ORIGIN AND NATURE OF ENTREPRENEURSHIP Albert Shapero- who has studied other works on

entrepreneurship has opined that in all of the definitions of

What is entrepreneurship? entrepreneurship.
- The term and idea on entrepreneurship appear to be
familiar, however, there is much more than what is Entrepreneurship- is the process of creating something
commonly perceived. different with a value by devoting the necessary time and
- Its origin remains to be unclear but there are effort, assuming the financial, psychic, and social risk and
indications that the term entrepreneur or receiving the resulting rewards of monetary and personal
- entrepreneurship originated in Europe in the Middle satisfaction.
Ages.
- The word entrepreneur is of French origin from the Entrepreneurship is a process and approach
word entreprendre, which simply means ‘’to Entrepreneurship is also described by renowned scholars as
undertake’’. dynamic process and an approach.
- There are also other terms an entrepreneur has, that it - As an approach, the entrepreneur considers the business
can also be translated to mean ‘’ between taker’’ or ‘’ opportunity as a chance to solve the problem rather than
go between’’. Cited as a typical example reflective of solving the problem itself.
the term entrepreneur as ‘’ go-between’’ or ‘’ Traditional manager and the traditional manager and the
between- taker’’. entrepreneurial manager are the bias towards growth and
Marco Polo – Who attempted to establish trade routes to the expansion scenario.
far East during his time. Albert Shapero- pointed out that entrepreneurship is a
- The twentieth century saw a number of scholars dynamic process of innovation and new- venture creation
focusing their research and studies on the concept of through five major dimensions.
entrepreneurship.
The entrepreneurial event focuses on the process of
Contemporary Views on Entrepreneurship
entrepreneurial activity and includes the following factors:
Entrepreneurs are made not born defined entrepreneur by
1. Initiative: An individual or group takes the initiative.
dissecting the word entrepreneur into three parts as follows:
2. Organization: Resources are brought together in
 entre means to enter
organization to accomplish some objective (or the resources in
 pre means before; and
existing organization are reorganized)
 neur means nerve center
Shefsky’s- practical view on the term entrepreneur leads to a
definition of the word as someone who enters a business- any A Perspective on Entrepreneurship
business in the time to form or change substantially that Entrepreneurship is a very important component of a capitalist
business nerve center. economy like the Philippines.
Karl Vesper- an entrepreneur in broader perspective by - It thrives in economic systems that support innovation and
postulating that entrepreneurship is now a concern of various hard work. When entrepreneurs become successful, the nation
professions. is immensely benefited.
- An entrepreneur is one who brings resources, labor,
materials, and other assets into combinations. Entrepreneurship and Economic Development
Economic development is a scheme aimed at improving the
- To a psychologist, entrepreneur could refer to such a living standards of the nation citizenry.
person as typically driven by certain forces, need to To achieve development goals, proper management of the
attain something, to experiment, to accomplish. following elements is necessary:
- To one businessman, an entrepreneur as threat, an [Link] resources (labor supply, education, discipline,
aggressive competitor whereas to another motivation)
businessman, the entrepreneur may be an ally, a [Link] resources (land, minerals, fuel, climate)
source of supply, a customer, or someone good to [Link] formation (machines, factories, roads) and
invest. [Link] (science, engineering, management,
Professor Robert Nelson - defines entrepreneur as ‘’ a person entrepreneurship)
who is able to look at environment, identify opportunities to
improve the environment, marshal resources, and implement The Entrepreneur’s Task
action to maximize those opportunities’’. The entrepreneur can assume his assigned role in the
development of economy. The review of the contribution of
Joseph Schumpeter-described entrepreneurship as doing entrepreneurs will reveal that no business, big or small, stated
things that are not generally done in the ordinary course of without hand of the entrepreneur.
business routine. It is essentially a phenomenon that comes This is made possible because the surviving enterprises are
under wider aspects of leadership. responsible for the following:
[Link] and services for customers and producers
Jeffry Timmons- described entrepreneurship as ‘’ the ability 2. Employment
to create and build a vision from practically nothing’’. 3. Taxes
4. Demand for suppliers’ products and services and
 5. Training facilities for future entrepreneur 1. Formation of the business
2. Generation of necessary capital
3. Purchase of facilities and equipment
4. Constructing prototype products and
5. Testing the market.

No full- scale activity must undertake at this stage for the

simple reason that feasibility must be established and verified.
The early growth stage follows after establishing feasibility.
Activities will be on a small scale, selling to limited resources.

The Nature of Small Business

-The business size is one factor that does not prevent one from
engaging in entrepreneurship.
-Since only a small number of people have a capital large
enough to start a large enterprise.
-The bigger number of people with minimal resources are
forced to operate on a small-scale basis.
In the attempt to make profits, the entrepreneur performs
the following specific functions:
1. To supply the necessary capital
2. To organize production by buying and combining
inputs like materials and labor
3. To decide on the rate of output, in the light of his
expectation about demand and
4. To bear the risk to the venture

