Entrepreneurship development Module 1

1. Entrepreneurship
Development
Module 1

2. Entrepreneur
• An entrepreneur is a person with a vision who orchestrates other
peoples time, talents and money to make his/her vision real.
• An entrepreneur is a person who organizes and operates a business
concern for the purpose of making profit. He is a specially talented
person having the qualities of skill, initiative and an insight of
innovation to achieve high goals.
• He looks for opportunities, identifies and seizes them for making
economic gains.
• Economic progress of a country mainly depends on the success or
failure of the entrepreneurial development in that country.

3. • Two major problems faced by the developing countries are
unemployment and underemployment.
• Unemployment – situation where individuals do not get any jobs and
there by earns nothing. It reduces the standard of living and the
economic development of the country.
• Underemployment – situation where the individuals are employed on
jobs which are below their educational standard.
• Example - An engineer appointed as a blank clerk
• Entrepreneurship solves all these problems.

4. So Why Choose to be an Entrepreneur?
• Freedom: “starting and running a business is the best way of controlling your
destiny”
• Changing the world: “creating an enterprise is perhaps the most effective way
of making a positive difference to society that has ever been devised.” “What
could be more important than creating jobs?”
• Progress: “new business is about upsetting the status quo, thereby leading to
progress. I think that is a virtuous mission”

5. continued
• Social mobility: “business is a fantastic way for someone from a modest
background … to improve their life and get ahead.”
• Creative destruction: inefficient and loss making companies die … but
productive companies tend to create a virtuous circle: … attract talent, pay
more, make investors good returns, and can afford to launch better
products. This is called progress.”
• Creating a better future: “the inventive ability of entrepreneurs to find
solutions to … problems” such as global warming and so forth.
• Entrepreneurship is about striving for a better future – not just
dreaming.

6. Meaning of entrepreneur
• An individual can set up business ventures and enterprises by utilizing
his entrepreneurial talents. He can earn profit through production,
processing or distribution of goods and services to the society.
• He is one of the important segments of economic growth. He is a
catalytic agent of change, and works for the good of others. There by
he accelerates personal, economic as well as human development.

7. Evolution of the word entrepreneur
• Entrepreneur – word derived from the French verb ‘entreprendre’
which means ‘to undertake’.
• Original meaning – Organizer of musical or other entertainments.
• Early 16th century – Applied to those who were engaged in military
expeditions.
• In 17th century – Extended to cover civil engineering activities
• From 18th century – Refer to economic activities.
Since then, the term ‘entrepreneur’ is used in various ways and views.

8. Entrepreneur - Definitions
• Richard Cantillon (French economist)
• He is the first one to use the term ‘entrepreneur’ in the business field.
• To him, an entrepreneur means a dealer who purchases the means of
production for combining them into marketable products.
• J.B. Say (French economist)
• “an entrepreneur is an economic agent who unites all means of production,
the labor force of the one and the capital or land of the others and who finds
in the value of the products which results from their employment, the
reconstitution of the entire capital that he utilizes and the value of the wages,
the interest and the rent which he pays as well as profit belonging to himself”

9. Entrepreneur – Definitions cont.
• Joseph A Schumpeter
• “An individual who introduces something new in the economy – a new
method of production not yet tested by experience in the branch of
manufacture concerned, a product with which consumers are not yet familiar,
a new source of raw material or of new markets and the like”.
• According to him, entrepreneur = innovator
• Innovation may be in the areas of,
• Introduction of a new product
• Introduction of a new method of production
• Development of a new technology
• Development of a new market
• Finding out the source of new materials
• Making changes in the organization and management

10. • Peter F Drucker
“An entrepreneur is one who always searches for change, responds to it, and
exploits it as an opportunity. Innovation is the specific tool of entrepreneurs, the
means by which they exploit change as an opportunity for a different business
or service”.
• F.H. Knight
• “Entrepreneur is a person or a group of persons who bears risk and
uncertainty”.

11. Entrepreneurship
• Different scholars given different definitions to the term
‘entrepreneurship”
• For some, entrepreneurship is risk ‘risk-bearing’, for some others, it is
‘innovating’ and for certain others, it is ‘thrill-seeking’.
• Entrepreneur is essentially a business leader and the function
performed by him is the entrepreneurship.
• A.H. Cole: A.H Cole defines entrepreneurship as “the purposeful
activity of an individual or a group of associated individuals, under-
taken to initiate, maintain or aggrandize profit by production or
distribution of economic goods and services”.

12. • The concept of entrepreneurship involves four key elements
1. Organizing
• Mobilization of resources and utilization of them to initiate, maintain or enhance profit
by the production of goods and services.
2. Risk-bearing
• Starting a new enterprise always involves risk. The enterprise may earn profit or incur
loss. The entrepreneurs should be bold enough to assume risk.
3. Vision
• Entrepreneurial vision includes the relentless pursuit of operational excellence,
innovative technology and responsiveness to the needs of the market.
4. Innovating
• Innovation refers to the introduction of something new in to the market.

