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OF ENTREPRENEURSHIP
◦ Objective
◦ Introduction
◦ Theory of Entrepreneurship
Entrepreneurship: A Function of Innovation
Entrepreneurship: A Function of Group Level Pattern
Entrepreneurship: A function of Managerial Skills and Leadership
Entrepreneurship: An Organization Building Function
Entrepreneurship: A Function of High Achievement
Entrepreneurship: ‘Input-Completing’ and ‘Gap- Filling’ Function
Entrepreneurship: A Function of ‘Status Withdrawal’
Entrepreneurship: A Function of Social, Political, and Economic Structure
Entrepreneurship: A Function of Religious Beliefs
◦ Few Entrepreneurial Development Models
◦ Summary
Theobjective of the present lesson is to
discuss the theories of entrepreneurship.
The word ‘entrepreneur’ appeared in the French
language long before the emergence of the concept of
entrepreneurial function.
Richard Cantillon, an Irishman living in France, who
defined an entrepreneur as a person who buys
factor services at certain prices with a view to sell its
product at uncertain prices in the future.
Richard Cantillon conceived of an entrepreneur as a
bearer of non-insurable risk.
The ‘classic’ definition, which was to survive for
almost two centuries, was given by an aristocratic
industrialist, J.B. Say, who had unpleasant practical
experiences.
According to him an entrepreneur is the most
important agent of production who provides
continuing management and brings together the
factors of production.
J.B. Say emphasizes coordination and supervision
explicitly, there are three more implicit factors which
form the crux of entrepreneurship.
◦ Firstly, moral qualities for the work which includes
judgment, perseverance and the knowledge about the
environment within which the business is functioning.
◦ Secondly, the prospective entrepreneur should have
command over sufficient capital resources.
◦ The third factor refers to the uncertainty of profits.
Knight described entrepreneurs to be a
specialized group or persons, who bear
uncertainty; and uncertainty is defined as the
risk which cannot be calculated.
Entrepreneurship: A Function of Innovation
Joseph A. Schumpeter (1934) for the first time, put the human
agent at the centre of the process of economic development and
assigned a critical role to the entrepreneurship in his theory of
economic development.
He considered economic development as a discrete technological
change.
According to Schumpeter development is not an automatic or
spontaneous process, but it must be deliberately and actively
promoted by some agency within the system, he is the agent who
provides economic leadership that changes the initial conditions
of the economy and causes discontinuous dynamic changes.
Entrepreneurship: A Function of Innovation
A.H. Cole defines entrepreneurship as “the purposeful
activity (including an integrated sequence of decisions) of
an individual or a group of associated individuals,
undertaken to initiate, maintain or aggrandize a profit
oriented business unit for the production or distribution of
economic goods and services.”
The two definitions made by Schumpeter and Cole, differ
only in respect of the scope within which the term may be
applied.
Entrepreneurship: A Function of Group Level
Pattern
Frank W. Young was reluctant to accept the entrepreneurial
characteristic at the individual level.
According to him, instead of individual, one must find clusters which
may qualify itself as entrepreneurial groups, as the groups with higher
differentiation have the capacity to react.
He defined ‘reactiveness’ or ‘solidarity’ as the degree to which the
members of the group create, maintain and project a coherent definition
of their situation; and
‘differentiation’ is defined as the diversity, as opposed to coherence, of
the social meanings maintained by the group
Entrepreneurship: A Function of Group Level
Pattern
Young’s theory is a theory of change based on society’s
incorporation of reactive sub-group.
A group will become reactive, as per Young’s theory, when
the three conditions coincide. The conditions are
firstly, when a group experiences low status recognition,
◦ Stimulation,
◦ Identification,
◦ Development,
◦ Promotion and
◦ Follow up.
M.M.P. Akhori (1977) suggested the following cycle
for the promotion and development of
entrepreneurship:
Stimulatory,
Support, and
Sustaining activities.
K.L. Sharma (1978) describing four stages of
economic growth, namely: