CHAPTER 1

INTRODUCTION TO
ENTREPRENEURSHIP
 ASSESSEMENT

TUTOTIAL
10%
PRESENTATION
10%
FINAL EXAM
TEST 40%
10%

PROJECT
30%
 DEFINITIONS
 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.
 THEORIES OF
ENTREPRENEURSHIP
 Economic Theories

Economic entrepreneurship theories date back to the first half of the 1700s with the
work of Richard Cantillon, who introduced the idea of entrepreneurs as risk takers.

The classic, neoclassical and Austrian Market process schools of thought all pose
explanations for entrepreneurship that focus, for the most part, on economic
conditions and the opportunities they create.

Economic theories of entrepreneurship tend to receive significant criticism for

failing to recognize the dynamic, open nature of market systems, ignoring the
unique nature of entrepreneurial activity and downplaying the diverse contexts in
which entrepreneurship occurs.
 Resource-Based Theories
Resource-based theories focus on the way individuals leverage different types of resources to
get entrepreneurial efforts off the ground.

Access to capital improves the chances of getting a new venture off the ground, but
entrepreneurs often start ventures with little ready capital. Other types of resources
entrepreneurs might leverage include social networks and the information they provide, as well
as human resources, such as education.

In some cases, the intangible elements of leadership the entrepreneur adds to the mix operate
as resource that a business cannot replace.

 Psychological Theories
Psychological theories of entrepreneurship focus on the individual and the mental or emotional
elements that drive entrepreneurial individuals.
A theory put forward by psychologist David McCLelland, a Harvard emeritus professor, offers
that entrepreneurs possess a need for achievement that drives their activity. Julian Rotter,
professor emeritus at the University of Connecticut, put forward a locus of control theory.
Rotter’s theory holds that people with a strong internal locus of control believe their actions can
influence the external world and research suggests most entrepreneurs possess trait.
A final approach, though unsupported by research, suggests personality traits ranging from
creativity and resilience to optimism drive entrepreneurial behavior.
 Sociological/Anthropological Theories
The sociological theory centers its explanation for entrepreneurship on the various
social contexts that enable the opportunities entrepreneurs leverage. Paul D. Reynolds,
a George Washington University research professor, singles out four such contexts:
social networks, a desire for a meaningful life, ethnic identification and social-political
environment factors.

The anthropological model approaches the question of entrepreneurship by placing it

within the context of culture and examining how cultural forces, such as social attitudes,
shape both the perception of entrepreneurship and the behaviors of entrepreneurs.

 Opportunity-Based Theory
Prolific business management author, professor and corporate consultant, Peter
Drucker put forward an opportunity-based theory. Drucker contends that entrepreneurs
excel at seeing and taking advantage of possibilities created by social, technological
and cultural changes.

For example, where a business that caters to senior citizens might view a sudden influx
of younger residents to a neighborhood as a potential death stroke, an entrepreneur
might see it as a chance to open a new club.
 ENTREPRENEURSHIP PROCESS
Learning what you are doing; examining your strengths and weaknesses. Examining work experience
SELF DISCOVERY and relating it to potential opportunities.

IDENTIFYING Looking for needs, wants, problems and challenges that are not yet being met or dealt with effectively
OPPORTUNITIES

GENERATING AND Using creativity and past experience to devise new and innovative ways to solve a problem, or meet a
EVALUATING
IDEAS need and then narrowing the field to one best idea.

PLANNING Researching and identifying resources needed to turn the idea into a viable venture. Preparing the
research in the form of a written business plan. Preparing marketing strategies.

Using the business plan to attract investors, venture capitalists partner. This stage can involve
RAISING START‐UP producing prototypes or test marketing services.
CAPITAL

Launching the venture, developing a customer base and adjusting marketing and operational plans
START‐UP as required.

Growing the business: developing and following strategic plans, adapting to new circumstances.
GROWTH

Selling the business and harvesting the rewards. For many entrepreneurs, this also means moving on
HARVEST
to new ventures and new challenges.
 4

3 Start and
Manage the
Determine business.
the resources
2 required
Develop a
business plan

1
Identify and
evaluate
the
opportunity

The Entrepreneurial Process

CHARACTERISTICS AND ATTRIBUTES
OF ENTREPRENEURSHIP
 Ability to take a risk- Starting any new venture involves a considerable
amount of failure risk. Therefore, an entrepreneur needs to be courageous
and able to evaluate and take risks, which is an essential part of being an
entrepreneur.

 Innovation- It should be highly innovative to generate new ideas, start a

company and earn profits out of it. Change can be the launching of a new
product that is new to the market or a process that does the same thing but
in a more efficient and economical way.

 Visionary and Leadership quality- To be successful, the entrepreneur

should have a clear vision of his new venture. However, to turn the idea into
reality, a lot of resources and employees are required. Here, leadership
quality is paramount because leaders impart and guide their employees
towards the right path of success.
 Open-Minded- In a business, every circumstance can be an opportunity
and used for the benefit of a company. For example, Paytm recognised
the gravity of demonetization and acknowledged the need for online
transactions would be more, so it utilised the situation and expanded
massively during this time.

 Flexible- An entrepreneur should be flexible and open to change

according to the situation. To be on the top, a businessperson should be
equipped to embrace change in a product and service, as and when
needed.

 Know your Product-A company owner should know the product offerings
and also be aware of the latest trend in the market. It is essential to know
if the available product or service meets the demands of the current
market, or whether it is time to tweak it a little. Being able to be
accountable and then alter as needed is a vital part of entrepreneurship.
 TYPES OF ENTREPRENEURSHIP
 Small Business 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.

 Scalable Startup Entrepreneurship-

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.
 Large Company Entrepreneurship-

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.

 Social Entrepreneurship-
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.
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