Welcome back
In this session,
we are going to explore
the definition of the entrepreneurship
and the historical origins of entrepreneurship
Actually, many people think of the entrepreneur
as simply someone who runs their businesses
But the concept of the entrepreneurship
and entrepreneur goes much deeper
and is rooted in diverse academic traditions
You may have heard of the term of
the entrepreneurship many times,
but what does it truly mean?
Let's first look at the structure of world making
Entrepreneurship is formed by
combining the words entrepreneur
and the suffix ship
We have many such examples in our daily vocabulary
Let's take sportsmanship for example
This term is made from sportsman and ship
So what does it mean?
It refers to the sportsman's behavior and attitude
in the sports area
The sportsmanship is
behavior and attitude in the sports area
Then, what are they?
Different people have different ideas
Look at this
What about fairness?
Fairness is a good attitude
and good behavior for the sportsman
And other people said that
What about respecting for the rule of game?
We need to accept the result
Or some people said that
We should respect for our other players
This is respect for other players
In short, although the general idea is simple,
but its interpretation can vary
people by people
Another example would be the leadership
Again, the leadership is a combination of the leader and ship
Leadership refers to a set of
behavior or attitude for leaders
I think it's a pretty simple definition
But the problem was
What are the behavior and attitude?
Different people have a different idea
For example, some people said that
the great attitude or behavior of a leader
would be motivating others
Motivating others is a very important behavior
Or what about charisma?
Many people emphasize
charisma or visionary or the ability
to assign the right people to the right task
There's no single
and simple definition about the leadership
Although we know leadership or sportsmanship is a set of behavior
related to the leader, related to the sportsman,
but the interpretations are different
Same thing happen to the entrepreneurship
So the entrepreneurship
The words combined by two words Entrepreneur and ship
and this entrepreneur came from France
In French, the meaning of entrepreneur is
someone who initiates something new
We can define entrepreneurship as
behavior and attitude for entrepreneur
Entrepreneur means someone who initiated something new
We say the start of founders or something like that
So the problem was
What exactly are those behaviors or attitudes?
Just like previous examples, people have different ideas
Let's look at the academic study
that tried to answer these questions scientifically
This research was conducted by Bill Gartner
which is a well-known American scholar in the field of entrepreneurship
He conducted Delphi method
Delphi method involves gathering opinions from the experts
Dr. Gartner asked straightforward one question
One question
We often talk about entrepreneurship,
but what does it really mean?
What are the behavior and attitude
or quality an entrepreneur should have?
So he sent the questionnaire to 283 individuals,
and then he received the answers
Although the return rate is low
The results are different as we expected
Some people said that
entrepreneurship is about starting new ventures
Other people said that entrepreneurs share
the financial risk, management risk,
and perhaps more importantly,
put their whole career on the line
in their pursuit of a new independent company
These people emphasize risk, career, and a new company
Other people said that
I want to define entrepreneurship
as becoming owner-manager
of a new or small company
And any company
Other people said that
The innovation is important
Innovative activities in combining resources
to exploit new technology, invention, or something like that
So, Dr. Gartner then sent out
follow-up letter and asked them
Please make a ranking out of many attributes
We talked about risk
We talked about new businesses
We talked about innovation
and we talked about career
Among those various attitudes and various behaviors,
can you please rank them?
This is the second question
He summarized the ranking
This is the result
Rank number three, what is it?
Rank number three was related to entrepreneurship,
which is the behavior and attitude
Three, innovation
What is very important?
What is important attitude and behavior
related to the entrepreneurship?
Innovation, rank three
What ranked second?
Ranked second attitude and behavior would be
bring resources to pursue your opportunities
So the entrepreneurship is about
those behavior and attitude
And then rank number one attitude and behavior would be what?
It would be new company creation
You created your new company
then you are entrepreneur,
then it is entrepreneurship
Which is very interesting
So please keep that in your mind
Those three attributes and those three behaviors,
those three attitudes are very important for
understanding entrepreneurship
Again, entrepreneurship is about
attitude and behavior for the entrepreneur
What are they?
There are a lot of attributes
But among many attributes,
we say those three attributes are very important
From now on
We will explore the origin of this concept,
which is entrepreneurship
So, three economists
made a significant contribution to the field of entrepreneurship
The picture here is Richard Cantillon
He lived in almost 350 years ago,
and he was one of the earliest scientists,
earliest thinker to write about entrepreneurship
He saw the entrepreneur as a kind of a middleman
Middleman who profit from prices differences
In his view
Entrepreneurs purchase and sell in uncertain markets,
take a risk and use those risks as opportunities
Unlike wage workers,
entrepreneurs do not depend on fixed income
Instead, they embrace uncertainty
and pursue the profit
by purchasing product at a relatively low price
and selling the product at
a relatively, hopefully, expensive prices
So, he thinks entrepreneurs are not necessarily innovators
For him, innovation is not necessary
Entrepreneurs are same as traders
who bear uncertainty and take a risk
So, the key to entrepreneurship
is uncertainty and the risk-taking
You will watch the video
This video will illustrate
the trade of pepper from India to Europe
Let's watch together, and later we will discuss
So, what do you think?
