Introduction Concept, meaning and definition of Entrepreneur and Entrepreneurship. Evolution of Entrepreneurship, Role of Entrepreneurship in economic Development; Managerial vs entrepreneurial approach; Classification and types of Entrepreneurs. Characteristics and qualities of successful Entrepreneurs; Women Entrepreneurs; Corporate & Social entrepreneurship. 1.1 Entrepreneur and Entrepreneurship 1.1.1 Entrepreneur + Entrepreneur is derived from the French word entreprendre, meaning “to undertake”, * An entrepreneur is basically an innovator who tries to develop new technology, products, markets etc. * Jean-Baptist Say, Says that: Definition of Entrepreneur: “Entrepreneur is someone who takes resources from a lower level of productivity and raises them to a higher level.” An entrepreneur performs following functions: © Generation of business idea © Converting idea into reality © Establishment of enterprise © Organization and Management of the productive enterprise © Risk taking Supply of capital2 Decision making ) dekanging resources Maintaining good relations with the existing and potential investors. © Rcuring adequate financial resources > Developerent of market far the products. > Daadiag with competition ‘© Management of customers and suppliers relation ‘We can classify the function of an entrepreneur under the following heads : 1, Satrepreneurial Function 2. Primary Function 3. Other Functions Entrepreneurial Function Determination of objectives Idea generation Implementation of project Market research Recruitment of manpower Procurement of machinery Procurement of raw material Raising of funds Primary Functions (a) Planning () Organizations of land, labor and capital (©) Decision Making (d) Management Other Functions (a) Risk taking (b) Develop venture (©) Decide strategies to start ventureIntroduction 1.2. Entrepreneurship Definition of Entrepreneurship: Entrepreneurship is the process of creating a new enterprise with an aim of making profit, Entrepreneurship refers to a process of actions an entrepreneur undertakes to establish his business. Benjamin Higgins has defined entrepreneurship as “the function of foreseeing investment sé production opportunity, organizing an enterprise to undertake a new production Process, raising capital, hiring labour, arranging for the supply of raw materials, and selection to managers for the day-to- day operation of the enterprise”, Prot Roa and Mehta defined Entrepreneurship as “Entrepreneurship can be described as ‘Teative and innovative response to the environment” L.2 Evolution of Entrepreneurship First stage of entrepreneurship is Ancient Period: Entrepreneurship is the process of creating 3 Rew enterprise with an aim of making profit. Entrepreneurship refers to a process of actions an entrepreneur undertakes to establish his Business. May co Polo has signed an agreement with the capitalists to sell their products. er© cnn reneurship and E-Business (MI enna (MU) 14 Introduction In the contract merchant adventurer took a loan at 22.5% rate including insurance. Capitalist was the passive risk bearer and merchant adventurer took the active role in trading, bearing * all physical and emotional risks. When the merchant adventurer successfully’sold the goods and completed the trip, the Profits were divided with the capitalist taking most of them up to 75%, while the merchant adventurer settled for the remaining 25%. In 17% century, the evolution of entrepreneurship can be related with the relationship between risk and entrepreneurs. Entrepreneur is the person who signed the contract agreement with the government to provide a service or supply products that have been determined. The contract price is fixed. Then, the entrepreneurs are fully responsible for the gains and losses of the business. John law, a Frenchman was one of the entrepreneurs in that period, ‘The founder of the royal bank of France and the Mississippi Company, which had an exclusive franchise to trade between France and the new world. Monopoly on French trade eventually led to collapse of the company. Richard Cantillion, an economist defines entrepreneurs earlier. In his view, the entrepreneur is risk insurers, Merchants, farmers, craftsmen, and so is an entrepreneurs. They buy things at a certain price and sell it ata price that is uncertain, with the risks «Inthe 18th century, the person with capital was differentiated from the one who needed capital. The entrepreneur was distinguished from the capital provider. One reason for this differentiation was the industrialization occurring throughout the world. Eli Whitney was an American inventor best known for inventing the cotton gin. ‘© This was one of the key inventions of the industrial Revolution. Thomas Edison, the inventor of many inventions. He was developing new technologies and was unable to finance his inventions himself. Edison was a capital user or an entrepreneur, not a provider or a venture capitalist. ; ; were In 19%and 20" century, entrepreneurs were not distinguishing from mangers and i i jerriam- viewed mostly from managers and from economic perspective. According to Mi i i i assumes Webster's online dictionary, an entrepreneur is one who organizes, manages, and the risk of a business or an enterprise. wonW courepreneurship and E-Business (MU) Ls Ineraduction. The entrepreneur organizes and manages an enterprise for personal gain, The materials consumed in the business, for the use of the land, for the services he employs, and for the capital he requites. «Andrew Carnegie is one of the best examples of this definition. Carnegie, who descended! from a poor Scottish family, made the American Steel Industry one of the wonders of the industrial world, «In the middle of the 20% Century, the function of the entrepreneurs is to recreate or revolutionize the pattern of production by introducing an invention. Innovation, the act of introducing some new ideas, is one of the most difficult tasks for the entrepreneur. For example, Edward Harriman, who reorganized the railroad in the United States and John Morgan, who developed his large banking house by reorganizing and financing the nation’s: industries. Besides, the Egyptian who designed and built great pyramids out of stone blocks weighing many tons each, to laser beams, supersonic planes and space stations. © In21*century, Entrepreneurs are known as a hero for Free Enterprise market, Entrepreneur of the century created many products and services and is willing to face a lot of risks in the business. According to Kuratko & Hodgetts, most people say entrepreneurs are pioneers in creating new businesses. In the year 2005 Hisrich, Peter and Shepherd regarded entrepreneur as an organizer who controls, systematize, purchases raw materials, arranges infrastructure, throw in his own inventiveness, expertise, plans and administers the venture, * The Future of entrepreneurship will be growth with development of technologies, The modern technologies and internet have improved the ways of conduct business, Entrepreneurs now have the luxury of putting their business idea into action through the click of button. 