The Entrepreneur and the Manager Distinguished

The terms “entrepreneur” and “manager” are sometimes used interchangeably. Although both jobs are
useful to the economy, each performs distinct functions.

The difference between the entrepreneur's and the manager's job may be pointed out in Chapter 1’s
discussion about the stages by which the enterprise must get through before it becomes stable.

Enterprise Stage Factor Emphasis

I. Prestart-up Business idea Full
Human resource None
Capital None

II. Start-up Business idea None

Human resource Limited
Capital Limited

III. Early growth Business idea None

Human resource Escalating
Capital Escalating

IV. Later growth Business idea None

Human resource Full
Capital Full

V. Stable enterprise Business idea None

Human resource Full
Capital Full
Figure 10. Avtivity Emphasis of New Ventures

For the firm to get along in the first three stages, the entrepreneur’s skill is requied. The last two stages
require the skills of the manager.

Enterprise Stage Activity Entrepreneur’s Manager's

Involvement Involvement
I. Prestart-up Feasibility of an idea, product or
service, among other, is Full None
scrutinized.

II. Start-up Business is formed, necessary

capital is generated, facilities
and equipment are purchased, Full None
prototyoe of products are built,
market is tested.

III. Early growth With limited resources, selling is Full None

undertaken in limited markets.
 IV. Later growth Structured management, long-
term financing, and facilities Declining Partial
planning are established.

V. Stable enterprise With bigger resources, recurring

sales and profits, selling is None Full
undertaken in bigger markets.
Figure 11. The Entrepreneur's Task vs. The Manager’sTask

A major distinction between the entrepreneur and the manager is about orientation. The entrepreneur
(also alternatively called promoter) feels confident of his ability to seize a business opportunity regardless
of the resources under his current control. The manager (also alternatively called the trustee) emphasizes
the efficient utilization of resources.

Figure 12 on the next page illustrates the complementary roles of the entrepreneur and the manager as
they confront competition.

Note: At the prestart-up stage, the only activity of the entrepreneur is identifying a good business idea.
When he decides on a business idea, he starts operating with limited human resource and capital. He does
not consider new business ideas from start-up to stable enterprise. As the business grows, so does human
resource and capital. New business ideas may only be considered when the venture fails.