LESSON ONE

NATURE AND DEVELOPMENT OF ENTREPRENEURSHIP

Who is an entrepreneur?
According to the business management literature, entrepreneurship is an exceptional set of
activities carried out by individuals with an exceptional mind-set in order to maximize profit. Therefore,
the process is closely tied to success. The expression “exceptional mind-set” is used as a broader term
to encapsulate the characteristics that shape the entrepreneurial activities of those individuals.
An entrepreneur is someone who exercises initiative by organizing a venture to
take benefit of an opportunity and, as the decision maker, decides what, how, and how much of a
good or service will be produced. An entrepreneur supplies risk capital as a risk taker,
and monitors and controls the business activities. The entrepreneur is usually a sole proprietor,
a partner, or the one who owns the majority of shares in an incorporated venture. According
to economist Joseph Alois Schumpeter (1883-1950), entrepreneurs are not necessarily motivated
by profit but regard it as a standard for measuring achievement or success.
Entrepreneurs are seen as individuals who see the world differently and envision the future
better than others do. They seize opportunities that otherwise would go unnoticed. They perceive and
accept risks differently than others.

An Intrapreneurship is the system wherein the principles of entrepreneurship are practiced

within the boundaries of the firm. An intrapreneur is a person who takes on the responsibility
to innovate new ideas, products and processes or any new invention within the organization.

Self-Employment and Entrepreneurship

Employment is working to earn a living. Payment could be in the form of wages or salaries
depending on the nature of the work. Employment is a contract between two parties, one being
the employer and the other being the employee. In this relationship, the employer conceives of a
productive activity, generally with the intention of creating financial revenues, and
the employee contributes labour to the enterprise, usually in return for payment. Employment also
exists in the public, nonprofit and household sectors. An employer is any entity that hires employees;
it can be a person, a company, an organisation or a corporation.

Types of employment

There are two main types of employment:

 1. Self-employment: Self-employment is owning your own business alone or in partnership with
others or with members of your family. It is the alternative to wage employment
2. Wage employment: Working for someone, an organisation or a company and getting for the
work done.

Advantages of self-employment

Self-employment has several advantages. Being self-employed enables a person to:

1. you get to lead rather than follow

2. you are able to implement your creative ideas
3. you have the potential for increased income with hard work
4. you are independent in taking initiative, make own decision at your own pace
5. you are able to control your own workplace and the work that needs to be done
6. continue to learn more about business each day and this could provide an opportunity for
self-fulfilment
7. be in business beyond retiring age.

Distinction between Entrepreneurship and Self-employment (Businessmen)

Entrepreneurship – this is the activity of setting up a business or businesses taking on financial risk, in
hope of profit. Self-employment – this is where one works for himself, maybe as being a contractor, a
freelancer or you owning your business.