1.3 Role of Entrepreneurship in Economic Development Economic development is often defined as a process in which the real per-capita income of a nation increases over a period of time but then the question arises that what causes this development? There are innumerable factors that cause the economy of a country to develop and entrepreneurship is one among them.Entrepreneurship and E-Business (MU) Introduction © We will try to find out what is the significance of entrepreneurship for economic development? Does it add an important independent influence to that of other factors widely agreed to promote economic development? ‘Adam Smith, the foremost classical economist assigned no significance to entrepreneurial role in economic development in his monumental work, ‘According to him capital formation was the main determinant of economic development and this largely depended on the ability of the people to save more and invest more in a country So it was not at all entrepreneurs who held in economic development rather it was the ability to save and invest or what we call capital formation which led to economic development. * Schumpeter visualized the entrepreneurs as the key figure in economic development, Schumpeter economic development consists of employing resources in a different way in doing new combination of means of production. Hence it is the entrepreneur who locates ideas and puts them into effect in the process of economic development. Hence the entrepreneur becomes the agent of change in society. + Ithas been realized that for achieving the goal of economic development it is necessary to increase entrepreneurship in the country. * Itis the entrepreneurs of a country who explore the saondet the countries available Tesources and what are those resources, land, labor, technology and capital. ‘* The entrepreneur searches for change, sees need and then brings together the manpower, material and capital required to respond the opportunity what he sees. ‘* These entrepreneurs use the resources and produce goods and services out of them. * Optimum use of resources : It is the responsibility of the entrepreneur to make use of resources at the fullest extent. Regional dispersal of industries or balance regional development : India itself is an under-developed country aims at decentralized industrial structure to militate the regional imbalanced in levels of economic development. » Small scale entrepreneurship in such industrial structure plays an important role to achieve balanced regional development. Capital formation : Entrepreneur mobilizes the idle savings, Saving in industry result in productive utilization of national resources. An entrepreneur is the creator of wealth.W Entreprenes hip and E-Business (MU) 17 + Improvement in per capita income : Entrepreneurs locate and exploit opportunities. It converts idle resources like road, labor and capital into national income and wealth in the form of goods and services. + Employment Generation : Entrepreneurs generate employment both directly and indirectly. Entrepreneurship helps to reduce the unemployment problem in the country, Entrepreneurship is the source of livelihood to those who do not neither have capital to earn interest on nor have the land to earn rent. + Improvements in living standards : Entrepreneurs set up industries which remove scarcity of essential commodities and introduce new products, scale Production of goods on ma helps to improve the standard of living of a common man. + Bconomic independence : Entrepreneurship is essential for national self-reliance. Businessman exports goods and services on a large scale and earns foreign exchange for the country, Import substitution and export promotion help to ensure the economic independence of the country, Increases productivity : the entrepreneur through massive small scale and large scale industries, it helps in growing productivity in the enterprise. The entrepreneur plays a vital role through good relation, Contribution to GDP : Increase in the Gross Domestic Product or GDP is the most common definition of economic development. The income is generated in the process of production. So, entrepreneurs generate income via organization of production be it agriculture, manufacturing or services. Income generated is distributed among the factors of production where land gets rent, labour gets wages and salaries, capital gets interest and the profit to the entrepreneur. Reduces unrest and tension : An entrepreneur plays a crucial role in solving tensions and problems and tries to minimize it. Wy lea tewatatys1.4 Managerial Vs Entrepreneurial Approach * Entrepreneur : We have discussed that an entrepreneur is a person who searches for change and responds to it by starting an enterprise. An Entrepreneur introduces new ideas, carrie, on new activities, coordinates the factors of production and describes how the busine, should run. * Manager : A manager is one who deals with day-to-day affairs of a going concern an¢ ‘operates in an existing enterprise. Managers use entrepreneurial skills:in order to mang change and innovation to effectively deal with uncertain external environment of business. Table 1.4.1 Entrepreneur Manager Innovation | Entrepreneurship is another name of | A manager is an employee of the innovation. Entrepreneur works to find | business organization. He cannot new methods, products. etc. operate independently. Venture ‘An entrepreneur sets up a new venture | A manager only runs existing units. Creation and runs it. Status An entrepreneur starts and runs his | A manager needs not to be an venture independently; He is self- | innovator. He deals with the day-to- employed and is his own boss. day affairs of a going concern. Risk ‘An entrepreneur takes calculated risks. He | A manager takes less risk as compare taking is responsible for failure and financial loss. | to an entrepreneur. He is less tolerant to uncertainty. Reward | An entrepreneur is motivated by profits. | A manager is motivated by rewards He may even suffer a loss. or incentives. His salary cannot be negative. | Change __| Anentrepreneur is responsible to external | A manager may not very receptv’ o| environments and is always prepared to | change, unless he is enterprising: | change. wo gdEntrepreneurship and tusiness (MU) 1 1.5 Classification and Types of Entrepreneurs Introduction Not all entrepreneurs are alike this was observed ‘by Clarence H,, then based on the basis ofa study of American agriculture, classified entrepreneurs into four types. Types of Entrepreneurs 1. Innovative Entrepreneurs These were entrepreneurs who work to break the status quo and constantly engage themselves in doing things differently and are called innovators. They innovate by introducing new goods, finding new methods of production, discovering new markets or reorganizing the enterprise. These entrepreneurs work only when a certain level of development has already been achieved and hence people look for change and improvement in their existing goods and services. So such entrepreneurs are mostly found in developed countries. 