Concept of Entrepreneurship
Concept of Entrepreneurship
Concept of Entrepreneurship
Concept of Entrepreneurship:
The word “entrepreneur” is derived from the French verb enterprendre, which means ‘to
undertake’. This refers to those who “undertake” the risk of new enterprises. An enterprise is
created by an entrepreneur. The process of creation is called “entrepreneurship”.
Koontz & Fulmer said _The ability of a person to see a business opportunity, to get
together the capital needed to take advantage of the opportunity, and to start a business,
taking the risk of failure in the hope of reaping the rewards of success.”
Characteristics of Entrepreneurship:
2. Related to innovation:
Entrepreneurship involves a continuous search for new ideas. Entrepreneurship compels an
individual to continuously evaluate the existing modes of business operations so that more
efficient and effective systems can be evolved and adopted. In other words, entrepreneurship
is a continuous effort for synergy (optimization of performance) in organizations.
3. Profit potential:
“Profit potential is the likely level of return or compensation to the entrepreneur for taking
on the risk of developing an idea into an actual business venture.” Without profit potential,
the efforts of entrepreneurs would remain only an abstract and a theoretical leisure activity.
4. Risk bearing:
The essence of entrepreneurship is the ‘willingness to assume risk’ arising out of the creation
and implementation of new ideas. New ideas are always tentative and their results may not
be instantaneous and positive.
An entrepreneur has to have patience to see his efforts bear fruit. In the intervening period
(time gap between the conception and implementation of an idea and its results), an
entrepreneur has to assume risk. If an entrepreneur does not have the willingness to assume
risk, entrepreneurship would never succeed.
Entrepreneurial Process:
Entrepreneurship is a process, a journey, not the destination; a means, not an end. All the
successful entrepreneurs like Bill Gates (Microsoft), Warren Buffet (Hathaway), Gordon
Moore (Intel) Steve Jobs (Apple Computers), Jack Welch (GE) GD Birla, Jamshedji Tata and
others all went through this process.
To establish and run an enterprise it is divided into three parts – the entrepreneurial job, the
promotion, and the operation. Entrepreneurial job is restricted to two steps, i.e., generation
of an idea and preparation of feasibility report. In this article, we shall restrict ourselves to
only these two aspects of entrepreneurial process.
1. Idea Generation: To generate an idea, the entrepreneurial process has to pass
more like the natural seeding. Most creative ideas can be linked to an
b. Preparation: Once the seed of interest curiosity has taken the shape of a
focused idea, creative people start a search for answers to the problems.
engineering new product ideas and marketers will study consumer buying
habits.
2. Feasibility study: Feasibility study is done to see if the idea can be commercially
viable.
a. Illumination: After the generation of idea, this is the stage when the idea is
b. Verification: This is the last thing to verify the idea as realistic and useful for
Importance of Entrepreneurship:
alternatives in terms of cost and benefits implications, and finally chooses the best
managerial skills.
the society which results into higher standards of living for the people.
malls, etc. are pointers to the rising living standards of people, and all this is due
managerial skills, etc., and all these factors are so essential for the economic
development of a country.
Factors affecting Entrepreneurship:
entrepreneurs, include:
(c) Perseverance (working against all odds to overcome obstacles and never
(e) Persuasion (to customers and financiers for patronization of his business and
entrepreneurship. Higher income levels of people, desire for new products and
sophisticated technology, need for faster means of transport and communication,
influence entrepreneurship and brings in desired results for the individual, the
Types of Entrepreneurs:
Depending upon the level of willingness to create innovative ideas, there can be
better and more economical ideas of business organization and management. They
country. Inventions like the introduction of a small car ‘Nano’ by Ratan Tata,
2. Imitating entrepreneurs: These entrepreneurs are people who follow the path
because the environment in which they operate is such that it does not permit
them to have creative and innovative ideas on their own.Such entrepreneurs are
found in countries and situations marked with weak industrial and institutional
base which creates difficulties in initiating innovative ideas.In our country also, a
large number of such entrepreneurs are found in every field of business activity
and they fulfill their need for achievement by imitating the ideas introduced by
of imitating entrepreneurs. All the small car manufacturers now are the imitating
entrepreneurs.
3. Fabian entrepreneurs:
The dictionary meaning of the term ‘Fabian’ is ‘a person seeking victory by delay
rather than by a decisive battle’. Fabian entrepreneurs are those individuals who
do not show initiative in visualizing and implementing new ideas and innovations
wait for some development which would motivate them to initiate unless there is
4. Drone entrepreneurs:
The dictionary meaning of the term ‘drone’ is ‘a person who lives on the labor of
others’. Drone entrepreneurs are those individuals who are satisfied with the
existing mode and speed of business activity and show no inclination in gaining
5. Social Entrepreneur:
enterprise development.
entrepreneur.
