ENTREPRENEURSHIP

DEVELOPMENT
JYOTSNA
ASSISTANT PROFESSOR
 COURSE CONTENT UNIT 1
• UNIT 1
Introduction: The Emergence: Definition, Emergence of
Entrepreneurial Class; Theories of Entrepreneurship.
 INTRODUCTION
TO
ENTREPRENEURSHIP
• An entrepreneur is an individual with knowledge, skills, initiative, drive
and spirit of innovation who aims at achieving goals. An entrepreneur
identifies opportunities and seizes opportunities for economic benefits.
• Entrepreneurship is a dynamic activity which helps the entrepreneur to
bring changes in the process of production, innovation in production, new
usage of materials, creator of market etc.
 EVOLUTION
OF ENTREPRENEURSHIP

• The entrepreneurship has been around for a very long time. In the last
decade as it has resurged as if a new discovery has been made. It is an
elusive concept that cannot be defined precisely. It has been taken from
the French word “entre prendre” means “to undertake” ie the person who
undertakes the risk of new enterprise.
 MEANING
• Entrepreneurship is more than simply “starting a business”. The definition
of entrepreneurship is a process through which individuals identify
opportunities, allocate resources, and create value. This creation of value
is often through the identification of unmet needs or through the
identification of opportunities for change.
• The capacity and willingness to develop organise and manage a business
venture along with of its risks in order to make a profit. The most obvious
example of entrepreneurship is the starting of new business venture.
 CHARACTERISTICS OF
ENTREPRENEUR
• Need to achieve
• Independence
• Risk bearing
• Locus of control
• Positive self concept
• Ability to find and explore opportunities
• Hope of success
• Flexibility
• Sense of efficacy
• Openness to feedback and learning from experience
• Interpersonal skills
• Need to influence others
• Stress takers
• Innovators
• Business Communication skills
 DEFINITION
OF
ENTREPRENEUR
• According to Galbraith : “An entrepreneur must accept the challenge and should
be willing hard to achieve something.”
• Drucker’s View on Entrepreneur: An entrepreneur is the one who always searches
for change, responds to it and exploits it as an opportunity. Innovation is the
specific tool of entrepreneurs, the means by which they exploit changes as an
opportunity for a different business or different service.
• Max Weber, “Entrepreneurs are a product of particular social condition in which
they are brought up and it is the society which shapes individuals as
entrepreneurs.”
 CHARACTERISTIC OF
ENTREPRENEURSHIP
• Decision Making
• Accepting Challenges
• Risk-taking
• Building organisation
• Skillful management
• Innovation
 BARRIERS
TO
ENTREPRENEURS

• Lack of viable concept

• Lack of market knowledge
• Lack of technical skills
• Lack of capital
• Lack of business knowhow
• Legal constraints and regulations
 COMPARISON
OF ENTREPRENEUR
WITH ENTREPRENEURSHIP
Entrepreneur Entrepreneurship
It is a person It is a process
It is a risk-taker It is a risk taking activity
It is an innovator It is a process of innovation
It is a decision maker It is nothing but a decision-making activity
It is a good planner It is planning for successful performances.
It is an administrator It is the administration
It is an initiator It is taking an initiative.
 DISTINGUISH
BETWEEN
ENTREPRENEUR AND ENTERPRISE
Entrepreneur Enterprise
It is a person It is the business unit
It is a risk-taker It is the unit involving risk and uncertainty
It is a decision-maker It serves as the framework within which
decision concerning what to produce, how
much to produce, where to produce are
taken by the entrepreneur.
It procures raw materials & others It utilises the raw materials and other inputs in the process of production.

Inputs for production.

 CLASSIFICATION
OF
ENTREPRENEUR

• Innovating Entrepreneur
• Adoptive or imitative entrepreneurs
• Fabian Entrepreneurs
• Drone Entrepreneurs
 OTHER
CLASSIFICATIONS
• Industrial Entrepreneurs
• Service Entrepreneurs
• Business Entrepreneurs
• Agricultural Entrepreneurs
• Corporate Entrepreneurs
• First Generation Entrepreneurs
• Pure Entrepreneurs
• Women Entrepreneurs
• Modern Entrepreneurs
• Technical Entrepreneurs
• Professional Entrepreneurs
• Entrepreneurs by inheritance
 DISTINCTION BETWEEN
ENTREPRENEUR & INTRAPRENEUR
• Entrepreneur is independent
• It raises their funds on his own initiative.
It bears the full risk of the business
It is the real owner of the business
It operates from outside an organisation
Intrapreneur is semi-independent.
It depends upon the industry in
which he works for getting the finance.
It bears the risk of the business
which is a small part of the entire business
It is not the real owner of the business,
rather he works for the business.
s It operates from within the organization.
 FUNCTIONS
OF
ENTREPRENEURS

