Part A: The entrepreneur
The entrepreneur
Key takeaways
- An entrepreneur identifies a business opportunity, organises the capital, labour and materials needed to pursue it, and bears the risk of the venture; a manager runs an existing operation that he or she did not necessarily create or risk.
- Entrepreneurs contribute to national development by creating employment, generating tax revenue and export earnings, introducing innovation, using idle local resources and spreading the economy across regions.
- The five types of entrepreneur are told apart by behaviour: innovative (genuinely new), imitative (copies proven innovations), Fabian (adopts change only once its success is established), drone (resists even beneficial change) and social (a social or environmental mission alongside return).
- Entrepreneurship development is shaped by economic, social and cultural, political and legal, technological and psychological factors.
- Kenya's entrepreneurship culture has grown around the jua kali sector, mobile money and programmes such as the Youth Enterprise Development Fund and Ajira Digital, with affordable credit and formal registration the two most cited constraints.
A quality management technician often works inside a small enterprise, or advises one on its processes, so this unit opens with the person at the centre of it: who an entrepreneur is, what they contribute, and the traits and conditions that shape whether someone becomes one.
Defining the entrepreneur
An entrepreneur is a person who identifies a business opportunity, organises the resources, capital, labour and materials, needed to pursue it, and bears the risk of the venture in the hope of a return. The role is distinct from a manager, who runs an existing operation but did not necessarily create or risk it.
The entrepreneur's role
- Identifies and exploits business opportunities
- Mobilises capital and other resources needed to start and run the business
- Bears the risk of the venture succeeding or failing
- Organises production or service delivery and coordinates the factors of production
- Innovates, introducing new products, processes or ways of working
Contribution to national development
- Creating employment, directly and through the businesses they support
- Generating tax revenue and export earnings
- Introducing innovation and new technology into the economy
- Utilising local resources that would otherwise be idle
- Contributing to a more balanced, regionally spread economy
Types of entrepreneur
Routes into entrepreneurship
- Starting a new business from an original idea
- Buying an existing business
- Acquiring a franchise
- Inheriting a family business
- Entering a partnership or joint venture with an existing entrepreneur
Characteristics of entrepreneurs
- Self-confidence and a strong internal locus of control
- Willingness to take calculated risks
- Persistence and resilience in the face of setbacks
- Innovativeness and openness to new ideas
- Strong need for achievement
- Ability to identify and act on opportunities others overlook
Factors in entrepreneurship development
Entrepreneurship culture in Kenya
Kenya's entrepreneurship culture has grown around a large informal (jua kali) sector, mobile-money-enabled small trade, and government programmes such as the Youth Enterprise Development Fund and Ajira Digital, alongside a fast-growing technology and innovation hub centred on Nairobi. Access to affordable credit and formal registration remain the two most cited constraints on turning informal activity into a fully formalised enterprise.
Born or made
The born-versus-made debate asks whether entrepreneurial ability is an innate trait or a skill developed through exposure, education and experience. The evidence supports both: some personal traits (risk tolerance, self-confidence) appear to have a natural basis, but skills such as opportunity evaluation, financial planning and business-plan development (see the chapter on the business plan) are demonstrably teachable, which is the premise this whole qualification's entrepreneurship unit ultimately rests on.
Self-check
(a) Define an entrepreneur and distinguish the role from a manager. (3 marks)
(b) State four roles of an entrepreneur in business. (4 marks)
(c) Name the five types of entrepreneur and give the distinguishing behaviour of each. (5 marks)
(d) State three factors affecting entrepreneurship development. (3 marks)
(e) A business owner only adopts a new technology once every competitor has already proven it works, well after the initial risk has passed. Which type of entrepreneur is this? (2 marks)
Show worked answer
(a) An entrepreneur identifies a business opportunity, organises the resources needed to pursue it, and bears the risk of the venture. This is distinct from a manager, who runs an existing operation but did not necessarily create or risk it.
(b) Identifies and exploits business opportunities; mobilises capital and other resources; bears the risk of success or failure; organises production or service delivery. Any four.
(c) Innovative: introduces genuinely new products, processes or methods. Imitative (adoptive): copies and adapts innovations proven elsewhere. Fabian: cautious, adopts change only once its success is established. Drone: resists change even where it would benefit the business. Social: pursues a social or environmental mission alongside commercial return.
(d) Economic factors (access to capital, market size); social and cultural factors (attitudes toward risk-taking); political and legal factors (government policy, regulation). Any three.
(e) This is a Fabian entrepreneur, cautious and adopting change only once its success is already established.
Exam tip
The five entrepreneur types (innovative, imitative, Fabian, drone, social) are commonly tested by describing a business owner's behaviour and asking which type it illustrates, learn the distinguishing behaviour of each, not just the label.