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The Nature and Development

of Entrepreneurship
The word “entrepreneur” stems from French,
means “between-taker” or “go between.”
Our definition involves four aspects:
1. The creation process.
2. The devotion of time and effort.
3. The assumption of risk.
4. Rewards of independence, satisfaction,
money.
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Entrepreneurship
is the process of creating something
different with value by devoting the
necessary time and effort, assuming
the accompanying financial, psychic,
and social risks, and receiving the
resulting rewards of monetary and
personal satisfaction and
independence.
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Importance of entrepreneurship
in economic development
Increase per capita output/income
Initiating change in business/society structure
Innovation stimulates new products/services
Innovation stimulates new investments in
new ventures (increased capital expands
capacity for economic growth)
Growth in economy stimulates additional
spending (increased demand)

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There are 3 types of start-up ventures.

1 A lifestyle firm exists primarily
to support the owners and usually
has little growth opportunity.
2 Foundation companies are firms
created from research and
development that lay the
foundation for a new industry.
3 High powered ventures are new
companies that receive the greatest
interest and publicity (example: Lucent
Technologies.)

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What type of environment favours entrepreneurial
activities?
Culture that values independence, “being
one’s own boss”
Failure not considered a disgrace
Available markets
Available capital sources
“Critical mass” of entrepreneurial talent
Strong educational base
Tax structure that favours new ventures
Government policies and programmes
(facilitate technology transfer)
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What about Hong Kong?
According to the Global Entrepreneurship
Monitor 2002, 2003 and 2004, Hong Kong
has one of the lowest entrepreneurial
participation rates in the world
Entrepreneurs in Hong Kong tend to be:
Higher educated
Wealthier
Young
Working
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Hong Kong’s Strengths & Weaknesses
Rule of law High cost of land and
Work ethic, culture of labour
adaptability Emphasis on rote
Laissez faire government, learning in education
free market Capital unavailability
ease of setting up Get-rich-quick mentality
companies Erosion of traditional
Well-educated population entrepreneurial values
attuned to business Government lacks
Location near Pearl River direction and increasing
Delta of China amount of “red tape”
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The Individual Entrepreneur

Should you start your own business?

Quiz A.1
Quiz A.2
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No “true entrepreneurial profile.”

 Locus of control refers to the internal-external
control dimension of an individual. Managers
and entrepreneurs both have more of an
internality tendency than the general public.
 Entrepreneurs also seem to have a high need
for independence and may have a high need for
achievement (McClelland 1961).
 Risk taking seems to be a part of the process.
3-2

Key Elements in Entrepreneur’s Background

 Supportive childhood family
environment.
 Having a father who is self-
employed helps.
 Education is important.
 Aged 22-45 when starting venture.
 Work history: dissatisfied with
company job but has technical
knowledge.

Bill Gates
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Role Models
parents, relatives, friends or
entrepreneurs in the community.
 may serve as mentors.
 may help establish a moral and
professional support network.
 invaluable source of counsel and
advice.

Who are your entrepreneurial role models?

Male Entrepreneur Characteristics
Make Things Happen, Role In Corp. Not Important,
Motivation Desire To Be In Control
Dissatisfied With Present Job, Sidelines,
Departure Point Discharged/Laid-Off, Acquisition Opportunity
Personal Assets/Savings, Bank, Investors,
Fund Sources Family/Friends Loans
Occupational Experience, Recognized Specialist, Competent In
Background Business Functions
Opinionated/Persuasive, Goal-Oriented,
Personality Innovative/Idealistic, Self-Confident, Energetic
Age = 25-35, Father Self-Employed, College-Educated,
Background Firstborn Child
Friends, Professional Acquaintances (Lawyers,
Support Groups Accountants), Associates, Spouse

Business Started Manufacturing/Construction

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 Female Entrepreneur Characteristics
Motivation Accomplishment Of Goal, Do It Alone

Job Frustration, Recognition Of Opportunity, Change In

Departure Point Personal Circumstance

Fund Sources Personal Assets/Savings, Personal Loans

Occupational Experience, Mid-Management/Administrative

Background Experience, Service Occupation

Flexible/Tolerant, Goal-Oriented, Creative & Realistic,

Personality Self-Confident, Energetic, Social
Age = 35-45, Father Self-Employed, College Educated
Background (Liberal Arts), Firstborn Child
Friends, Spouse, Family, Women’s Prof. Groups, Trade
Support Groups Associations

Business Started Service-Related

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3-5

Entrepreneur Vs. Inventor

An inventor creates something for the first
time. While the entrepreneur falls in love
with the new venture, the inventor falls in
love with the invention and often requires
the expertise of an entrepreneur to launch a
new venture.

