Topic1 3

ENTREPRENEURSHIP
(These lecture notes are compiled by Mohamad Saidy Ismail

for CUCMS’s MPU2232 / MPU 3232 class discussions with
references to “Fundamentals of Entrepreneurship”, Oxford
Fajar, by Sodri Ariffin, et al and “Entrepreneurship”, Oxford
Fajar, by Sariah Hanim and Cecilia Soon Teik Lan. Students are
encouraged to refer directly to these main reference books.)
May 2018
CUCMS
Fundamentals of Entrepreneurship All Rights Reserved

© Oxford Fajar Sdn. Bhd. (008974-T), 2013 1– 1
TOPIC 1
FUNDAMENTALS OF ENTREPRENUERSHIP
(PART 1)
Note:
This note is a supporting reading materials for students who take
Entrepreneurship. The main reference for this note is Fundamentals of
Entrepreneurship published by Sodri Ariffin, Ismail Ab Wahab
and Zarida Hambali (Oxford Fajar) and a few other books.

Learning Outcomes
At the end of this chapter, students should be able to:

 understand the principles and theory of
entrepreneurship
 gain a better understanding of the concept of the need
for achievement, locus of control and risk taking
propensity as key dimensions of entrepreneurship in
managing a business organization

Introduction
 Entrepreneurial activities in the form of producing goods and

services for human needs, selling, trading or exchanging of
goods were in existence since time immemorial.
 Presently, entrepreneurship development is recognized as
an important catalyst that can spur economic growth and
prosperity especially in the countries that practise free
market economy.

Introduction (cont.)
 Entrepreneurship by definition is a process of identifying the

opportunity, converting the opportunity into marketable
products or services using creative and innovative means
and through the process creates value and wealth to the
society.
 Entrepreneurs are individuals who undertake entrepreneurial
process.

The Evolution of Entrepreneurship
Entrepreneurship has existed in Malaya since the interaction of

Malacca with foreign traders. However, when the British
colonised the Malay Peninsular, they changed the structure of
the society and practised the “divide and rule” system in which
the Chinese were engaged in mining and business, the Malays
were in administration and agriculture and the Indians were
engaged in rubber plantations.
In such situation, the Chinese society was exposed and had

gone advance in business compared to the Malays and
Indians.

The Evolution of Entrepreneurship
(contn)
After independence, the Government through its public

policies such as The New Economic Policy (1971-1990),
the National Development Policy (1990-2000) and Vision
2020 has encouraged and supported entrepreneurship
development in Malaysia because entrepreneurs contribute
to the nation’s prosperity as well to the individuals and local
society.
In fact at one time, there was Ministry of Entrepreneurship

Development. Today, it has become a department under
the Ministry of Rural Development.

Definition of Entrepreneurship
There is no consistent and standard definition

on entrepreneurship.
But Richard Cantillon introduced the word

‘entreprende’ in 1755, a French word which
means “to undertake”, “to try” or to do
something”. And this is to refer to individuals
who undertake the risk of new ventures or
enterprise’.

Definition of Entrepreneurship
(contn)
One of the most comprehensive definition of entrepreneurship

is as what been given by Histrich and Peter (1998):
“Entrepreneurship is the dynamic process of creating

incremental wealth. The wealth is created by individuals who
assume major risks in terms of equity, time and career
commitment or provide value for some products or services.
It is the process of creating something new with value by

devoting the necessary time and effort, assuming the
accompanying financial, psychological and social risks, and
receiving rewards of monetary, personal satisfaction and
independence”

Entrepreneurship versus
Entrepreneur
 Entrepreneurship refers to an entrepreneurial process while
entrepreneur is the individual that executes the process.
 Entrepreneurship entity or groupings can be categorized
based on the type of entrepreneurial activities being carried
out.
 The entrepreneurship process may comprise several
entrepreneurial activities which might differ from one
organization to the other.
 Types of entrepreneurs are best described in terms of their
motives and their functions as entrepreneurs.