2. imitative Entrepreneur These entrepreneurs adopt successful innovations introduced by innovating entrepreneurs elsewhere and are flexible to adopt their ideas. They do not innovate but only imitate techniques and technology innovated by others. Such entrepreneurs are generally found in underdeveloped countries where they imitate new combinations of factors of production already prevalent in developed countries. 3. Fabian Entrepreneurs ‘These are entrepreneurs who bring any kind of change in their enterprise with great caution, These people are lazy, shy and lack the will to adopt new methods of production. They imitate only when they are confident that failure to imitate the change will result in loss in business. These entrepreneurs are with the following features. (a) Adopt and follow conventional approaches (b) Belong to family business (©) Cautious (a) Exhibit resistance to risk (e) Firm, rigid and fundamental approach ——— aus TeattanniatetW cnerepreneurship and E-Business (MU) 1-40 aa ee . Drone Entrepreneurs Wa. «These entrepreneurs are ones who refuse to make any change in their business even , i * means lost to business. So these people just do not change no matter what. They are rea, " vt suffer losses but are not ready to make changes in their existing production methods, + Because of positive of funds, lack of skilled labor, lack of proper infrastructures 4, conditions in underdeveloped economies are less conducive to the emergence 5. of entrepreneurs especially the innovative entrepreneurs. * In developing and underdeveloped economies non innovative entrepreneurs like imitative, Fabians and drones are generally noticed. Entrepreneurs in such regions are ng innovators but are imitators who copy the innovations made by the innovative entrepreneurs of the developed countries. + As imitation requires lesser funds than innovation therefore it is considered that developing countries have more of imitative entrepreneurs. 1.6 Characteristics and Qualities of Successful Entrepreneurs” Personality of the entrepreneurship plays a very important role in success of his business Following are some of the qualities required to be a good entrepreneur. 1. Future Vision 7 ‘The entrepreneur should have a good foresight about future market situation, The entrepreneur also has knowledge about external business environment. Without a vision for the future of his venture, entrepreneur would just be working aimlessly without reaching any point of success. 2, Innovation , ee - u Innovation refers to generating a new idea with which we can start a business and ear profit. In today’s highly competitive business environment, it is only the innovators who survive and success. Continuous innovation is the only road to success in the global economy. Innovation can be in the form of a product or it can be also in the form of process. 7 3. Communication Skills , An entrepreneur needs to communicate with different people like customers, suppliers creditors, employees etc., he must be able to express his ideas and strategies effectively. It very important that the sender and receiver of the message are being understood perfect! wrenv Entrepreneurship and E-Business (MU) 1-11 Introduction — 4. Technical Knowledge ‘An entrepreneur should have sufficient technical knowledge about the products and his plan to produce. An entrepreneur should be updated with the latest technology to be in pace with the market. 5, Hard Work An entrepreneur should be ready to work hard. It is more necessary when a new venture is started. An entrepreneur has to work for long hours. Many a times he has to handle the main areas of business independently. 6. Ability to take risk This is the first and foremost trait of entrepreneurship. The entrepreneur is true risk bearer of any business. Starting any business involves a considerable amount of risk of failure. Therefore, the courage and capacity to take the said risk are essential for an entrepreneur. 7. Highly Optimistic An entrepreneur should always think positively. He/she should always be hopeful and confident about the market situations even in failure times. This positive attitude helps him to run his/her business successfully. 8 Planner Planning is also one of the important functions of an entrepreneur. A company without a plan is alike a ship without a direction. Big businesses cannot operate without proper planning. . Self Confidence An entrepreneur should have self-confidence. He/she should have positive desires to achieve his/her goals. Such self confidence keeps him strong and motivated to face various obstacles. 10. Leadership A single person cannot perform all the tasks and therefore it is important to bring some more people to do it. This makes leadership very important as a leader provides a required * direction to the efforts of the employees. Without proper leadership, everyone would be working independently without achieving the desired results, 11. Quick Decision Maker The entrepreneur also should be quick decision maker. Taking too much time in decision making can lead to loss of good business opportunities which would be costly in today’s highly competitive business environment. HH TettnontedstW _cxirepreneurship and &-Business (MU) 112 Introduction eee ee 1.7. Women Entrepreneurs * Women have been regarded as the nuclei of a nation and the builder of its destiny. ‘The emergence of women entrepreneur in the economy is an indicator of women’s economic independence. Women entrepreneurship is the process in which women initiate a business, gather all resources, undertake risks, face challenges, provides employment to others and manages the business independently. Approximately 1/3 rd of the entrepreneurs