1

An Introduction to Entrepreneurship

I) Defining entrepreneurship Entrepreneur: a person who undertakes a commercial venture

Oxford English Dictionary

The word entrepreneur has roots in the French word entreprendre meaning to undertake, hence the literal definition above, however it wasnt until the mid-19th Century that the term entrepreneur was linked

to creating a business enterprise. Throughout history it has been used as a label for a diverse range of individuals from champions in battles to

managers of musical entertainments and gambling establishments. Since the term came under academic scrutiny there has been much

debate on what lies at the heart of definitions of entrepreneurship and the entrepreneur, with many conflicting opinions on the exact nature of

entrepreneurship and entrepreneurs. For example, there is no clear agreement on the necessity of creating a commercial venture (see definition above) as a defining aspect of entrepreneurship; or the role of

risk-taking and investment. The definitions below illustrate just some of the diversity of opinion on what constitutes entrepreneurship.

Entrepreneurs 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 organisation. Schumpeter, 1934

Entrepreneurship is the creation of new organisations. Gartner, 1988

Entrepreneurship is the process by which individuals either on their own or inside organisations pursue opportunities without regard to the resources they currently control. Stevenson and Jarillo, 1990

Entrepreneurship is a way of thinking, reasoning and acting that is

opportunity obsessed, holistic in approach, and leadership balanced. Entrepreneurship results in the creation, enhancement, realisation, and renewal of value, not just for owners, but for all participants and

stakeholders. At the heart of the process is the creation and/or recognition of opportunities, followed by the will and initiative to seize

these opportunities. It requires a willingness to take risks both personal and financial but in a very calculated fashion in order to constantly shift the odds of success, balancing the risk with the potential reward.

Timmons and Spinelli, 2007

Entrepreneurship is the creation and extraction of value from an environment Anderson, 1998

2

Group Task 1.1

Find two further definitions of entrepreneurship, and entrepreneurs, which offer some contrast to the definitions above, and identify the themes and

perspectives that can be extracted from all of these definitions. II) Who is an entrepreneur?

From the brief history above, you can perhaps see that historical ideas of

the entrepreneur are diverse, but tend to portray someone (male) who is heroic, a maverick, a great leader.

Group Task 1.2

Consider some well known, modern day entrepreneurs, and discuss whether this image has changed. What characteristics would you associate with well-known modern day entrepreneurs? Who do you think

of?

In researching the typical entrepreneurial personality, and entrepreneurial traits1, academics have proposed various lists they believe capture the

essence of the entrepreneur. A typical list includes the following traits (Burns, 2007):

1. High need for independence 2. High need for achievement

3. Strong internal locus of control 4. Ability to live with uncertainty 5. Opportunistic

6. Innovative 7. Self-confident

8. Proactive and decisive with high energy 9. Self-motivated 10.Vision and flair

Whilst the economic and societal contribution of entrepreneurs is generally

seen as a positive and substantial one, and entrepreneurial characteristics are generally seen in a positive light, some academics have commented on the potential negative implications of the extreme entrepreneurial

personality. For example, Kets de Vries (1985) looks at the potentially negative aspects of the entrepreneurial characteristics identified above,

and identifies a range of organisational problems that can arise as a result of the entrepreneurs need for control.

Recently the literature suggests that there is no consensus that a personality trait, or combination of traits, actually determine whether

somebody will be an entrepreneur or not. It seems that a combination of self and circumstances shapes the decision.

1 Traits tend to operate on a spectrum from strong to weak so could include opposites such

as extroversion and introversion, proactivity versus passivity. Traits combine to form particular personality types.

3

Whilst substantial research into typical entrepreneurial traits has been

published over the decades, the majority of recent research into the nature of the entrepreneur has abandoned the perspective that an

entrepreneurial personality exists. Gartner (1988) suggests that Who is an entrepreneur is the wrong question in a paper of the same name, in which he criticises the trait approach to analysing entrepreneurship. One

of the main thrusts of his arguments is that trait-based approaches to examining the phenomenon of entrepreneurship (1988: 12) does not

allow for learning, development and change over time. Group Task 1.3

Find and read GARTNER, W. B. 1988. Who is an entrepreneur? is the

wrong question. American Journal of Small Business, Spring 1988, 11-32. What approach is Gartner proposing and why?

http://www.freepatentsonline.com/article/Academy-Entrepreneurship-Journal/175065811.html

III) What does an entrepreneur do? The previous sections have introduced the idea of entrepreneurship as a

process, and it is the way that the entrepreneur interacts with, or behaves in relation to, this process that is of importance in studying

entrepreneurship. The entrepreneurial process is the creation of new value through the entrepreneur identifying new opportunities, attracting the resources needed to pursue those opportunities and building an

organisation to manage those resources. In the definition above, Wickham (2006) identifies three key components to the entrepreneurial

process: opportunity, resources and organisation. Various academic writers have outlined the more detailed, practical steps

involved in addressing these three areas, for example, Klofsten (2003) outlines the following steps in the entrepreneurial process:

1. Development of a clear business idea that creates value; 2. Development of a functional product or service;

3. Defining the target market; 4. Creating the organisation to coordinate all supply chain and value

chain activities; 5. Development or acquisition of essential competencies; 6. Core group commitment;

7. Development of trustful relationships with prospective customers; 8. Development of other relationships with, for example, suppliers,

investors or government agencies.

4

IV) The decision to be an entrepreneur

There are commonly one or more factors that can facilitate the individuals decision to pursue entrepreneurship as a career option. These factors can

be classified as push or pull factors (those that attract or pull the individual into entrepreneurship). Push and pull factors include:

Pursuit of a particular life style; Loss of long term employment;

Serious illness: Fulfilling a dream; Family influence;

Financial inheritance.

Group Task 1.4 Research an example of a well-known entrepreneur of interest to you, and

identify the push or pull factors that were significant in their entrepreneurial story. Are they included in, or do they add to, the list

above? Is the idea of being pushed or pulled to entrepreneurship useful for explaining motivation?

V) The Context for Entrepreneurship

When we talk about entrepreneurship and entrepreneurs, most people make the assumption that we are talking about an individual who has set

up a new, private, commercial enterprise. Nowadays, however, the term entrepreneurship can be used to refer to the following:

Individuals and teams demonstrating entrepreneurial behaviour within a civic setting Civic Entrepreneurship;

Individuals and teams demonstrating entrepreneurial behaviour within a public sector setting Public Sector Entrepreneurship:

Individuals and teams demonstrating entrepreneurial behaviour

within a corporate, or large firm, setting Intrapreneurship or Corporate Entrepreneurship;

Individuals and teams creating businesses which fulfil the social or economic need of others Social Entrepreneurship.

In researching entrepreneurship, academics focus on additional context variables which can be explained here by way of their entrepreneurship

prefix such as female, green, ethic-minority, technology-based, family and cultural.

5

References

ANDERSON A.R., 1998, Cultivating the Garden of Eden: Environmental Entrepreneuring, Journal of Organisational Change Management, vol. 11

no. 2. p 135-144 BURNS, P. 2007. Entrepreneurship and Small Business. Second Edition.

Basingstoke: Palgrave Macmillan.

GARTNER, W. B. 1988. Who is an entrepreneur? is the wrong question. American Journal of Small Business, Spring 1988, 11-32.

KETS DE VRIES, M. F. R. 1985. The dark side of entrepreneurship. Harvard Business Review. November-December, 160-167.

KLOFSTEN, M. 1994. Technology-based firms: critical aspects of their early development. Journal of Enterprising Culture, 2, 1, 535-557.

SCHUMPETER, J. 1934. Capitalism, socialism, and democracy. New York:

Harper and Row.

STEVENSON, H. H. and JARILLO, J. C. 1990. A paradigm of entrepreneurship: entrepreneurial management. Strategic Management Journal, Summer Special Issue 11: 1727.

TIMMONS, J. A. and SPINELLI, S. 2007. 7th Edition. New Venture Creation:

Entrepreneurship for the 21 Century. New York: McGraw-Hill. WICKHAM, P. A. 2006. Strategic Entrepreneurship. Essex: Pearson

Education Limited.