CONCEPT OF ENTREPRENEURSHIP

ORIGIN:-

The term ‘entrepreneur first of all appeared in the French Language. In the early 16th century it was applied to a person engaged in military expedition. To was extended to cover the construction and civil engineering activities in the 17th century. It was the only in the 18th century that the word was used to refer to economic activities. Richard Cantillon, a French banker applied the word entrepreneur to mean a person who bears uncertainty and risk ’

Introduction

Economic development essentially means a process of upward change. It can be defined as a process of a upward change. It can be define as a process whereby the real per capita income of the country increases over a long period of time.

Concept

Entrepreneurship is the tendency of a person to organize the business of his own and it run a profitably, using the quality of leadership, decisions making and managerial caliber etc. The term entrepreneurship is often used interchangeably with entrepreneurship. But conceptually they are different

ENTREPRENEUR ENTREPRENEURSHIP

Refer to a person Refer to a process

Creators Creation

Organizer Organization

Decision Maker Decision making

Initiator Initiative

Leader Leadership

Motivator Motivation

Risk Taker RiskTaking

In a way entrepreneur precedes entrepreneurship. Entrepreneurship is an abstraction and entrepreneur are tangible person. Well designed and controlled research studies on entrepreneurship are very few.

Entrepreneurship is an abstraction and entrepreneurs are tangible persons. Well Designed and controlled research studies on entrepreneurship are very few. Entrepreneurship is a role played by or the task performed by the entrepreneur. The central task of the entrepreneur is to take the moderate risk and invest the money to earn profit by the exploiting an opportunity. For this he must posses far sight6edness to perceive an opportunity so that he can exploit it well in time.

Entrepreneurship can be defined as the propensity of mind to take calculated risk with confidence to achieve a pre determined business or industrial objectives. The word ‘entrepreneurship’ typically means to undertake. Recently in the west, the entrepreneurship is mainly an attribute of an efficient manager. But the success achived by entrepreneurs in developing countries demolish the contention thet entrepreneur is a rare animal and an elusive character. Incidentally entrepreneurship has engaged the attention of sociologist, psychologists and economist. Sociologist analysis the characteristics of an entrepreneurs in terms of caste, family, social status etc. Psychologists analysis the attribute on the basis of their personality traits such a need of achievement, affiliation and power, risk taking, decision making, creativity and leadership etc. the economist analyses them on the bases of occupational background, access to capital, business to technical experience.

According to HIGGINS “Entrepreneurship is meant the function of seeing investment and production opportunity, organizing an enterprises to undertaken a new production process, raising capital, hiring labour arranging for supply of raw material and selecting top managers for the day to day operation of the enterprise”

According to Josepf. A. Schumpeter

Entrepreneurship is essentially a creative activity or it is a innovation function. The process of innovation may be in the form of

Introduction of a new product.

Use of a new method of production.

Opening of a new market.

The conquest of new sources of supplying raw material

A new form of organization

According to H.N.Pathak

Entrepreneurship involves the wide range of area on which series of decision are requiredwhich can be grouped into 3 categories

Perception of an opportunity

Organizing an industrial unit

Running the industrial unit as a profitable, growing and going concern

CHARACTERISTICS OF ENTREPRENEURSHIP

1)Calculated risk taker:- a risk situation occurs when one required to make a choice between two or more alternatives whose potential outcome are not known and must be subjectively evaluated. A Risk situation involve potential gain or loss. The greater the possible loss, the greater the risk is involved. An entrepreneur is a calculated risk taker. An entrepreneur likes to take a realistic risk because he want to be successful.

2)Innovator:- innovation may occur in the following forms:-

Introduction of a new product.

 Use of a new method of production.

Opening of a new market.

The conquest of new sources of supplying raw material

A new form of organization.

Beside this an innovator must have following qualities

More educated.

Higher in social standing.

Better equipped to deal with abstraction

More receptive to risk in general

Higher in achievement motivation

Higher in social participation

A more active information seeker

An opinion leader

More in contact with person outside the social system

3) Organizer:- An entrepreneur has to bring together various factors of production, minimize losses and reduce the cost of production. Initially, he may take all the decisions but as the enterprise grows, he starts delegating the authority. He produce the best result as an organizer. He select the best person, financer and make their employees to work with their loyalty and dedication. An enterprising entrepreneur should be energetic, resourceful, alert to new opportunities and able to adjust the changing condition.

4)Creative:- creativity as a field knowledge, seeks to explain how human, either individually or collectively, reach solution that are both novel and useful. Innovation means the efforts to create purposeful ventures

5)Achievement Motivated: Achievement motivation is a drive to overcome challenges to advance and to grow. An entrepreneur is achievement oriented person not ‘money hungry’. He works for his desire for challenge, accomplishment and services to other.

