INTRODUCTION TO ENTREPRENEURSHIP STUDY NOTES
Specific Objectives
a) Describe the history of entrepreneurship
b) Describe the myths associated with entrepreneurship
c) Explain the theories of entrepreneurship
d) Explain the importance of these theories
e) Entrepreneurial environment
f) Entrepreneur
g) Entrepreneurial opportunity
h) Entrepreneurial culture
INTRODUCTION TO ENTREPRENEURSHIP EDUCATION
Terms used in entrepreneurship
i) Entrepreneurship
The term entrepreneurship has been described by different people in different ways.
Entrepreneurship is the process of scanning the environment in order to identify a business
opportunity, gathering resources with the aim of establishing a profit making enterprise,
under conditions of risk.
The concept of entrepreneurship became clear due to the researches by scientists like Mc
Clelland(1969) who stressed need for achievement motive, Schumpeter( ) who prioritized
new combinations of means of production by which there occurs disequilibrium, Cantillon
who emphasized the functions of risk taking and uncertainty bearing, Drucker who stressed
on ‘systematic innovation’ consisting purposeful and organized search for changes among
other scholars.
ii) Entrepreneur
The term entrepreneur is coined from a French verb ‘entreprendre’ which means to
undertake. Various scholars have defined the term entrepreneur in different ways but all
place emphasis on the entrepreneur;
1. Bringing innovation and creativity into the enterprise.
2. Taking calculated and moderate risks and
3. Facing uncertainties
An entrepreneur is someone who detects a previously untapped opportunity to make some
profits (either by lowering the costs of producing the existing goods /services or by creating
new ways for people to satisfy their needs or wants through new products). They then brings
together the necessary factors of production to exploit these opportunities.
Richard Cantillon defines an entrepreneur as a person who buys factor services at “certain”
prices, with a view to sell their product at “uncertain” prices in the future.
David McClelland defines an entrepreneur as a person with a high need for achievement,
someone who has control over the means of production and produces more than they can
consume in order to sell (or exchange) it for income.
Joseph Schumpeter defines an entrepreneur as a person who carries out new combinations of
means of production within an organization, while distorting the routine of the existing
products/services, to set up new products and services.
ENTREPRENUERSHIP NOTES PREPARED BY MR. ANTONY AMBIA Page 1
, iii) Intrapreneurship
It is the practice of entrepreneurship by employees within an organisation. Intrapreneurship
is a novel way of making organisations more profitable where imaginative employees
entertain entrepreneurial thoughts. It is a significant method for companies to reinvent
themselves and improve performance.
iv) Intrapreneur
An intrapreneur is an employee who uses entrepreneurial skills to generate profits for the
venture they works for.
v) An enterprise
It is a business organisation that provides goods and services to make profits and has growth
potential.
A business enterprise is a legally recognised organisation designed to provide goods and/ or
services to consumers.
vi) Business person
A person who undertakes any business activity for the purpose of making profit
Difference between self employment and salaried employment
Self employment
Self employment is a situation in which a person starts and operates a business enterprise.
Since entrepreneurial skills drive people into self employment, entrepreneurship training is
therefore expected to prepare trainees for starting and operating their enterprises effectively.
Self employment is a situation in which individuals create and run/operate their own income
generating activities.
Salaried employment
Salaried employment is a process in which an individual is hired for a period of time, which
may range from a few months to a few years, and is paid a given amount of money as salary
or wages for the work done.
The merits and demerits of salaried employment are varied and largely depend on a person’s
qualification, experience and specialisation area. The merits and demerits are also determined
by the magnitude of growth, investment ability, profit and government support of a given
organisation.
Defined working hours, guaranteed income, delegation of duties and specialisation are some
of the main advantages of being in salaried employment. However, salaried employment is
affected largely by organisational elements such as change of management, especially where
new management introduces new policies, rules, conditions of employment and other
statutory requirements to the organisation. Job security is not guaranteed and personal
satisfaction and motivation is not wholly experienced.
Contribution of Entrepreneurship to National Development
Entrepreneurship is the process that creates people (entrepreneurs) who contribute to
economic development in various ways. The contributions are made through:
ENTREPRENUERSHIP NOTES PREPARED BY MR. ANTONY AMBIA Page 2
, 1. Stimulating indigenous entrepreneurship and technological development.
2. Creating jobs for themselves and other people
3. creating wealth and distributing income
4. Utilising locally available resources
5. Dispersal and diversification of economic activities and mobilisation of savings.
6. Promotion of entrepreneurial culture i.e. they become models to be imitated by potential
entrepreneurs because of successful images already potrayed by existing entrepreneurs.
7. Increasing regional business activities through the export of manufactured goods.
8. Promotion of indigenous/local technology e.g. use of jua kali technology.
9. Raising the economic productivity level.
Narrowing the “missing middle gap
EVOLUTION OF ENTREPRENEURSHIP
Introduction
Entrepreneurship was introduced by the economists of the eighteen century, and it
continued to attract the interest of economists in the nineteenth century. In the present
century the world has become synonymous or at least closely linked with free enterprise and
capitalism. Also it is generally recognised that entrepreneurs serve as agents of change,
provide creativity innovative ideas for business enterprises and help businesses grow and
become profitable.
HISTORY OF ENTREPRENEURSHIP GLOBALLY AND IN KENYA
History of entrepreneurship globally
Entrepreneurship has been part of human history since records began. The bible, in the old
testament, raises the idea of stewardship with regard to utility resources of the earth .( Gen.
2.15)The bible also in the new testament, reveals that gain requires risk (the parable of
talents) (Luke 17.11)
Entrepreneurship is also closely linked to the protestant work ethics and capitalists
(Weber 1995)
Early economists in the 18thc, such as Richard Cantilon and Jean Baptiste Say recognized in
the role of the entrepreneur as essential to the progress of the world economic system 8
developed early economic theories on entrepreneurship.
During the industrial revolution entrepreneurship was linked to the creation of wealth and
prosperity (long 1983)
The 1920s and Schumpeter (1934) linked entrepreneurship with the dynamic process on
innovation from the 1960s entrepreneurial SME (s) have played an increasingly significant
role in the economic development of the world (Kirzner 1973)
From the 1980s government have increasingly seen entrepreneurship as a means of creating
innovative technology and services which can increase , national competitiveness fosters
economic growth and employment (stoner and Freeman1992) Commentators suggests that
two main reasons for the ascendreccefs of high tech .
ENTREPRENUERSHIP NOTES PREPARED BY MR. ANTONY AMBIA Page 3
Specific Objectives
a) Describe the history of entrepreneurship
b) Describe the myths associated with entrepreneurship
c) Explain the theories of entrepreneurship
d) Explain the importance of these theories
e) Entrepreneurial environment
f) Entrepreneur
g) Entrepreneurial opportunity
h) Entrepreneurial culture
INTRODUCTION TO ENTREPRENEURSHIP EDUCATION
Terms used in entrepreneurship
i) Entrepreneurship
The term entrepreneurship has been described by different people in different ways.
Entrepreneurship is the process of scanning the environment in order to identify a business
opportunity, gathering resources with the aim of establishing a profit making enterprise,
under conditions of risk.
The concept of entrepreneurship became clear due to the researches by scientists like Mc
Clelland(1969) who stressed need for achievement motive, Schumpeter( ) who prioritized
new combinations of means of production by which there occurs disequilibrium, Cantillon
who emphasized the functions of risk taking and uncertainty bearing, Drucker who stressed
on ‘systematic innovation’ consisting purposeful and organized search for changes among
other scholars.
ii) Entrepreneur
The term entrepreneur is coined from a French verb ‘entreprendre’ which means to
undertake. Various scholars have defined the term entrepreneur in different ways but all
place emphasis on the entrepreneur;
1. Bringing innovation and creativity into the enterprise.
2. Taking calculated and moderate risks and
3. Facing uncertainties
An entrepreneur is someone who detects a previously untapped opportunity to make some
profits (either by lowering the costs of producing the existing goods /services or by creating
new ways for people to satisfy their needs or wants through new products). They then brings
together the necessary factors of production to exploit these opportunities.
Richard Cantillon defines an entrepreneur as a person who buys factor services at “certain”
prices, with a view to sell their product at “uncertain” prices in the future.
David McClelland defines an entrepreneur as a person with a high need for achievement,
someone who has control over the means of production and produces more than they can
consume in order to sell (or exchange) it for income.
Joseph Schumpeter defines an entrepreneur as a person who carries out new combinations of
means of production within an organization, while distorting the routine of the existing
products/services, to set up new products and services.
ENTREPRENUERSHIP NOTES PREPARED BY MR. ANTONY AMBIA Page 1
, iii) Intrapreneurship
It is the practice of entrepreneurship by employees within an organisation. Intrapreneurship
is a novel way of making organisations more profitable where imaginative employees
entertain entrepreneurial thoughts. It is a significant method for companies to reinvent
themselves and improve performance.
iv) Intrapreneur
An intrapreneur is an employee who uses entrepreneurial skills to generate profits for the
venture they works for.
v) An enterprise
It is a business organisation that provides goods and services to make profits and has growth
potential.
A business enterprise is a legally recognised organisation designed to provide goods and/ or
services to consumers.
vi) Business person
A person who undertakes any business activity for the purpose of making profit
Difference between self employment and salaried employment
Self employment
Self employment is a situation in which a person starts and operates a business enterprise.
Since entrepreneurial skills drive people into self employment, entrepreneurship training is
therefore expected to prepare trainees for starting and operating their enterprises effectively.
Self employment is a situation in which individuals create and run/operate their own income
generating activities.
Salaried employment
Salaried employment is a process in which an individual is hired for a period of time, which
may range from a few months to a few years, and is paid a given amount of money as salary
or wages for the work done.
The merits and demerits of salaried employment are varied and largely depend on a person’s
qualification, experience and specialisation area. The merits and demerits are also determined
by the magnitude of growth, investment ability, profit and government support of a given
organisation.
Defined working hours, guaranteed income, delegation of duties and specialisation are some
of the main advantages of being in salaried employment. However, salaried employment is
affected largely by organisational elements such as change of management, especially where
new management introduces new policies, rules, conditions of employment and other
statutory requirements to the organisation. Job security is not guaranteed and personal
satisfaction and motivation is not wholly experienced.
Contribution of Entrepreneurship to National Development
Entrepreneurship is the process that creates people (entrepreneurs) who contribute to
economic development in various ways. The contributions are made through:
ENTREPRENUERSHIP NOTES PREPARED BY MR. ANTONY AMBIA Page 2
, 1. Stimulating indigenous entrepreneurship and technological development.
2. Creating jobs for themselves and other people
3. creating wealth and distributing income
4. Utilising locally available resources
5. Dispersal and diversification of economic activities and mobilisation of savings.
6. Promotion of entrepreneurial culture i.e. they become models to be imitated by potential
entrepreneurs because of successful images already potrayed by existing entrepreneurs.
7. Increasing regional business activities through the export of manufactured goods.
8. Promotion of indigenous/local technology e.g. use of jua kali technology.
9. Raising the economic productivity level.
Narrowing the “missing middle gap
EVOLUTION OF ENTREPRENEURSHIP
Introduction
Entrepreneurship was introduced by the economists of the eighteen century, and it
continued to attract the interest of economists in the nineteenth century. In the present
century the world has become synonymous or at least closely linked with free enterprise and
capitalism. Also it is generally recognised that entrepreneurs serve as agents of change,
provide creativity innovative ideas for business enterprises and help businesses grow and
become profitable.
HISTORY OF ENTREPRENEURSHIP GLOBALLY AND IN KENYA
History of entrepreneurship globally
Entrepreneurship has been part of human history since records began. The bible, in the old
testament, raises the idea of stewardship with regard to utility resources of the earth .( Gen.
2.15)The bible also in the new testament, reveals that gain requires risk (the parable of
talents) (Luke 17.11)
Entrepreneurship is also closely linked to the protestant work ethics and capitalists
(Weber 1995)
Early economists in the 18thc, such as Richard Cantilon and Jean Baptiste Say recognized in
the role of the entrepreneur as essential to the progress of the world economic system 8
developed early economic theories on entrepreneurship.
During the industrial revolution entrepreneurship was linked to the creation of wealth and
prosperity (long 1983)
The 1920s and Schumpeter (1934) linked entrepreneurship with the dynamic process on
innovation from the 1960s entrepreneurial SME (s) have played an increasingly significant
role in the economic development of the world (Kirzner 1973)
From the 1980s government have increasingly seen entrepreneurship as a means of creating
innovative technology and services which can increase , national competitiveness fosters
economic growth and employment (stoner and Freeman1992) Commentators suggests that
two main reasons for the ascendreccefs of high tech .
ENTREPRENUERSHIP NOTES PREPARED BY MR. ANTONY AMBIA Page 3
