Entrepreneurship Development

Concept of Entrepreneurship

The word entrepreneur is derived from the French verb entreprendre, 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.
Meaning
Entrepreneurship is a process of actions of an entrepreneur who is a person always in search of
something new and exploits such ideas into gainful opportunities by accepting the risk and
uncertainty with the enterprise. It is the process of starting a business, a startup company or other
organization. The entrepreneur develops a business plan, acquires the human and other required
resources, and is fully responsible for its success or failure.Entrepreneurship operates within
an entrepreneurship ecosystem.
Definitions
According to A.H.Cole
Entrepreneurship is the purposeful activity of an individual or a group of associated
individual,undertaken to initiate,maintain or aggrandize profit by production or distribution of
economic goods and services.
According to J.A. Timmons
Entrepreneurship is the ability to create and build something from practically nothing.
According to Musselman and Jackson
Entrepreneurship is the investing and risking of time, money and effort to start a business and
make it successful.

Characteristics of Entrepreneurship
http://www.yourarticlelibrary.com/entrepreneur/entrepreneurship-characteristicsimportancetypes-and-functions-of-entrepreneurship/5228/
Entrepreneurship is characterized by the following features:

1. Economic and dynamic activity

Entrepreneurship is an economic activity because it involves the creation and operation of an
enterprise with a view to creating value or wealth by ensuring optimum utilization of scarce
resources. Since this value creation activity is performed continuously in the midst of uncertain
business environment, therefore, entrepreneurship is regarded as a dynamic force.
2. Related to innovation
Entrepreneurship involves a continuous search for new ideas. Entrepreneurship compels an
individual to continuously evaluate the existing modes of business operations so that more
efficient and effective systems can be evolved and adopted. In other words, entrepreneurship is a
continuous effort for synergy (optimization of performance) in organizations.
3. Profit potential
Profit potential is the likely level of return or compensation to the entrepreneur for taking on the
risk of developing an idea into an actual business venture. Without profit potential, the efforts of
entrepreneurs would remain only an abstract and a theoretical leisure activity.
4. Risk bearing
The essence of entrepreneurship is the willingness to assume risk arising out of the creation and
implementation of new ideas. New ideas are always tentative and their results may not be
instantaneous and positive.An entrepreneur has to have patience to see his efforts bear fruit. In
the intervening period (time gap between the conception and implementation of an idea and its

results), an entrepreneur has to assume risk. If an entrepreneur does not have the willingness to
assume risk, entrepreneurship would never succeed.
5. Skillful management
Entrepreneurship involves skillful management.The basic managerial skill is the most important
characteristic feature of entrepreneurship. Foreffective management of an enterprise,the role of
an entrepreneur is to initiate and supervise design of organization improvement projects in
relation to upcoming opportunities is very much important.
6. Accepting challenges
Entrepreneurship means accepting challenges amidst risk and uncertainty.While accepting
entrepreneurship as a career the entrepreneur accepts the challenges of all odds and puts his
efforts to convert the odds into viable business opportunities by pooling together the resources of
building and running the enterprise.
7. Goal-oriented Activity
The entrepreneur who creates and operates enterprises seeks to earn profits through satisfaction
of needs of consumers; hence, entrepreneurship is a goal-oriented activity. Entrepreneurship
emphasizes results, achievements and targets achieved. It is work done not imaginary plans or
paper decisions. Hence entrepreneurship is a goal-oriented activity.
8. Value Creation
Next, we find that the process of creating value is a characteristic in describing
entrepreneurship. Through entrepreneurship, new products, services, transactions, approaches,
resources, technologies, and markets are created that contribute some value to a community or
marketplace. We can also see value created when, through entrepreneurship; resources are
transformed into outputs such as products or services. During this transformation process, value
is created because the entrepreneur is fashioning something worthwhile and useful. Drucker says,
Until entrepreneurial act, every plant is a seed and every mineral just another rock.
9. Dynamic Process