6)Technically Competent: success of an entrepreneur depends largely upon his ability to adopt latest technology. Technical knowledge implies his ability to device and use new and better ways of producing and marketing goods and services. An entrepreneur must have a reasonable level of technical knowledge. A dynamic entrepreneur must also be interested in changing the pattern of production to suit the requirement.

7)Self confident: Entrepreneur must be self confident. He should have faith in himself, only then he can trust others.

8)Socially responsible: in the context of the universal urge for the social change and economic development, the old concept of an entrepreneur seeking certain advantages for himself is no longer acceptable. The changing environment calls for the socially conscious entrepreneur who is not threatened by the progress of others.

9)Optimistic: an entrepreneur should approach his task with a hope of success and optimistic attitude. He attempts any task with the hope that he will succeed rather than with a fear of failure. Such a hope of success enhances his confidence and drives him towards success.

10)Equipped with capability to drive: drive is a person’s motivation towards a task. It comprises of such personality traits as responsibility, vigor, initiative, persistence and ambition. An entrepreneur must exert considerable efforts in establishing and managing his business.

11)Blessed with mental ability: this consist of overall intelligence .i.e. IQ, creative thinking ability and analytical thinking ability and analytical thinking ability.

12)Human relation ability: personality factors such as emotional stability, personal relations, sociability, consideration and tactfulness are important contributors to entrepreneur’s success.

13)Communication ability: An entrepreneur must possess the quality of communicating effectively in written and oral communication. Good communication also means that both the sender and receiver understand and are being understood.

14)Decision making: He must possess ability to take decision effectively. Decisions taken should be based on quantitative facts.

CONCEPTUAL MODEL OF ENTREPRENEURSHIP

In the initial stage of economic development , entrepreneurs tend to be the shy and humble but as the development process pick up the speed, they tend to more enthusiastic and confident. They help to make the business environment healthy and development oriented. These kind of entrepreneur exist in developed countries only as their economic development and technology level reached at a certain level. Imitative entrepreneurs are more successful.

However various types of entrepreneur are classified as under:-

1)According to the type of business:-

  • Trading entrepreneur: They are related to trading activities not a manufacturing. This means buying goods from other producer and selling the goods to consumers
  • Industrial entrepreneur: one who set up industrial units. He complies with necessary formalities of getting license, power connection, pollution control clearance etc
  • Business entrepreneur: who gave new idea of a new product and services and then translate their idea into reality.
  • Corporate entrepreneur: Who plans, develops and manages a corporate body. He is promoter, an essential part of board of director, an owner as well as entrepreneur.
  • Agriculture entrepreneur: one who engaged in agriculture activities.

2)According to motivation:

  • Pure entrepreneur: who may or may not possess an aptitude for entrepreneurship but it is tempted by the monetary rewards.
  • Induced entrepreneur: attracted by the various subsidies, facilities and incentives offered by the government.

3)According to the uses of technology:

  • Technical entrepreneur: He concentrate more on production than the marketing.
  • Non – Technical entrepreneur: Developing alternative strategies for the different marketing and distribution to promote his business activity.
  • Professional entrepreneur: Who is interested to float a business but not ready to manage or operate it.

4)According to stages of development:-

  • First Generation entrepreneur: who do not possess any entrepreneurial background
  • Second Generation entrepreneur: who inherit the family business firms and pass it generation to another
  • Classical Generation entrepreneur: Who want to maximize the profit at consistant level.

5)According to Capital Ownership:

  • Private entrepreneur: when a individual and group of individuals setup an enterprises, arrange finance, bears the risk and adopt the latest techniques in the business with the intention to earn profit, he or the group is called as private entrepreneur.
  • State entrepreneur: State entrepreneur means the trading and industrial venture undertaken by the state or the government itself.
  • Joint entrepreneur: Joint entrepreneur means the combination of private entrepreneur and state entrepreneur who join hands.

6)According to gender and age

  • Man entrepreneur
  • Woman entrepreneur
  • Young entrepreneur
  • Old entrepreneur
  • Middle –aged entrepreneur

7)According to area

  • Urban entrepreneur
  • Rural entrepreneur

8)According to scale

  • Large scale industry entrepreneur
  • Medium scale industry entrepreneur
  • Small scale industry entrepreneur
  • Tiny industry entrepreneur

SOCIO – ECONOMIC ORIGIN OfENTREPRENEURSHIP

Entrepreneurial environment constitutes both internal and external factors. Environment refers to all external factors which has an impact on the working of the firm. It refers to those aspect of the surrounding of the business enterprises and circumstances of business unit which affect or influence its activities and operations and decide its effectiveness.

