INTRODUCTION TO ENTREPRENEURSHIP 1

(ENT 126)

YEAR ONE SECOND SEMESTER FOR ND STUDENTS`

Course Objectives

1. Understand enterprises, entrepreneurship, entrepreneur, and related concepts.

2. Know the history and challenges of entrepreneurship in Nigeria and strategies

for overcoming them.

3. Know the nature, functions, roles, personal rewards of entrepreneurs, and

value and creation.

4. Understand the psychology of entrepreneurship; entrepreneurs` mindset,

attitudes and behavior.

5. Understand entrepreneurship as a process, a type of ability, and a way of

thinking and behaving.

6. Know the social and economic importance of entrepreneurship in Nigeria.

7. Know the sociology of entrepreneurship; the interdependence between the

society and entrepreneurship.

COMPILED BY: BELLO KASIM S. 1

 Chapter one

Understand enterprises, entrepreneurship, entrepreneur, and related concepts

1.1 The Nature of Enterprises

The terms entrepreneurship and entrepreneur came out of the word enterprise. It is therefore
important to understand the meaning of enterprise in order to appreciate all the other concepts.
Enterprise has been defined in various ways by different authors.

A careful study of these definitions and other definitions of enterprise show that the word
enterprise means:

(i) A project, undertaking, or a business unit that is methodically organized, and is associated
with risk and reward,

(ii) Personal attributes required to start and operate such an entity successfully.

The term enterprise can therefore be defined as a properly planned and organized project,
undertaking, or a business unit that is associated with risk and reward, and the personal
attributes required to start and operate such an entity successfully. The personal skills and
abilities required to start an enterprise is usually qualified as entrepreneurial traits/qualities or
what some authors referred to an entrepreneurial mindset.

Some Definitions of Enterprise

1. The Free Dictionary by Farlex as shown by the American Heritage Dictionary of the
English Language (2009). An enterprise is a business organization, industrious, systematic
activity, especially when directed towards profit, and/or willingness to undertake new
ventures; initiatives.

2. Collins (2003)

A Project or undertaking, especially one that requires boldness or effort, participation in such
projects, readiness to embark on new ventures; boldness and energy, initiative in
business/commerce, a business unit; a company or firm.

3. Rosa (1992).

A series of personal skills and qualities vital to economic development; qualities vital to
good citizenship and the realizations of the individual's full potential; a business organisation
of some types.

4. Kearney (1998)

Any identified idea that is translated into a planned and satisfactorily implemented activity.

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5. Manu, Nelson and Thiongo (2005) in the Know About Business (AKAB) document of the
international Labour Organisation (IL0). A business, a project, or an undertaking that the five
steps mentioned: (idea, identification, planning, implementation, successful completion of an
activity, and acceptance of risk and reward) are followed.

1.1.2 Classifications of Enterprises

Enterprises comprise all types of projects or undertakings. Enterprises are usually classified
based on a number of factors such as the nature of objectives being pursued, size of the
enterprise, ownership structure, and the products of the enterprise. Although these factors are
interrelated, they serve as the basic distinguishing features of the various enterprises in any
society.

The Basic Objective Being Pursued

All undertakings or projects are established with particular goals and objectives in mind.
Organisations pursue some common objectives such as growth, creativity and innovation,
maximization of market share and sales, cost minimization, customer satisfaction, employee
satisfaction and corporate social responsibility. The basic objective of an enterprise is either
for the achievement of profit or not-for-profit. Therefore, an enterprise can be classified
based on its basic objective, whether profit or not-for-profit.

Profit oriented enterprises are organisations that pursue profit making as a basic objective. To
them all other objectives are secondary and these secondary objectives are being achieved for
the enhancement and sustenance of the basic objectives — profit for owners. Business
organisations are typical examples of profit-oriented enterprises. Nonprofit oriented
enterprises are those undertakings whose objectives do not include profit making but to meet
the various needs of some people in the society. Therefore, non-profit oriented organisations
are not established to make profit for owners (that are shared as dividends). Instead these
enterprises are started to meet needs of some members of the society. Such needs may
include spiritual, emotional, financial, protection of rights, and other physical needs. For
examples, spiritual needs required enterprises such as church and mosque; emotional needs
are satisfied through education and enlightenment of the disadvantaged or physically
challenged people by non-governntental organisational (NGOs), financial needs through
scholarships, donations, grants are met through foundations. In the same way protection of
rights are needs of some, people that required enterprises in form of NGOs, and other
physical needs through establishment of orphanage or motherless homes. People in every
society have different needs and interest.

Some Objectives of Business Enterprises

1. Profit Maximization: Business is basically established for profit. Profit is the excess of
sales revenue over costs and expenses. Therefore, in order to make profits, managers must
ensure that sales are increasing and costs and expenses are kept down.

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2. Growth: Managers equally pursue growth and expansion of their businesses. Growth
objectives are achieved through different strategies that involve more and better products,
geographical expansion through new branches and businesses etc.

3. Customer Satisfaction: Customers are the reasons for the existence of businesses. It is
important to ensure that customers are attracted and retained to keep the sales going. Business
organisations usually attract and retain customers through many strategies such as quality
products, moderate prices, services, education, timely delivery, and good packaging

4. Employees Satisfaction: Employees need adequate and equitable pay, good work
environment and tools, recognition, etc, to work well and be committed.

5. Cost minimization: Entrepreneurs and their managers also pursue cost minimization to
get a good bottom line. Costs are reduced through excellent negotiation skills, efficient
sourcing, skilled workforce, productivity, good machines etc.

6. Good Public image: Every business organization needs to build and maintain good
corporate image through good behavior of its managers and employees and by being
responsive to social responsibilities. Social responsibility actions are expressed to all
stakeholders of the business and this cost money too.

7. Market and Competitive Position: All businesses always aim at increasing sales to bring
in the money. Achievement of market position such as leadership, follower, challenger, or
nicher requires some managerial and financial Commitment.

8. Survival: In times of unfriendly wind from the external environment, business

organisations seek for strategies for survival. The basic goal of any business in times of
environment turbulence and uncertainty is concerned with how to survive in the face of
challenges such as economic recession.

Size of the Enterprise

Enterprises can also be categorized into micro, small, medium and large-scale enterprises.
Micro, small, and most medium enterprises are mostly managed by their owners because the
scope of activities is not usually relatively large, and start-up capital is also not too
cumbersome. Large enterprises such as refineries, deposit money banks, textiles companies
are not as common as small enterprises but they are involved in large scale activities and
because of this they require large capital to set up. These profit-oriented enterprises are
usually structured as large private limited liability companies or public limited liability
companies (or variously referred to as corporations). There are also many large-scale not-for-
profit enterprises in our societies in the form of educational institutions such as universities,
polytechnics, and other institutes; churches, NGOs etc.

1.2 Differences between Business Enterprises and Social Enterprises

The concept of social entrepreneurship may be new, but the phenomenon is not because we
have always had social entrepreneurs, even if we did not call them by this name. On the
surface we all know that social entrepreneurship is a good thing, but when study further it

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becomes clear that social entrepreneurship is a complicated phenomenon and difficult to
understand. In spite the popularity of social entrepreneurship, there is a great problem about
its definition; it means different things to different people. Some authors have argued that all
entrepreneurship is social; it is therefore difficult to differentiate between social and the more
traditional business entrepreneurship. Social entrepreneurs like the traditional entrepreneurs
look for the most effective methods of serving their social missions. Many associate social
entrepreneurships exclusively with not-for-profit organizations starting for profit or earned-
income ventures. Yet others view social entrepreneurship as a form of entrepreneurship in
non-profit sectors but as popularly known, social entrepreneurship encompasses for-profit
and not-for-profit ventures.

Social entrepreneurship differs from business entrepreneurship in a number of ways.

Osalor (2010) defined social entrepreneurs as individuals who identify public problems and
apply business acumen to resolve them. According to him, the social entrepreneur instead of
only creating a venture to make profit, he simultaneously strives to contribute to societal
development and regulate positive change by creating social and economic values.

 Ownership Structure: Social enterprises are autonomous organizations with

governance and ownership structures based on participation by stakeholder groups
(users or clients, local community groups etc.) or by trustees. Business entrepreneurs
can be owned by one person, a few people as partners, or as limited or unlimited
liability companies. In a one-man business; the owner manages the affairs of the
business, some partners known as active partners manage the affairs of the partnership,
but owners of companies usually hire professional managers to take care of their
investments in a company.

 Organizational Aims: Social entrepreneurs have explicit social aims such as job
creation, training or the provision of local services. They have ethical values including
a commitment to local capacity building, and they are accountable to their members
and the wider community for their social environmental and economic impact. They
seek creative and valuable solutions to problems such as educational problems,
poverty, social ills in the society, global warming, global water shortage and energy.
Business entrepreneurs start their businesses for primary purpose of making profits
that is economic motive.

 Profit Orientation: Social entrepreneurs operate in the community and are more
concerned about social issues affecting the community than profit making as is
common in business entrepreneurship (Kao, 1993). Madhuka (2006) points out that a
business entrepreneur may create changes through innovation in the society, but that
is not the primary purpose of starting the venture, Similarly, a social entrepreneur may
generate profits (not maximize profits), but that may not be the primary reason for
starting the venture. Being ‘profitable’ helps self-sustainability of the venture, and
also works as a mechanism for self-monitoring. Making profits (commonly referred to
as surplus) is always regarded as a necessary condition for success to show that they
are covering costs.

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  Market Discipline: Social entrepreneurs basically focus on the social mission of their
ventures which is explicit and central to its existence. The way social entrepreneurs
perceive and assess opportunities is different from business entrepreneurs because
solving the identified social problem is the central criterion for assessing success and
not wealth creation because to them wealth is just a means to an end. However,
business entrepreneurs see wealth creation as a way of measuring value creation. This
is because business entrepreneurs are subject to market discipline, which determines
in large part whether they are creating value. If they do not shift resources to more
economically productive uses, they tend to be driven out of business. Markets are not
perfect, but over the long haul, they work reasonably well as a test of private value
creation, specifically the creation of value for customers who are willing and able to
pay. An entrepreneur’s ability to attract resources (capital, labor, equipment, etc.) in a
competitive marketplace is a reasonably good indication that the venture represents a
more productive use of these resources than the alternatives it is competing against.
The logic is simple.
Entrepreneurs who can pay the most for resources are typically the ones who can put
the resources to higher valued uses, as determined in the marketplace. Value is
created in business when customers are willing to pay more than it costs to produce
the good or service being sold.

 Measurement of value: In particular, markets do not do a good job of valuing social

improvements, public goods and harms, and benefits for people who cannot afford to
pay. These elements are often essential to social entrepreneurship because that is what
makes it social entrepreneurship. As a result, it is much harder to determine whether a
social entrepreneur is creating sufficient social value to justify the resources used in
creating that value.
The survival or growth of a social enterprise is not proof of its efficiency or
effectiveness in improving social conditions. It is only a weak indicator, a best. Social
entrepreneurs operate in markets, but these markets often do not provide the right
discipline. Many social-purpose organizations charge fees for some of their services.
They also compete for donations, volunteers, and other kinds of support. But the
discipline of these markets is frequently not closely aligned with the social
entrepreneur’s mission. It depends on who is paying the fees or providing the
resources, what their motivations are, and how well they can assess the social value
created by the venture. It is inherently difficult to measure social value creation. How
much social value is created by reducing pollution in a given stream, by saving the
spotted owl, or by providing companionship to the elderly? The calculations are not
only hard but also contentious.
However, it is very easy to measure the value being created by business entrepreneurs
through profits, patronage, employment generated, taxes paid, saw materials
purchased especially locally, contributions to GNP/GDP.

 Difficulty in Linking Benefits to Social Enterprises: Even when improvements can

be measured, it is often difficult to attribute them to a specific intervention. Are the
lower crime rates in an area due to the activities of a social enterprise with a mission

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 of crime reduction through education and empowerment, new policing activities such
as new techniques/strategies, of just a better economy? Even when improvements can
be measured and attributed to a given intervention, social entrepreneurs often cannot
capture the value they have created in an economic form to pay for the resources they
use. Sources of Income or Revenue In attacking social problems, social entrepreneurs
rely on subsidies, donations, and volunteers, but this further muddies the waters of
market discipline. The ability to attract these philanthropic resources may provide
some indication of value creation in the eyes of the resource providers, but it is not a
very reliable indicator.

1.3 Entrepreneurship

Entrepreneurship has multitudes of definitions. Some of these definitions are shown below.
Entrepreneurship is an important part of modern economic, social and political life of any
people or nations. Based on due consideration of the various definitions by some different
authors, Stokes, Wilson and Mador (2010) categorized the definition of entrepreneurship into
three basic dimensions: as a process, special behaviors, and a way of thinking. As a process,
entrepreneurship involves recognition of opportunities, evaluation of such opportunities for
careful selection, marshaling resources to tap on the opportunity for reward while bearing the
risks.

Some Definitions of Entrepreneurship

1. Stevenson and Jarrilo (1990)

Entrepreneurship is the process by which individuals either on their own or inside
organizations pursue opportunities without regard to the resources they currently control.

2. Hisrich and Peters (2002)

The process of creating something new and of 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.

3. Nwachukwu (1990)
A process of seeing and evaluating business opportunities, gathering the necessary resources
to take advantage of them and initiate appropriate actions to ensure success.

4. Wennekers and Thurik (1999)

The manifest ability and willingness of individuals on their own, in teams, within and outside
existing organisations, to perceive and create new, economic opportunities (new. products;
new ‘production methods, new, organisational schemes and new product-market
combinations) and to introduce their ideas in the market, in the face of uncertainty, and other
obstacles, by making decisions on location, form and the use of resources and institutions.

5. Okpara (2000)
The willingness and ability of an individual to seek out investment opportunities in an
environment and establish and run an enterprise successfully based on the identified
opportunities.

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6. Kuratko (2002)
Entrepreneurship is the characteristics of seeking opportunities, taking risks beyond security,
and having tenacity to push an idea through to reality.

7. Timmons and Spinneli (2004)

Entrepreneurship is a way of thinking, reasoning and acting that is opportunity based, holistic
in approach and leadership balance.

Entrepreneurship is also the manifest abilities, skills and behavior of an individual or group
of people to birth business ideas, recognize business opportunities, and gather resources to
maximize selected opportunities, bear risks, cope with uncertainties, and manage resources to
achieve success or reward in the face of various environmental challenges. Entrepreneurship
is a way of thinking, reasoning and acting that is opportunity-based, holistic in approach,
leadership balanced, innovative, and growth oriented. The pursuit of opportunities usually
results in the creation of value; something new such as a product or an organization.

1.3.1 Characteristics of Entrepreneurship

Entrepreneurship is known through some characteristics that distinguish it from other

endeavors of life. Rockstar (2008) identified some of these characteristics: creative activity,
dynamic process, purposeful activity, and risk involvement.

Creative Activity Entrepreneurship entails creativity and innovation. It either a new

organisation is started, a new product is borne, or a new production technique is developed.
At other times entrepreneurship may involve improvement of an existing organization,
product, or technology. Such improvement may cover adaptation of a product to new
functions or uses. Product and technology development or innovations are implemented in
alignment with market requirements.

Dynamic Process Entrepreneurship as a process is totally dynamic because it is not a static

or once-and-for-all activity. The business environment is constantly changing because all the
factors and influences in the external environment are continuously changing especially
customers’ taste and preferences, government legislations and control, rate of competition,
and technology. Therefore, entrepreneurship success of today cannot guarantee a further
success tomorrow. The entrepreneur must keep monitoring the environment and continuously
adapting to such changes in terms of product offering, production process and technology,
and general ways of conducting business activities.

Purposeful Activity Entrepreneurship tasks are associated with different types of risks and
high capital outlay. It is not embarked upon for the fun of it but for the achievement of some
strategic goals and objectives. The strategic purpose of an entrepreneurship venture can be
purely for profit making, humanitarian or solving a social problem in the society, or for
changing the existing market trends through technology.

Involvement of Risks The various risks that are associated with entrepreneurship include
financial, social and psychological for the entrepreneur. All entrepreneurial decisions affect
not only the entrepreneur, but others such as financiers like angels and venture capitalists,

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employees, immediate community, consumers, and government. Therefore, failure or crisis
that arises out of entrepreneurial decisions usually lead to unfriendly consequences for some
if not all these stakeholders.

1.4 Types of Entrepreneurship

The common types of entrepreneurship are social, indigenous, community-based, and family
business.

1.4.1 Social Entrepreneurship

A social entrepreneur is any individual who targets an unfortunate but stable equilibrium that
causes the neglect, marginalization, or suffering of a segment of humanity; who brings to
bear on this situation his or her inspiration, direct action, creativity, courage, and fortitude;
and who aims at and ultimately affects the establishment of a new stable equilibrium that
secures permanent benefit for the targeted group and society at large, This definition of social
entrepreneurship encompasses for-profit and not-for-profit organizations created by these
entrepreneurs and also some government initiatives, but it excludes organisations that exist
solely to provide social services and those groups formed to engage in social activism.

Social entrepreneurs use their skills not only to create profitable business ventures but also, to
achieve social and environmental goals for the common good of all. They are people who
start businesses so that they can create innovative solutions to society’s most vexing
problems. Therefore, they see themselves as change agents for society.

1.4.2 Indigenous Entrepreneurship

Indigenous entrepreneurship simply means entrepreneurship carried out by indigenous people,

but it can also refer to the common situation where indigenous entrepreneurs, sometimes
through community-based enterprises, start businesses that are largely intended to preserve
and promote their culture and values. There is rich heterogeneity among indigenous peoples,
and some of their cultural values are often incompatible with the basic assumptions of
mainstream theories.
Indigenous entrepreneurship often has non-economic variables. Some indigenous
communities’ economies display elements of egalitarianism, sharing, and communal activity
Indigenous entrepreneurship is usually environmentally sustainable; this often allows
indigenous people to rely on immediately available resources and consequently, work m
indigenous communities is often irregular. Social organization among indigenous peoples
often based on kinship ties, not necessarily created in response to market needs.

1.4.3 Community Based Enterprises and Community Based Entrepreneurship

Community-based enterprises (CBEs) usually emerge from a process in which the

community acts entrepreneurially to create and operate a new enterprise embedded in its
existing social structure. CBEs emerge when a community works collaboratively to create or
identify a market opportunity and organize themselves in order to respond to it.

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These ventures are managed and governed to pursue the economic and social goals of a
community in a manner that is meant to yield sustainable individual and group benefits over
the short and long term. CBEs are positioned in a sector of the economy that is not dominated
by a profit motive, often because there is little profit to be made, or by the government.

