2024/2025

ACHOH S. TIMAH
ENTREPRENEURSHIP

Before going through this lesson, ask yourself if you are hard-
working, smart, creative, willing to take risks and good with
people. If the answer is yes, then take heart, stay motivated and be
steered by your inherent inner drive. You are on the road to
entrepreneurship, the ultimate career in capitalism in which you
put your idea to work in a competitive economy. Entrepreneurship
does not mean sticking to conventional business. It implies
creating new things. Its emphasis is not merely on idea generation
but also on the promotion and implementation of a new business
environment.

FINISTECH
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 Chapter One

An Overview of Entrepreneurship and

Entrepreneur

1.1 INTRODUCTION

The word „entrepreneur‟ is widely used, both in everyday conversation and as a technical
term in management and economics. Its origin from a French word, entreprender, where an
entrepreneur was an individual commissioned to undertake a particular commercial project. A
number of concepts have been derived from the idea of the entrepreneur such as
entrepreneurial, entrepreneurship and entrepreneurial process. The idea that the entrepreneur
is someone who undertakes certain projects offers an opening to developing an understanding
of the nature of entrepreneurship. Undertaking particular projects demands that particular
tasks be engaged in with the objective of achieving specific outcomes and that an individual
take charge of the project. Entrepreneurship is then what the entrepreneur does.
Entrepreneurial is an adjective describing how the entrepreneur undertakes what he or she
does. The entrepreneurial process in which the entrepreneur engages is the means through
which new value is created as a result of the project: the entrepreneurial venture.
Chapter Objectives
This chapter is concerned with developing a predominant and integrated perspective of the
entrepreneur and entrepreneurship. It reviews the great variety of definitions given for the
word entrepreneurship and also the different activities performed by the entrepreneur. In This
chapter we are going to look at the following:

 Historical origin of entrepreneurship

 Meaning of entrepreneurship
 Definition of entrepreneurship and other concepts
 Characteristics of entrepreneurship
 Difference between entrepreneur and entrepreneurship
 Importance of entrepreneurship/ benefits of entrepreneurship
 Entrepreneurial Behavior
 The Functions of an Entrepreneur
 Myths Associated with Entrepreneurship
 Theories of entrepreneurship

1. Historical Origin of Entrepreneurship

What is entrepreneurship? And who is an entrepreneur? These two questions are asked more
frequently reflecting the increasing demand in the field of entrepreneurship. Offering a
specific and unambiguous definition of the term entrepreneurship /entrepreneur presents a
challenge. This 3 is not because definitions are not available, but because there are so many.
Here let us took in to the historical development of entrepreneurship so as to grasp the
meaning of the word entrepreneurship.
During the ancient period the word entrepreneur was used to refer to a person managing large
commercial projects through the resources provided to him.
In the 17th Century a person who has signed a contractual agreement with the government to
provide stipulated products or to perform service was considered as entrepreneur. In this case
the contract price is fixed so any resulting profit or loss reflects the effort of the entrepreneur.
In the 18th Century the first theory of entrepreneur has been developed by Richard Cantillon.
He said that an entrepreneur is a risk taker. If we consider the merchant, farmers and /or the
professionals they all operate at risk. For example, the merchants buy products at a known
price and sell it at unknown price and this shows that they are operating at risk. The other
development during the 18th Century is the differentiation of the entrepreneurial role from
capital providing role. The later role is the base for today‟s venture capitalist.
In the late 19th and early 20th Century an entrepreneur was viewed from economic
perspectives. The entrepreneur organizes and operates an enterprise for personal gain. In the
middle of the 20th Century the notion of an entrepreneur as an inventor as established. “The
function of the entrepreneur is to reform or revolutionize the pattern of production by
exploiting an invention or more generally untried technological possibility for producing new
commodities or producing an old one in a new way or opening a new outlet for products by
reorganizing a new industry.” The concept of innovation and newness are at the heart of the
above definition. From the historical development it is possible to understand the fact that the
perception of the word entrepreneur was evolved from managing commercial project to the
application of innovation (creativity) in the business idea.

