Who is an Entrepreneur ?
The entrepreneur as a person brings in overall change though innovation for the maximum social good. Human values remain sacred and inspire him to serve society. He has firm belief in social betterment and he carries out this responsibility with conviction. In this process, he accelerates personal, economic as well as human development. The entrepreneur is a visionary and an integrated man with outstanding leadership qualities. With a desire to excel, he gives top priority to Research and Development. He always works for the well – being of the society. More importantly entrepreneurial activities encompass all fields / sectors and fosters a spirit of enterprise for the welfare of mankind.
“ A good entrepreneur is one who is capable of inspiring confidence in people and has the ability to motivate them to work with him in fulfilling the economic goals set by him”
Entrepreneurial Behaviours
· Grasping opportunity
· Taking initiative
· Solving problems creatively
· Managing autonomously
· Taking responsibility for and ownership of things.
· Seeing things through
· Networking effectively to manage interdependence
· Putting things together creatively
· Using judgement to take calculated risk
Entrepreneurial Attributes
· Achievement orientation and ambition
· Self confidence and self esteem
· Perseverance
· High internal locus of control ( autonomy)
· Action orientation
· Preference for learning by doing
· Hard working
· Determination
· Creativity
Entrepreneurial Skills
· Creative problem solving
· Persuading
· Negotiating
· Selling
· Proposing
· Holistically managing business / project situation
· Strategic thinking
· Intuitive decision – making under uncertainty
· networking
DEFINITIONS AND STRUCTURE
Definition of an Entrepreneur.
The word “Entrepreneur” is derived from the French verb enterprendre. It means to undertake. In the early sixteenth century, the Frenchmen who organized and led military expeditions were referred to as entrepreneurs.
The New Encyclopedia Britannica considers an entrepreneur as “an individual who bears the risk of operating a business in the face of uncertainty about the future conditions.”
For example
The first commercial manufacture of two wheelers is to be called as an entrepreneur, who has visualized the importance of two wheelers is to be called as an entrepreneur, who has visualized the importance of two wheelers in modern times for the benefit of the maximum users and all subsequent scores of people engaged are just imitators. Likewise, a brothel- keeper or call- girl business organizer cannot be an entrepreneur, though he takes risks, creates a market and gets a reward more than visualized. So also a bootlegger, drug peddler, black marketer etc. These occupations are not for the social good. They violate business ethics.
Entrepreneurship may be defined in various ways, but the four key elements involved in it are: 1) Innovation 2) Risk –Taking 3) Vision 4) Organizing skill. All the four elements are inter-related and form a continuous process in business.
Entrepreneurial Process
Entrepreneurial process is a leadership function which centers round the dynamics of entrepreneurial growth and change. It is a process comprising of several distinct stages.
The first stage in the entrepreneurial process is some change in the socio-economic environment leading to the changes in the every aspect of life in the country. Interalia, the change creates needs for new goods and services.
The second stage is by starting a new venture.
The third process is entrepreneurship. It is the process of extending the enterprises domain of competence by exploiting new opportunities through new combinations of its available resources.
The fourth process is to coordinating the varied activities to achieve the entrepreneurial goal.
Socio-Economic Origins of Entrepreneurship
The entrepreneurship activity at any time and place is governed by varying combination of socio-economic, psychological, cultural and other factors. The empirical studies have identified the following socio-economic factors:
Ø Cast/religion
Ø Family background
Ø Level of education
Ø Level of perception
Ø Occupational background
Ø Migratory character
Ø Entry into entrepreneurship
Ø Nature of enterprise
Ø Investment capacity
Ø Ambition and motivation.
Barriers to Entrepreneurship
A large number of entrepreneurs particularly in the small enterprises fail due to several problems and barriers. Karl.H. Vesper has identified the following entrepreneurship barriers.
Ø Lack of a viable concept
Ø Lack of market knowledge
Ø Lack of technical skills
Ø Lack of seed capital
Ø Lack of business knowhow
Ø Complacency-lack of motivation
Ø Social stigma
Ø Time presence and distractions
Ø Legal constraints and regulations
Ø Monopoly and protectionism
Ø Inhibitions due to Patents.
