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13
LEARNING OBJECTIVES E NTREPRENEURSHIP
After studying this chapter, you
D EVELOPMENT
should be able to:
S EEDS OF VIRCHOW
Ø state the meaning of the
Until 1981 Narayan Reddy, M.Sc.
terms, ‘entrepreneur,’
Organic Chemistry, had been working
‘entrepreneurship’ and ‘enterprise’;
for a pharmaceutical company where he
had developed a molecule. He was
Ø distinguish between contemplating commercial utilisation of
entrepreneurship and that molecule by setting up a small-scale
management and discuss the unit – much smaller than what he
characteristics of actually started. Actually, he met two
entrepreneurship; medicos, who had just returned from a
Gulf country and were looking for some
productive avenue for investment of
Ø explain the need for their savings (remember the Gulf
entrepreneurship; crisis?), Reddy’s idea appealed to them.
Thus, the willing entrepreneurs met–
Ø describe the roles and functions where there is a will there is a way–
and the seeds for the venture were
of the entrepreneurs;
sown. After a detailed study of the
technical, economic, commercial and
Ø identify the entrepreneurial financial feasibility of the idea of
competencies; manufacturing a bulk drug from the
molecule, ‘Virchow Laboratories’ was
Ø explain and follow the process started in 1982 as a SSI with an initial
investment of Rs. 28 lakhs – Rs. 8 lakh
of entrepreneurship
in the form of equal contribution by the
development; and three promoters and Rs. 20 lakh
funding from the Andhra Pradesh
Ø identify the values, attitudes State Finance Corporation (APSFC).
and motivation for a plunge in Project implementation was even more
entrepreneurship. challenging as he set out to acquire land,
construct factory, purchase equipment,
negotiate with suppliers, potential
customers and obtain environmental,
drug control and other clearances.
Initially, it was he who acted as the pivot
of the enterprise wheel. In the course of
time, a strong managerial team was put
in place and thanks to persistent
emphasis on good management
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practices, Virchow emerged as the world’s largest and the best producer of the basic
drug from the chosen molecule. In fact, web search on ‘Virchow Laboratories’ takes
you to the home page saying “Welcome to Virchow Group of Companies”, the group
comprising 4 companies with Virchow Laboratories being the flagship company.
SVO Analogy
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THE C ONCEPT OF ENTREPRENEURSHIP pointed out that whereas the wars are
rare and far between, in today’s
You are aware that entrepreneurship competitive world, entrepreneurs wage
is regarded as one of the four major wars everyday. There is a tremendous
factors of production, the other three pressure to continually develop new
being land, labour and capital. products, explore new markets, update
However, it should surprise you that technology and devise innovative ways
as regards its French origin, the term of marketing and so on.
‘entrepreneurship’ (derived from the The term ‘entrepreneur’ was first
verb ‘entreprende’ meaning ‘to introduced in economics by the early
undertake’) pertained not to economics 18th century French economist Richard
but to undertaking of military Cantillon. In his writings, he formally
expeditions. So is true of many terms defined the entrepreneur as the “agent
in management such as strategy (a who buys means of production at certain
course of action to beat the competition, prices in order to sell the produce at
the ‘enemy’) and logistics (movement of uncertain prices in the future”. Since then
men and machines for timely a perusal of the usage of the term in
availability), etc. Historically, as wars economics shows that entrepreneurship
are followed by economic recons- implies risk/uncertainty bearing;
truction, it should be no surprise that coordination of productive resources;
military concepts are used in introduction of innovations; and the
economics and management. It may be provision of capital.
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We would like to define entrepre- does one first of all decide to choose own
neurship as a systematic, purposeful business as a career; how does one
and creative activity of identifying a sense a market opportunity; how does
need, mobilising resources and one muster up courage to embark
organising production with a view to upon it, and mobilise the requisite
delivering value to the customers, resources, etc.; so much so that
returns for the investors and profits for recourse to entrepreneurship, in
the self in accordance with the risks common parlance, is considered as an
and uncertainties associated with exclusive preserve of a few gifted
business. This definition points to certain individuals. In the following paragraphs,
characteristics of entrepreneurship that our effort would be to establish
we turn our attention to. entrepreneurship as a career that you
should aspire for. Remember, resources
may be limited, aspiration need not be.
