Entrepeneurship

1. Entrepeneurship

2. Entrepreneurship Corporate entrepreneurship – intrapreneurship Global entrepreneurship, entrepreneurship in Ireland Case studies

3. Derivation The word ‘entrepreneur’ is derived from the French verb enterprendre. It means “ to undertake.” The term “entrepreneur” was applied to business initially by the French economist, Cantillon, in the 18th century, to designate a dealer who purchases the means of production for combining them into marketable products

4. Approaches to entrepreneurship Economic approach Psychological trait approach Socio-behaviourial approach (environmental factors)

5. Economic approach In neoclassical economic theory viewed as someone who coordinates different factors of production Not looked on as an important role Significance of role developed by writers outside of economic mainstream

6. Economic approach An entrepreneur is someone who organizes, manages, and assumes the risks of a business or enterprise. An entrepreneur is an agent of change. Entrepreneurship is the process of discovering new ways of combining resources. When the market value generated by this new combination of resources is greater than the market value these resources can generate elsewhere individually or in some other combination, the entrepreneur makes a profit. 

7. Economic approach A vibrant, growing economy depends on the efficiency of the process by which new ideas are quickly discovered, acted on, and labelled as successes or failures. Just as important as identifying successes is making sure that failures are quickly extinguished, freeing poorly used resources to go elsewhere. This is the positive side of business failure.

8. Economic approach An entrepreneur who takes the resources necessary to produce a pair of jeans that can be sold for thirty dollars and instead turns them into a denim backpack that sells for fifty dollars will earn a profit by increasing the value those resources create

9. Economic approach Successful entrepreneurs expand the size of the economic pie for everyone. Bill Gates, who as an undergraduate at Harvard developed BASIC for the first microcomputer, went on to help found Microsoft in 1975. During the 1980s, IBM contracted with Gates to provide the operating system for its computers, a system now known as MS-DOS. Gates procured the software from another firm, essentially turning the thirty-dollar pair of jeans into a multibillion-dollar product

10. Examples Sam Walton, the founder of Wal-Mart, was another entrepreneur who touched millions of lives in a positive way. His innovations in distribution warehouse centers and inventory control allowed Wal-Mart to grow, in less than thirty years, from a single store in Arkansas to the nation’s largest retail chain. Shoppers benefit from the low prices and convenient locations that Walton’s Wal-Marts provide. Along with other entrepreneurs such as Ted Turner (CNN), Henry Ford (Ford automobiles), Ray Kroc (McDonald’s franchising), and Fred Smith (FedEx), Walton significantly improved the everyday life of billions of people all over the world.

11. Economic theorists Richard Cantillon Jean Baptiste Say John Stuart Mill Joseph Schumpter Israel Kirzner Frank H Knight

12. Richard Cantillon French-Irish born in Co.Kerry First academic use of the term Identified the willingness to bear the personal financial risk of a business venture as the defining characteristic of an entrepreneur.  Essay on the Nature of Trade in General only surviving work  Entrepreneurs, according to Cantillon, are non-fixed income earners who pay known costs of production but earn uncertain incomes  due to the speculative nature of pandering to an unknown demand for their product Influenced Adam Smith

13. Jean Baptiste Say Say predominately considered the entrepreneur a "planner". Say stressed the role of the entrepreneur in creating value by moving resources out of less productive areas and into more productive ones.

14. John Stuart Mill Mill used the term “entrepreneur” in his popular 1848 book, Principles of Political Economy, to refer to a person who assumes both the risk and the management of a business. In this manner, Mill provided a clearer distinction than Cantillon between an entrepreneur and other business owners (such as shareholders of a corporation) who assume financial risk but do not actively participate in the day-to-day operations or management of the firm.

15. Joseph Schumpter Schumpeter stressed the role of the entrepreneur as an innovator who implements change in an economy by introducing new goods or new methods of production. In the Schumpeterian view, the entrepreneur is a disruptive force in an economy.

16. Creative destruction Schumpeter emphasized the beneficial process of creative destruction, in which the introduction of new products results in the obsolescence or failure of others. The introduction of the compact disc and the corresponding disappearance of the vinyl record is just one of many examples of creative destruction: cars, electricity, aircraft, and personal computers are others.

17. Israel Kirzner Kirzner focused on entrepreneurship as a process of discovery. Kirzner’s entrepreneur is a person who discovers previously unnoticed profit opportunities. The entrepreneur’s discovery initiates a process in which these newly discovered profit opportunities are then acted on in the marketplace until market competition eliminates the profit opportunity.

18. Equilibrating force Unlike Schumpeter’s disruptive force, Kirzner’s entrepreneur is an equilibrating force. An example of such an entrepreneur would be someone in a college town who discovers that a recent increase in college enrollment has created a profit opportunity in renovating houses and turning them into rental apartments. 

19. Frank H Knight Emphasised risk The behaviour of the entrepreneur reflects a kind of person willing to put his or her career and financial security on the line and take risks in the name of an idea, spending much time as well as capital on an uncertain venture. Knight classified three types of uncertainty.

20. Three types of uncertainty Risk, which is measurable statistically (such as the probability of drawing a red color ball from a jar containing 5 red balls and 5 white balls). Ambiguity, which is hard to measure statistically (such as the probability of drawing a red ball from a jar containing 5 red balls but with an unknown number of white balls). True Uncertainty or Knightian Uncertainty, which is impossible to estimate or predict statistically (such as the probability of drawing a red ball from a jar whose number of red balls is unknown as well as the number of other coloured balls). Often the type associated with entrepreneurship

21. Environmental factors The environment influences both opportunities for entrepreneurial activities and accessing resources in order to participate in the process of entrepreneurship.

22. Environmental factors Environment – Sum total of external factors within which an enterprise operates. Entrepreneurs do not emerge at their own. Characteristics of Environment: Dynamic Uncontrollable and External Affect the business in varying degrees Poses threats and offers opportunities

23. Factors Affecting Entrepreneurship Economic Factors Social Factors Psychological Factors Facilitating Factors Competitive Factors

24. Economic Factors Financial Assistance from Institutional Sources Accomodation in Industrial Estate Attitude of the Government Encouragement from Large Business Machinery on Hire-Purchase Labour Conditions Raw Materials Size and Composition of Market

25. Social factors Social Status Religion Social Mobility Social Marginality

26. Psychological Factors  Need Achievement Withdrawal of Status Respect

27. Competitive Factors Porters Five forces