ENTREPRENEUR AND HIS ROOTS

13TH CENTURY
- Entrepreneur is from the 13th century French word “entrepredre” which meant to undertake.
- Stems from the French literally, between taker or go between w/ early references to 18 th century
economists Richard Cantillon, Anne- Robert Jacques Turgot and Francois Quesnay.
- Also used in the Middle Ages where “entrepreneur” is denote as an actor with reference to warlike action or
a person in charge of a large-scale construction projects bearing no risks but simple carry the task forward.
- 16th century, first related to business and mean as a person engaged in business.

- Richard Cantillon, first academic usage of the word entrepreneur in his Essai sur La Nature du Commerce
en General; further identified entrepreneur as an adventurer.
- Later supported by Daniel Defoe through the protagonist of his novel Robinson Crusoe, which gives
meaning to “private enterprise.”

17th CENTURY – 18th CENTURY

- Entreprendre is highly related to risk taking, risk taker, bore the risks of profit and loss from the barging.

19TH CENTURY (the who of entrepreneur: who does the doing)

- THREE major additions about an entrepreneur;
- Jean Baptiste Say; “he is called upon”; with knowledge and judgement as someone who sought
opportunities to earn profits.
- John Stuart Mill; someone who was more than the venture capitalist.
- Alfred Marshall; link the first two concepts. Entrepreneur coordinates four factors (land, labor, capital and
organization) together.

 Dubbed from risk taker, a projector and adventurer, Say: arbitrageur; Mill: manager dinstinct from a capitalist;
Marshall: coordinator.

- Who concepts was further developed by Frank H. Knight and Joseph Schumpeter.

Frank H. Knight (1885 – 1972) – Two Kinds of Risks

- Measured risk – probability that an event will happen
- Un-measurable risk – inability to predict consumer demand.
- Entrepreneur take unmeasurable risk. “true” uncertainty found in situations.
- Entrepreneurs are producers : the population furnish them with productive services

- In this era (19th century) entrepreneur becoming distinguished from the manager, the capitalist, and the
businessman.

Frank’s two greatest insights

a. innovation is a driving force not only of capitalism but also economic progress in general
b. entrepreneurs are agents of innovation.

Entrepreneurs did not necessarily have to be the inventor, more importantly he had to be the one to act in an
enterprising manner upon the innovation.

Innovation need not to be new, but on how it can be used in production or can be brought commercially.
Schumpeter definition of entrepreneurship no longer entirely focused on the who but more on what who’s actions
were.
Five Types of Innovation
a. Product – a new product or quality
ex. Horseless carriage into steam engine which then become automotive such as trains and etc. combination of
two existing products to create a new product is innovation (Schumpeter)

b. Process – a new method of production

ex. Henry Ford’s assembly line

c. Business Model – opening a new market

ex. Angkas – ride-sharing company.

d. Source of Supply – a new source of supply of new materials or parts

ex. Sustainable and eco-friendly products – vegan leather from cactus.

e. Mergers and Divestments – organization of any industry

ex. Creation of a monopoly position or breaking up of a monopoly position

These ideas were further developed by Ludwig Von Misses and Peter Drucker.

Ludwig Von Misses

- Innovation in an important factor of entrepreneurship but it is not entirely what makes him one.
- Consumer sovereignty, entrepreneurs for production, customers determines what is to be produce
(demand)
- “innovation is the whim of an elite before it becomes a need of the public.”

Peter Drucker (1909 – 2005)

- Entrepreneurship, changing the yield of resources (supply) or changing the value and satisfaction obtained
from resources by the consumer (demand), innovation (instrument).
- “Systematic innovation consists in the purposeful and organized search for changes and in the systematic
analysis of the opportunities such changes might offer for economic or social innovations.”
- Entrepreneurship is the mindset and process to create and develop economic activity by blending risk-
taking, creativity and/or innovation with sound management, within a new or an existing organization.

Entrepreneurial Competencies – key characteristics of an ideal entrepreneur.

Competencies – combination of knowledge, abilities and attitudes.

