Entrepreneurship

MODULE 1:

NATURE AND RELEVANCE OF

ENTREPRENEURSHIP

Module for Week No. 1

Prepared by Ms. Junalyn Iligan, BSC

Name: __________________________________ Strand and Section ____________________

Teacher: ________________________________ Date Submitted: ______________________

Entrepreneurship

Module

1 Nature and Relevance of Entrepreneurship

“Entrepreneurship is the mindset that allows you to see opportunity everywhere. It could be a
business idea, but it could also be seeing the possibilities in the people that can help you grow that
business” (Preeti Sriratana n.d. – co-founder and chief strategy officer of Sweeten.)

Entrepreneurial activity responds to policies that ensure protection of new ideas, facilitates access
to capital and talent, and allows the management of risks. Oftentimes, entrepreneurship is perceived to
be the symbol of business innovation, determination, perseverance, and achievement.

At the end of this unit, you will be able to:

1. explain the concept of entrepreneurship;
2. discuss entrepreneurship in some countries and in the Philippines;
3. trace the development of entrepreneurship;
4. explain the entrepreneurship process; and
5. discuss the relevance of entrepreneurship in economic growth and society.
Entrepreneurship

Lesson 1 – Concept of Entrepreneurship

Entrepreneurship is a catchword in this era of globalized economy. It is a foundation and catalyst for
economic growth and innovation across nations. Entrepreneurial activities thrive in societies with
supportive government policies and which give much importance to innovativeness and risk-taking to turn
new ideas into breakthrough solutions.

Small and medium enterprises (SMEs) are concrete manifestation of entrepreneurship.

It is interesting to note that over the years, the meaning of entrepreneurship has had a lot of
variations. These are some of the definitions that have been given to entrepreneurship from early on to
the present time:
CONTRIBUTOR DEFINITION
Frank H. Knight (1921) Having profits from bearing the uncertainty and risk.
Joseph Schumpeter (1934) Carrying out of new combinations of firm organization –
new products, new services, new sources of raw material,
new methods of production, new markets, new forms of
organization.
Berthold Frank Hoselitz (1925) Uncertainty bearing… coordination of productive
resources… Introduction of innovations and provision of
capital.
George Douglas Howard Cole (1959) Purposeful activity to initiate and develop a profit-oriented
business.
David McClelland (1961) Taking moderate risk.
Albert Shapero (1975) A kind of behavior that includes: (1) initiative-taking, (2) the
organizing or reorganizing of social economic mechanisms
to turn resources and situations to practical account, and
(3) the acceptance of risk failure.
Mark Casson (1982) Decisions and judgments about the coordination of scarce
resources.
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Robert Ronstadt (1984) Dynamic process of creating incremental wealth. This

wealth is created by individuals who assume the major risks
in terms of equity, time, and/or career commitment of
providing value for some product or service. The product or
service itself may or may not be new or unique, but value
most somehow be infused by the entrepreneur by securing
and allocating the necessary skills and resources.
Peter Ducker (1985) Behavior rather than personality trait. Its foundation lies in
concept and theory rather than in intuition.
William Gartner (1985) Creation of new organization.
Robert Hisrich and Candida Brush (1985) Process of creating something new with value by devoting
the necessary time and effort; assuming the accompanying
financial, psychic, and social risks and uncertainties and
receiving the resulting rewards of monetary and personal
satisfaction.
Roberts Stevenson and H. Irving Pursuit if opportunity without regards to resources
Grousbeck (1989) currently controlled.
Myra Hart, Stevenson and Dial (1995) Pursuit if opportunity without regards to resources
currently controlled, but constrained by the founders’
previous choices and industry-related experiences.
Scott Shane (2003) An activity that involves the discovery, evaluation, and
exploitation of opportunities to introduce new goods and
services, ways of organizing, markets, processes and raw
materials through organizing efforts that previously had not
existed.
Bruno Dyck and Mitchell Neubert (2012 Conceiving an opportunity to offer new or improved goods
or services, showing the initiative to pursue that
opportunity, making plans, mobilizing the resources
necessary to convert the opportunity into reality.
Donald Kuratko (2017) Dynamic process of vision, change and creation that
requires an application of energy and passion toward the
creation and implementation of new ideas and creative
solutions.
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Common elements of entrepreneurship definitions in different perspective:

Innovation

Economic and Opportunity

personal reward Seeking and
ENTREPRENEURSHIP exploitation

Resource
Encountering mobilizing
risks and
uncertainties

10 Countries that are friendly to entrepreneurs:

1. United States – noted to be one of the friendliest countries for entrepreneurs in the world. Home to
thousands of successful entrepreneurs as shown by companies like

2. China – this emerging country is home to budding entrepreneurs who

manufacture different products that range from toys, gadgets,
electronics and cars.
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3. Singapore – this is literally a small country that controls a significant portion of the economy in Asia.
Many of their entrepreneurs innovate on existing services for local and international use.

4. Canada – entrepreneurs in Canada are exploring opportunities over the internet.

5. India - entrepreneurship plays a dominant role in the

country’s economic landscape, with the government
providing a venue, called the Delhi Huts, to start-up
entrepreneurs which promote local handicrafts. The
Cottage Industries compound is another venue put up
by the Indian government for the development of
local products manufactured and retailed by start-up
entrepreneurs. In fact, India is one of the countries in
the Asia-Pacific rim with a strong base of
entrepreneur organizations led by the youth and
women.

6. Taiwan - entrepreneurship is encouraged here through the small and medium enterprise incubation
centers for the purpose of nurturing young firms, new products and technologies.

7. Hongkong – with a knowledge-based economy, Hongkong

utilizes its human resources to make its economy the best
possible through entrepreneurship. Entrepreneurial
activities related to tourism and agricultural exports have
likewise continually received strong support, both from
the government and private sectors. Hongkong is known
as a “shopping haven.”

8. Thailand - the extent of government support to entrepreneurs is very evident in, for example, its
international airport in Bangkok, where a huge
section is subsidized by the Bureau of Small
and Medium Enterprises for the promotion of
local products marketed by the entrepreneurs
such as tamarind and mangoes. Tourism for
the international markets and agricultural
exports are two majors sources of income
generated by the Thai entrepreneurs.

9. Malaysia - this country is becoming friendlier to entrepreneurs, and this is apparent in the number of
businesses, both international and local, which decided to locate in Malaysia. Its current emphasis on
tourism as a business venture for entrepreneurs is gaining popularity.

10. South Korea - South Korea emerged from the Asian financial crisis better than any other country in
the region.
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Brief History of Entrepreneurship in the Philippines

The Philippines is an entrepreneurial country. The government has been focused on promoting
entrepreneurship with the right environment. This includes regulatory frameworks, financial resources,
and support programs for entrepreneurs, as well as business practices and social attitudes towards
entrepreneurship in general.

Examples:

Although legislation certainly helps, entrepreneurs are also given opportunities for training and
promotion and to gain a wide range of skills and varied experiences, so that they can sustain their firms
or establish their own businesses. The programs and services provided for entrepreneurs are relatively
adequate. At the same time, universities/colleges, non-government organizations, employers, and
associations of entrepreneurs are providing support independently or in coordination with the
government agencies.
Entrepreneurship

Name: __________________________________ Strand and Section ____________________

Teacher: ________________________________ Date Submitted: ______________________

LET’S ANALYZE. Exercise 1

1. Explain the meaning of entrepreneurship according to Shane.

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2. What are the differences between the meaning of entrepreneurship as defined by Schumpeter,
Drucker and Kuratko?
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3. What are the five common elements in the various definitions of entrepreneurship?
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4. Discuss why the USA, India and South Korea are friendly to entrepreneurs?
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5. What are the factors that stimulate entrepreneurship in the Philippines?

