BBME/BAAIS/BMPR/BMIS YEAR 1
ENTREPRENEURSHIP FUNDAMENTALS
(ENF123)
COURSE LECTURER: MS FAITH KACHOKA
TITLE: SENIOR LECTURER
COMPILED BY: MS FAITH KACHOKA
SEMESTER: APRIL TO SEPTEMBER 2022
MODULE AIM AND LEARNING OUTCOMES
Module Aim
The aim of the module is to introduce the students to the theoretical and practical aspects of setting up a business.
Module Learning Outcomes
On completion of this module the student should be able to:
◦ Describe the concepts of entrepreneurship, enterprise and an entrepreneur
◦ Explain the properties and constituent parts of the entrepreneurship process
◦ Illustrate the key role of the creative process of innovation
◦ Outline the nature of, and need for, the management of creativity
◦ Demonstrate the value of networks and how to access them
◦ Prepare simple business plans
Unit One: The Search for Entrepreneurship
Introduction to Entrepreneurship
◦ Entrepreneurship is defined as “the process of creating a new enterprise and bearing any of its risks, with the view of
making a profit.”
◦ An entrepreneur is a person who “creates a new enterprise and embraces every challenge for its development and
operation.”
◦ A product is something tangible that exists naturally or is made by a person.
◦ A service is an intangible work that provides time, skills or expertise in exchange for money.
◦ Generally speaking, entrepreneurship is a four phase process as follows:
◦ *Phase 1: Identifying an opportunity
◦ *Phase 2: Planning the enterprise
◦ *Phase 3: Launching the enterprise
◦ *Phase 4: Managing the enterprise
The Three Dimensions of Entrepreneurship
Entrepreneurship is viewed as a fundamentally important part of modern and social life.
Entrepreneurs play a key role in our societies.
There are at least 8 different features which regularly feature in definitions of entrepreneurship which sets it apart as
follows:
The environment within which entrepreneurship occurs.
The people engaged in entrepreneurship.
Entrepreneurial behaviours displayed by entrepreneurs.
The creation of organizations by entrepreneurs.
Opportunities identified and exploited.
Innovation; whether incremental, radical, or transformative.
Assuming risk, at personal, organizational, and even societal levels.
Adding value for the entrepreneur and society.
The Definitional Mayhem of Entrepreneurship
As there are many different definitions of entrepreneurship, we can usefully categorise them according to three main
dimensions of entrepreneurship; namely:
o Behaviours
o Processes
o Outcomes
• There are so many definitions of entrepreneurship which suggests that entrepreneurship plays a key role in the modern economic and
social life of any organization.
• The many definitions of entrepreneurship bring in a definitional mayhem as it is defined depending on what it is doing at the particular
moment; there are different dimensions to entrepreneurship which brings the definitional mayhem.
Entrepreneurship as a Process
These definitions all focus in the first instance on the process of entrepreneurship, i.e. what is involved and why it matters for individuals,
organizations, and society as a whole. For example:
Hisrich & Peters (2002) defined entrepreneurship as “the process of creating something new 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.”
Stevenson & Jarillo (1990) defined entrepreneurship as “the process by which individuals - either on their own or inside organizations
- pursue opportunities without regard to the resources they currently control.”
The process dimension has often focused on the development of a new business or innovation strategy and the writing of a business plan;
activities that are sometimes viewed as surrogate for the entrepreneurship process itself.
This confuses the micro level “agential” processes of entrepreneurial activities, i.e. the “nuts and bolts” practices carried out by individual
entrepreneurs with the “structural” process at the level of societal change.
• This entails that entrepreneurship focuses on the process and what is involved.
• Entrepreneurship is the process of creating something new of value by devoting time and effort, and receiving the resulting rewards of
monetary and personal satisfaction (Hisrich and Peters, 2002).
• Entrepreneurship is the process by which individuals pursue opportunities without regard to the resources they currently control.
• Entrepreneurship is a process that is centered on the development of a new business, innovation and writing a business plan.
Entrepreneurship as a Behaviour
These definitions are concerned with highlighting the roles of particular individuals (whom we call entrepreneurs) with specific
behaviours which set them apart from others. For example:
Wennekers & Thurik (1999) stated that entrepreneurship is “the manifest ability and willingness of individuals, on their own, in
teams, within and outside existing organizations, to: perceive and create new economic opportunities (new products, new production
methods, new organizational 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.”
Timmons & Spinelli (2004) defined entrepreneurship as “a way of thinking, reasoning, and acting that is opportunity based, holistic
in approach and leadership balanced.”
Casson (1982) stated that entrepreneurs are “specialists who use judgment to deal with novel and complex problems.”
Kirzner (1973) was of the view that entrepreneurship consists of “the competitive behaviours that drive the market process.”
