ENTREPRENEURSHI

P DEVELOPMENT
UNIT I

Entrepreneur
Origin:
Entreprendre (French Word)
To undertake (Risk Bearer)
Concept:
An individual or group of individuals who create
something new, who organizes production and
undertake risk involved in the establishment
or operation of a business enterprise.

Entrepreneur
Definitions:
Entrepreneur is an innovator and develops untried
technology.

Joseph A. Schumpeter
(Austrian-born American economist and political scientist)

An agent who buys factors of production at certain

prices in order to combine them into a product with

a view to selling it at uncertain prices in future.

Richard Cantillon
(Irish-French economist)

Intrapreneur
Concept:
A manager within a company who promotes innovative
product development and marketing.
An intrapreneur is an inside entrepreneur, or an
entrepreneur within a large firm, who uses entrepreneurial
skills without incurring the risks associated with those
activities.
Definition:
Intrapreneur is an entrepreneur within an already established
organization.

Gifford Pinchot
(American forester and politician)

Entrepreneur Vs. Intrapreneur

Bases of
Difference
Dependency

Entrepreneur

Intrapreneur

An
Intrapreneur
An Entrepreneur is
dependent
on
independent in his
Entrepreneur. i.e.,
operations.
Owner

is
the
the

Raising of Funds

An
Entrepreneur
himself raises funds Funds are not raised by
required
for
the the Intrapreneur.
enterprise.

Risk

An Intrapreneur does not

An Entrepreneur bears
fully
bear
the
risk
the rick involved in
involved
in
the
the business.
enterprise.

Operation

An
Entrepreneur An Intrapreneur operates
operates from out-side from
within
the
the Organization.
Organization itself.

Entrepreneur Vs.
Manager
Bases of
Difference

Entrepreneur

Manager

Motive

To start a venture.

To render his / her

service in an enterprise.

Status

Owner of the
Enterprise.

Employee in the
Enterprise.

Assumes all risk and

uncertainty.

Does not bear any risk.

Profit Highly
Uncertain.

Salary Fixed and

Certain.

Innovator Change
Agent.

Translates Entrepreneur
ideas into practice.

Risk Bearing
Rewards
Innovation

Qualifications

High
Achievement Sound knowledge in
Motive, Originality in Management
Theory
Thinking,
Foresight, and Practices.
Risk Bearing Ability,
and so on.

Characteristics of Successful Entrepreneur /

Entrepreneurial Competence / Entrepreneurial Traits
Hard Work
Achievement-Oriented
Optimistic
Independence
Foresight
Organizer
Innovative
Perseverance
Team Spirit

Azim Premjis 10 Golden Rules for a

Successful Entrepreneur
Dare to Dream
Set Clear Goals
Never Loose Zest and Curiosity for Learning
Strive for Excellence
Build Self-Confidence
Learn to Work in Teams
Take Care of Yourself
Persevere
Have a Broader Social Vision
Never Let Success go to Your Head.

Kiran Mazundar-Shaw Essential

Qualities of a Successful Entrepreneur
Spirit of challenge
Sense of conviction
Resourcefulness
Ethos of persistence
Ability to manage failure
Problem solving approach
Ability to spot and leverage opportunity
Building core competence and excellence
Uncompromising work ethic
Building a strong organizational DNA through differentiation

Knowledge and Skills of an

Entrepreneur
Vision
Environmental Awareness
Socio-cultural Awareness
Political and Legal Concern
Administration
Financial Knowledge
Marketing
Leadership
Conflict and Consensus Management Skill
Interpersonal Skill
Communication Skill
Problem Solving Skill
Technical Know-how
Time Management

Types
Types of
of
Entrepreneur
Entrepreneur

Business
Business
Type
Type

Manufacturin
Manufacturin
g
g

Trading
Trading

Technology
Technology
Use
Use

Technical
Technical

Non
Non -Technical
Technical

Gender
Gender

Men
Men

Women
Women

Enterprise
Enterprise
Size
Size

Small
Small

Medium
Medium

Agricultural
Agricultural

Large
Large

Behavioral
Scientist
Types of
Entrepreneu
r
Clarence
Danhof
(1949)

