UNIT II - Introduction to Entrepreneurship

UNIT II
Introduction to Entrepreneurship

The word “entrepreneur” is derived from the French verb “entreprendre”, which
means ‘to undertake’. This refers to those who “undertake” the risk of new
enterprises. An enterprise is created by an entrepreneur. The process of creation
is called “entrepreneurship”.

Meaning
Entrepreneurship is a process of actions of an entrepreneur who is a person
always in search of something new and exploits such ideas into gainful
opportunities by accepting the risk and uncertainty with the enterprise. It is
the process of starting a business, a startup company or other organization.
The entrepreneur develops a business plan, acquires the human and other
required resources, and is fully responsible for its success or failure.
Entrepreneurship operates within an entrepreneurship ecosystem.

Definitions
According to A.H. Cole

Entrepreneurship is the purposeful activity of an individual or a group of

associated individual, undertaken to initiate, maintain or aggrandize profit by
production or distribution of economic goods and services.

According to J.A. Timmons

Entrepreneurship is the ability to create and build something from practically

nothing.

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According to Musselman and Jackson

“Entrepreneurship is the investing and risking of time, money and effort to

start a business and make it successful.

Importance of Entrepreneurship

To understand the importance of entrepreneurship, recognising what an

entrepreneur does is necessary. The term itself comes from the French
'entreprendre', which means 'to undertake.' An entrepreneur is someone who
undertakes or plans for all the risks and responsibilities that come with the
formation of a new business to earn profits. Entrepreneurship is important
because it has the following benefits:

1) Creation of job opportunities:- Entrepreneurs start new firms, which may

mean more job prospects for individuals. People who start a new business
typically have the opportunity of working for themselves and support
other businesses while expanding their own. Entrepreneurs can both earn
cash for themselves and employ others in their business activities. As a
result, entrepreneurship usually creates new jobs at every level.
2) Creation of new businesses:- Entrepreneurship is essentially the ownership
of a business by a single person. The entrepreneurs can run the vast
majority of these enterprises entirely by themselves. They assemble and
coordinate their operational processes that support other business
ventures. It is a sector in which a person might start a business idea that
could grow into a large corporation. All big industrial organisations usually
begin as small business initiatives. In every economy, entrepreneurship
typically offers a diverse range of initiatives that lead to the creation of
new businesses.

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3) Innovation:- Entrepreneurship is the ability to innovate, whether in an

established company, a government agency or a new business. It is the
process that either generates new wealth-producing resources or enhances
the potential of existing resources to create more revenue. It creates new
product lines and improves product quality, ideas, technologies and markets
and usually makes life easier for both the entrepreneurs and the
consumers.
4) Leads to better standards of living:- 'Standard of living' is a term or
theory which involves higher consumption of a variety of products and
services over a period. It usually depends on the items found in the
market. Entrepreneurship, by its innovative nature, can create a wide
range of commodities in different areas. An entrepreneur can develop
products and services to suit customer demands, even if they cater to a
comparatively smaller market. They can meet even the most specific
needs. Since entrepreneurship usually creates new jobs and generates
income for a family, entrepreneurship can help improve your standard of
living.
5) Supports research and development:- Before introducing a new product or
service in the market, an in-depth investigation and testing of the
product is typically necessary. As a result, an entrepreneur works with
research organisations and institutions and provides funding for research
and development. This often helps boost research and development, which
may make discoveries possible.
6) Promotes community development:- Entrepreneurs can help bring unity
and build goodwill among individuals who have common goals and interests.
Entrepreneurs may also help finance charities. Their goods and services
often lead to the social and economic well-being of communities. This
usually brings positive changes like fewer slums, better sanitation, a skilled

