ATIBA UNIVERSITY

OYO

ENTREPRENEURSHIP & INNOVATION

[ENT 211]

PREPARED BY
‘BOSUN SOWUNMI, Esq.

COURSE OUTLINE

CHAPTER ONE
The Basic Concepts, Characteristics and Theories of Entrepreneurship

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CAL 0.42 2 0.39 21 0
CHAPTER TWO
Entrepreneurial Thinking - And Its Roles In The Development of An Economy

CHAPTER THREE
The Concept of Innovation

CHAPTER FOUR
Enterprise formation, Partnership, and Networking

CHAPTER FIVE
Contemporary Entrepreneurship Issues

CHAPTER SIX
Entrepreneurship in Nigeria-I

CHAPTER SEVEN
Entrepreneurship in Nigeria- II

CHAPTER EIGHT
Basic Principles of E-commerce.

CHAPTER ONE
THE BASIC CONCEPTS, CHARACTERISTICS AND THEORIES OF ENTREPRENEURSHIP

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Often times many people go into one business or the other without the businesses surviving, this is because
of lack of understanding of how businesses are created. This course will introduce you to the formation of
entrepreneurship and the theories behind entrepreneurship formation.

Entrepreneurship
Entrepreneurship has no universal definition like other disciplines as many scholars have defined it
differently according to their own perspective. But the word entrepreneurship stems from the French word
‘entreprendre‘, which indicates an act in which the individual attempt, or undertake an act of some sort.
In fact there are many definitions of the concept ‘entrepreneurship’. For instance, Putari (2006) observes that
scholars had not been in agreement in their definitions of entrepreneurship and chronicled the definitions of
entrepreneurship by various scholars (Brockhaus & Horwitz, 1986, Sexton & Smilor, Wortman, 1987;
Gartner, 1988). Cantillon (circa 1730) views entrepreneurship as: “self employment of any sort”. In 1934,
Joseph Schumpeter equated entrepreneurship with the concept of innovation and applied it to a business
context, while emphasizing the combination of resources. Penrose (1963) views entrepreneurship as the
activity that involves identifying opportunities within the economic system. While Leibenstein (1968, 1979)
perceives entrepreneurship as involving "activities necessary to create or carry on an enterprise where not all
markets are well established or clearly defined and/or in which relevant parts of the production function are
not completely known”. Gartner (1988) conceives entrepreneurship as the creation of new organizations.
Okpara (2000) defines entrepreneurship as the willingness and ability of an individual to seek out investment
opportunities in an environment and be able to establish and run an enterprise successfully based on the
identifiable opportunities. In addition, Nwachukwu (1990) regards entrepreneurship as a process of seeing
and evaluating business opportunities, gathering the necessary resources to take advantage of them and
initiate appropriate action to ensure success.
After critically studying the above definitions, it can be summarized by concluding that entrepreneurship is
a function which involves the exploitation of opportunities which exist within a market. Thus, from the
definitions above it could be said that while defining the concept ‘entrepreneurship’, emphasis was laid on a
wide spectrum of activities such as
• Self-employment of any sort.
• Creation of organizations.
• Innovation applied to a business context.
• The combination of resources.
• Identification and exploitation of opportunities within the economic system or market.
• The bringing together of factors of production under uncertainty.
It can be concluded that whatever activity that involves any or all of the above activities can be regarded as
Entrepreneurship. Entrepreneurship refers to all the processes and activities involved in establishing,
nurturing, and sustaining a business enterprise.
Entrepreneur Scholars have also given several definitions of the concept ‘entrepreneur’. For instance in 1816,
Putari (2006) quoted Say, who asserts that the entrepreneur is the agent "who unites all means of production
and who finds in the value of the products ... the reestablishment of the entire capital he employs, and the
value of the wages, the interest, and rent which he pays, as well as profits belonging to himself." He views

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entrepreneurs as change agents (Say, 1816). Knight (1921) views entrepreneurs as individuals who attempt to
predict and act upon change within markets.
Schumpeter (1934) conceives the entrepreneur as the innovator who implements change within markets
through the carrying out of new combinations such as introduction of new techniques of production,
reorganization of an industry and innovation. He further argues that the entrepreneur is an innovator, one that
introduces new technologies into the workplace or market, increasing efficiency, productivity or generating
new products or services (Deakins and Freel, 2009).
Cantillon (circa 1730) conceptualized the entrepreneur as: the "agent who buys means of production at
certain prices in order to combine them" into a new product (Schumpeter, 1951). In Quick MBA (2010), the
entrepreneur is defined as one who combines various input factors in an innovative manner to generate value
to the customer with the hope that this value will exceed the cost of the input factors, thus generating superior
returns that result in the creation of wealth.

Views of Entrepreneurship
A. Economist’s View
Entrepreneur and Entrepreneurship have been a point of interest to economics as early as 1755. The term
Entrepreneur seems to have been introduced into Economics by Cantillon, but the Entrepreneur was first
accorded prominence by Say. It was variously translated into English as:
• merchant,
• adventurer and
• employer
Though the precise meaning is the ‘undertaker of a project,’ James Stuart Mill popularized the term in
England. The concept was vague, and not clear. Entrepreneurs were looked as adventurer. Entrepreneurship
was looked as speculative activity. The economist sees an entrepreneur as someone who combines resources
such as labour, materials and other assets, introduces changes, innovations and new orders for profitable and
rewarding ends. These rewards double as incentives and gains; and are regarded as the sufficient conditions
for the emergence of industrial entrepreneurship.

B. Sociologist’s View
Entrepreneurship is inhibited by the social system, which denies opportunities for creative facilities: The
forces of custom, value system, the rigidity of status, district of new ideas and the exercise of intellectual
curiosity, combined together creates an atmosphere inimical to experiment and innovation. Sociologists
argue that Entrepreneurship is most likely to emerge under a specific social culture.
The sociologist sees the Entrepreneur as goal-oriented and has the capacity to adapt to changing
environment. According to the sociologist, social sanctions, cultural values and role expectations are
responsible for the emergence of entrepreneurship. Social-cultural values channel economic action that gives
birth to entrepreneurship.

C. Psychologist’s View
The psychologist sees an entrepreneur as someone who is being driven by certain forces that are mainly
internal, personal attributes and traits. The phenomenon of entrepreneurship development has been viewed,
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explained and interpreted differently. Among those who stressed the psychological aspects as contributing to
entrepreneurial success are Joseph Schumpeter, McClelland, Hagen and Kunkal. The main centre of attention
of these theories includes:
Schumpeter believes that entrepreneurs are primarily motivated by an atavistic will to power, will to find a
private kingdom or will to conquer.
According to McClelland, it is the high need for achievement which drives people towards entrepreneurial
activities. This achievement motive is inculcated through child rearing practices, which stress standards of
excellence, material warmth, self-reliance training and low father dominance. Individuals with high
achievement motive tend to take keen interest in situations of high rest, desire for responsibility and a desire
for a concrete measure of task performance.

Assessment Exercise
What is it that comes to your mind when you hear the word ‘entrepreneurship’

Who is an Entrepreneur?
The word "Entrepreneur" is derived from the French verb 'entrepredre'. It means 'to undertake'. In the early
16th century the Frenchmen who organized and led military expeditions were referred to as 'Entrepreneurs'.
In the early 18th century French economist Richard Cantillon used the term entrepreneur to business.
Since that time the word entrepreneur means one who takes the risk of starting a new organization or
introducing a new idea, product or service to society.
• Having a vision you want to pursue.
• Creation of venture.
• Innovation
• The combination of resources.
• Identification and exploitation of opportunities within the economic system.
• The bringing together the factors of production
• Taking risk for profit purposes
According to J.B. Say, An entrepreneur is the economic agent who unites all means of production; land of
one, the labour of another and the capital of yet another and thus produces a product. By selling the product
in the market the pays rent of land, wages to labour, interest on capital and what remains is his profit. Thus
an Entrepreneur is an organizer who combines various factors of production to produce a socially viable
product.
An entrepreneur can be regarded as a person who has the initiative skill and motivation to set up a business
or enterprise of his own and who always looks for high achievements. He is the catalyst for social change and
works for the common good. They look for opportunities, identify them and seize them mainly for economic
gains. An action oriented entrepreneur is a highly calculative individual who is always willing to undertake
risks in order to achieve their goals. According to Joseph Schumpeter, An entrepreneur in an advanced
economy is an individual who introduces something new in the economy, a method of production not yet
tested by experience in the branch of manufacturing concerned, a product with which consumers are not yet
familiar, a new source of raw material or of new market and the likes.

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Assessment Exercise
1. Everyone doing business is an Entrepreneur. True Or False
False
2. What are the main characteristics of an Entrepreneur?
An Entrepreneur has the following characteristics :
a. Passion and Motivation. ...
b. Not Afraid to Take Risks. ...
c. Self-belief, Hard Work and Disciplined Dedication. ...
d. Adaptable and Flexible. ...
e. Product and Market Knowledge. ...
f. Strong Money Management. ...
g. Effective Planning (Not Over-Planning) Skills.
h. The Right Connections.

Who is an Intrapreneur?
There are given situations where an Entrepreneur is not able to establish his or her own business and as such
has to work in an organization. In this case they are referred to as ‘Intrepreneurs’ i.e. Entrepreneurs within an
organization. These individuals are entrepreneurs in their own right because they pursue the exploitation of
business opportunities as they emerge and are also visionaries within a given organization. Thus, once
identified, these individuals should be encouraged to manifest their entrepreneurial abilities to the benefit of
the organization otherwise they will be frustrated and may leave the organization or start their own
businesses. Entrepreneurship is the processes and activities by which corporate organization behave
entrepreneurially.
According to Jones, George and Hill (2000), an intrapreneur is a manager, scientist, or researcher who works
inside an existing organization and notices opportunities for product improvements and is responsible for
managing the product development process. The above definition was corroborated by Pinchot (1985), when
he coined the term intrapreneur to represent an innovative individual (employee) in an existing business
organization who perceives new market opportunities, secures resources and initiates the realization of the
opportunity. Rather than perform the roles of an entrepreneur as an independent unit and for private
economic gains, the intrapreneur performs the same roles within an existing large organization to enhance the
competitiveness and profitability of the organization.

Intrapreneurship
Stoner et al., (2009) opined that in today’s faced-paced economy, companies that do not keep up may go the
way of the dinosaur. According to them, a large number of companies have lost their entrepreneurial spirit
that they started with.
As they have grown larger, their ability to be innovative and flexible may have been stifled by the very size
and success of the organization. Many concepts have been used to describe how managers can keep
organizations from stagnating, make organizations adaptive, and promote organizational climates that
support creative learning. Perhaps, the most widely used term for this process is intrapreneurship.

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Intrapreneurship or corporate entrepreneurship is the process whereby an organization seeks to expand by
exploring new opportunities through new combinations of its existing resources.
Intrapreneurship requires special attention from managers, because by design it cuts against the grain of
established organizational activities. Thus, we might expect that the following are important to support
intrapreneurship:
1. Explicit goals for entrepreneurial processes
2. A system of information exchange between managers and intrapreneurship
3. An emphasis on individual responsibility and accountability
4. Rewards for creative effort

Assessment Exercise
Distinguish between Entrepreneur and Intrapreneur? Give Examples.

How is entrepreneur different from intrapreneur

Whereas an entrepreneur is a person who creates a venture or starts up a business and nurtures it, takes risks
of bringing together the factors of production to meet the society’s need at a profit, an intrapreneur works
within an existing organization to pursue the exploitation of business opportunities.
According to Investopedia
The central difference between entrepreneurs and intrapreneurs is the setting in which they work.
“An intrapreneur is an inside entrepreneur, or an entrepreneur within a large firm, who uses entrepreneurial
skills without incurring the risks associated with those activities,”
Examples are:
1. Apple Corporation
2. Churches in Nigeria who apart from the church activities have: Schools, mini industries such as soap
making, water production etc.

Characteristics of Entrepreneur
An entrepreneur must have certain traits in order to reach its full potentials. Some of the characteristics are:

Motivation
Entrepreneurs are usually passionate, buoyant and highly self-motivated. They have very high energy levels
and are always willing to take initiatives. They are usually concerned about their business and how to
increase the market share, how to improve their existing processes.

Risk Tolerance
The establishment of any entrepreneurial venture is risky and the entrepreneur has to assume risk. As risk and
rewards are inseparable, in order to grow, the entrepreneur should have large appetite for assuming risk.
Entrepreneurship is a very risky venture; entrepreneurial decisions can have far-reaching impact on the

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organization, people in the organization and even the economy. These decisions are critical, enormous and
cannot be easily reverted.

Vision
The entrepreneur is a visionary. One of the major responsibilities of an entrepreneur decides the direction the
business should go. It requires a strong vision on the part of an entrepreneur to ensure his/her business reach
maturity.

Mental ability and Creativity

The entrepreneur should anticipate changes and must be able to study the various situations under which
decisions have to be made. Successful entrepreneurs have the creative ability to recognize and pursue
opportunities.
They are always on a look out for new ways of doing things such as launching new products, rebranding
existing products, providing new services etc.

Clear Objectives
An entrepreneur has clarity about the objectives to be achieved in the business, the nature of goods to be
produced and subsidiary activities to be undertaken. This clarity in objectives helps them to translate their
business idea into reality and gives the business a sense of direction.

Good Communication Skills

This basically pertains to communicate effectively. An entrepreneur who can effectively communicate with
customers, employees, suppliers and creditors will be more likely to succeed than the entrepreneur who does
not. An entrepreneur must have a good feedback system.

Human Skills
An entrepreneur must have good human relations. The most important personality factors contributing to the
success of any entrepreneur include emotional stability, good inter- personal relations, consideration and
tactfulness.
An entrepreneur has to maintain good relations with his customers so as to encourage them to continue to
patronize his business. He must also maintain good relations with his employees so as to motivate them to
perform their jobs with a high level of efficiency.

Technical skills
An entrepreneur must have the competence and proficiency in the knowledge of the business. It is the
possession of specialized knowledge and understanding in methods, processes, procedures and techniques in
carrying out day-to-day activities. Examples are; coaching, organizing, monitoring environment amongst
others.
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Self Confidence and Multi-Skilled
The entrepreneur must have self-confidence and believe in him/herself. Self-confidence is an important
characteristic that enables individuals to handle any situation without having inferiority or any other type of
complex. The entrepreneur also has to be a jack of all trade and master of all. He/she must possess different
skills unlike other individuals. For instance, assuming an entrepreneur is a marketer, the entrepreneur should
not only possess marketing skills and interpersonal skills but also language skills i.e. ability to speak more
than one language. This definitely will be an added advantage!
Confidence in the Face of Difficulties and Discouraging Circumstances: The entrepreneur must be steadfast
and resolute and be ready to move on even in the face of adversity. He/she should be a ‘never say never’ kind
of person; everything is possible for the entrepreneur.

Innovative skills
The entrepreneur may not necessarily be an 'inventor' but the one that can make a difference; he/she should
be able to see what others cannot see and be able to carve out a new niche in the market place.

Results-Orientated
The entrepreneur is one who knows how to get results under any circumstances either with others or through
others. The entrepreneur does this by setting goals and ensuring that such goals are doggedly pursued by all
concerned willingly and with joy.

Risk-Taker
The business environment is dynamic and filled with uncertainties and risk. In order to succeed the
entrepreneur has to take risk. Successful entrepreneurs take calculated risks and in some cases shift the risks
to others.

Total Commitment
Starting /creating a new business is a serious exercise that requires a lot of commitment and hard work. It is
like bringing a child into the world and nurturing the child to adulthood. This requires commitment,
dedication, hard work, energy and single-mindedness otherwise the ‘child’ (i.e. business) may die
prematurely (Di-Masi, 2010).

Calm
Entrepreneurs need to be cool, calm and collected. They have to remain calm even when exposed to stress,
emergency or crisis situations.
Focused
In getting things done and starting and maintaining a business attention has to be paid to a lot of details.
Small things when not handled properly or noticed on time may lead to disastrous outcomes.

Tolerance

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The entrepreneur has to relate with people. People vary in terms of their perceptions, personality, motivations
and attitudes amongst other things. The entrepreneur needs to be tolerant while not being weak, in order to
get things done.

Balance
Though, the entrepreneur is a human being, he/she has to be like a super human being in order for him to
succeed. To this effect, he/she has to be able to balance all.

Rockstar (2008) recognized the characteristics of entrepreneurship to include

Creativity
Entrepreneurship entails innovations. It deals with product innovation, production techniques innovation
while bearing in mind the market

Dynamism
Entrepreneurship is a dynamic process that has to bear in mind the dynamic business environment.

Purposefulness
Entrepreneurship is an activity embarked upon for a specific purpose. This could be for profit making
purposes, for humanitarian purposes or to bring a difference to the market.

DiMasi (2010), on the other hand, regards the major characteristics of entrepreneurs as:
• Self-confidence and being multi-skill,
• Confidence in the face of difficulties and discouraging circumstances,
• Results-orientation and total commitment.
• Stephenson (2010) believes that entrepreneurial characteristics are:
• Seriousness, planning ability, prudence, and team work.

Assessment Exercise
1. Intrapreneurs can be identified through many traits, including all of these EXCEPT _____.
a. passion
b. creativity
c. curiosity
d. shyness
2. Businesses that want to support intrapreneurship can do so in all of the following ways EXCEPT:
a. Asking for employees' thoughts and opinions.
b. Creating a process for hearing and developing new ideas.
c. Encouraging the development of new ideas.
d. Fostering a culture where employees are afraid to speak up.

1. d
2. d
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Concept and Theories of Entrepreneurship
The functionality of an entrepreneur is based on some established theories. These theories covers the
economic, social and psychological behaviour of an entrepreneur as discussed hereunder.

Evolution of the concept of entrepreneurship

The concept of entrepreneurship was first established in the 1700s, and the meaning has evolved ever since.

Earliest Period
During this period, Marco polo who was an Italian acted as a go-between. He made attempts to trade routes
to the Far East. As a go-between, he had to sign a contract with a money person to sell his goods while as a
merchant; he took active role in trading by bearing all the physical and emotional risks involved in the
venture.
The economic theory of entrepreneurship considers the relationship between economic conditions and
incentives to arrive at a risk-reward equation that informs a determination on whether or not to pursue a
potential venture. This theory assumes that the entrepreneurs is the one responsible for pulling resources,
labour, materials and other assets together in order to make their value greater than before, and also introduce
changes, innovations, creativity and a new order.

Features of Economic Theory of Entrepreneurship

• Entrepreneurship and economic growth take place when the economic conditions are favorable.
• Economic incentives are the main motivations for entrepreneurial activities.
• Economic incentives include taxation policy, industrial policy, sources of finance and raw material,
infrastructure availability, investment and marketing opportunities, access to information about market
conditions, technology etc.
Economic theories of entrepreneurship tend to understand business ventures in terms of an innovator
purchasing several factors of a product at a bulk rate, combining them for resale at a higher rate but in the
face of unknown market conditions.

Economic factors that encourage or discourage entrepreneurship include:

• Taxation policy
• Industrial policy
• Easy availability of raw materials
• Easy access to finance on favorable terms
• Access to information about market conditions
• Availability of technology and infrastructure
• Marketing opportunities.

The economic theory of entrepreneurship is sub-divided into three namely;

Classical theory,
Neo-classical and Austrian Market Process
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Classical Theory
The classical theory inscribed the virtues of free trade, specialization which was a result of Britain‘s
industrial revolution which took place in the mid-1700 and lasted until the 1830s. The classical movement
described the role of the entrepreneur in the context of production and distribution of goods in a competitive
marketplace (Say, 1803). Classical theorists articulated three modes of production: land; capital; and labour.
There have been various objections to the classical theory. These theorists failed to explain the dynamic
upheaval generated by entrepreneurs of the industrial age (Murphy, Liao & Welsch, 2006).

Neo-classical Theory
The neo-classical model emerged from the criticisms of the classical model and indicated that economic
phenomena could be relegated to instances of pure exchange, reflect an optimal ratio, and transpire in an
economic system that was basically closed. The economic system consisted of exchange participants,
exchange occurrences, and the impact of results of the exchange on other market actors. The importance of
exchange coupled with diminishing marginal utility created enough impetus for entrepreneurship in the
neoclassical movement (Murphy, Liao &Welsch, 2006).
Some criticisms were raised against the neo-classical conjectures. The first is that aggregate demand ignores
the uniqueness of individual-level entrepreneurial activity. Furthermore, neither use nor exchange value
reflects the future value of innovation outcomes. Thirdly, rational resource allocation does not capture the
complexity of market-based systems. The fourth point raised was that, efficiency-based performance does
not subsume innovation and non-uniform outputs; known means/ends and perfect or semi-perfect knowledge
does not describe uncertainty.
In addition, perfect competition does not allow innovation and entrepreneurial activity. The fifth point is that,
it is impossible to trace all inputs and outputs in a market system. Finally, entrepreneurial activity is
destructive to the order of an economic system.

Austrian Market Process (AMP)

These unanswered questions of the neo-classical movement led to a new movement which became known as
the Austrian Market process (AMP). The AMP, a model influenced by Joseph Aloi Schumpeter (1934)
concentrated on human action in the context of an economy of knowledge. Schumpeter (1934) described
entrepreneurship as a driver of market-based systems.
In other words, an important function of an enterprise was to create something new which resulted in
processes that served as impulses for the motion of market economy. The economic school of
entrepreneurship considers the relationship between economic conditions and incentives in order to arrive at
a risk-reward equation that informs a determination on whether or not to pursue a potential venture. The
school saw an entrepreneur as a merchant, adventurer and an employer. The school was able to state the
underlining economic factors that can lead to the growth or decline of an entrepreneurial venture amongst
such are taxation policy, exchange rate and so on. The economic school is also subdivided into the classical
school, neo-classical and Austrian process market which serves an addition to the general framework.

Psychological theories of Entrepreneurship

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Psychological theory of entrepreneurship identifies traits, motives and personalities as the major factors that
infuse the entrepreneurial spirit in an individual. The theory emphasizes personal characteristics that define
entrepreneurship. Personality traits, need for achievement and locus of control are found to be associated
with entrepreneurial inclination. The psychological theory which focuses on personality factors, believes that
entrepreneurs have unique values and attitude towards work and life. Psychological attributes differentiate
entrepreneurs from non-entrepreneurs, and successful entrepreneurs from unsuccessful ones. The
psychological theories are:
i. Personality trait
ii. Need for achievement
iii. Locus of control
iv. Psychodynamic model
v. Risk taking propensity.

Personality Trait
According to the personality trait theory (2004), Personality trait is defined as stable qualities that a person
shows in most situations_. Personality traits are the enduring inborn qualities or potentials of the individual
that naturally make him/her an entrepreneur. Some of the traits which entrepreneur exhibits include vision,
enthusiastic, optimistic, flexible, open mindedness, and versatility amongst others.

Need for achievement model

The need for achievement theory was propounded by McClelland (1961). The theory explained that human
beings have a need to succeed, accomplish, excel or achieve. Entrepreneurs are usually driven by this need to
achieve and excel.
This theory states that people desire to achieve something for their inner feeling of accomplishment.

Observation/Criticisms.
This theory has been criticized as a result of the following:
i. The theory is contradictory and has limited evidence
ii. It has no direction for causality
iii. The theory is more applicable to the western culture where personal achievement is more appreciated as
compared to other culture
iv. It is limited only to business people while other people also show that behaviour.
Locus of control
Locus of control was first introduced by Julian Rotter in the 1950s. Rotter (1966) refers to Locus of Control
as an individual‘s perception about the underlying main causes of events in his/her life. Locus of control
orientation is a belief about whether the outcomes of our actions are contingent on what we do (internal
control orientation) or on events outside our personal control (external control orientation). Entrepreneur‘s
success comes from his/her own abilities and also support from outside. This theory states that there is a
degree to which one believes that he/she is in control of one‘s destiny. This can either be internal or external
locus of control.

