Entrepreneurship Development

Unit I
Prof. K.Shanthi
 Significance of Entrepreneurship
for Indian Economy
• Entrepreneurship plays a major role in
economic condition of a nation, developing
countries like India has to give more
importance for entrepreneurship.
• Entrepreneur is a person who leads and
implements good ideas which is highly useful
for the society that leads to the economic
development of a nation
• Entrepreneurship is not a word that describes
the struggle of a common person who puts all
his efforts to build something of his/her own,
it is also something that reflects the growth of
the country.
• When it comes to entrepreneurship, several
things come to the mind like the day-to-day
functioning of an organization, gathering
funds, manpower, resources and much more. 
 Another Side of Entrepreneurs
• Entrepreneurs really strive to be motivated
towards their work, they work hard for the
growth of an organization that directly
improves the Indian economy.
Entrepreneurship drives business
creation
People who are entrepreneurs are constantly
innovating, finding new market opportunities
and products that can serve them.
Anyone who is creating a new business is
attempting to do something innovative,
pushing both technical and human
capabilities.
 Businesses creation drives value
addition
Businesses create products and services that add
a lot of economic value.
They solve problems for businesses or consumers,
and the activities they engage in add value.
This value is captured in the GDP and is reflected
in the market value - for e.g. venture capital
backed companies account for 
4.3 trillion of US market cap.
Value addition drives job creation
For a country with more than 50% of its 
population below the age of 25, generating
employment is critical. India has a troubling
issue where more than 
30% of the youth is unemployed - creating
jobs is the only solution to this problem which
can be destabilizing.
Companies that are able to generate value will
hire more people to generate even more
value.
 Job creation drives consumption
Once people find employment and have jobs,
they have a steady stream of income.
With income comes the ability to purchase and
consume - a country that has more employed
people is also able to spend and consume
more.
 Consumption drives
entrepreneurship:
As people begin to consume more, a larger
market is created.
Higher consumption also means varied
consumption, people have more evolved
needs and wants.
Who serves these more complex, large, new
needs? Entrepreneurs.
Contribution to the GDP
• In a fast-growing economy like India, the
entrepreneurs play a vital role in producing
the optimum amount of products and services
in response to the demand by the people.
• If there were no entrepreneurs, the country
would be solely dependent on the imports
and multinational companies and the GDP
would be adversely affected or collapse.
• Therefore, the economy is hugely dependent
on the entrepreneurs for its GDP generation.
 Foreign Exchange Earnings
Industries like the handloom and many other
industries produce goods not only to meet the
domestic requirements but also export these
goods and earn valuable foreign exchange for
the country.
This adds to the economic growth of the country
 Tax Generation
• More employment to the people also results
in more taxable income for the government.
• This helps the government increase their tax
revenues that which they use for the
development of the country and improve the
standard of living of the people
 Eradicating Poverty
• India is a labor intensive economy because of
the vast population in the country.
• And since entrepreneurs help in generating
employment, they directly help the 
government in eradicating unemployment and
poverty in the economy.
• More income means that people are able to
afford more and better things.
 Entrepreneurs Introduce New
Technology
Since a long time, entrepreneurs have been
introducing new technologies in the economy.
For example, Steve jobs introduced the MAC
software.
Such technological advancements help to
develop the economy as a whole.
This is one of the reasons that the government
supports and promotes the entrepreneurs
 Entrepreneurs help other
Industries in the Economy
A lot of industries use the products of other
industries as a raw material for their finished
products, thus generating even more goods
and services as well as more revenue.
• For example, while flour is a finished product
for a person who owns a flour mill, it is a raw
material for the factory producing biscuits.
• In this way, it goes on and on. One idea or
product leads to the development of another
or complementary product or service.
 Specific Tax Revenue
Entrepreneurs pay various direct and corporate
taxes to the state governments without which
they cannot function in the states.
Therefore, the entrepreneurs help in additional
tax revenue generated in the country.
 Bringing in FDI
A lot of start-ups are funded by various
companies in foreign countries.
This helps the economy bring in more and more
foreign investments.
In fact, RBI helps these start-ups by relaxing
policies on FDI.
India is incredibly entrepreneurial on a micro
scale i.e. as individuals we are incredibly
entrepreneurial.
You will see this in our daily behavior, as well
flourishing tiny businesses (your single corner
stores, grocery guy, dhobhi). 
