Entrepreneurship Education

Entrepreneurship Education in Higher Education and Further Education in Wales:

An analysis of returns from an entrepreneurship audit Commissioned by Education and Learning Wales Jonathan Levie

Wendy Brown Final Report July 2003

Hunter Centre for Entrepreneurship @ Strathclyde, University of Strathclyde, 26 Richmond Street, GLASGOW, Gi 1XH

I .1evie(strath.ac.uk 0141 548 3502

wendy.brown@strath.ac.uk

0141 548 4418

Introduction

This report critically analyses the returns from 35 Welsh universities (HEIs) and further education colleges (FEIs) that participated in an audit of entrepreneurship activity conducted by the authors on behalf of Education and Learning Wales (ELWA).

The Entrepreneurship Audit was conducted between November 2002 and January 2003 by ELWA, using a modified version of a Toolkit originally developed by the Hunter Centre for Entrepreneurship @ Strathclyde The aim of the Audit was to provide data that would give support, evidence and direction- for strategic decision-making for funding and maintaining the roll-out of entrepreneurship programmes in tertiary education institutions in Wales Within each institution, entrepreneurship activity was audited by an internal “Entrepreneurship Champion”, using standard questionnaires Three elements of entrepreneurship activity within each HEI and FEI were covered by the Entrepreneurship Audit

1 the breadth and level of formal entrepreneurship education

2 the nature of umts, modules or electives dedicated to formal entrepreneurship education in each institution

3. the level of facilitation of actual entrepreneurial activity.

In addition, a significant minority of institutions volunteered information on informal entrepreneurship education

This report is intended to assist ELWA in its interpretation of the data collected in the course of the audit It critically analyses the audits produced by each Entrepreneurship Champion, and recommends policy initiatives for consideration by ELWA. It is not an assessment of the effectiveness of the audit. Included in this report is a comparison of this audit with a similar audit conducted in 2000/2001.

Definition of Entrepreneurs

For the purposes of this report, entrepreneurship is defined as the process of creating new 5usness activity, and entrepreneurship education is defined as the development of knowledge and skills relating to entrepreneurship It is recognized that these definitions are rather narrow, and that entrepreneurship education has a wider value beyond business forms of organization (Gibb and Cotton, 1998) At heart, entrepreneurship is the creation of value through pursuit of opportunity beyond resources currently controlled. This is a situation common to public sector- funded and voluntary organizations, and entrepreneurial concepts and skills learned in the context of new business activity can be applied to these sectors as well (Bygrave, D’Heilly, McMullen and Taylor, 1996) Social and community entrepreneurship education is however in its infancy. Education policy-makers should ensure that their policies do not prevent the emergence of what could become a popular and socially valuable subject.

UI

Gibb, Allan (1999) The Future of Work and the Role offltr frreAr and

Enterprise Education in Schools and Further Education.

Keynote to 3 Finnish

SME Forum, February 3fl 1999. Turku, Finland.

Ginsberg, An (1990) Guest Editors Introduction: Corporate Entrepreneurship Strategic Management Journal, Vol ii, Summer Special Issue, 5-15.

Heinonen, Jarna (1999a) Epilogi. Teoksessa Julkisten palvelujen laatu ja kilpailukyky (The Quality and Competitiveness of Public Services) (Maid, Katja — Sorri, Taija). ValtiovarainministeriUn hallinnon kehittamisosaston tutkimuksetja selvitykset 2/1999. Helsinki, 180-181.

Heinonen, Jarna (1 999b) Kohti asiakaslahtOisyytta ja kilpailukykycz Sisainen yrittajyys kunnallisen yksikön muutoksessa. (Towards Customer Orientation and Competitiveness. The Potential of Inlrapreneurship in the Change Process of a Municipal Service Unit) Publications of the Turku School of Economics and Business Administration Series A-

5:1999.

Heinonen, Jama — Leiwo, Kaisa (1998) Kunnalliset elinkeinoyhtiOt. ThtiOiden toiminnan resurssointi ja sisãltO seka yhteistyo TE-keskusten ja PK- yritysten kanssa (Municipal Support Agencies. Resources and

Substance of the Companies and their Co-operation with Employent and Economic Development Centres and SMEs) Suomen kuntaliitto, Kauppa- ja teollisuusministenô, SisaasiainministeriO. Helsinki. Kuratko, Donald F. — Montagno, Ray V. — Horusby, Jeffrey S. (1990) Developing an Intrapreneurial Assessment Instrument for an Effective Corporate Entrepreneurial Environment. Strategic Management Journal, Vol.

11, Summer Special Issue, 49-58.

Landstrom, Hans (1998) The Roots of Entreprenewh4 Research Paper presented to the RENT Xl Conference, November 26-27, 1998. Lyon, France. MacMillan, Ian C. (1986) Progress in Research on Corporate Venturing. Teoksessa The Art and Science of Entrepreneurship (toim Donald L Sexton ja Raymon W. Smilor). Ballinger: Cambridge, 241-263.

Miller, Danny (1983) The Correlates of Entrepreneuirsldp m Three Types of Firms. Management Science, Vol. 29, No. 7,770-791.

Nupponen, Matti (1997) Yhtiômuoto vakiintumassa kunnallisen elinkeinopolitiikan toüneenpano-organisaatioksi (Limited company as a typical

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3. Entrepreneurial Education

Entrepreneurial education provides skills that are not ordinarily taught in general curricula, while also giving students an opportunity to experience the practical effects of the skills being acquired. While there is a long tradition of business concepts being taught in higher education, entrepreneurial programs are now expanding into primary and secondary school as well. Studies of these programs demonstrate that entrepreneurship is a topic of interest by students of all ages.

Many studies of entrepreneurial education have highlighted specific components of successful programs, and to what extent such components can be replicated in various academic environments. Factors that are both successful and reproducible are of the greatest interest to an analysis such as this-, and will receive especial attention-in this section.

