ENT300 Chapter 1

THEORIES &CONCEPTS ON ENTREPRENEURSHIP

THEORIES & CONCEPT OF ENTREPRENEURSHIPCHAPTER 1ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPTHEORIES & CONCEPTS OF ENTREPRENEURSHIP Session Objectives: At the end of the session, students should be able to;understand the various theories and concepts on entrepreneurshiphave a deeper understanding of the discipline of entrepreneurshipENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPentrepreneurENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPTHE EVOLUTION OF ENTREPRENEURSHIP THEORY Definition of an Entrepreneur :The term entrepreneur is a French word first coined by Richard Cantillon.An entrepreneur is a person who undertakes to do a job Richard Cantillon (1755). In Malaysia the term usahawan is used for entrepreneur.ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPTHE EVOLUTION OF ENTREPRENEURSHIP THEORY Definition of Entrepreneurship:Entrepreneurship involves not only the process that leads to the setting up of a business entity but also the expansion and development of an on going concern. The study of entrepreneurship is concerned with the entrepreneurial behavior, the dynamics of business set up and expansion and development.ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPTHE EVOLUTION OF ENTREPRENEURSHIP THEORYAdam Smith (1776) - An entrepreneur is a person who acts as agent in transforming demand into supply.Jean Babtiste Say (1803) - An entrepreneur is a person who shifts resources from an area of low productivity to high productivity. ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPTHE EVOLUTION OF ENTREPRENEURSHIP THEORYJohn Stuart Mill (1848) - An entrepreneur is a prime mover in the private enterprise.The entrepreneur is the fourth factor of production after land ,labor and capital.Carl Menger (1871) - The entrepreneur acts as an economic agent who transforms resources into products and services.The entrepreneur transforms and gives added value. ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPTHE EVOLUTION OF ENTREPRENEURSHIP THEORYJoseph Aloysius Schumpeter (1934) - An entrepreneur is an innovator. The economy moves through leaps and bounds and the prime mover is the entrepreneur through the process of creative destruction.Alfred Marshall (1936) - The process of entrepreneurship or business development is incremental or evolutionary . It evolves from sole proprietorship to a public company. ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPTHE EVOLUTION OF ENTREPRENEURSHIP THEORYIbnu Khaldun (Abdul Rahman Mohamed Khaldun) - The entrepreneur is seen as a knowledgeable individual and is instrumental in the development of a city-state where enterprise will emerge.David McClelland - The entrepreneur is a person with a high need for achievement. This need for achievement is directly related to the process of entrepreneurship.

ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPDEFINITION OF ENTREPRENEURSHIPIt is more than mere creation of businessEntrepreneurship is a process of innovation and new venture creation through four major dimensions individual, organizational, environmental and process. The entrepreneurship process is aided by collaborative networks in government, education and institutions. ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPDEFINITION OF ENTREPRENEURSFunctional definition of entrepreneurs offers the following definition:Entrepreneurs are individuals who actively form or lead their own business and nurture them for growth and prosperity.ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPTHE IMPORTANCE OF ENTREPRENEURSHIP TO MALAYSIAN ECONOMYEntrepreneurship is the symbol of business steadfastness and achievement. Entrepreneurial revolution is critical to economic growth. Entrepreneurship may affect our future in many ways:Innovative creation of opportunityExample: Portable phones linked to faxes and laptop will turns cars, train, and airport terminal into offices.

ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPTHE IMPORTANCE OF ENTREPRENEURSHIP TO MALAYSIAN ECONOMYEntrepreneurship not only affect our lives through innovation but represent the working future for many of us due to lays off by large organization and shrinking of job opportunities for graduates.

Entrepreneurship is synonymous to creation of new venture and small businesses. SMIs have been important contributors to local economic growth.

ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPTHE IMPORTANCE OF ENTREPRENEURSHIP TO MALAYSIAN ECONOMYd.The entrepreneurial SMIs provide services that the large corporation has neglected or lack of economy of scale for the large corporation to serve.

e.Contribution of SMIs to Malaysian Economy - In Malaysia the SMIs employed 90% of the total labor force in manufacturing sector and contributed to about 26% of total value added in the sector.

ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPISLAMIC ENTREPRENEURSHIP ISLAMIC ENTREPRENEURSHIP FOCUS ON EIGHT PRINCIPLES OF THOUGHTS :-

Entrepreneurship is an integral parts of Islamic religion.By virtue of human nature , the Moslem entrepreneurs are khalifah and have the reponsibilities develop prosperity and sees business as part of ibadah or good deed.Motivation success in Islam is not merely measured by the end result but also the way and means of achieving them.Ibadah business activity is part of ibadah or good deedENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPPosition of Entrepreneurship and business in Islam Islam encouraged its ummah to venture into business . Prophet Muhammad S.A.W expounded that 9 out 10 source of rizque (reski) can be found in business.

