Entrepreneurship Development

RMB 402
Dr. Anurag Joshi
Unit 1
• The word entrepreneur originates from the French word,
entreprendre, which means "to undertake.“
• In a business context, it means to start a business. The
Merriam-Webster Dictionary presents the definition of an
entrepreneur as one who organizes, manages, and assumes the
risks of a business or enterprise.
• The concept of entrepreneurship has a wide range of
meanings. On the one extreme an entrepreneur is a person of
very high aptitude who pioneers change, possessing
characteristics found in only a very small fraction of the
population.
• On the other extreme of definitions, anyone who wants to
work for himself or herself is considered to be an entrepreneur.
 Schumpeter's View of Entrepreneurship
Austrian economist Joseph Schumpeter 's definition of
entrepreneurship placed an emphasis on innovation, such
as:

new products
new production methods
new markets
new forms of organization
Wealth is created when such innovation results in new
demand. From this viewpoint, one can define the function
of the entrepreneur as one of combining various input
factors in an innovative manner to generate value to the
customer with the hope that this value will exceed the cost
of the input factors, thus generating superior returns that
result in the creation of wealth.
• Entrepreneur is one of the important segments of
economic growth. Entrepreneur is a person
brings overall change through innovation for the
maximum social good. He is one who is
responsible for setting up a business or an
enterprise. Entrepreneur is visionary and an
integrated man with outstanding leadership
quality.
Definition
• The entrepreneur is an organizer of a business
firm, central to its distributive and production
function- Cantillon
• An entrepreneur is the economic agent who
unties all means of production, the labor force of
the one and the capital or land of the others and
who finds in the values of the products his result
from their employment, the reconstitution of the
entire capital that he utilizes and the values of
the wages, the interest and the rent which he
pays as well as profit belonging to himself.
J.B.Say
• As per New Encyclopedia Britannica considers an
Entrepreneur as “an individual who beers the risk
of operating a business in the face of uncertainty
about the future conditions.
 Characteristics of Entrepreneur
• Need to achieve
• Independence
• Risk bearing
• Locus of control
• Positive self- concept
• Hope of success
• Flexibility
• Analytical ability of mind
• Confronting uncertainty
• Interpersonal skills
• Stress takers
• Innovators
• Business communication skills
• Leadership
• Ability to mobilize resources
• Self confident
 Qualities of Entrepreneurs
• Disciplined • Creativity
• Confidence • Determination
• Open Minded • Strong people skills.
• Self Starter • Strong work ethic
• Competitive • Passion
 Importance of Entrepreneur
• Develop new market
• Discover new sources of materials
• Mobilize capital resources
• Introduces new technologies
• Create employment
• Increase in national income
• Balanced regional development
• Bringing change in structure of business &
society
• Knowledge and social need filling
• Dispersal of economic power
• Better standards of living
• Creation innovation
• Production evolution process
• Enhancing welfare amenities
 Functions of Entrepreneur
• Primary function • Other function
– Planning – Product diversification
– Organizing – Expansion of enterprise
– Decision making – Maintaining cordial
– Management industrial relation
– Innovation – Coordination without side
– Risk bearing agencies
– Uncertainty bearing
• Entrepreneurial function
– Idea generation
– Determination of objectives
– Raising of funds
– Procurement of raw material
– Procurement of machinery
– Market research
– Determination of form of enterprise
– Recruitment of manpower
– Implementation and control of project
• Functions for developing countries
– Management of scarce resources
– Dealing with public bureaucracy (license, subsidies)
– Acquiring and overseeing assembly of factory
– Industrial designing & reengineering
– Marketing of product & responding to competition
– Industrial new product
– Perception of market opportunities
– Financial/production management
– Management of customers and suppliers relation
 Classification of Entrepreneur
Based on functional characteristics
• Innovative entrepreneur
• Imitative or adoptive entrepreneur
• Fabian entrepreneur
• Drone entrepreneur
Based on development angle
• Prime mover
• Manager
• Minor innovator
• Satellite and Local trading
• Innovating Entrepreneurs: They are generally
aggressive on experimentation & cleverly put
attractive possibilities into practices. It
introduces new goods, inaugurated new
methods of production, discovers new
markets and recognizes the enterprises.
• Imitative Entrepreneurs: They do not
innovate the changes themselves, they only
imitate technology & techniques innovate by
others. They copy & learn by Innovating
Entrepreneurs.