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Internal Locus of control:
Individuals with an internal locus of control believe that they are able to control life events

External locus of control:

Individual with an external locus of control believe that life's events are the result of external factors, such as
chance, luck or fate.

Observation/Criticism
• This theory correlates to the need for achievement theory (n-ach). Individuals with internal locus of control
people are the ones who are interested in need for achievement than the externals.
• Directions of causality i.e. people tend to work harder when getting success thus have internal locus of
control.
• Culture and belief system; i.e. there are societies which their belief system make them more externals (for
example, those who believe that God will do everything for them).
• Being internal is not always the best (An individual cannot always be in charge of everything such as
weather and other peoples ‘behaviour).
• Locus of control (LOC) has negative influence on entrepreneurial inclination.
Psycho-dynamic Model
This model was propounded by Kets de Vries. The model is concerned with how people tend to be self-
employed and become successful because of their _troubled childhood_. In troubled childhood, children tend
to be abused, with low self-esteem, and lack of confidence. Therefore, an individual growing in such an
environment does have reserved wishes towards those in control.

Assessment Exercise
To be a good entrepreneur you must be:
a. patient
c. flexible
b. skilled
d. all correct
Feedback
D is the correct answer
Observations/criticism
1. This theory explains the behaviour of extreme category of people leaving out the rest.
2. Some people with similar background do not show innovative rebelliousness. Some tend to be criminals
and/or drug addicts or alcoholics.

Risk Taking
This theory contends about one‘s willingness to accept risk. People who are more likely to accept risk and
taking chances are more likely of being self-employed than those who do not take risk.

Observations/Criticism
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i. People tend to say that _they take the profit and pass the risk to someone else_.
ii. People who take risks normally take a _calculated risk_ and do not gamble.
iii. People who are success in business are moderate risk takers.
iv. Risk is not only a financial loss, but also image loss or loss of relationship with other people in the
society.

Sociological Theory of Entrepreneurship

The sociological theory is the third of the major entrepreneurship theories. Sociological enterprise focuses on
the social context. Reynolds (1991) has identified four social contexts that relates to entrepreneurial
opportunity.
i. The social networks: The social network focuses on building social relationships and bonds that promote
trust and not opportunism. In other words, the entrepreneur should not take undue advantage of people in
order to be successful.
ii. The life course stage: This involves analyzing the life situations and characteristic of individuals who has
decided to become an entrepreneur.
The experiences of people influences their thought and action which motivates them to do something
meaningful with their lives.
iii. The ethnic identification. One‘s sociological background is one of the decisive _push_ factors to become
an entrepreneur.
iv. The population ecology. Environmental factors play a vital role in the survival of businesses. The political
system, government legislation, customers, employees and competition are some of the environmental
factors that have an effect on the survival of new venture or the success of the entrepreneur.
The sociological theory of entrepreneurship embraces social culture as a driving force of entrepreneurship.
The entrepreneur becomes a role player in agreement with the role expectations of the society, and such role
expectations are based on religious beliefs, taboos, and customs. Sociological models that have received
significant empirical support are the intergeneration inheritance of enterprise culture, social marginality and
ethnicity.

Assumptions of the Sociological theory of entrepreneurship

• Entrepreneurship is likely to get a boost in a particular social culture
• Society‘s values, religious beliefs, customs, taboos influences the behaviour of individuals in a society
• The entrepreneur is a role performer according to the role expectations by the society

Social marginality model

This theory suggests that individuals who recognize a strong level of incongruence between their personal
attributes and the role they hold in society will be motivated to change or reconstruct their social reality.
Some individuals may reconstruct their reality by changing careers, employers, or result to self employment.
Marginal men are referred as individuals who are less included or integrated in their society.
Marginal men are usually not completely part of the society of their adoption as such; they are free of the
restrictions imposed by the value system governing the society. At the same time, having left their own
society, they are no longer constrained by its dominant values. This situation brings about the development
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of unconventional patterns of behaviour, which increases their propensity to become entrepreneurs.

Observations/Criticism
i. Marginality is not an adequate explanation for the over-representation of certain people in entrepreneurship
carriers e.g. Hispanics and Africans are underrepresented in entrepreneurship despite them being marginal.
ii. Aggressiveness and co-operation is an attribute in which marginal people tend to have.

Ethnicity
An ethnic origin of a person is said to influence the choice between paid employment and self-employment
as well as performance in self-employment. Evidence of over-representation of certain ethnic groups in
business carriers abounds throughout the world. The ethnic groups often quoted in the literature as being
overrepresented in entrepreneurship include Ibos in Nigeria, Kikuyus in Kenya and Chagga in Tanzania. All
of these are spread in different parts of their countries in which they over-represented in entrepreneurial
careers. To this extent, they are less integrated in the societies in which they work and therefore less likely to
be constrained by dominant values shared either by their own ethnic group or by their hosts.

Observations/Criticism
It has been found that, even members of these groups (Ibo, Kikuyu and Chagga) who have remained in their
homelands are quite active in entrepreneurship. Therefore their cultures must have influenced their
entrepreneurial behaviour rather than ethnicity.

Inter-Generational Inheritance of Enterprise Culture

This theory asserts that entrepreneurial practice is largely inherited. Consequently, offspring‘s of
entrepreneurial parents are more likely to become entrepreneurs and more successful as compared to others.
A strong grounding in business and ownership ethic at an early age is a very vital tool and powerful driving
force for children as they choose their future careers. An individual who grows up around a family that runs
and own a business is likely to benefit from the skills, accumulated experiences and networks of existing
firm. Such an individual will have better access to advice, credit, established markets and sources of inputs.

Observations/ Criticisms
Several studies supports this theory, however studies on female entrepreneurship found that most of them
were first generation entrepreneurs and none of their parents have been running their own business.
Other studies also found that there is no significant difference between entrepreneurs and managers in terms
of having self-employed parents. However this is the most supported sociological model.

Critique of Sociological Studies of Entrepreneur

Sociologists’ approach is seen to be mono-casual and fails to generalize the theory to explain the reasons all
those who belong to their chosen classes

The Entrepreneurship Culture

16
Every activity carried out by human being is surrounded by certain cultural values and ethics which depict
the behaviour of certain group or people. You can easily guess the tribe or ethnic group a particular person is
from through his/her cultural behaviour. This cultural value is also extended to different professions. Every
profession has its culture. This is not different with the entrepreneurs. Here, you will learn about the different
cultural values and behaviour of an entrepreneur.
Culture is a hot slogan among corporate and entrepreneurial companies alike. It's what everyone is striving
for, what brings on the loyalty, what attracts and keeps the really remarkable employees.
The term applies to individuals, teams, and entire organizational cultures. An entrepreneurial culture is what
many companies hope for. Certainly, in the fast moving and competitive technology industry, an
entrepreneurial culture is what most organizations should strive for.
Earlier definitions of entrepreneurship have referred to creation and running of innovative businesses by
people sharing a number of characteristics. Broadly speaking, entrepreneurship also includes innovative
positive social interventions (to be dealt with under Social Entrepreneurship in a later chapter).
Culture refers to attitudes and values which in the case of entrepreneurship may be linked with autonomy,
creativity and sense of responsibility (soft skills) and so on. It also refers to entrepreneurial knowledge and
skills and management competencies which have to be acquired (hard skills).
The hard aspects of culture apply to entrepreneurship because without them, an entrepreneurial culture would
not develop into a tangible act. Culture, is the fundamental mechanism of principles linking to a specific
community, and builds the progression of distinct personality uniqueness and motivates people in the culture
to utilize in behaviours which are not noticeable in different societies.
Our line of reasoning behind the general statement on traditionalistic culture and entrepreneurship is based
on two arguments:
First, traditionalism of the society may be helpful in dealing with the insecurities and uncertainties of
entrepreneurship by providing social supports. Due to the scarcity of alternatives and undeveloped
institutional supports, entrepreneurs in low-and-medium GDP countries have to rely much more on their
cultural support systems than entrepreneurs in high GDP countries. Thus, traditionalism of a society helps
entrepreneurship because traditional societies provide more social help and supports, in the form of family or
friends (which is congruent with high in-group collectivism and high humane orientation). Given the
availability of alternative avenues to survive and formal institutional support, the above argument does not
hold for high GDP countries.
The second line of reasoning is that in traditional societies the most promising avenue of actually escaping
traditional paths of careers may be entrepreneurship. This line of reasoning can be most clearly developed for
power distance. In societies with high power distance, a low status person will always continue to be a low
status person: The only way out may be to become an entrepreneur. Not only does this allow a person to
escape a dominant boss, entrepreneurship may also enable the person to escape the route that was
preordained by the status of one’s birth. In China, the harsh system of HuJi (Household registration)
produces a great deal of necessity driven entrepreneurs during the early age of Reform and Opening Up. In
India, it is full of examples in which an “untouchable” escaping their humble status by becoming rich
entrepreneurs as well. This approach is more likely to be successful in low-and-medium GDP countries,
because there are other avenues and resources to achieve a certain kind of independence in rich countries (for

17
example, by individually striving for further education, by moving away from a certain environment to
another one, etc.).

Entrepreneurial Culture
Culture can be defined as the mix of norms, values and beliefs that are shared by a particular community be it
a business community, a cultural (or ethnic) community, a country, or a geographical region. The concept of
“entrepreneurial culture” has existed for decades, described as an organizational culture representing and
defending entrepreneurial characteristics and attributes. These have included risk-taking, innovation, and
creativity; the elements one would expect to see among entrepreneurs as individuals. The literature suggests
that entrepreneurial culture is related to a number of positive organizational outcomes, such as generating
new business and improving firm performance.

Cultural Values
Linton (1975) describes values as a predisposition to act in a certain way.

Values of entrepreneurs:
According to Sexton & Bowman (1986), entrepreneurship is a value in itself for Americans. Different
authors suggest different values for entrepreneurs:
Kets de Vries (1984): reputation, power, status and recognition. Gordon Survey of values (1976):
independence, efficacy and a negative reaction to affiliation. There is a general presumption that a society
may have potential entrepreneurs, but only becomes entrepreneurial if it has a culture that supports
innovation and initiative.

Cultural Attitudes
According to J. M. Toulouse (1990), entrepreneurial culture is favoured by the following set of attitudes:
1. Business activities are valued.
2. Individual and collective initiatives are highly rated.
3. Determination and perseverance are desirable qualities.
4. An equilibrium between security and risk is accepted.
5. The tension between stability and change is resolved.
Therefore, in a society favouring entrepreneurship, entrepreneurs are role models who are not only
acceptable, but desirable.

Elements of Entrepreneurship Culture

• People and empowerment focused
• Value creation through innovation and change
• Attention to the basics
• Hands-on management
• Doing the right thing
• Freedom to grow and to fail
• Commitment and personal responsibility
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• Emphasis on the future and a sense of urgency

Difficulties Faced in Establishing an Entrepreneurial Culture

• Ignorance: Where people fail to capture the important role of entrepreneurship, for instance, in poverty
alleviation.
• Laziness: For example in communities who have got used to being assisted.
• Fear: Risk aversion
• Religious/Cultural constraints: Communities/societies where business and profit making are perceived as
being against cultural/religious values.
For the entrepreneurial business, its culture begins from day one. The culture is a reflection of the values the
entrepreneur brings into the business. Culture is important for an entrepreneurial venture because it is the
mechanism that institutionalizes the values of its founders. Culture serves to socialize new employees. It
helps them understand how they should treat the customers, how they should treat each other, how they
should act in their jobs, and how to generally fit in and be successful within the business.

AL 0.42 2 0.39 21 0

CHAPTER TWO
ENTREPRENEURIAL THINKING - AND ITS ROLES IN THE DEVELOPMENT OF AN
ECONOMY
THINKING LIKE AN ENTREPRENEUR
From Innovator To Entrepreneur: Where Do I Start?

Entrepreneurial Thinking vs. Becoming an Entrepreneur

A lot of people might think of Silicon Valley, venture capitalists, Facebook, and the early days of Apple
when they think of “startups,” “ventures,” or “entrepreneurs.” The truth is that there are many more ways to
bring a product out into the world.
If you’re “entrepreneurial,” it might mean that you want to make millions of dollars from your innovation—
but it doesn’t have to. It doesn’t even mean that you have to start a business. Generally, being
“entrepreneurial” means that you’re a problem-solver and innovator who is considering ways to get your

19
invention or product into the world. How much effort you put in and how you decide to obtain the resources
to make that a reality will determine your status as entrepreneur.
In this chapter, we will…….
• Define “entrepreneurship” and distinguish it from “entrepreneurial thinking”;
• Describe the mindset and behavior of an entrepreneurial thinker;
• Identify key entrepreneurial motivations that could impact your choices; and
• Introduce some ways to help you decide if you are ready to take the leap from “innovator” to
“entrepreneur”.

What is an Entrepreneur? Who is an Entrepreneurial Thinker?

First, there is a difference between being an entrepreneur and being an entrepreneurial thinker.
An entrepreneurial thinker, or someone with an entrepreneurial mindset, is someone who constantly
stretches their knowledge and experiences and embraces potentially uncomfortable situations from which
they might learn. This is a mindset, or way of seeing the world. Anyone can think entrepreneurially; some
people intuitively are more comfortable with this mindset, while others learn it over time.
An entrepreneur is “an individual who rather than working as an employee, runs a small business and
assumes all the risks and rewards of a given business venture, idea, or good or service offered for sale”
(Investopedia.com/dictionary). This is a lifestyle, or job, that someone has chosen.
Thinking like an entrepreneur can be valuable, even if you don’t decide to become one. Because
entrepreneurial thinkers are constantly learning, they use that new knowledge to be creative problem solvers.
This helps other people around them, while also helping them meet their own goals.
By combining entrepreneurial thinking and a willingness to take action, an entrepreneur does certain things
to build a strong business:
• They recognize an opportunity by observing others closely and asking questions about what could be
different or better
• They create a product or service that someone will want
• They make sure that the product or service “creates value.” This means that someone values the offering
enough to pay for it, to pay to do it themselves, or to otherwise pay to distribute it on your behalf for others’
benefit.
• They find the resources they need, even if they don’t have direct control over them. For example, they
may need to borrow money, use savings, or raise investment; they might rent or borrow equipment instead of
buying it; and they might hire an expert consultant, or offer part-ownership in the new company instead.
Most entrepreneurs aren’t just in it for the big bucks—they are passionate about seeing their idea become a
reality. Some are focused on the money, but others just want to get their innovation into the world, whether
they make money at it or not. This is still entrepreneurship: gathering the resources and turning your idea into
something that other people will value and use.

Learning Entrepreneurial Thinking

You may decide not to be an entrepreneur, but by practicing entrepreneurial thinking, you’re more likely to
be an effective employee, inventor, engineer, or designer.

20
Consider the last time you needed a big favor from someone, or the last time you suggested a new project at
your job. It is likely that you began to think like an entrepreneur:
“What resources are needed, and for how long? Who is willing to help? What’s in it for them?What problem
am I solving with my product or service? Can I design it to be even more useful?”
By identifying and building your entrepreneurial thinking skills, you become more knowledgeable, resilient,
and creative, no matter what you decide to do.
According to a study that reviewed the research about entrepreneurial mindsets
(https://venturewell.org/assessing-entrepreneurial-mindset), people with an entrepreneurial mindset have a
mix of these personality traits or habits of mind:
• Curiosity
• Risk-taking
• Innovation
• Perseverance
• Enjoy independence/limited structure
• Achievement orientation
• Ethics
• Future-focus
• Empathy/interpersonal sensitivity
• Non-conformity
• Optimism
• Leadership orientation
• Reflective
• Strong self-confidence
Many people seem to be born with these traits, but they can also be learned. Someone can cultivate an
entrepreneurial mindset when they think critically and holistically about their product, their customer, and
themselves:
• Identify stakeholders: Who will use the product? Are they the same as the people paying for it? Are there
regulators who could block its use? Who benefits and who loses if the product is widely used?
• Examine personal assumptions: What do you expect your stakeholders’ beliefs, needs, and actions to be?
What experiences have you had with these stakeholders that lead you to think your solution is the best for
them? How certain are you that you are correct?
• Then engage with stakeholders by asking questions and listening carefully for patterns. What are the
opportunities or barriers for them to use the innovation? Do they say their problem is the same as you
thought it was? Are you humble enough to be corrected? Are you resilient enough to re-work your designs to
meet their needs?

Making the Leap to Entrepreneurship

Assume that you have at least some entrepreneurial thinking skills, or at least a desire to practice them. If
you are thinking about becoming an entrepreneur, what factors could you consider so that you can jump in
with both feet, learn from the experience, and have an impact—while also minimizing your losses if it
doesn’t work out?
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Let’s apply entrepreneurial thinking skills of self examination and critical analysis to the decision to
become an entrepreneur:
Noam Wasserman, author of The Founders’ Dilemmas, studied the choices of thousands of different
entrepreneurs over the course of many years. He cites studies that showed that 60-65% of failed startups can
point to “team” or “founder” problems as a key factor. He suggests that innovators look carefully at their
motivations, personal circumstances, career circumstances, and the market circumstances before taking big
risks. He calls this “fitness to found.”
• First, by reflecting on your motivations, you can describe the type of entrepreneur you’d like to be.
• Next, by honestly looking at your capabilities and resources, you can also decide if the timing is right to
take the plunge.
When you put these factors together, you will be able to see the opportunities and risks of entrepreneurship.
They will help you decide if you’d like to be to be a full-time or part-time entrepreneur, or if
entrepreneurship is not the right path for you after all.

Examining Personal Motivations: Why am I commercializing?

Understanding your reasons for commercializing are important because they will influence how, or if, you
decide to bring your product into the world. For example, if your motives are altruistic and you want to help
people in poverty with your innovative water filter, you are likely to choose a different strategy from
someone whose goal is to get rich and have the prestige of selling their technology to Apple.
First, reflect on your vision and values for commercializing. Why are you excited about bringing your
innovation into the world? If your product is wildly successful and reaches millions of people, what’s in it for
you?
Next, honestly consider your work style, such as the level of control or amount of collaboration you
prefer. It will impact who, if anyone, you work with on this project. For example: Do you like to work solo?
Do you need a sounding-board? Are you indecisive or so decisive that you’re stubborn? Do you want to be
in charge, or do you prefer that someone else is responsible? How much structure do you like (or need)?
Then, consider your financial goals. These are your motivations for making money from the product, and
how much you’d also be willing to risk if you had to pay for all of the product development yourself. Would
you be content with making a steady income and making this your job? Are you seeking huge financial payoff
so that you can buy a private island?
Or, you are ok with breaking-even or even losing money if it means that your innovation gets to people in
need? Generally, based on your personality and goals, how much financial risk are you willing and able to
accept?

Evaluating Capabilities and Resources: Is the timing right for you?

Now that you have thought about why you are interested in commercializing, the next step is to take stock of
your capabilities and resources to see if you are equipped to actually do so. By thoughtfully assessing your
situation, you can save yourself a lot of heartache, drama, and credit card debt!

22
Examining Personal Circumstances helps you to identify the support systems you already have along with
resources you might need. Believe past entrepreneurs when they say it is difficult to focus on product
development or sales when you’re stressed out about family relationships or your ability to pay rent.

Relationship questions to consider:

• How supportive is your family or spouse? Are they accepting of how you will split your time between
spending time with them and spending time on the project?
• Are your motivations compatible with your co-founder’s (if you have one)?
• Can you find members of the local startup community who can give you advice and mentorship?
• Who—friend, spouse, parent, mentor—will help you think through tough decisions and offer
encouragement?

Logistical questions to consider:

• Are there enough savings or income to keep paying for rent, groceries, and other personal needs until your
product is profitable?
• Do you have a mortgage, credit card debt, or student loans?
• Would you be willing and able to move to a new country if that is where your customers are?
Shouldn’t we follow our passion? ...well, not if your passion sweeps you off a cliff without a parachute!

Examining Career Circumstances helps you to identify the ways that your career path may (or may not)
align with your entrepreneurial goals. Whether you want this business to be your job for the next 15 years;
whether you would like to be CEO of a large, growing organization, or maybe you don’t want to be in a
business at all, take a moment to consider whether you have the knowledge needed, or if you need to gain
industry experience before jumping into commercialization.

Career questions to consider:

• How well do you understand the end-customers and the industry that will use your product?
• If you hope to raise investment, do you have enough relevant work experience or have credentials to be
credible?
• Are you quitting a high-paying job to do this? Or, is being self-employed attractive because you currently
don’t have a job?
• Do you have the knowledge to make and distribute this product yourself? If not, can it be learned quickly
and easily?
• When you think of leadership or management skills, what are your strengths or weaknesses?

Lesson Summary: Entrepreneurial thinking is Critical Thinking

Being “entrepreneurial” simply means that you’re a problem-solver and innovator that is considering ways to
get your invention or product into the world. Because entrepreneurial thinkers are constantly learning, they
use that new knowledge to be creative problem solvers.
You can build your entrepreneurial mindset by practicing risk-taking, independence, curiosity, and empathy.
You practice those skills when you reflect on your vision and values, work-style, and financial goals. You
23
practice critical thinking, optimism, and humility when you examine your personal and career circumstances,
so you will have a better idea of if entrepreneurship is right for you.
When you put these factors together, you will be able to see the opportunities and risks of entrepreneurship.
You may notice some things that are missing for you to comfortably become an entrepreneur. This can be
disappointing. That’s OK. By identifying and building your entrepreneurial thinking skills, you become more
knowledgeable, resilient, and creative, no matter what you decide to do next.

ROLES OF ENTREPRENEURSHIP IN THE DEVELOPMENT OF AN ECONOMY

Small And Medium Scale Enterprise (SME) In Nigeria

Definition
Business segment terms are used differently in different countries. Sometimes, they are used differently in
different industries in the same country. For instance, in the United States of America, any firm from a small-
office home-office (SOHO) to a large corporation may be called a Small and Medium Scale Enterprise
(SME). In European Union, a firm with 50 to 250 employees, annual turnover of Euro 7 to 40 million, total
assets less than Euro 27 million, and not more than 25 percent ownership by a large corporation, may be
classified as a SME. The International Chamber of Commerce (ICC) on the other hand defines a SME as
having 100 to 2000 employees.

Small Scale Business

What constitutes a small business varies widely around the world. Small businesses are normally privately
owned corporations, partnerships, or sole proprietorships. What constitutes "small" in terms of government
support and tax policy varies by country and by industry, ranging from fewer than 15 employees under the
Australian Fair Work Act 2009, 50 employees according to the definition used by the European Union, and
fewer than 500 employees to qualify for many U.S. Small Business Administration programs. Small
businesses can also be classified according to other methods such as sales, assets, or net profits.
Small businesses are common in many countries, depending on the economic system in operation. Typical
examples include: convenience stores, other small shops (such as a bakery or delicatessen), hairdressers,
tradesmen, lawyers, accountants, restaurants, guest houses, photographers, small-scale manufacturing, and
online business, such as web design and programming, etc.
In the case of Nigeria, hardly do you see a clear-cut definition that distinguishes between small and medium
scale enterprises. However, the Central Bank of Nigeria in its monetary policies circular No. 22 of 1988 view
small scale industry as those enterprises with annual turnover not exceeding 500,000 naira (CBN; 1988). The
Central Bank of Nigeria defines small and medium enterprises in Nigeria according to asset base and number
of staff employed. The criteria are an asset base between N5 million and N500 million, and a staff strength
between 11 and 300 employees.
Similarly in 1990 the Federal Government of Nigeria defined small scale enterprises for the purpose of
commercial bank loans as those enterprises whose annual turnover does not exceed 500,000 thousand naira
and for merchant bank loan, those enterprises with capital investment not exceeding two million naira
(excluding the cost of land) or a maximum of 5 million naira.

24
Small scale business is characterized by size definition, labour intensive, flexibility, localized operation,
franchise businesses, retailers’ cooperative and profit motive.

