Entrepreneur, Characteristics, Types, Motivation and

Support system
Krishna Murari
Senior Faculty , HMA
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 Background
In current economic condition indicated by the reduction in GDP of many
countries in general and India in particular, specifically in last two years and
sign of a recession and high unemployment in India in comparison to last 45
years, there is more focus on entrepreneurship which can generate work for
others and improvement of society. The government of India has made
policies like Startup India and a complete waiver to income tax and other
taxes to SME so entrepreneurship can gain pace and contribute in
reduction in unemployment in a big way and also contribute in national
building.

Although, due to supportive government schemes, the startups have been

come up in with great enthusiasm in India and it has reached at third
position in the world in startups. But, the failure rate of these startups is as
high as 90% in the last five years as reported by Oxford Economics. It is a
big cause of concern for entrepreneurs as well as to the government.

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 • Entreprenueu:
The word ‘entrepreneur' is derived from the French word
‘entreprendre’which means ‘to undertake’. In the early
16th century the French men who organised and led
military expeditions were referred to as ‘entrepreneur'.
After 1700,the term was applied to other types of
adventures, mainly civil engineering like constructions of
roads etc.

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 Entrepreneur
Richard Cantillon(1755):
“Entrepreneurs work on uncertain wages, whether they establish with or
without capital.” The entrepreneurs are decision-makers and coordinators
between the producers and consumers.

Turgot (1766) :
“ The entrepreneur is the outcomes of a capitalist investment decision”.

Nicolas Baudeau (1771) :

The entrepreneur is an innovator.

Bapiste Say (1803) :

The entrepreneur is a Philosopher who finds out the new concepts and uses
them to designs new products and produces them by using the labour

(Grebel et.al, 2001). Iversen et al. (2008) found that Alfred Marshall in 1881
specified that search of opportunities for minimizing the costs is continuous
desire of an entrepreneur and he puts his efforts in that search.

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 Entrepreneur
Weber (1904-06) studied “entrepreneurship” from a sociological point of view
and considered is as “goodness of work”. He emphasized that “The
capitalistic entrepreneur has a quest for economic gain rationally, he makes
calculations based on economic criterion, extends trust through credit,
subordinate consumption in the interest of capital accumulation.
Howley (1907) :
“the entrepreneur is the motivator and uncertainty bearer who will decide what
shall be produced how much of it and by what method in order to attain his/her
own ends”.

Schumpeter (1928):
“Entrepreneur is the innovator, the individual who introduces new
combinations of production factors”.
He considered an entrepreneur as “a destroyer of the equilibrium (creative
destruction)”.

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 Entrepreneur

Knight (1921) considered an entrepreneur as a person with “knowledge of

judgment, foresight, self-confidence, managerial ability, sense of responsibility
and ability to control”.

Gilad and Levine (1986)”s Push and pull theory

Push theory supports the argument that a person is pushed to become of

entrepreneur due to external factors such as low salary, bad organizational
climate, unemployment, etc.
while pull theory emphasizes individuals’ preferences for self-fulfillment,
achievement, higher wealth generation, etc.

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 Entrepreneurs V. Intrapreneurs

• Entrepreneurs are people that notice

opportunities and take the initiative to mobilize
resources to make new goods and services.

• Intrapreneurs also notice opportunities and take

initiative to mobilize resources, however they
work in large companies and contribute to the
innovation of the firm.

• Intrapreneurs often become entrepreneurs.

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 Who are entrepreneurs?

• Common traits • Common traits

– Original thinkers – Self employed
– Risk takers parents
– Take responsibility – Firstborns
for own actions
– Between 30-50 years
– Feel competent and
old
capable
– Set high goals and – Well educated – 80%
enjoy working toward have college degree
them and 1/3 have a
graduate level
degree

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 Characteristics of Entrepreneurs

Key Personal
Attributes

Strong Managerial Successful

Competencies Entrepreneurs

Good Technical Skills

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 Key Personal Attributes

• Entrepreneurs are Made, Not Born!

