20MS2003 Concept of Entrepreneurship Module 1

Evolution, Characteristics
Role of Entrepreneurship in Economic Development, Models of
Entrepreneurship, Success Stories

Concepts of Entrepreneurship AW 1
 Concept and overview of Entrepreneurship
 Evolution and growth of Entrepreneurship in India
 Role of Entrepreneurship in Economic Development
 Concept and overview of Entrepreneurship

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 Introduction

• Entrepreneurship is the dynamic process of creating incremental wealth

• The product or service itself may or may not be new or unique but the value must somehow be
infused by the entrepreneur by securing and allocating the necessary skills and resources.

Entrepreneurs –
• Serve as agents of change
• provide creative and innovative ideas for business enterprises
• help businesses grow and become profitable

Entrepreneurs are people with the pioneering spirit, are intuitive and inspired with a
willingness to work hard and take risks.
 Definitions

The term entrepreneur is a French word, and is derived from the French word
“enterprendre”. It means “to undertake”. It is commonly used to describe an individual
who organizes and operates a business or businesses, taking on financial risk to do so

Around 1700 A.D. the term was used for architects and contractor of public
works. In many countries, the term entrepreneur is often associated with a person who
starts his/her own new business
“Entrepreneurship entails bearing the risk of buying at a certain price and selling at uncertain prices.” -
Ricardo Cantillon

Joseph A. Schumpeter “Entrepreneurship is any kind of innovative function that could

have a bearing on the welfare of an entrepreneur.
According to Robert K. Lamb “Entrepreneurship is that form of social decision making
performed by economic innovators.”
Definitions - Explained

Schumpeter's Definition ―The 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 manufacturing, a product with which consumers are not yet familiar, a new source of
raw material or of new markets and the like”

Drucker’s Views on Entrepreneur “An entrepreneur is the one who always searches for change,
responds to it and exploits it as an opportunity. Innovation is the specific tool of entrepreneurs, the
means by which they exploit changes as an opportunity for a different business or different service”
 Concept

The concept of entrepreneurship can be understood as under:

(i) Entrepreneurship involves decision making and innovation
(ii) Entrepreneurship is a discipline and is an outcome of complex socio-economic,
psychological, technological, legal, and other factors.
(iii) It is a dynamic and risky process.
(iv) It involves a fusion of capital, technology, and human talent.
(v) Entrepreneurship is equally applicable to big and small businesses
(vi) Different entrepreneurs might have some common traits but all of them will have some
different and unique qualities.
(vii)Entrepreneurship is a process. It is not a combination of some stray incidents.
(viii) It is the ability to create and build something from practically nothing.
 Common elements of
Entrepreneurship

• Creativity and innovation

• Resource identification, acquisition, and marshalling
• Economic organization
• Opportunity for gain (or increase) under risk and uncertainty
 Entrepreneurs Vs.
Entrepreneurship

Entrepreneurs are people with vision who recognize & pursue opportunities,
create & establish businesses / new ventures, take into account the risks
involved, have control over the present & future and have the flexibility to
change and adapt to the changing times.
Entrepreneurship is the means by which new organizations are formed with
their resultant job and wealth creation. It is the process of creating value by
bringing together a unique package of resources to exploit an opportunity.
 Why become an
Entrepreneur?

The three primary reasons that people become entrepreneurs and start
their own firms are to be their own boss, pursue their own ideas, and
realize financial rewards.
 Entrepreneurs are their own bosses - They make the decisions. They
choose whom to do business with and what work they will do.
 It provides the ability to be involved in the total operation of the
business, from concept to design and creation, from sales to business
operations and customer response.
 Entrepreneurship offers a greater possibility of achieving significant
financial rewards than working for someone else
 Benefits of
Entrepreneurship

• Opportunity to Create Your Own Destiny –Owning a business provides entrepreneurs

the independence and the opportunity to achieve what is important to them, they
provide employment opportunities for others
• Opportunity to Make a Difference - these business builders seek innovative solutions to
some of society‟s most vexing problems
• Opportunity to Reach Your Full Potential - Entrepreneurs‟ businesses become their
instruments for self-expression and self-actualization. Owning a business gives them a
sense of empowerment
• Entrepreneurs introduce innovative technologies - Innovative ideas and inventiveness
are foundational driving factors for entrepreneurs which result in a great contribution to
the economy
• Flexibility at work, growth, and development, carrying out your passion, self-
confidence, leadership
 Disadvantages of
Entrepreneurship

