L3_Theories & Concepts of Entrepreneurship

7/29/2019 L3_Theories & Concepts of Entrepreneurship

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Theories & Concepts of

Entrepreneurship

Mohamed Dahlan Ibrahim, Ph.D

Associate Professor


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AFT 1013 DR. DAHLAN 2

Session Objectives

At the end of the session, students should be

able to:

Understand the various theories and concepts ofentrepreneurship

Have a deeper understanding of the discipline of

entrepreneurship


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Definition of an Entrepreneur

An entrepreneur is a person who undertakes to

do a job. The term entrepreneur originated from

a French word entrependre was first coined byRichard Cantillon (1755).

In Malaysia, the term usahawan is used to

mean entrepreneur.


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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 angoing concern.

The study of entrepreneurship is concerned with

the entrepreneurial behavior, the dynamics ofbusiness set-up and expansion or development

of an entrepreneurial organization.


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Development of

Entrepreneurship Theories

Adam Smith (1776) An entrepreneur is a person who

acts as agent in transforming demand into supply.

Jean Baptiste Say (1803) An entrepreneur is a personwho shifts resources from an area of low productivity to

higher productivity.

John Stuart Mill (1848) An entrepreneur is a prime

mover in the private enterprise. The entrepreneur is the

fourth factor of production.


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Development of


Carl Menger (1871) The entrepreneur acts as aneconomic agent who transforms resources into productsand services. These transformation process gives added

value to the output. Joseph Aloysius Schumpeter (1934) The entrepreneur is

an innovator. The economy moves through leaps andbounds because of the innovations. This process is known

as creative destruction Alfred Marshall (1936) The process of entrepreneurship

development is evolutionary. The entrepreneur isresponsible for the evolution of sole proprietorships into a

public company.


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Development of


Ibnu Khaldun (Abdul Rahman Mohamed Khaldun)

The entrepreneur is seen as a knowledgeable individual

and is instrumental in the development of a city-statewhere enterprises emerge.

David C. McLelland (1951) The entrepreneur is a

person with a high need for achievement. This need for

achievement is the foundation of the entrepreneurshipprocess.



Islamic Entrepreneurship

Discussion on Islamic entrepreneurship is based on the

following main topics:

IntegrationHuman nature

Motivation

Islamic business and entrepreneurs

Islamic economic system

Guidelines

Exemplary conducts



The Concept of Integration

Islam is a complete way of life. There is no

separation between business and religion.

Islamic entrepreneurship is part of the way oflife.

Muslims are encouraged to get involve in

business activities. (9/10 rezeki adalah dalamperniagaan Hadis Nabi)



Human Nature

It is part of human nature to follow the teachings of theirreligion.

In Islam, Muslims are required to fulfill two importantduties, ibadah and khalifah.

In Islamic entrepreneurship, Muslims are able toperform both duties.

Maximizing profit is not the ultimate aim of Muslimentrepreneurs.

Islamic Man versus Economic Man



Motivation

Following the sunnah of ambiya and the

companion of Rasulullah saw.

Islamic entrepreneurship leads to the path ofsuccess both in this world and the hereafter.

Success in Islam is not measured by the end

result but also the means and ways of achievingthem.



The type of success according to

Al-Qurtubi

Halal (Rightful means of living)

Qanaah (Satisfying)

Taufiq (Guidance)

Saadah (Tranquility)

Jannah (Heaven)


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The level of success according

to Al-Ghazali

Depends on the following:

Level of knowledge

Level of repentanceLevel of challenges

Level of obstacles

Level of motivation

Level of handicap

Level of praise and thankfulness


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Possession of Wealth

In Islam, possession of wealth is allowed based

on the following principles:

Allah s.w.t. is the absolute owner of wealth

Allah s.w.t. has created wealth in abundance and

sufficient for all

Allah s.w.t. has created wealth for mankindWealth is entrusted to mankind


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Entrepreneurship as Ibadah

Muslim entrepreneurs involvement in business is

to fulfill an obligation known as fardhu kifayah

Muslim entrepreneurs bear the responsibility toprovide goods and services primarily to the

Muslim community and to others


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Islamic Entrepreneurship Model

Islam Propagates

(Business Venture)

Allah Prepared

(Facilities)

Islam Provides

(Guidelines & Procedures)

Allah Promised

(Rewards)


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Islamic Economic System

Islamic entrepreneurship is part of the frameworkof the Islamic Economic System.

Islamic economic system involves:Islamic banking

Islamic insurance (takaful)

Islamic capital markets

Islamic economic system is based on Islamicjurisprudence.


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Guidelines and Procedures

Islam has provided an extensive guidelines for

Islamic entrepreneurship activities.

Among others:

The principle of buying and selling

The permissible types of business

The principle of zakat in business

Business ethics and so on


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Entrepreneurial Ethics

Prevent laziness

Eradicate fear/shyness

Search for legitimate venturesAvoid unlawful sources of income

Show gratitude and thankfulness

Grow and develop wealth Diversify business ventures

Avoid greediness


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Entrepreneurial Ethics

Avoid malicious behavior

Avoid squandering

Avoid stinginess Pay zakat and alms

Be trustworthy

Pray consistently

Tawakkal

Patience

Qanaah


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Exemplary Conducts of Muslim

Entrepreneurs

Business is secondary to the call of jihad

(crusade)

Never use power or influence for self-interest

Afraid of accumulated wealth

Leadership qualities in all aspects

Practice moderate way of life

L3_Theories & Concepts of Entrepreneurship

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