1

UNIT-1
Unit -1: Entrepreneurship concept- Entrepreneurship as a Career- Entrepreneur-
Personality Characteristics of Successful. Entrepreneur- Knowledge and Skills
required for an Entrepreneur.

INTRODUCTION

The story of the Indian entrepreneurship is replete with paradoxes and surprises.
During the precolonial and colonial era, the entrepreneur was seen more as a trader-
money lender merchant, bound rigidly by caste affiliations and religious, cultural and
social forces ranging from the philosophy of Karma to the system of joint family.
Entrepreneurship as we understand it today was definitely not forthcoming from this
social segment. A number of political, economic factors too had an inhibiting effect
on the spirit of enterprise among Indians. Lack of political unity and stability, absence
of effective communication systems, existence of custom barriers and oppressive tax
policies, prevalence of innumerable currency system all these combined together to
restrict the growth of native entrepreneurship until around the third decade of the
19th century. The religious system of education and the low social esteem accorded to
business were the other potent forces that discourage the emergence of large scale
commercial ventures in the preindependence India.

The first half of the present century witnessed a gradual change in the scenario.
During this period, there was a visible tendency among the natives to take to business.
The spread of secular education, rising nationalist feelings and social reform
movements must have given a fillip to this initial phase of the emergence of
entrepreneurship. Further, the two world wars and the enormous opportunities they
created for the growth of Indian industrial ventures brought about a radical change in
the societal attitudes in favour of industrial entrepreneurship and broadened the vision
of Indian businessmen. The independent India thus could claim to have created a
conductive climate for spread of entrepreneurship. It is in this broad backdrop that the
later evolution and growth of Indian entrepreneurship has to be located.
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ENTREPRENEURSHIP IN INDEPENDENT INDIA

In a mixed economy, as India was defined by architects of this republic, with the
public sector having the definite upper hand, the role of the state becomes very
crucial. By its very nature such an economic system could not adequately focus
entrepreneurs as catalyst of economic development. The state rather assumed the role
of the major entrepreneur. Possibly and rightfully so, the overriding concern of the
newly independent country related to correcting the anomalies and distortions created
by the colonial rule.

Issues like employment generation, distributive justice and balanced regional

development thus occupied the centre stage of industrial policy making in India. The
first Industrial policy resolution of 1948 was a solid statement of the country's
philosophy of growth, the vital aspect of which was industrialization under
government regulation. Naturally neither this policy nor the subsequent ones made
any specific reference to the entrepreneur or entrepreneurship. It is interesting to note
that even the small scale sector, which later came to be known as ' the breeding
ground of indigenous entrepreneurship', has been promoted and nurtured for its
potential for addressing the larger developmental concerns. Such concerns, together
with a gradually expanding public sector had set out a framework of industrialization
where the cornerstones were controls, regulation and restrictions for the large
industries and a wide protective umbrella with special incentives and institutions for
the small ones. This was the scenario till late 1980s.

THE SMALL IS BEAUTIFUL

In spite of the domineering presence of large and medium enterprises in the economic
scene (the history of many such enterprises goes back to the preindepence era) it is the
small sector that that has always dominated the inquiries into Indian entrepreneurship.
In fact, this is quite characteristic of many of the developing countries. It is not that
the large and medium enterprises do not manifest entrepreneurship as their small
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counterparts. The reason could well be that it is in the small enterprise that the
presence of the entrepreneur, the most visible. Also in a country like India which is
vast , diverse, and less developed, small enterprises have a very definite role to play
not only by contributing towards employment and income generation, but also in
attending to the specific needs of a large proportion of customers. Their greater
visibility may also be attributable to the fact that inspite of all odds on the policy and
market fronts, several thousand s of small enterprises thrive in a large number of
production spheres. More importantly, the small scale sector has helped widen the
entrepreneurial base by giving rise to a new class of entrepreneurs from the ranks of
employees, business executive, technicians and professionals. Thus was broken the
earlier myth that entrepreneurship is an exclusive domain of the socially conservative,
traditional trading communities. In fact, in this 1960 study of small entrepreneurs in
the then State of Madras, James Bean observed that entrepreneurs could emerge from
a wide range of social and economical backgrounds.

THE GROWTH OF ENTREPRENEURSHIP IN INDIA

Through unrecognized by policy statements, entrepreneurial initiative was breaking

new grounds in the small industry scene over the past four decades banking mainly
upon the ingenuity and determination of individuals. The late sixties and early
seventies also witnessed a few sporadic attempts to create entrepreneurs from non
traditional communities with a view to breaking the monopoly of the dominant groups
and diversifying the entrepreneurial base in the country. The state of Gujarat was the
forefront of this movement.

By the late sixties it became quite evident that two resources are the most critical
(inspite of favourable policies) for development of entrepreneurship, finance (credit)
and managerial capabilities. The industrial policy exercises were woefully oblivion of
these two basic factors though there were incentives and special institutions. When
industrial development picked up in the sixties the bankers limited credit mainly to
established industrialists and merchants for existing projects with assured success and
sufficient collaterals. A study of 53 projects financed by banks and the Gujarat State
4

Financial Corporation during the period 1965-68 revealed many interesting things.
More than two thirds of institutionals loans were for diversifications and expansion of
existing enterprises. Of the new new loans, 30% were given to merchants and traders
with adequate financial resources and hence the required collateral. The entrepreneur's
financial stake stood very high in the transactions tat a debt equity ratio 1:1. Such
policies evidently were holistic to an aspiring and an otherwise competent young
entrepreneurs but without enough financial resources and tangible assets. As an
innovative alternative to the conventional banking system an Industrial Investment
Corporation was set up as a State company in Gujarat in 1968 with attractive and
unconventional credit schemes.

The task next was to identify and groom potential new entrepreneurs from a variety of
socioeconomic backgrounds. The entrepreneurship development programme with well
ell designed inputs for motivating, informing and skilling entrepreneurial individuals
was pioneered in 1970. Something started as an experiment soon spread to other parts
of the country (and now to many developing countries) and became a deeply
entrenched strategy for new enterprise creation over the years. Difficult models and
methodologies have been evolved and tasted by different organizations. Several
modifications have been carried out to suit the profile and needs of various groups of
trainees. For example, potential micro enterprises in the rural sectors by the poor,
whose ventures have only limited investment and low levels of technology must be
addressed differently from those of enterprising women whose talents and creativity
have been suppressed by age-old socio-cultural norms and practices. Both need
appropriate approaches so that they become capable of manifesting their
entrepreneurial competence.

Despite efforts made made by a host of institutions, only less than 20% of the new
entrepreneurs have access to training every year. This means that a large mass of
potential entrepreneurs are still outside the reach of training interventions.
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THE TRANSFORMING SENERIO

While training can provide the necessary skills and motivation to entrepreneurial
individuals, it is the government that should create an encouraging environment so
that creative individuals commercialize their innovative ideas. In other words, the
spirit of enterprise comes directly in contact with the 'system' at the stage of launching
a business venture. Unfortunately, enquiries among entrepreneurs time and again
reiterate the negative impact of the system on the morale of the entrepreneur and the
growth of enterprise. Unfriendly bankers, procedural delays, bureaucratic
indifferences all impede the smooth launching of enterprises. Ironically enough, the
policy imperatives with their trust on protecting the new entrepreneurs in the small
sector from the shocks of unequal market relations with the large sector, have turned
out to be the hardest stumbling blocks on their path to growth and prosperity.
Complex and burdensome regulatory and administrative environment created as a
result of excessive state intervention became the major deterrent to the emergence of
new entrepreneurship. An uncanny situation has thus been created. On the one hand
the numbers look impressive almost 15 million jobs, over two million enterprises;
around 7500 products. On the other, a good number of firms are observed to be failing
due to financial inadequacy, technological obsolescence and managerial inefficiency.
We have to sit back and take stock of the past now to see where and why we have
gone wrong in our assessment and planning.