Medium Scale Business

Medium-scale enterprises are defined as those with investments in machinery and equipment not exceeding 2
million naira and with not more than 100 paid employees. The Central Bank of Nigeria defines small and
medium enterprises in Nigeria according to asset base and number of staff employed. The criteria are an asset
base of between N5 million and N500 million, and a staff strength between 11 and 300 employees.
The medium scale business has virtually the same characteristics with small scale businesses. The major
differences are in the size definition, labour intensive and assets.

Large Scale Business

Simply explained, a large scale is a business which needs a large number of employees and it is managed by
stock holders. Large scale industry is that industry which requires huge capital investment and employs large
number of persons with very high output. Most of the developed countries of the world like USA, Russia,
Germany, Japan, Australia have fully developed large - scale industries.
Just like the small and medium scale businesses, there is very little definition of what makes an industry large
scale, but it is usually linked to the number of employees that work for the company and the turnover
generated each year, depending on the country. As mentioned earlier, the Central Bank of Nigeria
categorized small and medium enterprises in Nigeria as those having an asset base of between N5 million
and N500 million, and a staff strength between 11 and 300 employees. Any company exceeding these limits
is generally viewed as a large-scale one. Those are, for example, multinationals with production facilities in
many countries, or big retail chains.

Large scale industry is often referred to as an industry that produces on a large scale in order to obtain more
capital. Large scale can always be defined as a measurement. Scale means a form of measurement and when
it is referred to as large it means that you have a more than average amount on the measurement scale. Thus
any industry that is large scale will mean that products are produced at a high volume. This in turn provides a
higher capital.
Large scale company requires a huge amount of capital to be invested in the business first. It will provide
many jobs for employees in order to offer a high output. This type of company is found in places such as the
USA, Germany, Japan, Russia and Australia. All of these countries are big money makers and have large
operations producing a variety of products. This is different from a small scale business that does not require
as much capital or as many workers. Unfortunately, these companies have a lower survival rate, meaning that
they usually run for five to ten years and then end.

The Roles Of Entrepreneurship In The Development of An Economy

Most economists and academics support the notion that entrepreneurship is becoming a crucial factor in the
development and well-being of societies. Whether or not the entrepreneurial activities are practiced in factor-
driven, efficiency-driven, or innovation-driven economies (Porter et al., 2002), the ultimate results continue
to exhibit:
i) lower unemployment rates;

25
ii) increased tendency to adopt innovation; and
iii) accelerated structural changes in the economy.
Entrepreneurship offers new competition, and as such promotes improved productivity and healthy economic
competitiveness.

The following are reasons why entrepreneurs are important to the economy.
1. Employment Generation and Creation of New Businesses
Entrepreneurship development usually results in the establishment of many enterprises. These enterprises
will in turn employ many unemployed and other unproductive resources like idle capital and land.
Employment generation can curb social ills like idleness, drug addiction, insecurity, etc.
Also, path breaking offerings by entrepreneurs, in the form of new goods & services, result in new
employment, which can produce a cascading effect or virtuous circle in the economy. The stimulation of
related businesses or sectors that support the new venture add to further economic development.
For example, a few IT companies founded the Indian IT industry in the 1990s as a backend programmers'
hub. Soon the industry gathered pace in its own programmers’ domain. But more importantly, millions from
other sectors benefited from it. For instance, businesses in associated industries, like call center operations,
network maintenance companies and hardware providers flourished.
Education and training institutes nurtured a new class of IT workers offering better, high-paying
jobs. Infrastructure development organizations and even real estate companies capitalized on this growth as
workers migrated to employment hubs seeking new improved lives.

2. Wealth creation and income generation

Wealth refers to a given quantity and quality of resource under the ownership of individuals or nations, while
an income refers to a given amount of money earned by an individual or a nation due to an engagement in
any form of legitimate economy activity. Entrepreneurship development creates wealth mainly through
technological advancement occasioned by research and development (R and D). From the wealth created,
individuals or nations can generate a lot of income in a form of wages or salaries and taxes respectively.

3. Entrepreneurs Add to National Income

Entrepreneurial ventures literally generate new wealth. Existing businesses may remain confined to the scope
of existing markets and may hit the glass ceiling in terms of income. New and improved offerings, products
or technologies from entrepreneurs enable new markets to be developed and new wealth created.
Additionally, the cascading effect of increased employment and higher earnings contribute to better national
income in form of higher tax revenue and higher government spending. This revenue can be used by the
government to invest in other, struggling sectors and human capital. Although it may make a few existing
players redundant, the government can soften the blow by redirecting surplus wealth to retrain workers.

4. Entrepreneurs Also Create Social Change

Through their unique offerings of new goods and services, entrepreneurs break away from tradition and
indirectly support freedom by reducing dependence on obsolete systems and technologies. Overall, this
results in an improved quality of life, greater morale and economic freedom. For example, the water supply
26
in a water-scarce region will, at times, force people to stop working to collect water. This will impact their
business, productivity and income. Imagine an innovative, automatic, low-cost, flow-based pump that can fill
in people's home water containers automatically. Such an installation will ensure people are able to focus on
their core jobs without worrying about a basic necessity like carrying water. More time to devote to work
means economic growth.
For a more contemporary example, smart phones and their smart apps have revolutionized work and play
across the globe. Smart phones are not exclusive to rich countries or rich people either. As the growth of
China's smart phone market and its smart phone industry show, technological entrepreneurship will have
profound, long lasting impacts on the entire human race.

5. Community Development
Entrepreneurs regularly nurture entrepreneurial ventures by other like-minded individuals. They also invest
in community projects and provide financial support to local charities in the name of Corporate Social
Responsibility (CSR). This enables further development beyond their own ventures. Some famous
entrepreneurs, like Bill Gates, have used their money to finance good causes, from education to public
health. The qualities that make one an entrepreneur are the same qualities that motivate entrepreneurs to pay
it forward.

6. Creation of new technologies, products and services

Entrepreneurship development encourages creativity and innovation among individuals. The consequences of
this kind of encouragement will be the improvement and creation of new technology, products and services.
For instance, the mechanization of farming in Europe can be traced to the entrepreneurship development
witnessed during the industrial revolution of the 18th century. Availability of modern products such as
computer, Aeroplanes, GSM etc, can be attributed to entrepreneurship development of industrial countries
like U.S.A., Japan, South Africa etc.

7. Increase in productivity
One of the factors for the greater interest in entrepreneurship has been the increasing recognition of its role in
raising productivity through various forms of innovation. Entrepreneurs, through their innovation and
creativity are capable of transforming existing business sectors, and creating new sectors. They are helping to
bring about new goods and services (expanding productivity) and supplying the needs of large enterprises,
which have to rely on their operations for business success.
Productivity means the ability to produce more goods and services using minimum labour and other
resources like money and time. Entrepreneurship development increases the productivity of individuals and
the economy as a whole. This is achieved mostly through improved technology and management expertise of
entrepreneurs that are the products of entrepreneurship development process.

8. Enhancement of market competition

Due to improve technology and increase in productivity occasioned by entrepreneurship development, there
will be availability of goods and services in the economy. This kind of development usually benefits the

27
monopolistic powers of potentialities of the economy. With competition, consumers will have a variety of
alternatives and this may reduce prices and improve their satisfaction.

9. Promotion of effective domestic resource utilization

Nigeria is endowed with the abundance of human and natural resources like land, good weather, mineral
resources etc. Entrepreneurship development can help in the promotion of effective utilization of available
resources through the enhancement of entrepreneurial expertise and the subsequent establishment of many
enterprises. For instance, the establishment of many textile firms through entrepreneurship development
programmes, may result in the effective utilization of local materials like cotton. The use of local resources
in the production of goods and services will significantly reduce the country’s dependence on imports and
improve its balance of payments.

10. Economic growth and development

Economic growth simply means an increase or an expansion of the national income and the volume of goods
and services, in the economy. Economic development on the other hand, refers to the improvement of the
quality of life of the people due to the expansion of the national income and the volume of available goods
and services. Entrepreneurship development can bring about economic development through technological
advancement and the establishment of many enterprises. Entrepreneurship development can also bring about
economic development through employment and income generation.

11. Facilitate the transfer/adaptation of technology

It enables entrepreneurs to have the opportunities of developing and adapting appropriate technological
methods and provide a veritable avenue for skilled, unskilled and semi-skilled workers.

12. Ensures increased resource utilization

It helps entrepreneurs to put limited resources that might otherwise remain idle into good use. They
contribute to the mobilization of domestic savings and utilization of local resources, including human
resources.

13. Stimulates growth in those sectors which supplies it with inputs

Entrepreneurship stimulates growth in its supply market. The greater the number of entrepreneurship that
exist in the downstream‘ of a particular sector, the greater the market, hence, the greater the potential for
increased capacity utilization.

14. Reinvigorates large-scale enterprises and public enterprises

Most large scale enterprises and public sector enterprises depend on the activities of small and medium scale
enterprises (SMEs) to supply them with various raw materials and other component parts and also to assist
them in the distribution of the finished goods to the final consumers. Entrepreneurship has made it possible
to be able to transform the public sector into a viable, market oriented and profitable organization.

28
15. Encourages and sustains economic dynamism that enables an economy to adjust successfully in a
rapidly changing global economy
As a result of the dynamic nature of the environment, small and medium scale enterprises have no choice
than to respond and adapt to environmental changes from time to time.

CHAPTER THREE
THE CONCEPT OF INNOVATION
The means that was found most viable in remembering communication and policies is through
documentation. Documentation started through means of writing. Again writing started by writing on sand
with bear fingers. Today, computer is the popular means of documentation. Before computer, there was
qwerty typewriter, electric typewriter and even the computer has passed through stages. This process could
be described as innovative process because the typewriter was an older innovation on documentation but
today computer is the new innovation. This chapter will take you through the various stages of innovation.
To have a good startup, you must be innovative.
Innovation is the process of translating an idea or invention into a good or service that creates value or for
which customers will pay. Innovation involves introducing something new, such as a business model,
product, idea, or service, entrepreneurship focuses on turning a great idea into a viable business opportunity.
It is the starting point for entrepreneurship, as it involves the creation of new and valuable ideas.
To be called an innovation, an idea must be replicable at an economical cost and must satisfy a specific need.
Innovation involves deliberate application of information, imagination and initiative in deriving greater or
different values from resources, and includes all processes by which new ideas are generated and converted

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into useful products. In business, innovation often results when ideas are applied by the company in order to
further satisfy the needs and expectations of the customers.
In a social context, innovation helps create new methods for alliance creation, joint venturing, flexible work
hours, and creation of buyers' purchasing power. Innovations are divided into two broad categories:
Evolutionary innovations (continuous or dynamic evolutionary innovation) that are brought about by many
incremental advances in technology or processes and
Revolutionary innovations (also called discontinuous innovations) which are often disruptive and new.
Innovation is synonymous with risk-taking and organizations that create revolutionary products or
technologies take on the greatest risk because they create new markets. Imitators take less risk because they
will start with an innovator's product and take a more effective approach.
Types of Innovation
It is remarkable how many people are under the false assumption that companies are either innovative or not.
This is a very polarizing and simplistic perspective that does not take into account the different types of
innovations that companies can and do pursue. For this post, let’s break down innovation into two
dimensions: Technology and Market, which gives us the following 4 types of innovation:

Incremental Innovation
Incremental Innovation is the most common form of innovation. It utilizes your existing technology and
increases value to the customer (features, design changes, etc.) within your existing market. Almost all
companies engage in incremental innovation in one form or another. Examples include adding new features
to existing products or services or even removing features (value through simplification). Even small updates
to user experience can add value.

Disruptive Innovation
Disruptive innovation, also known as stealth innovation, involves applying new technology or processes to
your company’s current market. It is stealthy in nature since newer tech will often be inferior to existing
market technology. This newer technology is often more expensive, has fewer features, is harder to use, and
is not as aesthetically pleasing. It is only after a few iterations that the newer tech surpasses the old and
disrupts all existing companies. By then, it might be too late for the established companies to quickly
compete with the newer technology.
There are quite a few examples of disruptive innovation, one of the more prominent being Apple’s iPhone
disruption of the mobile phone market. Prior to the iPhone, most popular phones relied on buttons, keypads

30
or scroll wheels for user input. The iPhone was the result of a technological movement that was years in
making, mostly iterated by Palm Treo phones and personal digital assistants (PDAs). Frequently you will
find that it is not the first mover who ends up disrupting the existing market. In order to disrupt the mobile
phone market, Apple had to cobble together an amazing touch screen that had a simple to use interface, and
provide users access to a large assortment of built-in and third party mobile applications.

Architectural Innovation
Architectural innovation is simply taking the lessons, skills and overall technology and applying them within
a different market. This innovation is amazing at increasing new customers as long as the new market is
receptive. Most of the time, the risk involved in architectural innovation is low due to the reliance and
reintroduction of proven technology. Though most of the time it requires tweaking to match the requirements
of the new market.
In 1966, NASA’s Ames Research Center attempted to improve the safety of aircraft cushions. They
succeeded by creating a new type of foam, which reacts to the pressure applied to it, yet magically forms
back to its original shape.
Originally it was commercially marketed as medical equipment table pads and sports equipment, before
having larger success as use in mattresses. This “slow spring back foam” technology falls under architectural
innovation. It is commonly known as memory foam.

Radical innovation
Radical innovation is what we think of mostly when considering innovation. It gives birth to new industries
(or swallows existing ones) and involves creating revolutionary technology. The airplane, for example, was
not the first mode of transportation, but it is revolutionary as it allowed commercialized air travel to develop
and prosper.
The four different types of innovation mentioned here – Incremental, Disruptive, Architectural and Radical –
help illustrate the various ways that companies can innovate. There are more ways to innovate than these
four. The important thing is to find the type(s) that suit your company and turn those into success.

Assessment Exercises
1. How does innovation differ from invention?
2. Differentiate the different types of innovations

Innovation
Innovation and its benefits Zimmerer, Scarborough, and Wilson (2008) define innovation as the specific
instrument of entrepreneurs, the means by which they exploit change as an opportunity for a different
business or a different service.
As a dimension of corporate entrepreneurship, innovation is a firm’s commitment to creating and introducing
products, production processes, and organisational systems (Covin and Slevin, 1991; Lumpkin and Dess,
1996; Zahra, 1996).

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Innovation is the process that provides added value and novelty to the firm and its suppliers and customers
through the development of new procedures, solutions, products and services as well as new methods of
commercialisation (Shaw, O’Loughlin and McFadzean, 2005).
According to Knight (1997) and Kreiser, Marino and Weaver (2002) in Scheepers (2007), innovativeness
refers to the capability, capacity and willingness of an enterprise to support creativity and experimentation to
solve recurring customer problems. Innovativeness entails creativity and experimentation that result in new
products, new services, or improved technological processes (Dess and Lumpkin, 2005). It is arguably the
most essential component of corporate entrepreneurship (Fitzsimmons, Douglas, Antoncic, and Hisrich
(2005).
Innovation is the outcome of the firm’s effective development and use of new technologies and/or knowledge
about market opportunities (Ireland, Hitt, Camp, and Sexton, 2001).
For a firm to be innovative, it needs to have a free-wheeling, “boundary less” brainstorming culture to
engender creative ideas (Khandwalla and Mehta, 2004).
It also requires that organisations depart from existing technologies and practices and venture beyond the
current state (Dess and Lumpkin, 2005). Its attribute describes a firm’s imperative to initiate newness with
added value (Aloulou and Fayolle, 2005).
Innovation can lead to competitive advantage and provide a basis for firm growth (Hitt, Hoskisson, and Kim,
1997). Innovative firms develop strong, positive market reputations. They engage in opportunity exploration
which includes behaviour such as looking for ways to improve current products, services or processes, or
trying to think about current work processes, products or services in alternative ways (De Jong and
Wennekers, 2008). Innovative firms also adapt to market changes and exploit market or opportunity gaps.
Sustained innovation moreover distances entrepreneurial firms from their industry rivals, and thus increases
financial returns (Bhardwaj, Sushil and Momaya, 2007).

Forms of Innovations
According to Hamel (1997) in Dess and Lumpkin (2005), innovations come in different forms:
Technological innovativeness primarily comprises research and engineering efforts aimed at developing new
products and processes. Products market innovativeness consists of market research, products design, and
innovations in advertising and promotion. Administrative innovativeness is concerned with novelty in
management systems, control techniques, and organisational structure. Innovation can also be classified in
terms of whether it is incremental, modular, architectural or radical (Henderson and Clark, 1990 in Hager,
2006):
Incremental Innovation: This comprises relatively small modifications to preexisting solutions (Scheepers,
2007). In the view of Henderson and Clark (1990) in Hager (2006), this type of innovation improves and
extends an established design. Improvement takes place in individual components, but the basic core design
concepts and the linkage between them remain the same. An example is faster spinning hard drives.
Modular Innovation: This kind of innovation changes the core design of one or more components but does
not change the entire product architecture. This type of innovation requires new knowledge for one or more
components, but the architectural knowledge remains the same. A good example is the digital phone which
replaced the analogue phone, without changing the phone itself (Henderson and Clark, 1990 in Hager, 2006).

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Architectural Innovation: The essence of this type of innovation is the reconfiguration of an established
system to link together components and parts in a new way (Henderson and Clark, 1990 in Hager, 2006).
According to the authors, architectural innovation does not mean that the components remain unchanged but
they are changed in a manner that there are new ways of linkage between the components. The change is so
small that the core concept behind the changed component is the same, and the associated scientific and
engineering knowledge remain the same. An example is the technologies where architectural innovations
reduced the size of the hard drives from 14-inches diameter disks to diameter of 3.5-inches, and from 2.5-
inches to 1.8-inches.
Radical Innovation: This type of innovation brings about a new dominant design and consequently, a new
set of core design concepts embodied in components that are linked together in a new architecture (Hager,
2006). Radical innovation leads to new solutions that address customer needs (Morris and Kuratko, 2002 in
Scheepers, 2007). In the view of O’Connor and Ayers (2005) in Lassen (2007), radical innovation is the
commercialisation of products or technologies that have a strong impact on the market, in terms of offering
wholly new benefits; and the firms, in terms of generating new business. Moore (2004) also gives the
following taxonomy of innovation:
Disruptive Innovation: Gets a great deal of attention, particularly in the press, because markets appear as if
from nowhere, creating massive new sources of wealth. It tends to have its roots in technological
discontinuities, such as the one that enabled Motorola’s rise to prominence with the first generation of cell
phones.
Application Innovation: Takes existing technologies into new markets to serve new purposes.
Product Innovation: Takes established offers in established markets to the next level, as when Intel releases
a new processor or Toyota a new car. The focus can be on performance increase, cost reduction, usability
improvement or any other product enhancement.
Process Innovation: Makes processes for established offers in established markets more effective or
efficient. Examples include Dell’s streamlining of its PC supply chain and order fulfillment systems.
Experiential Innovation: Makes surface modifications that improve customer’s experience of established
products or processes. These can take the form of delighters (“You’ve got mail!”), satisfiers (superior line
management at Disneyland), or reassures (package tracking from FedEx).
Marketing Innovation: Improves customer-touching processes be they marketing communications or
consumer transactions
Business Model Innovation: Reframes an established value proposition to the customer or a company’s
established role in the value chain or both. Examples include IBM’s shift to on demand computing, and
Apple’s expansion into consumer retailing.
Structural Innovation: Capitalizes on disruption to restructure industry relationships. Innovators like banks,
for example, that have used the deregulation of financial services to consumers under one umbrella.

Phases In Successful Innovation

Desouza, Dombrowski, Awazu, Baloh, Papagari, Kim, and Jha, (2007) identify the following five essential
phases of successful innovation:
Idea Generation and Mobilisation. This phase is the starting point for new ideas. Successful idea generation
should be stimulated by the pressure to compete and by the freedom to explore. Once a new idea is
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generated, it is conveyed to the mobilization phase, wherein the idea travels to a different physical or logical
location. Because most inventors are not also marketers, a new idea often needs someone other than its
originator to move it along. This phase is crucially important to the progression of a new idea, and omitting it
can delay or even sabotage the innovation process (Desouza et al., 2007).
Advocacy and Screening. According to the authors, this phase is the period for weighing an idea’s costs and
benefits. Advocacy and screening have to take place simultaneously to weed out ideas that lack potential
without allowing
stakeholders to reject ideas impulsively solely on the basis of their novelty. Firms will have more success
when the evaluation process is transparent and standardized, because employees feel more comfortable
contributing when they could anticipate how their ideas would be judged.
Experimentation. The experimentation phase assesses the sustainability of ideas for a particular firm at a
particular time – and in a particular environment. In this phase, it is essential to determine who the customer
will be and what he or she will use the innovation for. With that in mind, the firm might discover that
although someone has a great idea, it is ahead of its time or just not right for a particular market. However, it
is important not to interpret these kinds of discoveries as failures – they could actually be the catalysts of new
and better ideas (Desouza et al., (2007).
Commercialisation. In this phase, the firm should look to its customers to verify that innovation actually
solves their problems and then should analyze the costs and benefits of rolling out the innovation. According
to the Desouza et al (2007), an invention is only considered an innovation once it has been commercialised.
Therefore, the commercialisation phase is a significant one similar to advocacy in that it takes the right
people to progress the idea to the next developmental phase.
Diffusion and Implementation. According to the authors, diffusion is the process of gaining final, company
overall acceptance of an innovation.
Implementation is the process of setting up the structures, maintenance and resources needed to produce it.
According to Loewe and Dominiquini (2006), good innovation processes share the following characteristics:
Allow divergence and exploration at the front end. This helps ensure that the new ideas generated are not
simply a repeat of what has been done before. Synthesize individual ideas into bigger platforms before
selecting individual ideas to develop further.
This enables the company to avoid "gambling the farm" on one idea without first learning about the larger
opportunities at hand.

How can one be innovative?

One can become innovative through continuous searching for better ways of doing things, it is the attitude
that challenge status quo.
According to Holt (1992), the creative process comprises the following five stages as shown below:
1. Idea germination
Exactly how an idea is germinated is a mystery; it is not something that can be examined under the
microscope. For most entrepreneurs, ideas begin with interest in a subject or curiosity about finding a
solution to a particular problem.
2. Preparation

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Once a seed of curiosity has taken form as a focused idea, creative people embark on a conscious search for
answers. If it is a problem they are trying to solve, then they begin an intellectual journey, seeking
information about the problem and how others have tried to resolve it. Inventors will set up laboratory
experiments, designers will begin engineering new product ideas, and marketers will study consumer buying
behaviour.
3. Incubation
The idea, once seeded and given substance through preparation, is put on a back burner, the subconscious
mind is allowed time to assimilate information. Incubation is a stage of ‘mulling it over’. When an individual
has consciously worked to resolve a problem without success, allowing it to incubate in the subconscious
will often lead to a resolution.
4. Illumination
Illumination occurs when the idea surfaces as a realistic creation. This stage is critical for entrepreneurs
because ideas, by themselves, have little meaning. Reaching the illumination stage separates daydreamers
and tinkerers from creative people who find a way to transmute values.
5. Verification
An idea once illuminated in the mind of an individual still has little meaning until verified as realistic and
useful. Thus, verification is the development stage of refining knowledge into application.

In summary:
Incubation: Subconscious assimilation of information fantasizing
Preparation: Conscious search for knowledge rationalization
Idea Germination: The seeding stage of a new idea recognition
Illumination: Recognition of idea as being feasible realization
Verification: Application or test to prove idea has value validation

Factors that encourage creativity

• Knowledge of noble idea generation
• Thinking,
• Personal motivation,
• Environment and
• Determination to be unique.