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workforce and better infrastructure. Entrepreneurship generally promotes

community stability and improves the quality of life.
7) Leads to increased productivity:- Entrepreneurs can make current
businesses more competitive by offering lower pricing and a wider range of
products. Existing firms may rethink their strategies, increase the quality
of their products, lower expenses and become more efficient. This
competitiveness often encourages businesses and individuals to seek new
solutions to enhance their services and, therefore, offers more value for
the customer's money. Thus, entrepreneurship may help established
companies in the market boost their productivity and performance.
8) Creation of national wealth:- Entrepreneurship usually plays a key part in
contributing to the country's national economy by generating wealth and
paying taxes, which generally adds to a country's gross domestic product
(GDP). Entrepreneurs not only invest their own money, but they also
draw money from the market. They take advantage of these resources to
develop unique products or services and open up new markets, which in
turn leads to economic growth. This increase in revenue can significantly
improve the national income of a country.
9) Contributes to social welfare:- Entrepreneurship also brings about social
integration and reforms by connecting and helping people. It helps provide
income to poor and marginalizeds sections of the society and allows them
to fulfil their basic needs. By being inclusive of all people regardless of
their differences, entrepreneurship can often create a sense of
connectedness.

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Factors affecting Entrepreneurship Development

Entrepreneurship is influenced by four distinct factors: economic development,

culture, technological development and education. In areas where these factors
are present, you can expect to see strong and consistent entrepreneurial growth.

These conditions may have both positive and negative influences on the
emergence of entrepreneurship. Positive influences constitute facilitative and
conducive conditions for the emergence of entrepreneurship, whereas negative
influences create inhibiting milieu to the emergence of entrepreneurship.

Let us look at each one of them in details.

Economic Factors: - Economic environment exercises the most direct and

immediate influence on entrepreneurship. This is likely because people become
entrepreneurs due to necessity when there are no other jobs or because of
opportunity.

The economic factors that affect the growth of entrepreneurship are the
following:

1. Capital:- Capital is one of the most important factors of production for the
establishment of an enterprise. Increase in capital investment in viable projects
results in increase in profits which help in accelerating the process of capital
formation. Entrepreneurship activity too gets a boost with the easy availability
of funds for investment.

Availability of capital facilitates for the entrepreneur to bring together the land
of one, machine of another and raw material of yet another to combine them
to produce goods. Capital is therefore, regarded as lubricant to the process of
production.

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France and Russia exemplify how the lack of capital for industrial pursuits
impeded the process of entrepreneurship and an adequate supply of capital
promoted it.

2. Labor :- Easy availability of right type of workers also effect

entrepreneurship. The quality rather than quantity of labor influences the
emergence and growth of entrepreneurship. The problem of labor immobility can
be solved by providing infrastructural facilities including efficient transportation.

The quality rather quantity of labor is another factor which influences the
emergence of entrepreneurship. Most less developed countries are labor rich
nations owing to a dense and even increasing population. But entrepreneurship is
encouraged if there is a mobile and flexible labor force. And, the potential
advantages of low-cost labor are regulated by the deleterious effects of labor
immobility. The considerations of economic and emotional security inhibit labor
mobility. Entrepreneurs, therefore, often find difficulty to secure sufficient
labor.

3. Raw Materials:- The necessity of raw materials hardly needs any emphasis for
establishing any industrial activity and its influence in the emergence of
entrepreneurship. In the absence of raw materials, neither any enterprise can be
established nor can an entrepreneur be emerged

It is one of the basic ingredients required for production. Shortage of raw

material can adversely affect entrepreneurial environment. Without adequate
supply of raw materials no industry can function properly and emergence of
entrepreneurship to is adversely affected.

In fact, the supply of raw materials is not influenced by themselves but becomes
influential depending upon other opportunity conditions. The more favorable

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these conditions are, the more likely is the raw material to have its influence of
entrepreneurial emergence.

4. Market- The role and importance of market and marketing is very important
for the growth of entrepreneurship. In modern competitive world no
entrepreneur can think of surviving in the absence of latest knowledge about
market and various marketing techniques.

The fact remains that the potential of the market constitutes the major
determinant of probable rewards from entrepreneurial function. Frankly speaking,
if the proof of pudding lies in eating, the proof of all production lies in
consumption, i.e., marketing.

The size and composition of market both influence entrepreneurship in their own
ways. Practically, monopoly in a particular product in a market becomes more
influential for entrepreneurship than a competitive market. However, the
disadvantage of a competitive market can be cancelled to some extent by
improvement in transportation system facilitating the movement of raw material
and finished goods, and increasing the demand for producer goods.

5. Infrastructure:- Expansion of entrepreneurship presupposes properly developed

communication and transportation facilities. It not only helps to enlarge the
market, but expand the horizons of business too. Take for instance, the
establishment of post and telegraph system and construction of roads and
highways in India. It helped considerable entrepreneurial activities which took
place in the 1850s.

Apart from the above factors, institutions like trade/ business associations,
business schools, libraries, etc. also make valuable contribution towards promoting
and sustaining entrepreneurship’ in the economy. You can gather all the

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information you want from these bodies. They also act as a forum for
communication and joint action.

Social Factors:- Social factors can go a long way in encouraging

entrepreneurship. In fact it was the highly helpful society that made the
industrial revolution a glorious success in Europe. Strongly affect the
entrepreneurial behavior, which contribute to entrepreneurial growth. The social
setting in which the people grow, shapes their basic beliefs, values and norms.

The main components of social environment are as follows:

1. Caste Factor:- There are certain cultural practices and values in every society
which influence the’ actions of individuals. These practices and value have evolved
over hundred of years. For instance, consider the caste system (the varna
system) among the Hindus in India. It has divided the population on the basis of
caste into four division. The Brahmana (priest), the Kshatriya (warrior), the
Vaishya (trade) and the Shudra (artisan): It has also defined limits to the social
mobility of individuals.

By social mobility’ we mean the freedom to move from one caste to another.
The caste system does not permit an individual who is born a Shridra to move
to a higher caste. Thus, commercial activities were the monopoly of the
Vaishyas. Members of the three other Hindu Varnas did not become interested
in trade and commence, even when India had extensive commercial inter-relations
with many foreign countries. Dominance of certain ethnical groups in
entrepreneurship is a global phenomenon

2. Family Background:- This factor includes size of family, type of family and
economic status of family. In a study by Hadimani, it has been revealed that

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Zamindar family helped to gain access to political power and exhibit higher level
of entrepreneurship.

Background of a family in manufacturing provided a source of industrial

entrepreneurship. Occupational and social status of the family influenced
mobility. There are certain circumstances where very few people would have to
be venturesome. For example in a society where the joint family system is in
vogue, those members of joint family who gain wealth by their hard work denied
the opportunity to enjoy the fruits of their labor because they have to share
their wealth with the other members of the family.

3. Education:- Education enables one to understand the outside world and equips
him with the basic knowledge and skills to deal with day-to-day problems. In any
society, the system of education has a significant role to play in inculcating
entrepreneurial values.

In India, the system of education prior to the 20th century was based on
religion. In this rigid system, critical and questioning attitudes towards society
were discouraged. The caste system and the resultant occupational structure
were reinforced by such education. It promoted the idea that business is not a
respectable occupation. Later, when the British came to our country, they
introduced an education system, just to produce clerks and accountants for the
East India Company, The base of such a system, as you can well see, is very
anti-entrepreneurial.

Our educational methods have not changed much even today. The emphasis is till
on preparing students for standard jobs, rather than marking them capable
enough to stand on their feet.

4. Attitude of the Society:- A related aspect to these is the attitude of the

society towards entrepreneurship. Certain societies encourage innovations and

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novelties, and thus approve entrepreneurs’ actions and rewards like profits.
Certain others do not tolerate changes and in such circumstances,
entrepreneurship cannot take root and grow. Similarly, some societies have an
inherent dislike for any money-making activity. It is said, that in Russia, in the
nineteenth century, the upper classes did not like entrepreneurs. For them,
cultivating the land meant a good life. They believed that rand belongs to God
and the produce of the land was nothing but god’s blessing. Russian folk-tales,
proverbs and songs during this period carried the message that making wealth
through business was not right.

