Entrepreneurship Module BMET5103.docx

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BMET5103
Entrepreneurship

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Copyright © Open University Malaysia (OUM)
BMET5103
ENTREPRENEURSHI
P
Dr Cordelia
Mason

Project Director: Prof Dato’ Dr Mansor Fadzil
Open University Malaysia
Module Writer: Dr Cordelia Mason
Developed by: Centre for Instructional Design and Technology
Open University Malaysia
First Edition, April 2017
Copyright © Open University Malaysia, April 2017, BMET5103
All rights reserved. No part of this work may be reproduced in any form or by any means without
the written permission of the President, Open University Malaysia (OUM).

Table of Contents
Course Guide ix–xiv
Topic 1 Entrepreneurship and its Revolutionising Impact 1
1.1 Definitions of Entrepreneurship 2
1.2 Entrepreneurs – Challenging the Unknown 2
1.3 Entrepreneurs and Small Business Owners 3
1.4 Entrepreneurship: A Mindset 5
1.5 The Evolution of Entrepreneurship 5
1.6 The Myths of Entrepreneurship 7
1.7 Approaches to Entrepreneurship 8
1.7.1 Entrepreneurial Schools-Of-Thought Approach 9
1.7.2 Process Approaches to Entrepreneurship 12
1.8 The Entrepreneurial Economy 14
1.9 Current Trends in Entrepreneurship Research 19
Summary 22
They Terms 23
References 23
Topic 2 Entrepreneurial Mindset of Individuals 25
2.1 The Entrepreneurial Mindset 26
2.2 Entrepreneurial Cognition 27
2.3 Common Characteristics of Successful Entrepreneurs 29
2.4 The Dark Side of Entrepreneurship 36
2.5 Ethics in Entrepreneurship 39
2.6 Entrepreneurial Motivation 41
Summary 44
They Terms 45
References 45
Topic 3 Creativity and Innovation 47
3.1 Opportunity Identification 48
3.1.1 Opportunity and Change 48
3.1.2 Opportunity andEntrepreneurship 49
3.1.3 Sources of Opportunity 50
3.2 Entrepreneurs: Imagination and Creativity 52
3.3 The Role of Creativity 55
3.4 Arenas and Environments in Which People are Creative 57
3.4.1 The Creative Environment 58

iv  TABLE OF CONTENTS
3.5 How Entrepreneurs Can Leverage on Innovation 60
3.6 The Innovation Process 62
Summary 64
They Terms 65
References 65
Topic 4 Legal Challenges in Entrepreneurial Venture 67
4.1 Legal Challenges for Entrepreneurial Ventures 68
4.1.1 Inception Phase of an EntrepreneurialVenture 69
4.1.2 On-going Phase of an EntrepreneurialVenture 69
4.1.3 Growth and Continuity Phase of an
Entrepreneurial Venture
4.2 Intellectual Property Protections
69
71
4.2.1 Patent 71
4.2.2 Copyright 74
4.2.3 Trademark 76
4.3 Identifying Legal Structures for Entrepreneurial Ventures 79
4.3.1 Sole Proprietorship, Partnership andPrivate
Limited Company
4.3.2 Setting up a Corporation
79
82
4.4 Bankruptcy 83
4.5 TheepingLegalExpensesDown 84
Summary 86
They Terms 87
References 87
Topic 5 Sources of Capital for Entrepreneurs 89
5.1 The Entrepreneurial Search for Capital 90
5.1.1 Own Money 90
5.1.2 Support from Family and Friends 90
5.1.3 Support from Investors 91
5.1.4 Bank Loans 91
5.1.5 Sources of Funds from the Government 91
5.2 Debt versus Equity 93
5.2.1 Comparing Debt and Equity 93
5.2.2 Debt Financing 93
5.2.3 Equity Financing 96
5.3 The Venture Capital Market 96
5.4 Informal Risk Capital: Angel Financing 97
5.5 Crowdfunding 102
Summary 105
They Terms 106
References 106

TABLE OF CONTENTS  v
Topic 6 Assessment of Entrepreneurial Opportunities 107
6.1 The Challenges of New Venture Startups 108
6.2 Pitfalls in Selecting New Ventures 110
6.3 Critical Factors for New Venture Development 113
6.4 Why New Ventures Fail 115
6.5 The New Venture Evaluation Process 118
Summary 121
They Terms 121
References 122
Topic 7 The Marketing Aspects of New Ventures 123
7.1 The New Marketing Concept for Entrepreneurs 124
7.2 Marketing Research 128
7.2.1 Defining the Research Purpose andObjectives 128
7.2.2 Data Gathering 128
7.2.3 Developing an InformationGathering
Instrument - The Questionnaire
7.2.4 Quantitative versus QualitativeMarketing
129
130
Research
7.2.5 Interpreting and Reporting Information 131
7.3 Inhibitors to Marketing Research 132
7.4 Internet Marketing 134
7.5 Developing the Marketing Concept 136
7.5.1 Current Marketing Research 136
7.5.2 Current Sales Analysis 137
7.5.3 Marketing Information System 137
7.5.4 Sales Forecasting 138
7.5.5 Evaluation 138
7.6 Developing a Marketing Plan 138
7.7 Pricing Strategies 139
Summary 141
They Terms 142
References 142
Topic 8 Financial Statements in New Ventures 144
8.1 The Importance of Financial Information to Entrepreneurs 145
8.2 Understanding They Financial Statements 147
8.2.1 Balance Sheet 147
8.2.2 Income Statement 149
8.2.3 The Cash Flow Statement 150
8.3 Preparing Financial Budgets 152
8.3.1 Operating Budget 152
8.4 Pro Forma Statements 159

vi  TABLE OF CONTENTS
8.5 Capital Budgeting 162
8.5.1 Payback Method 162
8.5.2 Net Present Value 163
8.5.3 Internal Rate of Return 164
8.6 Break-even Analysis 166
8.7 Ratio Analysis 168
8.7.1 Balance Sheet Ratios 169
8.7.2 Income Statement Ratios 170
8.7.3 Overall Efficiency Ratios 171
8.7.4 Specific Efficiency Ratios 172
Summary 173
They Terms 174
References 174
Topic 9 Business Plans For New Ventures 176
9.1 What is a Business Plan? 177
9.2 Avoiding Pitfalls in Planning 178
9.3 Benefits of a Business Plan 181
9.4 Developing a Business Plan 183
9.5 Elements of a Business Plan 187
9.6 Updating the Business Plan 190
9.7 Presenting the Business Plan 191
Summary 193
They Terms 194
References 194
Topic 10 Strategic Growth in Entrepreneurship 195
10.1 The Nature of Strategic Planning in Emerging Firms 196
10.2 The Lack of Strategic Planning 202
10.3 The Value of Strategic Planning 203
10.4 Venture Development Stages 205
10.5 The Entrepreneurial Company in the Twenty-First Century207
10.6 Building the Adaptive Firm 208
Summary 210
They Terms 211
References 211

COURSEGUIDE

COURSE GUIDE  ix
COURSE GUIDE DESCRIPTION
You must read this Course Guide carefully from the beginning to the end. It tells
you briefly what the course is about and how you can work your way through the
course material. It also suggests the amount of time you are likely to spend in order
to complete the course successfully. Please keep on referring to Course Guide as
you go through the course material as it will help you to clarify important study
components or points that you might miss or overlook.
INTRODUCTION
BMET5103 Entrepreneurship is one of the courses offered at Open University
Malaysia (OUM). This course is worth 3 credit hours and should be covered over
8 to 15 weeks.
COURSE AUDIENCE
This course is offered to all learners taking the Master of Management programme.
This module aims to introduce learners to the theory, process and practice of
entrepreneurship through topics covering the broad areas of entrepreneurial
mindset in the twenty-first century, how to initiate entrepreneurial venture, and
how to develop the entrepreneurial plan and growth strategies for entrepreneurial
ventures.
As an open and distance learner, you should be acquainted with learning
independently and being able to optimise the learning modes and environment
available to you. Before you begin this course, please confirm the course material,
the course requirements and how the course is conducted.
STUDY SCHEDULE
It is a standard OUM practice that learners accumulate 40 study hours for every
credit hour. As such, for a three-credit hour course, you are expected to spend
120 study hours. Table 1 gives an estimation of how the 120 study hours could be
accumulated.

x  COURSE GUIDE
Table 1: Estimation of Time Accumulation of Study Hours
Study Activities Study Hours
Briefly go through the course content and participate in initial
discussions
5
Study the module 60
Attend 3 to 5 tutorial sessions 15
Online participation 10
Revision 10
Assignment(s) and Examination(s) 20
TOTAL STUDY HOURS ACCUMULATED 120
COURSE OUTCOMES
By the end of this course, you should be able to:
1. Explain the types of entrepreneurs in the twenty-first century;
2. Describe the features of entrepreneurship and the traits of successful
entrepreneurs and their businesses;
3. Describe and apply the principles of business and development for a small
business i.e. how to initiate a business venture;
4. Evaluate the roles entrepreneurs play in Malaysia and the impact of
entrepreneurship on the national economy; and
5. Develop an entrepreneurial plan and formulate growth strategies.
COURSE SYNOPSIS
This course is divided into 10 topics. The synopsis for each topic is listed as follows:
Topic 1 introduces the field of entrepreneurship by discussing the revolutionary
impact of entrepreneurship. It describes entrepreneurs as those who thrive on
exploring and challenging the unknown. It explains how entrepreneurs andsmall
business owners differ. It narrates the evolution of entrepreneurship and its
approaches, and advises on the need to avoid folklore i.e. the myths of