Entrepreneurial programs can be divided into two types: Primary/Secondary and Post- secondary. Each targets a different type of student, having different goals and capabilities. The different programs also exhibit different resources and commitments to the community that must be recognized.

a. Primary/Secondary Programs

Many primary/secondary programs specifically target disadvantaged or “at risk” students, as an attempt to keep these youths in school and invested in education. Other entrepreneurial education courses are directed at “interested” students, or as a student activity, in order to expand students’ skills and post-school options.

Secondary programs rely upon the support of the host school system, and of outside partnerships, to ensure resources. Examples of resources utilized by secondary programs are:

• Outside businesses serving as mentors and as sources of apprenticeships or business experiences for students.

• Outside organizations and community groups becoming involved in a partnership with the schools.

• Outside interests donating computers and technical resources. While perhaps not essential, these resources are important f-or successful training, and often cannot be provided solely by the school system.

b. Post-secondary Programs

In contrast to the youth-oriented practices described above, post-secondary entrepreneurial programs target those involved in higher or continuing education. Often, these students have innovative ideas but require assistance in putting these ideas into practice. Studies level that entrepreneurial students, while requiring many of the same skills as traditional MBA business students, exhibit. Different behaviors and attitudes. Successful programs are those that care to these behaviors and attitudes and can be distinguished from traditional business courses in the following ways:

• Courses contain ambiguous circumstances and risk, as with real-life entrepreneurial ventures. Stress and frustration are expected to develop during the course.

• Simulated ventures that can give students I? real life references for later entrepreneurial experiences.

• Connections to successful alumni are important in giving programs prestige and credibility.

• Innovation and community involvement.

Two-year colleges have traditionally not provided entrepreneurial programs. However, this is an area receiving increasing interest, as many community and technical colleges have the capacity to deliver entrepreneurial programs as part of a continuing education program. The National Center for Research in Vocational Education conducted a 1996 study entitled Fostering Entrepreneurship through Business Incubation; a handbook for two-year colleges was released as part of this study and contains information on how two-year colleges can become more fully invested in entrepreneurial programs. Among its recommendations are to:

1. Establish a business incubator

2. Provide education and training opportunities

3. Support the local business community, and

4. Facilitate school-to-work-to-business ownership transition

Among four-year colleges, those that consistently rank highest in polls of business schools all offer at least three entrepreneurial courses as a requirement for- the MBA. What stands out is that to be a top business school, there must be at least an acknowledgement of entrepreneurship, as different from traditional business classes. In addition, the faculty, curriculum and resources are large influences on how successful the program will be.

Entrepreneurial education can be imbedded in an educational program as a core curricular component. Doing so emphasizes the importance of entrepreneurial principles and ensures that students receive business training as a normal part of the educational process. This in turn could have a marked change on how students and adults view the risks and rewards - of entrepreneurship J

Descriptions of entrepreneurship and the characteristics that contribute to entrepreneurial successfully. Jeffrey Timmons of Babson University has developed a useful definition that emphasizes the special set of skills needed by entrepreneurs:

Entrepreneurship is the ability to create and build something from practically nothing. It is initiating, doing, achieving and building an enterprise or organization, rather than just watching, analyzing, or describing one. It is the knack for sensing an opportunity where others see chaos,

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Contradiction and confusion. It is the ability to build a “founding team” to complement your own skills and talents. It is the know-how to find, marshal and control resources and to make sure you don’t run out of money when you need it most. Finally, it is the willingness to take calculated risks, both personal and financial, and then do everything possible to get the odds in your favor.
Entrepreneurial programs have been very successful in fostering the transition from idea to product or service. The continued diversification in program nature and student body will not only contribute to skills development but also to increased investment in fundamental local economies.

4. Assessing Technical and Managerial Assistance
The methodology for assessing performance of programs that provide managerial and technical assistance to entrepreneurs is a work in progress, but there is an emerging consensus on which indicators best measure achievement. Performance measurement starts with the program goals that define the desired outcomes. Entrepreneurial programs typically have multiple goals. For example:
• To help economically disadvantaged individuals start a business;
• To increase the number of jobs in micro-enterprises——especially with-paying jobs;
• To create/build wealth in the community;
• To enhance the success of existing firms
A potential for conflict among these goals contributes to the difficulty in assessing program performance. It is important to recognize that in the short term, creating new businesses is not synonymous with creating jobs and wealth. Few new businesses — even those that ultimately succeed — provide many jobs or generate large profits in their early years. Moreover, the different goals suggest different target populations. Are targeted clients potential entrepreneurs? Are there existing small businesses that could be helped to move to the next level? Is the program trying to serve both — perhaps with different service delivery
mechanisms? -
The review of program benchmarks examined assessments of diverse programs providing management and technical assistance to entrepreneurs. These programs range from micro- enterprise programs such as those participating in the Aspen Institute Self-Employment Learning Project to the national network of Small Business Development Centers, a partnership between the Small Business Administration and local institutions of higher education.
Micro-enterprise programs target potential or existing entrepreneurs and focus performance measurement on indicators such as the number of new business start-ups, survival rates, and expansions. Small business assistance programs measure their success in the number of new
 

Minority business program requires clients to submit their year-end financial statements, which provide the data needed for its performance indicators. This illustrates an important precept. Programs should build in procedures to collect data for performance measurement from the beginning.

It is not always easy to link program activities with the desired outcomes described in goal statements. A tiered performance measurement system helps make the connection. Typically, the lowest level of performance indicator counts program activities. The second level consists of intermediate outcomes, changes in behavior or status that lead to the third level, the desired outcomes. For programs providing management and technical assistance to entrepreneurs, the number of clients assisted is an activity count; the number of assisted clients who complete a plausible business plan and/or access capital is an intermediate outcome. Final outcomes include measures such as the number and percent of assisted clients who improve their economic status and documented increases in employment and profitability at assisted firms.

Program managers are usually most comfortable measuring performance with activity counts, which are the indicators most susceptible to the manager& control. However, activity counts are not sufficient to measure program performance, and should be used in concert with the higher level indicators.

