TOPIC ONE
MEANING OF ENTERPRISE AND THE ROLE ENTREPRENEURSHIP PLAYS IN ECONOMIC DEVELOPMENT
Introduction
Enterprise as the name implies is defined from narrower and wider perspectives. It entails the process of combining human and economic resources (materials, machine, money etc) for economic gain. At the end of this topic will give students the knowledge of opportunities of how they will make life better for themselves and others through wealth creation.
What is Entrepreneurship?
Entrepreneurship has no specific meaning. It depends on different author’s perspective as they view it. A well respected economist Mark Casson affirms that “Entrepreneurship means different things to different people” (Casson 2002).
Other definitions of Entrepreneurship by Jones and Sakong (1980); Ronstadt (1984); Stevenson and Gumpert (1985); Abraham (1999); Udeh (1999) as mentioned in the manual.
Jones and Sakong described it as a force that mobilizes other resources to unmet market demand.
Ronstadt on his own part sees it as the dynamic process of creating incremental wealth.
Stevenson and Gumpert also define entrepreneurship as the process of creating value by pulling together a unique package of resources to exploit an opportunity.
Abraham viewed it as a process that has to do with the conceptual approach of doing new thing with a philosophy of value, purpose, utility, quality and use which satisfies needs.
Also, entrepreneurship is the willingness and the ability of an individual to seek out an investment opportunity, establish an enterprise based on this, and run it successfully either for profit-making or social benefit (Udeh, 1999).
Background to Entrepreneurship
The word “entrepreneur” was derived from a French verb entreprendeur, which means to undertake.
From your manual read through the entrepreneurial concept into business development in the 17th, 18th, 19th, 20th and 21st century. I will like to be specific about that 19th and 21st century. During the 19th century, economic and managerial perspective was added to entrepreneurship.
The entrepreneur was then seen as someone who combines 6Ms i.e. Man, Machine, Material, Market, Management and Method for profitable reward. Let me also emphasized on David McClelland (1961) whose view on entrepreneur as someone who is out to satisfy identified needs. He classified his needs on 3 categories as Need for Achievement; need for power and need for Affiliation (APA). He sees an entrepreneur as someone who has the desire for achievement of a particular need.
Meaning and Scope of Enterprise
An enterprise is an identified idea that is translated into a planned and satisfactorily implemented activity. In its narrower sense which refers to a business venture or undertaking.
Being enterprising will specifically enable you to achieve a great deal, and you will stand out in the crowd due to your attitude and systematic approach to issues.
The ACRONYMS “ENTERPRISE” is the tools needed by an Entrepreneur to help you become enterprising:
E – Energy; N – Need to Achieve; T – Task Oriented; E – Empathy; R – Resourcefulness;
P – Planning; R – Risk Taking; I – Innovation; S – Skills and E – Endurance.
Different Forms of Enterprise
Private or Public
Formal or Informal
Profit or Non-profit
Individual or Community
Local or Foreign
Business or Social
Small or Large
Manufacturing or Service
Consumer or Industrial
Features of the Types of Enterprises
1. Business Enterprises and 2. Non-Business Types of Enterprise. *Read about the functions of these types of enterprises in your manual.
Further Classification of Enterprises
We have 2 classifications of Enterprises namely:
1. Sectoral and 2. Sizes
Under Sectoral which is refers as Sections:
- Retail
- Food and Recreation
- Manufacturing
- Services
- Other
While in Sizes (as adopted by the Federal Republic of Nigeria), we have
- Micro/Cottage
- Small Scale Industries
- Medium Scale Industries
- Large Scale Industries
Roles of Entrepreneurs in Business – This refer to an integral part played by entrepreneur compared to the main functions: Such roles are as stated:
1. Promoters 2. Partners 3. Shareholders 4. Directors 5. Organizers 6. Initiating
Ideas 7. Taking Risks 8. Planning 9. Controlling and 10. Coordinating
Types of Entrepreneurs
Before starting a business, there is a need to identify the type of entrepreneur you might choose to be:
1. Self-Employed 2. Opportunistic Entrepreneurs 3. Inventors 4. Pattern Multipliers
5. Economy of Scales Exploiters 6. Acquirers 7. Buy-Sell Artists 8. Speculators
9. Intrapreneurs (Internal Entrepreneurs) 10. Franchisee 11. Necessity Entrepreneur.
Classes of Entrepreneurship
*Business Entrepreneurs *Social Entrepreneurs *Intrapreneurs *Techno-Entrepreneurs
*Institutional Entrepreneurs
Functions of the Entrepreneur in Business
Entrepreneurs can be regards as:
1. Prime Mover 2. Financier 3. Manager 4. Risk bearer
Role of Business Entrepreneurship in Society
Entrepreneurs play a key role in business and the private sector. Most of the wealth in a society is created by business activity. Such roles are as follows:
1. Products and Services 2. Employment 3. Income 4. Wages, salaries and Profits
5. Taxes 6. Disposable Income 7. Consumer Spending 8. Personal Savings
9. Investment in Productive Assets and 10. National Well-being.
Importance of Entrepreneurship
1. Employment Creation 2. Local Resources 3. Decentralization and Diversification of
Business 4. Promotion of Technology 5. Capital Formation and 6. Promotion of an
Entrepreneurial Culture.
Advantages and Constraints of Self-Employment
Self-Employment is also regarded as Working for Yourself Programme (WFYP)
Advantages of Working for Yourself
1. Personal Satisfaction 2. Independence 3. Profit and Income 4. Job Security
5. Status 6. Flexibility
Disadvantages or Constraints or WFY
1. Possible loss of invested capital 2. Uncertain or low income 3. Long Business Hours
4. Routine Chores 5. Risks 6. Time Involvement and 7. People contact
Advantages and Challenges of Paid Employment and Self-Employment are shown below
PAID EMPLOYMENT
Advantages Challenges
1. Specific (or fixed) responsibilities 1. Follow orders
2. Steady Income 2. Ability not easily recognized
3. Fringe benefits 3. Set income
4. Fixed hours of work 4. Limited responsibility
5. More certain future 5. Difficulty to implement ideas
6. Set span of control 6. Dependent on the employer
7. Minimal risks
SELF-EMPLOYMENT
Advantages Challenges
1. Leads rather than follows 1. Long, irregular hours of work
2. Can Implement Ideas 2. Broad responsibility
3. Can be creative 3. Must take risks
4. Potential income unlimited 4. Income not stable nor guaranteed
5. Independence 5. No fringe benefits
6. Can take initiative 6. Always involved in finances
7. Controls work environment 7. Time constraint
8. Gives Orders 8. Uncertain future
9. Learning never ends
10. Hard to delegate work
11. Too much paperwork
12. Dependent on employee actions