Where we need to get better is at a macro scale
- the ability to build mammoth businesses and
at a faster pace. 40% of the ten 
largest businesses by market cap in India were
founded after the 70s (HDFC, Reliance, Infosys
and Suzuki).
On the other hand, 40% of the ten largest
businesses in the US were founded (or had
roots) before the 70s (Berkshire, Johnson and
Johnson, Exxon and JP Morgan Chase). 
• In light of the above points, it is clear that an
entrepreneur is a huge asset for a country and
the functioning of an economy greatly
depends on the existence
of entrepreneurship.
• A successful entrepreneur is usually a
responsible person.
• He is accountable for the success or the failure
of his venture, and he takes this responsibility
very seriously.
• And since he is the only person in-charge he is
automatically the leader.
• In fact, leadership qualities are one of the
main aspects of an entrepreneur.
• A manager, on the other hand, is not an
owner of an enterprise.
• Instead, he is the one that is responsible for
the management and administration of a
group of people or a department of the
organization.
• His day to day job is to manage his employees
and ensure the organization runs smoothly.
Difference between Entrepreneur and
Manager
• The key difference between an entrepreneur and a
manager is their standing in the company.
• An entrepreneur is a visionary that converts an idea
into a business. He is the owner of the business, so he
bears all the financial and other risks.
• A manager, on the other hand, is an employee, he
works for a salary. So he does not have to bear any
risks.
• The focus of an entrepreneur lies in starting the
business and later expanding the business.
• A manager will focus on the daily smooth functioning
of the business.
• For an entrepreneur the key motivation is
achievements.
• But for the managers, the motivation comes
from the power that comes with their
position.
• The reward for all the efforts of an
entrepreneur is the profit he earns from the
enterprise.
• The manager is an employee, so his
remuneration is the salary he draws from the
company.
• The entrepreneur can be informal and casual
in his role. However, a manager’s approach to
every problem is very formal.
• The entrepreneur by nature is a risk taker. His
has to take calculated risks to drive the
company further. A manager, on the other
hand, is risk-averse. His job is to maintain the
status quo of the company. So he cannot
afford risks.
 Nature of Entrepreneurship
• People with a strong Entrepreneurial Nature have a natural
flair for business.
• They get pleasure from creating financial value and the
ability to sustain and scale operations.
• They are constantly on the move to bring together people,
concepts, and capital in a way that generates wealth.
• Where others see problems, they tend to see
opportunities.
• Those who are entrepreneurially inclined have a knack for
thinking up novel products and services.
• They have an excellent power of persuasion and are able to
sell products, ideas and even themselves to others.
 Characteristics of an Entrepreneurial
Nature
• Bargain when they go shopping
• Negotiate and make good deals for
themselves
• Budget and spend money carefully
• Spot ideas that could make money
• Start ventures by bringing together various
resources
 Traits of an Entrepreneurial Nature
• Demonstrates ambition
• Prefers working independently
• Is opportunistic
• Demonstrates leadership
• Is perseverant
• Innovates
• Is flexible
• Creates & extracts value
• Resourcefulness
 Famous People with a High
Entrepreneurial Nature
• Warren Buffet (investor)
• Lucy Peng (entrepreneur)
• Steve Jobs (CEO of Apple Computers)
• Henry Ford (Industrialist)
• Thomas Edison (Investor and inventor)
•  Warren Buffett—one of the world's richest
people, consistently ranking high on Forbes'
list of billionaires.
• His net worth was listed at $100 billion as of
June 2022.
• Buffett is known as both a savvy businessman
and generous philanthropist.
Lucy Peng is a Chinese billionaire who co-
founded the Alibaba Group.
As such, she has held a number of important
positions in said company, with an excellent
example being how she is the executive
chairwoman of its Ant Financial Services.
• The entrepreneur who is a business leader
looks for ideas and puts them into effect in
fostering economic growth and development. 
• Entrepreneurship is one of the most
important inputs in the economic
development of a country.
• The entrepreneur acts as a trigger head to
give spark to economic activities by his
entrepreneurial decisions.
Role of Entrepreneurship in Economic
Development
1. Promotes Capital Formation
2. Creates Large-Scale Employment
Opportunities
3. Promotes Balanced Regional Development
4. Reduces Concentration of Economic Power
5. Wealth Creation and Distribution
6. Increasing Gross National Product and Per
Capita Income
7. Improvement in the Standard of Living
8. Promotes Country’s Export Trade
9. Induces Backward and Forward Linkages
10. Facilitates Overall Development