CHAPTER 1

THEORY OF ENTREPRENEURSHIP

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 DEFINITION OF AN
ENTREPRENEUR

Richard
defined from 2
Cantillon (1755).
perspective:
- French word (Blaug, 2000).
1. functional
entreprendre Depending on - a person who
approach
- Means to do how an undertakes to
based on what
something entrepreneur is do a job and
an entrepreneur
(Swedberg, defined, he can Entrepreneur is
does
2000) or to be different the middleman
2. an indicative persons wearing who buys at a
undertake the
approach different hats.\ lower price and
risk of new
based on his sells higher.
ventures
characteristics
(Kuratko &
and attributes.
Hodgetts, 2001).

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Fundamentals of Entrepreneurship All Rights Reserved
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 DEFINITION FROM RESEARCH
LITERATURES

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 DEFINITION FROM RESEARCH
LITERATURES (CONT.)
entrepreneurs are distinguishable from non-
entrepreneurs based on their willingness to bear
Frank Knight the cost of uncertainty.
In return for this willingness, the entrepreneur will
(1921), be rewarded with profitthe residual income
left after all necessary payments have been
made
entrepreneurship as human action seen from
the aspect of the uncertainty inherent in every
Von Mises action (Mises, 1949).
The entrepreneur is seen as an active individual
whose action is always
entrepreneurship mainlyspeculative.
consists of decision-
making activities particularly pertaining to
production.
Mises believes that entrepreneurship involves greater
responsibility, with the entrepreneur performing
(2000), a more crucial role than the manager. In
performing his/her role the entrepreneur is
motivated by the desire to make profits and
acquire wealth.

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 INDIVIDUAL CHARACTERISTICS
OF AN ENTREPRENEUR

Need for
achievement

Brockhaus (1982) :
three attributes
that are
consistently
associated with
entrepreneurial
behaviour
Risk-taking Internal locus
propensity. of control

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 INDIVIDUAL CHARACTERISTICS
OF AN ENTREPRENEUR
(Hansemark, 2003).
The need for achievement is a personal
attribute associated with the expectation
of doing something better over others
and/or the individuals earlier
accomplishment It is believed that the
individuals who score highly on the need
for achievement would have a strong
desire for success and are consequently
more likely to behave entrepreneurially
(Othman, Ghazali & Ong, 2005).

Beugelsdijk and Noorderhaven (2004)

Argue in a study which shows that
entrepreneurs generally have higher needs
for achievement.

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 INDIVIDUAL CHARACTERISTICS
OF AN ENTREPRENEUR
Cantillon, 1755; Knight, 1921
Individuals with higher propensities
for risk-taking are believed to be
more likely to be involved in
entrepreneurial activities. This is not
surprising as entrepreneurship has
long been associated with risk-
taking.
Beugelsdijk & Noorderhaven, 2005
Empirical evidence also supports
the view that risk-taking propensity
serves as one of the attributes
which influences entrepreneurial
success and performance

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 INDIVIDUAL CHARACTERISTICS
OF AN ENTREPRENEUR

Locus of control is a belief or disbelief that

one can control or influence the environment
in which one is found.
Rotter (1966)
individuals with internal locus of control
are more likely to strive for achievement
than those with external locus of control.
they can make things happen as they are
able to control and influence the
environment around them

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 PERSONAL
ENTREPRENEURIAL
COMPETENCIES (PEC)
In 1985, McClelland
with McBer & Co
developed
measuring
instrument

Personal
entrepreneurial
competencies
(PEC)
Inclinations among
successful entrepreneurs
in Malawi, India and
Ecuador

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 INDIVIDUAL CHARACTERISTICS
OF AN ENTREPRENEUR (CONT.)

These personal
entrepreneurial
competencies
can shed some
light on the
personality and
character of the
successful
entrepreneurs.
However, it is not
exhaustive and
the instrument is
not a one size fits
all tool.
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