THE CONCEPT OF ENTREPRENEURSHIP
Entrepreneurship is a process undertaken by the entrepreneur to augment his business interests. It is an exercise involving innovation and creativity that will go towards establishing his/her enterprise. One of the qualities of entrepreneurship is to discover an investment opportunity and to organize an enterprise, thereby contributing to the real economic growth. It involves taking of risks and making the necessary investments under conditions of uncertainty and innovating, planning and taking decisions so as to increase production in agriculture, business , industry etc.
Entrepreneurship is a composite skill, the resultant is a mix of many qualities and traits- these includes tangible factors as imagination , readiness to take risks, ability to bring together and put to use other factors of production ,capital ,labor, land as also intangible factors such as the ability to mobilize scientific and technological advances.
What is Entrepreneurship?
Entrepreneurship is the propensity of mind to take calculated risks with confidence to achieve a pre-determined business or industrial objective. In substance, it is the risk taking ability of the individual, broadly coupled with correct decision- making.
Entrepreneurship is a complex phenomenon. Some think of entrepreneurs primarily as innovators, some chiefly as managers of enterprise, some as bearers of risks and other place major emphasis on their function as mobilizes and allocators of capital. In Indian context, however, an entrepreneurship may at best be defined as a person or a group responsible for the existence of a new business enterprise.
Entrepreneurship is an attitude of the mind which calls for calculated risks, a true entrepreneur is one who see possibilities in a given situation where others see none and has the patience to work out the idea into a scheme to which financial support can be provided.
Who is an ideal Entrepreneur?
An ideal Entrepreneur is one who includes ethical consideration in business. He does not bend rules or does anything illegal towards achieving his goal in business. He takes with him the interests of his people, his country, and his natural resources and sees that his organization is a catalytic agent for development. These people are termed as ideal entrepreneurs – the real pillars of strength of any economy and developmental process.
CLASSIFICATION AND TYPES OF ENTREPRENEURS.
The entrepreneurs have been broadly classified according to the type of business, use of professional skill, motivation, growth and stages of development. The various type of entrepreneur is as follows
Entrepreneurs according to the type of business.
Entrepreneurs are found in various types of business occupations of varying size, we may broadly classify them as follows:
Business entrepreneur: Business entrepreneurs are individuals who conceive an idea for a new product or service and then create a business to materialize their idea into reality. They may set up a big establishment or a small business unit. They are called small business entrepreneurs when found in small business units such as printing press, textile processing house, advertising agency, readymade garments or confectionery.
Trading Entrepreneur: The trading entrepreneur is one who undertakes trading activities and is not concerned with the manufacturing work. He identifies potential markets, stimulates demand for his product line and creates a desire and interest among buyers to go in for his product line and creates a desire and interests among buyers to go in for his product line and creates a desire and interests and buyers to go in for his product. He is engaged in both domestic and overseas trade. Britain, due to geographical limitations has developed trade through trading entrepreneurs.
Industrial Entrepreneurs: Industrial entrepreneur is essentially a manufacturer who identifies the potential needs of customers and tailors a product or service to meet the marketing needs. He is product- oriented man who starts in an industrial unit because of the possibility of some new product.
Corporate Entrepreneur: Corporate entrepreneur is a person who demonstrates his innovative skill in organizing and managing corporate undertaking. A corporate undertaking is is a form of business organization which is registered under some statue or act which gives it a separate legal entity. A trust registered under Trust act or company registered under the companies act is examples of corporate undertakings. A corporate entrepreneur is thus an individual who plans, develops and manages a corporate body.
Agricultural Entrepreneur: Agricultural entrepreneur are those entrepreneurs who undertake agricultural activities as raising and marketing of crops, fertilizers and other inputs of agriculture. They are motivated to raise agricultural through mechanization, irrigation and application of technologies for dry land agriculture products.
Entrepreneurs in technology
We may broadly classify these entrepreneurs on the basis of use of technology as follows:
Technical entrepreneur: A technical entrepreneur is essentially compared to a crafts man. He develops improved quality of goods because of the craftsmanship. He concentrates more on production than marketing.
Non technical entrepreneur: These are people who are not concerned with the technical aspects of the product in which they deal. They are concerned only with developing alternative marketing and distribution strategies to promote their business.
Professional entrepreneurs: Professional entrepreneurs are a person who is interested in establishing a business but does not have interest in managing or operating it once it is established. A professional entrepreneur is a person who is interested in establishing a business but does not have interest in managing or operating it once it is established. A professional entrepreneur sells out the running business and starts another venture with the sales proceeds.
Entrepreneurs and motivation
Pure entrepreneur: A pure entrepreneur is an individual who is motivated by psychological and economic rewards. He undertakes an entrepreneurial activity for his personal satisfaction in work, ego, and status.
Induced Entrepreneur: He is the person who is induced to take up an entrepreneurial task due to the policy measures of the government that provides assistance, incentives, concessions, and necessary overhead facilities to start the venture. Most of the induced entrepreneurs enter entrepreneurship due to financial, technical and several other facilities provided to them by the state agencies to promote entrepreneurship.
Motivated entrepreneur: New entrepreneurs are motivated by the desire for fulfillment. They come into being because of the possibility of making and marketing some new product for the use of customers. If the product is developed to saleable stage, the entrepreneur is further motivated by reward in terms of profit.
Spontaneous Entrepreneur: These entrepreneurs start their business because of their natural talents. They are persons with initiative, boldness and confidence in their ability which motivate them to undertake entrepreneurial activity. Such entrepreneurs have a strong conviction and confidence in their inborn ability.
Growth and Entrepreneurs
Growth Entrepreneur: Growth entrepreneurs are those who necessarily take up high growth industry which has substantial growth prospects.
Super Growth Entrepreneurs: Super growth entrepreneurs are those who have shown enormous growth of performance in their venture. The growth performance is identified by the liquidity of funds, profitability and gearing.
Entrepreneurs and stages of Development:
Entrepreneurs may also be classified as the first generation entrepreneur, modern entrepreneur and classical entrepreneur depending upon the stage of development. They are explained below:
First-generation entrepreneur: A first generation entrepreneur is one who starts an industrial unit by innovative skills. He is essentially an innovator, combining different technologies to produce a marketable product or service.
Modern entrepreneur: A modern entrepreneur is one who undertakes those ventures which go well along with the changing demand in the market. They undertake those ventures which suit the current marketing needs.
Classical entrepreneur: A classical entrepreneur is one who is concerned with the customers and marketing needs through the development of the self supporting venture. He is a stereotype entrepreneur whose aim is to maximize his economic returns at a level consistent with the survival of the firm with or without an element of growth.
Others
Innovating Entrepreneurs: Men and women in this group are generally aggressive in experimentation who exhibit cleverness in putting attractive possibilities into practice. One need not invent but convert even old established products or services by changing their utility, their value, and their economic characteristics into something new, attractive and utilitarian. This is the secret of these people.
Imitative entrepreneurs: These people are characterized by readiness to adopt successful innovations by entrepreneurs. They imitate techniques and technology innovated by others. They are adoptive and more flexible.
By western standards, an imitative entrepreneur may be a pedestrian figure, an adopter an imitator rather than a true innovator. He is more an organizer of factors of production than a creator. But in a poor country attempting to industrialize, he is nevertheless a potent change producing figure. He can set in motion the chain reaction which leads to cumulative progress.
CHARACTERISTICS OF AN ENTREPRENEUR
A successful entrepreneur must be a person with technical competence, initiative , good judgment, intelligence , leadership qualities, self competence, initiative , self confidence, energy, attitude, creativeness, fairness, honesty, tactful, and emotional stability.
Mental ability: Mental ability consists of intelligence and creative thinking. An entrepreneur must be reasonably intelligent ,should have creative thinking and must be able to engage in the analysis of various problems and situations in order to deal with them. The entrepreneur should anticipate changes and must be able to study the various situations under which decisions have to be made.
Clear Objectives: An entrepreneur should have a clear objective as to the exact nature of the goods to be produced and subsidiary activities to be undertaken.
Business secrecy: An entrepreneur must be able to guard business secrets. Leakage of business secrets to trade competitors is a serious matter which should be carefully guarded against by an entrepreneur.
Human relations ability: The most important personality traits contributing to the success of an entrepreneur are emotional stability, personal relations, consideration and tactfulness. An entrepreneur must maintain good relations that will encourage them to continue to patronize his business. He must also maintain good relations with his employees if he is to motivate them to perform their jobs at a high level of efficiency. An entrepreneur who maintains good human relations with customers , employees , suppliers , creditors and the community is much more likely to succeed in his business than the individual who does not practice good human relations.
Communication ability: Communication ability is the ability to communicate effectively. Good communication also means that both the sender and the receiver understand each other and are being understood. An entrepreneur who can effectively communicate with customers, employees suppliers and creditors will be more likely to succeed than the entrepreneur who does not.
