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Entrepreneurship

Entrepreneurship is the act of being an entrepreneur, which can be defined as "one who
undertakes innovations, finance and business acumen in an effort to transform innovations into economic
goods". This may result in new organizations or may be part of revitalizing mature organizations in
response to a perceived opportunity. The most obvious form of entrepreneurship is that of starting new
businesses (referred as Startup Company); however, in recent years, the term has been extended to
include social and political forms of entrepreneurial activity. When entrepreneurship is describing
activities within a firm or large organization it is referred to as intra-preneurship and may include
corporate venturing, when large entities spin-off organizations.

According to Paul Reynolds, entrepreneurship scholar and creator of the Global Entrepreneurship
Monitor, "by the time they reach their retirement years, half of all working men in the United States
probably have a period of self-employment of one or more years; one in four may have engaged in self-
employment for six or more years. Participating in a new business creation is a common activity among
U.S. workers over their course of their careers."

Entrepreneurial activities are substantially different depending on the type of organization that is
being started. Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only
part-time) to major undertakings creating many job opportunities. Many "high value" entrepreneurial
ventures seek venture capital or angel funding (seed money) in order to raise capital to build the business.
Angel investors generally seek annualized returns of 20-30% and more, as well as extensive involvement
in the business.

Many kinds of organizations now exist to support would-be entrepreneurs, including specialized
government agencies, business incubators, science parks, and some NGOs. In more recent times, the term
entrepreneurship has been extended to include elements not related necessarily to business formation
activity such as conceptualizations of entrepreneurship as a specific mindset (see also entrepreneurial
mindset) resulting in entrepreneurial initiatives e.g. in the form of social entrepreneurship, political
entrepreneurship, or knowledge entrepreneurship have emerged.

Entrepreneur

An entrepreneur is a person who has possession of a new enterprise, venture or idea and assumes
significant accountability for the inherent risks and the outcome.[1][note 1] The term is originally a
loanword from French and was first defined by the Irish-French economist Richard Cantillon.
Entrepreneur in English is a term applied to the type of personality who is willing to take upon himself a
new venture or enterprise and accepts full responsibility for the outcome. Jean-Baptiste Say, a French
economist, is believed to have coined the word "entrepreneur" first in about 1800. He said an entrepreneur
is "one who undertakes an enterprise, especially a contractor, acting as intermediatory between capital
and labour.

As a Leader

The entrepreneur is the main person behind a firm or organization; he or she can demonstrate his or her
quality as a leader by choosing the right managers for the firm. Scholar Robert. B. Reich considers
leadership, management ability, and team-building as essential qualities of an entrepreneur. This concept
has its origins in the work of Richard Cantillon in his Essai sur la Nature du Commerce en (1755) and
Jean-Baptiste Say (1803 or 1834)[note 3] in his Treatise on Political Economy.A more generally held
theory is that entrepreneurs emerge from the population on demand, from the combination of
opportunities and people well-positioned to take advantage of them. An entrepreneur may perceive that
they are among the few to recognize or be able to solve a problem. In this view, one studies on one side
the distribution of information available to would-be entrepreneurs (see Austrian School economics) and
on the other, how environmental factors (access to capital, competition, etc.), change the rate of a
society's production of entrepreneurs.

Social Entrepreneur

Social entrepreneurs act within a market aiming to create social value through the
improvement of goods and services offered to the community. Their main aim is to
help offer a better service improving the community as a whole and are
predominately run as nonprofit schemes. To explain this point Zahra et al. (2009:
519) said that “social entrepreneurs make significant and diverse contributions to
their communities and societies, adopting business models to offer creative
solutions to complex and persistent social problems”. “Social entrepreneurship is
the work of a social entrepreneur. A social entrepreneur is someone who recognizes
a social problem and uses entrepreneurial principles to organize, create, and
manage a venture to make social change. Whereas a business entrepreneur
typically measures performance in profit and return, a social entrepreneur assesses
success in terms of the impact s/he has on society.”

There are 3 key components that emerge out of this definition and are more of less
common when it comes other variations of the definition of Social Entrepreneurship:

• The problem
• A sustainable solution
• Social change

Is Social Entrepreneurship really a new trend?

Strictly speaking no. Considering its broad definition no one can deny that its practice is far more ancient.
The roots and first usage of the term ‘Social Entrepreneurship’ can be dated back in the literature of social
change in 1960′s and 1970′s. What is rather new is the trend of categorizing these socially entrepreneurial
ventures as Social Enterprises fuelled by a recent influx of capital availability to fund such initiatives.
Add to this mix an emerging trend towards sustainable businesses, triple bottom line and Base of the
Pyramid economics and what you get is a explosive mix of buzzword compliant newsworthy story.
Sarcasm if any in my earlier sentence is not intended but merely is a reflection of a true representation of
the landscape.

