THE CONCEPT OF ENTREPRENEURSHIP

Entrepreneurship is a philosophy or process through which an entrepreneur seeks innovation

and employment. Entrepreneurship is the process of creating something different with value by
devoting the necessary time and effort, assuming the accompanying financial, psychic, social
risks and receiving the resulting rewards of monetary and personal satisfaction and
independence.

Entrepreneur (Oxford Dictionary) is a person who undertakes an enterprise with chances of

profit or loss.

Enterprise (Oxford Dictionary) is a bold Undertaking.

Entrepreneurship, just like management, has no single definition. Different scholars have defined
entrepreneurship differently. Barringer and Ireland (2012) defines entrepreneurship as the
process by which individuals pursue opportunities without regard to resources they currently
control. Wilson (2004) defines entrepreneurship as the art of turning an idea into a business.
Kuratko (2008) defines entrepreneurship as a dynamic process of vision, change, and creation.
Entrepreneurship is defined as the willingness and ability of an individual (or a group of
individuals) to seek out investment opportunities, especially through innovation, establish and
run the enterprise successfully.

Entrepreneur, like an entrepreneurship, has no single definition. Drucker (1986) defines the
entrepreneur as someone who always searches for change, respond to it, and exploits it as an
opportunity. According to Jones, George and Hill (2000), entrepreneurs are individuals who
notice opportunities and take responsibility for mobilizing the resources necessary to produce
new and improved goods and services. In other words, entrepreneurs start new business venture
and do all of the planning, organising, leading and controlling necessary to meet organizational
goals. Kuratko (2014), defines entrepreneurs are individuals who recognise opportunities where
others see chaos, contradiction, and confusion. An entrepreneur is a person who establishes his
own business with the intention of making profits.

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Advantages of Entrepreneurship

To an Individual

a) Provides Self Employment for the entrepreneur.

b) Entrepreneur can provide employment for near & dear one as well
c) Entrepreneurship often provides an employment and livelihood for next generations as
well.
d) Freedom to use own ideas – Innovation and creativity
e) Unlimited income / higher retained income – Bill Gates has risen to become richest in the
world in a single life time through entrepreneurship
f) Independence
g) Satisfaction

To the nation

a) Provides larger employment – Entrepreneurs provide employment for self as well as

other people and is source of employment creation.
b) Results in wider distribution of wealth – This is a logical sequel of above issue. Higher
the employment, greater the distribution of wealth.
c) Mobilizes local resources, skills and savings
d) Accelerates the pace of economic development – Entrepreneurship is the govt’s one of
the most trusted vehicles for economic development.
e) Stimulates innovation & efficiency

Role of entrepreneurs within the economy

1. Capital formulations: Entrepreneurs mobilize the idle saving of the public through the
issue of industrial securities.
2. Improvement in per capita income.
3. Generation of employment.
4. Improvement of the living standard.
5. Economic independence.
6. Balances regional development.

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 7. Innovation: the commercial application of invention.
8. Imitating role.

The Role of Entrepreneurship in a Developing Society

Entrepreneurship has been recognized all over the world as a catalyst for development in any
economy. Entrepreneurship in developing countries in particular is being seriously advocated
because of the following importance:

1. Employment Generation: It helps to provide jobs through the establishment of new

businesses, especially small and medium scale enterprises.

2. Productivity: One of the factors for the greater interest in entrepreneurship has been the
increasing recognition of its role in raising productivity through various forms of
innovation. Entrepreneurs, through their innovation and creativity are capable of
transforming existing business sectors, and creating new sectors. They are helping to
bring about new goods and services (expanding productivity) and supplying the needs of
large enterprises, which have to rely on their operations for business success.

3. Facilitate the transfer/adaptation of technology: It enables entrepreneurs to have the

opportunities of developing and adapting appropriate technological methods and provide
a veritable avenue for skilled, unskilled and semi-skilled workers.

4. Ensures increased resource utilization: It helps entrepreneurs to put limited resources

that might otherwise remain idle into good use. They contribute to the mobilization of
domestic savings and utilization of local resources, including human resources.

5. Stimulates growth in those sectors which supplies it with inputs: Entrepreneurship

stimulates growth in its supply market. The greater the number of entrepreneurship that
exist in the ‗downstream‘ of a particular sector, the greater the market, hence, the greater
the potential for increased capacity utilization.