in the world are women entrepreneurs. Women entrepreneurship refers to business or organization started by a woman or group of women. ‘* Women entrepreneur: Women, who initiate, organize and run a business. * According to Schumpter, Women who innovate, imitate or adopt a business activity are a women entrepreneur. * According to the Government of India, an enterprise owned and controlled by a woman having a minimum financial interest of 51% of the capital and giving at least 51% of the employment generated in the enterprise to women. © Qualities of Women Entrepreneurs : © Ambitious © Hard work © Accept challenges © Foresighted 0 Motivator © Optimistic o Intelligent © Conscious o PatienceDeveloping Equal Status In Society (Own Identity Be Independent uta ry Future Nood of Women Entreprono- urship Increasing isk Taking Ability Fig. 1.7.1 : Need of Women Entrepreneurship 1.7.1 Functions of Women Entrepreneurs Coordination, administration and control Idea generation Supervision and leadership Completion of promotional formalities Raising funds 7.2. Types of Women Entrepreneurs Affluent Entrepreneur They have wives and daughters of wealthy businessmen. They have sufficient financial aid. Pull factor Entrepreneur They are educated and living in urban areas. With or without experience they take the risk of anew enterprise. Their name is to become financially independent. WrsentEntrepreneurship and E-Business (MU) Intro eee ae nS tig 3, Push factor Entrepreneur ‘They take up business to overcome financial difficulties. Widows or single women bey, 01 , entrepreneurs because of some certain scenarios but not by their willingness. 4. Rural Entrepreneur They belong to rural areas. They choose a business with their resource and knowledge, 5. Self Employed Entrepreneur ‘They are uneducated. They lie below poverty line. They choose small enterprise which convenient to manage their family. Self employed Fig. 1.7.2: Types of Women Entrepreneurs 1.7.3 Problems to Women Entrepreneurs in Society Mobility problems © Lack of support from family members © Male dominant society © Family responsibilities © Indian values and Ethics * Face technological obsolescence due to lack of support. * They have to be dependent on men for doing work which requires muscular strength. * Financial problems ¥ echoW Entrepreneurship and E-Business (MU) 1:15 Introduction -__—aE—__——_— 1.8 Corporate and Social Entrepreneurship 1.8.1 Corporate Entrepreneurship « Corporate Entrepreneurship refers to entrepreneurial activities that-occur within an existing organization. «It refers not only to the creation of new business ventures, but also to other innovative activities and orientations such as: © Development of new products © Development of new administrative techniques © Development of new strategies and competitive postures. © Development of new services, technologies * Corporate Entrepreneurship: the pursuit of opportunity, within an established organization, without depending on the resources we currently control. 1(A) Types of Corporate Entrepreneurship * Entrepreneurship manifests in companies in two ways : 1. Corporate Venturing : creation, addition or investment into new businesses by an existing corporation. 2, Strategic Entrepreneurship : Strategic entrepreneurship is the use of entrepreneurial activities to achieve organization goals and objectives. Highly consequential innovations that are adopted in the firm's pursuit of competitive advantage. Corpors Entrepreneurship Corporate Venturing Strategic Entrepreneurship © Internal Corporate * Strategic Renewal Venturing * Sustained Regeneration ‘* Cooperative Corporate * Domain Redefinition Venturing * Organizational + External Corporate Rejuvenenation Venturing * Business Mode! Reconstruction Fig. 1.8.1: Modes of Corporate Venturing Teehkaouledy——— are — 2... Corporate Venturing Internal Corporate venturing - new businesses created and owned by the corporation, Cooperative corporate venturing - new businesses are created and owned by the corpo; ati together with one or more external development partner. tion External corporate venturing - new businesses are created by parties outside the Corpor, ji . © i at and subsequently invested in through equity positions or acquired by the corporation, 7 Modes of strategic Entrepreneurship Strategic Renewal: Adoption of a new strategy or developing strategies to conan ' fe organization weakness that is leading to performance decline. Ts Sustained Regeneration: Regular and continuous introduction of new products or servic 8 into pre existing markets and entering new markets. Learning businesses that embra : : ce change and willingly challenge competitors in battles for market share, Example banki sector. d Organizational Rejuvenation: A firm alters its internal processes, structures and o, capabilities to sustain or improve its competitive standing. Domain Redefinition: Business proactively creates a new product-market arena where i can enter as a pioneer that others have not recognized or actively sought to exploit. Example, Banks Facebook 1.8.2 Social Entrepreneurship It is an approach by individuals, groups, startup companies or entrepreneur in which they develop, fund and implement solutions to the social, cultural or environmental issues. Social entrepreneurship is doing business for a social cause. It might also be referred to selfless entrepreneurship. Social Entrepreneurship is a new area of entrepreneurship that involves nonprofit risk taking, and with that organizations, governments, and business that focuses on innovation, particular emphasis on bringing positive transformation to the social problems ultimately leads to social change. Social entrepreneurs combine commerce and social issues in a way that improves the lives of people. They don’t measure their success in terms of profit alone. Success to social entrepreneurship means that they have improved the world. wont Wa' Entrepreneurship and E-Business (MU) 1-17 Introduction According to Greg Dees, co founder of the Center for the Advancement of Social Entrepreneurship at Duke University, “Social entrepreneurs are individuals with innovative solutions to society's most pressing social problems. They are persistent and ambitious, tackle major social issues and offer new ideas for a wide-scale change.” Social entrepreneurs work as agents of change for the society. They look for opportunities that include improving the systems, inventing new approaches, and also to create solutions that can change society for the better. A social entrepreneur can come up with new solutions to the problems of society, implement them on a large scale, and change the face of society. 