UNIT - I

Entrepreneur definition :

An entrepreneur is an individual who creates a new business, bearing most of the

risks and enjoying most of the rewards. The process of setting up a business is known as
entrepreneurship. The entrepreneur is commonly seen as an innovator, a source of new
ideas, goods, services, and business/or procedures.

Entrepreneurs play a key role in any economy, using the skills and initiative
necessary to anticipate needs and bringing good new ideas to market. Entrepreneurship that
proves to be successful in taking on the risks of creating a startup is rewarded with profits,
fame, and continued growth opportunities. Entrepreneurship that fails results in losses and
less prevalence in the markets for those involved.

Entrepreneurial motivation and barriers:

The entrepreneurial motivation is the process that activates and motivates the
entrepreneur to exert higher level of efforts for the achievement of his/her entrepreneurial
goals.
here are five main motivations that drive most entrepreneurs:
1. Money
2. Flexibility
3. Control
4. Teamwork
5. Legacy
 Barriers:
Every entrepreneur aims to follow their passionate approach and convert it into a
successful business by earning more and more profits and creating goodwill in the market. But
many barriers can block the path to the success of entrepreneurship. So there is no other option
for an entrepreneur to be successful without solving or removing these major barriers in their
respective field.
1. Managing Finances
2. Inadequate Market Experience
3. Human Resource Problem
4. Non-strategic Planning
5. Lack of Capacity
6. Political Barriers
7. Lack of Practical knowledge
8. Not Having the Right Team

Types of Entrepreneurs:
There are seven different leading types of entrepreneurship, and we will discuss those briefly.
1. Small Business Entrepreneurship
2. Large Company Entrepreneurship
3. Social Entrepreneurship
4. Scalable Start-up Entrepreneurship
5. Hustler Entrepreneurship
6. Innovative Entrepreneurship
7. Imitator Entrepreneurship

1. Small Business Entrepreneurship

Small business entrepreneurship is for those who want a hassle-free life. When you are
maintaining a large company, you will need to focus on various factors. But, when it comes to
small businesses, they hire a minimum number of people and run a smooth business.
2. Large Company Entrepreneurship
When an existing larger company wants to offer more services, it comes under large company
entrepreneurship. This is for professionals who know how to manage a large company and get
maximum growth. They play with the innovation and test how they perform. You will need a
big team to manage a large company. For example Amazon, Apple, Microsoft, etc.
3. Social Entrepreneurship
When an entrepreneur has a passion for serving society and making it better for others, they
choose to be a social entrepreneur. This entrepreneurial mindset isn’t to generate maximum
profit but to start a social enterprise for the betterment of society. Sometimes, these
entrepreneurs create non-profits companies for social work.
4. Scalable Start-ups Entrepreneurship
When a start-up has an innovative idea to change the world, they become one of the
scalable start-ups. They create each step of a business plan to grow their business rapidly. They
intend to start getting the most profit from a short period. It’s not easy to establish a
scalable start-up because it requires education, hard work, and experience. If you are looking
to see some examples of a scalable start-up, then look at Facebook, Instagram.
5. Hustler Entrepreneurship
This entrepreneurial venture needs hard work and effort to become a hustler entrepreneur.
People who want to start small and aim to grow their business by hard work rather than capital
are in this category. They believe in themselves and keep their consistency towards their goal
until it’s achieved. When people have a low budget to start a business, they use their hard work
to gain some initial boost.
6. Innovative Entrepreneurship
While there is no doubt that every entrepreneur is an innovator, innovative entrepreneurs are
those who always come up with new ideas. They always seek ideas and build them in reality.
They know how to stand in the crowd with innovation. Steve Jobs is an example of an
innovative entrepreneur.
7. Imitator Entrepreneurship
It’s not easy to become an entrepreneur, but it’s relatively easy when you are practicing to be
an imitator. This entrepreneurial mindset needs you to be innovative. This is because you will
target other company’s products and try to replicate them with better features.

Classification of entrepreneurship:
Classification According to Type of Business

1. Business Entrepreneur

Business entrepreneur is called solo entrepreneur. He/she is the one who conceives an
idea for a new product/service and establishes a business enterprise to translate his idea into
reality. He/she may establish small or large enterprise to commercially exploit his/he idea.
He/she takes up production, operations and pursues marketing activities.

2. Trading Entrepreneur

Trading entrepreneurs are those who restrict themselves to buying and selling finished
goods. They may be engaged in domestic and international trade. Their core strength lies in
distribution and marketing. They get their income by way of commission and marketing.