C HARACTERISTICS OF ENTREPRENEURSHIP
So, you can aspire for something
In the SVO formulation of the concepts greater, bigger than your present status
of entrepreneur, entrepreneurship and and resources. And start today.
enterprise, we saw that entrepreneur- Remember, aspiration means desire
ship is about the process of setting up multiplied by action.
a business. One cannot help but 1. Systematic Activity: Entrepre-
marvel at the beauty of the process: how neurship is not a mysterious gift or
Nurturing Success
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charm and something that happens industries, for example, zerox machines
by chance! It is a systematic, step-by- destroyed carbon paper industry,
step and purposeful activity. It has mobile telephony threatens landline/
certain temperamental, skill and other basic telephony, net gains accruing to
knowledge and competency requirements the economy lend such entrepreneurial
that can be acquired, learnt and actions as commendable as the acts of
developed, both by formal educational creative destruction.
and vocational training as well as by Entrepreneurship is creative also
observation and work experience. Such in the sense that it involves
an understanding of the process of innovation- introduction of new
entrepreneurship is crucial for dispelling products, discovery of new markets
the myth that entrepreneurs are born and sources of supply of inputs,
rather than made. technological breakthroughs as well as
2. Lawful and Purposeful Activity: introduction of newer organisational
The object of entrepreneurship is lawful forms for doing things better, cheaper,
business. It is important to take note faster and, in the present context, in a
of this as one may try to legitimise manner that causes the least harm to
unlawful actions as entrepreneurship the ecology/environment. It is possible
on the grounds that just as that entrepreneurs in developing
entrepreneurship entails risk, so does countries may not be pioneering/
illicit businesses. Purpose of entrepre- innovative in introducing path-
neurship is creation of value for breaking, radical innovations. They
personal profit and social gain. may be the first or second adopters of
3 . Innovation: From the point of technologies developed elsewhere.
view of the firm, innovation may be cost That does not make their achievement
saving or revenue-enhancing. If it does small. For imitating technologies from
both it is more than welcome. Even if it developed world to the indigenous
does none, it is still welcome as setting is quite challenging. A lady
innovation must become a habit! entrepreneur wanting to introduce
Entrepreneurship is creative in the thermal pads for industrial heating
sense that it involves creation of value. faced tremendous reluctance form the
You must appreciate that in the owners of chemical and sugar mills
absence of entrepreneurship ‘matter’ despite the established superiority of
does not become a “resource.” By her products over the conventional
combining the various factors of heating of the vessels by burning of
production, entrepreneurs produce wood/coke or using LPG. Moreover,
goods and services that meet the needs there is no need to suffer from “it was
and wants of the society. Every not invented here” complex– there is
entrepreneurial act results in income no need to reinvent the wheel. The
and wealth generation. Even when global electronics major, Sony did not
innovations destroy the existing invent the transistor! It used the
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but what the person has taken is a risk situations as business ceases to
calculated risk. The situation is be a game/fun! Risk as such more
similarly to a motorcyclist in the ‘ring than a financial stake, becomes a matter
of death’ or a trapeze artist in circus. of personal stake, where less than
While the spectators are in the awe of expected performance causes
the high-risk, the artists have taken a displeasure and distress.
calculated risk given their training, The characteristics of entrepreneur-
skills, and of course, confidence and ship discussed as above apply in
daring. It is said that the entrepreneurs diverse contexts, so does the usage
thrive on circumstances where odds of the term, viz., Agricultural/Rural
favouring and against success area Entrepreneurship, Industrial entrepre-
even, that is 50:50 situations. They are neurship, Technopreneurship, Netpre-
so sure of their capabilities that they neurship, Green/Environmental or
convert 50% chances into 100% Ecopreneurship, Intra-corporate/firm
success. They avoid situations with or Intrapreneusrhip and Social
higher risks as they hate failure as entrepreneurship. In fact, entrepre-
anyone would do; they dislike lower neurship has come to be regarded as a
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‘type of behaviours’, whereby one, In developing countries, however, the
(i) rather than becoming a part of the concept of owner-manager seems more
problem, proactively tries to solve it; apt for entrepreneurship as the
(ii) uses personal creativity and intellect entrepreneur remains attached even to
to develop innovative solutions; the day-to-day operations of the venture.