13. • In short, entrepreneurship is the practical ability to create and build
up something new from nothing. It is fundamentally an act of human
activity. The act of merely observing, analyzing or interpreting a
process is not entrepreneurship.

14. Features of entrepreneurship
• It is a process of action to set up an enterprise
• It is an innovative response to the environment
• It means creating something new
• It is the organizing of a business or other enterprise and coordinating
of managerial functions
• It is the undertaking of risks and handling of economic uncertainties.

15. Enterprise
• An enterprise represents a business unit or a service unit which has
been established by an entrepreneur.
• It is the end result of all the entrepreneurial activities initiated by him.
• Enterprise is the fourth factor of production.
• Enterprise is the basic unit of economic organization

16. Relation of entrepreneur, entrepreneurship &
enterprise

18. Barriers to entrepreneurship?

19. Barriers to entrepreneurship
• Lack of a viable concept
• Lack of marketing knowledge
• Lack of technical skills
• Lack of seed capital
• Lack of business know how
• Lack of motivation
• Time pressures and distractions
• Legal constraints and regulations
• Monopoly and protectionism
• Inhibitions due to patents

20. Entrepreneur v/s Manager

21. Entrepreneur and manager

22. Intrapreneurs
• Entrepreneurs are people that notice opportunities and take the
initiative to mobilize resources to make new goods and services.
• Intrapreneurs also notice opportunities and take initiative to mobilize
resources, however they work in large companies and contribute to
the innovation of the firm.
• Intrapreneurs often become entrepreneurs.

23. Intrapreneurs
• In recent times, a new breed of entrepreneurs is coming to the fore in large
industrial organizations, known as intrapreneurs. They emerge from within
the countries of an existing enterprise.
• An intrapreneur is a person who takes on the responsibility to innovate
new ideas, products and processes or any new invention within the
organization
• In big industrial organizations, the top executives are encouraged to catch
hold of new ideas and then convert these into products through research
and development activities within the framework of the organization.
Intrapreneur with his innovations and dedicated effort is considered as a
valuable asset by the organization. He serves as a champion to others in
the organization, inspiring them.

24. • Learning organizations encourage intrapreneurship.
• Organizations want to form:
• Product Champions: people who take ownership of a product from concept to market.
• Skunkworks: a group of intrapreneurs kept separate from the rest of the organization.
• New Venture Division: allows a division to act as its own smaller company.
• Rewards for Innovation: link innovation by workers to valued rewards.

25. • In many countries it is found that an increasing number of
intrapreneurs are leaving their jobs in big organizations and are
starting their own enterprises. The reason for leaving their parent
organization are many.
• They feel that they can stand on their own legs from their successful
performance in the parent organization.
• These persons find that the management is not receptive to their new ideas

26. Entrepreneur v/s Intrapreneur

28. Assignment
• Role of Entrepreneur in Economic Development
• Factors Affecting Entrepreneurial Growth in India

29. Characteristics of an entrepreneur
• An analytical study on the successful entrepreneurs like Tata, Birla,
Kirloskar, Dalmia and others reveals that they all had a humble
beginning leading them up to great heights.
• The success or failure of a small enterprise mainly depends on
personal abilities of the entrepreneur.
• A successful entrepreneur must possess certain important qualities.
• The most important characteristic of an entrepreneur is his
achievement motivation. All other characteristics emanate from this
achievement motivation. Some of the important characteristics of an
entrepreneur are:

30. • Hard work: The success or failure of an entrepreneur mainly depends
on his willingness to work hard. It is the most distinguishing
characteristic of a successful entrepreneur. An entrepreneur’s tireless,
tedious and laborious work will enable him to lead his business to
success even at unfavorable situations.
• Desire for high achievement: Achievement motivation is the single
most factor that determines the success of an entrepreneur. Strong
desire to achieve high goals in business will help the entrepreneur to
develop his business empire. The achievement motive enables him to
overcome the obstacles and anxieties, to encounter misfortunes, to
devise remedial actions and to run the business successfully.

31. • Optimism: Successful entrepreneurs are not anxious or worried about
problems faced by them in the present. They are optimistic and think that
the situations will become favorable to business in the future. This
optimistic approach will result in the effective management of the
enterprise.
• Independence: A successful entrepreneur does not like to be guided by
others. He should have his own ways and means of performing things. He
should be independent in matters related to business.
• Foresight: An entrepreneur must have the ability to foresee the future
changes in the business environment. He must be vigilant with regard to
the changes that are taking place in the market such as consumer
attitudes, technological changes, demand and supply gaps.

32. • Organizing ability: An entrepreneur should possess organizing
capacity. He should have the ability to mobilize the factors of
production – land, labor and capital – required for starting an
enterprise and then to produce the goods. The fortune of an
enterprise mainly depends on the organizing abilities of the
entrepreneur.
• Innovative skill: Every business firm is set up to cater to the needs of
consumers: so the production will be consumer oriented. For this, the
entrepreneur has to evaluate the changes in the tastes and
preferences of the consumers from time to time. He must conduct
research and innovative activities with a view to producing goods to
satisfy the consumer’s changing demands for the products.