Solo
Operators

Active
Partners

Inventors

Challengers

Buyers

Life - Timers

Innovating

Fabian

Imitative

Drone

Entrepreneurship
Concept:
The capacity and willingness to develop, organize and
manage a business venture along with any of its risks in
order to make a profit. The most obvious example of
entrepreneurship is the starting of new businesses.
Definition:
Entrepreneurship is based on purposeful and systematic
innovation. It includes not only the independent
businessmen but also company directors and managers
who actually carryout innovative functions.

Joseph A. Schumpeter
(Austrian-born American economist and political scientist)

Growth of Entrepreneurship in India

1. Entrepreneurship during pre-independence:
a. Handicrafts Entrepreneurship
b. Manufacturing Entrepreneurship
c. Managing Agency System
2. Entrepreneurship during post-independence:
a. Industrial Policy
b. Small Scale Industries
c. Government established;
i.
ii.
iii.
iv.

Directorate of Industries
Financial Corporations
Small Scale Industries Corporation
Small Industries Service Institute

Role of Entrepreneurship in
Economic Development
Capital formation
Large scale employment
Balanced regional development
Economic power concentration
Wealth and income distribution
Export trade
Mobilization of finance and skills
Backward and forward linkages

Entrepreneurship as a Career
Options
Working for Others

Working for Oneself

Dependent on others

Independent

Following boss

Following self

Fixed and secured earnings

Variable
assured

Choice of jobs

Choice of business

Risk not borne

Risk is borne

Less scope
innovation

for

Job seeker

creativity

earning

is

not

and Large scope for creativity and

innovation
Job provider

Contributes indirectly to wealth Contributes

creation
creation
Self saturation

that

directly

to

wealth

Self actualization

Satisfaction through compliance Satisfaction through converting

of rules and procedures
ones creativity into reality

Benefits of becoming an Entrepreneur

Create ones own destiny
Make a difference
Reach ones full potential
Reap impressive profits
Contribute to society

Pull factors of Entrepreneurship

Career
High need for independence
High financial rewards
Long lasting mark
Dealing with all aspects of a business

Positive aspects of Entrepreneurship

Career
Enjoys unlimited powers
Numerous opportunity for self development
Immense satisfaction when getting rewards
Monetary rewards can be more than matching

with his / her capacity and capability

Respect for his / her immediate family and
friends
Independent, generates employment for
others
Develops the economy of a country
Can be a great achiever realizing his goals

Negative aspects of Entrepreneurship

Career
Faces constrains from financier, laborers,

suppliers, customers, etcetera

May lead to frustration since the scope of
operation is limited by resources
Have to work long and hard hours
Stress because of risk of failure
Frustration and disappoinment nay be present
because everything will not go as per plan

Entrepreneurial Personality Traits

1) Independence and Need for Achievement (N-Ach)
Need for Independence: An Entrepreneur is generally the
type of person who needs to do things in his or her own way
and has a difficult time working for someone else.
N-Ach: An individual's desire for significant accomplishment,
mastering of skills, control, or high standards.
The term was first used byHenry Murray(1938) and
associated with a range of actions.

These include: "intense, prolonged and repeated efforts to

accomplish something difficult.
To work with singleness of purpose towards a high and
distantgoal.
To have the determination to win".

The concept of N-Ach was subsequently popularized by the

psychologistDavid McClelland (1967).

Checklist for Feelings about Independence

1 I hate to go shopping for clothes alone.

Yes No

2 If my friends won't go to a movie I want to see, I'll go

by myself.

3 I want to be financially independent.

4 I often need to ask other people's opinions before I

decide on important things.

5 I'd rather have other people decide where to go on a

social evening out.

