1

UNIT I
OVERVIEW OF ENTREPRENEURSHIP

Introduction

Entrepreneurship is a way of life. Being entrepreneurial means being creative

enough to identify, start and maintain a viable and profitable business, particularly a small
enterprise.

Most people spend a large part of their lives working for somebody else. Several of
them eventually rise to positions of wealth and power, but the rest languish in
unchallenging and low-paying jobs. However, there is a selected few who strikes it out on
their own. Rather than working for others, they put up their own business and find
themselves successful. Thus, they considered entrepreneurship as a rewarding endeavor.

On the other hand, the government encourages people to become employers rather
than mere employees. This is because the government considers the vital role of
entrepreneurship in economic development. And in order to support this activity, the
government enacted several laws and policies.

Aside from being creative, the entrepreneur possesses ten important competencies
needed to successfully operate the business and to overcome various challenges and
problems. An emerging concept called intrapreneurship is also a growing concern in the
corporate world. This is necessary so that the organization will remain competitive and
profitable.

Entrepreneurship has various roles in supporting economic development. With

these positive effects, the entrepreneur needs to balance the operations of the enterprise
by not only focusing on the profits but also on its responsibilities to the society and to the
other stakeholders.

At the end of the unit, the student is expected to:

1) state the nature of entrepreneurship;

2) recognize the development of entrepreneurship;
3) define entrepreneurship and entrepreneur;
5) describe the personal entrepreneurial competencies;
6) recognize the ethics and social responsibilities of entrepreneurs;
8) explain the role of entrepreneurship in economic development;
9) describe the emerging trends and issues in entrepreneurship
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LESSON 1 NATURE AND DEVELOPMENT OF ENTREPRENEURSHIP

During the ancient times, people were nomadic. They transferred from one place to
another to satisfy their needs. As they developed their way of life, they learned or acquired
necessary skills for settling down. This early settlements was called early civilizations.

In Babylon for instance, the people developed their skills in business. The trade
between the people was characterized as lively buying and selling. The seafarers were also
enterprising people who sailed to other places to trade their goods. With this, early cities
were built up.

In like manner, the Black haired people chose to settle down in China because they
believed that the place had highly improved forms of trade, government, art, and science.

Man's mobility therefore not only facilitated in the flourishing of trade but also
facilitated in the widespread sharing of knowledge. It is evident that even during the early
times, entrepreneurship had already been observed since people made use of their skills to
develop and to improve their way of life. Although there were new processes that had
been introduced, still they seek for the better ones. This, however, does not limit other
people to continue looking for other ways to improve more their lives.

Some notable persons and their works in entrepreneurship history

Richard Cantillon (1697-1734). Irish economist of French descent, introduced the

term entrepreneur who organizes and assumes the risk of a business in return for the
profits. According to Cantillon’s original formulation, the entrepreneur is a specialist in
taking on risk. He “insures” workers by buying their products (or their labor services) for
resale before consumers have indicated how much they are willing to pay for them. The
workers receives an assured income while the entrepreneur bears the risk caused by price
fluctuations in consumer markets.

Joseph Schumpeter (1883-1950). Took a different approach, emphasizing the role

of innovation. According to Schumpeter, the entrepreneur is someone who carries out
“new combinations” by such things as introducing new products or processes, identifying
new export markets or sources of supply, or creating new types of organization.
Schumpeter presented an heroic vision of the entrepreneur as someone motivated by the
“dream and the will to find a private kingdom”; the “will to conquer: the impulse to fight ,
to prove oneself superior to others”; and the “joy of creating.”

Frank Knight (1885-1972). Refined Cantillon’s original formulation and distinguished

between risk, which is insurable and uncertainty, which is not. Risk relates to recurring
events whose relative frequency is known from past experience, while uncertainty relates
to unique events whose probability can only be subjectively estimated.
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Peter Drucker (1970). For him, entrepreneurship is about taking risk. The
entrepreneur is the kind of person that is willing to put his career and financial security on
the line for an idea, spending his time and capital in an uncertain venture.

Pinchot (1985) coined the term intrapreneurship to describe entrepreneurial – like

activities inside organization and government.

Theories that explain how economies grow.

This topic is needed to determine what theory supports entrepreneurship as aid to

economic development. The theories about economic development are classified into
three (3):

1. theories which view economic growth as a natural and inevitable process ( general
explanations of economic development)
2. theories that explain economic development as a rational process brought about
when men respond to opportunities (economic explanations of development)
3. socio-psychological theories

General Explanations of Economic Development

1. Economic development proceeds according to a master plan or "Law of Nature".

There are two (2) proponents under this theory, one is Spengler. According to
Spengler, economic development is likened to a living organism that grows, lives
and dies. Economic development is also a natural thing. Herbert Spencer offers
similar view about this. He said that society is like an organism constantly in the
process of evolution. As it evolves, it increases in complexity since new institutions
become increasingly specialized.

2. Economic development is brought about by an "invisible hand". Adam Smith said

that while individuals seek to work for their own personal goals, they unknowingly
promote what is best for all.