COURSE GUIDE  xi
entrepreneurship as well as describes how entrepreneurship has defined the
economies of countries around the world. The topic ends by describing current
research trends in entrepreneurship.
Topic 2 focuses on the psychological and cognitive side of entrepreneurs by
elaborating on four related areas which are the entrepreneurial mindset of
individuals, the entrepreneurial journey, the dark side of entrepreneurship and
entrepreneurial motivation.
Topic 3 discusses creativity and innovation as applied in the field of
entrepreneurship. It covers: opportunity identification; the relevance and roles of
imagination and creativity in the entrepreneurial process; the arena where people
are creative; innovation and the entrepreneur; and the innovation process.
Topic 4 outlines common legal challenges for the entrepreneurial venture focusing
on four main topics – how to protect intellectual property, how to select the
appropriate legal structure of businesses, comparisons of the different legal
structures of business, and bankruptcy and how to minimise legal charges.
Topic 5 describes the options entrepreneurs have in terms of entrepreneurial
capital; and which types of financing are available and what are the pros and cons
of each. The features of the various sources of capital are explained.
Topic 6 provides guidelines and advice on how entrepreneurs can assess
entrepreneurial opportunities by providing examples of challenges faced by
startups, pitfalls in selecting new ventures, factors to consider when developing
new ventures, reasons why ventures fail, and how to evaluate the potentials of
new ventures.
Topic 7 covers the marketing aspects of new ventures. The subtopics include the
marketing concept for entrepreneurs, marketing research, inhibitors to marketing
research, Internet marketing, how to develop a marketing concept and a marketing
plan, and how to decide on pricing strategies.
Topic 8 emphasises the importance of financial literacy in entrepreneurship and
how entrepreneurs should equip themselves with at least basic financial
knowledge. It provides explanations on the key financial statements; explains how
to prepare financial budgets, pro forma statements and how to do capital
budgeting. It provides brief explanations on how to do break-even analysis and
how to calculate some important financial ratios and what theymean.
Topic 9 provides an overview of the business plan for new ventures – what a
business plan looks like, pitfalls to avoid in planning, benefits of having a business
plan, how to prepare, update and present a business plan for new ventures.

xii  COURSE GUIDE
Topic 10 discusses how strategic growth in entrepreneurship is influenced by the
nature of strategic planning in emerging firms, and conversely by the lack of
strategic planning. It underscores the value of strategic planning and describes the
stages in venture development. It ends by describing the entrepreneurial company
in the twenty-first century and provides tips on how to build an adaptive firm.
TEXT ARRANGEMENT GUIDE
Before you go through this module, it is important that you note the text
arrangement. Understanding the text arrangement will help you to organise your
study of this course in a more objective and effective way. Generally, the text
arrangement for each topic is as follows:
Learning Outcomes: This section refers to what you should achieve after you have
completely covered a topic. As you go through each topic, you should frequently
refer to these learning outcomes. By doing this, you can continuously gauge your
understanding of the topic.
Self-Check: This component of the module is inserted at strategic locations
throughout the module. It may be inserted after one sub-section or a few sub-
sections. It usually comes in the form of a question. When you come across this
component, try to reflect on what you have already learned thus far. By attempting
to answer the question, you should be able to gauge how well you have
understood the sub-section(s). Most of the time, the answers to the questions can
be found directly from the module itself.
Activity: Like Self-Check, the Activity component is also placed at various locations
or junctures throughout the module. This component may require you to solve
questions, explore short case studies, or conduct an observation or research. It may
even require you to evaluate a given scenario. When you come across an Activity,
you should try to reflect on what you have gathered from the module and apply it
to real situations. You should, at the same time, engage yourself in higher order
thinking where you might be required to analyse, synthesise and evaluate instead
of only having to recall and define.
Summary: You will find this component at the end of each topic. This component
helps you to recap the whole topic. By going through the summary, you should be
able to gauge your knowledge retention level. Should you find points in the
summary that you do not fully understand, it would be a good idea for you to
revisit the details in the module.

COURSE GUIDE  xiii
They Terms: This component can be found at the end of each topic. You should go
through this component to remind yourself of important terms or jargon used
throughout the module. Should you find terms here that you are not able to
explain, you should look for the terms in the module.
References: The References section is where a list of relevant and useful textbooks,
journals, articles, electronic contents or sources can be found. The list can appear
in a few locations such as in the Course Guide (at the References section), at the
end of every topic or at the back of the module. You are encouraged to read or
refer to the suggested sources to obtain the additional information needed and to
enhance your overall understanding of the course.
PRIOR KNOWLEDGE
This is an introductory course. There is no prior knowledge needed.
ASSESSMENT METHOD
Please refer to myINSPIRE.
REFERENCES
Ireland, B. R. (2012). Entrepreneurship: Successfully launching new ventures.
Essex, England: Pearson.
Thuratko, D. (2014). Entrepreneurship theory, process and practice (9th ed.).
Singapore: Cengage Learning.
Thuratko, D., Morris, M. H., & Covin, J. G. (2011). Corporate innovation &
entrepreneurship (3rd ed.). Singapore: Cengage Learning.
Reynolds, P. D. (1991). Sociology and entrepreneurship: Concepts and
contributions. Entrepreneurship: Theory & Practice, 16 (2), 47-70.
Timmons, J., & Spinelli, S. (2008). New venture creation. Homewood, IL: Irwin
Publishing.

xiv  COURSE GUIDE
TAN SRI DR ABDULLAH SANUSI (TSDAS)
DIGITAL LIBRARY
The TSDAS Digital Library has a wide range of print and online resources for the
use of its learners. This comprehensive digital library, which is accessible through
the OUM portal, provides access to more than 30 online databases comprising e-
journals, e-theses, e-books and more. Examples of databases available are
EBSCOhost, ProQuest, SpringerLink, Books247, InfoSci Books, Emerald
Management Plus and Ebrary Electronic Books. As an OUM learner, you are
encouraged to make full use of the resources available through this library.

ic
1
Top Entrepreneurship
and its
Revolutionising
Impact
 INTRODUCTION
The field of entrepreneurship has evolved rapidly in the last few decades and
many ideas have been formed about it. Topic 1 traces this evolution by discussing
how entrepreneurs differ from small business owners, comparing the macro and
micro views of entrepreneurship and the various approaches aligned to each of
these views, sharing some myths about entrepreneurship, providing some insights
on the concept and development of the entrepreneurial economy and current
research trends in entrepreneurship.
LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Define entrepreneurship in various ways;
2. Explainthe evolution ofentrepreneurship;
3. Compare the macro and micro views of entrepreneurship;
4. Examine entrepreneurial activities using a process approach;
5. Evaluate the impact of entrepreneurial ventures; and
6. Assess the trends in research onentrepreneurship.

2  TOPIC 1 ENTREPRENEURSHIP AND ITS REVOLUTIONISING IMPACT
DEFINITIONS OF ENTREPRENEURSHIP
The word entrepreneurship is French in origin; entre means „between‰ and
prendre means „to take‰, and the French word for entrepreneurship is
entreprendre. Figure 1.1 provides some definitions of entrepreneurship.
Figure 1.1: Some definitions of entrepreneurship
ENTREPRENEURS – CHALLENGING THE
UNKNOWN
Entrepreneurship is about challenging the unknown, exploring uncharted
territories. It is about harnessing oneÊs ability to see what others cannot see and
listen intently in order to hear what others fail to hear. It is about the courage to
„When I started my airline business, I didn't know everything, right? If I start
up a newspaper tomorrow, I might get ripped off by journalists. You'd be naive
tothink youknoweverything fromday one.‰
– Tony Fernandez, Founder of AirAsia
1.1
1.2

TOPIC 1 ENTREPRENEURSHIP AND ITS REVOLUTIONISING IMPACT  3
walk where no one dares to walk; and the strength to seize an opportunity when
it presents itself. In life, there are many unknowns. The efficacy to challenge the
unknown sets the entrepreneur apart from the rest.
Although entrepreneurs are willing to go where others have not gone before, to
try things that others have not tried before, to do things which others have not
done before, they do all these in a calculated manner. They have the knack tospot
opportunities and change them into businesses. They dare to take risks. They are
passionate and believe strongly in themselves and are passionate about what they
do. They push themselves to go beyond what they already know or do. This spirit
of an entrepreneur resonates that of the athlete who keeps trying to improve his
performance. Both are people who push themselves to create a new frontier. Like
an explorer who sails to look for new waters, an entrepreneur keeps looking for
how he can serve a market well through the creation of wealth, the creation of
enterprise, the creation of innovation, the creation of change, the creation of jobs,
the creation of value and finally, the creation of growth.
ENTREPRENEURS AND SMALL BUSINESS
OWNERS
Now that we have some ideas about entrepreneurship, let us explore the main
actors or creators in entrepreneurship, the entrepreneurs. Who are they? What are
they like? What do they do?
Entrepreneurs have keen eyes for opportunities, and are often viewed as heroes
for various reasons. They are willing to take risks to start a business, providing
jobs for others. Entrepreneurs are innovative. In pursuing a venture, they strive for
profitability, and understand the cruciality of growth to sustain a business. Their
focus on innovation, profit and rapid growth is the key differentiator between
entrepreneurs and small business owners. Small business owners focus on
managing their business with the objective of having a stable business. Therefore,
although some entrepreneurial ventures may be small in size (many are), it is really
the presence or lack of the three elements – innovation, profit and rapid growth
which distinguishes entrepreneurs from small business owners. Nonetheless, both
play prominent roles in the small and medium size enterprises industry which in
ACTIVITY 1.1
Share with a friend one occasion when you „explored uncharted
territory‰ or when you „challenged the unknown‰. Do you think
entrepreneurial opportunities present themselves to everyone? Discuss
with your coursemates.
1.3

turn has a big impact on a nationÊs economy. For example, since the year 2010,
small and medium size enterprises (SMEs) in Malaysia have contributed to more
than half of overall employment in the country (refer to Figure 1.2).
Figure 1.2: Contribution of SMEs to overall employment (%) and
SME employment (%) annual growth
Sources: Department of Statistics Malaysia (DOSM) and SME Corporation Malaysia
In Malaysia, the National SME Development of Malaysia defines SME as
companies with sales turnover of less than RM50 million or having less than 200
full-time employees if they are involved in the manufacturing sector; and those
with sales turnover of less than RM20 million or having less than 75 full-time
employees if they are in the services and other sectors. Public-listed companies (or
their subsidiaries) on the main board of Malaysia or any other countries, and
subsidiaries of large firms, multinational corporations (MNCs), government-
linkedcompanies(GLCs),SyarikatMenteriThewanganDiperbandankan(MThDs)
i.e. Minister of Finance Incorporated companies, in English, and state-owned
enterprises cannot be categorised or considered as an SME.
SELF-CHECK 1.1
Discuss the main differences between an entrepreneur and a small
business owner.