Fabian Entrepreneurs: They are the second
generation Entrepreneur and they are very skeptic
(normally Refuse to adopt the changes) about
taking a step unless and until they are definite, it
would be a loss, if not steps are not taken in time

Drone Entrepreneurs: These entrepreneurs are

reluctant to change since they are very conservative
and do not want to make any changes in the
organization. They are happy with their present
mode of business and do not want to change even
if they are suffering the losses.
Based on entrepreneurs business
• Manufacturing
• Wholesaling
• Retailing
• Service
Based on personality traits
• The improver: They have unwavering to run
these businesses with high integrity and ethics.
• The advisor: “Customer is right and we must do
everything to please him” because company is
built by advisors and advisors become customer
focused.
• The superstar: All depends upon the charisma and on
the high energy of the superstar CEO. EX: Richard
Branson (400 co’s/Virgin coin), Larry Page (Google),
Lt. Steve Jobs (Apple), Ratan Tata (Tata sons).
• The artists: Are highly creative type, very conscious
about business. If feedback is constructive i.e. positive
than also lets go with negative self-image. EX: Aamir
Khan, Michael Dell (Dell), MC Cormich (EMI).
• The visionary: Too focused on dreams with little
focused on reality. EX: Jack Welch (GE), Bill
Gates (Microsoft), Kishore Biyani (Future
Group), Warren Buffet (Berkshire Hathaway), Sam
Walton (Wall Mart).
• The analyst: More focused on fixing problems in a
systematic way. EX: Gordon Hore (Intel), Rana Kapur
(Yes Bank), Gautam Adani (Adani Groups)
• The fireball: A business owned and operated by a
fireball is full of life, energy and optimism. They have
“A get it done attitude in a playful manner”.
EX: Malcolm Forbes – Forbes magazine
• The hero: Have an incredible will and ability to lead the
world and your business through challenges.
• The healer: They provide nurturing harmony to their
business, they have uncanny abilities to survive and
persists inner calm. EX: Dr. Bindeshwar Pathak (Sulabh
International), Kumar Manglam Birla (Son of L.M Birla).
According to Technology
• Technical Entrepreneur
• Non-technical Entrepreneur
• Professional Entrepreneur
According to Motivation
• Pure Entrepreneur
• Induced Entrepreneur
• Motivated Entrepreneur
• Spontaneous Entrepreneur
According to Area
• Urban Entrepreneur
• Rural Entrepreneur
According to stage of development
• First generation Entrepreneur
• Modern Entrepreneur
• Classical Entrepreneur
• Innovative Entrepreneur
• Imitative Entrepreneur
According to Growth
• Growth Entrepreneur
• Super-growth Entrepreneur
According to Gender
• Men Entrepreneur
• Women Entrepreneur
 Entrepreneurship
• Entrepreneurship is defined as a systematic
innovation, which consists in the purposeful and
organized search for changes and it is the
systematic analysis of the opportunities which
might offer for economic and social innovation.-
Peter Drucker
• “Entrepreneurship is based on purposeful and
systematic innovation. It include not only thr
independent businessmen but also company
directors and managers who actually carry out
innovative functions.” - Schumpeter
Characteristics of Entrepreneurship
• Economic Activity
• Purposeful Activity
• Decision Making
• Accepting Challenges
• Risk Bearing
• Building Organization
• Dynamic Process
• Gap filling function
• Skillful Management
• Innovation
• Mobilization of Resources
 Importance of Entrepreneurship
• Increase in National • Better standard of living
Income • Creating innovation
• Balanced regional • Production evolution
development process
• Change initiator of • Enhancing Welfare
business Amenities
• New product/ • Dispersal of Economic
service/ business power in several hands
• Knowledge & social need • Self Reliance
filling
 Theory of Entrepreneurship
Economic Theory
• Economic theory based as it as an economic activity
which is the main purpose to earn profit
• Entrepreneur is the key figure for the economic
development because entrepreneur always brings
innovation in the economy.
• He is focus on the entire thing which is effect on all the
economy.
• In every entrepreneur, they are capacity to change the
economy. Improper economic policy, Lack of
incentives, unfavorable market condition tends to
reduce the vigor of entrepreneurship
Leibenstein’s X-efficiency Theory/gap filling theory
• Harvey Leibenstein (1922 – February 28, 1994) was
a Ukrainian-born American Jewish economist.
• X-efficiency is the degree of inefficiency in the use of
resources in the wrong way, within the firm for
productive potential. The entrepreneur has to
complete the production efficiently with proper inputs
and improve flow of information in market by gap
filling in the economy
• In economics, x-efficiency is the effectiveness with
which a given set of inputs are used to produce
outputs. If a firm is producing the maximum output it
can, given the resources it employs, such as men and
machinery, and the best technology available, it is said
to be technical-efficient.