2. Meaning of Entrepreneurship
The entrepreneurial function implies the discovery, assessment and exploitation of
opportunities, in other words, new products, services or production processes; new strategies
and organizational forms and new markets for products and inputs that did not previously
exist.

The entrepreneurial opportunity is an unexpected and as yet unvalued economic opportunity.

Entrepreneurial opportunities exist because different agents have differing ideas on the
relative value of resources or when resources are turned from inputs into outputs. The theory
of the entrpreneur focuses on the heterogeneity of beliefs about the value of resources.
Entrepreneurship –the entrepreneurial function- can be conceptualized as the discovery of
opportunities and the subsequent creation of new economic activity, often via the creation of a
new organization.
Due to the fact that there is no market for “opportunities”, the entrepreneur must exploit them,
meaning that he or she must develop his or her capabilities to obtain resources, as well as
organize and exploit opportunities. The downside to the market of “ideas” or “opportunities”
lies in the difficulty involved in protecting ownership rights of ideas that are not associated
with patents or copyrights of the different expectations held by entrepreneurs and investors on
the economic value of ideas and business opportunities, and of the entrepreneur‟s need to
withhold information that may affect the value of the project.

Entrepreneurship is often discussed under the title of the entrepreneurial factor, the
entrepreneurial function, entrepreneurial initiative, and entrepreneurial behavior and is even
referred to as the entrepreneurial “spirit. The entrepreneurial factor is understood to be a new
factor in production that is different to the classic ideas of earth, work and capital, which must
be explained via remuneration through income for the entrepreneur along with the shortage of
people with entrepreneurial capabilities. Its consideration as an entrepreneurial function refers
to the discovery and exploitation of opportunities or to the creation of enterprise.
Entrepreneurial behavior is seen as behavior that manages to combine innovation, risk-taking
and proactiveness (Miller, 1983). In other words, it combines the classic theories of
Schumpeter‟s innovative entrepreneur (1934, 1942), the risk-taking entrepreneur that
occupies a position of uncertainty as proposed by Knight (1921), and the entrepreneur with
initiative and imagination who creates new opportunities. Reference to entrepreneurial
initiative underlines the reasons for correctly anticipating market imperfections or the
capacity to innovate in order to create a “new combination”. Entrepreneurial initiative covers
the concepts of creation, risk-taking, renewal or innovation inside or outside an existing
organization. Lastly, the entrepreneurial spirit emphasizes exploration, search and innovation,
as opposed to the exploitation of business opportunities pertaining to managers.

All this explains why entrepreneurship is described in different ways. The business process
includes the identification and assessment of opportunities, the decision to exploit them
oneself or sell them, efforts to obtain resources and the development of the strategy and
organization of the new business project. It has recently been claimed that if the managers and
businessmen of many of our firms were to adopt entrepreneurial behavior when developing
their strategies, firms would be facing a much brighter future than current perceptions
suggest. The entrepreneur‟s central activity is that of business creation, which can be studied
at an individual and/or group level –analyzing psychological aspects and social variables of
education, background or the family- either at an environmental level using variables that
enable business development, or by analyzing aspects of the economic, social and cultural
environments.

The study of entrepreneurs as individuals analyzes the variables that explain their appearance,
such as personal characteristics, the psychological profile (the need for achievement, the
capacity to control, tolerance of ambiguity and a tendency to take risks) or non-psychological
variables (education, experience, networks, the family, etc.).

Therefore, there are three basic ideas that explain the appearance of entrepreneurial activity.
The first focuses on the individual, in other words, entrepreneurial action is conceived as a
human attribute, such as the willingness to face uncertainty, accepting risks, the need for
achievement, which differentiate entrepreneurs from the rest of society. The second
fundamental idea emphasizes economic, environmental factors that motivate and enable
entrepreneurial activity, such as the dimension of markets, the dynamic of technological
changes, the structure of the market –normative and demographic or merely the industrial
dynamic. The third factor is linked to the functioning of institutions, culture and societal
values. These approaches are not exclusive, given that entrepreneurial activity is also a human
activity and does not spontaneously occur solely due to the economic environment or
technological, normative or demographic changes.