THREE components
a. Planning Cluster (knowledge) – characteristics: goal setting, information seeking and systematic planning and
monitoring. it is innate with them to set goals when meaning to achieve something, seeking relevant information that
would ensure success

b. Achievement Cluster (abilities) – characteristics: opportunity seeking, persistence, commitment to work, risk taking
and demand for efficiency and quality. Is usually never about the money.

c. Power Cluster (attitudes) – characteristics: persuasion and negotiation and self-confidence. Most important trait of
the successful entrepreneur.
ENTREPRENEURSHIP AND ITS SOCIAL IMPACT

I. THE ENTREPRENEUR AS THE INDIVIDUAL THAT STEERS

Entrepreneurs:
a. identify opportunities in the market. – they actively seek opportunities to pursue and exploit.

b. process market information. – most successful entrepreneurs identify opportunities by merely observing and
having and enthusiastic willingness to learn and understand.

Ex. Airbnb – founders Brian Chesky and Joe Gebbia. “Aire Bed and Breakfast”

c. bring innovation. – they don’t stop at simply creating a product but instead innovate and create more value
for customers.

d. take and accept risks. - It is believed that they’d rather fail trying than have someone else try it before them.

e. establish new venture and improve existing ones. – usually they don’t stop at one. Most successful
entrepreneurs pursue and exploit and opportunities one after another.

Ex. Elon Musk, at 24, first company of Zip2 Corporation, an online city guide later purchased by Compaq
Computer Corporation at 307$ million cash and 34$ million stock. Then established X.com, now PayPal, later
purchased by Amazon at 1.5$ billion. Then established Space Exploration Technologies Corporation or Space.X,
by 2008 NASA awarded the company. Then established Tesla Motors in April 2017 surpassed other companies
like General Motors.

f. are managers as well as leaders. – they know even the tiniest details.

Ex. Richard Branson - . "Getting up and at it early gives me time to get on top of things, and chart my day
effectively," from a 2014 blog post. "Not only does this help them know how important they are to me, but it
also grounds me before I start my day," he wrote. Once he's up, he's ready to move.”

THE IMPACT OF ENTREPRENEURSHIP

Entrepreneurship:
1. Spurs Economic Growth - the creation of other economic activities that would support the new business
venture activities could be job creation, the production of supplementary products and services and other
activities that would stimulate economic development.

2. Creates Jobs. - As new businesses are made, jobs are also created.

3. Bring Innovations. – “Necessity is the mother of invention” they find solutions to problems thus innovation in
the market and creates competition to other companies.

4. Creates Wealth. - help generate new wealth not only for the entrepreneur but for the nation as well.
THE ENTREPRENEUR AND HIS JOURNEY

Opportunity has been acknowledged as the key component of entrepreneurship.

Scholars defined it as situations in which new goods, services, raw materials, markets, and organizing methods can be
introduced through the formation of new means, ends, or means-ends relationships.

Smith, Matthews and Schenkel (2006) – TWO TYPES OF OPPORTUNITIES

1. CODIFIED OPPORTUNITY
- well-documented, articulated or communicated
- illustrated by a franchise in which the opportunity is clearly documented.

2. TACIT OPPORTUNITY
- difficult to codify, articulate or communicate.

In broad terms, an opportunity may be the chance to meet a market need.

Opportunity Recognition (Hansen 2006)

a. sensing or perceiving market needs
b. recognizing or discovering a fit
c. creating a new fit

PERSONAL EVALUATION
Smith, Matthews and Schenkel (2006) and Shane (2003) - necessary to bring the entrepreneur back into the picture to
understand the relationship between the type of opportunity and the entrepreneurial process.

Baum, Locke, and Smith (2001) and Rauch and Frese (2000) - personality remains an important general predictor of
entrepreneurial behavior, once specific mediating factors are considered which can be achieved by evaluating
themselves.

PERSONAL GOALS
Brunstein and Gollwitzer (1996) – self defining goals motivate some people.

Wishes – imagined future.

Goals – indicate the steps to make the wish come true.

The goal should be SMART:

S – pecific
M – easureable
A – chievable
R – ealistic
T – ime
CREATIVITY
- key to the development of both new and existing businesses, especially for those who want to grow to-
wards a profitable business.
- used to refer to the act of producing new ideas

a. producing or bringing about something partly or wholly new;

b. investing an existing object with new properties or characteristics; imagining new possibilities that were not
conceived of before and;
c. seeing or performing something in a manner different from what was thought possible or normal previously.

