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Chapter 3


The following qualities are considered to be some of the important ones for a successful
entrepreneur on the basis of the research and experience of Behavioral Science Centre,
Delhi and various other institutions involved in selection of candidates for entrepreneurial
development programmes conducted by them.

High level of motivation

Risk-taking ability
Self-confidence and positive self concept
Leadership qualities
Business acumen
Managerial competence
Problem solving
Realistic approach to planning
Independence of thought and action, and
Ability to perceive opportunities and threats.

Personality of an Entrepreneur is more or less same as per various scholars in the area.
Their are major points of view are discussed in detail now.

Defination of Intrapreneur
Intrapreneurs are generally defined as a person endoved with corporate success as
moving up the hierarchy. In broader terms intrapreneurs are people functioning with
the perview of an entreprenurial organization.
Intrapreneurship is the development, within a large corporation, of internal markets and
relatively small autonomous or semiautonomous business units, producing products,
services, or technologies that employ the firms resources in a unique way. It is
something new for the corporation and represents, in its fullest manifestation, a
complete break with the past. Intrapreneurship gives the managers of a corporation
the freedom to take initiative and try new ideas. It is entrepreneurship within an
existing business.Then companies recognize that individual could make major
contribution without becoming manager by inventing or making technical
breakthroughs. Many innovative companies IBM, Tektronic, 3M and Texas
Instrument among them, thus created a second career path through which inventors
could win prestige and salary increase without assuming management role.
Some people, however, have talent that neither of these career paths can develop. For
them, intrapreneurship offers a third career path to bridge the gap between manager and
inventor. Intrapreneurs, like entrepreneur, are not necessarily in new product or services.

Their contribution is in taking new idea and even working prototype and turning them
into profitable realities. When the ideas have become solid and functioning businesses, so
that even the least imaginative accountants can clearly see their value, Intrapreneurs tend
to grow bored. At this point, they often need prove manager to maintain and develop
business while they go back to building business while they go back to building new
ventures for others to manage.
Intrapreneurship is corporate -entrepreneurship, whereby an organization seeks to expand
by exploring new opportunities through new combinations of its existing resources. It is a
tool for stimulating and capitalizing on individuals in an organization who believe that
something can be done differently and better.
Hewlett - Packard is a company with a reputation for tolerating independent action. In its
citation to Charles H. House who developed the moonlander monitor, it stated, Medal of
Defiance awarded in recognition of extraordinary contempt and defiance beyond the
normal call of engineering duty. This indeed reflects the spirit behind intrapreneurship.
Intrapreneurs think about new business ideas while driving to work or taking a shower.
They are thus innovators. The notion of an entrepreneur as an innovator was
established in the early middle of the 20 th century. Joseph Schumpeter in 1934 said, the
function of the entrepreneur pattern of production by exploiting an invention or, more
untried technological possibility for producing a new commodity or
producing an old one in the new way, opening a new source of supply of materials or
anew outlet for products, by reorganizing.
Frequently entrepreneurship is thought to apply to creating and managing a small
business. But Henry Mintzberg in 1973 expounded that the basics of entrepreneurship
equally applies to large organizations through which they initiate changes to take
of opportunities. Peter Drucker stated that Innovation is the specific
function of entrepreneurship. It is the means by which the entrepreneur either creates new
wealth - producing resources or endows existing resources with enhanced potential for
creating wealth. The term enterprises size or age but to certain kind of activity. At heart
of that activity is
the effort to create purposeful focused change in enterprises economic or so potential.
Gifford Pinchot is credited make a distinction between intrapreneur and entrepreneur.
Specifically intrapreneur is a person focuses on innovation creativity and who transforms
dream or an idea into a profit venture by operating within organizational environment
contrast, the entrepreneur person who does the same outside the organization setting.
In his book Intrapreneuring, he argues that intrapreneuring is not a phenomenon but
one that been functioning despite the and present corporate sys He formulates some basic
and strategies for executives want to nurture entrepreneurial spirit themselves and
others in economic development of any country, intrapreneurship has certain distinct
advantages in the corporate culture. To list a few:

Intrapreneurial ideas offer a way to build onto or improve the corporate business.
Capital for the idea is easy to come from internal sources within a corporate identity.