A)ECONOMIC ORIGIN

Economic environment influences the entrepreneurship to a great extent. The business sectors has economic relation with the govt, capital market, household and with global sector. The success of any enterprises are decided by the economic environment. The important external factors that affect the economic environment of the business are as follow:

  • Economic Conditions: the general economic conditions prevailing in the country .i.e. national income, per capita income, economic resources, distribution of income and assets etc. are important determinants of the entrepreneurship environment. Business cycles and economic growth of the economy are important factors of economic development.
  • Economic System: the economic system of a country may be capitalistic , socialistic, communist or mixed. Government regulation of economic activities depends upon on the nature of the economic system
  • Economic Planning: economic planning deals with systematic and co-ordinated efforts on the part of the political authority to improve the effectiveness of the economy.
  • Economic infrastructure: economic infrasturture consist of the provision of roads and railways, hydroelectric works, etc, some attempts have been made to involve the private sector is some areas of the infrastructures power generation , roads constructions, building highways, and telecommunication but responsibility of infrastructure is with government sector. .
  • Availability of capital facilities: capital requirement is one of thye basic factor for any business . increase in capital investment leads higher output.
  • Labour: division of labour is very important factor for the development of the any business.
  • Per capita income: with help of more private entrepreneurs there can be higher level of per capita income.

B)SOCIO ORIGIN

Social environment is very comprehensive because it may include the total social factors with in which an business enterprises operates. Social environment includes people attitude, family background, religion, education etc. The factors are

  • Rural society: about 70% of the Indian people live in villages and Indian villages continue to be under developed even backward. Urban – rural gap is a reality of our society. The ruraliti4sfeels that though agriculture accounts for the major part’s of India’s national income.
  • Poverty: poverty of the masses ia an important features of the Indian social system. Despite the fact of having made considerable progress in the fields of agriculture and industrialization. A large number of population lives below poverty line.
  • Illiteracy and ignorance: illiterates constitute a major part of the Indian social system. Nearly 64% of the population continues to be illiterate. The faculty system of education has compounded the evil of illiteracy. The need is for more determined governmental action and strong social support in this respect.
  • Linguistic diversity: on the basis of language, Indian society stands divided into linguistic groups. The constitution of India recognize as many as 15 languages.
  • Caste and casteism:
  • Communalism: the presence of communal tension and the periodic outbreak of communal riots have been the bone of the Indian social system.
  • Occupational Background.
  • Regionalism.
  • Traditions
  • Problems of social communication.

TRIATS OF A GOOD ENTREPRENEUR

The term ‘competence’ implies a person’s underlying characteristics leading to his/ her superior performance. It is good combination of various qualities and traits required to perform the job effectively. Entrepreneurs who possess the necessary competencies succeeds while those deficient in these competencies fail in their ventures.

Some people believe that entrepreneurs are born not made. In other words, business family background is essential to success for entrepreneurs. Other people believe that entrepreneurs are not made born. According to some people, person which proper knowledge and skills acquired through education and experience can become successful entrepreneur. In other words resolve the controversy on what successful entrepreneurs, the Entrepreneurship development Institute of India (EDI). Following are the traits or good qualities of the entrepreneur:-

  • Initiation: given the demand of the situation, entrepreneur takes initiation to start an industry .
  • Watching for opportunity and take necessary action.
  • Persistence: - he should go for extreme efforts to get rid of the problem.
  • Information seeker:- ready to learn from his experience
  • Quality conscious: - Always put effort to excel better than the existing standard of performance.
  • Commitment to work: - Accord upmost priority to accomplish the work.
  • Efficiency lover: - tries to do things at the faster pace incurring minimum cost.
  • Proper planning: - frames realistic business plans and follow them effectively.
  • Self confidence: - A strong believer in his strengths and weakness.
  • Assertiveness: - able to assert his issues.
  • Persuasion:- succeeds in persuading other to do what he wants
  • Efficient monitoring: - personally supervises the work to ensure that the work is accomplished.
  • Concern of employees and take proper action to improve the welfare of employees working in his enterprises.

Several other research studies have tried to identify the qualities and traits of successful entrepreneurs. In the study of entrepreneurial development in Madras city of India, J. Berna has stressed the following qualities of a good entrepreneur.

