FOUNDATIONS
of
ENTREPRENEURSHIP
CLASS TWO: INTRODUCTION TO ENTREPRENEURSHIP
Elikem Nutifafa Kuenyehia
Class Outline
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Hand in class questionnaire
Recap of class 1
Recap of real life case study
Introduction to entrepreneurship
– Definitions
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Recap of Class One
• What did you learn about entrepreneurship
from Class One?
• What did you learn about opportunities and
challenges of entrepreneurship in Ghana?
• What did you learn from the Guest Speaker
Kwaku Ofosu-Bediako
Class Questionnaire
• Hand in to Malik now please
Case Study Write Up
Introduction to Entrepreneurship
 History and Development of Entrepreneurship
- Entrepreneurship evolved from French word
“entreprendre” meaning “to undertake”
- Other referrals include middleman, director of
resources, tax contractor
- Richard Cantillon maintains entrepreneurs as
middlemen in his postulation of agents of economy
(landowners, entrepreneurs, hirelings
- In mid 20th century definition of entrepreneurship
were based on economic situations
Some Definitions
 An entrepreneur is ‘a necessary
destabilising force bringing economic
growth through the disequilibrium of
constant change and innovation’.
-Joseph Schumpeter
 ‘Individual who undertook formation of an
organisation for commercial purposes’.
- Adam Smith
 ‘It is possessing the know-how to find,
marshal and control resources (often
owned by others)
- Timmons
My Definition
• ‘Is the process of risking resources
based on an idea (or series of ideas) to
develop the idea or ideas into goods
and/or services that people perceive
as valuable and are willing to pay for,
in such a way as to maximise profit for
the enterprise risking the resources’
Entrepreneurship as a process
 Entrepreneurial process begins with an
idea which develops into an
opportunity or vice-versa eg. Elizabeth
Villars – Camelot idea in 1974
 Idea and opportunity are intertwined
by size of willing patronisers
 Idea must remove an existing pain
 Key resources risked include time,
human and capital resources
 One Cycle Entrepreneurship vs
Repeated Cycle
Entrepreneurship as a state of
mind or series of attributes
• Entrepreneurship as a characterisation of
attributes that enable people to exploit
opportunities for financial reward
- Motivation factor is the individual’s
state of mind
• Entrepreneurship as a pattern of
behaviour
• Ability to build a vision from nothing-Timmons
• Complementing one’s skills by building a
venture team
Forms of entrepreneurship
 Social Entrepreneurship
o Creating social change through an enterprise
o Enterprises include non-profit organizations
and businesses set up with a social purpose
o Examples – Grameen Bank, Sinapi Aba Trust,
Teachers Fund Financial Services
 Intrapreneurship
o Formation of new idea within an existing
organisation
o Entrepreneurial concept belongs to the
organisation and not the intrapreneur.
o Financial rewards also go to the company
(Intrapreneur’s reward is limited)
o Examples – Google (3M), MET Insurance
(MET2U)
Forms of entrepreneurship
cont’d
Extrapreneurship
o Break off from existing company
o New company may carry similar idea
from parent company
o May have financial and social support
from parent company
o New enterprise may be in the same
business line as the existing company or
a supplier to it
Incubation
• Involves “nurturing” start-up business
with an enabling environment,
material and intangible resources
• Set up by universities or high tech parks
• Examples - Busy Internets Incubation
Program, Meltwater Foundation to
establish a Non-Profit Incubator In
Ghana?
Opportunity entrepreneurship vs.
Necessity entrepreneurship
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Opportunity entrepreneur develops an idea to exploit an
existing opportunity
Necessity entrepreneurs result from lack of alternatives
 Entrepreneur vs. Businessman
o All entrepreneurs are businessmen but not all
businessmen are entrepreneurs
o A Businessman establishes a business for personal goals
while an entrepreneur establishes an enterprise for profit
and growth –Beaver and Jenkins
Evolution of entrepreneurship in
Ghana
 Entrepreneurship began before the arrival of the
Europeans
 Europeans were also entrepreneurs as they risked
resources to identify trading opportunities in Ghana
 Post independence witnessed the introduction of a
mixed economy in Ghana
 Nkrumah’s Government encouraged private enterprise
 The NLC government also supported local
entrepreneurs when it published in 1968, ‘The
Promotion of Ghanaian Business Enterprise’
 Busia’s government was the first to extensively draw up
policies and establish bodies to aid entrepreneurs
Evolution of entrepreneurship in
Ghana cont’d
 Rawlings Government introduced ERP and
SAP
 Kufour’s government is dedicated to making
the private sector the engine of growth in
the economy. Policies aimed at
encouraging entrepreneurship can be found
in ‘KOE’
 Mills Government ‘better Ghana agenda’
aim to provide various incentive schemes to
ease credit delivery to entrepreneurs, to
establish export trade houses, and develop
an incubation policy
Role of entrepreneurship in a
country’s economy
development
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Creates jobs
Drives economic growth
Frees up states resources
Fosters competition
Fosters innovation
Increases productivity
Provides a tax base for government
Challenges facing Ghanaian
Entrepreneurs
• Access to finance
• Low incomes and corresponding low
savings culture
• Little initiative by banks to be creative
• Human Capital
• Unfriendly government machinery
• Political and economic instability
• Access to information
Factors favouring
entrepreneurship
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Political stability
Macro-economic stability
Secure property rights
Ease of starting a business
Free flow of information
The rule of law and mechanism for contract
enforcement
Availability of human capital
Access to finance
Size of the market in terms of numbers and income
levels
Regulation of businesses
Culture
Institutions that help
entrepreneurship to thrive
• An independent central bank
• An independent judiciary
• An independent media and easy access
to credible information
• Neutral and professional army or
security forces
Why become an entrepreneur?
 Most graduate students take regular executive or civil
service career paths while
 Some, after a few years of experience quit to start their own
enterprise or buy one.
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Appeal for joining ‘Corporate Ghana’ or civil service:
More security
Certainty of income
Greater training opportunities
Lower levels of stress
Smaller personal risk
Responsibility
Autonomy & desire to control one’s own destiny
....etc
Why become an entrepreneur?
• Others still prefer entrepreneurship
because;
• Autonomy & Desire to control own
destiny
• Flexibility
• Opportunity to reap unlimited profits
• Unemployment & Underemployment
• Family