Entrepreneurial Education

E-1 Callan, K. and M. Warshaw. “Choosing the Best,” in Success Sept. 1996, pg. 40.

E-2 Veser, K. and W.B. Gartner. “Measuring Progress in Entrepreneurship Education,” in Journal of Business Venturing 12: 403-421, 1997.

E-3 Sexton, D.L. and N.B. Upton. “Evaluation of an Innovative Approach to Teaching Entrepreneurship,” in Journal of Small Business Management, Jan. 1987: 35-43.

E-4 Clouse, V.G.H. “A Controlled Experiment Relating Entrepreneurial Education to Students’ Start-up Decisions,” in Journal of Small Business Management, April 1990; 45-53.

E-5-7 Hernandez-Gantes, V.M. Fostering Entrepreneurship through Business Incubation: A

3-part Series. Berkeley, Calif: National Center for Research in Vocational Education

(NCRVE), 1996.

Other References:

Benson, G.L. “Teaching Entrepreneurship through the Classics,” in Journal of Applied Business Research 8 (4): 135-144, 1992.

Ernshwiller, J.R. “Students Take Entrepreneurship Out of the Classroom: Many Small Business Schools Add Programs Offerirg Hands-on Experience.” The Wall Street Journal 11/1/90, B2.

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1. Fleming, P. “Entrepreneurship educat1on in Ireland: A longitudinal study,” in The Academy of Entrepreneurship Journal, 1996.

Gorman, G., D. Hanlon, and W. King. “Some Research Perspectives on Entrepreneurship

Education, Enterprise Education and Education for Small Business Management: A Ten-year

Literature Review. International Small Business Journal 15 (3): 56-77, 1997.

Management and Technical Assistance

M-1 U.S. Small Business Administration. A Report to the US. Congress on Minority Small

Business and Capital Ownership Development for Fiscal Year 1996. Washington, D.C.: U.S.

Small Business Administration Office of Minority Enterprise Development, 1997.

M-2 U.S. Small Business Administration. Opportunities for Success, Small Business

Administration FY99 Performance Report. Washington, D.C.: U.S. Small Business

Administration, 2000.

M-3 Johnson, S.L. and Holly M. Mudd. Performance Measurement in the SBDC Program, Inspection Report No. 98-09-01. Washington, D.C.: U.S. Small Business Administration Office of Inspector General, 1998.

M-4 Field Forum, Issue 1. The Aspen Institute, Washington, D.C. October, 1999. NOTE:

Additional information from telephone interview with Elaine Edgecomb, Aspen Institute consultant.

M-5 “Funding for the Future: The Young Entrepreneur Program.” Association for Enterprise

Opportunity Newsletter, September/October 1999. Arlington, Va.: Association for EnterpriseOpportunity.

NOTE: PYEP Evaluation Outcomes outline, QED Group, and other information provided by Jim Weglarz, AEO.

M-6 “Measuring the Success of Economic Development Tools.” Rural Development News, Fall 1998. Ames, Iowa: North Central Regional Center for Rural Development.

Notes

[iLServon, Lisa J. “Micro enterprise Programs in U.S. Inner Cities: Economic Development or Social Welfare?” Economic Development Quarterly, May 1997 vii n2 p166(15). j2LSchreiner, Mark. “A Review of Evaluations of Micro enterprise Programs in the United States.” http://gwbweb. wusti. edw’Users/csd/workingpapers. March 1999.

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EDUCATION

Definitions. Nowadays schooling is a concept subordinate concept education. (Ekola-Vaherva) 1985, 13) Teaching, on the other hand, means providing the learners with new information and skills. In the past, teaching was also regarded as a concept subordinate to education. Today the concepts “teaching” and “education” are, however, regarded as near synonyms. The teaching which takes the place within the general education system is in any case also regarded as education.

Education aims at influencing the learner’s characters and at enabling the learner to develop in all areas. Both teaching and education are seen as influencing the whole personality in the learning process. The concepts “teaching” and “education” are generally chosen on the basis of who the instructor is: a parent educates a child and a teacher teaches the learner. In society today, education and teaching are very much institutionalized, i.e. they are organized by the government and take p1

Auli Ojala

Concepts of education and schooling

Education is no one of the most central areas of culture. The task of education is to transmit cultural heritage to the following generations. As such it is thus bound with culture, human activity, and the society where the education takes place. Education and schooling are two concepts that have been defined many ways. Sometimes education has been seen as a synonym for schooling ace public institutions.

Concept of entrepreneurship

As entrepreneurship taught at school includes education, we shall examine the concept of entrepreneurship in the light of famous educational philosophers’ concept of a human being.

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The enlightenment philosopher John Locke (1632-1704) stresses that every human has a fortune in their own personality. From the perspective of entrepreneurship, this means that this fortune of a human being is constituted of mental and material recourses. The mental recourses include internal entrepreneurship, self-development, and learning new things and icteas as an entrepreneur. The material recourses, on the other hand, refer to external entrepreneurship, i.e. the material values brought by entrepreneurship, for exam goods and money.

The Nicomacheam ethics of the famous educational philosopher Aristotle (384-322 BC) divide the intelligence of a human being into chancing and static knowledge. The chancing knowledge includes ethics of chance, evaluation and a sense of justice. An example of static knowledge could be knowledge of the laws of physics of scientific knowledge. Applied to entrepreneurship, the static knowledge cloud be seen as, for example, understanding the facts of economics when setting up a business. An example of changing knowledge: the entrepreneur knows what changes are in the market. A sense of justice in entrepreneurship could be seen as an ethical view of a good and aesthetically valuable product for the customer.’

‘C

The literature, theories of motivation is usually the starting point of entrepreneurship. The ideas of the previously mentioned educational philosophers can also be applied to the theories of motivation The most common theories of motivation are tie need hierarchy by Maslow, the theory on conditions and motivations by Herzerberg, the expectancy theory by Vroom and the X and Y theories of human beings by McGregor.

