Entrepreneurship and the Entrepreneur

Entrepreneurship and the Entrepreneur

Prepared by: Andrijana Bogdanovska

Knowledge Center

Dubai Trainings 27th – 30th of October, 2014

Opening Discussion:

Current trends of Entrepreneurship in the World

2Dubai Training of Trainers on Enterprenuership 10/27/2014

Entrepreneurship - increasing trends of presence in the global environment

1. The accelerating pace of change. Micro and SMEs are better equipped to deal with fast, discontinuous and abrupt change -higher levels of flexibility and speed to respond to changing market circumstances.

2. The destruction of larger firms, leading to spin offs, smaller operating units, and outsourcing activities.

3. The overall shift in many (mainly developed, but also developing) economies away from manufacturing towards the service industry - an ideal ground for the flourishing of micro and SMEs.

4. Many micro and SMEs are run by individuals who provide specialized goods and services which are usually neglected by larger firms increasing overall market efficiency.


4. The fast pace of technological development which increased micro and SMEs’ ability to deliver new products, specialized goods and services to the market.

The rapid change and development of technology influenced SME firms in three specific ways:

• many new technologies were pioneered by SMEs,

• the development of new technologies has facilitated self employment by easing communication and allowing for habitual flexibility and, possibly most important,

• many new technologies have reduced fixed costs of operating a business thereby encouraging self-employment.

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Entrepreneurship - increasing trends of presence in the global environment

Dubai Training of Trainers on Enterprenuership 10/27/2014

Entrepreneurship and the Entrepreneur

1.What is Entrepreneurship? 2.Who is the Entrepreneur?3.Why is Entrepreneurship important?4.Types of Entrepreneurship5.How does Entrepreneurship develop

at social and individual level?

What?

Who?

Why?Types?

How?


What is Entrepreneurship?

“The search for the source of dynamic entrepreneurial performance has much in common with hunting the Heffalump. The Heffalump is a large and rather important animal (…). He has been hunted by many individuals using various ingenious trapping devices, but no one so far has succeeded in capturing him. All who claim to have caught sight of him report that he is enormous, but they disagree on his particularities.”

Kilby (1971:275)

What?

Who?

Why?Types?

How?


What is Entrepreneurship? Two basic theories on entrepreneurship from the economic theory:

1. Neoclassical Economic Tradition

The neoclassical view advocates that entrepreneurship is an innovation which will come about when the equilibrium is disrupted or as a result of the inputs into research and development: entrepreneurship is a product.

2. Classical Economic Tradition.

The classical economic traditions assumes that entrepreneurship is part of the nature of the actor, i.e., a character trait.

Neither option is satisfactory. The option that traces entrepreneurship to some natural character is basically tautological. The option that traces entrepreneurship to exogenous shocks simply begs the question: what is the origin of the shock?

New Economy Growth Models – entrepreneurship is a process of knowledge transfer.

What?

Who?

Why?Types?

How?



From the economic theory there are four theories that define Entrepreneurship:

1. Joseph Schumpeter and the Creative Destruction Concept

2. Frank Knight and the Uncertainty Concept

3. Israel Kirzner and the Austrian School - key concepts of “spontaneous learning”, “alertness” and “entrepreneurial discovery

4. William Baumol and the Role of Incentives

“the carrying out of new combinations we call ‘enterprise’; the individual whose function is to carry them out we call ‘entrepreneurs’”

What?

Who?

Why?Types?

How?



And two additional theories :

1. Peter Drucker’s Theory of Entrepreneurship –Opportunity and Entrepreneurship;

2. Ronald Burt’s Theory of Entrepreneurship –Network and Entrepreneurship

The theory of entrepreneurship centered on the concept of opportunity represents more or less the common point of view of current researchers within the field.

What?

Who?

Why?Types?

How?


Who is the Entrepreneur? 1. Labor Economics – Entrepreneurship is self-

employment …thus the entrepreneur is the self-employed

2. Microeconomics and Industrial Organization –Entrepreneur is the small organization …the SMEs

3. Entrepreneurship not only as an occupation (self-employment; startup rates), but as an entrepreneurial behavior too, including:• entrepreneurial employee activity (a term that is closely related

to “intrapreneurship” or “corporate entrepreneurship”, s

• “social enterprenuers”, which is about people starting and developing new initiatives where the value of the (local, regional) society is put before the value of the individuals leading these initiatives - http://www.iande.info/suzana-moreira

What?

Who?

Why?Types?