When referring to entrepreneurs, there is normally a differentiation between individual

entrepreneurs or businessmen (independent) and corporate entrepreneurs or businessmen
associated with the higher echelons of a firm‟s management. Different names have been used
to describe the latter such as “corporate Entrepreneurship”, “corporate venturing”,
“intrapreneurship”, “internal corporate entrepreneurship” and “strategic renewal”.
The study of entrepreneurship leads us to attempt to answer a series of questions such as:
What happens when entrepreneurs act? Why do they act? and How do they act?. Why, when
and how do opportunities for the creation of goods and services come into existence? Why,
when and how do some people and not others discover and exploit these opportunities? And
finally, why, when and how are different modes of action used to exploit entrepreneurial
opportunities?.

We have limited knowledge of the opinion of entrepreneurs, business opportunities, the

people that pursue them, the skills used for organizing and exploiting opportunities and the
most favorable environmental conditions for these activities. Moreover, studies are carried out
at different levels; individual, firm, sector and geographical space. There is no basic theory
for carrying out this type of study, resulting in approximations based on casuistry, anecdotes
or fragmented reasoning. The black box of entrepreneurial function is yet to be opened.

The differentiation of the field of entrepreneurship from other areas depends upon the object
of the research, the methodologies and the problems researchers are attempting to resolve
underline the importance of recognizing “entrepreneurship as a field of study within
management”, a field of knowledge that upholds the development of entrepreneurship. It is on
these fundamental ideas that we base our reflections.

3. Definition of Entrepreneurship and other Concept

3.1. Enterprise
Fairclough (1991) summarizes the definitions of the noun „enterprise‟ set out in the Oxford
English Dictionary according to three different senses: something one does; a set of personal
qualities; or a business venture. He analyzed a number of political speeches made during the
Thatcher Years in the UK according to these different interpretations of the word enterprise
and found almost without exception that reference was to personal qualities. He did
distinguish different variations within enterprise qualities, citing a range from business
qualities at one end of the spectrum through to more general personal qualities at the other.
Rosa (1992) discusses three different senses of the term enterprise: enterprise as a business
organization of some type; enterprise as a series of personal skills and qualities vital to
economic development; and enterprise as a series of personal skills and qualities vital to good
citizenship and the realization of the individual‟s full potential. Rosa (1992) argues that the
majority of policy makers and educationalists view enterprise in the third sense yet it is the
one option least related to economic development and least in tune with Thatcherite economic
principles. He quotes from Cannon (1991) to illustrate the development of personal qualities
in a social context:
“Enterprise is the characteristic of people, groups and organizations which produces a
disposition to self-realization through achievement. It encompasses the self-reliance to
innovate, accept risk and act independently, if these are needed to complete tasks effectively.
People and organizations showing enterprise have the drive, energy, creativity and
leadership to see tasks through to completion by individual effort or successful teamwork.”

OECD (1989), as part of a study of the development of employment and entrepreneurial skills
in education and training in OECD countries, develops a definition of „being enterprising‟:
“An enterprising individual has a positive, flexible and adaptable disposition towards change,
seeing it as normal, and as an opportunity rather than a problem. To see change in this way,
an enterprising individual has a security borne of self-confidence, and is at ease when dealing
with insecurity, risks, difficulty, and the unknown. An enterprising individual has the capacity
to initiate creative ideas, and develop them, either individually or in collaboration with others,
and see them through into action in a determined manner. An enterprising individual is able,
even anxious, to take responsibility, and is an effective communicator, negotiator, influencer,
planner and organiser. An enterprising individual is active, confident and purposeful, not
passive, uncertain and dependent.” (p36
This definition also refers to three contexts in which enterprise may exist: the personal, social
or economic contexts.

Kearney (1996) reviews the literature in the field and develops the following definition:
“Enterprise is the capacity and willingness to initiate and manage creative action in response
to opportunities or changes, wherever they appear, in an attempt to achieve outcomes of
added value. These outcomes can be personal, social and cultural. Typically enterprise
involves facing degrees of difficulty or uncertainty. The associated risks are not necessarily
financial but may be physical, intellectual or emotional.”