Entrepreneurship is a dynamic function. Entrepreneur thrives on changes in the environment,

which bring useful opportunities for business. An entrepreneur deals proactively with changing
markets and environment. He looks at the changes as the source of market advantages, not as a
problem. Uncertainties are market opportunities for him. He capitalizes on fleeting market
anomalies.
10. Uniqueness
Other characteristic found in entrepreneurship is that of uniqueness. Entrepreneurship involves
new combinations and new approaches with which entrepreneurs are willing to experiment.
Through Entrepreneurship unique products are created and unique approaches are tried.
Entrepreneurship isnt merely imitating what others have done. Its doing something new,
something untested and untried something unique.
11. Interest and Vision
The first factor for entrepreneurial success is interest. Since entrepreneurship pays off according
to performance rather than time spent on a particular effort, an entrepreneur must work in an area
that interests her. Otherwise, she will not be able to maintain a high level of work ethic, and she
will most likely fail. This interest must also translate into a vision for the company's growth.
Even if the day-to-day activities of a business are interesting to an entrepreneur, this is not
enough for success unless she can turn this interest into a vision of growth and expansion. This
vision must be strong enough that she can communicate it to investors and employees.
12. Risk and Rewards
Entrepreneurship requires risk. The measurement of this risk equates to the amount of time and
money you invest into your business. However, this risk also tends to relate directly to the
rewards involved. An entrepreneur who invests in a franchise pays for someone else's business
plan and receives a respectable income, while an entrepreneur who undertakes groundbreaking
innovations risks everything on an assumption that something revolutionary will work in the
market. If such a revolutionary is wrong, she can lose everything. However, if she is right, she
can suddenly become extremely wealthy.

Difference between Entrepreneur and Intrapreneur

Entrepreneur
An

entrepreneur

Intrapreneur
is

independent

operations

in

his An

intraprenuer

is

dependent

on

the

entrepreneur i.e. the owner.

An entrepreneur himself raises funds required The Intrapreneur does not raise funds.
for the enterprise.
Entrepreneur bears the risk involved in the An intrapreneur does not fully bear the risk
business.

involved in the enterprise.

An entrepreneur operates from outside.

On the contrary,an intrapreneir operates from

within the organization itself.

An entrepreneur begins his business with a An intrapreneur sets up his enterprise after
newly set up enterprise.

working someone elses organization.

As an entrepreneur establishes new business, An intrapreneur establishes his business after

so he does not posses any experience over the gathering experiences through working in the
business.

other organization.

Entrepreneurs may find it difficult to get Intrapreneurs have their resources readily
resources

available to them.

Entrepreneurs are found anywhere their vision Intrapraneurs work within the confines of an
takes them.

organization.

Entrepreneurs know the business on a macro Intrapreneurs

scale.

are

highly

skilled

and

specialized.

Difference between an Entrepreneur and a Manager

Basis of Difference
1. Motive

Entrepreneur

Manager

The main motive of an But, the main motive of

a manager

entrepreneur is to start a is to render his services in an

venture by setting up an enterprise already set up by someone
enterprise.
2. Status

An

else i.e., entrepreneur.

entrepreneur

is

the A manager is the servant in the

owner of the enterprise.

enterprise

owned

by

the

entrepreneur.
3. Risk Bearing

An entrepreneur being the A manager as a servant does not bear

owner of the enterprise any risk involved in the enterprise.
assumes

all

risks

and

uncertainty involved in running the enterprise.

4. Rewards

The reward an entrepreneur A manager gets salary as reward for

gets

for

bearing

risks the services rendered by him in the

involved in the enterprise is enterprise. Salary of a manager is

profit

which

uncertain.

is

highly certain and fixed.

Entrepreneur himself thinks A manager simply execute the plans

5. Innovation

over what and how to prepared by the entrepreneur. Thus, a

produce goods to meet the manager simply translates the
changing demands of the
customers. Hence, he acts as entrepreneurs ideas into practice.
an innovator also called a
change agent

6. Qualifications

An entrepreneur needs to On the contrary, a manager needs to

possess

qualities

qualifications

like

and possess distinct qualifications in

high terms

of

sound

knowledge

achievement motive, origi- management theory and practice.

nality in thinking, foresight,
risk -bearing ability and so
on.

in

7. Focus
An entrepreneur is someone A manager is typically concerned
who is concerned primarily with sustainability, and has to focus
with

the

necessary on what can be done within the

components to start up a framework of what he has been

business

given to work with in an existing

enterprise.