The real difference between an entrepreneur and a self-employed individual isn’t found within the
workload or the working environment; it lies in the mind-set, how they think and their view on
business world.
1. Being self-employed, you have people who are working FOR YOU but being an entrepreneur, you
have people who are working WITH YOU and not just under you. As a business person, you hire
people to work for you while the entire mission, vision and progress of the business lies on your
shoulder but for an entrepreneur, you have people working with you - you're the boss (director,
C.E.O, etc.) but you and your employees form a team and work as a team bringing in ideas and
innovations.
2. Businessmen have to go to work all the time regardless of the number of employees they have. If
they don't, the business will simply come to an end. It may not end on that day, but if their
 absenteeism is constant, as the days go, the business may stop. This is not so for an entrepreneur;
the business will keep on going even if the boss is absent because he/she has those who know and
understand his/her vision and can run things well in his/her absence.
3. For the businessman, if the business owner decides to retire, then that is the end of the
establishment. If the business owner passes away, the business will die as well. For
entrepreneurship, the business will outrun the existence of the owner because his/her employees
are working with him/her. Therefore, they understand the mission, vision and value of the
business. But for self-employment, the employees are working for the owner, therefore, all they
do is just sell products and services - they do not understand the owner's mind. For instance, Apple
Inc., even after the demise of Steve Jobs, the business still continues.
4. Entrepreneurs are Global thinkers. They see their business in larger scale than the self-employed.
An entrepreneur's mind thinks of how to build a business that can sustain itself and be valuable
enough to sell to others whereas the mind of a self-employed person thinks of how to create work
so as to pay bills. An entrepreneur understands that there is money to be generated and more
advantages to be had when you serve others on the larger scale. He/she thinks globally and
identifies the needs and frustrations to serve people and continually furthers his/her market reach
so that his/she is always seen in the international market more than a self-employed person.
5. A self-employed person does not want to go beyond his/her vicinity or do a new thing because
she/he fears taking risks. Entrepreneurs are risk-takers, they know how to manage and control
risks: they understand that if they’re going to achieve greatness, they need to take risks. They
never regret the unsuccessful risks they take, but the risks they failed to take.
6. Entrepreneurship is believed to be a key determinant of the economic success of a nation. Self-
employment may be seen as selfish at times when most of what a person thinks about is just their
own personal wealth. An entrepreneur also thinks about his/her wealth, but he/she creates
something that will benefit others and thereby bring in wealth for him/her - it is mutual and not
selfish.
7. A self-employed person tries to do everything themselves as they believe no one will do a better
job than them, they also want to save costs and maximize profits, to them it seems everything is
within their reach and manageable. An entrepreneur on the other hand knows that they can’t do
everything, so they delegate responsibilities to people they trust, who are smarter and more
experienced than them in those areas but still keep people accountable for their actions.
8. Compensation: self-employed individuals receive payments directly from their clients, generally
via cash, cheques or electronic payment, self-employed contractors send invoice to clients for
work performed and clients treat the payment as operating expenses outside of salaries/wages.
 Entrepreneurs on the other hand are compensated by taking a share of the profits from their
business. Business profit derives from revenue obtained from numerous customers or clients.
9. Requirements – Self-employment carries far fewer requirements and restrictions than
entrepreneurship. Contractors often deal with government agencies only when it is time to file
their personal income taxes. Entrepreneurs must deal with a wide range of legal requirements
including business registration and licenses, obtaining permits, meeting legal insurance
requirements and filing business taxes.

From this, there is a clear distinction between entrepreneurship and being a businessman. They are
not synonymous.

TYPES OF ENTREPRENEUR
Researchers who have studied entrepreneurial behaviour suggest that there are different types of
entrepreneurs. Classifying entrepreneurs into various categories is a tricky issue. The taxonomy of
entrepreneurs can be carried out in various ways. Entrepreneurs can be classified on various basis.

Clarence Denhof Classifies entrepreneurs on the basis of stage of economic development: some others
have classified on the basis of their functions and characteristics. In the initial stages of economic
development, entrepreneurs tend to have less initiative and drive. As development proceeds, they
become more innovating and enthusiastic. The various types of entrepreneurs are classified on certain
parameters. Some important classifications are described below:
1. On the Basis of Economic Development: Clarence Danhof classified entrepreneurs into four groups
on the basis of economic development.
A. Innovating Entrepreneurs: This type of entrepreneurship is characterized by aggressive
assemblage of information and the analysis of results deriving from novel combination of factors of
production. 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 contributes 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.
B. Adoptive or Imitative Entrepreneur: There is a second group of entrepreneurs generally referred
as imitative entrepreneurs. The imitative entrepreneurs copy or adopt suitable innovations made by
the innovative entrepreneurs. They only imitate technology innovated by others. They 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.

Sometimes, there is a need to adjust and adopt the new technologies to their special conditions.
Imitative entrepreneurs help to transform the system with the limited resources available. However;
these entrepreneurs face lesser risks and uncertainty then innovative entrepreneurs. While innovative
entrepreneurs are creative, imitative entrepreneurs are adoptive.

