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Entrepreneurship
“Entrepreneurship is an economic
phenomenon involving a nexus of two
phenomena: the presence of lucrative
opportunities and the presence of
enterprising individuals”.
Source:http://aventalearning.com/content168staging/2008A
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mHistA/unit1/html/section_3_page_7.html
What is an Entrepreneur?
http://ecorner.stanford.edu/authorMat
erialInfo.html?mid=400
•Novel
Resource
Combination –
Alfred
Marshall, 1920
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Evolving Entrepreneurs
Date Author Concept
1755 Cantillon Introduced the concept of entrepreneurs from entreprendre (‘ability to take charge')
Emphasised the ability of the entrepreneur to 'marshal’ resources in order to respond to
1803, 1817 Say
unfulfilled opportunities
Noted the ability of entrepreneurs to distinguish between 'economic goods' - those with
1871 Menger
a market or exchange value - and all others
Attributed to entrepreneurs the ability to take integrated action in the enterprise as a
1893 Ely and Hess
whole, combining roles in capital, labour, enterprise and entrepreneur
Envisioned that entrepreneurs proactively 'created' opportunity using 'innovative
1911, 1928 Schumpeter combinations' which often included 'creative destruction' of passive or lethargic
economic markets
Suggested that entrepreneurs were concerned with 'efficiency' in economic factors by
1921 Knight continually reducing waste, increasing savings and thereby creating value, implicitly
understanding the opportunity-risk-award relationship
Continued the Austrian tradition of analytical entrepreneurs giving them capabilities of
1948, 1952,
Hayek discovery and action, recognising the existence of information asymmetry which they
1967
could exploit
19373, 1979, Attributed to entrepreneurs a sense of 'alertness' to identify opportunities and exploit
Kirzner
1997, 1999 them accordingly
Attributed to entrepreneurs the capacity to 'foresee' market trends and make a timely
1974 Drucker
response
Attributed to 'judgement' ability to entrepreneurs to identify 'credible opportunities'
1975, 1984,
Shapero depending on two critical antecedents - perceptions of 'desirability' and feasibility' from
1985
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both personal and social viewpoints
Schumpeter
•Calculated risk-taker
•The opportunity for profit arises out of uncertainty and risk
•The entrepreneur is an individual who is prepared to
undertake risk and the reward - profit
•Responsibility for one's own actions
And he adds…
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MaterialInfo.html?mid=2803
Schumpeter
• “the person who destroys the existing economic order by introducing new products and services, by creating new forms
of organization, or by exploiting new raw materials.”
• “creative destruction”
• the entrepreneur is a special person
• entrepreneur is an innovator
• develops new technology
Kirzner
• entrepreneur is alert to profitable opportunities for exchange
• identifies suppliers and customers and acts as an intermediary (no necessity to own resources and profit arises from
intermediary function)
• entrepreneur has additional knowledge which is not possessed by others (the role of information is very important)
• anyone could potentially possess the additional knowledge and be alert to opportunities for exchange and trade.
Knight
• The entrepreneur is an individual who is prepared to undertake risk and the reward - profit - is the return for bearing
uncertainty and is an uninsurable risk.
• entrepreneur is a calculated risk
• taker
• opportunity for profit arises out of uncertainty surrounding change
• responsibility for one’s own actions
Achievement does not necessarily mean that money is an end itself. It may
allude to employing the 100th person, meeting the first million pound mark etc.
Believing you can exercise control over your environment and ultimately your
destiny.
A regular income is a requirement in any job and the cause of much upheaval
and stress. People tend to be risk averse and less willing to be risky with their
own money. In this manner managers and entrepreneurs are very different.
Reed Hastings
Self-confident
Entrepreneurs are highly driven and possess determination. They are impatient,
work long hours, committed and determined to succeed. This strong drive is what
psychologists call type ‘A’ behaviour. They are highly driven by money, their goals,
success, etc.
Clear vision of what they want, how they will achieve it and when.
Key characteristics:
•Achievement
•Calculated risk-taker
•High internal locus of control
•Creativity
•Innovative
•Need for authority
•Ambiguity tolerance
•Vision
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•Self-efficacy
Personality Approach Theories
Merideth et al. (1982)
• Confidence
• Risk-taking
• Flexibility
• Achievement orientation
• Independence
Meredith, G.G., Nelson, R.E. and Neck, P.A. (1982). The Practice of
Entrepreneurship, International Labour Office, Geneva.
Enterprise Concepts and Issues © Goodfellow Publishers 2016
Personality Approach Theories
Timmons (1994)
Timmons, J.A. (1994). New Venture Creation: Entrepreneurhsip for the 21st
Century, 4th Edition, Irwin: Chicago, IL.
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Entrepreneurial Types?
• Family
• Ethnicity
• Gender
• Education
• Previous employment
• Religion
• Social group
• National culture
• Employment
• Unemployment
• Immigration
• Economic opportunity