2. Unit Content
Defining entrepreneur and entrepreneurship
Characteristics/Qualities of individual entrepreneur
Importance of entrepreneurship
Small business venture and entrepreneurship
Obstacles in women entrepreneurship
Entrepreneurship and economic Development
Entrepreneurial motivation – motivating factors
McClelland’s Acquired Needs Theory
3. Concept of Entrepreneurship
The word “entrepreneur” is derived from the French verb enterprendre, which
means ‘to undertake’.
This refers to those who “undertake” the risk of new enterprises. An enterprise is
created by an entrepreneur. The process of creation is called “entrepreneurship”.
When a person realizes his ability or capacity and makes its practical use and
establishes new business unit this activity is known as entrepreneurship.
4. Concept of Entrepreneurship
Entrepreneurship is an innovative function. It is a
leadership rather than an ownership. 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 Source of supplying Raw material.
5. Definition
According to Joseph Schumpter
• Entrepreneurship is based on purposeful and systemetic
innovation--- it essentially consists in doing things that are not
generally done in the ordinary course of business routine.
According to Peter Drucker
• Entrepreneurship is gathering and using resources to produce
results--- it is allocation of resources to opportunities rather than
to problems.
6. For our purpose
ENTREPRENEURSHIP is the process of
exploiting opportunities by creating new
venture through resource pulling, risk
taking, innovating and managing for
rewards.
7. Types of entrepreneurship
1. Small Business Entrepreneurship
• Small businesses are grocery stores, hairdressers, consultants,
travel agents, internet commerce storefronts, carpenters,
plumbers, electricians.
• They are anyone who runs his/her own business.
• They hire local employees or family. Most are barely profitable
• Their definition of success is to feed the family and make a
profit, not to take over an industry or build a big business
8. 2. Scalable Startup Entrepreneurship
• These entrepreneurs start a company knowing from
day one that their vision could change the world.
• They attract investment from equally crazy financial
investors – venture capitalists.
• They hire the best and the brightest.
• Their job is to search for a repeatable and scalable
business model.
9. 3. Large Company Entrepreneurship
• Large companies have finite life cycles.
• Most grow through sustaining innovation,
• They offer new products that are variants around their core
products.
• Large company size and culture make disruptive innovation
extremely difficult to execute.
4. Social Entrepreneurship
• Social entrepreneurs are innovators who focus on creating
products and services that solve social needs and problems.
• Unlike scalable start-ups their goal is to make the world a
better place
10. Who is an entrepreneur?
Entrepreneur is a person who create a new venture.
In the words of JB Say, “An entrepreneur is one who brings together
the factors of production and combines them into a product.”
Peter F Drucker define an entrepreneur as “The one who always
searches for change, responds to it and exploits it as an opportunity.”
11. Characteristics of an entrepreneur:
An entrepreneur brings about change in the society
Entrepreneur Improves the technology, products and the society
Entrepreneur is action oriented, highly motivated individual who
takes risk to achieve goals
Entrepreneur is creative and result oriented
Entrepreneur is both thinker and doer
Entrepreneur can foresee the future
Entrepreneur is achievement oriented
Entrepreneur builds new enterprises
Entrepreneurs create capital
12. Skills required for an entrepreneur
1) Conceptual skills – Refers to the ability to conceive new ideas and
products and the ability to think analytically
2) Technical skills – technical knowledge of work and the ability to
apply the knowledge in the practical work
3) Human relation skills – ability to handle people and to influence
their behaviour
4) Communication skills – both written and oral communication skills
with the ability to listen to others and receive
information from them.
13. 5) Diagnostic skill – ability to understand problems or smell impending
problems from the visible symptoms
6) Decision making skill – ability to make clear decisions on the merit of
the case
7) Marketing skills – ability to develop new products and services to
maintain its distinctiveness in a competitive market.
8) Project development skill – ability to conceive the project, to know the
stage through which he should go to establish it, the
information which have to collect, the factors which
have to consider in taking investment decisions
9) Management skill – it relates to the accounting and financial control,
marketing, production planning, and inventory
control and to manage the people who work in the
enterprise.
14. Types of Entrepreneur
Entrepreneurs can be classified on various basis. Clarence Denhof
Classifies entrepreneurs on the basis of stage of economic
development: some others have classified on the basis of their
functions and characteristics. In the initial stages of economic
development, entrepreneurs tend to have less initiative and drive.
As development proceeds, they become more innovating and
enthusiastic. The various types of entrepreneurs are classified on
certain parameters. Some important classifications are described
below:
15.
16. On the Basis of Economic Development: Clarence Danhof
classified entrepreneurs into four groups on the basis of
economic development
1. Innovating Entrepreneurs:
• Innovating entrepreneurs are one who introduce new goods, inaugurate new
method of production, discover new market and reorganise the enterprise.