And Schumpeter (1934) described entrepreneurs as being individuals who “carry out “new combinations” by such things as
introducing new products or processes, identifying new export markets or sources of supply, or creating new types of organization.”
o Entrepreneurship is the willingness by individuals to perceive and create new economic opportunities and introduce their ideas in the
market in the face of uncertainty and other obstacles ( Wennekers and Thurik, 1999).
o Entrepreneurship is a way of thinking, reasoning, and acting that is opportunity based, holistic and leadership balanced (Timmons and
Spinell, 2004).
o Entrepreneurship consists of competitive behaviors that drive the market process ( Kirzner, 1973).
Entrepreneurship as Outcomes
These definitions focus on the results of entrepreneurship (as a process or set of behaviours).
Outcomes are usually understood in terms of new products and services, innovation, new ventures, and/or the creation of
value for society. For example:
Simon & Sarasvathy (1999) defined entrepreneurship as “the introduction of new economic activity that leads to
change in the market place.”
For Gartner (1988), entrepreneurship is simply “the creation of new organizations.”
Timmons & Spinelli (2004) suggested that entrepreneurship “results in the creation, enhancement, realisation, and
renewal of value not just for the owners, but for all participants and stakeholders.”
There is clearly a lot of overlap in many of these definitions, as their authors themselves often suggest.
For instance, Gartner (1988) focuses on the creation of a new organization as the outcome of entrepreneurship, but he
also stresses the importance of studying the behaviours required to achieve this outcome.
o Entrepreneurship is the production of new economic activity that leads to change in the market place (Simon, 1999).
o Entrepreneurship is the creation of new organizations (Gartner, 1988).
o Entrepreneurship is the creation, enhancement, realization and renewal of value not just for the owners but for all
participants and stakeholders (Timmons and Spinell, 2004).
A Summary of Definitions of Entrepreneurship
We can define entrepreneurship as a societal phenomenon or process of change, comprising the following 3 behavioural
components:
The identification, evaluation, and exploitation of an opportunity.
The management of a new or transformed organization so as to facilitate the production, and consumption of
goods and services.
The creation of value through the successful exploitation of a new idea, i.e. innovation.
We can therefore summarize what we know about entrepreneurship as follows:
It is a phenomenon that affects people and societies – it is a creative process of social and organizational change.
It involves the introduction of new products, services, and markets (as well as new organizations.
It relies on individuals with particular skills, attributes, and behaviours – whom we call entrepreneurs.
Entrepreneurs create value.
ENTREPRENEURSHIP: A QUESTION OF CONTEXT
• When defining entrepreneurship, it borders on a number of definitions in accordance with the dimension.
• As with the definition, the context is also differentiated as such, and there are a lot of contexts of entrepreneurship.
The Context of Government
• Most governments view entrepreneurship as a potential benefit for a society because:
It provides jobs, and
It creates wealth.
• However, the government should also be concerned with stimulating the establishment of new businesses and
encouraging more innovative businesses which have got the potential to grow.
The Context of Commerce
• For a large company, entrepreneurship is associated positively with innovation and growth as well as people, who are
difficult to manage.
• For a small and medium sized enterprise (SME) owner, he will think of himself as an entrepreneur and also as a business
manager.
• Within the SMEs there are those that are enterprising enough to set up their own businesses and manage them and those
that think of new innovation and services being introduced on the market.
The Context of Economists
• The entrepreneur is seen as being on the fringe of all economic theories.
• There is a belief that the entrepreneur’s judgement is central to models of economic activity and behavior.
DOMINANT PERSPECTIVES ON ENTREPRENEURSHIP
• There are different perspectives of entrepreneurship and they include the following:
The Functional Perspective
• This is the entrepreneurs interaction with the environment.
• It is understanding what the entrepreneur does.
• A lot of people have ideas but there are a few who do something about them.
The Personality Perspective
• There is a popular belief that some people possess distinctive characteristics which make them entrepreneurial.
• However, from an entrepreneurial view, it is seen that this personality is both socially construed and reliant upon some constituent
behaviors, skills and competencies.
The Behavioral Perspective
• This focuses on what the entrepreneur does and not what they are.
• An entrepreneur is said to be proactive, risk taking and unafraid of failure; as such he takes on every opportunity that comes his way.
• This perspective tries to explain the functions, activities and actions that are associated with the perceiving of opportunities and the
creation of organizations.
• Entrepreneurial behaviors include the following:
Opportunity seeking;
Networking capacity;
Ownership of a development;
Commitment to see things through; and
Initiative taking.
Entrepreneurship as New Venture Creation (setting up new businesses)
• In the past, there was a belief that entrepreneurship is about setting up a new business, but this is just a part of it.
• Entrepreneurship is now focusing on new venture creation and writing of business plans, not only exploiting of opportunities.
Entrepreneurship as Opportunity Identification, Evaluation and Exploitation
• Entrepreneurship involves transformation of social and market conditions that create value for society.
• It moves from identifying an opportunity to realizing the value.
• The value can be personal wealth, family security, social inclusion or cultural pleasure.
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