(iii) thinks beyond resources presently In fact, their lacking in managerial skills
controlled in exploiting the emerging is often forwarded as the cause of
opportunities or attending to the business failures. Just as managers are
impending problems; (iv) has the expected to play entrepreneurial roles in
conviction to convince others of one’s the times of need, likewise the
ideas and seek their commitment entrepreneurs must also demonstrate
towards the project; and (v) has the managerial abilities for the success of
courage of heart to withstand their ventures. Irrespective of whether the
adversities, persist despite setbacks entrepreneurs pave way for the managers
and be generally optimistic. or they themselves assume the
managerial responsibilities, it is possible
R ELATIONSHIP BETWEEN to distinguish between the terms
E NTREPRENEURSHIP AND M ANAGEMENT entrepreneurship and management. (See
the table on next page)
Entrepreneurship is about business
start-ups and renewals. That is, it N EED FOR ENTREPRENEURSHIP
appears at the time of starting a new
business, disappears for some time in Every country, whether developed or
the course of stabilising the venture as developing, needs entrepreneurs.
an on-going business and reappears in Whereas, a developing country needs
case there is a need for introducing entrepreneurs to initiate the process of
changes in product, market, technology, development, the developed one needs
structure and so on. In fact, it is said that entrepreneurship to sustain it. In the
everyone is an entrepreneur when he present Indian context, where on the
actually ‘carries out new combinations,’ one hand, employment opportunities
and loses that character as soon as he in public sector and large-scale sector
has built up his business, when he are shrinking, and on the other,
settles down to running it as other people vast opportunities arising from
run their businesses. In developed globalisation are waiting to be exploited;
countries, the distinction between the entrepreneurship can really take India
entrepreneurial focus on start-ups and to the heights of becoming a super
managerial focus on routine is so sharp economic power. (See the Box entitled
that it is argued that once the project ‘India Needs Entrepreneurs’)
has reached a level of maturity, the Studies by Global Entrepre-
entrepreneurs must move out and the neurship Monitor, a research programem
managers must come in. involving annual assessment of the
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Differences between Entrepreneurship and Management
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national level of entrepreneurial activity the absence this function, all other
across a number of countries (visit, resources, namely land, labour and
www.gemconsortium.org) show that capital would remain idle. They may
differences in the levels of entrepreneurial not be inventing/discovering the
activity account for the differences in products, their role in commercial
the level of economic growth to the exploitation of the advancements in
extent of as much as 33%. science and technology via organisation
What is that the entrepreneurs do of the productive apparatus makes the
to affect economic development? This other resources productive and useful.
leads us to a discussion of the functions So much so that it is said that in the
of the entrepreneurs in relation to absence of entrepreneurial intervention,
economic development. As the every plant would remain a weed and
enterprise is the object of their every mineral would remain a rock.
endeavour, it is also necessary that we 1. Contribution to GDP: Increase in
examine their functions in relation to the Gross Domestic Product or GDP is
the enterprise as well. the most common definition of economic
Thus, the need for entrepre- development. You are aware that income
neurship arises from the functions the is generated in the process of
entrepreneurs perform in relation to the production. So, entrepreneurs generate
process of economic development and income via organisation of production be
in relation to the business enterprise. it agriculture, manufacturing or services.
You are also aware that income
F UNCTIONS OF ENTREPRENEURS IN generated is distributed among the
R ELATION TO ECONOMIC DEVELOPMENT factors of production where land gets
rent, labour gets wages and salaries,
You are aware that entrepreneurs capital gets interest and the residual
“organise” the production process. In income accrues to the entrepreneur in
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the form of profits. As rent and interest Ratio (COR); more precisely Incremental
accrue to those few who have land and Capital Output Ratio (ICOR) that
capital respectively whereas larger measures the percentage increase in
masses are destined to earn their capital formation required obtaining a
incomes via wage employment, the percentage increase in GDP. So, if a
biggest contribution of the country desires to grow @ 10.0 % p.a.
entrepreneurship lies in capital and its ICOR is 2.6, then it must ensure
formation and generation of capital formation @ 26.0% p.a.
employment. This is what we turn our Entrepreneurs, by investing their own
attention to. savings and informally mobilising the
2. Capital Formation: The entrepre- savings of their friends and relatives
neurial decision, in effect, is an contribute to the process of capital
investment decision that augments the formation. These informal funding
productive capacity of the economy supplements the funds made available
and hence results in capital formation. by the formal means of raising
In fact, GDP and capital formation are resources from banks, financial
related to each other via Capital Output institutions and capital markets.
