ATTRIBUTES OF ENTREPRENEURS AND ENTREPRENEURIAL CAREERS NOTES

Definition of Entrepreneurship and Entrepreneurs

Definition an entrepreneur

An entrepreneur is basically a person who identifies a business
opportunity, harshness and obtains the resources necessary to initiate a
successful basis activity. The entrepreneur implements the idea
Undertakes to operate the business An entrepreneur is therefore a
central key individual in the society who makes things happens for
economic development.

Entrepreneurship meaning

In the broader sense entrepreneurship refers to the means of stimulating
innovative and creative undertakings for a better business community or
world. Entrepreneurship if French world meaning to undertake and focuses
on a business enterprise

Entrepreneurship can exist in any situation – therefore it is the
creation of values through establishing a business enterprise.
Entrepreneurship means having an idea of ones own and trying to
implement the idea to create values on it. Entrepreneurship is a term
which encompasses what entrepreneurs do i.e

• Identifying a business opportunity of a particular demand
• Look at the opportunity as a process of creating, something that did
  not exist.
• Constantly searching/ harnessing ones environment and resources to
  implement the activities.
• Creating a totally new product and using it in as new.

Entrepreneurship there is the practice at starting of a new business or
revitalizing existing businesses in response to identifying opportunities.

Types of Entrepreneurs

1. Craft entrepreneurs
   Exploits and utilizes personal skills to start a business without
   thinking of its growth or the expansion objectives Often times than in
   this type of entrepreneurship

• There is no expanding even after along time
• It is not business expansion oriented.
• The skills can be technical skills, professional skill e.t.c

1. Opportunistic entrepreneurs
   This is a person who starts a business, acts as a manager and with a
   view to expand the business to maximum.

He might not have the sill to profession but he has the opportunity to
start and direct others.

He sees beyond and has abilities to initiate and venture into business
that will expand and grow.

He is innovative I,e somebody able to delegate activities to others ,
ready and able to see, scan the environment.

1.1.3 Entrepreneurship

• Entrepreneurship looks at particular individuals in a business
  set-up. It operates in large business or organization which is
  business minded to make profit.
• Entrapreneurs operate autonomously for the welfare of the organization.
• The term Intra – refers to within – therefore Entrapreneurship is a
  process whereby an individual or group within a large organization
  creates something new or different to maximize on the available
  opportunities to that organization.
• Intra can therefore be equated to entra within the context of a
  large organization where the workers are a leeway to be creative or
  innovative on their own.
• They become competitive, socially and economically the idea is to
  allow individuals within the organization to act and think
  independently.

1.1.4 Entrepreneurial Behavior

• Several theories have been developed to explain why entrepreneurs
  behave the way they do.
• There has been debate on whether entrepreneurs are born or made
• Born-hereditary, entrepreneurs are environmental influenced by where
  they are born.

These are;

1. Economic
   The theory explains entrepreneurial behavior as influenced by economic
   factors through which.

• It is possible to introduce new methods
• It is possible to find new sources of materials
• It is possible to open new markets

The economic prospective is important since they create enabling
environment for the entrepreneur to combine the factors of production.

2. Psychological factors

• The theory states that entrepreneurs have unique values, attitudes
  and needs within which drive them.
• It is mostly concerned with personality traits as the main
  determinants of entrepreneurial behavior
• People are likely to become entrepreneurs because of high liking of say.
• Independence
• Attitude
• Need to satisfy certain needs.

2. Sociological factors

Maintains that environmental factors such as beliefs, culture, social
structures determine entrepreneurial behavior.

4. Management factors

• Emphasizes on the organization of resources in a specific way to
  attain profits
• Leadership impacts on behavior and facilitates pioneership,
  achieving of goals and provides vision.

1.1.5 The Functions of an Entrepreneur

1. The bearing of uncertainty is the primary function of the
   entrepreneur i.e losses or profits.
2. The management of the business enterprise can delegate
3. Provision of risk capital and invention.
4. Identifying gaps in the market and turning such gaps to business
   opportunities i.e to initiate a business.
5. Financing the businesses, through raising and mobilizing the
   necessary resources to exploit opportunity.
6. Searching for business opportunities through environmental scans.
7. Mobilization of resources needed to start and run a business e.g.
   from Personal savings, Friends & relatives and Financial
   institutions e.t.c
8. Evaluation of business opportunities to access viability and any
   other benefits that might accrue to the business.
9. Provide the necessary leadership for the business and those working
   in it.