8. Growth
An entrepreneur begins with A business manager is focused on
the idea of the business engendering

growth

based

on

from its inception and its available resources. A manager must

potential for growth in the get employees to perform at optimal
long run. An analysis of the levels, and must make use of nonmarket

and

available human resources to create additional

resources in relation to the growth beyond basic sustainability

original

idea

plays

primary role in his business

decisions.
9.Objective

Entrepreneurs objective is Managers objective is to supervise

to innovate and create and and create routines. He implements
he acts as a change agent.

the Entrepreneurs plans and ideas.

Relationship between Entrepreneur and Entrepreneurship/Difference between

Entrepreneur and Entrepreneurship/Entrepreneur Vs. Entrepreneurship

Entrepreneur

Entrepreneurship

Entrepreneur is a person.

Entrepreneurship is a process.

Entrepreneur is an organizer.

Entrepreneurship is an organization.

Entrepreneur is an innovator.

Entrepreneurship is an innovation.

Entrepreneur is a risk bearer.

Entrepreneurship is risk bearing.

Entrepreneur is a motivator.

Entrepreneurship is motivation.

Entrepreneur is a creator.

Entrepreneurship is a creation.

Entrepreneur is a visualizer.

Entrepreneurship is a vision.

Entrepreneur is a leader.

Entrepreneurship is leadership.

Entrepreneur is an imitator.

Entrepreneurship is an imitation.

Importance of Entrepreneurship
Entrepreneurship offers the following benefits:

1. Development of managerial capabilities

The biggest significance of entrepreneurship lies in the fact that it helps in identifying and
developing managerial capabilities of entrepreneurs. An entrepreneur studies a problem,
identifies its alternatives, compares the alternatives in terms of cost and benefits implications,
and finally chooses the best alternative.This exercise helps in sharpening the decision-making
skills of an entrepreneur. Besides, these managerial capabilities are used by entrepreneurs in
creating new technologies and products in place of older technologies and products resulting in
higher performance.
2. Creation of organizations
Entrepreneurship results into creation of organizations when entrepreneurs assemble and
coordinate physical, human and financial resources and direct them towards achievement of
objectives through managerial skills.

3. Improving standards of living

By creating productive organizations, entrepreneurship helps in making a wide variety of goods
and services available to the society, which results into higher standards of living for the
people.Possession of luxury cars, computers, mobile phones, rapid growth of shopping malls,
etc. are pointers to the rising living standards of people, and all this is due to the efforts of
entrepreneurs.

4. Means of economic development

Entrepreneurship involves creation and use of innovative ideas, maximization of output from
given resources, development of managerial skills, etc., and all these factors are so essential for
the economic development of a country.
5. Job Creation
We know that job creation is vital to the overall long-term economic health of communities,
regions, ad nations. Entrepreneurial ventures play very important role in it. Small business create
more jobs than large business do. During economic recession, when large companies are on their
way to retrenchment of their work force, individuals whose jobs are eliminated find employment
with small business. The creation of jobs by small businesses is expected to continue into the
future as new firms start small and grow.

6. Innovation
Innovating is a process of creating, changing, experimenting, transforming and revolutionizing.
Innovation is one of the key distinguishing characteristics of entrepreneurial activity. The
passionate drive and intense hunger of entrepreneurs to forge new directions products and
processes and to take risks set in motion a series of decisions that lead to the innovations that are
important for economic vitality. Without these new ideas, economic, technological, and social
progress would be slow indeed. The creative destruction process of innovating leads to

technological changes and employment growth. Entrepreneurial firms act as these agents of
change by providing an essential source of new and unique ideas that might otherwise go.

7. Other Contribution

Entrepreneurship in small businesses helps in distribution of products of large business.

They, thus, support the large business houses.

