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ENTREPRENEURSHIP

is the process of designing, launching and running a new business, which is often initially
a small business. The people who create these businesses are called entrepreneurs.[1][2]
Entrepreneurship has been described as the "capacity and willingness to develop, organize and
manage a business venture along with any of its risks to make a profit."[3] While definitions of
entrepreneurship typically focus on the launching and running of businesses, due to the high risks
involved in launching a start-up, a significant proportion of start-up businesses have to close due to
"lack of funding, bad business decisions, an economic crisis, lack of market demand, or a
combination of all of these."[4]
A broader definition of the term is sometimes used, especially in the field of economics. In this
usage, an Entrepreneur is an entity which has the ability to find and act upon opportunities to
translate inventions or technologies into products and services:"The entrepreneur is able to
recognize the commercial potential of the invention and organize the capital, talent, and other
resources that turn an invention into a commercially viable innovation." [5] In this sense, the term
"Entrepreneurship" also captures innovative activities on the part of established firms, in addition to
similar activities on the part of new businesses.

9 IMPORTANCE OF ENTREPRENEURSHIP
Importance of EntrepreneurshipEntrepreneurship is the dynamic process of creating incremental wealth
and innovating things of value that have a bearing on the welfare of an entrepreneur.

It provides civilization with an enormous amount of goods and services and enhances the growth of
social welfare.
The main importance of entrepreneurship is the creation of job opportunities, innovation, and improve
the economy.
Man behind the entrepreneurship is an action-oriented and highly motivated individual who is ready to
achieve goals.
M. Kirzner (1973) observes entrepreneurs as; “one who perceives what others have not seen and acts
upon that perception”.

Thus, entrepreneurs take the economy and the society that is the whole civilization to the state of
progress and prosperity.
Taking this into consideration we can describe the significance or importance of entrepreneurship which
is stated below.
9 IMPORTANCE OF ENTREPRENEURSHIP ARE;

1. Growth of Entrepreneurship.
2. Creation of job opportunities.
3. Innovation.
4. Impact on community development.
5. The consequence of business failure.
6. Political and economic integration of outsiders.
7. Spawns entrepreneurship.
8. Enhances the standard of living.
9. Promotes research and development.
1. Growth of Entrepreneurship
Entrepreneurship the advent of new venture particularly small ventures in order to materialize the
innovative ideas of the entrepreneurs.

Thus, the growth or establishment of small enterprises ii the specific contribution of entrepreneurship in
every economy of the world.

The statistics reveal that in USA economy nearly half a million small enterprise is established every year.
Our country is not an exception in this regard.

2. Creation of job opportunities


Entrepreneurship firms contributed a large share of new jobs. It provides entry-level jobs so necessary
fur training or gaining experience for unskilled workers.

The small enterprises are the only sector that generates a large portion of total employment every year.

Moreover, entrepreneurial ventures prepare and supply experienced labor to large industries.

3. Innovation
Entrepreneurship is the incubator of innovation. Innovation creates disequilibria in the present state of
order.

It goes beyond discovery and does implementation and commercialization, of innovations.

“Leapfrog” innovation, research, and development are being contributed by entrepreneurship.

Thus, entrepreneurship nurses innovation that provides new ventures, products, technology, market,
quality of good, etc. to the economy that increases Gross Domestic Products and standard of living of
the people.

4. Impact on community development


A community is better off if its employment base is diversified among many small entrepreneurial firms.

It promotes abundant retail facilities, a higher level of homeownership, fewer slums, better, sanitation
standards and higher expenditure on education, recreation, and religious activities.

Thus, entrepreneurship leads to more stability and a higher quality of community life.

5. The consequence of business failure


The collapse of the large industry almost has irresistible damage to the development of the state and to
the state of the economy and to the financial condition of the relevant persons.

The incumbents lost their jobs: suppliers and financial institutions face a crisis of recovery.

Customers are deprived of goods, services, and government losses taxes. This could not happen in the
case of failure of entrepreneurship.
There shall be no measurable effect upon the economy and no political repercussions too.
6. Political and economic integration of outsiders
Entrepreneurship is the most effective way of integrating those who feel disposed of and alienated into
the economy.

Minorities, migrants, and women are safely integrated into entrepreneurship that will help to develop a
well-composed plural society.

7. Spawns entrepreneurship
Entrepreneurship is the nursing ground for new inexperienced adventurists.

It is the field where a person can start his/her idea of the venture, which may be ended up in a giant
enterprise. All the large industrial ventures started as a small entrepreneurial enterprise.

Therefore, entrepreneurship provides a wide spectrum of ventures and entrepreneurs in every


economy. The vast open arena of entrepreneurship thus acts as an incubator to entrepreneurs.