ENTREPRENEURSHIP: A MINDSET
There is more to entrepreneurship than just the act of creating businesses, an
outcome which can be seen and is tangible. In fact, the outcomes of entrepreneurial
ventures originate from the entrepreneurial mindset. Financial Times describes the
entrepreneurial mindset as a specific state of mind which orientates human
conduct towards entrepreneurial activities and outcomes. Those with strong
entrepreneurial mindset are often attracted to opportunities, innovation and new
value creation. They are able to take calculated risks and manage change and
uncertainty. A strong entrepreneurial mindset enables entrepreneurs to seek
opportunities, to take risks beyond the safe zone and to have the willpower to push
dreams into reality. The mindset is abstract and can be developed in individuals.
This topic is discussed in detail in Topic 2.
THE EVOLUTION OF ENTREPRENEURSHIP
The development in the studies of entrepreneurship has expanded the concept of
an entrepreneur as someone who undertakes the opportunity to organise, manage
and assume (risk) to that of an innovator, a catalyst for change. As the field of
entrepreneurship develops, it is subject to further refinement and we see new
hybrid concepts emerging such as collective entrepreneurship, corporate
entrepreneurship and social entrepreneurship. What do they mean? The following
list provides short descriptions of each concept.
(a) Collective entrepreneurship
The definition of collective entrepreneurship provided by Connell (1999)
captures the complex essence of the concept. It is worded as follows:
„Collective entrepreneurship combines business risk and capital investment
with the social values of collective action. It is an event that exists when
collective action aims for the economic and social betterment of a locality by
ACTVITY 1.2
View the talk by Thim Cope entitled „The entrepreneurial mindset:
From kid to entrepreneur‰.
TheURLlinkishttps://www.youtube.com/watch?v=JiGJttyiqFs
Discuss the idea that „Entrepreneurship is a mindset.‰
1.4
1.5

means of some transformation of social norms, values and networks for the
production of goods and services by an enterprise.‰
A simpler definition would be where individual skills are integrated into a
group where the collective capacity to innovate fosters the creation of
something greater than the sum of its parts.
(b) Corporate entrepreneurship
Corporate entrepreneurship can be viewed as the creation of a new business
within an existing organisation, sometimes called corporate venture or
intrapreneurship. It can also refer to the transformation or renewal of existing
organisations; or an organisationÊs act of changing the rules of competition
of its industry.
(c) Social entrepreneurship
Greg Dees (1998) defines social entrepreneurship as the practice of combining
innovation, resourcefulness and opportunity to address critical social and
environmental challenges; and describes social entrepreneurs as people who
are focused on transforming systems and practices that are the root causesof
poverty, marginalisation, environmental deterioration and accompanying loss
of human dignity. Rees (1998) noted that, whether the organisations they set
up are for-profit or non-profit organisations, social entrepreneurs are said to
play the role of change agents in the social sectorby:
(i) Adopting a mission to create and sustain social value (not just private
value);
(ii) Recognising and relentlessly pursuing new opportunities to serve that
mission;
(iii) Engaging in a process of continuous innovation, adaptation and
learning;
(iv) Acting boldly without being limited by resources currently in hand;
and
(v) Exhibiting heightened accountability to the constituencies served and
for the outcomes created.

THE MYTHS OF ENTREPRENEURSHIP
As interest in entrepreneurship grows, people form thoughts and opinions about
it. Some of them are logical and some are not. These are what we mean by myths.
Let us find out what are some common myths about entrepreneurship which are
listed in the following:
(a) Entrepreneurshavecompletecontrolovertheirschedule
Many people are attracted to become entrepreneurs with the idea that they
can control their time and schedule. This is usually not the case though as
businesses usually deal with many parties and entrepreneurs certainly do
have a tight, even strict schedule to make and maintain a successful business.
(b) Ifmyproductorserviceisgood,IÊllbesuccessful
A „great‰ product or service alone does not guarantee success. There must
be a good marketing and product fit before a venture can take off well.
Everyone has a „good‰ product, be it the most delicious pineapple tart, the
most adventurous mountain climbing programme, the best corporate
training programme, etc, which will not see the light of day if the marketing
strategy is weak. In short, no matter how much an entrepreneur likes his
„good‰ product, there is no guarantee that the venture will be successful.
(c) Mostentrepreneursventureintoattractiveindustries
Unfortunately, the opposite is true. The world over, it has been observed that
entrepreneurs usually start their businesses based on the herd mentality and
usually end up failing in the business, as they are ill-prepared to do things
they are not cut-out for.
(d) Entrepreneurshipisfordoers,notthinkers
Becoming an entrepreneur is a tough decision due to the myriad of
challenges surrounding setting up a venture. Therefore, it certainly is a myth
that entrepreneurship is only for doers. An entrepreneur is highly resilient
and is able to analyse, strategise, plan and implement. Entrepreneurship is
definitely for a thinker who can execute his or her plans. The entrepreneur
has to think ahead of his or her competitors and take timely action.
(e) Banks do not lend money to start-ups
Many years ago, getting bank loans was quite a challenge. That is no longer
the case now as more nations view entrepreneurship as a positive contributor
to the economy. Sources of funds have increased. For example, aside from
traditional sources of funds, entrepreneurs can also consider crowdfunding.
1.6

APPROACHES TO ENTREPRENEURSHIP
How do people view entrepreneurship? What are their thoughts and beliefs about
entrepreneurship? What are some common theories of entrepreneurship? These
questions have often been asked by people from all over the world. Since interest
in entrepreneurship heightened in the last four decades or so, various views of
entrepreneurship have developed extensively.
Thuratko (2009) divides the approaches to entrepreneurship into two main clusters
as the entrepreneurial schools-of-thought approach and the process approaches to
entrepreneurship. Figure 1.3 provides an overview of the two clusters which will
be discussed in the following subtopics.
ACTIVITY 1.3
In pairs or in groups, appraise the following myths about
entrepreneurship. Provide reasons for each myth.
(a) Entrepreneurs are doers, not thinkers.
(b) Entrepreneurs are born not made.
(c) Entrepreneurs are always inventors.
(d) Entrepreneurs are academic and social misfits.
(e) Entrepreneurs must fit the profile.
(f) All entrepreneurs need is money.
(g) All entrepreneurs need is luck.
(h) Entrepreneurship is unstructured andchaotic.
(i) Most entrepreneurial initiatives fail.
(j) Entrepreneurs are extreme risk takers.
1.7

Figure 1.3: Two Clusters of Approach to Entrepreneurship
1.7.1 Entrepreneurial Schools-of-Thought Approach
Under the entrepreneurial schools-of-thought approach there are two ways to
think about entrepreneurship, the macro view and the micro view.
There are essentially three schools of entrepreneurial thoughts in the macro view
which are the:
(a) Environment school of thought;
(b) Financial/capital school of thought; and
(c) Displacement school of thought.
Meanwhile, the micro view also has three schools of thought which are the:
(a) Entrepreneurial trait school of thought;
(b) Venture opportunity school of thought; and
(c) Strategic formulation school of thought.
The macro view focuses on external factors which affect the success or failure of
an entrepreneurial venture. This type of view of entrepreneurship which is also
called the external locus of control point of view looks at factors which are beyond
the control of the individual entrepreneur. It is an „outside-in‰ view.

(a) Environmental School of Thought
The environmental school of thought contends that the environment in
which a person functions, be it the workplace or a social setting, influences
his propensity to consider becoming an entrepreneur. The influence can
either be positive or negative. For instance, if someone works in an
environment which fosters innovation, encourages new ideas on products or
processes or allows greater risk taking among its staff, it is highly probable
that he will be more confident to engage in entrepreneurial ventures. In other
words, if a work or social environment accords one with technical
competence, managerial competence and personal competence, he or she
would be better prepared to become an entrepreneur.
(b) Financial/CapitalSchoolofThought
The financial/capital school of thought, on the other hand, views the effort
to seek capital as the major focus of entrepreneurship. The entrepreneurs are
thus equipped with skills to write business plans and advise on fund
application process. Financial management skills are viewed as critical for
entrepreneurs and they are guided to make sound decisions suitable for the
common phases of a business venture such as the start-up stage, the ongoing
stage and the decline or succession stage. Some financial decisions which an
entrepreneur might make include:
(i) Looking for seed capital or venture capital at the early stage of the
business;
(ii) Managing the companyÊs finances such as managing cash, managing
investment, and analysing and evaluating its financial situation; and
(iii) Deciding whether to diversify and how to manage corporate buyout
and succession planning.
(c) Displacement School of Thought
The displacement school of thought states that a person who feels alienated
from the group has the tendency to be motivated to become an entrepreneur.
In other words, a „displaced‰ person or an individual who has to fight
diversity would be more likely to consider venturing into entrepreneurial
pursuits. Displacements can stem from political, cultural or economic
alienations. For example, many migrants who face political alienation in their
own countries would seek a greener pasture in a friendly country, and they
usually end up doing business as they do not have much choice, especially if
they are at the lower end of the job spectrum in terms of skills and
qualifications. Cultural displacement such as discrimination on the basis of
ethnicity, religion, race and gender can force a person to engage in
entrepreneurship as there are not many opportunities within the public