The established corporate image helps to boost the chances of success of an

intrapreneurial idea.
Corporates offer continuing access to the organizations proprietary technology to
stay competitive.
Corporates offer economics of scale in marketing, distribution and service.
Corporates offer the unique advantage of multi- disciplinary team work. The
intrapreneur retains the job security but as well enjoys the freedom and prosperity.

Intrapreneurs ride to the discovery of successful ventures on the strength of their vision.
They possess y the ability to visualize the steps from idea actualization.

Intrapreneurs want freedom. They are self-motivated but respond to corporate rewards
and recognition. Money is not the incentive for their efforts, but rather the measure of its

Bias to act
Intrapreneurs by nature are action - oriented. Rather than remaining entangled in the
cobweb of endless planning, they almost immediately start doing something to realize
their dreams. The venture may take a few years, but they look for incremental

The Intrapreneurs business intimately. He is general manger to new business that does not
yet exist. Intrapreneurs have generally marketing or technology background but once they
take on the role of intrapreneur, they belong to neither.
They take responsibility of all
aspect business.

Locus to control
Intrapreneurs generally dislike the system but they learn to live and manipulate it. They
possess a doer personality.

Locus to risk
Intrapreneurs are moderate risk takers. They dislike uncontrollable risks and what they
can to avoid then. Because of their self-confidence, they are more willing to accept risks
that depend directly on their skills. If Intrapreneurs are wild risk takers, Corporates could
not afford them.

Locus to status

Intrapreneurs do the mundane work that is part of every new project. Unlike managers,
whose job is largely to delegate, Intrapreneurs often do things faster by themselves.

Failure and mistakes

Intrapreneurs are sensitive to need to appear orderly in the organization. They attempt to
hide risky projects or ideas from view and ensure to learn from mistakes without political
cost of public failure. They quickly adjust and develop a multi-disciplinary team within
the organization. But if the situation demands, they over step the organizational
boundaries with a bias for result.

Intrapreneurs are self determined goal setters who often take the initiative to do things no
one asked them to do. The inner-directedness extends not only to goal setting but also to
setting quality standards.

Intrapreneurs become dedicated to an idea. Commitment is the primary force behind
successful innovation. Indeed it is this trait which makes an entrepreneur a strong
visionary and an insatiable and the venture emerges. The typical corporate culture has a
climate and reward system that favors conservative decision - making. Elaborate
collection of data, market research, review committees, approvals etc. ensures an
innovative idea a place in cold storage. The modern technology is creating a very
competitive atmosphere.
Innovative Intrapreneurs believe in doing their own things
and on their own terms. They possess strong belief in their own talents,, they have a
desire to create, they are enthusiastic to take responsibility, they have a strong drive
for self-expression, they want freedom but above all they want their idea to take shape.
The purpose of innovation is for being Fustest with the Mostest. In the internet age, if
the size of your market is huge - you have an advantage. But if the size of your
organization is huge you have a liability.
An Intrapreneurial climate has a flat
organizational structure with net-working, teamwork, sponsors and mentors abounding.
An eight point agenda is outlined below to create intrapreneurial environment in the

1. Research and Development

R & D efforts are key sources for successful new product ideas. It is an investment
for sustainability and growth.



Corporates should set up venture funds. If a company can invest in other companies,
Which cant they invest in idea; which are surfacing from their own employees
Corporates can be mentor strategic partner, service provider or even customer

Creating a climate
Corporates should define what an intrapreneurial culture means in different parts of their
organization and as appropriate for their industry.

4. Training
Corporates must conduct training for employees at different levels on how they behave in
accordance wit intrapreneurial .values an motivational factor; developing their creative
and innovative skill through brainstorming sessions and other mean; is a certain way
to bring Corporate Policy Most organizations
encourage an idea that has a strategic fit with the company.
However creativity has
no boundaries. As such, there should be no initial opportunity parameter inhibiting a new
idea. A different idea can be the nucleus for diversification.


Reward System

Corporates should have a well defined and transparent reward system to encourage
intrapreneurial ideas. Stock Option appears to be the best and most widely accepted
approach. While rewarding the success, the failure should not be harshly penalized. This
will create wrong and fear psychosis.


