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:
