1Topic 1: Introduction to Entrepreneurship

1. Entrepreneurship Overview
o Entrepreneurship is not magic or based on genetics; it is a learnable discipline
(Peter F. Drucker).
2. Historical Background
o 18th-century economists first introduced entrepreneurship for discussion.
o Gained more attention in the 19th century.
o In the 20th century, it became linked with free enterprise.
3. Role of Entrepreneurs
o Entrepreneurs act as agents of change.
o They provide creative and innovative ideas.
o They help businesses grow and become profitable.
4. Significance of Entrepreneurship
o Symbol of business perseverance and success.
o Important to individuals, society, and the economy.
o Recognized globally as a key driver of economic growth.
5. Focus of Discussion
o Evolution and concepts of entrepreneurship.
o Importance and impact of entrepreneurship.
o Myths about entrepreneurship.
o Entrepreneurship development in Malaysia.

1.1 The Evolution of Entrepreneurship

1. Earliest Period
o Example: Marco Polo as a go-between for trade.
o Merchants took risks, while capitalists were passive.
o Profits were shared between the merchant and capitalist.
2. Middle Ages
o "Entrepreneur" described someone managing large projects, like cathedrals.
o They used resources provided by the government without assuming risks.
3. 17th Century
o Entrepreneurship linked to risk-taking.
 o Entrepreneurs performed services or supplied products under fixed contracts,
bearing any profit or loss.
4. 18th Century
o Richard Cantillon viewed entrepreneurs as risk-takers.
o Entrepreneurs were merchants, farmers, and craftsmen, buying at fixed prices
and selling at uncertain prices.
5. Industrial Revolution (18th Century)
o Entrepreneurs distinguished from capital providers.
o Innovators like Eli Whitney and Thomas Edison used external funding
(venture capital) to finance their inventions.
6. 19th & 20th Centuries
o Entrepreneurs often blended with managers.
o In mid-20th century, entrepreneurs were seen as innovators who
revolutionized production by utilizing new technologies.
7. 21st Century
o Entrepreneurs viewed as pioneers in free enterprise.
o They use innovation and creativity to build successful businesses, taking risks
to create new products and services.

1.2.1 Entrepreneurship

1. Definition by Hisrich and Peter (1998)

o Entrepreneurship is the process of creating incremental wealth by assuming
major risks related to equity, time, and career.
o Involves creating something new of value, with time and effort devoted to this
process.
o Entrepreneurs face financial, psychological, and social risks but receive
rewards in the form of monetary gain, personal satisfaction, and independence.
2. Four Basic Aspects of Entrepreneurship (Figure 1.1)
o Creation Process: Developing something new and valuable for the market.
o Time and Effort: Significant commitment to bring ideas to life.
o Risk-Taking: Entrepreneurs face financial and personal risks.
o Rewards: Independence, personal satisfaction, and monetary benefits.
3. Definition by Kuratko and Hodgetts (2004)
 o Entrepreneurship is a process of innovation and new venture creation across
four dimensions:
 Individual: Personal effort and vision.
 Organisational: Structuring businesses effectively.
 Environmental: Influenced by external factors.
 Process: Managing the steps of new venture creation.
o Collaborative networks, including government, education, and institutions,
support this process.
o Entrepreneurship is driven by vision, energy, passion, and the ability to
identify opportunities amid chaos.

1.2.2 Who are Entrepreneurs?

1. Definition by Scarborough and Zimmerer (1998)

o Entrepreneurs create new businesses despite uncertainty.
o They seek profit and growth by identifying opportunities and assembling
resources.
o Often, they start with just a simple idea and build it into a sustainable business.
2. Definition by Kuratko and Hodgetts (2004)
o Entrepreneurs organize, manage, and assume the risks of a business.
o They are catalysts for economic change, using planning, creativity, and sound
judgment.
o Their goal is to create wealth by transforming resources and generating new
capacities.
3. Modern Entrepreneur
o Innovators who recognize and seize opportunities.
o Convert ideas into marketable products or services.
o Add value through time, effort, money, and skills.
o Assume competitive risks and realize rewards for their efforts.
4. Different Perspectives on Entrepreneurs
o Economists: Entrepreneurs combine resources, labor, and materials in
innovative ways to create value and profit.
o Psychologists: Entrepreneurs are driven by a desire for achievement, seeking
challenges and accomplishments.
 5. Common Elements in Definitions
o Newness
o Wealth creation
o Organizing and creating
o Risk-taking
o Catalysts for economic change through purposeful action and careful planning.