33. • Mental ability: An entrepreneur should possess intelligence and
analytical mind to evaluate the business situation for making
innovations
• Ability to guard business secrets: Business secrecy is one of the
fundamental aspects of a successful business. Disclosure of business
secrets will favor the rival firms.
• Decision making: For running a business, a number of decisions are to
be taken. In order to take decisions, the entrepreneur should have the
capacity to analyze the various aspects of business.

34. • Ability to maintain human relations: An entrepreneur has to deal with
a number of persons like customers, suppliers, govt. officials,
employees etc. He should be tactful in dealing with them or else it
will affect the reputation of the business.
• Initiative and risk bearing: He should have the initiative and drive to
venture into new areas and to accept responsibility. Entrepreneurs
should also possess the caliber to take the risks associated with his
business. Profit is his reward for taking the risk.

35. Entrepreneurial competencies
• For the successful completion of any job, the organizer should
possess certain special qualities. These qualities area known as
competencies or traits.
• The major competencies are,
• Knowledge: It means the collection and retention of information in one’s
mind. Knowledge is necessary for performing a task, but is not sufficient. A
person with knowledge can describe things to others, but mere description
will not enable the listener to perform a job. For example, one can acquire
knowledge in football by reading books regarding the rules of football or by
any other means, but it does not mean that he can he a good football player.
Knowledge is only one aspect of performing things. In order to be successful
one needs to have the skill to translate the knowledge into practice.

36. • Skill : Skill means the ability to practice knowledge. As in the above
example, knowledge regarding football can be acquired by reading,
talking etc. But the skill to play football can be acquired only through
practice. i.e., playing the game a number of times. Both knowledge
and skill are required to perform the task.
• Motive: Motive is an urge to achieve the goals. This achievement
motivation directs a person to perform his duties in a better manner.

37. Entrepreneurial traits
• Mental ability
• Consist of intelligence and creative thinking. Entrepreneur should possess the
ability to analyze problems to find out solutions.
• Clear objectives
• Without objectives, an entrepreneur cannot succeed.
• Guarding business secrets
• Leakage of business secrets is a serious matter. So entrepreneur should be
vigilant while selecting his employees.
• Effective communication
• Ability to mobilize resources

38. • Technical knowledge
• Risk-bearing capacity
• Looking for opportunities
• Persistence
• Self confidence
• Hard working mentality
• Leadership
• Effective strategist
• Willingness to change

39. Creativity for entrepreneurs
• A thorough observation of the entrepreneurial process shows that
creative thinking is the must have “skill” of an entrepreneur for the
creation of new ideas. Creativity allows a person to devise interesting
processes, which gives so many advantages to entrepreneurs.
• But what exactly makes creativity so crucial and important in an
entrepreneur’s work life?
• Creativity leads to success by:
• Creating new ideas for competitive advantage
• Thinking of novel ways to develop your product and improve the business
• Thinking the unthinkable.
• Finding similar patterns in different areas
• Developing new niches through creativity and entrepreneurship.

40. • Creating new ideas for competitive advantage
• The whole process of entrepreneurship is rooted in creation and exploration
of new ideas. When an entrepreneur is able to generate a new idea that is
feasible as well as efficient, it gives him an edge over the competition. The
ability to explore different niches is just like a learned skill or a resource that is
possessed by an individual.
• Thinking of novel ways to develop your product and improve the
business.
• Creativity helps develop new ways of improving an existing product or service
and optimizing a business. There is always a room for improvement in the
deliverables of an enterprise; it is the creative entrepreneur who can assess
how to do it.

41. • Thinking the unthinkable.
• Creativity requires imagination to produce the most obscure ideas.
Imagination is needed to cross the boundary of “usual” and “normal” or
to think outside the box. This allows entrepreneurs to think beyond the
traditional solutions, come up with something new, interesting, versatile, and
yet have success potential.
• Finding similar patterns in different areas
• Creativity enables people to connect dissimilar and unrelated subjects and
make successful entrepreneurial ideas. Merging different fields creates
interesting intersections that creates new niches. Most people are afraid of
bringing different disciplines together, but most interesting ideas come from
colliding different fields.

42. • Developing new niches through creativity and entrepreneurship.
• In entrepreneurship, it is important that new aspects of traditional business
are explored. This can be in the form of changing the method of
manufacturing the product or delivering the service or how are they supplied
to the user. All these areas can create a niche that has great potential in
business.

43. Problem solving skills for entrepreneurs
• When it comes to problem-solving, each situation is different and
therefore requires a different approach each time. Some business
challenges, such as taking a new product to market to sell online can
be very tough, and their solutions may require a lot more thought and
critical evaluation than others.
• Other problems are very simple, and you can solve them easily, but
regardless of how big or how complex a problem is, you will always
need to find a viable solution.
• Part of being a great problem solver is knowing how to evaluate each
situation and look at outcomes on a holistic level, analyzing how your
solutions will affect you or your business in the long term.

44. Decision making for entrepreneurs
• As an entrepreneur, you must make different types of decisions on the
everyday basis. You must choose directions. Also, you must solve
problems. You must take actions. The decision-making process is one
of the most critical processes in your company.
• Simply, you as an entrepreneur will make decisions about everything.
• Some decisions are more influential on your overall business
processes, but some of them are small decisions without significant
effect on your business as a whole.

45. Decision-Making Process
1. Recognize the problem – the gap
2. Analyze the problem
3. Define possible solutions
4. Analyze all possible solutions
5. Select the best solution for the application
6. Implement the decision

47. 1. Recognize the problem – the gap
Every decision-making process starts with the problem or some
discrepancy that exist between the desired and current state. You
have the desired state, and you have an existing state. The difference
between these two is the gap or problem that you must solve through
the decision-making process.

48. 2. Analyze the problem
• After you find possible problems that require solutions you can start with the
analysis of already defined problems. How these problems impact on the
achievements of your small business?
• At the end of this step, you will need to have a list of possible problems sorted
by their urgency for the solution. In your analysis, you need to find causes and
how the problem impact on your small business. If the impact of the problem
is higher, also the importance of the problem will be higher.

49. 3. Define possible solutions
• This is the step when you need to start brainstorming all possible solutions for
a given problem, or problem you want to solve with that solutions. For the
most critical problems, you analyze in the previous step, create possible
solutions.
• When you think about solutions, also think about the causes of the problems.
If you don’t remove the causes, your solutions will be only a temporary
solution. Your decision-making process needs to include possible causes of
each identified problem.

50. 4. Analyze all possible solutions
• Because in the third step you come to more than one possible solution for a
given problem, in this step you need to analyze all proposed solutions to rank
them and make a decision that you will implement in the future. This step will
need to give you the rankings of all possible solutions from the best ones at
the top to the worst ones at the end of your list for each problem you
discover at the beginning of the decision-making process.

51. 5. Select the best solution for the application
• Now is time for the real decision. The final result from the decision-making
process is a selection of the best possible solution to the problem. What will
you implement as a solution for the given problem? The answer to this
question will be the decision you are making.

52. 6. Implement the decision
• We can’t talk about decision-making process without the implementation of
the decision you have made. You will not finish the job until you don’t
implement what you have decided. Can you solve the problem only by
discovering the solution and making the right solution? No, you will not solve
your problem. You need to implement the solution and check the results to
see if the specific solution really solve the identified problem.

53. Communication skills for entrepreneurs
• Your success as an entrepreneur is determined in large part by your
ability to communicate. You can be the best at what you do, but if
you’re not communicating effectively with clients, staff and the
market, then you’re missing opportunities.
• Mastery of these different communications skills ensures that you’ll
be effective at every level.
• Listen deeply
• Solid listening skills help you more effectively serve clients, make sales and manage
employees because you’re picking up on and connecting to people’s most urgent
concerns.
• Interpret non-verbal cues
• Don’t just practice awareness of your own body language. Analyze specific cues -- such
as posture, expressions and gestures -- being made by others when they’re speaking.

54. • Conversing : Conversation is one of the most basic forms of
communication, but don’t underestimate it. A simple, friendly
conversation with your employees can build trust and expose issues
before they become serious. An innocuous bit of small talk with a
stranger can turn into a sales opportunity. Learn to speak in an
approachable, friendly way that you can apply to any situation.
• Body Language : Much of communication is nonverbal, so mastering
your body language presentation is a must. In any situation, posture
matters -- sit or stand up straight with your shoulders back and your
head high and straight. Look people in the eye. Don’t fidget. Keep
your hands out of your pockets. And these are just the basics!
Mastering body language can allow you to command a room.

55. • Writing : You don’t have to be a perfect writer, but you do need to
learn to be direct and concise in written forms. You’ll be emailing and
texting people within and outside your organization regularly, and it’s
important that you communicate your ideas clearly in this medium,
with minimal opportunities for misinterpretation.
• Presenting : You’ll be presenting in a few different formats as an
entrepreneur, but they can be collectively grouped into one skill. You
may be presenting company financials to your top employees or
investors. You may present your business’ services to an interested
buyer. You may even give a speech about entrepreneurship at a
speaking event. In all these cases, clarity, conciseness, confidence and
poise are all key.

56. • Negotiating : You have to negotiate for almost everything in a
business, so the better you are at negotiating, the more successful
your business will be. You’ll be able to secure better terms for your
office’s lease, more reasonable salaries for your most talented
employees and even more lucrative options for your top
clients. Negotiating effectively is more than just using the right
words; it employs timing, a knowledge of the right facts and the
ability to remain confident throughout the process.
• Mediating : Though your role as a mediator will be less often
necessary than your role as a converser, for example, there will be
times when you have to step up and resolve a conflict. It might be
between two employees with differing opinions about whose
responsibility something is. Or it might be between two competing
vendors who suffered a lapse in communication. In any case, you’ll
have to acknowledge both sides and help them work out their own
problems.

