BAM 074: ENTREPRENEURIAL BEHAVIOR

MODULE 1 2. FULL UTILIZATION OF AVAILABLE

INTRODUCTION RESOURCES
Economic resources - LLC (Land, Labor, Capital).

MODULE 2
OPPORTUNITIES RESOURCES
ENTREPRENEURIAL BEHAVIOR

WHAT IS AN ENTREPRENEUR?
• A person who undertakes the risk of starting a
ENTREPRENEURS new business venture.
• An entrepreneur creates a firm, which aggregates
capital and labor in order to produce goods or
services for profit.
• Entrepreneurship is an important driver of
ELEMENTS OF ENTREPRENEURSHIP economic growth and innovation.

• Always be with us. • Entrepreneurship is high-risk, but also can be

• Creative in maximization of utilities. high-reward as it serves to generate economic

• Provide structure of payoffs. growth wealth, growth, and innovation.

• Pursue opportunities beyond the resouces they WHAT IS ENTREPRENEURIAL BEHAVIOUR?

currently control.
• Is directly concerned with the understanding,
prediction and control of human behaviour in
One element of entrepreneurship is looking for the
enterprises.
best opportunities (Ideas that solve problems).
• Preference for innovation and a change in existing
Best way to cater the need of customers is to solve
institutions and the status quo.
their needs.
• Entrepreneurs often go into business for their
1. MAXIMIZATION OF SHAREDNESS passions rather than for profits.

Wealth 1. IN TERMS OF CUSTOMER RELATIONSHIP

• For entepreneur, customers are his companions
Assets Cash on hand whom he wants to make happy and satisfied by his
work so he will not be compelled to do many things Managerial Behaviour - preference for maintaining
for keeping them in their touch. the status quo.
• An entrepreneur always takes their customers as WHAT IS AN BUSINESSMAN?
his source of duty which he has to maintain for • A businessman is a person who runs the business,
lifetime an entrepreneur believes in maintaining undertaking an unoriginal business idea.
relationships for lifetime rather gaining profit. • A businessman walks on the defined path.
2. IN TERMS OF KEEPING EYES ON 1. IN TERMS OF IDEAS
COMPETITORS • A businessman always chooses a profitable
• Entrepreneurs always learn from their competitors, business idea whether it is his original idea or an
they handle their competition in an easy and calm already existing idea, that's why a businessman
way. always faces a big competition in the market
• Considers cooperation and collaboration rather because many other people are doing the same
than competition to achieve certain goals. thing but a businessman is the only person who can
• Competitors encourage them to do more and more make a success out of any idea.
good work for going ahead from their competitors.
2. IN TERMS OF RISK TAKING
3. IN TERMS OF EMPLOYER EMPLOYEE • In terms of risk taking a businessman always takes
RELATIONSHIP pre planned risks they don't want to lose money
• Entrepreneurs treat their employees as a friend and suffer from insolvency.
and a leader, entrepreneurs never treat their • That is why they always calculate profit and loss
employees as a worker only. when it comes to business.
• Always gives them respect and suggestions to do
3. IN TERMS OF WORKING STYLE
work in a good manner and invites them to help
• A businessman always does work for making profit,
them grow.
and their name for this world whether they are
4. IN TERMS OF MONEY MAKING MINDSET enjoying their work or not they are to do only work
• Entrepreneurs generally take more risks with for better results in income.
money finance and circumstances in comparison to • They want to gain profit by hook or crook,
businessmen. businessmen always see the world as an
• Almost all entrepreneurs believe in this line which opportunity.
has been said by a big personality that “nothing • They always want to become a big man by their
ventured, nothing gained” means you can’t expect money and standard anyhow.
to achieve anything if you never take any risks.