Technical knowledge: An entrepreneur must have a reasonable level of technical knowledge. Technical knowledge is the one ability that most people are able to acquire if they try hard enough. An entrepreneur who has a high level of administrative ability ,mental ability, human relations ability, communication ability, and technical knowledge stand a much better chance of success than his counterpart who possess low levels of these basic qualities. Brilliant men with first class degrees from universities shy away from becoming entrepreneurs because the one thing they cannot be taught is coping with human emotions. Robert D. Hisrich has identified a few more capabilities or personal characteristics that an entrepreneur should posses. Some key characteristics of successful entrepreneur are:
Motivator: An entrepreneur must build a team, keep it motivated and provide an environment for individual growth and career development.
Self confidence: Entrepreneurs must have belief in themselves and the ability to achieve their goals.
Long term involvement: An entrepreneur must be committed to the project with the time horizon of five to seven years . No ninety-day wonders are allowed.
High energy level: Success of an entrepreneur demands the ability to work long hours for sustainable period of time.
Persistent problem solver: An entrepreneur must have an intense desire to complete a task or solve a problem. Creativity is an essential ingredient.
Initiative: An entrepreneur must have initiative accepting personal responsibility for actions , and above all make good use of resources.
Goal setter: An entrepreneur must be able to set challenging but realistic goals.
Moderate risk taker: An entrepreneur must be a moderate risk-taker and learn from any failures.
CHARACTERISTICS OF SMALL SCALE ENTREPRENEURS
1. They are young men
2. They are energetic zealous / enthusiastic.
3. They have minimum basic education.
4. They are pleasant – mannered.
5. They are hard – working.
6. They are determined.
7. They are systematic.
8. They are self – made men.
9. They are self – confident.
10. They are disciplined men.
11. They follow a planned approach.
12. They are trained / experienced.
13. They have entrepreneurial zeal.
14. They have meager capital.
15. Their area of operation is small.
16. Generally they deal in one product.
17. They employ a few people.
18. Their turnover is small.
19. They are flexible.
CHARACTERISTICS OF LARGE SCALE ENTREPRENEURS
1. Promoted and professionally – managed through employed persons.
2. Large capital.
3. Capital contributed by a large section of shareholders.
4. Shares are registered in the share markets / stock exchanges.
5. Large assets.
6. Assets acquired on classified credit.
7. Engaged in diversified activities.
8. Promotes and pushes goods in the market.
9. Huge turnover / sales / profits.
10. Easy access to institutional finance.
11. They have greater leverage for development.
12. They are the trend setters.
13. They are well acquainted with political and officialdom.
14. They can create demand for their products through consumer awareness programmes, education etc.
15. They are great visionaries who foresee the need of the country well ahead of times.
16. They are responsible and have a value – driven corporate philosophy.
NATURE AND IMPORTANCE OF ENTREPRENEURS
The world is rapidly changing. The energy, food and the accommodation requirements for the growing world population is changing at a faster rate. In order to face the changing requirements of the world no system in this world is foolproof. It constantly changes. Hence the system constantly faces lot of problems due to its dynamic nature.. In order to face the challenges posed by the ever changing system we need entrepreneurs. Entrepreneurs are like rebels in the system. They are like shock absorbers of the system. They create new systems for life . They absorb the any type of changes in the system-absorb the shocks by creating a new system. They make life. In fact entrepreneurs are people who create life in this world. E.g. Bill Gates the founder chairman of software giant IBM is a classical example. He revolutionized the flow of information across the continents at a very cheaper rate. This forms the nature and importance of entrepreneurs.
Entrepreneurial qualities.
Entrepreneurial qualities are to some extent innate. But not all of them are entirely innate. Some can be enhanced by training, or simply by experience. For example, analytical ability and computational skill can be enhanced by education at school and university, while practical knowledge and foresight skills can be enhanced by the general experience of everyday life. Of the two inseparable qualities of the entrepreneur, imagination is almost entirely innate, while foresight can be enhanced by a varied experience. Imagination and foresight are the scarce qualities which are difficult to analyze and quantify. Delegation skill and organizational skill , though not essential are highly desirable whenever large scale decision making is involved. These are qualities which can be enhanced through experience.