3. Industrial Entrepreneur
 These are entrepreneurs who manufacture products to cater to the needs of consuming
public after identifying the need left unfulfilled by the manufacturer hitherto. They may be
small, medium and large entrepreneurs. Industrial entrepreneurs mobilise the resources of
various types and create an entity to manufacture the products or service. They add utility to
products rolled out by them which is termed as value addition.

4. Corporate Entrepreneur

Corporate entrepreneur is called promoter. He/she takes initiative necessary to start an

entity under corporate format. He/she arranges to fulfil the formalities to start a corporate entity
under Company law. Corporate entrepreneur assembles all the resources and put in place
organisation to run the business on a day-to-day basis. In corporate form of organisation,
ownership and management are separated. Corporate entities are registered under the
Companies Act or under the Trust Act. Corporate entrepreneurs install a team of experts to
manage the entity on a day to day basis.

5. Agricultural Entrepreneur

Agricultural entrepreneurs are those entrepreneurs who raise farm products and market
them. They use the various inputs like labour, fertilizer, insecticide, water technology etc. to
raise the products and market their products either directly or through co-operative entities or
through brokers or through tie up with large retailers. Those who raise allied products like
poultry, meat, fish, honey, skin, agricultural implements, flower, silk, fruits, prawn etc., are
called agricultural entrepreneur. In short these entrepreneurs pursue their venture in agriculture
and allied sector.

6. Retail Entrepreneurs

Retail entrepreneurs are those who enter into venture of distributing the end-product to
final consumer while wholesale entrepreneurs take up the venture of distributing the product
to retailer. They used to buy the goods in small quantities from numerous wholesalers and make
it available different products of different brands under one roof to end consumer.

7. Service Entrepreneurs

Service entrepreneurs enter into the venture of supplying service products to end
consumers. Hoteliers, airlines, banking, insurance and financial service providers, repair
service organisation, bus operators, train service, advisory organisation, advertising firms,
manpower supplier etc., come under service entrepreneur’s category.
Classification Based on Development Stage
1. First Generation Entrepreneur
First generation entrepreneur is one who starts venture by virtue of his knowledge, skill,
talent and competence. He/she innovates a product/service by technical expertise possessed by
him/her. These entrepreneurs do not have any family background or prior exposure to the
venture initiated by them. They are self made entrepreneurs.
2. Modern Entrepreneur
Modern entrepreneur is one who keenly observes the dynamics of the market with eagle
eye and identify the unfilled gaps, if any in product/service marketed. He/she takes initiative
in starting the venture to cater to the unmet needs of the market.
3. Classical Entrepreneur

Classical entrepreneur is one who starts his own venture as a family business. They are called
life timers. They engage in business as a matter of routine. Their prior exposure to business
environment impels them to commence venture of their own. Entrepreneurs from the business
families are called classical entrepreneurs.

Classification based on Technology Adopted

1. Technical Entrepreneur

Technical entrepreneurs are such of those craftsmen like welder, fitter, moulder, draughtsman,
turner, carpenter, goldsmith, tailor, photographer, repairer, weaver, sculptor, potter, wiremen
or so on who start small ventures. They turnout products/service of high quality. They simply
focus on production rather than on marketing. This type of entrepreneur demonstrates their
creative talents by producing innovative products. Their strength lies in skill or knowledge of
producing specialised product.

2. Non-technical Entrepreneur

Non-technical Entrepreneurs are those who do not possess any technical competence to
produce the goods or service but have special talents to market the products successfully or
expertise to distribute the products produced by technical entrepreneur effectively to channel
members and end consumers.

3. Professional Entrepreneur

Professional entrepreneur is one who is having a rich expertise in starting a venture but lack
interest in continuing the venture as a manager or as a owner. He/she simply sells out the
venture started by him to someone else after its successful take-off. They keep on conceiving
new ideas to develop alternative projects. In short, these entrepreneurs have got professional
expertise in starting the venture and exiting it after the establishment.

