Entrepreneurship

S 7 - GFC

Made by:
Younes EL MAAQILI

Supervised by:
Mr. HOUSSAINI Khalid

Academic year: 2018/2019

 Sammury

Introduction .................................................................................... 3
1- Key features of an entrepreneur .............................................. 6
A- ENTREPRENEUR - one who undertakes an endeavor. 6
B- WHO CAN BE AN ENTREPRENEUR? ........................ 6
2- Risks and benefits ...................................................................... 7
A- WHAT LEADS A PERSON TO STRIKE OUT ON HIS
OWN AND START A BUSINESS? ......................................... 7
3- Historic background .................................................................. 9
Conclusion .................................................................................... 11
Bibliography ................................................................................. 12

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 Introduction

Entrepreneurship has been correctly characterised as one of the most intriguing but equally
elusive concepts in economics (Baumol, 1968). Part of the difficulty in pinning down its
precise meaning stems from the sheer weight of the very fundamental functions it is held
responsible for. If we start with a bold synthesis of the literature, it is responsible for no
less than moving the economic system simultaneously closer to and away from
equilibrium. Depending on what intellectual tradition we follow, entrepreneurship either
enhances the allocative efficiency for given ends and means, or drives the dynamic
performance of the system through the progressive creation of new products, processes or
markets.
Another reason for the puzzling variety of concepts is the interdisciplinary nature of the
topic, involving scholars from the fields of economics, business strategy, organisational
behaviour, sociology and psychology, often further fragmented in competing strands and
research traditions. For instance, scholars of business strategy and management typically
apply a behavioural and process perspective, interested in how to act entrepreneurially.
Conversely, economists primarily care about how the economic system works, and
therefore characterise entrepreneurship by the particular functions it fulfills in order to
enhance the operations of the overall system. Yet, when labour economists deal with
entrepreneurship, they are specifically concerned with the occupational choice of either
being asalaried employee or self-employed. Finally, sociologists and scholars of
organisation studies investigate the social and organisational embeddedness of
entrepreneurial behaviour, while psychologists add their expertise to explain how
entrepreneurship relates to personal characteristics and individual cognitive processes
within varying situational contexts. Taking advantage of its opennes to such varied inputs,
in recent decades entrepreneurship research has emerged as an independent branch of
academic inquiry, being multidisciplinary but mostly associated with the management
focus of business schools. In one of the earliest attempts for an independent and
comprehensive intellectual basis, Casson (1982, p. 23) defines the entrepreneur as
“someone who specialises in taking judgemental decisions about the coordination of scarce
resources”, further explaining that judgemental decisions are those for which no obviously
correct procedure exists in the sense of the routine application of a standard rule. In a
similar vein, Hébert and Link (1989, p. 47) conclude that the “entrepreneur is someone
who specializes in taking responsibility for and making judgemental decisions that affect

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the location, form, and the use of goods, resources, or institutions.” Casson et al. (2006)
further emphasise that the sources of information are highly localized with different people
in different places having different perceptions of a situation. Judgemental decisions thus
depend on the identity of the entrepreneur and are potentially unique.
Still, the prevalent opinion is that the theoretical and empirical underpinnings of the
discipline are either partial or too vague and complain about “the considerable confusion
that exists in the way that people use the term entrepreneurship” (Ahmad and Seymour,
2008). Similarly, Shane and Venkataraman (2000: 217) critically observed that
“entrepreneurship has become a broad label under which a hodgepodge of research is
housed,” while Davidsson (2003, p. 2) admits to an apparent “confusion, signs of identity
crisis, or widespread frustration.” Against this widespread sense of frustration, this paper
applies a constructive approach, first reviewing many intellectual building-blocs from the
literature and then proposing a novel modular concept that is based on the explicit
distinction between the behavioural, occupational and functional dimensions of
entrepreneurship. As the paper is going to argue, this relatively straightforward separation
helps to illuminate several analytic puzzles and overcome much of the current confusion
about the actual meaning of entrepreneurship.
To begin with the behavioural explanations, the one aspect that prevailed most is the
opportunityseeking nature of entrepreneurship. For example, we find that in the widely
used textbook of Sahlman et al. (1999, p. 7), who define their management approach to
entrepreneurship as “the pursuit of opportunity without regard to resources currently
controlled.” Venkataraman (1997, p. 120) states that “entrepreneurship as a scholarly field
seeks to understand how opportunities to bring into existence ‘future’ goods and services
are discovered, created, and exploited, by whom, and with what consequences.” Finally,
paraphrasing Robbins’ (1935) popular definition of economics as the science of the
relationship between ends and scarce means, Shane and Eckhardt (2003, p. 165) define
entrepreneurial opportunities “as situations in which new goods, services, raw materials,
markets and organizing methods can be introduced through the formation of new means,
ends, or means-ends relationships.”
With its emphasis on the ‘individual-opportunity nexus’ entrepreneurship research appears
to arrive at a unique and independent foundation of its discipline. As the paper is going to
argue, its perspective is more comprehensive than any of the individual concepts that have
emerged from the economics literature. Its universality, however, also comes at a cost, as
many authors remain vague about the precise economic function they have in mind. To
give an example, some authors lay particular emphasis upon the Schumpeterian idea of
innovative entrepreneurship (e.g. Venkataraman, 1997; Ahmad and Seymour, 2008), while
others stress Kirzner's process of entrepreneurial discovery (e.g. Davidsson, 2003).
Ultimately, the proposed definitions typically embrace both in a way that makes the two

