ED CHAPTER 2

ENTREPRENEURSHIP- MEANING

• The word entrepreneurship originates from the French word entrependre,

which means “to undertake”.
• Entrepreneurship is the key to innovation, productivity and effective
competition.
• When a person realizes his ability or capacity and makes its practical use
and establishes new business unit this activity is known as entrepreneurship.
CONCEPT OF ENTREPRENEURSHIP
• Entrepreneurship is an innovative function. It is a leadership rather than an
ownership.
The process of innovation may be in the form of
 Introduction of a New Product
 Use of a New Method of production
 Opening of a New Market
 The conquest of New Source of supplying Raw Material
CHARACTERISTICS OF ENTREPRENEURSHIP

• Innovation
• Risk-Bearing Capacity
• Wealth Creation
• Creating & Managing Resources
• Managerial Skills & Leadership
• Gap Filling Function
• Change Agent
COMPONENTS OR ELEMENTS OF ENTREPRENEURSHIP

• Entrepreneur
• Pursuit of Opportunities
• Innovation
• Organisation Creation
• Creating Values
• Profit or Non-for- Profit
• Growth
• Uniqueness
• Process
MCCLELLAND THEORY OF NEED FOR ACHIEVEMENT

• David McClelland introduced this theory during 1960’s.

• It is based on Maslow’s hierarchy of need.
• According to him individual posses three needs which
are not innate they are learned through culture, age and
experiences
3 NEEDS

• The Need for Achievement

• The Need for Affiliation
• The Need for Power
These are the Motivators which are present in varying
degrees.
NEED OF ACHIEVEMENT
(IT IS THE DESIRE TO DO BETTER SOLVE PROBLEMS OR MASTER COMPLEX PROBLEMS)

The individuals who posses this need have following characteristics

• They are Challenging
• They like working Alone or with other Achievers
• They are self motivated
• They like feedback to assess their progress
• These individuals will perform better if money is linked with their
achievements.
NEED FOR AFFILIATION
(DESIRE FOR FRIENDLY AND WARM RELATIONSHIP WITH OTHERS)

Individual having this need have following characteristics.

• They are concerned in “being liked” and “being accepted”
• They Form Informal Relationships
• They are very cooperative
• These people perform better in Team
NEED OF POWER
(IT IS THE DESIRE TO CONTROL OTHER AND INFLUENCE THEIR BEHAVIOR)

People with this need have following characteristics.

• They Like to control others
• They are argumentative
• They have ability to influence people
• These people are suitable for leadership roles.
APPLICATION OF THIS THEORY

These are the prerequisites:

• Manager should be capable of identifying the needs of
individuals.
• Managers should motivate individuals according to their needs.
HIGH NEED OF ACHIEVEMENT

They should be given challenging but realistic projects

• They should be given a constant feedback
• For them money is not the main motivator, feedback, appreciation
and recognition is more important for them
• They must be grouped with other achievers for best performance
HIGH NEED OF AFFILIATION

• They will perform better in a Team.

• They should not be given challenging tasks, they prefer
manageable tasks.
• They should be given feedback in private rather than in
front of people.
HIGH NEED OF POWER

• These people should be provided leadership roles whenever

possible because they like to rule.
• They should be provided direct feed back as they like to know
the real situation.
• They should be motivated by offering career development
opportunities
CONCLUSION

• McClelland’s theory is very useful in helping managers

identify how they can motivate individuals to perform
better.
• According to him all individuals posses all of these
needs however one of them is more dominant.
MAX WEBER’S THEORY OF SOCIAL BELIEF

• Max Weber advocated a sociological explanation for the growth

of entrepreneurship in his theory of social belief.
• He felt that religion had a profound influence on the growth of
entrepreneurship.
• The religious belief and ethical value associated with the society
plays a vital role in determining the entrepreneurial culture.
 CONTINUE..

• Max Weber opined that the entrepreneurial energies of a society

are exogenously generated and supplied by religious believes.
Some religions profess the basic values to earn and acquire
money whereas some religions put less emphasis on it. In order
to understand the gist of Max Weber’s theory we need to
understand few fundamental points of the theory.
CONTINUE...

• In his theory spirit of capitalism is a fundamental concept.

• As economic freedom and private enterprises are promoted in
capitalism, the entrepreneurism is eulogized & entrepreneurial
pursuits are encouraged.
• Spirit of capitalism promotes the entrepreneurs to engage in
entrepreneurial pursuits and earn more and more profits.
MAJOR FINDINGS

• Weber felt that the belief systems of Hinduism didn’t

encourage entrepreneurship.
• Hinduism laid less emphasis on wealth accumulation, and
material life.
• The Hinduism didn’t profess the spirit of capitalism and was
thus an obstacle in the promotion of entrepreneurship.
 MAJOR FINDINGS

• The rate of industrial growth depends upon the values professed by the
religion of the society.
• The Protestants had advanced at a faster rate in establishing capitalism
in Europe owing to the value system professed by Protestant ethic.
• Protestant ethic granted them the rational economic attitude,
accumulating assets, and permitted them to take pleasure in the material
life.
 CRITICISM OF THE THEORY

• The theory is based on unrealistic and invalid assumptions.

• The theory has been found empirically invalid.
• Max Weber has been criticized by many sociologists on his view on Hinduism and
entrepreneurship. The rapid expansion of entrepreneurship in India in the post-independence
period disproves that Hinduism is averse to the spirit of capitalism and to adventurous spirit.
• The views on Protestant ethic were also not completely correct. Capitalism has flourished in
regions where Protestant ethic is not present.
 HAGEN THEORY OF SOCIAL CHANGE

• The theory is based on a general model of the society. His theory

viewed the entrepreneur as a trouble shooter who contributes to
economic development.
• The creativity of the entrepreneur brings about social transformation
and economic development. Economic growth is associated with the
social and political changes.
• He didn’t encourage the entrepreneurs to imitate other’s technology.
STATUS WITHDRAWAL

• The theory of social change explains status Withdrawal

i. e when members of some social groups feel that their
values and status are not respected by the society, they
turn to innovation to get the respect of the society.
According to Hagen, entrepreneurship is a function of
status withdrawal.
OUTCOME OF STATUS WITHDRAWAL

There four possible reactions to the withdrawal of status

respect which relates to four different personality types:
• (i) The retreatist – An individual who works in the society but is
indifferent to the work and position.
• (ii) The ritualist – An individual who works in the manner accepted
and approved by the society but has no hopes of improving his/her
position.
CONTINUE.....

(iii) The reformist – An individual who fights against the

injustice and tries to rebels against the established society in
order to form a new society.
• (iv) The innovator – An individual who endeavours to bring
about new changes and utilizes all opportunities. This
personality reflects the personality of an entrepreneur.
CRITICISMS

I. The theory lacks general application. It is not always

true that all the social groups have behaved in the manner
as advocated in the theory.
• II. The theory ignores the various other factors
accountable for development of entrepreneurship.
ENTREPRENEURSHIP & ECONOMIC DEVELOPMENT

• Entrepreneurship is the practice of setting up a business or setting yourself up as

self-employed.
• Entrepreneurship is the attempt to create Value through recognition of business
opportunity.
• The role of entrepreneurship motivates economic growth through innovation
and sustaining of competition among competitors. Entrepreneurship is an
important part of industrial growth and the backbone of any country for its
economic development.
ROLE OF ENTREPRENEURSHIP IN ECONOMIC
DEVELOPMENT
• Promotes Capital Formation
• Creates Large-Scale Employment Opportunities:
• Promotes Balanced Regional Development
• Reduces Concentration of Economic Power
• Wealth Creation and Distribution
• Increasing Gross National Product and Per Capita Income
CONTINUE....

• Promotes Country’s Export Trade

• Infrastructure Development
• Improvement in the Standard of Living
NARAYAN MURTHY

• Born on August 20, 1946, Mysore, Karnataka.

• Wife Sudha Kulkarni Murthy – Indian social worker and
accomplished author
• Obtained his degree in Electrical Engineering from NationalInstitute
Of Engineering, University of Mysore in 1967.Received Master‟s
Degree from IIT Kanpur in 1969..
CONTINUE...

• 1st Job at IIM Ahmedabad where he worked as Chief System

Programmer
• After that he started a company named Softronics in 1976 and
that company failed to perform well.
• Then he joined Patni Computers Systems in Pune.
• Founded Infosys in 1981 with an initial capital injection of
Rs.10,000 which was invested by his wife Mrs. Sudha Murty.
CONTINUE...

• Infosys was the 1st Indian companyto be listed on NASDAQ

• Murthy served as the founder CEO of Infosys for 21 years.
• At Infosys he articulated, designed and implemented the Global
Delivery Model which has become the foundation for the huge
success in IT services outsourcing from India