57. • Debating : Debating here doesn’t necessitate arguing. It can be a
healthy discussion of two or more alternative options in a productive,
respectful setting. Your job in a debate isn’t to win against the enemy
-- it’s to present your case and opinions clearly. Doing so, whether
you're dealing with investors, partners or employees, can help you
elucidate your ideas with greater strength and clarity.
• Leading Your responsibilities as a leader are multifaceted, but from a
communications perspective, your biggest responsibilities are
instilling confidence, trust and passion in your team. You’ll be
inspiring people through everyday messages, public and private, and
retaining your poise as a leader throughout those situations is key to
achieving and maintaining a powerful image.

58. Leadership skills for entrepreneurs
• Spotting and Retaining the Best Talent: Your business is as successful as the people working in it. Great
leaders who created successful companies have one thing in common: They surround themselves with
talented, courageous, loyal people. Once you have recruited them, invest in their development through
training and coaching.
• Delegation : Entrepreneurs by nature have a healthy ego. “When it comes to their company, almost all
entrepreneurs will say: Nobody can do it better than me.”
But those who are going to be successful are those who admit they can’t be the CEO, the chief financial
officer, the marketing director and the sales manager at the same time. They share, delegate and empower
their teams.
• Leading by Example : Be honest and ethical in everything you do. Have strong values. Live what you are
preaching.
• Asking for Advice : No matter how well you know your industry, change is reshaping business so fast that
entrepreneurs develop blind spots or become uncertain about how to proceed.
• Developing Leaders : Leadership should start at the top of the organization, but leaders don’t necessarily
come from positions of power. They can be found at all levels in an organization. Identify them and help
them to develop their leadership skills. The transfer of knowledge through mentoring allows you to build a
strong leadership pipeline in your company.

59. Interview with entrepreneur
• Interview an entrepreneur near to your home
• Submit it before the first class after Christmas vacation
• Sample questions to be asked is shared with you via email
• No two students can interview the same person

60. • Types of entrepreneurs – Group 1,2,3,4
• Role of entrepreneur in economic development – Group 5,6,7
• Factors affecting entrepreneurial growth in India – Group 8,9,10

61. Types of entrepreneurs
• An entrepreneur is an adventurous innovator who acts on his own
account, and introduces changes that others do not dare to
experiment with. Every entrepreneur gives his business a means for
the achievement of certain objectives. On the basis of these
objectives, Clarence Danhof classifies the entrepreneurs into 4
categories.
1. Innovative entrepreneurs
2. Adoptive or imitating entrepreneurs
3. Fabian entrepreneurs
4. Drone entrepreneurs

62. • Innovative entrepreneurs
• Is one who introduces new goods and new methods of production, discover
new markets and recognizes better combination of an enterprise.
• Among the different types of entrepreneurs, the innovative entrepreneur is
the most vigorous type of entrepreneurs. According to Peter F. Drucker, the
innovative entrepreneur is one who always searches for change, responds to
it, and exploits every opportunity.
Eg. Elon Musk

63. • Adoptive or imitating entrepreneurs
• Adoptive entrepreneurs are adopting or imitating the successful innovations
made by other entrepreneurs. They play a vital role in developing countries,
where innovative entrepreneurs are scarce. In developing countries scarcity
of capital and skilled labor act as a hinderance in the path of innovative
entrepreneurship.
• Adoptive entrepreneurs are the most suited for developing countries because
such countries can adopt technology, knowledge and skill already available in
advanced countries.
• Eg. Cochin Shipyard has adopted the technology of Mitsubishi Heavy industries Ltd. Of
Japan.
• Flipkart
• OLA

64. • Fabian entrepreneurs
• Fabian entrepreneurship is characterized by great caution in introducing any
change. These entrepreneurs have neither the will to introduce new changes
nor the desire to adopt new methods. Fabian entrepreneurs are shy and lazy.
Their dealings are determined by customs, religion, tradition and past
practices. Being not interested in taking risks, they follow the foot steps of
their predecessors.
• E.g. Kodak, a company that happened to be the market leaders in producing
analog cameras but they did not realize the change and the introduction of
the Digicam.

65. • Drone entrepreneurs
• A drone entrepreneur follows the traditional method of production. Under no
circumstances he will change the method of production that he has
introduced. He sticks on to his existing position even at the cost of losses. He
is hesitant to deviate from the traditional method of functioning. In majority
cases, drone entrepreneurs are thrown out of market due to poor
marketability of their products.
• E.g. Traditional industries of Kerala like bamboo and coir industries
• There is a tobacco making industry which is still making tobaccos entirely by hand. Not
willing to use the machines.

