ENT300: Fundamentals of Entrepreneurship

Module 1
THEORIES & CONCEPT
OF ENTREPRENEURSHIP

Lesson Outcome:
At the end of the session, students should
be able to:
1.Understand the various theories and
concepts on entrepreneurship
2.Have a deeper understanding of the
discipline of entrepreneurship
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THE EVOLUTION OF ENTREPRENEURSHIP THEORY

Definition of Entrepreneurship:
Entrepreneurship involves not only the process
that leads to the setting up of a business entity
but also the expansion and development of an on
going concern .
The study of entrepreneurship is concerned with
the entrepreneurial behavior, the dynamics of
business set up and expansion and development.

THE EVOLUTION OF ENTREPRENEURSHIP THEORY

Alfred Marshall (1936)

The process of
entrepreneurship or
business development is
incremental or evolutionary.
It evolves from sole
proprietorship to a public
company.
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THE EVOLUTION OF
ENTREPRENEURSHIP THEORY
Definition of an Entrepreneur :

1. RICHARD CANTILLON (1755)

2. ADAM SMITH (1776)
3. JEAN BABTISTE SAY (1803)

THE EVOLUTION OF
ENTREPRENEURSHIP THEORY
Definition of an Entrepreneur :

4. JOHN STUART MILL (1848)

5. CARL MENGER (1871)

6. JOSEPH ALOYSIUS SCHUMPETER
(1934)
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THE EVOLUTION OF
ENTREPRENEURSHIP THEORY
Definition of an Entrepreneur :

7. IBNU KHALDUN
(ABDUL RAHMAN MOHAMED KHALDUN)

8. DAVID MCCLELLAND

THE EVOLUTION OF ENTREPRENEURSHIP THEORY

An entrepreneur is a person
who undertakes to do a job
Richard Cantillon (1755).
The term entrepreneur is a
French word first coined by
Richard Cantillon.
In Malaysia the term usahawan is used for
entrepreneur.
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THE EVOLUTION OF ENTREPRENEURSHIP THEORY

Adam Smith (1776)

An entrepreneur is a person
who acts as agent in
transforming demand into
supply.
Jean Babtiste Say (1803)
An entrepreneur is a person who
shifts resources from an area of
low productivity to high productivity.
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THE EVOLUTION OF ENTREPRENEURSHIP THEORY

John Stuart Mill (1848)

An entrepreneur is a prime mover in
the private enterprise.
The entrepreneur is the fourth factor
of production after land ,labor and
capital.

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Factors of Production

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THE EVOLUTION OF ENTREPRENEURSHIP THEORY

Carl Menger (1871)

The entrepreneur acts as an
economic agent who transforms
resources into products and
services.
The entrepreneur transforms
and gives added value.

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THE EVOLUTION OF ENTREPRENEURSHIP THEORY

Joseph Aloysius Schumpeter (1934)

An entrepreneur is an innovator.
The economy moves through
leaps and bounds and the prime
mover is the entrepreneur
through the process of
creative destruction

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THE EVOLUTION OF ENTREPRENEURSHIP THEORY

Ibnu Khaldun
(Abdul Rahman Mohamed Khaldun)
The entrepreneur is seen as a
knowledgeable individual and is
instrumental in the development
of a city-state where enterprise
will emerge

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THE EVOLUTION OF ENTREPRENEURSHIP THEORY

David McClelland
The entrepreneur is a
person with a high need for
achievement. This need for
achievement is directly
related to the process of
entrepreneurship.

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DEFINITION OF ENTREPRENEURSHIP
It is more than mere creation of business
Entrepreneurship is a process of
innovation and new venture creation
through four major dimensions
individual, organizational,
environmental and process
The entrepreneurship process is aided by
collaborative networks in government,
education and institutions.
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DEFINITION OF ENTREPRENEURS
Functional definition of entrepreneurs
offers the following definition:
Entrepreneurs are individuals who
actively form or lead their own
business and nurture them for growth
and prosperity.

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THE IMPORTANCE OF
ENTREPRENEURSHIP
TO MALAYSIAN
ECONOMY

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THE IMPORTANCE OF ENTREPRENEURSHIP TO

MALAYSIAN ECONOMY
Entrepreneurship is the symbol of business
steadfastness and achievement. Entrepreneurial
revolution is critical to economic growth.
Entrepreneurship may affect our future in many ways:
Innovative creation of opportunity
Job opportunity
New creation
Service provider
Contribution to economy
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THE IMPORTANCE OF ENTREPRENEURSHIP TO

MALAYSIAN ECONOMY
1. Innovative creation of
opportunity
Example: Portable phones
linked to faxes and laptop will
turns cars, train, and airport
terminal into offices.

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THE IMPORTANCE OF ENTREPRENEURSHIP TO

MALAYSIAN ECONOMY
2. Job opportunity
Entrepreneurship not only
affect our lives through
innovation but represent the
working future for many of us
due to lays off by large
organization and shrinking of
job opportunities for
graduates.

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THE IMPORTANCE OF ENTREPRENEURSHIP TO

MALAYSIAN ECONOMY
3. New venture
Entrepreneurship is synonymous to creation of new
venture and small businesses. SMIs have been
important contributors to local economic growth.

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THE IMPORTANCE OF ENTREPRENEURSHIP TO

MALAYSIAN ECONOMY
4. Service provider
The entrepreneurial SMIs provide services that the
large corporation has neglected or lack of economy
of scale for the large corporation to serve.

