SESSION 1: INTRODUCTION

Why Entrepreneurship
 Entrepreneurship is important for socio economic development- capital formation, job creation,
innovation. Governments are championing for entrepreneurship to propel economic growth, as
a model for social-economic development and to create jobs and fuel innovations.
 We need entrepreneurship to help solve social problems-provision of goods and services.
 We need entrepreneurial organizations that are innovative to compete effectively in the current
market place
 Entrepreneurship as a career alternative to employment – it offers an individual independency
and creativity; for flexibility; to innovate to solve identified problems and to receive financial
rewards far more than employment can offer is on the rise.
 Entrepreneurship is invaluable given that unemployment and retrenchment are real, people stuck
in careers that they don’t like and are not working to their full potential, and many professionals
not living their passion, dreams and expectations,

Definitions of Entrepreneurship:
Entrepreneurship involves undertaking a business activity by an individual who undertakes to
organise, manage and assume the risks of an enterprise.
Overtime, the term entrepreneurship has evolved. Different scholars have come up with different
definitions, examples include

Several definitions
 Entrepreneurship as the ability to create and build something from practically nothing. This
involves the willingness to assume risks in undertaking a new economic activity through the
mobilization of human, financial and material resources.
 Entrepreneurship as the dynamic process of incremental wealth creation by individuals who
assume the major risks in term of equity, time and commitment to provide value.
 Entrepreneurship involves the identification of an opportunity, and organizing an enterprise for
the production and supply of goods and services
 Entrepreneurship is the act of creating or growing a business through innovative and risk-
assuming management.
 Entrepreneurship as the process of creating something new of value by devoting the necessary
time and effort, acknowledging and assuming the accompanying risks and receiving the resulting
rewards of monetary and personal satisfaction and independence.
 It involves doing things that are not generally done in the ordinary course of business routine
and entails the process of opportunity recognition and implementation and innovation
Recent definition of Entrepreneurship defines Entrepreneurship is the attempt to create value
through the recognition of a business opportunity, the management of risk taking appropriate to the
opportunity and through the management skills to mobilise human, financial and material resources
necessary to bring the project to fruition.

From the above definitions, we can summarise the key tenets of Entrepreneurship as the following;
Starting a business enterprise, initiative taking/creation
Being creative and innovative in developing new products and services. This involves doing
or creating something new or significantly different
Mobilization and management of resources
Accepting risk and uncertainty in the development of the venture. Starting new ventures and
applying creativity involves a lot of risks.

An Entrepreneur
The term ‘entrepreneur’ is coined from the French word ‘Entreprendre’ which means to undertake
or one who goes between hence an entrepreneur is one who is able to identify opportunities and
actualize them, by undertaking to organize, manage, and assume the risk of a business
Kirzner considers an entrepreneur as one who is alert for profitable opportunities for exchange.
The entrepreneur benefits by acting as a middleman who facilitates the exchange. The role of
information in the market-place is important and an entrepreneur is in possession of additional
knowledge that provides opportunities for creative discoveries
Schumpeter defines an entrepreneur as an innovative person who brings about change through
innovation by the introduction of new products, processes, markets, organizational methods and
new sources of raw materials.
Knight considers an entrepreneur as an individual who takes calculated risk which is uncertain
and whose reward (profit) is the return of bearing uncertainty
An entrepreneur is one who searches for change, responds to it and exploits it as an opportunity

Functions of an entrepreneur
1. Opportunity identifier
2. Entrepreneur initiates the business activity
3. Resource mobilizer
4. Entrepreneur is the manager – planning, organizing, directing -organises things and people
5. Entrepreneur is a decision maker
6. Entrepreneur coordinator and organizer
 7. Entrepreneur as an innovator - According to Schumpeter, the true function of an entrepreneur
is introducing innovations.
8. Entrepreneur as the financial manager
9. Entrepreneur as a risk bearer

The Entrepreneurship Process

The process of starting a new venture is embodied in the entrepreneurial process, which involves
more than just problem solving in a typical management manner. An entrepreneur must find,
evaluate, and develop an opportunity to create something new.

The process has the following distinct phases:

1. Identification and evaluation of the opportunity,
2. Development of the business plan, Determination of the required resources,
3. Implementing the enterprise
4. Management of the resulting enterprise
5. Harvesting the rewards

1. Identify and Evaluate the Opportunity

Opportunity identification and evaluation is a very crucial task in the entrepreneurship process.
Most good business opportunities do not suddenly appear, but results from an entrepreneur’s
alertness to possibilities and development of mechanisms that identify potential opportunities.
Opportunities are identified from the environment and this can be achieved by using input from
consumers, business associates, channel members, or technical people. Each opportunity must
be carefully screened and evaluated.
3. Develop a Business Plan - A good business plan must be developed to exploit the defined
opportunity and is essential in determining and obtaining the resources and successfully
managing the resulting venture.
4. Determine and obtain the required resources -The resources needed to implement the
opportunity must also be determined. Acquiring the needed resources in a timely manner while
giving up as little control as possible is important for the entrepreneur
5. Launch the Enterprise - Involves implementing the business plan using the obtained
resources. This will involve a wide range of actions and decisions which includes; choosing the
legal form of the enterprise, establishing HR positions and their roles, choosing the production
methods
2. Manage the Enterprise - After resources are acquired, the entrepreneur must use them to
implement the business plan. The operational problems of the growing enterprise must also be
examined. This involves implementing a management style and structure, as well as determining
 the key variables for success. A control system must be established, to help in problem
identification and resolution.
3. Harvesting Stage - This phase involves choosing an exit strategy that allows the entrepreneurs
to harvest the rewards they have earned through their time, effort and talent

Entrepreneurship process is a function of several factors that include:

The Entrepreneur- Entrepreneur’s environment- characteristics, background, education,
socialization, personal goals, support systems, personal goals, expectation and perceptions
Entrepreneurial environment – Source of opportunities, Availability of resources, laws, policy
Information, knowledge and unique business concepts

Intrapreneurship/Corporate Entrepreneurship
Changes in the internal and external environment propelled by rapid evolution of knowledge and
technology, and stiff competition is forcing corporates to restructure and change their way of doing
business. They are realizing that they need to be more innovative and flexible than in the past and
are hence engaged in corporate entrepreneurship or intrapreneurship.

Intrapreneurship is defined as a process whereby an individual or a group of individuals, in

association with an existing organization, creates a new venture within the organization or transforms
the organization by initiating renewal or innovation. Intrapreneurship involves enterprising/
entrepreneurship within an existing organization and is also referred to as corporate entrepreneurship.

Corporate Entrepreneurship can facilitate firm’s efforts to innovate constantly and to cope effectively
with competing realities in the market. Entrepreneurship is necessary for organizational survival in
the competitive environment. Corporates need to change the way they do business by re-inventing
themselves through the integration of the strengths of the entrepreneurial firms (creativity, flexibility,
innovativeness and closeness to the market) with the market power and financial resources of the
large organizations. Existing organizations have resources, business skills, marketing distribution
channels to commercialise innovations but their bureaucratic structures, highly structuredness inhibit
creativity and prevent the development of new products and services.

Factors fuelling Corporate Entrepreneurship include:

1. Rapid Growth in the number of new and sophisticated competitors including international
competitors
2. Sense of distrust in the traditional methods of corporate management
3. An exodus of some of the best employees from corporations to become entrepreneurs
4. An overall desire to improve efficiency and productivity
Intrapreneurship is reflected in entrepreneurial activities that include:
New business venturing – creation of new business units, products, services, markets, processes
Self-renewal –transformation of an organization through the renewal of key ideas- strategic and
organizational changes, change of business concepts, systems Re-invigorating the whole
organization and reinventing the business’s industry
Pro-activeness- Initiative and risk-taking, competitive aggressiveness and boldness
Creativity and innovativeness

Organizations can promote Intrapreneurship by developing an entrepreneurial culture through;

- Providing freedom and encouragement required for employees to develop new ideas
- Develop policies that encourage innovativeness
- Create a system of feedback and positive reinforcement
- Emphasize personal responsibility
- Provide incentives for innovative ideas
- Support of creativity by top management
- Have an appropriate organizational structure and values
Examples: XEROX – set up XEROX Technology Ventures, JKUATes, and Safaricom – innovation activities
Google, 3M

Social Entrepreneurship
Social entrepreneurship is a form of entrepreneurship that has a social purpose; applies
entrepreneurship to solve a social problem. Involves tackling social challenges in an innovative and
financially sustainable way. Unlike the traditional entrepreneurship, it is not focused on profit
making but on solving a social need. It begins with a perceived social opportunity that is translated
into an enterprise leading to the creation of new organizations; new products or services, new
industries, new business models that contribute to the social welfare of the society.

Social entrepreneurs are entrepreneurs with a social mission to create social value that fulfils social
needs as opposed to the usual profit-seeking motivation. Like other entrepreneurs, they are creative
thinkers who continuously strive for innovation that result in new technologies, supply of resources,
production methods. Social enterprises are market driven (based on opportunities), Social impact
centred and pursue revenue and sustainability.

Social entrepreneurs aim to achieve sustainable solutions to the problems they address and seek to
empower others in most cases. They however need to develop practical and innovative solutions,
given their limited finances and the scale of the problems they aim to solve. They need sustainability
strategies. Social entrepreneurship and social innovation aim to provide innovative solutions to
unsolved social problems, putting social value creation at the heart of their mission in order to
improve individuals’ and communities’ lives and increase their well-being.

Techno-preneurship
 Entrepreneurship in a technology - intensive context.
 Process of merging technology process and entrepreneurial talent and skills.

The Role of Entrepreneurship in Economic Development

Entrepreneurship contributes to economic growth through:
 The creation of new high growth enterprises that contribute to job creation, tax
 Entrepreneurship contributes to the creation of new technologies, products, processes and
services that drive the economy
 Entrepreneurship leads to capital and equity formation
 Helps to improve the standards of living of many
 Entrepreneurs are creators, innovators and leaders who give back to the society as
philanthropists, directors , trustees changing the lives of many people
 Entrepreneurship helps in the efficient utilization of resources
 Entrepreneurship steers competition in the market place leading to improved quality of goods
and services. It is an agent of change
 Contributes to social and economic mobility of individuals in the society
 Contribute to export earnings for the country
Being agents of innovation entrepreneurs are the key driver of economic progress.
 Schumpeter’s two greatest insights were that innovation is the driving force of economic
progress in general, and that entrepreneurs are the agents of innovation.
 Entrepreneurship is important for the strength and stability of the economy.
 Small entrepreneurial firms are responsible for most of the innovations which help working more
efficiently and effectively.
 Entrepreneurial firms have a positive impact on the effectiveness of larger firms.
 Evidence shows that many entrepreneurial firms have built their entire business models around
producing products and services that help larger firms to be more efficient or effective.
 Some entrepreneurial firms are original equipment manufacturers and supply large firms.
Many exciting new products, such as DVD players, digital cameras, and improved prescription dru
gs, are not solely the result of the efforts of larger companies with strong brand names. They were
produced with the cutting-edge component parts of R &D provided by edge entrepreneurial firms.

Why Become an Entrepreneur

1. To be one’s own boss- operate on your own rules, be in control, make one’s own decisions
2. Pursue one’s own ideas in your own way
3. Pursue financial rewards