The changing economic scenario domestically and globally warrants that this exercise
is done in right earnest without losing much time. The goals of economic policy in the
nineties and beyond appear now to be two fold: developing a viable, efficient and
internationally competitive small industry and creating an innovative, socially
responsible and liberated class of entrepreneurs who can take on the challenges that
spring up as the process of liberalization and reform progress.

With liberalization setting in, it was bound to be sooner, rather than later, that a new
business class would emerge. Never could we have predicted that Azim Premji, who
inherited a vegetable oil company, could beat traditional industrialists in becoming the
6

richest India. And that a school teacher's son, Narayana Murthy, would own the most
valued company in the country, Infosys. Such twists of fate, possible only in today's
India, were a far cry a decade ago.

Entrepreneur is an Economic Agent who plays a vital role in the economic

development of a country. Economic development of a country refers steady growth
in the income levels. This growth mainly depends on its entrepreneurs. 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. It is a mental attitude to foresee risk and uncertainty with a view to
achieve certain strong motive. It also means doing something in a new and effective

manner.

Who is an Entrepreneur?

An entrepreneur is someone who has an original idea and is able to change that idea
into a business opportunity and make it work.

One who starts his own business

One who creates a new business in the face of risk and uncertainty for the purpose of
achieving profit and growth by identifying opportunities and assembling the necessary
resources to capitalize on them

Evolution of Concept

The word entrepreneurs is derived from the French verb entreprendre. It means to
undertake it originally means that to designate an organize of musical or other
entertainments.
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Definitions

As per Peter Drucker- An entrepreneur is one who always searches for change,
responds to it as an opportunity. Entrepreneurs innovate. Innovation is a specific
instrument of entrepreneurship.

Richard Cantillon

A person who pays certain price for a product to resell it at an uncertain price thereby
making decision about obtaining and using resources while assuming the risk of
enterprise

According to J.B. Say, An Entrepreneur is the economic agent who unites all

means of production, land of one, the labour of another and the capital of yet another

and thus produces a product. By selling the product in the market the pays rent of
land, wages to labour, interest on capital and what remains is his profit. Thus an

Entrepreneur is an organizer who combines various factors of production to produce a

socially viable product.

An entrepreneur can be regarded as a person who has the initiative skill and

motivation to set up a business or enterprise of his own and who always looks for high

achievements. He is the catalyst for social change and works for the common good.

They looks for opportunities, identifies them and seizes them mainly for economic
gains.

An action oriented entrepreneur is a highly calculative individual who is always

willing to undertake risks in order to achieve their goals.

According to Joseph Schumepeter, An entrepreneur in an advanced economy

is an individual who introduces something new in the economy, a method of

production not yet tested by experience in the branch of manufacture concerned, a
product with which consumers are not yet familiar, a new source of raw material or of
new market and the like.
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Adam Smith The entrepreneur as an individual who forms an organization for

commercial purpose. He/She is proprietary capitalist, a supplier of capital and at the
same time a manager who intervenes between the labor and the consumer.

Entrepreneur is an employer, master, merchant but explicitly considered as a

capitalist

According to Cantillon An entrepreneur is the agent who buys factors of production

at certain prices in order to combine them into a product with a view to selling it at
uncertain prices in future. To conclude an entrepreneur is the person who bears risk,
unites various factors of production, to exploit the perceived opportunities in order to
evoke demand, create wealth and employment.

Oxford dictionary in 18 the director or a manager of a public musical institution,

one who gets up entertainment, especially musical performance. In it the early 16th
century entrepreneur was applied to those who were engaged in military expeditions.
In the 17th century it was considered as to cover civil engineering activities such as

construction and notification. It was only in 18th century the word entrepreneur was
used to cover economic aspects. The term entrepreneur is used in various ways and
terms.

The views are broadly classified in three ways.

Risk bearer

Organizer and

Innovator

1.Risk Bearer:

In 18th century Richard Cantillon an Irish man living in France, was first used
entrepreneur and defined as An agent who buys factors of production at certain prices
in order to combine them in to a product with a view entrepreneurs are risk bearing
agents of product.
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Knight also described entrepreneur to be a specialized group of persons who bear

uncertainty. Uncertainty can be defined as a risk which cannot be in insured against
and is incalculable.

2.As an Organizer:

Jean Baptiste says One who combines the land of one the labour of another and
capital of yet another and thus produces a product. By selling the product in the
market he pays interest on capital, rent on land wages to laborers and what remains is
his/her profit. Thus he made a clear distinction between the role of capitalist as a
financed and entrepreneurs as a organizer.

3.As an Innovator:

Joseph A Schumpeter in 1934 in his book theory of economic development he says

economic development as a discrete dynamic change brought entrepreneur by
instituting new combination of production i.e, .innovations. According to him
introduction of new product may occur in any of following five norms:

1. Introduction of new product in the market

2. The instituting of new production technology which is not yet tested by experience

in the branch of manufacture.

3. Opening of new market into which the specific product has not previously entered.

4. The discovery of new source of supply raw material

5. The carrying out of the new form of organization of any industry by creating of

monopoly position or the breaking of it. individual who ,rather than working as an

employee, runs a small business and assumes all the risk and reward of a given

business venture, idea, or good or service offered for sale. The entrepreneur is

commonly seen as a business leader and innovator of new ideas and business

processes.
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E:xamine needs, wants, and problems to see how they can improve the way needs
and wants are met and problems overcome.

N: arrow the possible opportunities to one specific "best" opportunity.

T:hink of innovative ideas and narrow them to the "best" idea.

R:esearch the opportunity and idea thoroughly.

E:nlist the best sources of advice and assistance that they can find.

P:lan their ventures and look for possible problems that might arise.

R:ank the risks and the possible rewards.

E:valuate the risks and possible rewards and make their decision to act or not to act.

N:ever hang on to an idea, no matter how much they may love it, if research shows it
won't work. E:mploy the resources necessary for the venture to succeed.

U:nderstand that they will have to work long and hard to make their venture succeed.

R:ealize a sense of accomplishment from their successful ventures and learn from
their failures to help them achieve success in the future.

Meaning of Entrepreneurship

In India, you have examples of Tatas, Birlas, Ambanis, etc. who have made valuable
contribution to the industrial development of the country. Mr. D.H. Ambani, the son
of a school teacher came from a small village of Gujarat. At the age of sixteen, he
travelled by boat to Aden to work as a clerk in a French Company. Later on he rose to
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the position of marketing manager of Burma Shell Products. In 1958, he returned to

India and started a modest import-export business.

Today, his company Reliance is one of the few Indian enterprises truly on the world
stage employing thousands of people and with a turnover of many crores of rupees.
mr. D.H. Ambani is a perfect example of an ENTREPRENEUR.

Let us now think why Mr. Ambani is an entrepreneur. An entrepreneur is a creative

thinker. He is an innovator, who volunteers to take risk and invest money. In the
process he generates jobs,solves problems, adds values and seeks excellence. This is
what Mr. Ambani did and therefore he is called an Entrepreneur.