Dynamic Entrepreneurship Innovation Theory
• Schumpeter identified innovation as the critical
dimension of economic change. He argued that
economic change revolves around innovation,
entrepreneurial activities, and market power.
• He sought to prove that innovation-originated market
power could provide better results than the invisible
hand and price competition.
• He argues that technological innovation often creates
temporary monopolies, allowing abnormal profits that
would soon be competed away by rivals and imitators.
He said that these temporary monopolies were
necessary to provide the incentive necessary for firms
to develop new products and processes.
Sociological Theory-
• Peter Marris“ To assemble or reassemble from what is
available ,very concrete kind of imagination ,to see what
other have missed, sensitivity to business and social
environment, zest in industrial development and
entrepreneurial courage are the factors that make an
entrepreneur.”
Harvard school theory – Cole
• Entrepreneurship comprises any purposeful activity that
initiates, maintain or develop a profit – oriented
business, in interaction with internal, economic, political
and social circumstances of business. Entrepreneurs
operate under fairly uncertain circumstances.
Theory of Profit- Knight
• Knight identifies the entrepreneur as a recipient of pure profit.
Uncertainty can be identified by priority reasoning or statistical
inference.
Peter Drucker’s Innovation theory
• Entrepreneurs need to search purposefully for the sources of
innovation, the changes and their symptoms that indicate
opportunities for successful innovation and they need to know and
apply the principles of successful innovations.
Theory of Entrepreneurial Supply/ Social Change
• Hagen views on entrepreneurship -“creative innovation is the
fundamental feature of economic growth. An entrepreneur is
described as a creative problem solver interested in things that are
practical.
• While facing a problem he feels a sense of increased pleasure and
tolerates disorder without disorders.” Innovation requires creativity
and individuals who are creativity can only bring about economic
growth that leads social change in all manner.
 Classification of Entrepreneurship
• Small Business Entrepreneurship
– Small Scale Industries (Rs. 5 Crore)
– Ancillary Units (which sells not less than its 50% output to other
industries-Rs. 5 Crore)
– Export-oriented Units (which exports not less than its 30%
output-Rs Rs. 5 Crore)
– Tiny Units( Rs 25 Lacs)
• Corporate Entrepreneurship/ Intrapreneurship
• Social Entrepreneurship-
It recognizes a social problem and uses entrepreneurial
principles to organize, create, and manage a venture to
make social change.
Unlike business entrepreneurs they don’t measures
performance in profit and returns, but assess success by
the impact they have on society and often work through
nonprofits and citizen groups.
• Corporate Entrepreneurship
– Administrative Entrepreneurship
– Opportunistic Entrepreneurship
– Acquisitive Entrepreneurship
– Imitative Entrepreneurship
– Incubative Entrepreneurship (in house idea generation)
Intrapreneurship
– An intrapreneur is defined as “any of the dreamer who
do” those who take hand on responsibility of creating
innovation of any kind within the organisation.
– The intrapreneur may be creator or inventor but he is
always a dreamer who finds out how to turn an idea
into a profitable reality.
• An intrapreneure is a person who practises
intrapreneureship. According to this
definition, a corporate manager who starts a
new initiative for their company which entails
setting up a new distinct business unit and
board of directors can be regarded as an
intrapreneure.