Entrepreneurial Behaviour - embraces innovation,

motivated to seek changes in the status quo, &
draws statisfaction from institutional changes.
4. IN TERMS OF TIME MANAGEMNT MODULE 3
• A businessman never wants to waste his time, he CHARACTERISTICS OF
always does his work in the same specific time
ENTREPRENEURIAL BEHAVIOUR
period which he has already planned for that.
• He never wants to delay any work or commitment • BEHAVIOURAL APPROACH TO MANAGEMENT
to be out of schedule. - Entrepreneurial behaviour represents the

5. IN TERMS OF UNDERSTANDING THE SUCCESS behavioural approach to management. It emerged

• Businessmen always describe success in money as a distinct field of study because of the

and growth. importance of human behaviour in enterprise.

• How much money they are getting from their Example: Empowering employees to make

business, what is the turnover of their business, suggestions and create initiatives is a behavioral

how much growth they are gaining on a daily basis, approach because it helps employees enjoy their

how much people want to work with them and want jobs and raise their self-esteem.

to invest in their business, that is the real success • CAUSE AND EFFECT RELATIONSHIP
for businessmen. - Human behaviour is generally taken in terms of
6. IN TERMS OF OPPORTUNITY UNDERSTANDING cause and effect relationship. It provides
• Businessmen always take money as an opportunity, generalization that entrepreneurs can use to
if they are seeing any area where they can invest anticipate the effect of certain activities on human
and make money in a huge amount then they will behaviour.
take that thing as an opportunity and they will Example: Customer dissatisfaction may be a result
never miss that opportunity. of long lead times in supply or poor after-sales
services.
WHAT IS THE DIFFERENCES BETWEEN AN
ENTREPRENEUR AND A BUSINESSMAN? • A BRANCH SOCIAL SCIENCES
- Entrepreneurial behaviour is greatly influenced by
• A person who brings his unique idea to run a
other social sciences viz., psychology, sociology and
startup company is known as entrepreneur. A
anthropology.
businessman is a person who starts a business on
an old concept or idea. Example: Social sciences help to explain how society
works, exploring everything from the triggers of
economic growth and causes of unemployment to
what makes people happy. This information is vital
and can be used for many purposes. Among other
things, it helps to shape corporate strategies and
government policies.
• A SCIENCE AS WELL AS AN ART Example: Most people want to get the most useful
- The systematic knowledge about human products at lowest price; because of this, they will
behaviour is a science and the application of judge the benefits of a certain object (for example,
behavioural knowledge and skill is an art. how useful is it or how attractive is it) compared of

Example: The major difference is that in science, we this, they to those of similar objects. They will then

seek truth, and in entrepreneurship, we seek compare prices (or costs). In general, people will

opportunities to make money. So, it can be said that choose the object that provides the greatest reward

Entrepreneurship is both an art and a science. at the lowest cost.

• A BODY OF THEORY, RESEARCH AND • HUMAN PART OF ENTERPRISE

APPLICANT - It focuses on people, their desires and needs. It is

- Entrepreneurial behaviour consist of a body of the systematic study of the action of the action and

theory, research and application which helps in attitudes of people working in enterprise.

understanding the human behaviour in organization. Example: The Human Enterprise reframes our

Example: In business, a system theory of relationship with technology to enable new ways of

organization refers to the way, for example, a part working and unlock new paths to value.

of a company or organization interacts with the THREE LEVELS OF ANALYSIS

organization as a whole, or even with the market or
• INDIVIDUAL BEHAVIOUR - can be defined as a
industry as a whole.
mix of responses to external and internal stimuli. It
• BENEFICIAL TO BOTH ENTERPRISE AND is the way a person reacts in different situations
INDIVIDUALS and the way someone expresses different emotions
- A reasonable climate is created so that employees like anger, happiness, love, etc.
may get much needed satisfaction and the
entrepreneur may attain its objectives. • INTER-INDIVIDUAL - differences the variations
between individuals in one or more traits, behaviors,
Example: Create a platform that is beneficial to
or characteristics (e.g., variations in intelligence).
both individuals and the organizations.

