DEPARTMENT OF COMMERCE AND BUSINESS MANAGEMENT

INTEGRAL UNIVERSITY, LUCKNOW

Session 2023-24

MBA, Final Year

UNIT-1 BM -517 PART B

Factors affecting Entrepreneurship, Concept of intrapreneurship, Entrepreneur v/s

Managers, Types of Entrepreneurs, Functions of Entrepreneurs, Entrepreneurial decision
process
Difference between Entrepreneur & Intrapreneur
Criteria Entrepreneur Intrapreneur
DEPENDENCY He is independent in his operation. He is dependent on the owner.
RAISING OF He himself raises funds required for the Funds are not raised by
FUNDS organization. intrapreneur.
STATUS Owner Executive (Top, Middle)
RISK Risk bearer. Does not bear any risk.

NOTE: If intrapreneur gets an opportunity, he will try to become entrepreneur with his knowledge and work
experience. Therefore, an enterprise always tries to keep intrapreneurs happy, prosperous and satisfied.

Difference between Entrepreneur and Manager

Criteria Entrepreneur Manager
Investors start a new venture while setting Manager renders his service in an
MOTIVE up an enterprise. enterprise set up by any other person
entrepreneur.
STATUS He is the owner of the enterprise. He is the servant of the enterprise.
Being the owner of the enterprise, he has Does not bear any risk.
RISK-
all the risk and uncertainties involved in
BEARING
running the organization.
Reward, i.e., profit goes in the favor of an Manager gets salary as a reward for the
entrepreneur for bearing risks involved. services rendered by him in the enterprise.
REWARDS Here profit is uncertain and directly Salary and incentives are fixed at sum of
dependent on the amount of hard work an certain.
entrepreneur puts in his organization.
Entrepreneur himself thinks of the plan on Manager simply executes the plan prepared
how to produce and sell the by entrepreneur. Therefore, manager
INNOVATION plans/products and also to meet the simply transform entrepreneur’s ideas into
challenges of the customer. Therefore, reality.
entrepreneur acts as an innovator.
An entrepreneur must have qualities like Managers must possess distinct
foresightedness, optimism, ambition, qualifications as required by jobs.
QUALIFICATI
risk-bearing, etc. Prior qualification is Managers must have knowledge of
ON
not essential in case of an entrepreneur. management theories and practices, which
can be utilized in enterprise working.
DEPENDENC Independent Dependent
Y
Types of Entrepreneurs

Based on Clarence Danhof Study

According to him, entrepreneurs generally have less initiative and drive when they start any business venture.
However, they learn things with their continued economic work and become more innovative and enthusiastic.
Based on his study, he classified entrepreneurs as follows:
Innovating Entrepreneurs
Innovative entrepreneurs, also known as innovators, are the type of entrepreneurs who usually come to the market
with new ideas or innovations. In particular, they create new products, find new production methods, create new
markets and restructure the business. Such entrepreneurs always try to innovate and invest their time and money
in research and development.
Imitative Entrepreneurs
Imitative entrepreneurs or imitating entrepreneurs are often called 'copy cats'. This is because these entrepreneurs
mainly follow and adopt the innovative entrepreneurs' existing successful enterprise system. They do nothing new
of their own. Imitative entrepreneurs apply strategy from other enterprises in a manner where all core
fundamentals of the original business model are replicated, and all efficiencies are retained. These entrepreneurs
help improve any product, production process or suggest the use of improved technology addressed by other
enterprises.
Fabian Entrepreneurs
Fabian entrepreneurs are defined as those types of entrepreneurs who generally do not seek to implement changes
in their enterprise techniques. They are very careful in applying any approach and cautious in exercising any
change. These entrepreneurs are known for not making sudden decisions. They imitate the change in their strategy
only when it is completely clear that failing to do so will not harm.
Drone Entrepreneurs
Drone entrepreneurs are defined as entrepreneurs who do not like to adopt any changes in their enterprise
techniques. They strictly follow their traditional strategies or methods for development, production or marketing.
These entrepreneurs feel or experience pride and tradition in the old ways of doing business. This is why drone
entrepreneurs sometimes suffer losses, yet they do not adopt changes in their current methods
 Traits (Skills) of entrepreneurship

Traits are underlining characteristics of a person which leads to his effective or superior performance in a job.
Traits of a good entrepreneur is a combination of his knowledge, skills, experience, motive/desires, etc.
which he uses to run his organization. Traits are basically the internal characteristics that are associated/linked
with the entrepreneur.

Following are the list of major traits that leads to superior performance of an entrepreneur given by EDI
(Entrepreneurial Development Institute):

1. Initiative (Ignited): It’s an ability of an entrepreneur to ignite/self-start. He has to leave the firm for all
the business function.
2. Persistence: Seven times fail, eighth time success.
3. Always looking for opportunities
4. Always seeking information
5. Quality conscious
6. Committed to work
7. Efficiency seeker (best utilization of resources)
8. Proper planning
 9. Problem solving
10. Self-confidence
11. Good leader
12. Employee well-wisher
13. Efficient monitor
14. Persuasive
15. Perfect strategis

The Entrepreneurial Decision Process

The individual / entrepreneur has to take a number of decisions in sequential order which is known as
entrepreneurial decision process, to leave the present status and become an entrepreneur.

Following is an illustrative decision process individual’s follow to become entrepreneurs:

1) The Present Status: There is an apt saying: “Change is the law of nature and change is the only
permanent thing in this world” Yet, change is often resisted because it involves uncertainty which causes
fear. It is due to uncertainty, the present state of affair is considered better than the unknown one after
the change. As such, leaving the present status and becoming an entrepreneur (i.e., a synonym of risk
and uncertainty) is not easy as it takes a great deal of preparation and courage to do so. Nonetheless,
individuals dare it and become entrepreneurs. Broadly, there are two reasons for individuals to
become entrepreneurs: (i) By chance, and (ii) By compulsion.