3. Economic development is brought about by "cultural diffusion". Anthropologists

introduced the idea that over the ages and across the years, societies have been
involved in different social or cultural "experiments". For example is the evolution
of machines. Man can now produce more and at the same time has more energy
left for other productive activities. Because of cultural diffusion, hence there is what
we call transfer of technology. As one culture that has began to use a new
technique interacts with another that has not been exposed to the technique. The
former is able to influence the latter to discard old ways and adopt new ones.

4. Racial heritage determines the economic development of people.

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5. Climatic conditions determine the energy level of people and, in turn, its rate of
development. Ellsworth Huntington concluded that extremes of temperatures as
well as high fluctuation of climatic conditions would have a detrimental effect on the
energy levels of people. An average temperature is the most stimulating climate.

6. The challenge of the natural environment is responsible for the rise of civilization. A
country for instance that has an absolute advantage would really have a more
developed economy over the others.

Economic Explanations of Development

1. Technology improvements and division of labor lead to development. Adam Smith

believed that the invention of better machines and equipment leads to an increase in
productivity which, together with specialization or division of labor makes economic
growth possible. The introduction of assembly lines, for instance, permits division of
labor and a more efficient production since there is a decrease on the rate of
wastage.

2. Population changes affect development. David Ricardo believed that increase in

population eventually lead to stagnation or a final stationary state of the economy.
Ricardo illustrated that when population increases, there is more demand for food
which in turn leads to an unproductive land (overused). With this, prices of finished
products increase and so employees would seek for higher salaries. This results to
lower profits on the part of the business.

In contrast to this point of view, John Maynard Keynes pointed out that capitalists or
entrepreneurs are most likely to invest their resources when there is demand for the
community. With increasing demand by an increasing population, capitalists would
most likely invest more.

3. Entrepreneurship is an important factor in development. For production to take

place, someone has to mobilize all resources of the enterprises.

Socio-Psychological Theory

Economic growth is a product of individual human behavior - a person's decisions,

thoughts and actions. Economic growth takes place because enterprising individuals seek
to fulfill their need for achievement. David Mc Clelland concluded that achievement
motive contributes most for individuals to do economic activities. Child rearing contributes
to this since early independent training of parents to their children further leads to a higher
need for achievement.

Categories of Enterprises
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In a bid to bolster financial support for small business, President Arroyo on signed
into law the Magna Carta for Micro, Small and Medium Entrepreneurs (MSMEs) or
Republic Act 9501.

The law aims to strengthen financial support to small businesses by addressing the
problem of lack of capital and access to credit and is part of the priority legislative agenda
crafted by the Legislative Executive Development Advisory Council (LEDAC) for the
remaining session days of Congress.

RA 9501 requires banks and lending institutions to allocate at least eight percent of
their loan portfolio to micro and small enterprises.

The present law requires only a six percent minimum allocation for micro and small
enterprises and a minimum of two percent for medium enterprises.

It also adjusted the definition of MSMEs:

Firms will now be considered as micro enterprises when they have total assets of
not more than P3 million, up from the previous threshold amount of P1.5 million.

Small enterprises will be those with total assets of P3 million to not more than P15
million.

Medium enterprises are those with total assets of P15 million to P100 million, from
the previous threshold amount of P60 million. (Arroyo signs MSME law; redefines micro,
small traders
05/23/2008 | 07:23 PM http://www.gmanews.tv/story/97000/Arroyo-signs-MSME-law-
redefines-micro-small-traders)

The figure below shows that majority of the businesses that operate in the country
are micro, small and medium enterprises. Eighty-eight per cent (88.45%) are micro
enterprises.
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MSMEs help assure a more equitable distribution of income. It disperses economic

activities to the countryside and are a potent force in the war against poverty. Undeniably
they are good sources of income for the government. The figure below shows that MSMEs
provide the most employment for the people.

The Government and Entrepreneurship

Classifying enterprises is very important because the government will be able to

identify the specific services each classification requires. The government has to make sure
that it has programs to assist all firms that need help. Some firms however, need more
assistance than the others do.

The government plays a vital role in entrepreneurship development. It sets up

economic and social infrastructures that aid in the smooth flow of commerce and trade.
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The government also provides policies and infrastructures to speed up the growth of the
economy.

Government Laws that Support Micro, Small and Medium Enterprises

1. RA 9178 or the Barangay Micro Business Enterprises (BMBE) Act of 2002. It

is an act to promote the establishment of barangay micro business
enterprises, and to provide incentives and benefits to entrepreneurs. A BMBE
is defined as any business enterprise engaged in production, processing or
manufacturing of products, including agro-processing, as well as trading and
services, with total assets of not more than P3 million.

Incentives of BMBE’s under the Act:

 Exemption from income tax for income arising from the operations of the
enterprise;
 Exemption from the coverage of the Minimum Wage Law;
 Special credit window; and
 Technology transfer, production and management training and marketing
assistance.