Thus we find, entrepreneurship consists of practices and skills of a person constantly

trying for growth and excellence. This is being done by innovating an idea, object,
product or service and put it to social use. To be an entrepreneur you need to possess
some qualities. However, entrepreneurship is also referred as a career oriented
purposeful task that can be learnt. It may be noted here that, in the context of
countrys economic development, entrepreneurship is not always confined to big
business. It is equally important to have small enterprises. As a matter

of fact the economic growth and prosperity of many developed and developing
countries is because of emergence of small enterprises.

In summary,

(i) Entrepreneurship is viewed as a function involving identification and use of

opportunities which exist in the market.

(ii) Entrepreneurs bear risks in converting the ideas into action and pursuing
opportunities.

(iii) Entrepreneurship involves creative and innovative action

(iv) Entrepreneurs undertake managerial activities as part of their work.

(v) An entrepreneur constantly strives for excellence in his/her field of work.

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The Myths of Entrepreneur

Myth 1: Entrepreneurs Are Doers, NotThinkers

Myth 2: Entrepreneurs Are Born, Not Made

Myth 3: Entrepreneurs Are Always Inventors

Myth 4: Entrepreneurs Are Academic and Social Misfits

Myth 5: Entrepreneurs Must Fit the Profile

Myth 6: All Entrepreneurs Need Is Money

Myth 7: All Entrepreneurs Need Is Luck

Myth 8: Ignorance Is Bliss For Entrepreneurs

Myth 9: Entrepreneurs Seek Success But Experience High Failure Rates

Myth 10: Entrepreneurs Are Extreme Risk Takers (Gamblers)

Importance of being an entrepreneur

In entrepreneurship the individual is the most important element. Entrepreneurship is

not limited to any class, community, gender or religion. There is no age bar. Any
person who possesses certain traits and attitudes can become an entrepreneur. In the
light of the above let us see the importance of being an entrepreneur:

An entrepreneur is an independent person and has enough scope for innovation.

Entrepreneur has an opportunity for self-expression and the realisation of
ones dream by doing something new and different.
An entrepreneur makes his/her own decisions and acts on them.
Working on ones own and thus getting rewards gives immense satisfaction
and pleasure far more than what one can get in a job.
An entrepreneur generates employment for others.
An entrepreneur can make significant contributions to the development of the
country.
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An entrepreneur realises his personal goals and contributes to the welfare of

society.
Above all he/she can be an achiever, realise his/her goals and prove ones
achievements to the world.
FUNCTIONS OF ENTREPRENEURS
An entrepreneur is an opportunity seeker. He is also the organizer and
coordinator of
the agents of production. He has to execute many a good functions while
establishing a small scale enterprise. He not only perceives the business
opportunities but also
mobilizes the other resources like 5 Ms-man, money, machine, materials and
methods.
However, the main functions of the entrepreneurs are discussed further.
1. Idea generation: This is the most important function of the entrepreneur.
Idea generation can be possible through the vision, insight, observation,
experience, education, training and exposure of the entrepreneur. Idea
generation precisely implies product selection and project identification. Ideas
can be generated through environmental scanning and market survey. It is the
function of the entrepreneurs to generate as many ideas as he can for the
purpose of selecting the best business opportunities which can subsequently be
taken up by him as a commercially-viable business venture.
2. Determination of objectives: The next function of the entrepreneur is to
determine and lay down the objectives of the business, which should be spelt
out on clear terms.
In other words, entrepreneur should be very much clear about the following
things:
(i) The nature of business
(ii) The type of business
This implies whether the enterprise belongs to the category of a manufacturing
concern or a service -oriented unit or a trading business, so that the
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entrepreneurs can very well carry on the venture in accordance with the
objectives determined by him.
3. Raising of funds: Fund raising is the most important function of an
entrepreneur. All the activities of a business depend upon the finance and its
proper management. It is the responsibility of the entrepreneur to raise funds
internally as well as externally. In this matter, he should be aware of the
different sources of funds and the formalities to raise funds. He should have the
full knowledge of different government sponsored schemes such as PMRY,
SGSY, REGP, etc. by which he can get Government assistance in the form of
seed capital, fixed and working capital for his business.
4. Procurement of raw materials: Another important function of the
entrepreneur is to procure raw materials. Entrepreneur has to identify the cheap
and regular sources of supply of raw materials, which will help him to reduce
the cost of production and face the competition boldly.
5. Procurement of machinery: The next function of the entrepreneurs is to
procure the machineries and equipments for establishment of the venture.
While procuring the machineries, he should specify the following details:
(a) The details of technology
(b) Installed capacity of the machines
(c) Names of the manufacturers and suppliers
(d) Whether the machines are indigenously made or foreign made
(e) After-sales service facilities
(f) Warranty period of the machineries
All these details are to be minutely observed by the entrepreneurs.
6. Market research: The next important function of the entrepreneur is market
research and product analysis. Market research is the systematic collection of
data regarding the product which the entrepreneur wants to manufacture.
Entrepreneur has to undertake market research persistently in order to know the
details of the intending product, i.e. the demand for the product, the supply of
the product, the price of the product, the size of the customers, etc. while
starting an enterprise.
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7. Determination of form of enterprise: The function of an entrepreneur in

determining the form of enterprise is also important. Entrepreneur has to decide
the form of enterprise based upon the nature of the product, volume of
investment, nature of activities, types of product, quality of product, quality of
human resources, etc. The chief forms of ownership organizations are sole
proprietorship, partnership, Joint Stock Company and cooperative society.
Determination of ownership right is essential on the part of the entrepreneur to
acquire legal title to assets.
8. Recruitment of manpower: Entrepreneur has to perform the following
activities while undertaking this function:
(a) Estimating manpower need of the organization
(b) Laying down of selection procedure
(c) Devising scheme of compensation
(d) Laying down the rules of training and development
9. Implementation of the project: Entrepreneur has to work on the
implementation schedule or the action plan of the project. The identified
project is to be implemented in a time-bound manner. All the activities from
the conception stage to the commissioning stage are to be accomplished by him
in accordance with the implementation schedule to avoid cost and time
overrun, as well as competition. Thus, implementation of the project is an
important function of the entrepreneur.
To conclude with, all these functions of the entrepreneur can precisely be put
into the following categories:
(i) Innovation
(ii) Risk bearing
(iii) Organization and
(iv) Management
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Classification of Entrepreneurs or Types of Entrpreneurs

The entrepreneurs have been broadly classified according to,

Types of business

Use of professional skill

Motivation

Stages of development

Entrepreneurs According to Types of Business

Business entrepreneurs are those individuals for a new product or service and
then translate the same into business reality.

Tap both production and marketing resources to develop a new business

opportunity. Setup big establishment or small unit such as printing press, textile
processing house, advertising agency, readymade garments or confectionery.

Trading entrepreneur: Undertakes trading activities; concerned with marketing

(Domestic and international level)

Industrial entrepreneurs are essentially a manufacturer who identifies potential

needs of customers and products or service to meet the marketing needs. He should
have the ability to convert economic resources and technology into a profitable
venture. Undertakes manufacturing activities only; new product development etc
(textile, electronics, etc)

Corporate entrepreneur is an individual who demonstrates his innovative skill in

organizing and managing corporate undertaking.