8.2(A) Characteristics of Social Entrepreneur Creative : They think creatively and develop new solution that breaks the existing one. They find all the time new ways of approaching the problem. Social vision : Social entrepreneurs have far sighted vision for changing the society and add values to the society. Direct Action takes : Social entrepreneurs take the direct action when they are convinced with the idea or opportunity, Innovator : They are innovator of the system, process, design and methods for better results and simplification. .8.2(B) The importance of Social Entrepreneurship Social Capital ; the most important values created by social entrepreneurship is social capital i.e. the networks of relationships among people who live and work in a particular society, enabling that society to function effectively, Employment Development : the major economic value that social entrepreneurship creates is the job and employment creation. On an average one to seven percent of people employed in the social entrepreneurship sector. Equity Promotion : Social entrepreneurship fosters a more equitable society by addressing social issues and trying to achieve ongoing sustainable impact through their social mission rather than purely profit-maximization. Innovation : Social enterprises develop and apply innovation important to social and economic development and develop new goods and services. Issues addressed include some Of the biggest societal problems such as mental ill-health, crime and drug, HIV, abuse is confronted in innovative ways. Ae atkaenteayv Entrepreneurship and E-Business (MU) = SS try 9 Factors Impacting Emergence of Entrepreneurship + There are certain major factors that affect the growth of entrepreneurship. In many oy OF thy less developed countries, most of their inventions either lies in idle conditions or fly, Out ts the prosperous nations. Several inimical factors are affecting the growth of entrepreney, hy Ship, * They can be studied under the following heads shown in Fig. 1.9.1. 1.9.1 Economic Factor Economic Factor Capital | Labour | Raw Material | Market | Infrastructure Fig. 1.9.1: Economic factor 1. Capital Capital is one of the most important prerequisite to establish an enterprise, Availabilty capital facilities for the entrepreneur to bring together the land of one, machine of anothe, and raw material of yet another to combine them to produce goods. Capital is therefore regarded as lubricant to the process of production. 2. Labour The quality rather quantity of labour is another factor which influences the emergence « entrepreneurship. The availability of cheap labour positively affects entrepreneurship. Bu entrepreneurship is encouraged if there is 2 mobile and flexible labour force. And, ti: potential advantages of low-cost labour are regulated by the deleterious effects of labou immobility. 3. Raw Material Entrepreneurship is encouraged only if there is an adequate supply of materials and know how. Quality of product depends on the quality of raw materials used. Easy availability material attracts more individuals towards entrepreneurship. To a modern enterpri: requires technical know_how for innovation. 4. Market ¢ The fact remains that the potential of the market constitutes the major determinant probable rewards from entrepreneurial function. eweW Entrepreneurship and E-Business (MU) 119 Introduction tio 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. Infrastructure Entrepreneurship development requires certain basic infrastructure like power, transportation, communication and technical information. Land and factory sheds at affordable rate, adequate supply of power, water, coal, and other sources of energy, transport facilities, and other facilities should be provided. 1.9.2 Socio-Economic Factors Socio-Economic Factors Caste and religion factor | Attitude of society | Family background Fig. 1.9. Socio-economic factors Caste and religion factor There are certain cultural practices and values in every society which influence the actions of individuals. ‘These practices and value have evolved over hundreds of years. Religion and cast play a vital role in entrepreneurial development. Certain cast system encourages the entrepreneurship. Religious communities like Parsees, Marwari , Sindhees seem to have an affinity for entrepreneurial activity. Attitude of society A related aspect to these is the attitude of the society towards entrepreneurship. Certain societies encourage innovations and novelties, and thus approve entrepreneur's 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. Family background This factor includes size of family, type of family and economic status of family. Background of a family in business provides a source of industrial entrepreneurship. Occupational and social status of the family influenced mobility. Families with properties like land and house and having sound financial resources may support entrepreneurship among family members. Techtnomtedss4 Introduction antrepreneurship and &-Business (MU) 1.9.3. Psychological Factors *, Inspiration tor achievement prepares an entrepreneur to set higher goals and achieve them, The important psychological factors influencing entrepreneurial growth may be outlined below, as {a}_ Need for achievement is the desire to abtain excellent results by setting high standards and striving to accomplish them. (tis a consistent concern with doing things better. It the average level! of need achievement in a society is relatively high, one would expect a relatively high amount of entrepreneurship development in that society. Achievement motivation training programmes organized by the small Industries Extension ‘cuning lnstitute (SIET), McClelland argues that the need achievement can be developed chraugh the intensive training programmes. Withdrawal of Status Respect : When members of a given social group perceive that they are not respected by the dominant groups in society, this triggers a personality change that encourages entrepreneurial behaviors. ic} Willingness to take risks : Researchers have come to the conclusion that entrepreneurship who takes moderate risks earns higher returns on their assets than those who take no risks. (d) Motives: Other psychological theories of entrepreneurship stress the motives or goals of the entrepreneur. Besides wealth, entrepreneurs seek power, prestige, security and service to society Non-monetary aspects such as independence, person's self esteem, power etc. also triggers entrepreneurship. TechknowleltW_tnurepreneurship and E-Business (Mu) 1-21 Introduction 1.9.4 Government Actions * The