1.3 The Importance of Entrepreneurship

1. Economic Catalyst
o Entrepreneurship drives economic change and growth.
o It initiates changes in business structures, leading to growth and increased
output.
2. Innovation and Economic Growth
o Innovation is key to developing new products and services, stimulating
economic growth.
o New ventures attract investments, fostering economic development.
o More ventures lead to job creation, reducing unemployment.
3. Improved Products and Services
o Entrepreneurs create new products and services that fulfill human needs.
o They innovate to find better ways to use resources and reduce waste,
providing better goods at lower prices.
4. Social Impact
o Entrepreneurship improves the lives of people by introducing new, beneficial
products and services.
o Entrepreneurs contribute to wealth creation and distribution, often donating
substantial wealth to worthy causes.

1.4 The Myths of Entrepreneurship

1. Myth 1: Entrepreneurs are doers, not thinkers

o Fact: Entrepreneurs are both doers and thinkers. They carefully plan their
moves and have backup plans in case of failure.
2. Myth 2: Entrepreneurs are born, not made
 o Fact: Entrepreneurship can be taught and learned through models, processes,
and case studies.
3. Myth 3: Entrepreneurs are always inventors
o Fact: Not all entrepreneurs are inventors. Successful entrepreneurs like Ray
Kroc (McDonald’s) innovate and apply creative ideas without inventing.
4. Myth 4: Entrepreneurs are academic and social misfits
o Fact: Entrepreneurs are now regarded as professionals, not misfits, even
though some successful entrepreneurs dropped out of school.
5. Myth 5: Entrepreneurs must fit the "profile"
o Fact: There's no standard profile for entrepreneurs. Many successful
entrepreneurs don't fit typical checklists of characteristics.
6. Myth 6: All entrepreneurs need is money
o Fact: Money is a resource but not the only factor for success. Capital alone
doesn't guarantee success; planning and resourcefulness matter too.
7. Myth 7: Entrepreneurs rely on luck
o Fact: Entrepreneurs create their own "luck" through preparation, planning,
and seizing opportunities.
8. Myth 8: Ignorance is bliss for entrepreneurs
o Fact: Successful entrepreneurs rely on detailed planning and strategy, not
ignorance, to overcome challenges.
9. Myth 9: Entrepreneurs face high failure rates
o Fact: Failure is common, but entrepreneurs learn valuable lessons from
failures, which often lead to future success.
10. Myth 10: Entrepreneurs are extreme risk-takers
o Fact: Entrepreneurs take calculated, moderate risks, relying on information
and planning before acting.

These myths provide insight into common misconceptions and help frame contemporary
entrepreneurship theories.

1.5 Development of Entrepreneurship in Malaysia

1. Historical Background
 o Entrepreneurship in Malaysia dates back to the Malacca Sultanate, during
interactions with foreign traders.
o Under British colonial rule, a "divide and rule" system was implemented,
where Malays were involved in agriculture and administration, the Chinese in
mining and business, and the Indians in rubber plantations. This system led to
the Chinese being more advanced in business compared to Malays and
Indians.
2. Post-Independence Realization
o After independence, the Malaysian government recognized the importance of
entrepreneurship for national prosperity.
o Policies like the New Economic Policy (1971-1990), the National
Development Policy (1990-2000), and Vision 2020 were implemented to
support and encourage entrepreneurship development.
3. Government Support
o In 1995, the Ministry of Entrepreneurship Development was established to
promote entrepreneurship in Malaysia.
o Today, this body is known as the Ministry of Entrepreneurship Development
and Co-operation, focusing on managing and fostering entrepreneurship
growth in the country.