Multi-disciplinary Team

An idea can be converted into an enterprise only by critical viewing from all aspects. The
role of a team comes in the second phase have to allocate people from different functions
for an intrapreneurial project and reabsorb after the project is over.



Most important aspect is a commitment to intrapreneurship in the organization by top,

upper and middle management level.
Without top management commitment, the
organization will never be able to go through all the cultural climate changes necessary
for implementation. A long term horizon should be set to evaluating the success of the
overall program. The spirit of intrapreneurship cannot be forced on individuals, it
emerges on a volunteer basis provided the management creates the climate.
Intrapreneurship has brought a transformation in the developed countries. Hewlett Packard, Dupont, AT & T, 3M, Xerox, Apple computers, G.E. and a large number
corporates attribute
success to Intrapreneurs. Indian corporates are also

emerging e.g. Ranbaxy, Dr.Reddys Las, Hindustan Lever,

Telco, Mahindra &
Mahindra, Apollo Tyres, Arvind
Mills, Godrej Group, Titan, and amongst the new
comers Infosys, Satya Computers, Tata Consultancy Services etc. Corporates need
promote the culture of creating wealth from their employee gene pool and bring a much
needed change in the way doing business.

Comparison between Entrepreneurial and

Intrapreneurial contexts

Intrapreneurial Characteristics

Primary motives
Freedom and access to corporate Wants
resources. Proactive but does respond oriented, self-reliant
to corporate rewards and and self motivated
Time orientation
Depending on venture, 5-10years. Depending on venture 5-10
Looks for incremental achievements.
years. Looks for incremental
and Much like the entrepreneur, but Knows business very well and
doesnt get discouraged by hierarchy. can put together resources.
Same as entrepreneur plus must deal Macro-environment
with corporate environment.
microenvironment relevance.
Derived primarily from slack within Assembled and acquired from
the Organization
the factor markets for
and Sensitive to corporate attitudes. May Learns from mistakes. Pays
attempt to hide errors. Will learn from for own errors. All errors
public and visible.
Needs to get others to share vision. Follows own vision and
More willing to accept compromise.
makes own decisions. May
not compromise.
to Dislikes the system but has learned to May have one done well in
live with and manipulate it.
impatient and left to start own
Risk preference
Accepts moderate risk. Puts career Accepts moderate risk. Has
and job on the line.
money, reputation in jeopardy.
Attitude to status

demeaning and worthless.

symbols Willing to accept long period

of low status
venture is a success.

The Psychologists View

Schumpeters entrepreneur possesses three qualities. These are:

An institutional capacity to see things in a way which afterwards proves to be true

A kind of effort of will and mind to overcome fixed habits of thinking
The capacity to surmount social opposition against doing something new. Such
individuals who occur randomly in any ethnically homogeneous population are
motivated by the dream and the will to found a private kingdom, the will to conquer,
and the joy of creating.

David C. McClelland emphasizes the Achievement Motive, which is inculcated through

child-rearing practices that stresses standards of excellence, maternal warmth, selfreliance training, and low father dominance. However, in a later study, he alters his
position and ascribes changes in motivation to the ideological arousal of latent need for
achievement among adults typically associated with a new sense of superiority. Thus, the
achievement-oriented behavior may be possible to stimulate through training programs.
Hagen considers the withdrawal of status respect as the trigger mechanism for changes in
personality formation. The status withdrawal occurs when members of some social group
perceive that their purposes and values in life are not respected by groups in the society
whom they respect and whose esteem they value. Hagen postulates four types of events,
which can produce status withdrawal:
Displacement of a traditional elite group from its previous status by another
traditional group by physical force;
Denigration of value symbols through some change in the attitude of the superior
Inconsistency of status symbols with a changing distribution of economic power; and

Non-acceptance of expected status on migration to a new society.

Kunkels behavioral model is concerned with the overtly expressed activities of
individuals and their relations to the previously and presently surrounding social
structures and physical conditions. The determinants of an individual activities are to be
found largely in the conditioning procedures both deliberate and accidental to which
he has been subjected in the past, and in the sets of reinforcing and discriminating stimuli
which have become part of his behavioral chains and are part of the present social
context. The selected elements of societal environment are open to change.

