ENTREPRENEURSHIP CHAPTER 1: UNDERSTANDING ENTREPRENEURSHIP
LESSON 3: Theories on Entrepreneurship
LEARNING OUTCOMES:
At the end of this lesson, the students should be able to:
Identify some theories on entrepreneurship and Cite the importance of the theories on entrepreneurship.
A theory is a generalization that explains set of
facts or phenomena. It is not an absolute truth.
It can be supported by another observation or
proven to be otherwise.
In the process of evaluating the soundness and
logic of various entrepreneurship theories,
remember that the scholars who developed or
contributed them mostly anchored their
concepts on the economic events which were
happening at that time. Learn by heart the
theories that you deem appropriate and
applicable in your prospective business and will
support your desire to become a successful
entrepreneur. Evaluate them and choose the
theory or theories that you will believe and
accept. In other words; there is no right or
wrong answer.
There are several theories on
entrepreneurship. Here are some of them.
1.Innovation theory
2.Keynesian theory
3.Alfred Marshall theory
4.Risk and uncertainty-bearing theory
5.Other theories on entrepreneurship
INNOVATION THEORYThe innovation theory on entrepreneurship
was contributed by Joseph Schumpeter, an
Austrian economist and political scientist. He
wrote about it in his book, the theory of
economic development. The innovation theory regards economic
development as the product of the structural
change or innovation. Schumpeter argued that
the chances for economic development to take
place would slim unless revolutionary changes
in the circular flow of economy would happen.
An economy without revolutionary change is
deemed to be static cannot expect any
economic development. Simply put, there will
be no development in any economic
equilibrium or status quo.
Schumpeter strongly believed that innovation
is the force that will propel the revolutionary
change. It will cost the created destruction of
the static mode of the economy, stir the
entrepreneurial activity and encourage
competition. Unless innovation takes place,
economic equilibrium or status quo will remain.
It becomes the primary role of the
entrepreneur to introduced innovation in any
of the following forms:
1.New product
2.New product method
3.New market
4.New supplier
5.New industry structure
KEYNESIAN THEORY The Keynesian theory was developed by John
Maynard Keynes, a British economist the key
concepts of the theory were included in his
book, the general theory of employment,
interest and money, which was the published
during the Great Depression in 1936. The theory put so many emphasis on the role
of the government in entrepreneurial and
economic development, most especially when
the economy was experiencing depression. It
suggests that entrepreneurial activities may not
LESSON 3: Theories on Entrepreneurship
LEARNING OUTCOMES:
At the end of this lesson, the students should be able to:
Identify some theories on entrepreneurship and Cite the importance of the theories on entrepreneurship.
A theory is a generalization that explains set of
facts or phenomena. It is not an absolute truth.
It can be supported by another observation or
proven to be otherwise.
In the process of evaluating the soundness and
logic of various entrepreneurship theories,
remember that the scholars who developed or
contributed them mostly anchored their
concepts on the economic events which were
happening at that time. Learn by heart the
theories that you deem appropriate and
applicable in your prospective business and will
support your desire to become a successful
entrepreneur. Evaluate them and choose the
theory or theories that you will believe and
accept. In other words; there is no right or
wrong answer.
There are several theories on
entrepreneurship. Here are some of them.
1.Innovation theory
2.Keynesian theory
3.Alfred Marshall theory
4.Risk and uncertainty-bearing theory
5.Other theories on entrepreneurship
INNOVATION THEORYThe innovation theory on entrepreneurship
was contributed by Joseph Schumpeter, an
Austrian economist and political scientist. He
wrote about it in his book, the theory of
economic development. The innovation theory regards economic
development as the product of the structural
change or innovation. Schumpeter argued that
the chances for economic development to take
place would slim unless revolutionary changes
in the circular flow of economy would happen.
An economy without revolutionary change is
deemed to be static cannot expect any
economic development. Simply put, there will
be no development in any economic
equilibrium or status quo.
Schumpeter strongly believed that innovation
is the force that will propel the revolutionary
change. It will cost the created destruction of
the static mode of the economy, stir the
entrepreneurial activity and encourage
competition. Unless innovation takes place,
economic equilibrium or status quo will remain.
It becomes the primary role of the
entrepreneur to introduced innovation in any
of the following forms:
1.New product
2.New product method
3.New market
4.New supplier
5.New industry structure
KEYNESIAN THEORY The Keynesian theory was developed by John
Maynard Keynes, a British economist the key
concepts of the theory were included in his
book, the general theory of employment,
interest and money, which was the published
during the Great Depression in 1936. The theory put so many emphasis on the role
of the government in entrepreneurial and
economic development, most especially when
the economy was experiencing depression. It
suggests that entrepreneurial activities may not
