Enterprise Project
CBTM5001
Lecture 2
Learning outcomes
What is an entrepreneur
Entrepreneurship and Small Business
Characteristics of an Entrepreneur
1
Discussion
What is an entrepreneur?
What is Entrepreneur?
“ a person who sets up a business or businesses, taking
on greater financial risks in order to do so”.
New Oxford Dictionary of English
1
Entrepreneur?
 Originated in seventeenth-century France;
 ‘Differences among entrepreneurs and among their
ventures are as great as the variations between
entrepreneurs and non-entrepreneurs and between
new and established firms’
-Gartner (1985)
Entrepreneur?
 A manager undertaking an activity – i.e. in terms of
the particular tasks they perform and the way they
undertake them;
 An agent of economic change – i.e. in terms of the
effects they have on economic systems and the
changes they drive; and as
 An individual – i.e. in terms of their psychology,
personality and personal characteristics
-Wickham (1998)
Entrepreneur?
 Often the term entrepreneurship is equated with
new venture creation and small business
management (Gibb, 1996), and the concept of
owner-management and self-employment.
- Kirby (2001)
 Not all owner-managers can be regarded as
entrepreneurs.
Entrepreneurship
 1803 (Jean Baptiste Say) - separated profits of entrepreneur
from profits of capital.

 1876 (Francis Walker) - distinguished between those who
supplied funds and received interest and those who received
profit from managerial capabilities.
 19th Century:
terms entrepreneur and manager were often used
interchangeably; concept of personal gain was central, and
the importance of investment of time, skills, innovation.
Entrepreneurship
 1934 (Joseph Schumpeter) - entrepreneur is an
innovator and develops untried technology.

 1961 (David McCelland) - entrepreneur is an
energetic, moderate risk taker.

 1964 (Peter Drucker) - entrepreneur maximises
opportunities.

Entrepreneurship
 1975 (Albert Shapero) - entrepreneur takes initiative,
organises some social and economic mechanisms,
and accepts risks of failure.
 1980 (Karl Vesper) - entrepreneur seen differently by
economists, psychologists, business persons, and
politicians.