1.4.4 Family Business

A family business is a commercial organization in which decision-making is influenced by

multiple generations of a family (related by blood or marriage) who are closely identified
with the firm through leadership or ownership. Owner-manager entrepreneurial businesses
are not considered to be family businesses because they lack the multigenerational dimension
and family influence that create the unique dynamics and relationships of family businesses.
Family business is the oldest and most common model of economic organization. The vast
majority of businesses throughout the world; from comer shops to multinational publicly
listed organizations with hundreds of thousands of employees; can be considered family
businesses.
The definitions of what constitute a family business vary amongst authors. Some include any
business that employs more than one family member, a very common situation that occurs in
three-quarters of all businesses. Other definitions are more restrictive and include only those
businesses passed on to a second generation which happens less frequently or in about one in
three of family businesses. The common thinking is that family businesses are businesses that
are started, owned, and operated by parents, with children helping out and later taking over.
Today, according to Megginson, Byrd, and Megginson (2003), two contrary trends are
developing. First, many young people are going into business for themselves while tapping
their parents for funds to finance such ventures. In return, the children often give one or both
parents an executive position in the company including a seat on the company’s board. The
second trend is the large number of spouses doing business together and this trend is expected
to continue into the twenty-first century. This second trend is the kind of family business we
traditionally think of: a married couple running a small neighborhood store, toiling long hours.

1.5 Entrepreneur

The term entrepreneur has been with us for more than 250 years and as observed by Hatten
(2006), it has evolved over the years into a multitude of definitions. Entrepreneur, a French
word from the seventeenth century literally means “between-taker” or “go between”. This
means entrepreneurs were referred to as men who organize and manage exploration
expeditions and military maneuvers According to Schumpeter (1934), an entrepreneur is the
innovator who implements change within a market through the introduction of new
techniques of production, reorganization of an industry and intention However, in 1961,
Schumpeter recognized the creative of the entrepreneur viewed him as an inventor, initiator,
and an agent of change or catalyst and therefore defined the entrepreneur as the person who
sees and makes use of opportunity fof introducing a new technique or a new commodity, and
improves organizations for the development of newly discovered resources In Quick MBA
(2010) the entrepreneur is defined as one who combines various input factors in an innovative
manner to generate value to the customer with the hope that this value will exceed the cost of
the input factors, thus generating superior returns that result in the creation of wealth. The

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entrepreneur according to Di-Masi (2010) is the person who perceives the market opportunity
and then has the motivation, drive and ability to mobilize resources to meet it.
Entrepreneur is the individual (or group of individuals) who acts as principal mediator of the
process of change through a specific project based on an opportunity that requires the
implementation of a new idea (ideas). An entrepreneur is a person who sees an opportunity
and assumes risk of developing a product in an existing organization of by starting a new
organisation to take advantage of the opportunity. An entrepreneur is a person or a group of
individuals that have the ability to recognize a business opportunity, gather the necessary
resources to exploit the opportunity while bearing the risks associated with these activities
and enjoying the reward in the form of profits or other benefits. The risks that go with
establishing an organisation can be financial, social, and psychological.

Multitude definitions of entrepreneur have evolved over the years, but most if not all of them
according to Vander Werf and Brush (1989) include all or some of the following behavioral
components:

i. Creation. A new business is started mostly from the scratch or a new product idea is born;
bringing into existence something that was not there before.

ii) Innovation. The business involves development of a new product, process, market,
material, or conquering obstacles that would have stopped other people and turning problem
to opportunities.

iii. Risk assumption. The owner/entrepreneur of the business bears the risk of potential loss
or failure of the business.

iv. General management. The owner of the business guides the business and allocates the
business’s resources.

v. Performance intention. High levels of growth and/or profit are expected.

1.6 Differences between an Entrepreneur and Small Business owners

Entrepreneurship has been misunderstood by many; it is therefore necessary to explain what

entrepreneurship is not. Entrepreneurship is not only linked to small business management.
Entrepreneurs are found in large as well as small-scale organisations. This means small
business does not have a monopoly of entrepreneurial talent. Most small business owners do
not innovate or pursue change in a continuous and purposeful way, Entrepreneurship is not
the unique domain of any country, gender, race, age, or socioeconomic sector. It can be found
in some form in every country, in every age group, and among both the rich and the poor. In
addition, entrepreneurship passion is not transferrable.

Most people think of the entrepreneur as a small business owner or put it in another way, that
all small business owners are entrepreneurs. This is far from the truth; the two concepts are
different but they are closely related. It is important to distinguish between entrepreneurial
ventures and small businesses. All entrepreneurs start and manage different enterprises but
not all small business owners are entrepreneurs. Although, it is difficult to distinguish

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between entrepreneurs and ordinary small business owners, the differences would be clarified
on the bases of the nature and scope of the enterprises the two usually venture into,
motivations for starting, objectives being pursued, behavioral posture, decision making,
management practices, and degree of commitment.

1.6.1 Nature and Scope of Enterprise: The entrepreneur starts and manages any of these
types of enterprises: profit-oriented, not-for-profit, small, medium, or large enterprises. They
can exist in large as well as small economic units, and in the private as well as the public
sector. This means an entrepreneur can be working as new venture creator in big companies
or organizations, or be independent; establish a new organization. A small business owner
starts and manages a small business for the basic purpose of sustenance and may be profit.

1.6.2 Motivations for Starting the Enterprise: Entrepreneurs don’t just businesses.
Entrepreneurs start their organizations based on opportunity recognition and exploitation.
What differentiates entrepreneurial opportunities from other profit-making opportunities,
according to Glosten and Muller (1993), is that to exploit entrepreneur opportunities, one
must discover a new means to an end, with unknown outcomes and with resources not yet
under the control of the entrepreneur. The motivations that propel the entrepreneur are
opportunities to develop new goods and services, means to gather the required resources to
produce those goods and services, and mechanisms to bring to market at a price greater than
their cost of production. Most small business owners start their businesses based on
superficial and ridiculous reasons which cannot stand the test of time. Many of such
businesses usually cease after only a few years’ trading, as the “heroic” vision fades making
the highly acclaimed growth in numbers of small businesses fake. The growth in the overall
number of small businesses has only been achieved through a high level of new entrants, and
some of these people quickly return to other types of employment, or sadly unemployment.

1.6.3 Goals and Objectives Being Pursued: The principal goals for starting any
entrepreneurial venture are high profitability and growth. The entrepreneurs and their
financial supporters are usually seeking rapid growth, immediate but high profit, and s quick
sellout that can possibly offer large capital gains. A small business owner usually establishes
the business for the basic purpose of furthering personal goals. Such personal goals may
include making a normal, moderate sales and profit, providing services to humanity,
expressing natural talents, gaining pride of ownership, or even running the business for fun.

1.6.4 Behavioral Posture: The behavior of entrepreneurs, especially those that started small
businesses can also be distinguished from other small business owners. Entrepreneurs have
their unique way of thinking, reasoning, and acting. This way involves bringing something
new to the marketplace and bearing the risk associated with creation of new value for existing
and new markets. Entrepreneurs start their business based on innovation and they keep these
businesses alive through innovation; they keep innovating new products or services, new
marketing strategies, and new ways to deliver products and services to customers. By contrast,
most small lifestyle businesses do not innovate or seek out change in a continuous or
purposeful way. Once they are established, small business lack innovation. Owner-managers
are usually close or even too close to the day-to-day problems of their businesses as they
grow to see opportunities or the need to change. Such pressure and managerial blindness

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make small business management to easily become a reactive process in which new ideas are
pushed aside as a result of the need to cope with more pressing realities thereby making the
owner manager an adaptor or a reactor to rather than a director or creator of changes. Small
“businesses or owner-managers lack creative spirit which is the reason most of them stick to
the same industry.
Risk-taking is a way of life for the entrepreneur. Entrepreneurs are mostly known as risk-
takers who instinctively know that gains do not accrue to those who always play safety first.
Although, the levels of risk that entrepreneurs can bear vary from one entrepreneur to another,
the conservative owner-managers only take risk to establish their businesses and will not be
ready to take further risk but to preserve what they have achieved. These small business
managers mostly avoid risk and engage in tight management practices for those risks that
cannot be avoided.

1.6.5 Management Practices: An entrepreneurial venture is mostly characterized by

strategic and aggressive management practices. The entrepreneur seeks rapid growth and high
profit from his/her venture based on clear vision being pursued which makes the adoption of
strategic approach to managing the business imperative. The entrepreneur understands the
environment of his/her business; therefore, he/she cleverly chooses appropriate strategies for
entering and competing in the chosen markets. Good strategic thinking which provides better
guidance and creates proactive management of strategies put the entrepreneurs far ahead of
small business owners that prefer a more relaxed and less aggressive approach to managing
their businesses. Small business owners, because their basic goal is usually the achievement
of a certain degree of freedom, usually run their businesses in a normal way with the
expectation of normal profit and possibly growth.

1.6.6 Degree of Commitment of Resources: The entrepreneurs’ higher commitment to the

success of their enterprises is borne out of entrepreneurial characteristics especially the ‘basic’
need for achievement personality. They are confident of success and have energy in pursuing
goals, they don’t give up easily or they are not generally daunted by failure but prefer to keep
trying until they succeed. Entrepreneurs have the orientation of being committed to taking
action on potential opportunities. They pursue opportunities rapidly so that the benefits from
such opportunities can be maximized. Entrepreneurs have the ‘push-the-plug’ and ‘pull-the-
plug’ tactics for tackling opportunities. They withdraw their resources rapidly from any
opportunity that is considered wrong along the way to minimize losses from the initial pursuit.
In addition, entrepreneurs commit resources to a venture in a multistep manner in an
incremental pattern so that exposure to risk can be reduced at each step and to provide the
business with the flexibility to change direction rapidly when the opportunity turns bad.
Small business owners due to fear of losing control and possibly their resources which may
be due to inability to manage larger firms do not always respond to new opportunities
especially those that will lead to rapid growth and the commitment of large resources.
An enterprise that started as a small business may become an entrepreneurial venture. The
owner’s intention may change from ‘no growth’, or slow and steady growth to ‘rapid growth’
and from normal sales and profits to high profits due to recognition of attractive opportunities
based on the appearance of a very good opportunity. This opportunity and the awakening of

COMPILED BY: BELLO KASIM S. 13

the entrepreneurial spirit in the small business owner can turn the business to an
entrepreneurial business.

1.7 Self-Employment and Salaried Employment

Employment of a person’s physical ability in the form energy and mental ability such as
expertise can be in the service of others or for personal benefits. Working for others is
commonly called regular paid or salaried employment while working in a personal business
is self-employment. Self-employment is a situation in which an individual conceives, creates,
manages and assumes responsibility for an enterprise mostly business enterprise rather than
working for others in a paid employment. According to Citizen Information (2014), a person
is self-employed when he/she owns a business rather than working for an employer. Abdul
Karim (2012) also describes self-employment as an act of working for oneself. Self-
employment avail the opportunity of generating one’s income directly from customers,
clients or other organizations as opposed to earning salary as an employee.

1.7.1 Preference for Salaried Employment

Most people are working for others and if you ask them whether they want to start a business
full-time or part-time the answer you get is capital no. Many reasons have been forwarded to
support this position. These reasons for preferring salaried employment to self-employment
include some of these benefits and conditions or situations.

Pride in Employment: Working for a large, well-known firm can be a source of pride to the
employee. Strong and big firms, especially multinational and transnational companies Such
as oil companies and United Nation Organizations, can afford to pay good salaries and
provide excellent benefits to employees. Such benefits include opportunity to satisfy Social
needs such as traveling from one country to another.

Job Security: The high mortality rate of small businesses has been argued by many to mean
job insecurity for owners. The job security of a business owner depends on the destiny of his
business, since the lives of most small businesses in developing nations are fragile, it means
except a small business is well-managed, it can fail. As a result of this most people prefer to
work in bigger organizations especially in civil service where their jobs are relatively safe
instead of establishing their own businesses.

Stable Temperament: There is a strong correlation between a man’s health and the state of
his temperament, that it, his emotional system. The prosperity of most businesses fluctuates.
At times high profit is made, some other times moderate profit is made, and at other times
heavy losses are incurred. Small businesses are not spared these fluctuations because all
businesses are affected by factors in both the industry and general environment.

A business owner is happy when much profit is made by his or her business. The reverse is
the case when a heavy loss is made. In such a situation his temperament is adversely affected.
He may be angry at everybody especially his employees and members of immediate family.
If such condition is not properly managed it can lead to severe sicknesses such as stroke or
paralysis, hypertension or even mental disorder in terrible situation of heavy and sudden loss

COMPILED BY: BELLO KASIM S. 14

arising from natural disaster such as fire or flood. Most people that are not emotionally strong
would prefer to remain in regular employment to avoid such troubles that can affect their
emotions.

Challenging Executive Cadre: Top positions in large organizations are very attractive. This
is because of the handsome compensation and rosy conditions of work they are able to offer
their employees especially those occupying management positions. Such attractive rewards
are difficult to get by most owners of small businesses.

Regular Income: Most people cannot cope with problems of irregular income. This may be
due to lack of adequate discipline in the management of money especially as this relates to
spending or consumption and savings. Such people would prefer salaried employment even if
the compensation is low. To them as long as the salaries can meet their basic needs they are
satisfied, especially when it is regular.

Regular Paid Vacations and Other Benefits: Other reasons some people prefer salaried
employment include regular paid vacations, fringe benefits, opportunity for sponsored
training and education, less responsibility because of limited demand on a worker’s
knowledge and ability and other social benefits that enhance quality of work life.

Shorter Hours of Work: The preferences for salaried employment have been argued by
many to be related to shorter hours of work. The time to put is already stated in the terms and
conditions of employment. A small business owner-manager must put in his best to the
service of his business. This may mean working round the clock.

Inability to take Risks: Risk is a fundamental part of business. Most people believe that the
higher the risk, the higher the probability of high profit, and the lower the risk, the lower the
profit. Although, this is not correct in the absolute sense, but some people cannot put their
money, time and effort in business venture for fear of loss. Such people are afraid to lose
their money through such risks as damages or loss in transit, fire, price collapse, pilferages,
and expiration of product life in shelves, swindlers or corrupt practices of other businessmen
and natural disasters.

Lack of Business Acumen: Business acumen includes not only the skills required to succeed
in the desired line of business but other necessary physical, sociological and psychological
abilities to manage business resources, relationship with customers and suppliers and to
handle crisis. Most people avoid starting a business because they are not tough
psychologically to withstand the different tunes from business wind. Others do not have
human relation skills to interact with other people as owner/leader manager. Some do not
have conceptual integrative skills to understand the trends of environmental changes and
diagnostic and problem-solving skills.

Advantages of Salaried Employment

The advantages of paid-employment include the following:

 Challenging executive cadre with paid holidays

COMPILED BY: BELLO KASIM S. 15

  The employee has fixed responsibility which he or she is accountable and paid for.

 The stress in paid-employment is lower because the employee in addition to fixed

hours of work may not necessarily take official work home.

 Employees are only exposed to minimum risks which may be loss of employment but
not loss of investment except in few cases where the employee has some shares in the
business.

 The chances of promotion with associated benefits are in most regular employment
especially in big organisations.

 Many networks of relationships can be built in working for big organization which
may create value for an employee.

 Regular wages or salaries makes planning easier for the employee and eliminates
negative emotional problems that are associated with irregular income of self-
employment.

Disadvantages of Salaried Employment

Salaried employment is associated with the following disadvantages:

 The employee’s income is relatively fixed and limited except in few cases such as
sales commissions that are determined by unit sold in addition to fixed salary.

 The use of discretion is somehow limited because the employee must follow the
established pattern of work in addition to order and instructions and policy.

 Employees may not be able to set their own schedule because the employer or their
managers have responsibility to establish work schedule.

 Each employee’s responsibility is fixed and sometimes limited which may cause
monotony and boredom.

 Employees as subordinate workers have no power or authority over their superior.

They give full respects to superiors and have no right of saying no to any staff senior
to him. Rules, instructions and commands are imposed on subordinates.

 Employees are usually transferred from one position or geographic location to another
without consideration of their opinion, and sometimes with insufficient notice.

 Workers are retired when their time reaches or when for one reason or the other an
employee is forced by an executive to retire.

 In many cases some unqualified persons are employed to handle difficult jobs
requiring dexterity for which they have no experience or qualification. The worker
becomes incompetent on the job or post. This wrong position results to inefficiency
and frustration on the part of the worker which can inevitably lead to dismissal.

COMPILED BY: BELLO KASIM S. 16

1.8 Preference for Self-employment

Many people that have chosen to be self-employed or started their own businesses gave so
many reasons for their decisions. Some of these include:

i. To maximise the advantages arising from the growth of the service sector. The service and
construction sectors which constitute a greater percentage of the total number of small
businesses have expanded due to increased affluence and sophistication of a greater
population of Nigerians. Most Nigerians now prefer to buy personal services such as dry
cleaning, day care, hair dressing, car-washing, and house/furniture cleaning instead of
providing these services themselves. Other service organisations that have expanded are
private security outfits, schools, transportations, and retailing activities.

ii. Favorable economic policies introduced by the new democratic government in the last
twenty years which have encouraged many people to start small businesses. Such policies
include ban on importation of some goods like vegetable and fruit drinks, agricultural
produce like rice which are now produced locally, permission for the establishment of various
financial organisation like Micro-finance banks to facilitate the activities of small and
medium scale businesses, increased government financing of small businesses through
different agencies. Some of these policies and incentives are discussed in the next section.

iii. Increased rate of unemployment, especially among young graduates has pushed many of
them to self-employment. Many of the people that started small businesses in the recent past
did so and are still doing so because of inability to secure regular employment or any other
means of earning income.

iv. Decrease in the purchasing power of the naira and increase in domestic expenditures has
pushed many people into the search for additional sources of income. From the very young
people to the very old, many people are starting new businesses everywhere and at a rapid
rate. Many young Nigerians are starting businesses to augment their income from regular
employment.

v. Self-employment has been considered by many husbands to be the best for their wives
because it allows them to spend more time with their families.

vi. Most students in Nigerian higher institutions have developed unusual interest in small
business entrepreneurship due a number of reasons such as the introduction of small business
education as a course in the curricula of all tertiary institutions in the form of
Entrepreneurship, Small Business Management, or Small Business Start-up; and the
formation of different student organisations such as Entrepreneurship Action in Us
(ENACTUS, formerly SIFE), Students Entrepreneurship Development Initiatives (SEDI, and
Social Welfare Development Initiatives (SOWEDI) in our higher institutions and Students for
the Advancement of Global Entrepreneurship (SAGE) in Nigerian high/secondary schools for
triggering entrepreneurship spirit in students and pupils.

vii. Most youths of today are generally adventurous; willing to try new ideas and maximize
their talents in competitive ways through small business ownership. More students are now

COMPILED BY: BELLO KASIM S. 17

starting businesses while still in school to sponsor their educations and to meet their personal
needs.

viii. Today, many people have begun to realize that self-employment is the only path to the
economic security, financial prosperity, social and psychological satisfaction they so much
desire.

ix. Some of the people that are self-employed today were middle-level executives that retired
or were laid off from large businesses who wanted to put their management skills and
experience to work and augment their little severance pay which may not be enough for their
former employees.

Advantages of Self-Employment

The advantages of self-employment include the following:

 The entrepreneur or business owner does not need any academic qualifications to start
and operate his or her business.

 There no ceiling to the income of the self-employed because his or her income
depends on the performance of the business.

