Lesson 1 - Overview
Given the rapid rate of changes led by globalization and proliferation of digital networks, we have started to see the rise of a new generation of entrepreneurs throughout the world, who have taken advantage of technology to boost productivity levels, create new business models, and bring innovation and disruption to existing markets and industries and even redistribution of wealth.
Internet startups such as Uber and Airbnb have challenged existing legal framework and industry incumbents on how values should be delivered to consumers. Social entrepreneurs have redefined the redistribution of wealth with innovative business models that can empower social classes beyond the traditional intervention by government in income redistribution through progressive taxation and social welfare programs.
Thus, the new Innovation and Technology Bureau marked an important milestone in the history of the HKSAR. Her arrival on the scene has affirmed that innovation and technology have impacted not only the way we work and live but also the way we learn, especially to our students who have to plan for their education and future career path. The slogan on “re-industrialization of Hong Kong” will herald a new period of the Hong Kong SAR in which she will undergo a major industrial transformation through the creation of more technology and innovation based businesses. Entrepreneurship is essential to this transformation.
Entrepreneurship will become an important topic in economic education. It is shaping the world around us, causing changes to market structure and the way how firm operates and wealth is created. Economics as a social science discipline will provide us with a perspective to examine all these changes.
An entrepreneur is a person who has a strong passion to build and grow a business organization despite adversities and the high possibility of failure. He or she would drive the business forward amidst fast changes and difficult challenges in the environment in which opportunities will be recognized, risks calculated, and resources acquired to bring innovation into the market to yield profitable return. Obviously, the journey will not be easy. But the spirit behind the endeavor will make the entrepreneur persevere against all odds. Built upon this basis, new jobs can be created, productivity raised, and wealth more equitably distributed, pushing the economy and society forward. This is what sustainable economic development is all about.
As economics educator, we want to nurture our students to develop such spirit. This can transform them into a resourceful person, who knows the risks, seizes the opportunities with a passionate attitude to persevere.
There have been various approaches developed to teach entrepreneurship. In our case, we have adopted a “process view” to understand entrepreneurship and the entrepreneurial spirit through the lens of basic economic principles, tracing the formation and development of an entrepreneur from recognizing opportunity to allocating resources, determining type of business organization to dissecting market structure, positioning market entry to overcoming market barrier, pricing and differentiating offerings to innovating for growth, tackling externality to understanding government policies, and finally navigating business cycles to determine the proper time to inject or freeze capital investment, ramp up or cut down production volume, withhold or reduce inventory.
The purpose of this resource pack is to equip us to articulate these changes to our students, so that they can apply their knowledge of economics to explain the day-to-day events that happen around them and build up a more proactive attitude with entrepreneurial spirit as the driving force. In short, they can start to see the world through the eyes of an entrepreneur.
Major points to recap
a. We are living in a rapidly changing and uncertain world in which disruptions caused by innovation and technology have challenged traditional industry and market structures and the legal framework built around them, causing new possibilities of how values and wealth can be created and distributed.
b. Innovation and technology will become important forces to transform Hong Kong’s industrial structure. Entrepreneurship is an essential part of that.
c. An entrepreneur is a person who:
• has a strong passion to build and grow a business organization
• willing to face adversities and the high possibility of failure and persevere
• recognizes opportunities under uncertainties
• acquires resources
• brings innovation into the market
• calculates risks to yield profitable return
Entrepreneurial spirit is the mindset and the attitude of developing the qualities (listed above) of an entrepreneur.
d. A “process view” of entrepreneurship depicts the formation and development of entrepreneurship and entrepreneurship spirit through the understanding of economic principles. It focuses on the application of micro and macro economic principles to describe a chronological sequence of entrepreneurship related events.
a. What makes someone an entrepreneur?
b. What is entrepreneurial spirit?
c. What is a “process view” of understanding entrepreneurship and entrepreneurial spirit?