UNIT – I

ENTREPRENEURSHIP

Entrepreneur
Types of Entrepreneurs
Difference between Entrepreneur and
Intrapreneur
Entrepreneurship in Economic Growth
Factors Affecting Entrepreneurial Growth.
Enterprise
• An unit of economic organization or activity;
– Especially a business organization
• A systematic purposeful activity
– Agriculture is the main economic enterprise among rural
Indian people.
Entrepreneurship
• It is the act of being an entrepreneur.
Entrepreneur
• “One who undertakes innovations, finance and
business acumen* in an effort to transform
innovations into economic goods”.
* Shrewdness shown by keen insight
 Importance of entrepreneurship
1. Greater employment opportunities to
unemployed youth.
2. Increase in per capita income.
3. Higher standard of living and increased
individual saving.
4. Revenue to the government in the form of
income tax, sales tax, export duties, import
duties and balanced regional development.
 Why should you become an entrepreneur?
• You will be your own boss and boss to other people and make decisions that
are crucial to the business’ success or failure.
• You will have the chance to put your ideas into practice.
• You will make money for yourself rather than for someone else.
• You may participate in every aspect of running a business and learn and gain
experience in a variety of disciplines.
• You will have the chance to work directly with your customers.
• You will have the personal satisfaction of creating and running a successful
business.
• You will be able to work in a field or area that you really enjoy.
• You will have the chance to build retirement value
Difference between a manager and an
entrepreneur
Entrepreneur Manager
• Own boss • Salaried employee
• Takes own decisions • executes the decisions of
• Hires employees the owner
• Uncertain rewards which • he is an employee
can be unlimited • Fixed rewards and salary
 Concepts of Entrepreneurship
1. It has assumed super importance for accelerating
economic growth both in developed and developing
countries.
2. It promotes capital formation and creates wealth in
country.
3. It is hope and dreams of millions of individuals around
the world.
4. It reduces unemployment and poverty and its a pathway
to prosper.
5. It is the process of searching out opportunities in the
market place and arranging resources required to exploit
these opportunities for long term gains.
 Concept of Entrepreneurship [contd.]
6. It is the process of assuming, planning,
organizing opportunities. Thus it is a risky
business enterprise.
7. It may be distinguished as an ability to take risk
independently to make utmost earnings in the
market.
8. It is a creative and innovative skill and adapting
response to environment of what is real.
 Classifications of Entrepreneurs
1. Based on Functional Characteristics
Innovative, Imitative / adoptive, Fabian, Drone
2. Based on the Developmental Angle
Prime mover, Manager, Minor innovator, Satellite,
Local trading
3. Based on Types of Entrepreneurial Business
Manufacturing, Wholesaling, Retailing, Service
4. Based on Nine Personality Types of Entrepreneurs
The Improver, The Advisor, The Superstar, The Artist, The
Visionary, The Analyst, The Fireball, The Hero, The
Healer
5. Based on the School of Thoughts on
Entrepreneurship
Assessing personal qualities
The Great Person School of Entrepreneurship
The Psychological Characteristics School of Entrepreneurship
Recognising opportunities
The Classical School of Entrepreneurship
Acting and Managing
The Management School of Entrepreneurship
The Leadership School of Entrepreneurship
Reassessing and Adopting
The Intrapreneurship school of Entrepreneurship
 1. Based on Functional Characteristics
Innovative Entrepreneur
• New goods
• New methods of production
• Discover new markets
• Reorganise their enterprises
Entrepreneurs in this group are characterised by an
aggressive assemblage of information for trying
out a novel combination of factors.
Imitative / Adoptive Entrepreneur
• Do not innovate themselves
• But imitate techniques and technology
innovated by others
In these groups are characterised by their
readiness to adopt successful innovations by
successful entrepreneurs.
Such entrepreneurs are particularly suitable for
underdeveloped economies as adoption saves
cost of trail and error.
Fabian Entrepreneur
Such entrepreneurs display great caution and skepticism 1 in
experimenting with any change in their enterprise.
They change only when there is an imminent threat to the
very existence of their enterprise.
Drone entrepreneur
Such entrepreneurs are characterised by a die-hard2
conservatism and may even be prepared to suffer the loss
of business.