C. Fabian Entrepreneur: The third type is Fabian entrepreneur. By nature, these entrepreneurs are
shy and lazy. This type of entrepreneurs has neither will to introduce new changes nor desire to adopt
new methods of production innovated by the most entrepreneurs. They follow the set procedures,
customs, traditions and religions. They are not much interested in taking risk and they try to follow
the footsteps of their predecessors. Usually they are second generation entrepreneur in a business
family enterprise.

D. Drone Entrepreneur: The fourth type is Drone entrepreneurs who refuse to copy or use
opportunities that come on their way. They are conventional in their approach and stick to their set
practices products, production methods and ideas. They struggle to survive not to grow. They may be
termed as Laggards. In such cases the organization loses market, their operations become
uneconomical and they may be pushed out of the market.

2. On the Basis of Type of Business: Under this category we can classify entrepreneurs as described
below:
A. Business Entrepreneurs: They are the entrepreneurs who conceive an idea for a new
product or service and then create a business to materialize their idea into reality. They tap the entire
factor of production to develop a new business opportunity. They may set up a big enterprise or a
small-scale business. When they establish small business units, they are called small business
entrepreneurs. In a majority of cases, entrepreneurs are found in small trading and manufacturing
business.
B. Trading Entrepreneur: As the name itself suggests, the trading entrepreneur undertake the
trading activities. They procure the finished products from the manufacturers and sell these to the
customers directly or through a retailer. These serve as the middlemen as wholesalers, dealers, and
retailers between the manufacturers and customers.
There entrepreneurs undertake trading activities and are not concerned with the
manufacturing work. They identify potentiality of their product in markets, stimulates demand for
their product line among buyers. They may go for both domestic and overseas trade. These
entrepreneurs demonstrate their ability in pushing many ideas ahead which promoted their business.

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

identifies the needs of customers and creates products or services to serve them. He is product-

oriented who starts through an industrial unit to create a product like electronic industry, textile

unit, machine tools. They identify the needs of the customers and, then, explore the resources

and technology to be used to manufacture the products to satisfy the customers’ needs. In other
words, the manufacturing entrepreneurs convert raw materials into finished products.

D. Corporate Entrepreneur: These entrepreneurs used his innovative skill in organizing and
managing a corporate undertaking. A corporate undertaking is a form of business organisation which
is registered under some statute or Act like a trust registered under the Trust Act, or a company
registered under the Companies Act. These work as separate legal entity. He is thus an individual who
plans, develops and manages a corporate body.
E. Agricultural Entrepreneur: Agricultural entrepreneurs are those who undertake agricultural
activities as through mechanization, irrigation and application of technologies to produce the crop.
They cover a broad spectrum of the agricultural sector and include agriculture and allied occupations.

3. According to the Use of Technology: The application of new technology in various sectors of the
national economy is essential for the future growth of business. We may broadly classify these
entrepreneurs on the basis of the use of technology as follows:

A. Technical Entrepreneurs: The entrepreneurs who establish and run science and technology-

based industries are called ‘technical entrepreneurs.’ Speaking alternatively, these are the

entrepreneurs who make use of science and technology in their enterprises. Expectedly, they

use new and innovative methods of production in their enterprises

With the decline of joint family business and the rise of scientific and technical institutions,

technically qualified persons have entered the field of business. These entrepreneurs may enter

business to commercially exploit their inventions and discoveries. Their main asset is technical

expertise. They raise the necessary capital and employ experts in financial, legal- marketing

and other areas of business. Their success depends upon how they start production and on the

acceptance of their products in the market.

B. Non-technical Entrepreneur: Non-technical entrepreneurs are those who are not

concerned with the technical aspects of the product or service in which they deal. They are

concerned only with developing alternative marketing and promotional strategies for their

product or service. Based on the use of technology, the entrepreneurs who are not technical

entrepreneurs are non-technical entrepreneurs. The forte of their enterprises is not science and

technology. They are concerned with the use of alternative and imitative methods of

marketing and distribution strategies to make their business survive and thrive in the

competitive market.

