The Nature and Importance of Entrepreneurs and Entrepreneurship_2012 Aug_final.ppt

Unit 1
The Nature and Importance of
Entrepreneurs and Entrepreneurship
Presented by:
Bal Ram Chapagain, M. Phil.
May 27, 2023 1
balram.chapagain@gmail.com

May 27, 2023 balram.chapagain@gmail.com 2

Opening profile of ‘Oprah Winfrey’
Background
 An American television host, actress,
entrepreneur, and philanthropist
 Richest African American of the 20th century
(only black woman billionaire)
 According to some surveys, the most influential
woman in the world.
May 27, 2023 3

Early life
 Born in a poor family of rural Mississippi in 1954
 Spent her early years in a house with no
electricity and no piped water
 Experienced considerable hardship during her
childhood, claiming to be raped at age nine
 And becoming pregnant at 14; her son died in
infancy
May 27, 2023 4

Turning points
 Landed a job in radio while still in high school
and began co-anchoring the local evening news at
the age of 19.
 Was hired by another television show; and within
a month ‘The Oprah Winfrey Show’ ranked first
in the USA.
 In 1986, at the age of 32, established her own
media company ‘Harpo Inc.’, and hired her own
former boss as a chief operating officer (COO).
May 27, 2023 5

Success story
 In her media company she became both chief content
creator and chief content itself.
 Gradually, she entered into alliances with other
companies; diversified her company to audio, video, print
magazine, film production etc. as an owner and chair of
all companies.
 In 1998, she got ‘Lifetime Achievement Award’ – a
very prestigious award in USA.
 In 2000, her company’s total net worth exceeded $ 1 billion
and became a only woman billionaire of 20th century.
May 27, 2023 6

Success story
 “One of the most influential people” from 2004 to 2011
by TIME.
 Although Oprah readily admits that she cannot read a
balance sheet, evidence clearly reveal that she has a
vision and a true entrepreneurial spirit.
 Having come from poverty, Oprah is one of the largest
philanthropists of our time (donates at least 10 percent of
her annual income to charity, most of it anonymously).
May 27, 2023 7

Lessons to learn
 Does not necessarily need to be rich (can be started small)
 Desire to be own boss (independence)
 Internal locus of control
 Aim high
 Creative and ability to find and explore opportunities
 Does not necessarily need sound technical skills
 Self-respect, respect for others, be responsible
 Entrepreneurship is important not only for self & family
but also for society and the country
 WHAT ELSE????....
May 27, 2023 8

Nature of Entrepreneurship
 Entrepreneur?
 Individual who takes risks and starts something
new
 Entrepreneurship?
 Process of creating something new and
assuming the risks and rewards
 Process of creating a venture capable of
entering new or established markets.
May 27, 2023 9

Evolution of the Concept of Entrepreneur
Earliest period : Marco-Polo (1254-1324)
Merchant adventurer. Capitalist provided
goods and money (at a 22.5 percent rate) to sell
the product, merchant sells and takes profit as
75% -25%
Middle Ages (15th – 16th Century): A person
who managed large construction/production
projects like public buildings, castles, cathedrals
etc., usually resources provided by government
or any others.
May 27, 2023 10

Evolution of the Concept of Entrepreneur
17th Century: Risk-taking, success and
failure was associated to Entrepreneurship
18th Century: The person with capital (venture
capitalists) was differentiated from one who
required capital (Entrepreneur)
19th and 20th Century: Innovation, creativity,
newness are associated with Entrepreneurship.
Entrepreneur is an individual developing
something new.
May 27, 2023 11

Living and Leading
Entrepreneurs of 21st Century
Carlos Slim Bill Gates

 ?????
??????? ????????

Chad Hurley, 29; Steve Chen, 28 ?????????
& Jawed Karim, 27, Founders of
You Tube

???? ???? ????