1Doubt about the truth of something

2 Tradition-bound and obstinately opinionated
 2. Based on the Developmental Angle
Prime mover
This entrepreneur sets in motion a powerful sequence of development,
expansion and diversification of business.
Manager
Such an entrepreneur does not initiate expansion and is content just staying
in business.
Minor innovator
This entrepreneur contributes to economic progress by finding better use
for existing resources.
Satellite
This entrepreneur assumes a supplier's role and slowly moves towards a
productive enterprise.
Local trading
Such an entrepreneur limits his enterprise to the local market.
 3. Based on Types of Entrepreneurial Business

Manufacturing: produces the products that can be sold

using resources and supplies
Example: apparel and other textile products, chemical
and related products, electronics and other electrical
products, industrial machinery and equipment
Wholesaling: sells products to middle man
Retailing: sells products directly to the people who use or
consume them.
Service: sells services rather than products
 4. Based on Nine Personality Types of Entrepreneurs

The complex of all the attributes--behavioral,

temperamental, emotional and mental--that
characterize a unique individual.
The Improver:
• If you are in this mode, you are focused using your
company as a means to improve the world.
• your overarching motto is: morally correct companies will
be rewarded working on a noble cause.
Personality alert : be aware of your tendency to be a
perfectionist and over-critical of employees and customers.
Ex: Anita Roddick, founder of the body shop.
The Advisor:
• This personality will provide an extremely high
level of assistance and advice to customers.
• motto is: the customer is right and we must do
everything to please them. Companies built by
advisors become customer focused.
Personality alert : advisors can become totally
focused on the needs of their business and
customers that they may ignore their own needs
and ultimately burn out.
Ex: John W. Nordstrom, founder Nordstrom.
The Superstar: the business is centered on the charisma
and high energy of the super star CEO.
Ex: Donald Trump, CEO of Trump hotels & Casino resorts
The Artist: highly creative type. Demanding creativity
such as web design and ad agencies.
The Visionary: based on future vision and thoughts.
Ex: Bill Gates, founder of Micro soft Inc.