• Such entrepreneurs can work only when a certain level of development is
already achieved, and people look forward to change and improvement.
2. Imitative Entrepreneurs:
• These are characterized by readiness to adopt successful innovations
inaugurated by innovating entrepreneurs.
• Imitative entrepreneurs do not innovate the changes themselves, they only
imitate techniques and technology innovated by others.
• They are also known as adoptive entrepreneur
17. 3. Fabian Entrepreneurs:
• Fabian entrepreneurs are characterised by very great caution and skepticism
in experimenting any change in their enterprises.
• They imitate only when it becomes perfectly clear that failure to do so would
result in a loss of the relative position in the enterprise.
• They are shy and lazy
4. Drone Entrepreneurs:
• These are characterised by a refusal to adopt opportunities to make changes
in production formulae even at the cost of severely reduced returns relative
to other like producers.
• They may even suffer from losses but they are not ready to make changes in
their existing production methods.
18. Entrepreneurship is mathematically defined as follows:
Entrepreneurship = Entrepreneur + Enterprise
Here
• Entrepreneurship is a “Process”
• Entrepreneur is a “Person”
• Enterprise is an “Object”
20. Importance of Entrepreneurship
Creation of Employment- Entrepreneurship generates employment. It provides an entry-level job,
required for gaining experience and training for unskilled workers.
Innovation- It is the hub of innovation that provides new product ventures, market, technology and
quality of goods, etc., and increase the standard of living of people.
Impact on Society and Community Development- A society becomes greater if the employment base is
large and diversified. It brings about changes in society and promotes facilities like higher expenditure on
education, better sanitation, fewer slums, a higher level of homeownership. Therefore, entrepreneurship
assists the organisation towards a more stable and high quality of community life
21. Cont.
Increase Standard of Living- Entrepreneurship helps to improve the
standard of living of a person by increasing the income. The standard of
living means, increase in the consumption of various goods and
services by a household for a particular period.
Supports research and development- New products and services need
to be researched and tested before launching in the market. Therefore,
an entrepreneur also dispenses finance for research and development
with research institutions and universities. This promotes research,
general construction, and development in the economy
22. Small business
Small business is a business organization that are involve in continuous
production or purchase of good and services in order to exchanges then
for profit.
The small business owner establishes and manages the business to
attain personal objectives. The business is an extension of the owner’s
needs, objectives and personality. The business growth is not a primary
objective. The aim is to continue operations over a long period of time.
23. Characteristic of Small Business
Management independent
Closely held ownership
Local operation
Small in size
24. Concept of Women Entrepreneurship
According to the general concept,
•Women entrepreneur may be defined as
a women or a group of women who
initiate, organize and operate a business
enterprise.
25. Reasons for the Slow Growth of Women Entrepreneurship
Unfavorable family background
Lack of business education
Dual role of women
Lack of aptitudes and training
Lack of freedom to choose a job according to ability, influence of sex, custom etc
Inadequate infrastructure facilities
26. Shortage of capital and technical knowhow
Lack of adequate transport and communication facilities
Lack of security
Absence of ideal market conditions
Corruption in administration
27. Obstacles in Women Entrepreneurship
Basic problem of a woman entrepreneur
is that she is a woman. Women
entrepreneurs face two sets of problems
specific to women and entrepreneurs.
These are summarized as follows.
28. Shortage of Finance:
• Women and small entrepreneurs always suffer from inadequate fixed
and working capital. Owing to lack of confidence in women’s ability,
male members in the family do not like to risk their capital in
ventures run by women. Banks have also taken negative attitude
while lending to women entrepreneurs. Thus women entrepreneurs
rely often on personal saving and loans from family and friends.
Shortage of Raw Material:
• Women entrepreneurs find it difficult to procure material and other
necessary inputs. The prices of many raw materials are quite high.
29. Inadequate Marketing Facilities:
• Most of the women entrepreneurs depend on intermediaries for marketing
their products. It is very difficult for the women entrepreneurs to explore the
market and to make their product popular.
Keen Competition:
• Women entrepreneurs face tough competition from male entrepreneurs and
also from organized industries. They cannot afford to spend large sums of
advertisement.
High Cost of Production:
• High prices of material, low productivity. Under utilisation of capacity etc.
account for high cost of production.
30. Family Responsibilities:
• Management of family may be more complicated than the management of
the business. Hence she cannot put her full involvement in the business .
Occupational backgrounds of the family and education level of husband
has a direct impact on the development of women entrepreneurship.
Low Mobility:
• One of the biggest handicaps for women entrepreneur is her inability to
travel from one place to another for business purposes. A single women
asking for room is looked upon with suspicion. Sometimes licensing
authorities, labour officials and sales tax officials may harass them.