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THE IMPORTANCE OF ENTREPRENEURSHIP TO

MALAYSIAN ECONOMY
5. Contribution to economy
Contribution of SMIs to Malaysian Economy In Malaysia the SMIs employed 90% of the total
labor force in manufacturing sector and contributed
to about 26% of total value added in the sector.

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ISLAMIC
ENTREPRENEURSHIP
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ISLAMIC ENTREPRENEURSHIP FOCUS ON

EIGHT PRINCIPLES OF THOUGHTS :
1.Integration : Entrepreneurship is an integral parts of
Islamic religion.
2.Human nature: the Moslem entrepreneurs are
khalifah and have the reponsibilities develop
prosperity and sees business as part of ibadah or good
deed.
3.Motivation: success in Islam is not merely measured
by the end result but also the way and means of
achieving them.
4.Ibadah: business activity is part of ibadah or good
deed
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ISLAMIC ENTREPRENEURSHIP FOCUS ON

EIGHT PRINCIPLES OF THOUGHTS :
5.Position of Entrepreneurship and business in
Islam: Islam encouraged its ummah to venture into
business . Prophet Muhammad S.A.W expounded that
9 out 10 source of rizque (reski) can be found in
business.
6.Islamic Economic System: Islamic Entrepreneurship
should operate within the domain of Islamic Economic
system and act as the vehicle towards global
acceptance of Islamic Economic System.

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ISLAMIC ENTREPRENEURSHIP FOCUS ON

EIGHT PRINCIPLES OF THOUGHTS :
7.Guideline: Guiding Principles of Islamic
Entrepreneurship is by the al-Quran and al-Hadith
8.Exemplary conduct: Entrepreneurial Ethics based on
exemplary conducts of Prophet Muhammad S.A.W

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1. ISLAMIC ENTREPRENEURSHIP AS INTEGRAL

PART OF THE RELIGION
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Islam is a complete way of life.

There is no separation between business
and religion.
Islam has its own entrepreneurship culture
and guiding principles based on the AlQuran and Hadith to guide business
operation .

2. HUMAN NATURE

(The fitrah of human being)

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By virtue of the human nature, the person

must firstly be a Muslim, then an
entrepreneur.
He has the responsibility to perform ibadah
and be a khalifah. Muslim entrepreneur
should search for Gods blessings above all
other factors. A Muslim entrepreneur perform
business not solely for profit, but above all, to
fulfill the fardhu kifayah.

3. MOTIVATION
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Most entrepreneurs have the desire to

achieve successful business venture.
The successful path and means for
achieving success for Muslim entrepreneurs
are unique.
Success in Islam is not merely measured by
the end result, but also the means and ways
of achieving them.

Saadah

Spiritual happiness

Jannah

Worldly success should act as the bridge to

the ultimate success in the life hereafter
(paradise).

Asking for the blessing of Allah in

proportion to ones expectation

Taufiq
Halal

livelihood that are in accordance to what is

being outlined by Allah SWT and Syariah.

Qanaah

be pleased and thankful with ones earning

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SUCCESS FORMULA BY AL-QURTUBI

SEVEN STEPS TOWARDS A SUCCESS IN LIFE

ACCORDING TO IMAM AL-GHAZALI
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Level of Knowledge
Level of Taubat or repentence
Level of Temptation
Level of Obstacles
Level of Motivation
Level of Handicap
Level of Praise and Thankfulness

POSSESSION OF WEALTH IS ALLOWED BASED

ON THE FOLLOWING PRINCIPLES:34

1.

Allah s.w.t is the absolute owner of

wealth
2.
Allah created wealth in
abundance and sufficient for all
3. Wealth is created for mankind
4. Wealth is entrusted to mankind

4. IBADAH
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In Islam, involving in business is part of

ibadah through the fulfilment of fardhu
kifayah.

POSITION OF BUSINESS AND ENTREPRENEUR

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ISLAMIC ENTREPRENEURSHIP MODEL

Islam Proposed
(Business Venture)
E
X
A
M
P
L
E

Allah Prepared
(Facilities)
Islam Outlined
(Rules and Regulation)
Allah Promised
(Reward)

E
X
A
M
P
L
E

5. ISLAMIC ECONOMIC SYSTEM

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Islamic Entrepreneurship should be in the

framework of Islamic Economic System and
should assist in establishing the
Islamic Economic System

6. GUIDING PRINCIPLES OF ISLAMIC

ENTREPRENEURSHIP
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Guidelines for Islamic Entrepreneurship

and business activities are wide and
comprehensive based on Al-Quran and
Al-Hadith.

7. MUSLIM ENTREPRENEURSHIP ETHICS

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To prevent laziness
To eradicate fear
To search for legitimate ventures
To avoid forbidden sources of income
and property
To show gratitude and thankfulness of
whatever has been acquired
To grow and develop capital and profit
To diversify business ventures
To avoid greediness

THE ETHICAL BEHAVIOR OF MUSLIM

ENTREPRENEURSHIP
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To avoid malicious behavior

To avoid squandering
To avoid stinginess
To pay alms (zakat)
Trustworthy
To pray consistently
Tawakkal
Patience
Qanaah

8. EXEMPLARY CONDUCTS OF GOOD MUSLIM

ENTREPRENEURS DURING THE PROPHET
MUHAMMAD41S.A.W REIGN

Business is secondary when being called for

other form of crusade
Avoid using influence for self interest
Afraid of accumulated wealth
Leadership qualities in all aspects
Practice moderate way of life

END OF MODULE 1
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