Theories of Entrepreneurship:
1) Innovation Entrepreneurship theory
According to Schumpeter, entrepreneurs take the stationary economy to a new level of
development by adding innovation and creativity of their own. Schumpeter also stated that
entrepreneurs bring innovation in two ways namely:

1. By reducing the cost of production

2. By increasing the demand for certain products
2) Economic Entrepreneurship theory
This theory was proposed by Richard Cantillon who considered the economy as one of
the fields affected by entrepreneurship. According to Cantillon, an entrepreneur acts as both
‘producers’ and ‘exchangers’. An entrepreneur’s action greatly affects the supply chain of raw
products being collected, to become an end product for consumers. Cantillon included
everyone as an entrepreneur from their little actions starting from a beggar to restaurant owners
as they also have their source of unfixed income; this counts as a unique factor and made his
theory stand out from other entrepreneurship theories.

3) Sociological Entrepreneurship theory

This theory talks about the social aspects of entrepreneurship. If an entrepreneur considers all
the social aspects such as social taboos, customs, culture, and other religious beliefs, they might
have a well-established business that is up to mark with every consumer’s expectation. Max
Weber propounded the sociological entrepreneurship theory and stated that entrepreneurs
should accept the system of a society for the development of themselves as well as their startup.

4) Psychological Entrepreneurship theory

Psychological theories are of three sections. They are based on the personal
characteristics of a typical entrepreneur.

1. Locus of control :- Any entrepreneur’s success can be an outcome of internal locus

of control as well as the outer locus of control i.e., his or her Inside abilities and
support from outside.
2. Theory of personality traits : The inborn qualities of an individual are the one that
naturally makes them an entrepreneur.

3. Theory of need for achievement :- Entrepreneurs are driven by a need for

achievement and it eventually makes them succeed.

5)Opportunity based Entrepreneurship theory

Peter Drucker in his theory stated that “this defines entrepreneur and entrepreneurship,
the entrepreneur always searches for change, responds to it and exploits it as an
opportunity”. Peter Drucker and Howard Stevenson focused on a wide-ranging conceptual
framework of entrepreneurship and hence contradicted Schumpeter’s theory which stated
entrepreneurship as change.
6) Resource-based Entrepreneurship theory

This theory states that entrepreneurs need resources to start and carry their businesses.
Money and time alone are not sufficient for a blooming startup; hence Entrepreneurs require
resources to make their efforts productive. Also, the theory’s main focus is on showing the
importance of financial, social, and human resources and in the process enhance an individual’s
abilities.

7) Anthropological Entrepreneurship theory

It relates to the cultural model of entrepreneurs. Anthropologists study the human

aspects within the past and present. This makes them good observers of society and hence
according to them, to have a successful venture, entrepreneurs should consider the social and
cultural contexts. Entrepreneurs can find possibilities that present themselves as difficulties
because of the social aspects of business activities (social or environmental). It pushes them to
come up with new ways to solve difficulties, or at the very least contribute to their solutions.

8) Process of stage Entrepreneurship theory

This theory is once again divided into five stages describing the development journey
of an entrepreneur. It is a widely accepted theory by Venkat Rao. The five steps of
entrepreneurship development according to this theory are:-

1. Simulation for stimulation of entrepreneurship

2. Identifying abilities and capacities of entrepreneurship
3. Expansion and development stage
4. Publicity foundation/Promotion
5. Feedback

Creative Problem Solving:

Creative problem solving (CPS) is a way of solving problems or identifying
opportunities when conventional thinking has failed. It encourages you to find fresh
perspectives and come up with innovative solutions, so that you can formulate a plan to
overcome obstacles and reach your goals.
1. Clarify
Explore the Vision
Identify your goal, desire or challenge. This is a crucial first step because it's easy to assume,
incorrectly, that you know what the problem is. However, you may have missed something or
have failed to understand the issue fully, and defining your objective can provide clarity.
Gather Data
Once you've identified and understood the problem, you can collect information about it and
develop a clear understanding of it. Make a note of details such as who and what is involved,
all the relevant facts, and everyone's feelings and opinions.
Formulate Questions
When you've increased your awareness of the challenge or problem you've identified, that will
generate solutions. Think about the obstacles you might face and the opportunities they could
present.

2. Ideate
Explore Ideas
Generate ideas that answer the challenge questions you identified in step 1. It can be tempting
to consider solutions that you've tried before, as our minds tend to return to habitual thinking
patterns that stop us from producing new ideas. However, this is a chance to use
your creativity .

3. Develop
Formulate Solutions
This is the convergent stage of CPS, where you begin to focus on evaluating all of your possible
options and come up with solutions. Analyze whether potential solutions meet your needs and
criteria, and decide whether you can implement them successfully.