3.2. Small business

Small business definitions are usually confined to a discussion of the number of employees or
sales turnover, although „small‟ can be quite different in different parts of the world, for
example in Australia it is up to 20 employees, while in other countries it is up to 100
employees or even up to 500 employees. They also contain statements about the
independence of the business and the involvement of the owner/manager in the day to day
management of the business. While the definition of small business does not add to the
confusion with the other two terms it is more the references to the context of small business
development and attributes of small business operators that leads to the uncertainty of
meaning.

3.3. Entrepreneurship
Entrepreneurship may be defined as the visualization and realization of new ideas by
insightful individuals, who are able to use information and mobilize resources to implement
their vision. Entrepreneurship is the ability (i.e., knowledge plus skills) of a person to
translate ideas of commencing a business unit into reality by setting up a business on ground
to serve the needs of society and the nation, in the hope of profits.
Entrepreneurship is a system that includes entrepreneurs (and potential entrepreneurs),
institutions and government actions. The desired policy outcome of this system is the
increased levels of entrepreneurial activity.

Wennekers and Thurik have probably provided the most elaborate and inclusive definition:
Entrepreneurship is the manifest ability and willingness of individuals, on their own, in
teams, within and outside existing organizations to perceive and create new economic
opportunities (new products, new production methods, new organizational schemes and new
product-market combinations), and to introduce their ideas in the market, in the face of
uncertainty and other obstacles, by making decisions on location, form and the use of
resources and institutions.
Finally, entrepreneurship can be understood as, An economic process where an idea is
generated or an opportunity is created, refined, developed and implemented, while exposed to
uncertainty to realize a profit by effective utilization of resources.

Entrepreneurship is the process of identifying opportunities in the market place,

arranging the resources required to pursue these opportunities and investing the resources to
exploit the opportunities for long term gains. It involves creating incremental wealth by
bringing together resources in new ways to start and operate an enterprise.
Entrepreneurship can also be defined as the process of creating something different
and better with value by devoting the necessary time and effort by assuming the
accompanying financial, psychic and social risks and receiving the resulting monetary reward
and personal satisfaction. In this case an individual should come up with something different
and better in order to the named as entrepreneur.
Entrepreneurship is the art of identifying viable business opportunities and mobilizing
resources to convert those opportunities into a successful enterprise through creativity,
innovation, risk taking and progressive imagination.
Entrepreneurship is a practice and a process that results in creativity, innovation and
enterprise development and growth. It refers to an individual‟s ability to turn ideas into action
involving and engaging in socially-useful wealth creation through application of innovative
thinking and execution to meet consumer needs, using one‟s own labor, time and ideas.
Engaging in entrepreneurship shifts people from being “job seekers” to “job creators”, which
is critical in countries that have high levels of unemployment. It requires a lot of creativity
which is the driving force behind innovation.

Entrepreneurship is a term which encompasses what entrepreneurs do i.e

 Identifying a business opportunity of a particular demand
 Look at the opportunity as a process of creating, something that did not exist.
 Constantly searching/ harnessing ones environment and resources to implement the
activities.
 Creating a totally new product and using it in as new.
  Entrepreneurship there is the practice of starting a new business or revitalizing
existing businesses in response to identifying opportunities.

In general, the process of entrepreneurship includes five critical elements. These are:
1) The ability to perceive an opportunity.
2) The ability to commercialize the perceived opportunity i.e. innovation
3) The ability to pursue it on a sustainable basis.
4) The ability to pursue it through systematic means.
5) The acceptance of risk or failure.

Based on the above concepts of entrepreneurship, an entrepreneur can be defined as follows:

3.4. Entrepreneur
1) An entrepreneur is any person who creates and develops a business idea and takes
the risk of setting up an enterprise to produce a product or service which satisfies customer
needs.
2) An entrepreneur can also be defined as a professional who discovers a business
opportunity to produce improved or new goods and services and identifies a way in which
resources required can be mobilized.