Some common characteristics of
today’s entrepreneurs
 Brainstorming about key characteristics

1. Strong desire to achieve
2. Independence
3. Risk-bearing (but never a wild gamble)
4. Internal locus of control
5. Persistence
6. Ability to create and innovate
7. Optimistic

8. Flexible and open minded (but assertive too)
9. Mostly rational but sometimes intuitive
10. Interpersonal skills
11. Ability to influence others
12. Stress takers
13. Visionary
14. Good planners, decision makers and
mobilizers

Top 10 characteristics of today’s
entrepreneurs (according to some
studies in the west)
1. Married
2. Man (but now rate of increase is high in woman)
3. Thirties (early thirties for man and late thirties for
woman)
4. Bachelor’s Degree
5. To be independent
6. Oldest

today’s entrepreneurs (according to
some studies in the west)
7. Doers
8. Take advice and support form mentor and/or
network system
8. Moderate risk takers
9. Want to do something new
10. Variety of ventures depending on their field of
experience and backgrounds; but woman prefer
service sector

To sum up…
 “Entrepreneurship 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 and
personal satisfaction and
independence.” – Hisrich, Peters and Shepherd (2007)

Role of Entrepreneurship in
Economic development
 Entrepreneurship converts idle or less
useful resources into valuable products.
 It creates new jobs, creates wealth and
many more.
 Thus, it is the backbone of all economies –
developed, developing and least developed.

Specifically, they are helpful in:
 Mobilizing idle resources
 Capital formation
 Employment creation and increasing per capita
income
 Stimulating both supply and demand sides
 Balanced development (e.g., tourism
development in Nepal)

 Export promotion
 Industrialization
 Increasing government revenue
 Reducing concentration of economic power; and
Finally, entrepreneurship contributes to different
types of innovations, commercializing
innovations and enhancing the quality of life of
people.

The Myths of Entrepreneurship
Myth 1: Entrepreneurs are doers, not thinkers
 It’s true that entrepreneurs are doers, but ate the same
time they are thinkers.
 The emphasis today on creation of clear business plan
is its indication.
Myth 2: Entrepreneurs are born, not made
 Entrepreneurial qualities are partly born and partly
made.
 Like other disciplines entrepreneurship can be taught
and, over time, an appropriate mind set and skills can
be developed.

Myth 3: All entrepreneurs need is money
 It is true that a venture needs capital to survive and
grow.
 But, it is mostly a means rather than ends.
 They create and run business mainly for independence
and status, rather than merely for money
Myth 4: Only rich people can become entrepreneurs
 Even poor people can become successful
entrepreneurs.
 It can be started small and gradually expanded.

Myth 5: Entrepreneurs are extreme risk takers
Myth 6: Entrepreneurs are favored by luck
Myth 7: Entrepreneurs are academic and social
misfits
Myth 8: Entrepreneurs are dishonest
Myth 9: Entrepreneurs are inventors
Myth 10: Entrepreneurs must fit the profile

The Dark Side of Entrepreneurship
 A great deal of literature is devoted on bright side of
entrepreneurship such as rewards, success and
achievements.
 However, it is also essential to understand that the a
dark side also exists – before creating a venture.
 The dark side is that entrepreneurs face a number of
different types of risks. They are:
1. Financial Risk
2. Career Risk
3. Family and Social Risk
4. Psychic Risk

1. Financial Risk
 In most of new ventures, the individual puts a
significant portion of his/her savings or other resources
at stake, which creates a serious financial risk.
 The entrepreneur is thus exposed to personal
bankruptcy.
 In case of sole proprietorship and partnership firms,
entrepreneurs may have to even sell their personal
property if the liability exceeds business assets.

2. Career Risk
 A question frequently raised by would-be
entrepreneurs is whether they will be able to find job
or go back to their old job if their venture fails.
 This career risk is a major concern to managers who
have a secured job with high salary and benefits.
3. Family and Social Risk
 Starting a new venture requires much of the
entrepreneur’s energy and time.
 Consequently, his/her commitment to spouse, children
and friends may suffer.

4. Psychic Risk
 Psychic risk is probably the most critical risk that an
entrepreneur faces.
 Money can be replaced; a new house can be built;
spouse, children, and friends can usually adapt.
 But alienation, depression resulting from failure of
venture may be very hard to recover.

Entrepreneurship vs. Intrapreneurship
S.N. Entrepreneur Intrapreneur
1 Entrepreneur is independent. Intrapreneur is semi-independent.
2 Entrepreneur raises their funds
on his own initiative.
Intrapreneur depends upon the industry in which he
works for getting the finance.
3 Entrepreneur takes the profit of
the business
Intrapreneur doesn’t take profit out of innovations
but he can be provided with a variety of benefits for
their innovation.
4 Entrepreneur bears the full risk
of his business.
Intrapreneur bears the risk of the business which is
a small part of the entire business.
5 Entrepreneur is the real owner
of the business.
Intrapreneur is not the real owner of the business;
rather he works for the business.
6 Entrepreneur operates from
outside and organization.
Intrapreneur operates from within the organization.
7 Entrepreneur converts the
ideas of intrapreneur into viable
opportunities.
Intrapreneur takes the responsibility of creating
innovation of any kind from within the organization.

Business Ethics (Ethics of Entrepreneurs)
 Ethics in concerned with adherence to widely
accepted norms of behavior, i.e., adherence to
right things.
 Business ethics is the application of general
ethical ideas to business behavior.
 Although ethical scandals in business are not
really new, media and public attention on them
in recent years has increased significantly.

Business Ethics (Ethics of Entrepreneurs)
 Violation of ethical codes, knowingly or
unknowingly, by business/entrepreneurs and
its managers may result in penalties and even
social boycott.
 However, if it is managed properly by
developing and adhering to ethical codes, it
results in better stakeholder relations and
enhanced reputation of the organization.

Social Responsibility of Business/
Entrepreneurs
 Widely known as corporate social
responsibility (CSR)
 It generally goes beyond ethical issues.
 CSR refers to the business management’s (or
entrepreneur’s) obligation to set policies, make
decisions and follow courses of action to
protect and promote the interest of different
stakeholders going beyond the minimum
requirement of law.

Social Responsibility of Business/
Entrepreneurs
 It oversees different areas as workplace
(employees); marketplace (customers, suppliers);
shareholders; government; community;
environment; ethics; and human rights.
 Organizations may reap long term benefits of
improved relationships with the local communities,
customer loyalty, increased worker motivation and
retention, enhanced reputation, and ultimately
higher profitability by committing themselves to
CSR practices.

Contrasting views on CSR
 To Milton Friedman:
“There is one and only one social responsibility
of business – to use its resources and engage in
activities designed to increase its profits so long
as it stays within the rules of the game, which is
to say, engages in open and free competition
without deception of fraud” (Friedman,
1970:126).

 Rejecting the idea of Milton Friedman, Drucker
states that:
“It is futile to argue, as Milton Friedman... that a
business has only one responsibility: economic
performance. Economic responsibility is the first
responsibility of a business... Economic performance
is the base without which a business cannot
discharge any other responsibilities... But economic
performance is not the only responsibility of a
business” (Drucker, 1992:99, cited in Smith, 2008).

 To me:
“CSR is a business principle and/or practice which
integrates legal, economic, ethical, social and
environmental concerns and seeks to fulfill the interests
of all stakeholders including the interest of business
itself” (Chapagain, 2010:11).
 In essence, CSR is not merely an obligation of business
enterprises towards different stakeholders but, more
importantly, an opportunity for economic success and
sustainability.

Video Show on
‘Social Responsibility of Nepalese
Entrepreneurs’
(Courtesy: BBC World Service)

Brainstorming
 What is the understanding of CSR among Nepalese
entrepreneurs? Are there any misconceptions?
 What does CSR mean to you? Is it a rhetoric or a nice
thing to do for creating a win-win situation between
business and other stakeholders?
 What is the role of government to promote CSR in
Nepal?
 If you were a consultant to Mr. Jyoti or any other
entrepreneur/industrialist of Nepal, what would be
your suggestions on CSR?

The Future of Entrepreneurship
 Entrepreneurship means different things to
different people and viewed in different
perspective (e.g. German view: power and
property; owner-manager vs. American view:
new and small-mainly owner)
 However, in spite of differences, there are
some commonalities – risk taking, creativity,
independence, and rewards – which will
continue to be the driving force behind the
notion of Entrepreneurship in future.

The Future of Entrepreneurship
 Entrepreneurship education throughout the
world is growing
 NGOs/INGOs are also giving more importance
to entrepreneurship
 Unique entrepreneurship programs are
evolving day after day
 Governments are taking an increased interest
in promoting the growth of entrepreneurship
 Society and media are giving more importance
 Corporations are encouraging Intrapreneurship

Discussion Questions
1. What is entrepreneurship? Why is it important for
individual, society and the country?
2. List merits and drawbacks of creating and running
your own venture and working for somebody else.
3. Despite the importance of entrepreneurship, why is
Nepal behind many other countries in the world? Is
the problem internal to individuals or somewhere
else?
4. Discuss the roles and responsibilities of different
stakeholders in promoting entrepreneurship in Nepal.

May 27, 2023 46

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