5. Cultural Value:- Motives impel men to action. Entrepreneurial growth requires

proper motives like profit-making, acquisition of prestige and attainment of
social status. Ambitious and talented men would take risks and innovate if these
motives are strong. The strength of these motives depends upon the culture of
the society. If the culture is economically or monetarily oriented,
entrepreneurship would be applauded and praised; wealth accumulation as a way
of life would be appreciated. In the less developed countries, people are not
economically motivated. Monetary incentives have relatively less attraction.
People have ample opportunities of attaining social distinction by non-economic
pursuits. Men with organizational abilities are, therefore, not dragged into
business. They use their talents for non-economic end.

Psychological Factors

Many entrepreneurial theorists have propounded theories of entrepreneurship

that concentrate especially upon psychological factors. These are as follows :

1. Need Achievement:- The most important psychological theories of

entrepreneurship was put forward in the early) 960s by David McClelland.

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According to McClelland ‘need achievement’ is social motive to excel that tends

to characterise successful entrepreneurs, especially when reinforced by cultural
factors. He found that certain kinds of people, especially those who became
entrepreneurs, had this characteristic. Moreover, some societies tend to
reproduce a larger percentage of people with high ‘need achievement’ than other
societies. McClelland attributed this to sociological factors. Differences among
societies and individuals accounted for ‘need achievement’ being greater in some
societies and less in certain others.

The theory states that people with high need-achievement are distinctive in
several ways. They like to take risks and these risks stimulate them to greater
effort. The theory identifies the factors that produce such people. Initially
McClelland attributed the role of parents, specially the mother, in mustering her
son or daughter to be masterful and self-reliant. Later he put less emphasis on
the parent-child relationship and gave more importance to social and cultural
factors. He concluded that the ‘need achievement’ is conditioned more by social
and cultural reinforcement rather than by parental influence and such related
factors.

2. Withdrawal of Status Respect:- There are several other researchers who have
tried to understand the psychological roots of entrepreneurship. One such
individual is Everett Hagen who stresses the-psychological consequences of social
change. Hagen says, at some point many social groups experience a radical loss of
status. Hagen attributed the withdrawal of status respect of a group to the
genesis of entrepreneurship.

Hage believes that the initial condition leading to eventual entrepreneurial

behavior is the loss of status by a group. He postulates that four types of
events can produce status withdrawal:

i. The group may be displaced by force;

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ii. It may have its valued symbols denigrated;

iii. It may drift into a situation of status inconsistency; and

iv. It may not be accepted the expected status on migration in a new

society.

3. Motives:- Other psychological theories of entrepreneurship stress the motives

or goals of the entrepreneur. Cole is of the opinion that besides wealth,
entrepreneurs seek power, prestige, security and service to society. Stepanek
points particularly to non-monetary aspects such as independence, persons’ self-
esteem, power and regard of the society.

On the same subject, Evans distinguishes motive by three kinds of

entrepreneurs

Managing entrepreneurs whose chief motive is security.

Innovating entrepreneurs, who are interested only in excitement.

Controlling entrepreneurs, who above all otter motives, want power and
authority.

Finally, Rostow has examined inter gradational changes in the families of

entrepreneurs. He believes that the first generation seeks wealth, the second
prestige and the third art and beauty.

4. Others:- Thomas Begley and David P. Boyd studied in detail the psychological
roots of entrepreneurship in the mid-1980s. They came to the conclusion that
entrepreneurial attitudes based on psychological considerations have five
dimensions:

First came ‘need-achievement’ as described by McClelland. In all studies of

successful entrepreneurs a high achievement orientation is invariably present.

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The second dimension that Begley and Boyd call ‘locus of control’ This
means that the entrepreneur follows the idea that he can control his own life
and is not influenced by factors like luck, fate and so on. Need-achievement
logically implies that people can control their own lives and are not influenced by
external forces.

The third dimension is the willingness to take risks. These two researchers
have come to the conclusion that entrepreneurs who take moderate risks earn
higher returns on their assets than those who take no risks at all or who take
extravagant risks.

Tolerance is the next dimension of this study. Very few decisions are made
with complete information. So all business executives must, have a certain
amount of tolerance for ambiguity.