Nature of Entrepreneurial functions:
According to some economists , the function of an entrepreneur incorporate coordination of the business management of the enterprise, risk taking, controlling the enterprise, innovation for change, motivation and other related activities. In reality, an entrepreneur has to carry out a combination of these in keeping with time and environment. Truly he has to consider new ideas ,demands and exploit the opportunities and thereby contribute to technical progress. He is thus a nucleus of high growth of the enterprise.
An entrepreneur is expected to perform the following functions:
1. Assumption of Risk: The entrepreneur assumes all possible risks of business. Which emerges due to the possibility of changes in the tastes of consumers, techniques of production and new inventions. Such risks are not insurable. If they meterialise the entrepreneur has to bear the loss himself. Thus risk – bearing or uncertainty – bearing still remains the most important function of an entrepreneur which he tries to reduce by his initiative skill and judgement.
2. Business decision: The entrepreneur has to decide the nature and type of goods to be produced. He enters the particular industry which offers him the best prospects and produces whatever commodities he thinks will pay him the most and employs whose methods of production which seem to him the most profitable. He effects suitable changes in the size of the business, its location , techniques of production and does everything that is needed for the development of his business.
3. Managerial functions: The entrepreneur performs the managerial function though they are different from entrepreneurial functions. He formulates production plans, sees to the finance, deals with purchase of raw materials, provides production facilities, organizes sales including management. In a large establishment these management functions are delegated to the paid managerial personnel.
DECISION MAKER
Author H. Cole described an entrepreneur as a decision maker and attributed the following functions to him:
1. The determination of those objectives of the enterprise and the change of those objectives as conditions required or made advantageous.
2. The development of an organization including efficient relations with subordinates and all employees.
3. Securing adequate financial resources and maintain good relations with the existing and potential investors.
4. The requisition of efficient technological equipment and the revision of it as new machinery appeared.
5. The development of a market for the products and the devising of new products to meet or anticipate consumer’s demand and
6. The maintenance of good relations with public authorities and with the society at large.
Modern writers on this subject have outlines the following three broad functions of an entrepreneur;
1. Innovation
2. Risk – taking
3. Organization and management of business so as to have leadership and control over it.
Innovation means ‘doing new things or the doing of things that are already being done in a new way”. It includes new processes of production, introduction of new products, creation of new markets, discovery of a new and better form of industrial organization. Risk – bearing means making provisions for capital in order to enable the entrepreneur is to reduce uncertainty in his plan of investment and expansion of the enterprise, thus innovations may occur in the following forms:
1. Introduction of a new good, that is one which consumers are not yet familiar with or of a new quality of a good.
2. Introduction of new method of production that is one not yet tested by experience in the concerned unit of manufacture, which needs to be founded upon a discovery scientifically new and which can also exist in a new way of handling a community commercially.
3. Opening of a new market that is a market into which the particular branch of manufacture of the country in question has not previously entered, irrespective of whether or not this market has existed before.
4. Turn into good account a ne source of supply of taw material or half manufactured goods, irrespective of whether this source already exists or whether it has first to be created.
5. Carrying out of the new organization of any industry like the creation of a monopoly position (for example through fructification) or the breaking of a monopoly position.
Entrepreneur Vs Entrepreneurship
ENTREPRENEUR
ENTREPRENEURSHIP
Refers to a person
Refers to a process
Visualiser
Vision
Creator
Creation
Organiser
Organization
Innovator
Innovation
technician
Technology
Initiator
Initiative
Decision - maker
Decision
Planner
Planning
Leader
Leadership
Motivator
Motivation
Programmer
Action
Risk - taker
Risk taking
Communicator
Communication
Administrator
Administration
“ The term entrepreneur” is often use interchangeably with “entrepreneurship”. But conceptually they are different yet they are just like the two sides of a coin. Their differences are as follows:
Conclusion
Entrepreneurs play an important role in the development of society. For example the use of Jeans in America has created the demand for it throughout the world. Similarly Coca Cola has been accepted as a social drink. The introduction of the television has provided the society a mans of information and entertainment. The society has accepted the innovations of such entrepreneurs as Gillette, Wright Brothers and Henry Ford. The inventions of these great entrepreneurs of the history has revolutionized the lfe style of people in the society.
Robert D. Hisrich has identified a few more capabilities or personal characteristics than an entrepreneur should possess. According to him, the entrepreneur must have an adequate commitment, motivation and skills to start and build a business. The entrepreneur must determine if the management team has the necessary complementary skills necessary to succeed. Some key characteristics of a successful entrepreneur are:
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