The Sociologists View

For Max Weber the driving entrepreneurial energies are generated by the adoption of
exogenously supplied religious beliefs. It is these beliefs which produce intensive
exertion in occupational pursuits, the systematic ordering of means to ends, and the
accumulation of assets. He further suggested that the belief systems of Hinduism,
Buddhism and Islam do not encourage entrepreneurship. However, this contention has
been challenged and refuted by sociologists like Fox, Nandy and Singer.
Cochran emphasizes cultural values, role expectations and social sanctions. According to
him, the entrepreneur represents societys model personality. His performance is
influenced by three factors: his own attitudes toward his occupation, the role
expectations held by sanctioning groups, and the operational requirements of the job.
Societys values are the most important determinants of the first two factors.

The importance of culturally marginal groups in promoting economic development has

also been underlined by some scholars like Hoselits. He hypothesizes that marginal men,
because of their ambiguous position from a cultural or social standpoint, are peculiarly
suited to make creative adjustments in situations of change and, in the course of this
adjustment process, to develop genuine innovations in social behavior.
Stockes, in an explanation of how economically transitional societies produce industrial
entrepreneurs, considers social and cultural values that channel economic action to be
important. He sees it as a direct product of the way in which the entrepreneurial role is
defined and comes to be defined, by collectivities, which are meaningful to the
prospective entrepreneur. Why persons with strong needs to achieve should seek to act
out these needs in economic activity is a function of cultural values and not of
psychological disposition per se. He, therefore, suggests that personal and societal
opportunity and the presence of the requisite psychological dispositions may be seen as
conditions for an individuals movement into industrial entrepreneurship, but it is the
group-generated value matrix that channels him away from or toward such activity.

The Economists View

The economists view is a counter-hypothesis to all the viewpoints of entrepreneurial
supply and is evident in empirical studies such as those of G. F. Papanek and J R. Harris.
According to this view, the psychological drive for pecuniary gain or the desire to
improve real incomes is present in all the societies. What matter is the economic
environment. The economic incentives are regarded as sufficient conditions for the
emergence of industrial entrepreneurs.

The Managerial Point of View

The fourth school of thought emphasizes the importance of managerial aspects. The
emphasis here is on perception of market opportunities as well as operational skills to run
an enterprise.
Kilby has recently provided an extensive sketch of the potential scope of the
entrepreneurial task in an underdeveloped economy. He envisages that the entrepreneur
himself might have to perform the following kinds of activities for the successful
operation of his enterprise:
Perception of market opportunities (novel or imitative).

Gaining command over scarce resources.

Purchasing inputs.
Marketing of the product and responding to competition.
Dealing with the public bureaucracy (concessions, licences, taxes).
Management of human relations within the firm.
Management of customer and supplier relations.
Financial management.

Production management records, supervision, coordinating input flows with orders,

Acquiring and overseeing assembly of the factory.

Industrial engineering (minimising inputs with a given production process).

Upgrading processes and product quality.
Introduction of new products.
Some of the activities in Kilbys list are such as can be parceled out to competent
subordinates, but that will depend upon;

The scale of production,

The degree of development of the high-level manpower market,
Social factors governing the amount of responsibility with which hired personnel will
perform and
The entrepreneurs comparative efficiency in utilizing high-cost managerial
It is a known fact that a vast majority of firms, in underdeveloped countries, are of small
and medium-size and factor input markets are also underdeveloped. Therefore, the
demands placed upon the entrepreneurial unit are considerably more extensive in lowincome as compared to high-income economies. Thus, the entrepreneurial roles may
encompass all activities from the perception of economic opportunity to the external
advancement of the firm in all its aspects. Certain tasks demand the entrepreneurs
critical attention, whereas others call for little, and can be safely delegated to