The familiar need hierarchy by Maslow can be applied to entrepreneurship by seeing the needs and treating them as the basis for entrepreneurship. When the entrepreneur has met his/her physiological needs in other words gets his/her living from entrepreneurship, the next stage in meeting needs Is that of safety — in entrepreneurship this could be seen as the need to ensure the continuation and development of the business. The third step in Maslow’s hierarchy is the step of the belongingness and love needs. In the work of a entrepreneur, this could be seen in terms of activities in society and its organizations. The esteem needs can be met by being esteemed by the family, the vocation or profession, and by the competitors. The need for self-actualization can be seen for example in seeking new leisure time interests, charity work, and patronizing the arts; there are numerous examples of this in the world of business. However we have to remember that MsIow’s need hierarchy is naturally bound to its original time and place.

Based on research on work motivation, Herzerberg (1968, 35-42) has found two central factors: the subsistence factor and the incentive factor. Herzerberg shows us that satisfaction and dissatisfaction are correlate with each other. In everyday life, this means that removing the causes of dissatisfaction is not enough to make a person satisfied; to make someone we need factors affecting a person’s internal motivation. A person can be dissatisfied and at the same time satisfied his/her work. For example, an entrepreneur may be dissatisfied with bureaucracy nut still love his/her work passionately. Often a person forgets his/her dissatisfaction when eagerly doing his/her work. Herzerberg’s two factor theory has been criticised for oversimplifying motivation and satisfaction.

Vroom’s expectancy theory, on the other hand, stresses 1) a person’s motivation with respect to a certain moment for his/her future 2) the person’s own possibilities and estimations of the future, and 3) the person’s own estimations of the mental and material returns that (s)he will receive if (s)he succeeds.

Applied to entrepreneurship, Vroom’s expectancy theory means that the entrepreneur believes in the constancy of the present social structure, in realizing his/her own business idea, and in a moderate return for his/her work. Inordinate taxation, growing bureaucracy, and threats of socialization, however, lead to the disappearance of entrepreneurship from society, according to Vroom’s expectancy theory.

McGregor divides people roughly into two opposite groups according to how they work. In the X theory, a person is lazy and indifferent, and (s)he only works if (s)he has to. According to the opposite Y theory, a person can be trusted and, in the right environment, his/her work prospers. McGregor’s theory cannot be applied to entrepreneurship as such a rough division because if society creates a framework for entrepreneurship and up to some extend acts as an umpire, favourable conditions for entrepreneurship do exist.

Peltonen (1985, 13) divides entrepreneurship into internal and external entrepreneurship. External entrepreneurship means setting up and taking care of one’s own business. Internal entrepreneurship means the creative and entrepreneur-like way of working either when developing one’s own business of when working in the service of another.

Conclusion

When we apply entrepreneurship to school and learners, then, according to John Locke, entrepreneurship education that takes place in school means that each learner has the chance to become an entrepreneur and that everyone is the architect of one’s own fortune. The Nicomaçhean ethics of Aristotle can be applied to the aesthetic value of learner’s work in the practical subjects. Applied to Maslow’s need hierarchy, initiative and co-operation skills are important characteristics for the learner. Vroom stresses the importance of the spirit of enterprise and motivation regarding one’s own future. All this can be applied to the learner as follows: by controlling their life and work motivation a learner is rewarded both materially and mentally. According to Herzerberg, an encouraging and target-oriented attitude towards work adds to the learner’s work satisfaction and spirit of enterprise. McGregor’s theory can be made relevant for a learner: care and diligence bring luck. The definitions and division of external and internal entrepreneurship by Peltonen are, however, not applicable to the learner as such, as it is difficult to tell which factors are external and which are internal entrepreneurship. It is indeed the school’s job to guide the learners towards entrepreneurship, towards self-directed learning, so that the new seeds of entrepreneurship could later be flourish in society.

Concept of entrepreneurship

The concept of entrepreneurship includes both external and internal entrepreneurship. As a concept, it is a process that changes according to the changes in the surrounding society.

Concept of an entrepreneur

As entrepreneurship education is carried out with the help of real models, we should also define the concept of an entrepreneur. An entrepreneur has been defined as a person who does not work full-time in the service of another and who has economic responsibility for his/her own work (Kettunen 1980, 2.)

Entrepreneurs have also been as people who run and develop their own business. Additionally through

owning the business, an entrepreneur may experience both the positive prospects and the risks. (Mäkineo

1982,7.)

The Longman Dictionary of English Language and Culture defines an entrepreneur: a person who $arts a company or arranges for niece of work to be done. and takes business risks in the hone of making profit.

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Huuskonen (1992, 101-105) defines entrepreneurship be defining the way a person chooses entrepreneurship: first the person becomes interested in entrepreneurship, than the ponders about entrepreneurship, then intends to become an entrepreneur, and, in the end, becomes an entrepreneur by setting up his/her own business. The time between these stages towards entrepreneurship varies; there may be delays on each of the levels.

Entrepreneur — learner with a spirit of enterprise

Studies made on personality on and entrepreneur have found the following characteristics: initiative, risk management, responsibility, creativity, co-operative skills. Teaching at school should also support and promote all of the listed characteristics of an entrepreneur in a learner, as they enhance entrepreneurship in the learner.

Concept of entrepreneurship education

Entrepreneurship education refers to education and teaching given both in school and in the surrounding society. Entrepreneurship education as a concept means growing into entrepreneurship which in turn here means both external and internal entrepreneurship.

Didactics of entrepreneurship education

The study of teaching is called didactics. Didactics concentrates around planning and the actual teaching:

it studies the aims of teaching, the teaching process, and the results. In addition, it aims at developing a theory of good teaching.

The scientific basis for the didactics of entrepreneurship education is found in the neighbouring sciences:

home-economics, economics, social sciences, engineering, psychology, pedagogics, sociology, and natural sciences.