Capital Formation
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3 . Generation of Employment: Every a. Improving processes, reducing
new business is a source of employment wastes, increasing yield ,and,
to people with different abilities, skills b. Bringing about technical progress,
and qualifications. As such that is, by altering labour-capital
entrepreneurship becomes a source of ratios. You are aware that if labour
livelihood to those who do neither have is provided with good implements
capital to earn interest on nor have the (capital), its productivity increases.
land to earn rent . In fact, what they earn 6. Increasing the Spectrum and
is not only a livelihood or means of Scope of Economic Activities:
sustenance but also a lifestyle for Development does not merely mean
themselves and their families as well as ‘more’ and ‘better’ of the existing, it
personal job satisfaction. As such also and more crucially means
entrepreneurs touch the lives of many, diversification of economic activities–
directly as well as indirectly. across the geographic, sectoral and
4. Generation of Business technological scope.
Opportunities for Others: Every new You are aware that underdeveloped
business creates opportunities for the countries are caught in the vicious cycles
suppliers of inputs (this is referred to on the demand as well as supply side.
as backward linkages) and the Entrepreneurs penetrate into and break
marketers of the output (what is these cycles, for example, by organising
referred to as forward linkages). As a and orienting domestic production for
pen manufacturer you would create exports. Thus, production (and thereby
opportunities for refill manufacturers generation of income) is not constrained
as well as wholesalers and retailers of by the inadequacy of domestic demand.
stationery products. These immediate (Demand-side Vicious Cycle). In today’s
linkages induce further linkages. For context, you are aware that India is poised
example greater opportunities for refill to become a manufacturing hub for the
manufacturers would mean expansion global markets for diverse products.
of business for ink manufacturers. In Economic development is also
general, there are greater opportunities constrained by the supply-side
for transporters, advertisers, and, so on. pressures resulting into absence of
So, via a chain-reaction, entrepreneurship capacity to meet the demand whether
provides a spur to the level of economic domestic or overseas. Entrepreneurs
activity. mobilise local and even overseas
resources to augment the productive
5. Improvement in Economic capacity of a country. Indian
Efficiency: You are aware that Multinational Giants is fast becoming
efficiency means to have greater output a reality.
from the same input. Entrepreneurs Entrepreneurs lead the process of
improve economic efficiency by, economic development via bringing
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Small-Scale Entrepreneurship among Marginalised Groups in India
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The established ways of life need to be cricket team from the villagers who had
challenged and change must be seen not even seen the game? Don’t the feats
as an opportunity to improve rather of Karasn Bhai of ‘Nirma’ who
than something to be scared of. challenged ‘Surf’ from the mighty
Entrepreneurs, through their urge to Hindustan Lever Limited make you
do something new, seeing change as an proud of the daring of the
opportunity, experimenting with the entrepreneurs?
novel ideas and showing the courage Thus, whether one looks at economic
to try them prepare a fertile ground for development narrowly in terms of the
persistent economic development. Have increase in GDP or in the wider context
you seen the Hindi movie ‘Lagaan,’ of economic, institutional and social
where the protagonist Bhuvan raises a change, entrepreneurship plays a
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Resource mobilisation
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the question is what to export and return of (safety and liquidity) of their
where? You may be required to compile investments. That is, the idea must be
a country-product matrix to be able to financially viable as well. There should
decide. (See proforma) be enough sales in the immediate and
This way you may arrive at the the prospect of growth in the foreseeable
product-market combination showing future; there should be adequate
the fastest growing import and from assurance on the commercial viability
your point of view export potential. of the chosen product offering. Now a
Deciding on the product offering day, it is also important to be sure that
makes the highest demand on the there aren’t any environmental and
entrepreneur’s creativity and other legal restrictions/necessity of prior
innovativeness. Yet, in a competitive approvals for setting up the business.
environment, it is possible to It is also to be decided as to whether the
differentiate your product offering even business will be organised as a
if the generic product is the same and proprietary concern/partnership firm/
serves the same need. company or cooperative entity.
