UNIT-1

ENTREPRENEURSHIP

Entrepreneur – Characteristics – Types of

Entrepreneurs – Difference between
Entrepreneur and Intrapreneur – Role of
Entrepreneurship in Economic Development –
Factors Affecting Entrepreneurial Growth –
Economic, Non Economic, Government Actions.
 An Entrepreneur
A person who sets up a business or businesses,
taking on financial risks in the hope of profit.

An entrepreneur is an individual who creates a new

business, bearing most of the risks and enjoying
most of the rewards. The entrepreneur is
commonly seen as an innovator, a source of new
ideas, goods, services, and business/or procedures.
CHARACTERISTICS OF AN ENTREPRENEUR
1. Hard Work:
Willingness to work hard distinguishes a successful
entrepreneur from unsuccessful one.
 Most of the successful entrepreneurs work hard
endlessly, especially in the beginning and the same
becomes their habit for their whole life.
2. Desire for High Achievement:
The entrepreneurs have a strong desire to achieve
high goals in business. This high achievement motive
strengthens them to surmount the obstacles,
suppress anxieties, repair misfortunes, and devise
expedients and set up and run a successful business
3. Highly Optimistic:
The successful entrepreneurs have a positive
approach toward things. They do not get disturbed
by the present problems faced by them.
They become optimistic for future that the situations
will become favourable to business in future.
4. Independence:
One of the common qualities of the successful
entrepreneurs has been that they do not like to be
guided by others and to follow their rules.
They resist to be pigeonholed. They like to be
independent in the matters of their business.
5. Foresight:
The entrepreneurs have a good foresight to know
about future business environment.
In other words, they well visualize the likely changes
to take place in market, consumer attitude and taste,
technological developments, etc. and take necessary
and timely actions accordingly.
6. Good Organiser:
Various resources required for production are owned
by different owners. Then, it is the ability of the
entrepreneur who brings together all required
resources for setting up an enterprise and then
produces goods.
7. Innovative:
Production is meant to meet the customers
requirements.
In view of the changing requirements of the
customers from time to time, the entrepreneurs
initiate research and innovative activities to
produce goods to satisfy the customers' changing
requirements and demands for the products.
The research centres/ institutes established by
Tata, Birla, Kirloskar, etc., are of the innovative
examples activities taken by the entrepreneurs in
our country.
8. Perseverance:
One of the qualities of successful entrepreneurs is that they
possess and exhibit tremendous perseverance in their
pursuits.
They do not give up their effort even if they fail. They undergo
lots and lots of failures, but do not become disheartened.
9. Team Spirit:
The word "Team' refers to: T for Together, E for Everyone, A for
Achieves and M for More.
Team results in synergy. Successful entrepreneurs build teams
and work with teammates.
 In simple words, team is a group of individuals who work in a
face-to-face relationship to achieve a common goal. They
share collective accountability for the outcome of the team's
effort.
 FUNCTIONS OF AN ENTREPRENEUR
 Perception of market opportunities
 Gaining command over scarce resources
 Purchasing inputs
 Marketing the products
 Dealing with officials
 Managing human resources within the enterprise
 Managing customer and supplier relations
 Managing finance
 Managing production
 Acquiring and overseeing assembly of the factory
 Industrial engineering
 Upgrading process and Product
 Introducing new production techniques and products
 NEED FOR ENTREPRENEURS
They create immediate and large-scale employment by establishing
small scale enterprises. Thus, they reduce the unemployment problem
in the country, i.e., the root cause of all socio-economic problems.
They promote balanced regional enterprises in development by
establishing small-scale rural, remote and less developed regions.
They help reduce the concentration of economic power.
They promote the equitable redistribution of wealth, income and even
political power in the interest of the country.
They encourage effective resource mobilization of capital and skill
which might otherwise remain unutilized and idle.
They, by establishing industries, induce backward and forward linkages
which stimulate the process of economic development in the country.
Last but no means the least; they also promote country's export
business, i.e. an important ingredient to economic development .
 TYPES OF ENTREPRENEURS
Based on the Type of Business
1. Trading Entrepreneur:
As the name itself suggests, the trading entrepreneur undertake the
trading activities.
They procure the finished products from the manufacturers and sell
these to the customers directly or through a retailer These serve as
the middlemen as wholesalers, dealers, and retailers between the
manufacturers and customers.
2. Manufacturing Entrepreneur:
The manufacturing entrepreneurs manufacture products. They
identify the needs of the customers and, then, explore the
resources and technology to be used to manufacture the products
to satisfy the customers' needs.
In other words, the manufacturing entrepreneurs convert raw
materials into finished products.
3. Agricultural Entrepreneur:
The entrepreneurs who undertake agricultural pursuits are
called agricultural entrepreneurs.
They cover a wide spectrum of agricultural activities like
cultivation, marketing of agricultural produce, irrigation,
mechanization, and technology
Based on the Use of Technology
1.Technical Entrepreneur:
The entrepreneurs who establish and run science and
technology-based industries are called "technical
entrepreneurs."
Speaking alternatively, these are the entrepreneurs who make
use of science and technology in their enterprises. Expectedly,
they use new and innovative methods of production in their
enterprises.
2. Non-Technical Entrepreneur:
Based on the use of technology, the entrepreneurs who
are not technical entrepreneurs are non-technical
entrepreneurs.
They are concerned with the use of alternative and
imitative methods of marketing and distribution
strategies to make their business survive and thrive in
the competitive market.
Based on Ownership
1. Private Entrepreneur:
A private entrepreneur is one who as an individual sets
up a business enterprise.
He/she its the sole owner of the enterprise and bears the
entire risk involved in it.
2. State Entrepreneur:
When the trading or industrial venture is undertaken by the State
or the Government, it is called state entrepreneur.
3. Joint Entrepreneurs:
 When a private entrepreneur and the government jointly run a
business enterprise, it is called joint entrepreneurs.
Based on Gender
1.Men Entrepreneurs:
 When business enterprises are owned, managed, and controlled
by men, these are called men entrepreneurs.
2. Women Entrepreneurs:
Women entrepreneurs are defined as the enterprises owned and
controlled by a woman or women having a minimum financial
interest of 51 per cent of the capital and giving at least 51 per
cent of employment generated in the enterprises to women.
Based on the Size of Enterprise
1. Small Scale Entrepreneur:
An entrepreneur who has made investment in plant
and machinery up to 1.00 crore is called small-scale
entrepreneur.
2. Medium-Scale Entrepreneur:
The entrepreneur who has made investment in plant
and machinery above 1.00 crore but below 5.00 crore
is called medium-scale entrepreneur.
3. Large-Scale entrepreneur:
The entrepreneur who has made investment in plant
and machinery more than 5.00 crore is called large-
scale entrepreneur.
Based on Clarence Danhof Classification
1. Innovative entrepreneurs:
These entrepreneurs have the ability to think
newer, better and more economical ideas of
business organization and management. They are
the business leaders and contributors to the
economic development of a country.
Inventions like the introduction of a small car Nano
by Ratan Tata, making mobile phones available to
the common man by Anil Ambani are the works of
innovative entrepreneurs.
2. Imitating entrepreneurs:
These entrepreneurs are people who follow the path
shown by innovative entrepreneurs.
 They imitate innovative entrepreneurs because the
environment in which they operate is such that it does not
permit them to have creative and innovative ideas on their
own.
3. Fabian entrepreneurs:
The dictionary meaning of the term fabian is a person
seeking victory by delay rather than by a decisive battle.
Fabian entrepreneurs are those individuals who do not
show initiative in visualizing and implementing new ideas
and innovations wait for some development which would
motivate them to initiate unless there is an imminent
threat to their very existence.
4. Drone entrepreneurs:
The dictionary meaning of the term drone is a
person who lives on the labour of others.
Drone entrepreneurs are those individuals who
are satisfied with the existing mode and speed of
business activity and show no inclination in
gaining market leadership.
In other words, drone entrepreneurs are die-hard
conservatives and even ready to suffer the loss of
business.
 DIFFERENCE BETWEEN ENTREPRENEUR AND MANAGER
Nature Entrepreneur A Manager

An Entrepreneur starts a But the main aim of a manager is

GOAL venture by setting up a new to render his service to an

MANAGEMENT enterprise for his personal goal Enterprise already in exceed.

achievements.