31. Lack of Education:
• There exists a belief that investing in woman’s education is a
liability, not an asset. Lack of knowledge and experience creates
further problems in the setting up and operation of business.
Low Capacity to Bear Risks:
• Women lead a protected life dominated by the family members.
She is not economically independent. She may not have
confidence to bear the risk alone. If she cannot bear risks, she
can never be an entrepreneur
32. Social Attitudes:
• Women do not get equal treatment in a male-dominated society. Wherever
she goes, she faces discrimination. The male ego stands in the way of
success of women entrepreneurs. Thus, the rigid social attitudes prevent a
woman from becoming a successful entrepreneur
Low Need for Achievement:
• Generally, a woman will not have strong need for achievement. Every
women suffers from the painful feeling that she is forced to depend on
others in her life. Her preconceived notions about her role in life inhibit
achievement and independence.
33. Lack of Training:
• A women entrepreneur from middle class starts her first
entrepreneurial venture in her late thirties or early forties due to
her commitments towards children. Her biggest problem is the
lack of sufficient business training
Lack of Information:
• Women entrepreneurs sometimes are not aware of technological
developments and other information on subsidies and concessions
available to them. They may not know how to get loans, industrial
estates, raw materials, etc
34. Role of Entrepreneurship in Economic Development
Promotes capital formation:
• Entrepreneur promotes capital formation by mobilizing the idle savings of
public. They employ their own as well as borrowed resources for setting up
their enterprise. It is a source of creation of wealth, which is very essential
for the industrial and economic development of the country.
Creates Large-scale Employment opportunity:
• Entrepreneur provides immediate large-scale employment to the
unemployed which is a chronic problem of underdeveloped nations with
the setting up of more and more units by entrepreneurs.
35. Cont.
Promotes balanced Regional development:-
• Entrepreneur helps to remove regional disparities through setting up of
industries in less developed and backward areas .Setting up more industries
lead to more development of backward regions and there by promotes
balanced regional development.
Reduces concentration of Economic power:
• Economic power is the natural outcome of industrial and business activity
.Industrial development normally leads to concentration of economic power in
the hands of a few individuals which results in the growth of monopolies.
36. Cont.
Wealth creation and distribution:
• It stimulates equitable redistribution of wealth and income in the
interest of the country to more people and geographic areas, thus giving
benefits to larger sections of society.
Improvement in the standard of living:
• Increase in the standard of living of people is a characteristic feature of
economic development of the country. Entrepreneur plays a key role in
increasing the standard of living of people by adopting latest innovation.
37. Need framework for Entrepreneurial
Motivation
People certainly don’t work for money alone
Money is required not for its own sake, but the sake of
the needs of the person fulfillment
McClelland may be regarded as the father of the study of
entrepreneurial motivation
38. Factors Motivating the Entrepreneurs
• Desire to do something
• Education background
• Business experience in same or related line
Internal factor
• Government assistance new and support
• Availability of raw material and labour
• Encouragement from big business houses
• Promising demand for the product
• Profit margins
External factor
39. McClelland’s Acquired Needs Theory
McClelland suggested that regardless of our gender, culture, or age, we all have
three motivating drivers, and one of these will be our dominant motivating driver.
This dominant motivator is largely dependent on our culture and life experiences.
David C. McClelland’s acquired needs theory is also known as “human motivation
theory “, “Motivational Needs Theory”. It is used to understand the need for
employees and create a strategy for the motivating process in the organization.
40.
41. 1. Need for Achievement (nAch)
Some people have a compelling drive to succeed. They are
striving for personal achievement rather than the rewards
of success . This drive is the achievement need (nAch).
McClelland found that high achievers differentiate
themselves from others by their desire to do things better
42. Features of
people with
Need for
achievement
(nAch);
They seek personal responsibility for finding solutions to
problems.
They want to receive rapid feedback on their performance
so they can tell easily whether they are improving or not.
They can set moderately challenging goals. High achievers
are not gamblers; they dislike succeeding by chance.
High achievers perform best when they perceive their
probability of success as 50-50.
They like to set goals that require stretching themselves a
little
43. 2. Need for Power (nPow)
The need to make others behave in a way that they would not have
behaved otherwise.
Need for power (nPow) features are;
• The desire to have an impact, to be influential, and to control others.
• Individuals high in nPow enjoy being “in charge.”
• Strive for influence over others.
• Prefer to be placed into competitive and status-oriented situations.
• Tend to be more concerned with prestige and gaining influence over others than with
effective performance.
44. 3. Need for Affiliation (nAfl)
The desire for friendly and close interpersonal relationships.
Features of Need for affiliation (nAfl) are;
• This need has received the least attention from researchers.
• Individuals with a high affiliation motive strive for friendship.
• Prefer cooperative situations rather than competitive ones.
• Desire relationships involving a high degree of mutual understanding.
