ENTREPRENEUR AND
INNOVATION
MANAGEMENT 214
Entrepreneurship
A South African Perspective
Stellenbosch University
, Chapter 1:
The Nature and development of entrepreneurship
The Economic Impetus of Entrepreneurship
The state of economy is determined by the type of business (small, micro etc).
GDP (Real gross domestc product) is the value of all producton ithin a country’s geographical
boundaries, it is used to measure the state of the economy (gro ing or declining)
- GDP determines the economic gro th rate.
Entrepreneurship has a higher stake in the employment industry than meets the eye. Best
employment opportunity that exists in South Africa.
No gro th in the economy equals less job opportunites.
The Development of Entrepreneurship Theory
The authors defne the economic and behaviourist perspectves of entrepreneurship
as follo s:
Economic perspectve:
Detectors of opportunites
Venture creaton
Risk taking
Proft
Innovaton
Tolerance for ambiguity
Behaviourist perspectve:
Max Weber: He identfed the value system as a fundamental element in explaining
entrepreneurial behavior. He vie ed entrepreneurs as innovators.
David C. McClelland: An entrepreneur is someone ho exercise control over producton that is not
just his personal consumpton.
Period Topics Authors and researchers
1.What entrepreneurs do 1700 From an economic perspectve Cantllon, Say, Schumpeter.
– (1950)
2.Who entrepreneurs are 1960 From an behaviourist Weber, McClelland, Roter. De
– (1980) perspectve Vries.
3. What entrepreneurs do From a mgmt. science Drucker, Mintzberg.
1980- perspectve
4. What support is needed by From a social perspectve, Gartner, Welsh, Bygrave,
entrepreneurs 1985- including economists Reynold.
, 5.What entrepreneurial From an entrepreneurship Timmons, Vesper, Brockhaus.
actvites are, and hat perspectve
competencies are requires to
perform them 1990-
Defning the Concepts of Entrepreneurship, the Entrepreneur, Small Businesses and
Entrepreneurial Ventures
Entrepreneurship is the emergence and gro th of ne businesses.
- Cause changes in the economic system through innovatons of individuals ho respond to
opportunites in the market.
- Create value for themselves and the society.
- Re arded ith proft if it succeeds.
Entrepreneur is an individual ho establishes and manages a business for the main purpose of proft and
gro th. IS A PERSON WHO SEES AN OPPURTUNITY IN THE MARKER, GATHERS RESOURCES, AND CREATES
AND GROWS A BUSINESS VENTURE TO MEET THESE NEEDS. HE OR SHE BEARS THE RISK OF VENTURE AND
IS REWARDED WITH PROFIT IF IT SUCCEEDS.
- Innovatve behavior and employs strategic management practces in the business.
- Characteristcs: Innovaton, opportunity recogniton and gro th in a business.
Important aspects of entrepreneurship and the entrepreneur:
Step 1: Identfying an opportunity.
Step 2: Innovaton and creatvity.
Step 3: Getng resources.
Step 4: Creatng and gro ing a venture.
Step 5: Taking risk.
Step 6: Being re arded.
Step 7: Managing the business.
Small business is any business that is independently o ned and operated, but is not dominant in its feld
and does not engage in any ne marketng or innovatve practces.
A small business is defned in qualitatve and quanttatve terms.
In terms of the qualitatve criteria, hich relate to the o nership structure of the business, it must:
be a separate and distnct business entty
not be part of a group of companies
include any subsidiaries and branches hen measuring the size
be managed by its o ners
Be a natural person, sole proprietorship, partnership or a legal person, such as a close corporaton
or company.
The quanttatve criteria classify businesses into micro, very small and medium, using the follo ing
guidelines in respect of diferent sectors of the economy:
, Total full-tme paid employees
Total annual turnover
Total gross asset values (excluding fxed property)
Entrepreneurial Ventures are businesses in hich the principal objectves are proftability and gro th.
Three characteristcs distnguish the entrepreneurial venture from the small business:
1. Innovaton.
Entrepreneurial ventures thrive on innovaton, be it technological innovaton, a ne product, or
organizatonal structures.
Small business is usually involved in delivering an established product or service.
2. Potental for Gro th.
Entrepreneurial venture is in a positon to create its o n market.
The small business operates in an established industry , is unique only in terms of locality, and operates
ithin a given market.
3. Strategic objectves
Entrepreneurial ventures set objectves in relaton to:
-market targets -market development
-market share -market positon
Small business objectves seldom go beyond survival, sales and proft.
A Model for Entrepreneurial development
This model demonstrates ho variables afect entrepreneurship.
INNOVATION
MANAGEMENT 214
Entrepreneurship
A South African Perspective
Stellenbosch University
, Chapter 1:
The Nature and development of entrepreneurship
The Economic Impetus of Entrepreneurship
The state of economy is determined by the type of business (small, micro etc).
GDP (Real gross domestc product) is the value of all producton ithin a country’s geographical
boundaries, it is used to measure the state of the economy (gro ing or declining)
- GDP determines the economic gro th rate.
Entrepreneurship has a higher stake in the employment industry than meets the eye. Best
employment opportunity that exists in South Africa.
No gro th in the economy equals less job opportunites.
The Development of Entrepreneurship Theory
The authors defne the economic and behaviourist perspectves of entrepreneurship
as follo s:
Economic perspectve:
Detectors of opportunites
Venture creaton
Risk taking
Proft
Innovaton
Tolerance for ambiguity
Behaviourist perspectve:
Max Weber: He identfed the value system as a fundamental element in explaining
entrepreneurial behavior. He vie ed entrepreneurs as innovators.
David C. McClelland: An entrepreneur is someone ho exercise control over producton that is not
just his personal consumpton.
Period Topics Authors and researchers
1.What entrepreneurs do 1700 From an economic perspectve Cantllon, Say, Schumpeter.
– (1950)
2.Who entrepreneurs are 1960 From an behaviourist Weber, McClelland, Roter. De
– (1980) perspectve Vries.
3. What entrepreneurs do From a mgmt. science Drucker, Mintzberg.
1980- perspectve
4. What support is needed by From a social perspectve, Gartner, Welsh, Bygrave,
entrepreneurs 1985- including economists Reynold.
, 5.What entrepreneurial From an entrepreneurship Timmons, Vesper, Brockhaus.
actvites are, and hat perspectve
competencies are requires to
perform them 1990-
Defning the Concepts of Entrepreneurship, the Entrepreneur, Small Businesses and
Entrepreneurial Ventures
Entrepreneurship is the emergence and gro th of ne businesses.
- Cause changes in the economic system through innovatons of individuals ho respond to
opportunites in the market.
- Create value for themselves and the society.
- Re arded ith proft if it succeeds.
Entrepreneur is an individual ho establishes and manages a business for the main purpose of proft and
gro th. IS A PERSON WHO SEES AN OPPURTUNITY IN THE MARKER, GATHERS RESOURCES, AND CREATES
AND GROWS A BUSINESS VENTURE TO MEET THESE NEEDS. HE OR SHE BEARS THE RISK OF VENTURE AND
IS REWARDED WITH PROFIT IF IT SUCCEEDS.
- Innovatve behavior and employs strategic management practces in the business.
- Characteristcs: Innovaton, opportunity recogniton and gro th in a business.
Important aspects of entrepreneurship and the entrepreneur:
Step 1: Identfying an opportunity.
Step 2: Innovaton and creatvity.
Step 3: Getng resources.
Step 4: Creatng and gro ing a venture.
Step 5: Taking risk.
Step 6: Being re arded.
Step 7: Managing the business.
Small business is any business that is independently o ned and operated, but is not dominant in its feld
and does not engage in any ne marketng or innovatve practces.
A small business is defned in qualitatve and quanttatve terms.
In terms of the qualitatve criteria, hich relate to the o nership structure of the business, it must:
be a separate and distnct business entty
not be part of a group of companies
include any subsidiaries and branches hen measuring the size
be managed by its o ners
Be a natural person, sole proprietorship, partnership or a legal person, such as a close corporaton
or company.
The quanttatve criteria classify businesses into micro, very small and medium, using the follo ing
guidelines in respect of diferent sectors of the economy:
, Total full-tme paid employees
Total annual turnover
Total gross asset values (excluding fxed property)
Entrepreneurial Ventures are businesses in hich the principal objectves are proftability and gro th.
Three characteristcs distnguish the entrepreneurial venture from the small business:
1. Innovaton.
Entrepreneurial ventures thrive on innovaton, be it technological innovaton, a ne product, or
organizatonal structures.
Small business is usually involved in delivering an established product or service.
2. Potental for Gro th.
Entrepreneurial venture is in a positon to create its o n market.
The small business operates in an established industry , is unique only in terms of locality, and operates
ithin a given market.
3. Strategic objectves
Entrepreneurial ventures set objectves in relaton to:
-market targets -market development
-market share -market positon
Small business objectves seldom go beyond survival, sales and proft.
A Model for Entrepreneurial development
This model demonstrates ho variables afect entrepreneurship.