 The entrepreneur sets his or her work schedules.

 The individual has flexible work hour; resumption and closing time is determined by
the individual.

 No specified dress code for the business owner except that which is suitable for
customers and acceptable to the particular society.

 The business owner gives orders and instructions unlike in regular employment when
people are subjected to various rules and regulations that may not be reasonable at
times.

 There is opportunity or freedom to implement your ideas instead of struggling for the
acceptance of ideas as intrapreneurs in other organisations.

 The employment of the self-employed is relatively secured because you decide when
to retire.

 The entrepreneur occupies the leadership position in the enterprise and as a result
he/she derives psychological satisfaction and is better able to maximise all personal
potentials.

 There is the higher possibility of achieving respect in the society and financial
independence.

 The feelings that the self-employed is contributing to the socio-economic

development of the society gives him/her some sense of fulfillment.

COMPILED BY: BELLO KASIM S. 18

Disadvantages of Self-employment

The disadvantages of self-employment are enumerated below:

 The entrepreneur needs adequate capital to start the business which may be difficult to
get and raising external capital for a business is associated with costs such as interests
and ownership dilution and control.

 The responsibility of running the business is very wide which usually contributes to
stress for the business owner.

 Uncertainty of the future can mean financial insecurity because the business owner
may not earn pension and his future financial fortune depends on the success of the
business.

 The income of self-employed individual is not guaranteed and regular because the
business environment is dynamic. Therefore, sales volume and profits that self-
employed people get from their businesses are therefore irregular and this means
smooth planning can be difficult for them.

 Higher risks are associated with self-employment because the owner is the one who
bears all of the business risks except those that are insured and even at that; insurance
cover is not free.

 Hours of work of the self-employed is not fixed and as the owner he or she needs to
work long hours on daily basis in most cases which can result in negative
consequences for his/her health and family.

 The success of your business does not depend on only you but the employees who
may not be honest and competent enough to take some decisions and actions when
you need it or absent from the office.

1.7 Practical Activities/Research Assignment

> Students in different Groups to visit an entrepreneur’s organization, gather necessary data
and information (based on the guidance of the Lecturer) from the entrepreneur.

> Write a report on the visit to be submitted to the Lecturer OR

> Invite a successful entrepreneur to give a talk.

COMPILED BY: BELLO KASIM S. 19

 Chapter Two

History and Challenges of Entrepreneurship

After studying this chapter, you should be able to:

 Explain the history of entrepreneurship in Nigeria

 List the challenges of entrepreneurship in Nigeria

 Explain how to overcome the challenges of entrepreneurship in Nigeria

 Types of entrepreneurship

 List successful entrepreneurs in Nigeria

2.1 Introduction

The importance of Entrepreneurship Education cannot be over-emphasized in any economy,

especially in developing countries where unemployment and poverty are at an alarming rate.
Even, in developed countries of Europe and America, entrepreneurship education ranks high
in policy agenda (Isenalumhe, 2015). Entrepreneurship education cuts across all fields of
human endeavor. It is aimed at instilling entrepreneurial spirit in individuals as well as
develops the individuals‘capability and competence in recognizing entrepreneurial
opportunities, and to be able to take necessary action to convert these opportunities to
practical economic activities, whether in economic, social or cultural circumstance. In this
chapter, the history of entrepreneurship, the beginning and birth of entrepreneurship in
Nigeria will be discussed. The chapter also addresses the challenges of business
entrepreneurship in Nigeria, the strategies for overcoming these challenges, and brief profiles
of some successful entrepreneurs in Nigeria.

2.2.1 The History of Entrepreneurship

The concept of Entrepreneurship is applicable and relevant to the entire human life and it cuts
across all fields of human endeavors, so it is regarded as a multi discipline. The word
entrepreneur was derived from a French word in 18th Century “Entreprendre” meaning
“Undertaking.” The term entrepreneur was first introduced by Irish—French economist,
Richard Cantillon in 1755 (Ojeifo, 2012; Burch, 1986, Lowe& Marriott, 2006; Swedberg,
2000; Kirby, 2003; Onu, 2013; Bholanath, 2009). Richard Cantillon used the word
“Entrepreneur” to describe people who took the risk of setting up business enterprises. Since
then entrepreneurship has been studied from different disciplines of Economic Theory,
Business Administration, Psychology, Political Science, Sociology and History (Cassis &
Minoglou, 2005). In the United States of America, the term “entrepreneurship” is often used
in the context a real business start-up and new venture creation (1-lannon, 2005). According
to Akhuemonkhafl et al., (2013), entrepreneurship in the curriculum of tertiary institutions in

COMPILED BY: BELLO KASIM S. 20

the United States of America dated back as far as 1947. The first entrepreneurship course was
taught to second-year Master of Business Administration (MBA) students by Myles Mace in
United States of America at Harvard’s Business School in the month of February, 1947 (Katz,
2003).

Some renowned British scholars, namely, Adam Smith, John Stuart Mill and David Ricardo,
tried to describe the word entrepreneurship by using an all-encompassing English phrase
“Business Management” to describe entrepreneurship. However, John S. Mill opined that
entrepreneurial success requires extraordinary skills and attitude, so, he lamented that there is
no English word equal to contain the exact meaning of the French term entrepreneur (NBTE,
2007). Thinking along the same direction, Adam Smith and David Ricardo suggested that
they likely undervalued the importance of entrepreneurship looking at the role of
entrepreneurs in economic development.

Alfred Marshal one of the founders of Neoclassical Economics in 1890, documented

entrepreneur as factor of production. Before his book, land, labour, capital and organisation
were known and accepted as factors of production. Organisation as one of the factors of
production is seen as the harmonizing force which brings other factor together. Marshall
opined that entrepreneurship is the driving force behind the harmonization of the other factors
of production. After his publication many scholar recognized and accepted entrepreneurship
as the fourth factor of production in place of organisation.

2.2.2 How Entrepreneurship started in Nigeria

The history of entrepreneurship is as old as man. It all started when man began to pursue
wealth creation needed for his well-being. Entrepreneurship in Nigeria could be traced to the
era of blacksmithing in the ancient times. As at that most men did not have adequate
competence to produce farm implements and other tools that made the practice of their
profession easier and more rewarding. Therefore, the farmers needed some people to produce
their farming implements. Based on this, the need for exchange arose coupled with the fact
that people produced more products than they and their family needed, for instance a
blacksmith who produced farm implements an individual who meticulously crafted
cylindrical baskets that helped to catch fish may not have a farm; as such, they had to
exchange these products or surpluses for what they did not have. If the blacksmith needed
some rice, beans, maize, yams or goat, etc. he would look for someone who needed his
products (farm implements) to exchange with. Producers came to realize that they could
focus and concentrate on one area production and produce more so that they could exchange
for what they needed. This how entrepreneurship started through exchange of products and
services called trade by barter. So, it could be concluded that entrepreneurship started with
trade by barter; solving the problem of exchange, even before the advent of any form of
money. Entrepreneurship at this stage was subsistent and crude in nature,

The modern day entrepreneurship in Nigeria started during the era of colonial masters who
brought in goods from United Kingdom and other countries into the country and used
Nigerians as distributors and retailers. These colonial masters were buying mostly raw
materials from Nigerians. The use Nigerians as middlemen was a welcome idea because the

COMPILED BY: BELLO KASIM S. 21

belief was that it could possibly increase the number and competence of Nigerians as
entrepreneurs which will enhance growth of industrialization in Nigeria.
These foreign entrepreneurs did not adhere to the mutual progress theory, because in selling
their imported goods, they were using Nigerians; but in buying from Nigerian producers, they
engaged in direct dealing. Their refusal to use Nigerians as intermediaries slowed down the
rate at which Nigerian entrepreneurs acquired entrepreneur skills and attitudes. This did not
only result in imbalance of trade but adversely affected the fortunes of these local
entrepreneurs as many of them closed down their shops.
The potential of acquiring entrepreneurial skills became slim and Nigerians were left with
little or no option than to send their children to school to prepare them for the lucrative source
of livelihood, which was to work with the colonial masters. This formal education further
reduced the flow of entrepreneurs in Nigeria, as the education was to prepare the youths for
civil service, thereby producing school leavers and graduates with blue-collar job orientation,
forgetting the fact that government cannot employ everybody. As more people were being
educated and government could no longer employ most of these school leavers, it became
apparent that there was need to invent economic programme that can encourage individuals
to go into private business and become self-reliant. One of the major initiatives was the
introduction of entrepreneurship education into Nigerian education curriculum, with the aim
to instilled entrepreneurial spirit in individuals as well as develop the individual’s capability
and competence for recognition of entrepreneurial opportunities and be able to take necessary
action to convert these opportunities to practical business activities, so that they can become
job creators rather than job seekers. Over the years, many Nigerian business men have
distinguished themselves in the business world because they have mastered the techniques of
entrepreneurship. Personalities like Aliko Dangote, Mike Adenuga, Price Arthur Eze, Tony
Elumelu, Cletus Ibeto, Jim Ovia and the rest, have excelled in their various lines of
businesses.
They have carved a niche for themselves by exhibiting the required skills and attitudes as
entrepreneurs.

2.3 The Birth of Entrepreneurship Education in Nigeria

The promotion of entrepreneurship education in Nigeria began after independence in th,

1960’s with the establishment of agencies that enhanced industrialization of the Nigeria state.
In 1962, Industrial Development Centre was established in Owerri. The then regional
government introduced vocational education in secondary schools. The Government of
Nigeria established various institutions to promote entrepreneurship development. These
include the Industrial Training Fund (ITF) in 1971, The Centre for, Management
Development (CMD) in 1973, The Administrative Staff College of Nigeria (ASCON) in
1973, National Office for Technology Acquisition and Promotion (NOTAP) and Nigeria
Institute for Chemical Technology. By the 1990s the Federal Government of Nigeria had
established more than 63 institutions dedicated for training and skills acquisition to enhance
entrepreneurial development (Abdullahi & Hassan, 2011). The State Government also
showed concern regarding entrepreneurship promotion by setting up vocational training
centres and business incubation centres to enhance entrepreneurship development. The main
focus of most of the state-owned intuitions was skills acquisition for self-employment

COMPILED BY: BELLO KASIM S. 22

(Abdullahi & Hassan, 2011). These skills acquisition training accentuate mostly on trades
like perfume making, carpentry, soap making, tailoring, hairdressing, manicure and pedicure,
bricklaying, welding, auto repairs, interior decoration, tie and dye, knitting, bead making, etc.
On the other hand, the Federal institutions provided formal entrepreneurship education which
covered a range of disciplines e.g. machineries, installation of machineries, product
development investment counseling, inventory control, business plan writing, preparation of
business feasibility studies, etc. Despite, the effort of the government, there is still shortage of
entrepreneurs in various aspects of the economy to support fast national economic growth
and development (Alarape, 2009).

Every year Nigeria turns out graduates from about 174 Universities, 132 Polytechnic’ and
Monotechnics, and Colleges of Education, all of them equipped with information and
knowledge to face the outside world. Surprisingly, the number of unemployed graduates
keeps increasing. One begins to wonder why poverty in the midst of abundance. With
continuous increase in unemployment in the last few decades, particularly among graduates
from tertiary institutions in Nigeria (Akhuemonkhan et al., 2013) coupled with the necessity
to diversify Nigerian economy, the Federal Government of Nigerian in 2006/2007 academic
year, introduced entrepreneurship education as a discipline and made it a compulsory
(module) course unit for every student of tertiary intuitions in Nigeria. In furtherance to this
mandate, the Federal Government of Nigeria through National Universities Commission
(NUC), National Board for Technical Education (NBTE), and National Commission for
Colleges of Education (NCCE) issued directive to all their schools in Nigeria to establish
entrepreneurship education development centers, latest by 2007/2008 academic session
(Adejimola & Olufunmilayo, 2009), with the aim to instill entrepreneurial spirit in every
Nigerian graduate as well as equip them with self-reliant skills (Ojeifo, 2012).Ejiogu and
Nwajiuba (2012) in advocating for the inclusion of entrepreneurship courses into the
‘curriculum of schools in Nigeria argued that the inclusion will enable youth to develop a
culture of entrepreneurial thinking at early stage in life and to be self-reliant. Akudolu (2010)
has similar view and concludes that implementation of entrepreneurship education curriculum
will assist students m Nigeria to development entrepreneurial skills and capacities to be self-
reliant and self-employed, as well as job creators. These entrepreneurial minded graduates are
expected to be well equipped with the necessary up-to-date knowledge, competence,
information, skills to drive the nation’s economy for prosperity.
With the introduction of entrepreneurship education into the curriculum of institutions of
higher learning, it is expected that there will be paradigm shift, from job-seeking graduates to
producing graduates with the capabilities to create jobs.

2.4 Challenges of Business or Traditional Entrepreneurship in Nigeria

The problems associated with entrepreneurship promotion in Nigeria include some of the
followings:

2.4.1 Lack of or inadequate capital: Many entrepreneurs in Nigeria have their good dreams
of establishing businesses but many have not succeeded in achieving their dreams because of
lack of initial capital to start. Government funding is inadequate and there are insufficient
venture capitalists and angels. On the other hand, savings from regular salaries towards

COMPILED BY: BELLO KASIM S. 23

starting a business have been difficult for many Nigerians in regular employment due to high
dependence ratio.

2.4.2 Lack of Specialized Financial Institutions: What we have in Nigeria is chains of

regular financial institutions that are not structurally designed to promote industrial and
domestic commerce. These financial institutions like Deposit Money banks do not have
lending policy that accommodates the challenges associated with income generations of
entrepreneurial ventures especially new ventures. Some new enterprises don’t start generating
high income and profit until after a couple of years. In addition, there is dearth of ventures
capital companies and angels that are ready to support promising enterprises in Nigeria.

2.4.3 Inadequacy of Organised Markets: Most Nigerian states have no big markets that are
equipped with necessary facilities and this makes most of the products left unsold especially
agricultural products and because of the perishability nature of agricultural produce like
vegetables, crops, poultry, fishes etc., it becomes difficult or impossible to sell within a few
days. The inadequacy of organized markets has also given rise to increase in costs of
distributions. Increase in costs of transporting, storing, and other channel expenses; economic
losses from unsold products; and the prevailing economic hardship in Nigeria have negatively
affected our indigenous entrepreneurs.

2.4.4 Lack of Professionalism in Management and Manpower: Management is one of the

most critical problems of many small business enterprises in Nigeria. Some conservative
theories once postulated that entrepreneur could not be taught, they see both managerial
ability and entrepreneur as innate, which means qualities that could not be acquired. Modern
approach has improved concerning this discussion by insisting that 4 person can be prepared
for entrepreneurship in terms of skills acquisition and attitudes: Many Nigerian entrepreneurs
lack the required management skills and discipline for successful business operations and this
has given rise to high mortality rate of small businesses in the country. Lack of or inadequate
management skills and abilities is one of the basic reasons most small business owners divert
money obtained through government grants and aids, and loans from financial institutions
into social activities like taking chieftaincy titles, additional wives, and other extravagant
activities. Poor management can be observed in the low commitment of some small business
owners to the operations of their business activities. In the same way, most small businesses
in Nigeria are manned with low-skilled employees due to owners’ inability to employ and
pay qualified workers.

2.4.5 Use of Obsolete Technology: Modern and the state-of-the-art technology facilitites
easy and economic production while obsolete and outdated technology makes production
cumbersome, slow and unnecessarily difficult, and expensive. Most small business
entrepreneurs in Nigeria do not have access to modem technology due to inadequate or
absence of research and development and shortage of funds. So many small business owners
have this erroneous belief that it is possible to succeed in business even with outdated
technology ignoring the fact that customers’ tastes and preferences is always changing with
speed due to the dynamism of the environment.

COMPILED BY: BELLO KASIM S. 24

2.4.6 Inadequate Training: Training is a means of inculcating and equipping people with
necessary skills and abilities that will enable them succeed in any area of human endeavor.
Therefore, through training, entrepreneurial skills and behaviors can be inculcated in people
that do not have them. However, in Nigeria training of potential and existing entrepreneurs is
hitherto insufficient and the programmes that are in place are general and broad which makes
it difficult for trainees to get any specific knowledge that are basic to entrepreneurial success
in their different pursuits. The results of these poor training are prevalence in semi-skilled
tailors, pharmacists, beauticians, farmers, and other small business owners everywhere in
Nigeria especially those who fled from their master trainers.

2.4.7 Lack of Incentives: An incentive is any form of encouragement offered to facilitate

easy accomplishment of a given tasks in a society, an enterprise or an organisation. Incentives
that can trigger or enhance entrepreneurship include tax holidays for starters, allocation of
portions of land on credit basis at developed industrial estates, advancement of soft loans by
the government or its agencies, and subsidies on some inputs such as farm implements and
seedlings. These incentives and other similar ones such as protective measures by
governments are not very much available in Nigeria.
Instead most state governments are concerned more about what they can get, like revenue
through taxes, from these small businesses and this is a source of concern for entrepreneurs
operating in the country.

2.4.8 Inadequate Commitment: To be a successful entrepreneur, you must devote the

totality of your time, energy and resources to the success of your enterprise. Lack of or
insufficient commitment to an entrepreneurial venture will certainly have negative effect on
its growth and survival. Most small business entrepreneurs in Nigeria hardly commit enough
time and resources to nurture their business especially during the start-up and early growth
stages when the personal attention and undivided interest of the entrepreneur is required. The
absence of such commitment usually results in premature demise of the business or at most,
stunted growth.

2.4.9 Cultural Barriers: All cultures have healthy and unhealthy components in them and
Nigerian culture is not an exception. Some aspects of our culture; either common or
individual have negatively affected entrepreneurship in Nigeria. Ajekwe (2017) observed that
religion, communal spirit, respect for seniority and authority, and belief in destiny, magic
“medicine” and witchcraft are some aspects of Nigerian culture that have negatively impacted
entrepreneurship development in Nigeria. While religion actually contributed to the
development of entrepreneurship in other countries like North America based on the study by
Berger (1991) through its tenets of individualism, diligence; reliability, frugality and
responsibility in all matters, our cultures did not imbibe the concept of individualism via
communal spirit and churches inadvertently discouraged entrepreneurship. The educational
system we inherited from our colonial masters was vigorously preparing us for clerical jobs
and not self-employment and today we are still finding it difficult to change this blue-collar
job orientation in our people especially from primary and secondary school levels. In addition,
the belief in destiny, magic “medicine” and witchcraft, has hindered the development of
entrepreneurship in Nigeria. It is generally accepted that an entrepreneur takes responsibility

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for what goes wrong, and does not attribute failure to destiny, external forces, or the hands of
evil people but in the Nigerian situation, the tendency to refuse to accept responsibility and
attribute adversity to external forces is an inhibitor towards the cultivation of an
entrepreneurial culture.

2.4.10 Inadequacy of Infrastructural Facilities

Infrastructural facilities, especially physical infrastructures are very important for the
development of entrepreneurs in any society. Infrastructures such as good transport networks
like roads, railway, and airports; electricity, and water supply can enhance or hinder rapid
development of entrepreneurship in a country. In Nigeria of today, our electric power supply
is not stable, roads are dilapidated, and railway system has been functioning as expected. The
inadequacy of good roads, railway, and electric power has greatly increased the costs of
doing business in Nigeria leading to the death of some businesses, or relocation of other
businesses to neighboring countries from Nigeria.