sector. It is therefore not surprising that in many countries, minority
businesses are on the rise. Economic displacements can also be caused by
economic depression where people face challenges such as job loss and lack
of capital, and this can encourage them to venture into entrepreneurship.
The second school-of-thought of entrepreneurship is the micro view which focuses
on internal factors which affect the success or failure of an entrepreneurial venture.
In other words, the type of view of entrepreneurship which is also called the
internal locus of control point of view, looks at factors which are within the control
of the individual entrepreneur. An entrepreneur can manage (by controlling,
directing or adjusting) the influence ofeach factor.It is an „inside-out‰ view. Some
of the schools of thought in the micro view are:
(a) TheEntrepreneurialTraitSchoolofThought
The entrepreneurial trait school of thought is essentially focused on the idea
that successful entrepreneurs have some common traits. It goes on to say that
if an aspiring entrepreneur can study these traits and emulate them, then he
can be equally successful. In other words, entrepreneurship can be learned.
There are differing views as to whether it is good to educate people in
entrepreneurship; one view thinks it might inhibit creativity, while another
view the educational development of entrepreneurs as beneficial to
developing new entrepreneurs. Interest in these opposing views has led to
more research being done on the concepts of entrepreneurial cognition and
metacognition. Another idea is that entrepreneurs can be developed within
an entrepreneurial family who run their own businesses – some kind of in-
situ learning or apprenticeship.
(b) TheVentureOpportunitySchoolofThought
The main idea of this school of thought is that an entrepreneur can be
successful if he has a good instinct to spot an opportunity. Thus, a skilful
entrepreneur is one who is constantly searching for sources of ideas,
developing concepts, creative and has high market awareness. He can
succeed if he is able to develop the right idea, at the right time for the right
market. This school of thought has also developed the corridor principle
which is essentially about the ability of an entrepreneur to recognise new
pathways or opportunities which present themselves in different directions,
and then to take the necessary actions to build a successful venture. A well-
prepared entrepreneur who is able to seize opportunities when they arise is
knowledgeable about interdisciplinary business segments.

(c) TheStrategicFormulationSchoolofThought
The main thrust of this school of thought is the emphasis on the planning
process in a business venture. It argues for the cruciality of strategic planning
in business and management. Strategic formulation views venture success as
being dependent on having adequate breadth of managerial capability. To be
competitive in order to succeed and remain sustainable, entrepreneurs must
be able to identify unique markets, unique people, unique products and
unique resources, indicating the possibility of creating opportunities through
differentiation.
1.7.2 Process Approaches toEntrepreneurship
There are quite a few process approaches to entrepreneurship. An
entrepreneurship researcher, Steyaert, uses the term „entrepreneuring‰ as a key
concept to explain entrepreneurship as a process especially on process theories
within a creative process view, attaching it to a series of perspectives such as
complexity and chaos theory, interpretive and phenomenological, social
constructionist, pragmatic and practice-based to the relational materialist. His
review of process theories in entrepreneurship studies to theorise about the
concept of entrepreneuring marks a shift to a view of entrepreneurship as a social
ACTIVITY 1.4
Watch:
● The Niaga TV Interview with Prof Dr Mazliham Mohd SuÊud
President/CEOUNIThL;and
● A talk on „Entrepreneurship education is killing education‰ by
Mallam Bolaji Abdullahi (TEDxJabi).
The URL links are:
https://www.youtube.com/watch?v=MTMduFR6hzQ
https://www.youtube.com/watch?v=zYcjTaYasZY.
(a) In groups, discuss the roles of a university in developing
entrepreneurs.
(b) Can entrepreneurship be taught?
(c) How does it relate to the approaches to entrepreneurship?
(d) How can a technical university produce entrepreneurs?

ontology of becoming or being. Two well-known traditional process approaches
are the:
(a) Integrative approach; and
(b) Dynamic states approach.
Firstly, the integrative approach to entrepreneurship is a concept provided by
researchers Morris, Lewis and Sexton (1994), focuses on two parts of the
entrepreneurial process, the input and outcome of the process. They identified five
elements which feed the entrepreneurial process which are:
(a) Environmental opportunities;
(b) Entrepreneurial individuals;
(c) An organisational context;
(d) Unique business concepts; and
(e) Resources.
Equipped with these five elements, an entrepreneur will try to identify business
opportunities, gather resources and mobilise them into action. As he engages in
more entrepreneurial activities through innovating, risk-taking and by being
proactive, the entrepreneur intensifies his entrepreneurial skills. The outcomes
could, among others, include a grow;ing venture, value creation, new products
and/or services, new processes, new technologies, profits, personal growth, as
well as employment, assets, equity and revenue growth.
This model which could be used to describe the entrepreneurial process for all
categories of entrepreneurship including intrapreneurship provides a
comprehensive picture of what entrepreneurs do along the supply chain of the
development of entrepreneurs. Embedded in this chain would be the supply chain
of the venture or business which the entrepreneur undertakes.
In contrast with the integrative approach to entrepreneurship is the dynamic state
approach, developed by researchers Jonathan Levie and Benyamin B. Lichtenstein,
which focuses on how business ventures rely on the environment to survive. In
other words, the sustainability of a business venture depends on the
entrepreneurÊs ability to turn an opportunity into a business model which
describes how activities are carried out, how resources are to be mobilised or
employed, and what strategic position to take, and to eventually create value. This
concept of a dynamic interface between opportunity and value creation by
leveraging on a business model is more user-friendly for a new venture to

conceptualise its entrepreneurial process. This could be because the business
model could provide guidance on:
(a) Activities – how to design the business activities, work tasks, etc;
(b) Resources – what processes to put in place, what capabilities to build and
grow, how to design and manage the supply chain for the venture, and
whom to collaborate with; and
(c) Position – how to position the business, what strategies to take.
THE ENTREPRENEURIAL ECONOMY
What is an entrepreneurial economy? An obvious answer would be an economy
which is entrepreneurial in nature. It basically means that the economy is driven
by entrepreneurial activities. This connotation may have been coined to describe
an economy which is opposite to the more common economies which were usually
driven or managed by the public sector. The idea of an entrepreneurial economy
is gaining popularity for at least two reasons; one is because entrepreneurial
organisations contribute to a nationÊs economy, and the second reason is the
empowering aspect of entrepreneurship as a mechanism through which millions
of people from differing backgrounds, be they men, women, black, yellow or
white, rich or poor, can enter mainstream economic or social domains of society,
to survive or seek prosperity.
In the early 1980s, Peter Drucker, the well-known guru of management, noted that
small new businesses are replacing bigger industries as the main driving force for
the nationÊs economic growth. Demographic shifts, technological advances, higher
risk appetite to challenge common wisdom and innovate, as well as easier access
ACTIVITY 1.5
In pairs, draw a model each for the integrative approach and the
dynamic state approach.
SELF-CHECK 1.2
1. Discuss your insights on entrepreneurship as a process.
2. Discuss the term „entrepreneuring‰.
1.8

to capital had enabled start-ups to engage in entrepreneurial activities through
systematic application of good management practice.
During post World War II, the emergence of small and new businesses began to
form a driving force for a nationÊs national growth; and for decades, the United
States of America and Europe had acknowledged the impact of these small
businesses on their economies especially their huge capacity to provide jobs. Soon
after, other nations around the world began to focus on entrepreneurship as an
engine of growth. Malaysia also did the same. The major step towards a national
focus on entrepreneurship could be traced in the Seventh Malaysia Plan with a
section on Entrepreneurial Development. In the previous Malaysia plans, the
related terminologies were women in business, youth in business, etc. As a
developing nation, MalaysiaÊs focus on entrepreneurship intensified at the turn of
the century as it gradually shifted from a strong focus on manufacturing towards
a more broad-based economy placing emphasis on multiple industries including
the service sector. MalaysiaÊs interest in leveraging on entrepreneurs for national
development culminated with the establishment of the Ministry of Entrepreneur
and Cooperative Development in 2004 which lasted until 2009. So how has
Malaysia rolled out this national effort to encourage entrepreneurial activities? Did
all these efforts make Malaysia an entrepreneurial economy? What exactly is an
entrepreneurial economy? Which are the most entrepreneurial countries?
Many people perceive the United States as the most entrepreneurial country as
there is abundant coverage on the start-up (a fundamental notion in
entrepreneurship) activities there. The word „start-up‰ conjures up images of
newly set up ICT-related companies such as Microsoft by Bill Gates and Apple by
Steve Job which have been dominating the business scene for more than three
decades. However, in many parts of the world, entrepreneurship has deeper roots
among the people as entrepreneurship in the form of self-employment is not a
choice but rather a primary means of survival. In poverty stricken countries where
jobs are scarce, the only choice to survive may well be self-employment.
Going back to the question of which countries are the most entrepreneurial, the
Global Entrepreneurship Monitor (GEM) Report gives us some insights on the
matter. According to its 2014 Global report, the 15 most entrepreneurial countries
are as listed in Table 1.1. Interestingly, in the report, none of the developed
countries were in the Top 25. Australia was placed at 26.