How?


http://www.iande.info/suzana-moreira

Who is the Entrepreneur?

One characteristic of entrepreneurs stands out:

Diversity!

Anyone – regardless of age, race, gender, color, national origin, or any other characteristic – can become an entrepreneur (although not everyone should).

What?

Who?

Why?Types?

How?


Why is Entrepreneurship important?

What?

Who?

Why?Types?

How?

Macroeconomics: Economic Growth and Development

From the different roles of the entrepreneur distinguished by the several “Heffalump hunters”, two main roles had been highlighted as the key ones to link entrepreneurship to economic growth and development:

1. The entrepreneur as the innovator (identified as the Schumpeterian entrepreneur) and

2. The entrepreneur as the creator of new firms and new jobs (a role mainly identified by IO economists).

Entrepreneurship in the endogenous and new growth economic models.


Why is Entrepreneurship important?

What?

Who?

Why?Types?

How?

Despite theory ….

• Entrepreneurship has many faces and also includes initiatives that are accompanied by less ambitious business activities leading to limited or no growth.

• Across the globe, many individuals pursue a business activity because alternative options for work are limited or non-existent; by having the option to engage in self-employment they are able to take care of themselves and their families.

• Even though the self-employed contribute to the flexibility and productivity of the overall economy, some could possibly be more productive by working as an employee.


Types of Entrepreneurship (GEM)

What?

Who?

Why?Types?

How?

By motivation factors:

1. Necessity driven Entrepreneurship

2. Opportunity driven Entrepreneurship

By the stage of development of the entrepreneurial activity:

1. Nascent entrepreneurs involved in setting up a business,

2. Entrepreneurs who own and manage a new business and

3. Entrepreneurs who own and manage an established business


Types of Entrepreneurship

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Types of Entrepreneurship

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How does Entrepreneurship develop in the economy?

What?

Who?

Why?Types?

How?

A synergy of activities covering Entrepreneurial Framework :1. Entrepreneurial Finance - availability of financial resources2. Government Policy 3. Government Entrepreneurship Programs 4. Entrepreneurship Education. The extent to which training in

creating and managing SMEs is incorporated in the education and training system at basic school, secondary and at post-secondary levels.

5. R&D Transfer. The extent to which national research and development will lead to new commercial opportunities and is available to SMEs.

6. Commercial and Legal Infrastructure. The presence of property rights, commercial, accounting and other legal and assessment services and institutions that support or promote SMEs.

7. Entry Regulation - Market Dynamics and Openness8. Physical Infrastructure. Ease of access to physical resources9. Cultural and Social Norms. 17

Entrepreneurial Framework Current Global Indicators

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Barriers to EntrepreneurshipPrepared by: Andrijana Bogdanovska

Barriers to Entrepreneurship


Discussion

On Barriers to Entrepreneurship – Fox News


http://video.foxbusiness.com/v/3674778538001/overcoming-the-barriers-to-entrepreneurship/#sp=show-clips

National Policies and Entrepreneurship Programs

Prepared by: Andrijana Bogdanovska

Government policies and measures


Formulating National Entrepreneurship Strategy


Optimizing the Regulatory Environment


Entrepreneurship Education and Skills


Facilitating Technology Exchange & Innovation


Improving Access to Finance


Promoting Awareness and Networking


Access to FinancePrepared by: Andrijana Bogdanovska

Access to FinanceTwo basic forms of access to finance for entrepreneurs:

1. Own resources

2. Debt/ Credit

3. Equity


Access to FinancePhase of Development

Sources of Funding Alternative sources of funding

Government framework

Pre seed and seed phase

Own funds, family friends Peer-to-peer lending Crowdsourcing KIVAwww.kiva.orgwww.crowdcube.com

Appropriate regulatory frameworkTax advantaged for investors Tax breaks for start-ups

Start-up phase Business Angles Lending Platforms –Market Invoice

Facilitate the formation BA networksTax relieves for companiesTax advantages

Emerging growth Bank FinanceVenture Capital

Explore credit guaranteesIntroduce monitoring and mediation entitiesMake it easier for VC firms to make cross-border investmentsCo-invest with the private sector

Expansion Private EquityGoing Public

Avoid too much regulation on the PE activity


https://www.youtube.com/watch?v=lSN2WdqXwfc

http://www.kiva.org/

http://www.crowdcube.com/

http://www.marketinvoice.com/

Improving Access to Finance


Economy & Finance

Entrepreneurship and the Entrepreneur