3) An entrepreneur is a person who identifies a business opportunity, harnesses and

obtains the resources necessary to initiate a successful business activity.
 The entrepreneur implements the idea
 Undertakes to operate the business
 An entrepreneur is therefore a central key individual in the society who
makes things happens for economic development.

3.4. Self-Employment
 Working independently and earning a living from it.
 This is a concept that arises when the entrepreneur relies on revenues from
his
  A business undertaking by an individual for the purpose of making a profit.

4. Characteristics of Entrepreneurship
i) Entrepreneurship is an economic activity done to create, develop and maintain a
profit-oriented business.
ii) It begins with identifying an opportunity as a potential to sell and make profit in the
market.
iii) Entrepreneurship is the best utilization of available resources.
iv) Entrepreneurship is the ability of an enterprise and an entrepreneur to take risk.

1. Fill in the blanks with suitable text.

(a) The emphasis of entrepreneurship is not merely on the ………………….. but also
on the ……………………and implementation of new business environment.
(b) Entrepreneurship is the best ………………. of available resources.
(c) Entrepreneurship is an economic activity done to create, develop and maintain a …

5. Difference between Entrepreneur and Entrepreneurship

 6. Importance/ Benefits of Entrepreneurship
1. Development of managerial capabilities: The biggest significance of
entrepreneurship lies in the fact that it helps in identifying and developing managerial
capabilities of entrepreneurs. An entrepreneur studies a problem, identifies its alternatives,
compares the alternatives in terms of cost and benefits implications, and finally chooses the
best alternative. This exercise helps in sharpening the decision making skills of an
entrepreneur. Besides, these managerial capabilities are used by entrepreneurs in creating new
technologies and products in place of older technologies and products resulting in higher
performance.

2. Creation of organizations: Entrepreneurship results into creation of

organisations when entrepreneurs assemble and coordinate physical, human and financial
resources and direct them towards achievement of objectives through managerial skills.

3. Improving standards of living: It‟s measured by the capacity of people of a

country to buy goods and services. Entrepreneurs contribute by employing people and giving
them salaries or wages to buy their necessities. By creating productive organizations,
entrepreneurship helps in making a wide variety of goods and services available to the society
which results into higher standards of living for the people. Possession of luxury cars,
computers, mobile phones, rapid growth of shopping malls, etc. are pointers to the rising
living standards of people, and all this is due to the efforts of entrepreneurs. Provide basic
needs to every citizen:- food, shelter, health, security, education, clothing

4. Elimination / Reduction of poverty: reduce rural-urban migration Provision

of opportunities for employment and personal advancement. Trying to narrow the income
differences between the rich and the poor.

5. Means of economic development: Entrepreneurship involves creation and use

of innovative ideas, maximization of output from given resources, development of managerial
skills, etc., and all these factors are so essential for the economic development of a country.
 6. Promotion of National Productivity: This is through production of goods and
services within the country and therefore they contribute to the Gross Domestic Product
(GDP).

7. Conservation of foreign Exchange: Entrepreneurs produce goods and

services that are needed by people and reduction in importing those goods and hence the
government saves foreign exchange.

8. Conservation Agent: Entrepreneurs can contribute to conservation and

utilization of resources e.g. manufacturing a Jiko that uses sawdust instead of wood charcoal

9. Development of technology through the establishment of research institutions

11. Facilitating community development through the establishment of small

businesses and the participation in community development projects.

12. Providing a positive role model and facilitating competition between domestic
entrepreneurship and imported entrepreneurship.

13. Reducing dependence on imported goods and services.

14. Stimulates competition through the fact that quality production methods are
adopted, quality products are produced and variety goods and services are produced.

15. Facilitated development of the financial sector through which; capital

accumulation is possible through savings, loaning is facilitated and development of the capital
market.

