Entrepreneurship

1. Introduction to Entrepreneurship
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Entrepreneurship is the ability and readiness to develop, organize
and run a business enterprise, along with any of its uncertainties in
order to make a profit. The most prominent example of
entrepreneurship is the starting of new businesses.
Joseph Alois Schumpeter is regarded as the father of entrepreneurship. He introduced the concept of
entrepreneurship.

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Theories of Entrepreneurship

1. Economic Entrepreneurship Theory

Pepuek and Cassis propose that every society is inherently motivated by

economic gains or a rise in real income, which originates from a
physiological drive.

Moreover, he has asserted that monetary incentives are all that are
necessary to spur individual industrial entrepreneurship. Nonetheless, if an
entrepreneur’s response remains inadequate despite this argument, it can
be attributed to various kinds of market flaws and potential policy
suggestions.

2. Sociological Entrepreneurship Theory

Max Weber was the originator of this concept, suggesting that

entrepreneurs arise and develop as a direct result of the ethical standards
found in their surroundings. For the very first time, he proclaimed that
societal values play an integral role in cultivating effective business owners.

He believes that the religion a person practices, combined with its

associated values and beliefs, has an influential role in their business life.
This ranges from occupation to entrepreneurial enthusiasm and energy
levels.
3. Entrepreneurship Innovation theory

Joseph A. Schumpeter is the originator of innovation theory, which

encompasses the assumptions like-

 An entrepreneur is driven by the innate urge to create

something of their own, and they strive tirelessly toward this
goal.
 He yearns to embark on an exciting new venture.
 Enjoying the thrill of cultivating new ideas, while gaining
valuable skills in completing a wide range of tasks.

The primary aim of the arms is to generate revenue, by seeking out new
raw materials and resources, investing in modern equipment and
technology, producing novel products with effective production techniques,
hiring capable workers, and most importantly delivering customer
satisfaction.

4. Psychological Entrepreneurship Theories

This theory postulates that entrepreneurial growth happens when

numerous individuals in society have an aptitude for entrepreneurship.

For an individual to develop into a successful leader, they must possess

certain traits: having a vision for the future and being able to stand strong
against opposition; possessing a drive for success.

5. Resource-based Entrepreneurship Theory

These theories suggest that entrepreneurs need resources to carry out

their businesses effectively. Time, money, and labor are just some of the
key components necessary for success. To achieve optimal results, these
resources must be utilized in conjunction with one another.

Without the right resources, all effort can be rendered useless. Access to
capital is particularly crucial for entrepreneurs looking to expand their
businesses.

Process of entrepreneurship
1. Idea Generation: every new venture begins with an idea.
2. Opportunity Evaluation: this is the step where you ask the question of whether there is an
opportunity worth investing in.  Investment is principally capital, whether from individuals in the
company or from outside investors, and the time and energy of a set of people. But you should also
consider other assets such as intellectual property, personal relationships, physical property, etc

3. Planning: Once you have decided that an opportunity, you need a plan for how to capitalize on
that opportunity. A plan begins as a fairly simple set of ideas, and then becomes more complex as
the business takes shape. In the planning phase you will need to create two
things: strategy and operating plan.

4. Company formation/launch: Once there is a sufficiently compelling opportunity and a plan, the
entrepreneurial team will go through the process of choosing the right form of corporate entity and
actually creating the venture as a legal entity.

5. Growth: After launch, the company works toward creating its product or service, generating
revenue and moving toward sustainable performance. The emphasis shifts from planning to
execution. At this point, you continue to ask questions but spend more of your time carrying out your
plans.

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factors impacting emergence of entrepreneurship
conomic Factors
The 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 jobs. “In countries where the economy is poorer, or where
unemployment rates are high, citizens turn to starting their own small
businesses where they see opportunity,” Trilby Rajna of Approved Index said. Economic
factors impacting entrepreneurship include:

1. Capital
Capital is one of the most important factors, yet one of the biggest barriers
when launching a new business. Entrepreneurs require capital to start risky
ventures and also require instant capital to scale up the business quickly if the
idea is found to be successful. There are however numerous ways to fund a
new venture including bank loans, crowdfunding, and bootstrapping.
2. Labor
The availability of labor impacts entrepreneurship. Nevertheless, the quality
 rather than the quantity of labor influences the emergence and growth of
entrepreneurship.
3. Raw Materials
The necessity of raw materials consisting of natural resources hardly needs
any emphasis for establishing any industrial activity and the emergence of
entrepreneurship. The absence of raw materials adversely affects the
entrepreneurial development.
Psychological Factors
They say entrepreneurship is not for the faint of heart. But then for whom is it! What does it
take for an individual to become an entrepreneur? While there isn’t a single “ideal”
entrepreneurial personality, one thing remains constant: an entrepreneurial spirit. This type
of spirit entails many traits and characters that make 400 million entrepreneurs out of 7
billion people worldwide.(1)

1. Passion
Starting up a new business is not an easy task to pull off and a consistent and
constant commitment to the idea and the long hours it will require to turn it
to a success is essential. Passion is the fuel of this commitment that motivates
entrepreneurs to rise early in the morning and put their blood, sweat, and
tears into their business.
2. Need for Achievement
Entrepreneurs are self-starters with a need to achieve. This achievement
motivation isn’t necessarily driven by the incentives of financial gain only but
also by the satisfaction gain. To add, entrepreneurs’ motivation extends to
reach their employees and partners to keep them on the same page and drive
them to achieve as well.
3. Resilience
Resilience comes with the package of the entrepreneurial spirit to help
entrepreneurs stay determined in the face of any defeat they might
encounter throughout the process. Failure is then a mere lesson to learn from
and continue instead of giving up.
Social Factors
Social factors can go a long way in boosting entrepreneurship. In fact, it was the highly
helpful society that made the industrial revolution a glorious success in Europe. Such factors
strongly affect the entrepreneurial behavior, which contributes to entrepreneurial growth.
The main components of the social environment include:

1. Family Background
Family background including the size, type, and economic status can influence
entrepreneurs and; therefore, entrepreneurship. Nonetheless, the
entrepreneurial spirit does not necessarily run in the family. According to
some sources, 51.9% of all entrepreneurs were the first to launch a business
in their family.(2) Furthermore, less than 1% of all entrepreneurs come from
extremely rich or extremely poor families.
2. Education
Studies state that 95.1% of all entrepreneurs hold a bachelor degree, 47% of
those have advanced in their education and acquired masters, Ph.D. or the
 like.(2) This is a well enough indicator of the importance of education to the
development of entrepreneurship.
3. Social Networks
Interacting with the surrounding society and forming a reliable network is
essential. Social networks facilitate access to information and influence the
quality, quantity, and speed of information reception thus help identify
opportunities.

Training & Entrepreneurship Development

Although entrepreneurship education is very important, it’s been found that training is more
effective in creating entrepreneurial skills. Studies found a strong relationship between
entrepreneurship training and business creation on the long and short-term horizons,
perceived entrepreneurial ability, and entrepreneurial mindset and thinking.

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Growth of entrepreneurship environment in India,
The booming entrepreneurship culture in India is a relatively recent
phenomenon, having taken off in the early 2000s. This is largely
due to the growth of the Indian economy, which has opened up
more opportunities for entrepreneurs to start their own businesses.
The availability of venture capital, the emergence of incubators, and
the availability of a large pool of talented individuals have all
contributed to the growth of entrepreneurship in India.
According to the Global Entrepreneurship Monitor (GEM) India
Report (FY 21–22), India's entrepreneurial activity increased in
2021, with the country's total entrepreneurial activity rate (the
percentage of adults (aged 18–64) who are starting or running a
new business) rising to 14.4% in 2021, up from 5.3% in 2020.
The following are the specifics of the government's various programmes to promote
startups across the country as part of the Startup India initiative:

1. Startup India Action Plan: On January 16, 2016, a Startup India Action Plan was
unveiled. The Action Plan comprises 19 action items spanning across areas such as
"simplification and handholding", "funding support and incentives" and "industry-
academia partnership and incubation". 
2. Fund of Funds for Startups (FFS) Scheme: To meet the
funding needs of startups, the government established FFS with a
corpus of ₹10,000 crore. 
3. Credit Guarantee Scheme for Startups (CGSS): The
government has set up the Credit Guarantee Scheme for Startups
to provide credit guarantees on loans made to DPIIT-recognised
startups by Scheduled Commercial Banks, Non-Banking Financial
Companies (NBFCs), and Venture Debt Funds (VDFs) under SEBI-
registered Alternative Investment Funds.
4. Regulatory Reforms: Since 2016, the government has implemented over 50
regulatory reforms to improve the ease of doing business, the ease of raising capital,
and the compliance burden on the startup ecosystem.
5. Ease of Procurement: To facilitate procurement, central ministries and
departments have been directed to relax the prior turnover and prior experience in
public procurement requirements for all DPIIT-recognized startups, subject to
meeting quality and technical specifications. 

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Role of entrepreneurship in economic development,

Entrepreneurship drives the growth and diversification of the

economy and contributes to the creation of wealth. Before we get
into the specifics of the role of entrepreneurship in economic
development, let’s briefly encapsulate its significance.
Entrepreneurship’s importance lies in the following: 

 Drives economic growth and creates new job 

 Encourages innovation by bringing new ideas, products, and
services to the market 
 Contributes to social change by developing products or
services that reduce people’s dependence on outdated
technologies 
 Addresses social and economic problems by creating
solutions that meet the needs of society
 Enables competition which improves business efficiency and
lowers prices for consumers
 Increases Gross National Product and Per Capita Income
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Traits of successful entrepreneurs; Managerial vs. entrepreneurial
approach,
Entrepreneur
Entrepreneurs establish a new organisation by assembling inputs, i.e., labour, land and capital, for
production purposes. They assume risk and business uncertainty to achieve growth and profit of the
business venture by combining resources and identifying new opportunities to capitalise on them.
They innovate new business processes and ideas. They are persons responsible for building an
organisation and taking business risks for profits. Eg: A company’s CEO who establishes the company
and takes business risks to gain profits.

Manager
Managers are responsible for the administration and management of a group of people or a
department of the company. Their day-to-day job is to manage employees and ensure the smooth
running of the organisation. They must possess similar qualities of an entrepreneur, like
accountability, leadership, decisiveness, etc. They must also have qualities such as empathy and
warmth. They may direct supervisors who will command workers or directly command workers. They
are responsible for supervising subordinates, who report to and work under them.

Eg: Head of a dept in a company, who administers employees under him and ensures the company
runs smoothly.