6. Reinvigorates large-scale enterprises and public enterprises: Most large scale

enterprises and public sector enterprises depend on the activities of small and medium
scale enterprises (SMEs) to supply them with various raw materials and other component

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 parts and also to assist them in the distribution of the finished goods to the final
consumers. Entrepreneurship has made it possible to be able to transform the public
sector into a viable, market oriented and profitable organization.

7. Encourages and sustains economic dynamism that enables an economy to adjust

successfully in a rapidly changing global economy: As a result of the dynamic nature of
the environment, small and medium scale enterprises have no choice than to respond and
adapt to environmental changes from time to time.

8. Enables individuals to use their potential and energies to create wealth, independence
and status for themselves in society.

The above eight points are not in any way exhaustive.

Functions of an Entrepreneur

To list the functions of entrepreneurs, give the impression that there are clearly defined activities
which the entrepreneur is expected to perform. On the basis of this understanding, the
entrepreneur is expected to perform the following functions:

1. Perception and identification of business opportunities: This is the first function of the
entrepreneur. It has to do with the recognition and definition of an unsatisfied need of
individuals, firms or households which can be satisfied with a product or service at the
right price that will guarantee satisfactory profit to the entrepreneur. In other words,
business opportunity occurs whenever there is a vacuum in the market place which is not
being satisfied by existing organizations or is being inadequately satisfied.

2. Selection of the legal form, location and site of the business: The form of business
ownership that the entrepreneur may decide to go into depends entirely on the amount of
capital available to the individual. To this end, the business enterprise may be operated
either as sole proprietorship, partnership or a limited liability. The selection of the initial
legal form of the enterprise as well as the location and site of the enterprise is the second
function performed by the entrepreneur.

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 3. Identification, selection and acquisition of key resources: The identification, selection
and acquisition of key resources is yet another function unique to entrepreneurs. For any
startup firm to survive and grow depends heavily on the availability of competent
manpower who will be able to translate the entrepreneur‘s ideas into concrete forms.
Thus, key personnel must be sourced and encouraged to contribute their talents and
energy during and after the turbulent period of formation and take-off. In addition, the
technology that is suitable for the needs of the firm must be identified, evaluated and
acquired. Sourcing of funds is one of the major constraints in starting businesses by
entrepreneurs, since the organization has no track record to boost of with investors and
bankers, a lot depends on the talents and trust of the entrepreneur to develop an attractive
project idea, form a credible and resourceful team in order to encourage others to believe
in the business.

4. Innovation: This is usually regarded as the height of entrepreneurship. Innovation may

be defined as the translation of a new idea into a new company. In other words,
innovation simply refers to striving to satisfy your customers better than what
competitors are doing/offering. This may take the form of a new product in an old
market; old product in a new market; or entirely a new product in a new market. It is
important to emphasize that sustaining the patronage of customers depend largely on the
ability of the entrepreneur to respond to their needs with new or modified products, new
and better techniques of production which reduce cost of production, better methods of
distribution, pricing and promotion.

5. Risk bearing: This has been traditionally associated with the entrepreneur. There are
various types of risks in business. The risk of fire, accidents, bad debts, theft etc can be
minimized by taking preventive action and by insuring against them. Other risks arise
because business decisions are future oriented. Risk of business failure may arise from
adverse fluctuation in demand, unfavourable government policies, strong competitive
advantage of other firms, obsolete technology and hence high cost of operation etc. These
risks cannot usually be insured against and must be borne by the entrepreneur. One way
of managing risk is for the entrepreneur to be engage actively in monitoring the
environment in order to be able to respond and adapt to the dynamic nature of the

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 environment from time to time. By so doing, the entrepreneur proactively assesses the
conditions facing him/her, and on the basis of the evaluation of his/her strengths and
weaknesses, he or she makes a choice of a strategy considered suitable. Having made a
choice, the entrepreneur accepts personal responsibility for the outcome of his/her
decision.

6. Management of the ongoing enterprises: The job of an entrepreneur is not hit and run
or one off activity. But rather, it is on a continuous basis (on going activity). To be able to
sustain the ongoing nature of the business, the entrepreneur must put in place these
activities namely: establishment of goals and targets for the enterprise; determination of
the tasks to be undertaken to achieve the goals/targets; efficient and effective allocation
of the necessary resources and controlling of the activities involved. This simply implies
that the entrepreneur is a planner, organizer, communicator, coordinator, leader,
motivation and controller, and most of all, a facilitator. Management of the on-going
enterprise also involves the process whereby the entrepreneur monitors and evaluates
changes that are continuously taking place in the political, economic, socio-cultural,
technological, legal and ecological environment so as to respond appropriately to ensure
the survival of the business.

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