7. Entrepreneurial Behavior
 Several theories have been developed to explain why entrepreneurs behave the way they
do.
 There has been debate on whether entrepreneurs are born or made
 Born-hereditary, made-entrepreneurs are environmental influenced by where they are born.
 These are;

i) Economic
 The theory explains entrepreneurial behavior as influenced by economic factors
through which.
a) It is possible to introduce new methods
b) It is possible to find new sources of materials
c) It is possible to open new markets
 The economic prospective is important since they create enabling environment for the
entrepreneur to combine the factors of production.

ii) Psychological factors

 The theory states that entrepreneurs have unique values, attitudes and needs within
which drive them.
 It is mostly concerned with personality traits as the main determinants of
entrepreneurial behavior
 People are likely to become entrepreneurs because of high liking of say.
a) Independence
b) Attitude
c) Need to satisfy certain needs.

iii) Sociological factors

Maintains that environmental factors such as beliefs, culture, social structures determine
entrepreneurial behavior.

iv) Management factors

 Emphasizes on the organization of resources in a specific way to attain profits
 Leadership impacts on behavior and facilitates pioneership, achieving of goals and
provides vision.

8. The Functions of an Entrepreneur

i) The bearing of uncertainty is the primary function of the entrepreneur i.e losses or
profits.
ii) The management of the business enterprise ie can delegate
iii) Provision of risk capital and invention.
iv) Identifying gaps in the market and turning such gaps to business opportunities i.e
to initiate a business.
v) Financing the businesses, through raising and mobilizing the necessary resources
to exploit opportunity.
vi) Searching for business opportunities through environmental scans. vii)
Mobilization of resources needed to start and run a business e.g. from a) Personal
savings b) Friends & relatives c) Financial institutions e.t.c
vii) Evaluation of business opportunities to access viability and any other benefits that
might accrue to the business.
viii) Provide the necessary leadership for the business and those working in it.

9. Factors Influencing Entrepreneurship

Figure 1: Facors affecting g entrepreneurship

Following are the various factors that influence entrepreneurship:

Economic, Social and Political Factors Affecting Entrepreneurial

Development

1. Educational: There is a need to have drastic changes in educational pattern to make

it more relevant to the needs of the time, economic, social and political environment. More
and more young minds should be trained to create avenues for self-employment. Designing a
suitable programme of entrepreneurial education and introduction of entrepreneurship, as a
subject for study even at the school level to make the young minds realize the Importance of
entrepreneurship are the need of the hour.

2. Legal: The law must protect the weak till the time they need it. Entrepreneurs in
small sectors have limited resources and cannot compete with large-scale manufactures.
Reservation of certain items of products for exclusive production in small sector is one such
legal measure to protect the interests for small-scale entrepreneurs.

3. Infrastructure: Land and factory sheds at concessional rates, adequate supply of

power, water, coal and other sources of energy, transport facilities, availability of wagons,
supply of raw materials and other physical facilities should be provided by the Government to
facilitate setting up of new enterprise.

4. Institutional: Entrepreneurs need advice on the lines of manufacture, which may be

suitable, sources of raw materials, finance and other facilities like technical know-how, tools
and equipment, etc. The entrepreneurs also need to know about the opportunities and threats
to their business, government policies, developments in international economic scene,
technological changes, etc. Institutions have to be established to keep the entrepreneurs
informed about all these matters of their interest and also to enable them to present their
problems before the authorities in the government.
 5. Financial: The needs for fixed and working capital should be adequately needed;
if the new enterprises are to serve and grow. The lack of financial resources deters potential
entrepreneurs to start new ventures. The problems become more acute in the capital short
developing countries where the business and industry how to put up with underdeveloped
capital market. The governments, in these countries should see that the capital market is
developed with newer and innovative capital market instruments and strong financial
institutions.

6. Procedural: The bureaucratic procedure of government offices, industries

departments and financial institutions is a great hindrance to the growth of new enterprises.
The entrepreneurs have to run to different jobs; and complete a number of offices in
government for different jobs; and complete a number of formalities prescribe) by several
laws, rules and regulations. It would be better for the potential and existing entrepreneur, if
the number of procedural and legal restrictions of the entrepreneurs is reduced and an
administrative mechanism is developed to look after all the needs and requirement the
entrepreneurs.

