CHAPTER 1

INTRODUCTION TO
ENTREPRENEURSHIP

FORMAL EDUCATION WILL MAKE

YOU A LIVING; SELF-EDUCATION
WILL MAKE YOU A FORTUNE.
Jim Rohn

CHAPTER OBJECTIVE

Understand the history and origins of entrepreneurship from the various

scope.
Understand the definition of entrepreneurs and entrepreneurship from
different perspectives and well-known business leaders.
Understand the importance of entrepreneurial activity in our daily lives
Provide definition of who is regarded as entrepreneurs with specific
features
Provide definition of who is regarded as entrepreneurs in accordance with
Islamic perspective.

BPME 1013 BASIC ENTREPRENEURSHIP

PREPARED BY: MATHIVANNAN JAGANATHAN

Introduction

Entrepreneurs and entrepreneurship are among the terms that are often
publicize by people since ancient times.
The term was brought to the meaning or definition based on various
areas or understanding by the individual.

BPME 1013 BASIC ENTREPRENEURSHIP

PREPARED BY: MATHIVANNAN JAGANATHAN

IMPORTANCE OF ENTREPRENEURSHIP AND

ENTREPRENEURIAL

In terms of management thoughts, it is more focused on

management science and decision making.
The World Bank began to introduce entrepreneurship as a major
boost for the economies of developing countries.
Contribution to national income.
Creating a new business but also increase employment
opportunities leading to the creation of the modern discovery of
resources, technology and innovation.

BPME 1013 BASIC ENTREPRENEURSHIP

PREPARED BY: MATHIVANNAN JAGANATHAN

ENTREPREPRENEURIAL CONCEPT

None of the standard and universal definition of entrepreneurship.

Derived from the French language, entreprendre, meaning assume duties
or attempt.
The word entrepreneur is popular among the Malaysian society is in the
middle of the 1970s.
Entrepreneurs are individuals who are develop a enterprise and the
businessman is a person who run a business.
Generally, entrepreneurs can be defined as a person who operates a
business that is successful with a profit motive in addition to adopting a
strategic practices to succeed

BPME 1013 BASIC ENTREPRENEURSHIP

PREPARED BY: MATHIVANNAN JAGANATHAN

ENTREPREPRENEURIAL CONCEPT

Richard Cantillon, an economist from France mixed Irish considered by

Schumpeter (1934) as the first who introduce the concept of
entrepreneurship.
A person who organizes & manages a business undertaking, assuming
the risk for the sake of profit. (Websters Dictionary)
Individuals who purchase or inherit an existing business with the intention
of expanding it (Hull, Bosley & Udel ,1980).
Entrepreneurs are people who have the ability to see & evaluate business
opportunities, to gather the necessary resources & take advantage of
them, and to initiate appropriate action to ensure success (Meredith,
Nelson & Neck,1982)

BPME 1013 BASIC ENTREPRENEURSHIP

PREPARED BY: MATHIVANNAN JAGANATHAN

ENTREPREPRENEURIAL CONCEPT

Sexton and Bowman-Upton (1991):

The process of identifying market opportunities, develop the resources to
achieve its objectives and further action needs to exploit resources for
personal gain in the long term.

Kao (1995)
A process of creating something new (creative) and different (innovative)
for the purpose of creating wealth for individuals and add value to the
community and the entrepreneurs are people who through the process of
wealth creation and value added through the incubation of ideas,
coordinating
resources
and
implement.

BPME 1013 BASIC ENTREPRENEURSHIP

PREPARED BY: MATHIVANNAN JAGANATHAN

ENTREPREPRENEURIAL CONCEPT

Coulter (2000)
A process in which individuals or groups of individuals to use the efforts
and intermediaries to look for opportunities to create value and growth
through meeting the needs and requirements. It should be through
innovative and unique no matter what source control is used.
Entrepreneur is someone who creates and operates an active business.
Hisrich and Peters (2002)
The process of creating something new added value and business needs
and time, assuming the financial, and social risks as well as receiving
awards in the form of money and personal satisfaction and
independence. While entrepreneurs are inventors who revolutionized by
the discovery of the source of the latest trend or a new outlet, new
industrial organization or acquisition of certain innovative activities

BPME 1013 BASIC ENTREPRENEURSHIP

PREPARED BY: MATHIVANNAN JAGANATHAN

ENTREPREPRENEURIAL CONCEPT

Kuratko and Hodgetts (2004)

The process of innovation and new business
creation through the four dimensions such as
individual, organization, environment and
processes supported by a network of cogovernment, and educational institutions.