Table 1.1: GEMÊs List of Most Entrepreneurial Countries
Country Percentage
1. Uganda 28.1
2. Thailand 16.7
3. Brazil 13.8
4. Cameroon 13.7
5. Vietnam 13.3
6. Angola 12.4
7. Jamaica 11.9
8. Botswana 11.1
9. Chile 11
10. Philippines 10.5
11. China 10.2
12. Indonesia 10.1
13. Ecuador 9.9
14. Burkina Faso 9.7
15. Guatemala 9.2
Source: Global Entrepreneurship Monitor (GEM) Report (2014)
The 15 least entrepreneurial countries according to the GEM 2014 Global Report
are as per Table 1.2.
Table 1.2: GEMÊs List of Least Entrepreneurial Countries
Country Percentage (%)
1. Surinam 0.2
2. Puerto Rico 1.3
3. Italy 1.3
4. Japan 1.3
5. France 1.7
6. Thosovo 1.8
7. Sweden 1.9
8. Croatia 2

9. Spain 2.2
10. Luxemburg 2.3
11. Finland 2.3
12. Germany 2.3
13. Russia 2.4
14. Ireland 2.5
15. India 2.5
How entrepreneurial is Malaysia as an economy? According to the Global
Entrepreneurship Monitor, although there are many financial and physical
infrastructure available in Malaysia, its total early stage entrepreneurial activity
rate (TEA) is rather low in the Asia Pacific and South Asia region, the second
lowest only after Japan. Given the strong governmental support for
entrepreneurship, entrepreneurial growth in Malaysia is relatively slow as
evidenced by the following:
(a) It has among the lowest percentage of people in the region who intend to
start a business, or have positive attitudes towards entrepreneurship; and
(b) Very few new businesses hope to employ more than 20 people. Most think
they would create jobs for less than four people.
The rankings of key indicators (2014 data) for entrepreneurship outlined by GEM
for Malaysia are as per Table 1.3.
Table 1.3: GEMÊs They Indicators for Entrepreneurship
Indicator Description Percentage (%)
Rank
/80
The total early-stage
Entrepreneurial
Activity (TEA)
Percentage of population* who
are either a nascent entrepreneur
or owner-manager of a new
business
5.9 n/a
Established business
ownership
Percentage of population* who
own and manage a business
which has paid salaries, wages or
any other payments for more
than 42 month
4.8 45

Perceived
opportunities
Percentage of entrepreneurs* (at
any stage of an entrepreneurial
activity) who perceive the
availability of opportunities
where they live.
28.2 49
Perceived
capabilities
Percentage of entrepreneurs*
who believe they have the
required skills and knowledge to
start a business.
27.8 57
Entrepreneurial
intention
Percentage of latent
entrepreneurs who want to start
a business within three years.
5.6 57T**
Fear of failure Percentage of population who
would not start a business due to
fear of failing.
27.1 12
*aged between 18 to 64 years old **Tie
ACTIVITY 1.6
Discuss in pairs:
The idea of entrepreneurship as an engine of growth has been
widespread around the world for quite some time. As a relatively
young developing nation, taking the cue from the global
entrepreneurship movement, Malaysia established the Ministry of
Entrepreneur and Cooperative Development in 2004 to be responsible
for the development of Bumiputera entrepreneurs (among Malays
and other indigenous people). This was in tandem with the policy of
poverty eradication through the alleviation of poverty among the
Bumiputera which was initially introduced in 1970.
The ministry defined entrepreneurial culture as follows:
„Entrepreneurial culture is a continuous and long-term process
designed to attract various strata of society, comprising
students at secondary schools and institutions of higher
learning as well as the general public to be involved in
business.‰

CURRENT TRENDS IN
ENTREPRENEURSHIP RESEARCH
Research on entrepreneurship is gaining popularity. Some current trends in
entrepreneurship research include research in the following areas:
(a) Entrepreneurship education;
(b) Entrepreneurial finance – such as crowdfunding and Fintechs;
(c) Social entrepreneurship;
(d) Family businesses;
(e) Women and minority entrepreneurs;
(f) Global entrepreneurial movements; and
(g) Technopreneurship.
Across the world, the impact of technology on entrepreneurship is a subject matter
which is drawing so much attention and many research projects are carried out on
how technology impacts entrepreneurship.
The World Economic Forum, for example, recently identified six megatrends and
21 tipping points that will change the world. The six megatrends are:
(a) PeopleandtheInternet
This relates to how the Internet impact how people connect with one another
and also with objects through a combination of technologies such as
wearable and implantable technologies This will enhance peopleÊs „digital
presence‰.
(b) Computing,communicationsandstorageeverywhere
The rapid decline in size and cost of computing and connectivity
technologies provides great potential to access and leverage the Internet. The
(a) Evaluate the ministryÊs definition of entrepreneurial culture.
Do you agree with its definition? What would you change, if
any?
(b) Suggest programmes the ministry could organise to build a
more entrepreneurial culture among Malaysians.
1.9

phenomenon of ubiquitous computing power has become more prevalent
with greater access to the supercomputer and huge storage capacity.
(c) TheInternetofthings
Smaller, cheaper and smarter sensors are being introduced – in homes,
clothes and accessories, cities, transport and energy networks, as well as
manufacturing processes.
(d) Artificial intelligence and big data
Artificial intelligence and big data are increasing used in decision making
and are viewed as tools to enhance competitive advantage.
(e) Thesharingeconomyanddistributedtrust
The trend is moving towards networks and platform-based social and
economic models where resources can be shared efficiently. There are
increased opportunities to ideate whole new business models and for social
self-organisation. The blockchain, an emerging technology, enables us to do
away with third-party institutions to provide security features, enhancing
the idea of distributed trust.
(f) Thedigitisationofmatters
Many processes such as 3D digital printing are lowering cost through a
shorter process flow. It is now possible to „print‰ physical objects from raw
materials via additive, or 3D printing. This has a transforming effect on
industrial manufacturing.
The 21 tipping points are:
(a) 3D Printing and consumer products;
(b) 3D Printing and human health;
(c) 3D Printing and manufacturing;
(d) A Supercomputer in your pocket;
(e) Artificial intelligence and decision making;
(f) Artificial intelligence and white collarjobs;
(g) Big data for decision;
(h) Bitcoins and blockchain;
(i) Driverless car;
(j) Government and blockchain;

(k) Implantable technologies;
(l) Internet of things (IOT);
(m) Our digital presence;
(n) Robotics and services;
(o) Smart cities;
(p) Storage for all;
(q) The connected homes;
(r) The sharing economy;
(s) Ubiquitous computing;
(t) Vision as new interface; and
(u) Wearable internet.
ACTIVITY 1.7
Discuss how the 21 tipping points can impact entrepreneurship. Pick
three of the tipping points and provide examples of their application
(in the form of product or service) that you have personally seen or
experienced. Present your answers to your coursemates.
SELF-CHECK 1.3
1. Discusshowtheterm„entrepreneurship‰hasevolved.
2. Define the role of an entrepreneur in business.
3. Distinguish an entrepreneur from a small business owner.
4. Describe at least five common mistakes of entrepreneurship. How
can we avoid them?
5. Discuss the common myths of entrepreneurship. Are there other
myths on entrepreneurship prevalent in your community? How
do they affect an entrepreneur?
6. State and then discredit three myths of entrepreneurship.
Compare your analysis with a coursemate.

● The field of entrepreneurship has developed rapidly and evolved in the last
five decades, producing many definitions, concepts and views of
entrepreneurship, as well as sub-branches such as collective entrepreneurship,
corporate entrepreneurship, opportunistic entrepreneurship and social
entrepreneurship.
● Entrepreneurs are viewed as breakthrough innovators and distinct from small-
business owners; while entrepreneurship is seen as transcending the mere
creation of a business to a mind-set.
● Being a field of interest to many and due to the relative lack of research on it,
many myths on entrepreneurship have arisen. Believing these myths blindly
could affect a personÊs perceptions towards entrepreneurship.
● There are many approaches to entrepreneurship. Two approaches are
discussed in this topic, the school-of-thought approaches to entrepreneurship
and the process approach to entrepreneurship.
● Entrepreneurship is increasingly viewed as important to an economy and is
seen as an engine of growth. The entrepreneurial revolution has become a
global phenomenon, spurring interest in how different countries fare in their
entrepreneurial venture. The Global Monitor of Entrepreneurship (GEM)
research consortium is a dominant authority on entrepreneurial development
across nations.
7. Compare the macro and micro views of entrepreneurship.
8. Discuss how can entrepreneurs manage their external locus of control
and internal locus of control to achieve success in their
entrepreneurial ventures.
9. Thoroughly
revolutionary.
evaluate the claim that entrepreneurship is
10. Discuss the importance of entrepreneurship to a countryÊs economy.
11. How does technology impact entrepreneurship?
12. Predict future trends in entrepreneurship by giving examples.

● Entrepreneurship research is gaining grounds and themes of research on
entrepreneurship are expanding. Some current areas of research interest
include venture financing, social entrepreneurship, entrepreneurial cognition
and others.
Collective entrepreneurship
Corporate entrepreneurship
Dynamic state approach
Entrepreneur
Entrepreneurial evolution
Entrepreneurial management
Entrepreneurial opportunity
Entrepreneurial trait school of thoughts
Entrepreneurship
External locus of control
Integrative approach
Internal locus of control
Macro view of entrepreneurship
Micro view of entrepreneurship
Myths of entrepreneurship
Process approach
School of thoughts approach
Social entrepreneurship
Deep Shift: Technology Tipping Points and Societal Impact. Retrieved from
http://www3.weforum.org/docs/WEF_GAC15.
Dees, G. (1998). The meaning of social entrepreneurship. Thansas City, MO:
Thauffman Foundation and Stanford University.
Drucker, P. (1984). Our entrepreneurial economy. Harvard Business Review,
62 (1),58-64
GEM Report2015/2016. (n.d.). Retrieved from www.gemconsortium.org/report/
49480
Ireland, B. R. (2012). Entrepreneurship: Successfully launching new ventures.
Essex, England: Pearson.
Thuratko, D. (2014). Entrepreneurship theory, process and practice (9th ed.).
Singapore: Cengage Learning.