Feedback
1. Invention can be defined as the creation of a product or introduction of a process for the first time.
Innovation, on the other hand, occurs if someone improves on or makes a significant contribution to an
existing product, process or service.
2. Remarkable innovations combine different types!
a. Incremental innovation.
b. Process innovation.
c. Red ocean innovation.
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d. Service innovation.
e. Business model innovation.
f. Sustainable innovation.
g. Frugal innovation.
h. Blue ocean innovation

Innovation Theory Of Entrepreneurship

This will guide you on innovative theory for entrepreneur. As you read through the text, think of how you
can apply what you read in setting up your business. Everyone has innovative idea. This is because everyone
experience one challenge or the order. Idea comes while trying to look for ways to resolve the challenge.
The innovation theory was first advocated by Joseph Schumpeter in 1934. A dynamic theory of
entrepreneurship was first advocated by Schumpeter (1949) who considered entrepreneurship as the catalyst
that disrupts the stationary circular flow of the economy and thereby initiates and sustains the process of
development.
Schumpeter introduced the concept of innovation as key factor in entrepreneurship in addition to assuming
risks and organizing factors of production. Schumpeter defined entrepreneurship as _a creative activity_. An
innovator who brings new products or services into economy is given the status of an entrepreneur. He
regards innovation as a tool of an entrepreneur. The entrepreneur is also viewed as the *engine of growth‘
which sees the opportunity for introducing new products, new markets, new sources of supply, new forms of
industrial organization or for the development of newly discovered resources.

Functions of Innovation
The concept of innovation and its corollary development embraces five functions:
i. The introduction of a new product with which consumers are not yet familiar or introduction of a new
quality of an existing product,
ii. The introduction of new method of production that is not yet tested by experience in the branch of
manufacture concerned, which need by no means be founded upon a discovery scientifically new and can
also exist in a new way of handling a commodity commercially,
iii. The opening of new market that is a market on to which the particular branch of manufacturer of the
country in question has not previously entered, whether or not this market has existed before,
iv. Conquest of a new source of supply of raw material and
v. The carrying out of the new organization of any industry.
Schumpeter is the first major theorist to put the human agent at the centre of the process of economic
development. He is very explicit about the economic function of the entrepreneur. The entrepreneur is the
prime mover in economic development; his function, to innovate or carry out new combinations.
Schumpeter makes a distinction between an innovator and an inventor. An inventor discovers new methods
and new materials. On the contrary, an innovator is one who utilizes or applies inventions and discoveries in
order to make new combinations. An inventor is concerned with his technical work of invention whereas an
entrepreneur converts the technical work into economic performance. An innovator is more than an inventor
because he does not only originate as the inventor does but goes much farther in exploiting the invention
36
commercially.
Wilken added the concept of the changes that an entrepreneur brings which includes:
i. Expansion of goods, products.
ii. Productivity of factors of production such as finance, labour, material.
iii. Innovation in production such as, technology, process changes and increase in human resource
productivity.
iv. Innovation in marketing area such as the composition of the market, size of the market and new markets.
According to Schumpeter, entrepreneurs are individuals motivated by a will for power; their special
characteristic being an inherent capacity to select correct answers, energy, will and mind to overcome fixed
talents of thoughts, and a capacity to withstand social opposition.
The entrepreneur has been the major mover for economic development process.

Criticism of Innovation Theory

i. The theory seems one-sided as it puts too much emphasis on innovative functions.
ii. It ignores the risk taking and organizing aspects of entrepreneurship. An entrepreneur has not only to
innovate but also assemble the resources and put them to optimum use.
iii. It ignored the risk-taking function, which is equally important. When an entrepreneur develops a new
combination of factors of production, there is enough risk involved.

Observations from the Innovation Theory

The theory supports the _enterprising spirit_ of entrepreneur to innovate. It is the act that endows resources
with a new capacity to create wealth. Drucker says, innovation creates a resource and it is endowed with
economic value.
Schumpeter‘s views are particularly applicable to developing countries where innovations need to be
encouraged.
The innovation theory was propounded by Joseph Schumpeter who is regarded as father of innovation. The
innovation theory looks at concept of innovation as key factor in entrepreneurship in addition to assuming
risks and organizing factors of production. The functions of innovation theory were described and criticism
of the theory was also discussed as one of it is that it ignored the risk taking function. Observations from the
theory were taken into cognizance.
• Financing Innovation and New Ventures
• Change management
• Technical Change and management of Innovation

Assessment Exercise
In what ways can an Entrepreneur apply the theories of innovation in managing business?
The following ways may be considered:
i. The introduction of a new product with which consumers are not yet familiar or introduction of a new
quality of an existing product,
37
ii. The introduction of new method of production that is not yet tested by experience in the branch of
manufacture concerned, which need by no means be founded upon a discovery scientifically new and can
also exist in a new way of handling a commodity commercially,
iii. The opening of new market that is a market, on to which the particular branch of manufacturer of the
country in question has not previously entered, whether or not this market has existed before,
iv. Conquest of a new source of supply of raw material and
v. The carrying out of the new organization of any industry.

Financing Innovation and New Ventures

Financing activities are transactions with creditors or investors used to fund either company operations or
expansions. These transactions are the third set of cash activities displayed on the statement of cash flows.
Financing innovation is a dynamic field. Many of the approaches that we may take for granted today, such as
equity financing and venture capital, were once novel and untested. As time goes on, new business models
are evolving to meet the challenges of developing.

Sources of Financing for Innovation and New Business Venture

Some important sources of funding for innovation activities include:
• Personal funds.
• Government grants.
• Family and friends.
• Debt.
• Equity.
• Business angels.
• Venture capital.
• Crowd funding.
Many entrepreneurs struggle to find the capital to start a new business. There are many sources to consider,
so it is important for an entrepreneur to fully explore all financing options. He also should apply for funds
from a wide variety of sources. Personal savings: Experts agree that the best source of capital for any new
business is the entrepreneur‘s own money. It is easy to use, quick to access, has no payback terms, and
requires no transfer of equity (ownership).
Also, it demonstrates to potential investors that the entrepreneur is willing to risk his own funds and will
persevere during hard times. Friends and family: These people believe in the entrepreneur, and they are the
second easiest source of funds to access. They do not usually require the paperwork that other lenders
require.
However, these funds should be documented and treated like loans. Neither part ownership nor a decision-
making position should be given to these lenders, unless they have expertise to provide. The main
disadvantage of these funds is that, if the business fails and money goes lost, a valuable relationship may be
jeopardized.
Credit cards: The entrepreneur‘s personal credit cards are an easy source of funds to access, especially for
acquiring business equipment such as photocopiers, personal computers, and printers. These items can
usually be obtained with little or no money paid up front and with small monthly payments. The main
38
disadvantage is the high rate of interest charged on credit card balances that are not paid off in full each
month.
Banks: Banks are very conservative lenders. As successful entrepreneur Phil Holland explains,
- Many prospective business owners are disappointed to learn that banks do not make loans to startup
businesses unless there are outside assets to pledge against borrowing._ many entrepreneurs simply do not
have enough assets to get a secured loan from a lending institution.
However, if an entrepreneur has money in a bank savings account, she can usually borrow against that
money. If an entrepreneur has good credit, it is also relatively easy to get a personal loan from a bank. These
loans tend to be short term and not as large as business loans.
Venture investors: This is a major source of funding for startups that have a strong potential for growth.
However, venture investors insist on retaining part ownership in new businesses that they fund. Formal
institutional venture funds are usually limited • partnerships in which passive limited partners, such as
retirement funds, supply most of the money.
These funds have large amounts of money to invest. How- ever, the process of obtaining venture capital is
very slow? Several books, such as Galante‘s Venture Capital & Private Equity Directory, give detailed
information on these funds. Corporate venture funds are large corporations • with funds for investing in new
ventures. These often provide technical and management expertise in addition to large monetary investments.
How- ever, these funds are slow to access compared to other sources of funds. Also, they often seek to gain
control of new businesses. Angel investors tend to be successful entrepreneurs • who have capital that they
are willing to risk. They often insist on being active advisers to businesses they support. Angel funds are
quicker to access than corporate venture funds, and they are more likely to be invested in a startup operation.
But they may make smaller individual investments and have fewer contacts in the banking community.
Government programs: Many national and regional governments offer programs to encourage small- and
medium-sized businesses.
In the United States, the Small Business Administration (SBA) assists small firms by acting as a guarantor of
loans made by private institutions for borrowers who may not otherwise qualify for a commercial loan.

Long-term financing sources can be in form of any of the under listed:

• Share Capital or Equity Shares.
• Preference Capital or Preference Shares.
• Retained Earnings or Internal Accruals.
• Debenture / Bonds.
• Term Loans from Financial Institutes, Government, and Commercial Banks.
• Venture Funding.
• Asset Securitization.

Innovative financing
This refers to a range of non-traditional mechanisms to raise additional funds for development aid through
"innovative" projects such as micro-contributions, taxes, public-private partnerships and market-based
financial transactions. How do entrepreneurs finance their new ventures? The most successful entrepreneurs
turn to the venture capital industry. The entrepreneur brings fresh ideas, management skills, and personal
39
commitment while the venture capitalists (VCs) bring cash. Venture capital is provided by professionals who
invest alongside management in young, rapidly growing companies that have the potential to develop into
significant ventures.
The venture capital industry in the U.S. has grown to a size that could only be imagined in years past. The
venture capital contribution to U.S. jobs, economic growth, and technological progress has climbed steadily
over the last few years.

Questions of how to raise money, when to raise money, and how to work with venture capitalists are frequent
topics of concern with entrepreneurs today. This section will describe some common sources of capital,
provide information about the venture capital market, and offer guidance in approaching the venture
capitalists and presenting the business plan.
Growth is an unavoidable fact of successful businesses. Growth due to an increase in sales requires product;
in turn, additional product requires inputs like labor, inventory, raw materials, plant, property, and
equipment. Since internally generated funds typically won’t meet all expansion needs, most startups depend
on outside capital to finance growth. In some instances, the entrepreneur may find that the new business does
not begin to earn a profit until 2 or 3 years down the road. The entrepreneur therefore revolves around
securing the necessary capital to pioneer a new venture through the “financial Death Valley” and sustain
the desired growth rate of the venture.
Financing the fast-growing venture tends be a time-consuming, complex task to the entrepreneur—who is
most likely working heads-downs on the daily needs. Typically, financing a new venture employs a
combination of debt and equity financing. Debt is presumed to be lower-risk capital because it is repaid
according to a set schedule of principal and interest. Debt financing involves an interest-bearing instrument
usually called a loan. The payment is only indirectly related to the sales and profits of the new venture and
typically, debt financing (also known as asset-based financing) requires some asset—for instance a vehicle,
house, or other property/land—that will be used as collateral. Generally, lenders will allow ventures to
borrow against their expected ability to generate the cash to repay the loan.
The entrepreneur with a new idea for launching a business, and when turned down by a bank, will often turn
to a wealthy individual or several friends to back the business venture. In the U.S. these “angel investors”
commit some $30-60 billion per year in small businesses. But before receiving such “angelic support” many
questions must first be answered. Certain critical elements must be present in a business plan before the
venture will receive financing. And those who wish to be successful in dealing with outside investors should
spend the time and effort to understand the objectives of their potential investors. Academic research on this
topic has shown that in all too many cases startups don’t get financed because the entrepreneur is not familiar
with an investor’s industry preferences, requirements, and specialization; risks, protection against losses;
participation in management; or with the investor’s “harvesting options” or “exit goals.”
A good relationship between the entrepreneur and the venture capitalist is a vital element in a successful
venture. Understanding this partnership is a necessary first step for the prospective entrepreneur. The
entrepreneur must be prepared to compete successfully for the venture capitalists’ dollars. It will be the task
of the entrepreneur to select and approach the VC, most often with a complete business plan and strategic
focus that supports an oral presentation. The presentation must demonstrate management’s competence in
knowing the following:
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(1) earning power/operating cash flows of the venture,
(2) the potential terminal value of the business at exiting,
(3) the value of the business model underlying the venture,
(4) industry competitors and competitive advantages, and
(5) how the management team intends to assess risks and create contingency plans.
When meeting with VCs, the entrepreneurs need to be well prepared and “know their business numbers
cold.” Few analytical terms are more widely used and, at the same time, more poorly understood than the
term cash flow. The cash
flowing into a business venture is not the same as accounting profit. It is important for entrepreneurs to make
weekly and monthly projections of cash received and disbursed. Such financial forecasts that relate to the
future are called financial pro forma. This forecasting procedure is very difficult and perhaps that is why
most entrepreneurs avoid it. As Mark Twain once said: “The art of prophecy is very difficult, especially with
respect to the future.”
Financial management is the cornerstone of the scorekeeping system for these investing and profit-making
activities. A cash flow statement can help the entrepreneur come up with realistic estimates, determine
financial requirements, understand the financial strategy framework, and craft a fund-raising strategy.
The cash flow statement, also known as the statement of cash flows, is one of the most important financial
planning tools that a startup venture can prepare for the business plan. It is used to provide the entrepreneur
with a clearer insight into the venture’s cash management strategy: where funds come from and how they
are disbursed; the amount of cash available; the amount of additional funds needed (AFN) to grow; and the
general financial well-being of the new venture.

Change Management
Change management is the process, tools and techniques to manage the people side of change to achieve the
required business outcome. Change management incorporates the organizational tools that can be utilized to
help individuals make successful personal transitions resulting in the adoption and realization of change.
When your organization undertakes projects or initiatives to improve performance, seize opportunities or
address key issues, they often require changes; changes to processes, job roles, organizational structures and
types and uses of technology. However, it is actually the employees of your organization who have to
ultimately change how they do their jobs. If these individuals are unsuccessful in their personal transitions, if
they don’t embrace and learn a new way of working, the initiative will fail. If employees embrace and adopt
changes required by the initiative, it will deliver the expected results.
Change management is the discipline that guides how we prepare, equip and support individuals to
successfully adopt change in order to drive organizational success and outcomes. While all changes are
unique and all individuals are unique, decades of research shows there are actions we can take to influence
people in their individual transitions. Change management provides a structured approach for supporting the
individuals in your organization to move from their own current states to their own future states.

Three Levels of Change Management

Individual Change Management

41
While it is the natural psychological and physiological reaction of humans to resist change, we are actually
quite resilient creatures. When supported through times of change, we can be wonderfully adaptive and
successful.
Individual change management requires understanding how people experience change and what they need to
change successfully. It also requires knowing what will help people make a successful transition: what
messages do people need to hear when and from whom, when the optimal time to teach someone a new skill
is, how to coach people to demonstrate new behaviours, and what makes changes “stick” in someone’s work.
Individual change management draws on disciplines like psychology and neuroscience to apply actionable
frameworks to individual change.

Organizational/Initiative Change Management

While change happens at the individual level, it is often impossible for a project team to manage change on a
person-by-person basis. Organizational or initiative change management provides us with the steps and
actions to take at the project level to support the hundreds or thousands of individuals who are impacted by a
project.
Organizational change management involves first identifying the groups and people who will need to change
as the result of the project, and in what ways they will need to change. Organizational change management
then involves creating a customized plan for ensuring impacted employees receive the awareness, leadership,
coaching, and training they need in order to change successfully. Driving successful individual transitions
should be the central focus of the activities in organizational change management.
Organizational change management is complementary to your project management. Project management
ensures your project’s solution is designed, developed and delivered, while change management ensures your
project’s solution is effectively embraced, adopted and used.

Enterprise Change Management Capability

Enterprise change management is an organizational core competency that provides competitive
differentiation and the ability to effectively adapt to the ever-changing world. An enterprise change
management capability means effective change management is embedded into your organization’s roles,
structures, processes, projects and leadership competencies. Change management processes are consistently
and effectively applied to initiatives, leaders have the skills to guide their teams through change, and
employees know what to ask for in order to be successful.
The end result of an enterprise change management capability is that individuals embrace change more
quickly and effectively, and organizations are able to respond quickly to market changes, embrace strategic
initiatives, and adopt new technology more quickly and with less productivity impact. This capability does
not happen by chance, however, and requires a strategic approach to embed change management across an
organization It has been determined that more successful change managers are those who have a clear,
personal understanding of the pressures on them and their organisations, as well as a well-developed
rationale for what they are attempting to achieve and the likely effect of their actions.

The nature of change and innovation.

42
Not all changes are of the same order of magnitude. In particular, it is the framing of change, and people’s
sense-making of it, that comes into play in building effective change and facilitating effective change visions.

Driving change.
The approaches to organisational change that managers need to take into account when planning for or
undertaking technology-induced changes. It builds on understanding of what it is that forces an organisation
to change, by considering different analytical frameworks for change, followed by a discussion of how
change affects innovation and innovation outcomes.

Diagnosing change.
This considers how to better diagnose change situations in order to select the appropriate approach to change
and Innovation. There are a range of diagnostic instruments and views relevant to managing change. We
consider questions and answers of how organisations change, bringing together the process aspects of
change.

Skills for communicating change.

We shall consider the process of building communication strategy and then communicating successful
change as we proceed.
Organisations implementing change need to signal this intention to change and create sensitivity to and a
sense of urgency for the need to change. Highlighting different communication strategies, consider ways to
increase the awareness of change by those involved with the implementation of change strategy, new
technology and innovations.

Implementing change: getting ready for change and innovation. Next is to begin examining the
implementation of change. Acknowledge the importance of learning from past change processes and
managing and deriving value from the organisational knowledge. We look at two ways of segmenting our
internal market for the change. We also examine several characteristics of innovations and new technologies
that have been shown to affect the likelihood of their being adopted. We also Analyse the impact of
organisational culture and organisational structure.
Implementing change: persuasion, decision, commitment. In the past, change professionals and managers
have assumed that people will rationally choose to adopt innovations and new technology to replace
outmoded systems and technologies. This is often proved to be a false assumption. Here, we look at the areas
of commitment, compliance and resistance; stress, pacing and celebration. Finally, we consider some of the
most powerful persuaders available: reward and recognition systems.
Implementing change: roll-out and project management. In this we address the basics of the technical side of
the process of roll-out. We cover basics of classic project management, and discuss several system
conversion strategies and the strengths and weaknesses of each.

Measuring and monitoring change.

The role of the change agent.

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We consider how to manage the process of changing an organisation. Specifically, we refer to the role of the
change agent. With this focus, we establish that this management role demands an understanding of the
impact of changes on the people affected by them. Management of Innovation and Technical Change
Program, quality assurance.

CHAPTER FOUR
ENTERPRISE FORMATION, PARTNERSHIP, AND NETWORKING

Sources of Business Opportunities in Nigeria

There is usually confusion that sets in when developing a business idea. You want to know which business
idea would sell and the one that will not. To work on an idea requires evaluation of the available
opportunities.

Concept of Business Opportunity

A business opportunity involves sale or lease of any product, service, equipment, etc. that will enable the
purchaser-licensee to begin a business. Nigeria is fast developing and there is a huge need for innovative
products. If you are resident in Nigeria, kindly reflect on the position of Nigeria ten years back and compare
it with her present state; you will agree with me that there is a huge change.

Ways to identify more business opportunities

1. Listen to your potential clients and past leads. When you're targeting potential customers listen to their
needs, wants, challenges and frustrations with your industry. ...
2. Listen to your customers. ...
3. Look at your competitors. ...
4. Look at industry trends and insights
To be successful entrepreneurs we need to be continually innovating and looking for opportunities to grow
our business. But how do you find new opportunities to take your business to new markets and growth
levels? Here are four ways to identify more business opportunities.

1. Listen to your potential clients and past leads

44
When you’re targeting potential customers listen to their needs, wants, challenges and frustrations with your
industry. Have they used similar products and services before? What did they like/dislike? Why did they
come to you?
What are their objections with your products or services? This will help you to find opportunities to develop
more tailored products and services, hone your target market and identify and overcome common objections.

2. Listen to your customers

When you’re talking to your customers listen to what they saying about your industry, products and services.
What are their frequently asked questions?
Experiences? Frustrations? Feedback and complaints? This valuable customer information will help you
identify key business opportunities to expand and develop your current products and services.

3. Look at your competitors

Do a little competitive analysis (don’t let it lead to competitive paralysis though!) to see what they doing and
more importantly not doing? Where are they falling down? What are they doing right? What makes
customers go to them over you?
Analyzing your competitors will help you identify key business opportunities to expand your market reach
and develop your products and services.

4. Look at industry trends and insights

Subscribe to industry publications, join relevant associations, set Google alerts for key industry terms and
news and follow other industry experts on social media. Absorb yourself in your industry and continually
educate yourself on the latest techniques and trends.

How do you evaluate a business opportunity?

Writing a business plan and weighing all relevant factors can help you better plan your entry into new
areas
1. Evaluate your market.
2. Study the business' financials from the past several years to measure potential earning power. ...
3. Examine your own finances.
4. Look at industry trends.
5. Consider your competition.

Sources of Business Ideas

Personal Skills and Experience
Over half of the ideas for successful businesses come from experiences in the work place, e.g. a mechanic
with experience in working for a large garage who eventually sets up his/her own car repair or a used car
business. Thus, the background of potential entrepreneurs plays a crucial role in the decision to go into
business as well as the type of venture to be created. Your skills and experience are probably your most
important resource, not only in generating ideas but also in capitalizing on them.

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Franchises
A franchise is an arrangement whereby the manufacturer or sole distributor of a trademark, product or
service gives exclusive rights for local distribution to independent retailers in return for their payment of
royalties and conformity to standardized operating procedures. Franchising may take several forms, but the
one of interest is the type that offers a name, image, method of doing business and operating procedures.
In the 1980s and early franchising experienced tremendous growth, becoming a much- used method of going
into business for the millions of enterprises that were starting up in the USA and Europe. In the USA alone,
there are over 2,000 types of franchise businesses, accounting for over US$300 billion in annual sales
revenue and about a third of all retail sales. Apart from buying a franchise, one can also develop and sell a
franchise concept. There are many directories and handbooks as well as associations, including the
International Franchise Association, which can provide further information.

Mass Media
The mass media is a great source of information, ideas and often opportunity. Newspapers, magazines,
television, and nowadays the Internet are all examples of mass media. Take a careful look, for example, at
the commercial advertisements in newspaper or magazine and you may well find businesses for sale. Well,
one way to become an entrepreneur is to respond to such an offer.
Articles in the printed press or on the Internet or documentaries on television may report on changes in
fashions or consumer needs. For example, you may read or hear that people are now increasingly interested
in healthy eating or physical fitness. You may also find advertisements calling for the provision of certain
services based on skills, for example accounting, catering or security. Or you may discover a new concept for
which investors are required, such as a franchise.

Exhibitions
Another way to find the ideas for a business is to attend exhibitions and trade fairs. These are usually
advertised on the radio or in newspapers; by visiting such events regularly, you will not only discover new
products and services, but you will also meet sales representatives, manufacturers, wholesalers, distributors
and franchisers. These are often excellent sources of business ideas, information and help in getting started.
Some of them may also be looking for someone just like you.

Surveys
The focal point for a new business idea should be the customer. The needs and wants of the customer, which
provide the rational for a product or service, can be ascertained through a survey. Such a survey might be
conducted informally or formally by talking to people – usually using a questionnaire or through interviews
– and/or through observation. You may start by talking to your family and friends to find out what they think
is needed or wanted that is not available. Or, for example, whether they are dissatisfied with an existing
product or service and what improvements or changes they would like to see. You can then move on and talk
to people who are part of the distribution chain that is manufacturers, wholesalers, distributors, agents and
retailers.
It would be useful to prepare beforehand a set of questions which might be put on a questionnaire or used in
an interview. Given their close contact with customers, channel members have a good sense of what is
46
required and what will not sell. Finally, you should talk to as many customers as possible – both existing and
potential customers. The more information you can get from them, the better. Besides talking to people, you
could also get information through observation. For example, in deciding whether to open a shop on a
particular street, you can observe and count the number of people going past on given days and besides
talking to people, you can also get information through observation. For example, in deciding whether to
open a shop on a particular street, you can observe and count the number of people going past on given days
and compare these to other sites. Or, if you are interested in an area frequented by tourists, you may be able
to set up or market products from a craft business. Or you may have noticed that there is no decent restaurant
or hotel on a tourist route or in a given town. One way of ensuring that you are not negligent in this area is to
be alert at all times to needs and opportunities to do business.
One entrepreneur apparently went round at every cocktail party asking if anyone was using a product that did
not adequately fulfill its intended purpose. Another monitored the toys of a relative’s children looking for
ideas for a market ruche.

