PRINCIPLES OF ENTREPRENEURSHIP

(AFT 06210)
Module Facilitator: Bundala Machiya (BM):0765956511
PRINCIPLES OF ENTREPRENEURSHIP

TOPIC 01

BASIC CONCEPTS OF ENTREPRENEURSHIP

(A) DEFINITION OF ENTREPRENEURSHIP:

 Entrepreneurship is the process of identifying, creating, and pursuing opportunities to

establish and grow new ventures or businesses. Entrepreneurs are individuals who take
calculated risks and leverage resources to turn innovative ideas into successful
enterprises (Shane & Venkataraman, 2000).
 Entrepreneurship is the driving force behind the creation of new businesses and the
rejuvenation of existing ones. It encompasses a wide range of activities, from recognizing
market gaps to assembling resources and taking calculated risks to realize opportunities.
Entrepreneurs are the engines of economic growth, job creation, and wealth generation
(Audretsch & Thurik, 2001).
 They bring novel ideas, products, and services to market, leading to competition,
innovation, and increased consumer choice.
(A) DEFINITION OF ENTREPRENEURSHIP:

 Accordingto Richard Cantillon, “An agent who buys factors of

production at a certain prices in order to combine them into a
product with a view to selling it at an uncertain price in future.
 Accordingto Oxford Dictionary, an entrepreneur is someone
who sets up a business, taking on financial risk in the hope of
profit.
(A) DEFINITION OF ENTREPRENEURSHIP:

 Entrepreneurship is the process of starting, organizing, managing, and

growing a business or venture with the goal of making a profit.
 It involves identifying opportunities, taking risks, and creating innovative
solutions to address market needs.
 Entrepreneurs play a critical role in driving economic growth, innovation,
and job creation in various industries.
 They typically exhibit qualities such as creativity, resilience, determination,
and a willingness to take calculated risks.
(A) DEFINITION OF ENTREPRENEURSHIP:

 Successful entrepreneurs are able to adapt to changing market

conditions, overcome challenges, and build sustainable
businesses.
 Entrepreneurship can take many forms, from starting a small
business to launching a tech startup or social enterprise.
 Overall, entrepreneurship is a dynamic and exciting journey that
requires a combination of skills, resources, and vision to achieve
success.
(A) DEFINITION OF ENTREPRENEURSHIP:

 An entrepreneur is an individual who takes on the risks and uncertainties

of starting, organizing, and managing a business or venture with the goal of
making a profit.
 Entrepreneurs identify opportunities, develop creative solutions, and
mobilize resources to bring their ideas to life in the marketplace. They are
driven by a passion for innovation, a desire to create value, and a
willingness to take on challenges and setbacks in pursuit of their goals.
(A) DEFINITION OF ENTREPRENEURSHIP:
 Intrapreneurship refers to the practice of applying entrepreneurial skills,
mindset, and behaviors within an existing organization to drive innovation,
growth, and change.
 Intrapreneurs are employees who take on the role of an entrepreneur
within their organization, identifying new opportunities, developing
creative solutions, and implementing new ideas to improve processes,
products, or services.
 Intrapreneurship typically involves taking risks, challenging the status quo,
and championing new initiatives to help the organization stay competitive
and adapt to changing market conditions.
(A) DEFINITION OF ENTREPRENEURSHIP:

 The word entrepreneur finds its origin in French word “entreprendre”

which means “to undertake” or initiate.
 The term was used in context of business and economic activities only in
the 18th century.
 Richard Cantillon, a French banker, is credited for the use of the word
entrepreneur for the first time to mean a person who bears uncertainty
and risk.
 (B) DEVELOPMENT OF THE
CONCEPT OF ENTREPRENEURSHIP
Earliest Period
 The term entrepreneur, in French if literary translated means, “go-
between” and has been used since 12th century.
 An earliest example of an entrepreneur as go between is Marco Polo who
attempted to establish trade routes to Far East.
 Marco Polo would sign a common contract with a capital provider(capitalist)
to sell his goods, which provide a loan to the merchant adventure at high
interest rate including insurance.
Earliest Period

 The capitalist being the passive risk bearer and the Merchant
bearing the physical and emotional risk used to trade the goods.
 After the Merchant completely sold of the goods, the profits were
divided between both with capitalist taking around 70-75 percent,
while the Merchant Adventure getting the remaining 25-30
percent.
Middle Ages

 In the middle ages; The term entrepreneur was used to describe

actor and person who managed large production projects.
 In such large production, projects, this individuals did not take
any risk but merely managed the projects using the resources
usually provided by the government of the country.
 17th Century

 Duringseventeenth century the term entrepreneur was used for

person who entered into a contractual arrangement with
government to perform a services or to supply a stipulated products.
 Since the contract price was fixed, any resulting profits or losses
belonged to the entrepreneurs, thereby assuming the risk out of the
expedition.
 Richard Cantillon a noted French economist during 17th century
developed on the early theories of entrepreneur and is credited as
the founder of the term.
 17th Century

 Heviewed an entrepreneur as risk taker, observing that merchants,

farmers, craftsmen and other sole proprietors buy at a certain price
and sell at an uncertain price, therefore operating at a risk.
18th Century
 During this period the person with capital was differentiated from
the one who needed capital.
 In other words, entrepreneur was distinguished from the capital
provider(the present day venture capitalist).
 One of the reasons for this differentiation was industrialization
occurring thought the world.
 Many of the inventions developed during this time were reactions
to the changing world
18th Century

 During this period the person with capital was differentiated from the one
who needed capital.
 In other words, entrepreneur was distinguished from the capital provider(the
present day venture capitalist).
 One of the reasons for this differentiation was industrialization occurring
thought the world.
 Many of the inventions developed during this time were reactions to the
changing world
19th and 20th Centuries
 In the late 19th century and early 20th centuries, entrepreneurs were
frequently not distinguished from Managers and viewed mostly from an
economic perspective.
 It was during 19th century, entrepreneurs were viewed from economic
Perspective
 The entrepreneur organizes and operates enterprise for personal gain.
He pays current prices for the materials consumed in the business, for
the use of land, for personal services he employs and for the capital
he requires
19th and 20th Centuries

 Inthe late 19th century and early 20th centuries, entrepreneurs

were frequently not distinguished from Managers and viewed
mostly from an economic perspective.
 It was during 19th century, entrepreneurs were viewed from
economic Perspective
 The entrepreneur organizes and operates enterprise for personal
gain. He pays current prices for the materials consumed in the
business, for the use of land, for personal services he employs and
for the capital he requires
19th and 20th Centuries

 Hecontributes his own initiative, skills and ingenuity in planning,

organizing and administering enterprises.
 He also assumes the chance of loss and gain consequent to
unforeseen and uncontrollable circumstances.
 The net residue of the annual receipts of the enterprises after all
cost have been paid, he retain for himself
19th and 20th Centuries
 In the middle of the twentieth century, the notion of an entrepreneur as an
innovator was established.
 Entrepreneur as an innovator; an individual developing something unique
 The function of the entrepreneur is to reform or revolutionize the pattern of
production by exploiting an invention or more generally untried
technological method of producing a new commodity or producing an old one
in a new way, opening a new sources of supply materials or new outlet for
products by organizing new industry.
19th and 20th Centuries

 The concept of innovation and newness is an integral part of

entrepreneurship in this definition.
 Indeed, innovation, the act of introducing something new, is one
of the most difficult task for the entrepreneur.
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