INTRODUCTION TO

ENTREPRENEURSHIP
INTRODUCTION
 To some economists, the entrepreneur is one who is
willing to bear the risk of a new venture if there is a
significant chance for profit. Others emphasize the
entrepreneur’s role as an innovator who markets his
innovation. Still other economists say that entrepreneurs
develop new goods or processes that the market demands
and are not currently being supplied.
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 Inthe 20th century, economist Joseph Schumpeter
(1883-1950) focused on how the entrepreneur’s
drive for innovation and improvement creates
upheaval and change. Schumpeter viewed
entrepreneurship as a force of “creative
destruction.” The entrepreneur carries out “new
combinations,” thereby helping render old
industries obsolete. Established ways of doing
business are destroyed by the creation of new and
better ways to do them.
CONCEPT OF ENTREPRENEUR
 The word "Entrepreneur" is derived from the French
verb 'entrepredre'. It means 'to undertake'. In the early
16th century the Frenchmen who organized and led
military expeditions were referred as 'Entrepreneurs'. In
the early 18th century French economist Richard
Cantillon used the term entrepreneur to business. Since
that time the word entrepreneur means one who takes the
risk of starting a new organization or introducing a new
idea, product or service to society.
DEFINITION
 According to J.B. Say, “An Entrepreneur is the economic
agent who unites all means of production; land of one,
the labour of another and the capital of yet another and
thus produces a product. By selling the product in the
market the pays rent of land, wages to labour, interest on
capital and what remains is his profit". Thus an
Entrepreneur is an organizer who combines various
factors of production to produce a socially viable
product.
CONTINUED…
 According to Cantillon "An entrepreneur is the agent
who buys factors of production at certain prices in order
to combine them into a product with a view to selling it
at uncertain prices in future". To conclude an
entrepreneur is the person who bears risk, unites various
factors of production, to exploit the perceived
opportunities in order to evoke demand, create wealth
and employment.
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 According to Joseph Schumepeter, "An 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
manufacture concerned, a product with which consumers
are not yet familiar, a new source of raw material or of
new market and the like".
ROLE OF AN ENTREPRENEUR IN ECONOMIC
DEVELOPMENT

 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. He plays a pivotal role not only in the
development of industrial sector of a country but
also in the development of farm and service sector.
The major roles are as follows:
(1) PROMOTES CAPITAL FORMATION:

Entrepreneurs promote capital formation by mobilising the

idle savings of public. They employ their own as well as
borrowed resources for setting up their enterprises. Such
type of entrepreneurial activities leads to value addition
and creation of wealth, which is very essential for the
industrial and economic development of the country.
(2) CREATES LARGE-SCALE EMPLOYMENT
OPPORTUNITIES:

Entrepreneurs provide immediate large-scale

employment to the unemployed which is a chronic
problem of underdeveloped nations. With the setting up
of more and more units by entrepreneurs, both on small
and large-scale numerous job opportunities are created
for others. As time passes, these enterprises grow,
providing direct and indirect employment opportunities
to many more. In this way, entrepreneurs play an
effective role in reducing the problem of unemployment
in the country which in turn clears the path towards
economic development of the nation.
(3) PROMOTES BALANCED REGIONAL
DEVELOPMENT:

Entrepreneurs help to remove regional disparities through

setting up of industries in less developed and backward
areas. The growth of industries and business in these areas
lead to a large number of public benefits like road
transport, health, education, entertainment, etc. Setting up
of more industries leads to more development of backward
regions and thereby promotes balanced regional
development.
(4) REDUCES CONCENTRATION OF ECONOMIC
POWER:

Economic power is the natural outcome of industrial and business

activity. Industrial development normally leads to concentration of
economic power in the hands of a few individuals which results in
the growth of monopolies. In order to redress this problem a large
number of entrepreneurs need to be developed, which will help
reduce the concentration of economic power amongst the
population.
(5) WEALTH CREATION AND DISTRIBUTION:

 It stimulates equitable redistribution of wealth and

income in the interest of the country to more people and
geographic areas, thus giving benefit to larger sections of
the society. Entrepreneurial activities also generate more
activities and give a multiplier effect in the economy.
(6) INCREASING GROSS NATIONAL PRODUCT
AND PER CAPITA INCOME:

Entrepreneurs are always on the lookout for

opportunities. They explore and exploit opportunities,,
encourage effective resource mobilisation of capital and
skill, bring in new products and services and develops
markets for growth of the economy. In this way, they
help increasing gross national product as well as per
capita income of the people in a country. Increase in
gross national product and per capita income of the
people in a country, is a sign of economic growth.
(6) IMPROVEMENT IN THE STANDARD OF
LIVING:

Increase in the standard of living of the people is a characteristic

feature of economic development of the country. Entrepreneurs
play a key role in increasing the standard of living of the people by
adopting latest innovations in the production of wide variety of
goods and services in large scale that too at a lower cost. This
enables the people to avail better quality goods at lower prices
which results in the improvement of their standard of living.
(7) PROMOTES COUNTRY'S EXPORT TRADE:

Entrepreneurs help in promoting a country's export-trade,

which is an important ingredient of economic
development. They produce goods and services in large
scale for the purpose earning huge amount of foreign
exchange from export in order to combat the import dues
requirement. Hence import substitution and export
promotion ensure economic independence and
development.
(8) INDUCES BACKWARD AND FORWARD
LINKAGES:

 Entrepreneurs like to work in an environment of change

and try to maximise profits by innovation. When an
enterprise is established in accordance with the changing
technology, it induces backward and forward linkages
which stimulate the process of economic development in
the country.
(9) FACILITATES OVERALL DEVELOPMENT:

Entrepreneurs act as catalytic agent for change which

results in chain reaction. Once an enterprise is established,
the process of industrialisation is set in motion. This unit
will generate demand for various types of units required by
it and there will be so many other units which require the
output of this unit. This leads to overall development of an
area due to increase in demand and setting up of more and
more units. In this way, the entrepreneurs multiply their
entrepreneurial activities, thus creating an environment of
enthusiasm and conveying an impetus for overall
development of the area.
FEW EXAMPLES
 Walt Disney
 Walt Disney started off as a farm boy drawing cartoon
pictures of his neighbor's horses for fun. When he was
older, Walt tried to get a job as a newspaper cartoonist,
but was unable to find one and ended up working in an
art studio where he created ads for newspapers and
magazines. Eventually he grew to work on commercials,
became interested in animation, and eventually opened
his own animation company.
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 Disney's first original character creation was Oswald the Lucky
Rabbit, but it was officially owned by Universal Pictures because
he was working under contract at the time. When Walt walked out
on Universal Pictures after getting a pay cut, he needed to create a
replacement, which is how Mickey Mouse came into being.
 Disney was wildly successful with his animation company, but he
wasn't satisfied. He was determined to make the biggest and
greatest theme park ever seen, saying to a colleague, "I want it to
look like nothing else in the world."
 One of the biggest entertainment moguls of all-time, with an
unrelenting spirit and commitment to his vision, Disney is
undoubtedly an entrepreneurial all-star.
STEVE JOBS

 You can't really make a self-respecting "famous

entrepreneurs" list without throwing in Steve
Jobs. Jobs dropped out of college because his
family couldn't handle the financial burden of
his education. He unofficially continued to audit
classes, living off free meals from the local Hare
Krishna temple and returning Coke bottles for
change just to get by. Jobs credited the
calligraphy class he stopped in on as his
inspiration for the Mac's revolutionary typefaces
and font design.
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 Jobs went on to have an unbelievable career, eventually forming the
Apple Computer Company with his childhood friend and
electronics expert Steve Wozniak. Often referred to as "The
Grandfather of the Digital Revolution," Jobs forever changed the
consumer electronics industry. At the time of his death, his net
worth was over $8.3 billion, and his influence will be felt for many
digital generations to come.
HENRY FORD
 Henry Ford, One of the few men that made mainstream
automobiles become a reality. He was born into a family
of farmers who originated from England and Ireland. Not
the wealthiest of families but certainly not poverty
stricken. In his teenage years, his father had given him a
timepiece, which he later took to pieces just to see if he
could piece it together again successfully, which he did.
He then started to do the same with other peoples
timepieces and eventually he started to repair them too.
Henry was also a sufferer of Dyslexia, and although this
was a hurdle it was by no means a reason to give up.
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 He went on to complete an apprenticeship with James F. Flower &
Bros, and also with the Detroit Dry Dock Company. In 1891 he
met with Thomas Edison who liked his concept of an auto-mobile,
so he allowed him to use his warehouses to manufacturer two
vehicles. Ford was grateful but later went on to build his own
company so he could build the cars on his own terms backed by
William H. Murphy he founded the Detroit Automobile Company
(1899). This was short lived however, as the vehicles produced
lacked the quality and precision Ford wanted as well as being
horribly expensive. The business went under but it didn’t stop him.
Ford went on to build the Cadillac Automobile company. After
almost failing a second time due to lack of sales and high debts
more partners came into the business and the name was changed to
the Ford Motor Company. Current sales for the Ford group are
now a massive $190 billion.