2. RA 6977 (amended by RA 8289) or the Magna Carta for Small Enterprises. It

is an act to promote, develop, and assist small and medium scale enterprises
through the creation of a Small and Medium Enterprise Development (SMED)
Council. The SMED Council is an interagency body established on January 4,
1991. The Council is attached to the DTI Several agencies are involved in the
SMED council namely: Bureau of Domestic Trade Promotion (BDTP); Bureau of
Small and Medium Enterprises Development (BSMED); Philippine
International Trading Corporation (PITC); Philippine Trade and Training Center
(PTTC); Product Development and Design Center of the Phils (PDDCP);
Regional Operations Group (ROG); Small Business Guarantee Finance
Corporation (SBGFC) and Trade and Industry Information Center (TIIC).

The following are the specific objectives of the SMED Plan:

1. To increase the share of small and medium segments from 8.7% to

10% by fortifying micro enterprises into small businesses and
generating new ones.
2. To strengthen 20 strategic SME centers all over the Philippines and
3. To intensify awareness of government initiatives to provide assistance
to SMEs.
3. RA 3883 or Business Name Registration. It protects an enterprise
guaranteeing exclusive use of its registered name and goodwill.
4. Fair Trade Laws. The government defines operating boundaries within which
businesses can carry out their affairs while at the same time protecting the
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interest of consumers. The government can close the firm down when it is
proven that something harmful is being done to the public.
5. Decentralization and localization. With this, there has been an increase in
the participation of local government in crucial business activities. The
Department of Trade and Industry (DTI) for instance implements various
efforts such as consolidating business registration requirements, buyer-
supplier matching, streamlining financial requirements of government
financing institutions (GFIs) and other similar initiatives toward reducing the
cost of doing business. The Department of Interior and Local Government
(DILG) provides one-stop shops to address complaints and other concerns
about the local government. Both aforementioned agencies offer business
counseling as well as service facilities such as fax, computer and the like
through SME centers.

Programs and Services for Micro, Small and Medium Enterprises

Programs for the promotion, expansion, and growth of small and medium industries
are grouped into three broad categories namely financial assistance, technology/production
assistance, marketing assistance and training assistance.

Financial Assistance

1. SULONG (SME Unified Lending Opportunities for National Growth)

Program. This is the financing initiative of the SMED Plan. It supports the
One Town, One Product, One Million Pesos Program. OTOP is a priority
program of President Gloria Macapagal Arroyo to promote
entrepreneurship and create jobs. OTOP – Philippines encourages the
country’s MSMEs to produce and market distinct products or services using
indigenous raw materials and manpower.
2. Industrial Guarantee and Loan Fund (IGLF). This loan program meets the
financing needs of collateral-deficient small and medium enterprises.
Viable economic projects in need of capital may avail of the IGLF assistance
under liberalized terms and procedures, such as collateral short guarantee
coverage of up to 25% and credit risk guarantee coverage of up to 60%.
3. Guarantee Fund for Small and Medium Enterprises (GFSME). The GFSME
encourages banking institutions to lend to small and medium scale agri-
based entrepreneurs. The fund supports the participating financial
institutions by assuming up to 85% of the total risk involved in lending
small and medium enterprises.
4. Export Industry Modernization Program (EIMP). The EIMP of the
Technology and Livelihood Resource Center (TLRC) is designed to respond
to the needs of the export industry by providing loan funds to small and
medium businessmen in the preparation and implementation of
modernized projects.
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5. Agro-Industrial Technology Transfer Program (AITTP). It is a program of the

Philippine Government managed by the TLRC and funded by Japan
Overseas Economic Cooperation Fund (OECF). Eligible projects for the
program are financially viable agri-based projects that contribute to
technology transfer particularly for production and processing for the
export market.
6. Urban Livelihood Financing Program (ULFP). It is organized and funded in
1981. It is also implemented for Metro Manila and sub-urban areas by the
TLRC.
7. DBP Agri-Small and Medium Industries lending Program (A-SMILE). It aims
to infuse much required financial resources into countryside development.
It is particularly concerned with accelerating the growth of agricultural and
small and medium-scale industries.
8. Bagong Kilusang Kabuhayan at Kaunlaran Program. (B-KKK). It provides a
new perspective in the delivery of livelihood services. This is a recognized
program of the previous KKK. Its efforts are directed to create livelihood
opportunities for the economically depressed sectors by encouraging and
supporting labor-intensive projects.

Balikatan sa Kabuhayan Program. Launched in October 1986, this program

aims to deliver livelihood assistance to small business enterprises and
export firms. A technology information is offered to its clients.

Kabuhayan sa Nayon Program. This program aims to promote the

establishment of labor-intensive projects of small and micro enterprises in
the countryside. This is being undertaken jointly with the private and
public banking institutions.

 Anchor chain type. This consists of an existing established anchor firm.

Smaller business entities are linked to the anchor firm under a
subcontracting or contract-growing arrangement. Loans up to Php 1M
may be granted to the anchor firm, the smaller entities or both.
 Stand alone type. This consists of any new or existing livelihood
enterprise not falling under the anchor chain type.
9. Agricultural Loan Fund (ALF). The ALF program is designed by the Central
Bank to supplement traditional sources of farm credit to boost
productivity, to generate employment and to raise farm income. This fund
provides short-term, medium and long-term credit to finance eligible
agricultural and agri-business projects.
10. DTI "Tulong sa Tao" Program (TST). It is developed in line with the national
objective of developing programs that generate employment
opportunities.