Clearly decision on specific Clearly the chosen product offering
product offering necessitates decisions must be feasible from the diverse
on who is buying, why, and what are perspectives. You must compile these
the value expectations. You will be able findings in the form of a business plan
to succeed when the value delivered that would have to be submitted to the
not only meets but also exceeds funding authorities, in the Indian
customers’ expectations and create a context, the State Finance Corporation
‘Vow!’ impact. of your area. They may be having a
Feasibility Analysis: The product prescribed proforma in which the details
offering idea must be technically feasible, of the business plan are required to be
that is it should be possible with the furnished and, as such there may a
available technology to convert the idea need to adapt the contents accordingly.
into a reality. And this should be An idea about the generic contents of a
possible at a cost that can be covered business plan may be had from.
by the price it will fetch; in other words, The business plan may be
the idea must be economically feasible appraised by the funding institution,
too. The project cost should be within and upon satisfying itself about the
the resources available and the resource desirability of assisting your project
providers should be reasonably sure of and upon the furnishing of some
an appropriate return on (profit) and margin money it may sanction the loan
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Countries
Products
A B C D E
Product Differentiation
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to simpler, softer and safer options of between the person and the
employment and practice of environment. Ultimately the choice of
profession. Entrepreneurial going may entrepreneurship as a career lies with
be tough; but then that is where the the individual, yet he must see it as a
tough get going! Do not worry if desirable as well as a feasible option. In
presently you may find yourself short this regard, it becomes imperative to
on those competencies, values and look at both the factors in the
attitudes. It is just a matter of making environment as well as the factors in the
up your mind for a career in individual as having a nearing on the
entrepreneurship and grooming perception of desirability and feasibility
yourselves for it. This takes us to the and thereby entrepreneurship
discussion of the process of development. One may, therefore, model
entrepreneurship development. the process of entrepreneurship
development in terms.
T HE PROCESS OF ENTREPRENEURSHIP In general, capitalist economy with
D EVELOPMENT its emphasis on individual achievement
is more suitable for entrepreneurship.
Entrepreneurship does not emerge Lower rates of taxation on personal
spontaneously. Rather it is the outcome income, lower rates of interest and
of a dynamic process of interaction moderate inflation stimulate
Technical
Administrative/Legal Economic
Commercial Financial
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Business Plan
1. Executive Summary
2. Business/industry background
3. Product/service to be offered
4. Market analysis
5. Sales and marketing strategy
6. Production/operations strategy
7. Management
8. Risk factors
9. Funds required
10. Return on and off investment and exit routes
11. Use of the sales proceeds
12. Financial summaries
13. Appendices, e.g., Reports on Market Survey,
Financial Statements, Track Record etc.
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experience and the necessary values, entrepreneurship. They could be having
attitudes and motivation (the opening a low perception of self-efficacy either
case does not elaborate this. We will on account of lack of resources (or to be
discuss these at suitable places). Even more correct, resourcefulness),
you may like to see as to where do you knowledge or know-how, and the skills.
find yourself on the desirability Collectively, these are referred to as
(willingness)-efficacy (ability) matrix, competencies, which now we turn our
won’t you? attention to.
As you may see from the matrix
figure able and willing men and women E NTREPRENEURIAL C OMPETENCIES
are a “ready” source of entrepreneurship.
Such persons leap up the first Every opportunity and successful
opportunity comes their way to be on performance of every role and function
their own. Recall, Narayan Reddy leapt has a competence requirement. Its true
up the opportunity as he met the two of entrepre-neurship as well. entitled
medicos who had returned from the Gulf. ‘Cash OR KASH?’
At any point of time, there are The term ‘competence’ refers to a
many men and women who “want” to composite of knowledge, skills and a
set up a business of their own but host of psychosocial attributes
experience self-perceived barriers to (including Attitudes and Motivation that
Shape
Entrepreneurship
Development
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Economic
Entrepreneurship
Development
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Initiative: Acting out of choice rather
Initiative: Efficiency Orientation: Concern for
than compulsion, taking the lead conservation of time, money and effort.
rather than waiting for others to start. Systematic Planning: Breaking up
Sees and Acts on Opportunities: A the complex whole into parts, close
mindset where one is trained to look for examination of the parts and inferring
business opportunities from everyday about the whole; e.g. simultaneously
experiences. Recall ‘oranges’ example.