  • He is an enterprising individual. He is energetic, hardworking, resourceful, very alert to new opportunities, able enough to adopt to the changing condition.
  • He is also interested in expanding the scale of his operation by way of ploughing back his profit.
  • He welcome advanced technology.
  • He well visualize the likely changes and ready to adapt them

According to McClelland the successful entrepreneurs are characterized by the 3 qualities:

  • He is endowed with an unusual creativeness.
  • He is enriched by high propensity.
  • He has a strong need for achievement.

Having gone through the foregoing qualities of a successful entrepreneur, an integrated view of the qualities of a successful entrepreneur can be listed as follows:-

  • Capacity and willingness to assume risk.
  • Willingness to hardwork and be always tenacious.
  • Vision and forsightedness.
  • Creative and imaginative thinking.
  • High need achievement.
  • Innovativeness and willingness to adapt change.
  • Ability to utilize resources properly.
  • Total commitment, determination and perseverance.
  • High degree of ambition.

DIFFERENCE BETWEEEN ENTREPRENEURS AND MANAGER

BASIC / MANAGER / ENTREPRENEURS
Primary Motives / Mangers want promotion and traditional corporate reward / Entrepreneurs want freedom, a goal oriented self– reliant and self motivated
Time Orientation / Manager respond to quotas and budgets, weekly, monthly and yearly, / Entrepreneurs end goals of 5 to 10 year growth of business in view as guides
Skills / Mangers are business schools trained / He knows business intimately. He learns through experience.
Attention / Attention of managers are primary on event inside corporation / The attention of entrepreneur is primarily on technology and market place.
Risk / Managers are very careful / Entrepreneur like calculated risk
Status / Managers are the employees / Entrepreneur are the owner.
Educational Level / Highly educated. / Less well educated.

FACTORS EFFECTING ENTREPRENEURSHIP

Entrepreneurship does not emerge and grow spontaneously. Rather it is dependent rather it is dependent upon several economic, social political and psychological factors. These environmental factors may have both positive and negative influences on the growth of entrepreneurship. Various environmental factors inhibiting the emergence of entrepreneurship are given below.

  • ECONOMIC CONDITION: Economic environment exercise perhaps the most direct and immediate influence on entrepreneurship. Capital, labour, raw materials and markets are main economic factors. enterprise. Availability of capital facilities the entrepreneur to bring together the labour of one, machine of another and raw material yet of another to combine them to produce goods. Capital is regarded lubricant in the production process. With an increase in investment, capital – labour ratio tends to increase. This results in increase in profit which ultimately goes to a capital formation. This suggest that capital supply increases, entrepreneurship increases entrepreneurship. As the given labour is more efficient it increases the quality as well as production. Which help to increase the level of profit and encourage more entrepreneurship. If labour supply is unlimited even then entrepreneur can use labour intensive technology. Which reduce the cost of production and remove the problem of unemployment from the economy.
  • Material: The necessity of the raw material hardly needs any emphasis for establishing any industrial activity, therefore it influence in the emergence of entrepreneurship. In the absence of raw material there is no production which leads to no entrepreneurship.
  • Determinant of probable rewards for the entrepreneurial function. The size and composition of market both influence entrepreneurship in their own way.
  1. SOCIAL FACTORS: social environment in a country exercise s significant impact on the emergence of entrepreneurship. The main component of social environment are as follows
  • Legitimacy of entrepreneurship: The proponents of non – economic factors give emphasis to the relevance of the system of norms and value with a socio – cultural setting for the emergence of the entrepreneurship. In a professional vocabulary, such system is referred to as legitimacy of entrepreneurship in which the degree of approval or disapproval of granted entrepreneurial behavior influence its emergence and its characteristics if it does emerge. While Schumpeter recognize the importance of such Legitimacy in the terms of appropriate social climate for entrepreneurship.
  • Social Mobility: Social mobility involves degree of mobility, both the social and geographical, and the nature of the mobility channels with in the system. Some hold the view that a high degree of mobility is conductive to entrepreneurship. Both the needs for “openness” of a system and need for “flexibility” in role relations imply the need for the possibility of mobility within the system for entrepreneurship development. But this is believe that system should not be to rigid nor to flexible. If it is to flexible than the individual will gravitate toward other roles. If it is too rigid , entrepreneurship will be restricted along with other activities.

The two preceding factors - Legitimacy of entrepreneurship and Social Mobility largely determine the influence of marginality on entrepreneurship. In situation in which entrepreneurial Legitimacy is low, mainstream individual will be diverted to non entrepreneurial role and entrepreneurial role will be relegated to the marginals. On the contrary in the case of the high Legitimacy of entrepreneurship, mainstreams individual will assume the entrepreneurship and marginal will have to find other role as mean