Who are Entrepreneurs?
Who are Entrepreneurs:

 According to Zimmerer and Scarborough, 2008. “Entrepreneur is an
individual who creates a new venture in the face of uncertainty for the
purpose of achieving profit and growth by indentifying and capitalising
opportunities and assembling the necessary resources to capitalise on the
indentified apportunities”.
 Kuratko and Hodgetts, 2001. “An entrepreneur is an individual who

organises, manages and assumes the risks of a business”.
 In short, entrepreneurs are the pioneers of today’s business success.Their

sense of opportunity, their drive to innovate and their capacity for
accomplishment have become the standard by which free enterprise is
now measured.

Who are Entrepreneurs? (contn.)
Entrepreneur can also be defined from a functional

approach i.e. based on what an entrepreneur
does, or an indicative approach based on his
characteristics and attributes.

Other Definition of
Entrepreneurship
Kuratko and Hodgetts (2004)
Entrepreneurship is a dynamic process of vision, change and

creation. It request an application of energy and passion towards
the creation and implementation of new ideas and creative
solutions.
Essential ingredients include the willingness to take calculated risks

in terms of time, equity or career; the ability to formulate an effective
venture team; the creative skill to marshal needed resources; the
fundamental skill of building a solid business plan, and finally, the
vision to recognise opportunity where others see chaos,
contradiction and confusion”.

 Adam Smith (1776) widened the scope of
entrepreneurship to include the dynamism
of the personality of an ‘enterpriser’ such
as the ability to foresee potential through
changes in the economy and to take
advantage of the opportunities thereby
created.

 Jean Babtiste Say (1803)
“Entrepreneurs are individuals with certain

competencies who can influence society by
forming enterprises and likewise were influenced
by society to recognize needs and fulfil them
through skilful management of resources”.

 Joseph Schumpeter believed entrepreneurship plays a
crucial role in triggering economic development.
 Schumpeter (1934) defined development as the exercising of
new combinations of productive factors.
 Such efforts may result in the introduction of a new product
or a new method of production, the opening of a new market
or the finding of a new source of the inputs supply or the
establishment of a new organization.

A SUMMARY OF DEFINITIONS
Basic aspects of Entrepreneurship:
 Creation of something new of value or novel (original,

unique and unexpected) for both, the entrepreneur and the market
 Devotion of time and effort

 Assuming necessary risks in many forms
 Involves the rewards, monetary and self satisfaction

CHARACTERISTICS OF SUCCESSFUL
ENTREPRENEURS
Successful entrepreneurs have different backgrounds and ways in which they started their ventures
and managed them. But studies have shown they have certain personal characteristics in common
which you can learn from and work on to nurture them:
1. Able to identify opportunities. When some has a problem or a shortage, entrepreneurs

perceive this and opportunity to make a profit by solving the problems and supplying
products.
2. Initiative and Responsibility. Effective entrepreneurs seek and take initiative; feel a personal
responsibility for the outcome of ventures in which they are associated.
3. High Degree of Commitment. Always seek to improve
4. Orient to Customers’ needs
5. Able to tolerate tedium / details
6. Risk takers
7. Able to rebound from disappointments
(Note: For this topic, you can refer it to many literature on the net and also reference books in the
library. Many authors look from many perspective as much as the successful entrepreneurs may
have different experiences. However, the above characteristics are rather common and reckoned
by many. Please search for more explanation on the above mentioned characteristics).

Individual Characteristics of an
Entrepreneur (contn.)
These personal
entrepreneurial
competencies can
shed some light on
the personality and
character of the
successful
entrepreneurs.
However, it is not
exhaustive and the
instrument is not a
‘one size fits all’
tool.
Entrepreneur (contn)
 Brockhaus (1982) identifies three attributes that are
consistently associated with entrepreneurial behaviour: the
need for achievement, the internal locus of control and a risk-
taking propensity.

