Functions of entrepreneur

Assumption of risk
Business decision making Managerial functions

Function of innovation

Entrepreneur & Manager Similarities

Both focus in results Both take decisions

Face constraints

Entrepreneur & Manager Differences

Primary motive Role

Delegation
Risk Innovation

Rewards
Relationship Skills &

Qualifications

Facts do not speak for themselves, they are read in the light of theory. - Stephen Jay Gould

Theories of entrepreneurship
Economic Psychological
Sociological Anthropological

Economic theories of entrepreneurship

Economic growth & entrepreneurship

Richard Cantillon & Say

Mark "Entrepreneurship, an Economic theory" Casson

Demand & supply of entrepreneurs
Four Qualities of Entrepreneur

1. Judgmental decisions 2. Co-ordination of Scarce resources 3. Motivated by Self Interest 4. Imaginationentirely innate

Mark Casson
The problems encountered in screening for these qualities & in enhancing the ones that are deficient, have a no. of implications for the development of a successful entrepreneurial career.

X- efficiency theory
Harvey Leibenstein
When an input is not used effectively the difference

between the actual output and the maximum output attributable to that input is measure of Degree of X Efficiency. X- efficiency is the degree of inefficiency in the use of firms resources Firms resources are wasted/used wrongly/not used at all Two main roles of entrepreneur (i) input completion (ii) gap filling

Dynamic entrepreneurship innovation theory

By Joseph Schumpeter
Entrepreneurship is a catalyst that disrupts the

stationary circular flow of the economy & thereby initiates and sustains the process of development Entrepreneur activates the economy to a new level of development through new combinations Risk taking, superintendence & coordination

Harvard school theory

By Cole

Entrepreneurship comprises any purposeful

activity that initiates , maintains or develops a profit oriented business Interaction with internal business situation or economic political and social circumstances of business Entrepreneurial activities (i) Coordination activity and (ii)Sensitivity to the environment

Theory of adjustment of price

By Kirtzner

Entrepreneur is a person who discovers

previously unnoticed profit opportunities spontaneous learning and alertness two major characteristics of entrepreneurship Inter temporal & interspatial demands Alertness to disequilibrium & Price adjustment

Theory of Profit
By Knight
Entrepreneur is a recipient of pure

profit
Pure profit

Uncertainty

Behavioral economic theoryProspect theory

By Daniel Kahneman
Peoples attitudes to gains & losses is in relation to a

reference context Context of risk aversion & risk seeking behavior Immersing the hand in water at 200 C will feel pleasantly warm after prolonged immersion in much colder water and pleasantly cool after immersion in warmer water

Psychological theories
Entrepreneurship emerges when a society

has sufficient supply of individuals possessing particular psychological characteristics

An urge to do something, to fulfill a

dream, etc.

Theory of High Achievement

Mc Clelland
(n-ach), (n-pwr), (n-aff) Two characteristics of entrepreneur-

(i) doing things in a new & better way (ii) decision making under uncertainty Tendency to strive for success Sense of doing & getting things, not money get big not get rich

Psychological theories
Maslows need hierarchy theory
Clayton Alderfers ERG theory

Sociological theories of entrepreneurship

Focus on social context
Society is the level of analysis for these

theories

Youngs theory of change

Based on societys incorporation of relative sub-

groups. Groups become reactive when (i) they experience low status (ii) denied access to important social networks This reaction leads to entrepreneurial behavior when supported by institutional resources

Hagens theory of social change

How Economic Growth Begins: A Theory of Social

Change (1964) -Hagen, Everett E Entrepreneur is a creative problem solver with high need for achievement, order and autonomy Fixed status in traditional societies new group rising to power frustration new values changed behavior children accept new values innovative personalities economic development

John Kunkels theory of entrepreneurial supply

Entrepreneurial behavior is a function of surrounding

social structure Sociological variables determine entrepreneurial supply (i) Conditioning procedures social & economic incentives (ii) activities of individuals past & present

Max Webers theory

Social cultures are the driving force of

entrepreneurship Entrepreneur becomes a role performer in conformity with the role expectations of the society Such role expectations base on religious beliefs, taboos, and customs Spirit of capitalism

Peter Druckers Theory of Entrepreneurship

Peter F. Drucker opined that an entrepreneur is one

who always searches for change, responds to it and exploits it as an opportunity. Innovation and resource Entrepreneurship involves : Value and satisfaction from resource, new product configuration or combination

Anthropological theory
Anthros Logos = signs of man; study of man in totality;

biological & cultural aspects 2 branches physical & cultural Fredrick Barth developed anthropological theory of entrepreneurship 2 spheres in society cheap & expensive Entrepreneurial behavior is the means to connect two different spheres in society

There are very few things that are purely conceptual without any hardcontent. Kevin Bacon

John J Kaos conceptual model

John J Kaos conceptual model

ED cycle M P Akhori

Stimulatory activities
Ensure emergence of entrepreneurs in the society
Initial motivation Entrepreneurial education, identification of potential

entrepreneurs, motivational training, making available techno-economic information, etc

Support activities
Nurture & help entrepreneurship to grow
Necessary infrastructure Consultancy

Arranging finance
Providing land, shed, and water, granting tax relief,

subsidies, supply of raw material, marketing the product, etc.

Sustaining activities
Help continuous and efficient functioning of

entrepreneurship Modernization, diversification, expansion, substitute production, additional financing, policy changes & regulation