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Member News: C.C. Eship / NACCE Journal Spring/Summer 2010

Defining Entrepreneurship

Wednesday, April 21, 2010   (0 Comments)
Posted by: Matthew Montoya
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<Editor's Note: at the end of this article we invite you to share your thoughts and opinions at a blog we set up just for this article. www.cceship.blogspot.com>

Who is an entrepreneur?

What is entrepreneurship?

What does it mean to be entrepreneurial?

Ask a roomful of NACCE members to agree on a definition of entrepreneurship and you are bound to have a lively and lengthy discussion. But will this definition of entrepreneurship be the same one you’d get if you asked state legislators, business owners, program funders, or traditional and nontraditional college students to hold a similar discussion? Possibly not.

And therein lies the challenge. If NACCE members and their key constituencies do not share a common understanding of what entrepreneurship is, how can we be sure our message about the importance and application of entrepreneurship education at community colleges will be understood by these critical audiences?

NACCE Executive Director Heather Van Sickle, puts it this way: "To provide clarity to members and to the communities our members serve, we are beginning a dialogue seeking to define entrepreneurship and its application in the community college setting.” That’s the task NACCE has set for itself–developing a shared definition of entrepreneurship that members can communicate to their key constituencies. If everyone is using the same "game plan”, then helping others understand the value and scope of entrepreneurship education as it is being practiced on community college campuses nationwide will be easier.

In the Beginning–

Who Is an Entrepreneur?

So let’s start at the beginning. The word "entrepreneur” originated with the French word "entreprendre,” which means "to undertake.” The Merriam-Webster Dictionary defines an entrepreneur as one who organizes, manages, and assumes the risks of a business or enterprise.

Joseph Schumpeter, a noted 20th century economist expanded on this when he wrote that an entrepreneur is "an innovator who implements change in an economy by introducing new goods or new methods of production…Schumpeter emphasized the beneficial process of creative destruction, in which the introduction of new products results in the obsolescence or failure of others.”2

In the late 20th century, management guru Peter Drucker differentiated between small business owners and entrepreneurs: "Admittedly, all new small businesses have many factors in common. But to be entrepreneurial, an enterprise has to have special characteristics over and above being new and small. Indeed, entrepreneurs are a minority among new businesses. They create something new, something different; they change or transmute values.”3

"One of my favorite quotes from Drucker is that ‘the purpose of a business is to create a customer,’” says Les Ledger, professor and Sam Walton Fellow of Free Enterprise at Central Texas College in Killeen, TX. "Drucker, in my opinion, is stating that an entrepreneur has to provide a good or service for which the customer has a need. Risk, as well as innovation, is involved in trying to create goods and services for the customer. If the customer sees no value, then there is no exchange of money between the entrepreneur and customer. The customer has to see that the good or service is worth the money that the entrepreneur needs to stay in business.”

"I think NACCE is on to something to want to define entrepreneurship,” says Melissa Crawford, director of the Scheinfeld Center for Entrepreneurship & Innovation at Santa Barbara City College in Santa Barbara, CA. "I find that people use the word ‘entrepreneur’ very loosely–and the general public sometimes mistakenly believes that an entrepreneur is any business owner. I disagree. I believe an entrepreneur invents a new way of accomplishing an old task to make it more efficient, or a way to meet an existing need that hasn’t been met yet. An entrepreneur spends time critically thinking about or analyzing how to fill that gap with a new service or product. An entrepreneur improves the way services and products are delivered.”

From all of this,NACCE’s proposed definition of an entrepreneur is:an individual that develops a new or improved product, service or way of doing things that can exist independent of the creator, and bears the financial responsibility for risks in bringing their development to market.

So what of the oft-used terms entrepreneurship, self-employment, small business owner, entrepreneurial, and intrapreneur? There is a place for those terms in the community college setting as well. Let’s look at where they fit in.

Entrepreneurship

Writing in their report "Entrepreneurship in American Higher Education,” the Kauffman Panel on Entrepreneurship Curriculum in Higher Education defined entrepreneurship as "the transformation of an innovation into a sustainable enterprise that generates value…entrepreneurship merges the visionary and the pragmatic.”4Therefore, the education of entrepreneurship is the exposure to and understanding of the skills, knowledge and process of innovation and new venture creation.

The Babson College definition of entrepreneurship is "a way of thinking and acting that is opportunity obsessed, holistic in approach, and leadership balanced.” Students in their entrepreneurship program "develop a broad-based entrepreneurial skill relevant to any organization–start-up, established, and for and not-for profit–in an industry.”5

For NACCE’s definition, entrepreneurship involves consistently thinking and acting in ways designed to uncover new opportunities that are then applied to provide value.The scope of this definition is precisely why entrepreneurship education belongs cross-campus and not only in the business department or as one non-credit course. Entrepreneurship provides a lens to view each discipline through and offers an application beyond traditional employment. The real world application of entrepreneurship education will result in: entrepreneurs, the self-employed, small business start-ups, and intrapreneurs.

What all these individuals have in common is that they have an interest in creating something that didn’t exist before in their community or in a broader market. And for those who are not traditional entrepreneurs (i.e., not focused on innovation and market transformation), they will still benefit from learning skills, such as opportunity recognition and capture and how to write a business plan that will attract funding, that are inherent to the traditional definition of entrepreneurship.

"These definitions recognize the broad range of students who turn to community colleges for knowledge that will enable them to add to the economic well-being of their communities either now or in the future,” says Van Sickle.