Entrepreneur (cont.)
 The need for achievement is a personal attribute

associated with the expectation of doing something better
over others and/or the individual’s earlier accomplishment
(Hansemark, 2003).
 It is believed that the individuals who score highly on the
need for achievement would have a strong desire for
success and are consequently more likely to behave
entrepreneurially (Othman, Ghazali & Ong, 2005).
 This argument is supported in a study by Beugelsdijk and
Noorderhaven (2004) which shows that entrepreneurs
generally have higher needs for achievement.

Entrepreneur (cont.)
 ‘Locus of control’ is a belief or disbelief that one can control

or influence the environment in which one is found. Rotter
(1966) hypothesizes that individuals with internal locus of
control are more likely to strive for achievement than those
with external locus of control.

Individual Characteristics of
an Entrepreneur (cont.)
 Personal entrepreneurial competencies (PEC)
– In 1985, McClelland with McBer & Co, had developed a
measuring instrument to measure the personal
entrepreneurial competencies (PEC) or inclinations among
successful entrepreneurs in Malawi, India and Ecuador.

Among founders of world great
products
 Apple Inc: Steve Job, the Co-founder and the Chief Executive Officer
(CEO) of Apple Inc.
 Microsoft: Bill Gates, the Co-Founder, the former Chairman and the CEO
of Microsoft Corporation.
 Oprah Winfrey, the former host of the Oprah Winfrey Show, the
Chairwoman and the CEO of Harpo Production.
 Honda: Soichiro Honda (Nov 17, 1906)
 Body Shop: Anita Rodick, Body shop founded in 1976 in UK
 Air Asia: Tony Fernandes
 Samsung: Lee Byung-Chul, born on 12 Feb, 1910
 Facebook: Mark Elliot Zuckerberg
(Note: Students are encouraged to study to have a closer view on the successful factors that
help the above entrepreneurs to achieve high)

Among Founders of Great –
Products
In Malaysia:
 Tune Air (which introduce produce AirAsia) – Tony

Fernendes
 99 Speedmart, Lee Thiam Wah (Mr Mini Mart, 1992)
founded Pasar Mini99
 Tan Sri Robert Kuok
 Tan Sri Syed Mokhtar Al-Bukhary

Steve Job’s 10 Rules for Success
 Don’t live a limited life

 Have passion
 Design for yourselff
 Don’t sell crap
 Build a great team
 Don’t do it for the money
 Be proud of your products
 Build around customers
 Marketing is about value
 Stay hungry, stay foolish

Bill Gates’s 10 Rules for Success
 Have energy
 Have a bad influence
 Work hard
 Create the future
 Enjoy what you do
 Play bridge
 Ask for advice
 Pick good people
 Don’t procrastinate
 Have a sense of humour

Types of Entrepreneurship

Corporate Entrepreneurship
 Corporate entrepreneurship refers to the entrepreneurial

activities carried out in large corporations.
 Large companies have to continually expand and diversify
their entrepreneurial activities in order to sustain its existence
by creating new products or services to their customers.

Private or Independent
Entrepreneurship
 Private or independent entrepreneurship refers to:

– the entrepreneurial activities of private or independent firms where
the entrepreneurship process is most prevalent
 The entrepreneurship process begins with
– the identification of business opportunity
– setting-up of the business entity
– growing the business to a higher level
– ‘planning for the harvest’ strategy
 The majority of the small and medium-sized enterprises in this
country belong to this kind of entrepreneurship.
 Independent entrepreneurship contributes to the nation’s
economy in terms of providing jobs and value added initiatives.
Intrapreneurship
 Intrapreneurship can be defined as:

– an innovative corporate management strategy that encourages
employees within an organization to create new product ideas—
if employees’ ideas are approved, management will finance
research and development of the product while sharing an
equitable partnership arrangement with the employee
 Intrapreneurship scheme allows and encourages
entrepreneurial activities within the corporation or institution

Social Entrepreneurship
 Social entrepreneurship refers to the entrepreneurial activities

carried out by social enterprises, NGOs and charitable
organizations.
 The process involves recognition of a social problem and the
application of the entrepreneurial approach to organize, create
and manage a venture to achieve the social objectives or social
ROI (return on investment).
 Example of economic based social entrepreneurship project is
the Grahmeen Bank in Bangladesh whose objective is to provide
easy and cheap credit to poor women who are involved in micro
business.