– Many of these key attributes are developed early
in life, with the family environment playing an
important role
– Entrepreneurs tend to have had self employed
parents who tend to support and encourage
independence, achievement, and responsibility
– Firstborns tend to have more entrepreneurial
attributes because they receive more attention,
have to forge their own way, thus creating higher
self-confidence

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 Key Personal Attributes (cont.)
• Entrepreneurial Careers
– The idea that entrepreneurial success leads to
more entrepreneurial activity may explain why
many entrepreneurs start multiple companies over
the course of their career
– Corridor Principle- Using one business to start or
acquire others and then repeating the process
– Serial Entrepreneurs- A person who founds and
operates multiple companies during one career

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 Key Personal Attributes (cont.)
• Need for Achievement
– A person’s desire either for excellence or to
succeed in competitive situations
– High achievers take responsibility for attaining
their goals, set moderately difficult goals, and want
immediate feedback on their performance
– Success is measured in terms of what those
efforts have accomplished

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 Key Personal Attributes (cont.)

• Desire for Independence

– Entrepreneurs often seek independence from
others
– As a result, they generally aren’t motivated to
perform well in large, bureaucratic organizations
– Entrepreneurs have internal drive, are confident in
their own abilities, and possess a great deal of
self-respect

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 Key Personal Attributes (cont.)

• Self-Confidence
– Because of the high risks involved in running an
entrepreneurial organization, having an “upbeat”
and self-confident attitude is essential
– A successful track record leads to improved self-
confidence and self-esteem
– Self-confidence enables that person to be
optimistic in representing the firm to employees
and customers alike

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 Key Personal Attributes (cont.)

• Self-Sacrifice
– Essential
– Nothing worth having is free
– Success has a high price, and entrepreneurs have
to be willing to sacrifice certain things

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 Technical Skills

• Many entrepreneurs demonstrate strong technical skills,

typically bringing some related experience to their
business ventures
• For example, successful car dealers usually have lots of
technical knowledge about selling and servicing
automobiles before opening their dealerships
• Especially important in the computer industry
• NOT ALWAYS NECESSARY

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 Characteristics of Entrepreneurs
1. Calculated Risk-taker
2. Innovator
3. Organiser
4. Creative
5. Achievement Motivated
6. Technically Competent
7. Self-confident
8. Socially Responsible
9. Optimistic
10. Equipped with Capability to drive

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 Traits of Entrepreneur
• Characteristics
• Self-confidence
• Drive
• Task-result oriented
• Risk-taker
• Mental Ability
• Traits
• Confidence, Independence,
Optimism, Individuality.
• Responsibility,Vigour, Initiative,
persistence, Ambition.
• Need for achievement, Profit-
oriented, Energy.
• Risk taking ability, Likes
challenges.
• Overall intelligence(IQ),Creative
thinking, Analytical thinking
ability.

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 Traits of Entrepreneur
• Characteristics
• Leadership
• Human Relations Ability
• Originality
• Communication Ability
• Traits
• Leadership behaviour, Gets along
with others, Responsive to
situations, Criticism.
• Emotional stability, Healthy
personal relations,
Sociability, Tactfulness,
Consideration.
• Innovative, Creative, Resourceful,
knowledge.
• Perceptive, Foresight, Future
oriented.

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 Types of Entrepreneur
1. according to the type of business
i. Business entrepreneur: Business entrepreneurs are those
entrepreneurs who conceive the idea of a new product or
service and then translate their ideas into reality.
ii. Trading entrepreneur: as the very name indicates trading
entrepreneur is concerned with trading activities and not
manufacturing.
iii. Industrial entrepreneur: as the very name indicates, an
industrial entrepreneur is one who sets up an industrial unit.
iv. Corporate entrepreneur: corporate entrepreneur is the one
who plans,develops and manages a corporate body.
v. Agricultural entrepreneur: agricultural entrepreneur is the
one who is engaged in the agricultural activities.

