Chapter 5: Entrepreneur and Manager

Objectives
• Understand the concept and appreciate the importance of Professional Management.
• Describe and differentiate the character traits of owner manager and entrepreneur.
• Distinguish between the features of entrepreneur and professional manager.
• Outline the trait profiles for entrepreneur and administrators.
• Explain the difference between entrepreneurship and intrapreneurship.
• Discuss the social obligation of entrepreneur towards society
• Focus on the ethical and social responsibility related issues of an entrepreneur
Professional Management
What is professional management?
Professional management organizes managerial functions by setting long-term objectives, formulating
policies and strategies, developing formal communication network and evaluation system to deal with
the emergence of business problems.
The characteristics of professional management are as follows:
Body of Knowledge: Management theory has a philosophy of its own. It is based on systematic and
scientific studies.
Management Tools: Tools of management such as accounting, business law, psychology, statistics and
data processing have been developed to enhance the practical utility of the science of management.
Specialization: There is a growing tendency to select and appoint highly qualified, trained and
experienced persons to manage the business in each functional area of management. This has created
greater demand for professionals.
Separate Discipline: Management studies in many universities and institutions of higher learning are
recognized as a separate discipline. Seminars, special courses, and training programmes have become
essential in management areas like export management, personnel management, production
management, marketing management, financial management, etc.
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Professional Association: In our country too, business management association have been
formed. They mainly aim at spreading the ethics of business management and build up a sound
public image of the managerial profession.
Who is a professional manager?
“A professional manager is an individual who belongs to the profession for example law,
accountancy, medicine, engineering or architecture,
OR is a member of a recognized professional body or institutional body exercising supervisory
jurisdiction over its members,
OR is a holder of a degree or diploma in management from any recognized university and
possesses not less than five years’ experience in an executive capacity in a company, corporation
or in the government
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A professional manager is required to possess specific management knowledge relating to:

• Technical processes, products, materials, equipment and procedures

• Economic knowledge about the basic objective of the entreprize and its position in the
economic and social system within which it is operating
• Human knowledge about employee motivation, moral and delegation of authority
• Administrative knowledge about application and analysis of data.
Note: This will facilitate him to deal with various problems of the organization in an effective
manner.
Owner-Manager vs. Entrepreneur
Note: You do not have to own a firm to manage it. However, some managers do own the firms they
manage and these make up the majority of managers of small firms.
Character Traits of Owner-managers and Entrepreneurs
Owner-managers
• Need for independence
• Need for achievement
• Internal focus of control
• Ability to live with uncertainty and take measured risks
Entrepreneurs
• Opportunistic
• Innovative
• Self-confident
• Proactive and decisive with high energy
• Self-motivated
• Vision and flair
• Willingness to take greater risks and live with greater uncertainty
 Influences on Owner-Managers and Entrepreneurs

Note: All these factors influence the decision whether to start up a business and whether to
grow it. If all the factors are favorable the volume of start-ups should increase.
 Managers vs. Entrepreneurs
Any enterprise needs entrepreneurs to start the enterprise and run it. It also needs managers for
the managerial role required for running day to day operations of the enterprise.
Managers
A professional manager takes care of the general functions of running an organization such :
strategic planning,
• operation planning
• organizing the resources
• staffing
A manager is appointed by the organization and paid as per the employment contract.
The professional manager is driven by a plan to achieve the predetermined targets to build the
organization and develop it.
 Managers vs. Entrepreneurs
Entrepreneur
An entrepreneur is not a paid manager.
He is great motivator to start his new business and also manage it successfully. He is the
investor and takes risks in the enterprise.
He is an innovator and a manager and works for his satisfaction and he is happy to get
positive results.
An entrepreneur appoints a manager for carrying out some of his functions, whereas the
reverse is not true.
An entrepreneur may also perform duties of a manager in getting done his creative activities
and satisfying need of achievement.
Note: Any failure of an enterprise may be a huge loss in the career of an entrepreneur. In
case of professional managers the failures may mean little.
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 Owner Manager vs. Professional Manager
• The owner-manager assumes all business risks and stands to lose not only his capital but
reputation and prestige in the event of failure of business, whereas the professional manager
is not exposed to such risks.
• The owner-manager is identified with individuality, flair, strong motivation to achieve
success and the urge to grow while the professional manager conjures up a picture of
organizing, planning, motivating and controlling.
• The owner-manager exhibits a strong desire for independence, which he demonstrates
through the building of an organization which is not the case with a professional manager
•
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Entrepreneur vs. Administrator
Intrapreneurship
Who is an intrapreneur?
A person within a large corporation who takes direct responsibility for turning an idea into a
profitable finished product through assertive risk-taking and innovation.”
They foster organization innovation by assuming entrepreneurial roles. While entrepreneurs
are persons who start their own company, intrapreneur is a person who pursues an
entrepreneurial idea within a company.
Note: Intrapreneur is “a person similar to an entrepreneur, except that he or she develops a
new business in the context of a large organization.
Both the entrepreneur and intrapreneur are innovators and both perform the function of
organization and management. But the contexts within which the two operate and the degree
of risk they bear are different.
An intrapreneur is dependent on the organization in which he is working while an
entrepreneur doesn’t work in any confines.
Entrepreneurship involves huge amount of risk while there is no personal risk involved in
case of an intrapreneurship
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Ethics and Social Responsibilities of Entrepreneurs
Profit cannot be the sole objective of the entrepreneur. It is a means. No enterprise can last long
unless along with earning profits, it continues to fulfil its obligations to the society. The ultimate
objective of every enterprise has to be the good of the people. Business must be run by the
people through the people and for the people.
Obligations of the Entrepreneur to the Different Segments of the Society
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Employees: Employees need security of job, higher wages, full employment, better conditions
of work and opportunities for self-development and promotion. They also desire their work itself
to be rewarding and to contribute something good to the society in general.
Stockholders: An entrepreneur must provide safe, fair adequate and stable long-run rate of
return and steady capital appreciation to the shareholders for their investments. It must also
provide regular, accurate and adequate information about the working of the company.
Suppliers: Dealings with the suppliers should be based on integrity, impartiality and courtesy.
Customers: In the words of Henry Ford, an entrepreneur must provide, “those goods and
services which the society needs at a price which the society can afford to pay.” Entrepreneurial
ventures must meet the requirements of the customers of different classes, tastes and with
different purchasing power .
Government: Entrepreneurs must abide by the laws of the country in their true spirit. They must
help in the proper implementation of all social improvement policies adopted by the
Government. They must pay taxes honestly and promptly.
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Trade Associations and Competitors: An entrepreneur should develop healthy inter-business
relationships with fellow-entrepreneurs. He must adopt fair trade practices regarding prices,
quality, terms and conditions of sale and after-sales service.
Community: The entrepreneurs should manage their business with such competence and skill
that it inspires confidence and pride in the mind of the people. It must help in bringing about a
cultural, social and economic revolution in the society and lead to the economic growth of the
backward regions of the world.