Chapter 2 Types of Entrepreneurship-1

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CHAPTER 2TYPES OF

ENTREPRENEURSHIP


Objectives

The objectives of this chapter are to: disseminate and intensify knowledge on the different types of

entrepreneurship and entrepreneurs differentiate the differences based on entrepreneurial

activities as well as the functions assumed by the entrepreneurs


Learning Outcomes

At the end of this chapter, students should be able to: classify the types of entrepreneurship and entrepreneurs into

proper context without any difficulty differentiate and articulate the different types of

entrepreneurship and entrepreneurs that exist in the current entrepreneurship literature

explain the differentiating factors based on the respective entrepreneurial activities and functions of the entrepreneurs.


Introduction

Entrepreneurial activities in the form of producing goods and services for human needs, selling, trading or exchanging of goods were in existence since time immemorial.

Presently, entrepreneurship development is recognized as an important catalyst that can spur economic growth and prosperity especially in the countries that practise free market economy.


Introduction (cont.)

Entrepreneurship by definition is a process of identifying the opportunity, converting the opportunity into marketable products or services using creative and innovative means and through the process creates value and wealth to the society.

Entrepreneurs are individuals who undertake entrepreneurial process.


Entrepreneurship versus Entrepreneur

Entrepreneurship refers to an entrepreneurial process while entrepreneur is the individual that executes the process.

Entrepreneurship entity or groupings can be categorized based on the type of entrepreneurial activities being carried out.

The entrepreneurship process may comprise several entrepreneurial activities which might differ from one organization to the other.

Types of entrepreneurs are best described in terms of their motives and their functions as entrepreneurs.


Types of Entrepreneurship


Corporate Entrepreneurship

Corporate entrepreneurship refers to the entrepreneurial activities carried out in large corporations.

Large companies have to continually expand and diversify their entrepreneurial activities in order to sustain its existence by creating new products or services to their customers.


Corporate Entrepreneurship (cont.)

The introduction of entrepreneurial culture and process can be seen as an effort to– instigate renewal or innovation in the organization (Sharma &

Chrisman, 1999)– explore research – take calculated risks and invest in new promising areas – create a working environment that can tolerate experimentation,

uncertainty, risk and failures


Private or Independent Entrepreneurship

Private or independent entrepreneurship refers to: – the entrepreneurial activities of private or independent firms where

the entrepreneurship process is most prevalent The entrepreneurship process begins with

– the identification of business opportunity– setting-up of the business entity– growing the business to a higher level– ‘planning for the harvest’ strategy


The majority of the small and medium-sized enterprises in this country belong to this kind of entrepreneurship.

Independent entrepreneurship contributes to the nation’s economy in terms of providing jobs and value added initiatives.

Private or Independent Entrepreneurship (cont.)


Intrapreneurship

Intrapreneurship can be defined as:– an innovative corporate management strategy that encourages

employees within an organization to create new product ideas—if employees’ ideas are approved, management will finance research and development of the product while sharing an equitable partnership arrangement with the employee

Intrapreneurship scheme allows and encourages entrepreneurial activities within the corporation or institution


Social Entrepreneurship

Social entrepreneurship refers to the entrepreneurial activities carried out by social enterprises, NGOs and charitable organizations.

The process involves recognition of a social problem and the application of the entrepreneurial approach to organize, create and manage a venture to achieve the social objectives or social ROI (return on investment).

Example of economic based social entrepreneurship project is the Grahmeen Bank in Bangladesh whose objective is to provide easy and cheap credit to poor women who are involved in micro business.


Other examples of societies and clubs are Students in Free Enterprise (SIFE), Society for the World Wild Life Protection (WWF), Society for welfare and aid for unfortunate groups like orphans, Palestinians, aborigines, urban and rural poor

There are also societies formed to cater to specific interests like the Malaysian Nature Society, Environmental Protection Society of Malaysia and Amnesty International for protection of human rights.

Social Entrepreneurship (cont.)


Public Sector Entrepreneurship

Public sector entrepreneurship refers to entrepreneurial activities carried out by government-linked companies (GLCs) or state-owned enterprises.

The majority of these companies were formed as part of the nation’s privatization programme which aimed at providing more efficient services to the people.

State-owned enterprises such as the SEDCs are engaged in certain entrepreneurial activities through joint-ventures, equity participation as well as management buyouts.

They are also entrusted with the task of entrepreneurship development in their respective states.


Academic Entrepreneurship

Entrepreneurial activities in academic and research institutions mainly involve: – research and development of new products, processes, systems,

materials, etc. with the objectives that these innovations will lead to intellectual property rights (e.g. patents, copyright, trademark) and its commercialization through outright sale of IPs, technology licensing or through creation of new ventures.


Other Variants of Entrepreneurship

There are also other variants of entrepreneurship such as– gender entrepreneurship– political entrepreneurship – ethnic and sectarian entrepreneurship – agriculture and technology entrepreneurship, etc.

Gender entrepreneurship refers to entrepreneurial activities that are carried out by women or any entrepreneurship programme targeted to this particular group.


Ethnic entrepreneurship refers to entrepreneurial activities carried out by the various ethnic groups in the country. Studies in this area of entrepreneurship focus on whether certain ethnic group is more entrepreneurial than the others and the factors contributing to that phenomenon.