It offers business avenues to women and minorities. Women and minorities are allowed
the benefitof financial independence and a chance to exhibit the ability to manage
business enterprises.

Dispersal of economic activities to different sectors of economy and identifying new

avenues ofgrowth.

Improvement of the standard of living of different weaker sections in the society.

Bring socio political change in the society.

Develop technological know-how.

Improve culture of business and expand commercial activities.

Entrepreneurship acts as a change agent to meet the requirements of the changing

markets andcustomer preferences.

Develop a culture of achievement orientation.

It helps in bringing about change and development of the civilization through change in
trade, commentbe and industrialization.

It arouses the need for achievement in individuals, which brings about a change in the
economic scenario through economic development and growth.

It results in exploitation of economys resources, such as labor, capital and technology to

the fullestextent.

Classification and Types of Entrepreneurs

Entrepreneurship Development and Small Business Enterprises

By Poornima M Charantimath
https://books.google.co.in/books?
id=iIEUWEs8awAC&printsec=frontcover#v=onepage&q&f=false
Definitions
Entrepreneurs

are

people

who

have

the

ability

to

see

and

evaluate

business

opportunities,together with the necessary resources to take advantage of them and to intimate
appropriate action to ensure success.
-International LaborOrganization
Entrepreneur searches for change,responds to it and exploits opportunities.Innovation is the
specific tool of an entrepreneur.
-Peter F. Drucker
Entrepreneur is the onewho is endowed with more than average capacities in the task of
organizing and coordinating the various factors of production.He is pioneer and captain of
industry.
-Francis A.Walker

Classification of Entrepreneurs

a) Based on Functional Characteristics

Classification Given by Danhof
1. Innovative Entrepreneur
An innovative entrepreneur is one who launches new products, discovers new markets,
establishes new methods of production and restructures the enterprise. They focus on
revolutionalisation and development.Such entrepreneurs can do well only when certain level of
development has already been achieved;they look forward to improving upon the past.
2. Imitative or adoptive entrepreneur
Imitative Entrepreneurs adopt victorious innovations launched by the innovative entrepreneurs.
They duplicate the technology and techniques innovated by others and they are suitable for
underdeveloped countries. Imitative entrepreneurs are characterized by readiness to adopt
successful innovations inaugurated by successful innovating entrepreneurs. Imitative
entrepreneurs do not imitate the changes themselves, they only imitate techniques and
technologies innovated by others. However, the talent of imitative entrepreneurs should not be
under-estimated. Even imitative entrepreneurs are revolutionary and agents of change. They have
ability to do things which have not been done before even though, unknown to them, the problem
may have been solved in the same way by others. Innovative entrepreneur is creative, while
imitative entrepreneur is adoptive.
3. Fabian Entrepreneurs
Fabian entrepreneurs are exemplified by great caution and skepticism in experimenting any
change in the organization. They imitate only in situations where it becomes necessary to do
so. Such entrepreneurs are shy, lazy and lethargic. They are imitative by nature but are not
determined and also lack power. They imitate only when it becomes perfectly clear that failure to
do so would result in a loss of the relative position of the enterprise.

4. Drone Entrepreneurs
Drone Entrepreneurs suffer losses, as they refuse to make any modifications in the existing
production methods. Drone entrepreneurs are characterized by a refusal to adopt opportunities to
make changes in production formulae even at the cost of severely reduced returns. When
competition increases, they are pushed out of the market as it becomes uneconomical for them to
exist and operate in a competitive market.
b) Based on developmental angle
1. Prime

mover:

This

entrepreneur

sets

in

motion

powerful

sequence

of

development,expansion and diversification of business.