Complaints
Complaints and frustrations on the part of customers have led to many a new product or service. Whenever
consumers complain bitterly about a product or service, or when you hear someone say ‘I wish there was …
“or “If only there were a product/service that could … “, you have the potential for a business idea.
The idea could be to set up a rival firm offering a better product or service, or it might be a new product or
service which could be sold to the firm in question and/or to others.

Brainstorming
Brainstorming is a technique or creative problem-solving as well as for generating ideas. The object is to
come up with as many ideas as possible. It usually starts with a question or problem statement. For example,
you may ask “What are the products and services needed in the home today which are not available?” Each
idea leads to one or more additional ideas, resulting in a good number.

When using this method, you need to follow these four rules:
• Don’t criticize or judge the ideas of others
• Freewheeling is encouraged – ideas that seem to be wild or crazy are welcome
• Quantity is desirable – the greater the number of ideas, the better
• Combine and improve upon the ideas of others.

Reasons for generating business ideas:

• Business idea generation is a sine-qua-non (inevitable) for business.
• Ideas are generated to respond to market needs
• Ideas are also generated to respond to changing fashions and requirements.
• In order to stay ahead of competition
• To be in tune with latest technology so as to do things better.
• In response to product life cycle
• In order to spread risk and allow for failure.
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The difference between Ideas and Opportunities
One of the most important questions an entrepreneur should ask: Idea or Opportunity?
According to my mother-in-law, my wife invented the pet rock. As a child she would adopt a pebble and
look after it, just like they did with those pet rocks a decade later. She had the idea before the inventor! You
have probably met someone with a story about how they had an idea, years ago, that someone else later
turned into a successful product. If they genuinely think that they could have hit the big time they likely
don’t know the difference between an opportunity and an idea. Don’t get me wrong – ideas are important.
They are the creative lifeblood of your business. People that generate lots of ideas are good at coming up
with solutions to problems. However, an idea is not an opportunity. Here are just five of the differences:
1. Ideas are cheap. Opportunities have value.
2. Ideas just take inspiration. Opportunities need perspiration too.
3. You can work on lots of ideas at once but should focus on only one or two opportunities.
4. When dealing with ideas it’s OK to dream, to speculate. When dealing with opportunities get ready to
measure, to use data.
5. Investors do not put their money into ideas. They back opportunities.

From Idea to Opportunity

Turning an idea into an opportunity is a process. It takes time, resources and hard work. It helps to think of it
in terms of The Recipe for Business Success. You can take an idea, from a secret pickling recipe to space
tourism, and use the five elements of The Recipe to start turn it into an idea.
1. Strategic Fit. To have an opportunity the market needs to want what you have and you need to be able to
provide it.
2. Business Plan. The process of writing a business plan actually helps develop an idea into an opportunity.
It forces you to ask and answer hard questions and explore your options.
3. Team. An idea rarely becomes an opportunity without a team. No individual has all the knowledge and
skills necessary to make the transformation.
4. Leadership. Once you have a team, the right leadership is essential to guide the development from idea to
opportunity.
5. Resources. The planning process will have given you a good idea of the resources that will be required to
turn your idea into an opportunity.
Successful entrepreneurs are good at turning ideas into opportunities. They act. They execute. As things
turned out my wife did not develop her love of pebbles into the Next Big Thing. Startups may fail and even
tall businesses may fall.
While there are many factors that decide the fate of big and small companies, identifying ideas and
opportunities is what makes it worthwhile to run a business.
Let us try to understand the difference. An idea is like a seed, an impression of a concept or a notion that
revolves around seemingly successful product or service. A thought that needs some amount of commercial
validation before it shapes self into an opportunity. Opportunity is the care and nurturing that a gardener has
to endeavour for to turn the seed into a sapling and then allow it to grow into a tall tree. The gardener ensures
that it gets good soil, sunshine, proper environment and protection from harsh rains or weather conditions.
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A business idea may not necessarily be a business opportunity; one needs to filter and sift through these ideas
to realize whether they are real opportunities.
Most of the times, these ideas remain dormant because of the lack of courage, resources, time and money or
mere inability to take action. And those who show courage to take action generally see their dreams go off
track due to lack of far sighted vision or lack of preparedness. The business owner or the management must
own the responsibility of its success or failure regardless of the circumstances. Successful entrepreneurs are
good at turning ideas into opportunities. They act. They execute to make it all happen. It takes time,
resources and hard work. The canvas to paint your idea is large and enormous.
You can take an idea from a secret preserving recipe to space tourism, and use the basic elements of the
recipe to turn ideas into tangible opportunities that further allow you to make work plans.

Scanning Business Opportunities in Nigeria

You have hitherto learned about different business opportunities. Would you pick every opportunity that
comes your way when setting up a business?

Environmental Scanning
Going into business venture, certain steps must be taken before establishing a new business, joining an
existing one or inheriting an old business. The steps normally start with environmental scanning.
Environmental scanning can be said to be a process of visiting sites and gathering information about
prospects of establishing a new business venture. It is indeed a casual survey of the happenings in the
proposed business environment, with a view to assessing the possibility and the viability of a new business.
Every entrepreneur performs environmental scanning before starting a business. Medical practitioner, for
example perform scan on a pregnant woman to determine the sex and position of the baby before delivery.
Teachers scan the environment to detect examination cheats, by observing the attitude and movement of
students who have form the habit of writing on their palms, laps, desks, pieces of paper during tests and those
who are the habit of _going to the toilet_. Students who cheat in examinations also scan the environment, to
determine when careless invigilators relax, sleep or read newspapers.
A motor mechanic who wishes to establish a workshop must scan the environment to determine a site where
there are many motor owners and users and other supporting artisans, such as welders, vulcanizes, spare part
sellers and electricians, to complement his trade. A computer technician who has completed his training and
wishes to establish a workshop, must scan the environment before choosing a location for his workshop. He
could go to the computer village or hire a workshop at an attractive site. Market women, who sell at street
corners, scan then environment before choosing the sites. Even the federal and state governments scan the
environment before locating schools, hospitals, industries, universities, etc.

Advantages of Environmental scanning

• Scanning the environment is better and safer method of assessing than jumping into the business
environment.
• Environment scanning gives on-the-spot assessment of the immediate happenings in the environment,
instead of relying on stories.
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• It assists the entrepreneur to assess his personal strengths, weaknesses, opportunities, and threats (SWOT)
in the environment, and in choosing favourable ones while avoiding unfavourable ones;
• Scanning the environment assists the entrepreneur to observe business trends as they occur in their natural
manner. Trends are the known occurrences in the environment that has assume identifiable patterns over
a period. It is better and easier to manage something that has a pattern than something that has no pattern;
• It assists the entrepreneur to observe business treads in the locality and to see how those trends would affect
his business positively and negatively.

Assessment Exercises
Why is it important to carry out an environmental scanning before a decision is made on where a business
enterprise is sited in a particular location?
Environment and New Venture Idea Generation
You could have a good business idea, have the opportunity that would help to bring the idea to fulfillment,
but the good idea and the opportunity may not be able to succeed because of unfriendly environment. What is
this environment? You will find the answer in this as we move.

Business idea generation and opportunity analysis are the foundation for launching a new business or
venture. The origin of a business idea and the analysis of the opportunity needed to build and grow such idea
into a business structure is one necessary marriage in entrepreneurship. The process of generating business
idea could be learn and developed. This is a unique quality that an entrepreneur need to develop if he wants
to generate business ideas that would later become a business structure.
In this section, we will discuss the concept of business idea generation, available methods for generating new
business ideas, creative problem-solving techniques, innovation, types of innovation, difference between
innovation and creativity. The purpose of is to provide fresh impetus for the prospective entrepreneur to see
the idea of becoming a business owner in the Nigerian environment as a possibility. Existing entrepreneurs
will find this section very helpful in assisting them to generate new business ideas or concepts that will grow
their business in term of product or services they rendered.
Idea generation (ideation) is an emerging buzzword representing the creative process of generating,
developing, and communicating new ideas, while an idea is understood as a basic element of thought that can
be visual, concrete, or abstract. Ideation can be contrasted with brainstorming in that brainstorming is a
specific instance of ideation. Brainstorming employs specific rules (such as disallowing any contributor to
negate any idea offered during a brainstorming session), while ideation encompasses all techniques that can
be used to generate ideas.
Idea generation is also critical to the design and marketing of new products, marketing strategy, and to the
creation of effective advertising copy. In new product development, for example, idea generation is a key
component of the front end of the process, often called the “fuzzy front end” and recognized as one of the
highest leverage points for a company.
The business idea arises from an opportunity in the market. It originates from real demand for any product or
service that an entrepreneur should have a keen and open mind to look for opportunities and generate
business ideas.
While selecting a business idea, the following points need adequate consideration:
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i. The business idea should enable the entrepreneur to utilize his technical and professional skills. If an
entrepreneur has knowledge of some special manufacturing techniques, because of previous experience or
otherwise, it would be easier for the entrepreneur to manage such techniques effectively.
ii. It should enable the use of locally available raw materials for product or service. As compared to imported
materials/ local materials are easy to procure.
iii. It should ensure making products that have a demand, but are not freely available in the market. It is
potentially a good idea to start with a product that could be sold.
iv. It should enable the entrepreneur to solve a current problem existing in the market. Products may be
available in the market but they do not meet the demand fully or in a satisfactory manner. Sometimes, an
existing product is used in combination with another, which is not available. Attempts to solve such market
problems do give rise to business ideas.

Sources of Information for Business Ideas

As said earlier, generation of project idea is the starting point in product development. For this, an
entrepreneur can refer to potential studies prepared by different organisations. There are a number of
potential studies conducted by several organisations like the National Council of Applied Economic
Research (NCAER), financial institutions and other promotional organisations such as Confederation of
Indian Industries (CII), etc. These may include the following:
a. Area studies which identify development potential of particular areas like a backward area or a district.
b. Sub sectoral studies which identify opportunities in specified subsectors (such as food processing).
c. Resource-based studies which identify opportunities based on utilisation of natural or industrial resources
such as forest-based industries, marine based industries, industries using rubber as the main raw material, etc.
d. Studies of the product consumption pattern of the country.
e. Surveys of existing industrial establishments.
f. Import and export possibilities.

Approaches to Generating Ideas

While exploring different sources of business ideas, an entrepreneur can use the following approaches to
generate ideas:
i. Brainstorming. It helps in generating a large number of product ideas. It should be conducted by an expert
and none of the ideas mentioned should be evaluated or judged. At this stage one should not worry if the
ideas are suitable or not.
ii. New ways of doing old things. A large number of products are being made and provided in the market
using traditional methods and practices. One approaches can be to examine if these could be made by a
different and newer method that would give the entrepreneur an advantage over the older methods.
iii. Converting hobby into business. Some people are adept at doing something or the other as a hobby or for
use in the house only. It is possible to use such skills to set up an enterprise. Hobbies like photography,
interior decoration, fashion designing etc. are often developed as business ventures.
iv. Improving an existing product. An existing product can be improved by using old techniques with more
care or using newly developed technology.

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v. Utilising waste material. Conservation and environment protections are presently getting a lot of attention.
Recycling waste or turning them into useful products are good product ideas. Presently, energy conservation
products also have good potential.

Selection of Project Idea

At this stage, all the project ideas are screened on the basis of well-defined criteria to eliminate ideas which
are not promising and select the best idea. While selecting the idea, the following facts should be considered:
• The project should be compatible with the objectives and resources of the entrepreneur. It should also
match his capabilities and skills.
• The resources required for the project such as capital requirements, technical know-how, raw materials,
power supply etc. must be reasonably assured.
• The cost structure of the proposed project must enable it to realise reasonable returns on investment.
• The effect of external environmental factors such as technological changes, state of economy, competition,
etc. should be considered.
• The project idea should be consistent with the government policies, licensing requirements, environmental
regulations, foreign exchange regulations, etc.

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 CHAPTER FIVE
CONTEMPORARY ENTREPRENEURSHIP ISSUES
Creativity and Intellectual Rights
Intellectual Properties and its Dimensions
Entrepreneurs come up with great ideas that lead to creativity and innovation. There are measures through
which protection is given to the original owners of idea creation.

Creativity
The terms creativity and innovation are often used to mean the same thing, but each has a unique
connotation. Creativity is ‘’ the ability to bring something new into existence. “This emphasizes the “ability,”
not the “activity,” of bringing something new into existence. A person may therefore conceive of something
new and envision how it will be useful, but not necessarily take the necessary action to make it a reality.
Innovation is the process of doing new things. It is the conversion of creative ideas into market place reality,
which people are prepared to buy. This distinction is significant. Ideas have little value until they are
converted into new products, services, or processes. Innovation, therefore, is the transformation of creative
ideas into useful applications but creativity is prerequisite to innovation (Holt, 1992).

Stages of creativity
According to Holt (1992), the creative process comprises the following five stages as shown below:
1. Idea germination: Exactly how an idea is germinated is a mystery; it is not something that can be
examined under the microscope. For most entrepreneurs, ideas begin with interest in a subject or curiosity
about finding a solution to a particular problem.
2. Preparation: Once a seed of curiosity has taken form as a focused idea, creative people embark on a
conscious search for answers. If it is a problem they are trying to solve, then they begin an intellectual
journey, seeking information about the problem and how others have tried to resolve it. Inventors will set up
laboratory experiments, designers will begin engineering new product ideas, and marketers will study
consumer buying behaviour.
3. Incubation: The idea, once seeded and given substance through preparation, is put on a back burner, the
subconscious mind is allowed time to assimilate information. Incubation is a stage of ‘mulling it over’. When
an individual has consciously worked to resolve a problem without success, allowing it to incubate in the
subconscious will often lead to a resolution.

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4. Illumination: Illumination occurs when the idea surfaces as a realistic creation. This stage is critical for
entrepreneurs because ideas, by themselves, have little meaning. Reaching the illumination stage separates
daydreamers and tinkerers from creative people who find a way to transmute values.
5. Verification: An idea once illuminated in the mind of an individual still has little meaning until verified as
realistic and useful. Thus, verification is the development stage of refining knowledge into application.

According to Adams (2005), the following are critical to individual creativity:

1) Knowledge: The T-shape mind with a breadth of understanding across multiple disciplines and one or two
areas of in-depth expertise.
2) Thinking: a strong ability to generate novel ideas by combining previously disparate elements. This
‘synergistic’ thinking must be combined with analytical and practical thinking.
3) Personal motivation: the appropriate levels of intrinsic motivation and passion for one’s work combined
with appropriate synergistic motivators and self-confidence.
4) Environment: a non-threatening, non-controlling climate conducive to ideal combination and
recombination such as ‘intersection’.
5) An explicit decision to be creative along with a meta-cognitive awareness of the creative process can
go a long way in enhancing long-term creative results.

What are the factors that encourage creativity?

 The factors are knowledge of noble idea generation, thinking, personal motivation, environment and
determination to be unique.

Types of intellectual property

Copyright
Copyright is a legal term used to describe the rights that creators have over their literary and artistic works.
Works covered by copyright range from books, music, paintings, sculpture and films, to computer programs,
databases, advertisements, maps and technical drawings

THE NIGERIAN COPYRIGHT ACT, CAP C28. Act to make provisions for the definition, protection,
transfer, infringement of and remedy and penalty thereof of the copyright in literary works, musical works,
artistic works, cinematograph films, sound recordings, broadcast and other ancillary matters.
THE NIGERIAN COPYRIGHT ACT, CAP C28. n Act to make provisions for the definition, protection,
transfer, infringement of and remedy and penalty thereof of the copyright in literary works, musical works,
artistic works, cinematograph films, sound recordings, broadcast and other ancillary matters. Refer to the
Copyright Act, Chapter 68, Laws of the Federation of Nigeria 1990 for further details on coverage etc.

Patents
What is a patent?
A patent is an exclusive right granted for an invention, which is a product or a process that provides, in
general, a new way of doing something, or offers a new technical solution to a problem. To get a patent,
technical information about the invention must be disclosed to the public in a patent application.
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What is a trademark?
Distinctive design, graphics, logo, symbols, words, or any combination thereof that uniquely identifies a firm
and/or its goods or services, guarantees the item's genuineness, and gives it owner the legal rights to prevent
the trademark's unauthorized use.
A trademark must be
(1) Distinctive instead of descriptive,
(2) Affixed to the item sold, and
(3) Registered with the appropriate authority to obtain legal ownership and protection rights.
Trademark rights are granted usually for 7 to 20 years and, unlike in case of patents, are renewable
indefinitely. These rights are protected worldwide by international intellectual property treaties and may be
assigned by their owner to other parties.

Assessment Exercises
1. What are Intellectual Property Rights (IPR)?
2. What does copyright cover?

Feedback
1. IPR is a general term covering patents, copyright, trademark, industrial designs, geographical indications,
layout design of integrated circuits, undisclosed information (trade secrets) and new plant varieties.
2. It covers:
i. Literary, dramatic and musical work. Computer programs/software are covered within the definition of
literary work;
ii. Artistic work;
iii. Cinematographic films which include sound track and video films;
iv. Record-any disc, tape, perforated roll or other device.

Strategies for Protection of Intellectual Property Right

There are procedure in place in intellectual property protection. Some of these strategies and how they can be
applied to achieve a desirable goal are discussed here.
How important is intellectual property protection to your startup? Not too long ago, defensible IP was one of
the top things venture capitalists wanted to see in a startup. But the success of several high-profile tech
startups, such as Twitter and Facebook, that are relatively weak on patentable intellectual property, has
caused many to rethink that assumption. After all, creating and maintaining a robust IP portfolio is
expensive. Patents don’t determine whether a startup will be able to scale. And the lean startup model is all
about getting to market fast with the minimum viable product. Launch first, patent later… if at all.
But every startup – lean or not – needs to plan for success. If your startup starts to scale quickly, a strong IP
portfolio will be vitally important to your ability to play the long game. The world’s largest innovators,
including Google, Microsoft and Apple, seem to agree. During the past six months, these companies have
spent more than $18 billion on intellectual property in the voice space alone. They’re investing top dollar to

55
ensure that their corporate IP portfolios are diverse, rich in innovation, and allow them to hedge against many
possible futures.
So what should startups do to protect their IP assets?
• Patent what is important to others, not just you
• Make time to get smart on intellectual property. Educate yourself and team on the basics of trademarks,
copyrights, patents, and trade secrets. Investing a day or two early on will save headaches later.
• Reduce costs by doing your own IP searches first. Start with a Google patent search at google.com/patents.
• Work with an attorney who specializes in intellectual property and ask for a fixed rate to file.
• Save money by working with a patent attorney from a different geography. Ivy-league lawyers in
Wisconsin are just as good as Ivy-league lawyers in New York City. The cost savings may be upwards of
50%, and sometimes more.
• Patents aren't your only asset. Conduct an audit to identify all your registered and unregistered trademarks
and copyrights.
• Invest in well-written non-disclosure agreements (NDAs). Make sure your employment agreements,
licenses, sales contracts and technology transfer agreements all protect your intellectual property too, right
from the get-go.
• File as fast as you can. A patent application holds your place in line. You will have 12 months from that
initial submission to expand upon your filing. And remember, US patents can take more than five years to
issue.
• Investigate international patents if key competitors are outside the US. A US patent will not protect you
against competitors in Europe, never mind China.
• Think hard about the future. From your vantage point, what does the future look like? Use this information
to devise your patent strategy, and to figure out which of your work needs to be legally protected. From
there, your patent applications should flow.
As President Lincoln once remarked, the patent system adds "the fuel of interest to the fire of genius." IP
rights, which include patents, trademarks, trade secrets and copyrights--even the right URLs--play an
essential role in monetizing innovation. If you make it easy for others to steal your ideas, you can ultimately
end up washing away your own path to success

Assessment Exercise
1. If an employee in a company develops a program, would this employee own the copyright?
2. What is the rule for the transfer of copyright?

Feedback
1. No. In the case of a program made during author's employment under a contract of service or
apprenticeship, the employer shall, in the absence of any agreement to the contrary, be the first owner of the
copyright.
2. The owner of the copyright in an existing work or prospective owner of the copyright in a future work may
assign to any person the copyright, either wholly or partially in the following manner.
a. for the entire world or for a specific country or territory; or
b. for the full term of copyright or part thereof; or
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c. relating to all the rights comprising the copyright or only part of such rights

The Interface between Technology Development and Entrepreneurship

From time immemorial technology direct the trend in business. As an individual or organization the use of
technology is vital. This is found more significant in daily activities in all sectors. Therefore in this unit you
will learn the twist between technology and entrepreneurship.

Technological change provides the basis for the creation of new processes, new products, new markets, and
new ways of organizing; and entrepreneurship is central to this process (Schumpeter 1934, p. 66). However,
before technological change results in this process of entrepreneurial exploitation, entrepreneurs must
discover opportunities in which to use the new technologies. Because opportunities do not appear in a
prepackaged form (Venkataraman 1997), this process of opportunity identification is far from trivial. In any
given new technology, entrepreneurs could fail to identify any opportunities, or could identify the wrong
opportunities, making an explanation for the discovery of opportunities an important part of the domain of
entrepreneurship research. Unfortunately, most research on entrepreneurship investigates the entrepreneurial
process after opportunities have been discovered (Fiet 1996). Researchers typically adopt this approach
because they draw on neoclassical economic or psychological theories that assume people will discover the
same opportunities in a given technological change (Khilstrom and Laffont 1979), or discover opportunities
that are uncorrelated with the attributes of the discoverers (Evans and Jovanovic 1989).
Austrian economics challenges the validity of these assumptions, arguing that different people will discover
different opportunities in a given technological change because they possess different prior knowledge
(Venkataraman 1997).

Assessment Exercises
1. what is the relationship between entrepreneurship and technology?
2. What can you say is the role of technology in entrepreneurship and to Entrepreneurs?

Feedback
1. Technological innovations result when new rules and ideas find practical use through being applied and/or
commercialized by entrepreneurs. Technological innovation contributes to higher levels of economic output
and can deliver new goods and services that change human lives and capabilities.
2. Entrepreneurial ventures are considered as the engines for the development of economy and nation. They
are the transformation agents and knowledge resource of the nation upon who the responsibility of structured
development and radical changes is there.
Entrepreneurs need Technology for undertaking these responsibilities. Technology as a method, tool, process
or modification work as a support element for entrepreneurship development.

Technological Environment and Business

Availability of technology and usage differ from place to place. A technology that is found very useful in a
particular environment may be less useful in another environment. In business, it is important to study the

57
prevailing technology in an environment to determine the type of technology that may be required for a
business startup or in sustaining an existing business.

Technological environment refers to the state of science and technology in the country and related aspects
such as rate of technological progress, institutional arrangements for development and application of new
technology, etc.
According to the well-known economist J.K. Galbraith, technology means, “systematic application of
scientific or other organized knowledge to practical tasks”. Technology comprises of both machines (hard
technology) and scientific thinking (soft technology) used to solve problems and promote progress. It
consists of not only knowledge and methods required to carry on and improve production and distribution of
goods and services but also entrepreneurial expertise and professional know how. Technology includes
inventions and innovations.
.
The main features of technological environment are as follows:
• Technological environment is a component of macro or indirect action environment.
• Technological environment changes very fast.
• Technological environment affects the manner in which the resources of the economy are converted into
output.
• Technological environment is self-reinforcing. An invention in one place leads to a sequence of inventions
in other places.