Technical/Production Assistance. Assistance in the areas of planning, development,

programming, monitoring and evaluation of services and technical assistance is
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continuously being provided to SMEs through the various development and implementing
office of the Department of Trade and Industry, governmental and non-governmental
agencies and various external organizations, among others.

1. Agencies of the Department of Trade and Industry

a. Bureau of Small and Medium Business Development (BSMBD). This

Bureau formulates and monitors development programs for private
institutions involved in assisting trade and industry sector, delivery
mechanisms and linkage for marketing, financial and sub-contracting
services.
b. Bureau of Product Standards (BPS). Some of its responsibilities are the
following: (1) It studies and/or does research on the various reference
materials to be used as basis for the start of whatever analysis or
evaluation is demanded by the products under examination or
investigation. (2) It establishes standards for all products of the
Philippines. (3) It ensures the manufacture, production and distribution
of quality products for the protection of consumers. (4) It maintains
consultative liaison with the International Organization for
Standardization, Pacific Area Standards Congress, and other
international standards organization.
c. Bureau of Patents, Trademarks and Technology Transfer. It registers
trademarks, trade names and other marks of ownership.
d. Board of Investments. This agency is responsible for the coordination,
formulation and implementation of short, medium and long-term
industrial plans.
e. Cottage Industries Technology Center (CITC). This provides technical
training.
f. Regional Operations Group (ROG). It serves as the implementing arm of
the DTI. It operates in 16 regions and 79 provinces nationwide.
2. Other Governmental and Non-Governmental Institutions
a. The Department of Science and Technology (DOST) gives financial
assistance, technical and training assistance to scientific, engineering
and technological undertakings.
b. Other research and development institutes
1. Technology and Livelihood Resource Center (TLRC). The TLRC
serves the public through the acquisition and promotion of
livelihood skills and information for Filipinos worldwide. It is
attached at the Office of the President and operates as a self-
sustaining institution with minimal subsidy from the National
Treasury.
2. National Food Authority. The NFA is envisioned to be at the
forefront in providing excellent needed services to the food
marketing industry towards global competitiveness an committed
to ensuring food security.
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3. Food and Nutrition Research Institute. The principal research arm

of the government in food and nutrition is one of the research
and development institutes of the DOST. it is mandated to define
the citizenry’s nutrition status, develop recommendations for
improvement of nutrition status, and disseminate research
findings and recommendations.
4. Packaging research and Development Center. This serves as a
venue to conduct package research and development, testing,
training, and as depository of packaging information, standards
and regulations.
5. Product Development and Design Center of the Philippines. It
promotes design as a tool for improving the quality and
competitiveness of Philippine products. it services the design
needs and requirements of SMEs.
6. UP-AYALA Technology Business Incubator. It is a joint
experimental facility on technology development and technology-
based entrepreneurship program by the University of the
Philippines and the Ayala Foundation. The partnership seeks to
create a community of innovators and entrepreneurs by providing
a facility that offers an IT-friendly environment, access to
academe research, and access to IT industry breakthroughs.

Marketing Assistance. The marketing assistance programs being developed and

implemented through the DTI are spearheaded by the following government agencies and
NGOs:

1. Agribusiness and Marketing Assistance Service. It is mandated to facilitate and

coordinate the efforts of the Department in all matters pertaining to
agribusiness development and marketing activities.
2. Bureau of Domestic Trade Promotion. Develops, strengthens and promotes
the domestic market for MSMEs. It ensures the rational, economical and
steady flow of materials to production centers and increases domestic trade
through effective marketing and efficient distribution of finished goods.
3. Bureau of Export Trade Promotion. The main concern of the BETP is the
expansion of foreign trade. It seeks to enable Philippine exporters to compete
with world-class products and services in the international market.
4. Center for International Trade Exposition and Mission. The agency organizes
efficient participation in trade fairs.
5. Market Encounter Goes to Manila (MEGMA) Foundation, Inc. A non-stock,
non-profit organization registered at the SEC. It was established primarily to
assist in the full development of the domestic market as primary market for
micro, small and medium enterprises.
6. Philippine International Trading Corporation. It undertakes both import and
export of a wide range of commodities, industrial products and consumer
goods.
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7. Philippine Shippers Council. It handles negotiations for more favorable

shipping rates.

