoter Manager/Administrator
Management Skill
Entrepreneurial Mind Test
Desirable attitudes and behaviors for the
entrepreneurial mindset:
1. Commitment and determination
2. Leadership
3. Opportunity obsession
4. Tolerance of risk, ambiguity, and uncertainty
5. Creativity, self-reliance, and adaptability
6. Motivation to best
You can check your entrepreneurial mindset using
the following questionnaire:
1. Are you willing to sacrifice your personal issues
for the company’s sake? Y or N
2. Are you persistent in solving problems? Y or N
3. Do you like teamwork, rather than being a “lone
wolf”? Y or N
4. Do you wish to share the wealth with all the
people who helped you? Y or N
5. Are you familiar with customers’ needs and
specifications? Y or N
6. Are you obsessed with your product
performance/design improvement? Y or N
7. Can you tolerate minimum risk for your firm,
including financial debt? Y or N
8. Do you have confidence in enduring and in
resolving dilemmas or uncertainties? Y or N
9. Are you a nonconventional and open-minded
thinker? Y or N
10. Are you a quick learner and chance-taker
without fear of failure? Y or N
11. Do you have perspective and a sense of humor? Y
or N
12. Are you aware of your weaknesses and strengths?
Y or N
Questions 1 and 2 are concerned with commitment and
determination; 3 and 4 with leadership; 5 and 6 with
opportunity obsession; 7 and 8 with tolerance of risk,
ambiguity, and uncertainty; 9 and10 with creativity, self-
reliance, and adaptability; and 11 and 12 are related to
motivation to excel.
If you answered Yes to all questions, you are confident of your
skills to start your new firm.
• If you answered No to Question 3 or 4, you may be a lone-wolf
researcher who is better suited to working in a large firm.
• If you answered No to Question 5, you may be suitable to be a
university scientist, not a corporate developer.
• If you did not answer Question 7 in the affirmative, you should
not start your own company.
Challenges of Entrepreneurs
The entrepreneur faces problems perhaps
starting from the day she/he identifies the
business idea.
In fact, problems follow the entrepreneur
like a shadow.
The challenges faced by the entrepreneur
can be classified as internal and external
Internal problems
Choice of business idea
Financial limitations
Inadequate knowledge and experience
Poor project planning
Faulty planning: Lack of strategies and vision
poor production and marketing
Poor product quality
Labor problems
Lack of vertical and horizontal integration
Inadequate underutilization
Inadequate connection
External problems
Infrastructure
Finance
Administrative problems
and corruption
Tax
Raw material availability
Environmental regulation
Technology
Government policy
Competition
Culture