Thus, as observed earlier, very theorist has looked at the problem on the basis of his
specialty and therefore, can at best provide solution that is only wrong, or more or less
useful in context to this theory. As so many explanations have been put forward, they
speak of their inadequacy independently. In fact, the various factors, which cause
emergence of entrepreneurs, are integral and not additive. They are inter-looking,
mutually dependent and reinforcing.
Some factors, which are sociological or psychological in nature, take a sufficiently long
time to change, whereas others (like economic, political and legal factors) can be quickly
manipulated to render an environment conducive to emergence of entrepreneurship.
It may, therefore, be concluded that given a degree of ambition and ability not uncommon
to many individuals, certain kinds of experiences and situational conditions are the major
determinants of whether or not an individual becomes an entrepreneur. At the beginning
when people make the decision to start an entrepreneurial career, they are in most
respects very much like many other ambitious, striving individuals. But the
entrepreneurial interests for those who select that path are more a function of external
differences than internal ones more the result of practical readiness and cost/income
constraints than of individual psychology or personality. This does not mean that starting
a successful company is a game that anyone can play. It, however, means that far more
people could become entrepreneurs than ever do, and that the inclination of people to
move in this direction could be increased by an enhanced awareness and recognition of
this as a career alternative. Efforts have been made in the book to examine the process of
making of an entrepreneur, and the stages through which an individual normally passes to
become an entrepreneur, so that there is a better understanding of the subject. This
understanding can be utilized for vocational guidance for augmenting the supply of
entrepreneurs so vitally needed for rapid economic development and reduction of
unemployment in the country.

Indian Entrepreneurship surveyed in retrospect

The earliest research on Indian entrepreneurship dates back to 1750 when D. R. Gadgil
emphasized the role of non-Indian businessmen in the Indian Industry. On the basis of his
survey of the Indian political situation, conditions of agriculture, urbanization, trade
activities and the business communities then prevalent, he concluded that India possessed
a highly developed business community with respect to both national and international

A.Guha traced the growth of the Parsi business community over a hundred years till
1850 and showed that Parsi mercantile capital was ripe for industrial transformation
which was however curtailed by the then ruling power. He attributed the achievement
orientation Parsis to their ability to adjust to the prevailing political situation rather
than to a religious factor.


D. P. Pandit studied the development of entrepreneurship in the 19 th century with

particular emphasis to the Gujarati community and discarded caste or religion as
having any relation to entrepreneurial activity as people of all communities and
religions were found in Indian industry. However, a regional preference could be seen

The Marwaris were another successful commercial and industrial community. In
terms of asset accumulation they were better off than the Gujaratis. They were
reported to have controlled 60 per cent of the assets in the Indian industry, more
widely dispersed geographically and industrially than the Gujaratis.
It would be worthwhile to specially mention some special features of Marwari
Entrepreneurship. One of them was a Communal credit network that enabled
trading operations to move smoothly. Alan R. Cohen has described the sarafi
system used by Marwari cloth traders in Banaras as follows:
Firms in the system borrowed from each other whenever short of cash, loans were
payable on demand, even at midnight and interest was tallied and settled once a year,
with total borrowing offset by total lending.
Community banks provided accommodation for goods in transit and remittance
facilities. Community customs provided for apprenticeships in which youngsters
could learn the technique of business, and profit-sharing scheme by which they could
accumulate enough capital to start their own enterprise. Community or sometimes
inter-community institutions existed for adjudicating commercial disputes.
This community also ran community hostels popularly known as Basas where
members of their community could come, stay and engage in trading activities. This
sort of support to encourage entrepreneurship is unique and confined to the Marwari
community. The result is that because of community support a large number of
Marwaris were developed as entrepreneurs.

The Chettiars formed an important part of the propertied class of Indians in Malaya.
More than half of their total working funds was employed in Burma. After the change
of U. Nus Government in Burma and the successor governments policies of
Burmanisation of the trade and industry, most of these Chettiars have returned back to
India, where unfortunately they have not been able to establish themselves as
successful entrepreneurs.
A.K.Bagehi, in a comparative study of European and Indian capitalist groups between
1900-1930, pointed out the domination of Indian economy by European capital and the
discriminative colonial policy against entrepreneurs, particularly non-Parsi Indians. He
disagreed with the popular notion that the lack of interest of Indian businessmen in