2.4.11 Economic Challenges

Challenges such as inflation, unfavourable exchange rates, high lending rates by banks, low
purchasing power, are discouraging entrepreneurs from starting businesses in Nigeria.

2.4.12 Dearth of Information

All stages and actions of entrepreneurs require effective decision making. Effective decision
requires adequate data and information for situational analysis, assessment and selection of
alternatives, implementation and evaluation. There is dearth of information such as birth and
death rates, migration, etc. at both state and federal levels in Nigeria.
Where there is information in Nigeria for entrepreneurs, such information is usually outdated
and unreliable.

2.5 Strategies for Overcoming Entrepreneurship Challenges in Nigeria

Starting a business of your own can be a rewarding experience but very challenging.
Entrepreneurship involves taking risks, facing obstacles, and continuously adapting to
changes in the market. While the journey can be challenging, many entrepreneurs have
overcome the obstacles and achieved long-term growth and success. In this article, we'll
explore the common challenges of entrepreneurship and strategies for overcoming them.

Lack of or inadequate Capital

One of the most common challenges faced by entrepreneurs is lack of or inadequate capital. It
can be difficult to secure funding for your business, especially in the early stages. To
overcome this challenge, consider alternative sources of funding, such as grants, loans, and
investors. You can also explore cost-cutting measures, such as reducing overhead costs and
utilizing technology. This equally means the entrepreneur should avoid extravagant life style,
search for trade credit and bootstrapping, and avoid wastages.

Lack of Specialized Financial Institutions

In Nigeria there are no any specialized banks such as entrepreneurship banks as found in
some other countries. The banks that are common in Nigeria are government banks such as
Bank of Agriculture and Bank of Industry that have specialized but relatively narrow. Others

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are money deposits and microfinance banks which are purely business organisations and may
not understand the peculiar nature of businesses especially in terms of cash flows. The
entrepreneur may use less debt financing from deposit money banks but more from other
sources to avoid the high financial costs of debt financing and other stringent conditions
especially at the early stage of the business.

Competition
Competition is a fact of life in the business world. To overcome the challenge of competition,
it’s essential to differentiate your product or service from those of competitors. This can be
achieved through better marketing efforts, branding, and providing excellent customer service.
It’s also important to stay informed about the competition and continuously refine your
strategies to stay ahead.

Time and Stress Management

Time management aspect of entrepreneurship. It’s essential to balance your time between
running the business, networking, and taking care of your personal life. To overcome the
challenge of time management, prioritize your tasks, delegate responsibilities, and make use
of technology and tools that can help you manage your time more efficiently.

Balancing Work and Life

Entrepreneurs often face the challenge of balancing work and life. It can be easy to become
consumed by the demands of running a business and neglect other aspects of your life. To
overcome this challenge, it’s essential to set boundaries, take breaks, and prioritize your
personal life.

Managing People

Managing people is a critical aspect of entrepreneurship. To overcome the challenge of

managing people, it’s essential to communicate effectively, provide clear expectations, and
be an effective leader. It’s also important to provide your team with the tools, resources, and
support they need to succeed.

Overcoming Setbacks and Failure

Setbacks and failures are inevitable in the world of entrepreneurship. To overcome these
challenges, it’s essential to have a growth mindset, stay focused on your goals, and
continuously learn from your experiences. Remember, failure is an opportunity to learn and
grow, not a reason to give up.

Guarding Cash Flow

Cash is always running for entrepreneurs, so you must guard it carefully, It’s g challenge to
ensure revenue is consistent and can always cover costs and payroll, The last thing you want
to do is start paying employees late because you didn’t plan cash flow properly, which can
have ripple effects on the morale of your staff and their trust in your company and leadership.

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Delegating Authority

It’s not good enough to hire people without care or indiscriminately. It will be difficult to
handover the affairs of your business to incompetent people. Therefore, it is important to
recruit and select employees with care. As an entrepreneur, the temptation is to try to do
everything yourself, but this is not productive and will limit your company’s growth. Strike a
balance between monitoring the business and trusting others to accomplish objectives. In
solving the challenges associated with delegation, give your employees clear roles and
responsibilities, as well as rewards for meeting certain benchmarks. Make them stakeholders
in your company’s success. Avoid micromanaging people and processes. Give people the
space to use their talents and only step in for minor course corrections. Be patient with others
and with yourself.

Alternative Supply

The entrepreneur should seek for alternative supply of energy to solve the problem of
irregular power supply, sink borehole for water instead waiting for government for water
supply which is not there, and can integrate backward when external suppliers are very
expensive for a modest living.

2.6 Successful Entrepreneurs in Nigeria

There are thousands of successful entrepreneurs in Nigeria. There stories can be found on
internets and different publications. In this book, we decided to mention only ten because of
the limitation of space.

1. Aliko Dangote (The Cement King)

A list of successful entrepreneurs in Nigeria would not be complete without mentioning

Aliko Dangote. He is, after all, Africa’s richest man, with a net worth of over 10 billion
dollars. Dangote’s success story is the stuff of legend. He started as a smalltime trader,
importing and selling commodities like sugar and rice. But his decision to invest in cement
really set him apart.
Today, his company, Dangote Cement, is the largest cement producer in Africa, with
operations in 10 countries. And if you’ve ever driven on a Nigerian road, chances are you’ve
seen one of his billboards advertising the brand. But Dangote’s success hasn't come without
its challenges. He once famously said, “I have never really failed. I have always learned from
my mistakes.” And one of those mistakes was launching a line of packaged rice under his
brand name. Unfortunately, the venture was unsuccessful, and Dangote lost millions of
dollars. But he bounced back, as all successful entrepreneurs do, and continued to grow his
empire.
In 2015, Dangote offered to buy Arsenal Football Club, one of the successful football clubs
in the English Premier League. Unfortunately, the offer was rejected, and Arsenal fans
worldwide breathed a sigh of relief.

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2. Folorunso Alakija (Oil Queen of Nigeria)

Folorunso Alakija is one of the most successful entrepreneurs in Nigeria. Her story is one of
determination, hard work, and perseverance. From a humble background, Alakija Worked
hard to become one of the wealthiest women in Africa. Alakija was born in 1951 in Ikorodu,
Lagos State, Nigeria. She started her career in the fashion industry and then moved on to the
oil and gas sector.
In the 1980s, she founded the oil exploration company Famfa Oil Limited, one of Nigeria’s
most successful oil companies. Today, she is the Vice Chairman of the company. In addition
to her success in the oil and gas sector, Alakija is also philanthropist. She founded the Rose
of Sharon Foundation, a non-profit organization that provides financial assistance and support
to widows and orphans in Nigeria. The foundation has helped to improve the lives of many
families across Nigeria; Alakija’s net worth is estimated to be around $1.1 billion. This
makes her one of the wealthiest women in Africa and the world. Alakija’s success story is a
testament to the fact that anything is possible with hard work, determination, and
perseverance. She has shown that it is possible to succeed in a male-dominated industry and
become a role model to other women.

3. Mike Adenuga (The Bull)

Mike Adenuga is a Nigerian business magnate and philanthropist well-known for his
entrepreneurial skills and business acumen. He is the founder and chairman of Globacom, a
leading telecommunications company in Nigeria, and Conoil, an oil exploration company in
Nigeria. His nickname was earned due to his tenacity and determination to succeed in
business. His upbringing was humble, and he had to work hard to get an education. He got his
Bachelor’s degree in Business Administration from Northwestern Oklahoma State University
and his MBA from Pace University, New York. Mike Adenuga’s business career started in
the 1980s when he founded his first company, a trading firm called Consolidated Oil Limited.
The company became very successful, allowing him to venture into other business areas. He
later founded Globacom, which has become one of the leading telecommunications
companies in Nigeria and has operations in other African countries. Globacom, or Glo, is a
Nigerian multinational telecommunications company offering various services; including
voice, data, and the internet.
The company was launched in 2003 and has since become the second-largest telecom
operator in Nigeria, with millions of subscribers. Besides telecommunications, Mike
Adenuga is also involved in the oil and gas industry through his company, Conoil. Conoil js
an indigenous Nigerian oil exploration and Production Company in several African countries.
It was founded in 1990 and has become a significant player in the Nigerian oil and gas sector.
According to Forbes, as of 2021, Mike Adenuga’s net worth is estimated at $9.9 billion.

4. Jim Ovia (Mr. Zenith)

Jim Ovia was born on November 4, 1951, in Agbor, Delta State, Nigeria. He attended
Southern University in Louisiana, earning a degree in Business Administration. After
graduation, he returned to Nigeria and started working in the banking sector. In 1990, he
founded Zenith Bank, which quickly became one of the most profitable banks in Nigeria. As

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of 2021, Jim Ovia’s net worth is estimated to be around $1 billion. That’s right, a billion with
a “B.”
He is one of the wealthiest people in Nigeria and has used his wealth to give back to his
community. Ovia is a philanthropist who has donated millions of dollars to various causes,
including education, healthcare, and the arts. When asked about the secret to his success, he
once replied, “It’s simple, I just put one foot in front of the other, and before I knew it, I was
at the top of the mountain.”
Jim Ovia’s success has made him a legend in Nigeria and beyond. He inspires many young
entrepreneurs who aspire to follow in his footsteps. His nickname, “Mr. Zenith,” is a
testament to his impact on Nigeria’s banking industry. And his net worth is a reflection of his
hard work and determination.

5. Tony Elumelu (The Lion of Africa’s Business Jungle)

When it comes to African business tycoons, Tony Elumelu is a name that must be included.
Born on March 22, 1963, in Jos, Nigeria, Elumelu has become a force to be reckoned with in
the continent’s business scene. Elumelu’s line of business is diverse, but he’s best known for
his contributions to the banking industry in Africa.
In the late 1990s, he played a pivotal role in the turnaround of the United Bank for Africa
(UBA), transforming it from a struggling institution into a top-tier bank. Elumelu’s,
leadership style, which emphasized teamwork and innovation, proved successful, and he soon
became known as one of Nigeria’s most prominent bankers. Outside of banking, Elumelu has
made significant contributions to various industries. He founded the Tony Elumelu
Foundation to empower young African entrepreneurs and help them grow their businesses.
He’s also invested in a range of sectors, including energy, hospitality, and agriculture, among
others. Of course, with success comes wealth, and Elumelu’s net worth is nothing to scoff at.
As of 2021, he’s worth an estimated $1.4 billion, making him one of the wealthiest people in
Nigeria and Africa.

6. Abdulsamad Rabiu (The Sugar King)

Abdulsamad Rabiu is a Nigerian billionaire industrialist who has made waves in the business
world with his savvy and innovative approach. With a net worth estimated at over $5 billion,
Rabiu has established himself as one of the most successful entrepreneurs in Africa, and his
story is both inspiring and entertaining. So, how did the Sugar King earn his nickname? It all
started with his family’s sugar business, founded by his father in the 1950s.After his father’s
passing, Rabiu took over the company’s reins and quickly began expanding its reach. Today,
his conglomerate, BUA Group, has interests in cement, sugar, flour, and more, and Rabiu is
widely recognized as one of the most influential businessmen in Nigeria.
Put what sets the Sugar King apart from his peers? For one, he’s not afraid to take risks.
In 2018, he acquired a controlling stake in Nigeria’s largest oil refinery, despite having no
experience in the oil and gas industry. Many were skeptical of the move, but Rabiu's boldness
paid off: the refinery is now set to become one of the largest in the world, with capacity of
650,000 barrels per day. Another critical factor in Rabiu’s success is his commitment to
innovation.

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When his sugar business was struggling in the face of competition from cheaper imports, he
didn’t give up — instead, he invested heavily in new technologies and processes to make his
operations more efficient. The result? BUA Group’s sugar refinery is now one of the most
advanced in the world, producing high-quality sugar at a competitive price point.

7. Cosmas Maduka (Coscharis)

Have you ever heard of a man who started selling akara (bean cakes) on the streets of Lagos
and rose to become one of the wealthiest men in Nigeria? Meet Cosmas Maduka, the man
behind the “Coscharis” brand. Cosmas Maduka was bom in Nnewi, Anambra State, Nigeria
in 1958. His parents were poor, and he had to drop out of school at seven to help his mother
sell akara on the streets.
However, this didn’t deter him from pursuing his dreams. He learned the value of hard work
and perseverance from his mother and applied these principles in his business ventures.
Maduka started his entrepreneurial journey by selling spare parts for cars. He would travel to
various parts of Nigeria to buy and sell these parts, and he made a decent profit. However, he
wanted to do more and saw an opportunity in the automobile industry.
In 1982, Maduka started Coscharis Motors Limited with a loan of N200,000. He began by
selling just one brand of car, but he was determined to grow his business. He worked hard to
build relationships with car dealerships and manufacturers, eventually becoming the sole
distributor of BMW and Ford in Nigeria. Maduka’s business expanded rapidly and
diversified into other areas, such as real estate, agriculture, and healthcare. He also
established the Coscharis Group, now a conglomerate with over 12 subsidiaries. Maduka’s
net worth is estimated to be around $1.2 billion, and he is one of the richest men in Nigeria.
However, he still remembers his humble beginnings. He is passionate about helping the less
fortunate and has established several foundations to support education and healthcare in
Nigeria.

8. Pascal Dozie (The Dozie)

Pascal Dozie is a Nigerian businessman and entrepreneur who has made a name for himself
in telecommunications. With a net worth of over $1 billion, Dozie has become bne of the
most successful businessmen in Africa. Dozie started his career as a banker but quickly
realized his true passion was entrepreneurship. In the early 1990s, he founded Diamond Bank,
one of Nigeria’s largest banks.
But despite his success, Dozie always remembered his roots as a banker. He once joked that
he had “banker’s DNA” and couldn’t resist the lure of a good investment opportunity. One of
Dozie’s most successful investments was in MTN Nigeria, a telecommunications company he
helped launch in 2001. At the time, many people thought he was crazy for investing in a
mobile network in Nigeria — after all, who would - want a mobile phone in a country where
landlines were still a luxury? But Dozie had a hunch that mobile phones would soon become
necessary, and he was right. Today, MTN Nigeria is the largest telecommunications company
in Nigeria, and Dozie’s investment has paid off handsomely.

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9. Leo Stan Ekeh (The Lion of Africa)

Leo Stan Ekeh is a Nigerian businessman, entrepreneur, and philanthropist who have become
a household name in the tech industry. Ekeh is the founder and chairman of Zinox
Technologies, Nigeria’s leading information Technology Company. Born in Ubomiri
Mbaitoli, Imo State, Nigeria, in 1956, Ekeh’s entrepreneurial journey began in his early
twenties when he started his first company, Task Systems Limited; which focused on
computer maintenance and later became a distributor of computer systems. He later
established Zinox Technologies in 2001, which has grown to become a major player in the
tech industry in Nigeria and across Africa. One thing that sets Ekeh apart from other
entrepreneurs is his unique leadership style. He is known to be hands on leader who is deeply
involved in the day-to-day operations of his company.
He says, “I’m not the leader who sits in an ivory tower and gives orders. I believe leading by
example and getting my hands dirty.”In terms of net worth, Ekeb is estimated to be worth
over $1 billion, making him one of the richest men in Africa. However, he is not one to flaunt
his wealth and is often seen in simple attire, preferring to invest his money back into his
businesses and philanthropic initiatives.

10. Ibukun Awosika (The Chairman)

Ibukun Awosika, fondly called the “Chairman,” is a Nigerian business magnate, author, and
motivational speaker who has made a name for herself in the corporate world. Her numerous
accomplishments have made her a household name in Nigeria and beyond. Her contributions
to the business world have earned her a place amongst the top businesswomen in Africa.
Ibukun Awosika, who earned her nickname “Chairman” because she was the first female
Chairman of the board at First Bank Nigeria Limited, is a force to be reckoned with in the
Nigerian business scene.
She is the founder and CEO of the Chair Centre Group, which comprises several subsidiaries
such as Furniture Solutions, Health Assure, and several others. Her line of business includes
furniture production, healthcare, and finance. But that’s not all there is to Ibukun Awosika.
She’s also a seasoned motivational speaker and has published several books, including “The
Girl Who Said I Can” and “Business His Way.”

Her business expertise and drive for success have made her: a sought-after speaker in Nigeria
and beyond. Amazingly, her hard work and dedication have paid off, as she has a net worth
of over $200 million, making her one of the richest women in Africa. Her success hasn’t
come without challenges, but she has overcome them gracefully and resiliently.

2.7 Practical Activities/Research Assignment

2.7.1 Guest Speaker: Invite very successful entrepreneurs on the challenges of

entrepreneurship in Nigeria and how to overcome these challenges.

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 CHAPTER THREE

Nature, Functions, and Roles of Entrepreneur

3.1 Entrepreneur

The term entrepreneur as noted by Hatten (2006) has evolved over the years into a multitude
of definitions. Entrepreneur, a French word from the seventeenth century literally means
between-taker or-go-between. This means entrepreneurs were referred to as men who
organize and manage exploration expeditions and military maneuvers.

What Is an Entrepreneur?

Entrepreneur is a word borrowed from French which defined an individual who organizes or
operates a business or businesses. Although, credit for coining the term entrepreneur
generally goes to the French economist Jean Baptise Say, but in fact the Irish-French
economist; Richard Cartillon defined it first in his Essai sur la Nature du Commerce en
Général, or Essay on the Nature of Trade in General. This book was considered by William
Stanley Jenvons as the cradle of political economy.

1. Richard Cantillon 1734

Entrepreneurs are non-fixed income earners who pay known cost of production but earn
uncertain incomes.

2. Jean Baptise Say 1803

An entrepreneur is an economic agent who unites all means of production land of one, the
labour of another and the capital of yet another and thus produces a product. By selling the
product in the market he pays rent of lands, wages to labour, interest on capital and what
remains is his profit. He shifts economic resources out of an area of lower into an area of
higher productivity and greater yield.

3. Di-Masi 2010

The person who perceives the market opportunity and then has the motivation, drive and
ability to mobilize resources to meet it.

Say and Cantillon used the term differently, however. Cantillon biographer Anthony Breer
notes that Cantillon saw the entrepreneur as a risk-taker while Say considered the
entrepreneur a "planner" Cantillon defined the term as a person who pays a certain price for a
product and resells it at an uncertain price: "making decisions about obtaining and using the
resources while consequently admitting the risk of enterprise." The word entrepreneur first
appeared in the French dictionary entitled “Dictionnaire Universel de Commerce" which was
compiled by Jacques des Bruslons and published in 1723. Entrepreneur is the individual (or
group of individuals) who acts as principal mediator of the process of change through a
specific project based on an opportunity that requires the implementation of a new idea

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(ideas). An entrepreneur is a person who sees an opportunity and assumes risk of developing
a product in an existing organization or by Starting a new organisation to take advantage of
the opportunity.

Multitude of definitions of entrepreneur has evolved over the years, but most if not all of
them according to Vander Werf and Brush (1989) include all or some of the following
behavoural components:

i. Creation. A new business is started mostly from the scratch or a new product idea is born;
bringing into existence something that was not there before.

ii. Innovation. The business involves development of a new product, process, market,
material, or conquering obstacles that would have stopped other people and turning problem
to opportunities.

iii. Risk assumption. The owner/entrepreneur of the business bears the risk of potential loss
or failure of the business.

iv. General management. The owner of the business guides the business and allocates the
business’s resources.

v. Performance intention. High levels of growth and/or profit are expected. Entrepreneur is
any person or a group of individuals that have the ability to recognize a business opportunity,
gather the necessary resources to exploit the opportunity while bearing the risks associated
with these activities and enjoying the profits or other benefits. The risks that go with
establishing an organisation can be financial, material, and psychological.

3.2 Types of Entrepreneur

Entrepreneurs are classified into

 Independent Entrepreneur: This, according to Pinchot (2005), is any individual

who establishes a new organization without the benefit of corporate support.
Independent entrepreneurs can be business, technology, or social entrepreneurs. Spin-
offs: These are corporate managers who become entrepreneurs by splitting from the
parent company and creating new businesses.

 Business or Traditional Entrepreneur: This is an entrepreneur that started the

enterprise for the basic purpose of making profit. The purpose and mission of such
organization is to make profit for owner and other co-owners such as partners or
shareholders which make the degree of efficiency and effectiveness very high.

 Social Entrepreneur: A social entrepreneur is any individual who can easily identify
a social problem in a community and continue to gather financial resources through
the profits of an established organization, donations, sponsorships, or other reliable
sources.

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  Intrapreneurs: These are new venture or product creators working in big
corporations who are variously called corporate entrepreneurs.

 Technology or Techno-entrepreneurs: It is also possible for an individual to be an

independent entrepreneur and a technology innovator. Ogundele (2007) opined that a
technopreneur’s business involves high technology or when an individual is both a
technological innovator and a businessman.

 Institutional Entrepreneurs: These are entrepreneurs that are organized in a

formalized way or informally like a family that use their combined expertise, skills,
and capabilities to recognize investment opportunity, mobilize necessary resources to
exploit it, and exit the organization at the appropriate time.

3.4 Functions and Roles of the Entrepreneur

Based on our discussion so far, we can see that the entrepreneur performs so many functions
in starting and ensuring the business succeed.

3.4.1 Functions of the Entrepreneur

In starting and ensuring the success of the enterprise, every entrepreneur performs some basic
functions which include recognition and evaluation of business opportunity, organising the
business, decision making, risk bearing, factor combination and management, and innovation.
These functions are explained in turns in the following passages:

3.4.2 Recognition and Evaluation of Business Opportunity

One of the basic functions of the entrepreneur 1; recognition of investment opportunities in
the changing environment and evaluation of these opportunities so that choice can be made.
An opportunity can be thought of as constituting those situations in which goods, services,
raw materials and organizing methods can be introduced and sold at greater than their cost of
production. An entrepreneurial opportunity can also be thought of as a situation in which a
person can create a new means-to-ends framework for recombining resources that the
entrepreneur believes will yield a profit. Business opportunities represent the needs of people
and organizations that are not being satisfied at all or not adequately satisfied. In case of
traditional or business entrepreneurship, to constitute an investment opportunity, the people
and organizations must have money to spend on their needs and the population of the people
and organizations in need must be reasonably large. However, in social entrepreneurship such
as an NGO, the present economic wealth of the people in need may not be important; what
constitutes one of the important considerations is the ability of the entrepreneur to start and
continue to satisfy the identified.

3.4.3 Organising the Business

Exploitation of business opportunity requires fulfillment of legal requirements, resources and
proper allocation of resources, and a good structure for maximizing all the resources available
in the achievement of the enterprise goals and objectives. Organizing the business involves
choosing a legal form of ownership, registering it with the appropriate governmental agencies,
sourcing for required resources, allocating these sourced resources in the most efficient

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manner, and placing managers and employees in their different posts reflecting levels of
authority and responsibility and reporting relationships.

4.4.4 Decision Making

Decision making is concerned with critical and comprehensive understanding of a problem or
a goal, identification of alternative solutions to the problem or alternative routes to achieving
the goal, and selection of the most appropriate solution or route, implementing and
controlling the chosen alternative. The entrepreneur usually makes fundamental choices from
the beginning of the enterprise through managing it to his/her exit. Such decisions include the
choice of business or enterprise; location of facility; sources of inputs such as: raw materials,
finance, employees; the strategies to adopt in accomplishing objectives; the markets to pursue;
and decision regarding when to retire and succession planning amongst others.

3.4.5 Risk Bearing

Every venture is associated with different types of risks. Entrepreneurs own the resources that
they and their teams manage. Some of these risks are insurable while others cannot be insured
by insurance companies. In the event of loss due to some natural factors, entrepreneurs bear
such losses because such risks are not insurable. Risks that are associated with enterprise
ownership can be financial and/or psychological. Financial loss relates to loss of money due
to factors such as bad debts, changing consumer’s tastes due to changing technology or
arrival of superior competitors, or any natural disaster.

3.4.6 Innovation
Due to the dynamism of the organisation’s, the entrepreneur must introduce new products and
ways of satisfying the needs and wants of the society. This involves improving the existing
products and/or introducing new products to serve existing needs or new needs, improving
the ways customers’ needs are being satisfied in all the or some of the activities of the
business. Innovation is important to succeed, survive, or beat competitors in the marketplace
especially in the areas of costs, sale, and speed.

3.4.7 Factor Combination and Management

Opportunity exploitation involves building the entrepreneurial and management teams and
ensuring proper management of all resources mobilized for the enterprise. Resources required
for opportunity exploitation include human; physical resources such as finance, buildings and
machines including equipment, materials; natural resources like time, air, water, land etc.;
and other intangible resources such as information and reputation. The entrepreneur ensures
the appropriate combination of these resources through effective management practices,
policies, and procedures.

3.5 Personal Rewards of Entrepreneurs

Such benefits include

 Income/Additional Income: Entrepreneurs derive their salaries and wages from the
businesses they establish, and as owners, they are entitled to the profits after taxes are
paid to governments. This financial reward that entrepreneurs derive after their
salaries have been paid is referred to as dividends.

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  Social and Psychological Satisfaction: The satisfactions owners derive from their
businesses include the sense of pride, security and respect from members of the
society. They see ownership of small business as a good opportunity to serve
humanity and maximize their energies, talents in profitable investments thereby
getting a sense of fulfillment.

 Independence: Business entrepreneurs derive financial rewards from their businesses

instead of remaining as liabilities to their family members, governments, or
communities.

3.6 Importance of Entrepreneurs in the Society

It is unarguable that entrepreneurs contribute a great deal to our society. The importance of
entrepreneurs in every society cannot be overemphasized. Irrespective of the theory adopted
in explaining the entrepreneurial abilities of individuals, entrepreneurship promotion usually
brings about numerous benefits to individuals concerned and the nation at large. The roles
and contributions of entrepreneurs in any society are numerous but not limited to some of the
benefits stated by Gana (2001) and Odah (2003) which are explained as follows;

3.6.1 Increase in Productivity

Productivity means the ability to produce more goods and services using minimum labour
and other resources like money and time. Entrepreneurship promotion increases the
productivity of individuals and the economy as a whole; this is achieved mostly through
improved technology and management expertise of entrepreneurs that are the products of
entrepreneurship development process.

3.6.2 Promotion of Effective Domestic Resource Utilization

Nigeria is endowed with different basic resources required for production purposes. These
include natural resources (which can serve as raw materials for production) such as mineral
deposits, good weather; and human resources. These resources can be put to maximum usage
instead of direct consumption and wastages or keeping them idle through entrepreneurship
promotion. Entrepreneurship can assist in the promotion of effective utilization of these
resources because established enterprises and all new products invented will require much of
these resources.

3.6.3 Enhancement of Market Competition

Due to improved technology and increase in productivity occasioned by entrepreneurship
development, there will be increased availability of goods and services in the economy from
larger number of competitors. This competition gives consumers better opportunity to choose
from a variety of alternative products and improvement in the quality of these products. Other
benefits of competition to the consumers is reduction in prices, improvement in distribution
or availability of products, better customer services all of which will improve consumers’
satisfaction.

3.6.4 Employment Generations

Entrepreneurship promotion usually results in the establishment of many enterprises; these
enterprises will in turn employ many unemployed and other unproductive resources like idle

COMPILED BY: BELLO KASIM S. 37

capital and land. The numbers of jobs being created by private-sector organizations are larger
than those created by government or public-sector organizations.

3.6.5 Wealth Creation and Income Generation

Wealth refers to a given quantity and quality of resource under the ownership of individuals
or nations, while an income refers to a given amount or money earned by an individual,
entrepreneurship promotion creates wealth mainly through technological ad\ ancement
occasioned by research and development (R&D) from the wealth created, individuals can
generate a lot of income in a form of wages or salaries and takes respectively.

3.6.6 Economic Growth and Development

Economic growth simply means an increase or an expansion of the national income and the
volume of goods and services in the economy. Economic development on the other hand is a
multi-dimensional process involving changes in structures, attitudes and institutions as well
as the acceleration of economic growth, the reduction of inequality and eradication of
absolute poverty. Economic growth is the expansion in real] terms of national income per
head; the development in the overall standard of living of a nation’s citizens.
Entrepreneurship promotion can bring about economic development through technological
advancement and the establishment of many enterprises, entrepreneurship development can
also bring about economic development through employment and income generation.

Entrepreneurs perform several roles in contributing to the economic growth and development
of a country or the society in several ways such as

 Mobilization of local savings necessary for the enterprise which reduces wastages or
consumption and idle cash thereby keeping financial institutions relevant and active.

 Provision of channel for the disposal of economic activities through technological

advancement and organized productive activities.

 Bearing the ultimate risk by ensuring higher value for all stakeholders.

 Creation of new products and services and improvement of the existing ones.

3.6.7 Transformation of Traditional Indigenous Industry

Every local industry continuously requires improvements in its operations. This is necessary
to reduce costs and wastages, improve product quality, achieve and competitive advantages to
remain profitable and also to meet international standards of best practices. Industry
transformation is the progressive change in the ways production and operational activities are
being carried out in terms of processes, procedures, and basic practices. This change requires
the birth of new entrepreneurs and enterprises.

3.6.8 Redistribution of Wealth and Income

All societies have social problems and governments cannot solve all these problems because
of insufficient finance. Entrepreneurs, especially social entrepreneurs assist greatly in

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eliminating and reducing some of these problems by providing social welfare services to the
less-privileged members of the society.

3.6.9 Technological Creativity and Innovation

Entrepreneurship especially its promotion encourages technological creativity and innovation
among individuals, the results of this kind of encouragement leads to benefits such as:

 Improve and create new technology that enhances quality and cost reduction and
products and services for the benefits of everyone.

 Stimulation of indigenous technology in the production process.

 Adaptation of traditional technology to modem system and requirements.

 Adaptation of imported or transferred technology to local environment.

 Development in the technological competence of the enterprise managers and

employees.

3.7 Roles of Entrepreneurs in Accomplishing Success of their Enterprises

Entrepreneurs perform many roles in ensuring the success and survival of their businesses
from the beginning to their exit from the management, and sometimes, ownership of the
business. These roles include wealth creation and managerial roles that are explained in the
next subsections.

3.7.1 Wealth Creation Roles

The entrepreneur as a wealth creator performs some roles as the promoter, a partner, a
shareholder, director, and an idea initiator in starting and ensuring the success of the
enterprise.

Promoter: The entrepreneur is the individual that will analyse the general environment;
identify, shape, evaluate and select appropriate opportunity; marshal adequate resources for
exploitation of the opportunity, and ensure effective and efficient management of the
organisation’s resources to ensure the achievement of desired goals and objectives especially
profit.

Partner: Entrepreneurs usually solicit the participation of other people and organizations in
the business for a number of reasons: (1) to seek for additional capital, (2) when the
complexity of the business require more than one person, (3) when the influence, experience,
competence and capability of other people is highly useful in the success of the business, and
(4) to reduce risks through sharing the business risks with others.

Shareholder: Entrepreneurs also participate as shareholders when the enterprise requires

very large capital outlay or when it has grown beyond what one or a few people can finance
or handle. Risk is directly related to the size of resource committed and invariably the scope
of the enterprise therefore entrepreneurs usually minimize business risk through sharing it
with other interested parties. To minimize risk on their own sides, entrepreneurs avoid full-

COMPILED BY: BELLO KASIM S. 39

time commitment to the business by giving other people and organizations part-ownership of
the business who equally share in its rewards in the form of dividends.

Director: Directing the enterprise’s activities involves providing guidance for all the
members of the organization. Entrepreneurs perform as directors by ensuring compliance
with all legal requirements and that the business activities are conducted ethically, honestly
and diligently by avoid fraud, deceits, and harms in relations to stakeholders and the general
society. Entrepreneurs as directors also safeguard the interest of all stakeholders and ensure
that the enterprise carries out its operations in responsible manners by fulfilling its basic
social responsibilities.

3.7.2 Managerial Roles

Entrepreneurs perform some basic managerial roles in ensuring the success of the enterprise.
These basic roles have been classified into three by Henry Mintzberg in 1973 and they
include interpersonal, informational, and entrepreneurial roles.

Interpersonal Roles
The entrepreneur interacts with many people such as managers and employees, suppliers,
marketing intermediaries, government officials, members of the community or their
representatives, customers, financiers or creditors, debtors, and pressure groups. Therefore,
the entrepreneur performs three basic informational roles: figurehead, leadership, and liaison.

Figurehead Role: The entrepreneur has to act as figure head in the organization, as such; he
or she is the symbol of legal authority, and performs several routine and ceremonial duties.
This is done by representing the organization in formal and informal functions.

Leadership Role: The entrepreneur is the one who brings other people together in order to
create the business. Thus, he/she has to chart the enterprise strategic goals; vision, Mission,
and strategic objectives; and ensure that such goals are achieved by ensuring every member
and parts are working towards the common goal and good of the enterprise. This includes
galvanizing the efforts and commitments of all organizational members through motivation in
proper ways.

Liaison Role: The entrepreneur also acts as the link between the business and its
stakeholders especially the external stakeholders. He or she serves as a link
between management and employees and between departments and units of the enterprise.

Informational Roles: Entrepreneurs and their managers need information to manage and
operate the business activities in the most effective and efficient: manner. Such information is
gathered from within and outside the organization. The informational roles the entrepreneur
plays here include monitor, disseminator, and spokesman.

Monitor: The entrepreneur must continuously analyze both the internal and the external
environment of the business to gather relevant data and information. Such data and
information are required for managerial decisions especially strategic decisions which
determine the success of the organization in the marketplace. He or she is therefore the nerve
center of the whole organization for receiving all types of organization.

COMPILED BY: BELLO KASIM S. 40

Disseminator: The entrepreneur transmits information that has been processed, based on
collected data, to members of the organization and sometimes to relevant external
stakeholders. Within the organization the entrepreneur transmits selected information to
managers and employees.

Spokesman: The entrepreneurial manager is the main representative of the enterprise. This
involves speaking on behalf of the organisation or passing necessary information about it to
external stakeholders.

Decisional Roles: Decision making involves choosing the best or most appropriate courses of
action out of the numerous alternative courses available. Choices are made from the
beginning of entrepreneurship process to the end or exit of the entrepreneur. Such choice
making relates to opportunity selection, location and layout of facility, sources of resources
especially finance, employee selection, strategies, market selection, and ownership and
management succession. Decision making is associated with risks and as the major risk
bearer; the entrepreneur must lead major decisions of the enterprise like strategic decisions.
Decisional roles include entrepreneurial, resource allocation, negotiation, and disturbance
handling.

Entrepreneurial Role: The entrepreneur in addition to generating, evaluating and selecting,

and exploiting the business opportunity, bears the various risks associated with the venture.
He or she introduces new ideas, design and initiates changes that are necessary for the
business to succeed in the marketplace.

Resource Allocator: The entrepreneur allocates the human, financial, and other physical
resources of the enterprise in appropriate ways and based on needs and assignments to
achieve its goals and objectives in the most efficient manner.

Negotiator: Different contractual relationships exist m all enterprises. These include

contracts of employment, suppliers of raw materials, sellers of other goods and providers of
services that are required by the organization, and other partnership relationships. All these
contractual relationships involve costs and expenses therefore it is important for the
entrepreneur to develop negotiation skills.

Disturbance Handler: All enterprises encounter disturbances in the form of conflicts, Crisis,
and risks that may make decision-making a complex challenge. Most disturbances arise from
dynamism of both the internal and external environment and pressure from Stakeholders such
as industrial actions from employees. To achieve smooth operations, the entrepreneurial
manager must manage disturbance as early as possible to avoid deterioration of cases.

3.8 Practical Activities/Research Assignment

3.8.1 Assignment on Group Visitation to Entrepreneurs in the immediate community on the

functions they have been performing to ensure the success of their enterprises

3.8.2 Organize a Debate in the class on the reasons self-employment is better than salaried
employment and vice versa.

COMPILED BY: BELLO KASIM S. 41

 CHAPTER FOUR

The Psychology of Entrepreneurs

4.1 Personality of an Entrepreneur

We have established that entrepreneurship is the manifest ability and willingness of

individuals on their own, in teams, within and outside existing organizations, a way of
thinking, and a process; it involves some logical steps. But what makes entrepreneurs
different from other people? How do entrepreneurs think and behave? What do they engage
in that other people fail to do or do poorly? These questions and more of such questions
revolve round the psychology of entrepreneurship and its process. Psychology of
entrepreneurship is concerned with how entrepreneurs think and behave. The basic concern
of entrepreneurship psychology includes entrepreneurial characteristics or traits and behavior
which make them stand out. On the other hand, sociology of entrepreneurship is concerned
with the interdependence between the society and entrepreneurs and entrepreneurship. In this
Chapter the characteristics that make entrepreneurs stand out and their management behavior
will be discussed. The discussion also covers the basic reasons entrepreneurs and other
people go into business and the factors that make some other people prefer regular or salaried
employment. Other topics in this Chapter include the roles that entrepreneurs play in the
society, impact of the society on entrepreneurship, the roles of the various governments in
facilitating entrepreneurship and regulating the activities of business and non-business
organizations in Nigeria, and the various problems that are associated with entrepreneurship
promotion in Nigeria.

4.1.1 Entrepreneurial Characteristics

So many questions have been asked with regard to characteristics that make an individual
become a successful entrepreneur in the addition to whether such attributes can be learned or
acquired. Characteristics that are displaced by entrepreneurs can be classified into
psychological, social, and economic characteristics. Psychological characteristics observed in
most entrepreneurs include their high need for achievement and success, strong desire for
responsibility, high degree of self-confidence, and strong dislike for routine work. Social
characteristics show that entrepreneurs are goal-oriented and they have capacity to adapt to
changing conditions, and they have ability to organize or combine resources for the
achievement desired goals and objectives. Economic characteristics of entrepreneurs include
profit orientation, ability to take risk and innovate.