• Uncertainty of Income
• Risk of Losing Your Entire Investment
• Long Hours and Hard Work
• Lower Quality of Life
• High Levels of Stress
• Complete Responsibility
 Entrepreneurship is the ability and readiness to develop, organize and run a
business enterprise, along with any of its uncertainties in order to make a profit.
 The most prominent example of entrepreneurship is the starting of new businesses.
 In economics, entrepreneurship connected with land, labour, natural resources and
capital can generate a profit.
 The entrepreneurial vision is defined by discovery and risk-taking and is an
indispensable part of a nation‟s capacity to succeed in an ever-changing and more
competitive global marketplace.
 The entrepreneur is defined as someone who has the ability and desire to establish,
administer and succeed in a startup venture along with risk entitled to it, to make
profits.
 The entrepreneurs are often known as a source of new ideas or innovators, and
bring new ideas in the market by replacing old with a new invention.
 It can be classified into small or home business to multinational companies.
 In a nutshell, anyone who has the will and determination to start a new company
and deals with all the risks that go with it can become an Entrepreneur.
 Small Business Entrepreneurship
 Scalable Startup Entrepreneurship
 Large Company Entrepreneurship
 Social Entrepreneurship
 These businesses are a hairdresser, grocery store, travel agent, consultant,
carpenter, plumber, electrician, etc.
 These people run or own their own business and hire family members or local
employee.
 For them, the profit would be able to feed their family and not making 100
million business or taking over an industry.
 They fund their business by taking small business loans or loans from friends
and family.
 This start-up entrepreneur starts a business knowing that their
vision can change the world.
 They attract investors who think and encourage people who
think out of the box.
 The research focuses on a scalable business and experimental
models, so, they hire the best and the brightest employees.
 They require more venture capital to fuel and back their project
or business.
 These huge companies have defined life-cycle.
 Most of these companies grow and sustain by offering new and innovative products that revolve
around their main products.
 The change in technology, customer preferences, new competition, etc., build pressure for large
companies to create an innovative product and sell it to the new set of customers in the new market.
 To cope with the rapid technological changes, the existing organisations either buy innovation
enterprises or attempt to construct the product internally.
 This type of entrepreneurship focuses on producing product and services that
resolve social needs and problems.
 Their only motto and goal is to work for society and not make any profits.
 Ria Sharma, born in New Delhi, is a social
activist who graduated from Leeds College
of Art, UK.
 She is the founder of world's first
rehabilitation center for acid attack
survivors.
 Ria also founded Make Love Not Scars
NGO in 2014, which is a rehabilitation
center for acid attack survivors which are
mostly women in India.
 It is the crowd-funded organization where it
teams up to reach volunteers and funders
through a social media platform.
 Harish Hande is another pioneering
social entrepreneur of India and a
remarkable committed one.
 He is the CEO & Founder of Selco, a
company rendering sustainable energy
source to rural regions of the country.
 This project was the first rural solar
financing program in India.
 Till date, Selco has contributed over
120,000 installations and has more than
25 operating retail and service centres in
Karnataka alone.
 Born in a middle-class family in Uttar
Pradesh, took media as a profession and
while as an intern he witnessed the need
of proper clothing for the poor in rural
India.
 Anshu then founded Goonj, a social
enterprise that collects used clothing
from the urban crowd, sort them, fix and
later distribute among the poor and
needy.
 The relief work was done by Goonj
during the times of natural calamities in
Gujarat, Tamil Nadu and Kerala have
been highly acknowledged.
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Evolution of Entrepreneurship

 Marco Polo, the Venetian merchant, arrived in China

in the thirteenth century
 He was one of the first entrepreneurs who got venture
capital. He convinced several wealthy Venetians to
finance his commercial expedition to Asia.
 Marco Polo promised that he would share his profits
from this risky venture with them.

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Evolution of Entrepreneurship

Middle-Ages : In the Middle-Ages, the term entrepreneur was referred to a person who
was managing a large number of projects using the resources provided. An example is a
person who is in charge of great architectural works such as castles, public buildings,
cathedrals etc.
16th century: During the early 16th century, the term was used for the persons engaged in
military expeditions.
17th century: In the 17th century, an entrepreneur was a person who used to have a
contractual arrangement with the government to perform a service or to supply some
goods. The profit or loss was borne by the entrepreneur. The term was extended to cover
construction and civil engineering works
18th century: It was Richard Cantillon, a French Economist, who applied the term
entrepreneur to business for the first time. He is regarded, by some, as the founder of the
concept of entrepreneurship. He defined an entrepreneur as a person who buys services at
certain prices with a view to selling them at uncertain prices in the future; As a person who
takes the risk
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 19th century: In the 19th century, entrepreneurs were not distinguished from
managers. They were viewed mostly from the economic perspective. An
entrepreneur was the one who assumes the risk, contributes his own initiative
and skills, plans organizes and leads his enterprise.
20th century: Entrepreneur was considered as a business promoter, as the
one who transformed ideas into a profitable venture. It was Joseph
Schumpeter who described that an entrepreneur is an innovator who develops
untried technology.
21st century: Scientists like Live De Bone stated that to be an entrepreneur it
was not necessary that an individual generates an entirely new idea, but if he
is adding incremental value to the current product or service, he can rightly
be called an entrepreneur.

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History of Entrepreneurship in India

The history of entrepreneurship in India started in the era of Indus Valley

Civilization.
• Apart from agriculture and hunting, the Indus people supported
themselves by trading goods like exchange of Potteries, ornaments,
exchanges of animals etc…

• The early years (1000 B.C-500 B.C): Indian traders introduced re-exporting silk
bought from the Chinese and sold to central Asia. They bought horses from west
Asians and sold them to the Chinese.
• The Maurya Era: In modern times the Maurya Empire is remembered as one of the
golden ages of Indian history, a time when the country was united and independent. •
Vast territory, better trade. Widespread use of metallic money, Missions to Sri Lanka
and Southeast Asia increase trade.