6 When I know I'm in charge, I don't apologize, I just

do what has to be done.

7 I'11 speak up for an unpopular cause if I believe in it.

8 I'm afraid to be different.

9 I want the approval of others.

1 I usually wait for people to call me to go places,

rather than intrude on them.
0

2) Locus of Control
The extent to which individuals believe they can
control events affecting them.
Understanding of the concept was developed
byJulian B. Rotterin 1954, and has since
become an aspect of personality studies.
A person's "locus" (Latin for "place" or
"location") is conceptualized as either internal
or external.

Checklist for Feelings about Control

Yes No

1 Do you often feel "That's just the way things are and there's
nothing I can do about it"?
2 When things go right and are terrific for you, do you think
"It's mostly luck!"?
3 Do you think you should go into business or do something
with your time for pay because everything you read these
days is urging you in that direction?
4 Do you know that if you decide to do something, you'll do it
and nothing can stop you?

5 Even though it's scary to try something new, are you the
kind who tries it?
6 Your friends, spouse, and mother tell you that it's foolish of
you to want a career. Have you listened to them and stayed
home all these years?
7 Do you think it's important for everyone to like you?
8 When you do a good job, is your pleasure in a job well done
satisfaction enough?

9 If you want something, do you ask for it rather than wait for
someone to notice you and "just give it to you"?

1 Even though people tell you "it can't be done: do you have
to find out for yourself?
0

3. Risk Taking
According to Peter Drucker, Risk is of the
essence, and risk making and risk taking
constitute the basic function of enterprise.
Drucker outlined the following four kinds of risk:
1. The risk one must accept, the risk that is built
into the nature of the business
2. The risk one can afford to take
3. The risk one cannot afford to take
4. The risk one cannot afford not to take

Frank H. Knight classified Uncertainty into 3

types;
1. Risk that can be measured statistically
2. Ambiguity that is difficult to measure
statistically
3. Uncertainty that cannot be predicted
statistically


1
2
3
4
5
6
7
8
9
1
0

Checklist for Willingness to Take Risks

Can you take risks with money, that is, invest, and not
know the outcome?
Do you take an umbrella with you every time you
travel? A hot water bottle? A thermometer?
If you're frightened of something, will you try to
conquer the fear?
Do you like trying new food, new places, and totally
new experiences?
Do you need to know the answer before you'll ask the
question?
Have you taken a risk in the last six months?
Can you walk up to a total stranger and strike up a
conversation?
Have you ever intentionally traveled an unfamiliar
route?
Do you need to know that it's been done already
before you're willing to try it?
Have you ever gone on a blind date?

Yes No

Notes

Checklist for Feelings about Independence:

Yes answers to questions 1, 4, 5, 8, 9, and 10 indicate that you do

not have a strong need for independence.
Checklist for Feelings about Control:
1. Yes answers to questions 4, 5, 8, 9, and 10 indicates that

you possess the internal control aspect of being an

entrepreneur.
2. Yes answers to questions 1, 2, 3, 6, and 7 indicate that you
are more geared to external controls, which may inhibit your
entrepreneurial tendencies and ability to sustain drive.

Checklist for Willingness to Take Risks:

Yes answers to questions 2, 5, and 9 you may need to develop

greater willingness to take risks.

Others Traits of an Entrepreneur

1. Visionary
2. Dreamer
3. Optimistic
4. Passionate
5. Persistent
6. Flexible
7. Market Knowledge
8. Technical Expertise
9. Good Networker
10.Good Communicator
11.Energetic
12.Intelligent
13.Resourceful
14.Versatile
15.Impatient
16.Imitativeness
17.Foresight
18.Hard Working
19.Sincere
20.Profit Oriented
21.Competitive
22.Efficient
23.Motivated
24.Courageous
25.Confident
26.Innovative
27.Creative
28.Leader
29.Decision Maker
30.Good Executer
31.Responsive to Criticism
32.Responsible
33.Opportunist