Does Social Entrepreneurship equate to starting Non-profit organizations?

Social Entrepreneurship by its nature is essentially only bound by the social mission
and theory of change. The general perception of equating Social Entrepreneurship
to starting Non-profit organizations probably arises out of the strong social missions
that these organizations pursue. Although, it is not wholly inaccurate there are far
many examples of for-profit sustainable revenue generating enterprises with a
social value generating structure prompting us to re-think the traditional models
and conceptualize new hybrid business models.

Examples of Social Enterprises:


1. Aravind Eye Hospital & Aurolab
Social Entrepreneur: Dr.Govindappa Venkataswamy (Dr. V) & David Green
Type of Organization: Trust
Location: Madurai, India
Mission: Making medical technology and health care services accessible, affordable
and financially self-sustaining
Founded in 1976 by Dr. G. Venkataswamy, Aravind Eye Care System today is the
largest and most productive eye care facility in the world. From April 2007 to March
2008, about 2.4 million persons have received outpatient eye care and over
285,000 have undergone eye surgeries at the Aravind Eye Hospitals at Madurai,
Theni, Tirunelveli, Coimbatore and Puducherry. Blending traditional hospitality with
state-of-the-art ophthalmic care, Aravind offers comprehensive eye care in the most
systematic way attracting patients from all around the world.

2. SKS India
Social Entrepreneur: Vikram Akula
Type of Organization: For-profit
Mission : Empowering the poor to become self-reliant through affordable loans
SKS believes that access to basic financial services can significantly increase
economic opportunities for poor families and in turn help improve their lives. Since
inception, SKS has delivered a full portfolio of microfinance to the poor in India and
we are proud of our current outreach. As a leader in technological innovation and
operational excellence, SKS is excited about setting the course for the industry over
the next five years and is striving to reach our goal of 15 million members by 2012.

3. AMUL (Anand Milk Union Limited)


Social Entrepreneur: Dr. Verghese Kurien
Type of Organization: Co-operative
Amul has been a sterling example of a co-operative organization’s success in the
long term. It is one of the best examples of co-operative achievement in the
developing economy. The Amul Pattern has established itself as a uniquely
appropriate model for rural development. Amul has spurred the White Revolution of
India, which has made India the largest producer of milk and milk products in the
world.

Microenterprise

A micro-enterprise (or microenterprise) is a type of small business, often unregistered, having five or
fewer employees and requiring seed capital of not more than $35,000 .The term is often used in Australia
to refer to a business with a single owner-operator, and no employees.

The term microenterprise connotes different entities and sectors depending on the country.

Generally speaking,

* In developed countries, microenterprises comprise the smallest end (by size) of the small business
sector, whereas

* In developing countries, microenterprises comprise the vast majority of the small business sector -- a
result of the relative lack of formal sector jobs available for the poor. These microentrepreneurs operate
microenterprises not by choice, but out of necessity.Microenterprises add value to a country's economy by
creating jobs, enhancing income, strengthening purchasing power, lowering costs and adding business
convenience.Because microenterprises typically have little to no access to the commercial banking sector,
they often rely on "micro-loans" or microcredit in order to be financed. Microfinance institutions often
finance these small loans, particularly in the Third World. Those who found microenterprises are usually
referred to as entrepreneurs.The terms microenterprise and microbusiness have the same meaning, though
traditionally when referring to a small business financed by microcredit the term microenterprise is used.
Similarly when referring to a small, usually legal business that isn't financed by microcredit, the term
microbusiness is used.

Definitions of Micro, Small & Medium Enterprises

In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act,
2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Classes:

(a) Manufacturing Enterprises- The enterprises engaged in the manufacture or production of goods
pertaining to any industry specified in the first schedule to the industries (Development and regulation)
Act, 1951). The Manufacturing Enterprise are defined in terms of investment in Plant & Machinery.

(b) Service Enterprises: The enterprises engaged in providing or rendering of services and are defined
in terms of investment in equipment.

The limit for investment in plant and machinery / equipment for manufacturing / service
enterprises, as notified, vide S.O. 1642(E) dtd.29-09-2006 are as under:

Manufacturing Sector
Enterprises Investment in plant & machinery
Micro Enterprises Does not exceed twenty five lakh rupees
Small Enterprises More than twenty five lakh rupees but does not exceed five
crore rupees
Medium Enterprises More than five crore rupees but does not exceed ten crore
rupees
Service Sector
Enterprises Investment in equipments
Micro Enterprises Does not exceed ten lakh rupees:
Small Enterprises More than ten lakh rupees but does not exceed two crore
rupees
Medium Enterprises More than two crore rupees but does not exceed five core
rupees

In India, the enterprises have been classified broadly into two categories:

(i) Manufacturing; and

(ii) Those engaged in providing/rendering of services.