Technological Change
Technological change is improvement in the 'art' of making products or developing processes. Barney's
biggest threat is new technological products and processes that are destroying the traditional print industry. A
technological product is just something that man created using the application of knowledge to improve a
person's life, environment or society.
In Barney's case, the new technological products wreaking havoc with his business are e-readers and
computer tablets. Every year, more and more consumers are ditching the printed word for digital.
A technological process is a means to make and improve products and services. For example, the traditional
manner of 'printing' magazines involved a mechanical printing press. Now, a new technological process has
been developed to digitize the magazine to be transmitted and stored electronically.
Barney figures if he can't beat technological change, then his company must embrace it. He has decided to
turn his print magazine into a digital one that will be readable on all major e-readers and computer tablets. He
may also have to adopt or develop new technological processes for the production and distribution of his new
e-magazine.

Advantages of Change
IMPACT OF TECHNOLOGY ON BUSINESS:
Impact on society/ social implications Impact on economy/ economic implications Impact on plant/ plant
level implications
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SOCIAL IMPLICATIONS:
• Technology reaches people through business
• High expectations of customers
• System complexity
• Social changes
• Social systems

ECONOMIC IMPLICATIONS:
• Increased productivity
• Need to spend on R & D
• Jobs become intellectual
• Problems of techno structure
• Bio professional & multi-professional managers
• Increased regulations & stiff opposition
• Demand for capital
• Rise & decline of products & organizations
• Boundaries redefined

IMPORT OF TECHNOLOGY/METHODS OF TECHNOLOGY TRANSFER:

• Foreign investment
• Joint venture
• Training or employment of technical expert
• Contract for supply of machinery & equipment
• Licensing agreements
• Turnkey contracts

APPROPRIATE TECHNOLOGY:
Appropriate technology (AT) is technology that is designed with special consideration to the environmental,
ethical, cultural, social and economic aspects of the community it is intended for. With these goals in mind,
AT typically requires fewer resources, is easier to maintain, has a lower overall cost and less of an impact on
the environment compared to industrialized practices

PROBLEMS IN TECHNOLOGY TRANSFER:

• Unwillingness on the part of the government
• Lack of resources
• Obsolete technology
• Inappropriate technology
• Costly Lack of technological know-how

Assessment Exercises

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1. What is technological environment?
2. How does the technological environment affect a business?

Feedback
1. technological environment consists of External factors in technology that impact business operations. A
business may have to dramatically change their operating strategy because of changes in the technological
environment.
2. Businesses are affected by changes in the technological environment. Technology is simply the application
of knowledge to control or change our environment. ... Some businesses can leverage changing technology to
improve products and processes or even create new products and processes that will expand markets and
profits.

New Technology and Entrepreneurship Opportunities

Every business, small dedicated company and big multinational alike, once upon a time was established
because their founders saw a business opportunity, or to be more precise: an entrepreneurial business
opportunity. Entrepreneurial here indicates that a new firm may have a good chance, and perhaps even a
better chance than established companies, of successfully exploiting the opportunity.
Understanding how to recognize and evaluate entrepreneurial business opportunities based on developments
in science and technology constitutes the core of these new developments.
The advent of digital revolution in late 1950s ushered in a new era of modern technology, which was a result
of constant innovation and change. The world saw how many opportunities were brought in by this new
found marvel, and thus, began the process of exploiting and developing new technology in order to gain
more power and assist in development across various sectors, industrial or otherwise.
The extent and power of technology was further witnessed when it came within the reach of various business
owners, who saw the growth and possibilities it could bring into their businesses. Soon, having a
technological advantage over other competitive players in the market became the pinnacle for success in
businesses of all shapes and sizes. Thereafter, advancement in technology became one of the major
contributing factors in expansion and success of many business ventures. Nowadays, there are many startups
that have emerged by exploring new and innovative technology and are dedicated to further their growth
using the same.
With extensive market research, many entrepreneurs have been able to pinpoint current trends that could help
in developing that kind of technology for both businesses and consumers. Building a business from scratch
can be a daunting and tiresome task, which involves many risks and minimal guaranty of success. Around 25
per cent of startups fail in their first year of business due to various factors like lack of experience and
improper book keeping skills. Therefore, prior industry experience and knowledge can help entrepreneurs
build their business with adequate planning and design in place.
Modern world is dominated by innovative ideas and new technology, but innovation alone cannot facilitate
success. Innovators need a great start to further their ideas and explore newer and better avenues. Similarly,

60
startups require initial funding so they can kick-start their business till the time it starts generating revenues
on its own. Investors look for dynamic entrepreneurship ventures and only invest in the cream of the crop. A
great idea and persuasive ability can help startups gain investors who could help them in expanding their
business goals.
Over the years, there has been an increase in number of startups, or entrepreneurial ventures that have come
into existence. Despite the risks involved, many of them have charted through unfavorable circumstances and
flourished mostly through innovation of modern technology. Therefore, one can safely assume that tech
startups are here to stay and may help in contributing to the constant process of innovation and development
of technology.

Assessment Exercises
1. What comes to your mind when new technology is mentioned in relation to entrepreneurship?
2. As a student of Entrepreneurship, list some of these new technologies?
Feedback
1. New technology has to do with the understanding of how to recognize and evaluate entrepreneurial
business opportunities based on developments in science and technology. That is what constitutes the core of
these new developments.
2. Let us explore some of these technologies together
a. Virtual Offices. As millennial slowly take over the workforce, it’s important for businesses to realize that
their employees don’t work in the same way as previous generations. The ability to work remotely is
important to a lot of younger professionals because it is a generation of convenience and streamlining.
b. Partnerships. Businesses are now teaming up with publishers, platforms, content creators and online
influencers to push their products and services, connecting with consumers across the digital ecosystem.
Building those partnerships will be key to future success
c. Original Content. Customers are loyal to brands that share their values, but how exactly do you show your
consumers that your values align with theirs? The answer is high quality, original content.
d. Live Video. The web has seen the rise of live streaming over the past year. Everyone has embraced the
live video option available on platforms such as Facebook Live.
e. APIs. It’s no secret at this point that for a company to be successful, they can’t rely on only one avenue to
connect with their customers.
f. Secure In-Person Payments. Buyers want to ensure that their data and personal information is safe.
Companies who don’t adjust to accept the cards in their new form (meaning they continue to use swipe
machines, rather than the more and more common “dip” option) in the next year will lose credibility among
their customers.
g. Focus on Mobile Ads. In the last two years, mobile usage has exceeded that of traditional desktop or
laptop computers. People are doing everything on their mobile devices: reading, banking, shopping, gaming
… you name it.
h. Consistency Between Platforms
i. Augmented and Virtual Reality. Augmented and virtual reality was mostly reserved for gaming.
j. Data, Data, Data

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 CHAPTER SIX
ENTREPRENEURSHIP IN NIGERIA-I
Brief Biographical Studies of Prominent Nigerian Entrepreneurs
There are different things that inspire one to go into being an entrepreneur. Apart from being inspired by the
challenges in the society, one could also be inspired by the achievements of existing entrepreneurs. Often
times you study other people’s life to know why they are doing what they do and how they do it.
In the case of becoming an entrepreneur, do the existing successful entrepreneurs go into it as passion
towards providing solution to existing challenges? Do they go into it because others are doing it? What is
their motives and the secret of their success? These are some of the questions you might find answer to as
you study this chapter.

Aliko Dangote
This Nigerian entrepreneur was born in 1957. He created the Dangote Group and is considered to be one of
the richest men in Africa. The Dangote group is a big organization that is into export, import, manufacturing,
real estate and philanthropy. Some of the products it deals with are: spaghetti, macaroni, sugar, salt, rice
textile materials, while the Group is also into transportation, packaging, and even security. The Dangote
Group imports sugar, rice, fish, and cement, fertilizer and building materials. While it exports cotton, cocoa,
cashew nuts, sesame seed, ginger and gum. Aliko Dangote has contributed tremendously to the economic
development of Nigeria and has greatly assisted in reducing the rate of unemployment in the country by
providing employment to Nigerian graduates and even other categories of labour (Africansuccess.org, 2008;
Nairaland.com, 2010).

Chidi Anyaegbu
This entrepreneur is regarded as ‘King’ of the transport industry. He founded the Chisco Transport Limited
which is one of the biggest in the Nigerian transport industry. Over the years, Chisco Transport Limited grew
to become the Chisco Group. The Chisco group is into variety of businesses such as: oil and gas, finance,
hospitality, real estate, import and export. Apart from this he has also contributed tremendously to the
development of the nation through various philanthropic activities. For instance, he established a foundation
to take care of his philanthropic interests and also built a Faculty of Business building for Transport Studies
at the Nnamdi Azikiwe University, Awka (Prince Society, 2009; Nairaland.com, 2010; Onyima, 2010).

Chris Ejiofor
This is an entrepreneur in the importation and marketing of car or auto batteries. He established Dimaps
Batteries and has written extensively about usage and maintenance of batteries in Nigeria.

Bello-Osagie Hakeem
He was born in Lagos. His father was a professional Gynecologist and his mother was a Nurse. At age three,
he moved with his parents to England. He lived in England until he was about eight and then he came back to

62
Nigeria where he went to primary and secondary school. He left Nigeria when he was about sixteen and did
his last years of high school in England. He started University at about eighteen and was in University of
England for five years and then in the United States for two years from age twenty-three to twenty-five. . He
came again to Nigeria and ventured into the financial area and his first experience was in First Securities
Discount House, which was a small institution he established. His interest in a large bank stemmed from his
first experience into the purchase of the United Bank for Africa.(Nwoye 2010).

Hussan Okoya
Born in Lagos Island on June 8, 1935. His father Hussan Okoya Thomas, was one of the people who
established CFAO in Nigeria. His mother Alhaja Suwebat Okoya-Thomas was a renowned trader. He had his
education at the Princess School, Lagos Island in the early forties. He thereafter proceeded to the Lagos
Baptist Academy in the late 50s.
He later moved to Balham and Toothing College of Commerce, United Kingdom. He eventually qualified as
a Professional Accountant at the Columbia University, New York, United State of America.
There, Okoya-Thomas exhibited traits of good leadership and his approach to work was astounding. He soon
proved himself an indispensable material at his duty post and rewarded with the position of Director in 1975.

Orji Uzoh Kalu

Business Name: Slok Group of Companies
Orji Kalu is from Igbere a largely business community in the East where trading is a way of life. While he
was at the University of Maiduguri, he was a member of the executive of the students union. There was a big
riot, which led to a lot of vandalism. The university authorities suspended the student union leaders. He was
one of them. It was during this period that he decided to go into trading. He started his business which
involved the buying and selling of palm oil with a capital of less than five thousand naira. His mother who
was also, an astute trader provided the initial capital. He bought oil from the East and sold it in the North, at
Maiduguri. There, he discovered the need for good furniture; People who needed good furniture imported
them from overseas at exorbitant rates.
Knowing that there were many good upholstered furniture made in Aba, he purchased the furniture from Aba
and resold it in Maiduguri, they were as good as the imported ones, but far cheaper. Many people liked the
furniture and the patronage was high. He had orders from many customers, especially the Leventis Stores,
which mixed them with their imported stock. (Nwoye 2010).

Mike Adenuga Junior

This entrepreneur was born in 1953. He has business in various industries such as banking, oil and
telecommunications. He owns the Consolidated Oil Company, which is the first indigenous company to
strike crude in December 1991. Consolidated Oil Company is into crude oil drilling, refining and marketing.
He also owns the Equatorial Trust Bank and created one of the main telecommunications companies in
Nigeria (Globacom), against all odds.
Globacom Limited was created after he failed to penetrate the telecommunications industry in 1999 with his
first telecommunications company-Communications Investment Limited, (CIL) because his conditional
license was revoked. However, in 2002 he won the bid for the Second National Operator (SNO) license. This
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was a better strategic business option for him because the SNO has a wider range of operations and this gave
Globacom the right to serve as international gateway for telecommunications in Nigeria and also operate:
digital mobile lines, fixed wireless access phones and also operate as a national carrier. This entrepreneur
was able to achieve these entrepreneurial successes because he has a unique flair for risks and tenacity of
purpose (Africansuccess.org, 2010; Nairaland.com, 2010).

Obateru Akinruntan
This entrepreneur comes from the Royal family in Ondo State, Nigeria. He is a king in Yoruba land i.e. an
Oba hence he has the appellate HRH (i.e. His Royal Highness); and also a graduate of Business
Administration from Lead City University Ibadan. He created the Obat Oil and Petroleum Limited in 1981, a
company that is into the marketing of petroleum nation-wide, and has the largest privately owned oil depot
and jetty in Africa. His business interests have grown steadily over the years to become the Obat Group
which has interests in petroleum, fishery, construction, tourism and hospitality, shipping, consultancy
services and water purification and production (Obateru, 2010; Nairaland.com, 2010).

Paul Okafor
This Nigerian entrepreneur established Elbe Pharma, an organization that deals with the importation and
marketing of pharmaceutical products such as Amalar anti malaria tablets, Solotone multivitamin etc. nation-
wide.

Razaq Okoya
This Nigerian entrepreneur created the Eleganza industries. An organization that has contributed
tremendously to national development through its assortment of consumer products such as biros and coolers
manufactured and marketed nation-wide (Nairaland.com, 2010).

Uche Ohafia
This is another notable Nigerian entrepreneur in the shipping industry. He created the Trans-Atlantic
Shipping Agency Limited. The company is into air freight, shipping line agency and charter services, import
and export agency, collateral management and warehousing services among others.

Cletus Olebune
This is a social entrepreneur who focuses on the development of tourism in Africa. He created an enterprise
that promotes tourism in Africa by informing the world about events taking place in Africa. He has also used
written communication to educate and impart knowledge which will help Nigerians in the different aspects of
their lives and boost productive engagements thereby improving Nigeria’s world ranking.

Durojaiye Isaac
He is the social entrepreneur with the slogan “Shit business is Good Business”. In 1999, he established the
DMT Mobile Toilets in Lagos. Prior to that period, Lagos State did not have enough public toilets to cater for
its teaming population.

64
In order to help solve the social problem created by this inadequate toilet facilities in Lagos State, Durojaiye
established the DMT Mobile Toilets, which is an organization that manufactures, hires out and maintain
moveable toilets in Lagos State. Thereby promoting environmental sanitation and creating job opportunities
in Lagos State.

Gabriel Uriel Ogunjimi

This is a social entrepreneur in the area of information technology. He was interested in promoting
employment opportunities for Nigerians. To this effect, he established the Landmark Internship International,
organization that helps meet Nigeria’s social and economic challenges by using the internet to network
globally with social enterprises in need of local talents.

Joachim Ezeji Ezeji

He contributed to the social development of Nigeria by helping in the development of community water
infrastructure across the country through enhancing access to potable water in remote Nigerian communities.
To achieve this aim, in the year 2000 he established the Rural Africa Water Development Project (RAWDP)
which has tremendously assisted in improving the standard of living of millions of Nigerians by giving them
access to clean potable water.

Rochas Okorocha
This is a social entrepreneur interested in poverty alleviation of the less privileged in the Nigerian society. To
this effect, he founded the Rochas Foundation which is concerned with helping Nigerian children to become
self-sufficient thereby breaking the cycle of poverty in the nation (Osalor, 2010).
Though as can be seen above we do have some entrepreneurs and social entrepreneurs in Nigeria, they are
still not adequate in number given its population of over 150 million. Perhaps this underdevelopment of the
entrepreneurial class is responsible for the current status of the nation as a developing nation. For instance,
China and India that were previously in the same developmental class as Nigeria are now developing rapidly
following the flourishing of their entrepreneurial class (Sogbesan, 2009). Recently, the Nigerian government
recognized the importance of entrepreneurship to national development; this is because apart from creating
employment, and producing innovative goods and services, entrepreneurs and social entrepreneurs also
create wealth and generate social capital that is needed for national development (Osalor, 2010).
Consequently, the Nigerian government has taken steps to encourage the development of entrepreneurship
through the formulation of various policies. This is why entrepreneurship as a course has been introduced
into the curriculum of all Nigerian universities.

The Nigerian Entrepreneur and Peculiarities of Nigerian Business Environment.

Though, starting a small business in Nigeria is much the same as starting a business in any other part of the
world, the Nigerian entrepreneur, unlike other entrepreneurs, faces some challenges that are peculiar only to
businesses established in Nigeria. This is because the Nigerian business environment is very complex,
uncertain and dynamic and as such, a lot of factors operate at cross purposes in Nigeria. For example; many
decisions that lack rationality are made on a continuous basis; also various governmental and macroeconomic
policies which affect businesses are made and sometimes reversed instantly as was the case in 1998 when the
65
then Head of State General Abdul salaam Abubakar increased workers’ salaries and reversed it again after a
few months on the ground that “he was ill advised”! Thus, to survive in the Nigerian business environment,
the Nigerian needs to identify and have a thorough understanding of the mechanics, elements, dynamics, and
functioning of the Nigerian business environment. While bearing in mind that the Nigerian economy is
primarily a mixed economy. A mixed economy is midway between a free market economy i.e. capitalist, and
a pure planned economy i.e. socialist (Isimoya,1998; Dixon-Ogbechi, 2003).
Also, given its large population, there is ample business opportunities for entrepreneurs. A business
opportunity exists when there are unmet needs backed up with effective demand. Effective demand is
demand that is backed-up by purchasing power. That is, people have demands for a product and they are
ready/willing to part with their money (or other means of exchange) in exchange for the product that can
satisfy such needs and wants. Nigeria as a nation is blessed with some of the factors of production. For
instance Nigeria has plenty of land, but has shortage of capital and skilled labor and high-level manpower
while it has a fairly adequate number of entrepreneurs. However, it lacks adequate entrepreneurial ability
because the quality of entrepreneurship that is still largely low. Other peculiar problems faced by Nigerian
entrepreneurs are: Financial Problems, Infrastructural Problems, Low standard of Business Ethics and
Political Instability though the situation seems relatively stable since the advent of the current democratic
dispensation in 1999. Thus, in analyzing and scanning the business environment for entrepreneurial
opportunities, the Nigerian entrepreneur has to bear in mind the peculiar problems in the Nigerian business
environment.

Discussion Forum
A brief has been given of some Nigerian Entrepreneurs. Choose two of the entrepreneurs and do further
studies on them or two other entrepreneurs in Nigeria. Present your findings about them on:
1. Entrepreneurship type e.g. social entrepreneur
2. What motivated them into becoming an entrepreneur
3. Their challenges and success
4. The lesson you learned from their entrepreneurial life style
5. Read and comment on the posts of other two persons.

Assessment Exercise
What skills would an entrepreneur need to acquire to succeed in his business?

Feedback
Going into business is a decision which one makes to passionately undertake the setting up business concern,
manage it, grow it, develop it and diversify requires possession and mastery of certain skills.
The skills needed would include the following:
• Original or natural skills
• Technical skills
• Business skills
• Financial skills and of course
• Time management skills
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• Menteeship skills

Barrier to Entrepreneurial Practice

Entrepreneurship is the process of innovation and establishing new businesses conditions in hazardous
conditions through discovering opportunities and utilization of resources. In other words, entrepreneurship
means turning a new idea into a product or service which consequently provides increasing productivity,
creating wealth, prosperity and employment. An entrepreneur is someone who presents a new product or
service to the market with a new idea establishing a business mobilizing sources associating with financial,
social and honor risks (Ahmadpoor and Erfanian 2007). Today, all agree that there is a positive relationship
between entrepreneurship and economic growth (Benzing et al. 2009; Valliere and Peterson 2009). Studies
also show that.
Today entrepreneurship is considered as the economic driving engine for developed and developing countries
and most countries have invested considerably on entrepreneurship development. The entrepreneurship
development in a community could provide sustainable employment and economic development. It should be
noted that entrepreneurship development has always been encountered different challenges and barriers. The
present article is aimed to detect and classify the barriers of entrepreneurship development in SMEs and
determine the importance of each barrier.

Lack of supportive governmental regulations

This serve as a barrier to entrepreneurship. A number of African nations lack rule of law. They have poorly
defined property laws, enforce regulations inconsistently, and allow widespread corruption and bribing. What
measures can be taken to overcome this huddle? This administrative barrier is not easy to overcome,
however, consulting your industry chambers and associations will help. Cooperatives and advocacy groups
can fight against such predatory behaviour. Entrepreneurs should be vocal about favourable policing and
regulations.

Shortage of funds and resources

Money to start up an enterprise is another leading barrier to entrepreneurship. Without funds, any person
cannot begin to organise, train, develop and sell product. How can one overcome financial barriers? It is very
important that you do not see money as the fundamental element to make or break your business. It is true
that money is important, but if you put it in front of your projects they will never take off, and you will end
up putting aside other key elements. If you start a business online, you will be reaping the benefits of Internet
and investment costs are lower.

Employee related difficulties

Entrepreneurs must find and select the best-qualified employees who are motivated and willing to grow with
the venture. Then they must ensure the employees do not leave. Practically this task becomes a barrier when
employees’ expectations increases, governmental regulations related to labour employment is hardened, and
employee costs grow. Employee cost is more than pay. It includes healthcare, workers’ compensation, social
security tax, and health and safety regulations. What’s the way forward? The finances of your business
should be audited consistently and thoroughly also scaling down operations and overhead costs so that you
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will sustain profits and payments. Ensure that your business is authorised to function, has all the permits,
pays all the taxes and compensations.

Severe market entry regulations

Taxation, environmental regulations, lending requirements, government rules and licensing are all barriers to
entrepreneurship. Most countries license market entry and the creation of new firms to protect employees in
certain industries and professions. Entry procedures vary such that entrepreneurs need one day to register an
enterprise in one country and up to half a year in another. How do you deal with this red tape scenario?
Honestly, you have to wait and pull through.

Lack of entrepreneurship opportunities

Business creation needs existing marketplace opportunities with possibilities known to the entrepreneur and
favorable odds for success for entrepreneurial “spirit” to succeed. How do you start? Try to figure out new
and hidden opportunities. A market opportunity for entrepreneurs should always be unique, a gap and should
be serviced with ideal quality in form of products or services. Learn and acquire or pull yourself until you
have the entrepreneurial capacity. Entrepreneurial capacity is the existence of entrepreneurship qualities,
willingness and motivation to initiate new ventures.

Perception of society
Perception of society towards failure. Our society tends to reject and judge failure and a mistake, keeping us
in a mindset of going through life trying to avoid mistakes without realising that failure is part of success.
How to overcome cultural barriers? This obstacle is mostly in your head. To overcome it you need to change
your thinking and your attitude towards life. Entrepreneurship is about attitude, to see life in a different way
and be willing to fight tirelessly to achieve our goals.

Educational barriers
Entrepreneurs must develop skills related to leadership, teamwork, negotiation and communication. There
are things you learn in school, yet many of these skills must be acquired by taking risks and throwing caution
to the win, venturing into the unknown. How to overcome educational hurdles? It is important to begin to
identify skills you need to run your company. Many of the qualities of an entrepreneur can only be learned
through experience, start your project and start learning along the way.

Lack of adequate entrepreneurship training

Training and education can be a biggest advantage for new ventures. This includes training in technical
skills, managerial skills, entrepreneurial skills and entrepreneurship. In Africa, are they adequate? Surely
they are not. Join cooperatives, learn from other players in your industry and acquire free knowledge through
banks and nongovernmental organisations.
Lack of industry experience
Rushing into a new market because it looks attractive and rewarding without having some experience and
background in it can be fatal. The heart of leadership is learning first and doing before leading. Experience in
a related business before startup is positively associated to success. You can work freely for big businesses
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that are into your chosen industry so that you acquire knowledge and experience. There is no harm in
learning so that you follow your passion and succeed.