(ii) As regards choice, individuals working in marketing area become familiar with market and gain
experience and, in turn, they decide to start their own business in that market. Sales representatives
working in publishing companies generally start their own publishing business and present such
example of becoming entrepreneurs by choice.

On the other hand, disruption in the present job/status due to retirement, lay-off, and other compulsions also
compel people to become entrepreneurs. Thus, the idea and decision to become an entrepreneur, i.e. to start one’s
own business enterprise occurs when an individual perceives and realizes that establishing a new enterprise is
desirable for him / her.
 2) Reasons for Changing the Present Status:
The researchers report that people generally become entrepreneurs because of economic reasons. These include
unemployment, completion of education, dislocation, no or less possibility for career and / or economic
prosperity, etc. Nonetheless, the personal dislocation is reported as one of the most powerful reasons galvanizing
an individual’s will to become an entrepreneur.

This is duly supported by an increase of 12% in number of new business enterprises in the United States during a
lay-off period. Completion of one’s education is reported another major reason for becoming an entrepreneur.

3) Desire for Change from the Present Status to Become Entrepreneur:

Evidences are available to believe that the desire to start one’s own enterprise and, thus, become an entrepreneur
is spawned by some factors like the culture and family one belongs to and the teachers and peers one comes into
contact with. Like elsewhere in the world, there are cultures in India also which place a high value on being
entrepreneur. For example, Punjabis and Gujaratis in India represent such cultures which value more on making
money, becoming one’s own boss, having more individual opportunities for being successful in career and life.

It is, therefore, not surprising to find the greater number of enterprises formed by the people belonging to the
Punjabis and Gujaratis cultures. This is contrary in the Assamese culture which places low value on being
selfemployed i.e. entrepreneur and high value on being an employee. As such, the rate and number of new
enterprise formation is expectedly low in the Assamese culture.

Of late, educational institutions and teachers are also found encouraging individuals to regard entrepreneurship
as the desirable and viable career. Concerted efforts are made by the educational institutions to design and develop
exciting course curriculum on entrepreneurship and enterprise management to mould and stimulate individuals to
become entrepreneurs.

For example, Central Board of Secondary Education (CBSE), Nagaland Board of School Education (NBSE),
Meghalaya Board of Secondary Education (MBOSE), and Council of Higher Secondary Education (CHSE),
Odisha has very recently introduced entrepreneurship as an optional subject at their higher secondary level of
education.

Somuchso, Jammu & Kashmir State Board of School Education (JKBSE) has just introduced entrepreneurship as
a compulsory subject in Class 11 and 12. Not only that, the premier national educational institutions likes
Universities, Indian Institutes of Management (IIMs), and the Indian Institute of Technologies (IITs), besides
teaching the subject entrepreneurship, have even established Centre of Entrepreneurship and Innovation
Incubation to stimulate the students to form their own enterprises.

4) Possibilities to Become an Entrepreneur:

No doubt, the desire to form an enterprise needs to be present before forming an enterprise, but just desire to form
an enterprise cannot make an individual an entrepreneur. Available literature on entrepreneurship indicates that
an individual’s business background, educational background, previous experience, government attitude,
availability of finance and market and, of course, one’s role models in business world make it possible to form
an enterprise.

Similarly, it is also no wonder why more enterprises are established in the places with supporting facilities like
roads, communication, transportation systems, utilities, economic and political stability, finance, and market.
Finally, to have someone else successful in business as one’s role model also makes enterprise formation possible.
The reason is the role model develops the feeling of ‘self-efficacy’ in the individual. That is: “If that person can
do and succeed, so can I also.” In other words, entrepreneurs are not born, they develop. It is possible to become
entrepreneur.

Factors affecting Entrepreneurship

1. Economic Factors: Related to money, men, machine & labour.

2. Non-economic Factors: Political, legal & external factors.

Generally, there are 3 types of factors that affect entrepreneurship:

Internal Factors:
• Family background.
• Educational background.
• Training & Work Experience.
• Desire for achievement.
• Desire to lead a manufacturing business unit.
• To earn more money.
• To have a respectable position in society.

External Factors:
• Government Policies & Regulation: They play an important role in shaping the venture.
E.g. To boost exports of handicraft from U.P., Government of India started tax concession
policies to motivate small business for huge production.

• Availability of inputs or raw materials: Food manufacturing units, basically rice, are located in
Punjab for better crops.
E.g. Kohinoor Basmati rice

• Market demand and product demand: E.g. Solar cooking appliances.

• Availability of technology: E.g. E-commerce
• Scope of large profit: Where there is profit, entrepreneur wants to do more investments.
• Level of economic growth of the country: The phase of economic existence (Least
Developing, Developing, Developed) affects the level of entrepreneurship.
E.g. Of the 80% employees in U.S.A. are employed in S.B.A., 60% are employed in services.
Compelling, Facilitating & Ambitious Factors:
V.N. Murthy while studying the entrepreneurial motivation, classified motivating factors on the following
basis:

• Compelling Factors: They include:

1. Not satisfied with present job
2. Unemployment
3. Market demand
4. Availability of funds
5. Family business
6. For utilization of professional skills
7. Revival of sick units.
• Facilitating Factors: These factors help entrepreneurs in starting new ventures through
observation & experiences. They include:

1. Inspiration from other entrepreneurs

2. Past experiences and training
3. Inherited property
4. Influence from seniors or advisors.
• Ambitious factors: Following the factors which motivate an entrepreneur to start a new
venture:
1. To make money.
2. To secure living or self-employment.
3. To fulfil their parent’s desire.
4. To become an independent person.
5. To develop his family business.

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