The common characteristics that are associated with successful entrepreneurs include the “the
big five personality dimensions’ emphasized by Vecchio (2003), innovation and some other
traits put forward by Drucker (1986), and tolerance for ambiguity discovered by Begley and
Boyd (1987).

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The Big Five Personality Dimensions
The big five personality dimensions include need for achievement, need for autonomy, and
internal locus of control, risk-taking, and self-efficacy. We now discuss them in turn.

Need for Achievement: The father of the theory of ‘Need for Achievement’ (N Ach) David
C. Mcllelland, a psychologist posits that individuals who are high in N Ach more likely to
become entrepreneurs than those who are low in N Ach. Entrepreneurs tend to have a high
desire for personally responsible for solving problems, and setting and reaching goals. People
with high N Ach in addition are ready to bear moderate risk with clear feedback on
performance. This trait is also referred to as “the burning gut,” “fire in the belly,” or simply
“passion”. The need for achievement manifests itself in a number of ways: risk-taking,
confidence of success, desire for independence, energy in pursuing goals, and measurement
of success by wealth.
According to Stokes and Wilson (2006) an entrepreneur’s need for achievement manifests
itself in a number of ways:

 Risk-taking

 Confidence of success

 Desire for independence

 Energy in pursuing goals

 Measurement of success by wealth

Need for Autonomy: Strong desire for independence or the freedom to create their own
features is another trait which is commonly recognized as prevalent among entrepreneurs and
owner-managers alike. Entrepreneurs’ pursuit of independence to become their own boss in
situations that allow them to assume a higher degree of personal responsibility for their
decisions and achievements is another basic entrepreneurial characteristic. This desire to be
independent and self-directing often makes it difficult for entrepreneurs to delegate authority.
The inability to delegate has mostly been referred to as the dark side of the entrepreneur.

Internal Locus of Control: Successful entrepreneurs, based on research studies are

convinced that they can control their own destinies. People who believe they have the ability
to control their environment are considered to have an internal locus of control, while those
who believe that their lives are dominated by chance and fate have external locus of control.
Entrepreneurs have a strong internal locus of control because they possess a higher level of
confidence, stronger commitment to self-determination, and robust initiatives; they cannot be
pushed around or be cheaply influenced by people.
Small business survival and success, according to Brockhaus ‘and Horwitz (1986), is linked
to the internal locus of control beliefs of the owner-managers.

Risk-taking Propensity: Entrepreneurs are often characterized as risk-takers who believe

that gains do not accrue to those who always play safety first. There i8 agreement from
research on risk-taking in entrepreneurs is that they are not big risk-takers; they are moderate,

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calculated risk-takers who define the risks inherent in any venture and attempt to reduce them,
or manage them in the presence of opportunity. Entrepreneurs see challenges as opportunities
and regard roadblocks as simply temporary pauses in their journey.

Self-efficacy: Self-efficacy describes an individual’s belief in their ability to undertake and

accomplish some particular task or activity. This personality trait is the most compelling of
the big five personality dimensions; it characterizes all stages of the entrepreneurship process
because the entrepreneur is by definition dealing with new situations and outcomes.

Innovation: Innovation is one of the characteristics of the entrepreneur. Innovation is a

process of turning ideas into new opportunities for value creation and of putting these into
widely used practice. Ability to innovate can be learned or developed and people are also
born with it. Entrepreneurship and innovation are inseparable; they are tasks that can be and
should be organized in a purposeful way.

Tolerance of Ambiguity: Entrepreneurs have the ability for accommodating uncertainty.

Entrepreneurship process especially when it leads to the path of initial start-up can be
dynamic, uncertain, complex, and ambiguous. However, this type of environment is more
attractive to entrepreneurs because it is challenging and exciting and offers more opportunity
than structured environment. Other related personality traits associated with entrepreneurs are:
proactive approach, self-motivation, opportunistic behavour, creative, visionary, manipulative,
impatient, energetic, and charismatic.

4.1.2 General Qualities of Entrepreneur

There are so many qualities to be considered when entrepreneurship qualities are discussed.
The frequent and common entrepreneurial qualities (some have been explained above or as
components of those mentioned) offered by Kuratko & Hodgetts (1998), as quoted by Aykan
(2002) include the following forty two qualities.

1. Self-confidence 22. Reliability

2. Constancy 23. Precision

3. Being active and energetic 24. Honesty

4. Skill 25. Commonality

5. Risk taking 26. Being profit-minded

6. Dynamism & Leadership 27. The Ability of Learning from mistakes

7. Optimism 28. Desire for Power

8. Ambition 29. Good personality

9. Versatility 30. Self-centeredness

10. Creativity 31. Courage

11. The ability of Manipulation 32. Imagination

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12. The Ability to Communicate. 33. Understanding/Sympathy with people

13. Initiative 34. The Tolerance against uncertainty

14. Flexibility 35. Aggression

15. Intelligence 36. Satisfaction

16. Focusing on Clear Objectives 37. Advantage

17. Being competitive 38. Being promising

18. Independency 39. The Ability to rely on employees

19. Sensitivity to critical situations 40. Sensitivity to others

20. Efficiency 41. Integrity

21. Being Decisive 42. Maturity

4.2 Desirable and Acquirable Attitudes, Habits, and Behaviors

Many successful entrepreneurs have emphasized that while their colleagues have initiative
and a take-charge attitude, are determined to persevere, and are resilient and able to adapt, it
is not just a matter of personality. It is what they do that matters most. Although there is an
undeniable core of such inborn characteristics as energy and raw intelligence, which an
entrepreneur either has or docs not, it is becoming apparent that possession of these
characteristics does not necessarily make a successful entrepreneur. There is also a good deal
of evidence that entrepreneurs are born and made better and that certain attitudes and
behaviors can be acquired, developed, practiced, and refined through a combination of
experience and study, In addition, although not all attitude habits, and behaviors can be
acquired by everyone at the same pace and with the same proficiency, entrepreneurs are able
to significantly improve their odds of success by concentrating on those that work, by
nurturing and practicing them, and by eliminating, or at least mitigating, the rest. Painstaking
effort may be required, and much will depend on the motivation of an individual to grow; but
it seems people have an astounding capacity to change and learn if they are motivated and
committed to do so.

Testimony given by successful entrepreneurs also confirms attitudes and behaviors that
successful entrepreneurs have in common. The principal reasons why most entrepreneurs
have been successful has been the possession of three attributes: (1) the ability to respond
positively to challenges and learn from mistake (2) Personal initiative, and (3) Great
perseverance and determination. A consensus has emerged, according to the findings of
Timmons and Spinelli (2009), around seven dominant themes which are explained in the next
subsection. These themes include commitment and determination, courage; leadership,
opportunity obsession, tolerance of risk, ambiguity, and uncertainty, creativity, Self-Reliance,
and adaptability, and motivation of excel.

COMPILED BY: BELLO KASIM S. 45

Commitment and Determination: Commitment and determination are seen as more
important than any other factor. With commitment and determination, an entrepreneur can
overcome incredible obstacles and also compensate enormously for other weaknesses. The
attitudes of commitment and determination include Tenacity and decisiveness, ability to
recommit/commit quickly, Intensity or aggressiveness/competitive in achieving goals,
persistence in solving problems, disciplined willingness to undertake personal sacrifice,
immersion in the mission.

Courage: The attitude or behavior that shows courage includes moral strength fearless,
experimentation, boldness in the face of conflicts or failure, intensity and curiosity in the face
of risk.

Leadership: Successful entrepreneurs are experienced, possessing intimate knowledge of the

technology and marketplace, in which they will compete, sound general management skills,
and a proven track record. They are self-starter and have an internal locus of control with
high standards. They are patient leaders, capable of installing tangible visions and managing
for the longer haul. The entrepreneur is at once a learner and a teacher, a substantial
enterprise that will contribute something lasting and relevant to the world while realizing a
capital gain requires the patience to stick to the task for 5 to 10 years or more.

Opportunity Obsession: Successful entrepreneurs arc obsessed first with opportunity not
with the money; the resources, the contacts and networking, and not with image or
appearances. Although some of these latter items have a place and time in the entrepreneurial
process, they are not the source and driver for new venture. Entrepreneur, in their in best
creative mode, are constantly thinking or new ideas for businesses by watching trends,
spotting patterns, and connecting the dots to shape and mold a unique enterprise.
Entrepreneurs realize good ideas are a dime a dozen, but good opportunities are few and far
between. Fortunately, a great deal is now known about the criteria, the patterns, and the
requirements that differentiate the good idea from the good opportunity. Entrepreneurs rely
heavily on their own previous experience (or their frustrations as Customers) to come up with
their breakthrough opportunities.

Tolerance of Risk, Ambiguity, and Uncertainty: Because high rates of change and high
levels of risk, ambiguity, and uncertainty are almost a given, successful entrepreneurs tolerate
risk, ambiguity, and uncertainty. They manage paradoxes and contradictions.
Entrepreneurs risk money, but they also risk reputation, successful entrepreneurs are not
gamblers; they take calculated risks, Like the parachutist, they are willing to take a risk;
however, in deciding to do so, they calculate the risk carefully and thoroughly and do
everything possible to get the odds in their favor. Entrepreneur get others to share inherent
financial and business risks with them, Partners put up money and put their reputations on the
line, and investors do likewise. Creditors also join the party, as do customers who advance
payments and supplier who advance credit.

Creativity, Self-Reliance, and Adaptability: The high levels of uncertainty and very rapid
rates of change that characterize new venture require fluid and highly adaptive forms of
organization that can respond quickly and effectively.

COMPILED BY: BELLO KASIM S. 46

Successful entrepreneurs believe in themselves. They believe that their accomplishments (and
setbacks) lie within their own control and influence and that they can affect the outcome, and
they have the ability to see and “sweat the details” and also to conceptualize (i.e., they have
“helicopter minds”. They are dissatisfied with the status quo and are restless initiators. The
attributes and behavior that can be learnt from entrepreneurs in terms of creativity, self-
reliance, and adaptability include nonconventional, open-mindedness, lateral thinking, quick
learning adaptability, creativity and problem solving.

Motivation to Excel: Successful entrepreneurs are motivated to excel. Entrepreneurs are

self-starters who appear driven internally be a strong desire to compete against their own self-
imposed standards and to pursue and attain challenging goals. Conversely, these
entrepreneurs have a low need for status and power, and they derive personal motivation
from the challenges and excitement of creating and building enterprises. The acquirable
attitudes and behavior required for motivation to excel include result orientation, and drive to
achieve and grow.

4.3 Motivating Factors for Starting Businesses in Nigeria

Today there is explosion of new entrepreneurs. Many reasons have been advanced by
numerous small business owners for their attraction towards business ownership. Based on
the works of Stokes and Wilson (2006), the motives for going into business can be classified
into pull and push motives. Pull motives include desire for independence; desire to exploit
opportunity, turning a hobby or previous work experience into business, and financial
incentive while the push motives include redundancy, unemployment (or threat of), and
disagreement with previous employer. However, Megginson and Megginson (2003:24-28)
classified the reasons behind business ownership into two: to satisfy personal objectives and
to achieve business objectives. The personal objectives of owners of small businesses are to
(1) achieve independence, (2) obtain additional income, (3) help their families, and (4)
provide products not available elsewhere. Business objectives include (1) service objective,
(2) profit objective, (3) social objective, and (4) growth objective. Small business
entrepreneurs go into businesses for various reasons. We will discuss factors that influence
people into business ownership under two classifications: pull and push influences.

4.3.1 Pull Influences

Some people are attracted towards business ownership by positive motives such as inherent
triggers or a specific idea which they are sure will work. Pull motives include:

Personal Characteristics of the Entrepreneur

Some basic entrepreneurial characteristics that propel individuals to start businesses of their
own are desire for independence and power, need or passion for achievement.

 Desire for Independence and Freedom

Since freedom does not mean indolence but ability to take up normal responsibility to
achieve results without unnecessary external control. It therefore means that some
people start businesses to be able to try their own ideas, express their talents or gifts
thereby achieve independence. Others, however, prefer self-employment to avoid

COMPILED BY: BELLO KASIM S. 47

 unnecessary harassment such as derogatory treatment from unfriendly managers or
business owners. They protect their pride from thy dominating impact of others.

 Desire for Power

Power is the capacity to make things happen through others. Power brings respect,
recognition and, when properly used, it multiplies. It is not difficult to recognize an
entrepreneur who went to business to acquire power. Such a person craves for respect
especially from his employees and within the community he works for recognition.

 Need for Achievement:

Entrepreneurs tend to have a high desire for personally responsible for solving
problems, and setting and reaching goals. This trait is also referred to as “the burning
gut,” “fire in the belly,” or simply “passion”. The need for achievement manifests
itself in a number of ways: risk-taking, confidence of success, desire for independence,
energy in pursuing goals, and measurement of success by wealth.

Service to Humanity
One major source of opportunity for service is to be self-employed and be able employ others.
Some entrepreneurs have established private schools or bakeries in their local communities to
meet the needs of the people. This does not only meet the needs of the people but creates
employment opportunities for others.

Favourable Government Policy

Where government policy is favourable to free enterprise people are encouraged and
influenced to go into business. In Nigeria different governments have formulated various
policies that are favourable to existing and would-be entrepreneurs. These include tax
holidays, provision of facilities such as land, roads, provision of education and training to
entrepreneurs, provision of both direct and indirect financing through different agencies.

Financial Incentives
Entrepreneur’s especially small-scale entrepreneurs start businesses to secure income or
additional income. A business enterprise that is properly managed will yield income such as
salaries and profits to the owners. Profit is the excess of revenue over costs and expenses. A
person that is not in regular employment can derive his salary without ceiling from starting a
business. People that are already in regular or salaried employment can start small businesses
from their savings to earn additional income. The management of such businesses can be
delegated or entrusted to others who are, in most cases, Close relations or other partners.
Venturing into business while a person is still working for someone else serves as an
offensive strategy for tackling the disenchantment phase that follows retirement. Such
engagements prepare the would-be retiree for stable and profitable engagement in addition to
providing additional income.

Turning a Hobby or Previous work experience into business:

It is not strange to see many new entrepreneurs seek fulfillment by spending more time
involve in a cherished hobby, or part of their work that particularly enjoy.

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4.3.2 Push Influences
In the same way that some people are attracted to business ownership, many others are
‘pushed’ into founding a new enterprise by a variety of external factors or circumstances
which include:

Unemployment (or threat of unemployment)

In most developing countries the level of unemployment is high. Most school-leavers,
especially graduates that were unable to secure regular employment, have started small
businesses. Some of them have recorded appreciable success in their businesses.
Job or Pay Dissatisfaction
Work is a fundamental aspect of man. People therefore work for achievement of both
psychological and materials or financial rewards. It means all jobs have two components; the
input of the worker in form of physical and mental efforts and the reward for him that is
usually monetary and non-monetary compensation. It is the desire of every worker to derive
some reasonable degree of satisfaction from his or her work. Such satisfaction includes
maximum utilization of his or her skills, experience and other abilities; freedom to contribute
to the organization and job challenges. When such satisfaction is not found, even when the
employee gets a good pay, he is dissatisfied and alienated. This is underemployment and can
gradually make a worker to become redundant. An individual with entrepreneurial traits
loathes redundancy and so he is pushed or propelled to go and establish his own business.

An employee’s pay must be adequate, equitable, balanced and acceptable for him to perform
well on his job and to remain loyal and committed to his employer. Employee compensation
must be commensurate with his efforts and qualifications. It must not be only monetary but
must include other benefits, promotion and recognition. Where the compensation is too low,
such a worker may feel used or cheated. Such employee may look for another job, but if he
possesses entrepreneurial traits, he will choose to start his own business.

Middle Age Crisis

Middle age crises such as lack of success in education, refugee status, orphanage and
widowhood among others can propel the individual affected to consider establishing a small
business to create a source of income to cater for personal and other needs.

Lack of Job Security or Disagreement with previous Employer:

Job security is the assurance that, all things being equal, the worker would keep his job.
However, jobs are not secured in all cases. There is job insecurity in any failing organization,
merging firms and other cases politics in the place of work. Some people have been
motivated to leave their organization because it was not doing well to establish their own
businesses. They do not want to wait to be retrenched or “rationalized from work”, so they
resign to start their own business before the company collapses. On the other hand, some
people detest the insecurity of their positions especially when the management changes or
because of office politics or the intrigues associated with appointments to very high positions
in organization. Other people leave their employers at the news of mergers or other form of
integration to avoid being rationalized from such merging companies. Above all,
organizations that are known for pre-mature or mandatory retirement equally spell job
insecurity. So, workers in these organizations start their own businesses rather than to be

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retrenched or retired without notice. A person who owns his own business is free from all
these troubles if he manages his business well.
Termination of Life Path/Pursuit
Sudden termination in a life path of a person can equally motivate the decision to establish a
business. It could be when one is out of school or jail or out of career. Through the assistance
of relations and friends a person who regained his freedom from jail or just expelled from
school and not ready to go back may be established in a business.
Inheritance
Some other people find themselves in business because they inherited it from their parents or
any older relation such as an uncle. This may be due to sudden death of the original owner or
retirement due to old age.

4.4 Practical Activities/Research Assignment

4.4.1 Guide students in Group Discussions on how to develop entrepreneurial qualities such
as abilities, thinking or mindset, and behavior.

4.4.2 Guest Speaker: Invite a successful entrepreneur to give a talk in the Class/Hall

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 CHAPTER FIVE

Entrepreneurship as a Process, Type of Ability, and Way of Thinking

5.1 Entrepreneurship as Process

The definitions in the previous chapter by Jarrilo, Hisrich and Peters, and Nwachukwu, and
some other definitions of entrepreneurship show that it is a process that involves some
methodical activities. As a process, entrepreneurship involves recognition of opportunities,
evaluation of such opportunities for careful selection, marshaling resources to tap on the
opportunity. Entrepreneurship involves some step or methodical activities that must be
undertaken to accomplish the success of the enterprise. Although, a few of these activities
may not be taken sequentially and some may be carried out simultaneously but they are basic
requirements for the accomplishment of the entrepreneur‘s desired goals and objectives.
Entrepreneurial activities include:
 Identification of Business opportunities

 Evaluation of generated opportunities

 Choice of entry strategy, path and form of ownership

 Development of Team

 Registration of the business

 Establishment of the business plan

 Organization of the required resources

 Commencement and management of the business

 Exit of the entrepreneur through a good succession plan.