Training Assistance

1. Asian Institute for Entrepreneurship (Asian Institute of Management). It brings

together classic, corporate, and social entrepreneurs who want to create value
and bring their organizations to higher levels of productivity, profitability and
professionalism.
2. Center for Small Entrepreneurs. It is committed to work for the development of
micro and small enterprises by providing holistic programs to enhance the
entrepreneurs’ management skills and knowledge in enterprise development.
3. Cottage Industry Technology Center. Provides production-related and skills
development training programs, technical assistance, facility servicing, and
consultation services for the country’s furniture, gifts and housewares, fine
jewelry and leather footwear industries.
4. Philippine trade training center. Designs and develops training curricula and
corresponding instructional materials, and conducts training programs for micro,
small and medium enterprises, business support organizations and the
government sector.
5. Technical Education and Skills Development Authority (TESDA). Manages and
supervises technical education and skills development in the Philippines.
6. UP – Institute for Small-Scale Industries. It is a training, research and
consultancy organization for SME development and new enterprise promotion.
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LESSON 1
SUMMARY

Entrepreneurship has been practiced even during the early times. There were
notable individuals who contributed to its development which helps us to better
understand the concept today. Entrepreneurship has been associated with economic
development. The topic on the different theories must have helped you identify what
theory supports entrepreneurship.

As entrepreneurship becomes widely accepted, efforts were made for its further
development. In the Philippines, enterprises were categorized into Micro, Small and
Medium in order to determine what needs more assistance and in what way. The
government supports entrepreneurship in various ways. It could be in the form of laws or
more specific assistance along financial, marketing or technical.
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LESSON 2
DEFINITION OF ENTREPRENEURSHIP AND ENTREPRENEUR AND THE TEN PERSONAL
ENTREPRENEURIAL COMPETENCIES

Definition of entrepreneurship

Entrepreneurship is derived from the French word entre meaning to undertake. It is

usually associated with a small enterprise operated by an enterprising person. From this
point of view, one can say that entrepreneurship is an undertaking, which is initiated and
operated by an enterprising person.

Entrepreneurship is also a process of identifying business opportunities in the

market place. It is the capacity for innovation, investment, and expansion in new markets,
products, and techniques.

Austrian economist Joseph Schumpeter's definition of entrepreneurship placed an

emphasis on innovation, such as: new products, new production methods, new markets,
and new forms of organization.

The Entrepreneur

The word entrepreneur originates from the French word, entreprendre, which
means "to undertake." In a business context, it means to start a business. The Merriam-
Webster Dictionary presents the definition of an entrepreneur as one who organizes,
manages, and assumes the risks of a business or enterprise.

Wealth is created when such innovation results in new demand. From this
viewpoint, one can define the function of the entrepreneur as one of combining various
input factors in an innovative manner to generate value to the customer with the hope that
this value will exceed the cost of the input factors, thus generating superior returns that
result in the creation of wealth.

Man is vital in the success of any business endeavor. He mobilizes resources and
makes use of his skills to look for better ways of doing things. He continuously looks for
opportunities for the improvement of the organization. When faced with problems, he
persistently looks for the best alternative to solve the problem.

The ten (10) characteristics of successful entrepreneurs (A.K.A. personal entrepreneurial

competencies)

According to McClelland and McBer, the term entrepreneurial competencies refer to

the key characteristics that should be possessed by successful entrepreneurs in order to
perform entrepreneurial functions effectively. These competencies are clustered into three:

Achievement Cluster
 15

1. Opportunity seeking. This means that he readily identifies opportunities for going
into business. He sees and acts on new opportunities. He seizes unusual
opportunities to obtain financing, equipment, land, workspace or assistance.
2. Commitment to the work contract. Once he accepts a job, he accepts full
responsibility for the satisfaction of the customer.
3. Persistence. When faced with obstacles, he takes repeated or different actions to
overcome them.
4. Risk taking. He is however a cautious risk taker because he takes moderate risks,
after assessing the advantages and disadvantages personally.
5. Demand for efficiency and quality. He acts to do things that meet or surpass
existing standards of excellence or improve on past performance. He strive to do
things better, faster, and cheaper.

Planning Cluster

6. Goal setting. He sets clear and specific short-term objectives and long-term goals.
7. Information seeking. He personally seeks information on clients, suppliers, and or
competitors and makes positive efforts in finding relevant information for the
benefit of the business. He consults for business and technical advice from experts.
8. Systematic planning and monitoring. Before making plans, the entrepreneur
gathers all the necessary data and follows a process in order to reach goals. He
monitors his activities and evaluates alternatives when problems crop up.

Power Cluster

9. Persuasion and networking. He links with other individuals, agencies and other
groups to maintain business contacts. He also uses deliberate strategies to
influence or persuade others.
10. Self-confidence. He has strong belief in his own abilities.

LESSON 2
 16

SUMMARY

Entrepreneurship is a business undertaking which involves creativity and innovation.

Behind the success of any entrepreneurial undertaking is the entrepreneur. The
entrepreneur mobilizes resources and implements various strategies to make the business
successful. To effectively discharge the functions of the entrepreneur, McClelland and
McBer identified key personal entrepreneurial competencies.

LESSON 3 ETHICS AND SOCIAL RESPONSIBILITIES OF ENTREPRENEURS

 17

Ethics and social responsibility are two important values in any entrepreneurial
undertaking. There is a very evident link between ethics and social responsibility: a socially
responsible firm should be an ethical firm and an ethical firm should be socially responsible.
To distinguish the two, corporate social responsibility is about responsibility to all
stakeholders while ethics is about morally correct behavior. (http://courseblog-
entrepreneurship.blogspot.com/2013/03/notes-ethics-and-social-responsibility.html)

Entrepreneurs behaving ethically have the following advantages over others: 1)

customers are more confident when buying goods and services from them; 2) an ethical
workplace motivates employees; and 3) ethical behavior prevents legal problems.