Some examples of the how the listed sciences can be applied to entrepreneurship education: home- economics (consumer education), pedagogics (psychology of learning), social sciences (sociology), natural sciences (environment education), engineering (production sciences), and, of course, economics (marketing).

We must examine the didactics of entrepreneurship education as a part of the national economy, in the framework of each municipality’s industrial structure, as the interaction between school and interest groups is important in entrepreneurship education. There is experimental proof that learner learn more efficiently outside the classroom, which is a challenge for the entrepreneurship teacher. Thus, in entrepreneurship education, replace the classroom with a real business environment and the theoretical teaching with real learning experiences! School is not an isolated section of society but a vital part of it. Thus an important function of entrepreneurship education is to provide the learners with relevant simulation models of entrepreneurship and, at the same time, to support the internal entrepreneurship, activity, creative, and initiative of the leaner.

In addition to the traditional economics concept, the concept of additional value is included in the didactics of entrepreneurship education, In the entrepreneurship education, additional value means the mental or material surplus value that is a result of entrepreneurship education. Mental additional value could be for example, the fact that interaction between schools and business and business life has resulted in up-to- date teaching material.

Each teacher or group of teachers writes the school-specific syllabus of entrepreneurship education in cooperation with the interest groups. Some general didactics goals of entrepreneurship education are presented in the following:

• The learner understands the meaning of entrepreneurship as a part of the prosperity of national economy

• Understands the controversy between nature and prosperity in entrepreneurship

• Understand the meaning of sustainable development and the importance of tolerating uncertainty in entrepreneurship and society

• Receives information on the vocation of an entrepreneur

• Acquires the knowledge and skills relevant for choosing a career and further education suitable for

them later in life

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We will take closer look at tips on curricula and methodology later in chapter 4 in which entrepreneurship education is discussed on the basis of the concepts of learning in the principles of the new curricula.

Networking

THE CONCEPT OF ENTREPRENEURSHIP

Entrepreneurship has been long recognized as performing a central role in the process of development. Yet that role is largely ignored in the main body of economic theory and has received surprisingly little attention in the general literature on development. Basically, an entrepreneur is one who perceives and seizes an opportunity to achieve an objective; visualizes and plans how to achieve the objective; and undertakes to do everything necessary to implement the vision, carry out the project, construct an ‘enterprise” or organization, and fulfill the opportunity envisaged. More specifically, the entrepreneur brings together all the resources, inputs, and individuals necessary to implement the project. Presumably, an entrepreneur could operate in politics, academe, religion, music, sports, or almost any area of human endeavor. Most often, however, the entrepreneur is viewed principally as participating in the economic arena.

As employed in this essay, the term entrepreneurship refers to entrepreneurial capabilities or qualities, or the ability to envisage, initiate, organize, coordinate, and manage new projects in the economic sphere. Entrepreneurship can be exercised in different types of economic systems and in the various contexts of the private sector, the state sector, mixed ownership sectors, the cooperative sector, and the nongovermnental sectors of an economy.

Perhaps the seminal analysis of the role of entrepreneurship in economic development is that of Harvey Liebenstein (1968). In discussing the functions an entrepreneur performs, Liebenstein identifies the following: a “market-connecting role” (linking the potential market for the outputs with the markets for all the relevant inputs), a “gap-filling role” (doing what is not normally or easily done through markets), an “input completing role” (improvising the provision of all the inputs necessary for the enterprise), and an “enterprise-creating role” (bringing together the inputs for the production of an output over a period of time and in some sort of organization). The specific activities of entrepreneurs, then, volve a wide variety of things, some of which are clear-cut and others somewhat more abstract, whether they are applied in running a large firm or at the level of self-employment, in the microenterprise or informal sector. These activities would include

Exploring, discovering, and evaluating new economic opportunities

Seizing the initiative to implement a vision and to do everything necessary for its realization

Determining, locating, hiring or purchasing, and integrating human and material inputs

Establishing an enterprise, managing it, and providing leadership for the people involved in it

Structuring and implementing an appropriate incentive structure for people in the firm

Bearing uncertainty and facing risk

Bearing ultimate responsibility and managing crisis

Continuously exploring, learning, evaluating, and implementing new production techniques, new input possibilities, and new management approaches

Entrepreneurship is scarce for many types of economic activities in most countries and at most times, particularly for new activities

requiring relatively new types of technical and market knowledge

Entrepreneurship, microenterprise, and public policy in Cuba: Promotion, containment, or asphyxiation?

Journal of Interamerican Studies and World Affairs, Suimner 1998 by Ritter, Archibald R M Save a Responding to Opportunity and Need

By Elizabeth J Gatewood, director University Office of Entrepreneurship and Liberal Arts Wake Forest

University and G Page West III program director for the University Center for Entrepreneurship Wake

Forest University

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AAC&U

Spring2O

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05 peer

Review

To many in academia who are accustomed to thinking of entrepreneurship in business terms the notion of entrepreneurship in the liberal arts might seem incongruous, even heretical. But consider this definition, which the Ewing Marion Kauffman Foundation espouses and we at Wake Forest University embrace: “An entrepreneur is one who takes advantage of knowledge and resources to identify and pursue opportunities that initiate change and create value in one’s life and those of others. “This definition suggests something broader and more inclusive than one might think. Value in this sense connotes not only economic value, but also social, intellectual, artistic, and spiritual value—value in any sector of human endeavor. The person who mounts a theater production, develops a novel database that is useful for researchers, or founds a nonprofit philanthropic organization is every bit as much of an entrepreneur as the one who starts a business. And what are the qualities of the successful entrepreneur? Willingness to ask questions. Openness to new information and the viewpoints of others. Eagerness for gathering data with which to make connections and draw conclusions. Critical thinking. Seeing the big picture. Thinking outside the box. Perceiving issues and

finding creative ways. to deal with them. These all sound a lot like the goals and outcomes of a liberal education, don’t they? More importantly ie concept of entrepreneurship embodies the value of freedom that is also at the core of the liberal education.