Industry, due to low returns or a preference for liberal professions, was responsible for
the late emergence of Indian entrepreneurship.
P.B.Medhora also attributed the cause for this backwardness to the colonial rule and
repudiated the charge that religion inhibited entrepreneurship in India. He further
established the profit-motive as the basic impetus towards entrepreneurship.
The role of the Managing Agency System was brought out by Andrew F. Brimmer who
felt them to be the result of efforts of British and Indian entrepreneurs to overcome the
limitations imposed by the shortage of venture capital and business ability. This system
was however prey to intense legal discussions, whereby irresponsible agents made it to
the limelight and the achievements of those who contributed positively to Indian industry
were glossed over.
H.B.Lamb acknowledged the concentration of entrepreneurship within certain
communities in the early post-Independence phase and proposed explanations for this
phenomenon. She further noted that these business communities are currently becoming
less distinct. She anticipated a further communal equality in Industry through
geographical relocation with the development of infrastructure and the succumbing of
present-day large industrial families to the inevitable pressure of a culture that looks
down on entrepreneurship. These findings have not been fully borne out by research, as
Gujaratis and Marwaris continue to dominate the industrial scene.
In the opinion of Hemlata Acharya, regional analysis does not offer a complete
explanation for the rise of the business class in Gujarat as the indication of a definite
correlation between castes of business tradition and their involvement with industry.
V.I. Pavlov studied the process of formation of the Gujarati and Marwari business
communities and analyzed their rise to the upper strata of Indian intelligentsia.
Howard Spodex describes the evolution of entrepreneurship in the textile industry at
Ahmedabad and the movement of old money into industry, which was demonstrated
successful by a Brahmin or Patel. Gradually these communities were joined by Jains,
Banias and Parsis in industry and the profits of one undertaking were applied to the
further development of industry. Spodek highlights the paradox of conservative
Ahmedabad industry sprouting pioneers like Sarabhai who are renowned for their
M.D. Morris again demolished the popularly held belief that Indian values and social
structure were obstacles to the growth of Entrepreneurship. He commented on the interjati cooperation in Ahmedabad and Bombay enterprises and further felt that the high
degree of dynamism displayed by Indian society did not warrant any definite predictions
on the influences of caste on economic change.
D. Tripathy believed that neither sociological factors nor the policies of the British
Government were responsible for the economic backwardness in India. He lays emphasis
on factors like

Political unity,
Effective communication system,
Property protection, and
Customs barriers, varied currency systems and the like.

He observes the change in the Hindu class structure because of the entry of non-business
classes into industry. He was of the opinion that if entrepreneurship is a response to the
perceived dis-equilibrium between opportunities available and the extent of their
exploitation, it is the forces leading to the perception of new opportunities that requires to
be studied.

From the above researches, it is immediately apparent that while there is no consensus
whatsoever regarding the role of religion and caste system in the determination of
development of Entrepreneurship. Most researchers agree on the profit-motive as an
incentive and the existence of colonial rule as an impediment to entrepreneurship in

Social Values Related to Entrepreneurship

The spirit of entrepreneurship and its effectiveness is to a large degree affected by the
prevailing climate of religion, social values and culture.
While on the one hand Hinduism has been tradition bound, on the other it is equally true
that it has never been static. In accordance with the exigencies of time and circumstances,
it has displayed a power of adaptation, which is highly remarkable. This has led to the
emergence of new sub-sects and philosophies without creating a conflict.
At the level of social values, the basic social structure of the Indian society is the one
defined by the caste system. The leaders of the society were the Brahmins whose main
objective was pursuit and dissemination of knowledge. The Hindu culture is basically
opposed to acquisition of wealth. The Brahmins though they acquired considerable
knowledge used it only for advising the ruling class.
The vaishys used financial instrument like Khojas and Kacchi Memons in conducting the
affairs trading. They participated both in internal as well as in international trade with the
Persian Gulf, Arabia, Africa, and Malaya, Indonesia, etc. Certain communities did well as
far as entrepreneurial activities were concerned.
The Marwaris were successful commercial and industrial community. For example, the
147 large enterprises owned by Marwari groups on the monopolies Inquiry Commissions
list included 23 jute mills, 34 cotton textile mills, 11 sugar mills, 8 cement factories and
interests of one sort or another in almost every line of endeavor, thereby reflecting
Parsis who migrated to Gujarat from Persia in the 8th century had vocations like artisans,
carpenters, weavers, etc., in the 11th century. Their overseas trade was in yarn and opium.

