Last updated November 20264 sectionsabout 7 min read
Key takeaways
Entrepreneurship is identifying a business opportunity, mobilising the resources to pursue it and running a venture to exploit it, while bearing the risk in the hope of a reward.
An intrapreneur shows the same initiative and calculated risk-taking inside an existing organisation, using its resources and still answering to it.
Entrepreneurs share recognisable traits, among them self-confidence, calculated risk-taking, persistence, a need for achievement and alertness to unmet needs, and each matters for what it does for a new business.
By how they relate to innovation, entrepreneurs are innovators, imitators, fabians, drones or researchers, and the type predicts how each will respond to competition.
Necessity entrepreneurship starts because other work is unavailable and opportunity entrepreneurship pursues an identified gap, so each needs different support.
Entrepreneurship is the starting point of this paper and of the CAMS syllabus as a whole: before a business idea, an entry option or a source of finance can be chosen, a candidate needs a clear grip on what entrepreneurship actually is, who practises it, and why it matters both to the individual and to the country. This chapter fixes that vocabulary.
Key terms
Entrepreneurship
The process of identifying a business opportunity, mobilising the resources needed to pursue it, and organising and running a venture to exploit it, while bearing the associated risk in the hope of a reward.
An entrepreneur
A person who identifies a business opportunity, assembles the capital, labour and other resources needed to act on it, and bears the risk of the venture in exchange for the profit, or loss, it produces.
Intrapreneurship
Entrepreneurial behaviour, innovation, initiative and a willingness to take calculated risks, practised by an employee inside an existing organisation rather than by someone starting their own venture. An intrapreneur uses the parent organisation's resources and still answers to it.
Entrepreneurial culture
The shared values, attitudes and norms within a society or an organisation that encourage initiative, risk-taking, innovation and self-reliance, as opposed to a culture that rewards only conformity and caution.
Characteristics of entrepreneurs
Self-confidence and a strong internal locus of control, a belief that outcomes depend on one's own effort rather than luck
Risk-taking ability, willing to commit resources to an uncertain outcome after weighing it, not recklessly
Innovativeness and creativity in spotting and shaping opportunities others overlook
Persistence and determination in the face of setbacks
Strong need for achievement, driven by a personal standard of excellence rather than external pressure
Independence, a preference for making one's own decisions over following instructions
Ability to tolerate ambiguity and uncertainty while a venture is still taking shape
Opportunity-oriented, alert to gaps in the market that others have not yet acted on
The characteristics of entrepreneurs are easier to list than to use, and an examiner rewards linking each one to what it does for a new business. Tolerance for risk matters because most decisions in a start-up are made without enough information. Persistence matters because early setbacks are normal rather than exceptional. Opportunity recognition matters because the idea is rarely new; what is new is seeing that a known need is unmet in a particular place. A willingness to learn from failure matters because the first version of almost every business model turns out to be wrong in some important respect.
Types of entrepreneurs
Entrepreneurs are commonly classified by how they relate to innovation, from those who create something genuinely new to those who simply copy what already works.
Innovators
Introduce a genuinely new product, process or way of doing business, rather than improving on an existing one. They carry the highest risk but capture the greatest reward when the innovation succeeds.
Drone
Resist change altogether, continuing with outdated methods even after the market has moved on, and losing ground to competitors who adapt.
Fabian
Cautious and sceptical of change, adopting a new idea only once its success is already proven beyond doubt, and only under real competitive pressure to do so.
Imitating
Adopt an innovation that has already succeeded elsewhere, adapting it to a new market or context rather than originating it themselves.
Researchers
Build a venture on the back of systematic research and technical knowledge, commercialising a discovery or a deep understanding of a problem rather than acting purely on instinct or opportunity.
Entrepreneurs are commonly classified by how they operate. An innovative entrepreneur introduces something genuinely new. An imitative entrepreneur adapts an idea proven elsewhere to a new market. A fabian entrepreneur is cautious, changing only when failing to change would clearly cause losses. A drone entrepreneur refuses to change even at a cost. The classification is useful because it predicts how each will respond to competition.
Entrepreneurs may also be classified by motive, into those driven by independence, by wealth, or by a social purpose, and the motive shapes how far the entrepreneur will want the business to grow.
Types of entrepreneurship
Entrepreneurship also varies by the kind of venture it produces, from a small local shop to a large, well-resourced corporation.
Small business entrepreneurship
A modestly resourced venture, often family-run, aiming to earn its owner a living rather than to scale rapidly or dominate a market.
Large company entrepreneurship
Innovation and new-venture activity carried out inside an already-large corporation, drawing on its existing capital, brand and distribution to launch a new line of business.
Scalable start-up entrepreneurship
A venture deliberately designed from the outset to grow fast and large, typically backed by outside investors seeking a high return.
Social entrepreneurship
A venture whose primary goal is to solve a social, environmental or community problem, with any profit reinvested toward that mission rather than distributed for its own sake.
Innovative entrepreneurship
Built specifically around a new product, technology or business model, rather than around replicating an existing one.
Hustler entrepreneurship
Opportunistic, low-capital ventures built on effort, resourcefulness and quick adaptation rather than formal planning or outside funding, common in the informal sector.
Imitator entrepreneurship
Replicates a business model that already works elsewhere, competing chiefly on execution, price or local adaptation rather than originality.
Researcher entrepreneurship
Grounded in a strong technical or academic foundation, turning research findings or specialised expertise directly into a venture.
Buyer entrepreneurship
Acquires an existing business, franchise or brand rather than building one from scratch, and grows it from that base.
Entrepreneurship takes recognisable forms. Necessity entrepreneurship is started because other employment is unavailable, and it dominates the informal sector. Opportunity entrepreneurship is started to pursue an identified gap. Social entrepreneurship pursues a social or environmental objective using business methods, and measures success by impact as well as profit. Intrapreneurship is entrepreneurial behaviour inside an existing organisation. The distinction between necessity and opportunity matters for policy, because the support each needs is different: the first needs access to basic finance and markets, the second needs capital, networks and room to grow.