MGT 601 SME MANAGEMENT Lesson 03 The Role

MGT 601 SME MANAGEMENT Lesson 03 The Role of Entrepreneurship in SMEs

Chapter Learning Objectives This lecture will define the ¡ modern concepts of enterprise ¡ entrepreneurship ¡ relationship between an enterprise and an entrepreneur ¡ SMEs advancement with entrepreneurship

History ¡ ¡ “Entrepreneur” is a basically French word. An Irish-French economist Richard Cantillon identified the first definition of entrepreneur function in the mid-18 th century to mean, a person who is “uncertainty bearer” or “a person who is willing to help launch a new venture or enterprise and accept full responsibility for the outcome”.

Definitions-Entrepreneur: is an owner or manager of a business enterprise who takes risks or makes money through risk and initiative. The famous economist Joseph Schumpeter defined theory of entrepreneurship with a new perspective and regarded the entrepreneur as an innovator who has the potential of doing things in a new way.

Definitions-Entrepreneur…. . ¡ The concept of entrepreneur was referred to a generic type of operator who bought at fixed prices in order to sell at prices, which were uncertain at the time of purchasing.

Definitions-Entrepreneurship: The act of being an entrepreneur, which can be defined as "one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods". According to Frank H. Knight (1921) and Peter Drucker (1970) entrepreneurship is about taking risk.

Definitions-Entrepreneurship ¡ Entrepreneurship was defined by Cole (1959), “a purposeful activity (including an integrated sequence of decisions) of an individual or group of associated individuals who undertake to initiate, or organize a profit oriented business unit for the production or distribution of economic goods or services”.

Definitions-Entrepreneurship ¡ ¡ In the year 1959 her Bison and Meyers replaced the terms with “management” and “organization” for entrepreneurship. According to Reggie Aggarwal and Mark Esposito; Entrepreneurship is a way of life. It is a driving force that compels you to do more, move faster, and go farther than anyone else, even in the face of high risk and uncertain outcomes.

Entrepreneurship Role ¡ The entrepreneurship played a very vital role in the small and medium sized industries. The new innovations, courage to face the risk of uncertainties and qualities of entrepreneur to act as a leader gave rise to more than seventy percent of new innovations and new combination of skills like Microsoft, Yahoo, and Linux etc.

Characteristics of Entrepreneurs ¡ According to Schumpeter, an entrepreneur characteristically innovates, introduces new technologies, increases efficiency, productivity, or generates new products or services.

Characteristics of Entrepreneurs…. . ¡ The most significant influence on an individual's decision to become an entrepreneur is workplace peers and the social composition of the workplace. Entrepreneurs also often possess innate traits such as extroversion and a propensity for risk taking.

Characteristics of Entrepreneurs… Characteristics profile of entrepreneur ¡ Need for achievement ¡ Desire for Responsibility ¡ Preference for Moderate Risk ¡ Perception for the Probability of Success

Characteristics of Entrepreneurs…. . Future Oriented ¡ Stimulated by Feedback ¡ Energetic Activity ¡ Skill in Organizing ¡ Attitude Towards Money ¡

Qualities of an Entrepreneur ¡ The entrepreneur leads the firm or organization and also demonstrates leadership qualities by selecting managerial staff. Management skill and strong team building abilities are essential leadership attributes for successful entrepreneurs. Scholar Robert. B. Reich considers leadership management ability, and team-building as essential qualities of an entrepreneur.

Qualities of an Entrepreneur…. . Entrepreneur should have the following abilities ¡ Mental Ability ¡ Human Relation Ability ¡ Communication Ability ¡ Technical Knowledge ¡ Decision Making Ability ¡ Conceptual Ability

SMEs advancement with entrepreneurship ¡ Given entrepreneurship's potential to support economic growth, it is the policy goal of many governments to develop a culture of entrepreneurial thinking. This can be done in a number of ways by integrating entrepreneurship into education systems, entrepreneurial centers in institutions, legislating to encourage risk-taking, and national campaigns.

SMEs advancement with entrepreneurship…… Small business is often regarded as entrepreneurship-driven. There are many reasons for this, e. g. ¡ The entrepreneur as a person plays a much more vital role than in large firms and ¡ entrepreneurial spirit is not weakened by considerable hierarchies (which is not in SMEs) and can more easily pass through the firm.

SMEs advancement with entrepreneurship…… ¡ The purpose of to explore the many dimensions of new venture creation and growth and to foster innovation and new business formations in independent and corporate settings.

Entrepreneurship promotion SME policy makers who work to promote entrepreneurship and advance the performance of small businesses by reviewing issues and diffusing best practice policies in such areas as: business environment, globalization, financing, innovation, training, access to markets, taxation, e-business and women's entrepreneurship.

Conclusion At the end of this chapter, you will be able to understand the terms entrepreneurship and entrepreneur. Also, entrepreneur role, characteristics and qualities. In next chapter we will define kinds of entrepreneur.

Thank you Happy Learning, Keep Learning