Overview and History of Entrepreneurship
Learning Objectives and Course Context
Course Code:
Course Title: Co-Curriculum (Entrepreneurship)
Topic: Topic : Overview of Entrepreneurship
Prepared by: Siti Nur Shahida, AFHEA PPI, SPACE-UTM, Universiti Teknologi Malaysia, Sekolah Pendidikan Profesional dan Pendidikan Berterusan (SPACE).
Primary Objectives:
To describe the evolution and concepts of entrepreneurship.
To discuss the importance of entrepreneurship.
To explain the development of entrepreneurship in Malaysia.
s sectors and skill levels.Introduction to Entrepreneurship
Entrepreneurship has gained significant importance in countries with free-market economies.
In these nations, entrepreneurial development is a critical component of nation-building, driving economic progress, growth, and prosperity.
Entrepreneurial activities serve as the backbone of a nation's economy by fostering innovation, creating jobs, and ensuring competitive markets.
A society with a strong entrepreneurial culture tends to be more productive, competitive, and prosperous.
Entrepreneurs play a vital role in advancing economic development by introducing new products and services, optimizing resources, and stimulating market dynamics.
Successful entrepreneurs are often rewarded with substantial profits, and many transform small businesses into large, influential corporations. This journey creates wealth and contributes to the overall economic health and stability of nations.
Definitional Perspectives of Entrepreneurship
Academic Definition (Ariffin & Hamidon)
Definition: "Entrepreneurship is the activity of setting up a business or businesses and taking on financial risks in the hope of making profit."
Key Points:
Business Setup: Involves the creation and establishment of new businesses.
Financial Risk: Entrepreneurs must invest their own or borrowed capital with no guarantee of return.
Profit Motive: The primary goal is to achieve financial gain and profitability.
Academic Definition (Stevenson & Jarillo)
Definition: "Entrepreneurship is the process by which individuals pursue opportunities without regard to resources they currently control."
Key Points:
Opportunity Pursuit: Entrepreneurs actively seek and exploit business opportunities.
Resource Independence: Successful entrepreneurs do not let limited resources hinder their ambitions; they find ways to acquire what they need.
Innovative Approach: Emphasizes creativity and innovation in leveraging opportunities.
Venture Capitalist Perspective (Fred Wilson)
Definition: "Entrepreneurship is the art of turning an idea into a business."
Key Points:
Idea Realization: Focuses on transforming innovative ideas into viable commercial enterprises.
Creative Process: Highlights the imaginative and strategic elements of entrepreneurship.
Business Creation: Involves developing a structured plan to bring ideas to market.
Integrating Definitions
Setting and Managing Ventures: Entrepreneurs setup and manage new businesses while taking calculated financial risks.
Opportunity-Driven: They are adept at identifying and pursuing opportunities regardless of initial resource constraints.
Innovation and Creativity: It involves the creative process of turning ideas into practical, marketable solutions.
Value Creation: Ultimately, the goal is to create value for both the individual and society through profitable and sustainable business practices.
Basic Aspects and Origin of the Entrepreneur
The term "entrepreneur" originates from the French word "entreprendre," which means "to do something" (Swedberg, ) or "to undertake" the risk of new ventures (Kuratko & Hodgetts, ).
Basic Aspects:
Creating something new of value.
Devoting necessary time and effort.
Assuming risks across financial, psychological, and social areas.
Receiving rewards of independence, personal satisfaction, and monetary gain (a sign of success).
Historical Evolution of Entrepreneurship
The Earliest Period
Entrepreneurial activities date back to ancient civilizations such as the Phoenicians.
Known for extensive trade networks across the Mediterranean, early entrepreneurs engaged in barter trade.
They traveled vast distances to exchange goods like textiles, spices, and precious metals, laying the groundwork for modern economic systems.
The Middle Ages
The concept took shape during this period. The term "entrepreneur" (meaning to undertake) became relevant.
Key Figures: Individuals like Marco Polo managed large-scale trading expeditions along the Silk Road.
Medieval guilds included merchants who organized production and trade, showcasing early forms of organized entrepreneurship.
The Century
Marked by the rise of joint-stock companies and colonial ventures.
Key Examples: The Dutch East India Company and the British East India Company.
These companies expanded trade routes, established new markets, and drove global economic integration as large-scale, state-supported entrepreneurial ventures.
The Century
Referred to as the Age of Enlightenment, seeing the rise of industrial entrepreneurship.
Key Innovators:
James Watt: Improved the steam engine.
Eli Whitney: Invented the cotton gin.
These technologies fueled the Industrial Revolution, emphasizing innovation's role in driving industrial growth.
The and Centuries
Post-Industrial Revolution era brought rapid technological advancements and major corporations.
Key Figures:
Henry Ford: Revolutionized the automotive industry with mass production techniques.
Thomas Edison: Numerous inventions, including the electric light bulb, transformed everyday life.
The mid- century saw the emergence of venture capital, spurring start-up cultures exemplified by companies like Intel and Apple.
The Century
Driven by globalization, digital technology, and the internet.
Modern entrepreneurs leverage digital platforms for innovative business models.
Key Examples: Amazon and Alibaba (e-commerce), Facebook and Twitter (communication).
Emerging Trends: The gig economy (represented by Uber and Airbnb) and social entrepreneurship (e.g., TOMS Shoes).
Contemporary focus: Sustainable business practices and social impact addressing global challenges.
Seminal Thinkers in Entrepreneurship
Richard Cantillon ()
Definition: Economic agents with the foresight and willingness to take advantage of profit opportunities through buying and selling.
Contribution: Entrepreneurs as risk-takers capitalizing on market inefficiencies.
Adam Smith ()
Definition: Agents transforming demand into supply.