government by its actions does influence the entrepreneurship development. * Any interested Government in economic development promotes entrepreneurship by enacting some policies and strategies, + By creating basic facilities, utilities and services, the Government can create a facilitative set up to establish enterprise. * Development of industrial estates, export promotion zones, special economic zones etc. aims at promotion of entrepreneurial activities. * — Government actions : 1. Promotional schemes 2, Government incentives, subsidies and grants 3. Concession on Excise Duty 4. Credit facility to MSME 5. Micro Small and Medium Enterprises Development Act, 2006 Barriers to entrepreneurship Unfavorable family background Inadequate infrastructure facilities Lack of education Lack of seed capital Lack of technical know how Legal constraints and regulations Unavailability of raw material. Absence of regular supply of power. Lack of attitude and training Monopoly Influence of gender , cast, custom TechKanmledgaEntrepreneurship and E-Business (MU) 1-22 Introduction Review Questions Define Entrepreneurship and Entrepreneur. (Refer Section 1.1) Explain the role of Entrepreneurship in Economic development (Refer Section 1.3) Differentiate following two approaches. 1 Managerial and 2. Entrepreneurial (Refer Section 1.4) Explain different types of Entrepreneurs. (Refer Section 1.5) What are the qualities of successful Entrepreneurs. (Refer Section 1.6) Write a short note on women entrepreneur. (Refer Section 1.7) Explain corporate entrepreneurship. (Refer Section 1.8.1) Explain social entrepreneurship. (Refer Section 1.8.2) Explain the different factors affecting the growth of entrepreneurship. (Refer Section 1.9) gagEntrepreneurship Development and x K Leadership Entrepreneurial Motivation : motivating factors, Types of startups; Characteristics of entrepreneurial leadership, Components of Entrepreneurial Leadership; Factors influencing Entrepreneurship process. Types of Enterprises and Ownership Structure: small scale, medium | | | | | entrepreneurial development and motivation, Entrepreneurial Opportunities and challenges, | | scale and large-scale enterprises: Meaning and definition (evolution), role of small enterprises in economic development; proprietorship, Policies governing SMEs, partnership, Ltd. companies and co-operatives: their formation, capital structure and source of finance. 2.1 Entrepreneurial Motivation : Motivating Factors 2.1.1 Meaning - Motivation The term motivation has been derived from the word ‘motive’. Motivation is the process that activates or directs our behavior towards achieving our goals. Motives are expressions of a person’s goals or needs. Motive is always internal to us and is externalized via behaviour. 2.1.2 Definition : Motivation According to Bernard and Steener, Motivation is regarded as “An inner state that energizes activities and directs or channels behavior towards the goal”. Motivation is the process that arouses action, sustains the activity in progress and that regulates the pattern of activity.WY entrepreneurship and Eusiness (MU) Emreprencarship Development & Leaders; 2.1.3 Definition : Entrepreneurial Motivation The entrepreneurial motivation may be defined as the process that activates and motivates the entrepreneur to exert higher level of efforts for the achievement of his/her entrepreneurial goals. In other words, the entrepreneurial motivation refers to the forces or drive within an entrepreneur that affect the direction, intensity, and persistence of his / her voluntary behavior as entrepreneur. So to say, a motivational entrepreneur will be willing to exert » particular level of effort (intensity), for a certain period of time (persistence) toward = particular goal (direction). Entrepreneurial motivations are necessary steps of getting individuals to become entrepreneurs. 2.1.4 Motivational Theories 1. Maslow’‘s Need Hierarchy Theory Prof. A. H. Maslow developed a theoretical framework for understanding human motivatioy (Refer Fig 2.1.1). Process of motivation begins with an assumption that behaviour, at least ir part, is directed towards the satisfaction of needs. Maslow's Hierarchy of Needs Growth Self-fulfillment needs needs ‘actualization / Social needs Deficiency needs Basic needsW _cnerepreneurship and E-Business (MU) 2-3 Entrepreneurship Development & Leadership — Es (a) (b) © (a) () McCl Basic Physiological Needs : The physiological needs relate to the survival and maintenance of human life. These needs include such things as food, clothing, air, water and other necessaries of life which are biological in nature. These are the primary needs. Safety and Security Needs : After satisfying the ‘physiological needs, people want the assurance of maintaining a given, economic level. They want job security, personal bodily security, security of source of income, provision for old age, insurance - against risks, ete. Social Needs : Man is a social being. He is, therefore, interested in conversation, sociability, exchange of feelings and grievances; companionship, recognition, belongingness, etc. Esteem and Status Needs : These needs embrace such things as self- confidence, independence, achievement, competence, knowledge and success. These needs boost the ego of individual. They are also known as egoistic needs. They are concerned with prestige and status of the individual. Self-Fulfillment Needs : The final step under the need priority model is the need for self-fulfillment or the need to fulfill what a person considers to be his mission in life. It involves realizing one’s potentialities for continued self-development and for being creative in the broadest sense of the word. After his other needs are fulfilled, a man has the desire for personal achievement. land’s Three Need Model According to David MCClelland, as a result of a person’s cognitive pattern and environment, a person experiences three types of needs. He gave a three needs model of motivation. These three types of needs are: achievement, power and affiliation. ‘They are as follows : f@) (b) () Need for achievement : This refers to ones desire to excel, advance and grow in life. / Need for power: This refers to ones desiréto influence/r dominate others and situations; Need for affiliation : It refers to establishing a friendly, healthy and close interpersonal relationships. TectKaouleay?