Functions of an Entrepreneur:
technology, products, markets, etc. Innovation may involve doing new things or
new things and exploit opportunities in the market. He does not believe in status
shirker. He is always prepared for assuming losses that may arise on account of
new ideas and projects undertaken by him. This willingness to take risks allows an
entrepreneur to take initiatives in doing new things and marching ahead in his
efforts.
applicability, supplementing them with empirical findings, and then choosing the
best alternative. It is then that he applies his ideas in practice. The selection of an
equilibrium between his organization and its environment.However, when the size
entrepreneur always first tries new ideas at his level.It is only after the successful
others for their benefit. In this manner, an entrepreneur paves the way for the
acceptance of his ideas by others. This is a reflection of his will power, enthusiasm
and energy which helps him in overcoming the society’s resistance to change.
6. Catalyst of Economic Development: An entrepreneur plays an important role in
Over the years, a few myths about entrepreneurship have developed. These are as under:
(i) Entrepreneurs, like leaders, are born, not made:The fact does not hold true for the simple
reason that entrepreneurship is a discipline comprising of models, processes and case studies.
One can learn about entrepreneurship by studying the discipline.
(ii) Entrepreneurs are academic and socially misfits: Dhirubai Ambani had no formal
education. Bill Gates has been a School drop-out. Therefore, this description does not apply
to everyone. Education makes an entrepreneur a true entrepreneur. Mr. Anand Mahindra,
Mr. Kumar Mangalam Birla, for example, is educated entrepreneurs and that is why they are
heroes.
(iii) To be an entrepreneur, one needs money only: Finance is the life-blood of an enterprise
to survive and grow. But for a good idea whose time has come, money is not a problem.
(iv) To be an entrepreneur, a great idea is the only ingredient:A good or great idea shall
remain an idea unless there is proper combination of all the resources including
management.
(v) One wants to be an entrepreneur as having no boss is great fun:It is not only the boss who
is demanding; even an entrepreneur faces demanding vendors, investors, bankers and above
all customers.
An entrepreneur’s life will be much simpler, since he works for himself. The truth is working
for others are simpler than working for oneself. One thinks 24 hours a day to make his
venture successful and thus, there would be a punishing schedule.
Features of Entrepreneurship:
Entrepreneurship is the tendency of a person to organize the business of his own and to
run it profitably, using various traits like leadership, decision making, innovation,
managerial caliber etc. Entrepreneurship is a set of activities performed by an
entrepreneur In a way, entrepreneur precedes entrepreneurship. The main features of
entrepreneurship are as follows :
(i) Economic Activity: Although classical economists like Adam Smith and Richard
Cantillon and many others didn’t recognize entrepreneurship as an economic activity but
since last few decades entrepreneurship is catching up and is primarily becoming an
economic function because it involves creation and operation of an enterprise.
(ii) Innovative Activity: According to Schumpeter, entrepreneurship is essentially a
creative and an innovative activity. There are five ways of being innovative.
(a) The introduction of a new good;
(b} The introduction of a new method of production ;
(c) Opening of a new market;
(d) The conquest of a new source of supply of raw-material;
(e) The creation of a new organization of an industry.
Schumpeter’s entrepreneur combines already existing materials and thereby produces
something novel and innovative. It is only at that very moment when someone
actually puts together such a combination that he is engaged in entrepreneurship. He
suggests that it is very useful to study the constitutive parts of entrepreneurship,
different motives that drive the entrepreneur and the main types of innovative
behavior that entrepreneurship may result in.
Entrepreneurs tend to tackle the unknown; they do things in new and different ways’
they weave old ideas into new patterns; they offer more solutions than exercises.
However, just to be innovative is not enough unless that innovation is carried into
production to benefit consumers.
David McClelland stressed that entrepreneurs are highly motivated by challenging and
competitive work situations.
(iv) Creative and Purposeful Activity: Entrepreneurship is virtually a creative, and
purposeful activity. Entrepreneurship is a creative response to the changing
environment. Earning profit may not be the sole objective but introduction of
something creative and new is the purpose of entrepreneurship. The benefit of this
creativity must be enjoyed by people at large.
Marshall also advocated the significance of organization among the services of special
class of business undertakers.
(vi) Entrepreneurship: A function of Risk-Bearing: Richard Cantillon, an Irishman living
in France, defined entrepreneur who buys factors of production with a view to sell it
at uncertain prices in future. Cantillon concerned of an entrepreneur as a bearer of
non-insurable risk. Thus, Cantillon introduces elements of direction and speculation
into the function of entrepreneurship.
Entrepreneurship is a dynamic and multi-dimensional concept. It is both an art as well
science. It is more an art than science. In short, Entrepreneurship is what
entrepreneurs do.
Need for and Significance of Entrepreneurs in India!
The entrepreneurs are considered ‘change agents’ in the process of industrial and
economic development of an economy. The premium mobile role that entrepreneurs
play in promoting industrial and economic development of an economy is well
adduced across the countries.
In a sense, entrepreneurs are the ‘spark plug’ who transform the economic scene of an
economy. For example, Japan and United States are developed because of their
entrepreneurial development and Bangladesh and Nepal are underdeveloped because
of lack of their entrepreneurial development.
Within India itself, Gujarat and Punjab are developed because of their entrepreneurial
development and Bihar and Odisha are backward or underdeveloped because of the
lack of entrepreneurial development. Thus, with entrepreneurs societies prosper,
without them they are poorer.
