Characterizing Entrepreneurship: Who are Pinoy Entrepreneurs?

There are problems with this title. First, it might be interpreted to refer to a particular person. While we have a category on (and some lists of) successful and inspiring Pinoy Entrepreneurs, the thrust of this article is not to identify any particular Pinoy Entrepreneur, but to characterize an entrepreneur. Having a characterization would make it much easier to identify specific Pinoy Entrepreneurs. This may be of particular interest considering that an overwhelming majority are not cowed with the current recession in other countries and would still try business in 2009.

Second, and more importantly, there seems to be no generally-accepted definition of an entrepreneur. While the concept of entrepreneurship, as distinguished from business, has gained popularity in the Philippines in recent years, the agreement seems to be on the existence of disagreement as to its meaning. We now have various awards for entrepreneurs, but we may not have an idea how an entrepreneur is distinguished from the rest of the pack.

Some focus on the personal traits of an entrepreneur, while others on the behavior and acts. Entrepreneurs, to some, are those engaged in small and new businesses, while others say entrepreneurs are just as present in big, established businesses. Some say an entrepreneur creates something of value where there was nothing before, while others say that the entrepreneur also endows existing resources with enhanced potential for creating wealth. The subject grew more complex as we read more about it.

Personal Traits of an Entrepreneur. The discussion on entrepreneurship may focus on the traits of an entrepreneur. An entrepreneur has the desire to achieve, work hard, and take responsibility. He/she is an optimist and a risk-taker. He strives for excellence. Prof. Marites Khanser (John L. Gokongwei, Jr.: The Path of Entrepreneurship) mentioned the following attributes of an entrepreneur – risk-taking behavior, skills and competency level, and tolerance for ambiguity. There are other personality traits of entrepreneurs and while we could spend the whole day discussing these traits, the fact remains that there’s no single agreed definition of entrepreneurship.

Small and New Businesses. Peter Drucker notes that “the entrepreneur is often defined as one who starts his own, new and small business.” This is apparent, for instance, in the book “Introduction to ENTREPRENEURSHIP: Success Stories of Filipino Entrepreneurs”, which notes in its preface that the “SME sector has become the backbone of the Philippine economy, comprising a staggering 99.6 percent of all registered firms nationwide, employing 69.9 percent of the labor force, and contributing 32 percent to the economy.” The same preface also speaks of “entrepreneur-franchisors” and asserts that “franchisees are themselves entrepreneurs”.

On another framework, however, the franchisee who simply implements the processes of the franchisor is not an entrepreneur. Based on Prof. Khanser’s working definition of an entrepreneur – someone who “creates something of value where there was nothing before” – she ruled out “take-overs of existing business or securing a franchise, since these are not truly “start-up” operations.” (Incidentally, a comment left by “Brainleak” in a previous post reads: “I believe someone who is NOT a Pinoy entrepreneur is the one who just inherited/claimed the reins of an existing family enterprise.”)

Entrepreneurship is not simply about starting a business. Mr. Candari made a comment in the precursor of this article: “Every entrepreneur is a businessman, but not all businessmen are entrepreneur.” A small and new business may be entrepreneurial, but this does not rule out existing and big businesses. A franchisor who sets out to formalize processes and standardize products may be entrepreneurial, but a franchisee, by the sole fact of being a franchisee, is not automatically an entrepreneur.

The entrepreneurship spirit may be developed. Entrepreneurship is also not confined to any class or group of people, and it can be developed. More than half of those who voted in the poll believe so. Prof. Andy Ferreria, who provided the entrepreneurial lessons in the book “Negosyo: Joey Concepcion’s Inspiring Entrepreneurial Stories”, noted that the “entrepreneurial spirit can be made and can be developed regardless of age, gender, social status, economic status…etc.” Prof. Ferreria goes on to say that “becoming the best that one can be is the object of the entrepreneurial spirit” and that the entrepreneurial spirit “uses the innovation process of idea generation, incubation, and implementation, to be better than yesterday.”

Entrepreneurship and Innovation. Innovation appears to be the core of entrepreneurship. Innovation, which is the “specific function of entrepreneurship” according to Drucker, “is the means by which the entrepreneur either creates new  wealth-producing resources or endows existing resources with enhanced potential for creating wealth.” Drucker went on to say that: “The term [entrepreneurship], then refers not to an enterprise’s size or age but to a certain kind of activity. At the heart of that activity is innovation: the effort to create purposeful, focused change in an enterprise’s economic or social potential.” (“The Discipline of Innovation”, Harvard Business Review, 1985)

It’s interesting that Ducker was cited in the book Blue Ocean Strategy in relation to “value innovation”, which “is the cornerstone of blue ocean strategy”. According to Drucker, “the very foundation of entrepreneurship is the practice of systematic innovation,” although there are two other critical aspects – entrepreneurial strategies and entrepreneurial management, both of which deserve separate discussions.

Drucker discussed certain principles of innovation: “Purposeful, systematic innovation begins with the analysis of the sources of opportunities”. “To be effective, an innovation has to be simple, and it has to be focused.” “Effective innovations start small.” “The successful innovation aims from the beginning to become the standard setter, to determine the direction of a new technology or a new industry, to create the business that is – and remains – ahead of the pack.” “Innovation is work rather than genius. It requires knowledge. It requires ingenuity. And it requires focus.”

Entrepreneurship and Opportunities. The entrepreneur, according to Drucker (Innovation and Entrepreneurship), “always searches for change, responds to it, and exploits it as an opportunity.” He went on to quote J.B. Say, that the entrepreneur “shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.” In a way, we could say that entrepreneurship is identifying, responding to and maximizing an opportunity. Entrepreneurship is not limited to the creation of value from nothing, but also enhancing the potential of existing resources.

In sum, we could argue that a person who takes the risks inherent in a business is an entrepreneur. We could also argue that business is not equivalent to entrepreneurship, for entrepreneurship requires something more — innovation. Businesses that simply copy an existing framework or system are not innovative. This distinction, however, may not be material especially in times of economic crisis when any Pinoy who successfully engages in business, generating employment in the process and contributing to the economy, is most welcome.

To be sure, however, a single article would not do justice to a topic discussed in various books for decades, spawning various schools of thoughts. But we have to start somewhere and provide a working, although unfinished, definition of the Pinoy Entrepreneur for this site.

If someone has an idea, please step up. A discussion on this matter would be helpful in the search for the Pinoy Entrepreneurs.

Leave a Reply

Your email address will not be published. Required fields are marked *