Entrepreneurship and Innovation

Innovation may be defined as the introduction of a new
method, procedure, custom, device among others.
1. A new product
2. A new process of production
3. The substitution of a cheaper material in an unaltered - Since most new ventures will be small business, it is
product. expected that majority of the efforts of those involved
4. The reorganization of production, internal function, or in the propagation of entrepreneurship.
distribution arrangement leading to increased efficiency, - The premises is that if small business is managed
better support for a given product, or lowest cost. properly, their chances of becoming large enterprises
5. An improvement instruments or methods of doing are increased.
innovation. Innovation may also be viewed as the last - Since well-known that large enterprises bring certain
stage in an important process consisting of the following: benefits to the economy, small business management
is an activity worth pursuing.
Invention – which refers to the discovery or devising of a new - But if many small businesses will not develop into
product and processes large businesses, their contribution is still very
Development – which refers to the process by which the ideas significant.
and principles generated from the stage on invention are
embodied in concern product and techniques What is a Small Business?
Innovation- which refers to the actual introduction of a new Small business – may be defined by using any two
product process. approaches:
1. Market Share
New Ventures and Long-Term Enterprises 2. Total assets
A new venture cannot remain as such forever. The Small business may be defined as one which independently
entrepreneur must develop it into a small business or make it owned and operated and which is not dominant in its field of
grow into a mature and bigger company. operation.
The transition from a new venture to a successful long-term The term ‘’ independently owned’’ means ownership is by a
enterprise consists of a least four major stages. The stages are private individual, a partnership, or a corporation.
as follows: The term ‘’ not dominant’’ indicates that a small business does
1. The prestart-up stage not control a sizeable share of its market.
2. The start-up stage
3. The early growth stage - A small business may be defined under the total
4. The late growth stage assets approach as one having total assets that fall
within a certain bracket
In the start-up stage the following activities are undertaken:
 - One of the disadvantages of the total assets approach General constructions firms
is that values are affected by inflation. - are those engaged in the construction of buildings
- Inflation alters the nominal value of business assets whether for private individuals or firms for the
and what maybe previously considered small government.
business may no longer be classified.
- The market share approach in defining small business - Many of them perform subcontracting jobs for the
is more appropriate. bigger contractors such as installing electrical
facilities and sewerage.
- As a whole, general construction firms employ
hundreds of thousands of people and they operate in
the countryside.
Characteristics of Small Business
Small business has their own distinctive characteristics. They
are the following:
1. Independent management - the owner is also a manager
2. Small capital requirement – small business requires only
small capital and this can be supplied by a single or a few
individuals.
3. Mostly local operates – small business usually operates in
a certain locality although there are cases when the market is
not confined to a local area.
Types of Small Business
Small business may be classified into five types: (1)
manufacturing, (2) service, (3) wholesaling, (4) retailing, and Economic importance of Small Business
(5) general construction firms. - Small business plays an important role in the development of
our economy.
1. Small Manufacturing Business They assume the following functions:
- A manufacturing business is one involved in the conversion 1. Provides of economic opportunities for entrepreneurs –
of raw materials into products needed by society. People who do not feel comfortable as employees have the
2. Small Service Business option of engaging business in the small business operation.
- Service business is those that provide service in one way or 2. Providers of products and services to consumers – the
another. They may be further classified into the following: productions and service is oftentimes not feasible with a big
1. Business services – those that provide service to and medium business operation.
other business. 3. Suppliers of products and services to other business –
2. Personal service – those that provide service to the some business requires raw materials, semi- finished parts,
person. finished components or even labor, which they cannot
3. Repair service – those that provide repair services to economically produce.
owners of various machinery and appliances. 4. Distributors of products and services of other businesses
4. Entertainment and recreation – include movie – some manufacturers do not have the ability to distribute their
houses, resorts, billiard pool centers, and the like. products and services.
5. Hotel and Motels. 5. Supporters of government – small business supports the
6. Education services – include Montessori schools for government with taxes the pay, as well as performing other
children, high school, correspondence schools, functions.
among others. 6. Provides of employment – A large proportion of the labor
Wholesaling force are employed by small business
- refers to the activities of a persons or establishments, which
sell to retailers and other merchants, and to industrial, Advantages of Operating Small Business
institutional, and commercial users, wholesalers in local areas, An individual has various options to improve his economic lot.
dealers of suppliers and office equipment, grains wholesalers, They are the following:
and the like. [Link] an employee
- A big number of these wholesalers are owned by small 2. Be a professional
operators. 3. Be a small business operator (SBO)

The opportunity to Gain Control Over His Own Destiny

Retailing
- The prospective small business owner chooses from several
- covers all activities involved in the sale of goods and
business opportunities that he would like to take an advantage
services to the final consumers.
of.
- The bulk of retailing activities are performed by a small
- If, after a few years, he thinks that the business is not worth
business.
operating anymore, then he can dissolve it and open a new
- An organization be it a manufacturing or a whole seller sells
one.
directly to the end consumer it is actually operating in the
retail space.
The Opportunity to Reach Full Potential
- The employee will do his work based on prescribed targets
which many only require less than his full potential.
- This is not so with a small business operator, his freedom to
act is limited only by his potential and he can revise or amend
his targets within short notice.

The Opportunity to Reap Unlimited Profits

- If the small business, all profits, big or small, accrue to the
owner.
- If he is not satisfied, he may exert more efforts to increase
his profits the opportunity is not afforded to the plain
employee.

The Opportunity to Make a Contribution to Society and

Receive Recognition for his Efforts
- Entrepreneurs who make innovative products available to the
public are recognized properly by society.
- Some of them like Henry Ford, became billionaire, others
like Walter Disney, merited listings in books of eminent
personalities.

Disadvantages of Operating a Small Business

The small business operator, there are certain disadvantages
that must be considered. These are the following:
[Link] of income
2. Risk of losing your entire capital investment
3. Lower quality of life until the business gets established
4. Complete responsibility
5. Having to serve undesirable customers
6. Paper work and other chores
7. Long hours and demanding work condition.