Just as a liberal education is intended to break the shackles of parochial thinking and broaden the individual’s perspective entrepreneurship is about freedom from institutionalized ways of thinking and acting Like liberal education entrepreneurship is concerned with empowering individuals to see new possibilities and to effect change for the good In a world where the best opportunities are increasingly entrepreneurial, the importance of an entrepreneurial component in a liberal education cannot be overstated. Our economy will prosper only to the extent that we are able to cultivate entrepreneurial enterprises to replace large traditional employers who are on the wane or are moving their workforces overseas. About 12 percent of American adults today are actively involved in the startup process. Close to 40 percent will engage in an entrepreneurial endeavor at some point in their lives. Not all of these individuals7We are indebted to William Green of the University of Rochester for these ideas. Please contact Dr. Green atw.green@rochester.edu for his working paper on this subject The concept of entrepreneurship embodies the value of

freedom that is also at the core of the liberal education. Spring 2005 peer Review AAC&U 13 are—or, some would argue, should be— products of business schools. Recognizing this trend, the Kauffman Foundation in December 2003 elected to support eight schools, including Wake Forest, in developing programs to promote entrepreneurship outside the traditional business school environment. A four-year, $2.16 million matching grant to Wake Forest will facilitate development of a host of curricular and extracurricular programs to achieve that purpose in our liberal arts institution. By the end of the grant period, the university will be equipped to support any student from any discipline, from freshman year through graduate school, who wants to learn about and engage in entrepreneurship in any field of endeavor To be sure entrepreneurship is not a revolutionary ounce at Wake Forest

Examples of successful student ventures abound. Within the last couple of years, undergraduates have created a nonprofit corporation that provides medical services and supplies to a West African country; a company that markets and distributes designer handbags made by Vietnamese craftswomen; an Internet dial-up access service; a new community program for getting citizens more involved in the democratic process; a provider of temporary banquet labor; and some of the most popular youth-oriented Web sites on the Internet, among other ventures. What the Kauffman program provides is structure and support to enable any budding entrepreneur to bring an idea to fruition. William Conner, a biology professor who serves on our steering committee, tells of a young woman who was one of his freshman advisees last year. At their first meeting, she told him she had a dream of starting a summer camp for children with incurable illnesses, but didn’t know where to begin. Now, as Bill notes, she can start with an introductory entrepreneurship seminar, proceed with a program of coursework practical experience mentoring, and plan development, and be ready to go by the time she graduates. What many faculty members are most enthusiastic about is the program’s emphasis on interdisciplinary collaboration. An endless array of interesting opportunities can be found at the boundaries between disciplines. One art graduate has a successful practice in the visual communication of complex medical, scientific, and technical subject matter. She had double-majored in art and biology, and based on the connections she made the fields, went on to study medical illustration. Another effort centers on education for learning-disabled children, and represents a collaboration between education, computer science, and business. The program has gotten off to a fast start in its first year. A center for entrepreneurship that will function as an incubator and a provider of extracurricular assistance for campus entrepreneurs who are in the early stages of idea development and feasibility assessment has been launched.

Communication and promotion have been major emphases. Members of the entrepreneurship steering committee have already met with representatives of departments comprising about 75 percent of Wake Forest’s total undergraduate faculty to explain and promote the concept A best ideas m the liberal arts contest will award up to one thousand dollars for novel thinking and innovative ideas for using the Internet to create value in 14 AAC&U Spring 2005 peer Review liberal arts studies. To inspire others-and provide examples, faculty members have been invited to “tell a story” about an especially creative entrepreneurial activity of someone from their discipline; the stories will be disseminated in print and electronically. Guest speakers on campus this year have included Jose Rivera, an award-winning film and theater writer who spoke of the intersection of his art and business, and Bill Rancic, a business and social entrepreneur and winner of the inaugural round of The Apprentice. Scheduled for next year are

David Finckel and Wu Han, a classical music couple who started their own Internet-based record label, founded a summer music festival in Silicon Valley, and serve as artistic directors of the Chamber Music Society of Lincoln Center. Presentations on the program to alumni and parent groups have generated enthusiasm— a solid foundation for building the internship and

5

a.

Mentoring networks that are planned. In the classroom, four first-year seminars and one upper-level seminar on entrepreneurship themes have been developed and taught this year with a half dozen or so planned for next year A biology professor this spring is mentoring an

interdisciplinary group of student entrepreneurs who are forming a biotechnology company to manufacture disease antibody company to manufacture disease antibody testing kits for the fish-fanning industry and is leading a seminar in which six faculty members from vanous disciplines are developing courses with entrepreneurship components Four new liberal arts faculty positions will be added to provide enhanced teaching resources for entrepreneurship curriculum initiatives The first of these, a creativity expert in the theater department, has been advertised and interviews of finalists have begun. In a sense, the Kauffman-funded program of entrepreneurship in the liberal arts at Wake Forest University is a metaphor for the very subject it concerns. It is a bold and creative exercise in the process of perceiving and responding to opportunity and need. The need is society’s and our students’. The opportunity is ours. . Selected Courses at Wake Forest University (2004—6) American Indian Communities in

Urban America Toward Cultural and Economic Well-Being • Biological Innovation and Entrepreneurship Designer Antibodies Starting a Biotech Company Entrepreneurship in Commerce, Philanthropy, and Politics Free Trade, Fair Trade: The Independent Entrepreneur in the Global Market Garners and

Dreamers: The Rise of the Computer Game Culture Professional Baseball: The Entrepreneurial Globalization of a National Pastime Social Entrepreneurship Doing Good While Doing Well. Understanding Entrepreneurship A Sociological Perspective Women Entrepreneurs in Literature and Life

Association of American Colleges and Universities Liberal Education AAC&U’s flagship journal expresses the

voices of individuals working to enrich liberal learning and undergraduate education. Recent issues— The Future of Diversity Beyond Computer Literacy Cultural Studies and GeneralEducation$l4each Prospects of Nigerian SMEs Under The Small and Medium Industries Investment Scheme (SMIEIS). (Posted 18th Mar, 2002) Tell your friends about this page! Email it to them.