Islamic Economic System - Islamic Entrepreneurship should operate within the domain of Islamic Economic system and act as the vehicle towards global acceptance of Islamic Economic System.ISLAMIC ENTREPRENEURSHIPENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPGuiding Principles of Islamic Entrepreneurship is by the al-Quran and al-Hadith.

Entrepreneurial Ethics based on exemplary conducts of Prophet Muhammad S.A.W.

ISLAMIC ENTREPRENEURSHIPENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIP#ISLAMIC ENTREPRENEURSHIP AS AN INTEGRAL PART OF THE RELIGION

Islam is a complete way of life. There is no separation between business and religion. Islam has its own entrepreneurship culture and guiding principles based on the Al-Quran and Hadith to guide business operation .ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIP#HUMAN NATURE (The fitrah of human being)By virtue of the human nature, the person must firstly be a Muslim, then an entrepreneur. He has the responsibility to perform ibadah and be a khalifah. Muslim entrepreneur should search for Gods blessings above all other factors. A Muslim entrepreneur perform business not solely for profit, but above all, to fulfill the fardhu kifayah.ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIP#MOTIVATIONWhat motivates Muslim entrepreneurs? SUCCESSMost entrepreneurs have the desire to achieve successful business venture. The successful path and means for achieving success for Muslim entrepreneurs are unique. Success in Islam is not merely measured by the end result, but also the means and ways of achieving them.ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPSUCCESS FORMULA BY AL-QURTHUBI Halal livelihood that are in accordance to what is being outlined by Allah SWT and syariah. Qanaah be pleased and thankful with ones earning Taufiq-Asking for the blessing of Allah in proportion to ones expectation Saadah -Spiritual happiness Jannah Worldly success should act as the bridge to the ultimate success in the life hereafter (heaven).ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIP Stage of Knowledge Stage of Taubat or repentence Stage of Temptation Stage of Obstacles Stage of Motivation Stage of Imperfections Stage of Praise and ThankfulnessSEVEN STEPS TOWARDS A SUCCESS IN LIFE ACCORDING TO IMAM AL-GHAZALIENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIP#IBADAHIn Islam, involving in business is part of ibadah through the fulfilment of fardhu kifayah.ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIP#ISLAMIC ECONOMIC SYSTEMIslamic Entrepreneurship should be in the framework of Islamic Economic System and should assist in establishing the Islamic Economic SystemENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPPOSSESSION OF WEALTH IS ALLOWED BASED ON THE FOLLOWING PRINCIPLES:- Allah s.w.t is the absolute owner of wealth Allah created wealth in abundance and sufficient for all Wealth is created for mankind Wealth is entrusted to mankindENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIP#GUIDING PRINCIPLES OF ISLAMIC ENTREPRENEURSHIPGuidelines for Islamic Entrepreneurship and business activities are wide and comprehensive based on Al-Quran and Al-Hadith.ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPMUSLIM ENTREPRENEURSHIP ETHICS To prevent laziness To eradicate fear To search for legitimate ventures To avoid forbidden sources of income and property To show gratitude and thankfulness of whatever has been acquired To grow and develop capital and profit To diversify business ventures To avoid greedinessENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPTHE ETHICAL BEHAVIOR OF MUSLIM ENTREPRENEURSHIP To avoid malicious behavior To avoid squandering To avoid stinginess To pay alms (zakat) Trustworthy To pray consistently Tawakkal Patience QanaahENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIP#EXEMPLARY CONDUCTS OF GOOD MUSLIM ENTREPRENEURS DURING THE PROPHET MUHAMMAD S.A.W REIGNAvoid using influence for self interest Afraid of accumulated wealth Leadership qualities in all aspects Practice moderate way of lifeENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIPPOSITION OF BUSINESS AND ENTREPRENEURISLAMIC ENTREPRENEURSHIP MODELIslam Proposed(Business Venture)Allah Prepared(Facilities)Islam Outlined(Rules and Regulation)Allah Promised(Reward)EXAMPLE

EXAMPLEENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIP

ANY QUESTIONS?ENT/ETR300 FUNDAMENTALS OF ENTREPRENEURSHIPTHEORIES & CONCPET OF ENTREPRENEURSHIP