High
Eager Ready
Entrepreneur Entrepreneur
Desirability
Low High
Self-Efficacy
Efficacy-Desirability Matrix
Persistence: A ‘never say die’ attitude, attending to production, marketing and
not giving up easily, striving financial aspects (parts) of the overall
continuously until success is achieved. business strategy (the whole).
Information seeking: Knowing and Problem-solving
Problem-solving: Observing the
knowing who knows, consulting experts, symptoms, diagnosing and curing.
reading relevant material and an overall
openness to ideas and information. Self-confidence
Self-confidence: Not being afraid of the
risks associated with business and
Concern for High Quality of Work:
Attention to details and observance of relying on one’s capabilities to
established standards and norms. successfully manage these.
Commitment to Work Contract: Assertiveness: Conveying emphatically
Taking personal pains to complete a one’s vision and convincing others of
task as scheduled. its value.
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Cash or KASH
“What do you need to be a business person?” was the opening question the anchor of
a television interview asked an eminent business personality. “Caash” she heard and
though that her interview is going to be a spoil, for it was an answer so obvious and
exhaustive that there was not anything else to talk. Or this is what she thought.
The entrepreneur saved her day, “young lady,” he continued, “you seem to have got it
wrong!” “What I meant was not C_a_s_h_=Cash, but K_A_S_H= KASH!”
Interview was off to a flying start! And the interviewee went on to elaborate what he
meant, K=Knowledge, A=Attitude, S=Skills and H=Habits.
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makes a man perfect”? For example, Need for Achievement (N-Ach.): Need
‘persuasion,’ and ‘use of influence for achievement implies a desire to
strategies’ require presentation skills. accomplish something difficult. To
You may do double the homework on master, manipulate, or organise
what you want to say, how you want physical objects, human beings or
to say, who is your audience and what ideas. To do this as rapidly and as
are their backgrounds, what could be independently as possible. To overcome
the possible questions that may be obstacles and attain a high standard.
asked, what would be their answers To excel one’s self. To rival and surpass
and so on. Practice it all over a number others. To increase self–regard by
of times, may be before mirror or your successful exercise of talent. Yes
friends, so that when you are actually entrepreneurship provides you with the
in that situation, you perform well. best opportunity for making the best
use of your talents as in employment
E NTREPRENEURIAL MOTIVATION the 9-5 routine, pressure to adhere to
rules and regulations, preference for
Men and women who have a perception compliance of boss’s instructions over
of self-efficacy and are yet to feel the use of personal creativity and
interested in or motivated by the idea innovativeness stifles your progress
of being on their own comprise a and self-development. You can create
potential, future source of a work environment that suits your
entrepreneurship. What motivates a abilities and interests.
person is a question easier asked than Need for Power (N-Pow): Need for
answered. Mr. Narayan Reddy was
Power is the concern for influencing
driven by the desire to utilise his people or the behaviour of others for
discovery of the molecule as a business moving in the chosen direction and
opportunity. In terms of Maslow’s need attaining the envisioned objectives. In
hierarchy theory, one may say that Mr. common perception, politicians, social-
Narayan Reddy was driven by the need religious leaders Chief Executive Officers
for self-actualisation. Since (CEOs), Government Bureaucrats/Civil
entrepreneurial situation is characterised Servants typify the need for power. Such
by personal accomplishment in a perception seems more based on the
competitive situations and involving belief that the source of power lies in
higher standards of excellence, one the “position” a person occupies in
often come across reference to ‘need for organisational/societal context. In the
achievement’ or N-ach for short as the same vein, business ownership too may
primary driver of entrepreneurial imply a need for power. Moreover, you
behaviour. See Box entitled ‘How N- would appreciate that the process of
Ach. Drives Entrepreneurship and founding a business, one has to win
Economic Development’. the commitment of capital providers,
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Need for Affiliation (N-Aff.): Often you carry on the tradition of business in the
must have heard your parents saying family and the community to which one
that whatever they do they do it for their belongs, may be interpreted as reflecting
children. If a man thinks about need for affiliation as well. In the
interpersonal relationships, he has a countries with the colonial past, such
concern for affiliation. It implies, among as ours, the first generation of
other things a tendency of the people to entrepreneurs in Independent India was
conform to the wishes and norms of driven by patriotic fervor and the desire
those whom they value. Apparently, to rebuild the economy left stagnated
social activists, environmentalists, by the alien rulers. One can certainly
teachers, and doctors and nurses may trace some elements of affiliation
seem as predominantly driven by these motivation in such instances.