© Entrepreneurship Development & Leaders ip and E-Business (MU) 2 Entrepreneu Meclelland's theory of needs Need for Need for Need for power affiliation achievement ff Drive to excel To control others || Friendship Achieve in relation|] To get desire Good relationship toa things done set of standards strive to succeed Fig. 2.1.2 : McClelland’s Three Needs Motivational Theory McClelland also suggests that these three needs may simultaneously be acting on an individual. But, in case of an entrepreneur, the high need for achievement is found dominating one. In his view, the people with high need for achievement are characterised by the following (a) They set moderate, realistic and attainable goals for them. (b) Prefer to situations in which they can find solutions for solving personal responsibility. () They need concrete feedback on how well they are doing. (d) They have need for achievement for attaining personal accomplishment. (e) They look for challenging tasks. Entrepreneurial motivation may be defined as a set «! motives such as high need to achieve, moderate need for power and low affiliation motive which induce people to set up and run their own enterprises. Apart from these entrepreneurs have other behavioural dimensions such as, tolerance for ambiguity, probler: solving, creativity, etc 2.1.5 Entrepreneurial Motivation Factors Several research studies have been conducted to identify the factors that inspit entreprenuers. The motivating factors can be classified into two categories Internal factors 2. External Factors eetEntrepreneurship and E-Business (MU) 2 Entrepreneurship Development & Leadership Internal Factors ‘These include 1, Desire to do something new Become independent Achieve what one wants to have in a life Be recognized for one’s contribution One's educational background ae een One's occupational background and experience in the relevant field. External Factors ‘These include 1, _ Assistance from Government 2. Financial assistance from institutions 3. Availability of technology and/or raw materials 4. Encouragement from big business units 5. Heavy demand for product 2.2 Types of Start-ups + A term startup is used for a young company founded by one or more entrepreneurs to develop a unique product or service and bring it to market. Nowadays, more and more individuals are interested in becoming entrepreneurs and therefore open their own business. * Asstartup is a company working to solve a problem where the solution is not obvious and success is not guaranteed. 1. Lifestyle start-up : Work to live your passion. It is founded by entrepreneurs. They live their preferred life and work for themselves, Examples of these are freelancers or web designers who have passion for their work. 2. Small business start-up : Work to feed the family These are the Small businesses. Their main objective is to provide only a comfortable life for their family.} -) W _cnireprencurship and E-Business (MU) 2-6 Entrepreneurship Development & Leadershi, ‘The owner follows less ambitious goals and doesn't think of scaling the business. Examples of these types of start-ups are hairdressing salons, grocery stores, bakeries, among others. 3. Buyable start-up : Acquisition target The main goal of such businesses is to sell the business to large companies after achievins positive results that catch their attention, This type of startup is very common in wel solutions development companies and mobile. An example of this was the purchase o Instagram by Facebook. 4, Social start-up: Driven to make a difference ‘The main goal of social entrepreneurs is to make a difference in society and make a beite, world, Thus, the main objective is not to gain profit, but rather to contribute positively to ti, community. One example is the charity or charitable institutions. 5. Scalable startup - Born to be big ‘These entrepreneurs are very ambitious and believe from the beginning that they can chang, the world with their business idea, They try to find a” model scalable and repeatatj, business” in order to draw the attention of investors. Google, Uber and Facebook are some, the examples of these type of startups. Big business start-up - Innovate or evaporate The large companies have finite life duration, They have the main objective of innovation 1 business that falls into this category develop products or services that are quickly recognie: by the market and becomes revolutionary. Due to the market changes, the user preferenc competitive pressures, these bbusinesses tend to create new innovative products for ns users of different markets. To ensure their survival and growth, corporations need to key inventing new business models. This challenge requires entirely new organization: structures and skills. 2.3 Characteristics of Entrepreneurial Leadership Today, having just leadership or entrepreneurship qualities by business managers enough for success of enterprises. Managers need to have both leadership and entreprenei qualities in order to be successful. At this point, the concept of entrepreneurial leade" emerges. Entrepreneurial leadership is a new and modern type of leadership that is a combins of leadership qualities and spirit of entrepreneurship. ee bo¥ Entrepreneurship and E-Business (MU) 7_Entrepreneurship Development & Leadership Definition : Entrepreneurial Leadership According to Alvarez and Barney, “entrepreneurial leadership is a type of leadership that consists of actions towards establishment of a business at the individual level, actions towards following the innovations at the organizational level and actions towards benefiting from the opportunities that are distinguished at the market level.” Entrepreneurial leadership is a concept appeared by blending the leadership potential with entrepreneurial spirit. It is a new leadership model, In entrepreneurial leadership, the leader also has the entrepreneurial qualities, Entrepreneurship Pro-activeness Innovativeness Risk-taking = Entrepreneurial leadership | Performance | Leadership Technical Psycho-emotive Ethical Fig. 2.3.1: Entrepreneurial leadership Model Entrepreneurial leadership refers to the entrepreneur status of a leader. In other words, entrepreneurial leadership can be used for a leader who has the characteristics such as taking risks, evaluating the opportunities, being innovative, productive, interchanging and strategic. In short, entrepreneurial leadership, it is a combination of leadership and entrepreneurship. Entrepreneurial Leadership = f (Entrepreneurship + Leadership) ‘Some of the common entrepreneurial leadership characteristics are as follows : Confidence : Entrepreneurial leaders are in a situation where they are trying something new and they're not sure of success. ‘They're constantly stretching themselves and that requires confidence. Confidence is equal to or even more important than competence to succeed as a leader. FF fettawmieantW entrepreneurship and jusiness (MU) Entrepreneurship Development & Leaderst 2. Self-Awareness : Self-Awareness is essential for Entrepreneurial Leadership. Leaders wh have an understanding of their own emotions, personality, strengths and weaknesses car, better engage with employees and clients. 