66. Types of entrepreneurs in Indian context
• In the Indian context, entrepreneurs are classified as follows.
1. Entrepreneurs by inheritance
2. Individual entrepreneurs
3. Institutional entrepreneurs
4. Technologist turned entrepreneurs
5. Self employed entrepreneurs
6. Foreign returned entrepreneurs
7. Non-resident Indian entrepreneurs (NRI entrepreneurs)

67. • Entrepreneurs by inheritance
• In India, such entrepreneurs are very common. Most of these enterprises are
family controlled business units and their management is passed from one
generation to another. Only a minor portion of such entrepreneurs are
innovative and a majority of them want to conduct business as drone
entrepreneurs
• Eg. Wipro
• Individual entrepreneurs
• This type of entrepreneurs are seen mainly in the small scale sector. As an
individual, he encounters many limitations like lack of sufficient finance, lack
of efficient hands in marketing the products, delay in the implementation of
decision etc. In a highly populated country like India, where unemployment is
the main problem, individual entrepreneurship has got great scope.

68. • Institutional entrepreneurs
• Institutional entrepreneurship can co-ordinate different types of personal
skill, ability and risk bearing capacity. Such entrepreneurs act as a corporate
body where decision making is done after discussing with each other. The
combined skill and ability of the group is maximized. The business can enjoy
financial prosperity to a certain extent
• Technologist turned entrepreneurs
• They are technically qualified persons who find their own employment
opportunities as self-made entrepreneurs. They commercially exploit their
inventions and technical knowledge by establishing their own business units.

69. • Self employed entrepreneurs
• Most of these entrepreneurs are educated but employed. They need financial
assistance from the govt. or from other financial institutions. They are also called
Govt. sponsored entrepreneurs. The circumstances force them to act as
entrepreneurs. The success of self employed entrepreneurs paves the way for the
speedy economic development of the country
• Foreign returned entrepreneurs
• This type of entrepreneurs are many in India, especially in Kerala. People who were
employed in foreign countries could earn attractive amounts. On return, some of
them seek employment and business opportunities here. But, foreign returned
entrepreneurs face many difficulties in making their business a success. Lack of
technical knowledge, inefficiency in exploring markets, lack of knowledge in
analyzing market conditions etc. are some of the problems which they usually face.
Many of them face severe setbacks within a short time.

70. • Non-resident Indian entrepreneurs ( NRI entrepreneurs)
• They are another type of entrepreneurs having foreign connection. They are
persons with Indian citizenship residing outside India. Our government
extends attractive incentives to NRIs to start business in India and to utilize
their savings in a better way. Now-a-days, the central and state governments
persuade the NRI to make investments in India. SO the NRI entrepreneurs are
also known as persuaded entrepreneurs.
• Examples
• Ravi Pillai
• Yusaf Ali

71. • The entrepreneurs have also been classified on the basis of:
1. Type of business
2. Motivation
3. Growth
4. Stages of development, and
5. Scale of operations

72. Based on the Type of Business:
1. Trading Entrepreneur:
As the name itself suggests, the trading entrepreneur undertake the
trading activities. They procure the finished products from the
manufacturers and sell these to the customers directly or through a
retailer. These serve as the middlemen as wholesalers, dealers, and
retailers between the manufacturers and customers
2. Manufacturing Entrepreneur:
The manufacturing entrepreneurs manufacture products. They identify the
needs of the customers and, then, explore the resources and technology to
be used to manufacture the products to satisfy the customers’ needs. In
other words, the manufacturing entrepreneurs convert raw materials into
finished products.

73. 3. Agricultural Entrepreneur:
The entrepreneurs who undertake agricultural pursuits are called
agricultural entrepreneurs. They cover a wide spectrum of agricultural
activities like cultivation, marketing of agricultural produce, irrigation,
mechanization, and technology.

74. Based on the Use of Technology:
1. Technical Entrepreneur:
The entrepreneurs who establish and run science and technology-based
industries are called ‘technical entrepreneurs.’ Speaking alternatively, these
are the entrepreneurs who make use of science and technology in their
enterprises. Expectedly, they use new and innovative methods of
production in their enterprises.
• 2. Non-Technical Entrepreneur:
• Based on the use of technology, the entrepreneurs who are not technical
entrepreneurs are non-technical entrepreneurs. The forte of their
enterprises is not science and technology. They are concerned with the use
of alternative and imitative methods of marketing and distribution
strategies to make their business survive and thrive in the competitive
market.

75. Based on Ownership:
1. Private Entrepreneur:
A private entrepreneur is one who as an individual sets up a business enterprise.
He / she it’s the sole owner of the enterprise and bears the entire risk involved in
it.
Example: Yusuf Ali
2. State Entrepreneur:
When the trading or industrial venture is undertaken by the State or the
Government, it is called ‘state entrepreneur.’
Example: Indian Railway
3. Joint Entrepreneurs:
When a private entrepreneur and the Government jointly run a business
enterprise, it is called ‘joint entrepreneurs.’
Example: Cochin International Airport Limited – CIAL

76. Based on Gender:
1. Men Entrepreneurs:
When business enterprises are owned, managed, and controlled by
men, these are called ‘men entrepreneurs.’
2. Women Entrepreneurs:
Women entrepreneurs are defined as the enterprises owned and
controlled by a woman or women having a minimum financial interest
of 51 per cent of the capital and giving at least 51 per cent of
employment generated in the enterprises to women.