An Entrepreneur is the owner of A manager is the employee of an

STATUS the enterprise. enterprise owned by the
Entrepreneur.
An Entrepreneur bears all risk A manager being a employee does
RISK TAKING and uncertainty involved in the not take any risk involved in the
enterprise. enterprise.
An Entrepreneur is motivated A manager receives salary as
by profit. The profit of an reward for service rendered which
REWARDS
Entrepreneur is uncertain and is fixed and regular.
irregular.
 INTRAPRENEUR
A new breed of entrepreneurs is coming to the
fore in industrial organisations. large They are
called intrapreneurs. They emerge from within the
confines of an existing enterprise.
According to Gifford Pinchot (1985), "Intrapreneur
is an entrepreneur within an already established
organization.“
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 framework of
organisation.
DIFFERENCE BETWEEN ENTREPRENEUR AND INTRAPRENEUR
BASES OF DIFFERENCE ENTREPRENEUR INTRAPRENEUR

Dependent on entrepreneur
DEPENDENCY Independent in his operation
i.e., Owner

An entrepreneur himself
Funds are not raised by the
RAISING OF FUNDS raises funds required for the intrapreneur.
enterprise.

An intrapreneur does not

Entrepreneur bears the risk
RISK fully bear the risk involved in
involved in the business. the enterprise.

OPERATION An entrepreneur operates intrapreneur operates from

from out-side. within the organisation itself.
 What is Entrepreneurship?
Entrepreneurship is the process of designing,
launching and running a new business, which
is often initially a small business.
The people who create these businesses are
called entrepreneurs.
entrepreneurship is the act of being an
entrepreneur.
Entrepreneurship is a process involving various
actions to be undertaken to establish an
enterprise. It is, thus, process of giving birth to a
new enterprise.
DIFFERENCE BETWEEN ENTREPRENEUR AND ENTREPRENEURSHIP

SL.NO Entrepreneur Entrepreneurship

1 Person Process
2 Organizer Organization
3 Innovator Innovation
4 Risk Bearer Risk Bearing
 ADVANTAGES OF ENTREPRENEURSHIP