Social Entrepreneurship (cont.)
 Other examples of societies and clubs are Students in Free

Enterprise (SIFE), Society for the World Wild Life Protection
(WWF), Society for welfare and aid for unfortunate groups
like orphans, Palestinians, aborigines, urban and rural poor
 There are also societies formed to cater to specific interests
like the Malaysian Nature Society, Environmental Protection
Society of Malaysia and Amnesty International for protection
of human rights.

Public Sector Entrepreneurship
 Public sector entrepreneurship refers to entrepreneurial activities

carried out by government-linked companies (GLCs) or state-
owned enterprises.
 The majority of these companies were formed as part of the
nation’s privatization programme which aimed at providing more
efficient services to the people.
 State-owned enterprises such as the SEDCs are engaged in
certain entrepreneurial activities through joint-ventures, equity
participation as well as management buyouts.
 They are also entrusted with the task of entrepreneurship
development in their respective states.

Academic Entrepreneurship
 Entrepreneurial activities in academic and research institutions

mainly involve:
– research and development of new products, processes, systems,
materials, etc. with the objectives that these innovations will lead to
intellectual property rights (e.g. patents, copyright, trademark) and its
commercialization through outright sale of IPs, technology licensing
or through creation of new ventures.

Other Variants of Entrepreneurship
 There are also other variants of entrepreneurship such as

– gender entrepreneurship
– political entrepreneurship
– ethnic and sectarian entrepreneurship
– agriculture and technology entrepreneurship, etc.
 Gender entrepreneurship refers to entrepreneurial activities that
are carried out by women or any entrepreneurship programme
targeted to this particular group.

Other Variants of Entrepreneurship
 Ethnic entrepreneurship refers to entrepreneurial activities

carried out by the various ethnic groups in the country. Studies
in this area of entrepreneurship focus on whether certain ethnic
group is more entrepreneurial than the others and the factors
contributing to that phenomenon.
 Political entrepreneurship refers to entrepreneurial activities
carried out by various enterprises that are created by political
parties as vehicles to source funds for the political parties.
 Agriculture entrepreneurship and technology entrepreneurship
are terms used to refer entrepreneurial activities in agriculture
and technology respectively.

DEFINITION OF SMALL & MEDIUM
ENTERPRISE
A business will be deemed as an SME if it meets either one of the following two
specified criteria, namely sales turnover or full-time employees whichever is lower
CATEGORY SMALL MEDIUM

Manufacturing Sales Turnover: Sales Turnover:
RM300,000 to less than RM15 million to less that
RM15 million RM50 million
Full-Time Employees: Full-Time Employees:

5 to less than 75 75 to not exceeding 200
Services and Sales Turnover: RM300,000 Sales Turnover:
Other Sectors to less than RM3 million RM3 million to not exceeding
RM20 million
Full-Time Employees: 5 to Full-Time Employees: 30 to not
less than 30 exceeding 75
Source: “Guideline for New SME definition”. By SME Corp. Malaysia, Secretariat
to the National SME Development, October, 2013
IN CONCLUSION ….
 Entrepreneurs are individuals who undertake entrepreneurial

process.
 The other conclusion – it is the process of creating
something new with value by devoting the necessary time
and effort, assuming the accompanying financial, psychic
and social risks and receiving the resulting rewards of
monetary, personal satisfaction and independence.
 Entrepreneurship by definition is a process of identifying the
opportunity, converting the opportunity into marketable
products or services using creative and innovative means
and through the process creates new value and wealth to the
society.