Ethical issues for entrepreneurs

(https://www.district205.net/cms/lib07/IL01001003/Centricity/Domain/116/Chapter_5-
W.pdf)

1. Intellectual property is artistic and industrial creations of the mind. Examples are
copyright, patent and trademark. Copyright is the exclusive right to perform,
display, copy or distribute an artistic work. A patent is the exclusive right to make,
use, or sell a device or process. A trademark is a symbol that indicates that the use
of a brand or brand name is legally protected and cannot be used by other
businesses.

So, an entrepreneur must be aware of the above concepts and be conscious on the
things they use and introduce in order not to encounter problems regarding
intellectual property.

2. A conflict of interest exists when personal considerations and professional

obligations interfere with each other. For instance, the entrepreneur need to hire an
employee and needs to choose between a relative and an outsider. The
entrepreneur may be faced with ethical issues when the relative is selected while a
more competent applicant is rejected.

3. Confidentiality involves respecting the privacy of others. The entrepreneur may be

faced with this ethical issue when information is disclosed without the consent of
the individual concerned. For instance, the entrepreneur should not divulge any
information about an employee to co-workers or family members in social
gatherings or informal communication.

Corporate social responsibility means that businesses act in ways that balance profit
and growth with the good of the society. This means that if you do good, you will do well.
For instance, treating your employees ethically like providing them with the right salary and
other compensation will lead to employee satisfaction and loyalty which are beneficial to
the successful operations of an enterprise. Entrepreneurs are responsible to the following:
1) individuals; 2) environment; and 3) community.
(https://www.district205.net/cms/lib07/IL01001003/Centricity/Domain/116/Chapter_5-
W.pdf)
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Responsibility to individuals

The entrepreneur is responsible to the following:

1. Employees. Treating employees fairly by providing safe working environment,

fair salaries, wages and other compensation and benefits.
2. Customers. Entrepreneurs need to treat customers fairly and ensure that the
amount they pay is commensurate with the goods they receive.
3. Suppliers. Entrepreneurs are responsible in dealing with their suppliers fairly by
paying them on time or adhering what was agreed upon.
4. Investors/creditors. Investors/creditors help the entrepreneur start the business
by providing additional capitalization. In return, the entrepreneur must do all his
best to run the business efficiently in order to generate income for the benefit
not only for the entrepreneur but also to investors.

Responsibility to the environment

How can the entrepreneur become responsible to the environment? Some ways are
enumerated below:

1. Sustainable design. The entrepreneur must offer products which will not harm
the environment which may result to resource depletion.
2. Alternative energy. The entrepreneur may support the use of fossil-fuel
alternatives such as solar, wind and hydrogen power whichever is applicable. In
which case, the entrepreneur helps in controlling pollution that harms the
environment.
3. Organics. The growing number of people consuming organic produce is a good
start for entrepreneurs. Offering organic produce will not only benefit the
customers but the environment as well.
4. Fair trade. This is a way of doing business based on principles of social and
environmental responsibility and promoting sustainable growth. Without proper
planning and monitoring, the entrepreneur may lead to overproduction which
may lead to overconsumption of natural resources which causes natural
depletion.

Responsibility to the community

The entrepreneur may adopt the following initiatives for the benefit of the
community:

1. Cause-related marketing is a partnership between a business and a nonprofit

group for the benefit of both. It increases sales for the business and raises
money and awareness for the nonprofit group.
2. Sponsorship is when a business sponsors a community event or service in
exchange for advertising.
 19

3. With facilitated giving, a business makes it easier for customers to contribute to

a cause.
4. Philanthropy occurs when business leaders donate money and other resources
for socially beneficial causes.
5. An in-kind donation is the gift of a good or service.

LESSON 3
SUMMARY

Ethics and social responsibility are two different words but they are so much related.
Businesses behaving ethically are socially responsible businesses. There are ethical concerns
and issues for the entrepreneur. These concerns need to be addressed in order to avoid
problems along the way. Corporate social responsibility is a way of balancing profit and
responsibility to the society. Entrepreneurs are responsible to individuals, to the
environment and to the community.

LESSON 4 ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT AND EMERGING

TRENDS AND ISSUES IN ENTREPRENEURSHIP
 20

The image below enumerates the roles of entrepreneurship in economic development:

(https://evoma.com/business-centre/7-roles-of-entrepreneurship-in-economic-
development-of-a-country)

