Chapter 1

Introduction to entrepreneur and entrepreneurship

Who is an entrepreneur?• Entrepreneur stems from the French word

entreprendre which refers to individuals who undertake the risk of new ventures.

• Richard Cantillon, a French economist asserted that an entrepreneur invests, transforms and makes profit / loss.

• Adam Smith widened the scope to include the task of forming an organisation for commercial purposes and the extra qualities of the entrepreneur (ability to foresee potential through changes in the economy and to act on the demand).

Who is an entrepreneur?

• French economist, Jean Baptiste Say: the entrepreneur was said to influence society by forming enterprises and in turn influenced by society to recognise needs and to fulfill them through skill management resources.

• British economist, John Stuart Mill: entrepreneurs as one of the factors of production (land, labour, capital and entrepreneur).

The evolution concept of entrepreneurship

• Joseph Schumpeter introduced the concept of creative destruction.

• Creative destruction sees the destruction of usual ways of doing things by the introduction of new improved ways.

The Economic Questions

• What should be produced?• When will it be produced?• How will it be produced?• Who will produce it?• Who gets to have what is produced?

An economy is a country’s financial structure. It is the system that produces and distributes wealth.

Entrepreneurship development in Malaysia

• Entrepreneurship has existed in Malaysia since the interaction of Malacca with foreign traders.

• When the British colonized in Malay Peninsular, they practiced the ‘divide and rule’ system :Malays – engaged in administration and agricultureChinese – engaged in mining and businessIndians – engaged in rubber plantations

Entrepreneurship development in Malaysia

• After independence, the Malaysian government has been focusing on the field of entrepreneurship until today

• A specific body to manage and promote the growth of entrepreneurship is the Ministry of Entrepreneurship Development and Co-operation.

• Others:• The New Economic Policy(1971-1990)• The National Development Policy (1990 –

2000)• Vision 2020

Why Be an Entrepreneur?

• Control over time• Fulfillment• Creation/Ownership• Control over Compensation

-salary-wage-dividend-commission

• Control over Working Conditions

The importance of entrepreneurship• Micro aspectsMicro aspects::

• Sources of new ideas and change: • New and value added ideas & products

• Transforming ideas and opportunities into profitable businesses

• Macro aspectsMacro aspects::• Creating wealth & promoting wealth distribution• Catalyst for economic change and growth• Creating job opportunities• Developing supporting industries• Providing wider choices of technologically up to date products• Utilising resources more efficiently• Expanding family business that can be inherited and expanded• Role model for society

Characteristics of Successful Entrepreneurs

Initiative &

ResponsibilitySeeking

Feedback

Creative and

Innovative

High

Commitment

Opportunity

Orientation

Moderate

Risk Taker

Confidence &

Optimistic

Internal

Locus of Control-they control their

destinies

Flexibility

IndependentSkilled at

Organising

Drive to

Achieve

Tolerance

to Failure

Ability to

set Vision

Team

Building

High

Energy

Businessmen vs EntrepreneursBusinessmen vs Entrepreneurs

Small Businessman Entrepreneur

Engages in business to support living & family

Starts the ventures, assume leadership & expand it to fulfill personal goals n self-accomplishment

Low risk taker Moderate risk taker

Follows others and invests only in tested and proven mkts

Takes calculated risk

Managers Vs EntrepreneursManagers Vs Entrepreneurs

Managers EntrepreneursPrimary Motives promotion & other

traditional rewardsIndependence, opportunity to create & money

Time Orientation Short-term: meetings, quota, budgets

Survival and achieving; 5 to 10 yrs growth of business

Activity Delegates and supervises more than direct involvement

Direct involvement

Risk Careful Moderate risk takerStatus Concerned about status

symbolsNot concerned about status symbols

Failure & Mistake Tries to avoid mistakes & surprises

Deals with mistakes and failures

Decisions Usually agrees with those in upper management

Follows dream with decisions

Who serves Others Self and customersFamily history Family members worked for

large organisationsEntrepreneurial small business, professional

Relationship with others

Hierarchy as basis relationship

Transactions and deal making as basic relationship