• IDEA GENERATION
• DETERMINATION OF OBJECTIVES
• RAISING OF FUNDS
• PROCUREMENT OF RAW MATERIALS
• PROCUREMENT OF MACHINERY
• MARKET RESEARCH
• DETERMINATION OF FORM OF ENTERPRISE
• RECRUITMENT OF MANPOWER
• IMPLEMENTATION OF THE PROJECT
 EMERGENCE
OF
ENTREPRENEURIAL CLASS

• Emergence of entrepreneurial class is as old as our ancient history itself. It dates

back to the Pre-Vedic period when Harappan culture flourished in India.
However, history of entrepreneurship and emergence of entrepreneurial class in
India may be viewed under the following periods:
• Period I:Entrepreneurship in Ancient Period
• Period II: Entrepreneurship in pre-Independence era, i.e before 1850
• Period III: Entrepreneurship between 1850-1947
• Period IV: Entrepreneurship in 1947 and onwards-post Independence period
 PERIOD I
• Ancient India-Even in 2700 BC during the Harappan civilization internal and
external trade was prevalent. Moving onto Iron age, Vedic age, Magadha
empire, Nanda dynasty and Mauryan empire trade was widespread and
overseas trade was also done.
• Medieval India (AD 700-AD 1857) trade was heavily done by the Delhi
sultanate and later on by the Mughals. Mughals used to trade with the Arab
countries, Persia and Egypt. They imported silver from Japan, horses from
West Asia and gold from East Indies. They traded with Europe and China also.
 CONTINUED…
• Indian trade prospered during the Mughal Period and Indian products were in
huge demand in Britain starting from 1600.Between 1700 and 1720,British
government revised its custom regulations twice to discourage demand of
Indian goods. This phase continued upto to 1757 when East India Company
captured parts of Bengal.
• With the arrival of the British in India trade was hit as they implemented
policies which discouraged indigenous industry. The British administrators
transported the raw material to Britain and discouraged indigenous
manufacturing to allow the British products to find a market in India.
 PERIOD II
• During pre-Independence era, agriculture was the main stay of the people
of India. It is said that besides agriculture, a class of businessmen
specialized in manufacturing of handicrafts, metal works, stone carving
and jewellery designing etc.
• Following industries were found in those period:
• Cottage Industries
• Village Industries
 CONTINUED…
• The following reasons are attributed to the slow growth of entrepreneurship in India during
this period:
1.The enterprise were not given proper protection by the British government.
2.Only those industries in which the British government put their own capital were given
encouragement.
3.The railways freight charges were higher for locations not nearer to the ports.
4.The British imposed tariffs on Indian-made goods.
5.There were almost no facilities for technical education which could alone strengthen Indian
industrial entrepreneurship.
 PERIOD III
• The mid-nineteenth century opened up the path for rapid industrialization.
With the introduction of railways in 1853 in the country, the scope of
industrial entrepreneurship had gone up. Britishers started harnessing the
natural resources of India to their own advantage simultaneously
developing the roads, railways ports and other infrastructural facilities.
• However during 1850-1947,entrepreneurship in India can be analysed in
the following manners:
 CONTINUED..
• It deliberately kept the economic development of the country in poor
shape. Despite these hurdles India entrepreneurs like Jamset Ji Tata, GD
Birla and Jamnal Bajaj started off ventures which not only encouraged
other Indian entrepreneurs but also succeeded. The Swadeshi Movement
also encouraged consumption of Indian goods and hence these industries
setting up of the First Indian Mills.
 Setting up of the
First Indian Mills
• In 1854,a parsi businessman Cowasji Dowar set up the first Cotton Textile
mill in India.
• In 1868 Jamsetji Tata set up the Tata Group.
• In 1874 Jamsetji Tata set up a cotton mill called the Empress mill in
Nagpur.
• In 1880 Wadia set up a cotton mill in Mumbai.
• In 1888,Lakshman Rao founded the Kirloskar group.
 PERIOD IV
• In the Post-independence period, the Government of India identified the need
for rapid industrialization. According to V. R. Gaikward and R.N Tripathi,
socio-economic background of the persons played a decisive role in the process
of entrepreneurship
• Thomash Timberg has traced the growth of Entrepreneurship in the context of
leading business community of Marwaris. During post-independence period,
Marwaris emerged as a big investors and industrialists from the status of petty
shopkeepers and money lenders. India adopted the mixed economic system
where both private and public sector enterprises play crucial role.
• In free India, the government itself emerged as a strong force to take up
entrepreneurial ventures by establishing new occupation and industries.
The First Industrial Policy Resolution (IPR) was announced in 1948
which provided clear-cut guidelines for industrial and entrepreneurial
development.
 Entrepreneurial Class in
Modern India Post Independence
• In 1991,Dr.Manmohan Singh brought huge economic reforms in terms of
Liberalisation. The economic focus changed from an agro based economy
to an industrialised one. With LPG (Liberalisation, Privatisation,
Globalisation ) the barriers for entrepreneurial development diminished
leading to growth of the entrepreneurial class.
• The Industrial Development and Regulation Act of 1971 was abolished in
1991.
 CONTINUED..
• On 14th August,1995 the first publically available Internet service in India
was started by VSNL (Videsh Sanchar Nigam Limited) while the
ERNET(Educational Research Network) was launched in 1986.
• In 2004 the government formulated its Broadband policy leading to
availability of high speed internet in the country and in 2010 the 4G
spectrum auction made the 4G internet available.
• On 16th January,2016 the government launched Start Up India scheme to
further support the budding entrepreneurs of the Nation.
 THEORIES OF
ENTREPRENEURSHIP
• Entrepreneurship, like many other economic concepts, has been long debated. It has been
used in various ways and in various senses. It is an elusive concept that cannot be
defined precisely. The word ‘entrepreneurship’ has been derived from a French root
which means ‘to undertake’. call it by various names, e.g, ‘risk taking’, ‘thrill seeking’,
‘innovating’, etc.
• According to Higgins, “Entrepreneurship is meant the function of seeking investment
and production opportunity, organising an enterprise to undertake a new production
process, raising capital, hiring labour, arranging the supply of raw materials, finding site,
introducing a new technique and commodities, discovering new sources of raw materials
and selecting top managers of day-to-day operations of the enterprise
 CONTINUED…
• In this definition entrepreneurship is described as the function of handling