 1982 (Casson) - "someone who specialises in making
judgemental decisions about the co-ordination of
scarce resources"
Entrepreneurship
 1983 ( Gifford Pinchot) - intrapreneur is an entrepreneur
within an already established organisation.
 1985 (Robert Hisrich) - entrepreneurship is the process of
creating something different with value by devoting the
necessary time and effort, assuming the accompanying
financial, psychological and social risks, and receiving the
resulting rewards of monetary and personal satisfaction.
Entrepreneurship
 1998 (Wickham) - entrepreneur as - a manager undertaking
an activity, an agent of economic change, an individual.
 20th Century:
entrepreneur as an innovator was established
Definition of Entrepreneurship
“Entrepreneurship, rigorously defined, refers to the
creation of a new economic entity centred on a novel
product or service or, at the very least, one which
differs significantly from products or services offered
elsewhere in the market place.”
- Curran and Stanworth
Perspectives
Economic: as seen above
Psychological: personality traits
need to achieve, attitude to risk, be in control,
autonomy, determination, initiative, creativity, selfconfidence and trust
Sociological approaches: importance of family
members, culture, education
Entrepreneurship
 Entrepreneurship—a way of thinking,
reasoning, and acting that is opportunity
obsessed, holistic in approach, and leadership
balanced
(This definition of entrepreneurship has evolved over the past two
decades from research at Babson College and the Harvard Business
School and has recently been enhanced by Stephen Spinelli, Jr., and John
H. Muller, Jr., Term Chair at Babson College.)
Entrepreneurship
Trends for the new Millennium:
An emphasis on social responsibility;
A focus on the environment;
A global orientation;
Fitness and health;
The aging population;
Consolidation of industries
-Kathleen (1999)
What is entrepreneurship?
 A process, not a state of being. It is concerned with
change, and the management of that change.
Entrepreneur?
 The entrepreneur’s tasks:
 Owning organisations
 Founding new organisations;
 Bringing innovation to market;
 Identification of market opportunity;
 Application of expertise;
 Provision of leadership;
 The entrepreneur as manager
Entrepreneur?
 An entrepreneur is an individual who establishes and manages a
business for the principal purpose of profit and growth. The
entrepreneur is characterised principally by innovative
behaviour and will employ strategic management practices in
the business.
 An entrepreneurial venture is one that engages in at least one
of Schumpeter’s five categories of behaviour: that is, the
principal goals of an entrepreneurial venture are profitability
and growth and the business is characterised by innovative
strategic practices.
- Carland et al. (1984) (more)
Entrepreneur?
 A small business owner is an individual who establishes and
manages a business for the principal purpose of furthering
personal goals. The business must be a primary source of
income and will consume the majority of one’s time and
resources. The owner perceives the business as an extension of
his or her personality, intricately bound with family needs and
desires.
 A small business venture is any business that is independently
owned and operated, not dominant in its field, and does not
engage in any new marketing or innovative practices.
- Carland et al. (1984) (cont.)
Relationship between entrepreneurship & small business
Birley (In Burns & Dewhurst, 1994 )
Carland et al (1984) construct two dichotomies:
Small Business Venture v. Entrepreneurial Venture
Small Business Owner v. Entrepreneur
A difficulty with this is that it assumes that
categorisation is possible entirely in terms of
motivations and personal drive. However evidence
suggests that there is often no apparent relationship
between the reasons owner managers give for
starting and the subsequent size or performance of
their business.
Relationship between entrepreneurship & small business
Small Business Venture – any business that is independently
owned and operated, not dominant in its field, and does not
engage in any new marketing or innovative practices.
Entrepreneurial Venture – one that engages in at least one of
Schumpeter’s four categories of behaviour: that is, the
principal goals of an entrepreneurial venture are profitability
and growth and the business is characterised by innovative
strategic practices
Birley (1994)
Relationship between entrepreneurship & small business
Small Business Owner – an individual who establishes and manages a
business for the principal purpose of furthering personal goals. The
business must be the primary source of income and will consume the
majority of the owner’s time and interest. The owner perceives the
business as an extension of his or her personality, intricately bound
with family needs and desires.
Entrepreneur – an individual who establishes and manages a business for
the principal purpose of profit and growth. The entrepreneur is
characterised principally by innovative behaviour and will employ
strategic management practices in the business.
Birley (1994)
Relationship between entrepreneurship & small business
Storey & Sykes (in Burns & Dewhurst, 1994)
‘Link between small firm and entrepreneurship is clear at the
intuitive level. The small firm is less concerned with formal
systems and its decision-making processes will be more
judgemental, involving fewer individuals and can therefore be
quicker. It can be much more responsive to changes in the
market-place but, conversely, is much less able to influence
such developments. Hence the small firm is likely to adjust
more quickly than the large firm to situations of market
disequilibrium and in these senses, embodies the
characteristics of the classic entrepreneur’.
Relationship between entrepreneurship & small business
BUT not all small businesses are entrepreneurial businesses.
Storey and Sykes then focus on uncertainty (market,
customer and aspirational), innovation(new good, new
process, new market, new supply source, new type of
organisational structure) and management as potential
separating factors.
Relationship between entrepreneurship & small business
Deakins (1996)
Small business objectives
survival
life-style maintenance
Entrepreneurial objectives
growth
expand employment
develop into a large or medium
sized enterprise
Growth potential
Entrepreneurial venture
Small
business
Innovation
Strategic objectives
Wickham (2001)
Relationship between entrepreneurship & small business
Different roles in the economy of entrepreneurial ventures and
small businesses (Wickham, 1998)
 Entrepreneurial venture is usually based on significant
innovation, a significantly new way of doing things. Small
business usually delivers an established product or service
 Entrepreneurial ventures have a greater potential for growth.
A small business operates within a given market; the
entrepreneurial venture is in a position to create its own
market.
 Entrepreneurial ventures have stronger and clearer strategic
objectives
Characteristics of Entrepreneurs
 Characteristics of entrepreneurs
 Types of entrepreneurs
 Moving into entrepreneurship
Who becomes an entrepreneur
 The Inventor
 The unfulfilled manager
 The displaced manager
 The young professional
 The excluded
(from Wickham, 1998)
Characteristics of entrepreneurs
Joseph R Mancuso (US Centre for Entrepreneurial Management), in
Dewhurst, Burns & Dewhurst
‘It is not the critic; nor the observer who watches from a safe distance.
Wealth is created only by doers in the areas who are marred with dirt,
dust, BLOOD AND SWEAT. These are producers who strike out on their
own, who know high highs and low lows, great devotions, and who
overextend themselves for worthwhile causes. Without exception, they
fail more than they succeed and appreciate this reality even before
venturing out on their own. But when these producers of wealth fail, they
at least fail with style and grace, and their gut soon recognises that failure
is only a resting place, not a place in which to spend a lifetime.
Their places will never be with those nameless souls who know neither
victory nor defeat, who receive weekly paycheques regardless of their
week’s performance, who are hired hands in labour in someone else’s
garden. These doers are producers and no matter what their lot is at any
given moment, they’ll never take a place beside the takers, for theirs is a
unique place, alone, under the sun.’
Characteristics of entrepreneurs
Dewhurst in Burns & Dewhurst (1996)
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Doers
Sweat
Overextending
Venturing alone
Style and grace
Characteristics of entrepreneurs
Doers
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Belief driven
Desire to succeed
Want to achieve new and challenging goals
Hate delay, like to get on with work in hand
Accept obstacles, believe they can overcome all obstacles
Characteristics of entrepreneurs
Sweat
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Commitment
Perseverance
Hard work and single-mindedness
Work as hobby, hobby as work
'Controlled' leisure and life-style
Determination
Characteristics of entrepreneurs
Overextending
 Failure is a learning experience
 Quick learners
 Need to know how well (or how badly) they are doing
(importance of feedback)
Characteristics of entrepreneurs
Venturing alone
 Calculated risk takers, maximising odds in their favour
 Long term strategic planning
 Goal (i.e. market) orientation
Characteristics of entrepreneurs
Style & Grace
 Reputation for reliability and integrity is important
 Flexible and creative
 Vision
Dark side of entrepreneurship
(Entrepreneurs are difficult/impossible employees)
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Control
Quirks
Social attitudes
Hardship, self-reliance and discipline
- Dewhurst
(1996)
Dark side of entrepreneurship
Control
 Difficulty of 'controlling'
 Importance of motivating and empowering employees
 Recognition that staff may not necessarily have same
drive/vision as entrepreneur
Dark side of entrepreneurship
Quirks
 Unconventional approaches
 Need for recognition
 Power
Dark side of entrepreneurship
Social attitudes
 Negative British attitude to entrepreneurial traits
 Production/manufacturing as a poor relation of rest of
economy
 Low public image of the 'self made person'
Dark side of entrepreneurship
Hardship, self-reliance and discipline
 Difficult reliance
 Lack of support
 Isolation
Types of entrepreneur
Classify by
-
individuals
business venture
Opportunist entrepreneur growth-orientation
independence-orientation
Craftsmen –
traditional skills
scientific or high-technology
Types of entrepreneurs
Webster (1977), types of Entrepreneurs
 Classic entrepreneur identifies an unexploited opportunity & innovates to
pursue it
 Industry maker goes beyond this to create a whole new industry
 Administrative entrepreneur
 Small business entrepreneur
Three types of entrepreneurial venture:
 large payoff: many participants (investors)
 small payoff: few participants
 Large payoff: few participants
High
Gambler
Entrepreneur
Consolidator
Dreamer
Risk bearing
Low
Low
High
Innovativeness
Landau’s classification of entrepreneurial types
Types of entrepreneurs
Wai-Sum Siu (1996) (in Wickham) Chinese position
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Senior Citizen entrepreneur
Workaholics
Swingers
Idealists
High-flyers
Types of entrepreneurs
Senior Citizen entrepreneur
 to keep busy
 small & based on personal experience
 privately funded
 no long-term strategic aims
Workaholics
 often also retired
 greater commitment
 bigger, more technical
 explicit strategic goals
Wai-Sum Siu (1996) (in Wickham)
Types of entrepreneurs
Swingers
 younger entrepreneurs
 aim to make a living from making deals
 limited industrial & technical experience
 rely on networks
Idealists
 also younger
 moderate sized ventures
 motivated by achievement & independence
 financing through retained profits
Wai-Sum Siu (1996) (in Wickham)
Types of entrepreneurs
High-flyers
 highly motivated
 explicit corporate goals
Wai-Sum Siu (1996) (in Wickham)
Summary
What is an entrepreneur
Historical
Perspectives
Entrepreneurship and Small Business
Characteristics of an Entrepreneur
Types of entrepreneurs
1
Entrepreneurial
Presentation
Reasons for choosing
Was your Entrepreneur born or made?
Was there a trigger?
Outside influence? Cultural? Family member?
Did they create or discover opportunities?
How did they discover the opportunity?
Characteristics
Short term or long term opportunities?
Serial entrepreneur?