Entrepreneurship

The term entrepreneur is often used interchangeably with entrepreneurship. But conceptually they are different. An entrepreneur is a creator whereas entrepreneurship is the creation. Entrepreneurship is the tendency of a person to organise his own business and run it profitably, exploiting the qualities of leadership, decision making, managerial caliber etc. Entrepreneurship is concerned with the development and coordination of entrepreneurial functions. It is a role played by or task performed by an entrepreneur. The central task of the entrepreneur is to take moderate risks and invest money to earn profits by exploiting an opportunity. According to Zimmerer and Scarborough, An entrepreneur is one who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying significant opportunities and assembling the necessary resources to capitalize on them.

According to John K. and Howard Stevenson, Entrepreneurship is the attempt to create value through recognition of business opportunity, the management of risk-taking appropriate to the opportunity, and through the communicative and management skills to mobilize human, financial and material resources necessary to bring a project to fruition. According to Schumpeter, Entrepreneurship is based on purposeful and systematic innovation. It included not only the independent businessman but also company directors and managers who actually carry out innovative functions. In India, the definition of an entrepreneur as being the one who undertakes to organise, own and run a business was accepted in 1975 at a national seminar on Entrepreneurship held in New Delhi.

Characteristics of an Entrepreneur
The basic characteristics of an entrepreneur are: Desire for responsibility Preference for moderate risk Confidence in their ability to succeed High level of energy Desire for immediate feedback Future orientation Skill at organizing Value of achievement over money Flexibility High degree of commitment

Entrepreneurial Motivation Factor

1. Educational background 2. Occupational Experience 3. Desire to work independently 4. Desire to branch out to manufacturing 5. Family background 6. Assistance from Government 7. Assistance from Financial Institution 8. Availability of technology/raw material 9. Profit margin 10. Desire for taking personal responsibility 11. Anticipation of future possibilities 12. Success stories of entrepreneurs 13. To gain social prestige 14. Heavy Demand 15. Technical knowledge

Functions of an Entrepreneur An entrepreneur is expected to perform the following functions: 1.Assumption of Risk: The entrepreneur assumes all possible risks of business which emerge with changes in the tastes of consumers, techniques of production and new inventions. Such risks are not insurable and the entrepreneur has to bear the loss, if any. Thus, risk-assumption and risk-bearing remain the most important functions of an entrepreneur, which he tries to reduce with his initiative, knowledge and skill and good decisions.

2. Business Decisions: The entrepreneur has to decide the nature and type of business to undertake and the nature and type of goods that must be produced or services that must be provided to customers. He enters the particular industry which offers Him the best prospects and produces whatever commodities he thinks will pay him the most and employs those methods of production which seem to him to be 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:
These are different types of managerial functions that an entrepreneur has to perform and these are based on the size and activities of an enterprise. The managerial functions include formation of production plans, raising of finance, dealing with suppliers for procurement of raw materials and other materials, providing production facilities, organising sales, and conducting and so on. Administrative functions such as manpower planning, recruitment etc. Generally an entrepreneur performs many useful functions for the development of society and to satisfy the needs of fellow citizens. The entrepreneur can identify opportunities to start a business either as a manufacturer or as a distributor, for entrepreneurship exists in every field of economic endeavor. Manufacturing activities require a relatively high capital investment and more entrepreneurial abilities than distribution activities. An entrepreneur has a strong motivation and desire to achieve success by undertaking a venture and bearing risk for earning profit.

Types of Entrepreneurs
Clarence Danhof has classified entrepreneurs in the following way: 1. Innovative Entrepreneur: An entrepreneur who is able to foresee potentially viable and profitable opportunities through innovation is considered an innovative entrepreneur. An innovative entrepreneur is highly motivated and talented and innovation is his key function. According to Peter Drucker, an innovative entrepreneur is one who always searches for change, responds to it, and exploits it as an opportunity. An entrepreneur creates new values or increases the value of what already exists. An entrepreneur can exhibit his innovativeness in any of the following ways: By introducing a new product, a new quality, a new process or a new method for an existing product. By opening a new market, for example e-business.

By discovering a new source for the supply of raw material or semi-finished goods. By reorganizing the enterprise so as to achieve monopoly or to break up an existing monopoly position. 2. Adoptive or Imitative Entrepreneur: An Imitative Entrepreneur does not innovate anything, but imitates techniques and technologies innovated by others. That means an Imitative Entrepreneur is one who is ready to adopt the successful innovations already inaugurated by innovating entrepreneurs. He simply follows the innovators after carefully observing innovative practices of others and to what extent their innovation has caught the imagination of the society. This type of entrepreneurs play a vital role in developing countries. For example, Indian entrepreneurs are adopting the new Technologies developed in Japan, France, and Germany in various lines of products such as auto mobiles, electronics, and infrastructure.

3. Fabian Entrepreneur

This type of entrepreneur is one who is cautious in introducing any change in the business. Normally, he has neither the will to introduce new changes nor the desire to adopt new methods. He is ready to imitate only when it becomes perfectly clear that failure to do would result in heavy loss for him. He is dominated more by customs, religion, traditions and past practices and he is not ready to take any risk at all. 4. Drone Entrepreneur: This type of entrepreneur is one who blindly follows the traditional methods of production even when it results in loss to him. He is not prepared to introduce any change in his method of production, which is already in place. He continues to carry out his business in the traditional way even when he suffers losses. Reasons of this attitude could be several, such as lack of funds, lack of understanding of new developments in his field of operations. For example, the coir industry in Kerala is dominated by done entrepreneurs.