BPME 1013 BASIC ENTREPRENEURSHIP

PREPARED BY: MATHIVANNAN JAGANATHAN

Characteristics in entrepreneurship definition

Process
Entrepreneur

Uniqueness

E/ship definition

Development

Profit/non-profit

BPME 1013 BASIC ENTREPRENEURSHIP

Value creation

Innovation

Organisation
creation

PREPARED BY: MATHIVANNAN JAGANATHAN

Theory and Model of Entrepreneurship (by economists)

Joseph A. Schumpeter (1934)
Innovation as one of entrepreneurial characteristics. Innovation means
modification, activities or effort that leads to new discovery.
Entrepreneur is an innovator, making sure that economy is vibrant.
Entrepreneur contribute to economic development.
Alfred Marshall
Entrepreneurship as an evolution process (business life cycle starting
from the beginning until the business stop it is operation).
How business emerge from small to big.
Business ends when the founder passed away.
To continue there is a need to have a successor or business will be taken
over by other entrepreneur.

BPME 1013 BASIC ENTREPRENEURSHIP

PREPARED BY: MATHIVANNAN JAGANATHAN

Theory and Model of Entrepreneurship (by sociologist)

Theory and Model of Entrepreneurship (According to sociologists)

Max Weber (1958) Protestant Ethic and the Spirit of Capitalism

Max Weber relates the element of religion as a foundation to succeed in
economic activities.
Weber said that the success of Protestant people in economic activities is
because of the Protestant ethics.
Relates religion with success in economic activities.
Everett Hagen
Proposes a theory- entrepreneurs exist among lower level class people
that are not satisfied within a community.
Unsatisfied with the treatment that they received contribute to their
venture into economic activities.
This study was based on research carried out in Japan, Columbia, UK
and Russia.

BPME 1013 BASIC ENTREPRENEURSHIP

PREPARED BY: MATHIVANNAN JAGANATHAN

Theory and Model of Entrepreneurship (According to sociologists)

Gibb and Ritchie (1981):

British academic scholar which introduce entrepreneurship through the
approach of social development model.
The role of socialization that push individual towards taking up
entrepreneurship.
(Interaction with entrepreneurs leads to entrepreneurial start-ups.

BPME 1013 BASIC ENTREPRENEURSHIP

PREPARED BY: MATHIVANNAN JAGANATHAN

Theory and Model of Entrepreneurship (According to the

psychologist)

Heredity (Traits) Model (McClelland, Lynn & Schrage)

Psychologists concentrate on the characteristics & personality of an
individual that form a business.
Entrepreneurs are different from non-entrepreneurs.
Among characteristics being associated with entrepreneurs are; taking
initiative, able to plan, risk taker & opportunity seeker.
McClelland (1961)
Has identified the personality of need for achievement as an important
characteristic of an entrepreneur.
McClelland (1961) The Achieving Society
Individuals that have high need for achievement tends to try hard to
achieve goals with their own effort. They are more incline to be an
entrepreneur

BPME 1013 BASIC ENTREPRENEURSHIP

PREPARED BY: MATHIVANNAN JAGANATHAN

Historical Development of
Entrepreneurship
Early in 18th century, French Economist, Richard
Cantillon, developed one of the early theory of an
entrepreneur.
His work Essai sur la de commerce en general
published in 1755; observed merchants, farmers,
craftsmen and other sole proprietors buy at a
certain price & sell at uncertain, therefore operating
at a risk.

Historical Development of
Entrepreneurship

French Economist, Baudeau (1730-1790):

A sense an entrepreneur as an innovator.

Entrepreneur as a person who invents, modify
and applies new techniques in order to reduce
cost and raise profit. He also identified ability &
intelligence as qualities needed to achieve
success.