8. Enhances the standard of living


The standard of living is a concept built on an increase in the amount of consumption of a variety of
goods and services over a particular period by a household.

So it depends on the availability of diversified products in the market. Entrepreneurship provides


enormous kinds of a product of various natures by their innovation.

Besides, it increases the income of the people who are employed in entrepreneurial enterprises.

That also capable employed persons to consume more goods and services. In effect, entrepreneurship
enhances the standard of living of the people of a country.

9. Promotes research and development


Entrepreneurship is innovation and hence the innovated ideas of goods and services have to be tested
by experimentation.

Therefore, entrepreneurship provides funds for research and development with universities and
research institutions. This promotes the general development, research, and development in the
economy.

Entrepreneurship is the pioneering zeal that provides events in our civilization.

We are indebted to it for having prosperity in every arena of human life- economic, technological and
cultural.

The above discussion, in a nutshell, enumerates that tremendous’ contributions of entrepreneurship.

Entrepreneurs are frequently thought of as national assets to be cultivated, motivated, and


remunerated to the greatest possible extent. Great entrepreneurs have the ability to change the way we
live and work. If successful, their innovations may improve standards of living, and in addition to
creating wealth with entrepreneurial ventures, they also create jobs and contribute to a growing
economy.
Entrepreneurship is thus important for a number of reasons, from promoting social change to driving
innovation.

Entrepreneurs Spur Economic Growth


New products and services created by entrepreneurs can produce a cascading effect, where it stimulates
related businesses or sectors that need to support the new venture, furthering economic development.

For example, a few information technology companies made up the IT industry in India during the
1990s. The industry quickly expanded and many other sectors benefited from it. Businesses in
associated industries—such as call center operations, network maintenance companies, and hardware
providers—flourished.

Education and training institutes nurtured a new class of IT workers who were offered better, high-
paying jobs. Infrastructure development organizations and even real estate companies capitalized on
this growth as workers migrated to cities where employment was growing.

Similarly, future development efforts in underdeveloped countries require robust logistics support,
capital investments, and a qualified workforce. From the highly qualified programmer to the
construction worker, entrepreneurship benefits a large part of the economy.

Entrepreneurs Add to National Income


Entrepreneurial ventures help generate new wealth. Existing businesses may remain confined to existing
markets and may hit the glass ceiling in terms of income. New and improved products, services or
technology from entrepreneurs enable new markets to be developed and new wealth to be created.

Additionally, increased employment and higher earnings contribute to better national income in the
form of higher tax revenue and higher government spending. This revenue can be used by the
government to invest in other, struggling sectors and human capital. Although it may make a few
existing players redundant, the government can soften the blow by redirecting surplus wealth to retrain
workers.

Fast Fact
According to Babson College, there are 25 million entrepreneurs in the U.S.

Entrepreneurs Create Social Change


Through offering unique goods and services, entrepreneurs break away from tradition and reduce
dependence on obsolete systems and technologies. This results in an improved quality of life, improved
morale, and greater economic freedom.

For example, the water supply in a water-scarce region will, at times, forces people to stop working to
collect water. This will impact their business, productivity, and income. Imagine an innovative and
automatic pump that can fill people's water containers automatically. This type of innovation ensures
people are able to focus on their jobs without worrying about a basic necessity like water. More time to
devote to work translates to economic growth.

For a more contemporary example, smartphones and apps have revolutionized work and play across the
globe. Smartphones are not exclusive to wealthy countries or people. As the growth of the smartphone
market continues, technological entrepreneurship can have a profound, long-lasting impact on the
world.

Moreover, the globalization of technology means entrepreneurs in lesser-developed countries have


access to the same tools as their counterparts in richer countries. They also have the advantage of a
lower cost of living, so a young entrepreneur from an underdeveloped country can compete with a
multi-million-dollar existing product from a developed country.

Community Development
Entrepreneurs regularly nurture ventures by other like-minded individuals. They also invest in
community projects and provide financial support to local charities. This enables further development
beyond their own ventures.

Some famous entrepreneurs, such as Bill Gates, have used their money to finance good causes, from
education to public health. The qualities that make one an entrepreneur are the same qualities that help
motivate entrepreneurs to pay it forward.

KEY TAKEAWAYS
Entrepreneurship is important as it has the ability to improve standards of living and create wealth, not
only for the entrepreneurs, but also for related businesses.
Entrepreneurs also help drive change with innovation, where new and improved products enable new
markets to be developed.
Economy wise, higher earnings thanks to entrepreneurship can help boost national income and tax
revenue.
Entrepreneurs contribute in other ways as well, such as investing in community projects and supporting
local charities.
Too much entrepreneurship (i..e, high self-employment) can be detrimental to economic development.
Is All Entrepreneurship Good?
Are there any drawbacks to cultivating entrepreneurs and entrepreneurship? Is there a limit to the
number of entrepreneurs a society can hold?