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Need for Autonomy (N-Aut.): The for the avenues for their expression and
need for autonomy is a desire for hence are drawn to entrepreneurship.
independence and being responsible Persons eager to be on their own may
and accountable to oneself rather than strive hard to acquire the necessary
some external authority for competencies to realise their dreams.
performance. It is the desire for an How truly one has said that
opportunity for the fullest expression entrepreneurs are the dreamers
of one’s abilities. In the context of who do!
entrepreneurship, it is usually In explaining and developing
interpreted as the determination not to entrepreneurial motivation, it is
work for someone else. In most job important to learn that different
situations, employees are given little individuals are motivated differently, and
freedom to exercise their discretion in that one may be trying to satisfy more
taking decisions and choosing a course than one need through one’s pursuit.
of action so much so that absence of it This is an important observation as
drives them into starting their own economic theory very simply says that
ventures. As such n-pow. becomes the objective of the firm or that of the
more a desire for preserving one’s ethos entrepreneur is profit maximisation.
rather than the freedom from the boss.
Take the example of another E NTREPRENEURIAL VALUES AND
Hyderabad based entrepreneur entitled A TTITUDES
Entrepreneurship for Preserving
Personal Work Ethos). While explaining human behaviour,
What does the above discussion one often comes across the terms
mean for entrepreneurship development? values and attitudes. Rather than
It means that for promoting entrepre- attempting to distinguish between these
neurship it is important to kindle and two terms, it would be sufficient to say
arouse the right motivation. In the here that taken together, entrepreneurial
absence of motivation, even able men values and attitudes refer to the
and women may not take to entrepre- behavioural choices individuals make
neurship. Hence. In every Entrepre- for success in entrepreneurship. The
neurship Awareness Programme (EAP) word ‘choice’ is important, as there are
or Entrepreneurship Development alternative ways of behaving too.
Programme (EDP), there are special In entrepreneurship, a host of
sessions on entrepreneurial motivation, behavioural tendencies or orientations
besides sessions on entrepreneurial have been reported as having a bearing
competencies. on success. The entrepreneur in ‘Cash
You may note that motivation and or KASH’ labeled these as ‘Habits’,
ability can positively reinforce each some researches have called these as
other. Persons having abilities search policies or strategies. Be it the decision
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KEY TERMS
Entrepreneurship Enterprise
Entrepreneurial Risks Experimentation
Exploration Rural Entrepreneurship
Entrepreneurial Opportunities Entrepreneurial Competencies
SUMMARY
The terms ‘entrepreneur,’ ‘entrepreneurship’ and ‘enterprise’ can be understood
by drawing an analogy with the structure of a sentence in English language.
Entrepreneur is the person (the subject), entrepreneurship is the process (the
verb) and enterprise is the creation of the person and the output of the process
(the object).
Entrepreneurs play important roles both in relation to economic development
and in relation to the enterprise. In relation to economic development, entrepreneurs
contribute to growth in GDP, capital formation and employment generation besides
creating business opportunities for others and bringing about an improvement
in the quality of life in the community in which they operate. In relation to the
enterprise, they perform a number of roles right from the conception of a business
idea, examining its feasibility and mobilisation of resources for its eventual
realisation as a business firm. They bear the uncertainties and risks associated
with the business activity, introduce product, market, technological and a host of
other innovations. In the developing country context they also assume the
responsibility for the day-to-day management of the enterprise.