4. Implement
Formulate a Plan
Once you've chosen the best solution, it's time to develop a plan of action. Start by identifying
resources and actions that will allow you to implement your chosen solution. Next,
communicate your plan and make sure that everyone involved understands and accepts it.

Lateral & Creative Thinking:

Introduction
Lateral and creative thinking work hand-in-hand with critical thinking as we solve
problems. Lateral thinking offers a somewhat structured way to generate new ideas, while
creative thinking opens the door to all possibilities. While critical thinking is needed in
identifying and starting to solve problems, lateral and creative thinking help generate
multiple, different, and often unexpected solutions.
Creative thinking:
 The definition of creativity is the ability to come up with new and exciting ideas.
 creative thinking is intentionally gaining new insights and different ideas through existing
information.
 Often, creative thought involves tapping into different styles of thinking and examining
information from different viewpoints to see new patterns.
 Creativity allows us to view and solve problems more openly and with innovation.
 Creativity opens the mind.
 A society that has lost touch with its creative side is an imprisoned society, in that
generations of people may be closed minded.
 It broadens our perspectives and can help us overcome prejudices.
 Example, When Apple Computer comes up with a brand new product such as the iPod that
no one has ever thought of before, this is an example of creativity. When a painter creates
a beautiful work of art, this is an example of creativity.
Lateral thinking:
 Lateral thinking is a manner of solving problems using an indirect and creative approach
via reasoning that is not immediately obvious.
 It involves ideas that may not be obtainable using only traditional step-by-step logic.
 According to de Bono, lateral thinking deliberately distances itself from the standard
perception of creativity as "vertical" logic, the classic method for problem solving.
 Lateral thinking is the ability to use your imagination to look at a problem in a fresh way
and come up with a new solution.
 Lateral thinking is based on applying logic in an unconventional way, from a logic
perspective to the application of a problem to reach a different and creative solution.
 This thinking is still rational and logical.

Views of De Bono, Khandwalaand others:

Dr. Edward de Bono is the leading international authority in the teaching of thinking
and creativity. Born on Malta, he received his M.D. from the Royal University of Malta when
he was 21 years old. He proceeded as a Rhodes Scholar to Christ Church, Oxford, where he
gained an honours degree in psychology and physiology, and then a D. Phil. in medicine. He
also holds a Ph.D. from Cambridge and has had faculty appointments with the universities of
Oxford, London, Cambridge, and Harvard.
De bono is the originator of the concept of Lateral Thinking, which now has its own
entry in the Oxford English Dictionary. Lateral thinking is sideways thinking. It allows a
thinker to cut across conventional patterns of logic and to come up with new concepts and
ideas. Although de Bono's intellectual interests span everything from education to
philosophy, his focus recently has been business and organizations.
He has published 27 books which have been translated into 20 languages. de Bono: An
intelligent person scans quicker. He may cover four or five activity areas in the brain, while
another person covers only two. You can test intelligence by such things as reaction times.
There is a physiological component to intelligence, but how you use your intelligence
is a matter of strategy.
Edward de Bono’s six thinking hats prevent this, so that everybody shares each other’s
opinions about the problems, advantages, facts, reducing distraction and supporting thought
cross pollination.
This will be accomplished because everyone will put on a hat together, for instance the
white hat. After the attendants have expressed their thoughts in a round of discussion, they will
put on the next hat.

In this way all the attendants will think in the same way at the same time. The only
exception is the facilitator, who will tend to keep the blue hat to ensure that the discussion will
progress effectively.
Creative performance in terms of motivation and skills:
Creative performance requires a larger investment of attention and effort when people
are avoidance motivated than when they are approach motivated, which makes avoidance
motivated people more likely to invest in creativity when creative performance helps them to
achieve their goals.
Creative performance is a valuable workplace skill because it can be a useful tool for
developing new ideas, increasing efficiency and devising solutions to complex problems.
While you may have natural creativity skills in certain forms, it is a skill that can be learned
and developed over time.
People will be most creative when they feel motivated primarily by the interest,
enjoyment, satisfaction, and challenge of the work itself, when they are driven by a deep
involvement in their work and a passion for it.
This note describes the ways in which creativity can be stimulated by this intrinsic
motivation, and by certain forms of extrinsic motivation, such as rewards that signal
competence or support future achievement. Managerial implications are discussed
There are several kinds of creative skills that you can practice to become more creative in the
workplace.
 Making connections.
 Asking questions.
 Making observations.
 Networking.
 Experimenting.