During the Age of Exploration,
European merchants imported pepper and spices from India
and sold them in Europe
As you saw in this video,
pepper at that time was very expensive
So, a single successful voyage could yield profit
by exceeding the cost of the production of the ship
So, this is a classic example of the risk-bearing entrepreneurship
as Richard Cantillon argued
Look at the picture
This is another example of the economist
who can contribute to the concept of entrepreneurship
His name is Jean Baptiste Say
He was born in France but moved to England
and then he observed what?
He observed the Industrial Revolution over there
He defined the entrepreneur
who combined the factors of the production
Why?
Because in the Industrial Revolution era,
the production is very important
So, the entrepreneurs are someone
who combine those factors of production
whether they are land or labor or capital
In order to create something new, something valuable
A valuable product or service
They are not just managers or they are not just investors
They are not just inventors
They successfully and creatively organize the resources
and generate the new value
from the combination of the resources
What attitude or behaviors are
essential or necessary for the entrepreneur?
Jean Baptiste Say emphasized
What about the judgment?
What about persistence?
What about experience?
If you are good at judgment,
if you are good at persistence
and if you have great experience,
then you are more likely to combine
valuable resources better than anybody else
So, these are necessary to
effectively combine and manage the production factors
I would like to give you another example about
Jean Baptiste Say's entrepreneur
Let's watch together
Did you watch the video?
This video illustrates the moment
when Lee Byung-chul,
who is the founder of the Samsung Group,
accepted some idea about
semiconductor businesses from his son Lee Kun-hee
Why Lee Byung-chul is Jean Baptiste Say's entrepreneur?
I will explain more detail about him
He is Lee Byung-chul
and he is the founder of Samsung Group
He started his businesses in 1938
His first business is not manufacturing businesses
His business was trading businesses
and also he started rice mill around that time
Then later, eventually,
he made Samsung into Korea's leading company
in the sugar and textile area
Later on, when he was 73 years old,
he accepted his son's idea about semiconductor
and invested in semiconductors
Despite the massive capital,
complicated technology, and talent needed,
Basically, he invested all he got
in order to make great semiconductor businesses
So, today,
Samsung leads the world in the semiconductor area
because of his decision and his investment
That's why we say Lee Byung-chul is
Jean Baptiste Say's entrepreneur
I want to give you another example
for the Jean Baptiste Say's entrepreneur
Look at him
He is Howard Schultz,
who is the CEO of Starbucks
He is very famous
and you know what Starbucks is, right?
The funny thing is,
he is not the founder of Starbucks
Actually, he was a salesman for Xerox in New York
and he sold coffee maker
He visited early Starbucks store in Seattle
and then he was hired as a marketer
at Starbucks store at that time
Back then, it was not
a Starbucks coffee shop as we know it
It was just a store that had a factory
that roasted the coffee beans
and sold the coffee beans produced there
In other words
It was just a factory
and the factory driven stores
Then, Howard Schultz went on a business trip to Italy
Then, he saw a well-developed
coffee shop culture over there
It was different from
the coffee shop culture in America at that time
The people in America drank coffee
at home and diner
Actually, there were no stand-alone coffee shop there
So, like a coffee shop in Italy,
he suggested stand-alone coffee shop
to the founder of Starbucks
But the founder of Starbucks didn't accept his idea
They didn't give good impression
on Howard Schultz's proposal about
the stand-alone coffee shop idea
Then what happened?
Howard Schultz quit the Starbucks
and he decided to start his own coffee shop
He received the investment of
$300,000 from Starbucks founders
and additional $100,000 from individual investors
Then he created the company
and opened the Italian style coffee shop
and he called it Il Giornale
This is Il Giornale coffee shop
This is very similar to the Italian coffee shop
What about the result of the Il Giornale?
The store was a huge success
and attracted more than
1,000 consumers a day in six months
Two years later, what happened?
Howard Schultz purchased Starbucks he worked for
and he created today's Starbucks
In this way, Howard Schultz
patiently realized his plan despite the criticism
He raised the fund through the investors
and he combined all the resources needed for the businesses
and he tried to make new images
What about the important attitude or behavior in this case?
Think about judgment like Howard Schultz and persistence
The ability to combine production factors
Again, according to Jean Baptiste Say
entrepreneurs are not just the middle man
Entrepreneurs are someone
who combine the production resources very well
After Jean Baptiste Say,
there is another very important economist
who contributed to the field of entrepreneurship
His name is Joseph Schumpeter
He introduced idea of innovation
According to him,
entrepreneur is a person
who breaks the old and creatively creates a new thing
This is image of entrepreneur we often refer to today
The person who bring innovation and transformation
So, the key to success of the entrepreneurship
key attribute, and key behavior of entrepreneurship
are creative destruction and innovation
He introduced several different types of innovation
According to him,
there are five major form of the innovation
Innovation is a very important topic
Right now, we don't have time
So, we will cover the innovation
in more detail in the next session