Disgust for risk

A psychological barrier closely related to the fear of failure is aversion to risk. Entrepreneurs must take
initiative, create structure with a social-economic mechanism and accept risk of failure. So what should you
do? Entrepreneurs have to be risk takers while those who are risk averse will seek the security if an existing
establishment. Entrepreneurs have to decide whether to take action so they don’t miss the boat. Just be
aggressive as a business person and take the risk. Big risk means big chances of making it.
Barriers facing entrepreneurial development in developing countries are often similar. Most entrepreneurs in
developing countries face an unstable business environment and the bureaucratic rules of private firms,
especially business registration and taxation systems, are complicated (Benzing et al. 2009).

S/No. MAIN BARRIERS SECONDARY BARRIER

Financial barriers
1 Insufficient capital to start and sustain a business
2 High cost of advertisement services
3 Difficulty in finding adequate office and operational space
4 Difficulty in recruiting good and reliable staff
5 Lack of hardware and software
6 Difficulty in providing security guarantees to launch an
entrepreneurial activity
Scientific/educational barriers
7 Lack of skills and knowledge required to launch and sustain a
business
8 Lack of sufficient knowledge in management skills and how to
manage business
9 Lack of marketing training
10 Lack of accounting training and inexperience in financial
planning
11 Lack of adequate knowledge of the laws and regulations
12 Difficulty in finding information about markets, products and
prices
13 Little knowledge of the business environment and the ruling
environmental factor
14 The lack of knowledge about how to enter market and expand
market presence
15 Lack of knowledge of foreign markets
16 Lack of education and extension programs on how to export
products.
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17 Lack of entrepreneurial skills training

Policy making barriers

18 The high rates
19 Troublesome rules obtaining bank loans
20 Restrictions on labor laws
21 Lack of support from banks and financial institutions
22 Insecurity for investments
23 High price volatility
24 Weak insurance system
Cultural barriers
25 Relation-based distribution of inputs and credits
26 Rule of brokers and intermediaries
27 Lack of moral and material support from family
28 Negative attitudes towards risk
Source: International Journal of Academic Research in Economics and Management Sciences July 2013, Vol. 2, No. 4

Although many factors as articulated above have always been major constraints
to business growth problems associated with small and medium businesses, very
little attention has been paid to entrepreneurship which is the underlying factor to the development of
business.
The failure of many businesses in Nigeria particularly the parastatal sector has been generally attributed
many factors such as management, political interference and lack of entrepreneurial spirit. Entrepreneurship
behaviour which is associated with taking advantage of opportunities and taking risks is what makes
businesses grow fast and create abundant wealth. (Nwoye 2010).

The Nigerian Entrepreneurial Environment-The Business External Environment

The success of a business is not only dependent on the entrepreneurial characteristics and internal factors
which may have to do with working environment. External factor such as government policies, instability in
economy could have advert effect on a business. This unit will introduce you to such external factors that
could affect business.

Concept of Environment
The concept ‘environment’ literally means the surroundings, internal, intermediate and external objects,
influences or circumstances under which someone or something exists (Kazmi, 1999). The environment
within which something exists exhibits certain characteristics which have been identified by Kazmi (1999) to
be: complexity, dynamism, multifaceted and far-reaching impact.
These are apart from the simple and stable environmental conditions. The business environment is simply the
surroundings within which a business exists. The environment of the business exhibits the following
conditions and characteristics. These are:

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Stable Condition: This environment is highly predictable, thus permitting a great deal of standardization
(work process, skills and output) to take place within the organization.
Simple Condition: This environment is one where knowledge can be broken down into easily
comprehended components (Minzberg, 1979).
Dynamism: The business environment is not static. It is dynamic and as such changes continuously. This is
because of the interactions of the various factors that make up the business environment.
Complexity: The business environment is not simple; it is complex by virtue of the various components that
comprise it and the interactions and interrelationships among these factors.
Multifaceted: The business environment is many-sided. It can be viewed from many angles by the parties
involved. Hence, an occurrence that is viewed as strength to an organization may be perceived as a weakness
by another.
Far-reaching impact: The happenings in the business environment can have enormous impact on the
organization. It could have the ripple effect. This is because the business environment can be conceived as a
system, specifically an open system made up of different components that interact and interrelate with one
another. Hence, once there is a problem or development with one aspect/sector, it could have far reaching
impact on the other aspects/sectors (Kazmi, 1999).
By virtue of the above characteristics, it is important for the entrepreneur to monitor the business
environment constantly. Thus, it is of fundamental importance for the entrepreneur to monitor both the key
macro-environmental forces (demographic/economic, technological, political/legal and social/cultural) and
micro environmental forces (customers, competition, distribution channels, and suppliers) that will affect
their ability to earn profits in the market place (Kotler, 1995). These macro environmental forces and micro-
environmental forces are the components of the business environment. Why is business environment
important to an entrepreneurs?
 It is important because it determines the success or otherwise of their venture. Also it is within the
environment discover opportunities. Threats to the business success are equally found within the
environment. It is absolutely necessary for entrepreneurs to understand the environment.

Components of the Business Environment – An overview

Scholars have classified the business environment using various basis or criteria. This notwithstanding, it
should be noted that the business environment is made up of the internal and the external environment and
the main macro-environmental forces/factors found in the external environment and micro-environmental
forces/factors/ in the internal environment of the business. These are discussed briefly in succeeding sections.

Internal Environmental Factors:

The internal environmental factors refer to those factors over which the entrepreneur has control, at least in
the short run; this is why it is also called the controllable environment of the business. The internal
environment of the business is made up of all those physical and socials factors within the boundaries of the
business, which impart strengths or cause weaknesses of a strategic nature and are taken directly into
consideration in the decision-making behaviour of the business. Strengths are inherent capacities, which a
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business can use to gain strategic advantage over its competitors; they are the internal strong points of the
business such as: its core skills, competencies and expertise.
While weaknesses are inherent limitations or constraints, which create strategic disadvantages, they are the
internal factors that are lacking in the business. A successful entrepreneur will find ways of overcoming the
weaknesses and convert them into strengths (Ifechukwu, 1986; Kazmi, 1999; Business-Plan, 2010). The
internal environment of the business is made up of micro-environmental factors such as: organizational goals
and objectives, specific technologies utilized by component units of the organization, the size, types and
quality of personnel, its administrative units, and the nature of the organization’s product/service (Ifechukwu,
1986). The nature of a business’ internal environment is also determined by the organizational resources,
organizational behaviour, strengths, weaknesses, synergistic relationships and distinctive competence
(Kazmi, 1999). Kazmi’s (1999) views Organizational resources as the physical and human resources used as
inputs in the organization to create outputs. Organizational behaviour is the manifestation of the various
forces and influences operating in the internal environment of an organization. Strengths are inherent
capabilities that give strategic advantage.
Distinctive competence: The specific ability possessed by a particular organization that distinguishes it
from others. Organizational capability: This is the inherent capacity or ability of an organization to use its
strengths, and overcome its weaknesses in order to exploit opportunities and face threats in its external
environment.
Intermediate Environmental Factors Intermediate determinants of entrepreneurship ideally represent issues or
factors in the borderlines between strictly internal and external factors affecting entrepreneurship. Generally
they include the customers and the suppliers who are the links between the organization and the purely
external environmental factors. They also include various support systems, both private and public e.g. legal
firms and public relations agencies. Some of such support systems include: The National Directorate of
Employment (NDE): This was established by the Federal Government of Nigeria in November, 1986. It was
designed to work out strategies for dealing with mass unemployment in the country especially among the
school leavers and college graduates. The mandate given to NDE is executed within the framework of four
core programs. These are:
 The Small-Scale Industries and Graduate Employment and Vocational Skills Development.
 Support for Agricultural Programs.
 National Youth Employment and Vocational Skills Development and
 Special Public Works Programmes. NDE executes its programs by providing financial support and
training and development for existing entrepreneurs and new entrants into entrepreneurship (Ogundele,
2007). Some Financial Support Systems: These include:
 Small Industries Credit Committee.
 National Economic Reconstruction Fund.
 Small and Medium Enterprises Loans Scheme.
 Micro Finance Banks.
 Nigerian Industrial Development Bank.
 Extension Services Units: The Federal Government in 1964 established Industrial Development Centers
(ADC) located in Oshogbo, Owerri and Zaria. They were to provide extension services to small and medium
scale enterprises in terms of technical appraisal of loans application, managerial assistance, product
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development and production planning and control. Later more were created to have IDC in each state of the
Federation.
Technical and Technological Related Support Systems: These include:
 The Federal Institute of Industrial Research, Oshodi (FIRO).
 Project Development Institute (PRODA) in Enugu.
 Rural Agro-Industrial Development Council (Raw Material Research and Development Council) etc.
These were established to provide technical and technology related support for Nigerian entrepreneurs.
These support systems as intermediate factor have closer links with the entrepreneurs to facilitate their
operations in various ways.

External Environmental Factors:

The external environmental factors refer to those factors over which the entrepreneur has no control but have
tremendous impact on the survival of the business; this is why it is also called the uncontrollable
environment of the business. Within the external environment of the business are all the factors which
provide opportunities or pose threats to it. Opportunities are favourable conditions in the business’
environment, which enable it to consolidate and strengthen its position. They are the likely benefits to the
business resulting from changes in the external environment while threats are unfavorable conditions in
the business’ environment, which create a risk for, or cause damage to, the business; they are the possible
pitfalls or dangers resulting from changes in the external environment. A successful entrepreneur will grab
opportunities as they emerge and avoid threats or even look for ways of converting threats into opportunities
(Kazmi, 1999; Business-Plan, 2010).

The Major Environmental Factors

Demographic factors:
These include the market i.e. consumer populations. It deals with their composition in terms of sex, age,
income, marital status, educational levels etc.
Political/Legal Factors:
This is made up of laws, government agencies and pressure groups that affect the business. Technological
Factors: This deals with knowledge of how to accomplish tasks and goals, and innovations (Herbert, 1973).
Natural Environment:
This deals with all the gifts of nature or natural resources of the nation that serve as input for the business.
Socio-Cultural Factors: These deal with the people, their norms, values and beliefs as they affect the
business.
Economic Factors:
These deal with the Macro level factors relating to means of production and wealth distribution. It also
includes the forces of supply and demand, buying power, willingness to spend, consumer expenditure levels,
and the intensity of competitive behaviour.

Competitive Environment:
These are those firms that market products that are similar to, or can be substituted for, a business’ product(s)
in the same geographical area.
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The four general types of competitive structure are monopoly, oligopoly, monopolistic competition, and
perfect competition.

Other Factors:
The other factors making up the external business environment are:
1. Suppliers, which are other firms and individuals that provide the input resources needed by the
organization to produce goods and/or services.
2. Intermediaries, who are independent businesses that perform all the activities necessary to direct the flow
of goods and services from manufacturers/marketers to ultimate consumers/customers. They include
wholesalers, retailers, agents and distributors, and;
3. Customers who constitute a portion of the target market of the business; they are the ones the business
strives to satisfy.
Assessment Exercise
In your jotter, explain the internal and external environmental variables of an entrepreneur. What are the
likely challenges an entrepreneur will face from these environmental factors. Compare your answer with the
feedback.

Feedback
Internal Environmental Variables Generally, the internal environmental factors that affect the nature and
operation of business are manageable, controllable and monitorable environmental variables. They include
the following:
i. The Structure of the Industry This entails the key players, nature of the market i.e. monopoly, oligopoly,
duopoly, monophony and perfect competition.
ii. Sources of Supplies This contains the various sources of supplies, how reliable are the sources, what are
the terms and conditions between supplies and the organization?
iii. Company’s Culture This spells out the methods and ways things are done, rules and regulations,
discipline, procedures and processes, organizational structure, company trust, belief and norms as well as
union activities and pattern.
iv. Nature of Customers This includes how sophisticated are they, the purchasing decision process, how
regular and reliable are the customers and the level of customer loyalty?

External Environmental Variables These are factors that are very difficult to influence, control, manage
but can be exploited. They normally pose a threat to business existence. As a business manager in this
present epoch, you must be aware of them. They are as follows:
i. Political/Legal Factors. Here the manager will concern himself with the elements such as the type of
political system, political ideological inclination and philosophical convictions, the legal provisions relating
to business operations in terms of registration, tax, licensing, standards and quality requirements, stability of
government and democracy as well as nature of economic system.
ii. Economic Factors. These factors may include among others; the general price level. Macroeconomic
policies of the government, Gross Domestic Product level and inflation, interest and tax rates, availability of
raw material, etc. exchange rate, balance of payment, and balance of trade conditions.
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iii. Social. This factor includes the following: General social settings, religious inclination, beliefs, values,
norms and attitude of people in general, family and community structure.
iv. Geographical Factor This entails climatic conditions of business areas i.e. temperature, weather, season
etc. availability of and distribution of natural resources – raw materials, topography and landscape, deserts,
rainforest or glacial, ecology, animals and forests reserves, population size and structure, demographic
characteristics in terms of sex, age, income, health, education etc.
v. Technological Factor. This encompasses level of technical know-how,

Identifying Business Opportunities and Threats

Before going into a business it is good to study your environment to know your area of comparative
advantage, the opportunities you are likely to enjoy and your weakness you need to improve on in order to be
able to compete comparatively with your counterparts.
Overview of SWOT Analysis SWOT entails the objective analysis of a business’s Strengths and Weaknesses
and its Opportunities and Threats. In order to identify its strengths, weaknesses, opportunities and threats, an
organization has to carry out internal and external evaluation and also opportunities/threats analysis and
strengths/weaknesses analysis.

SWOT Analysis: (Strengths, Weaknesses, Opportunities and Threats) will enable the student mirror himself
in relation to identification and assessment of business opportunities. He might posses certain unique skills or
abilities, which along with his knowledge and experience can provide him a cutting edge.

Strengths are his stronghold; positive internal factors that contribute to an individual’s ability to accomplish
his/her mission, goals and objectives.

Weaknesses imply shortcomings; they are negative internal factors that inhibit an individual’s ability to
accomplish his/her mission, goals and objectives. An entrepreneur should try to magnify his strengths and
overcome or compensate for his/her weaknesses.

Opportunities, otherwise known as possible areas of exploitation, are positive external options that an
individual could exploit to accomplish his/her mission, goals and objectives.

Threats are those things that are cogs in the wheel of progress, such as competitors, economic recession,
technological advances /breakthroughs, change in government policies etc. They are negative external forces
that an individual could exploit/overcome to accomplish his/her mission, goals and objectives.

SWOT ANALYSIS CHART

STRENGTHS

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 THREATS
OPPORTUNITIES

WEAKNESSES

An analysis of the above can give the entrepreneur a more realistic perspective of the business, pointing out
foundations on which they can build future strengths and the obstacles they must remove for business
progress.
The Internal Evaluation starts with: The identification of the profit contribution of each area, followed by
allocation of resource, determination of risks involved, variety reduction, realistic allocation of costs and the
assessment of company resources. External evaluation starts with the determination of market stranding,
determination of competitors’ strengths and weaknesses, assessment of the vulnerability of the business’
main products to substitutes, assessment of the effects of economic changes on the business, inter firm
comparisons and Stock Market Valuation in terms of an assessment of the company’s vulnerability to
takeover (Dixon-Ogbechi, 2003).

Strengths/Weaknesses Analysis. This involves scanning the internal environment of the business in order to
identify its strengths and weaknesses. The entrepreneur needs to evaluate the strengths and weaknesses of the
business periodically. Also, the entrepreneur can assess the internal environment of the business by critically
looking at the internal factors in terms of the 5s, namely: Skills, Strategy, Staff, Structure, Systems and
Shared Values (Dibb, Simkin, Pride, & Ferrell, 1991; Aluko, Odugbesan, Gbadamosi & Osuagwu, 1998;
Business-Plan, 2010). To do this effectively the entrepreneur needs to ask him/herself and answer questions
pertaining to the 5s (five ‘s’) in terms of their strengths and weaknesses by developing questionnaires to ask
questions pertaining to major internal environmental factors such as:
Skills: What skills do the organizational members possess? What are the distinctive competencies of the
organization?
Strategy: Does your business have a clear vision and mission? Are your business objectives/goals derived
from its mission? Does your business have plans? Do you follow the laid down plans of the business as
scheduled? Does your business have clear strategies to operationalise its policies? What skills do the
organizational members possess? What are the distinctive competencies of the organization?
Staff: Does the business have qualified staff for the relevant positions? Are the staff rightly placed? Does the
business have adequate number of personnel to man the various positions? Structure: Does the business have
an organizational structure or organogram? What type of organization structure does your business adopt?
Are there clear lines of reporting and communication?
Systems: Does your organization have a system? What kind of systems (e.g. MIS, Accounting, Quality
Control, and Inventory) does your business have in place? (Business-Plan, 2010).

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If the answers to these questions are positive/or the factors are present, then you record them as strengths and
if the answers are negative/ the factors are absent, then you record them as weaknesses. After this, each
factor is rated as to whether it is a major strength, minor strength, neutral factor, minor weakness, or major
weakness (Business-Plan, 2010).
Opportunities and Threats Analysis: This involves scanning the external environment of the business in
order to identify the Opportunities and Threats. The entrepreneur can assess the external environment of the
business by critically looking at the opportunities and threats emanating from changes in the major external
environmental factors. For instance opportunities in the technological environment could be availability of
advanced technology, developments in Information Technology like the advent of the GSM; opportunities in
the Political/Legal environment could be favourable government policies, tax holidays; opportunity in the
Demographic environment could be great market demand; opportunities in the Economic environment could
be growing export market increased consumer spending and growing industry.
Positive seasonal influences are an opportunity in the natural environment; opportunities in the other
environment could be change in consumers taste in favour of your product and Intermediaries’ cooperation.
Examples of threats in some external environmental factors can come from direct competitors, indirect
competitors, consumers, substitute products or services and suppliers, customers brand switching and
innovations by competitors (Dixon Ogbechi, 2003; Business-Plan, 2010).

Discussion Forum
In your context, identify the strengths, weaknesses, opportunities and threats, that are likely to affect young
Entrepreneur? Among the posts, identify two that share the same view with you.

Strategies for exploring opportunities in the Environment

To know the opportunities out there is often difficult especially for young entrepreneur. In this unit you will
learn how such opportunities can be identified.
Opportunity exploitation refers to activities conducted in order to gain economic returns from the discovery
of a potential entrepreneurial opportunity. It involves the decision to act upon a perceived opportunity and
the associated behaviours aimed at realizing the value of the opportunity.
What do entrepreneurial opportunities look like? How do firms discover and exploit these opportunities to
create value and sustain competitive advantage? This paper reviews the strategic management and
entrepreneurship literatures to identify the nature and character of entrepreneurial opportunities and the
entrepreneurial strategies that firms employ to seize and commercialize these opportunities. Three emerging
schools are identified. The economic school argues that entrepreneurial opportunities exist as a result of the
distribution of information about material resources in society. The cultural cognitive school argues that
entrepreneurial opportunities exist as a result of environmental ambiguity and the cultural resources available
to interpret and define these opportunities. Finally, the sociopolitical school stresses the role of network and
political structures in defining entrepreneurial opportunities. We integrate these perspectives to offer a way to
improve understanding of the opportunity creation and exploitation process.

Four ways to identify more business opportunities.

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1. Listen to your potential clients and past leads. When you're targeting potential customers listen to their
needs, wants, challenges and frustrations with your industry. ...
2. Listen to your customers. ...
3. Look at your competitors. ...
4. Look at industry trends and insights.

Exploit new business opportunities

Once you have identified new business opportunities, narrow the list down to those customers that you think
are potentially the most lucrative. Using a more targeted approach will prevent you spreading your
marketing budget and time too thinly. Any business opportunities you identify need to be managed. Carefully
examine the action you plan to take - you need to make sure the opportunities fit in with your business
objectives.
Be careful that you don't develop the business beyond your means - make sure that your capabilities match
the opportunity. There is no point securing too much new business if you can't then successfully deliver your
promises. Planning is essential to all businesses during their entire lifespan. It focuses on defining business
goals for the future and determining steps, activities and resources needed to achieve them.
Successful businesses regularly review their business plan to ensure that it continues to meet their needs and
responds to any internal and external changes. This guide explains how you can turn your business plan from
a static, 'one-off' document into a dynamic template that will help your business both survive and thrive. It
describes the benefits of ongoing business planning and the importance of writing clear business growth
plans. It also explains how to use a business plan to allocate resources effectively and tells you why you
should carry out regular business plan reviews.

Take advantage of new opportunities

Monitor your competitors. Identify areas they don't operate in and find out who they sell to - these are
potential customers for your business as well. Examine their product range or the services they offer, check
out their marketing and investigate their pricing. A competitor's poor performance could create an
opportunity for your product or service.
Look for events or changes that could trigger a need for a new type of product or service, for example:
• new legislation can create opportunities for business consultants or advisers
• two organizations may be merging - providing a great deal of opportunity for all types of services and
trades.
Look beyond your current market. Looking further than your sector or established market can open up
business opportunities. By looking to other sectors, businesses and countries for inspiration and ideas you
can combine existing ideas to produce a more effective product or service and take a fresh approach to
meeting an identified need.
Consider working in partnership with other businesses that offer complementary services to yours and which
are aimed at similar customer groups. The number of potential opportunities could be increased in this way
by:
• the partner business selling your products or services to customers who don't currently buy from you
• you selling your partners' products or services
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• jointly developing new products or services based on a combination of your business and theirs. You will
have to agree fixed fees or commission rates with the other business if you are selling each other's products
or services. A further benefit of working in partnership is that marketing and promotional costs are shared
(equally or proportionately). Pooling your resources can also increase your bargaining power, enabling you
to negotiate better deals with suppliers.

Approaches to addressing environmental barriers

In every face of life, there are challenges. This is not different in business. You do not quit a business
because there are challenges. Rather you look for ways such challenges can be surmounted. You are going to
learn strategies you can use in solving environmental barriers in business.

Five kinds of Environmental Barriers

People with disabilities can face many Environmental Barriers. These barriers depend on the person, the type
of the disability, and many other things. There are five broad types of barriers:
1. Physical barriers: Is your home accessible? Does it let you move around easily? How accessible is work
or school, and the public places you go?
Physical barriers can be caused by things like buildings, stairs or hills, doorways, or even the weather and
climate.
2. Attitude barriers: These have to do with prejudice and discrimination. Do negative attitudes and
prejudice from people you come in contact with keep you from being as productive and successful as
possible?
3. Assistance barriers: Does lack of transportation keep you from going where you need to go? Does a lack
of good information or medical care keep you from doing what you need to do? Are people in your home and
community helpful enough?
4. Policy barriers: Do government rules make road-blocks for you? Can you find the educational,
employment, and service programs you need? Do rules and regulations stop you or get in your way?
5. Work and School Barriers: Are people you interact with at school or work positive and helpful? Do they
support you? Does how they act prevent you from doing the things you need to do?
These were the biggest and most common barriers that people did report:
1. Not having the transportation they need
2. Barriers in their surroundings – like poor lighting, too much noise, crowds. It also includes things in nature
like cold temperatures, too much rain, steep hills, etc.
3. The attitudes of people in their own homes or families

Barriers affected people with TBI in several ways

1. People who said they had a lot of barriers were less satisfied with their lives.
2. People had trouble getting out of their houses and moving around their communities also said they had
more barriers in their environment.
3. People who reported experiencing negative attitudes or prejudice were less independent and less active in
outside activities.

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4. People who did not work or go to school reported more barriers. In other words, people who were not
doing something “productive” also thought they had more barriers.

What does this mean to you?