C. Professional Entrepreneur: Professional entrepreneur is an entrepreneur who is

interested in establishing a business but does not have interest in managing it after establishment. A
professional entrepreneur sells out the existing business on good returns and starts another business
with a new idea. Such an entrepreneur is dynamic and conceives new ideas to develop alternative
projects.

4. According to Motivation: Motivation is the main force that promotes the efforts of the
entrepreneur to achieve his goals. An entrepreneur is motivated to achieve or prove his excellence in
their performance. According to motivation we can classify entrepreneur as:
A. Pure Entrepreneur: A pure entrepreneur is the one who is motivated by psychological
economical, ethical considerations. He undertakes an entrepreneurial activity for his personal
satisfaction in work, ego or status.
B. Induced Entrepreneur: This type of entrepreneur is one who induced to take up an
entrepreneurial task due to the policy reforms of the government that provides assistance, incentives,
concessions and other facilities to start a venture. Most of the small-scale entrepreneurs belong to
this category and enter business due to financial, technical and several other facilities provided to
them by the various agency of Govt. to promote entrepreneurship. Today, import restrictions and
allocation of production quotas to small units have induced many people to start a small-scale unit.
C. Motivated Entrepreneur: New entrepreneurs are motivated by the desire for self-
fulfilment. They come into being because of the possibility of making and marketing some new
products for the use of consumers. They are motivated through reward like profit

5. According to Growth: The industrial units are identified as high growth, medium growth and low
growth industries and as such we have ‘Growth Entrepreneur’ and ‘Super Growth Entrepreneur.’
A. Growth Entrepreneur: He necessarily takes up a high growth industry and chooses an
industry which has sustained growth prospects. Growth entrepreneurs have both the desire and
ability to grow as fast as large as possible
B. Super-Growth Entrepreneur: This category of entrepreneurs is those who have shown
enormous growth of performance in their venture. The growth performance is identified by the high
turnover of sales, liquidity of funds, and profitability.

6. According to Entrepreneurial Activity: Based on entrepreneurial activity, entrepreneurs are

classified as novice, serial, and portfolio entrepreneur.
A. Novice Entrepreneur: A novice is someone who has started his/her first entrepreneurial
venture. A novice entrepreneur is an individual who has no prior business ownership experience as a
business founder, inheritor of a business, or a purchaser of a business. It is not similar to early starter;
a novice can also be a 50-year-old with over 25 years of experience in the industry
B. A Serial Entrepreneur: A Serial Entrepreneur is someone who is devoted to one venture at
a time but ultimately starts many. It is the process of starting that excites the starter. Once the
business is established, the serial entrepreneur may lose interest and think of selling and moving on.
C. Portfolio Entrepreneur: A Portfolio entrepreneur is an individual who retains an original
business and builds a portfolio of additional business through inheriting, establishing, or purchasing
them. A portfolio entrepreneur starts and runs a number of businesses. It may be a strategy of
spreading risk or it may be that the entrepreneur is simultaneously excited by a variety of
opportunities. Also, the entrepreneur may see some synergies between the ventures.

7. Other Entrepreneurs:
 A. First-Generation Entrepreneurs: A first-generation entrepreneur is one who starts an
industrial unit by means of an innovative skill. He is essentially an innovator, combining different
technologies to produce a marketable product or service.
B. Modern Entrepreneur: A modern entrepreneur is one who undertakes those businesses
which go well along with the changing scenario in the market and suits the current marketing needs.
C. Women Entrepreneurs: Women as entrepreneurs have been a recent phenomenon. The
social norms had made it difficult for women to have a professional life. Now this has changed.
Progressive laws and other incentives have also boosted the presence of women in entrepreneurial
activity in diverse fields.
D. Nascent Entrepreneur: A nascent entrepreneur is an individual who is in the process of
starting a new business.
E. Habitual Entrepreneur: A habitual entrepreneur is an individual who has prior business
ownership experience. The nascent entrepreneur can either be a novice or a habitual entrepreneur.
F. Lifestyle Entrepreneurs: Lifestyle entrepreneurs have developed an enterprise that fits
their individual circumstances and style of life. Their basic intention is to ear an income for themselves
and their families.
G. Copreneurs: It is related to the married couples working together in a business. When a
married couple share ownership, commitment and responsibility for a’ business, they are called
“copreneurs”. As copreneurs, couples struggle in ventures to establish equality in their relationships.
Such couples represent the dynamic interaction of the systems of love and work.
H. IT Entrepreneurs: IT entrepreneurs are creating a new business platform that takes them
straight to the top. They are confident, ambitious innovative and acquired creativity in the competitive
global environment and created a niche of their self. They are the brave new bunch of entrepreneurs
who are raring to take on the world of information technology.
I. Social Entrepreneur: Social entrepreneur is one who recognizes the part of society which is
stuck and provides new ways to get it unstuck. Be it dedicated efforts for child upliftment, fighting for
the conservation of Assam’s rainforests, working for the betterment of the blind or initiatives to
empower women, the entrepreneur’s passion is very strong. Freedom, wealth, exposure, social
mobility and greater individual confidence are driving this huge wave of social innovation and
entrepreneurship. After all are tired with the Inefficiency of governments and the indifference of
corporate, and want to make a change and this is the case everywhere
J. Forced Entrepreneurs: The money-lenders of yesterday, who are thrown out of their family
business because of government legislation, the neo-rich returning from abroad and the educated
unemployed seeking self-employment form this class of entrepreneurs.
 K. Individual and Institutional Entrepreneurs: In the small-scale sector individual
entrepreneurs are dominant. Small enterprises outnumber the large ones in every country. Such
entrepreneurs have the advantage of flexibility, quick decision making. But a single individual can
establish, operate and control an organization up to a limit. Thereafter, it becomes necessary to
institutionalize entrepreneurship. The business will have to acquire a number of new entrepreneurial
skills through a corporate body. A group of entrepreneurs has to be developed to handle the
increasingly complex network of decision making. The central function of the entrepreneur remains
the same but the basic decisions like the line of business, the amount of capital employed, etc. are
taken collectively by the promoters at the helm of affairs. Thus, individual entrepreneur and
institutional entrepreneur coexist and support each other. Corporate sector the symbol of
institutionalized entrepreneurship.
L. Entrepreneurs by Inheritance: At times, people become entrepreneurs when they inherit
the family business.

ENTREPRENEURIAL CONTEXTS AND TRAITS OF ENTREPRENEURS

The Entrepreneurial Context [How the entrepreneur comes about]
Entrepreneurship is the recognition, evaluation and pursuit of opportunity in diverse contexts
(Christensen, Madsen & Peterson 1989). It is expressed in observable behaviour such as founding an
organization (profit or non-profit) or leading a project within an organization to pursue an opportunity.
Entrepreneurship is situational and varies among nations and regions, over time, and among
individuals (Reynolds et al, 2001). Environmental factors are key in fostering entrepreneurship and
include culture, networks, access to capital, mobility, and government policies. Although the
entrepreneurial setting differs from corporate and bureaucratic contexts, entrepreneurial behaviour
may occur in small or large organizations (intrapreneurship).
Entrepreneurial ventures transit stages of start-up, growth, and harvest. The distinctive quality of the
early-stage entrepreneurial experience arises from its focus on opportunity, uncertainty and lack of
structure, resource scarcity, and fluid or dynamic quality.

THE ENTREPRENEURIAL CONTEXT

Generally, the entrepreneurial context is characterised by:
• Opportunity-orientation
• Unstructured, Uncertain
 • Resource Scarcity
• Fluid, Dynamic, Turbulent

A. Opportunity-orientation

Entrepreneurs pursue opportunities, whether attracted to them by their compelling quality or pushed
by economic and personal necessity. The ability to recognize and pursue opportunities is what makes
an entrepreneur
An opportunity is an arrangement or nature of the (business) environment that supports the creation
of a (profitable) new enterprise. Entrepreneurial opportunities are related to shortfalls or gaps in
markets, needs and technologies that arise (and disappear) at different junctures in the external
environment.
Opportunities arise from (a) external changes in industry entry barriers, (b)emergence of new
markets, (c) identification of underserved markets (waiting lines, bottlenecks), (d)new needs that
arise from secular changes in the economy (e.g. outsourcing), or (e) technologies that provide the
ability to serve existing needs more efficiently.
In some cases, proactive entrepreneurs may “create” new opportunities through purposive action to
restructure the social understanding of an industry (e.g.) (Rindova & Fombrun, 2001). In exceptional
cases, the driven entrepreneur may single-mindedly raze barriers to entry and change the course of
history, as Bill McGowan (MCI) did in his successful campaign against AT&T’s monopoly in the
telecommunications sector

B. Uncertainty

In entrepreneurial situations, the opportunity is not a “sure thing” and this inaugural uncertainty is
compounded by the challenges of implementation. The absence of a clear structure creates a need to
establish a new organization where jobs are undefined, customers and suppliers are new, and there
are constant surprises in the external environment. These uncertainties, however, provide a margin
for unusual profitability. This is where persons with entrepreneurial inclinations are exposed. People
without entrepreneurial acumen will easily drop out

C. Resource Scarcity

Most entrepreneurial start-ups begin with few funds, no intellectual property, no reputation, no
customers, and new suppliers. The ability to make a way when there is no way is what reveals the
entrepreneurship in you. Persons without entrepreneurship inclination are unable to make a move
towards a start-up in times of resource scarcity

D. Fluidity and Turbulence

New ventures face fluid and changing circumstances. Especially for novice entrepreneurs, each day is
filled with new and surprising challenges. Turbulent markets are inherently attractive to
entrepreneurs because of the margin they allow for inventiveness, daring, and commitment. But even
in less turbulent circumstances, entrepreneurs cope with continual change

TRAITS OF ENTREPRENEURS
Entrepreneurial situations like those described above attract individuals who possess attributes that
are adapted to their challenges. People who possess these attributes are comfortable with, and have
the qualities to succeed in, entrepreneurial situations. These attributes are commonly referred to as
“traits,” “personality” or “mind-set.” They consist of values, beliefs, attitudes, and behaviours that are
functional within entrepreneurial contexts. Individually, non-entrepreneurs may possess many of
these traits. The entrepreneurial profile comprises a cluster of traits that are mutually supportive.

The entrepreneurial experience/Context Traits of Entrepreneurs

Opportunity focused • Inquisitiveness, opportunity-recognition
• Action-orientation (pro-active)
• Need for achievement
Unstructured/Uncertain • Tolerance of ambiguity or uncertainty
• Independence, self-starting, Internal locus of
control, individualism
• Risk propensity
• Creativity, and innovative
Scarce resource • Networking, coalition building
• Teamwork, hero-making
• Belief in personal efficacy
• Niche-craft
• Persistence and determination
 Dynamic/Turbulence/Fluid • Improvisation
• Innovation
• Empirical/Pragmatic/Experimental/Muddle
through

1. Opportunity-related Attributes
a. Inquisitiveness and Opportunity Recognition

An entrepreneur uses his mind-set (alertness) and personal experience to recognize opportunities,
employ skills to evaluate such opportunities; and then pursues them in an organized way using his
motivation and skills.
Opportunity-recognition involves an inquisitive turn of mind. One does not necessarily need
personal experience in an industry to help him or her recognize opportunities although this can
provide a strong basis for insights into emerging opportunities.

b. Action-orientation (pro-active)

Entrepreneurs recognize that the window of opportunity may not remain open long, and engage
in entrepreneurial behaviour to pursue them (Becherer & Maurer, 1999). As a result,
entrepreneurs exhibit decisiveness and rapid reaction time.
c. Need for achievement (N-Ach)

Entrepreneurs manifest a need for achievement that drives them to pursue opportunity and
create tangible, measurable targets and outcomes within the context of the creation of a new
organization. Money is not typically the goal, but it provides the proverbial scorecard to
measure progress.