Basic Concepts in SMEs www. Furl.net.

The Small and Medium Industries and Equity Investment Scheme (SMIEIS) defines Small and Medium Enterprise (SME) as any enterprise with a maximum asset base of N200 million excluding land and working Capital and with the number of staff employed not less than 10 or more than 300. Small and Medium Enterprises (SME) have been defined along a broad continuum of size and type. In terms of size, measures used to classify SMEs include employment, assets and revenue.

Employment-based Classification

Micro-Enterprise Small Enterprise Medium Enterprise

Organisation

International Finance <10 10- 50 50 - 100

Corporation (IFC)

Central Bank of - <50 < 100

Nigeria (CBN)

National Association

Of Small Scale Industries - <40 -

(NASSI)

Accenture - <50 <500

Asset-Based (excluding Real Estate) Classification

Organisation Small Enterprise Medium Enterprise

IFC <$2.5 million -

CBN <Ni million <N150 million

NASSI <N40 million

Federal Ministry of <N50 milion <N 200 million

Industry

National Economic

Reconstruction Fund < N10 million

(NERFUND)

6

U,

Source: International Finance Corporation (IFC) publications (2000

Element of The Small and Medium Industries Equity Scheme (SMIEIS)

SMIEIS is a voluntary initiative of the Bankers’ Committee whose membership includes all the Managing Directors

and Chief Executive Officers (MD/CEOs) of banks in Nigeria, which require all licensed banks in Nigeria to set aside

10% of their Profit Before Tax (PBT) for equity investment in, and promotion of Small and Medium Enterprises

(SME).

SMIEIS is intended to stimulate economic growth and development, develop local technology and generate employment. The participating banks for equity investment under this scheme have currently set aside over N5 billion for alternative approach to financing SMEs. The goal of this scheme is to reduce SME5 borrowing and consequently relieve them from interest and other bank charges that are not favourable to their capital structure. It also espouses the provision of financial, advisory, technical and managerial support to SMEs by banks.

Activities Covered By SMIEIS

As regards the practice everywhere and Central Bank stipulation coupled with the agreement reached by the Bankers’ Committee. The following activities will be covered under the SMIEIS:

1. Agro-allied

2. Information technology and telecommunications

3. Manufacturing

4. Educational Establishment

5. Services (Excluding Banking and Insurance)

6. Tourism and Leisure

7. Solid Mineral

8. Construction, and

9. Any activities that may be determined from time to time by the Bankers’ Committee.

Activities Not Covered By SMIEIS

In line with international practices, banks will not invest SMIEIS funds in entities whose principal business involve or comprise the manufacture or supply of, or any activities in the following sectors:

1. Tobacco and Tobacco products

2. Armaments production or where 25% or more of the total production output or,

3. Turnover of the investee company is derived from military related purposes

4. Beverages with alcoholic content exceeding 15%

5. Casino or companies where the principal source of income is gambling

6. Speculative investments in real estate or commodities

7. Banking, insurance or financial services

8. Immoral and illegal activities

9. Investments that are harmful to the environment.

Eligible SMEs

Any business activities that do not fall among the specifications above and meets the following criteria will be considered an eligible SMES and thus can partake in SMIEIS:

1. Enterprises with a maximum asset base of N200 million excluding land and working capital

2. Enterprises with not less than 10 or more than 300 employees

3.. SMEs registered with Corporate Affairs Commission (CAC) and in compliance with Companies and Allied Matters Act (1990) such as filing of annual returns and un-audited financial statements of accounts

4. Those who comply with all applicable tax laws and regulations as well as render regular returns to the appropriate authorities

Those prepared to ensure prudent utilization of funds granted under SMIEIS

6. Enterprises prepared to make the company’s books, records and structures available for inspection by the appropriate authorities (This including SMIEIS granting bank and the CBN) when required

7. SME5 who are prepared to comply with the guidelines of the scheme even after funds have been disbursed

8. Enterprises ready to provide monthly financial and operational report to the investing banks before the 15th of the next succeeding month, and

9. SMEs committed to keeping up to date records on the company’s activities under the scheme.

Modalities For Implementation

To safeguard the abuse of the scheme, the following modalities subsist:

• Funds invested by participating banks shall be in the form of equity investment in eligible industries

• Equity investment may be in the form of fresh cash injection and/or conversion of existing debts owed to participating banks into equity investment

• A participating company may obtain more funds by way of loans from banks in addition to equity investment under the scheme

• Eligible industries may approach any bank, including those they presently have relationship with or the ones they do not have any relationship

• Banks may operate the scheme directly, through their wholly-owned subsidiary venture capital companies floated by a consortia of banks

• Prospective beneficiaries should seek the opinion of third party consultants like lawyers, accountants and valuers in the determining the value to be placed on the asset and capital of their businesses to enjoy a fair price before and during negotiations with banks

• The recommendations of industrial associations (e.g. MAN, NACCIMA, NASME, NASSI etc.) will be mandatory for members of these associations (where applicable), and

• Membership of recognised NGO5 engaged in entrepreneurial development and promotion of small scale industries will also be an advantage.

Potentials of SMEs

SMEs is believed to be the engine room for the development of any economy, because they form the bulk of business activities in a growing economy like that of Nigeria. This is manifested in the following ways:

1. Employment Generation

• 30% contribution to global GDP

• Employment generation capacity of about 58% of global working population

• SMEs also play the critical role of principal safety net for the bulk of the population in developing economies, and

• Their labour intensity structure accounts for their recognition as a job creation avenue.

2. Rural Development

• SME5 constitute major avenues for income generation and participation in economic activities in the lower income and rural brackets of developing societies especially in agriculture, trading and services, and

• The employment opportunities offered apparently reduces rural-urban migration and allows for even development.

