Entrepreneurial Leadership.

Dr Tariq uz Zafar.
BSc, MBBS, MSc (Hosp Mgt)

Head of Department Healthcare Management Hamdard Institute of Management Sciences, HAMDARD UNIVERSITY, KARACHI.

Class 1:

The Nature and Importance of Entrepreneurs.

Definition: Individual who takes risks and starts something new: this includes 1) initiative taking 2) organising & reorganising social & economic mechanisms to turn resources & situations to practical account; and 3) acceptance of risk or failure.
Jean-Baptiste Say (19th century French economist): entrepreneur - one who undertakes an enterprise, especially a contractor, acting as intermediatory between capital and labour. Origin: 17th century French: entreprendre: under taker, gobetween. The undertaker undertook the risk of a profit or loss in an enterprise. Usually they paid for a license to collect taxes in an area. If they managed to collect more than they paid for the license, then they ended up with a profit. The government basically outsourced or contracted tax collection to the entrepreneurs of the time.

Development of Entrepreneurship Theory & the term Entrepreneur.

1725: Richard Cantillon: (initial Def) person bearing risks is different from person supplying capital. 1803: Jean-Baptiste Say: separated profits of entrepreneur from profits of capital. 1876: Francis Walker: distinguished b/w those who supplied funds and received interest and those received profit from managerial capabilities. 1934: Joseph Schumpeter: entrepreneur is an innovator and develops untried technology. 1961: David McClelland: entrepreneur is an energetic, moderate risk taker. 1964: Peter Drucker: entrepreneur maximises opportunities. 1975: Albert Shapero: entrepreneur takes initiative, organises some social and economic mechanisms, and accepts risk of failure. 1980: Carl Vesper: entrepreneur seen differently by economists, psychologists, business-persons and politicians. 1983: Gifford Pinochet: INTRApreneur is an entrepreneur within an already established organisation. 1985: Robert Hisrich: entrepreneurship is the process of creating something different with value by devoting the necessary time and effort; assuming the accompanying financual, psychological and social risks; and receiving the resulting rewards of monetary and personal satisfaction.

1934 Joseph Schumpeter: Concept of entrepreneur as an Innovator*. The entrepreneur reforms/revolutionises production by exploiting an invention or an untried technology to produce a new commodity, or, to produce an old commodity in a new way, open a new source of supply of materials or a new outlet for products, by opening a new industry. *innovation: the act of producing something new. To the economist, the entrepreneur enhances the value of resources, labour, materials and other assets, and also one who introduces changes, innovations and a new order. To the psychologist, he is typically driven by certain forces: the need to obtain or attain something, to accomplish or to escape the authority of others. To one business person the entrepreneur appears as a threat, an aggressive competitor, while to the other business person he may be an ally, a source of supply, a customer or someone who creates wealth for others, as well as finds better ways to resources, reduce waste, and produce jobs that others are glad to get.

Definition: Entrepreneurship. The process of creating something new with value, by devoting the necessary time & effort, assuming the accompanying financial, psychological and social risks and receiving the resulting rewards of monetary and personal satisfaction and independence. Entrepreneurship is the dynamic process of creating wealth.
Decisions for a potential Entrepreneur.
Change from present life-style Work-environment. Disruption.
Form new enterprise Desirable: 1. Cultural 2. Subcultural 3. Family 4. Teachers 5. Peers Possible: 1. Govt 2. Background 3. Marketing 4. Financing 5. Role models

Change from Personal Life-style: Difficult decision: requires courage & energy. R&D (technology) and Marketing specially good for new enterprises. Disruption: a strong negative force that is one of the main incentives to start a new enterprise. Retirement, re-location, being fired: the individual feels that forming a new enterprise is both desirable & possible.

Desirability of New venture formation: Results from an individuals culture, sub-culture, family, teachers and peers. A culture that places a high value on being ones own boss, having individual opportunities, being a success, making money (which are all aspects of entrepreneurship) will give rise to more venture formations than a culture that does not. Subcultures (e.g., Silicon Valley, California; Bangalore, India) supportive of new ventures exist within cultures. Very often parents who valued independence can be found in the family of individuals who desire to form new ventures. Teachers and schools offering exciting courses in entrepreneurship and innovation encourage individuals to form new companies. Peers are very imp in starting a new company: an area with a meeting place to enable sharing of entrepreneurial ideas and experiences encourages new enterprise.

Possibility of new venture formation: A Govt supportive of new ventures, necessary educational background, previous business experience, marketing and role models all play a part in a new venture. Entrepreneurs are not born: they develop. Finally, financial resources must be readily available. Most start-up money for new companies comes from personal savings, credit, friends and relatives. However, seed-money in the form of risk-capital plays an essential role in the development and growth of entrepreneurial activity. TYPES OF START-UPS
TYPE OF STARTUP Lifestyle firm OWNERSHIP Private GROWTH (5-10 YEARS) SOURCE OF CAPITAL Personal, limited

Modest. 30-40 employees. $2 million Lays foundation of new business area. 40-400 employees. $10-20 million Greatest investment interest. 500 employees. 20-30 million

Foundation company High-potential venture (gazelles)

Private

Private investors

Receives greatest Public interest

Venture capital