NATURE AND RELEVANCE OF

ENTREPRENEURSHIP

LESSON 1: CONCEPT OF
ENTREPRENEURSHIP
Ms. Beverly Joy N. Ramos
G12 Entrepreneurship Teacher
“The entrepreneur always searches for
change, responds to it, and exploits it
as an opportunity.” (Peter Drucker)
GOOGLE IMAGE
AT THE END OF CHAPTER 1, THE STUDENTS
WILL BE ABLE TO :
1. Explain the concept of entrepreneurship;
2. Discuss entrepreneurship in some countries and in the
Philippines;
3. Trace the development of entrepreneurship;
4. Explain the entrepreneurial process; and
5. Discuss the relevance of entrepreneurship in economic
growth and society.
LESSON 1: CONCEPT OF ENTREPRENEURSHIP
• Entrepreneurship is a catchword in this era of
globalized economy. It s a foundation and catalyst for
economic growth and innovation across nations.

• Entrepreneurial activities thrive in societies with

supportive government policies and which give much
importance to innovativeness and risk-taking to turn
new ideas into breakthrough solutions.
• Small and medium enterprises (SMEs) are concrete
manifestations of entrepreneurship. According to a
United Nations report, in developing countries, SMEs
account for more than 90% of all jobs, sales, and value
added; while in developed countries, they account for
only over 50% of these same measures

• It is interesting to note that over the years, the meaning

of entrepreneurship has had a lot of variations. These
are some of the definitions that have been given to
entrepreneurship from early on to the present time:
CONTRIBUTOR DEFINITION

Knight (1921) Having profits from bearing uncertainty and risk

Schumpeter (1934) Carrying out of new combinations of firm organization-new

products, new services, new sources of raw material, new
methods of production, new markets, new forms of
organization.

Hoselitz (1952) Uncertainty bearing…coordination of productive

resources…introduction of innovations and provision of capital.

Cole (1959) Purposeful activity to initiate and develop a profit-oriented

business.
CONTRIBUTOR DEFINITION

McClelland (1961) Taking moderate risk

Shapero (1975) A kind of behavior that includes: (1) initiative taking, (2) the
organizing or reorganizing of social economic mechanisms to
turn resources and situations to practical account, and (3) the
acceptance of risk failure.

Casson (1982) Decisions and judgments about the coordination of scarce

resources.

Ronstadt (1984) Dynamic process of creating incremental wealth. This wealth is

created by individuals who assume the major risks in terms of
equity, time, and/or career commitment of providing value for
some product or service. The product or service itself may or may
not be new or unique, but value must somehow be infused by the
entrepreneur by securing and allocating the necessary skills and
resources.
CONTRIBUTOR DEFINITION

Drucker (1985) Behavior rather than personality trait. Its foundation lies in
concept and theory rather than in intuition.

Gartner (1985) Creation of new organizations.

Hisrich & Brush (1985) Process of creating something new with value by devoting
the necessary time and effort; assuming the accompanying
financial, psychic, and social risks and uncertainties; and
receiving the resulting rewards of monetary and personal
satisfaction.

Stevenson & Grousebeck Pursuit of opportunity without regard to resources currently

(1989) controlled.
CONTRIBUTOR DEFINITION
Hart, Stevenson, and Dial Pursuit of opportunity without regard to resources currently
(1995) controlled, but constrained by the founders’ previous choices
and industry-related experience.

Shane (2003) An activity that involves the discovery, evaluation and

exploitation of opportunities to introduce new goods and
services, ways of organizing, markets, processes, and raw
materials through organizing efforts that previously had not
existed.

Kuratko (2009) Dynamic process of vision, change, and creation that requires
an application of energy and passion toward the creation and
implementation of new ideas and creative solutions.

Dyck and Neubert (2012) Conceiving an opportunity to offer new and improved goods or
services, showing the initiative to pursue that opportunity,
making plans, mobilizing the resources necessary to convert
the opportunity into reality.
• Although each of these definitions views
entrepreneurship from a slightly different
perspective, they all contain the following common
elements:
 Innovation
 Opportunity seeking and exploitation
 Resource mobilizing
 Encountering risks and uncertainties
 Economic and personal rewards
A BRIEF HISTORY ON ENTREPRENEURSHIP IN
THE PHILIPPINES
• The Philippines is an entrepreneurial country, where 99.7% of all
firms operating in the country are small and medium enterprises
employing 69% of the labor force; and 47% of the 803, 476
registered establishments are SMEs owned by women. SMEs
and large enterprises are predominantly found in and around
Metro Manila, while micro enterprises are relatively less
geographically concentrated.
• The government, among its major strategies, is focused on
promoting entrepreneurship with the right environment.
This pertains to its regulatory frameworks, financial
resources, and support programs for entrepreneurs, as well
as business practices and social attitudes towards
entrepreneurship in general.
Examples of SME-friendly laws are the Magna for Small
Enterprises and the Barangay Micro-Business Enterprises
Act which provide for incentives to registered BMBEs, such
as exemption from minimum wage law, exemption from
income tax, special financing, and technical assistance. The
2004 to 2010 SME Development Plan identifies the following
specific programs to promote entrepreneurship: (1)
Provision of Business Opportunities; (2) Strategic Business
Planning, Training, and Self-help packages to develop
Strategies Business Plans; (3) Product Development and
Design Services; (4) Support to Start-up Enterprises in
Selected Areas; (5) Business Opportunity and Enterprise-
creation approaches; (6) Entrepreneurship Training Camps
and Enterprise Development Programs
• (7) Business Opportunity Development and Investment Promotion
for Innovative Ideas; (8) Institutionalization of the SME
Opportunities Caravan; (9) Franchising Seminars; and (10)
Cooperatives Business Development Program.

• Although legislation certainly helps, entrepreneurs are also given

opportunities for training and promotion and to gain a wide range
of skills and varied experiences, so that they can sustain their firm
or establish their own businesses. To date, the programs and
services provided for entrepreneurs and relatively adequate. At
the same time, universities/colleges, non-government
organization, employers, and associations of entrepreneurs are
providing support independently or in coordination with the
government agencies.
INDIVIDUAL ACTIVITY
• Let’s analyze
1. Explain the meaning of entrepreneurship according to
Shane.
2. What are the differences between the meaning of
entrepreneurship as defined by Schumpeter, Drucker,
and Kuratko?
3. What are the five common elements in the various
definitions of entrepreneurship?
4. What are the factors that stimulate entrepreneurship in
the Philippines?
GROUP ACTIVITY (ASSIGNMENT)
Let’s perform
1. Move around your community. Record five micro, small, and medium enterprises that
have been established there for at least five years. Find out the effects of their presence
in your community.

2. Look for a woman entrepreneur in your community. Ask her about the reasons for
engaging in entrepreneurship.

3. Report in class what you have gathered.

SOMETHING TO PONDER

• Entrepreneurship is a catalyst for

change.

• Entrepreneurship flourishes in
nurturing environments.