Jean Baptiste Say (1767-1832)

Entrepreneur must have judgement,

perseverance & knowledge, possess the art of
supervision, administration & problem solving
skills, otherwise venture would probably fail.

Historical Development of
Entrepreneurship
Schumpeter- entrepreneurs role is to
change econ. status quo through
innovation.
Innovation is the key to entrepreneurship,
The key role of the entrepreneurs is to
bring innovation in the marketplace.
In doing so, they create new demand,
destroying existing market & creating new
ones.

Historical Development of
Entrepreneurship: Schumpeter
Innovation may result in: The creation of a new product or
alteration in its quality
The development of a new method of
production
The opening of a new market
The capturing of a new source of supply
Formation of new biz organizations

Historical Development of Entrepreneurship

McClelland (1961):
The key to entrepreneurial behavior lies in
achievement motivation.
The need to achieve is a drive to excel, to
achieve a goal in relation to a set of
standards.
A person endowed with a need to achieve,
will spend time considering how to do a job
better or how to accomplish something
important to them

Historical Development of
Ent/ship
Characteristics of high achievers:
Like situation where they can take personal responsibility
to find a solution;
Like rapid feedback;
Avoid what they perceive to be very easy or very difficult
task
Prefer to strive to achieve target, which is challenging &
is not beyond their capabilities.

Historical Development of
Entrepreneurship
Rotter (1966):
Introduced the notion locus of control.
Internal LOC: individuals who believes in
themselves.
External LOC: Fate, chance, events outside
their control or powerful people has a
dominating influence over their lives.

Historical Development of
Entrepreneurship
Peter Drucker (1964):
Entrepreneur as someone who maximizes
opportunity. Ent/ship arises in response to what
the entrepreneur sees an untapped or untaken
opportunities.
Underlined the importance of mgt and
leadership, and able to respond to change.

Continue
Schultz (1980): ( a pioneer of human capital theory)
In a dynamic economy, human attitudes, behaviours, skills &
knowledge are important elements to create wealth & good
values.

Carson (1982):
Entrepreneur is someone who is good at making decisions, good
at utilising scarce resources & not everyone can be entrepreneur.
Entrepreneur must proficient in all aspects of decision making.
The possession of imagination and foresight as an added
ADVANTAGE.

Continue.
Kets de Vries (1996) :
Entrepreneur as creator of risk than a taker, since
he often use someone elses capital.
However, even if the entrepreneur does not bear
most of financial risk in business, at an early
stage exposed to a considerable amount of social
and psychological risks (when the risk of failure is
high at start-up stage).
Bolton & Thompson: See entrepreneur as an
individual who habitually creates & innovates to
build s/thing of values from opportunity he has
identified.

Entrepreneurship Education in Malaysia

The role of government and private agencies in the advancement of

education and entrepreneurship training in formal schools, colleges and
universities.
In Malaysia in particular, interest to policy makers in providing small and
medium enterprises (SMEs) has increased since the establishment of the
Ministry of Entrepreneur and Cooperative Development (MECD), Ministry
of Science, Technology and Innovation (MOSTI), Majlis Amanah Rakyat
(MARA), Ministry of Youth and Sports , Production Association of
Malaysia (FMM), Malaysia Business Council (DPM), SIRIM, Entrepreneur
capital Nasional Berhad (PUNB), Bank Pembangunan Malaysia and
various other parties.
Cultivate entrepreneurship is through the introduction of entrepreneurship
programs at both levels of schools and universities.
Many universities have been offering courses on entrepreneurship or
small and medium businesses.

BPME 1013 BASIC ENTREPRENEURSHIP

PREPARED BY: MATHIVANNAN JAGANATHAN

Entrepreneurship Education in Malaysia

To promote effective entrepreneurship education at institutions of

higher education, several challenges need to be implemented.
1. Encourage entrepreneurs or small and medium businesses in the
entrepreneurial process in educational institutions to become role models
and provide opportunities for students and lecturers to see the real
situation.
2. Provide opportunities for lecturers and staff involved in entrepreneurship,
making mistakes, through experiments, given the time and schedule
flexibility and creates an uncertain situation (uncertainty).
3. Establish a mechanism for students who have no entrepreneurial
background to assist entrepreneurs or small and medium businesses
around the place of learning for action learning.