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 Types of Entrepreneur

2. According to Motivation

i. Pure entrepreneur: Pure entrepreneur is one who may or

may not possess an aptitude for entrepreneurship but is
tempted by the monetary rewards or profits to be earned
from the business venture.
ii. Induced entrepreneur: Induced entrepreneur is attracted by
the various incentives, subsidies and facilities offered by the
government.

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 Types of Entrepreneur

3.According to the Use of Technology

i. Technical entrepreneur: The strength of a technical

entrepreneur is in his skill in production techniques. He
concentrates more on production than on marketing.
ii. Non-technical entrepreneur: Unlike technical
entrepreneur, non-technical entrepreneur is not concerned
with the technical aspect of the product rather he spends
more time in developing alternative strategies of the
marketing and distribution to promote his business.
iii. Professional entrepreneur: Professional entrepreneur
means an entrepreneur who is interested in floating a
business but does not want to manage or operate it.

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 Types of Entrepreneur

4.According to stages of Development

i. First generation entrepreneur: First generation entrepreneur are

those entrepreneur who do not possess any entrepreneurial
background.
ii. Second generation entrepreneur: Second generation
entrepreneur are those entrepreneurs who inherit the family
business firms and pass it from one generation to another.
iii. Classical entrepreneur: A classical entrepreneur is a stereotype
entrepreneur whose aim is to maximize his economic returns at a
level consistent with the survival of the unit but with or without an
element of growth.

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 Types of Entrepreneur

4.According to stages of Development

i. First generation entrepreneur: First generation entrepreneur are

those entrepreneur who do not possess any entrepreneurial
background.
ii. Second generation entrepreneur: Second generation
entrepreneur are those entrepreneurs who inherit the family
business firms and pass it from one generation to another.
iii. Classical entrepreneur: A classical entrepreneur is a stereotype
entrepreneur whose aim is to maximize his economic returns at a
level consistent with the survival of the unit but with or without an
element of growth.

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 Types of Entrepreneur

5.Classification Given by Danhof(1949)

i. Innovating entrepreneur: Innovative entrepreneurs are generally

aggressive and possess the art of cleverly putting the attractive
possibilities into practice.
ii. Imitative entrepreneurs: Imitative entrepreneurs are
characterised by readiness to adopt successful innovations
inaugurated by successful innovating entrepreneurs.
iii. Fabian entrepreneur: Fabian entrepreneurs are cautions and
skeptical in experimenting change in their enterprises. Such
entrepreneurs are shy, lazy and lethargic.
iv. Drone entrepreneur: Drone entrepreneurs are characterised by a
refusal to adopt opportunities to make changes in production
formulae even at the cost of severly reduced returns.

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 Types of Entrepreneur

6.According to Capital ownership

i. Private entrepreneur: When an individual or a group of

individuals set up an enterprise, arrange finance, bear the risk
and adopt the latest techniques in the business with the
intention to earn profits, he or the group is called as private
entrepreneur/entrepreneurs.
ii. State entrepreneur: As the name indicates, state entrepreneur
means the trading or industrial venture undertaken by the state
or the government itself.
iii. Joint entrepreneur: Joint entrepreneur means the
combination of private entrepreneur and state entrepreneur
who join hands.

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 Types of Entrepreneur

7. According to Gender and Age

i. Man entrepreneur
ii. Woman entrepreneur
iii. Young entrepreneur
iv. Old entrepreneur
v. Middle-aged entrepreneur

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 Types of Entrepreneur

8.According to Area

i. Urban entrepreneur
ii. Rural entrepreneur

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 Types of Entrepreneur

8.According to Scale

i. Large scale industry entrepreneur

ii. Medium scale industry entrepreneur
iii. Small scale industry entrepreneur
iv. Tiny industry entrepreneur

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 FUNCTIONS OF AN ENTREPRENEUR

There has been a great deal of confusion and contradiction

in literature on the functions of an entrepreneur.
FUNCTIONS
1. Innovations: J.Schumpeter has made substantial
contribution to the literature of entrepreneurship. The
process of innovations may be in the form of:
a) Introduction of a new product.
b) Use of new methods of production.
c) Opening of a new market.
d) The conquest of new source of supply of raw material.
e) A new form of organisation.

