CHAPTER 1

Nature and Relevance of Entrepreneurship

ENTREPRENEURSHIP LESSON 1:
PRELIM REVIEWER CONCEPT OF ENTREPRENEURSHIP

LESSON 2:
DEVELOPMENT OF ENTREPRENURSHIP

LESSON 3:
RELEVANCE OF ENTREPRENEURSHIP AND
ENTREPRENS IN ECONOMIC
DEVELOPMENT AND SOCIETY
LESSON 1
CONCEPT OF ENTREPRENEURSHIP

“The ENTREPRENEUR always search for change, responds to it, and exploits it as an opportunity.”
- Peter Drucker

Entrepreneurial activity responds to policies that ensure the protection of new ideas, facilitate
access to capital and talent, and allow the management of risks. Often times, Entrepreneurship is
perceived to be the symbol of business innovation, preservation, and achievement.

Entrepreneurship activities thrive in societies with supportive government policies and which give much
importance to innovativeness and risk-taking to turn new ideas into breakthrough solutions.
Small Medium Enterprises (SMEs) are concrete manifestations of Entrepreneurship. SMEs account
for more than 90% of all jobs, sales, and values added.

THE DEFINITION OF ENTREPRENEURSHIP THROUGH THE YEARS

CONTRIBUTOR DEFINITION
Knight (1921) Profits from bearing uncertainty and risk
Schumpeter (1934) Firm organizations
New products
New services
New new sources of raw materials
New methods of production
New markets
New form of organizations
Hoselitz (1952) Introduction of innovation
Cole (1959) Purposeful activity to initiate and develop a profit-oriented business
McClelland (1961) Taking moderate risk
Shapero (1975) Initiative talking
Organizing and reorganizing economic mechanisms
Acceptance of risk failure
Casson (1982) Decisions and judgements about the coordination of scarce resources
Ronstadt (1984) Valuable goods and services.
Drucker (1985) Behavior over personality. Concept and theory over intuition
Gartner (1985) Creation of new organization
Hisrich & Brush (1985) New products and services with value resulting in rewards of monetary and
personal satisfaction (consumers’ perspective)
Stevenson & Pursuit of opportunity (attitude / characteristics of an Entrepreneur)
Grousebeck (1989)
Hart, Stevenson, & Pursuit of opportunity based from founder’s previous choices and industry-
Dial (1995) related experience.
Shane (2003) An activity that involves discovery, evaluation, and exploitation of opportunities
to introduce new goods and services.
Kuratko (2009) Dynamic process of vision, change, and creation.
Dyck and Neubert Conceiving an opportunity to offer new or improved goods and services,
(2012) showing the initiative to pursue that opportunity, making plans, mobilizing the
resources necessary to convert the opportunity into reality.
Although each of these definition views entrepreneurship from a slightly different perspective, they all
contain the following common elements:
Innovation
Opportunity seeking and exploitation
Resource mobilizing
Encountering risks and uncertainties
Economic and personal rewards

A Brief History on Entrepreneurship in the Philippines

99.7% of all firms operating in the country are small and medium enterprises employing 67% of the
labor force, and 47% of the 803,476 registered establishments are SMEs owned by women.

2004 to 2010 SME Development PLAN identifies the following specific programs to promote
Entrepreneurship:
Provision of Business Opportunities
Strategic Business Plan
Product Development and Design Services
Support to Start-up Enterprises in Selected Areas
Business Opportunity and Enterprise-Creation Approaches
Entrepreneurship Training Camps and Enterprise Development Programs
Business Opportunity Development and Investment Promotion for Innovative Ideas
Institutionalization of the SME Opportunities Caravan
Franchising Seminars
Cooperative Business Development Program
LESSON 2
DEVELOPMENT OF ENTREPRENEURSHIP

The evolution of the field of Entrepreneurship has been formulated by scholars based on theories that
are rooted in economics, psychology, sociology, anthropology, and management.

PERIOD THEORY and CONCEPT

The earliest period Marco Polo (1254 – 1324): a merchant from Venice who travelled to many
places in Asia to trade and enter into formal agreement with a capitalist to sell
his goods.

The middle ages Entrepreneur in this age was the person who oversaw great architectural
works such as public buildings and cathedrals.

The 17th Century Richard Cantillon (1680 – 1734): an economist who viewed the entrepreneur
as risk taker and a bearer of uncertain

The 18th Century Jean-Baptiste Say (1767 – 1832): Jean-Baptiste Say (1767 – 1832):
“someone who coordinates, leads, and manages all the activities of the firm.”

19th and 20th Joseph Schumpter (1883 – 1950): Austrian-Hungarian-American economist

Centuries and scientist.
“The entrepreneur is neither a risk-bearer nor a manager or capitalist.”

21st Century “Today, many people regard Entrepreneurship as “pioneership” on the

frontiers of business.”(Kuratko & Hodgetts, 2004)

The small and medium enterprises (SMEs) became the embodiment of entrepreneurship in the country.
The SME development regulatory framework and policies started in the 1935 when the 1935 Philippine
Constitution first recorded the national commitment to economic success through industrial and
technological growth.

Reinforcing the thrust on Entrepreneurship

through trade and investment results to
economic development and job creation.
LESSON 3
RELEVANCE OF ENTREPRENURSHIP
AND ENTREPRENEURS IN ECONOMIC
DEVELOPMENT AND SOCIETY

“Consumers choose products that

provides the greatest value and innovating on established brands
that are already trusted by consumers can be a powerful strategy.”

Role of Entrepreneurship and Entrepreneurs in Economic Development and Society

Creates Employment
Employ people who possess different competencies and personal values to help operate the business.

Develops New Market

Entrepreneurs go beyond places where their products are sold and look for other people who will be
interested.

Introduces Innovation
Innovations can be something ordinary or technological breakthrough. Due to innovations, business
fold, while others will open and flourish.

Generates New Sources of Materials

Entrepreneurs always look for better quality materials at a cheaper price which helps economic growth.
These could be sourced from because of the value creation.

Stimulates investment interest in the new business ventures being created

Entrepreneurs engage in new business because it stirs up curiosity for other people to invest because
of benefits it offers.

Improves the quality of life

It increases the personal benefit and convenience of people in the society. From ordinary household
products, services, technology, agriculture, travel, machines, and etc.

Serves as role models

Emulated by the youth and society at large as innovators, business leaders, environmental
conservatist, creativeness, proactiveness.

Brings social benefits to the people

Entrepreneurs pay taxes to government which would then turn into projects for a better living
conditions of the people in the society. With more government revenues, they may able to create
infrastructures such as schools, hospital, roads, bridges, electricity, and water supply.
Utilizes and mobilizes indigenous resources
Local enterprises patronize their own resources and they do not become dependent on imported
materials

Provides more alternatives for consumers

Stiff competition in the market for quality and cheaper products and services requires the
Entrepreneurs to come up with more products and services consumers can choose from.