Both categories of enterprises have been further classified into micro, small and medium enterprises
based

on their investment in plant and machinery (for manufacturing enterprises) or on equipments (in case of

enterprises providing or rendering services). The present ceiling on investment to be classified as micro,
small

or medium enterprises is as under:

Classification Investment Ceiling for Plant, Machinery or Equipments*@

Manufacturing Enterprises Service Enterprises


Micro Upto Rs.25 lakh ($50 thousand) Upto Rs.10 lakh ($20
thousand)
Small Above Rs.25 lakh ($50 thousand) & upto Above Rs.10 lakh ($20 thousand) &
Rs.5 crore ($1 million) upto Rs.2 crore ($0.40 million)
Medium Above Rs.5 crore ($1 million) & upto Above Rs.2 crore ($0.40 million) &
Rs.10 crore ($2 million) upto Rs.5 crore ($1 million)
* Fixed costs are obviously higher.

GOVERNMENT POLICIES AND SUPPORT MEASURES : BRIEF HISTORY

The evolution of the policy framework and support measures of the Government can be broadly grouped
into the following three periods:1948-1991: In all the Policy Resolutions from 1948 to 1991, recognition
was given to the micro and small enterprises, termed as an effective tool to expand employment
opportunities, help ensure equitable distribution of the national income and facilitate effective
mobilization of private sector resources of capital and skills. The Micro, Small and Medium Enterprises
Development Organisation [earlier known as Small Industries Development Organization (SIDO)] was
set up in 1954 as an apex body for sustained and organised growth of micro, small and medium
enterprises. Within next two years, the National Small Industries Corporation, the Khadi and Village
Industries Commission and the Coir Board were also set up. The era provided the supportive measures
that were required to nurture MSEs, in the form of reservation of items for their exclusive manufacture,
access to bank credit on priority through the Priority Sector Lending Programme of commercial banks,
excise exemption, reservation under the Government Purchase Programme and 15% price preference in
purchases, infrastructure development and establishment of institutes for entrepreneurial and skill
development. MSME – Development Institutes [earlier known as Small Industries Service Institute
(SISI)] were set up all over India to train youth in skills/entrepreneurship. Tool Rooms were established
with German and Danish assistance for providing technical services essential to MSEs as also for skill-
training. At the State level, District Industries Centres were set up all over the country. 1991-1999: The
new Policy for Small, Tiny and Village Enterprises of August, 1991laid the framework for government
support in the context of liberalisation, which sought to replace protection with competitiveness to infuse
more vitality and growth to MSEs in the face of foreign competition and open market. Supportive
measures Development (IID) scheme was launched to set mini industrial estates for small industries. 1999
onwards: The Ministry of MSME [earlier known as Ministry of Small Scale Industries and Agro &
Rural Industries (SSI & ARI)] came into being from 1999 to provide focused attention to the
development and promotion of the sector. The new Policy Package announced in August, 2000 sought
to address the persisting problems relating to credit, infrastructure, technology and marketing more
effectively. A Credit Linked Capital Subsidy Scheme was launched to encourage technology
upgradation in the MSE sector and a Credit Guarantee Scheme was started to provide collateral-free
loans to micro and small entrepreneurs, particularly the first generation entrepreneurs. The
exemption limit for relief from payment of Central Excise duty was raised to Rs.1 crore ($0.25 million)
and a Market Development Assistance Scheme for MSEs was introduced. At the same time,
consultations were held with stakeholders and the list of products reserved for production in the
MSE sector was gradually reduced each year. In 2006, the long-awaited enactment for this sector
finally became a reality with the passage of the Micro, Small and Medium Enterprises Act. In March,
2007, a third Package for the Promotion of Micro and Small Enterprises was announced which
comprises the proposals/schemes having direct impact on the promotion and development of the
micro and small enterprises, particularly in view of the fast changing economic environment, wherein to
be competitive is the key of success.

Micro-financial institutions focus on creating micro-entrepreneurs by providing


access to micro-credit. While there are mixed reports on the overall impact of such
programmes (which have a lot to do with the operational aspects of programme
implementation) MFIs as vehicles have the ability to impact very significant
numbers of people as the Grameen Bank has shown