• RATIONAL THINKING • ORGANIZATIONAL BEHAVIOUR - directly

- Entrepreneurial behaviour provides a rational concemed with the understanding, prediction, and
thinking about people and their behaviour. The control of human behavior in organizations.
major aim of entrepreneurial behaviour is to explain
and predict human behaviour in enterprise.
- an essential part of our daily life and business is
also not an exception. Only those people who think
rationally will be effective in businesses.
 MODULE 4 3 MAJORR AREAS OF RESPONSIBILITIES
APPROACHES TO THE STUDY OF OF HUMAN RESOURCE MANAGER
ENTREPRENEURIAL BEHAVIOUR • STAFFING
Business goal - to satisfy the nends and wants of The function of employee recruitment, screening
customer. and selection performed within an organization or
Profit Customer Loyalty = more sales & business to fill job openings. Other areas of
business plan employment which may be handled by a staffing
• Leader identify the goals. department are orientation, training, retention and
• Continuity is the key. termination.

1. HUMAN RESOURCES APPROACH • COMPENSATION & BENEFITS

- Entrepreneurs should provide active support to Refers to the compensation/salary and other
workers by threating them part and parcel of the monetary and non- monetary benefits passed on by
unit. Entrepreneurs should provide opportunities a firm to its employees. It helps give benefits to
and encouragement to workers to work under loose employees based on their performance and actions
supervision. and brings the best out the employees at workplace.
- The term used to describe formal systems devised • WORK/JOB DESIGN
for the management of people within an Used to assess how tasks or the entire job is
organization. organised within the work environment, and then
• HR Management (employee, workers, team ensure these are well-matched to the attributes of
members) the employee. While both terms, job design and
• Resource Capital work (place) design are used interchangeably, job
• People Management design has a focus on those administrative changes
• Evaluation that are required to improve working conditions,
• Succession with work design having a more pragmatic
approach and addressing those adjustments that
WHAT IS THE PURPOSE OF HRM? may be required to workstations, tools, and body

To maximize the productivity of an organization by positions.

optimizing the effectiveness of its employees. This

mandate is unlikely to change in any fundamental 2. CONTINGENCY APPROACH
way, despite the ever-increasing pace of change in - There is no single way to handle the human
the business world. resources under all conditions. The behaviours or
methods successful in one situation may fail in
other situation.
• Strategy Mana MODELS
• Plan of Action E = f(e)
• Goal Setting ENTREPRENEURSHIP IS A FUNCTION OF THE
• Methodology ENTREPRENEUR:
• Statement Analysis
• Introduction
• Innovation
3. PRODUCTIVE APPROACH • Independence
- Productivity means the numerical value of the • Human Relations
ratio of output to input. Higher the value of this • Risk Taking
ratio, greater is the efficiency and effectiveness of
Imagination
the entrepreneur.
Flexibility = Willingness to accept risk
• Production and Operational Management
• Total Quality Management MODULE 5
• Customer Feedback
MODEL OF ENTREPRENEURIAL
• Performance Evaluation
BEHAVIOUR

EFFECTIVENESS - Doing the RIGHT THING. WHAT IS MODEL?

EFFIENCY - Doing the THING RIGHT (allocate - A system or thing used as an example to follow
recources). or imitate.
- A three-dimensional representation of a person

4. SYSTEM APPROACH or thing or of a proposed structure, typically on a

smaller scale than the original.
- An enterprise is a powerful system with several
subsystems which are highly and closely THE IMPORTANCE OF MODEL
interconnected. Any action taken to solve the Models help us to visualize a system as it is or as we
problem in one subsystem will have its effect on the want it to be. Models permit us to specify the
other subsystems also. structure or behaviour of a system. Models give us a
• Identifying Sub System (Powerful) template that guides us in constructing a system.
• Whole Social System of Entrepreneurship Models document the decisions we have made.
Entrepreneurs
MODEL OF ENTREPRENEURIAL BEHAVIOUR
Supplies Customers
• Autocratic Model : The basis of this model is the
Manufacturers Distributors Consumers Customers power of the boss.