77. Based on the Size of Enterprise:
1. Small-Scale Entrepreneur:
An entrepreneur who has made investment in plant and machinery
up to Rs 1.00 crore is called ‘small-scale entrepreneur.’
2. Medium-Scale Entrepreneur:
The entrepreneur who has made investment in plant and machinery
above Rs 1.00 crore but below Rs 5.00 crore is called ‘medium-scale
entrepreneur.’
3. Large-Scale entrepreneur:
The entrepreneur who has made investment in plant and machinery
more than Rs 5.00 crore is called ‘large-scale entrepreneur.’

78. Role of entrepreneur in economic
development
• Entrepreneurs play a vital role in the economic development of a
country. The economic resources alone will not produce
development. There should be dynamic entrepreneurs with vision,
initiative and drive to make changes in the economic field. It is often
said that “ India is a rich country inhibited by the poor”. India is
endowed with plenty of natural resources and good climate. In spite
of these blessings, our country is only a developing one. The main
reason of this under development is the lack of sufficient number of
dynamic entrepreneurs. A country can achieve economic
development only when it is able to utilize its natural resources
effectively.

79. • Economic development and entrepreneurship
• Economic development essentially means a process of upward change by
which the real per capita income of a country increases over a long period of
time. Entrepreneurship is a very significant factor which brings about this
change.
• The economic history of the presently developed countries like America,
Russia, Britain, France and Japan bears testimony to the fact that
entrepreneurship is an inevitable cause for their economic development. The
entrepreneurs played a prominent role in the economic development of these
countries. The people of underdeveloped and developing countries are now
aware of the importance of entrepreneurship for economic development.
Now they have realized that for achieving economic development it is
necessary to develop entrepreneurial mentality among their people.

80. • The following points elucidate the pivotal role played by the
entrepreneurs in the economic development.
1. Capital formation
• Capital formation involves making of more capital goods such as machines, tools,
factories, transport equipment, materials, electricity, etc., which are all used for future
production of goods. One single individual will not be able to contribute the entire
capital required for a big business concern. So, the entrepreneur mobilizes the small and
scattered savings from the households and this will lead to capital formation.
2. Generating employment opportunities
• The most important socio-economic problem faced by the developing countries is
unemployment. The entrepreneurs by setting up new business concerns can generate
employment opportunities. Most of the entrepreneurial concerns are labor oriented and
they provide large scale employment opportunities to the unemployed. Which will result
in the improvement in the standard of the people.

81. 3. Balanced regional development
Setting up of business concerns in the rural or under developed areas will help
to achieve a balanced regional development of the nation. Small business
concerns can be set up at places where raw materials & labor forces are
available.
4. Encourages the effective utilization of capital & natural resources
Entrepreneurs help in the effective utilization of idle fund in the society. They
can also profitably utilize the natural resources at their place of operation.
In the absence of entrepreneurs these funds & resources will be kept idle.
5. Reduces the concentration of economic power
Entrepreneurship reduces the accumulation of economic power in a few hands.
It ensures a wider distribution of economic power among the people.

82. 6. Promotes export trade
Exports are necessary for earning foreign exchange. So the countries follow a
policy of export promotion & import substitution. Entrepreneurs setting up
their business as EOUs (Export Oriented Units) at EPZs (Export Promotion
Zones) will help to increase the exports of the nation. Level of exports is
one of the vital ingredients of economic development.
7. Promotes the equitable distribution of wealth & national income
Entrepreneurship helps to achieve the socialistic objective of the nation. It
helps to reduce disparity in income & wealth of people. It creates wealth,
generates employment & income & increases the standard of living of the
people.

83. Factors affecting entrepreneurial growth in
India
• Development of a nation depends on the development of
entrepreneurship. Emergence & development of entrepreneurship is
not a spontaneous phenomenon. It depends on several economic,
social, political & psychological factors which are often regarded as
supporting conditions to entrepreneurship growth.
• These conditions may have both positive & negative influence on the
emergence & growth of entrepreneurship.
• Positive influence promotes entrepreneurship
• Negative influence inhibit entrepreneurship

85. 1. Economic Factors
• Lack of adequate infrastructure facilities
• Non-availability of capital
• Lack of good quality cheap labor
• Lack of good quality cheap raw materials