Finally, here is what psychologists call ‘Type A’ behavior. This is nothing

but “a chronic, incessant struggle to achieve more and more in less and less of
time” Entrepreneurs are characterize by the presence of ‘Type A’ behavior in all
their endeavors.

Characteristics or Traits of Entrepreneurship

1. Economic and dynamic activity

Entrepreneurship is an economic activity because it involves the creation and

operation of an enterprise with a view to creating value or wealth by ensuring
optimum utilization of scarce resources. Since this value creation activity is
performed continuously in the midst of uncertain business environment,
therefore, entrepreneurship is regarded as a dynamic force.

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2. Related to Innovation

Entrepreneurship involves a continuous search for new ideas. Entrepreneurship

compels an individual to continuously evaluate the existing modes of business
operations so that more efficient and effective systems can be evolved and
adopted. In other words, entrepreneurship is a continuous effort for synergy
(optimization of performance) in organizations.

3. Profit Potential

“Profit potential is the likely level of return or compensation to the

entrepreneur for taking on the risk of developing an idea into an actual business
venture.” Without profit potential, the efforts of entrepreneurs would remain
only an abstract and a theoretical leisure activity.

4. Risk Bearing

The essence of entrepreneurship is the ‘willingness to assume risk’ arising out of

the creation and implementation of new ideas. New ideas are always tentative
and their results may not be instantaneous and positive. An entrepreneur has to
have patience to see his efforts bear fruit. In the intervening period (time gap
between the conception and implementation of an idea and its results), an
entrepreneur has to assume risk. If an entrepreneur does not have the
willingness to assume risk, entrepreneurship would never succeed.

5. Skillful Management

Entrepreneurship involves skillful management. The basic managerial skill is the

most important characteristic feature of entrepreneurship. For effective
management of an enterprise, the role of an entrepreneur is to initiate and
supervise design of organization improvement projects in relation to
upcoming opportunities is very much important.

6. Accepting Challenges

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Entrepreneurship means accepting challenges amidst risk and uncertainty. While

accepting entrepreneurship as a career the entrepreneur accepts the challenges of
all odds and puts his efforts to convert the odds into viable business
opportunities by pooling together the resources of building and running the
enterprise.

7. Goal-Oriented Activity

The entrepreneur who creates and operates enterprises seeks to earn profits
through satisfaction of needs of consumers; hence, entrepreneurship is a goal-
oriented activity. Entrepreneurship emphasizes results, achievements and targets
achieved. It is work done not imaginary plans or paper decisions. Hence
entrepreneurship is a goal-oriented activity.

8. Value Creation

Next, we find that the process of creating value is a characteristic in describing

entrepreneurship. Through entrepreneurship, new products, services, transactions,
approaches, resources, technologies, and markets are created that contribute
some value to a community or marketplace. We can also see value created when,
through entrepreneurship; resources are transformed into outputs such as
products or services. During this transformation process, value is created because
the entrepreneur is fashioning something worthwhile and useful. Drucker says,
“Until entrepreneurial act, every plant is a seed and every mineral just another
rock.

9. Dynamic Process

Entrepreneurship is a dynamic function. Entrepreneur thrives on changes in the

environment, which bring useful opportunities for business. An entrepreneur deals
proactively with changing markets and environment. He looks at the changes as
the source of market advantages, not as a problem. Uncertainties are market
opportunities for him. He capitalizes on fleeting market anomalies.

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10.Uniqueness

Other characteristic found in entrepreneurship is that of uniqueness.

Entrepreneurship involves new combinations and new approaches with which
entrepreneurs are willing to experiment. Through Entrepreneurship unique
products are created and unique approaches are tried. Entrepreneurship isn’t
merely imitating what others have done. It’s doing something new, something
untested and untried – something unique.

11. Interest and Vision

The first factor for entrepreneurial success is interest. Since entrepreneurship

pays off according to performance rather than time spent on a particular effort,
an entrepreneur must work in an area that interests her. Otherwise, she will
not be able to maintain a high level of work ethic, and she will most likely fail.
This interest must also translate into a vision for the company’s growth. Even if
the day-to-day activities of a business are interesting to an entrepreneur, this is
not enough for success unless she can turn this interest into a vision of growth
and expansion. This vision must be strong enough that she can communicate it
to investors and employees.

12.Risk and Rewards

Entrepreneurship requires risk. The measurement of this risk equates to the

amount of time and money you invest into your business. However, this risk also
tends to relate directly to the rewards involved. An entrepreneur who invests in
a franchise pays for someone else’s business plan and receives a respectable
income, while an entrepreneur who undertakes ground breaking innovations risks
everything on an assumption that something revolutionary will work in the
market. If such a revolutionary is wrong, she can lose everything. However, if
she is right, she can suddenly become extremely wealthy.

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Types of Entrepreneurs

1. Innovative Entrepreneur: These are the ones who invent the new ideas, new
products, new production methods or processes, discover potential markets and
reorganize the company’s structure. These are the industry leaders and
contribute significantly towards the economic development of the country. The
innovative entrepreneurs have an unusual foresight to recognize the demand for
goods and services. They are always ready to take a risk because they enjoy the
excitement of a challenge, and every challenge has some risk associated with it.
Ratan Tata is said to be an innovative entrepreneur, who launched the Tata
Nano car at a considerably low cost.
2. Imitating Entrepreneurs: The imitating entrepreneurs are those who immediately
copy the new inventions made by the innovative entrepreneurs. These do not
make any innovations by themselves; they just imitate the technology, processes,
methods pioneered by others. These entrepreneurs are found in the places where
there is a lack of resources or industrial base due to which no new innovations
could be made. Thus, they are suitable for the underdeveloped regions where
they can imitate the combinations of inventions already well established in the
developed regions, in order to bring a boom in their industry.
3. Fabian Entrepreneurs: These types of entrepreneurs are skeptical about the
changes to be made in the organization. They do not initiate any inventions but
follow only after they are satisfied with its success rate. They wait for some

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time before the innovation becomes well tested by others and do not result in a
huge loss due to its failure.
4. Drone Entrepreneurs: These entrepreneurs are reluctant to change since they are
very conservative and do not want to make any changes in the organization.
They are happy with their present mode of business and do not want to change
even if they are suffering the losses.

Other Types

5. Industrial Entrepreneur: Industrial entrepreneur is essentially a manufacturer who

identifies the potential needs of customers and tailors product or service to
meet the marketing needs. He is a product oriented man who starts in an
industrial unit because of the possibility of making some new product.
6. Corporate Entrepreneur: Corporate entrepreneur is essentially a manufacturer
who identifies the potential needs of customers and tailors product or service to
meet the marketing needs. He is a product oriented man who starts in an
industrial unit because of the possibility of making some new product. Corporate
entrepreneur is a person who demonstrates his innovative skill in organising and
managing a corporate undertaking. A corporate undertaking is a form of business
organisation which is registered under some statute or Act which gives it a
separate legal entity.
7. Agricultural Entrepreneur: Agricultural entrepreneurs are those entrepreneurs
who undertake such agricultural activities as raising and marketing of crops,
fertilizers and other inputs of agriculture. According to the use of Technology.
8. Technical Entrepreneur: A technical entrepreneur is essentially an entrepreneur of
“Craftsman type”. He develops a new and improved quality of goods because of
his craftsmanship. He concentrates more on production than marketing. He does
not care much to generate sales by applying various sales promotional techniques.
He demonstrates his innovative capabilities in matters of production of goods
and rendering services.
9. Non-technical Entrepreneur: on-technical entrepreneurs are those who are not
concerned with the technical aspects of the product in which they deal. They are

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concerned only with developing alternative marketing and distribution strategies

to promote their business.
10.Professional Entrepreneur: Professional entrepreneur is a person who is
interested in establishing a business but does not have interest in managing or
operating it once it is established.
11. Induced Entrepreneur: Induced entrepreneur is one who is being induced to take
up an entrepreneurial task due to the policy measures of the government that
provides assistance, incentives, concessions and necessary overhead facilities to
start a venture. Most of the entrepreneurs are induced entrepreneurs who enter
business due to financial, technical and several other several other provided to
them by the state agencies to promote entrepreneurship.
12.Motivated Entrepreneur: New entrepreneurs are motivated by the desire for
self-fulfillment. They come into being because of the possibility of making and
marketing some new product for the use of consumers. If the product is
developed to a saleable stage, the entrepreneur is further motivated by reward
in terms of profit and enlarged customer netwo

Thus, this classification is done on the basis of the willingness of an entrepreneur

to create and accept the innovative ideas.