Retailer Wholesale
Maxweber defined power as, "the probability that • Supportive Model : The supportive model has
one actor, within a social relationship, will be in a originated from the 'Principals of supportive
position to arry out his own will despite resistance." relationships’.

The essential feature of this model are as follows: The main features of this model are as follows:

➤ Enterprise with an autocratic environment is The supportive model depends on leadership

authority oriented. instead of power or money.
➤ Under autocratic model, the employee's ➤ The leader assumes that the workers will take
orientation is obedience to the boss, they need not responsibility, make their contribution and improve
be respectful to him. themselves, if given a chance.
➤ The autocratic model has been successful in ➤ It should be the duty of the entrepreneur to
some situations where the workers are actually lazy support the employees' job performance.
and have a tendency to shirk work. ➤ This model takes care of the psychological needs
➤ The leadership in an autocratic model is of the employees in addition to their subsistence an
negative security needs

• Custodial Model : This model overcomes the • Collegial Model : The dictionary meaning of
shortcomings of the Autocratic model. The collegial is a body of persons having a common
insecurity and stration felt by the workers under purpose.
the autocratic model sometimes led to aggression The main features of these model areas follow:
frustration. There was a deed to develop a model
➤ This model creates a favorable climate in the unit
which will improve the employer-employee relations.
as the workersfeel that they are the partner in t
Some of these important features of this model are enterprise.
as explained below: ➤ This model inculcates the teamspirit in a unit.
➤ The success of the custodial model depends ➤ In this model, the workers have job satisfaction,
upon the economic resources because this model job involvement, job commitment.
emphasis the economic reward & benefits.
➤ The employees depend upon unit rather than
their boss.
➤ Under this model, the employees are satisfied &
happy and they are not strongly motivated.
➤ The main benefit of this model is to bring
security & satisfaction to the employees.
 MODULE 6 5. IDEOGRAPHIC MODEL
• The models that are developed to deal with
OTHER MODEL OF ENTREPRENEURIAL
specific cases or unique situations are called
BEHAVIOUR ideographic models.
• An idiographic method focuses on individual cases
1. NORMATIVE MODEL
or events. Ethnographers, for example, observe the
• The normative models seek to find out that what
minute details of everyday life to construct an
should be done to produce optimum result.
overall portrait of a specific group of people or
• A normative model answers an optimization
community
question - if you are trying to solve a problem,
what's the optimal way to solve it? For example, if
6. NOMOTHETIC MODEL
you want to travel from one point to another, the
• These models deal with general situations. These
fastest way is to take a straight line.
are concerned with theory building on the macro
level basis.
2. EMPIRICAL MODEL
• A nomothetic method, on the other hand, seeks to
• The empirical models describe the activities that
produce general statements that account for larger
the employees actually perform. Is a generic term
social patterns, which form the context of single
for activities that create models by observation and
events, individual behaviours, and experience.
experiment.
• Empirical Modelling (with the initial letters
capitalized, and often abbreviated to EM) refers to MODULE 7
a specific variety of empirical modelling in which ENTREPRENEURSHIP AND ECONOMIC
models are constructed following particular
DEVELOPMENT
principles.
WHAT IS ECONOMIC DEVELOPMENT?
3. ECOLOGICAL MODEL
Economic growth is effect, entrepreneur is the
• Models which deal with the changes which take
cause. Entrepreneurs explore opportunities, convert
place in the environment & which understand the
ideas into viable business proposition and provide
complexities of environment are ecological models.
new products and services to the society by
• For example, having violent friends may influence
bringing together and combining various factors of
whether a young person engages in or becomes a
production. They change life style of the people.
victim of violence.

4. NON-ECOLOGICAL MODEL
• Assume stability in the environment & that
everything will remain the same.
WHAT ENTREPRENEURS DO? and linking the person with a viable business
opportunity.

