Module 1:

Entrepreneurship
Lesson 2: Elements of Entrepreneurship
Factors or Elements of Entrepreneurship
 Entrepreneurial Spirit
 Risk-taking and uncertainty
 Creativity and innovation
 Competition
 Independence
Factors or Elements of Entrepreneurship
 Entrepreneurial Spirit
 It is an inner strength that entrepreneur acquires
from what surrounds him. It includes the culture in
which the person grows. Some cultures encourage
entrepreneurship as a way of life while other
cultures do not consider it that important.
 The strength of one’s entrepreneurial spirit will
indeed depend on the people involved- the
entrepreneur himself, partners, advisers, employees
or even family members – who exhibit a passionate,
almost compulsive desire to succeed.
Factors or Elements of Entrepreneurship
 Entrepreneurial Spirit
 It is the atmosphere of fun and excitement that is
generated when people work together to create an
opportunity for greater success which is called
synergy.
Factors or Elements of Entrepreneurship
 Risk-taking and Uncertainty
 most of the author consider risk taking and
uncertainty as inherent elements of entrepreneurship
 Frank Knight (1921) made a distinction between
risk (randomness with knowable probabilities) and
uncertainty (randomness with unknowable
probabilities).
 Risk is measurable statistically, such as the
probability of drawing a red ball from a jar
containing five red balls and five white balls
Factors or Elements of Entrepreneurship
 Risk-taking and Uncertainty
 Ambiguity is hard to measure statistically such as
the probability of drawing a red ball from a jar
containing five red balls but with an unknown
number of white balls.
 True uncertainty known as Knightian Uncertainty,
which is impossible to estimate or predict
statistically, such as the probability of drawing a red
ball from a jar whose number of red balls is
unknown as well as the number of other colored
balls.
Factors or Elements of Entrepreneurship
 Risk-taking and Uncertainty
According to Knight, the acts of entrepreneurship
were often associated with true uncertainty,
particularly when bringing something novel to the
world whose market does not even yet exist.

 David McClelland’s Achieving Society (1961),

viewed entrepreneurship as calculated, informed
risk taking
Factors or Elements of Entrepreneurship
 Risk-taking and Uncertainty
Shane and Venkataraman (2000) define
entrepreneurial opportunities as those situation in
which new goods, services, raw materials, and
organizing methods can be introduced and sold at a
price greater than their cost of production.
2 component of entrepreneurship
o enterprising individual
o entrepreneurial opportunities
Factors or Elements of Entrepreneurship
 Creativity and Innovation
Robert Fisher (2007) Creative Minds: Building
Communities of Learning for the Creative Age
o describe creativity and innovation very extensively.
The basic process of creative evolution, whether of
ideas or of species, are according to, Fisher ,
generation, variation or innovation, and uniqueness.
o Generation is making, forming, or bringing
something into being. The generation of ideas, of
experiments and innovations, is a necessary part of
creative effort. However, generation by itself does
not guarantee creativity.
Factors or Elements of Entrepreneurship
 Creativity and Innovation
Robert Fisher (2007) Creative Minds: Building
Communities of Learning for the Creative Age
o The principle of variation or differentiation ensures
that creativity is not mere repetition. New
knowledge or new creation seek variation of what is
given.
o The principle of uniqueness provides the elements
of surprise. It is expressed in differing levels of
originality. Creativity means generating one or more
different or unique expressive responses.
Factors or Elements of Entrepreneurship
 Creativity and Innovation
Robert Fisher (2007) Creative Minds: Building
Communities of Learning for the Creative Age
o Creativity and innovativeness enable the mind to
represent images and ideas of what is not actually
present to the senses. It can refer to the capacity to
predict, plan and foresee possible future
consequences.
Factors or Elements of Entrepreneurship
 Competition
Peter Drucker (2011) – “Hit ‘em where they
ain’t”, meaning taking the substance of an
invention by imitating it and creatively
improving upon it in a way that the original
developer was not able to do.
 Technically its called perfecting and
positioning. This is seen in rapid market growth
where competition is about serving new
segments, not simply taking the market away
from existing competitors.
Factors or Elements of Entrepreneurship
 Independence
 The freedom to operate independently is both
a need and a reward for the entrepreneur.
Entrepreneurs desire to make their own
decisions, take their own risk, and reap the
rewards of their efforts. They need the
satisfaction of making their own decisions
within the constraint imposed by economic
and other environmental factors.
 Thank you!

Reference: Entrepreneurship Study and Practice (2015) by Paz and Fajardo. Small Enterprises
Research and development Foundation