Given its critical role in economic development at a broader level and business
start-ups at the micro level, it is imperative that a conscious effort be made to
popularise entrepreneurship as a career option. In this regard, EAPs and EDPs
can play an important role. Besides, there is a need to create an entrepreneurship
friendly environment. Since, entrepreneurship is the outcome of a dynamic
interaction between the person and the environment, there is need also for
developing entrepreneurial competencies, motivations, values and attitudes.
EXERCISES
Multiple choice questions
Put a tick against the most appropriate answer to the following questions.
1. Entrepreneurs undertake
a. Calculated risks
b. High risks
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c. Low risks
d. Moderate and calculated risks
2. In economics, which of the following is not a function of the entrepreneur?
a. Risk-taking
b. Provision of capital and organisation of production
c. Innovation
d. Day to day conduct of business
3. Which of the following statements does not clearly distinguish between
entrepreneurship and management?
a. Entrepreneurs found the business; managers operate it
b. Entrepreneurs are the owners of their businesses; managers are
employees
c. Entrepreneurs earn profits; managers earn salaries
d. Entrepreneurship is once for all activity; management is a
continuous activity
4. In the roles and functions of the entrepreneur identified by Kilby, which
of the following is not an aspect of ‘political administration’?
a. Dealing with public bureaucracy
b. Managing human relations within the firm
c. Introducing new production techniques and products
d. Managing customer and supplier relations
5. Which of the following attitudes is not generally associated with
successful entrepreneurship
a. Investing in R and D
b. Live your business day by day
c. Innovate and improvise continually
d. Produce as per customers’ requirements
Short answer questions
1. Clarify the meaning of the terms ‘entrepreneur,’ ‘entrepreneurship,’ and
‘enterprise.’
2. Why is entrepreneurship regarded as a creative activity?
3. “Entrepreneurs undertake ‘moderate’ risks.” Elaborate this statement.
4. How does entrepreneurship result in increasing the spectrum and scope
of economic activities?
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Case Problem
Inspiring Feat: Dailywage Labourer Turns Entrepreneur
A landless woman from Bihar has been nominated among the top 25 farmers in
Asia by a Mexican website.
Forty-five-year old Lalmuni Devi was a daily wage labourer when she decided to
take destiny into her own hands and transformed herself into a successful
mushroom farmer. Today she manages to make Rs. 12,000 every year for an
investment of only Rs. 600.
Her feat finds mention on a Mexican website that has grouped her as the top 25
inspirational farmers in its photo gallery.
”I am a poor woman. I thought that mushroom farming would profit henceforth
I started it. Now I can earn a living for my family,” said Lalmuni Devi.
Successful enterprise
The success story has caught on with many women in the Azadpur village on
the outskirts of Patna.
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”It is effortless farming, which we can even do in our village. Working in the
scorching heat is very tiring. Mushroom farming generates more profit,” said
Urmila Devi.
Lalmuni and other landless women have been encouraged by the Indian Council
for Agriculture Research to take up mushroom farming.
”It is to help the poorest of the poor through alternative livelihood support system.
For that we have chosen a village where people have no land and they have to
share croppers,” said Dr A.R. Khan, Principal Scientist, ICAR, Patna.
Lalmuni’s efforts have paved the way for many other landless women to take up
mushroom farming and earn a livelihood for their family with little effort.
Source: - www.ndtv.com/features downloaded on 15/3/2006 at 1.35 am
Question
1. What inspiring feat did Lalmuni Devi perform?
2. Do you feel that you can also become an entrepreneur? Elaborate.
3. What qualities of an entrepreneur did Lalmuni Devi exhibit?
4. What are the benefits and risks of becoming an entrepreneur? How can you
guard against the risks?
(Teachers should highlight the qualities of an entrepreneur and motivate
students to do so. Help that is available from the government of India is
listed on the website www.india.gov.in.).
Project Work
1. Visit a newly started small business in your neighbourhood and interview
the owner. Prepare a report on how he/she decided to start the enterprise
and the difficulties he/she faced. Also include steps taken by the owner to
overcome them. Discuss the findings in the class.
2. Study the life history of great entrepreneurs, such as Dhirubai Ambani,
Jamshedji Tata, G.D.Birla or Kiran Mazumdar Shaw etc. Prepare a list of
common traits of these people and discuss them in your class. Can you
imbibe some of these qualities and start some enterprise later on in life?
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