ENTREPRENEURSHIP PROCESS

 Most resource rich regions the world over are

poor and resource poor regions are rich. We call
it the ‘resource curse’ phenomenon.
ROLE AND IMPORTANCE OF
ENTREPRENEURIAL BEHAVIOURAL
 Underdevelopment is not because of the lack of
natural resources but because of the deficiency
• Understanding human behaviour: Entrepreneurial
in the combining process itself that is
behaviour plays an important role to develop full
undertaken by entrepreneurs
knowledge about the behaviour of employees.

 Capital and technology are futile till the

Human behaviour is absolutely fascinating.
absorptive capacity of the country is
Observing people and trying to predict what they
inadequate because of the shortage of skills or
will do next can provide a real leaming experience.
of attitude (entrepreneurship) which favor
Human behaviour is quite predictable in many
change.
instances. Personalities can be extremely complex
CAN ENTREPRENEURS BE CREATED? but there are areas that can be understood with a
Certainly, as experiences indicate that: high degree of accuracy. That is part of the value in
1. There is enormous untapped entrepreneurial using validated personality assessments. It's a lot
potential. like on the job training in the human behavior
2. There are ample unexploited opportunities. department.
3. Once shown, people will respond to opportunities.
4. This latent potential enterprise among people A study on human behavior has revealed that 90
could be identified and then developed through percent of the population can be classified into four
appropriate training-cum-counseling interventions basic personality types: optimistic, pessimistic,
trusting and envious.
• Predicting human behaviour: Entrepreneurial An employee is generally subject to the business's
behaviour also help in predicting the future instructions about when, where, and how to work.
employee behaviour. This would allow them to take All of the following are examples of types of
preventive actions. instructions about how to do work.

 When and where to do the work.

Human behaviour modeling normally requires a
 What tools or equipment to use.
predictive mechanism that can predict a future
 What workers to hire or to assist with the work.
behavior of an individual, such as click, a buy, a call,
 Where to purchase supplies and services.
or exercise. It can take the observed attributes of
 What work must be performed by a specified
the individual and the social network as input and
individual.
provide a predictive score as output.
 What order or sequence to follow when
performing the work.
• Control and direct behaviour: Entrepreneurial
behaviour assists entrepreneur to direct and DEGREE OF INSTRUCTION
control the human behaviour to build successful
• Means that the more detailed the instructions,
enterprise.
the more control the busines exercises over the
worker.
Behavioural control refers to facts that show
whether there is a right to direct or control how the • More detailed instructions indicate that the
worker does the work. A worker is an employee worker is an employee. Less detailed instructions
when the business has the right to direct and reflects less control, indicating that the worker is
control the worker. The business does not have to more likely an independer contractor.
actually direct or control the way the work is done
Note: The amount of instruction needed varies
the employer has the right to direct and control the
among different jobs. Even if no instructions are
work.
give sufficient behavioral control may exist if the
employer has the right to control how the work
The behavioural control factors fall into the
results are achieved. A business may lack the
categories of:
knowledge to instruct some highly specialized
• Type of instructions given
professionals; i other cases, the task may require
• Degree of instruction
little or no instruction. The key consideration is
• Evaluation systems
whether the busines has retained the right to
• Training
control the details of a worker's performance or
instead has given up that right.
EVALUATION SYSTEM • Motivation is also important to those that
• If an evaluation system measures the details of entrepreneurs work with and interact with.
how the work is performed, then these factors wou Entrepreneurs need to understand, tap into, and
point to an employee sustain their own motivation for starting a business,
• If the evaluation system measures just the end but they also need to be able to motivate others to
result, then this can point to either an buy into their idea.
independence contractor or an employee.
Entrepreneurial motivation is the process of
TRAINING transforming an ordinary individual to a powerful
• If the business provides the worker with training businessman, who can create opportunities and
on how to do the job, this indicates that the helps in maximizing wealth and economic
business wants the job done in a particular way. development. It is defined as various factors
This is strong evidence that the worker is an stimulate desires and activates enthusiasm in
employee periodic or on-going training about entrepreneurs which make them attain a particular
procedures and methods is even stronger evidence goal. Entrepreneurship is the process of identifying
of an employer-employee relationship. However, strengths and opportunities which help in the
independent contractors ordinarily use their own realization of one's dreams for designing,
methods. developing and running a new business by facing
threats and risks effectively.
ENTREPRENEURIAL EFFECTIVENESS
• It helps in better use of raw material and other BETTER HUMAN RELATIONS
resources to improve the quality of work in the • Entrepreneurial behaviour also help in
enterprises. Because, in each and every decision- maintaining cordial human relations in the
making process, effectiveness plays a central role. enterprise. It assists in find out causes of industrial
Effectiveness comes down to producing desired conflicts.
results. The most successful entrepreneurs have
maste effectiveness because it makes them work MODULE 8
smarter, eliminating unnecessary effort and wasted ECONOMIC FUNCTION OF
time.
ENTREPRENEURSHIP