7. Communicational: The information gap pushes many entrepreneurial ventures

towards extinction. Unless an entrepreneur known about the market potentials, competition in
the market, technological and other developments, the entrepreneurs is not likely to succeed
in the venture. The government departments, organizations of entrepreneurs, financial
institutions and business consultants have a role to play in this regard. It is very important for
an entrepreneur to succeed. 8. Information technology and communication: Modern
technology such as Information Technology has entered every walk of human life. Faster
mode of communication through email, networking, web technologies have revolutionized
the industrial scene with the fast and up to date information at different levels of management,
the management processes also have gone considerable changes in decision making and
implementation.

8. Rapid Changes: IT and communication revolution, the networking within the

industry and outside the industry has increased many fold. The exchange of information and
availability of resources is bringing changes in the industry faster than ever before in the
history.

9. Large size: There is considerable increase in automation and introduction of

computerized Production and process controls in industries. The demand for the goods and
the geographical reach is bringing large size industries as well as services. The size gets
advantage of economies of scale in manufacturing marketing.

10. R&D Technology: Companies today are investing lots of money in R&D activities
to develop new products and new processes to compete in the global market.

11. Stakeholders: The stakeholders of today are more knowledgeable and get up to
date information about the industry developments as well as the progress of particular
industries were interested. Thus there is awareness by the stakeholder, which gives him closer
involvement than ever before.

12. Globalization: Now business operates in an open environment, as there is no

geographical boundaries exist. So competition has become very intense. To survive in today‟s
market company has to be very competitive in terms of quality, price and delivery.

13. High taxation levels: For business and personal incomes which in effect reduce
profits earned making it un-attractive to engage in business. Taxation of raw materials and
other inputs raise production costs.

14. Corruption and official harassment: Occurs where entrepreneurs are forced to
bribe officials in various government departments to allow operation or start up. Raids under
one pretext or another which tends to be very harassing.

15. Unregulated competition from the outside world due. This leads to liberalization
which opened importation competing locally produced goods.
10. Myths Associated with Entrepreneurship
Entrepreneurs are doers not thinkers: Although it is true entrepreneurs
tend towards action, they are also thinkers.
Entrepreneurs are born not made: The idea that the characteristics of
entrepreneurs cannot be taught or learned, that they have innate trait, has long
been prevalent. Today, however, the recognition of entrepreneurship as a
discipline is helping to dispel the myth.
Entrepreneurs are always inventors: entrepreneurship covers more than
just invention. It requires a complete understanding of innovative behavior in
all forms.
Entrepreneurs are academic and social misfits. The belief that
entrepreneurs are academically and socially ineffective is as a result of some
business owners having started successful enterprise after dropping out of
school or quitting a job. Today the entrepreneur is considered a hero socially,
economically and academically and no longer misfit. Entrepreneurs must fit the
profile many books and articles have presented checklist of characteristics of a
successful entrepreneur. Today we realize that a standard entrepreneurial profile
All entrepreneurs need to run a business successful is money: Many
business fail because of managerial incompetence, lack of financial
understanding, poor planning etc. To many entrepreneurs money is a source but
not an end in itself.
All entrepreneurs need is luck. Being at “the right place at the right
time” is always an advantage. But luck happens when preparation meets
opportunity as an equally appropriate advantage. Prepared entrepreneurs who
seize the opportunity when it arises often seem “Lucky” they are in fact simply
better prepared to deal with situations and turn them into success. What appears
to be luck really is preparation, determination, desire, knowledge and
innovativeness?
Entrepreneurs must fail; in fact failure can teach many lessons to those
willing to learn and often leads to future successes.
 Entrepreneurs are extremely risk takers (Gamblers). Entrepreneur is
usually working on a moderate or calculated risk.
It takes a lot of money to start a business. This is false because it is all
about using the little resources to make the most out of it.
Those who make it are those with rich backups. You can start from
scratch with no special favors or advantages and succeed
Some people go about thinking that banks do not lend to those who
wish to start-up businesses.
Those who start business, do so in very attractive industries
All entrepreneurs are rich and have financial success
Starting a business is easy. It is difficult and getting it running takes a
lot.