By 18th century they had established merchant houses in Bombay, Burma, China and
England. They also acted as brokers for European traders. Because of their style of living,
which was more in line with Europeans, they were preferred for representing the
European businessmen. While most of the Parsis engaged themselves in trading, this
community produced such industrial entrepreneurs as Jamshedji Nasarvanji Tata, who
established a steel mill in far-away Jamshedpur in Bihar. He laid the foundation of the
famous Tata House or the Tata group of companies. This group had occupied the top
position asset-wise amongst the private sector groups for a long time. However, the Parsi
community now seems to be stagnating and shrinking showing very little
entrepreneurship. Most of the members of this community now prefer stable jobs as
professionals, to being entrepreneurs.
In South India Chettiars form the trading caste. One of the sub-castes Nattukottai
Chettiars were the chief bankers and financiers of South India. These trading
communities had their trade connections with the South-East Asian countries like Burma,
Ceylon, Malaya, Singapore, etc.
On the West Coast of South India, the trade was mostly in the hands of Syrian
Christians and Mohammedan merchants (Moplahs). As the trading monopoly of the
East India Company faded and finally vanished after 1857, many of the Christians
prospered as merchants in the benign atmosphere of Victorian free trade. In the 19 th
century they promoted native joint stock banks.
In Bengal, Subarna Baniks, who were the counterparts of banias in other regions,
specialized in trade and commerce. The average Bengali received an English education
and joined mercantile houses as well as administrative services. Movements towards
entrepreneurship were limited.
Besides these trading communities, there were some like the Bhatias, Lohanas and
Khatris, who were actively engaged in entrepreneurial activities, mostly trading and were
spread all over the country.
There are innumerous example of entrepreneurship in India that could inspire the present
day entrepreneurs. Even in the recent past there have been a good number of
entrepreneurs, Dhirubhai Ambani of Relaince Industries Ltd. Kursonbai of Nirma
Industries Ltd., Azim Premji of Wipro , Narayan Murthi of Infosys Ltd. are some of
As a potential entrepreneur you to have respond to following questions:

Are you prepared to put in hard work for achieving your goal?
Do you possess a strong will power to face and overcome the difficulties and setbacks
and make the enterprise successful?
Is your family environment congenial to leaving the traditional family occupation and
undertaking a new venture?
Are you prepared to wait if it takes time to get the results of your efforts?

As entrepreneurs managerial skill, drive, ingenuity, resourcefulness and dogged

determination are a small-scale industrys major sources of strength. The entrepreneur has
to plan, organize, direct subordinates and control their performance. He is not afraid to
pitch in personally whenever an operational task requires additional effort. Thus, smallscale businessmen have to spend more time at work. They cannot have the strictly 10
oclock 5 oclock schedule.
Generally, the various managerial and operational responsibilities in small-scale business
are not neatly segregated and assigned to different persons. An assortment of tasks and
activities are either performed by just one person or are assigned to different employees
at different times. These operating conditions, typical of most small-scale firms, reflect
the inter-relatedness of the functional activities of a business enterprise much more
explicitly than do the conditions in larger firms.
Any small company, which ignores sound management practice, will sooner or later
become sick and eventually fail. Effective business management is a must whether you
are in large scale or small-scale business. But, it would be the biggest folly if you start
using blindly all the business management practices of a large enterprise in a small-scale
business. We have already assessed the difference in small-scale and large-scale business.
The functional environment of the business changes with the scale of business. Therefore,
imitating or implementing the style of one in the other could cause problem.

Enterprise Planning:
For the success of an entrepreneur and subsequently his enterprise, planning is the most
significant factor. Entrepreneurs starts planning their ventures much ahead of the time
when they take shape sometimes in his teens. They plans and consciously make
endeavors to achieve their dreams.
Planning is an important management tool in any organisation, large or small. Any
organizations success depends on how well its management is able to use this tool of
planning. Actually one of the most serious operational problems for small business is lack
of effective formal planning.
One example will clarify.
In one year alone in a country like USA where strong management is wide spread in all
sectors of economy, there were about 20,000 small business firms that failed every year.
The estimated loss due to their failure was over three billion dollars. Researchers have
found that 90 per cent of these failures could be attributed to lack of planning,
inexperience. Only a few are accounted for by neglect, fraud, and disaster. This explains
the importance of planning.