1.1.6 The Characteristic of a Potential Entrepreneur.

1. Initiative and risks taken by;

• Doing things before being asked or forced by events
• Acts to extend business in to new areas products etc
• Sees and acts on opportunities
• Looks for and takes action on opportunities.
• Sees and acts on new business opportunities

1. Persistence and patience through

• Taking repeated action to overcome obstacles
• Taking action to overcome obstacles
• Taking action in the face of significant obstacles.

1. Information and property seeking

• Takes action on his own to get information to help reach business
  objectives
• Does personal research on how to provide a product or service
• Consultation of experts on business and technical advice
• Asks questions to clarify information
• Undertakes market research analysis and investigation.

1. Concern for high quality work by

• Acting to do things that meet or beat existing standards
• A desire to produce and sell top and better quality products or services
• Compares own work favorable to other.

1. Commitment to work contract by

• Placing the highest priority on getting the job completed.
• Accepts full responsibility for problems that may arise in getting
  the job done
• Expresses concern on customers satisfaction.

1. Efficiency orientation by;

• Finding ways of doing things faster and cost effectively
• Uses information to improve efficiently.
• Express concern on costs improvements change etc.

1. Systematic planning

• by developing and using logical plans to meet goals
• breaking tasks down to sub-tasks
• developing plans which anticipate obstacles
• evaluates alternatives
• takes logical and systematic approach to activities
• identifies new and potential unique ideas to reach goals
• Switches to alternative strategies to reach goals.

1. Self –confidence

• has a strong belief in self and own abilities
• expresses confidence in own ability to complete task or meet challenges
• sticks with own judgment in the face of opposition or early lack of
  success
• confronts problems and issues directly
• Tells others what they have to do.

1. Persuasion

• convinces people to buy the products or service
• convinces people on providing funds
• Asserts own competence reliability and the company product.

1. Uses strategic influence and networking

• To develop business contact
• Uses influential people as agent to accomplish objectives

Advantages of Entrepreneurship

• Financial gains
• Self-employment which leads to job satisfaction and flexibility
• Provide job opportunities to the unemployed or those seeking better
  jobs.
• A means of opening up new industries especially in the rural
  areasfacilitating globalization
• A source of generating income and increased economic growth.
• facilitates competition encouraging high quality products
• facilitates production of more goods and services
• Leads to the development of newer markets
• Promotes use of modern technology in especially small- scale
  manufacturing to enhance higher productivity

Drawbacks of entrepreneurship

1. Challenges of a bidding entrepreneur

• long working hours
• poor pay
• unclear future
• fear of loosing all that has been invested
• bankruptcies and closure

1. Other challenges

• Fear of delegating
• the problem do it your self and know it all
• competition by established business
• lack of funds especially before break even
• Mis- management by employees

1.1.9 Promotion of Entrepreneurship

• Integrating entrepreneurship into the education system
• Registration to encourage risk taking
• National companies to promote entrepreneurship
• Support of entrepreneurs through friendly loans at the appropriate time.

1.2. Entrepreneurship and Innovation

1.2.1 Definition

• Innovation or creativity or novetty refers to the process of
  devising a new idea, or thing or improving an existing idea or thing.
• Innovation like all human activities has a cost as well as benefits
• Innovation turns new concepts into realities, creating wealth and power.
• Innovation can also disrupt the status quo. E.g computerization i.e
  Creative destruction.
• Creative destruction occurs when innovations make long-standing
  arrangement obsolute and frees resources to be employed else where
  leading to greater economic efficiency.

1.2.2 Reasons for Opposing Innovation

1. The entrepreneurs tend to have a practical concern that unforeseen
   innovation may cause a disaster e.g side effects e.g of a drug.
2. Fear of loosing profits in the event innovation does not translate to the expectations.
3. Where the entrepreneur held a monopoly position in the market, there
   is fear of losing authority and control.
4. Fear of upsetting the moral and social value of demand for the product.
5. Desire to preserve the existing market confidence.
6. Fear of upsetting tradition in production management and market scope.
7. Fear of opening a loophole to competition hence lose of business grip.

1.2.3 Reasons for Innovation

• Innovation is essential for the entrepreneur in solving the
  inefficiency problems.
• As a means of cost reduction and imposing significance social and
  market grip.
• Profit improvements are looked at from the innovation point of view
  though newer technology in management and production.
• To encounter competition by already established businesses.
• To facilitate opening up of new markets both locally and
  internationally.
• To facilitate diversification of products risks and losses.
• To protect current position of monopoly or success.

1.2.4 Requirements of Innovation

1. Economic demand
   People engage in innovation out of belief that the economic returns will
   be greater than its costs.
2. Surplus capital
   Provides the necessary time and startup costs for implementing a new idea.
3. Ability to assemble and invest capital.
4. Mobile capital which is stable.
   Capital cannot serve unless it can move to potential innovator unless it
   can move to allow the various types of wealth to be created e.g title
   deeds – stability is provided by a rule of law.
5. Availability of growth- fostering social institutions which
   facilitate the speed of technological advancement.
6. Ability and willingness to think and act creativity (Entrepreneurs)
   I,e the philosophical and psychological requirements.
7. Geographical and other circumstantial causes such as ethical issues.
   Societies in which innovation is seen as a sinful or people are punished
   or are shunned to think differently than others are unlikely to
   experience innovation.
8. The size of the firm.
   Large firms have the advantage of introducing innovation since they can
   afford it. They tend to attract more talents employees to advice on new
   ideas.

1.3 The Evolution of Entrepreneurship in Kenya

Interest in the development of entrepreneurship and small enterprise in
Kenya gained momentum as a possible remedy to the stagnation of economic
development and the escalating unemployment problem between the early
1960 and 1970s Although there were attempts by the government to develop
entrepreneurship, the main impetus came form the international labour
organization (ILO) report. The report centered on the potential of the
informal sector and suggested that the bulk of Kenya’s urban workers
were self –employed in small enterprises. The report proposed that the
development of this sector could;

• promote employment
• facilitate development
• facilitate equitable distribution of resources.

Based on this report the government responded with a seasonal paper in
1973 – which recognized the role of entrepreneurship in employment
creation not just in the formal sector but also in the formal sector.
Subsequent development plans have devoted time to the development of
strategies and to promote small-scale enterprises and entrepreneurs
which include.

• The industrial estate programme
• Establishment of development agents e.g ICDC and KIE
• Policy and institutional framework to promote entrepreneurs.
• Promoting indigenous Kenyan enterprises.

1.3.1 How the government planned to promote entrepreneurship

The development plan laid down proposed to

• implement small scale industrial policy
• Review the central and local government regulations that a hindrance
  to entrepreneurial development.
• Provision of direct assistance to the small scale businesses all
  over Kenya.
• Establishment of an organization that would give extension services
  to the small scale enterprises.
• Creating and strengthening institutions and schemes for the
  assistance of the small enterprise sector
• Establishment of credit guarantee schemes for loans given by
  commercial banks
• Establish procedures to improve small scale training through the
  ministry of technical training and Applied Technology.
• Overhaul the education system i.e introduction of the 8.4.4 system.
• Establish a full fledged small industrial division in the ministry
  of commerce and industry – which gave rise to the District focus for
  rural development.
• Introduction of entrepreneurship education is all levels of training.

1.3.2 Economic, Social and Political Factors Affecting Entrepreneurial Development

High taxation levels. For business and personal incomes Which in effect
reduce profits earned making it un attractive to engage in
business Taxation of raw materials and other inputs raise production costs.

1. Corruption and official harassment
   Occurs where entrepreneurs are forced to bribe officials in various
   government departments to allow operation or start up.
   Raids under one pretext or another which tends to be very harassing.
2. Unregulated competition from the outside world due.
   Liberalization which opened importation competing locally produced goods.
3. Declining personal incomes of people due to
   Over-increasing cost of living
   Arise in unemployment
4. The high cost of finance
   The cost of borrowing is high
   Business collapses because they lack ability to repay loans.
5. Lack of necessary skills and knowledge due to

• lack of training opportunities
• high education costs

1. Poor transport and communication network

• making business difficult
• Inconveniencing consumers
• High energy costs
• Lack of entrepreneurial culture

1.4 The Entrepreneurship Culture

1.4.1 Culture Definition

• Culture is defined as asset of values, perceptions wants and
  behaviour learned by a member of a society from family and other
  institutions
• Culture is a tool of leaned behavior patterns of living. It is a
  powerful human tool for survival constantly changing and easily lost.
• Weber argues that “Protestantism encourages a culture which
  emphasizes individualism, achievement motivation, legislation of
  entrepreneurial vocations, rationality and self – reliance.
• Hosted – defines culture as a collective programming of the mind
  which distinguishes the member of one group or category of people
  from another.

1.4.2 Entrepreneurial Culture
Refers to the way of embracing the concept of finding new opportunities
in business and gathering the necessary resources to fill the opportunity.

• Many governments around the world want to promote entrepreneurship
  because they have recognized the importance of entrepreneurship.
• In other words entrepreneurial culture is away of people
  embarrassing life by participating in activities that enable then
  create new business enterprises.
• A country can develop the entrepreneurial culture by forming
  policies that constitute the following ;
• Integration of entrepreneurship training in the overall education
  sys tem to tap on youths
• Exposure of entrepreneurship those look potential to actual business
  practices and activities through the networks and business contacts
  of rule models.
• Creation of a conducive and enabling that permits new business to
  immerge and flourish.
  The creation of entrepreneurial culture has to come from deep social
  convictions based on strong values and systems of the locals
• It should be created in away that it welcomes entrepreneurship and
  respects the investor and also reflecting the core values

1.4.3 What Constitutes Entrepreneurial Culture?

• Growth in concentration of firms networks and linkages
• Growth in intermediary organizations to which some tasks are
  delegated and it different form of entrepreneurship
• High levels of education skills and learning.

1.4.4 Importance of Entrepreneurship Culture

• Enhances economic growth and building of social capital.
• Enhances job creation
• Acts as a primary source of innovation
• Helps in the devolution of government power for policy implementation.
• Direct influence development in tech. H/R capital formation e.t.c.

1.4.5 The cultural habits that promote entrepreneurial development

1. Money orientation
   Money oriented people know the value of money and has the intention of
   making it. The money oriented people use the need of money as a
   motivating factor pushing then to being entrepreneurs.
2. Future orientation
   A society that has foresight to know about the future business
   environment is likely to have more entrepreneurs. This is because they
   are likely to visualize key changes that are likely to create opportunity.
3. Time consciousness

• Knowledge that time exists and its importance
• Knowing the right time to start an entrepreneurial activity.
• Utilization of time
• The correct timing of the market conditions

1. Trust and honesty

• Through trust consumer demand is gained on the products and services
  available.
• Entrepreneurs should reciprocate this by ensuring honesty by
  providing the expected standards.

1. Hard work i.e
   Willingness to work hard distinguishes between successful and
   unsuccessful persons.

1.4.6 The cultural factors inhibiting entrepreneurial development.

1. Religion – religious believes may deter entrepreneurial investments
   in items such as night clubs and pubs.
2. Language – establishing businesses in areas where language barrier
   may allow poor communication or fear of invation.
3. Personal relationship – Married people may avoid getting involved in
   business activities since no time is spared for the family.
4. Attitude towards innovation
   Especially in cultures which oppose innovation due to fear of change
5. Networks – poor networking and ability to meet people limit new
   Opportunities
   New knowledge
   New information.
6. Technology – lack of technical skills and knowledge may slow growth
   and dev. Of entrepreneurial Lock one out of being competitive.

1.4.7 Ways of managing Factors which Inhibits Development of Entrepreneurial Culture.

1. Working in related business to gather the necessary skills required
   before one starts his own business.
2. Setting policies t hat ensure that entrepreneurship training is
   established in the school syllabus.
3. Your people to be encouraged to read articles from newspaper, watch
   television and business contacts to enable them choose products in
   demand with a bright future.
4. Young youths as wll as aspiring adults entrepreneurs should be
   encouraged to get better and faster access to

• Knowledge
• Information or business
• Competition
• Internet e.t.c

1. Aspiring entrepreneurs to seek guidance in selection of machines and
   other facilities.

1.5 Entrepreneurial Cultural Practices in Kenya

The cultural practices of entrepreneurs varies from country depending on the

• The material resources
• The industrial climate
• The social & political systems

The undeveloped regions especially Kenya due to the policing of funds lacks

• Skilled labour
• Existence of minimum social and economic overheads to curb
  emergencies of innovative entrepreneurs.
• Entrepreneurship does not emerge out of industrial background with
  developed institutions to support and encourage it.
• Kenya has imitators entrepreneurs lacking enough innovators unlike
  other countries like South Africa.

However Kenya has established institutions that provide assistance to
aspiring entrepreneurs in terms of

• Establishing a fund to disburse loans to especially youths in the
  hope of promoting entrepreneurship
• Some of the entrepreneurial activities that have emerged in our
  country include.

1.5.1 Steps towards Promoting Entrepreneurship by the Government.

1. Increase small scale industrial sector.

• These are small tiny cottage industries e,.g the Tabaka soap stones
• They have increased and the governments in developing schemes to
  help entrepreneurs

1. Increase investments in the service sector by Increased investments
   in quality services especially in the

• Transport sector
• Repairs services
• Entertainment sector
• Hospitality sectors

1. Increased in rural entrepreneurship dev. Promoting rural
   entrepreneurship by

• Promoting Agro exports e.g eggs , meat e.tc
• Development of brick making

1. Promoting women entrepreneurs in;

• Encoring women to a variety of ventures
• Education programmes.

1.5.2 Other Steps
The future of entrepreneurship in Kenya is great- we now live in the age
of entrepreneurial development.

• Through educational development in institutions, government
  participation would greatly promote entrepreneurship
• Introduction of the study of entrepreneurships as a core subject in
  not only universities curriculum but also tertiary institutions.
• Tax holidays for initial periods of 5 to 10 years of a new venture
• Help by government organizations which have facilitated building new
  infrastructure e.g roads, loans, training institutions e.t.c.
• Collaborations and joint ventures between the government and private
  sector e.g in technology.

1.6 The Theories of Entrepreneurship

1. Richard Cantilon
An entrepreneur as a person with foresight and competence to operate in
conditions on uncertainty. Richard was a particular about an
entrepreneur being a person who performed in uncertain environments
because the market demand is not perfectly predictable not necessarily
that his products are untested an untried Cantilon contributed to the
contention that an entrepreneur is somebody who has foresight and confidence to operate under conditions of uncertainty. He associated risks and uncertainties with administrative
decisions of entrepreneurs. He identified the facto that profit to the
entrepreneur arises out of decision making and risk taking.

2. John Baptise
   Entrepreneurs coordinate and combine the factors of production John
   described the entrepreneur as a rare phenomenon who is able to
   coordinate and combine the factors of production. He places emphasis on
   the variety of markers and inputs which the entrepreneur has to deal
   with “ successfully” in effect, the entrepreneur is expected to “
   perceive and realize potential arbitrage” in addition to
   taking risks associated with uncertainty. According to say, the
   entrepreneur must surmount abundant obstacles, suppress anxieties,
   repair misfortunes and devise expedients. As a result, the entrepreneur
   accommodates the unexpected and overcome problems successfully in
   dealing both the input and consumer market. A possible conclusion form
   this contention is that the entrepreneur is a locator of resources in
   the adjustment process during equilibrium, during equilibrium, towards
   equilibrium.
3. Carl Menger,(1950) and the Austrian School
   Carl Menger and what is known as the Autrian school in economics
   emphasizes the locative role in directing that entrepreneurs role is
   that of risk taker in an uncertain environment. They added that the
   entrepreneur needs information and has to have the ability to analyze
   and use this information to make the correct decision in allocating
   resources. Other followers of the Austrian school of Thought went on to
   add that the alertness, superior perception and leadership of the
   entrepreneur cause factors of production to
   be allocated and continuously allocated.
4. Joseph Schumpeter (Innovation)
   He in the early 20th century provided perhaps one of the most
   comprehensive analyses of entrepreneurship within the context of
   economic development. He introduced the notion that the entrepreneur is
   not just an allocate or director of resources, but combines
   inputs in untried combinations (innovator). Schumpeter asserted that the
   entrepreneur only remained an entrepreneur for as long as he is
   innovative, and losses that characteristics as soon as he falls into the
   routine management of the business. Schumpeter described this process as
   discrete rather than constituting a gradualist change or evolution.
5. MC Cleland (a function of High Achievement)
   According to MC Cleland, the characteristics of entrepreneur have two
   features- first doing things in a new better way and second making under
   uncertainty. He emphasizes achievement orientation as most important
   factor for entrepreneurs. Individuals with high achievements orientation
   are not influenced by considerations of money or any other external
   incentives. He argues that profit
   and incentives are merely yardsticks of measurement of success of
   entrepreneurs with high achievement orientation. The achievement
   orientation can be taught and increased by deliberate efforts. He
   finally observed that the individual with high achievement orientation
   take calculated risks and can make decisions where there are incomplete
   information or have tolerance for ambiguity Psychologists call this
   behavior a type –Abehaviour.