1. Wealth creation and sharing. When entrepreneurs start their business, they invest
and mobilize resources. For instance, when they invest their money, other resources
such as labor and land are utilized, thus owners of land get income through leasing or
sale. Hired labor get compensated which results to increased consumption which will
also benefit other types of businesses. When entrepreneurs succeed in their
businesses, individuals are then attracted to invest their resources.
2. Creation of jobs. Entrepreneurs are job creators. The vast number of micro, small and
medium enterprises in the country employs a number of individuals which aids in
economic development.
3. Balanced regional development. Entrepreneurs locate their businesses in both urban
and rural areas, in cities or even in small communities. With this scattered operations,
infrastructure improvements are expected to facilitate a more efficient and effective
delivery of services.
4. Growth in GDP and Per Capita Income. The use of the various resources like land,
labor and capital add up to the national income, national product and per capita
income of the country.
5. Increase in the standard of living. Entrepreneurs improve the standard of living not
only by providing employment but also by introducing innovations that make the
quality of life better.
6. Foreign market expansion through exports. A growing enterprise definitely would
want to expand sales in a saturated market by considering operating in foreign markets
through exporting.
7. Community development. An enterprise established in a community aids in its
development. An enterprise’s need for better infrastructure for education and training,
 21

healthcare and other public services paves the way of attracting other businesses to
invest and eventually contribute to the community’s development.

Trends in entrepreneurship

Neil Patel identified the following trends in entrepreneurship

(https://thegrittifund.com/entrepreneurship-ecosystem/trends-issues-challenges/)

1. Everyone is doing it. It seems like everyone calls themselves an entrepreneur.

According to Inc, nearly a fifth of all working adults in the US are “entrepreneurs”.
The barriers to entrepreneurship are technically low. You don’t need a ton of
capital. It is generally fairly easy to go through the bureaucratic steps to be an
entrepreneurs.
2. Intrapreneurs are becoming more common. Many established companies are
promoting innovation through internal entrepreneurs. These are employees that
are allowed to work like entrepreneurs.
3. Solopreneurs are increasing. A solopreneur is an entrepreneur who runs their
business alone. They don’t have employees, but may have contractors.
Solopreneurship is rising as it’s lean, nimble, minimal, and free. For example, only
one person can run an e-commerce store at the beginning.
4. Marketers are becoming Entrepreneurs. More and more people with marketing
ability are taking up entrepreneurship. With the rise of social media, it’s
increasingly marketing ability that sells any product.
5. Hiring contract workers is the thing to do. Since it is getting more expensive to hire
and retain experienced staff, a common solution is to find term contractors. It’s a
win-win for both the contractor and start-ups/small enterprises.
6. Entrepreneurs are laser-focused on revenue. More entrepreneurs are seeing the
need to focus on revenue, first and foremost. Funding is limited. The entrepreneur
is forced to gain early viability and near instant revenue.
7. Few entrepreneurs are starting big companies. Most companies are digital. They
focus on digital technology. The ideal entrepreneurial venture now happens with a
laptop and a vision. Large scale ventures like a manufacturing plant, or a transport
company is not a popular pursuit.
8. Technology is becoming more and more disruptive. Take the examples of AirBnB
and Uber. These startups have redefined hotel industry and transportation
industry. New entrants include Virta Health, which connects diabetes patients
directly with doctors via video chat. Roadrunner Recycling that connects people
with scheduled pickups and various waste management solutions.

9. Working from home. Almost every startup is leveraging the power of remote work.
And many startups are taking that to the next level and going completely online.
Startups like Knack and Toggl are 100% virtual.
10. Marketing is getting more interactive. Twitter/Facebook is an example. Users
comment or retweet. Social media marketing is making marketing a two-way
conversation.
 22

11. Consumers are in control. You can’t manipulate or trick people into buying your
product. That just doesn’t work today. Being honest works. They can also easily give
feedback. Negative feedback instantly ruins your reputation.
12. The Internet of Things is here. Internet of Things (or IoT) connects devices to the
Internet to open up new possibilities for using those devices. Apps to control those
devices through IoT are in demand. Data from wearable devices or even your
fridge.
13. Automation is rising. Chatbots and digital assistants are increasing. They are also
getting intelligent. Some even answer like a human would do.

Issues and challenges in entrepreneurship

Entrepreneurs face a lot of issues and challenges as they operate their businesses.
The following are some of these challenges: (https://www.deluxe.com/sbrc/financial/top-
10-challenges-faced-entrepreneurs-today-solved)

1. Cash flow management. Cash flow is essential in every entrepreneurial activity.

However, entrepreneurs sometimes experience a delay in the payments of goods
and services that is why they face a dilemma in paying the bills.
2. Hiring employees. The hiring process is a rigorous and tedious activity that takes
much of the entrepreneur’s time. The process becomes a challenge when the
entrepreneur will not be able to hire the most competent and qualified employee
just because of unattractive compensation package.
3. Time management. The entrepreneurs may have conflicting roles and so it may
be hard to manage their time.
4. Delegating tasks. The entrepreneur sometimes is hesitant to delegate tasks
because of possible delays in outputs.
5. Choosing what to sell. Entrepreneurs may be faced with keen competition and
therefore needs to find their own niche. This becomes a challenge when the
entrepreneur is hard up in doing such.
6. Marketing strategy. To effectively compete, the entrepreneur needs to adopt
effective marketing strategies. This becomes a challenge when the entrepreneur
becomes confused on what marketing strategy is best suited for the business.
7. Capital. When the entrepreneur wants to grow or expand the business but lacks
capital to do it.
8. Strapped budget. Although the business has good cash flow management, lack of
budget in marketing the business could pose a challenge to the entrepreneur.
9. Business growth. The entrepreneur might think the business is not growing
because of the thought of lack of focus to a specific area of the business. The
entrepreneur who used to “wear all the hats” is the one who experience this
situation.
10. Self-doubt. Self-doubt happens when business operations do not jibe with what is
expected. When something goes wrong in the business, self-doubt creeps in.
 23