economic activity, undertaking risk, creating something new and organising and
coordinating resources.
• At a conference on entrepreneurship in the United States, entrepreneurship was
defined as follows:
• “Entrepreneurship is the attempt to create value through recognition of business
opportunity, the management of risk-taking appropriate to the opportunity ,and
through the communicative and management skills to mobilise human, financial
and material resources necessary to bring a project to fruition.
 NATURE AND
CHARACTERISTICS OF ENTREPRENEURSHIP
• Innovation
• A function of High Achievement
• Organisation Building Function
• Gap Filling Function
• A function of Social, Political and Economic Structure
• A function of Religious Beliefs
 INNOVATION
• According to Schumpeter, entrepreneurship is a creative activity. An
entrepreneur is a creative activity. An entrepreneur is basically an
innovator who introduces something new into the economy. The
innovation may be a method of production not yet applied in the particular
branch of manufacturing or a product with which customers are not yet
familiar or a new source of raw material or a new combination of means
of production.
 A Function of
High Achievement
• Mc Clelland identifies two characteristics of entrepreneurship, namely
doing things in a new and better way and decision making under
uncertainty. He stressed the need for achievement or achievement
orientation as the most directly relevant factor for explaining economic
behaviour. This motive is defined as the tendency to strive for success in
situations involving an evaluation of one’s performance in relation to
some standard of excellence.
 Organisation
Building Function
• Entrepreneurship implies the skills to build an organisation. Organisation
building ability is the most critical skill required for industrial
development. This skill means the ability to multiply oneself by
effectively delegating responsibility to others.
 GAP FILLING
FUNCTION
• The most significant feature of entrepreneurship is gap filling. It is the job
of the entrepreneur to fill the gap or make up the deficiencies which
always exist in the knowledge about the production function.
 A CONCEPTUAL MODEL OF
ENTREPRENEURSHIP
• There are several obstacles in defining entrepreneurship clearly. First everyone, has
a personal opinion or understanding of entrepreneurship. Secondly, entrepreneurs
are viewed as the new cultural heroes. Thirdly, entrepreneurship is an abstraction,
though entrepreneurs are tangible persons .Fourthly ,well-designed and controlled
research studies on entrepreneurship are very few.
• Lastly, when it is assumed that entrepreneurship is something opposed to or
divorced from management defining entrepreneurship become difficult:
• Kao has developed a conceptual model of entrepreneurship. This model is
presented in Figure
 Schumpeter’s
Theory of Innovation
• Schumpeter’s theory of entrepreneurship is a pioneering work of
economic development. Development ,in his sense, implies that carrying
out of new combinations of entrepreneurship is basically a creative
activity.
• According to Schumpeter, an entrepreneur is one who perceives the
opportunities to innovate, i.e to carry out new combinations or enterprise.
Innovation involves problem solving and the entrepreneur is a problem
solver. In his views, the concept of new combination leading to innovation
covers the following five cases:
 CONTINUED..
• The introduction of new goods, that is the one with which consumers are not yet
familiar, of a new quality.
• The introduction of new method of production, that is yet to be tested by
experience in the branch of manufacture concerned which need, by no means, to be
founded upon a scientifically new discovery and can also exist in a new way of
handling a commodity commercially.
• The opening of new market, that is market into which the particular branch of
manufacture of the country in question has not previously entered, whether or not
this market has existed before.
 CONTINUED..
• The conquest of a new source of supply of a raw material or semi-
manufactures goods; again irrespective of whether this source already
exists or whether it has first to be created.
• The carrying out of the new organisation, of any industry like the
creation of monopoly position through fructification or breaking up of a
monopoly position.
 CONTINUED..
• The carrying out of the above-mentioned combinations, Schumpeter calls
enterprise and the individual who carries them out he calls entrepreneur. In views
of the above, Schumpeterian theory of entrepreneurship has got the following
features:
• 1.Distinction between invention and innovation
• 2.Emphasis on entrepreneurial function
• 3.Entrepreneurial dream and the will to found a private kingdom
 WALKER’S VIEWS ON
ENTREPRENEURSHIP
• Walker has considered an entrepreneur as an organiser and coordinator of
the various factors of production. According to him the true entrepreneur
is one who is endowed with above average ability for organisation and
coordination. He is a pioneer and a captain of industry. However, in
practice, entrepreneurs possess different degrees of organisational skills
and coordinating capacity. The supply of true entrepreneurs is limited. The
more competent entrepreneurs earn superior rewards in terms of profit.
 DRUCKER’S VIEW ON
ENTREPRENEURSHIP
• According to Peter Drucker, an “entrepreneur is one who always searches for
change ,responds to it, and exploits it as an opportunity”. Entrepreneurs innovate and
innovation is a specific instrument of entrepreneurship. It creates resource because there
is no such thing as a ‘resource’ until man finds a use of something and endows it with
economic value.
• J.B says defined entrepreneurship as improving the yield of resources .Drucker's defines
it as increasing the value and satisfaction obtained from resources by the consumer.
Successful entrepreneurs create new values or increase the values of what already exists.
They convert a material into a resource or combine existing resources in a new or more
productive configuration.
 Continued..
• Entrepreneurship is based on purposeful and systematic innovation. “Systematic
innovation consists in the purposeful and organised search for changes, and in the
systematic analysis of the opportunities such changes might offer for economic or social
innovation.”
• Drucker considers entrepreneurship behaviour rather than personality trait as people
with diverse personalities and temperaments have performed well in entrepreneurial
challenges. The foundation of entrepreneurship lies in concept and theory rather than in
intuition .An entrepreneur need not necessarily be a capitalist or an owner. A banker
who mobilises others money and allocates it areas of higher yield is very much as
entrepreneur though he is not the owner of the money.
 Theories
of
Entrepreneurial Supply