Thuratko, D., Morris, M. H., & Covin, J. G. (2011). Corporate Innovation &
Entrepreneurship 3rd Edition. Singapore: Cengage Learning. Singapore: South
Western - Cengage Learning.
Levie, J. D., & Lichtenstein, B. B. (2010). A terminal assessment of stages theory:
Introducing a dynamic states approach to entrepreneurship. Entrepreneurship
Theory and Practice, 34 (20), 317-350.
Malaysia Economic Planning Unit (1991). Sixth Malaysia plan 1991-1995. Thuala
Lumpur, Malaysia: Prime Minister's Department.
Morris, M. H., Lewis, P. S., & Sexton, D. L. (1994, Jan 1). Entrepreneurship
(Analysis). SAM Advanced Management Journal (Winter), 59 (1).
Steyaert, C. (2007, Nov 15). „Entrepreneuring‰ as a conceptual attractor? A review
of process theories in 20 years of entrepreneurship studies. Entrepreneurship
and Regional Development. Page 453-477. Retrieved from
http://www.tandfonline.com/doi/abs/10.1080/08985620701671759
Stevenson, H. & Jarillo-Mossi, J. C. (1986). Preserving entrepreneurship as
companies grow. Journal of Business Strategy (Summer), 7 (1), 10-23.
Timmons, J., & Spinelli, S. (2008). New venture creation. Homewood, IL: Irwin
Publishing.

ic
2
Top Entrepreneurial
Mindset of
Individuals
 INTRODUCTION
LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Describe the entrepreneurial mindset and entrepreneurial cognition;
2. Describe some common characteristics of successful entrepreneurs;
3. Discuss the "dark side" of entrepreneurship; and
4. Examineentrepreneurialmotivation.
Nothing is Over
Encik Nazim watched the vermillion sun as it slowly sank into the horizon.
Forlorn and in deep despair, he thought about how he could get out of the
doldrums he was in. After, two previous failures, one in the hotel industry and
another in the laundry business, he had thought he would be able to survive any
business challenge. Apparently, he was wrong. What was supposed to be the
biggest break for him turned out to be a nightmare. After 13 years in an IT
business worth a few millions, he was back to square one when his biggest
account continuously delayed payments. As age was catching up, Nazim was
not sure whether he could get up on his feet again. He remembered a famous
quote uttered by Rambo [played by Sylvester Stallone (see Figure 2.1)], a
troubled Vietnam War veteran skilled in many aspects of survival, weaponry,
hand-to-hand combat and guerrilla warfare. The quote was „Nothing is over‰.

26  TOPIC 2 ENTREPRENEURIAL MINDSET OF INDIVIDUALS
The mindset of an entrepreneur is a popular topic of discussion and has been
explored at length in an academic setting. To find out what makes an entrepreneur
tick, this topic deliberates on the entrepreneurial mindset, entrepreneurial
cognition, as well as entrepreneurial motivation. It describes some common
characteristics of successful entrepreneurs; and explains how the negative aspects
of entrepreneurship also known as the dark side of entrepreneurship can be
destructive to a venture.
THE ENTREPRENEURIAL MINDSET
What drives individuals to pursue entrepreneurship? What exactly are the driving
forces behind entrepreneurship? What does the psychological outlook of
entrepreneurs look like? What goes on in the mind of entrepreneurs? What are the
"dark side" or negative aspects of entrepreneurship? How do entrepreneurs face
ethical challenges? This chapter focuses on the cognition of entrepreneurs with the
aim to uncover the entrepreneurial mindset.
Entrepreneurial mindset is about how entrepreneurs think. It relates to uncovering
their cognition and metacognition, especially how they think about opportunities
and how they make decisions. The focus on understanding the traits of
Figure 2.1: Sylvester Stallone
Source: http://consequenceofsound.net/
Nazim knew that he must remain strong and resilient as business survival or
any form of survival is very much in his hands. He reminded himself that a
successful entrepreneur always dares to face failure and is ever ready to go
again, to explore opportunities, to never give up. Will Nazim get back on his
feet again?
2.1

TOPIC 2 ENTREPRENEURIAL MINDSET OF INDIVIDUALS  27
entrepreneurs is driven by the idea that entrepreneurs cause entrepreneurship i.e.
entrepreneurship is a function of the entrepreneur. The lists of traits of
entrepreneurs are endless and are constantly developing. One example is given by
the entrepreneur and writer, Roger Cowdrey, who lists the nine characteristics
associated with the entrepreneurial mindset which are:
(a) A clear and achievable vision;
(b) A vision where all the resources may not be in their control;
(c) Self-awareness;
(d) Confidence;
(e) Self-motivation;
(f) A willingness to take calculated risk;
(g) A willingness to listen to others;
(h) A lack of fear of failure; and
(i) A willingness to work hard.
ENTREPRENEURIAL COGNITION
Cognition refers to mental processes, and originates from the Latin word
cognoscere which means "to know", "to conceptualise" and "to recognise".
Cognition refers to the functions, the processes, and the state of mind of an
individual. Mental processes refer to what the mind can do for example thinking,
recognising, remembering, producing, understanding meanings through
languages, solving problems, making decisions, feeling, reflecting, etc.
SELF-CHECK 2.1
Out of the nine characteristics given, choose five which you think
describes you the best. Do you think you are cut out to be an
entrepreneur? Explain.
2.2

The concept of entrepreneurial cognition was introduced into entrepreneurship
literature through social cognition theory and cognitive psychology. There are
many definitions of entrepreneurial cognition, and a widely accepted definitionis
that of Mitchell and Busenitz et al. (2002) which is:
Understanding entrepreneurial cognition is about getting to know how
entrepreneurs think, trying to decipher why entrepreneurs do some of the things
they do. An interesting area which has emerged from the study of entrepreneurial
cognition is cognitive adaptability which is the ability to be dynamic, flexible and
self-regulating, attributes which many successful entrepreneurs possess.
Another concept is metacognitive. While cognitive is a process responsible for
selecting a response, metacognitive is the process which selects the way the
entrepreneur will frame the entrepreneurial task. In short, cognition selects "the
which" while metacognition selects "the how". Many studies on entrepreneurial
cognition revolve around how founders and entrepreneurs think differently from
other individuals in the organisations. Are the differences (if any) due to task or
environmental conditions?
"The knowledge structures that people use to make assessments, judgments or
decisions involving opportunity evaluation and venture creation and growth."
ACTIVITY 2.1
Is there such a concept as being „entrepreneurially smart‰? Read the
following case and decide.
Rozina who had been employed for the last 15 years felt a strongsense
of boredom at work. She had been a personal assistant to three CEOs
and no longer found it challenging to handle the activities of the top
guns. She was interested in starting her own business, perhaps a little
cafe or a flower shop. Growing up in a well to do family, Rozina was
often surrounded by plants and flowers in the lush garden surrounding
her family's mansion. In her condominium, a few tenants were already
cultivating organic indoor plants. Rozina wondered if indoor plants
could be a potential business to explore.

COMMON CHARACTERISTICS OF
SUCCESSFUL ENTREPRENEURS
Studies on entrepreneurs revealed some common characteristics and traits of
successful entrepreneurs such as having clear vision, passion, determination, high
energy, drive to achieve, ability to calculate risk and tolerance for ambiguity.
Passion is central to the success of an entrepreneur - it is a driver of success.
However, according to G. Gupta, passion alone does not guarantee success. An
entrepreneur needs to know how to leverage on that passion for turning his dream
business into a reality. Gupta suggests three simple steps to turn passion into a
successful venture. They are as follows:
(a) Find out as much as possible about the industry you wish to do business in.
Do secondary research - there is so much information which you can source
online. Talk to people who have long experience in the industry. Visit
companies doing the business in the industry - they can be a competitor ora
collaborator, it is up to you to build the business network! Find out the
challenges and opportunities they have gone through. Join an industry-
related association - you have a high chance of meeting people with common
interests. Strong knowledge in an organisation can help you decide on
products to produce or source, determine your market segment and build
the business you deeply want to.
(b) Once you have gathered "enough" information, jump in! Do not hesitate and
wait for "the perfect time". Think, "it's now or never". Starting a business
around a passion can give you the courage to overcome challenges. Passion
motivates us to learn as much as possible about our object of passion,
increasing our enthusiasm and drive to excel in our chosen business venture.
As she contemplated when to quit her job and start her business,
Rozina began to have doubts.
„I am not sure if I could break-even in my chosen business, let
alone become successful. Entrepreneurship is the prerogative of
the business community and the intelligent. Besides, I am not
good incalculations.‰
Can Rozina succeed in business? Discuss this with your coursemates.
2.3

(c) Be around people who share your passion and vision. You need to avoid
negative vibes and naysayers when pursuing your passion as they can drain
your energy. Having people who share your passion can be encouraging and
inspiring. It would be better still if they have experience in the line of
business you wish to pursue as they can guide as you put in long hours to
start and grow your venture. Successful entrepreneurs look far ahead and
aspire to turn their passion into a venture that is not only profitable, but more
so, a venture which allows them to do what they love most and in the process
create a good impact on their customers and ensure the endurance of their
brand.
Entrepreneurs are a special breed of people. Some characteristics which have been
associated with entrepreneurs are:
(a) Determination and perseverance
The level of determination and perseverance of entrepreneurs is very high.
They are willing to make a lot of commitment to ensure the success of their
venture. Take for example, Zaliha Mohamad (see Figure 2.2) the founder of
Palmeka Sdn Bhd (http://palmeka.com/index.php), who gave up a high-
paying job to set up a manufacturing company, investing all her savings in
the venture.
Figure 2.2: Zaliha Mohamad - founder of Palmeka
Source: https://my.linkedin.com
(b) Drivetoachieve
It is the drive to achieve which entrepreneurs have that helps them to
visualise success and plan their moves to live their mission in order to
achieve their vision. Entrepreneurs believe in what they do and will take
whatever it needs to succeed.
(c) Opportunity orientation
Successful entrepreneurs have the uncanny power to spot opportunitiesand
act on them. They can see opportunity in the most mundane and least likely
places and turn them into business ideas. In Malaysia, Nizam Mustapha of