He plans, develop and manage a corporate body. Interested in management part of

organisation; (Ambani, Tata families)

Agricultural entrepreneur are the ones who undertake agricultural activities such
as raising and marketing of crops, fertilizers and other inputs of agriculture. They
are motivated to improve agriculture through mechanization, irrigation, and
application of technologies for dry land agricultural products.
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Entrepreneurs in Technology

Technical entrepreneur is the one who is essentially a craftsman. He develops

improved quality of goods because of his craftsmanship. He concentrates more on
production than on marketing.

He demonstrates his innovative capabilities in matter of production of goods and

rendering of services.

Non- technical entrepreneur are those who are not concerned with the technical
aspects of the product in which they deal.

They are concerned only with developing alternative marketing and distribution
strategies to promote their business.

Professional entrepreneur is interested in establishing a business but does not

have interest in managing or operating it once it is established. He sells out the
running business and starts another venture with the sales proceeds. (Uses the
proceeds from sale of one business to start another one. Brimming with ideas to
start new ventures)

Arthur H. Cole Classification:

Empirical: He is an entrepreneur hardly introduces anything revolutionary and

follows the principle of rule of thumb.

Rational: The rational entrepreneur is well informed about the general economic
conditions and introduces changes which look more revolutionary.

Cognitive: Cognitive entrepreneur is well informed, draws upon the advice and
services of experts and introduces changes that reflect complete break from the
existing scheme of enterprise.

Entrepreneur and Motivation

An entrepreneur is motivated to achieve or prove his excellence in job

performance. He influences others by demonstrating his business acumen.
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Pure entrepreneur is an individual who is motivated by psychological and

economic rewards. He undertakes entrepreneurial activity for his personal
satisfaction in work, ego and status.

Induced entrepreneur is one who is induced to take up an entrepreneurial task due

to policy measures of the government that provides assistance, incentives, and
concessions and other facilities to start a venture. Enter business due to financial,
technical and other facilities provided to them by the state agencies to promote
entrepreneurship.

Motivated entrepreneur: they come into being because of the challenge involved
in developing and marketing a new product for the satisfaction of consumers. If the
product succeeds, the entrepreneur is further motivated for launching of newer
products.

Entrepreneur and Stages of Development

First generation entrepreneur is the one who starts an industrial unit by his
innovative skill. He is the one who combines different technologies to produce a
marketable product or services.

Modern entrepreneur is one who undertakes those ventures which go well with
the changing demand in the market. He undertakes those ventures that suit the
current market needs

Classical entrepreneur is one who is concerned with maximizing the economic

returns at consistent level. He is concerned more about the survival of the firm
with or without an element of growth. Apart from the above, there are
entrepreneurs who can be classified into innovative and imitative categories.

Classification on the Basis of Ownership:

1.Private: Private entrepreneur is motivated by profit and it would not enter those
sectors of the economy in which prospects of monetary rewards are not very
bright.

2. Public: In the underdeveloped countries government will take the initiative to

share enterprises.
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Classification Based on the Scale of Enterprise:

1. Small scale: This classification is especially popular in the underdeveloped

countries. Small entrepreneurs do not posses the necessary talents and

resources to initiate large scale production and introduce revolutionary
technological changes.

2. Large scale: In the developed countries most entrepreneurs deal with large

scale enterprises. They posses the financial and necessary enterprise to initiate
and introduce new technical changes. The result is the developed countries are
able to sustain and develop a high level of technical progress.

Clarence Danhof, have classified the entrepreneurs as follows:

1.Innovating Entrepreneurs:

An innovating entrepreneur is one who introduces new goods, inaugurates new

method of production, discovers new market and reorganizes the enterprise.

2.Imitative Entrepreneurs:

These are characterized by readiness to adopt successful innovations

inaugurated by innovating entrepreneurs. Imitative entrepreneurs do not
innovate the changes themselves, they only imitate techniques and technology
innovated by others.

3.Fabian Entrepreneurs:

Fabian entrepreneurs are characterized by very great caution and skeptic in

experimenting any change in their enterprises. They imitate only when it
becomes perfectly clear that failure to do so would result in a loss of the
relative position in the enterprise.

4.Drone Entrepreneurs:

These are characterized by a refusal to adopt opportunities to make changes in

production formulae even at the cost of severely reduced returns relative to
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other like producers. Such entrepreneurs may even suffer from losses but they
are not ready to make changes in their existing production methods.

Following are some more types of entrepreneurs listed by some other behavioral
scientists:

i.Solo operators:

These are the entrepreneurs who essentially work alone and it needed at all,
employ a few employees. In the beginning most of entrepreneurs start their
enterprise like them.

ii.Active partners:

Active partners are those entrepreneurs who start/carry on an enterprise as a

joint venture. It is important that all of them actively participate in the
operations of the business.

iii.Inventors:

Such entrepreneurs with their competence and inventiveness invent new

products. Their basic interest lies in research and innovative activities.

iv.Buyers:

These are those entrepreneurs who do not like to bear much risk. Hence, in
order to reduce risk involved in setting up a new enterprise, they like to buy the
ongoing one.

v.Lifetimers:

These entrepreneurs take business as an integral part of their life. Usually, the
family enterprise and businesses which mainly depend on exercise of personal
skill fall in this type/category of entrepreneurs.
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Distinction between an Entrepreneur and a Professional Manager:
Points Entrepreneur
Motive The main motive of an
entrepreneur is to start a venture by
setting up of an enterprise. He
standards the venture for his personal
gratification.
Functions The major functions of an
entrepreneur are risk bearing,
organizing and innovation.
Status An entrepreneur is the owner of the
enterprise
Risk bearing An entrepreneur being the owner of
the enterprise assumes all the risks
and uncertainty involved in running
the enterprise
Rewards The reward of the entrepreneur is
profit which is highly uncertain.
Innovation Innovation Entrepreneur himself
thinks over what and how to produce
goods to meet the changing demands
of the customers. Hence, he acts as
an innovator also called a change
agent.
Qualification An entrepreneur needs to possess
qualities and qualifications like high
achievement motive, originality in
thinking, foresight, and risk bearing
ability and so on.
Decision All policy and strategic decisions
making. such as expansion, diversification,
take-over, amalgamations, mergers,
reorganization, capital budgeting,
pricing, credit granting etc. are taken
by the entrepreneur
Manager
Here, the motive of manager is
to render his services in an
enterprise already set up by
entrepreneur
The major functions of a
manager are planning,
organizing, staffing, directing,
controlling and other such
managerial functions.
A manager is the servant in the
enterprise owned by the
entrepreneur.
A manager as a servant does not
bear any risk involved in the
enterprise.
A manager gets salary as
reward for the services rendered
by him in the enterprise. The
salary is certain and fixed
A manager simply executes the
plans prepared by the
entrepreneur. Thus, a
manager simply translates the
entrepreneurs ideas into
practice.
A manager needs to posses
distinct qualifications in terms
of sound knowledge in
management theory and
practice.
All the managerial and
operational decisions relating to
day to day activities of he
business of the firm are taken
by the manager.
22

Difference between Trader and Entrepreneur

TRADER
A trader is not always an entrepreneur
Involve in buying and selling
Always work out to gain profit
Not interested in new technology
evolvement and new changes
Selling common stuff
Competition is a common challenge
Focus on daily matter
Short term profit oriented
ENTREPRENEUR
An entrepreneur also a trader
Involve in creating new product
Besides profit, also considered about
satisfaction and successful
Always alert and follow any new changes
and technologies
Introduce new products
Competition is a challenge that needs further
details
Farsighted and try to improve in the future
Long term profit oriented

ENTREPRENEURSHIP
Entrepreneurship is an attitude of mind, which calls for

calculated confidence to achieve a pre-determined business objective. It

is the risk taking ability of the individual combined with correct
decision-making. Entrepreneurship is an exercise or process
undertaken by an entrepreneur to increase his business enterprise. It
involves innovation and creativity.