5.1.2 Identification of Business Opportunity

The first step in every entrepreneurial effort is to identify some business or investment
opportunity. A business opportunity is any lasting problems or needs of people or
organisations that are large in number and possesses the economic power and the willingness
to solve the problem or satisfy the needs. A business opportunity therefore can be a
problem/need that is not being solved or met at all, or inadequately solved which means
customers are still looking or hoping for a better product; this constitute a gap in the market.
On the other hand, a problem/need may be latent even to the people or organisations but not
to the entrepreneur. However, when the entrepreneur through creative and innovative ability
makes the product available, people and organisations begin to appreciate and patronize it.
Therefore, opportunities are usually identified and recognized through some basic ways such
as by the analysis of the general environment. Environmental analysis done through scanning,
monitoring, forecasting and assessing consequences of investment actions. Scanning means

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close and critical study of the environment to identify early signs of emerging trends and
changes in the environment that may result in an opportunity. Monitoring means observing
environmental changes on a continuous basis to determine whether a clear trend is emerging
while forecasting is the firms attempt to predict what is likely to happen in the future, the
intensity of such event, its pace and time frame. Assessing is important to avoid investment
blunders. Environmental study is necessary to identify the needs to be satisfied with a product
or service. External environments of businesses include the factors in the political and legal,
economic, social and cultural, technology, physical and natural, and competitive segments
surrounding the business. A change in any of the segments of the business environment
create opportunities for some businesses while the same change may give rise to threats for
others,

5.1.3 Evaluation of Generated Opportunities

Generation of business opportunities is not enough but the beginning, Evaluation of business
opportunities involves the following and some other activities:

Feasibility studies and choosing a location: Feasibility study involves gathering data about
a business idea to evaluate the business profit potential, return on investment and most
importantly the costs and risks associated with the business. Feasibility study is important to
ascertain management requirements, production process, financial requirement, market
arrangement and conditions etc. At this point, a location for the business should be
considered after careful assessment of necessary factors and personal reasons,

Recognition and Overcoming Entry barriers: Several barriers can be encountered when a
new business is to be started. These may include lack of viable business concept or market
familiarity, lack of technical skill or business know-how on the part of the owner, lack of
adequate capital or required infrastructures. The barriers may even be personal problems such
as insufficient motivation, family distractions or time pressures. Entrepreneurs need to
quickly identify these barriers and determine how best they can be overcome.

5.1.4 Planning the Entry Strategy, Choosing the Path and Ownership Form

Once the strategy has been developed, the next step is to choose a path to business ownership.
There are common routes to business ownership: buying a part of a business through
franchising, buying an existing business that is up for sale, and starting a business from the
scratch which is referred to initial start-up. It is important for the entrepreneur to carefully
decide the path that he or she considers best, such decision is very crucial except where the
entrepreneur inherited a business. In the same way, the entrepreneur needs to decide at this
point the legal form of business organization he/she is going for. The commonest forms of
business ownership are Sole proprietorship (one man business), the Partnership, and the
Limited Liability Companies. Each business ownership structure has its advantages and
disadvantages. Choosing a form of ownership structure therefore involves the consideration
of several personal and other factors that are discussed later in this manual.

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5.1.5 Development of a Team

The task of developing an entrepreneurial team to start a new venture is a difficult one that
the entrepreneur must undertake. It is difficult because it is not possible to understand a
person’s character from afar or within a short time until that person has spent some time
working in the company. All primary stakeholders from investor, bankers, to potential
customers look at the founding team of the new venture to determine their commitment of
time, energy, and finance to the organisation’s plans. Members of the entrepreneurial team
are commonly referred to as partners; not partners in the sense of a Partnership business. The
entrepreneur must choose partners who have complementary skills and experience and who
do not have a history that might be detrimental to the company.

Finding partners with complementary skills means making sure the team is not overloaded
with people who all have the same expertise. This type of team is referred to as a
homogenous team. Stakeholders have more confidence in a heterogeneous team than a
homogeneous one. A heterogeneous team is a team that its members have different but
complimentary skills. Some research has found team heterogeneity to be a significant
predictor of long-term performance. In terms of skill sets, heterogeneous teams also tend to
handle the complexity of new ventures better than homogeneous.

When a new venture is in its infancy, it generally doesn’t have the resources to hire in-house
professional help such as an attorney or accountant. Instead, it must rely on building
relationships with professionals on an “as-needed” basis. Such professionals provide
information and services not normally within the scope of expertise of most entrepreneurs,
and they can play devil’s advocate for the entrepreneur, pointing out potential flaws in the
business concept. These partners provide the entrepreneur and his or her team with necessary
guide to engage an invaluable reality check of the new venture.

5.1.6 Registration of Business

Activities at this stage include the following:

Decide the name of the business: The choice of name is regulated by laws. It is not any
name that would be accepted for registration, therefore the small business owner (or owners)
is expected to understand legal requirements concerning company name. Choosing a name
for a Partnership business may be more challenging than for a Sole proprietorship or
Company because all partners, especially active partners, must agree to the name of the
business.

Prepare Registration Documents: One fundamental document required for the registration
of a Partnership business the Partnership Deeds while for companies the Corporate Affairs
Commission will require the Memorandum of Association and Articles of Association.

Registration: Apply to the Corporate Affairs Commission for registration and collection of
license or certificate.

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4.1.7 Establishment of the Business Plan

Once an entrepreneur bas identified and evaluated business opportunities, conceived 4 good
idea for a new business, conducted feasibility study, chosen and registered a desired form of
business ownership, the next critical step is to establish a business plan. A business plan,
according to Nickels, et al (2002), is a detailed written statement that describes the nature of
the business, the target market, the advantages the business will have in relation to
competition, and the resources and qualifications of the owners(s). The nature of the business
is described in the form of ownership, size of business, i? products and services, while
competitive advantages are explained based on industry's analysis, assessment of risk, and
plan in area of production, finance, marketing, and Organizational structure. These areas
assist the entrepreneur to estimate the resource required. However, Gomez-mejia and Balkin
(2002) defined a business plan as a blue print that maps out the business for entering markets
and explains the business to potential investors. This definition explains one of the basic
purposes of a business plan, that is, attraction of investors. They explain further that a
business plan develops strategies and tactics needed to minimize the enterprise’s risk of
failure, which is highest during the early stages. A business plan is a blue print that indicates
the objectives of a new business, how such objectives would be achieved after consideration
of both internal and external factors, and the benefits to be derived from investing in the
business. A good business plan usually describes all the elements involved in starting the new
venture.

The business plan is a very important document for all stakeholders in the entrepreneurial
process: entrepreneurs, investors like venture capitalists, financial institutions, donor agencies;
suppliers; managers; and other supporters. All these stakeholders would want to know what
the new venture is all about, its activities and objectives, their own roles and benefits.

5.1.8 Organisation of the Required Resources

Entrepreneurs need various types of resources to start, manage, and grow their businesses.
Such resources include human, physical, financial capital. The entrepreneur needs to
determine how much of each resource is required and where they would be acquired from.
Financial resources .in the form of money are required to procure some other resources. For
example, you need to hire workers, buy machines and equipment, and to buy raw materials.

Once these resources have been acquired, it is important to allocate them properly to ensure
the smooth running of the business. This usually requires the establishment of an appropriate
structure (organogram) that will show the hierarch of authority, distribution of ‘power,
channels of communication, reporting relationships, lines of command and shows scope of
authority and responsibility.

5.1.9 Commencement and Management of the Business

Commencement of business usually requires the holding of the first meeting and some other
ceremonial activities. Management is concerned with the judicious utilization of the available
resources for the achievement of the organisation’s goals and objectives.

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Management requires abilities to plan, organize, direct, and control daily, weekly, quarterly
and yearly activities of the business. The entrepreneur is the chief manager in a small
business while the shareholders of large businesses hire professional managers to be in
charge of their business activities.

5.1.10 Exit of the Entrepreneur through a Good Succession Plan

Entrepreneurs know that they will one day handover the affairs of the business to another
party either by retiring from active service or by selling the business if there is no one, such
as a family member, that is willing to continue the business. Most entrepreneurs that have
decided to keep their businesses as legacies to be left for the family usually develop a good
succession plan and have been mentoring that person or people they desire for some years.

5.2 Basic Entrepreneurial Abilities and Skills

Entrepreneurship to Wennekers and Thurik (1999) is the manifest ability and willingness of
individuals on their own, in teams, within and outside existing organisations, to perceive and
create new economic opportunities (new products, new production methods, new
organisational schemes and new product-market combinations) and to introduce their ideas m
the market, in the face of uncertainty and other obstacles, by making decisions on location,
form and the use of resources and institutions. Okpara (2000) defines entrepreneurship as the
willingness and ability of an individual to seek out investment Opportunities in an
environment and establish and run an enterprise successfully based 02 the identified
opportunities, Entrepreneurship therefore is the manifest ability to birth business ideas,
recognize business opportunities, gather resources to maximize selected opportunities, bear
risks, cope with uncertainties, and manage resources to achieve success or reward in the face
of various environmental challenges.

Ability to develop a clear vision

It is important for an entrepreneur to know exactly what he or she wants to pursue of

accomplish. Astute entrepreneurs will write it down, verbalize and embrace such vision. It
gives the entrepreneur idea on the necessary steps to take and defines the strategic goals of
your company in terms of mission, values and objectives. Such vision will make easier to
lead and measures progress.

Ability to Challenge Yourself

Some people are not sincere with themselves. Successful entrepreneurs consistently question
their plans, strategy, and other decisions they make. Such acts as checks on their actions and
helps to refine visions so that the entrepreneur and his subordinates are always on the right
path.

Communication

Every entrepreneur needs to be an effective communicator. Whether a person is a solo

entrepreneur or a partner they need to understand how best to communicate effectively to all
stakeholders (both existing and potential stakeholders). It is imperative for an entrepreneur to

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be able to communicate his or her ideas, decisions, and preferences to employees, investors,
customers, creditors, peers, and mentors. If an entrepreneur cannot communicate the value of
their company, its unlikely the company will be successful. They also need to master all
forms of communication, including one-on-one and in-person conversations, group
conversations, written communication, and email or online messages.

Sales

The soft skill of sales goes hand-in-hand with the communication necessary to be successful.
An entrepreneur should able to sell anything and everything and needs to continuously sell
the business idea to potential investors, the product or service to customers, and themselves to
employees. If an entrepreneur is able to communicate effectively, they are better equipped to
sell their ideas and physical products. In the beginning, it's natural for entrepreneurs to be the
first salespeople at their respective companies. Those sales skills are necessary to
demonstrate value for all stakeholders inside and outside the company.

Focus

The path to successful entrepreneurship is riddled with ups and downs. There are the highs of
successes and the despairs of setbacks. A successful entrepreneur needs to be able to focus so
they can stay the course when the going gets tough. This skill can also be thought of as
thinking with the end in mind. No matter what struggles an entrepreneur goes through, a
successful entrepreneur has the focus necessary to keep an unwavering eye on the end goal
and can push himself to achieve it.

Ability to Learn

The ability to learn is one of the most important skills to have in life, let alone in
entrepreneurship. Ability to learn is required for success all enterprises. The ups and downs
that an entrepreneur usually goes through are unavoidable. An entrepreneur needs a high
ability to learn and a desire to learn. If a person is able to learn in any situation, even failure,
they have the skills necessary to become a successful entrepreneur. Failure can help expand
one's knowledge and understanding of business.

Business Strategy

While a successful entrepreneur has, by definition, built a successful company, the skill of
business strategy is actually another important skill that an entrepreneur needs. Often,
entrepreneurs achieve success in their businesses through their own sheer strength of will.

By employing effective communication skills, sales skills, a deep focus, and a high ability to
learn, an entrepreneur can actually learn a business strategy on the fly. When structuring and
growing a business, however, it's important that the structure and growth strategy is based on
sound business sense and skills. A successful entrepreneur needs have a solid strategy to take
their business from good to great.

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5.4 Practical Activities/Research Assignment

5.4.1 Class Assignment: Guide students to identify various activities in the entrepreneurship
process, unique abilities required for success in entrepreneurship, common characteristics of
prominent entrepreneurs in Nigeria, and entrepreneurial mindset and attitude.

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 CHAPTER SIX

Social and Economic Importance of Entrepreneurship in Nigeria

6.1 Socio-cultural Contributions of Entrepreneurship to Nigeria

The larger society also derives a lot of benefits from the establishment and successful
operation of businesses and other enterprises. These benefits include:

 Employment generation which has assisted in the reduction of social ills like
prostitution, hooliganism, armed robbery, and stealing;

 Utilization of resources that especially those that have been ignored in the past;

 Improvement in the standard of living;

 Stimulation of indigenous entrepreneurs;

 Encouragement of creativity;

 Discouragement of rural urban migration;

 Transformation of traditional industry; and

 Provision of specialized services

6.2 Economic Contributions of Entrepreneurship to Nigeria

 Mobilization of local savings through the redirection of financial resources from

consumption and savings to investment in small businesses;

 Increase in Gross National Product (GNP) that is increase in the quantity of goods and
services produced and available in country.

 Revenue generation to governments through taxes rates and rents, registration fees,
licenses, and royalties;

 Enhancement of economic growth and development through employment generation

that do not only empower people but leads to revenue for government through
personal income taxes.

 Facilitation of balance of trade and payments through exportation of goods and

services by Nigerian international entrepreneurs and businesses.

6.3 Practical Activities/Research Assignment

Demonstrate the contributions of entrepreneurship to the social and economic development of

Nigeria.

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 CHAPTER SEVEN

Sociology of Entrepreneurship

7.1.1 Factors that affect Location of Business

In choosing a location for an enterprise many factors must be considered by the entrepreneur.
These factors are:

 Proximity to Suppliers of Raw Materials: Sitting a business near the Suppliers of

main inputs has many advantages. One, it reduces transport and carriage, expenses.
Two, it enhances flexibility and three, constant factory-supplier, dialogues on
technical and delivery problems can easily be handled.

 Transport: Good transport facilities are very important to the success of any business.
Good roads would enhance quick delivery to customers. To the business, it reduces
expenses, for large-scale businesses, sitting a factory close to the airports or railway
stations are equally an advantage.

 Safety: Small business owners must consider the safety of the immediate community
they intend to site their businesses. An environment that is volatile or experiences
frequent burglaries is not advisable for small business owners.

However, large businesses such as fertilizer plants, explosive factories, refineries are of a
necessity located far from residential areas.

 Legal Consideration: Sitting any business would equally require the consideration of
government’s laws and policies. For example, it is against the law to site some types
of business in some areas due to the adverse effects such may have on the immediate
community.

 Banking Facility: To avoid carrying of heavy cash which is risky, it is advisable for a
factory to be located close to a bank.

 Essential Services: These include water, electricity, gas, diesel, petrol and waste
disposal. All these services are very vital to the successful operation of any business.

 Labour: Availability of skilled labour should equally not be overlooked.

 Sufficient Market: People that need the product or service output of a business must
have, money to spend, and the willingness to spend must be available in adequate
number to provide profitable sales for the business.

 Available Inducements: Some state governments offer tax rebates or holidays, low
cost of land, low rentals and ready factory sites as inducements to attract industrial
plants to their states. To utilize such financial opportunities, business owners can site
their businesses in such places.

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7.1.2 Factors that Influence When to Set Up

In a review of research into influences on the timing of new business births, Storey (2009)
identified several possible factors:

 Levels of Unemployment: As we saw earlier in this Chapter, unemployment, and lack

of alternative employment possibilities, is an important factor which pulls people into
self-employment and so times of relatively high unemployment are associated with
higher rates of new firm formations,

 Government Policies: Successive governments in developed countries and elsewhere

have encouraged new business start-ups through various incentives and
encouragements. When such favorable policies and incentives are generous from
governments, more people and organizations would be encouraged to start businesses.

 Profitability: When income from self-employment is higher, more people will be

attracted by this option. Income from business profits is mostly higher when the
economic condition of the country is stable and buoyant.

 Interest Rates: When real interest rates are high, new owner-managers find it more
difficult to obtain finance and are less willing to borrow. However, when the interest
rates are high especially on borrowing, the motivation to engage in entrepreneurship
is lowered.

 Personal Savings and Assets: Personal savings or borrowings guaranteed by personal

assets are the most common form of finance for a new business. Periods when the
value of houses, the most common form of personal guarantee, are high favour
business start-ups.

 Consumer Expenditure: The highest number of new firms is in consumer services, so

during times of growing consumer expenditure, more opportunities for new ventures
appear in this sector.

 Structural Change: Some structural changes in the economy favour the small
business, such as the movement from manufacturing to service industries. When these
changes occur, more new firms are likely to appear. While these factors may induce
more new business start-ups, they do not all represent positive forces in the business
environment which are likely to help the new owner-manager. Some are potentially
negative factors which can push people into new ventures for the wrong reasons.

 Potential Negative Factors: Unemployment and government initiatives to reduce

unemployment through self-employment may encourage many people into a new
venture creation. The opposite is more likely to be true as high unemployment is
likely to depress levels of demand, and therefore potential customer expenditure with
a new business. High house prices, which make more finance available through
personal bank guarantees, can increase the penalty for failure through the potential
loss of a key personal asset without necessarily reducing the risks of it happening,

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  Potential Positive Factors: Periods when real interest rates are low and consumer
expenditure is growing are likely to be good times to start a new business, providing
demand is not too dependent on a healthy economy.

The successful entrepreneur is alert to underlying structural changes which can be rich
sources of innovation and new business ideas

7.2 Roles of Government in Promotion and Development of Entrepreneurship

In Nigeria, governments at all levels have recognized the importance of entrepreneurship

especially small business entrepreneurship especially those mentioned in this Chapter. Based
on this, governments in Nigeria have been playing important roles in stimulating
entrepreneurship to ensure the establishment and prosperity of businesses with reasonable
emphasis on small businesses.

Training and Enlightenment: Numerous government agencies like National Agency for
Poverty Eradication Programmes (NAPEP), the Small and Medium Enterprises Development
Agency of Nigeria (SMEDAN), Centre for Industrial and Research Development CIRD),
Industrial Training Fund (ITF), and National Directorate for Employment (NDE) provide
different training programmes for small business owners. Such training programmes are
mostly free for participants and are in the forms of seminars and workshops. Another training
being extended to existing and potential business owners is the inclusion of Small Business
Management/Start-up and Entrepreneurship education into the syllabuses of most courses in
our tertiary institutions by the Federal government.

Provision of Infrastructural Facilities: These are basic facilities that are usually provided
by governments and they can enhance productivity and reduce costs of business activities.
Infrastructural facilities being provided by governments in Nigeria include access roads,
prepared portions of land or industrial layout with electricity, efficient communication
systems, and pipe-borne water supply.

Research and Development: Agencies such as Industrial Research and Development

(CIRD), Federal Institute of Industrial Research, Oshodi (FIIRO), and Project Development
Institute (PRODA) are all established by the Federal government for, conducting
management training through seminars and workshops especially in the area of technological
innovation and to conduct research into various aspects of industrial development in Nigeria.
The results of such research efforts are to be disseminated to all those who seek industrial
research information.

Encouragement of Policy Makers and Financiers: The Federal government, in its efforts
to encourage the establishment of small businesses for enhancement of rapiq industrialization,
has been acquainting policy makers and financiers with important features and the needs of
small-scale enterprises. This is being done to facilitate and generate external finances through
international financial institutions such as World Bank.

Provision of Local Finance: These include all credit facilities that are being provided by
governments through financial agencies. Agencies such as Bank of Industry (BOI), Bank of

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Agriculture (BOA) are established to provide various classes of loans to small and medium-
scale businesses at interest rates that are lower than what is obtained in commercial banks.

