Chapter 1 Introduction to Entrepreneurship (1)

Chapter 1: Introduction to Entrepreneurship

Learning Objectives

• Understand what entrepreneurship is and its dimensions.

• Describe the importance of entrepreneurship.

• Identify characteristics of entrepreneurs, including their behavior and motivation.

• Explain the entrepreneurial process.

What Is Entrepreneurship?

• Definition: The process by which individuals pursue opportunities beyond the resources they currently control.

• Dynamic Process: Involves change and creation, focusing on the establishment of new enterprises and the wealth creation associated with them.

• Opportunity Identification: Involves identifying, evaluating, and exploiting previously unexploited opportunities.

Essential Dimensions of Entrepreneurship

1. Opportunities: Ability to identify and act on potential opportunities.

2. Risk: Willingness to take calculated risks for potentially higher rewards.

   • Entrepreneurs carefully evaluate risks before making decisions.

3. Creativity & Innovation: Skills to apply creative solutions and new ideas to problems.

4. Pro-activity: Timely action on ideas and opportunities can lead to greater success.

   • Acting promptly on information distinguishes successful entrepreneurs.

Importance of Entrepreneurship

1. Job Creation: Entrepreneurs start new businesses, generating employment and reducing unemployment rates.

2. Promotion of Innovation: Fosters a culture of innovation by addressing evolving customer needs with creative solutions, improving quality and technology.

3. Improving Standards of Living: Creates various commodities and job opportunities that enhance quality of life and community well-being.

4. Improving Existing Businesses: Drives innovation and competitiveness, prompting existing firms to enhance products and services, thus benefiting consumers.

Who Are Entrepreneurs?

• Definition: Individuals who start new ventures to contribute positively to society while making a profit.

• Characteristics:

  • Agents of economic change.

  • Risk-takers, optimistic, determined, and committed.

  • Achieve satisfaction from independence.

Entrepreneurial Behavior

• Primary Characteristics:

  1. Passion for their business.

  2. Customer and product focus.

  3. Execution intelligence.

  4. Tenacity despite failure.

Risks in Entrepreneurship

• Financial Risk: Potential loss of resources if the venture fails.

• Career Risk: Impact on job stability if the new venture doesn't succeed.

• Family and Social Risk: Imbalance due to time and energy demands can affect personal relationships.

• Psychological Risk: Financial failure may lead to psychological stress.

Sources of Stress in Entrepreneurship

1. Loneliness from lack of a support network.

2. Immersion in business leading to neglect of breaks.

3. People problems arising from conflicts with partners or employees.

4. High achievement pressures creating disappointment during failures.

Dealing with Stress

• Develop networking opportunities.

• Take breaks from business to recharge.

• Communicate effectively with employees.

• Delegate routine tasks to focus on critical areas and reduce stress.

Entrepreneurial Motivation

• Definition: Drive causing a person to take goal-oriented actions.

• Types of Motivation:

  1. Extrinsic: Driven by external rewards (money, fame).

  2. Intrinsic: Driven by self-satisfaction and enjoyment.

Motivational Theories

• Behavior is purposeful and directed toward achieving goals.

Reasons for Becoming Entrepreneurs

• Desire to be one's own boss.

• Pursuit of personal ideas.

• Seeking financial rewards.

McClelland's Human Motivation Theory

• Social Motives: Influential factors in human behavior, including:

  • Need for Achievement: Drive to do well and overcome challenges.

  • Need for Power: Desire to control and influence others.

  • Need for Affiliation: Drive to maintain and renew relationships.

Personal Entrepreneurial Competencies (PECs)

1. Initiative: Take proactive actions beyond job requirements.

2. Sees and Acts on Opportunities: Recognize and seize unusual opportunities.

3. Persistence: Make repeated efforts despite obstacles.

4. Information Seeking: Actively seek information for business objectives.

5. Concern for High Quality of Work: Aim for excellence in outcomes.

6. Commitment to Work: Prioritize job completion above all.

7. Efficiency Orientation: Find ways to maximize resources and reduce costs.

8. Systematic Planning: Develop logical plans to achieve goals.

9. Problem Solving: Engage in creative resolution of challenges.

10. Self-Confidence: Strong belief in personal abilities.

11. Assertiveness: Confidence in style and behavior.

12. Use of Influence Strategies: Impact others to achieve business results.

13. Persuasiveness: Successfully mobilize resources through influence.