C1 Theories and Concepts of Entrepreneurship

CHAPTER 1: THEORIES & CONCEPT
OF ENTREPRENEURSHIP
FUNDAMENTALS OF ENTREPRENEURSHIP
(ENT300)
Chapter Objectives
The objectives of this chapter are:
• To introduce students to the theory of entrepreneurship.
• To have a deeper understanding of the the role of entrepreneurship
towards economic development.
Contents
1.0 Theories & Concepts of
Entrepreneurship
• 1.1 Evolution of Entrepreneurship Theory
• 1.2 Islamic view on Entrepreneurship
• 1.3 Definition of Entrepreneur and Entrepreneurship
• 1.4 Entrepreneurship and SMIs in Malaysia
• 1.5 The role of Entrepreneurship in Malaysian
Economic Development
1.1 Evolution of Entrepreneurship Theory
• The concept of entrepreneurship has evolved throughout the decades
& encompasses trends in thoughts as well as development of
entrepreneurship as a discipline of studies.
• Theories of entrepreneurship can be viewed in 4 different
perspectives:
I. Economic
II. Psychological
III. Sociological
IV. Management perspective
Different Perspectives of Entrepreneurship
Theories
Economic Scholars that define an entrepreneur via the
perspective contributions & roles played in economic
development such as allocating resources
efficiently, creating job opportunity & pioneering
innovations.
E.g. Richard Cantillon (1755), Adam Smith (1776),

Alfred Marshall (1776), Jean Baptiste Say (1803),
John Stuart Mill (1848), Carl Menger (1871), Joseph
Schumpeter (1934) & Israel Kirzner (1978)
Theories
Psychological Scholars that define entrepreneurs through the
perspectives
behavior & personality traits possessed by successful
individuals. Such personalities are risk taker, having
high internal locus of control & desire for
accomplishment.
E.g. McClelland (1951), & Julian Rotter (1954)

Theories
Sociological Scholars that define entrepreneurs as a generation
perspective or a group which adopts entrepreneurship as a
career to improve the status of the group in the
eyes of the society through their social roles.
E.g. Ibn Khaldun (Abdul Rahman Mohamed

Khaldun) (1406), Max Weber (1917) & Everett
Hagen (1957)
Theories
Management Scholars that define an entrepreneur as a
perspective strategic manager who strives to ensure the
business gains profit & expands.
E.g. Peter F. Drucker (1985), Donald L. Sexteon

and Nancy Bowman-Upton (1991), Dylan
Jones-Evans (1995), Donald F. Kuratko and
Richard M. Hodgetts (2004) & Robert D.
Hisrich, Michael P. Peters and Dean A.
Shepherd (2005)
1.2 Islamic View on Entrepreneurship
• Entrepreneurship is an integral part of the religion.
• Islam is a complete way of life. It has its own entrepreneurship culture
& guiding principles based on the Quran & Hadith to guide business
operation.
1.2 Islamic View on Entrepreneurship
Human Nature (The Fitrah Of Human Being)
•By virtue of the human nature, the person must firstly be a Muslim,
then an entrepreneur. He has the responsibility to perform ‘ibadah’ and
be a ‘khalifah’. Muslim entrepreneur should search for God’s blessings
above all other factors. A Muslim entrepreneur perform business not
solely for profit, but above all, to fulfill the ‘fardhu kifayah’.
The Ethical Behavior of Muslim Entrepreneurship
To avoid
To avoid malicious To avoid
squandering
(hateful) behavior stinginess
(wasteful)
To pay alms To pray

Trustworthy
(zakat) consistently
Qana’ah (Be
Tawakkal Patience pleased &
thankful)
11
Exemplary Conducts of Good Muslim Entrepreneurs
During The Prophet Muhammad S.A.W Reign
① Business is secondary when being called for other form of

crusade (cause/battle/war).
② Avoid using influence for self interest.
③ Afraid of accumulated wealth.
④ Leadership qualities in all aspects.
⑤ Practice moderate way of life.
12
1.3 Definition of entrepreneurship &
entrepreneur
Entrepreneurship Entrepreneur
• Entrepreneurship is a • Entrepreneurs is an
process of identifying individual who carried out
business opportunity, seize the process of identifying
that opportunity, with the business opportunity, seize
use of creativity & that opportunity, with the
innovation to produce use of creativity &
product or service that innovation to produce
have value for customers. product or service that
have value for customers.
1.4 Entrepreneurship & SMIs in Malaysia
• Entrepreneurship has taken on great global significance for

governments looking to boost growth and employment since the
global financial crisis. It is also seen as a remedy for socio-economic
challenges.
• It leaves no question as to why the government has placed so much
emphasis on the small and medium enterprise (SMEs), as well as
entrepreneurs to start formulating their companies especially now.
1.4 Entrepreneurship & SMIs in Malaysia
• Governments such as Malaysia’s, who is looking at entrepreneurship

to boost economic growth continue to focus on promoting
opportunity entrepreneurship in particular, even though these
entrepreneurs might form only a very small part of the total
entrepreneurship pool.
1.5 The role of entrepreneurship in Malaysia
economic development
Create large Catalyst to
Offering goods
scales job national
& services
opportunity development
Generate Backbone of Spotting &

income for the heavy seizing
economy industries opportunities
Forming Managing
ventures resources
END OF CHAPTER 1

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CHAPTER 1: THEORIES & CONCEPT

E.g. Richard Cantillon (1755), Adam Smith (1776),

E.g. McClelland (1951), & Julian Rotter (1954)

E.g. Ibn Khaldun (Abdul Rahman Mohamed

E.g. Peter F. Drucker (1985), Donald L. Sexteon

To pay alms To pray

① Business is secondary when being called for other form of

• Entrepreneurship has taken on great global significance for

• Governments such as Malaysia’s, who is looking at entrepreneurship

Generate Backbone of Spotting &

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