Creativity allows us to look at things from a different perspective.

BRAINWRITING
- a method where a person writes whatever comes to mind.

PROBLEM SOLVING
- Without the prior knowledge and associated knowledge corridor, the potential entrepreneur would not
recognize the opportunity.

NEEDS
- a human need is a basic requirement that a person wishes to satisfy.
- Needs are basic parts of human life
- therefore not created by businesses.

Identifying people’s needs is one of the better strategies: Opportunities can be identified through other ways like:

a. Existing product/service provider weaknesses

b. Application of existing products or new functions
c. Cross-border limitations

THE ENTREPRENUER AND HIS PERSONAL INITIATIVE

Entrepreneurship requires action, the entrepreneur has to act to successfully accomplish each phase.

Personal Initiative is a behavior by an individual that is characterized by:

a. being self – starting
b. being proactive
c. being persistent in the pursuit of a goal.

Contrary behavior: passing and doing only what is told, giving up in the face of difficulties and go with the flow rather
than shape the environment.

PERSONAL INITIATIVE – ASPECTS

a. being self-starting – doing something without being told.
 b. being proactive – anticipates the future and does not wait until he or she can only react environmental
challenges, to deal with threat immediately.

c. being persistent – does not give up when facing obstacles.

PERSONAL INITIATIVE WHEN ACCOMPLISHING TASKS

FOUR General steps to accomplish task:
a. set a goal to define what to achieve
b. collect information
c. plan which actions to take, sub-goals too,
d. get feedback to monitor

BEING SELF-STARTING
- sets goals on his own and that these goals go beyond the usual goals

Be stable on goals but flexible on the plans to reach the goal.

Self-Starting Behavior - means extra effort.

Reactive Behavior – opposite of self-starting.

Principles of Being Self-Starting

1. . Strive for the non-obvious! Do something that is new, different, unusual, something that adds a new quality
and that goes beyond!

2. Be willing to spend extra energy and to go the extra mile!

3. Seek information that helps you carrying out your plan!

4. Develop a detailed and elaborate plan how you will achieve your goal!

5. Seek feedback to monitor the progress in your goal attainment!

ENTREPENEUR AND HIS MARKET

Marketing
Common definitions
- helps people know what you are selling and where they can find you if they want your product.
- “Marketing is a social and managerial process by which individuals get what they need and want through
creating and exchanging products and value”
- “Marketing is the management process that identifies, anticipates and supplies customer requirements
efficiently and profitably”
- “Marketing is the all-embracing function that links the business with customer needs and wants in order to
get the right product to the right place at the right time”
- “Marketing is the performance of business activities that direct the flow of goods and services from
producer to consumer or user”

Business Perspective
- simply means ascertaining what a consumer wants and providing it to the consumer at a profit
- a process by which people who have business (entrepreneurs) stimulate the sale and distribution of their
products to somebody else (the customer) so as to make a profit.
- buyer and a seller, and both should be willing to exchange something for value in return.
Marketing is not selling or advertising or distribution or retailing etc.

Conclusions about Marketing:

- marketing involves meeting the needs and wants of customers (And consumers)
- Marketing involves exchange that is to say marketing is an exchange process
- Marketing creates time, place and possession utilities, that is to say marketing ensures that the customer
gets what he/she needs at the right time in the right place, and creates ownership.
- Marketing is a business-wide function. It is a responsibility of all the other functional areas of business. It
doesn’t operate alone from other business activities.
- Marketing is about understanding customers and finding ways to provide products or services which
customers demand.

Marketing involves:
- Ascertain what consumers want and provide it to them at a profit!
- Meet the needs and wants of customers!
- Create a good exchange environment!
- Creates time, place and possession utilities!

Customer Needs and Wants

Needs are a basic part of human life, and are therefore not created by businesses. Businesses only try to
influence demand by designing products and services that are attractive, affordable, and available and work well for the
customer.

A want on the other hand is a desire for a specific product or service to satisfy the underlying need. These are
usually shaped by social and culture forces, individual personality as well as the marketing activities of the business such
as advertising.

Customers and Consumers

Customers – one who purchases and pays for a product or service
Consumers – ultimate user of the product or service

Exchange
Kotler Armstrong (1995) define exchange as the act of obtaining a desired object from someone by offering
something in return.

Demands