The Analyst: focus on fixing problem in a systematic

way. Often the basis for science, engineering or
computer firms.
Ex: Intel founder, Gordon Moore.
The Fireball: A
business owned and
operated by a fireball
is full of life, energy
and optimism.
The Hero: you have an incredible will and ability to
lead the world and your business through any
challenge. You are the essence of
entrepreneurship and can assemble great
companies.
Ex: Jack Welch, CEO of GE
The Healer: you provide nurturing and harmony to
your business.
Ex: Ben Cohen, Co-Founder of Ben & Jerry’s Ice cream
company.
 INTRAPRENEUR (overview)
• Of late, a new breed of entrepreneurs is coming to the fore in large
industrial organisations. They are called “intrapreneurs”.
• They emerge from within the confines of an existing enterprise.
• In big organisations, the top executives are encouraged to catch hold of new
ideas and then convert these into products through research and
development activities within the frame work of organisation.
• The concept of intrapreneurship has become very popular in developed
countries like America.
• It is found that an increasing number of intrapreneurs is leaving their jobs in
big organisations and is starting own enterprises.
• Many of such intrapreneurs have become exceedingly successful in their
ventures.
• What is more that they are causing a threat to the organisations they left.
• Such intrapreneurs breed to the innovative entrepreneurs who inaugurate
new products.
 INTRAPRENEURSHIP
A person employed to work independently within a
company in order to introduce innovation and to
revitalize and diversify its business.
Why are entrepreneurs and intrapreneurs suddenly
more important today than before?
The world is changing nowadays more rapidly under the
influence of new technologies.
The increasing competition hinders our work.
It does not suffice anymore to stand before our
competitors simply driven by our will of competing; we
have to bring something new to the market.
 ROLE OF AN INTRAPRENEUR
Intrapreneurship represent the Initiation and
implementation of innovative systems and
practices within an organization by some of its
staff under the supervision of a manager who
takes the role of an intrapreneur, in order to
improve the economical performance of the
organization, by using a part of its resources,
namely those that previously have not been used
in an appropriate manner.
Unlike the entrepreneur, the intrapreneur acts within an
existing organization.
The intrapreneur is the revolutionary inside the
organization, who fights for change and renewal from
within the system.
This may give rise to conflicts within the organization, so
respect is the necessary key in order to channel these
conflicts and transform them into positive aspects for
the organization.
Even though intrapreneurs benefit from using the
resources of the organization for the implementation of
the emerging opportunities, there are several motives
why innovation is more difficult to implement in an
existing organization, such as
• The size: the bigger the organization the more
difficult it is to have an overview of the actions of
every employee.
• Lack of communication: Specialization and
separation, help in concentrating on the areas of
interest, but hinder communication.
• Internal competition: Internal competition
amplifies the problem because instead of sharing
the knowledge with others it borders the
knowledge sharing. Everyone wants to keep the
information for themselves.
• Feedback received in case of success/ mistake:
Costs in case of failure are too great and the reward for
a successful outcome too small.
Intrapreneurs must be allowed to commit mistakes,
because such mistakes are an inevitable part in the
entrepreneurial process.
The recognition of success is also very rare.
No company provides payment in advance for what an
entrepreneur might accomplish, but a lot of them like to
talk about the concept of intapreneurship and expected
their employees to get involved and assume their risk.
But finally, when motivated employees get involves and
have success their only reward is a small bonus.
• Dullness: Many companies are slow and
reluctant to change.
Intrapreneurs bump many times into the well
known sentence “We always did it this way”,
which leaves little or no space to creativity.
The willingness to try new things appears only
when the company's shortcomings become
apparent, but even so they don’t give room to an
innovative leadership.
 Factors Affecting Entrepreneurial Growth /
Entrepreneurial Environment
Economic
• Capital
• Labour
• Raw materials
• Market
Non Economic
• Legitimacy of entrepreneurship
• Social mobility
• Marginality
• Security
Psychological factors
• Need for Achievement
• Withdrawal of status respect
Government Actions
 Factors Affecting Entrepreneurial Growth /
Entrepreneurial Environment
(1) Economic Factor:
Economic environment exercises perhaps the most direct and immediate influence on entrepreneurship.
It has some conditions which are following below.
(a) Markets:
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.
(b) Capital:
Availability of capital help to bring together the labour at one, machine of another and raw material of
yet another to combine them to produce product.
(c) Labour:
Labour is the most important factor of economic condition of entrepreneurship. It appears that the
labour problem can’t protect entrepreneurship from emerging.
(d) Raw materials:
Without raw materials business can’t be started, because production isn’t possible.
(e) Industrial policy:
It includes rules, incentives.
(f) Fiscal policy:
It include tax, vat.
 Factors Affecting Entrepreneurial Growth
(2) Social Factors:
Social environment in a country exercises a significant impact on the
emergence of entrepreneurship. The main components at social
environment are as follows:- 
(a) Social Mobility:
It means the people of society transfers from one place to another exchange
culture, attitude etc. If mobility is positive then growth is also positive.
(b) Security:
Entrepreneurship security is an important facilitator of entrepreneurial
behavior. Insecurity doesn’t hinder entrepreneurship, but rather that
different kinds of insecurity will result in different kinds of
entrepreneurship.
(c) Legitimacy of entrepreneurship:
Illegal activities are not under business as well as entrepreneurship. High
degree of legitimacy support to start business.
 Factors Affecting Entrepreneurial Growth
(3) Political Factor:
It is also a important factor to the entrepreneur. A country’s
economic growth depends on its political factors. The political
factors are as follows:-
(a) Political stability:
(b) Political ideology of government:
Political ideology of government influences the development of
entrepreneurship. It political ideology is favorable to bus growth
then entrepreneurship takes new initiative to from business.
(c) Nature of change in political ideology:
Due to the change of government the political ideology also
changes again and again. As a result new sectors arise by
declining the previous sectors.
 Factors Affecting Entrepreneurial Growth
(4) Psychological Factor:
Many entrepreneurial theorists have propounded theories of entrepreneurship that
concentrate especially spontaneously psychological factors. These factors are following:
(a) Need for achievement:
Need for achievement motivate to enhance business tasks for success. It is psychological
power.
(b) Perception and motivation:
Eternally support entrepreneurial behavior. Especially perception and motivation with positive
forces to enter into business.
(c) Learning and personality:
More learning about business increases business efficiency. Different personality including
reformist, innovator, ret realists, retails affect business.
(5) Legal factor:
It means the country’s law and order situation. It the law order situation keep calm and quiet
the entrepreneurial growth may be high. Various types of legal factor are as follows:
    (i).    Income tax law.
    (ii).    Labor law.
    (iii).    Wage law.
 Characteristics of Entrepreneurs
1. Creativity - The ability to create
2. Innovation - The act of starting something for the first time;
introducing something new
3. Dynamism - The activeness of an energetic personality
4. Leadership - The body of people who lead a group
5. Team Building - A cooperative unit
6. Achievement Motivation
7. Problem Solving
8. Goal Orientation
9. Risk Taking
10.Decision Making
11.Commitment
 Core Competencies of Entrepreneurs
The quality of being adequately or well qualified physically
and intellectually
1. Initiate
2. Perceiving opportunities
3. Persistence
4. Information gathering
5. Concern for quality work
6. Commitment to contractual obligation
7. Efficiency oriented
8. Planning
9. Problem solving
 Core Competencies of Entrepreneurs
10.Self confidence
11.Expertise
12.Self critical
13.Persuasion
14.Use of influence strategies
15.Assertiveness
16.Monitoring
17.Credibility
18.Concern for employee welfare
19.Impersonal relationship
20.Expansion of capital base
21.Building product image.
 Myths about Entrepreneurship
1. Entrepreneurs are born not made.
2. Entrepreneurs are academic & social misfits.
3. Entrepreneurs fit an ideal profile.
4. All you need is money to be an entrepreneur.
5. All you need is luck to be an entrepreneur.
6. A great idea is the only ingredient in a recipe for business.
7. My best friend will be a great business partner.
8. Having no boss is great fun.
9. I can make lot of money.
10.I will become definitely successful.
11.Life will be much simpler if I work for myself.