ENT300 Chapter 1.1 THEORIES & CONCEPT OF ENTREPRENEURSHIP

Summary

This video introduces the fundamentals of entrepreneurship, exploring key theories and historical concepts from philosophers like Richard Cantillon, Adam Smith, Jean-Baptiste Say, and Joseph Schumpeter. It covers entrepreneurship's role in economic growth, innovation, and the formation of new ventures. The video also discusses the significance of entrepreneurship in Malaysia's economy, emphasizing the importance of small and medium enterprises (SMEs) and cyber entrepreneurship in a digital world. It concludes with a preview of Islamic entrepreneurship, to be discussed in a future video.

Takeaways

• 📚 The term 'entrepreneur' originates from 18th-century literature, with Richard Cantillon providing the first formal definition in 1755.
• 🏢 Adam Smith defined entrepreneurs as individuals who recognize demand for goods and services and organize resources to meet this demand, acting as economic agents.
• 🔄 Jean-Baptiste Say emphasized the role of entrepreneurs in coordinating and organizing economic resources such as land, labor, and capital.
• 🏗️ Entrepreneurs are seen as key figures in transforming resources to create new ventures, driving economic and industrial growth.
• 💡 Joseph Schumpeter described entrepreneurs as innovators who bring about 'creative destruction,' leading to new industries replacing older ones.
• 💻 Cyber-entrepreneurship involves exploiting information and communication technology (ICT) to generate profit through e-commerce and digital businesses.
• 🇲🇾 Entrepreneurship plays a significant role in the Malaysian economy, contributing to gross domestic product (GDP) and creating jobs, especially through small and medium enterprises (SMEs).
• 🌱 SMEs are crucial to economic growth, providing employment opportunities and filling market gaps left by large corporations.
• ⚙️ Large corporations often enjoy economies of scale, but SMEs serve niche markets and focus on products that larger firms may neglect.
• 📊 In Malaysia, SMEs employ around 90% of the manufacturing sector's labor force and contribute 26% of the sector's value.

Q & A

What is the earliest formal definition of an entrepreneur, and who provided it?

The earliest formal definition of an entrepreneur was provided by Richard Cantillon in 1755. He described an entrepreneur as an adventurer who invests in goods with the intent of selling them later.

How does Adam Smith define an entrepreneur in 'The Wealth of Nations'?

In 'The Wealth of Nations' (1776), Adam Smith defines an entrepreneur as an individual who forms an organization for commercial purposes by recognizing the demand for goods and services, thereby acting as an economic agent who transforms demand into supply.

What role did Jean-Baptiste Say attribute to entrepreneurs in 1803?

Jean-Baptiste Say emphasized that entrepreneurs function as coordinators, organizers, and speculators in business enterprises. They manage economic resources like land, labor, and capital to improve productivity and revenue.

What is Joseph Schumpeter's view on entrepreneurs?

Joseph Schumpeter described entrepreneurs as innovative heroes and the primary agents of economic growth. He introduced the concept of 'creative destruction,' where entrepreneurs drive innovation, disrupting economic equilibrium and leading to the creation of new industries.

What is the distinction between innovation and invention as per Schumpeter?

According to Schumpeter, innovation refers to upgrading or improving existing products, whereas invention involves creating something entirely new. During economic downturns, innovation may slow, but invention continues as entrepreneurs seek to break out of recessions.

How did Alfred Marshall view the evolution of business development?

Alfred Marshall saw business development as an incremental and evolutionary process. It evolves from sole proprietorships, where one person owns a business, to more structured public companies with shareholders and managers, especially after the industrial revolution.

What contribution did entrepreneurship have during the Industrial Revolution?

During the Industrial Revolution, entrepreneurs played a crucial role by producing goods and services on a massive scale, which led to international trade and economic growth. Their ability to estimate investment needs and manage resources led to the expansion of businesses and industries.

What is the significance of cyber entrepreneurship?

Cyber entrepreneurship refers to businesses that exploit information and communication technology to generate profit. Cyberpreneurs create companies that operate entirely online, like Netflix and Spotify, conducting all transactions digitally without the need for physical premises.

Why is entrepreneurship important to the Malaysian economy?

Entrepreneurship is important to the Malaysian economy because it drives innovation, creates jobs, and contributes significantly to GDP. Small and medium enterprises (SMEs) provide many jobs and fill niche markets neglected by large corporations, contributing to local economic growth.

What is the role of small and medium enterprises (SMEs) in Malaysia’s economic growth?

SMEs are critical to Malaysia's economic growth, contributing about 38.9% to GDP in 2020. They provide jobs for 90% of the manufacturing labor force and contribute 26% of the sector's value. SMEs often serve niche markets and provide goods and services that large corporations overlook.