2. Manager: Such an entrepreneur does not initiate expansion and is content just staying in
business.
3. Minor innovator: This entrepreneur contributes to economic progress by finding better use
for existing resources.
4. Satellite: This entrepreneur assumes a suppliers role and slowly moves towards a productive
enterprise.
5. Local trading: Such an entrepreneur limits his enterprise limits his enterprise to the local
market.
c) Based on Types of Entrepreneurial Business
1. Manufacturing
An entrepreneur who runs such a business actually produces the products that can be sold using
resources and supplies.For example,apparel and other textile products,chemical and related
products,electronics and other electrical equipment,fabricated metal products,industrial
machinery

and

equipment,printing

products,stone,clay etc.

and

publishing,rubber

and

miscellaneous

plastic

2. Wholesaling
An entrepreneur with such a business sells products to the middleMan.
3. Retailing
An entrepreneur with such a business sells products directly to the people who or consume them.
4. Service
An entrepreneur in this business sells services rather than products.
d) Based on the Nine Personality types of Entrepreneurs
Your business personality type is the traits and characteristics of your personality that blend with
needs of the business.If you better understand your business personality,then you can give your
company the best part of you.There are 9 key types of personality and understanding.
1. The improver
If you operate your business predominately in the improver mode,you are focused on using your
company as a means to improve the world.Your overarching motto is : morally correct
companies will be re-warded working on a noble cause.Improvers have an unwavering ability to
run their business with high integrity and ethics.
Personality Alert: Be aware of your tendency to be a perfectionist and over-critical of employees
and customers.
Entrepreneur example: Anita Roddick,Founder of the Body Shop.
2. The Advisor
This business personality type will provide an extremely high level of assistance and advice to
customers. The advisors motto is : the customer is right and we must do everything to please
them.Companies built by advisors become customer focused.

Personality Alert: Advisors can become totally focused on the needs of their business and
customers that they may ignore their own needs and ultimately burn out.
Entrepreneur example: John W. Nordstrom,Founder Nordstrom.
3. The Superstar
Here the business is centered on the charisma and high energy of the Superstar CEO.This
personality often will cause you to build your business around your own personal brand.
Personality Alert: Superstars can be too competitive and workaholics.
Entrepreneur example: Donald trump,CEO of Trump Hotels and Casino Resorts.
4.The Artist
This business personality is the reserved but a highly creative type. Often found in businesses
demanding creativity such as web design and ad agencies.As an artist type youll tend to build
you business around the unique talents and creativities that you have.
Personality Alert: You may be overly sensitive to your customers responses even if the feedback
is constructive.Let go the negative self image.
Entrepreneur example: Scott Adams,Creator of Dilbert.
5. The Visionary
A business built by a Visionary will often be based on the future vision and thoughts of the
founder.You will have a high degree of curiosity to understand the world around you and will set
up plan to avoid the landmines.
Personality Alert: Visionaries can be too focused on the dream with little focus on reality.Action
must proceed vision.
Entrepreneurial example: Bill Gates,Founder of Microsoft Inc.

6. The Analyst
If you run a business as an analyst,your company focus is on fixing problems in a systematic
way.Often the basis for science,engineering or computer firms,Analyst companies excel at
problem solving.
Personality Alert: Be aware of analysis paralysis.Work on trusting others.
Entrepreneurial example: Intel Founder,Gorden Moore.
6. The Fireball
A business owned and operated

Role of an Entrepreneur in Economic Development

The entrepreneur who is a business leader looks for ideas and puts them into effect in fostering
economic growth and development. Entrepreneurship is one of the most important inputs in the
economic development of a country. The entrepreneur acts as a trigger head to give spark to
economic activities by his entrepreneurial decisions. He plays a pivotal role not only in the
development of industrial sector of a country but also in the development of farm and service
sector. The major roles played by an entrepreneur in the economic development of an economy is
discussed in a systematic and orderly manner as follows.
(1) Promotes Capital Formation
Entrepreneurs promote capital formation by mobilizing the idle savings of public. They employ
their own as well as borrowed resources for setting up their enterprises. Such type of
entrepreneurial activities lead to value addition and creation of wealth, which is very essential for
the industrial and economic development of the country.
(2) Creates Large-Scale Employment Opportunities
Entrepreneurs provide 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, both on small and large-scale numerous job opportunities are created for others.
As time passes, these enterprises grow, providing direct and indirect employment opportunities
to many more. In this way, entrepreneurs play an effective role in reducing the problem of
unemployment in the country which in turn clears the path towards economic development of the
nation.
(3) Promotes Balanced Regional Development
Entrepreneurs help to remove regional disparities through setting up of industries in less
developed and backward areas. The growth of industries and business in these areas lead to a
large number of public benefits like road transport, health, education, entertainment, etc. Setting
up of more industries lead to more development of backward regions and thereby promotes
balanced regional development.