3. Economic Growth and Industrialisation

• National economic development prospects hinge on entrepreneurial energy of vibrant SMEs as most big business concern grew from small scale to become big icons, and

• As they grow, they protect nations from the geographical cost-benefit permutations of a few multinationals who are ever prepared to close up their businesses and relocate at the slightest provocation or appearance of economic downturn.

4. Better Utilisation of Indigenous Resources

• The considerable low capital outlay required for setting up SMEs enables them to convert minimal resources into productive ventures,

• They also offer veritable outlets for technological advancement especially in businesses with rudimentary technology requirements.

Challenges Constraints of Funding SME Operations in Nigeria

• Insufficient personal savings/funds resulting in low initial promoters’ equity

• Uncoordinated business ideas and plans

• Non bankable projects by entrepreneurs

• Inability of the customers (SMEs) to satisfy high credit risk standards, including security/collateral

• Inability of banks to provide long-term funds due to mismatch between tenor of bank deposits and loans being sought

• Fluctuating and prohibitive interest rate regime, and

• Volatile exchange rate regime.

Summary, Conclusion and Recommendations

From the above information, banks would always insist on clean, defensible and comprehensive business proposals before investing under SMIEIS, support businesses that are properly focused, professionally managed and with bright prospect. SMEs with a clear-cut and practicable succession plan will enjoy the blessing of SMIEIS. No doubt, banks would be represented on the Management Board of any enterprise they have equity investment.

SMIEIS, if properly managed could provide the necessary impetus for growth in Initial Public Offers (IPOs) in the future as the banks would exit from the investments made under the scheme and trade off the equity invested to interested the public as banks do not generally tend to stay too long with SME5. SMEs would be better assisted with the provision of basic functional infrastructures, the inadequacy of which has constituted a drain channel for the investible funds of SMEs, they have to make provision for all these from the loan/funds hither to acquired from banks. If these basic amenities were readily available, SMEs would divest such funds to more productive operations.

The government could also assist by establishing a well funded National Credit Guarantee Fund that will act as buffer for credit facilities from banks and other financial institutions over and above the equity provided under

SMIEIS.

* Part of this piece was extracted from Ben Akabueze’s paper on Financing Small and Medium Enterprises (SMEs): The Small and Medium Industries Equity Investment Scheme (SMIEIS) Option, delivered at the week 2002 Seminar held at the Muson Centre, Lagos between 11-14 February, 2002. The remaining was prepared by our team.

NigeriaBusinessinfo. Com

WHAT IS GLOBALIZATION?

One can be sure that virtually every one of the 2822 academic papers on globalization written in 1998 included its own definition, as would each of the 589 new books on the subject published in that year.

Many see it as a primarily economic phenomenon, involving the increasing interaction, or integration, of national economic systems through the growth in international trade, investment and capital flows. However, one can also point to a rapid increase in cross-border social, cultural. anti technological, exchange as part of the phenomenon. of globalization.

The sociologist,. Anthony Giddens, defines globalization as a decoupling of space and. time, emphasizing that with instantaneous communications, knowledge and culture can be shared around the world siltaneous1y

A Dutch academic who maintains a good website on globalization, Rudd Lubbers, defines it as a process in which geographic distance becomes a factor of diminishing importance in the establishment and maintenance of cross border economic, political and socio-cultural relations Left critics of globalization define the word quite differently, presenting it as worldwide drive toward a globalize economic system dominated by supranational corporate trade and banking institutions that are not accountable to democratic processes or national governments. Globalization is an undeniably capitalist process. It has taken off as a concept in the wake of the collapse of the Soviet Union and of socialism as a viable alternate form of economic organization. Try this: Globalization is the rapid increase in cross-border economic, social, technological exchange under conditions of capitalism.

Simon Reich also explores this question in a working paper for the Helen

Kellogg Institute for International Studies at the University of Notre.

Dame

‘What is globalization? Four Possible Answer , Working Paper #261 - December 1998 -that is downloadable at

A comprehensive and regularly updated bibliography on all aspects of the political economy of globalization compiled by Douglas Nelson of the Murphy Institute of Political Economy at Tulane University can also be found at

It attempts to characterize globalization, and its effects on poverty, the environment, gender, culture, and political structure and dynamics.

David Held and Anthony McGrew write in their entry for Oxford Companion to Politics that globalization can be conceived as a process (or set of processes) which. Embodies a transformation.   In the spatial organization of social relations and transactions, expressed in transcontinental or interregional flows and networks of activity, interaction and power.

Globalization

Globalization — the growing integration of economies and societies around the world — has been one of the most hotly-debated topics in international economics over the past few years. Rapid growth and poverty reduction in China, India, and other countries that were poor 20 years ago, has been a positive aspect of globalization. But globalization has also generated significant international opposition over concerns that it has increased inequality and environmental degradation. This site provides access to some of the most recent presentations on globalization and some of the leading research on the subject.

Highlights

Making Globalization Work For All The Chancellor of the Exchequer, Gordon Brown, hosted an international conference at the Treasury on Monday, 16 February 2004. Sponsored by Lord Carey of Clifton and Lord Griffiths of Forestfach, the conference will examine the challenges of making globalization work for all. Delegates have been invited to attend from the faith, business, academic, NGO and diplomatic communities, as well as representatives from Government and Parliament. They will hear keynote addresses from Gordon Brown; Jim Wolfensohn, President of the World Bank; Bono; President Luis macb Lula da Silva of Brazil; and Hilary Benn, Secretary of State for International Development. Additional information.

Globalization, Growth and Poverty: Building an Inclusive World Economy I Globalization has helped reduce poverty in a large number of developing countries but it must be harnessed better to help the worlds poorest, most marginalized countries improve the lives of their citizens, says a new World Bank research report published today. Includes quotes from James Wolfensohri, President of the World Bank. (December 5, 2001)

See the video: (Quicktime 10..6 MG) I (Real Video 400K)

Listen to the radio: (Quicktime: 422K) I (MP3: 2.7

MB)I

(RealAudio: 355K)