Directives to Commercial Banks: The federal government through its monetary policies
also issues directives to banks to grant specified minimum credit to small businesses, and the
maximum interest rates.

Foreign Trade Measures: Several measures such as trade protection are adopted by the
federal government to protect our indigenous small businesses. Imposition of high tariffs on
some categories of imported goods to discourage their importation, the use of quotas for
some other goods, outright ban on importation of some goods, and strict custom control to
avoid “unfriendly” trading such as dumping are examples of such measures. Most of these
measures are directed towards protecting our infant industries to ensure their growth and
survival.

Export Promotion Activities: Promotion of exportation among local entrepreneurs through

the Nigerian Export Promotion Council (NEPC).

Extension of Subsidies: Governments in various ways extend subsidies to all businesses in

the form of reduced prices while government bears the financial burdens. Subsidies are the
various forms of financial assistance granted to economic agents such as business
organizations with the aim of supporting such businesses so that increased productivity and
employment can be achieved. Subsidies are basically offered to organizations to enable them
contribute to the reduction of some social problems such unemployment, poverty, hunger and
the general society’s welfare. Examples of such subsidies are those granted to farmers on
fertilizers, seeds and seedlings, and some agricultural implements.

Creating Conducive Investment Environments: Governments at all levels in Nigeria have

established different agencies and mechanism to ensure peaceful co-existence of all residents
(both indigenes and non-indigenes) in all parts of the country. This has been done to ensure
the safety and security of lives and property especially business assets.

Tax Holiday: A tax holiday is a temporary reduction or complete waver of tax for business
organizations over a specified period usually in years. Governments at various levels usually
create tax holidays as incentives for attraction of business investment. The common taxes that
are most commonly reduced by national, state and local governments are sales taxes,
company income tax, and value added taxes.

Provision of information and data: Organizations need adequate information and data to
plan and make decisions. Strategic decisions by managers require data about the external
environmental conditions for effective prediction and charting of future courses.

Stability of system of laws and justice: Another area that governments facilitate
entrepreneurship is ensuring that laws are relatively stable and justice prevails in all cases.

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7.2.1 Regulating Roles of Governmental Agencies

There are many agencies established by governments to regulate the activities of enterprises
especially businesses in Nigeria. Some of these agencies are discussed in the subsections that
follow.

The Corporate Affairs Commission

The Corporate Affairs Commission (CAC) was established by the Companies and Allied
Matters Act (CAMA) 1990 as a corporate body with perpetual succession and a common seal
which means it is capable of suing and being sued in its corporate name. The headquarters of
the Commission was to be based at Abuja the Federal Capital Territory. All business
activities or organizations are required by law to register with CAC. The commission ts
expected to give the Certificate of registration or incorporation after all requirements for
registration/incorporation have been met. The Commission has the power to revoke
certificate of any company that contravene any part of the law.

Functions of the CAC

 The Act that established the Commission specified the following functions:

 The regulation and supervision of the formation, incorporation, registration,

management, and winding up of companies.

 Establishing and maintaining companies’ registry and offices in all the states of the
Federation suitably and adequately equipped to discharge its formations.

 Arrange or conduct an investigation into the affairs of any company where the
interests of the shareholders and the public so demand.

 Perform such other functions as may be specified by any act or enactment.

 Undertake such activities as one necessary or expedient for giving full effect to the
provisions of the Act (CAMA 1990).

National Agency for Food and Drug Administration and Control (NAFDAC)

NAFDAC was established under decree No 15 of 1993.The decree vested in it dual functions.

 To see to the establishment of food beverages and cream industry, and

 Regulating and controlling the importation, manufacturing, distribution, sales and use
of processed food, drugs, cosmetics, medical devices, bottled water, chemicals and
advertisements relating to food, beverages and cream products.

 Ensure that the use of narcotic drugs and psychotropic substances are limited to
medical and scientific purposes.

 Conduct appropriate tests and ensure compliance with standard specifications to

ensure efficiency and safety of food, drugs, cosmetics, bottled water, medical devices,

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 chemicals and their raw materials as well as production process in factories and other
establishments.

 Undertake the registration of processed foods, drugs, cosmetics, medical devices,

bottled water and chemicals.

 Compile standard specifications and guidelines for production, importation, sales and
distributions of processed foods, drugs, cosmetics, medical devices, bottled water and
chemicals.

 Inspect all imported and locally made processed foods, drugs, chemicals, cosmetics,
medical devices, bottled water, and establish relevant quality assurance systems.

The Standard Council

According to Ogundele, (2007), the body was established as Nigerian Standard Organization
Act of 1971, now Standard Organization of Nigeria (SON). The functions of the council
include:

 To advise government on standards, standard specifications, control and methodology.

 Designating, establishing and approving standard in respect of Metrology materials,

commodities, products, processes for the certification of product in commerce and
industry throughout Nigeria.

 To provide necessary measures for the control of raw materials and products in
conformity with standard specifications.

 Awarding of certificate marks by the council to the manufacturers whose product,

meet Council’s established standards

 Sealing up and confiscating of assets of organizations that fail to live up to the

standards set.

The Independent Corrupt Practices and Other Related Offences Commission (ICPC)

The Independent Corrupt Practices and other Related Offences Commission was established
as a corporate body by the Federal Government of Nigeria as a legislative initiative to combat
corruption which has become endemic in the national life. The commission comprises high
police ranking officers, legal practitioners with at least 10 years post-call experience, retired
judge of a superior court of law, a retired public servant not below the rank of a director, a
woman, a youth not less than 21 or more than 30 years of age at the time of his or her
appointment and a chartered accountant. The ICPC mandate was to prohibit and prescribe
punishment for corrupt practices and other related offences.

Duties of the Commission:

Section 6 (a-f) of the ICPC Act 2000 sets out the duties of the Commission as paraphrased in
the following:

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  To receive and investigate complaints from members of the public on allegation of
corrupt practices and in appropriate cases, prosecute the offenders.

 To examine the practices, systems and procedures of public bodies and where such
systems aid corruption, to direct and supervise their review.

 To instruct advice and assist any officer, agency, or parastata on ways by which fraud
or corruption may be eliminated or minimized by them.

 To advise heads of public bodies of any changes in practice, systems or procedures

compatible with the effective discharge of the duties of public bodies to reduce the
likelihood or incidence of bribery, corruption and related offences.

 To educate the public on and against bribery, corruption and related offences.

 To enlist and foster public support in combating corruption

With respect to the prosecution of cases, the ICPC Act provides that every prosecution for
offences under it shall be deemed to be done with the consent of the Attorney General.
Furthermore, it is provided that the Chief Judge of a State or the Federal Capital Territory
shall designate a court or judge to hear and determine all cases arising under the Act.

The Economic and Financial Crimes Commission (EFCC)

The EFCC was established by Act of parliament in 2004 and the Commission was
empowered by the Act to carry out the following function which can be found in part two of
the Act:

Functions of the Commission

The Commission according to the Act shall be responsible for

 The enforcement and the due administration of the provisions of this Act;

 The investigation of all financial crimes including advance fee fraud, money
laundering, counterfeiting, illegal charge transfers, futures market fraud, fraudulent
encashment of negotiable instruments, computer credit card fraud, contract scam, etc.;

 The co-ordination and enforcement of all economic and financial crimes laws and
enforcement functions conferred on any other person or authority;

 The adoption of measures to identify, trace, freeze, confiscate or seize proceeds

derived from terrorist activities, economic and financial crimes related offences or the
properties the value of which corresponds to such proceeds;

 The adoption of measures to eradicate the Commission of economic and financial

crimes,

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  The adoption of measures which include coordinated, preventive and regulatory
actions, introduction and maintenance of investigative and control techniques on the
prevention of economic and financial related crimes;

 The facilitation of rapid exchange of scientific and technical information and the
conduct of joint operations geared towards the eradication of economic and financial
crimes;

 The examination and investigation of all reported cases of economic and financial
crimes with a view to identifying individuals, corporate bodies or groups involved;

 The determination of the extent of financial loss and such other losses by government,
private individuals or organizations;

 Collaborating with government bodies both within and outside Nigeria carrying on
functions wholly or in part analogous with those of the Commission concerning (i) the
identification, determination, of the whereabouts and activities of persons suspected
of being involved in economic and financial crimes, (ii) The movement of proceeds or
properties derived from the commission of economic and financial and other related
crimes; (iii) The exchange of personnel or other experts, (iv) The establishment and
maintenance of a system for monitoring international economic and financial crimes
in order to identify suspicious transactions and persons involved, (v) maintaining data,
statistics, records and reports on persons, organizations, proceeds, properties,
documents or other items or assets involved in economic and financial crimes;
undertaking research and similar works with a view to determining the manifestation,
extent, magnitude, and effects of economic and financial crimes and advising
government on appropriate intervention measures for combating same; (k) dealing
with matters connected with the extradition, deportation and mutual legal or other
assistance between Nigeria and any other country involving Economic and Financial
Crimes; (1) The collection of all reports relating to suspicious financial transactions,
analyse and disseminate to all relevant Government agencies; (m) Taking charge of,
supervising, controlling, coordinating all the responsibilities, functions and activities
relating to the current investigation and prosecution of all offenses connected with or
relating to economic and financial crimes; (n) The coordination of all existing
economic and financial crimes investigating units in Nigeria; (0) maintaining a liaison
with office of the Attorney-General of the Federation, the Nigerian Customs Service,
the Immigration and Prison Service Board, the Central Bank of Nigeria, the Nigeria
Deposit Insurance Corporation, the National Drug Law Enforcement Agency, all
government security and law enforcement agencies and such other financial
supervisory institutions in the eradication of economic and financial crimes; (p)
Carrying out and sustaining rigorous public and enlightenment campaign against
economic and financial crimes within and outside Nigeria and; (q) Carrying out such
other activities as are necessary or expedient for the full discharge of all or any of the
functions conferred on it under this Act.

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In addition to the functions listed above, the Commission was also empowered by the Act to:
(a) Cause investigations to be conducted as to whether any person, corporate body or
organization has committed any offence under this Act or other law relating to economic and
financial crimes.

(b) Cause investigations to be conducted into the properties of any person if it appears to the
commission that the person’s lifestyle and extent of the properties are not justified by his
source of income; What other responsibilities does the Commission have?

The Commission was also charged with the responsibility of enforcing the provisions of the
following laws:

(a) The Money Laundering Act 2004; 2003 No.7 1995 NO. 13

(b) The Advance Fee Fraud and Other Fraud Related Offences Act 1995;

(c) The Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act 1994 as
amended;

(d) The Banks and other Financial Institutions Act 1991, as amended; and

(e) Miscellaneous Offences Act

(f) Any other law or regulations relating to economic and financial crimes, including the

Criminal code or Penal Code

7.3 The Objectives of Government Regulation

The objectives behind government regulation of business activities in Nigeria include but not
limited to the following:

 To ensure the development of healthy balance between private and public Ownership

 To make use of equal opportunity for cooperation

 To ensure utilization of the existing capacity and the creation of economy of scale

 To avoid the creation of natural monopolies

 To promote a more equitable distribution of income and a wider ownership of

business enterprises within and among nationals

 To develop data base or data bank in business activity.

 To raise revenue for purpose of financing other social, economic and political
objective defined by the government.

 To promote general pattern of distribution

 To raise the living standards of Nigerians

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  To regulate by-laws and taxation with a view to equating the private and social costs.

Ogundele (2007) listed the following as the objectives for business regulation in Nigeria:

 To create and maintain a climate of confidence, trust and stimulating the activities of
enterprises by respecting the rules of competition

 Creating an environment that will allow the enterprise to thrive, grow and maintain
stability

 Determine clearly the national goals of acceptable global levels, wages, price of other
goods and services, credits and investment

 Ensuring social progress and maximum justice in consonant with the level of
economic activity

 To fix and distribute public and social burdens in a fair manner

 The constitutional rights or sovereign rights of government demand that it should

keep close watch over the activities of business

 To protect the needs of consumers against the production and sales of inferior goods

 To control sources of revenue in the form of taxes, customs and excise duties etc.

 It could also be for keeping international obligations e g requirements of International

Monetary Fund (IMF) and World Bank as noted earlier.

 Ensuring that the economy is not dominated by foreigners.

Lawal (1993) included the following as part of government reasons for business regulation:

a. Providing greater employment opportunities

b. Increasing exportation of manufactured goods

c. Achieving dispersion of industries

d. Improving technology

e. Attracting foreign investment

f. Increasing Private sector participation and

g. Increasing local content of industrial output.

7.2.2 Facilitating Agencies

Agencies that are established to facilitate business activities in Nigeria include Bank of
Agriculture (BOA), Bank of Industry (BOI), Industrial Training Fund (ITF), Centre for
Industrial and Research Development (CIRD), Federal Institute of Industrial Research, and
Small and Medium Enterprises Development Agency of Nigeria (SMEDAN). Bank of

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Agriculture Formerly known as the Nigerian Agricultural Cooperative and Rural
Development Bank (NACRDB), Bank of Agriculture (BOA) was established for the primary
aim of financing agriculture at micro and macro levels as well as micro-financing of small
and medium scale enterprises. The objectives of establishing BOA include among others are:
1. Provision of affordable credit facilities to the less privileged segment of the Nigerian
society who cannot readily access the services of conventional.

2. Acceptance of savings/deposits from customers and repayment of the accrued interest

when due.

3. Provision of opportunities for self-employment in rural areas, thereby reducing rural-urban

migration.

4. Augmentation of government efforts to diversify the productive base for the national
economy.

5. Establishment of banking habits at the grassroots of Nigeria society.

6. Promotion of capacity-building through the provision of relevant training and advisory

services.

7. Fostering accelerated growth and development of agricultural and rural economy.

8. Encouraging the formation of agricultural cooperative societies at all levels.

Industrial Training Fund

The ITF was established on 8th October 1971 by the Federal Government for the primary
purpose of promoting and encouraging the acquisition of skills in industry and commerce to
meet the needs of the Nigerian economy. The decree (No 47 of 1971) promulgated for the
establishment of ITF empowered the Fund to pursue the following:

1. Provide facilities for training persons employed in industry and commerce.

2. Approve courses and appraise facilities provided for training by other bodies, particularly
in industry and commerce.

3. Consider regular operational areas of industry and commerce that require specific
manpower training and development inputs, and to recommend the kinds of training, the
standards to be attained and to ensure that such standards are met. Assist individual persons
or corporate organisations in finding training facilities for employees of industry and
commerce. Conduct or assist others to conduct research into any matter relating to training in
industry and commerce.

Functions of ITF

1. Identify the training needs of companies/employers in commerce and industry.

2. Designing and development audio-visual equipment and advising on their utilization.

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3. Installing and maintaining audio-visual equipment and advising on their utilization.

4. Liaising with international bodies for bilateral technical cooperation agreements in human
resources development and management.

5. Managing the career development of students.

6. Planning physical facilities for vocational and apprentice training scheme in Nigeria.

7. Providing assistance to enterprise in developing expertise in the development of

competency-based training programmes.

8. Establishing training standards in skills and apprentice training.

9. Coordinating empirical studies on the impact of ITF training programmes.

10. Coordinating empirical studies on skills and training and correcting deficiencies in
industry and commerce in Nigeria.

11. Administering nationwide students industrial work experience scheme (SIWES).

12. Liaising with external bodies (NBTE, NIIC, NCCE, Federal Ministry of Education etc.)
in developing the modalities for national training needs.

Centre for Industrial and Research Development (CIRD)

The CIRD was established in June 1979 as an interdisciplinary unit in Faculty of Social
Sciences of the Obafemi Awolowo University (OAU) Ile-Ife. It is being funded by the
Federal government of Nigeria and the United Nations Industrial Development Organisation
(UNIDO); a specialist agency established by the United Nations in 1985.

Objectives of CIRD
The objectives of CIRD include among others:

i. To conduct research into various aspects in of industrial development in Nigeria and to

disseminate the results of such researches to all those who seek industrial research
information.

ii. To develop an effective industrial management development and training programmes that
can assist indigenous industries and improve their contributions to the general economic
development of Nigeria.

iii. To encourage and assist community industries through a close liaison between the Centre
and the local communities particularly in western states which may want to develop
community sponsored industries.

iv. To provide teaching and research materials in industrial and business economics and
cooperate with the relevant departments and/or institutes i providing post-graduate and
professional courses in industrial and management economics.

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v. To undertake consultancy work that will continue to improve the expertise of the personnel
in the center.

Federal Institute of Industrial Research

The Federal Institute of Industrial Research Oshodi (FIIRO) was established by the federal
Government of Nigeria in 1958. As a semi-autonomous Institute, it was founded in 1953 as
the Institute of Applied Technical Research but later converted to FIIR and placed under the
control of the Federal Ministry of Science and Technology.

The Scope of FIIRO

The mandate given to FIIRO was streamlined by the federal Government in 1990 to focus on
research and development in:

i. Local food stuffs and vegetables oils to determine their nutritional quality and their
suitability for industrial processing and application.

ii. Bio-technology processes for industrial production of enzymes, amino acids, food and
feeds, yeast alcohol etc.

iii. Textiles especially using locally grown fiber materials as well as synthetic yams.

iv. Pulp and paper with special reference to developing local substitute for imported long
fiber pulp and other agricultural forest products specific to industrial processes.

v. Utilisation of industrial and domestic waste for fertilizer, biogas and other uses.

vi. Engineering design of processes and fabrication of equipment related to all the above.

The Institute is expected to provide laboratory and other technical services in the relevant
field to industries, disseminate research findings to general public, collaborates with other
research and development organisations to perform functions that may be determined from
time to time.

Objectives of FIIRO

To assist in quickening the pace of industrialization in Nigeria through:

1. Research and development of our local raw materials for industrial utilization.

2. Upgrading of indigenous technology and adaptation of imported technology.

3. Routine technical and consultancy services to industries, government establishment,

private organisations and individuals.

4. Provide the scientific knowledge and technical know-how needed to convert locally
available raw materials into capital and consumer goods.

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Small and Medium Enterprises Development Agency of Nigeria

Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) was established
by the Federal government of Chief Obasanjo for the facilitation of the establishment and
continued existence of small businesses. The agency is expected to accomplish this through:
1. Careful study of potentials of the informal sector that engages more than eighty percent of
the entire population

2. Provision of legal framework and policy for government interventions and the participation
of the private sector in exploiting these informal potentials to enhance poverty reduction and
economic growth

3. Training and equipping identified small-scale entrepreneurs (upgrading skills)

4. Facilitating and promoting the growth of small and medium-scale enterprises

5. Provision of consultancy services that would assist in identifying potentials and constraints
being experienced by local entrepreneurs to ascertain their areas of needs.

7.9 Practical Activities/Research Assignment

7.9.1 Class Assignment: Guide students on assignment with regards to factors that can
encourage them towards business ownership in Nigeria

7.9.2 Group Visitation: Arrange students on visits to different regulatory agencies of Federal
government OR Invite a representative from NAFDAC to speak on the functions of the
Agency.

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