Contribution: Emphasized the function of balancing market demand and supply to contribute to economic equilibrium.
Jean-Baptiste Say ()
Definition: Individuals who shift resources from areas of low productivity to areas of high productivity.
Contribution: Introduced the concept of resource allocation efficiency and optimizing resource use.
Joseph Schumpeter ()
Definition: Innovators who introduce new products, services, or methods, replacing old ones.
Contribution: Driving economic development through innovation, leading to "creative destruction" and industrial transformation.
Motivations, Benefits, and Challenges
Reasons to Become an Entrepreneur
Desire to be their own boss: Seeking independence and autonomy in decision-making.
Desire to pursue own ideas: Driven by passion for unique visions and creative problem-solving.
Financial rewards: Potential for substantial gain and financial independence.
Control over time: Flexible working hours and setting own schedules.
Fulfillment: Satisfaction in overcoming challenges and achieving goals.
Creation/Ownership: Pride in building something from scratch that reflects personal values.
Control over compensation: Directly influencing earnings based on business success.
Control over working conditions: Designing the environment and company culture.
Benefits of Entrepreneurship
Independence: Controlling one's own destiny and schedule.
Satisfaction: Professional fulfillment from building something personal.
Doing What You Enjoy: Turning hobbies or interests into successful ventures.
Financial Reward: Potential for impressive profits and long-term wealth.
Self-Esteem: Building confidence through goal achievement.
Contribution to Society: Creating jobs and products that improve lives.
Creating Your Own Destiny: Innovating in niche markets and becoming a leader.
Making a Difference: Developing eco-friendly products and promoting sustainability.
Reaching Full Potential: Maximizing talents in ways traditional employment might not allow.
Challenges of Entrepreneurship
Business Failure: Risk of the venture not succeeding, leading to financial loss.
Obstacles: Dealing with competition, regulations, and supply chain issues.
Loneliness: Isolation due to the solitary nature of high-stakes decision-making.
Financial Insecurity: Risk of losing entire investments and receiving fluctuating income.
Long Hours/Hard Work: Sacrificing personal time to manage growth; hours far beyond a standard workweek.
Strain on Personal Relationships: Missing family events due to business commitments.
Uncertainty of Income: Facing periods of low or no revenue in early stages.
Low Quality of Life Until Established: Living frugally to keep the business afloat.
High Levels of Stress: Constant pressure to perform and meet goals.
Complete Responsibility: Being accountable for every facet, from operations to finances.
Discouragement: Facing multiple rejections or failures that affect motivation.
The Importance of Entrepreneurship Across Dimensions
Self-Development
Opportunity to control direction in life: Pursuing ventures aligned with passions.
Maximize self-potential: Learning new skills and pushing personal boundaries.
Unlimited financial rewards: Unlike traditional salary caps, successful ventures can generate substantial wealth.
Family Development
Increases family income: Boosting financial stability for healthcare, education, and leisure.
Raises living standards: Enabling investments in better housing and transportation.
Improves social status: Gaining respect and recognition within the community.
Society/Community Development
Enhances living standards: Introducing innovative products and solutions to the community.
Social contribution: Addressing societal needs (environmental concerns, essential services).
Fulfilling needs and wants: Identifying and filling gaps in the market.
Creating choices: Fostering diversity in products through creative production techniques.
National Development
High-quality products: Meeting standards for excellence in the global marketplace.
Job creation: Significant driver of employment across variou
Catalyst for growth: Fuels economic progress and sector-wide innovation.
Income Generation: Contributing to the economy via business activities and taxation (funding infrastructure, education, and healthcare).
Backbone of heavy industries: Driving efficiency and productivity in manufacturing.
Spiritual Development
Practicing faith: Aligning business practices with religious or spiritual values and principles.
Religious obligations: Flexibility in schedules allows for balancing professional life with fulfillng spiritual duties.
Entrepreneurship Development in Malaysia
Pre-Colonial Era
Roots trace back to the Malacca Sultanate, which served as a vital trading hub.
Local traders engaged with foreign merchants, exchanging goods and ideas.
British Colonial Period
Colonial administration implemented the "divide and rule" system, segregating society along racial lines:
Malays: Involved in administration and agriculture.
Chinese: Encouraged to participate in mining and business activities.
Indians: Primarily engaged in rubber plantations.
This created economic disparities; the Chinese community emerged as leaders in business, commerce, and trading networks.
Malays and Indians faced challenges in accessing economic opportunities and developing ventures during this time.
Post-Independence Period
Following independence in , the government implemented policies to address disparities.
New Economic Policy (NEP): Aimed to rectify socio-economic imbalances, reduce poverty, and promote greater participation of Malays in business.
The Present Landscape in Malaysia
Government Initiatives: Grants, tax incentives, and regulatory reforms (e.g., MDEC and MaGIC).
Start-up Ecosystem: Emerging hubs in Kuala Lumpur, Penang, and Johor Bahru featuring incubators, accelerators, and co-working spaces.
Access to Financing: Proliferation of venture capital, angel investors, and crowdfunding. Government schemes like Cradle Fund and Malaysia Venture Capital Management Berhad (MAVCAP) support early-stage entrepreneurs.
Education: Introduction of entrepreneurship programs in universities and vocational institutions.
Digital Transformation: Promoting digital entrepreneurship through the Digital Free Trade Zone (DFTZ) and e-commerce programs.
Social Entrepreneurship: Growing interest in addressing social/environmental challenges through sustainable business models.
Questions & Discussion
Activity 1: Group Discussion & Presentation
Prompt: "You are an entrepreneur who is about to open a franchise restaurant (e.g., KFC, Marrybrown, Long John Silver's, Wendy's, McDonald's, Jollibee, Burger King). What should you do before you start your business?"
Duration: .
Deliverable: Present ideas in class.