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 FUNCTIONS OF AN ENTREPRENEUR

2. Risk-taking: Richard cantillon states that entrepreneur is

an agent who buys means of production at certain prices and
sells them at uncertain prices.
The entrepreneur performs the function of reducing uncertainty
in his plan of investment and expansion of the enterprise.
J.b. Say also stresses risk-taking as the specific function of an
entrepreneur.
3. Decision Maker: Entrepreneur as a decision maker
describes the following functions of an entrepreneur.
a) The determination of objectives of an enterprise and the
change of those objectives as conditions required or made
advantageous,
b) The development of an organisation including efficient
relations with subordinates and all employees,

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 FUNCTIONS OF AN ENTREPRENEUR

c) Securing adequate financial resources and the relations

with existing and potential Investors,
d) The acquisition of efficient technological equipment and
the revision of it as new machinery appears,
e)The development of a market for the products and the
devising of new products to meet or anticipate
consumer’s demand,
f) The maintenance of good relations with public authorities
and with society at large.

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 FUNCTIONS OF AN ENTREPRENEUR

4. Organisation and Management: Marshall recognised

organisation and management of the enterprise as the
important functions of an entrepreneur.
When the organisation grows bigger, the entrepreneur
effectively delegates authority and finds responsibility at
various levels of management. The network of decision
making becomes more complex.
The functions of organisation and management includes:
a) Planning of an enterprise,
b) Co-ordination, administration and control,
c) Routine type of supervision.

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 DISTINCTION BETWEEN AN
ENTREPRENEUR AND A MANAGER
• ENTREPRENEURS • MANAGERS

1. Status: An entrepreneur 1. Status: A manager is

just an employee in the
is the owner of his enterprise.
enterprise which is owned
He makes his own investment and run by entrepreneur.
and owns his business.

2. Target: The main target 2. Target: The main goal or

of an entrepreneur is to start
his venture by setting up as a
sole-trader or firm or a
company.
motive of a manager is give
his services to an enterprise
set up by someone else i.e.
an entrepreneur.

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 DISTINCTION BETWEEN AN
ENTREPRENEUR AND A MANAGER
• ENTREPRENEURS
3. Decision making:
All of the policies and strategic
decisions, like those comprising
of expansion diversification, take-
over etc are taken by the
entrepreneur.
4.Rectification of
wrong decisions:
The wrong decisions taken by the
entrepreneur may not be
rectificable and may result in
losses or even closure of the unit.
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• MANAGERS
3. Decision making:
While all those managerial,
operational decisions which
would have impact on the
short-and medium-term results
are taken by the managers.
4. Rectification of
wrong decisions:
Whereas the wrong decisions
taken by the managers can be
amended and rectified by the
entrepreneur.
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 DISTINCTION BETWEEN AN
ENTREPRENEUR AND A MANAGER
• ENTREPRENEURS
5. Innovations: An
entrepreneur innovates and
exploits his innovation
commercially.
6. Risk bearing: An
entrepreneur being the owner of
his unit undertakes all risks and
uncertainty of running his
enterprise.
7. Skills: The skill expected from 7. Skills:
an entrepreneur is in the form of
creativity, innovation, desire for
high achievement, intuition etc.
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• MANAGERS
5. Innovations: A manager
is merely an officer or an
executive who is appointed for
the promotion of the unit.
6. Risk bearing: A manager
doesn’t bear any risk because
he is paid fixed salary.
Whereas manger
depends on public dealing
abilities and conceptual
abilities.
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 DISTINCTION BETWEEN AN
ENTREPRENEUR AND A MANAGER
• ENTREPRENEURS • MANAGERS

8. Qualification: An 8. Qualification: On the

entrepreneur doesn’t need to other hand, a manager now a
have distinct degree from a days need to possess degree
reputed university. in the stream of management
theory and practice.