Aside from the above issues and challenges, Neil Patel also identified other issues
and challenges: (https://thegrittifund.com/entrepreneurship-ecosystem/trends-issues-
challenges/)

11. Difficulty Keeping up with innovations or being the visionary. With the large
number of competitors emerging, it is becoming increasingly difficult to keep up
innovating. On top of that, investors want a better product. Knowing when to
change is becoming key.
12. Harder navigating regulation and compliance. More and more regulations and
bureaucratic red tapes have emerged. Many startups are bringing in a consultant
to help with these areas rather than trying to understand the complexities
themselves.
13. Exploding data. With 90% of the world’s data was created in the past two years
and managing, keeping safe and extracting insights from the ever-increasing
amounts of data your company produces is becoming difficult.
14. Maintaining reputation is getting tougher. With sites like Yelp or TripAdvisor,
customers can voice any displeasure so much more publicly and loudly than ever
before. Businesses need to continually monitor and maintain their online
reputations.

LESSON 4
SUMMARY

The role of entrepreneurship in economic development cannot be denied. The

ripple effects made by these entrepreneurial activities bring positive results and
development in the community and eventually to the economy. Entrepreneurship is not
only on job creation but also aids in the improvement of infrastructure and the standard of
living of people.

The rapid growth and development of entrepreneurship requires the entrepreneur

to keep pace of the emerging trends in order to remain competitive and address the
entrepreneurial issues and challenges to stay in business.

LEARNING ACTIVITIES FOR UNIT I

General instruction: Complete the learning activities below and submit to your instructor
through the link provided. The file name format will be LASTNAME-FIRSTNAME-UNIT I
 24

1. Conduct a remote interview to an owner of a small business and ask the

interviewee what assistance (Financial, Technical, Marketing) he/she has availed
or is currently availing. Follow the format below:

Name of the small Nature of assistance availed/or currently availing

business
owner/Name of the
business
MR. ABC

*more rows may be

added
Discuss the benefits
derived by the
entrepreneur or the
business

2. Read the success of story of Orville Redenbacher’s Gourmet Popping Corn

(adapted) then fill-up the table that follow:

A 63-year-old farmer, one day, went to Chicago to see the advertising and marketing
firm of Gersonm, Howe and Johnson. You see, this farmer was totally obsessed with his
new product, which actually took him at least ten years to develop. For the past 4,000 year
or so, nobody has ever perfected the 100% popability of corn.

That’s right, POPCORN. This man’s passion, his masterpiece, his business was the good
old popcorn we bring to the moviehouse. And for four years, after having discovered the
rick to its “popability” (an exact moisture content of the kernel would blast the kernel apart
when steamed, allowing it to be fluffier and lighter), he wore down his car tires and shoe-
leather going from farmer to processor to retailer. But nobody paid attention too his
popcorn. Their reason, there are over 80 brands of popcorn and they have no room for
another most especially when it costs two and a half times as much.

Disappointed and discouraged over his foolishness to pursue his dream, he thought of
settling with his old as a county agricultural agent. Then a memory from his Sunday school
classes during his childhood stuck him. It was a passage from the Bible that says, For by
wise guidance you can wage war, and in abundance of counselors there is victory (Proverbs
2:6). After some thought, the farmer decided it was time to get his ego out of the way and
admit that he does need some help on the ins and outs of big-time marketing. Back in
Chicago, he found himself seated in front of two young copywriters, a retailing expert and
Mr. Gersonn, the president of the marketing firm. “Talk to us about popcorn,”the president
said.
 25

The farmer, whose name was Orville, began talking-explaining his convictions to
send this product out for others to enjoy. Well he actually talked about his popcorn for full
three hours, while the consultants sat down listening.
After one week, Orville came back for the marketing schemes that these fellows
formulated. However, he found them ridiculous when he heard them. One, they wanted to
use his full name for a brand name. They wanted to call it Orville Redenbacher’s Gourmet
Popping Corn. Second, they wanted to put his picture in the packaging. He could not
believe he paid $13,000 for someone who could come up with these so-called marketing
strategies! If people balked ate the price before, what would they say now with a funny
name and a funny face?

Convinced however that this was God’s way… he test marketed his newly branded
product in the biggest retailer in Chicago – Marshall fields. And the rest of course, is history.
Orville Redenbacher began filling warehouses with huge stocks of his gourmet popcorn. In
fact, he could hardly keep up with the orders. Today, Orville Redenbacher’s Gourmet
Popping Corn is a product of Hunt-Wesson Foods. You can actually buy them in
supermarkets, convenience and online stores in the Philippines.

Entrepreneurial qualities or competencies Support/s to your answers in Column A

of Orville