Role of entrepreneurship in economic development The important role that an entrepreneurship plays in the economic development of an economy can

be put in a more systematic manner as follows. 1. Entrepreneurship promotes capital formation by mobilizing the idle saving of the public. 2. It provides immediate large-scale employment. Thus it helps to reduce unemployment in the country. 3. It provides balanced regional development. 4. It helps reduce the concentration of economic power. 5. It stimulates the equitable redistribution of wealth, income and even political power in the interest of the country. 6. It encourages effective resources mobilization of capital and skill which might otherwise remain unutilized and idle. 7. It also induces backward and forward linkages which stimulated the process of economic development in the country. 8. It promotes countrys export trade i.e. an important ingredient for economic development. Types of entreprenuer Clearance Danhofs Classifications Danhof classifies Entrepreneur into four types. 1. Innovative entrepreneur: This category of Entrepreneur is characterized by smell of innovativeness. This type of Entrepreneur, sense the opportunities

for introduction of new ideas, new technology, discovering of new markets and creating new organizations. Such Entrepreneur can work only when certain level of development is already achieved and people look forward to change and improve. Such Entrepreneur are very much helpful for their country because they bring about a transformation in life style. 2. Adoptive or imitative entrepreneur: Such entrepreneurs imitate the existing entrepreneur and set their enterprise in the same manner. Instead of innovation, may just adopt the technology and methods innovated by others. Such types of entrepreneur are particularly suitable for under-developed countries for imitating the new combination of production already available in developed countries. 3. Fabian entrepreneurs: Fabian entrepreneurs are characterized by great caution and skepticism, in experimenting any change in their enterprises. They imitate only when it becomes perfectly clear that failure to do so would result in a loss of the relative position in the enterprises. 4. Drone entrepreneurs: Such entrepreneurs are conservative or orthodox in outlook. They always feel comfortable with their old fashioned technology of production even though technologies have changed. They never like to get rid of their traditional business, traditional machineries and traditional system of business even at the cost of reduced returns. Arthur H Cole Classification Arthur H Cole classifies entrepreneurs as empirical, rational and cognitive entrepreneur. Empirical: He is entrepreneur hardly introduces anything revolutionary and follows the principle of rule of thumb. Rational: The rational entrepreneur is well informed about the general economic conditions and introduces changes, which look more revolutionary. Cognitive: Cognitive entrepreneur is well informed, draws upon the advice and services of experts and introduces changes that reflect complete break from the existing scheme of enterprise. Classification Based on the Scale of Enterprise Small scale: These entrepreneurs do not posses the necessary talents and resources to initiate large-scale production and to introduce revolutionary technological changes. Large scale: They possess the necessary financial and other resources to initiate and introduce new technological changes. They possess talent and research and development facilities. Other Classification Following are some more types of entrepreneurs listed by behavior scientists.

Solo operators: These are the entrepreneurs who essentially work alone, introduce their own capital and if essential employ very few employees. In the beginning most of the entrepreneurs start their enterprises like them. Active partners: Such entrepreneurs jointly put their efforts and resources. They actively participate in managing the daily routine of the business concern. Entrepreneurs who only contribute their funds but not actively participate in the business are called simply Partners. Inventors: Such entrepreneurs are creative in character and feel happy in inventing new products, technologies and methods of production. Their basic interest lies in research and innovative activities. Challenge: According to such entrepreneurs, if there is no challenge in life, there is no charm in life. Such entrepreneurs plunge into industry/business because of the challenge it presents. When one challenge seems to be met, they begin to look for new challenges. They convert odds and adversities into opportunities and make profit .
Characteristics of entreprenurship
I. David McClellands N-ach Hypothesis Need for achievement (N-ach) has been emphasized and has the following characteristics. (i) N-ach It is prime psychological drive that motivates the entrepreneur. Drive within an individual that motivates behavior towards accomplishment i.e. in achieving goals that poses reasonable challenge. (ii) Desire for responsibility Entrepreneur prefers to use his own resources to be personally responsible for the results. (iii) Preference for moderate risk. (iv) Perception of the probability of success. (v) Future oriented i.e. he plans & thinks in the future. Anticipates possibilities that lie beyond the present (vi) Stimulated by feedback. (vii) Energetic activity Exhibits a level of energy than an average person. - Spends time in finding out novel ways of getting done the set task. (viii) Skills in organizing Entrepreneurs have remarkable skill in organizing work & people. They make objective selection of individuals in conformity with their skills in solving specific problems. II. Psychological Characteristics of an entrepreneur by Albert Shapero According to him an important personality dimension of entrepreneur is the degree to which they can affect the world around them called locus of control. People who are externals believe that the reward in life come from forces outside themselves such as luck, fate, power over others etc.

