PGDM THIRD SEMESTER

 
BM 3.01: ENTREPRENEURSHIP & INCUBATION
Dr. Raj Kumar Singh
Professor
 
 UNIT 1
LECTURE 1
 Concept of Entrepreneurship
Entrepreneurship is the process that involves all actions
an entrepreneur undertakes to establish an enterprise to
give reality to his business idea. It’s a creative and
innovative response to the environment.
Entrepreneurship is a composite skill, the resultant of a
mix of many qualities and traits. These includes
imagination readiness to take risks, ability to bring
together and put to user other factors of production,
capital, labour , land , as also intangible factors such as
the ability to mobilize scientific and technological
advances.
 Economic Approach Theory
This view point gives emphasis that Entrepreneurship is
basically concerned with the different economic activities
and meant for the economic enrichment and growth
where the economic conditions are most favourable. Here
the Economic Incentives are the main drive for the
entrepreneurial activities.
Entrepreneurship is the process of initiating a new
venture , organizing the resources it requires and
assuming the risks it entails. Thus the word
‘Entrepreneurship’ is derived from the 17th century French
word “Entreprendre” which refers to the individuals who
were undertook the risk of new enterprise.
Richard Cantillon (1755) : Entrepreneur is a person who
pays a certain price for a product resources while
consequently assuming the risk of enterprise.
Adam Smith (1776) : Entrepreneur is an individual who
undertook the formation of an organization for commercial
purpose with unusual foresight who could recognize
potential demand for goods and services reacting to
economic change , becoming the economic agents who
transformed demand into supply.
J. B. Say (1803) : Entrepreneur is one who possessed certain
arts and skills of creating new economic enterprises, yet a
person who had exceptional insight into society’s need and
was able to fulfil them. Entrepreneur is the co-ordinator
and organizer of resources to design a business enterprise.
Carl Menger (1871) : Entrepreneur is the change agent who
transforms resources who transforms resources into useful
goods and services often creating the circumstances that
leads to industrial growth .
Joseph Schumpeter (1934) : Entrepreneurs is a force of
creative destruction whereby established ways to get the
things done. It is a process and entrepreneurs as innovators
who use the process to shatter the status quo through the
new combinations of resources and new methods of
commerce.
Peter F. Drucker (1985) : Entrepreneurship occurs when
resources are redirected to progressive opportunities not
used to ensure administrative efficiency .The redirection of
resources distinguishes the entrepreneurial role from that
of the traditional management role.
 Sociological Approach Theory
Sociologists consider the entrepreneurship as a
process of role performance . Entrepreneurs are
expected to be governed by the wishes of the
society , customs, ethics, values etc.
Entrepreneurship is inhibited by the social
system , which denies opportunities for the
creative facilities . The forces of customs ,
values, the rigidity of status, distinctness of new
ideas and of the exercise of intellectual
curiosity , combine to create an atmosphere
inimical to experiment and innovation.
 Sociologists argue that entrepreneurship is most likely to
emerge under a specific social culture. According to
them social sanctions, cultural values and role
expectations are responsible for the emergence of
entrepreneurship . Socio - Cultural value channel
economic action that gives birth to entrepreneurship. As
per the Sociological Theory the concept of innovation
and its corollary development embraces five functions:
Introduction of a new good
Introduction of a new method of production
Opening of New Market
Conquest of new source of supply of raw materials and
Carrying out of a new organization of any industry
Thomas Cocharan (1965) : Entrepreneurs represents
society’s model personality. Their performance depends
upon their own attitude towards their occupations , the
role expectations of sanctioning groups and the
occupational requirements of the job. Society’s values
are the most important determinant of the attitude and
role expectations.
Peter Marris (1967) : Entrepreneurship requires to
assemble or reassemble from what is available very
concrete kind of imagination to see what others have
missed , sensitivity to business and social environment
rest in industrial development and entrepreneurial
courage . These are the important factors that make an
entrepreneur .
 Psychological Approach Theory
According to the Psychologists, entrepreneurship is most
likely to emerge when a society has sufficient supply of
individuals possessing particular psychological
characteristics. The main characteristics which motivate
and drive people towards entrepreneurial activities :
An urge to do something
To fulfill a dream
An institutional capacity to see things in a new way (Vision)
Energy of will and mind to overcome fixed habits of
thoughts
The capacity to withstand social opposition
The high need for achievement
David C McClelland (1961) : It is the high need for
achievement which drives people towards entrepreneurial
activities . Achievement motive is basically measured
through the child rearing practices which stresses
standards of excellence , material warmth, self –reliance
,training and low father dominance . Individuals with high
achievement motive tend to take keen interest in
situations of high risk , desire for responsibility and desire
for a concrete measure of task performance.
E. E. Hagen ( 1964) : Withdrawal of the status respect as
the trigger mechanism for changes in personality
formation . Status withdrawal is the perception on the
part of members of some social group in the society
whom they respect and whose esteem they value.
 Anthropological Theory

This theory says that entrepreneurship has essentially to

do with connecting two spheres in the society between
which there exists a difference in value, something
which is cheap in one sphere, may be expensive in
another sphere. Entrepreneurship a bridge which tries
to integrate diversified values and minimize the huge
discrepancy in value.
 Libenstein’s X-Efficiency Theory

X-Efficiency is basically the degree of

inefficiency in the use of the resources
within the firm ; it measures the extent
to which the firm fails to realize its
productive potential.
 Dynamic Entrepreneurship Innovation Theory

As per this theory the Entrepreneurs are the

catalysts that disrupts the stationary circular flow of
the economy and thereby initiates and sustains the
process of development.
 Harward School Theory

Entrepreneurship comprises any

purposeful activity that intimate,
maintain or develop a profit – oriented
business in interaction with the internal
situation of the business or with the
economic, political and social
circumstances surrounding the business.
 Theory of High Achievement

Entrepreneurship is doing things in a

new and better way and decision making
under uncertainty with stress on the
need for achievement or achievement
orientation as the most directly relevant
factor for explaining economic behavior.
 Max Weber’s

Entrepreneurial energies are

generated by the adoption of
exogenously – supplied religious
belief.
 Theory of Cultural Value

On the process of economic

development, entrepreneurs are not
seen as being deviant or super normal
individuals but rather as representing
society’s modal personality molded by
the inherent culture.