Italy may provide an example of a place where high levels of self-employment have proved to be
inefficient for economic development. Research has shown that Italy has experienced large negative
impacts on the growth of its economy because of self-employment. There may be truth in the old
saying, "too many chefs and not enough cooks spoil the soup."
The Role of Government
Regulation plays a crucial role in nurturing entrepreneurship. Unregulated entrepreneurship may lead to
unwanted social outcomes including unfair market practices, pervasive corruption, and criminal activity.

Findings from the United Nations University also indicate the possible implications of “over-nurturing"
entrepreneurship. European economist Wim Naudé argues that “while entrepreneurship may raise
economic growth and material welfare, it may not always result in improvements in non-material
welfare (or happiness). Promotion of happiness is increasingly seen as an essential goal.”

Paradoxically, a significantly high number of entrepreneurs may lead to fierce competition and loss of
career choices for individuals. With too many entrepreneurs, levels of aspirations usually rise. Owing to
the variability of success in entrepreneurial ventures, the scenario of having too many entrepreneurs
may also lead to income inequality, making citizens more unhappy.

The Bottom Line


The relationship between entrepreneurship and economic development is important to understand for
policymakers and business owners. Understanding the benefits and drawbacks of entrepreneurship
allows a balanced approach to nurturing entrepreneurship to be taken, which can result in a positive
economic and societal impact.

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THREE COMPETENCIES EVERY ENTREPRENEUR SHOULD DEVELOP


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KEY CONCEPT
Is there such a thing as a ‘natural-born entrepreneur’? According to this Idea there is not. Specific
techniques and habits must be practiced and developed by all would-be entrepreneurs. And as well as
business competencies, entrepreneurs need interpersonal and self-leadership skills too; however, these
are often overlooked. Read on for advice on how to build and put these skills into practice.

IDEA SUMMARY
Are entrepreneurs born or made? Commonly, characteristics such as risk seeking, assertiveness and
vision are considered typical of a successful entrepreneur. But these are innate predispositions or
aspects of temperament; by using them as yardstick, it is wrongly concluded that only certain types of
people make good entrepreneurs or are capable of worthwhile innovations. Instead, this Idea proposes
that ‘entrepreneurial behaviour’ can be learned and developed.

The question is not who entrepreneurs are, but what they do, and more important than business skills
can be other competencies that provide a foundation for those business skills.
The research behind this Idea is based on empirical studies of hundreds of entrepreneurs, which
revealed that entrepreneurial behaviour is the result of a combination of:

strong motivation to achieve something; and


the capabilities to achieve it.
Furthermore, there are three levels of competencies, which all entrepreneurs need:

Personal competencies: creativity, determination, integrity, tenacity, emotional balance and self-
criticism.
Interpersonal competencies: communication, engagement/charisma, delegation, respect.
Business competencies: business vision, resource management, networking, negotiating skills.
Previous research has also highlighted other competencies that make up the ‘ingredients’ of a successful
entrepreneur, including initiative, ambition and even luck.

BUSINESS APPLICATION
Though the key take away from this Idea is that entrepreneurship can be learnt by anyone, it’s not
something that can simply learn in a classroom. Even once key business knowledge has been acquired,
the entrepreneur still has to learn how to use it in practice - something that can only be done through
practice. In this respect, ‘leaning by doing’ is useful. Other tips include the following:

Have a clear understanding of industry evolution, knowledge of the effects of globalization, techniques
for developing markets, etc. Some training in an academic environment (e.g. business schools) may help
with this, particularly where case methods/working groups are used to teach.
Practice developing your interpersonal competencies. Certain skills, such as communication, delegating
and respecting others can only be acquired through practice and developing ‘habits of character’.
Habits of character may not strictly be related to business but are to do with the kind of person the
entrepreneur is and what he/she does. These are indispensable, alongside ‘technical habits’ and ‘skills’.
The only way to acquire the habits essential for entrepreneurs is by acting in a way consistent with
them. Only then do these habits become the ‘driving force’ of successful entrepreneurial ventures.

Leader Prompts - enable your leaders with these 50 practical and straight-forward mini-guides to
handling common management challenges.

Use our Ideas to:

1. Catalyze conversations with mentors, mentees, peers and colleagues.


2. Keep program participants engaged with leadership thinking when they return to their
workplace.
3. Create a common language amongst your colleagues on leadership and management practice
4. Keep up-to-date with the latest thought-leadership from the world’s leading business schools.
5. Drill-down on the original research or even contact the researchers directly

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