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approaches indistinguishable. The conceptual differences, however, are real and
elementary.
Lacking the means to discriminate them implies a loss in terms of analytical precision.
How can we reconcile the aim of generality with that of analytic specifity? One popular
option is to pile up characteristic attributes that take account of the manyfold dimensions
of the phenomenon. But following that path easily leads into a ‘complexity trap’. Despite
the growing enumeration of important characteristics, the attempted definitions can never
become fully comprehensive. At the same time, they increasingly loose their
discriminatory power as the distinctions between analytically useful categories get blurred.

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1- Key features of an entrepreneur
A- ENTREPRENEUR - one who undertakes an endeavor.
This is the meaning of the French word entrepreneur. It is really all about starting
something and making it prosper while offering people the services and products they need.
When you decide to become an entrepreneur your life changes or at least it should. In order
to become a successful entrepreneur, it is important that you develop your entrepreneurial
skills through education, networking and research.
Entrepreneurialism is a career long endeavor, but only for those who choose to stick with
it and develop their skills in their respective fields.
According to some theories, the entrepreneur is one who is willing to bear the risk of a new
venture if there is a significant chance for profit. Other economists emphasize the
entrepreneur’s role as an innovator who markets his innovation. Still others say that
entrepreneurs develop new goods or processes that the market demands and are not
currently being supplied.

B- WHO CAN BE AN ENTREPRENEUR?

There is not one single quality or skill to define an entrepreneur.
Successful entrepreneurs come in various ages, gender, race and social status. They also
differ in education and experience. However, research indicates that most successful
entrepreneurs share certain personal attributes, including: creativity, dedication,
determination, flexibility, leadership, passion, self-confidence, and “smarts”.
o Creativity is the spark that drives the development of new products ideas or ways to do
business. It is the push for innovation and improvement.
o Dedication is what motivates the person to work hard to get the endeavor off the ground.
Planning and ideas must be joined by hard work to succeed. Dedication makes it happen.
o Determination is the extremely strong desire to achieve success. It includes persistence
and the ability to bounce back after rough times. It persuades the entrepreneur to make the
10th phone call, after nine have yielded nothing. For the true entrepreneur, money is not
the motivation.
o Flexibility is the ability to move quickly in response to changing market needs. It is being
true to a dream while also being mindful of market realities.

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A story is told about an entrepreneur who started a fancy shop selling only French pastries.
But customers wanted to buy muffins as well. Rather than risking the loss of these
customers, the entrepreneur modified his vision to accommodate these needs.
o Leadership is the ability to create rules and to set goals. It is the capacity to follow through
to see that rules are followed and goals are accomplished.
o Passion is what gets entrepreneurs started and keeps them there. It gives entrepreneurs
the ability to convince others to believe in their vision. It can’t substitute for planning, but
it will help them to stay focused and to get others to look at their plans.
o Self-confidence comes from thorough planning, which reduces uncertainty and the level
of risk. It also comes from expertise. Self-confidence gives the entrepreneur the ability to
listen without being easily swayed or intimidated.
o “Smarts” consists of common sense joined with knowledge or experience in a related
business or endeavor. The former gives a person good instinct, the latter, expertise. Many
people have smarts they don’t recognize. A person who successfully keeps a household on
a budget has organizational and financial skills. Employment, education, and life
experiences all contribute to smarts.
Every entrepreneur has these qualities in different degrees. However, many skills can be
learned. Or, someone can be hired who has strengths that the entrepreneur lacks.
The most important strategy is to be aware of strengths and to build on them.

2- Risks and benefits

A- WHAT LEADS A PERSON TO STRIKE OUT ON HIS OWN AND
START A BUSINESS?
Sometimes a person is frustrated with his or her current job and doesn’t see any better
career prospects on the horizon. Sometimes a person realises that his or her job is in
jeopardy. Some people are actually repulsed by the idea of working for someone else. They
object to a system where reward is often based on seniority rather than accomplishment, or
where they have a corporate culture. Other people decide to become entrepreneurs because
they are disillusioned by the bureaucracy or politics involved in getting ahead in an
established business or profession.
Those who are attracted to entrepreneurship by the advantages of starting “their own
thing”.
These include:

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o Entrepreneurs are their own bosses. They make the decisions. They choose whom to do
business with and what work they will do. They decide what hours to work, as well as what
to pay and whether to take vacations.
o Entrepreneurship offers a greater possibility of achieving significant financial rewards
than working for someone else.
o It provides the ability to be involved in the whole lifecycle of the business, from concept
to design and creation, from sales to business operations and customer response.
o It offers the prestige of being the person in charge.
o It gives an individual the opportunity to build equity, which can be kept, sold, or passed
on to the next generation.
o Entrepreneurship creates an opportunity for a person to make a contribution. Most new
entrepreneurs help the local economy. A few—through their innovations—contribute to
society as a whole.
One example is entrepreneur Steve Jobs, who co-founded Apple in 1976, and the
subsequent revolution in desktop computers.
However, it is important to note that to every single advantage there is a matching
disadvantage which should be carefully analysed. Here is an example of the most
common pros and cons to entrepreneurship:

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After comparing the advantages and disadvantages, you will have to decide if you can
realistically handle the responsibility of running your own business. Being an
entrepreneur is a huge responsibility with many risks attached. In business decisions
should be carefully considered.
Risk assessment (giving thoughtful consideration to potential costs and benefits) and the
collection of relevant information are key to successful decision making.
Nothing splendid has ever been achieved except by those who dared believe that
something inside them was superior to circumstance.

3- Historic background

One of the first entrepreneurs was Marco Polo. He had ideas of trading with Asia in the

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13th century and was sure of how he could get there and the materials he could trade. His
expeditions were financed by venture capitalists in Venice with an assurance that he
would share his profits with them. These loose associations continued to flourish in Europe
and other parts of the world where people with money were willing to back ideas and new
schemes when they were convinced that there was some pecuniary
advantage in the end.
Entrepreneurship first took off when production levels exceeded local consumption and
people were left with surpluses of the things they produced, whether in the form of
agricultural produce, dairy products, livestock and quite a few manufactured items.
This initially led to a barter system that allowed people exchanged things to satisfy their
own requirements. This further led to the development of the market place where people
gathered to barter or sell their excess production in order to profit themselves. This came
about with the realization that they could not wait indefinitely for a coincidence of wants
before they could barter their own products. Government agencies stepped into the act in
the 17th century and made capital available to people to finance production ventures. The
risk involved in such ventures was the sole responsibility of the entrepreneur and they had
to make a fixed payment to the government, irrespective of any profit they made from the
venture. Governments considered this as a source of revenue.
The concept of entrepreneurship was first established in the 1700s. There are many
concepts and theories about its genesis. However, based on its key features, there were
three basic ideas that explain the appearance of entrepreneurial activity.
o The first focuses on the individual, in other words, entrepreneurial action is conceived as
a human attribute, such as the willingness to face uncertainty, accepting risks, the need for
achievement, which differentiate entrepreneurs from the rest of society.
o The second fundamental idea emphasizes economic and environmental factors that
motivate and enable entrepreneurial activity, such as the dimension of markets, the
dynamic of technological changes, the structure of the market or merely the industrial
dynamic.
o The third factor is linked to the functioning of institutions, culture and societal values.
This approach is not exclusive given that entrepreneurial activity is also a human activity
and does not spontaneously occur solely due to the economic environment or technological,
normative or demographic changes.

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 Conclusion

We share the opinion of Mark Casson, who wrote that “The most difficult part of studying
entrepreneurship is to define who and what an entrepreneur is” (Casson, 1982: 1). There
are many dimensions that can be considered in a definition of what an entrepreneur is,
based on what entrepreneurs do. An important dimension to remember is that there are
different levels of entrepreneurial expression. Ultimately, each discipline could have its
own definition of the entrepreneur. However, every definition must reflect the contingency
elements on which it is based. Questions concerning the definition of the entrepreneur will
continue as long as researchers devise new disciplinary sets and metaphors to explore the
different facets of human behaviour. Fully integrated, more complete definitions of the
entrepreneur will become possible once a science of action has been developed. Even then,
it may well be that entrepreneurs will continue to be misunderstood not only by others, but
by themselves as well.

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 Bibliography

• Publication reference of this paper: Filion, L.J. (2011) Defining the entrepreneur.
In: Dana, L.-P. (Ed.) World Encyclopedia of Entrepreneurship.Cheltenham, UK
and Northampton, MA, USA, Edward Elgar: 41-52.

• Working Paper, The Meaning of Entrepreneurship: A Modular Concept WIFO

Working Papers, No. 335

• THE STUDY OF VENTURE CAPITAL FINANCE AND INVESTMENT

BEHAVIOUR IN SMALL AND MEDIUM-SIZED ENTERPRISES Thokozani
Patmond Mbhele School of Management, IT and Governance, University of
KwaZulu-Natal Accepted: September 2011

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