They are their own boss

They can choose a business that interest them

They can be creative

They can make lots of money

 DISADVANTAGES OF ENTREPRENEURSHIP
Entrepreneurship is risky

Entrepreneurs face uncertain an irregular

incomes

Entrepreneurs work long hours

Entrepreneurs must make all decisions by

themselves
 BARRIERS TO ENTREPRENEURSHIP

Lack of a viable concept

Lack of market knowledge
 Lack of technical skill
 Lack of initial capital
Lack of business know how
Time Pressure and Distraction
Legal Constraints and Regulations
 ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT
 Entrepreneurship promotes capital formation by mobilising the idle
saving of the public.
 It provides immediate large-scale employment. Thus, it helps reduce
the
 unemployment problem in the country, i.e., the root of all socio-
economic problems.
 It promotes balanced regional development.
 It helps reduce the concentration of economic power.
 It stimulates the equitable redistribution of wealth, income and even
political power in the interest of the country.
 It encourages effective resource mobilisation of capital and skill which
might otherwise remain unutilized and idle.
 It also induces backward and forward linkages which stimulate the
process of economic development in the country.
 Last but no means the least, it also promotes country's export trade i.e.,
an important ingredient to economic development.
 FACTORS AFFECTING ENTREPRENURIAL GROWTH
1.Economic Factors:
(a) Capital:
 Capital is a crucial requirement while initiating an
entrepreneurial activity. it is capital which is essential to
procure land, material, machines etc.
 An entrepreneur is able to procure all the necessities of
production when adequate capital is available with them.
this, in turn, leads to entrepreneurial growth.
(b) Labour:
 To carry out successful business, inexpensive as well as
skilled labour is essential. this will increase the overall
productivity of the venture, leading to the growth and
development of the entrepreneur’s venture.
(c) Raw Materials:
Another factor affecting entrepreneurship
development is the availability of quality raw
material at affordable costs. if the raw material is
readily available and is within the manufacturing
unit’s proximity, it will help reduce the cost of
production. 
However, this problem can be solved by ensuring
a strong supply chain, but this might increase the
cost of manufacture.
(d) Market:
in simple terms, a market is a place where both
producers and customers interact. this is where actual
selling and buying takes place.
The market is the place where the future course of the
business rests. if a consumer isn’t willing to buy a
product offered by the entrepreneur, then the venture
is bound to fail.
However, if the entrepreneur’s product is able to serve
the purpose and solve the problems of the customers,
this means that the demand for the product is present
in the market. this will increase sales of the business,
which will lead to entrepreneurial growth
2. NON-ECONOMIC FACTORS
(i). Social Factors Affecting Entrepreneurial Growth
(a)Legitimacy of Entrepreneurship:
Every society formulates its own norms, rules and
regulations. these values, in turn, act as a social
environment for entrepreneurial activities.
 Therefore, the entrepreneur should always try to
work keeping in mind that the social values and
rules are complied with while fulfilling business
objectives, or earning profits through the new
idea.
(b)Social Mobility:
Social mobility is one of the social factors
affecting entrepreneurship development.
It involves social as well as geographical mobility.
it has been observed in the past that an
entrepreneurial venture has the ability to grow
more in places where the environment is flexible
and liberal.
Therefore, we observe that there are certain
regions where more entrepreneurial activity is
taking place as compared to others.
(c) Marginality:
A group of scholars hold a strong view that social
marginality also promotes entrepreneurship.
 They believe that individuals or groups on the
perimeter of a given social system or between
two social systems provide the personnel to
assume the entrepreneurial roles.
They may be drawn from religious, cultural,
ethnic, or migrant minority groups, and their
marginal social position is generally believed to
have psychological effects which make
entrepreneurship particularly attractive for them.
(d)Security:
Security to be a significant factor for
entrepreneurship development.
This is reasonable too because if individuals are
fearful of losing their economic assets or of being
subjected to various negative sanctions, they will
not be inclined to increase their insecurity by
behaving entrepreneurially.
(ii). Psychological Factors
(a)Status Respect
It has been observed that withdrawal of status
encourages the dissatisfied people belonging to
a society to opt for another unique product
option.
This creates room for entrepreneurial
development. when an individual is not content
with the present situation, then they look for
innovations. this drives entrepreneurial growth.
(b)Motivation For High Achievement
The theory of need achievement propounded by
D. McClelland states that entrepreneurial growth
or development is dependent on the need or
motivation for high achievement. he has
mentioned that it is the level of motivation that
decides whether a venture or an entrepreneur is
bound to succeed or fail.
To ensure a high level of motivation, both
employees and the entrepreneur can undergo
appropriate training. 
(iii) Political Factors Affecting Entrepreneurship
All of these factors are either directly or indirectly
impacted by government action.
The government frames policies and laws while
keeping in mind entrepreneurs, because they
understand that development of
entrepreneurship in the country will bring
significant benefits to the economy.
 GOVERNMENT ACTIONS
The Government by its actions or failure to act
also does influence both the economic and non-
economic factors for entrepreneurship. Any
interested government in economic development
can help through its clearly expressed industrial
policy; promote entrepreneurship in one way or
other.
Factors Influencing the Emergence of Entrepreneurship
THANK YOU