 Difference b/w Entrepreneur &
Entrepreneurship
Entrepreneur Entrepreneurship
Meaning-A person who • A process of concerting the
purchases means of idea of establishing a new
production for combining enterprise into its
them into marketable implementation
products as profit motive in
future. • It is a process
Concept-It is a person • It is a specific quality shown
Specific Qualities-It requires in an entrepreneur due to
specific qualities ie. which he can establish a
Creativity, innovation, new enterprise
decision making, leadership,
management efficiency,
flexibility
Entrepreneur Entrepreneurship
Function- the prime • The prime function is to
function is motivate entrepreneur
establishment of an so it is like fuel supply
enterprise so he is into the engine of an
engine of organization entrepreneur
Economic point of value- • The word like imitative,
it is called initiator, innovation, leadership,
innovator, leader, planning, risk taking &
planner, risk taker, motivation are being
motivator, organizer etc used
 Role of Entrepreneurship in Economic
Development
• Increase in National Income
• Balanced regional development
• Bringing change in structure of business & society
• New Product/services/business
• Knowledge & Social need filling
• Dispersal of economic power
• Better standard of living
• Creating innovation
• Product evolution process
 Factors influencing Entrepreneurship
• Internal Factors • External Factors
– Psychological & – Cultural factors
sociological factors – Political Environment
– Personality factors – Economic factors &
– Educational factors policies
– Personal – Social factors
characteristics – Technological factors
– Family/ Tradition – Availability of resources
– Motivation
 Barriers of Entrepreneurship
• Lack of viable concept
• Lack of market knowledge
• Lack of technical skill
• Lack of capital
• Lack of business know-how
• Lack of motivation
• Legal constraints and regulation
• Monopoly
 Women Entrepreneurship
• At the macro level as women constitute half of
a country’s population, women’s
empowerment is closely linked with the
development of that nation
• At the micro level, the fastest means to a
woman’s empowerment is through economic
independence which can be achieved through
business and entrepreneurship development
The tools for women’s entrepreneurship development
• Access to Education
• Access to Mobility
• A conducive Social Structure
• Access to Finance
Direct & Indirect Financial Support
• Nationalized banks
• State finance corporation
• State industrial development corporation
• District industries centers
• Differential rate schemes
• Mahila Udyog Nidhi scheme
• Small Industries Development Bank of India (SIDBI)
• State Small Industrial Development Corporations (SSIDCs)
Women Entrepreneurship in India
• Earlier there were 3 Ks
– Kitchen
– Kids
– Knitting
• Then came 3 Ps
– Powder
– Pappad
– Pickles
• At present there are 4 Es
– Electricity
– Electronics
– Energy
– Engineering
 Women Entrepreneurship is an adult woman
who undertakes to organize own and run an
enterprise2 Her illustration about women
entrepreneurs in India, represents a group of
women’s who have broken away from the
beaten track and exploring new vistas of
economic participations……Manorama Vaid
The task of women entrepreneurs has been
full of challenges and yet they have steer clear
of prejudice opposition, constraint and have
established themselves as successful
entrepreneurs.
• Challenges of Women Entrepreneurship
Even though female entrepreneurship and the
formation of women business networks is
steadily rising, there are a number of challenges
and obstacles that female entrepreneurs face.
One major challenge that many women
entrepreneurs may face is the traditional gender-
roles society may still have on women.
Entrepreneurship is still considered as a male-
dominated field, and it may be difficult to surpass
these conventional views. Other than dealing
with the dominant stereotype, women
entrepreneurs are facing several obstacles related
to their businesses.
Reasons for Women Entrepreneurship
• Having an idea for a business plan,
• A passions for solving a specifically related
career problem,
• Wanting to be more in control of their careers,
• Maintaining a more balanced life,
• Having a flexible work schedule,
• Taking a personal vision and turning it into a
lucrative business.
 Barriers of Women Entrepreneurship
• Financial Barrier
• Marketing Barriers
• Production Barrier
• Health Barrier
• Working Place Facility Barrier
Family Business Entrepreneurship
• Family business is owned and managed by one
or more family members.
• Family firms are organizations where two or
more extended family members influence the
direction of business through the exercise of
kinship ties, management roles, or ownership
rights…….Davis & Tagiuri
• Family Business is essentially the same in
every country in the world relative to their
problems, issues and interests………..Gallo.
Characteristics of Family Business
• Clearly separate management and ownership
• Have a clearly defined vision and speak with
one voice
• Take time to understand the family’s concerns
and the need of individuals
• Have a common language of trust inside and
outside the family business
• Live their values as well as espouse them and
have high staff loyalty and small employee
turn over
• Have defined the role & responsibilities for
family members, shareholders and employees
• Consider appointing non-executive directors
to help bring objectivity
• It also considers the family business members
who are not involved in the family business
Advantages of Family Business
• Commitment
• Knowledge
• Flexibility in work, time & money
• Stable culture
• Long range thinking
• Speedy decisions
• Reliability & pride
Disadvantages of Family Business
• Rigidity
• Business challenges in modernizing outdated
skills, managing transitions and raising capital
• Failing to document the Terms of Agreement
in written
• Ignoring fiduciary Responsibilities in the event
of dispute
• Failing to plan for future
• Nepotism
FAMILY Vs NON FAMILY ENTREPRENEUR
The major differences are:-
• Authority structure
• Succession plan
• Interest
• Familial feud
• Power
• PROFESSIONALISM
Professionalism is actually the process by which
given occupation becomes professions in the
sense of attaining professional status.
PROFESSIONALISM Vs FAMILY ENTREPRENEURS
• Degree of open mindedness
• New practice
• Impartial HRM
• Organization oriented financial management
• Decision making style
• “VENTURE CAPITAL”
• Most important factor of production. No economic
entity can function without capital.
• Requires at every step for set up, expansion, growth,
modernization, diversification.
• It is type of private equity capital typically provided by
professional, outside investor to buss. Growth