• The concept of entrepreneurship and its theory have been evolved over a
period of more than two centuries. There are different opinions on the
emergence of entrepreneurship. These opinions may be classified into
three categories:
• 1.The economist’s view
• 2.The sociologist’s view
• 3.The psychologist view
 ECONOMIC THEORY
• According to economists entrepreneurship and economic growth will take
place in those situations where particular economic conditions are most
favourable .G. F. Papanek and J.R Harris are the main advocates for this
theory. According to them, economic incentives are the main drive for the
entrepreneurial activities. In some cases, it is not so evident, but the
persons inner drives have always been associated with economic gains.
Therefore, these incentives and gains are regarded as the sufficient
condition for the emergence of industrial entrepreneurship.
 SOCIOLOGICAL THEORY
• Sociologists argue that entrepreneurship is most likely to emerge under a
specific social culture. According to them social, cultural values and role
expectations are responsible for the emergence of entrepreneurship. The
entrepreneur represents society’s model personality. His performance
depends upon his attitudes towards his occupation, the role expectations
of groups and the occupational requirements of the job. Society’s values
are the most important determinant of the attitudes and role expectations.
 PSYCHOLOGICAL THEORY
• According to the advocates of this theory, entrepreneurship is most likely to emerge
when a society has sufficient supply of individuals possessing particular
psychological characteristics. Schumpeter believes that entrepreneurs are primarily
motivated by an atavistic will to power, will to found a private kingdom or will to
conquer.
• Their main characteristics are:
• 1.The institutional capacity to see things in a way which afterwards proves
correct.
• 2.energy of will and mind to overcome fixed habits of though and
 CONTINUED..
• 3.the capacity to withstand social opposition
• According to McClelland it is the high need for achievement which drives
people towards entrepreneurial activities. This achievement is inculcated
through child rearing practices, which stress standards of excellence,
maternal warmth, self-reliance training and low father dominance.
Individuals with high achievement motive tend to take keen interest in
situations of high risk, desire for responsibility and a desire for a concrete
measure of task performance.