ENTREPRENEUR SELF-
ASSESEMENT
You can try one of the online tests by

accessing your potential to be a
successful entrepreneur:
http://bizmove.com/other/quiz.htm

TOPIC 1
FUNDAMENTALS OF
ENTREPRENEURSHIP
(Continuation)
The Importance of Entrepreneurship and its Development in
Malaysia

The Importance / Benefits of
Entrepreneurship
NATIONAL DEVELOPMENT
 It a catalyst for economic change & national growth
 Improving the country’s balance of payment by increasing the
country’s Gross National Product (GNP)
 It increases per capita output and income
 Produces more products of high quality
 Creates more job opportunities
 Better way utilizing national resources
SOCIETY DEVELOPMENT
 Improves the lifestyle of the society
 Fulfils the needs / wants of the community
 Create choices of produts through innovative and creative
production techniques
 Reduces waste

The Importance / Benefits of
Entrepreneurship (contn)
FAMILY DEVELOPMENT
 Increases family income
 Raises living standards of famalies
 Improves social status
SELF DEVELOPMENT
 Maximising potential skills and credibility to face
challenges
 Possesses freedom in carrying out a job
 Maximising the benefits obtained from available
opportunities
 Determining your own performance target


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ENTREPRENEURSHIP

(These lecture notes are compiled by Mohamad Saidy Ismail

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

At the end of this chapter, students should be able to:

Fundamentals of Entrepreneurship All Rights Reserved

 Entrepreneurial activities in the form of producing goods and

Fundamentals of Entrepreneurship All Rights Reserved

 Entrepreneurship by definition is a process of identifying the

Fundamentals of Entrepreneurship All Rights Reserved

Entrepreneurship has existed in Malaya since the interaction of

In such situation, the Chinese society was exposed and had

Fundamentals of Entrepreneurship All Rights Reserved

After independence, the Government through its public

In fact at one time, there was Ministry of Entrepreneurship

Fundamentals of Entrepreneurship All Rights Reserved

There is no consistent and standard definition

But Richard Cantillon introduced the word

Fundamentals of Entrepreneurship All Rights Reserved

One of the most comprehensive definition of entrepreneurship

“Entrepreneurship is the dynamic process of creating

It is the process of creating something new with value by

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Who are Entrepreneurs:

 Kuratko and Hodgetts, 2001. “An entrepreneur is an individual who

 In short, entrepreneurs are the pioneers of today’s business success.Their

Fundamentals of Entrepreneurship All Rights Reserved

Entrepreneur can also be defined from a functional

Fundamentals of Entrepreneurship All Rights Reserved

Entrepreneurship is a dynamic process of vision, change and

Essential ingredients include the willingness to take calculated risks

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

“Entrepreneurs are individuals with certain

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

 Creation of something new of value or novel (original,

 Devotion of time and effort

Fundamentals of Entrepreneurship All Rights Reserved

1. Able to identify opportunities. When some has a problem or a shortage, entrepreneurs

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

 The need for achievement is a personal attribute

Fundamentals of Entrepreneurship All Rights Reserved

 ‘Locus of control’ is a belief or disbelief that one can control

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

 Tune Air (which introduce produce AirAsia) – Tony

Fundamentals of Entrepreneurship All Rights Reserved

 Don’t live a limited life

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

 Corporate entrepreneurship refers to the entrepreneurial

Fundamentals of Entrepreneurship All Rights Reserved

 Private or independent entrepreneurship refers to:

 Intrapreneurship can be defined as:

Fundamentals of Entrepreneurship All Rights Reserved

 Social entrepreneurship refers to the entrepreneurial activities

Fundamentals of Entrepreneurship All Rights Reserved

 Other examples of societies and clubs are Students in Free