Keep in mind that, in spite of the research we described here, the majority of people with TBI in our we
study did not report that environmental barriers are a big problem for them. That means that it is very likely
that you don’t have a lot of trouble with barriers either. If that is the case, then think of this brochure as just
“food for thought.”
However, if you are dealing with barriers in the environment, you need to think about whether they are
making a difference in your life. Here is a modified version of the survey we used in our research:
Check the barriers that are big problems for you: ones that you experience often, or ones that are severe
problems:
• The availability of transportation
• Design and layout of your home
• Design and layout of buildings and places you use at school or work
• Design and layout of buildings and places in your community
• The natural environment — temperature, terrain, and climate
• Aspects of your surroundings — lighting, noise, crowds, etc.
• The availability of information you want or need
• The availability of education and training you want or need
• The availability of health care services and medical care
• Lack of personal equipment or special adapted devices
• Lack of computer technology
• The availability of someone else to help you in your home
• The availability of someone else to help you at school or work
• The availability of someone else to help you in your community
• The attitudes of others in your home
• The attitudes of others at school or work
• The attitudes of others in your community
• Lack of support and encouragement from others in your home
• Lack of support and encouragement from others at school or work
• Lack of support and encouragement from others in your community
• Prejudice or discrimination
• Lack of program or services in your community
• Problems with rules and policies of businesses and organizations
• Problems with education and employment programs and policies
• Problems with government programs and policies. Now, go back and look at the ones you checked. Ask
yourself: What can you change to make these barriers smaller or less frequent?
• Do the people around you know what kind of support you need from them?
• Could you move to a different place that is more accessible?
• Could equipment like a cane or a wheelchair, or even a wheelchair lessen your barriers?
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• Could you find new people to be with -- ones who are more supportive and positive?
• Can you change what you do so you are less bothered by your environment? For, example, if noise bothers,
could you avoid noisy places?
• Can you change things about yourself so other people perceive you differently? This could improve their
attitudes. Check out our brochure on Communicating for ideas.

CHAPTER SEVEN
ENTREPRENEURSHIP IN NIGERIA- II
The Concept of Women Entrepreneurship
Before now, women were mostly known to be in the kitchen and their kind of business was only in trading.
But today, women have place in business.

Concept and Functions

Women entrepreneur may be defined as a woman or group of women who initiate, organize, and run a
business enterprise. It is based on women participation in equity and employment of a business enterprise. It
is a general belief in many cultures that the role of women is to build and maintain the homely affairs like
task of fetching water, cooking and rearing children. Since the turn of the century, the status of women in
India has been changing due to growing industrialization, urbanization, spatial mobility and social

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legislation. With the spread of education and awareness, women have shifted from kitchen to higher level of
professional activities. Entrepreneurship has been a male-dominated phenomenon from the very early age,
but time has changed the situation and brought women as today's most memorable and inspirational
entrepreneurs. In almost all the developed countries in the world women are putting their steps at par with the
men in the field of business. Except some Islamic countries of the world the law of the country has been
made in favour of the development of women entrepreneurship Kamal Singh who is a woman entrepreneur
from Rajasthan, has defined woman entrepreneur as “a confident, innovative and creative woman capable of
achieving self-economic independence individually or in collaboration, generates employment opportunities
for others through initiating, establishing and running the enterprise by keeping pace with her personal,
family and social life.”
Women Entrepreneur is not different from the concept of Entrepreneur, all the concept characteristics &
functions are applicable to Women Entrepreneur. Role of women in family & society is changing very fast.
Those days are gone where typically women are expected to look after household activities change in various
social aspect like an equal treatment to women, no discrimination among male & females availability of
equal opportunities to work in any field slowly these changes have forced her to become more competitive &
also encouraged into business operations.
In nutshell, women entrepreneurs are those women who think of a business enterprise, initiate it, organize
and combine the factors of production, operate the enterprise and undertake risks and handle economic
uncertainty involved in running a business enterprise.

Functions of Women Entrepreneurs:

As an entrepreneur, a woman entrepreneur has also to perform all the functions involved in establishing an
enterprise. These include idea generation and screening, determination of objectives, project preparation,
product analysis, and determination of forms of business organization, completion of promotional
formalities, raising funds, procuring men, machine and materials, and operation of business.
Frederick Harbison (1956) has enumerated the following five functions of a woman entrepreneur:
1. Exploration of the prospects of starting a new business enterprise.
2. Undertaking of risks and the handling of economic uncertainties involved in business.
3. Introduction of innovations or imitation of innovations.
4. Coordination, administration and control.
5. Supervision and leadership.
The fact remains that, like the definition of the term ‘entrepreneur’, different scholars have identified
different sets of functions performed by an entrepreneur whether man or women.
All these entrepreneurial functions can be classified broadly into three categories:
(i) Risk-bearing
(ii) Organization
(iii) Innovations

Role Orientation and Women Entrepreneurial Aspirations

The dialogue has become too negative, degrading, and hostile toward women. Too often people in the public
sphere, on social media, and in our everyday lives personally attack women with whom they disagree. By
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objectifying, mocking, dismissing, and degrading women’s appearances or backgrounds, they seek to
delegitimize their qualifications and distract from their ideas. All women should be treated with respect. Fear
of being shamed, mocked, or silenced should have no place in the national debate. Join the movement to
encourage respectful, diverse, and thoughtful conversations. No woman should be afraid to share her
thoughts and beliefs. We encourage everyone to show respect for others who disagree with them and ask that
they be given the same in return.
The only way to achieve real, lasting change is to come together as a unified force. We have a network of
supporters and STAND or ARE ready to take on anyone who tries to tear down or shut up women.
Enterprising new firms drive economic growth, and women around the world are important contributors to
that growth. As entrepreneurs, they seize opportunities, develop and deliver new goods and services and, in
the process, create wealth for themselves, their families, communities, and countries. This volume explores
the role women entrepreneurs play in this economic progress, highlighting the challenges they encounter in
launching and growing their businesses, and providing detailed studies of how their experiences vary from
country to country.
Enterprising new firms drive economic growth, and women around the world are important contributors to
that growth. As entrepreneurs, they seize opportunities, develop and deliver new goods and services and, in
the process, create wealth for themselves, their families, communities, and countries. This volume explores
the role women entrepreneurs play in this economic progress, highlighting the challenges they encounter in
launching and growing their businesses, and providing detailed studies of how their experiences vary from
country to country.
Statistics show that businesses owned by women tend to remain smaller than those owned by men, whether
measured by the number of employees or by the size of revenues. Because women-led firms fail to grow as
robustly, the opportunities to innovate and expand are limited, as are the rewards. Based on recent studies
that examine the links between entrepreneurial supply and demand issues, this volume provides insights into
how women around the world are addressing the challenges of entrepreneurial growth. The first set of
chapters consists of country overviews and provides discussions of the state of women growing businesses.
The second set of chapters describes research projects under way in different countries and explores more
focused topics under the umbrella of women business owners and business growth. The volume concludes
with an agenda and projects for future research.
Academics and policymakers will gain a greater understanding of women’s entrepreneurial behaviours and
outcomes through this path-breaking volume. Those who support women through education and training,
policymaking, or providing entrepreneurial resources will also find the volume of great practical interest.

Contributions of Women to National Socio-Economic and Human Development

Are the contribution of women different from that of men in business? This is the big question that will be
classified in this unit. Before now people attribute some kind of business to men and others to women.
Today, such classification seems to be giving way. Find out more as your read.

Socio-economic development is the process of social and economic development in a society. Socio-
economic development is measured with indicators, such as GDP, life expectancy, literacy and levels of
employment. The concern for ‘women in development’ or ‘women progress’ and ‘women participation’ in
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national activities as par the men is not only a street slogan in Nigeria but a governmental struggle and
popularised programme.
The contributions of women in National Development were beyond agriculture and household duties Firstly,
the uncertainty of the new urban system which saw only the men who were known to be the accredited
family bread winners ventured out while women and children remained in the villages to look after the
homes and farms. This earlier contact with the colonial work system put the men in an advantageous position
to acquire all the relevant skills before some women.
Secondly, there was the existing cultural belief that the responsibilities of the women do not extend beyond
the houses, the farm and market. Women who ventured to project themselves beyond these sectors were
suspected to have easy virtue tendencies and were despised in the communities. This fact also delayed the
education of women or girl children, therefore, seeing them as not having the necessary skill, to function in
the colonial urban system. At that stage what became known as modern and mechanisms for prop.
When it became difficult for the men alone to sustain the family it became imperative for the woman to earn
some income. The port of call due to her lack of skills and education was the market- for trading while their
husbands engaged in ‘government work’. Today in Nigeria for example male nurses are endangered species.
This also applied to teaching which except in the technical colleges and the universities male teachers are on
minority. The delayed incursion of women into other male dominated jobs such as management positions in
the public and private sectors and lectureship position in University was as a result of socioeconomic
prejudices associated with university educated woman. Soon after women diversified into professional areas
such as medicine, law, accountancy, politics, engineering, power sharing and decision making. Since then
women have never relented but are making waves in all spheres of life. Today, women are present in all
occupations in Nigeria, Africa and the world. Women have proved very capable of effective representation
over the years. What is left is policy re-thinking to integrate women into the main stream of national decision
making.

Barriers to Women Entrepreneurial Practice

Though women are up and doing today in business, there are barriers that still inhibit their productivity in
business.
Some of the problems faced by women entrepreneurs
1. Problem of Finance:
Finance is regarded as “life-blood” for any enterprise, be it big or small. However, women entrepreneurs
suffer from shortage of finance on two counts.
Firstly, women do not generally have property on their names to use them as collateral for obtaining funds
from external sources. Thus, their access to the external sources of funds is limited.
Secondly, the banks also consider women less credit-worthy and discourage women borrowers on the belief
that they can at any time leave their business. Given such situation, women entrepreneurs are bound to rely
on their own savings, if any and loans from friends and relatives who are expectedly meager and negligible.
Thus, women enterprises fail due to the shortage of finance.

2. Scarcity of Raw Material:

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Most of the women enterprises are plagued by the scarcity of raw material and necessary inputs. Added to
this are the high prices of raw material, on the one hand, and getting raw material at the minimum of
discount, on the other. The failure of many women co-operatives in 1971 engaged in basket-making is an
example how the scarcity of raw material sounds the death-knell of enterprises run by women (Gupta and
Srinivasan 2009).

3. Stiff Competition:
Women entrepreneurs do not have organizational set-up to pump in a lot of money for canvassing and
advertisement. Thus, they have to face a stiff competition for marketing their products with both organized
sector and their male counterparts. Such a competition ultimately results in the liquidation of women
enterprises.

4. Limited Mobility:
Unlike men, women mobility in Nigeria is highly limited due to various reasons. A single woman asking for
room is still looked upon suspicion. Cumbersome exercise involved in starting an enterprise coupled with the
officials humiliating attitude towards women compels them to give up idea of starting an enterprise.

5. Family Ties:
In Nigeria, it is mainly a women’s duty to look after the children and other members of the family. Man
plays a secondary role only. In case of married women, she has to strike a fine balance between her business
and family. Her total involvement in family leaves little or no energy and time to devote for business.
Support and approval of husbands seem necessary condition for women’s entry nto business. Accordingly,
the educational level and family background of husbands positively influence women’s entry into business
activities.

6. Lack of Education:
In India, around three-fifths (60%) of women are still illiterate. Illiteracy is the root cause of socio-economic
problems. Due to the lack of education and that too qualitative education, women are not aware of business,
technology and market knowledge. Also, lack of education causes low achievement motivation among
women. Thus, lack of education creates one type or other problems for women in the setting up and running
of business enterprises.

7. Male-Dominated Society:
Male chauvinism is still the order of the day in India. The Constitution of Nigeria speaks of equality between
sexes. But, in practice, women are looked upon as weak in all respects. Women suffer from male reservations
about a women’s role, ability and capacity and are treated accordingly. In nutshell, in the male dominated
Indian society, women are not treated equal to men. This, in turn, serves as a barrier to women entry into
business.

8. Low Risk-Bearing Ability:

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Women in Nigeria lead a protected life. They are less educated and economically not self-dependent. All
these reduce their ability to bear risk involved in running an enterprise. Risk-bearing is an essential requisite
of a successful entrepreneur.
In addition to above problems, inadequate infrastructural facilities, shortage of power, high cost of
production, social attitude, low need for achievement and socio-economic constraints also hold the women
back from entering into business.

Discussion Forum
From your opinion, is there a different between women and men entrepreneurs? Post your view on the
discussion page.

Social Entrepreneurship
The Concept of Social Entrepreneurship
When you mention entrepreneurship, what easily come to most people mind is learning a vocation such as
baking, cloth making, block making and the like. To think further some will look at production which might
come in form of creativity and innovation. Services rendered are often kept silent. This is where social
entrepreneurship comes in.
Social entrepreneurship is the use of startup companies and other entrepreneurs to develop, fund and
implement solutions to social, cultural, or environmental issues. This concept may be applied to a variety of
organizations with different sizes, aims, and beliefs.
Social entrepreneurship is important because it provides a framework for businesses to find their own success
in the pursuit of helping others. Social entrepreneurship is important because it provides a framework for
businesses to find their own success in the pursuit of helping others. Thus, business should aim to generate
profits and help society.

Types of Social Entrepreneurship

Community Project.
Non-profit Organization.
Co-operative.
Social Enterprise.
Social Purpose Business.

Role and Importance of Social Entrepreneurship for Sustainable Rural Development

Social economy and social entrepreneurship are a subject of special consideration, particularly in recent
years. This is due to their potential to find solutions to society’s problems related to the creation of
sustainable jobs, facilitating social and labor integration, provision of social services and improving the
quality of life, including the fight against poverty and social exclusion. The social enterprise is identified as a
key component of the civil society and the European social model. Social enterprises are an integral part of
the wider civil society and a major component of the social economy sector, which is politically and
financially supported in its entirety by the European policy.
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The Importance of Social Entrepreneurship for Development
1. Employment Development
The first major economic value that social entrepreneurship creates is the most obvious one because it is
shared with entrepreneurs and businesses alike: job and employment creation.
2. Innovation / New Goods and Services
Social enterprises develop and apply innovation important to social and economic development and develop
new goods and services. Issues addressed include some of the biggest societal problems such as HIV, mental
ill-health, illiteracy, crime and drug abuse which, importantly, are confronted in innovative ways.

3. Social Capital
Next to economic capital one of the most important values created by social entrepreneurship is social capital
(usually understood as “the resources which are linked to possession of a durable network of ... relationships
of mutual acquaintance and recognition").

4. Equity Promotion
Social entrepreneurship fosters a more equitable society by addressing social issues and trying to achieve
ongoing sustainable impact through their social mission rather than purely profit-maximization.
Assessment Exercise
Why does your business exist – to serve only the shareholders or all the stakeholders?

Feedback
To make profit?

CHAPTER EIGHT
BASIC PRINCIPLES OF E-COMMERCE
Introduction to Basic Concepts and Definitions

Definition of E-commerce E-Commerce simply means Electronic Commerce; E-commerce is the buying
and selling of goods, products, or services using the internet as a medium whereby the buyer gets to see the
products online, order it and make payment through the mode accepted by the seller. The seller then delivers
these products to the consumer via available and accepted means. E-commerce is also known as internet
commerce. Online stores like Amazon, Shopify, Ebay, Olx are examples of E-commerce websites. E-
commerce concept is a fast rising one, gaining steady popularity as there is Increased accessibility and
availability of Internet access which is making many small and medium and even large-scale businesses to be
considering e-commerce as a valid and more profitable sales channel. Ecommerce is better understood with
the concepts of the 5Cs, the 5C model consists of:
 Commerce which is like a market place that consist of the buyers and sellers, transaction terms and
facilities to perform business transactions. This helps create and strengthen a universal supply chain.

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 Collaboration: the internet being a network of networks supports interrelationships among businesses and
individuals in a manner that is not limited by space, time, national or organizational constraints.
 Communication: the internet technology and the world wide web provides a great interactive medium for
self-expression (as in reviews or comments of clients) and self-presentation (as a means for businesses to
showcase their products or services; a kind of marketing)
 Connection: it is likely that different businesses use different software platforms to run their business
processes, leveraging on the advantages of the internet, it is achievable to incorporate the different software
platforms of different businesses that want to collaborate.
 Computation: large scale sharing of resources is paramount to a successful business transaction. The
internet technology facilitates this to ease successful completion of business processes.

Features of E-commerce
 Wider range of audience: with the internet as the backbone of ecommerce, business transactions can take
place across national boundaries in a more convenient and cost-effective form.
 Universal standard: internet technology has a universal standard, it's not a different one in UK and a
different one in Nigeria.
 Rich content: ecommerce allows for integration of the various forms of content, one can use video, audio,
combination of two or all three.  Ease of interaction: clients interact with businesses from the comfort of
their homes. There is no need to physically visit a store as in the place of the traditional commerce.
 Personalization or customization: the various technologies integrated to the internet allows businesses to
send personalized/customized messages that can be delivered to individuals or even groups.
 Ubiquity: the internet technology is widely available and accessible from anywhere at any time; be it at
home, at work via mobile devices like a mobile phone phone, ipad, and even PCs.
 Business digitalization: this involves comprehensively using the internet and other tools of Information
and Communication Technologies to link information and cooperate seamlessly every stakeholder of the
business.
 Automation of business processes to increase delivery speed

Assessment Exercise(s)
1. the following are 5C models of E-commerce except a. computation b. connection c. commerce d.
competition
2. One of the following is a feature of E-commerce a. Planning Management b. Ease of interaction c.
Supply Relationship d. Customer Planning

Types of E-Commerce
E-commerce can be divided into different types, some are: Business to Business (B2B), Business to
Customer (B2C), Customer to Customer (C2C), and Customer to Business (C2B).

Business to Business (B2B): only the companies are doing business with each other. Here, the final
consumers are not involved. Therefore, the online transactions that are carried out in a business to business e-
commerce transaction involve parties like the manufacturers, wholesalers, retailers etc. B2B e-commerce is
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simply the electronic exchange of products, services or information between businesses rather than between
businesses and consumers as expected. Examples include companies such as Xero that offers inbound
marketing and sales and accounting software for small to medium businesses or a construction materials
company selling its products to architects and interior designers. Business to business ecommerce is the
largest form of ecommerce and it requires high level of security in exchanging data.

Business to Customer (B2C): here, the business sells directly to customers. The customers can browse the
website, see reviews and order directly from the business. After the order, the good is shipped directly to
them (the customers). Some of the most popular business to customer websites are; Amazon, Jumia and
Konga. The businesses strive to reach individuals and not businesses as in business to business type. Various
means are employed for this purpose like newsletters, email list, instant messaging and the likes. Advertisers
and content providers can as well assist in the marketing process of ensuring that these businesses reach the
intended audiences using contents like digital news, photos, music, videos and even artworks.

Customer to Customer (C2C): for this model, the consumers are in direct contact with one another and
they can buy or sell freely without any middleman. This model enables the consumers to buy and sell used
goods like furniture, mobile phones or electrical appliances. Examples of websites that use this model are:
OLX and Jiji. Consumer to consumer ecommerce presents a means for consumers to set their rules for the
business transaction, they set their prices as well and the buying party checks for themselves if the set prices
and rules are favorable before making a deal with the selling party. The consumer that's selling prepares the
product to be sold and place it on sale on their own while the consumer that's purchasing chooses from the
different displayed good s to be sold or uses the search engine to search for what to be purchased and chooses
from the returned results of the search like on eBay.

Consumer to Business (C2B): this model is the inverse of business to consumer because here, as the name
implies, it‟s the consumers that sell to the business. Freelancers and businesses that buy from then are a
perfect example for this model of E- Commerce. Here, individuals (that is, consumers) create value (could be
goods or services) that businesses consume. A programmer for instance can give his/her service and abilities
to utilize and maintain the online resources of a system as a specialist in the programming field. A platform
known as “fiver” works on this model.
Business to administration: also known a s business to government which usually involve exchange of data
between businesses and the government via the internet, an example is when a business wants to advertise its
product or service at the government level. Business to administration type of ecommerce includes different
services like legal documents, social security, fiscal measures and the likes.

Consumer to administration: also known as consumer to government entails electronic transaction between
individuals (consumer) and the government. When an individual makes a request or a query from the
government, it works on the model of consumer to administration type of ecommerce. It creates a way that is
easy for communication between governments and individuals. Examples include payment of health services,
distance learning, information dissemination and so on.

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M-Commerce (mobile commerce) is the buying and selling of goods and services through wireless
technology-i.e., handheld devices such as cellular telephones and personal digital assistants (PDAs). It does
not always require internet, such as mobile banking. It is also referred to as next generation e-commerce.
Japan is seen as a global leader in m-commerce. As content delivery over wireless devices becomes faster,
more secure, and scalable, some believe that m-commerce will surpass wire-line e-commerce as the method
of choice for digital commerce transactions. Industries affected by m-commerce include: financial services,
telecommunications, service/retail, and information services.

Benefits and Key Ideas in E-Commerce

E-commerce has come with some benefits, which are:
 Cheaper cost: E-Commerce is usually much cheaper than because a physical store is not necessary.
Businesses that have a physical store in a popular location will have higher cost of operation and
maintenance.
 Wider reach: with e-commerce, there is no restriction, no limitation to how large the audience to reach will
be. People from different countries who are willing and able to patronize an ecommerce business can contact
the business, place orders and the business works out delivery to them. With ecommerce, businesses can
have as many clients as possible.
 Direct (face to face) interaction is not needed: unlike the traditional means of commerce which is based on
face to face interaction for when clients have an enquiry and for the business's response too; ecommerce does
not need this. The electronic channels like email, live chats and the likes are used for these purposes and
more.
 E-Commerce removes geographical barriers. Which means you can buy and sell from any part of the
world.
 E-Commerce enables sellers to lower transaction cost as they don't need to pay rent for a physical store.
This will enable them to maximize their profit.
 Goods are delivered quickly and easily with little efforts on the side of the consumer.
 Complaints are addressed quickly and consumers can see reviews of other consumers before purchasing an
item.
 E-Commerce saves time, effort and energy of the consumers and of the seller.
 With E-Commerce, customers get to shop any day at any time as there is no closing hour like physical
stores.
 E-Commerce enables the buyer and seller to be in direct contact with no intermediary. This gives room for
personal touch and quick transaction.

Disadvantages of E-commerce
 Security: The platform being used for the ecommerce can be hacked which can lead to client's details
being compromised and used for illegal and fraudulent purposes.
 Trust: It might take time for the ecommerce to get clients that will actually patronize it. People have trust
issues to entrust their money or details via the internet as ecommerce usually has no physical store which
makes tracing very difficult or even impossible.

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 Credit card fraud is another security threat that ecommerce is exposed to and this is like the most common
and most accepted means of payment for ecommerce transactions.

Key Ideas in E-commerce

 D2C: means direct to consumer. Middle men are cut off and business deliver their product or services
directly to the consumer without wholesalers or retailers. It is direct!
 White labeling: when a business applies its brand name to a generic product after purchasing from a
distributor. If a food business buys snacks from a distributor of food company and then applies its own
business brand name on the snacks it has purchased, that is white labeling.
 Private labeling: a business makes a deal with the manufacturer directly to create a unique product
specially for the business with an exclusive right for them as the sole seller. If a food business approaches the
manufacturers of “minimie-chinchin” to exclusively start producing say chips for them with an exclusive
right that only this business can sell the chips, this is private labeling.
 Wholesaling: wholesaling involves a retailer carrying out the business process like a wholesaler by
offering a discount in price when its products are sold in bulk. The business will have piece prices and bulk
prices so they can sell in bit and also in bulk but there will be a discount in price for bulk purchase.
 Drop-shipping: is a way of marketing and selling items that will be delivered by a third party
(manufacturer or supplier). Consumers pay the drop-shipper, drop-shipper pays the supplier for the good or
service to be delivered to the consumer. Drop-shippers are like middle men that connect suppliers to
consumers. Shopify is a good example of drop-shipping platform.
Subscription: consumers pay certain agreed amount to business and business delivers the equivalent good or
service to consumer regularly at scheduled intervals. A good example is DSTV subscription

Assessment Exercise(s)
1. The following are benefits of e-commerce except: (a) Cheaper cost 21 (b) Wider reach (c) Face to face
interaction (d) Quick delivery of goods
2. The following are factors that hinders e-commerce except: (a) Insecurity (b) Lack of trust (c) Credit card
fraud exposure (d) Internet access

======BEST OF LUCK======

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