BPME 1013 BASIC ENTREPRENEURSHIP

PREPARED BY: MATHIVANNAN JAGANATHAN

Entrepreneurship Education in Malaysia

4. Encouraging learning environment that is less rigid structure as
well as use of informal channels of communication.
5. Establish a higher education institution that provides awards to
students and lecturers by the decision, creativity and individual
initiative.

BPME 1013 BASIC ENTREPRENEURSHIP

PREPARED BY: MATHIVANNAN JAGANATHAN

Entrepreneurship from Islamic

Perspectives:

Definition
Entrepreneurship can be defined as any business activities carried out
by the individual in order to produce product or services in accordance to
syariah (Islamic law)
The concept of syumul (integrated; achieving success in this world as
well as achieving success thereafter).
Business activity is also a religious activity. This means entrepreneurship
is not separated or isolated from the life thereafter (akhirat) where
people will be judged rewarded or punished.
Therefore, entrepreneurship falls within the system of Islam (Islamic
faith, law, moral & ethics).

Entrepreneurship from Islamic

Perspectives
Islam encourages entrepreneurship activities as the way
to derive an income.
Prophet Muhammad (saw) mentioned that 9/10 of
sources of rezeki (incomes) can be derived or generated
from business activities.
With good intention, entrepreneurial activity is considered
as an IBADAT, will be rewarded by Allah because
business activities generate incomes that can be used by
entrepreneur himself & his family.
By offering products or services to the community
(customers), an entrepreneur is also considered to fulfill
a fardhu kifayah (fulfilling ones obligations to the
community)

An entrepreneurial as a branch of Jihad and Amal Soleh

Considered as jihad fi sabilillah.

Through entrepreneurship, entrepreneurs has
opportunity to increase good deeds. Among the
things that can be deemed as good deeds in the
field of entrepreneurship are:
1. Creating products that can be enjoyed long lives so hereditary. For instance, the
creation of vehicles, machinery and equipment
2. Market products more efficiently and at full effectiveness, and cost by facilitating
the extension of benefits to as many users as possible. For instance, retail outlets
and supermarkets.
3. Generate employment and livelihood to its members and their dependents.
4. Opportunities for career development and continuing to increase revenue for
those involved.
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An entrepreneurial as a branch of Jihad and Amal Soleh

5. Improving quality of life so life becomes more perfect.
6. Strengthen the social and economic status and enhance the
dignity of their race, religion and country.
7. Strengthen national economy.
8. Build Khairun Ummah..

BPME 1013 BASIC ENTREPRENEURSHIP

PREPARED BY: MATHIVANNAN JAGANATHAN

Guidelines of Entrepreneurship in the Islamic

1) Doing what he was told
Entrepreneurs still have to perform the obligatory practices such as
prayer, fasting and so forth. Despite the busy in business, the practice
must not be abandoned.
2. Avoiding what is prohibited
The practice is forbidden by Islam such as riba and gharar be avoided
because these practices cause harm and oppress others.
3. Applying the properties of good
Someone who wants to make the entrepreneurial nature of worship
should adopt "attributes" and away from nature "mahmudah" in all
matters.
4. Planning and business strategy
Entrepreneurs must have a thorough strategic planning and a strategy
that is not contrary to the principles of Islam.

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PREPARED BY: MATHIVANNAN JAGANATHAN

Guidelines of Entrepreneurship in the Islamic

5. Understand the tenets of business

Entrepreneurs need to equip themselves with knowledge relating to

muamalah law for entrepreneurial activity is carried out not in conflict with
the muamalah rules of Islam.

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Conclusion

The concept of entrepreneur and

entrepreneurship to bring a definition and a
very broad perspective.
The concept of entrepreneurship and
entrepreneurs are a vast field of interpretation
according to different perspectives and views
of business leaders.

BPME 1013 BASIC ENTREPRENEURSHIP

PREPARED BY: MATHIVANNAN JAGANATHAN