Business Ethics

Business ethics is a practice that determines what is right, wrong, and

appropriate in the workplace. Business ethics is often guided by laws, and these
principles keep companies and individuals from engaging in illegal activity such as
insider trading, discrimination and bribery.

Business ethics ascertain social, cultural, legal, and other economic

limitations and safeguard the interest of parties involved. Further, it emphasizes
moral and social values like consumer protection, welfare, fair business practices,
and service to society. Business ethics is the prescribed code of conduct for
businesses. It is a set of guidelines for dealing with various procedures ethically.

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Social Responsibility of Entrepreneurs

Responsibility of Entrepreneur Towards Local Community

1. Encouragement to Healthy Competition

The entrepreneur should encourage healthy competition among the local

community and make good quality commodities available to the public at fair
prices.

2. To Save Local Environment from Pollution

Risks of pollution of the environment at the factories sites, due to the

smoke of the coal, polluted water and manufacturing process cannot be ruled
out.

So, the responsibility of the entrepreneur is that the factory may be

established at a fair distance from the residential areas may shift the factories
to distant places from the residential areas.

Besides, arrangements may also be made to reduce the menace of polluted

water and smoke, etc.

3. To Help in Activities of Public Utility

The entrepreneur should cooperate in providing facilities for the public

utility to the local community, Like, Education, entertainment, medical, housing,
and Libraries, etc. For that may provide help in the establishment of new
schools, parks, hospitals and rest houses, etc.

4. To Provide Employment to Local Community

The entrepreneur should provide more and more employment to the local
people of the place, Where he is establishing his business unit or is performing
the business activities.
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He should invest capital in such business which may provide employment to

a large number of people.

The business has also the responsibility of providing employment to the

members of the community.

5. To Improve Standards of Living

The entrepreneur should make all possible efforts to improve the standard of
living of the public.

For that, scholarships may be granted to the children of the employees

and other students, employment facilities, suiting disabled persons and orphans
may be provided for.

Besides, encouragement may be provided for various socially useful

programs of the country, like, family welfare and small savings, etc.

6. To Promote Public Relations

The entrepreneur should provide information to the public about the

policies and activities of his business or business organization and should try to
understand the feelings of the common man.

Responsibility of Entrepreneur Towards World Society

1. To Follow the Rules of International Trade

This is the responsibility of entrepreneurs that during trade with other

countries, he should follow the trade-related rules of those countries.

The entrepreneur should not Resort to undesirable activities, like

smuggling, etc.

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 UNIT II - Introduction to Entrepreneurship

2. To Avoid Unfair Competition in International Market

The entrepreneur should not indulge in unfair competition in the markets

of other countries.

Besides, he should not undertake activities that have adverse effects on

the businessman of those countries.

3. Honest Business Dealings

While dealing with foreign countries, full honestly should be too.

Standardized commodities at fair prices alone should be supplied to foreign
customers.

Timely payments for purchases from foreign countries should be ensured.

All types of cheating should be avoided, or else I reduce the prestige of the
country also.

4. To Help Economic Development of Underdevelopment Country

The entrepreneur established new industries in the undeveloped country

because such a step helps in economic development in an undeveloped country.

5. To Contribute towards International Peace

Trade or exchange of commodities between the two countries lead to

mutual cooperation between these countries and mutual differences get reduced.

In such circumstances, the responsibility of the entrepreneur is that they

increase their dealings with the businessmen of various countries, so that world
peace may flourish.

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