Self-employed/Small Business Owner

So are self-employed individuals and small business owners entrepreneurs? Based on the above NACCE definition of an entrepreneur, the answer is "no.” They are rather "replicative” entrepreneurs, "those producing or selling a good or service already available through other sources” or whatNACCE will define as the self-employed or small business owners. Notice that they do bear the financial risk for their enterprise which sets them apart from an "intrapreneur” or someone acting in an entrepreneurial way inside a corporation. So they too can benefit greatly from learning the basic skills of entrepreneurship that are being taught on NACCE member campuses. And it may well be that in some cases, learning these skills will prompt the self-employed and small business owners to embrace innovation, either with new products and services or in the processes they use to operate their companies.

Intrapreneur/Entrepreneurial

"Here at Southeast Community College, we have added ‘intrapreneur’ to our definitions to include those that are entrepreneurial in their career, i.e., willing to take a risk in their current position to help the company succeed all while receiving a paycheck,” says Tim Mittan, director of the Entrepreneurship Center at Southeast Community College in Lincoln, NE.

"Intrapreneurs are people working within corporations who approach their work in an entrepreneurial fashion,” says Van Sickle. "Speaking at one of our conferences, Michael Hennessy of the Coleman Foundation noted that in today’s complex and challenging environment, businesses need employees who are entrepreneurial. So while not all students who study entrepreneurship will start their own businesses, their careers as employees, and the businesses they work in, will thrive if they exhibit an entrepreneurial mindset.

In the community college setting, this is where the term "entrepreneurial president” or "culture of entrepreneurship” can be applied. The president, for instance, is not an entrepreneur as defined above, but within the structure of the bureaucratic college, they can act entrepreneurially, trying things that have never been done before. While they have not assumed personal financial risk, they can create something that didn’t exist previously.

The Implications

So what are the implications of delineating the definitions involved with entrepreneurship? For one thing, entrepreneurship can be embraced by the entire institution creating an empowering environment where recognizing and seizing opportunities can help turn around fragile local economies.

"It will require greater cooperation among disciplines and departments,” says Sherry Tshibangu, assistant professor of Business and Economics at Monroe Community College (MCC) in Rochester, NY. "The dominant view on campus may be that an entrepreneur is a business student; however, innovation comes from various disciplines and a strong curriculum will need to draw from multiple resources—inside and outside—the college. We must develop relationships outside the college that will benefit students, for example, with lenders and the local community of entrepreneurs, the self-employed and small business owners.

"Entrepreneurship Across the Curriculum (EAC) must be embraced by the leadership of the college,” adds Tshibangu. "To give students adequate support, it also requires workshop/seminar development of non-credit courses to complement current credit-bearing courses. At MCC, we have Auto Tech students and students in the Massage Therapy program who do not view themselves as "entrepreneurs” even though many expressed an interest in working for themselves. Embracing EAC will be a great benefit to these students, the college and the community.”

"The NACCE definitions challenge us as administrators and faculty to step away from the safety net of the traditional teaching model and become more experiential in our teaching and continued learning,” says Melissa Garcia, area program manager at Mid-Plains Community College in North Platte, NE. "Entrepreneurs evolve with changes in their environment, and to successfully encourage students to do so, we must practice what we preach—a forwardthinking mindset. For the curriculum, it allows us an opportunity to ingrain it across trades and into liberal arts as an essential 21st century skill.”

"Curriculum must also be created to be delivered via continuing education and into the workforce. The potential entrepreneurial strength of a community lies in the intellectual property that resides in the community,” says Tim Putnam, Director of the John Pappajohn Entrepreneurial Center at North Iowa Area Community College, IA.

Regarding the curriculum implications Les Ledger says, "The effort must be collaborative across the campus. No discipline can exist without creating something of value for the consumer, and private enterprise is the machine that delivers the product or service. Every discipline needs to see its part in creating value for the consumer in America and more especially for the consumers of the world market. Disciplines need to show the student how that discipline will help the student gain a job, become an entrepreneur, and produce new, better goods or make the price cheaper.”

"We welcome members to share their views on these definitions and their implications,” says Van Sickle. "We’ve set up a blog on the NACCE Web site to continue this important discussion.”

Join the Conversation!

As we evolve the NACCE definition of entrepreneurship, we’d appreciate your thoughts on these questions:

  • Do you agree/disagree with
    NACCE’s definitions of
    entrepreneurship?
  • What are the implications of these definitions for community college administrators and for faculty? For the curriculum?
  • How are community colleges going to innovate to provide an educational experience that serves these definitions of entrepreneurship?

Please visit www.cceship.blogspot.com to share your ideas.


References

1.Russell S. Sobel, "Entrepreneurship,” Concise Encyclopedia of Economics,http://www.econlib.org/library/Enc/Entrepreneurship.html

2. Ibid, Sobel.

3. Peter Drucker, "Systematic Entrepreneurship,”http://www.smarterhomebusiness.com/entrepreneurship

4. "Entrepreneurship in American Higher Education, Kauffman Foundation, Kansas City, MO, 2008, p. 5.

5. Babson Web site:http://www3.babson.edu/Offices/ug_ccd/Entrepreneurship.cfm.

6. William J. Baumol, Robert E. Litan, and Carl J. Schramm, Good Capitalism, Bad Capitalism, and the Economics of Growth and Prosperity, Yale University Press, New Haven, CT, 2007 p. 3




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