MOTIVATION The role of entrepreneurship in economic

• Entrepreneurial behaviour helps the development is substantial.
entrepreneurs to identify the needs and
Entrepreneurs not only build businesses and grow
requirement of the employees.
their personal wealth.
 They also impact the economy by creating new self-reliance, currency inflow, and economic
jobs and opportunities. independence.

 Driving innovation. 3. BENEFITS OF NEW FIRM AND BUSINESSES

Entrepreneurship also promotes innovation and
 Developing new markets, products, and services.
competition, leading to new and improved products
IMPORTANCE OF ENTREPRENEURSHIP and services that contribute to economic growth
and development.
• Drives economic growth and creates new job.
• Encourages innovation by bringing new ideas, 4. CREATION OF JOBS
products, and services to the market. Entrepreneurship is a pivotal driver of job creation.
• Contributes to social change by developing Running the operations of new businesses and
products or services that reduce people’s meeting the requirements of customers results in
dependence on outdated technologies. new work opportunities
• Addresses social and economic problems by 5. ENCOURAGES CAPITAL FORMATION
creating solutions that meet the needs of society. Entrepreneurship can encourage capital formation
• Enables competition which improves business by attracting investment. In addition, the creation
efficiency and lowers prices for consumers. of new businesses and the growth of existing firms
can also contribute to the development of a more
ROLE OF ENTREPRENEURSHIP IN
diverse and dynamic economy that encourages
ECONOMIC DEVELOPMENT
capital formation and opens the door to a wide
1. RAISES STANDARD OF LIVING range of investment opportunities.
Setting up industries and creating wealth and new
6. ELIMINATION OF POVERTY
positions. Entrepreneurship not only provides large-
By generating employment and stimulating
scale employment and ways to generate income, it
economic activity. Entrepreneurship also
also has the potential to improve the quality of
contributes to the development of local economies
individual life by developing products and services
and helps improve the overall standard of living.
that are affordable, safe to use, and add value to
7. COMMUNITY DEVELOPMENT
their lives. Entrepreneurship also introduces new
Many entrepreneurs also make a positive impact on
products and services that remove the scarcity of
their communities and improve their well-being by
essential commodities.
catering to underserved areas and developing
2. ECONOMIC INDEPENDENCE
environment-friendly products. Their work can help
It reduces the nation’s dependence on imported
build stronger, more vibrant communities and
goods and services and promotes self-reliance. The
promote social and economic development.
manufactured goods and services can also be
exported to foreign markets, leading to expansion,
8. OPTIMAL USE OF RESOURCES
Entrepreneurship can help identify market
opportunities and allocate resources in the most
effective way possible. Entrepreneurs also play a
key role in developing innovative products and
services that meet the needs of customers while
optimizing the use of available resources.