Introduction to Entrepreneurship

By: Dr. Ghazala Tunio

 Recommended Books:

• 1. Entrepreneurship: Successfully Launching New Ventures

by Bruce R. Barringer, Duane Ireland, Latest Edition
• 2. Entrepreneurship new venture creation by David H.
Holt - Latest Edition
• 3. Pitts R.A. and Snow C.C., Strategies for Competitive
Success, Johan Willy - Latest Edition
 Learning Objectives
1 of 2

1. Describe entrepreneurs, corporate entrepreneurship,

and the characteristics of entrepreneurial firms.
2. Discuss three main reasons people decide to
become entrepreneurs.
3. Identify four main characteristics of successful
entrepreneurs.
4. Explain five common myths regarding
entrepreneurship.
5. Describe three types of start-up firms.

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 Learning Objectives
2 of 2

6. Discuss the positive effects of entrepreneurship and

entrepreneurial firms on economies and societies.
7. Explain the entrepreneurial process.

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 Definition of Entrepreneurship
• An entrepreneur is an individual who creates a
new business, bearing most of the risks and
enjoying most of the rewards. The
entrepreneur is commonly seen as an
innovator, a source of new ideas, goods,
services, and business/or procedures.
 Entrepreneurship
• The capacity and willingness to develop,
organize and manage a business venture along
with any of its risks in order to make a profit.
The most obvious example of
entrepreneurship is the starting of new
businesses.
 What is Entrepreneurship?

• Academic Definition (Stevenson & Jarillo)

– Entrepreneurship is the process by which individuals pursue
opportunities without regard to resources they currently
control.
• Venture Capitalist (Fred Wilson)
– Entrepreneurship is the art of turning an idea into a
business.
• Explanation of What Entrepreneurs Do
– Entrepreneurs assemble and then integrate all the resources
needed – the money, the people, the business model, the
strategy – to transform an invention or an idea into a viable
business.
 The Concept of Entrepreneurship
• Entrepreneurship is the process of seeking
businesses opportunities under conditions of
risk. Entrepreneurship also refers to the
process of creating something new of value by
devoting the necessary time and effort,
assuming the accompanying financial, and
social risks and receiving the resulting rewards
of monetary, personal satisfaction and
independence.
 The Concept of Entrepreneurship
• According to Yep Putih, entrepreneurship is the ability,
capability, and tendency to perform the following activities :
• i. Identify business opportunities.
• ii. Manage a business effort which brings profit to the
entrepreneur and the public.
• iii. Obtain success and richness by fulfilling the society's
needs.
• iv. Take calculated risks.
• v. Manage & utilize the factors of production to bring
economical development and enhance social welfare.
• vi. Work hard and be prepared to make new changes that can
increase production quantity and quality from time to time..
Entrepreneurship vs. Entrepreneurs
Entrepreneurship Entrepreneur
• The process of starting and • An entrepreneur is an
running one’s own business individual who undertakes
• This involves a considerable the risk associated with
amount of risk. creating, organizing, and
owning a business.

10
ENTREPRENEUR VS
ENTREPRENEURSHIP

Person. Process.

Organizer. Organization.

Innovator. Innovation.

Risk-bearer. Risk-bearing.

Motivator. Motivation.
Visualiser. Vision.

1
1
DIFFERENTIATE ENTREPRENEUR AND
BUSINESSMAN

Time Unlimited Limited

Nature of job Flexible Rigid in adapting to
changes
Decision making Makes own decision Follows decision
made by others
Effort and Continuous Low
commitment
Risk taker Moderate Low
Goal Maximize s self Solely for profit
potential by utilizing maximization
available
opportunities

1
2
 Entrepreneurs V. Intrapreneurs
• Entrepreneurs are people that notice opportunities
and take the initiative to mobilize resources to make
new goods and services.
• Intrapreneurs also notice opportunities and take
initiative to mobilize resources, however they work in
large companies and contribute to the innovation of
the firm.
 Corporate Entrepreneurship

• Corporate Entrepreneurship
– Is the conceptualization of entrepreneurship at the firm
level.
– All firms fall along a conceptual continuum that ranges
from highly conservative to highly entrepreneurial.

– Corporate entrepreneurship (also know as

intrapreneurship)

.
 Corporate Entrepreneurship
2

Entrepreneurial Firms Conservative Firms

• Proactive • Take a more “wait and see”

• Innovative posture
• Risk taking • Less innovative
• Risk averse

1-
 Corporate entrepreneurship (Shaker A.
Zahra, 1991)
• is a set of activities to enhance a company’s
ability to innovate, take a risk, and seize the
opportunities that are allocated in the market.
Also, Corporate entrepreneurship is targeting
the new business establishment, new market
allocation with further business pursuing, or
both.
 Why Become an Entrepreneur?