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• The Mughal age (1500 A.D-1600 A.D): Dominated world
commerce, large quantities of gold and silver came into the country.
• The Mughal Era II (1600 A.D-1700 A.D): British arrived in this
era. A person named Virji Vora , a Surat merchant was among the
first entrepreneurs.
• The colonial-era I (1700 A.D-1850 A.D): Europe was then the
hotbed of technological innovation. The traders brought with them
plenty of new ways of doing business. Seizing the opportunities that
emerged, many Indians became entrepreneurs.
• Dwarkanath Tagore, who formed India„s first Joint Venture with a
foreigner, Carr Tagore Nanabhai Davar, who put up the country‟s
first textile mill in 1854.

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The colonial ERA II (1850 A.D-1900A.D): Railways set up (1853).
Nanabhai Davar‟s first cotton mill in Bombay. Sir J.N Tata founded
Jamshedpur steelworks. Foundations of jute mills, the pharmaceutical
industry were laid.
• The colonial-era III (1900 A.D-1947A.D): Changemakers like JRD
Tata, MS Oberai, Jamuna Lal Bajaj lead the way for Indian
entrepreneurs.

• After Independence: Entrepreneurs like Dirubai Ambani emerged.

Globalization took place, and over the last 68 years, India has seen
entrepreneurs evolve in a different role.

• The modern entrepreneurs are wealth creators, communicators,

change agents, entertainers etc. Tata Steel

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Characteristics of Entrepreneurs

Initiative- An entrepreneur takes actions that go beyond job requirements or the demand
of the situation.

Opportunity seeking- An entrepreneur is quick to see and seize opportunities. He/she does things
before he/she is asked to work by people or forced by the situation

Persistence - An entrepreneur is not discouraged by difficulties and problems that come up in the
business or his/her personal life. Once he / she sets a goal he/she is committed to the goal

Information seeking - An entrepreneur undertakes personal research on how to satisfy customers

and solve problems. He/she seeks relevant information from his/her clients, suppliers, competitors
and others. He/she always wants to learn things that will help the business to grow.

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Characteristics of Entrepreneurs

Demand for quality and efficiency - An entrepreneur is always competing with others to
do things better, faster, and at less cost, he/she strives to achieve excellence.
Risk-taking - Entrepreneurs are not gamblers, but they calculate their risks before taking
action. They place themselves in situations involving moderate risk such that they can
achieve what they aim
Goal setting - An entrepreneur does not just dream. He or she sets meaningful and
challenging goals for him/herself.
Commitment to work. An entrepreneur will work long hours after into the night just to be
able to keep his/her promise to his/her client. The entrepreneur ensure that the work is
done according to the goals set

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Characteristics of Entrepreneurs

Systematic planning and monitoring - An entrepreneur plans for whatever he/she

expects in the business. He/she does not leave things to luck. He/she plans by breaking
large tasks down into small ones
Persuasion and networking – An entrepreneur acts to develop and maintain business
contacts by establishing a good working relationship.
Independence and self-confidence. Most entrepreneurs start a business because they like
to be their own boss. They are responsible for their own decisions and they are confident
of winning.

http://www.nevillewadia.com/images/Cronicle2012/DR.-A.-B.-DADAS12.pdf

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Skills of Entrepreneurs

https://twitter.com/TechtitudeT/status/1421867242682130433/photo/1

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Skills of Entrepreneurs

https://www.oecd.org/cfe/leed/cooney_entrepreneurship_skills_HGF.pdf
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Role of Entrepreneurship in Economic Development

1. Employment opportunities -Entrepreneurs employ labor for managing their business

activities and therefore provide employment opportunities to a large number of people.
2. Balanced Regional Development- Entrepreneurs establish industries in backward and
rural areas. They remove regional disparities and help to reduce the problems of
congestion, and pollution in cities by providing employment and income to people living
in rural areas.
3. Mobilization Of Local Resources – Entrepreneurs help to mobilize and utilize local
resources like small savings and talents of relatives and friends, which might otherwise
remain idle and unutilized. Thus they help in the effective utilization of resources.
4. Optimization Of Capital – Entrepreneurs aim to get a quick return on investment.
5. Promotion of Exports - Entrepreneurs earn valuable foreign exchange through exports.

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Role of Entrepreneurship in Economic Development

6. Consumer Demands - Entrepreneurs produce a wide range of products required

by consumers. They meet the demand of the consumers without creating a
shortage of goods.
7. Increase per capita income - Entrepreneurs help to increase the per capita
income of the country in various ways and facilitate the development of backward
areas and weaker sections of the society
8. Economic Integration - Entrepreneurs reduce the concentration of power in a
few hands by creating employment opportunities and through equitable
distribution of income.
9. They help in effective resource mobilization of capital and skill which might
otherwise remain unutilized and idle
10. They promote the country's export trade i.e., an important ingredient to
economic development.

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