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ENTREPRENEURIAL DEVELOPMENT

ENTREPRENEURIAL DEVELOPMENT
Evolution of Concept
The word „entrepreneurs‟ is derived from the French As an Organizer:
verb „entreprendre‟. It means to „undertake‟ it originally means Jean Baptiste says “One who combines the land of one
that to designate an organize of musical or other the labour of another and capital of yet another and thus
entertainments. Oxford dictionary in 18 “the director or a produces a product. By selling the product in the market he
manager of a public musical institution, one who „gets up‟ pays interest on capital, rent on land wages to laborers and
entertainment, especially musical performance”. In it the early what remains is his/her profit. Thus he made a clear distinction
16th century entrepreneur was applied to those who were between the role of capitalist as a financed and entrepreneurs as
engaged in military expeditions. In the 17th century it was a organizer.
considered as to cover civil engineering activities such as
construction and notification. It was only in 18th century the As an Innovator:
word entrepreneur was used to cover economic aspects. The Joseph A Schumpeter in 1934 in his book “theory of
term entrepreneur is used in various ways and terms. The views economic development” he says economic development as a
are broadly classified in three ways. discrete dynamic change brought entrepreneur by instituting
 Risk bearer new combination of production i.e, .innovations. According to
 Organizer and him introduction of new product may occur in any of following
 Innovator five norms:
Risk Bearer: 1. Introduction of new product in the market
In 18th century Richard Cantillon an Irish man living in 2. The instituting of new production technology which is
France, was first used entrepreneur and defined as An agent not yet tested by experience in the branch of
who buys factors of production at certain prices in order to manufacture.
combine them in to a product with a view entrepreneurs are 3. Opening of new market into which the specific product
risk bearing agents of product. has not previously entered.
Knight also described entrepreneur to be a specialized 4. The discovery of new source of supply raw material
group of persons who bear uncertainty. Uncertainty can be 5. The carrying out of the new form of organization of any
defined as a risk which cannot be in insured against and is industry b creating of monopoly position or the
incalculable. breaking of it.

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An individual who, rather than working as an 8. Recruitment of men.


employee, runs a small business and assumes all the risk 9. Undertaking the business operations.
and reward of a given business venture, idea, or good or
service offered for sale. The entrepreneur is commonly The functions of entrepreneurs can be also classified as under:
seen as a business leader and innovator of new ideas and 1. Risk bearing
business processes. 2. Organization
3. Innovation
Characteristics of an Entrepreneur:
The features of successful entrepreneurs are: Types of Entrepreneurs
1. Hard work: Clarence Danhof, have classified the entrepreneurs as
2. Desire for high achievement follows:
3. Highly optimistic Innovating Entrepreneurs:
4. Independence An innovating entrepreneur is one who introduces new
5. Foresight goods, inaugurates new method of production, discovers new
6. Good organizer market and reorganizes the enterprise.
7. Innovation Imitative Entrepreneurs:
These are characterized by readiness to adopt
successful innovations inaugurated by innovating
Functions of Entrepreneurs: entrepreneurs. Imitative entrepreneurs do not innovate the
An entrepreneur does perform all the functions changes themselves, they only imitate techniques and
necessary right from the genesis of an idea upt the technology innovated by others.
establishment of an enterprise. These can be listed in the Fabian Entrepreneurs:
following manner: Fabian entrepreneurs are characterized by very great
1. Idea generation and scanning of the best suitable idea. caution and skepticm in experimenting any change in their
2. Determination of the business objectives. enterprises. They imitate only when it becomes perfectly clear
3. Product analysis and market research that failure to do so would result in a loss of the relative
4. Determination of form of ownership/ organization position in the enterprise.
5. Completion of promotional formalities Drone Entrepreneurs:
6. Raising necessary funds. These are characterized by a refusal to adopt
7. Procuring machine and material opportunities to make changes in production formulae even at

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eh cost of severely reduced returns relative to other like Distinction between an Entrepreneur and a
producers. Such entrepreneurs may even suffer from losses but
they are not ready to make changes in their existing production Professional Manager:
methods. A professional manager is one who specializes in the
Following are some more types of entrepreneurs listed
by some other behavioral scientists: work of planning, organizing, leading and controlling the
Solo operators: efforts of others by the systematic used of classified knowledge
These are the entrepreneurs who essentially work alone
and it needed at all, employ a few employees. In the beginning and principles.
most of entrepreneurs start their enterprise like them. Both managers and entrepreneurs are answerable for
Active partners:
Active partners are those entrepreneurs who start/carry producing results. Both have to produce results through people
on an enterprise as a joint venture. It is important that all of working with them though they deal with different sets of
them actively participate in the operations of the business.
Inventors: people. Both are decision makers but the decisions are different
Such entrepreneurs with their competence and as their tasks vary. Both have to operate under constraints
inventiveness invent new products. Their basic interest lies in
research and innovative activities. which are understandably different. To be effective in their
Buyers: respective roles, both have to follow sound principles of
These are those entrepreneurs who do not like to bear
much risk. Hence, in order to reduce risk involved in setting up management like planning, staffing, delegation and control.
a new enterprise, they like to buy the ongoing one.
Lifetime:
These entrepreneurs take business as an integral part of
their life. Usually, the family enterprise and businesses which
mainly depend on exercise of personal skill fall in this
type/category of entrepreneurs.

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Points Entrepreneur Manager


Motive The main motive of an entrepreneur is to start a venture Here, the motive of manager is to render his services in
by setting up of an enterprise. He standards the venture an enterprise already set up by entrepreneur.
for his personal gratification.
functions The major functions of an entrepreneur are risk The major functions of a manager are planning,
bearing, organizing and innovation. organizing, staffing, directing, controlling and other
such managerial functions.
Status An entrepreneur is the owner of the enterprise A manager is the servant in the enterprise owned by the
entrepreneur.
Risk bearing An entrepreneur being the owner of the enterprise A manager as a servant does not bear any risk involved
assumes all the risks and uncertainty involved in in the enterprise.
running the enterprise.
Rewards The reward of the entrepreneur is profit which is highly A manager gets salary as reward for the services
uncertain. rendered by him in the enterprise. The salary is certain
and fixed.
Innovation Entrepreneur himself thinks over what and how to A manager simply executes the plans prepared by the
produce goods to meet the changing demands of the entrepreneur. Thus, a manager simply translates the
customers. Hence, he acts as an innovator also called a entrepreneur‟s ideas into practice.
change agent.
Qualification An entrepreneur needs to possess qualities and A manager needs to posses distinct qualifications in
qualifications like high achievement motive, originality terms of sound knowledge in management theory and
in thinking, foresight, and risk bearing ability and so practice.
on.
Decision making All policy and strategic decisions such as expansion, All the managerial and operational decisions relating to
diversification, take-overs, amalgamations, mergers, day to day activities of he business of the firm are taken
reorganization, capital budgeting, pricing, credit by the manager.
granting etc. are taken by the entrepreneur.

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Entrepreneur and Entrepreneurship 3. Risk-taking


The entrepreneurship is the elusive concept. Many 4. Innovation
others defined it in many ways such as risk bearing, innovating, 5. Organization
and thrill-seeking. Let‟s see some definitions. 6. Skilful management
In the opinion of A. H Cole: 7. Making the enterprise a success
Entrepreneurship is the purposeful activity of an
individual or a group of associated individuals, undertaken to Relationship between Entrepreneur and the
initiate, maintain or aggrandize profit by production or Entrepreneurship
distribution of economic goods and services. Entrepreneur Entrepreneurship
Entrepreneurship is the process undertaken by an  Person  Process
entrepreneur to augment his business interests. It is an exercise  organizer  Organization
involving and creativity that will go towards establishing hi/her  Risk-bearer  Risk bearing
enterprise.  Motivator  Motivation
Entrepreneurship is the propensity of mind to take
 creator  Creation
calculated risks with confidence to achieve a pre-determined
 Visualiser  Vision
business or industrial objective.
 leader  leadership
 Imitator  Imitation
Characteristics of Entrepreneurship
1. Accepting challenges
2. Decision making

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INTRAPRENEUR
A new breed of entrepreneurs is coming to the fore in Differences between Entrepreneur and Intrapreneur:
large industrial organizations. They are called „intrapreneurs‟. Points Entrepreneur Intrapreneur
They emerge from within the confines of an existing enterprise. Ownership entrepreneur is the An intrapreneur is an
In big organizations, the top executive‟s area encouraged to owner of the employee of the
catch hold of new ideas and then convert these into products organization enterprise
through research and development activities within the Status An entrepreneur is An intrapreneur is
framework of organization. The concept of Intrapreneurship independent in his dependent on his
has become very popular in developed countries like America. status employer or owner
It was Gifford Pinchot III, an American Management Raising of an entrepreneur raises An intrapreneur does
expert, who used the term „intrapreneur‟ for the first time in capital: the required capital for not raise the capital
1983. a his business
A person within a large corporation who takes direct Risk An entrepreneur bears An intrapreneur does
responsibility for turning an idea into a profitable finished the risk involved in his not bear any risk
product through assertive risk taking and innovation business. involved in his
Intrapreneurs have entrepreneurial skills blended with business
managerial skills but operate within the confines of an operations An entrepreneur An intrapreneur
organization. operates in his business operates from within
"Intrapreneurship refers to employee initiatives in from outside his business
organizations to undertake something new, without being asked organization.
to do so". This Intrapreneur focuses on innovation and Guarantee of An entrepreneur gives An intrapreneur does
creativity and who transforms a dream or an idea into a payment guarantee of payment not required to do so
profitable venture, by operating within the organizational of money to the
environment. Thus, Intrapreneurs are inside entrepreneurs who lenders
follow the goal of the organization. Convention An entrepreneur An intrapreneur has
of new ideas converts his new ideas only to create his new
or high intrapreneurs‟ ideas but he cannot
ideas into reality. convert them on his
own account.

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It may be noted that the economic factors are included


THEORIES OF ENTREPRENEURSHIP: under the following conditios.
The word entrepreneurship is changed from period to  The market incentives which; ae present themselves in
period. Many of scholors have made an attempt to draft the the form of new social needs and wants
emergnence of entrepreneurship in the view of development.  The existences of qdequate stock of capital to finance
The theories of entrepreneurship have been discusses new enterprises.
below:  The occurrence of institutions like development banks
1. Traits theory entrepreneurship in order to direct the capital to those who want to use it
2. Economic theory of entrepreneurship for new entrepreneurial projects.
3. Socio-cultural theory of entrepreneurship Socio-cultural theory of entrepreneurship:
4. Psychological theory of entrepreneurship Sociologists argue that entrepreneurship is most likely
Traits theory of entrepreneurship: to emerge under socio-cultural environment. According to
According to this theory entrpreneurship developed them social changes, cultural values and role expectations are
because individuals called entrepreneurs, possessed certain responsible for the emergence of entrepreneurship.
specific characteristics or traits or competencies which made Max Weber says that religious beliefs generate a drive for the
them capable of generating new ideas and creating new entrepreneurship growth. For example Marwaris in india.
business ventures. The main traits or qualities responsible for
the rise of entrepreneurship are such as innovative and creative Psychological theory of entrepreneurship:
skills, ability an=fo bilifng a strong orgainsation and managing According to this theory the psychological
it efficiently and effectively, propensity to take risks, efforts characteristics of people plays main role rather than resources
patience and perseverance and foreseeabililty. Desire for high available. It is said that the true power of generating and
achievement etc. growing any enterprise is 5 percent technology and 95 percent
psychology.
Economic theory of entrepreneurship: David McCllend developed a theory to explain the
This theory is propounded by the economists. psychological roots of entrepreneurship. He identified 3 such
According to this theories, the entrepreneurship and economic motives of needs. They are as follows.
growth will take place in those situations where particular Need for high achievement: this is concerned with the desire
economic conditions are most favourable. Many economists to do complex or very difficult tasks, to do something better or
propounds the economic incentives are the main drive for the more efficiently and to solve problems.
entrepreneurial activities. 1. Always desires to take personal responsibility for finding
solutions to problems.

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2. Seeks a challenge
3. Desires immediate and specific feedback on his
performance
4. Is objective oriented.
5. Is pre-occupied with his work and
6. Has a high level of energy to hard work.
Need for power:
This is concerned with the desire
1. To influence or control other people,
2. To be responsible for others
3. To hold authority over them and
4. To control one‟s environment including resources and
information.

Need for affiliation;


This is concerned with the desire to establish and
maintain friendly, cordial and warm relationships with others.