9. Rewards: The reward 9. Rewards: A manager

of an entrepreneur is the profit gets his monthly salary as his
earned by him. reward for the services
rendered by him.

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 Motivation to Be An Entrepreneur
• Entrepreneurial behavior is the result of entrepreneurial
motivation.

• Motivation has been derived from the word ‘motive’ which

implies the inner state of mind that activates, provokes and
directs our behavior towards the goal.

• Motivation is a process that motivates a person into action

and induces him to follow the course of action till the goals
are finally achieved.

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 Motivation to Be An Entrepreneur
• (Vroom, 1964):
“Motivation may be a product of an individual’s
expectancy which suggests the hassle resulting in the
intended performance, the instrumentality of this
performance to realize a result and, the valence or the
desirability of this result”
• Sánchez and .Sahuquillo (2017) find, “expectancy,
instrumentality and valence enhance entrepreneurial
motivation and someone gets motivated to be
entrepreneur supported the expectation that his efforts
will lead to a particular outcome and also the attractiveness of
that outcome. The motivation plays important role in business
creation”.
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 Motivation to Be An Entrepreneur

• McClelland (1961) :
“Need for achievement, need for control, individual motives,
self-confidence, risk-taking, problem-solving skills, follow up and
feedback, and taking individual responsibility are the behavior
aspects of entrepreneurship”.

• (Ketz de Vries (1977):

“Entrepreneurial personality, developed by his/her childhood
experiences of an unhappy family, leads to a desire for
autonomy, and dislike for working along with others”

• Delmar and Davidsson (2000) bring out two new

factors leading to entrepreneurship namely over-optimism
and desire for autonomy.
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 Motivation to Be An Entrepreneur

Ajzen (1991)’s theory of planned behaviour specifies that

intention ends up in and depends on attitude (the attractiveness
of the behaviour in-turn expectation of desired outcome),
subjective norm (the perceived social support to perform a
behaviour by family, friends, mentors and role models) and
perceived behavioural control (self-evaluation of own competence
to the task or behavior).

“Learning ability of entrepreneur, deciding ability of entrepreneur,

human capital, job experience, work-related knowledge, access
to new technology, skill-mix, the potential to know the uncertainty
of technology and entrepreneurial education are the important
ingredients of high tech entrepreneurship”(Ohyama, 2011).

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 Need for achievement
Government policies

To be own boss Availability of Human

Support of resources
High Chances for success OEMs
Opportunities
Push beyond status quo Attitude towards
entrepreneur-ship
Patriotism
Entrepreneurial High
Motivation returns
Childhood dream

Role Models
Behavior-
Intention to become start/running of
Family business Subjective
high tech high tech venture
norms and
entrepreneur in Aerospace
Mentors social support
industry

Freedom to become Entrepreneur

Education -engineering/science

Work Experience in aerospace

Perceived behavioral
Motivation to
Accepting Challenges
control/Competence
Be An
Creativity/research orientation
Entrepreneur
Ability to work on cutting edge technologies

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 Skills of An Entrepreneur

Ten Essential Entrepreneurial Skills

communication organizing and planning

Risk Management teamwork

problem-solving social

technology adaptability

decision-making basic business

Section 2.2 What Does It Take to Be an Entrepreneur? 43

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 Successful and Unsuccessful
Entrepreneurs
• Successful • Unsuccessful
– Creative and – Poor Managers
Innovative
– Low work ethic
– Position themselves
in shifting or new – Inefficient
markets – Failure to plan and
– Create new products prepare
– Create new – Poor money
processes managers
– Create new delivery

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 Entrepreneurial Role Models