Historians classify Albert Einstein as an inventive genius and Henry

Ford as an entrepreneurial genius. Do you agree or disagree? Why?
3-6

Warning: Difficult personality types.

Shotgun An entrepreneurial type who quickly
Sam identifies new, promising opportunities but
rarely, if ever, follows through.
Simplicity A type who thinks everything is a lot simpler
Sue than it actually is and feels she can create a
successful business through easy solutions.
Prima A type so in love with his own idea the he
Donna Paul feels everyone is out to steal his idea and take
advantage of him.
Ralph the This type is well grounded in theory but lacks
Rookie real-world business experience.
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 Difficult personality types (continued)
3-7

Meticulous A perfectionist type who is so used to having

Mary things under control that she cannot handle
catastrophe, ambiguity and/or chaos.
Underdog This type is not comfortable with actually
Ed transforming the invention into a tangible
business success. Attends seminars.
Hidden This type does not have the right motives and
Agenda objectives for developing and expediting a
Harry new enterprise.
Inventor An inventor more than an entrepreneur, Irving
Irving is more concerned with the invention itself
rather than creating and expediting a business.
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Characteristics of Successful Entrepreneurs
Basic intelligence
High level of energy
Commitment and determination
Desire for responsibility
Opportunity obsession
Tolerance for risk and uncertainty
Self-confidence
Creativity and flexibility
Good listeners and quick learners
Self-starters and self-motivated
Learn from their mistakes
Have intimate knowledge of their technology and the
marketplace
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Sustaining a New Venture
To start a technology-oriented business, the
entrepreneur must have a deep
understanding of the technology.
Once the business is running, the
entrepreneur must shift from the technology
to becoming a manager of people and
resources, and a marketer.
Many times, the entrepreneur fails at this in
the first business but is successful in the
second business.
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Causes of Failure
Managerial incompetence
Lack of experience
Poor financial control
Failure to plan
Poor location
Lack of inventory control
Improper attitudes
Inability to make the (strategic and
organisational) transition from startup to
growth phase
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The Entrepreneurial Process involves

finding, evaluating, and developing an
opportunity by overcoming
the strong forces that
resist the creation
of some- thing
new.

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The Entrepreneurial Process has

4 distinct phases
1. Identification and evaluation of the
opportunity
2. Development of the business plan
3. Determination of the required
resources
4. Management of the resulting
enterprise

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Opportunity Analysis: Assessing the

Opportunity
What market need does it fill?
What personal observations have you
made?
What are the underlying social
conditions?
Examine the market research data.
Assess competition. Any patents?
Where is the money to be made?
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Opportunity Assessment Plan
Description of the product or service
Functions and features
Target buyers/users
Assessment of the opportunity
Market size, window of opportunity
Real and perceived value
Risks and returns
Differential competitive advantage
Assessment of the entrepreneur and the team
Specification of the activities and resources
needed, source of financing
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The Entrepreneurial and
Intrapreneurial Mind

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“Intrapreneurship” is entrepreneurship
within an existing business structure.
The process begins by establishing an
an intrapreneurial culture. This refers
to instilling the entrepreneurial spirit

in an existing organization in order to

innovate and grow.

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Characteristics of an Intrapreneur
1 Often operates on the frontiers of technology
so understands multiple aspects of the
environment.
2 Has a vision.
3 Possesses flexibility, problem
solving skills and uses a
multi-disciplinary approach.
4 Encourages open discussion and
teamwork.
5. Builds a coalition of supporters.

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