Multiple Choice Questions:

1. What is entrepreneurship most commonly associated with?

o A) Magic and mystery
o B) Free enterprise and business growth
o C) Inherited traits
o D) Passive risk-taking
2. Which century saw the introduction of entrepreneurship as a topic for discussion
by economists?
o A) 16th Century
o B) 17th Century
o C) 18th Century
 o D) 19th Century
3. According to Richard Cantillon, what is a key characteristic of an entrepreneur?
o A) Innovation
o B) Risk-taking
o C) Leadership
o D) Wealth creation
4. In the 18th century, what distinguished entrepreneurs from capital providers?
o A) Their financial status
o B) Their role in industrialization and innovation
o C) Their ability to assume risks
o D) Their government contracts
5. In the 21st century, entrepreneurs are often seen as:
o A) Traditional business owners
o B) Managers of inherited wealth
o C) Innovators and pioneers in business
o D) Government employees
6. Which of the following is NOT one of the four basic aspects of entrepreneurship,
according to Hisrich and Peter?
o A) Creation process
o B) Devotion of time and effort
o C) Guaranteed success
o D) Risk and reward
7. Who defines an entrepreneur as a person who organises, manages, and assumes
the risks of a business?
o A) Richard Cantillon
o B) Kuratko and Hodgetts
o C) Hisrich and Peter
o D) Scarborough and Zimmerer
8. What is one key role of entrepreneurship in economic development?
o A) Reducing innovation
o B) Creating jobs and wealth
o C) Preventing societal change
o D) Supporting government monopolies
9. Entrepreneurs are often viewed as catalysts for economic change because:
o A) They focus on preserving traditional business methods
o B) They take risks and create new ventures
o C) They rely solely on government support
o D) They avoid innovation and change
10. Which myth states that entrepreneurs are always inventors?
o A) Entrepreneurs are doers, not thinkers
o B) Entrepreneurs are born, not made
o C) Entrepreneurs are always inventors
o D) Entrepreneurs need money to succeed
11. What does the myth "Entrepreneurs are born, not made" imply?
o A) Entrepreneurship is a learned skill
o B) Entrepreneurship traits are innate and cannot be taught
o C) All entrepreneurs are inventors
o D) Entrepreneurs rely on luck
12. Which of the following is a reason why the myth "Entrepreneurs are extreme
risk-takers" is false?
o A) Entrepreneurs ignore risks completely
o B) Entrepreneurs take calculated, moderate risks
o C) Entrepreneurs depend on chance
o D) Entrepreneurs always have guaranteed success
13. What was the main focus of the New Economic Policy (1971-1990) in Malaysia?
o A) Supporting foreign trade
o B) Promoting entrepreneurship development
o C) Focusing on agriculture over business
o D) Avoiding business innovation
14. Which of the following policies was created to promote local entrepreneurship in
Malaysia after independence?
o A) British Colonial Rule
o B) Vision 2020
o C) Divide and Rule System
o D) National Mining Policy
 15. When was the Ministry of Entrepreneurship Development established in
Malaysia?
o A) 1957
o B) 1985
o C) 1995
o D) 2000

Answers:

1. B) Free enterprise and business growth

2. C) 18th Century
3. B) Risk-taking
4. B) Their role in industrialization and innovation
5. C) Innovators and pioneers in business
6. C) Guaranteed success
7. B) Kuratko and Hodgetts
8. B) Creating jobs and wealth
9. B) They take risks and create new ventures
10. C) Entrepreneurs are always inventors
11. B) Entrepreneurship traits are innate and cannot be taught
12. B) Entrepreneurs take calculated, moderate risks
13. B) Promoting entrepreneurship development
14. B) Vision 2020
15. C) 1995
MCQ TOPIC 1 - Introduction to Entrepreneurship

1. Who is an entrepreneur?

A. Someone who invests time and money to start a business.

B. Someone who makes a lot of money.

C. Someone who takes a risk to make a profit.

D. Both A & C.
2. Marco Polo is an example of entrepreneur of which century:

A. Earliest period

B.19th and 20th century

C.Middle Ages

D.17th century

3. Schumpeter considered that innovative entrepreneurs would:

A) Thrive

B) Disappear

C) Be absorbed within large innovative firms

D) Be absorbed within non-innovative firms

4. What is entrepreneurship?

A. Is a process of innovation and new venture creation

B. Entrepreneurs are born talented.

C. All entrepreneurs need luck

D. Successful entrepreneur only after dropping out of school

5. Why is entrepreneurship important?

A. It is a catalyst for economic change and growth

B. It creates new investment that incurred risk

C. It produces existing products to create a new demand

D. It improves the lives of millions of people by reducing the

employment rate
6. A is person who managed large contracts, funded by
government

was termed as entrepreneur in the ____________

A. Middle Ages

B. 17th Century

C. 18th Century

D.19th and 20th Century

The correct answer is: A. Middle Ages

Explanation:

In the Middle Ages, the term "entrepreneur" was used to describe individuals who
managed large projects or contracts, often funded by the government or royalty. These
entrepreneurs did not bear personal financial risks; instead, they acted as coordinators or
managers for projects such as building castles, bridges, or roads.

Why Not the Other Options?

1. 17th Century (B):

o The concept of entrepreneurship evolved to include risk-taking. Richard Cantillon, an
economist, described entrepreneurs as individuals who take risks in the economy.

2. 18th Century (C):

o The definition further expanded during the Industrial Revolution. Entrepreneurs
were seen as innovators who transformed resources into profitable ventures.

3. 19th and 20th Century (D):

o The modern interpretation of entrepreneurship emerged, emphasizing innovation,
leadership, and creating new markets.

7. Which one is NOT the basic aspects of Entrepreneurship as

proposed by Kuratko and Hodgetts (2004)

A. Process

B. Individual

C. Achievement

D.Organisational
The correct answer is: C. Achievement

Explanation:

Kuratko and Hodgetts (2004) proposed three basic aspects of entrepreneurship that include:

1. Process:
o Entrepreneurship is seen as a process that involves innovation, risk-taking, and
resource allocation to create value.

2. Individual:
o Focuses on the entrepreneur's personal traits, such as creativity, leadership, and
perseverance.

3. Organisational:
o Examines how entrepreneurial activities influence or are carried out within an
organizational structure.

Achievement, while important as an outcome or goal, is not considered one of the core
aspects as per Kuratko and Hodgetts. It is more a result of successful entrepreneurial
processes rather than a defining component.

8.The word entrepreneur is derived from the French word

`entreprendre’ meaning:

A. To Undertake

B. To Present

C. To Perform

D. To Challenge

An entrepreneur is someone who "undertakes" the risk of starting and managing a business or
enterprise

9. The following are myths related to entrepreneurs…

A. Entrepreneurs are born not made

B. Entrepreneurs are doers and not thinkers

C. Entrepreneurs are gamblers

D. All of the above

10. Which of the following is NOT a myth related to
entrepreneurs?

A. All entrepreneurs need is money

B. All entrepreneurs need is luck

C. Entrepreneur are creative and innovative

D. Entrepreneurs are always Inventors

11.Richard Cantillon viewed the entrepreneurs as persons who

focus on the _________ and ignore the ____________.

A. Demand side, Supply side

B. Supply side, Demand side

C. Supply, Transport

D. Production, Distribution

Thank you for pointing that out! Let's clarify:

Correct Answer: B. Supply side, Demand side

Richard Cantillon viewed entrepreneurs as individuals who focus primarily on the supply
side of the economy while largely ignoring the demand side. Here’s what that means:

1. Focus on the Supply Side:

o Entrepreneurs were seen as people who took on the responsibility of organizing
resources (land, labor, and capital) to produce goods or services. Their primary role
was to manage the supply aspect of the economy.

2. Ignore the Demand Side:

o Cantillon's definition placed less emphasis on consumer behavior or demand.
Entrepreneurs assumed the risk of uncertainty by producing goods and hoping they
would sell, often without detailed attention to specific demand patterns.

Key Insight:

Cantillon’s entrepreneur is a risk-taker who operates under uncertainty:

  They buy inputs (like raw materials) at certain prices and sell finished goods at uncertain
prices.
 Their focus on supply means they are more concerned with production and managing costs,
while market demand is less predictable.

This interpretation is foundational in early economic thought about entrepreneurship. Would

you like examples of how this applies in modern entrepreneurship?

12.Which of the following factors does not affect a person for

being an entrepreneur?

A. Work history

B. Nationality

C. Education

D. Personal values

13.Which one of the following is NOT the barriers of

entrepreneurship?