86. Lack of adequate infrastructure facilities
• Successful implementation of an enterprise requires various
infrastructural facilities like, transportation, communication,
power supply, technical knowledge, irrigation facilities etc.
• These facilities help the entrepreneur improve his efficiency &
reduce the cost of production.
• Developing country like India lack these facilities, & the
entrepreneur has to obtain them at his own expense. This
greatly affects his profit margin & discourages him.
• It is not possible for entrepreneur to set up his own railway
line or power project & then indulge in entrepreneurship

87. Non-availability of capital
• Maximization of production & minimization of cost are twin objective of all
inventions.
• Huge amounts of capital is needed for conducting research & development
activities.
• Capital is needed for purchasing machinery & equipments, to adopt latest
innovations, to import raw materials and also to meet working capital
requirements.
• The rate of interest charged by banks on loans & the rate of domestic
savings affect the capital requirements of an entrepreneur.
• Non-availability of adequate capital & the low rate of domestic savings
prevent the development of entrepreneurship in India.

88. Lack of good quality cheap labor
• Easy availability of right type of workers also effect entrepreneurship.
The quality rather than quantity of labor influences the emergence
and growth of entrepreneurship. The problem of labor immobility can
be solved by providing infrastructural facilities including efficient
transportation.
• Need cheap quality labor

89. Centralization of Economic Power
• Dominance by few industrialists on most of the industries in India
implies that small entrepreneurs do not get the opportunity to get
ahead. The big industrialist is capable of molding the government
policies and rules in their favor.
• These big industrialists run their industrial empire, parallel to the
government, and as a result, the government is also unable to have
the adequate industrial development of the country.
• The centralization of economic power in the hands of a few big
Industrialist has also resulted in slow entrepreneurship growth in
India.

90. Low Expenditure on Research and Development
• The government and private entrepreneurs incur expenditure on
research and development activities.
• The entrepreneurs regard expenditure on research and investigation
is unnecessary.
• As a result, innovations do not get encouragement. The Indian
entrepreneurs incur expenditure on research and development only
for strategy formation for competitions, whereas expenditure
incurred on research and development is a long-term investment in
the real sense.

91. Insufficient Government Facilities and Incentives
• In India, the development of infrastructural facilities is quite
inadequate.
• In backward areas, the entrepreneurs are unable to establish
Industries because sufficient incentives are not being provided by the
government to the entrepreneurs in the form of allotment of suitable
land, sources of energy and other required infrastructural facilities.

92. Social factors
1. Social Factors
1. Caste Factor
2. Family Background
3. Education
4. Attitude of the Society
5. Cultural Value

93. Caste Factor
• There are certain cultural practices and values in every society which influence
the’ actions of individuals. These practices and value have evolved over hundred
of years. For instance, consider the caste system (the varna system) among the
Hindus in India. It has divided the population on the basis of caste into four
division. The Brahmana (priest), the Kshatriya (warrior), the Vaishya (trade) and
the Shudra (artisan): It has also defined limits to the social mobility of individuals.
• By social mobility’ we mean the freedom to move from one caste to another.
• The caste system does not permit an individual who is born a Shudra to move to a
higher caste. Thus, commercial activities were the monopoly of the Vaishyas.
Members of the three other Hindu Varnas did not become interested in trade and
commence, even when India had extensive commercial inter-relations with many
foreign countries. Dominance of certain ethnical groups in entrepreneurship is a
global phenomenon

94. Family Background
• This factor includes size of family, type of family and economic status
of family.
• Muslim families -> More into business
Education
• In any society, the system of education has a significant role to play in inculcating entrepreneurial
values.
In India, the system of education prior to the 20th century was based on religion. In this rigid
system, critical and questioning attitudes towards society were discouraged. The caste system and
the resultant occupational structure were reinforced by such education. It promoted the idea that
business is not a respectable occupation

95. • Later, when the British came to our country, they introduced an
education system, just to produce clerks and accountants for the East
India Company, The base of such a system, as you can well see, is very
anti-entrepreneurial.
• Our educational methods have not changed much even today. The
emphasis is till on preparing students for standard jobs, rather than
marking them capable enough to stand on their feet.

96. Attitude of the Society
• Certain societies encourage innovations and novelties, and thus
approve entrepreneurs’ actions and rewards like profits.
• Certain others do not tolerate changes and in such circumstances,
entrepreneurship cannot take root and grow.
• Similarly, some societies have an inherent dislike for any money-
making activity.

97. Cultural Value
• If the culture is economically or monetarily oriented,
entrepreneurship would be applauded and praised; wealth
accumulation as a way of life would be appreciated. In the developing
countries like India, people are not economically motivated.
Monetary incentives have relatively less attraction.

98. Other factors
• Bureaucracy and Redtapism
• Besides the fact that Government of India has been provided providing very
few facilities to the entrepreneur, another fact is that due to the prevalence of
Bureaucracy and red-tapism, even these facilities have benefited very few
entrepreneurs.
• Several times, the entrepreneur runs away, rather than obtaining these
facilities, on account of lots of formalities.
• Lack of Education Training Facilities
• Education and training facilities relating to entrepreneurship skill lack in India.