People who are internals believe that they can influence events to their own good or detriment. They crave for independence & autonomy and rely on their own resources. . III. Johan A Horanday & John Abonds StudyResults of the study showed that as compared to general population entrepreneur rated higher on scales reflecting need for achievement independence & effectiveness of their leadership. Low on scales reflecting need for support by others. Other Characteristics Their flexibility makes them best suited in environments where intervening variables play a large part in day to day business management. Also small enterprises have a better change to carry out a number of innovations like combination of new products, raw materials, new methods of production, new markets, new sources of materials, new forms of organizations. Being fairly labour-intensive, they provide an economic solution by creating employment & income opportunities in urban & rural areas at relatively low cost of capital investment. Decentralization & dispersal of industries into rural areas prevent the influx of job seekers in cities & urbanizing centers thus allowing for a more balanced growth in a transitional economy Being set up by individuals, they provide a productive outlet for expressing the entrepreneurial spirit of human resources. Home delivery of goods IV. Robert D. Hisrich has identified a few more personal characteristics of an entrepreneur. Motivator Builds a team & keeps it motivated & provides environment for individual growth and career development. ENTREPRENEURIAL PERSONALITY- PSYCHOLOGICAL 1. Motivation driven by range of factors Necessity (survival) Opportunity (proactively) Dissatisfaction (cant stand job) Curiosity (What if?) Material gain (We could make a killing) Achievement oriented more than anything else Driven by the task, challenge, opportunity. Money as a by-product 2. Strong belief in themselves- believe they can change their environments 3. Calculated risk-takers (financial, career) Attempt to estimate likelihood and magnitude of key risk factors and manage or mitigate them through good planning or decisions 4. High tolerance of ambiguity Process can be loose, messy, shift directions 5.Prize their independence self-motivated, self-reliant, prefer autonomy, have perseverance

Who is an entreprenuer
Successful entrepreneurs come in various ages, income levels, gender, and race. They differ in education and experience. But research indicates that most successful entrepreneurs share certain personal attributes, including: creativity, dedication, determination, flexibility, leadership, passion, self-confidence, and smarts. Creativity is the spark that drives the development of new products or services or ways to do business. It is the push for innovation and improvement. It is continuous learning, questioning, and thinking outside of prescribed formulas. Dedication is what motivates the entrepreneur to work hard, 12 hours a day or more, even seven days a week, especially in the beginning, to get the endeavor off the ground. Planning and ideas must be joined by hard work to succeed. Dedication makes it happen. Determination is the extremely strong desire to achieve success. It includes persistence and the ability to bounce back after rough times. It persuades the entrepreneur to make the 10th phone call, after nine have yielded nothing. For the true entrepreneur, money is not the motivation. Success is the motivator; money is the reward. Flexibility is the ability to move quickly in response to changing market needs. It is being true to a dream while also being mindful of market realities. A story is told about an entrepreneur who started a fancy shop selling only French pastries. But customers wanted to buy muffins as well. Rather than risking the loss of these customers, the entrepreneur modified her vision to accommodate these needs. Leadership is the ability to create rules and to set goals. It is the capacity to follow through to see that rules are followed and goals are accomplished. Passion is what gets entrepreneurs started and keeps them there. It gives entrepreneurs the ability to convince others to believe in their vision. It cant substitute for planning, but it will help them to stay focused and to get others to look at their plans. Self-confidence comes from thorough planning, which reduces uncertainty and the level of risk. It also comes from expertise. Self-confidence gives the entrepreneur the ability to listen without being easily swayed or intimidated. Smarts consists of common sense joined with knowledge or experience in a related business or endeavor. The former gives a person good instincts, the latter, expertise. Many people have smarts they dont recognize. A person who successfully keeps a household on a budget has organizational and financial skills. Employment, education, and life experiences all contribute to smarts.

Importance of entreprenuership
. Entrepreneurship offers a greater possibility of achieving significant financial rewards than working for someone else. It provides the ability to be involved in the total operation of the business, from concept to design and creation, from sales to business operations and customer response. It offers the prestige of being the person in charge. It gives an individual the opportunity to build equity, which can be kept, sold, or passed on to the next generation. Entrepreneurship creates an opportunity for a person to make a contribution. Most new entrepreneurs help the local economy. A fewthrough their innovationscontribute to society as a whole. One example is entrepreneur Steve Jobs, who co-founded Apple in 1976, and the subsequent revolution in desktop computers. .

intraprenuership
Intrapreneurs are employees thinking and acti ng as entrepreneurs, but within a company. They are aware of and accept the goals of the company. Within their scope of responsibiliti es they do their best to acti vely contribute to the achievement of these goals.

Advantages of intraprenuership
Creative Flexible Visionary Ability to work within the corporate structure Encourage teamwork Work diplomatically Understands the environment Encourages open discussion & strong support of team members Persistent

Importance of business plan

To plan for an uncertain future Business planning is vital to help you manage your business more effectively. By committing your thoughts to a plan, you can understand your business better and also chart specific courses of action that need to be taken to improve your business. A plan can also detail alternative future scenarios, set specific objectives and goals, and list the resources required to achieve these goals. In short, it can help ensure that you are prepared for all sorts of eventualities. 2. To help grow your business In an ideal world, all businesses would be self-financing in exploiting business opportunities. In reality, few are afforded this luxury, and hence, will be required to secure external investment eventually. The production of a credible business plan is one of the primary requirements for any entrepreneur seeking investment to grow. 3. To commit to a particular course of action A business plan can help a company assess future opportunities, choose one, and then commit to a particular course of action. By committing to one opportunity, all other options are effectively marginalised and the company is aligned to focus on key deliverables. 4. To manage cash flow Careful management of cash flow is a fundamental requirement for all businesses. The reason is quite simple-many businesses fail, not because they are unprofitable, but because they ultimately become insolvent (i.e., are unable to pay their debts as they fall due).

5. To value a business

Given that valuing firms is notoriously difficult and subjective, a well-written plan will clearly highlight the opportunity for any prospective investors, explain the value of the business, and increase the likelihood of a successful exit by the current owner. 6. To ensure all bases are covered When you start a new business, the temptation is to spend time on the idea and then react to events as they come up rather than focusing on what is important. The very creation of a business plan ensures that you cover all the various bases you need to when taking an idea from conception through to launch