A role model is a common reference to individuals who set examples

to be emulated by others and who may stimulate or inspire other
individuals to make certain (career) decisions and achieve certain
goals (Shapiro et al., 1978; Basow and Howe, 1980; Wright et al.,
1997).
Therefore, role models may also enhance the desire to become an
entrepreneur and the entrepreneurial self-efficacy of individuals.
These can be
•
Parents having business
• Peer group and networks
• A region with high levels of entrepreneurship
• Icons with whom the entrepreneur is not familiar on a personal
basis, models such as Narayan Murthy or Bill Gates.
• Former employers or colleagues

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 Entrepreneurial Role Models

Individuals are attracted to role models who are perceived to be

similar in terms of their characteristics, behavior or goals (the role
aspect), and from whom they are able to learn certain abilities or
skills (the model aspect).
Identification may result
• in the formation or adaptation of an individual’s preferences (Witt,
1991)
• in imitative behavior if this is expected to be rewarding (Kagan,
1958).
• In providing someone with the motivation and inspiration to choose
a particular direction, activity or career path (Krumboltz et al.,
1976).
• In providing living evidence that certain goals are achievable.

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 Entrepreneurial Role Models
The identification of, and comparison with, role models may help
individuals define their self-concept or sense of self and enhance their
self-efficacy to engage in a certain (e.g. entrepreneurial) occupation.

Thus, role models may enhance the desire to become an

entrepreneur by providing legitimization and encouragement to turn
entrepreneurial ambitions into reality (Arenius and De Clercq, 2005;
Koellinger et al., 2007; Mueller, 2006).

In addition, role models may provide entrepreneurs with practical

support and advice as a mentor to a mentee, i.e. learning by support
(Nauta and Kokaly, 2001).

Functions of role models are “to provide learning, to provide motivation

and inspiration and to help individuals define their self-concept”.

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 Entrepreneurial Mentoring
Mentoring provides opportunities to:
• Build relationships
• Learn from mentor’s experiences
• Develop & fine tune skills
• Access to new resources for information, referrals, & support

Entrepreneurial Mentoring Results

• Improves self-awareness & confidence
• Enhances communication skills
• Develops leadership skills
• Prepares mentees to deal with the challenges of starting a
new business
• Expands personal networks
• Reenergizes employment search
• Encourages mentees to mentor others

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 THE MENTORING SKILLS MODEL

Instructing/
Acquiring Developing
Listening
Mentors Capabilities
Actively

Learning Quickly Inspiring

Building
Trust
Showing Initiative Providing
Encouraging
Corrective
Identifying Feedback
Following
Goals & Current
Through Managing
Reality
Risks
Managing the
Relationship Opening
Doors
Mentee Shred Mentor
Specific core Specific
skills skills skills
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 Institutional Support System
This institutional support system has been designed at following
four levels:
1. Central Government
2. State Government
3. Non-Government Support System
4. District Industries Centres (DIC).
• National Board for Micro, Small and Medium Enterprises
(NBMSME) 
•  National Commission for Enterprises in the Unorganised Sector
(NCEUS) 
• Small Scale Industries Board (SSIB)
• National Bank for Agriculture and Rural Development (NABARD)
• Small Industry Development Organisation
• Small Industries Service Institutes (SISI)
• Product-cum-Process Development Centre
• Regional Training Centres (RTCs)
• National Small Industries Corporation (NSIC)
• Indian Institute of Entrepreneurship (IIE)
• Small Industries Development Bank of India (SIDESI)

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 Institutional Support System

Lending Institutions (PLIs), which includes:

i. State Financial Corporation’s (SFCs),
ii. State Industrial Development Corporations (SIDCs),
iii. Scheduled Commercial Banks (SCBs) both in the public
and the private sector.
iv. State Co-operative banks,
v. Scheduled urban co-operative banks and
vi. regional rural banks SIDBI – Venture Capital Ltd.

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