The concept of entrepreneurship is highly elusive and it is defined

differently by different authors. Some mean entrepreneurship as risk
bearing others view it as "innovating" and yet others consider it thrill
seeking. Some of the important definitions are narrated below for
understanding of the meaning of entrepreneurship.

DEFINITIONS:

a) As per Schumpeter "Entrepreneurship is based on purposeful,

systematic innovation. It included not only the independent man but also
company directors and managers, who actually carry out innovative
functions".
23

b) According to A.H.Cole "Entrepreneurship is the purposeful of an

individual or a group of associated individuals; undertaken to initiate,
maintain or aggrandise profit by production or distribution of economic
goods and services".

c) At a conference on Entrepreneurship held in United States the term

Entrepreneurship was defined as "an 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".

d) According to Diamond, entrepreneurship is equivalent to which

involves the willingness to assume risks in undertaking an economic
activity particularly a new one. It may involve or may not involve an
innovation but it always involves risk taking and decision-making,
although neither risk nor decision-making may be of great significance.

In general, entrepreneurship refers to the functions performed by an

entrepreneur in establishing an enterprise. Entrepreneurship is the act of
being an entrepreneur. In a nutshell, the process of giving birth to a new
enterprise is called entrepreneurship. The basic elements involved in
entrepreneurship are innovation and risk bearing.

THE CONCEPT OF ENTREPRENEURSHIP

The term entrepreneurship is often used synonymously with the term Entrepreneur

though, they are two sides of the same coin, conceptually they are different.
Entrepreneurship is the indivisible process flourishes, when the interlinked dimensions
of individual psychological entrepreneurship, entrepreneur traits, social
encouragement, business opportunities, Government policies, availability of plenty of

resources and opportunities coverage towards the common good, development of the

society and economy.

24

Entrepreneurship is the process of identifying opportunities in the market place,

arranging the resources required to pursue these opportunities and investing the
resources to exploit the opportunities for long term gains. It involves creating wealth
by bringing together resources in new ways to start and operate an enterprise.
According to Cole Entrepreneurship is the purposeful activity of an individual or

a group of associated individuals undertaken to initiate, maintain and aggrandize profit

by production or distribution of economic goods and services.

According to Higgins Entrepreneurship is meant the function of foreseeing

investment and production opportunities, organizing an enterprise to undertake a new

production process, raising capital, hiring labour, arranging the supply of raw
materials, finding site, introducing a new technique, discovering new resources or raw
materials and selecting top managers for day to day operations of the enterprise. The
above definitions highlights risk bearing, innovating and resource organizing aspects
and an individual or group of people achieve goal through production or distribution
of products or services. To conclude entrepreneurship is set of activities performed by
an entrepreneur thus, entrepreneur proceeds entrepreneurship.

Entrepreneur Entrepreneurship Enterprise

Person Process of action Object

Entrepreneur and Entrepreneurship

The process undertaken by an entrepreneur to augment his business interests gave

birth to ENTREPRENEURSHIP.

The entrepreneurship is the elusive concept. Many others defined it in many ways
such as risk bearing, innovating, and thrill seeking.

Lets see some definitions.

In the opinion of A. H Cole: Entrepreneurship is the purposeful activity of an

individual or a group of associated individuals, undertaken to initiate, maintain or
25

aggrandize profit by production or distribution of economic goods and services.

Entrepreneurship is the process undertaken by an entrepreneur to augment his

business interests. It is an exercise involving and creativity that will go towards
establishing hi/her enterprise.

Relationship between Entrepreneur and the Entrepreneurship

Entrepreneur Entrepreneurship

Person Process

Organizer Organization

Risk-bearer Risk bearing

Motivator Motivation

Creator Creation

Visualiser Visualisation

Leader leadership

Imitator Imitation

Factors Influencing Entrepreneurship

The definition of entrepreneurship is clearly defining that how an entrepreneur

establish their enterprise with such a superb quality of willingness and to convert it in
success. There are various definitions which emphasize at the factors which influence
the entrepreneurs and entrepreneurship.

These factors could be classified as.

i) Individual factors (Desire to do something new,Educational background,

Occupational Background)

ii. Environmental Factors ( Political and Legal, Economical,Technological, Social

and Cultural Factors(Family Background,Friends, Relatives and Teachers, Religions)
26

iii. Support Systems (The support systems for developing entrepreneurs, government
has taken certain steps)

INTRAPRENEUR

Meaning

A new breed of entrepreneurs is coming to the fore in large industrial organizations.

They are called intrapreneurs. They emerge from within the confines of an existing
enterprise. In big organizations, the top executives area encouraged to catch hold of
new ideas and then convert these into products through research and development

activities within the framework of organization. The concept of Intrapreneurship has

become very popular in developed countries like America.

It was Gifford Pinchot III, an American Management expert, who used the term
intrapreneur for the first time in 1983. A person within a large corporation who takes
direct responsibility for turning an idea into a profitable finished product through
assertive risk taking and innovation .

Intrapreneurs have entrepreneurial skills blended with managerial skills but operate
within the confines of an organization. "Intrapreneurship refers to employee initiatives
in organizations to undertake something new, without being asked to do so". This
Intrapreneur focuses on innovation and creativity and who transforms a dream or an
idea into a profitable venture, by operating within the organizational environment.
Thus, Intrapreneurs are inside entrepreneurs who follow the goal of the organization
27

Differences between Entrepreneur and Intrapreneur

Points Entrepreneur Intrapreneur

Ownership entrepreneur is the owner of the An intrapreneur is an

organization employee of the enterprise

Status An entrepreneur is independent in An intrapreneur is dependent

his status on his employer or owner

Raising of an entrepreneur raises the An intrapreneur does not raise

capital: required capital for his business the capital

Risk An entrepreneur bears the risk An intrapreneur does not bear

involved in his business
Operations. An entrepreneur operates in his
business from outside
Guarantee of An entrepreneur gives guarantee
payment of payment of money to the
lenders
any risk involved in his
business
An intrapreneur operates from
within his business
organization
An intrapreneur does not
required to do so

Convention of An entrepreneur converts his new An intrapreneur has only to

new ideas ideas or high intrapreneurs ideas create his new ideas but he
into reality cannot convert them on his
own account

Importance of Entrepreneurship in Economic Develoment

The importance of entrepreneurship to any economy is like that of entrepreneurship in

any community. Entrepreneurial activity and the resultant financial gain are always of
benefit to a country. If you have entrepreneurial skills then you will recognize a

genuine opportunity when you come across one.

28

Now the reasons why entrepreneurship holds a dominant position in the society? The
following reasons are responsible for the same:

1) Provides employment to huge mass of people:

People often hold a view that all those who do not get employed anywhere jump into
entrepreneurship, a real contrast to this is that 76% of establishments of new business
in the year 2012 were due to an aspiration to chase openings. This emphasizes the fact
that entrepreneurship is not at all an encumbrance to an economy. Whats more is that
approximately 34 million of fresh employment opportunities were created by
entrepreneurs from the period of 1980.

This data makes it clear that entrepreneurship heads nation towards better
opportunities, which is a significant input to an economy.