Now the question is why planning is neglected in small business firms. The answer,
generally, is that small firms are relatively simple. It is not very unusual to hear
managers of small businesses frequently telling, My business is simple and I know
what the problems are! Such owner-entrepreneurs consider that planning is a luxury,

meant only for large-scale enterprises with surplus of resources. They feel that for
managers in the small-scale sector it is better to use rules of thumb and not waste
scarce resources in such avoidable luxuries like planning. They, unfortunately, are
grossly mistaken.

The second important reason is that the entrepreneurs, who keeps everything in his
head and does not feel the necessity of formalizing it, create problems for most small

Another reason is that most small firms have a short-range orientation where the
management tends to focus on day-to-day survival and bothers little about the growth
of the company. He is a fire fighter who tries to fight the battles of survival. By
proper planning the need for such fire-fighting exercises could be eliminated.

Though entrepreneurs are able to plan their entrepreneurial venture well in advance,
they fail when it comes to actually planning the day to day running of business. Small
business entrepreneurs/executives frequently lack planning skills. As they are small
they also do not have the staff support which a large enterprise generally has. In large
organizations they have corporate planners and full-fledged corporate planning
departments, which are unheard of in small firms. Therefore, they are unable to
anticipate the needs of the environment and fail to make provision for the same.
These obstacles are the reasons for the low planning intensity or adhocism among firms
in the small-scale sector. However, it must be realized that unless these obstacles are
overcome small-scale industrialists would be only moving towards failure for want of

What is planning?
Planning process involves:
The development and specification of a balanced set of organizational objectives;
A realistic assessment of the organizations internal resources; an objective evaluation
of the external environmental conditions that affect the organization.

An analysis of the organizations situation as compared with its direct competitors.

On the basis of these three sets of information a systematic investigation of a firms
internal, external, and competitive situation, managers become aware of the firms
opportunities and risks, strengths and weaknesses. Taking into account their personal
value orientations, managers can then relate the specified objectives to the observed
opportunities and risks. This matching process leads to the development of strategies for
achieving the organizations objectives by fully exploiting opportunities and strengths
while averting or minimizing risk and weaknesses. Each systematic approach to planning
has to go through such a process.

Approaches to planning
In general the smaller the firm and more limited its experience of systematic formal
planning, the simpler must be its first approach to planning. Therefore, the manager of the
small firm should start with simple, uncomplicated approach to planning and increase
sophistication as the firms planning experience and its management planning skills

The first step in developing a formal comprehensive planning system in a small firm
is to analyze those forces that are of critical importance for achieving success. Every
firm is subject to a variety of internal and external forces that are potential obstacles
or constraints on an organizations achievement of its desired objectives. As an
uncomplicated approach to planning, small business managers should start with
identifying and evaluating those strategic factors that are hindering their firm from
reaching its potential.

Once these factors are identified, the next step is to search for the ways to overcome
these problems. George Steiner developed a list of over 70 items that may be of
critical importance to a companys success. An entrepreneur needs to identify specific
problem areas, assessing the significance and severity of the problems and planning
Focussing attention on critical strategic factors is an appropriate way for small-scale
industries to start developing a formal planning effort. The advantages of such
planning are;

It does not require an elaborate planning organisation;

It does not require any extensive or exact quantification of the strategic factors under
It leads to a better understanding of the interdependencies of the various strategic
It leads the planner to a recognition of the urgency of the crucial problem areas that
require planned change;
It provides a basis for the development of remedial action; and
It can be used as a communication device to get information from the employees as
well as to inform them about planned activities.

A small industrial entrepreneur should, at regular intervals, complete the exercise of

assessing the level of competence for each factor and decide on an action plan to improve
competence, where the levels are low. Some factors may be more important for a
particular firm. Needless to say that those factors shall get priority over others in deciding
and implementing the action plans.

Entrepreneurs are self driven proactive people who are not restrained by the boundaries
of caste and creed. The main motive for them personally is self actualization and profit-

motive for business. Most the time starting an enterprise is easy as the dream of
enterprise launch is germinated and cultured in the minds of entrepreneurs much before it
takes actual shape. The critical time however, starts afterwards when the enterprise and
entrepreneur needs to sustain.
For sustenance and growth of a strong enterprise a very sound planning is needed.