The three primary reasons that people become

entrepreneurs and start their own firms

Desire to be their own boss

Desire to pursue their

own ideas

Financial rewards
Characteristics of Successful Entrepreneurs

Four Primary Characteristics

Characteristics of Successful Entrepreneurs

• Passion for the Business

– The number one characteristic shared by successful
entrepreneurs is a passion for the business.
– This passion typically stems from the entrepreneur’s belief
that the business will positively influence people’s lives.
• Product/Customer Focus
– A second defining characteristic of successful
entrepreneurs is a product/customer focus.
– An entrepreneur’s keen focus on products and customers
Characteristics of Successful Entrepreneurs

• Tenacity Despite Failure

– Because entrepreneurs are typically trying something new,
the failure rate is naturally high.
– A defining characteristic for successful entrepreneurs is
their ability to persevere through setbacks and failures.
• Execution Intelligence
– The ability to fashion a solid business idea into a viable
business is a key characteristic of successful entrepreneurs.
 Common Myths About Entrepreneurs

• Myth 1: Entrepreneurs Are Born, Not Made

– This myth is based on the mistaken belief that some people
are genetically predisposed to be entrepreneurs.
– The consensus of many studies is that no one is “born” to
be an entrepreneur; everyone has the potential to become
one.
– Whether someone does or doesn’t become an entrepreneur
is a function of their environment, life experiences, and
personal choices.
 Common Myths About Entrepreneurs
Although no one is “born” to be an entrepreneur, there are common traits
and characteristics of successful entrepreneurs
• A moderate risk taker
• Persuasive • A networker
• Promoter • Achievement motivated
• Resource assembler • Alert to opportunities
• Creative • Self-confident
• Self-starter • Decisive
•Tolerant of ambiguity • Energetic
• Visionary • A strong work ethic
• Lengthy attention span
 Common Myths About Entrepreneurs

• Myth 2: Entrepreneurs Are Gamblers

– Most entrepreneurs are moderate risk takers.
– The idea that entrepreneurs are gamblers originates from
two sources:
• Entrepreneurs typically have jobs that are less structured, and so
they face a more uncertain set of possibilities than people in
traditional jobs.
• Many entrepreneurs have a strong need to achieve and set
challenging goals, a behavior that is often equated with risk taking.
 Common Myths About Entrepreneurs

• Myth 3: Entrepreneurs Are Motivated Primarily by

Money
– Some entrepreneurs warn that the pursuit of money can be
distracting.
 Common Myths About Entrepreneurs

• Myth 4: Entrepreneurs Should Be Young and

Energetic
– Entrepreneurial activity is fairly easily spread out over age
ranges.
– While it is important to be energetic, investors often cite
the strength of the entrepreneur as their most important
criteria in making investment decisions.
• What makes an entrepreneur “strong” in the eyes of an investor is
experience, maturity, a solid reputation, and a track record of
success.
• These criteria favor older rather than younger entrepreneurs.
 Common Myths About Entrepreneurs

• Myth 5: Entrepreneurs Love the Spotlight

– While some entrepreneurs are flamboyant, the vast
majority of them do not attract public attention.
– As evidence of this, consider the following question: “How
many entrepreneurs could you name?”
• Most of us could come up with Jeff Bezos of [Link], Mark
Zuckerberg of Facebook, Steve Jobs of Apple, and maybe Larry
Page and Sergey Brin of Google.
• But few could name the founders of Twitter, YouTube, Netflix,
even though we frequently use those firms’ services.
Types of Start-Up Firms
 Salary-replacement firms
• Salary-replacement firms provide their
owners with income levels comparable to
what they would have earned working for
much larger firms. Examples include
single store retailers, restaurant owners,
and financial and tax services providers
 Lifestyle firm

• Lifestyle firm allow their owners

to pursue specific lifestyles while
being paid for doing what they
like to do. Examples include
owning and operating a ski
instruction or whitewater raftin
business
 Entrepreneurial ventures
• Entrepreneurial ventures strive for high
growth rates for revenue, profit, and cash
flow. Typically, entrepreneurial ventures will
not be able to grow at the targeted rate
without attracting external investment above
and beyond that provided by the
entrepreneur and retained profits.
 Changing Demographics of Entrepreneurs

• Women Entrepreneurs
– While men are more likely to start businesses than women,
the number of women-owned businesses is increasing.
 Changing Demographics of Entrepreneurs

• Senior Entrepreneurs
– The numbers of seniors (those 50 years old and older)
starting businesses is substantial and growing.
 Changing Demographics of Entrepreneurs

• Young Entrepreneurs
– A desire to pursue an entrepreneurial career is high among
young people.
Economic Impact of Entrepreneurial Firms

• Innovation
– Is the process of creating something new, which is central to
the entrepreneurial process.
– Small innovative firms are 16 times more productive than
larger innovative firms.
• Job Creation
– Small businesses create a substantial number of net new jobs
 Entrepreneurial Firms’ Impact on Society
and Larger Firms
• Impact on Society
– The innovations of entrepreneurial firms have a dramatic
impact on society.
– Think of all the new products and services that make our
lives easier, enhance our productivity at work, improve our
health, and entertain us in new ways.
• Impact on Larger Firms
– Many entrepreneurial firms have built their entire business
models around producing products and services that help
larger firms become more efficient and effective.
 Risks of being an entrepreneur
• Potential Business Failure.
• Being fully responsible means the success or
failure of your business rests on you.
•  Unexpected Obstacles. Problems can
happen that you don’t expect.
•  Financial Insecurity. Many new businesses
don’t make much money in the beginning, so
you may not always be able to pay yourself.
 Entrepreneurs v/s Managers
• • Entrepreneur refers to a person who creates
an enterprise, by taking financial risk in order
to get profit.
• • Manager is an individual who takes the
responsibility of controlling and administering
the organization.
Entrepreneurs v/s Managers
 The Entrepreneurial Process

The Entrepreneurial Process Consists of Four Steps

Step 1: Deciding to become an entrepreneur.
Step 2: Developing successful business ideas.
Step 3: Moving from an idea to an entrepreneurial firm.
Step 4: Managing and growing the entrepreneurial firm.

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