A. Technical Knowledge

B. Time pressure and distractions

C. Lack of technical skills

D. Political instability

14.Successful entrepreneurs enjoy their work and often start

their businesses so that they can share their interests and
enthusiasm with others. In other words, successful entrepreneurs
have _______________ what they do.

A. passion for

B. concerns about

C. apathy for

D. reservations about
15.Even though there is a significant chance that his business will
fail, Lai Fong intends to open a sports memorabilia shop. What
entrepreneurial trait is Lai Fong exhibiting?

A. Organization

B. Creativity

C. Open-mindedness

D. Willingness to take risks

If the question focuses on Lai Fong's attitude towards the idea of starting a business, then open-
mindedness (C) is indeed the correct answer. He is willing to consider a new opportunity, even
though it involves uncertainty.

16.Before starting their business ventures, which of the

following would entrepreneurs recognize first:

A. Regulations

B. Opportunity

C. Associations

D. Liability

Before starting a business, entrepreneurs typically recognize opportunity first. Identifying a

market need or a gap in the market is the first step in developing a business idea. This
opportunity drives the entrepreneur's vision and decision to pursue a business venture.

17.Entrepreneurs often discover business start-up ideas by

looking for gaps between what is currently being done and.........

A. what was done in the past

B. how things are being done

C. what needs to be done.

D. when changes were last made

Entrepreneurs often discover business start-up ideas by identifying gaps between what is
currently being done and what needs to be done. This means that they observe current
processes, products, or services, and look for areas where improvements can be made or
where there is a need that isn't being fulfilled. This gap can then serve as an opportunity for a
new business idea.

18. Jenny Lim is an entrepreneur and owner of 2 successful

businesses. Jenny’s colleagues value her ability to come up with
new ways of doing things and to find solutions to seemingly
impossible problems. What entrepreneurial trait do Jenny’s
colleagues admire?

A. Initiative

B. Goal setting

C. Integrity

D. Creativity

Jenny’s colleagues admire her ability to come up with new ways of doing things and find solutions
to seemingly impossible problems, which reflects the entrepreneurial trait of creativity. Creativity
involves the ability to think outside the box, generate new ideas, and find innovative solutions to
challenges. This is a key trait for entrepreneurs, especially in overcoming obstacles and creating new
business opportunities.

19. Kasturi’s primary reason for starting her own business is her
desire to make her own schedule. Kasturi is looking forward to
the _____________ she hopes to have as an entrepreneur.

A. tax breaks and deductions

B. flexibility and independence

C. advanced technology

D. personal commitment

20. How do entrepreneurs develop their skills?

A. By seeking little or no advice from others

B. By reducing their flexibility

C. By training and continuous practice

D. By becoming an autocratic leader

21.__________ is the position of a firm on a continuum ranging from
highly conservative to highly entrepreneurial.

A. Risk tolerance

B. Entrepreneurial intensity

C. Inventiveness

D. Organizational bureaucracy

Entrepreneurial intensity refers to the degree to which a firm embraces entrepreneurial

behavior, innovation, and risk-taking. It represents the position of a firm on a continuum that
ranges from being highly conservative (risk-averse, traditional) to highly entrepreneurial
(innovative, risk-taking). A firm with high entrepreneurial intensity is one that actively seeks
new opportunities, embraces change, and takes calculated risks to drive growth.

22.Some entrepreneurs report that the financial rewards

associated with entrepreneurship can be bittersweet if they are
accompanied by ________.

A. modest upside potential

B. the thrill of starting a business

C. motivating factors

D. losing control of the firm

If the correct answer is B. the thrill of starting a business, it means that some entrepreneurs might
find the financial rewards bittersweet because the excitement and thrill of starting the business is a
key motivator. After the initial startup phase, the day-to-day grind of managing and scaling the
business might become less exciting, making the financial rewards feel less fulfilling. In other words,
the early enthusiasm may fade, leaving the entrepreneur to focus on the responsibilities and
challenges of running the business.

Answer to MCQ Topic 1

1. D
2.A
3.C
4.A
5.A
6.A
7.C
8.A
9.D
10.C

11.B

12.B

13.B

14.A

15.C

16.B

17.C

18.D

19.B

20.C

21.B

22.B