20140722082556_05. ABPS3103 Topic 1

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       INTRODUCTION In the past few years, there has been a lot of hype about entrepreneurship. This is mainly because of the discovery by economists that entrepreneurs and small market enterprises (SMEs) are one of the key contributors to economic growth and creation of jobs. Furthermore, many people are also opting for careers as entrepreneurs because it seems to offer greater financial and psychological rewards than the average nine-to-five drill. Entrepreneurship has also been the solution for the high rates of unemployment of fresh graduates, especially since the last economic recession. However, despite all the attention entrepreneurship has received, one question still begs for an answer  Âwhat is entrepreneurship?Ê The cartoon below illustrates entrepreneurship at the most basic level. You see a woman (an entrepreneur) selling lemonade (a business) and describing franchising opportunities to a client (showing entrepreneurial behaviour). However, TTooppiicc   1 Introduction to Entrepreneurship  1  By the end of this topic, you should be able to: 1.Define entrepreneurship; 2.Discuss the concept of entrepreneurship; 3.Describethe relationship between psychology and entrepreneurship; and 4. Analyse the advantages and disadvantages of entrepreneurship. LEARNING OUTCOMES      TOPIC 1 INTRODUCTION TO ENTREPRENEURSHIP 2 entrepreneurship is more than simply starting a business. One definition of entrepreneurship is a process through which individuals identify opportunities, allocate resources, and create value (Baum, Frese, & Baron, 2007). The word „entrepreneur‰ srcinates from the French word, entreprendre  , which means to undertake. An entrepreneur is often described as one who organises, manages, and assumes the risks of a business or enterprise (Herbert and Link, 1988). To understand what entrepreneurship is, it is useful to first understand what it is not. Being an entrepreneur is not a short-cut to becoming rich, and neither is it an easy way out of poverty. We will discuss the advantages and disadvantages of entrepreneurship later on in this topic. We will also discuss the different types of entrepreneurship that have emerged such as lifestyle entrepreneurship, social entrepreneurship and political entrepreneurship. Watch videos online about entrepreneurship: (a)http://www.youtube.com/watch?v=T6MhAwQ64c0&feature=related (b)http://www.youtube.com/watch?v=cfKimrZStA8&feature=related (c)http://eclips.cornell.edu/themes.do?id=109&clipID=1192&tab=TabClipPage DEFINITIONS OF ENTREPRENEURSHIP 1.1 SELF-CHECK 1.1   What is entrepreneurship?Entrepreneurship may mean different things to different people depending on their respective fields. Entrepreneurship has been defined by multiple disciplines  economics, psychology, sociology and management. To an economist, an entrepreneur is one who brings resources, labour, materials and other assets into combinations that make their value greater than before. For example, an entrepreneur who takes the resources necessary to produce a dress that can be sold for RM40 and instead turns it into an elegant handbag that sells for RM60 will earn a profit by increasing the value those resources create. Psychology focuses on the psyche (traits and personality) of the entrepreneur. The questions psychologists are investigating with regards to entrepreneurship include who entrepreneurs really are, how they are similar to and different from other people, and the factors that affect entrepreneurial behaviour. Psychologists have also identified entrepreneurial attributes, and the characteristics that make   TOPIC 1 INTRODUCTION TO ENTREPRENEURSHIP    3 entrepreneurs successful and unsuccessful. Why is psychology important in understanding entrepreneurship? From the time of an initial business idea to the time that a new business is developed, most of the critical processes involve the psychological characteristics and the actions of individuals (Frese, 2009). Meanwhile, sociologists are more interested in what entrepreneurs do, their position in society with respect to class structures and their social responsibility (Cole, 1959). For example, certain cultures are known to have „entrepreneurial  blood‰. These cultures have developed entrepreneurial attributes as a result of engaging in entrepreneurship as a means of survival generation after generation to improve their living conditions. For example, the Chinese ethnic minorities in Malaysia have managed to maintain better living conditions than the rest by  becoming entrepreneurs, which now is said to run in their blood. In America, the  Jews are known for their entrepreneurial qualities. Even today, the Chinese and the Jews remain powerful and superior in the business world. From the Management perspective, entrepreneurship is defined as strategic management, and the role of entrepreneurs is to maximise profit, achieve goals and develop the company. Managers are interested in how entrepreneurs use tools on strategic management to achieve goals for their business (Busenitz & Barney, 1997). Table 1.1 is a summary of the definitions of entrepreneurship from the 18th century right up till the 21st century. From Table 1.1, you will be able to see how difficult it can be to define entrepreneurship. However, instead of looking at this as a problem, let us try and look at it as an opportunity to see the flexibility of entrepreneurship in creating meaning in so many different contexts. Table 1.1 also describes the concepts first introduced through a definition.      TOPIC 1 INTRODUCTION TO ENTREPRENEURSHIP 4 Table 1.1 : Definitions of Entrepreneurship Author s), Year  D efinition  C oncept Introduced  Knight, 1921 The entrepreneur is an individual with an unusually low level of risk aversion. Risk aversion Schumpeter, 1934 The entrepreneur is a leader and a contributor to „creative destruction‰. He carries out „new combinations‰ which include: 1) the introduction of new goods or new qualities of a good 2) a new method of production 3) a new market 4) a new supply of raw materials or components 5) reorganisation of an industry. Entrepreneur as innovator McClelland, 1961 First attempt to explain the psychology of the entrepreneur through the need for achievement Personality trait research Casson, 1982 Entrepreneurship is about being different  from the aspect of having a different perception of the situation. Entrepreneurial perception Z. Acs, Audretsch and Feldman, 1994; Drucker, 1985 Entrepreneurship is an act of innovation that involves endowing existing resources with new wealth-producing capacity. Innovation Gartner, 1988 Entrepreneurship is best explained by what the entrepreneur does not who the entrepreneur is. Process approach to entrepreneurship Stevenson and  Jarillo, 1990 Entrepreneurship is the pursuit of opportunities without concern for current resources  either in a private business or within other organisations. Current resources not a concern Bygrave and Hofer, 1991 Focus on the nature and characteristics of the entrepreneurial process. Entrepreneurial process tangled with the individual North, 1990 Institutional affects on entrepreneurship Institutions Source : Fuduric (2008) Although each of these definitions views entrepreneurs from a slightly different perspective, they all contain similar notions, such as newness, organising, creating, wealth and risk taking. Yet each definition is somewhat limiting, since every entrepreneur is different, and there are different types of entrepreneurs. Many researchers grasped the idea of it, and it serves as a useful definition. However, it does not go much deeper than that.
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