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Something to Ponder On

• Entrepreneurship is a catalyst for change.

• Entrepreneurship flourishes in nurturing environments.
Entrepreneurship

Lesson 2 – Development of Entrepreneurship

Evolution of the Field of Entrepreneurship

The evolution of the field of entrepreneurship has been formulated by scholars based on the
theories that are rooted in economics, psychology, sociology, anthropology, and management.

PERIOD THEORY AND CONCEPT

The Earliest Based on the idea than an entrepreneur is a person who sells goods on behalf of the good’s
Period owner, entrepreneurship was exhibited by Marco Polo (1254-1324), the merchant from
Venice who travelled to many places in Asia to trade. He would enter into a formal
agreement with a capitalist to sell his goods. He bore all the risks of possible damage or
loss of the goods. After everything was sold, profits were divided between the capitalist
and the trader as agreed. (OUM n.d.)
The Middle Ages The term entrepreneur was used to describe both an actor and a person who was in-
charge of and managed large production projects. This person merely managed the
projects using the resources provided by the government. In this case, he did not assume
any risks. The entrepreneur in this age was the person who was in-charge of great
architectural works such as public buildings and cathedrals. (OUM n.d.)
The 17th Century Entrepreneurship has become associated with risk. The entrepreneur was someone who
would enter into a formal agreement with the government to provide products or services.
It was common practice to agree on the price as part of the terms in the agreement. In
effect, the entrepreneur either reaps profits or bear losses (OUM n.d.) A prominent
theorist during this period was Richard Cantillon (1680-1734), an economist who viewed
the entrepreneur as a risk taker and a bearer of uncertainty. (Van Praag 1999)
The 18th Century The entrepreneur was distinguished from the capitalist who simply provides money for the
creation of products to be sold. Jean-Baptiste Say (1967-1832), a French economist and
businessman, described the entrepreneur as a person who plays a central coordinating tole
both in producing and selling goods. He was someone who coordinates, leads and manage
all the activities of the firm (Van Praag 1999)
19th and 20th There was very little distinction between an entrepreneur and a manager. However,
Centuries towards the middle of the 20th century, Joseph Schumpeter (1883-1950), an Austrian-
Hungarian-American economist and political scientist, refuted the idea of entrepreneurship
as manager of the firm, and espoused the concept of the entrepreneur as innovator who
seeks opportunities and leads “existing mean dog production into new channels.” “The
entrepreneur is neither a risk-bearer nor a manager or capitalist.”(Van Praag 1999, 319-
321)
21st Century Hailed as the DotCom era, entrepreneurs in the 21st century are considered the heroes of
free enterprise (OUM n.d.) Creativity and innovation have made many of these
entrepreneurs able to exploit high growth potentials. “Today, many people regard
entrepreneurship as ‘pioneership’ on the frontiers of business” (Kuratko & Hodgetts 2004).
Much of the significant changes revolutionizing the world of business was due to the
internet which provided countless opportunities for entrepreneurs.
Entrepreneurship

Reinforcing the thrust on entrepreneurship through trade and investment results to

economic development and job creation

Evolution of Entrepreneurship in the Philippines

Entrepreneurship has existed in the Philippines since the interaction of the early Filipinos with
foreign traders, especially the neighboring countries like Malaysia, Indonesia, and China. They started
business transactions through the barter system where in goods and services were the means of
exchange. Then countries moved towards a money economy when people use different forms of money
to pay for the goods that they bought. After the colonization of Spain, America, and Japan, our country
changed the structure of the society. After independence, the Philippine government realized the
importance of entrepreneurship to individual, society and the country and how it contributes to the
nation’s economic development.
The small and medium enterprises (SMEs) became the embodiment of entrepreneurship in the
country. The SME development regulatory framework and policies started in 1935 when the 1935
Philippine Constitution first recorded the national commitment to economic success through industrial
and technological growth.
The “Magna Carta for Small Enterprise” is the landmark
of legislation which reflects the current government policy to
foster a dynamic SME sector, particularly rural and agricultural-
based manufacturing ventures. The law states the potential of
SMEs to help spur economic growth and generate jobs, which
will help support a self-sustaining trade and industry for the
country.