Qualities of an Entrepreneur
Success and Achievement Risk Bearer Opportunity Explorer

Perseverance
Facing Uncertainty Feedback Independence Flexibility Planner Self Confidence

Motivator
Stress Taker

The Entrepreneurial Process involves ____, ________, and _________ an opportunity by overcoming the strong forces that resist the creation of something new.

1. Identify and evaluate the opportunity

Opportunity
2. Develop Business Plan

3. Determine and attract resources required

Entrepreneur 4. Lead and manage resulting enterprise

Resources

Organisation

THE ENTREPRENEURIAL PROCESS:

An Entrepreneur is the key figure in the process of economic growth.

He is an economic person who tries to maximize his profits by

innovation and thus aggressively contributing towards economic development. He is an organizer and speculator who is doing new

things or doing things that are already being done in a new way.
Entrepreneur is the individual who lies at the heart of Entrepreneurial process that is the Manager who drives the whole

process forward.

OPPORTUNITY: It's the potential to serve customers better than they are being served at present. An entrepreneur is held responsible for scanning the business landscape for unexploited opportunities. The improved way of doing is the innovation that the entrepreneur presents to the market. RESOURCES: Resources include the money invested in the venture, the people include their efforts, Knowledge and skills to it etc. It also includes the intangible assets such as brand name, reputation of the company and the goodwill of the company.

ORGANIZATION: Every organization consists of number of factors such as their size, their rate of growth, the industry they operate in and the type of products they deliver.

Role Of Entrepreneurship In Economic Development

Need for Entrepreneurship Development
Economic development essentially means a process of upward change whereby the real pr capita income of a country increases over a period of time .

Entrepreneurship has an important role to play in the

development of a country. It is one of the most important inputs in economic development.

The number and competence of entrepreneurs affect the

economic growth of the country.

The economic history of the presently advanced countries like USA,

Russia and Japan supports the fact that economic development is the outcome for which entrepreneurship is an inevitable cause.

The crucial and significant role played by the entrepreneurs in the

economic development of advanced countries has made the people of developing and under developed countries conscious of the importance

of entrepreneurship for economic development.

It is now a widely accepted fact that active and enthusiastic entrepreneurs can only explore the potentials of the countries availability of resources such as labour, capital and technology.

The role of entrepreneurs is not identical in the various economies. Depending on the material resources, industry climate and responsiveness of the political system, it varies from economy to economy. The contribution of entrepreneurs may be more in favorable opportunity conditions than in economies with relatively less

favorable opportunity conditions.

Entrepreneurship and Economic Development

Entrepreneurship helps in the process of economic development in the following ways : Employment Generation : Growing unemployment particularly educated unemployment is the problem of the nation. The available employment opportunities can cater only 5 to 10 % of the unemployed. Entrepreneurs generate employment both directly and indirectly. Directly, self employment as an entrepreneur and indirectly by starting many industrial units they offer jobs to millions. Thus entrepreneurship is the best way to fight the evil of unemployment.

National Income :

National Income consist of the goods and services produced in the country and imported.

The goods and services produced are for consumption within the country as well as to meet the demand of exports.
The domestic demand increases with increase in population and increase in standard of living. The export demand also increases to meet the needs of growing imports due to various reasons. An increasing number of entrepreneurism are required to meet this increasing demand for goods and services. Thus entrepreneurship increases the national income.

Balanced Regional Development :

The growth of Industry and business leads to a lot of Public benefits like

transport facilities, health, education, entertainment etc.

When the industries are concentrated in selected cities, development gets

limited to these cities. A rapid development .

When the new entrepreneurers grow at a faster rate, in view of increasing

competition in and around cities, they are forced to set up their enterprises in the smaller towns away from big cities. This helps in the development of backward regions.

Dispersal of economic power : Industrial development normally may lead to concentration of economic powers in a few hands. This concentration of power in a few hands has its own evils in the form of monopolies. Developing a large number of entrepreneurers helps in dispersing the economic power amongst the population. Thus it helps in weakening the harmful effects of monopoly.

Better standards of living : Entrepreneurers play a vital role in achieving a higher rate of economic growth. Entrepreneurers are able to produce goods at lower cost and supply quality goods at lower price to the community according to their requirements. When the price of the commodities decreases the consumers get the

power to buy more goods for their satisfaction. In this way they can
increase the standard of living of the people.

Creating innovation :

An entrepreneur is a person who always look for changes. apart from

combining the factors of production, he also introduces new ideas and new combination of factors.

He always try to introduce newer and newer technique of production of

goods and services. An entrepreneur brings economic development through innovation.

Entrepreneurship also helps in increasing productivity and capital

formation of a nation. In short, the development of the entrepreneurship is inevitable in the economic development of the country. The Role played by the entrepreneurship development can be expressed in the following words :

" Economic development is the effect for which entrepreneurship is a cause "