Medijaring (refer to Figure 2.3) for example became one of the pioneers in
providing solutions for third party administration for the healthcare system
after observing how doctors seem to juggle with so many roles in their small
medical practice.
Figure 2.3: Medijaring logo
Source: http://www.heart.com.my/
(d) Persistent problem solving
Problems spell opportunities for entrepreneurs. They understand that
problems require solutions which could be turned into business
opportunities. Nonetheless, they know how to avoid unsolvable or easy
problems. They will optimise their chances by looking for "lucrative",
problems which can help them achieve their business mission. For example,
Madam Zhang Yin (refer to Figure 2.4), a paper-recycling entrepreneur and
one of the richest women in the world became rich by solving the problem of
trash through paper recycling.
Figure 2.4: Madam Zhang Yin - founder of Nine Dragons Paper Holdings
Source: https://www.nextinsight.net
(e) Highneedforfeedback
Entrepreneurs are realistic and appreciate feedback. Feedback gives them the
chance to improve their business and therefore they take feedback seriously.
Entrepreneurs treat failure as a learning point. They move on and take the
"nothing is over attitude". Mega entrepreneur Richard Branson (refer to
Figure 2.5) for example is a strong believer in the importance of getting

feedback and he advises companies to get constant feedback from staff as
well as people external to the organisation.
Figure 2.5: Richard Branson
Source: http://www.marketleadership.net
(f) Highinternallocusofcontrol
Entrepreneurs believe that they are in control of their own destiny. They do
not blame fate or luck (lack of) for their failure. They know their decisions
and the choices they make determine the performance of their business.
Jayson DeMers (refer to Figure 2.6), CEO of AudienceBloom learned that 100
per cent attention, focus and effort is required for a successful venture. On
the other hand, low locus of control will derail an entrepreneur.
Figure 2.6: Jayson DeMers - CEO of AudienceBloom
Source: http://www.inc.com/author/jayson-demers
(g) Tolerance for ambiguity
The entrepreneur has a high tolerance for ambiguity. The less known or
unknown circumstances do not hold them back. In fact, occasionally,
entrepreneurs can leverage on ambiguity and turn it into an opportunity.

(h) Calculated risk taking
While entrepreneurs are in many ways risk takers, they evaluate the risks
carefully. Their decisions are well thought out and they are apt at taking
calculated risks. They spread out business risk in as much as possible by
negotiating business terms and sharing risks through shared partnership. For
example, Igor Salindrija (refer to Figure 2.7), a successful entrepreneur and
CEO of AskGamblers.com says that beneficial risks require careful planning
such as assessing needs, identifying areas that need improvement, formulating
strategic plans, and executing initiatives while anticipating mistakes.
Figure 2.7: Igor Salindrija - CEO of AskGamblers.com
Source: https://eegaming.org
(i) Highenergylevel
Many entrepreneurs have to work longer hours than most people. This
requires a high level of energy. The discipline in entrepreneurs helps them
maintain a balanced life - they know that they need to take care of their
health. However, for start-ups, the pressure may be higher as they have yet
to prove themselves.
(j) Creativeandinnovative
To be competitive in business, entrepreneurs need to be creative and
innovative. They need to constantly keep abreast with market demands to
understand the market better. Then, they need to design or choose products
which customers want. Creativity comes in many forms. For example,
Professor Mohamed Yunus (refer to Figure 2.8) of Grameen Bank introduced
microfinance, a kind of innovation for the financial services industry,
dedicated for women to help alleviate poverty; while Tan Hooi Ling (refer to
Figure 2.9) of Grab, innovated Grab which is one of Southeast Asia's leading
ride-sharing platforms.

Figure 2.8: Professor Mohamed Yunus of Grameen Bank
Source: https://en.wikipedia.org
Figure 2.9: Tan Hooi Ling of Grab
Source: http://fortune.com
(k) Has clear vision and strong passion
Entrepreneurs are driven by their vision. Without vision, they would not
know what to do nor have the drive to undertake a venture. A vision is a
dream; and passion is the feeling which comes from the heart, an energy
which drives the entrepreneur to achieve his dreams. For example, Vivy
Yusof (refer to Figure 2.10) of Fashion Valet went into business with a clear
vision of selling fashionable items through the online platform.

Figure 2.10: Vivy Yusof of Fashion Valet
Source: https://www.easystore.co
(l) Able to build a good team
No man is an island. The same goes for entrepreneurs. Successful
entrepreneurs are inspiring and have the ability to propel others to share
their dream, to build good teams. They have stories to motivate their team
members and they appreciate the importance of teamwork. This is evident in
well-performing companies, for example AirAsia, which has a corporate
culture that stresses the importance of teamwork.
Entrepreneurs are often exposed to the possibility of failure in their quest to set up
a business. Many of them know this, and they learn to cope and in the process
develop a tolerance for failure. They learn to manage setbacks and
disappointments as part of the learning process. However, the learning associated
with failure is neither automatic nor instantaneous. Entrepreneurs need to go
through a period of grief recovery process.
ACTIVITY 2.2
Watch the YouTube video entitled "50 Entrepreneurs share priceless
advice" at https://www.youtube.com/watch?v=QoqohmccTSc.
(a) What are the major themes shared by the netrepreneurs?
(b) Discuss the top five pieces of advice that you like. Explain why
you like them. Are your choices similar, different or a mix of
both? Compare.

THE DARK SIDE OF ENTREPRENEURSHIP
Figure 2.11: Manfret Thets De Vries
Source: http://www.strategy-business.com
The dark side of entrepreneurship relates to risk-taking, stress and ego. It is about
how entrepreneurs need to confront risks, manage stress and manage the
entrepreneurial ego through personal influence in the venture to rise to the
challenges of ethical leadership within each venture.
Although entrepreneurship is often touted as a contributor to economic
development, not all aspects of entrepreneurship are positive. There is what is
called the dark side of entrepreneurship or the negative aspects of
entrepreneurship. Some elements of this dark side of entrepreneurship which were
written about by a well-known Dutch psychologist, Manfret Thets De Vries (refer
to Figure 2.11), in the 1980s include the following:
(a) Entrepreneurs have personality quirks which make them hard people to
work with for which they could be seen to be prone to take biased actions.
They can also act thoughtlessly and have difficulty following instructions.
(b) Entrepreneurs could have gone into business because he finds it difficult to
work for others. This could stem from the fact that an entrepreneur may not
like to take orders from others, an idiosyncrasy which can be harmless if his
business is small; but could be detrimental when the business grows big and
he would need support and cooperation from others.
(c) Entrepreneurs often feel ambivalent when control issues arise, filled with a
sense of grandiosity, influence, power and authority but at the same time,
they also feel helpless. Their high need of control can affect their ability to
take or give direction, and how they relate to and get along with others.
2.4

Because they want to be in control, they cannot tolerate subordinates who
are independent and able to think for themselves. Their desire for control can
lead to micromanaging where they want to be in the know about everything
in the organisation. Excessive concern about minute details can have
negative repercussions in the long run.
(d) Entrepreneurs can be dominant and suspicious of authority, making it hard
for them to switch from a superior to a subordinate role. This is because they
find structure stifling. The dominant nature of entrepreneurs can build
resentment among those they manage and can cause people to leave.
(e) Many entrepreneurs are social misfits who want a strong grip on their life and
not be at the mercy of others. They do not like being subordinated to others.
(f) Yet, another dark side to entrepreneurship is a sense of distrust. They can
have a strong distrust of the world around them. This could be because of
their fear of victimisation and the need for them to prepare for any disaster.
They scan their surroundings to confirm their suspicions. They can be
trivial and gradually lose their sense of reality. They become difficult to
work with and this can result in low morale, employee dissatisfaction and
decreased productivity.
(g) Another negative aspect of entrepreneurship is the entrepreneurs desire for
applause. The stressful life of entrepreneurs has the power to destabilise their
sense of reality, and this can lead to a greater craving for control as well as a
greater sense of distrust. The entrepreneurs constantly want to be heardand
recognised. They like to be seen as heroes, tell others that they amount to
something and are not to be taken for granted.
(h) Entrepreneurs have the tendency to externalise their internal problems and
often resort to scapegoating,projectingtheir discomforts and fears onto others.
If exaggerated, it can create much stress in an organisation and can result in
politicalinfighting,denial of responsibilities as well as factions and insularism.
(i) Some entrepreneurs are unable to keep a balance between dependency needs
and their wish to be independent, and are subject to mood swings.
This list is but some of Manfret Thets De Vries' observations of entrepreneurs he
had studied in his profession. The good news is that there is "light" to the dark
side of entrepreneurship. Firstly, there are countervailing forces to the dark side
of entrepreneurship which include institutions, government, banks and a
person's good judgement. More reassuringly, the sense of reality for most
entrepreneurs acts as a buffer to prevent the dark side of entrepreneurship from
getting out of hand.

Other main points stressed by De Vries are summarised in the following:
(a) Entrepreneurs do not necessarily have more personal problems or personal
disorders than other people;
(b) The boundaries between being creative and aberrant behaviour are blurry,
and are not discrete categories;
(c) The blend of creative and irrational is what makes entrepreneurs tick and
this has driven many positive contributions;
(d) As entrepreneurs' personality quirks are the source of their entrepreneurial
drive, executives and venture capitalists may well stop fighting these
idiosyncrasies and regard developing them as a challenge instead by
building a relationship based on mutual trust in order to enable an
entrepreneur to test ideas against reality.
ACTIVITY 2.3
Rather than being called the COO, Tan Hooi Ling of Grab prefers to be
seen as the "plumber" of Grab. What started out as MyTeksi, Grab has
now grown into Southeast Asia's leading ride-sharing platform. It
continues to transform the way we commute with GrabCar for private
car hire, GrabHitch, a carpooling service and newer services such as
GrabBike and GrabExpress. Read the following excerpt of a blog entry
by Michelle Nickolaisen, owner of a freelance writing business. Discuss
with a friend the addictive nature of entrepreneurship. Suggest how it
can be managed.
"Ask any entrepreneur; we don't measure time in units of weeks
or months, but from deadline to deadline, launch to launch and
failure to failure. It's how we gauge our impact on the world.
Remember the pure euphoria of your first successful launch? Or
when you made your first sale? Nothing beats the bliss that came
from your first major press mention or reached whatever recent
milestone that signalled measurable growth.
We crave these moments and fight for them with a superhuman
intensity.
Friends and colleagues cheer as you turn your vision into reality,
transform lives and punch crater-sized dents into the universe.

But nobody talks about how addictive that high is. Or that when left
unchecked, we risk losing ourselves like an addict seeking any other
drug.
Entrepreneurship can be a gristly, volatile mess of toxic ingredients
on the verge of combustion, threatening to consume your health,
relationships, and potentially, your life.
According to the Gallup Wellbeing Index, 45% of entrepreneurs
report being stressed, and another survey of 242 entrepreneurs,
30% identified as depressed (compared to the national average,
which is 7%), and 72% of entrepreneurs have a family history of
mental health conditions.
Entrepreneurial swagger is often a thin veneer masking crippling
self-doubt, insecurity, and fear of catastrophic failure. The more
successful you are, the more people depend on you, and the more is
at stake if you fail."
Source: Nickolaisen, M. (2016, July 25). The dark side of entrepreneurship that
nobody talks about. Retrieved from https://www.shopify.com/enterprise/the-
dark-side-of-entrepreneurship-that-nobody-wants-to-talk-about.
ETHICS IN ENTREPRENEURSHIP
Ethics in entrepreneurship has emerged as an important area in academia and
research. Entrepreneurship is also increasingly seen to have an important ethical
dimension at the individual, organisation and societal level. Entrepreneurial action
has powerful ethical dimensions and implications i.e. the question of the ethical
(or unethical) entrepreneur, organisation (ventures set up by entrepreneurs) and
ethical behaviour of entrepreneurs within each society.
Ethics which originate from the Greek word ethos means custom or code of
conduct, how one carries oneself. Entrepreneurs are subject to various ethical
considerations and they often need to rationalise on how to handle ethical
challenges which could constitute acts "against the firm" or "on behalf of the firm".
Either way, ethics is not an easy matter to manage. There are many considerations
to be made with regard to what constitutes a right or a wrong, and what is
acceptable.
2.5

Ethical conflicts arise due to many reasons. Firstly, entrepreneurs need to balance
the needs of various stakeholders, both internal and external stakeholders, and
sometimes they have conflicting demands which require ethical considerations.
Secondly, the dynamic nature of society entails the need to adapt to changing
perspectives, paradigms and values in terms of what is legal and what is ethical.
The American Management Association for example, made five assumptions
when considering how business ethics will evolve over the next decade and
beyond. These five assumptions are as follows:
(a) Technology has a major impact on ethics and is expected to grow even
stronger and this can affect individual privacy.
(b) Global trends which have a strong influence on business ethics include
global free trade initiatives, shifting demographic trends, conflicts and a
global workforce. There will be a shift towards what constitute global ethics.
The development of global ethical standards seems eminent.
(c) Organisational structures will see a shift towards greater integration and
networking across the globe. There will be an expanded flow of information,
technology, goods, services, human resources, etc. There are bound to be
differing ways of thinking about values and ethics among partners and allies.
Organisations will thus need to set up and maintain codes of ethics and
conduct to build shared values.
(d) Changes in socioeconomic trends can increase competition and this can
tempt organisations to make decisions based on expediency rather than
ethics.
(e) Environment trends – increasing concerns about the environment requires a
more robust ethical framework as conflicting ideas regarding what is ethical
in preserving the environment are becoming more pronounced. There is also
an increasing demand for companies to be environmentally ethical such as
the Green movement.
There is a need to determine managerial roles within the ethical framework -non-
role, role failure, role distortion and role assertion. Ethics as a code and as a process
is becoming more important and entrepreneurs need to consider establishing
ethical strategies.
The ethics of entrepreneurship must be taken seriously for many reasons. Firstly,
at the societal level, it influences the way we live, as to a large extent, our livesare
shaped by market activities for example in the products and services we consume.
The introduction of social media platforms which we use for communication has
had a fair share of ethical issues arising as a result of the misuse of these platforms
such as leak on confidential documents.

Positive ethical impacts have also been exerted by organisations which were set
up with good values as its driving mission, for example, the Body Shop. Their
emphasis on social mission had caught on quite rapidly. Across the world, social
enterprises had sprung to address the social challenges plaguing each area of
concern. These firms not only exert economic power but also symbolic power,
motivating a movement to do good around the world. It is obvious that ethical
influences of entrepreneurship impact us as individuals, communities and
societies. The consumer association movement might provide a clue to the ethical
dimensions of businesses and entrepreneurship. In deciding the type of products
and services to offer and how to distribute them, ethical considerations are
paramount for entrepreneurs as these decisions impact consumers, and
entrepreneurial actions have ethical consequences. Entrepreneurs must realise that
the entrepreneurial process has ethical demands and this can entail making ethical
decisions under conditions of extreme uncertainty, ambiguity and ignorance.
Although the field of entrepreneurial ethics is a relatively young one, there have
been encouraging findings signifying an important and positive role for ethics.
Studies have shown that the perception of the character of an entrepreneuraffects
access to financing and impacts the success of the venture. Entrepreneurs are
regarded as having high integrity when their values are congruent with
prospective resource providers. When they make positive social contributions,
they are even more likely to be supported by key stakeholders.
ENTREPRENEURIAL MOTIVATION
The word motivation originates from the Latin word mover which means "to
motive". In English the root word of motivation is "motive" which refers to an inner
state of mind which activates or directs our behaviour towards our goals; an
expression of a personal needs or goals; and motives are internal and are expressed
by our behaviour which is external. Entrepreneurial motivation is about how
psychological factors contribute to the process of entrepreneurship - how
perceived expectations impact actual outcomes in starting, growing and sustaining
a venture.
ACTIVITY 2.4
Conduct an Internet search on how technology impacts the ethical
behaviour of a firm.
Share your findings with your coursemates.
2.6

Despite a lack of agreement on the profile of a successful entrepreneur, studies on
the psychological makeup of an entrepreneur continues to be a major topic of
research interest for many reasons including the fact that the entrepreneur is the
main driver of entrepreneurship, and he is driven by his inner innovation. Before
we go deeper into the psychological theory of entrepreneurship, let us explore
other theories of entrepreneurship and see how they relate to entrepreneurial
motivation. Some of these theories include the sociological theory of
entrepreneurship, Joseph Schumpeter's entrepreneurship innovation theory, the
psychological theory of entrepreneurship, McClelland theory of high achievement
and McClelland theory of motivation.
(a) The sociological theory of entrepreneurship is about how entrepreneurship
is motivated by social values and religious beliefs, and therefore, an
entrepreneur performs according the role expectations of a society. Some
theorists in this field include Landstrom (1998) who studied
entrepreneurship at the level of society and Reynolds (1991) who identified
four social contexts relevant to entrepreneurial opportunity:
(i) The first is the social network context which focuses on building social
relationships which promote trust rather than opportunism - success
comes as a result of trust. An entrepreneur must strive ethically and
should not take advantage of others to succeed in business.
(ii) The second is the life course stage context, a stage where the life
situations and characteristics of individuals who become entrepreneurs
are analysed.
(iii) The third is the ethnic identification context where it is believed that
sociological background determines how far one can succeed in
business. People born into a society which is already successful in trade
would have a greater advantage than those without. However, there
are some observations that marginalised groups of people often fight
all barriers and obstacles; and against all odds managed to improve
their lives. Being marginalised, they are less likely to take things for
granted, and know that success is the main path for them to get out
from their misery.
(iv) The fourth is the population ecology context whereby the external
environment impacts the growth and survival of a business venture.
The external environment includes the political, social, economic,
technological, legal and environmental aspects of a particular
community, country or industry.

(b) JosephSchumpeter'sentrepreneurshipinnovationtheoryliesonthepremise
that an entrepreneur contributes to entrepreneurship by being innovative,
creative and having foresight. Innovation comes in the form of new products,
new production methods and new markets. Schumpeter stresses on the
cruciality of innovation without addressing risk-taking and organisational
skills. His focus is on entrepreneurs in big industries coming from more
developed countries.
(c) The psychological theory of entrepreneurship relates to individuals who
possess certain psychological characteristics whereby they have a high need
for achievement, vision or foresight and resilience in facing challenges -
based on upbringing which stresses on excellence, self-reliance and low
father dominance.
(d) McClelland theory of high achievement identifies two characteristics of
entrepreneurship which are doing things in a new and better way and
making decisions under uncertain circumstances. People with high need for
achievement and success are more likely to become entrepreneurs.
(e) McClelland theory of motivation states that people have three types of needs
at any given time - need for achievement, need for power and need for
affiliation. Entrepreneurs need achievement the most. They are usually not
influenced by money or external incentives, but rather think of profit as a
measure of success and competency.
(f) Yet another aspect of entrepreneurial motivation is entrepreneurial
persistence, an emerging field of research. Research on entrepreneurial
persistence looks into "how" and "why" entrepreneurs continue setting a
venture, as well as how their experience with adversity and values affect
their persistence.
ACTIVITY 2.5
Conduct an Internet search on the vision and mission statements of at
least two social enterprises.
(a) What motivates these social enterprises?
(b) How do their entrepreneurial motivations differ from that of
conventional business entrepreneurs?

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