In fact, the need for entrepreneurs in an economy can be imbued with multiplicity of
justifications as listed below:
a. Entrepreneurs promote capital formation by mobilising the idle saving of the
people.
b. They create immediate and large-scale employment by establishing small- scale
enterprises. Thus, they reduce the unemployment problem in the country, i.e., the
root cause of all socio-economic problems.
Mr. Rahul Bajaj, Chairman & Managing Director of Bajaj Auto extols the need for and
significance of entrepreneurs in India in these words: “If we could have an
entrepreneur in every family, India’s economy would sky rocket. We would then be
able to take our rightful place as an economic super power in the community of
nations. Entrepreneurs create jobs. They create wealth. They create products and
services.”
One way, perhaps the most plausible way, of examining and appreciating the role of
entrepreneurs in economic development in India is to see their contribution to
country’s total production, employment, and exports.
There are some differences between the entrepreneurs and the managers. The following table
will be helpful in understanding the differneces between the entrepreneurs and managers:-
Entrepreneur bears the risk An intraprenuer does not fully bear the
Risk involved in the business. risk involved in the enterprise.
According to the above table, anyone can differentiate between the entrepreneur and intrapreneur
as both the terms are heterogeneous.
Benefits Of Entrepreneurship
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6. Unexpected and thrilling experiences
If you are considering becoming an entrepreneur, you probably appreciate the value
of the unexpected. Not knowing exactly how the day is going to play out when you
wake up is exciting, especially when compared to the predictable and monotonous
schedule of a traditional office job. Another related benefit: responding to unexpected
situations teaches you to live in the moment and be more present.
7. Choosing who to work with
Entrepreneurs can choose which clients to work with, employees to hire, and
partnerships to pursue. If having control over business relationships appeals to you,
the entrepreneur life may be the perfect fit.
8. Greater self-confidence
Nothing boosts your confidence more than battling self-doubt and coming out on top.
Many entrepreneurs become more confident in their self-sufficiency as time goes on
and they see what they are truly capable of.
9. Leadership experience
Self-discipline, communication skills, passion, optimism, patience, and unrelenting
work ethic. Building a company from the ground up hones these leadership traits,
which means that entrepreneurship can transform you into an inspiring leader both
professionally and personally.
10. The best “offices”
Digital nomads are becoming increasingly common. These types of entrepreneurs
often combine fun travel with online business, and work from cafes, hotels, and co-
working spaces in the coolest cities around the globe, which can make for some neat
“offices.” Even if you aren’t trekking the world, the ability to work from a local park, a
beautiful café, or even a home office (while wearing pajamas), is incredibly tempting.
Maslow’s theory is based on the human needs. These needs are classified into a sequential
priority from the lower to the higher. According to him, all the human needs are classified into
the five needs-clusters as shown in the following figure...
1. Physiological Needs or Basic Needs: these needs are basic to human life and include
food, clothing, shelter, air, water and other necessities of life. They exert tremendous
influence on human behavior. Entrepreneur also being a man needs to meet his
physiological needs for survival. Hence, he /she are motivated to work in the enterprise to
have economic rewards to meet the basic needs.
2. Safety and security Needs: after satisfying the physiological needs, the next needs felt
are called safety and security needs. These needs find expression in such desires as
economic security and protection from physical dangers. Meeting these needs requires
more money and, hence, the entrepreneur is promoted to work more on his/her enterprise.
Like physiological needs, these become inactive once they are satisfied.
3. Social needs: Man is a social animal. These needs, therefore, refer to belongingness. All
individuals want to be recognized and accepted by others. Likewise, an entrepreneur is
motivated to interact with fellow entrepreneurs, his employees and others.
4. Esteem Needs: these needs refer to self-esteem and self-respect. They include such needs
which indicate self-confidence, achievement, competence, knowledge and independence.
In case of entrepreneurs, the ownership and self-control over enterprise satisfies their
esteem needs by providing them status, respect, reputation and independence.
5. Self -Actualizations: the final step under need hierarchy model is the need for self-
actualization. This refers self-fulfillment. The term self-actualization was coined by Kurt
Goldstein and means to become actualized in what one is potentially good at. An
entrepreneur may achieve self-actualization in being a successful entrepreneur.
In Maslow’s theory, needs are arranged in a lowest to the highest hierarchy. The second need
does not dominate unless the first is reasonably satisfied, and the third need does not dominate
until the first two needs have been reasonably satisfied. This process goes on till the last need.
This is because man is never satisfied. If one need is satisfied another need arises. Once a need is
satisfied, it ceases to be a motivating factor. For entrepreneurs, it is mainly social, esteem, and
self-actualization needs which motivate them to work more and more satisfying them.
1. Need for Affiliation: These refer to needs to accomplish and maintain friendly and warm
relations with others.
2. Need for power: These mean the one’s desire to dominate and influence others by using
physical objects and actions.
3. Need for achievement: this refers to one’s desire to accomplish something with own
efforts. This implies one’s will to excel in his/her life.
McClelland also suggests that these three needs may simultaneously be acting on an individual.
But, in case of an entrepreneur, the high need for achievement is found dominating one. In his
view, the people with high need for achievement are characterized by the following: