BATAAN PENINSULA STATE UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
Balanga, Campus
Balanga City, Bataan
SUBJECT: ENTREPRENEURIAL MANAGEMENT
SUBJECT CODE: BAEL0423
CHAPTER 1
Topic: Origin and Nature of Entrepreneurship
I. Learning Outcomes
Identify the origin and nature of Entrepreneurship
Distinguish newness from innovation
Enumerate the broad impact of Entrepreneurship upon the economy
Determine contemporary views on Entrepreneurship
II. Introduction
The concept of Entrepreneurship has gone through an evolution or promised that
commenced with providing service in feudalistic society.
Entrepreneurship may be traced back to the earliest human civilizations when
dealers and merchants traded to suit the needs of their societies. Artisans, blacksmiths,
and craftsmen arose as cultures advanced, providing the door for specialized trades and
economic growth. So, as factories and mass production grew prominent throughout the
Industrial Revolution, entrepreneurship took on new dimensions.
An entrepreneur is an inventor and developer of ideas, change agent, creative,
persistent, and a class of his own having his own value system.
The characterization of Entrepreneurship is that it is an approach and a dynamic
process. The approach of an entrepreneur is focused on growth and expansion
orientation. As a dynamic process, an entrepreneur goes through a stage that is nurtured
by his immediate environment and the kind of of scenarios and experiences he has gone
through.
III. Content
Entrepreneurship originated as a concept in the early 18th century, gaining
prominence in the 19th and 20th centuries. Its nature involves individuals or groups
taking risks to create, innovate, and manage businesses, often with the goal of profit.
Entrepreneurship encompasses various forms, from small startups to large-scale
ventures, contributing to economic growth and societal development.
The term “entrepreneur” likely comes from the French word "entreprendre,"
meaning to start something or to undertake. Richard Cantillon, an 18th-century Irish-
French economist, is widely credited with defining entrepreneurship and entrepreneurs
as an economic force that drives development.
CONTEMPORARY VIEWS ON ENTREPRENEURSHIP
Lloyd Shefsky, “Entrepreneurs are made, not born.” The term entrepreneur is divided
into three parts: entre, which means to enter; pre, which means before; and neur, which
means nerve center. This means that an entrepreneur, as said by Shefsky, is someone
who enters a business that can change and develop the nerve center of the business, not
someone who starts or inherits a business.
KARL VESPER, “Entrepreneurship is now a concern of various professions.” For
instance, to an economist, an entrepreneur is someone who brings and makes resources
greater than their value. To a psychologist, it means a person who needs to obtain or
attain something. And for a businessman, it may be perceived as a competitor or an ally.
Joseph Schumpeter, “Entrepreneurship is doing things that are not generally done in the
ordinary course of business routine.”
JEAN BAPTISTE SAY (1800) Entrepreneurship refers to the shifting of economic
resources out of an area of lower and into higher productivity and greater yield.
CARL MENGER (1871) Entrepreneurship involves obtaining information, calculation,
an act of will and supervision.
JOSEPH SCHUMPETER (1910) Entrepreneurship is, in its essence, the finding and
promoting new combinations of productive factors.
HARVEY LEIBENSTEIN (1970) Entrepreneurship is the reduction of organizational
inefficiency.
ISRAEL KIRZNER (1975) Entrepreneurship is the identification of market arbitrage
opportunity.
ALBERT SHAPERO (1975) Entrepreneurship involves a kind of behavior that includes
initiative taking, organizing and recognizing social mechanism to turn resources and
situations to practical account, and the acceptance of risks and failures.
KARL VESPER (1980) Entrepreneurship is the dynamic process of creating incremental
wealth
HOWARD STEVENSON (1992) Entrepreneurship is the pursuit of opportunity beyond
the resources currently under one’s control.
JEFFRY TIMMONS (1994) Entrepreneurship is the ability to create and build a vision
from practically nothing.
PETER DRUCKER (1998) Entrepreneurship is the process of starting one’s own new
and small business. It is also the process of innovation and new venture creation
through four major dimensions–individual, organizational, environmental, process–
aided by collaborative networks in government, education and institutions.
ROBERT HISRICH (2001) Entrepreneurship involves the creation process, requires the
devotion of the necessary time and effort, assumes the accompanying financial, psychic
and social risks, and receives the resulting rewards of monetary and personal
satisfaction and independence.
THE PHILIPPINE ECONOMY
The Philippine Economy is composed of business enterprises, households and
government. These are the sectors of the economy.
Basically, we have a market economy or free enterprise economy. Unfortunately, our
economy has not improved much in terms of the interests of the masses, because of our
colonial and primitive agricultural economy.
In economic development, the bottom line is the quality of the people of a given country.
Knowledge, skills and values are the main determinants of economic growth.
PHILIPPINE ECONOMIC DEVELOPMENT
About 250,000 to 300,000 years ago, there were already inhabitants in the
Philippines. They came from other countries in Asia through the land bridges. They
settled in the Philippines over the long years and lived by hunting, fishing and food
gathering. The barter system was also practiced throughout the country. This time the
people were no longer nomadic. They established permanent settlements.
THE COLONIAL RULE
The Philippines became the slave of three colonial masters: Spain, United States
and Japan. The Chinese dominated the retail trade business even during the Spanish
time. The only economic contributions of the Spanish rule were the encomiendas,
galleon trade and tobacco monopoly. All these benefitted the colonial masters while the
Filipinos were exploited.
Under the American regime, the tremendous growth of factories in the US
created a big problem. To solve this, they colonized new territories like the Philippines.
To control the Philippine trade, the US set up free trade through the Payne-Aldrich Act
in 1909. All US goods in unlimited quantities entered the Philippines free of tax.
Likewise, Japan invaded the Philippines and other Southeast Asian countries for
economic reasons. It had problems such as population explosion, shortage of raw
materials and surplus of factory products.
Our economy was at its worst during the Japanese time. Goods and services
were extremely scarce. The production of sugar stopped for lack of foreign market. As a
result, inflation became very high.
The Republic: 1946-1972
The US granted our political independence on July 4, 1946. Filipinos rejoiced and
expressed their gratitude to th US government, only to realize later that our
independence was not meaningful. The US still influenced our political and economic
policies.
The Americans imposed the Bell Trade Act of 1946 and this gave the American
businessmen the right to exploit our natural resources, to operate public utilities and
other businesses, and to enjoy the prewar free-trade agreement. The Philippine
government accepted the Bell Trade Act in exchange for war damage payment.
President Carlos Garcia, in 1958 introduced the Filipino First Policy
President Diosdado Macapagal abolished the import and foreign exchange control.
President Ferdinand Marcos, in his 1965 SONA said that more than 1,500 industries
were in distress, and hundreds of workers were jobless. The Philippine government was
heavily indebted to the US.
THE MARTIAL LAW REGIME
There was a fast decay in Philippine society and deterioration in the economy. To
prevent further ruins, martial law was declared. It was supported by the US.
The WB-IMF played a dominant role in the economy under the martial rule. The
said giant financial institutions were responsible in imposing financial reforms, import
liberalization, foreign investments, export processing zones, tariff reduction, high
interest rates, devaluation, and tight credit policy.
The remaining few years of martial rule was marked with economic devastation
and political instability. Finally, in Feb, 1986, people power ended the Marcos regime.
The Aquino Administration
Economic recovery was the first priority of the Aquino government. It stressed rural
development and the development of labor-intensive industries. The Aquino 6-year
development plan was based on the following principles:
1. respect for human rights
2. promotion of social justice
3. wiping out poverty
4. attainment of economic growth
5. market economy
Here some of the major national policy thrusts:
1. Greater reliance on the interplay of market forces and private sector initiative
2. Provision of basic infrastructure and social services
3. Implementation of tax reforms to enhance the efficiency and fairness of the tax
system, and improve tax administration
4. Establishment of more effective means of helping the poor, including the proper
implementation of the agrarian reform program, and the delivery of basic social
services
5. More effective implementation of the population program
6. Improvement of agricultural and industrial productivity
The last two years of the Aquino government were experiencing decline in
economic growth.
THE RAMOS GOVERNMENT
The Ramos government is just an extension of the Aquino administration. Ramos
was lucky to inherit the political stability, together with democratic institutions in place.
His government was given priorities to the problems of energy, peace and order and the
strengthening of local government units. The success of Ramos government on these
areas would certainly mean business growth. More local and foreign investments would
be encouraged to put up their businesses. And this would result to more jobs and
incomes for the people.
FUNDAMENTAL ECONOMIC PROBLEMS
We have economic problems because our resources – money, materials and
machines – are limited while our human needs are unlimited.
Most people are poor because they depend only on their labor resources. In our
country, the price of labor is very low.
The biggest problem of our country is unemployment. Hundreds of thousands of
Filipinos like to work in other countries for lack of job opportunities in our own country.
THE ENTREPRENEURIAL ECONOMY
A free enterprise or market economy is an entrepreneurial economy. This is an
economy dominated by entrepreneurs. They are risk takers and they organize and
manage their own business.
One of the main thrusts of the national government is the creation of the spirit of
entrepreneurship among the poor. Our government extends financial and technical
assistance to small-scale industries, especially micro-business enterprises. Small business
is exactly the need of our developing economy. The government and some non-
governmental organizations (NGOs) provide financial and technical support to
livelihood projects.
Many Filipinos are poor and jobless. Yet our country is rich in natural resources.
The government should train the poor to be entrepreneurs. Then give them the
opportunities to transform our idle natural resources into useful products. Thus, the
problem of unemployment is reduced, and our idle natural resources are utilized.
The real and enduring wealth of any country is its people. Their values and skills
and knowledge make the difference.