2. Uncertainty-related Attributes
a. Tolerance for ambiguity

Entrepreneurs demonstrate an ability to accommodate the uncertainties of entrepreneurial

situations. They do not require full information, clarity or closure at each step of the way.
Ambiguity itself provides an opportunity to introduce novel and creative responses that define
new rules of the game. This ability to deal with ambiguity reduces the perception of risk that might
otherwise impede action in uncertain environments. Entrepreneurs are sufficiently comfortable
with uncertainty that they embark on ventures with little research or planning.
b. Creativity

Uncertain situations require creativity to provide solutions. Entrepreneurs must be inventive to

create solutions to problems and challenges. Working without a large supportive organization,
entrepreneurs have few standard operating routines or stock responses to novel situations. As
described below, one of their key attributes is improvisation.

c. Independence, self-starting, internal locus of control

One of the most salient qualities of entrepreneurs is the desire for independence and autonomy,
to be the boss, not to work for someone else. Conditions of uncertainty would reinforce the
perception of personal efficacy or internal locus of control.

d. Risk propensity

Entrepreneurs are commonly described as risk-takers. Risk implies the possibility of loss due to
uncertain future events. The magnitude of risk depends both on the stakes and on the degree of
uncertainty. The perception of risk depends on how you compare both stakes (finance, social
relations, career, psychology, and health) and uncertainty.
Nevertheless, entrepreneurs do not simply plunge ahead foolishly mindless of the realities of risk.
They may be comfortable with uncertainty and sense of personal efficacy, but they also adopt
measures that reduce and syndicate risks.

3. Scarcity-related Attributes
a. Networking, coalition building

Bootstrapped entrepreneurial ventures (operating independently without external support) need

friends and allies to compensate for their limited resources. Successful entrepreneurs cultivate
the art of networking and coalition-building to augment their own scarce resources. Free advice,
referrals, and inside information can help to compensate for the lack of organizational resources.
In effect, the network becomes the entrepreneur’s organization. The existence of effective
networks within regions is a major element supporting entrepreneurship.
b. Teamwork
The energy and talent of the team is one of the few resources an entrepreneur can draw upon.
Skills in team building and recognition of individual and team performance maximize the
performance of team members.
c. Belief in personal efficacy

Entrepreneurs believe they can make a difference and influence their environment. They are
convinced that success or failure lies in their hands and not in the resources at their disposition,
the potency of their organization, luck, or other external forces beyond their control. This belief
in personal efficacy and a self-confidence reduces the perception of risk and reinforces their
action-orientation (pro-activity)
d. Niche craft

Entrepreneurs frequently economize by focusing on niches that have been ignored by large
dominant firms. Such dominant firms ignore such niches because of their limited profit potential.
Narrow markets (niches) do not require the large capital investments such as those required for
broad markets. By doing this, entrepreneurs sidestep frontal (or avoid direct) competition with
entrenched (larger) rivals. Consequently, entrepreneurs often focus on local markets, customers
with specialized needs, or new and emerging markets that are too uncertain for large competitors
(Bhide 2000).
e. Persistence, determination

The challenges of entrepreneurship require dogged persistence and determination. “It can’t be
done” is a phrase entrepreneurs commonly encounter. Scarce resources, novel ideas, unexpected
bumps in the road are all part of the entrepreneurial process and require persistence in the face
of obstacles.

4. Fluidity-related Attributes
a. Improvisation

Entrepreneurs face the continual need to improvise in response to challenges in an ever-changing

environment. They do not engage in extensive research or detailed planning. As Bhide reports,
they cannot afford to do so with limited resources, the modest likely profit of most ventures does
not merit it, and the high uncertainty limits its value (Bhide 2000).

b. Empiricism, pragmatism, experimentation

Entrepreneurs eschew dogmatism in favour of a pragmatic, empirical approach that experiments
to see what works. This requires flexibility in the face of continual uncertainty with respect to
outcomes and incipient challenges.
c. Muddling through

Entrepreneurs do not insist on the rational model of “one best solution.” In “satisficing” mode,
they adopt successive approximations to solve immediate problems.