2) Contributed towards research and development system:

Almost 2/3% of all innovations are due to the entrepreneurs.Without the boom of
inventions the world would have been a much dry place to live in. Inventions provide
an easier way of getting things done through better and standardized technology.

3) Creates wealth for nation and for individuals as well:

All individuals who search business opportunities usually, create wealth by entering
into entrepreneurship. The wealth created by the same play a considerable role in the
development of nation. The business as well as the entrepreneur contributes in some
or other way to the economy, may be in the form of products or services or boosting

the GDP rates or tax contributions. Their ideas, thoughts, and inventions are also a
great help to the nation.

4) Sky scraping heights of apparent prospects:

The individual gets maximum scope for growth and opportunity if he enters into
entrepreneurship. He not only earns, the right term would be he learns while he earns.
This is a real motivating factor for any entrepreneur as the knowledge and skills he
develops while owning his enterprise are his assets for life time which usually,
29

lacks when a person is under employment. The individual goes through a grooming
process when he becomes an entrepreneur. In this way it not only benefits him but
also the economy as a whole.

5) It is a challenging opportunity for the people:

Although entrepreneurship is a challenging task but in most of the cases the rewards it
gives are much more than what one anticipates. It does not only reward an
entrepreneur at financial levels but also on individual level. It provides self
satisfaction to the entrepreneur.

6) Entrepreneurship provides self sufficiency:

The entrepreneur not only become self sufficient but also provide great standards of
living to its employees. It provides opportunity to a number of people working in the
organization. The basic factors which become a cause of happiness may be liberty,

monetary rewards, and the feeling of contentment that one gets after doing the job.
Therefore the contribution of entrepreneurs makes the economy an improved place to
live in.

Role of entrepreneurship in economic development:

No Entrepreneur No development zin kin

Economic development means the process of upward change; thereby the real per
capita income of a country increases over a period of time. Entrepreneurship plays a
very important role in economic development. It serves as a catalyst in the process of
industrialization and economic growth.

According to Joseph Scum peter the rate of economic progress of a nation depends
upon its rate of innovation which intern depends upon the distribution of
entrepreneurial talent in the population

1. Capital formation:

Entrepreneurs encourage or mobilize the idle savings of the public through the issue
of various securities like equity shares, preference shares, public deposits, debentures,
30

etc. Even in case of sole proprietary concerns an entrepreneur helps in capital

formation by way of using ones own and others idle funds. High rate of the over all

economic growth

2.Generation of employment:

Entrepreneurs create employment both directly and indirectly. It is not always possible
for the government to provide employment to eligible individuals. It is the industries
and business houses, which generate employment opportunities. An entrepreneurial

venture creates employment, not only for the entrepreneur but for a few others also.
Apart from the direct employment, thus created indirect employment is also
encouraged because of backward and forward linkages.

3. Improvement in per capita income:

They help to increase the gross national product [GNP] and the per capita income,
which is an important yard stick for measuring economic development.

4. Important in standard of living:

Entrepreneurial activities result in creation of income and wealth for the entrepreneur
family and at the same time such ventures remove the scarcity for commodities by
way of introducing innovative products and services.

5. Economic independence;

Entrepreneurs help in the manufacture of indigenous substitutes for certain imports,

thereby encouraging economic independence.

6. Balanced regional development:

By encouraging people to take up entrepreneurial ventures for lively hood brings

about a balanced regional development specially when such ventures are set-up in
economically backward regions. The government offers a member of incentives to
entrepreneurs establishing ventures in remote and backward regions.
31

7. Backward and forward linkages:

An industries establishment has various backward, forward linkages. Ex:

Establishment of steel plant generators several ancillary units and expands the demand
for iron ore and coal. This is a backward linkage.

At the same time the plant encourages the growth of the machine, building,
manufacture of tools and implements and such other units, which make use of an
increase supply of steel. This is a forward linkage. Therefore entrepreneurial activities
initiate change and create a chain reaction with several links.

WOMEN ENTREPRENEUR IN INDIA:

The Indian sociological set up has been traditionally a male dominate done.
Women are considered as weaker sex and always .to depend on men folk in their
family and outside, throughout their life. They are left with lesser commitments and
kept as a dormant force for a quite long time. The Indian culture made them only
subordinates and executors of the decisions made by other male members, in the basic
family structure. The traditional set up is changing in the modern era. The
transformation of social fabric of the Indian society, in terms of increased educational
status of women and varied aspirations for better living, necessitated a change in the
life style of Indian women. Indian families do have the privilege of being envied by
the westerners, since women here are taking more responsibilities in bringing up
children and maintaining a better home with love and affection. At the family level,
the task of coordinating various activities in a much effective manner, without feeling
the pinch of inconveniences, is being carried out by the women folk.

Thus, the Indian women have basic characters in themselves in the present
sociological and cultural setup as follows.

Indian women are considered as Sakthi, which means source of power.

Effectively coordinating the available factors and resources.

Efficient execution of decisions imposed on them

Clear vision and ambition on the improvement of family and children.

32

Patience and bearing the sufferings on behalf of others and

Ability to work physically more at any age.

NEED OF THE HOUR: Women sector occupies nearly 45% of the Indian
population. The literary and educational status of women improved considerably
during the past few decades. More and more higher educational and research
institutions are imparting knowledge and specialisation. At this juncture, effective
steps are needed to provide entrepreneurial awareness, orientation and skill
development programmes to women. The institutions available at present are very
limited. Moreover, their functions and opportunities available with them are not
popularised much.

Factors affecting Entrepreneurship growth:

1. Economic factors

2. Social factors

3. Cultural factors

4. Personality factors

5. Psychological and sociological factors.

Economic Factors:
Lack of adequate basic facilities
Non- availability of capital
Non- availability of raw materials and finished goods.
Greater risk involved in business
Non- availability of skilled labour

Social factors
Customs and traditions
Rationality of the society
Social system
Social set-up
33

Personality Factors
Suspect personality
Emergence of planning

Entrepreneurship as a Career.

ENTREPRENEURSHIP AS A CAREER

Small - scale enterprises means the enterprises with less capital

investment and more labour absorption, less technology oriented,
using local resources, catering to local regional demands. In the small
enterprises same person performs various roles simultaneously as an
owner, a capitalist, an organiser, a manger, a labourer and what not. A
person organises, who manages and takes risks involved in running a
business enterprise is commonly called an "entrepreneur".

This means there are as many entrepreneurs as are small

enterprises. Increasing number of small enterprises means

Increasing number of persons assuming the entrepreneurial

career. More the small enterprise development, more will be
opportunities for entrepreneurial career and vice versa:

India is not a country of employment jobs but a country of

endless enterprise opportunities. There are not one million jobs but ten
million work opportunities.

An opportunity is identified and an enterprise established so that

the person who carries out all the operations is self-employed, earns
some income or profit. The whole activity is termed as entrepreneurship
and entrepreneurs are also self-employed.

In general there are two career options for a person. They are
wage or salary employment and entrepreneurial employment. In salary
employment, people are employed in government service, public and
private sector and earn a fixed salary or wage. Under entrepreneurial
34

employment people set up their new enterprises. The distinguishing

features between the wage or salary employment and entrepreneurial
employment are shown below.