Political entrepreneurship refers to entrepreneurial activities carried out by various enterprises that are created by political parties as vehicles to source funds for the political parties.

Agriculture entrepreneurship and technology entrepreneurship are terms used to refer entrepreneurial activities in agriculture and technology respectively.

Other Variants of Entrepreneurship


Types of Entrepreneurs

The classification on types of entrepreneurship is based upon the entrepreneurial activities carried out in each type of organization; categorization of entrepreneurs is based upon the functions and roles of the entrepreneurs in their respective organizations.


Corporate Entrepreneurs

Corporate entrepreneurs are those who managed large corporation usually public listed companies. Corporate entrepreneurs typically hold the position of Chief Executive Officer or Managing Director and they are either employed or own shares in those corporations.

In this sense, corporate entrepreneurs are known as ‘intrapreneurs’ because they assume the exact role of entrepreneurs in managing the organizations. In most cases corporate entrepreneurs are professionals.


Independent Entrepreneurs

Considered as the pure type of entrepreneur, independent entrepreneurs own and manage their own companies.

They invest and take risk upon any decision made and thus have complete control of the organization.

This type of entrepreneurs generally exist in most SMEs in the country.


Social Entrepreneurs

This type of entrepreneurs exist in social organizations or enterprises to achieve their social objectives and to sustain their organisation as an on going concern.

They function exactly as corporate entrepreneurs where they adopt entrepreneurship principles in managing their organizations.

Social entrepreneurs are more concerned with achieving the social ROI rather than the financial ROI.


Public Entrepreneurs

These entrepreneurs are found in public sector organizations including government-linked companies and state-owned enterprises.

Public entrepreneurs function exactly as corporate entrepreneurs—applying the same entrepreneurship principles in managing organizations or companies.

Sometimes they are also known as ‘intrapreneurs’ since they usually do not own the companies.


Academic Entrepreneurs

Academic entrepreneurs exist in most institutions of higher learning as well as in research and development organizations.

They are usually involved in entrepreneurial activities that lead to the innovation and commercialization of R & D products or processes.


Other Variants of Entrepreneurs

Other variants of entrepreneurs include: – serial entrepreneurs – lifestyle entrepreneurs – nascent entrepreneurs – necessity entrepreneurs – technopreneurs– agripreneurs– Infoprenuers – edupreneurs


Serial Entrepreneurs

Serial entrepreneurs refer to those who continuously start new ventures and sell off the ventures at a later stage.

This type of entrepreneur typically possesses a higher level of entrepreneurial characteristics and assumes a higher level of risk.

However, he/she is usually handsomely rewarded from the sale of successful ventures.


Lifestyle Entrepreneurs

These entrepreneurs usually start new ventures out of their passion rather than solely for profit.

They usually combine their personal interests and talents and the need to earn a living and probably create wealth along the way.


Lifestyle entrepreneurs develop and grow their businesses in order to make a sustainable living in the field of business they are passionate about.

Most of them are self-employed and enjoy doing something that they love and at the same time achieve greater freedom through working for themselves.

Lifestyle Entrepreneurs


Nascent Entrepreneurs

Nascent entrepreneurs refer to those who aspire to take up entrepreneurship as a career option. Nascent entrepreneurs have yet to incorporate their own businesses but all preparations have been undertaken.

They usually have prepared business plans, seek financial assistance, undertaken market research and have registered their businesses with the authorities.


Necessity Entrepreneurs

These entrepreneurs are involved in entrepreneurship activities not by their own choice. Majority of them are involved in starting up their own businesses out of necessity.

They usually start their businesses as micro enterprises and some of them manage to develop and grow the businesses and become very successful.


Technopreneurs

Technopreneurs refers to entrepreneurial persons who are technology savvy and earn a fortune using their expertise in the respective technologies.

Famous names like Steve Job, Michael Dell, Bill Gates and others are examples of successful technopreneurs in the information technology based industries.


The development of new technology in high growth areas like– information technology, – hardware and software for cellular phone based technology, – e-commerce, – e-government, – biotechnology, – environmentally friendly green technology, – multi-media based technology, – health and leisure-based technology, – pharmaceuticals, – application of nano-technology, etc. have created new opportunities for Malaysian technopreneurs.

Technopreneurs (cont.)


Products like Upin and Ipin is an example of multimedia product that appeals to the global market.

There are also successful Malaysian companies that produce specialized software to cater for a niche global market.

Technopreneurs (cont.)


Intrapreneur

In 1992, The American Heritage Dictionary acknowledged the popular use of a new word, intrapreneur, to mean ‘a person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation’ (Wikipedia).


Agripreneurs

These entrepreneurs are involved in entrepreneurial activities in the agriculture sector.

They may be involved in planting and producing agriculture products for consumption or for further processing, or other areas in the supply chain such as the downstream activities processing and packaging.

The agriculture sector also involves the fishing industry, aquaculture and animal husbandry.


Infopreneurs

Infopreneurs refers to those who utilize information as a commodity for sale.

As information is powerful, infopreneurs sell information to those who want to use the information as a business strategy or simply for marketing and promotional activities.


Edupreneurs

Edupreneurs are those involved in setting up educational institutions privately with the objective to make a profit.

Owners of tuition centres and private colleges are usually known as edupreneurs. They operate their institutions as business organizations and apply similar entrepreneurship principles as in any other corporations.

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