UNIT 2

Understanding Entrepreneurship
Learning Objectives
 Understand the evolution of the term entrepreneur.

 Study and analyse the reasons for the current growth in entrepreneurship.

 List various factors that inspire a person to start a business.

 Explore characteristics and skills of successful entrepreneurs.

 Classify different types of entrepreneurs.

 Identify the reasons for entrepreneurial failure.

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Entrepreneur
 The word ‘entrepreneur’ is derived from the French word entreprende, which
means 'to undertake’.
 The Webster Dictionary explains that the term entrepreneur is applicable to
'one who organizes, manages, and assumes the risks of a business or
enterprise’.
 The Schumpeterian view of an entrepreneur is that of 'an innovator playing the
role of a dynamic businessman adding material growth to economic
development’.

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Role of an Entrepreneur
 An individual who assumes uncertainty associated risk

 An individual who supplies financial capital

 An individual who starts off a new venture

 A person who owns an enterprise

 An individual who allocates resources among alternative uses

 A person who employs factors of production

 An individual who is a decision maker

 A person who has leadership qualities

 A person who manages

 An individual who is an organizer and coordinator of economic resources

 An innovative person

 A person who is a contractor

 A person who is an arbitrageur

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Reasons for Growth of Entrepreneurship
 Industry Structure  
 New Technologies  
 Deregulation and Privatization  
 Formation of New Business Communities  
 Increasing Demand for Variety  
 Services Sector  
 Government Incentives and Subsidies  
 Increasing Flow of Information  
 Easier Access to Resources  
 Entrepreneurial Education  
 Return on Innovation   5
 Entrepreneurship, 3E
Rajeev Roy

© Oxford University Press 2020. All rights reserved

 Entrepreneurship, 3E
Rajeev Roy

© Oxford University Press 2020. All rights reserved

Reasons for Growth
Entrepreneurial Characteristics
of Entrepreneurship
and Skills

 Commitment and determination

 Leadership
 Opportunity obsession
 Tolerance of risk, ambiguity, and uncertainty
 Creativity, self-reliance, and ability to adapt
 Motivation to excel

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Entrepreneurial Characteristics and Skills
 Being an offspring of self-employed parents
 Being fired from more than one job
 Being an immigrant or a child of immigrants
 Previous employment in a firm with more than 100 people
 Being the eldest child in the family
 Being a college graduate

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Entrepreneurial
Why Start a Business?
Characteristics and Skills

Be your own The idea Flexibility and Money

boss work/life balance

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Advantages Disadvantages
 You are the boss.  You are alone.

 All profits are yours.  All decisions are yours.

 There will be great variety in roles  All losses are yours.

and tasks.
 Work may not be satisfying.
 Increases self-confidence.
 You will need to put in long hours.
 Work can be very satisfying.
 Lack of success will affect self-esteem.
 Success will give you immense
satisfaction.  Exiting the business is difficult.

 Pressures will affect social and family life. 11

Entrepreneurship and the Economy
 Job Creation  

 Economic Growth  

 New Technology  

 Serving Small Markets  

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Entrepreneurial Motivation

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Types of Entrepreneurs
Classification based on the timing of venture creation
 Early Starters
 Experienced
 Mature

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Types of Entrepreneurs
Classification based on socio-cultural variables
 First-generation Entrepreneurs
 Entrepreneurs from Business Families
 Minority Entrepreneurs
 Women Entrepreneurs

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Types of Entrepreneurs
Classification based on entrepreneurial activity
 Novice
 Serial Entrepreneur
 Portfolio Entrepreneur

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