Entrep Mind Chapter 1

GE-EM: ENTREPRENEURIAL MIND
CHAPTER 1: Meaning, History and Elements of Entrepreneurship
EARLY EXCHANGE OF GOODS

 Historical records show that human beings depended on each other in order to survive.
 Exchanging of goods with other goods is called bartering.
 Natural goods like salt and spices were common items of exchange.
 Hunters exchange their catch with root crops grown by farmers. Farmers exchange with fisher folks and
people who built shelters were paid with goods that were gathered by those who needed shelter.
 Bartering became the norm for acquiring what people needed to survive.
 Towns began to be formed and people settled as farmers, producers, consumers and later as traders.
 Before long, money was invented because people who traded their ox with a sack of wheat were not
sure they were getting the worth of their ox for the wheat that they acquired.
 With money as the means for trade, people found it easier to acquire what they needed in the amounts
that they wanted or needed.
EARLY USAGE OF THE TERM “ENTREPRENEURSHIP”

 Entrepreneurship is the term we use today to explain this activity of gathering, producing, and
exchanging goods and services, with the advantage of earning a living for oneself.
 The person involved in this process is called the “entrepreneur”.
Entrepreneurship
 The use of the word entrepreneurship became popular among the early French philosophers and
economists who discussed the phenomenon of this “give” and “take” activity.
Entrepreneur
 In the 13th century, the word “entrepreneur” emerged. It was a combination of two French words, entre,
which means “in-between” and prendre, which is a verb meaning “to take”. Literally when the two terms
were combined, the new word meant “to take-in between”
 The French economist Richard Cantillon, who wrote his Essai sur la Nature du Commerce en General
(Essay on the Nature of Trade in General) in 1755.
Enterprise
 The French word enterprise first appeared in the French dictionary Dictionnaire Universal de
Commerce, Compiled by Jacques Savary des Bruslons and published in 1723.
20th CENTURY AUTHORS EXPLAIN “ENTREPRENEURSHIP”
A. Joseph Alois Schumpter

Two (2) meanings of Entrepreneurship:
1. An entrepreneur breaks with the old tradition and find new ways to produce and sell his products.
a. The entrepreneur is someone who adds new features to an existing technology in order to
produce a new commodity;
b. or To produce an old commodity by using new technology or;
c. Someone who sells existing commodities to new buyers who may be hearing of the product
for the first time.
2. Entrepreneur is primarily less “individualistic”, saying explicitly that the entrepreneur does not have
to be one person.
B. Peter F. Drucker
 Entrepreneurship is the maximization of opportunities.”
 He implies that effectiveness rather than efficiency is essential in business.
 The pertinent question is not how to do things right but how to find the right things to do and to
concentrate resources and efforts on them.
ELEMENTS OF ENTREPRENEURSHIP
1. Entrepreneurial Spirit
 It is an inner strength that the entrepreneur acquires from what surrounds him.
 It includes the culture in which the person grows. Some cultures encourage entrepreneurship as a way
of life while other cultures do not consider it that important.
 The strength of one’s entrepreneurial spirit will indeed depend on the people involved who exhibit a
passionate, almost compulsive desire to succeed.
 The intangible quality that comes from persons who are fully engaged and doing what they want to do
is the entrepreneurial spirit.
 It is the atmosphere of fun and excitement that is generated when people work together to create an
opportunity for greater success than is otherwise available.
2. Risk-Taking and Uncertainty
 The acts of entrepreneurship were often associated with true uncertainty, particularly when bringing
something novel to the world whose market does not even exist yet.
 In addition, even if a market already exists, there is no guarantee that a market exists for a
particular new player in any given category of products or services.
 Risk – Randomness with knowable probabilities.
 Uncertainty – Randomness with unknowable probabilities.
3. Creativity and Innovation

 Robert Fisher presented in his paper “Creative Minds: Building Communities of Learning for the
Creative age” that the basic processes of creative evolution, whether of ideas or of species, are,
according to him: Generation, Variation or Innovation and Uniqueness.
o The generation of ideas, of experiments and innovations, is a necessary part of creative
effort. However, generation by itself does not guarantee creativity.
o The principle of variation or differentiation ensures that creativity is not mere repetition. New
knowledge or new creations seek variation of what is given.
o The principle of uniqueness provides the element of surprise. It is expressed in differing
levels of originality. Creativity means generating one or more different or unique expressive
responses.
4. Competition
 This element is seen in rapid market growth where competition is about serving new segments, not
simply taking the market away from existing competitors.
 An entrepreneur stays ahead of the competition through specific innovative “twists” and substantial
and continuing efforts to retain leadership position.
 The entrepreneur’s alertness, flexibility, willingness to accept market verdict and hard work are
required here.
5. Independence
 The freedom to operate independently is both a need and a reward for the entrepreneur/
 Entrepreneurs desire to make their own decisions, take their own risks, reap the rewards of their
efforts.
 They need the satisfaction of making their own decisions within the constraints imposed by
economic and other environmental factors.
-End of Chapter 1-
Prepared by:
Louella Martina B. Era, BSPA

Faculty, College of Business and Accountancy
louera.psu@gmail.com

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GE-EM: ENTREPRENEURIAL MIND

CHAPTER 1: Meaning, History and Elements of Entrepreneurship

EARLY EXCHANGE OF GOODS

EARLY USAGE OF THE TERM “ENTREPRENEURSHIP”

20th CENTURY AUTHORS EXPLAIN “ENTREPRENEURSHIP”

A. Joseph Alois Schumpter

3. Creativity and Innovation

Louella Martina B. Era, BSPA

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