There is no doubt that the government, through the Department of

Trade and Industry and its attached agencies and bureaus,
recognizes that promotion of entrepreneurship demands a holistic,
integrated, and strategic set of interventions in order to hasten the
economic development of the Philippines in the midst of this globally
competitive environment. To implement these plans, significant
enabling laws, policies, and programs were instituted by the
government with the support of international development
organizations, non-government organizations, and private sectors.
Entrepreneurship

Name: __________________________________ Strand and Section ____________________

Teacher: ________________________________ Date Submitted: ______________________

LET’S ANALYZE! Exercise 2

1. Explain the perspective of entrepreneurship from the point of view of the classic contributors.
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2. Discuss the perspective of entrepreneurship from the point of view of the modern contributors.
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3. Explain how Philippine government supports the development of entrepreneurship.

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Something to Ponder On

• Women entrepreneurship is empowering.

• Entrepreneurship will always be dynamic but people-centered.
Entrepreneurship

Lesson 3 – Relevance of Entrepreneurship

and Entrepreneurs in Economic Development
and Society

Entrepreneurship has an enormous impact on the economy and in the society. Globally, the level
of entrepreneurial activity has contributed significantly to the national level of economic growth of many
countries. It was Joseph Schumpeter, an Austrian-American economist, who first articulated the
importance of entrepreneurship to the economy and in the society in 1934.

Creates Improves the

employment quality of life

Develops Serves as role

new market models

Introduces Role of Brings social

Entrepreneurship
innovation benefits to the people
and Entrepreneurs
in Economic
Generates Utilizes and mobilizes
Development and
new sources of indigenous resources
Society
materials

Stimulates investment Provides more

Interest in the new business alternatives for

Ventures being created consumers

• Creates employment – When entrepreneurs put up their business, they employ people who
possess different competencies and personal values to help them operate the enterprise.
• Develops new markets – Entrepreneurs are opportunity-seeker, creative, and resourceful.
• Introduce innovation – Entrepreneurs innovate. Innovations can be something ordinary or
technological or breakthrough.
• Generates new sources of materials – Entrepreneurs are always in constant search for better
and cheaper sources of materials they need.
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• Stimulates investment interest in the new business ventures being created – When
entrepreneurs engage in a new business, it stirs curiosity for other people to invest in the
business because of the benefits it offers.
• Improves the quality of life – The new products and services developed by the entrepreneur
contribute to the increase in the personal benefit and convenience of people in society.
• Serves as role models – Entrepreneurs are people to be emulated by younger generations in
the community and society at large.
• Brings social benefits to the people- Entrepreneurs pay taxes for every product sold in the
market. They also pay for the permits and licenses to operate their business.
• Utilizes and mobilizes indigenous resources – Small and medium enterprises will always look
for cheaper and local materials to supply their needs.
• Provides more alternatives for consumers – The stiff competition in the market for quality
and cheaper products and services requires the entrepreneurs to come up with more
products and services consumers can choose from.
Entrepreneurship

Name: __________________________________ Strand and Section ____________________

Teacher: ________________________________ Date Submitted: ______________________

LET’S ANALYZE! Exercise 3

1. Explain the contributions of entrepreneurship in economic development.

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2. Discuss the relevance of entrepreneurship in the community and society.

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Something to Ponder On

• Entrepreneurship leads to innovation.

• Entrepreneurship contributes to the economic development of a country.

References: Edralin, Divina M. Entrepreneurship. c2019.

Morato, Jr., Eduardo A. A Trilogy of Entrepreneurship. c2008