Wage or Salary Entrepreneurial

Employment Employment

1. Nature Selfsaturating. Once Self-generating

availed, it blocks the Has a chain of activities
employment opportunity and create unending
to others or another thirty employment
years. opportunities.
2.Orientation of Routine type of Creative
Job work Problem solving
Problem avoiding Independent
Dependent on the Decisions
employer. Innovative
Status Quo
3. Earning Fixed (Subsistence) Growing (Generating
Surplus)

4. Contribution Consumes National Generates National

Wealth wealth

Entrepreneurship Versus Self Employment

The terms Entrepreneurship, Self Employment and Income
Generation are often used interchangeably. Entrepreneurship refers to
identification of innovative ideas and setting up of a new enterprise.
Whereas, self-employment refers to full time involvement in one's
own occupation. There may or may not be bearing of risk;
mobilisation of inputs, organisation of production and marketing of
the product or service. On the other hand, income generating
activities are part time, casual and practised for raising additional
income. All entrepreneurs are self-employed and income generating
persons. But all self-employed and income generating persons may
not be entrepreneurs. However the terms Entrepreneurship, Self
35

Employment, and Income Generating Activities can be considered as

initial, middle and final stages of Entrepreneurial Growth Process.

In general, increasing number of small enterprises means

increasing number of persons assuming entrepreneurial career. In
1991, Government of India announced a separate Industrial Policy for
small-scale industry. This policy lays more thrust on SSI development
through innovative schemes for improving competitiveness in the
liberalized economic environment. It infers inter alia , more chances
for enterprising persons to assume the entrepreneurial career. Thus,
small scale enterprise serve as seedbed for the emergence of
entrepreneurial career in the country.

Positive aspects of entrepreneurship

Being the boss if his own business, he enjoys unlimited powers. He can do
things in his own way and he need not take orders from someone else. He can
make his own decisions and act on them.

There are numerous opportunities for his self- development.

Working on ones own and thus getting rewards yields immense satisfaction
and pleasure for more than what he can get in a job.

Monetary rewards can be more than commensurate with his capacity and
capabilities.

He can command deference and respect of his immediate family and friends. It
is a kind of intangible reward.

Instead of depending on others, he generates employment for others.

He can make significant contribution to the development of the country and be

proud of taking part in nation building activities.

He can be a great achiever realising his goals and proving his achievements to
the world. He can be recognised for his outstanding efforts.
36

Negative aspects

Though an entrepreneur is his own boss, in some respects he is not. It is so

because he is constrained by various people like his financiers, labourers,
suppliers, customers and so on.

He may have to face frustration since the scope of his operations is limited by
his limited resources.

He has to work long and hard hours from morning to dusk and his venture
tends to absorb all his energy and time. This may affect his social and family
life.

At times he may have to face disappointments and frustrations since everything

in his venture may not always work the way he would like it to.

He has to always work with tension since there is always the risk of failure.

CHARACTERISTICS OF ENTREPRENEUR

Entrepreneur is a key figure in economic progress. He is the person who introduces

new things in the economy. He is considered as the business leader and not as simple
owner of capital. He is a person with telescopic faculty, drive and talent who perceives
business opportunities and promptly seizes them for exploitation. M.M.P. Akhouri,
formerly Executive Director, National Institute for Entrepreneurship and Small
Business Development (NIESBUD), New Delhi, describes entrepreneur as a
character who combines innovativeness, readiness to take risk, sensing opportunities,
identifying and mobilizing potential resources, concerns for excellence and who is
persistent in achieving the goal. To be successful, an entrepreneur should have the
following characteristic features.

1. Need to achieve: Entrepreneurs have got strong desire to achieve higher goals.
Their inner self motivates their behaviour towards high achievement: most of the
people dream of success but do not take any action towards achieving these dreams.
37

Entrepreneurs with high n-Ach factor act continuously to achieve the goal and make
their dreams come true. For them, winning is achievement.

2. Independence: Most of the entrepreneurs start on their own because they dislike
towork for others. They prefer to be their own boss and want to be responsible for
their own decisions.

3. Risk-bearing: Entrepreneurs are the persons who take decisions under uncertainty
and thus they are willing to take risk, but they never gamble with the results. They
choose moderate risk rather than play wild gamble. They, therefore, undertake
calculated risk which is high enough to be exciting, but with a fairly reasonable
chance to win.

4. Locus of control: According to Rotters locus of control theory, an individual

perceives the outcome of an event as being either within or beyond his personal
control.

Entrepreneurs believe in their own ability to control the consequences of their

endeavour by influencing their socio-economic environment rather than leave
everything to luck.

5. Perseverance: Entrepreneur has got the quality of sticking to job he decides to

undertake. Once committed to a specific goal and course of action, entrepreneurs
become absorbed to it. They personally solve the problems that come across their way
while setting up the project. They also work sincerely until the whole project is
successfully implemented.

6. Positive self-concept: Entrepreneurs are always positive in their action. Being an

achiever, he directs his fantasies and dreams towards achievement of worthwhile goals
and sets extraordinary standard of excellence in what he is doing. This is based upon
his awareness of SWOT analysis, i.e. his strengths, weaknesses, opportunities and
threats. He utilizes his positive knowledge to support his thinking. He never exhibits
any negative attitude.

7. Ability to find and explore opportunities: Entrepreneurs are always alert to

opportunities. They are very much quick to see and grab opportunities. They exhibit
38

an innovative turn of mind and convert the problems into viable opportunities. They
plan intellectually and anticipate carefully how to achieve their goals in realizing an
opportunity.

8. Hope of success: Hope of success is a significant quality of entrepreneurial

personality. Entrepreneurs set their goals with a hope of success rather than fear of
failure. This is because they set their goals on the basis of facts and their ability to
maneuver them to their advantage.

9. Flexibility: Most of the successful entrepreneurs measure the pros and cons of a
decision and tend to change if the situation demands. They never feel reluctant to
revise their decisions. They are the persons with open mind without rigidity.

10. Analytical ability of mind: Entrepreneurs are unaffected by personal likes and
dislikes. They stand beyond these types of prejudices as they are realistic in their
approach. At the time of their need they select experts rather than friends and relatives
to assist them. They usually avoid emotional and sensitive attitude towards their
business or problem.

11. Sense of efficacy: Entrepreneurs are always oriented towards action for
accomplishment of their goals. Being confident of their abilities, they find themselves
as problem solvers rather than problem avoiders. They chalk out their goals for future
and make planning to achieve them.

12. Openness to feedback and learning from experience: Successful entrepreneurs

like to have immediate feedback of their performance. They modify their plans on the

basis of the feedback they receive from the environment around them. They learn
from their experience and never get discouraged having received unfavorable
information.

On the contrary, they are stimulated by unfavorable information to involve themselves

sincerely in their own tasks to reach their desired goals.

13. Confronting uncertainty: Successful entrepreneurs are always optimistic and

take every odd as the opportunity. They maneuver their environment in such a way
that the works get accomplished rationally. Thus, they win by the application of their
39

extraordinary insight and skill.

14. Interpersonal skills: Entrepreneurs are always comfortable while dealing with
people at all levels. They interact with raw material suppliers, customers, bankers,
etc.. for different activities. As successful entrepreneurs, they should be persons who
like working with others possessing the much needed quality of interpersonal skill to
deal with people.

15. Need to influence others: Once the entrepreneurs set their goals, they have to
play the roles of manager too. For influencing others (n Power), a low need to
establish emotional relationship (low n Affiliation), and a high need to discipline
ones own self (to inhibit over expression of their personality) are essential.

16. Stress takers: Entrepreneurs are capable of working for long hours and solving

different complexities at the same time. As the captain of an industry or an enterprise,

an entrepreneur faces a number of problems and in right moment he takes right

decisions which may involve physical as well as mental stress. He can face these
challenges if he has the capability to work for long hours and keep himself cool under

monotony.