3. Understanding and Committing to Life Goal: sense of passion and purpose to drive themselves and inspire those around them. This help intrepreneurial leaders allow their strony them stay focused and motivates employees and partners to produce their best efforts help make ita reality 4. Risk taking nature : Entrepreneurial leader must be ready to take risk, venture into ney areas and provide strategic direction and inspiration to their team. 5. Integrity : Integrity is one of the most important qualities of entrepreneurial leadership, It) about remaining true to one’s own values and vision and standing up for what they believe in, even in the face of opposition. 6. Managing and Motivating Subordinates : Managing and motivating people is probably on: of the most important entrepreneurial leadership skills. It directly influences productivi because of its impact on staff morale 7. Developing Subordinates : Entrepreneurial leaders are committed to developing the peop: who work for them. They help employees develop their own talents and skills. They know i: essential to help employees grow, so that the business can flourish into the future 8. Team Management/Development : The cornerstone of a successful enterprise is stroz and effective teams, Entrepreneurial leaders ensure that team morale remains high. 9, Innovation, Creativity and Entrepreneurship : Entrepreneurial leaders are constant being creative and innovative to get better. 10. Vision : A successful entrepreneurial leader has a clear vision. He knows exactly where: wants to go and how to get there. They communicate their vision to the team and work w them to make the vision a reality. 11, Flexibility : Entrepreneurial leaders must be flexible and he should change with the plans! progress of work. 42. Humility : Entrepreneurial leaders should be humble: They should be looking at thems®" the mistake in the business failure. If the business is successful, it should not seen onl" own success. At the same time, employees should be aware of the success as their © success. 13, Focus : Entrepreneurial leaders should focus on business success. They should be const" their time and energy in this way. e ron ]W Entrepreneurship and E-Business (MU) 2.9 __Entrepreneurship Development & Leadership 14, Decisiveness : Entrepreneurial leaders must make better decisions that will benefit the business. 15. Ownership : Entrepreneurial leaders are the owner of its own success. They take control of external pressures. They must adopt this condition. 16. Positivity : Entrepreneurial leaders look positively these events. And they provide their employees to be positive. 17. Ability to Listen : Entrepreneurial leaders are good a listener. They listen their employees and provide feedback. 18. Perseverance : When the going gets tough, the entrepreneurial leader perseveres. True entrepreneurs simply don’t quit, they keep going till they find what they're looking for. 19. Communication skills : The leader is able to clearly articulate their ideas, and the plan to achieve common goals. They encourage communication between departments and across levels. They avoid ambiguities and generalizations, and are able to avoid conflict and misunderstanding due to poor communication. Table 2.3.1 shows difference between common managerial leadership and entrepreneurial leadership. Table 2.3.1 : Difference between common managerial leadership and entrepreneurial leadership Sr.| _ Enterpreneur Manager Entrepreneurial Leader No, 1 | Locates new ideas Maintains current | Leverages core business while exploring operations new opportunities 2 | Starts a business Implements the | Starts businesses within an ongoing business organization 3 | Opportunity driven | Resourcedriven | Capacity and opportunity driven; leverages capacities and builds new ones to expand opportunity domain 4 | Establishes and Plans, organizes, | Establishes a vision and empowers others implements a vision | staffs,controls _| to carry it out. 5 | Builds an Enhances Maintains entrepreneurial ability as organization around | efficiency of | organization grows ; ensures culture, the opportunity organization structure systems are conductive to entrepreneurship ; removes barriers fechKnouledgé7 5 Manager \ No. | | — | © | Leads and inspires | Supetvixes and Develops and guides entrepreneuriay | others Wonttors others Individual ; bridges between individuals | and groups with diverse expertise ang orientation Orchestrates change in both the organizational and competitive | environment | Crebestnates change | Maintains a he competitive: ‘consistency and ee ronment predictability 2.4 Components of Entrepreneurial Leadership Karcioglu and Yucel have conducted a study in order to identify personality characteristics o entrepreneurial leaders and suggested that there are nine dimensions of entrepreneurs] leadership. Entrepreneurial leadership must have qualities or characteristic features, These dimensions are as follows: + Being a team player + Vision . Innovation * Problem solving © Being persistent © Taking risks * Adapting to changes © Knowing the consumer needs . Decisiveness 2.5 Factors Influencing Entrepreneurial Development and Motivation es a , fe Entrepreneurship is influenced by four distinct factors: economic development, cl w technological development and education. In areas where these factors are present yo" expect to see strong and consistent entrepreneurial growth. enue og‘WD _Encrepreneurship and E-Business (MU) Entrepreneurship Development & Leadership 2.5.1 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. Three important economic factor affecting entrepreneurship growth are capital, labor, raw material and market. 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, 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 entrepreneurship. Most less developed countries are labor rich nations owing to a dense and another factor which influences the emergence of even increasing population. But entrepreneurship is encouraged if there is a mobile and flexible labor force. Row Material 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. 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. With all of the social networks, digital publications, and online groups and forums, finding and reaching a targeted market has now become easier or cheaper. TechKaawledgé