1.7 Role of Entrepreneurship in Economic Development

Economic development is the process of structural transformation of an
economy towards a modern technologically advanced economy based on
services and manufacturing. This process involves not only qualitative
changes but also accompanied by
quantitative changes to improve welfare.Entrepreneurship contribute
greatly to economic development both;

• positively
• Negatively.

1.7.1 The Positive Role of Entrepreneurship

1. Entrepreneurship facilitates structural transformation, innovation –
   driven growth by

• Facilitating transformation from traditional agricultural based
  economy to modern industrial economy.
• And production for the market

1. Entrepreneurs are seen as capitalists with more to save than salaried
   people and therefore facilitate increased savings through which capital
   accumulation is stimulated for investment

• Entrepreneurs save to start up businesses
• Entrepreneurs save to expand their businesses
• Entrepreneurs to reduce need for expensive borrowings
• Entrepreneurs save for precautionary reasons.

1. Entrepreneurs provide an environment where human capital is
   accumulated in the form of;

• workers specialized and non-specialized
• Managers of all levels.

1. The entrepreneurial ability determines the sizes of firms and the
   general growth of an economy by;

• The limitative role and ability to take risks
• Ability to trigger investments.

1. Entrepreneurship facilitates re-allocation of production factors from
   less productive areas to productive areas.

• They cause an increase in the demand for education of labour
• Facilitates adoption of improved technology.

1. Through entrepreneurship creation of new firms through, which

• Increased production
• Production for expert market
• Employments are achievable.

1. Through entrepreneurship need to knowledge accumulation
   generalization and commercialization has had to cooperation between
   researchers and institutions, private firms (sector) and the government.
2. Through entrepreneurship development and production of;

• variety of consumer goods
• producers goods or intermediate goods has greatly increased hence
• new products are bought to the market
• Application of new technology and profit multiplication.

1. Through entrepreneurship information if provided on what an economy
   can be good at producing which in the context of LDCS information is
   lacking.
2. Thorough entrepreneurship a vast growth of the private sectors tends
   to automatically check the large government sector facilitating to
   development a greater free market economy.

The Negative Impact of Entrepreneurship to Economic Development.

1. Perverse allocation towards activities which are for private
   profitability and socially destructive or un productive due to;

• absence of good institutions
• Slow economic growth which will result to unemployment hence low
  levels of entrepreneurship ability.

1. Misallocation of entrepreneurial talents during low development
   levels affecting Resource utilizations especially human capital.

1.7.3 Entrepreneur Contribution to Economic Development.

1. Job creation
   Through establishment of businesses of all level which lead to
   distribution chain of;

• Producers, warehousing, transport, insurance e.t.c Which are
  basically levels of employment,
• Facilitates use of local resources through which
  1. local and international transactions are established
  2. production of more goods and services
• Rural development which in effect.
  1. Promotes change to the formal sector from informal sector
  2. Equitable development
  3. Reduced rural-urban migrations.
• Development of technology through
  1. establishment of research institutions
  2. education systems
• government revenue
  1. through taxes
  2. from domestic borrowing (TBs)
• Facilitating community development through
  1. Establishment of small businesses
  2. Participation in community dev. Projects
• Providing a positive role model and facilitating.
  1. Competition between domestic entrepreneurship and imported 2.
     Stimulating dev. Of entrepreneurship.
• Reducing dependence on imported goods and services.
• Stimulates competition through
  1. Quality production methods are adopted
  2. Quality products are produced
  3. Variety goods and services are produced.
• Facilitated development of the financial sector through which;
  1. Capital accumulation is possible through savings
  2. Loaning is facilitated
  3. Development of the capital market.