11. Theories of entrepreneurship

The theories that explains entrepreneurship include:
a) Psychological Theory
b) Motivational Theory
c) Sociological Theory
d) Economic Theory
e) The Resource Based Theory
f) Competence Based Theory
g) Heterogeneous Demand Theory

A. Psychological theory
• The focus is that entrepreneurs have unique values, attitudes and need which drive them.
• People‟s behavior results from their attempts to satisfy their unique needs and values.
• The psychological school focuses on personality factors believing that entrepreneurs have
unique values and attitudes towards work and life.
• Among the most frequent traits of entrepreneurs include the Need for achievement, Locus of
Control and Risk taking propensity.
 B. Motivational Theory
• Motivation is that which causes you to behave in the way you behave i.e. the why of
behavior
• Entrepreneurial motivation is those factors and forces or events that energizes an individual,
his desires and the needs to go into and sustain a business venture.
• Types of motivation;
i) Internal Motivation Factors
ii) ii) External Motivation Factors
 Internal Motivations and Drives
 Refers to those personal traits and desires that induce a person to become an
entrepreneur. Such motivations are;
i. Employment Creation Need.
ii. Need for independence or self-Reliance:
iii. Need for Power:
iv. Need for Recognition:
v. Need for Security:
vi. Self-actualization need:

 External Motivations and Drives

i. Infrastructure:.
ii. ii. Credit Facilities:
iii. Information Support
iv. Pricing Policy
v. Tax Policy
vi. Legal Control
vii. Political Climate
viii. Technical Technology Assistance
ix. Training Consultancy Assistance
x. Friends Motivation
 C. Maslow’s Need Theory
Theory of human needs is identified with the psychologist Abraham Maslow. This theory is
based on three specific assumptions:
1. The human beings are never satisfied. Their wants are determined by what they have.
When people are hungry or thirsty, the quest for food or water influences how they behave.
However if food and water is acquired, the same person will want something else, perhaps a
safe place to live in or a social status.
2. A satisfied need does not cause behavior. Once people satisfy their need for safety,
they are motivated by yet unsatisfied needs, not the ones – that are satisfied,
3. Human needs are arranged in hierarchy of importance. These needs range from low level
biological (physiological) needs to such high level needs as self-actualization.

12. Advantages of Entrepreneurship

i.) Financial gains
ii.) ii.) Self-employment which leads to job satisfaction and flexibility
iii.) Provide job opportunities to the unemployed or those seeking better jobs.
iv.) A means of opening up new industries especially in the rural areas - facilitating
globalization
v.) A source of generating income and increased economic growth.
vi.) Facilitates competition encouraging high quality products
 vii.) Facilitates production of more goods and services
viii.) Leads to the development of newer markets
ix.) Promotes use of modern technology in especially small- scale manufacturing to
enhance higher productivity

13. Drawbacks of entrepreneurship

a) Challenges of a being an entrepreneur
 long working hours
 poor pay
 unclear future
 fear of losing all that has been invested
 bankruptcies and closure

b) Other challenges
 Fear of delegating
 the problem do it yourself and know it all
 competition by established business
 lack of funds especially before break even
 Mis- management by employees

Promotion of Entrepreneurship
 Integrating entrepreneurship into the education system
 Registration to encourage risk taking
 National companies to promote entrepreneurship
 Support of entrepreneurs through friendly loans at the appropriate time.

ASSIGNMENT:
Write on the evolution of entrepreneurship in Cameroon
Question for practice
Part A
1. Define Entrepreneurship?
2. List the characteristics of entrepreneurship
3. Mention the functions of entrepreneurship
4. Difference between Entrepreneur and Manager
5. Explain the elements of entrepreneurship

Part B
1. Examine the importance of entrepreneurship.
2. Dimensions of entrepreneurship
3. Classify and explain types of entrepreneurs
4. Analyze and explain primary functions of entrepreneurship
5. Explain the Factors Influencing Entrepreneurship
6. Compare and contrast Entrepreneurship and managers

Review Questions
1. Give at least two definitions for entrepreneurship and two for entrepreneur.
2. Who are the potential candidates for entrepreneurship?
3. Identify any five qualities of a successful entrepreneur
4. Some people argue that “the only beneficiary of the entrepreneurial wealth is the
entrepreneur him/herself” Do you agree? Why or why not?