17. Time orientation: Entrepreneurs anticipate future trends basing upon their past

experience and exposure. They stick to the time pragmatically while doing their jobs.

18. Innovators: Successful entrepreneurs are innovators. They constantly put their

efforts in introducing new products, new method of production, opening new markets

and recognizing the enterprise.

19. Business communication skill: In order to motivate others in the business

entrepreneurs must possess good communication skill. Both written and oral
communication skills are necessary for the entrepreneurs for running enterprise
efficiently.

20. Telescopic faculty: Successful entrepreneurs always tend to think ahead. They

have got telescopic faculties which make them think for the future. Future orientation
40

makes them quite alert to the changing conditions of the time and they tend to produce

goods and commodities as per the changing demands.

21. Leadership: Entrepreneurs should possess the quality of leadership. Leadership

is the ability to exert interpersonal influence by means of communication towards the

achievement of goals. Entrepreneurs as the leaders should provide the necessary spark
to motivation by guiding, inspiring, assisting and directing the members of the group
for achievement of unity of action, efforts and purpose. Hence, entrepreneurs by their
own leadership styles and behaviour reduce the problems by proper handling of
situations. Good administrative work depends upon effective leadership of the
entrepreneur.

22. Business planning: Planning implies deciding in advance what, when and how to

do a thing. Entrepreneurs should be equipped with skill and knowledge to prepare

their business plan. A successful entrepreneur always follows the principles of
management while planning for his business. The planning can act as a bridge
between the present position and expected future shape of the enterprise. It provides a
sense of vision to the entrepreneurs to cope with risky and uncertain situation.

23. Decision making: Decision-making skill is a fundamental characteristic of an

entrepreneur. This implies the function of choosing a particular course of action at

every stage of creation of an enterprise out of several alternative courses for the

purpose of achieving specified goals. Hence, decision making is necessary at all times

and mostly at conditions of uncertainty and risk.

24. Ability to mobilize resources: Entrepreneurs must have the ability to marshal all

the inputs to obtain the end product. They have to mobilize 6Ms, i.e. Man, Money,

Material, Machinery, Market and Method effectively to realize the final product as

entrepreneurship is a function of gap filling and input completing.

41

25. Self-confidence: Entrepreneurs must have self-confidence to accomplish the task

effectively and efficiently. They must take decisions on their own in uncertain and
risky situation and should stick to it confidently even if there occurs initial setbacks.

Entrepreneurial competencies (or Qualities, or Traits)

A competence is an underlying characteristic of persons, which results in effective and

/or superior performance in a job. A job competence is an underlying characteristics of
a person, in that it may be motive ,traits, skills ,aspect of ones self-image a body of
knowledge ,set of skills and cluster of appropriate motives/ traits that an individual
possess to perform a given task.

The knowledge of entrepreneurial competence has been sharpened over the last 3
decades. The following is a list of major competencies that contribute towards top
performance.

1. Initiative:

Takes action that goes beyond job requirements or the of the situation.

Does things before being asked or forced to by events.

Acts to extend the business into new areas, products, or service.

2. Sees and acts on opportinities:

Looks for and action on opportunities. sees and acts on opportunities (business,
educational or personal growth).

Seizes unusual opportunities to obtain financing equipment, land, work space or

assistance.

3. Persistence:

Takes repeated action to overcome obstacles that get in the way of reaching goals.

Takes repeated or different action to overcome obstacle.

Takes action in the face of a significant obstacle.

42

4 Information seeking:

Takes action on own to get information to help reach objectives or clarify problems.

Does personal research on how to provide a product or service.

Consults experts for business or technical advice.

5. Concern for quality of works:

Acts to do things that meet or beat existing standards of excellence.

States a desire to produce work of high quality.

Compares own work or own companys work favorably to that of others.

6. Commitment to work contract:

Acts to do things that place the highest priority on getting a job completed.

Accepts full responsibility for problems in completing a job for others.

Pitches in with workers or works in their place to get the job done.

Expresses a concern for satisfying the customer.

7. Efficiency orientation :

Finds ways to do things faster or with fewer resources or at alower cost.

Looks for or finds ways to do things faster or at less cost

Uses information or business tools to improve efficiency.

Expresses concern about costs .

Benefits of some improvements, change, or course of action.

8. Systematic planning:

Develops and uses logical ,step-by-step plans to reach goals.

Plans by breaking a large task down into sub-tasks.

Develops plans that anticipate obstacles.

Evaluates alternatives.

Takes a logical and systematic approach to activities.

43

9. Problem solving:

Identifies new and potentially ideas to reach goals.

Switches to an alternative strategy to reach a goal.

Generates new ideas or innovative solutions.

10. Self-confidence:

Has a strong belief in self and own abilities

Expresses confidence is own ability to complete a task or meet a challenge.

Sticks to own judgment in the face of opposition or rarely lack of success.

Does something that he says is risky.

11. Assertiveness:

Confronts problems and issues with others directly.

Tells others what they have to do .

Reprimands or disciplines those failing to perform as expected.

12. Use of influence strategies:

Uses a variety of strategies to influence others. acts to develop business contacts.

Uses influential people as agents to accomplish own objectives. Selectively limits

the information given to others.

13.Monitoring:

Develops or uses procedures to ensure that work is completed or that work gets
standards or quality.

Personally supervises all aspects of a project.

14. Concern for employee welfare:

Takes action to improve the welfare of employees.

Takes positive action in response to employees personal concerns.

Express concern about the welfare of employees.

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SKILLS AND KNOWLEDGE REQUIRED FOR ENTREPRENEUR

SKILLS : An ability and capacity acquired through deliberate , systematic, and

sustained effort to smoothly and adaptively carryout complex activities or job
functions involving ideas (cognitive skills), things ( technical skills), and /or people (
interpersonal skills)

Knowledge: is a familiarity, awareness or understanding of someone or something,

such as facts, information, descriptions, or skills, which is acquired
through experience or education by perceiving, discovering, or learning. Knowledge
can refer to a theoretical or practical understanding of a subject. It can be implicit (as
with practical skill or expertise) or explicit (as with the theoretical understanding of a
subject); it can be more or less formal or systematic.
The skills required by an entrepreneurs can be classified into three main areas.

a) Technical skills.
b) Business Management skills.
c) Personal Entrepreneurial skills.
a) Technical skills
Writing
Oral communication
Monitoring Environment
Techical Business Management
Technology
Interpersonal
Listening
Ability to organize
Network building
Management Style
Coaching
Being a team player
b) Business Management skills.
Planning and goal setting
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Decision making
Human relations
Marketing
Finance
Accounting
Management
Control
Negotiation
Venture launch
Managing Growth
c) Personal Entrepreneurial skills.
Inner control Disciplined
Risk taker
Innovative
Change oriented
Persistent
Visionary Leader
Ability to manage change

Drawbacks of Entrepreneurship

Uncertainty of income

Risk of losing your entire investment

Long hours and hard work

Lower quality of life until the business gets established

_ High levels of stress

_ Complete responsibility

_ Discouragement
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Ten Deadly Mistakes of Entrepreneurs

1. Management mistakes

2. Lack of experience

3. Poor financial control

4. Weak marketing efforts

5. Failure to develop a strategic plan

6. Uncontrolled growth

7. Poor location

8. Improper inventory control

9. Incorrect pricing

10. Inability to make the entrepreneurial transition