(4) 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. In order to redress this problem a large
number of entrepreneurs need to be developed, which will help reduce the concentration of
economic power amongst the population.
(5) 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 benefit to larger sections of the society. Entrepreneurial
activities also generate more activities and give a multiplier effect in the economy.
(6) Increasing Gross National Product and Per Capita Income
Entrepreneurs are always on the look out for opportunities. They explore and exploit
opportunities,, encourage effective resource mobilization of capital and skill, bring in new
products and services and develops markets for growth of the economy. In this way, they help
increasing gross national product as well as per capita income of the people in a country.
Increase in gross national product and per capita income of the people in a country, is a sign of
economic growth.
(6) Improvement in the Standard of Living
Increase in the standard of living of the people is a characteristic feature of economic
development of the country. Entrepreneurs play a key role in increasing the standard of living of
the people by adopting latest innovations in the production of wide variety of goods and services
in large scale that too at a lower cost. This enables the people to avail better quality goods at
lower prices, which results in the improvement of their standard of living.
(7) Promotes Country's Export Trade

Entrepreneurs help in promoting a country's export-trade, which is an important ingredient of

economic development. They produce goods and services in large scale for the purpose earning
huge amount of foreign exchange from export in order to combat the import dues requirement.
Hence import substitution and export promotion ensure economic independence and
development.
(8) Induces Backward and Forward Linkages
Entrepreneurs like to work in an environment of change and try to maximize profits by
innovation. When an enterprise is established in accordance with the changing technology, it
induces backward and forward linkages, which stimulate the process of economic development
in the country.
(9) Facilitates Overall Development
Entrepreneurs act as catalytic agent for change, which results in chain reaction. Once an
enterprise is established, the process of industrialization is set in motion. This unit will generate
demand for various types of units required by it and there will be so many other units which
require the output of this unit. This leads to overall development of an area due to increase in
demand and setting up of more and more units. In this way, the entrepreneurs multiply their
entrepreneurial activities, thus creating an environment of enthusiasm and conveying an impetus
for overall development of the area.

Factors affecting Entrepreneurship

https://online.vmou.ac.in/oldweb/studymaterial/BBA%2012.pdf

Entrepreneurship is a complex phenomenon influenced by the interplay of a wide variety of

factors.The entrepreneurial activity at any time is dependent upon a complex and varying
combination of economic, social, political, psychological and other factors. These factors may
have been both positive and negative effluences on the emergence of entrepreneurship. Positive
influences

constitute

facilitative

and

conductive

conclusive

for

the

emergence

of

entrepreneurship whereas negative influences create inhibiting milieu to the emergence of

entrepreneurship. Following factors contribute to the success of entrepreneurship:
1.Personality Factors
Personality traits such as inner desire for control of their activities, tolerance for risk, high level
of tolerance to function in adverse situations and background experiences such as the family
environment, level of education, age and work history tolerance for ambiguity are important
personal characteristics that affect entrepreneurship. Individuals who are desirous of working
independently; willing to work for long hours and assume risk; are self-confident and hardworking are likely to be more successful as entrepreneurs than those who do not posses these
qualities
Personal factors, becoming core competencies of entrepreneurs, include:
(a) Initiative (does things before being asked for)
(b) Proactive (identification and utilization of opportunities)
(c) Perseverance (working against all odds to overcome obstacles and never complacent with
success)

(d) Problem-solver (conceives new ideas and achieves innovative solutions)

(e) Persuasion (to customers and financiers for patronization of his business and develops &
maintains relationships)
(f) Self-confidence (takes and sticks to his decisions)
(g) Self-critical (learning from his mistakes and experiences of others)
(h) A Planner (collects information, prepares a plan, and monitors performance)
(i) Risk-taker (the basic quality).
2. Environmental factors
These factors relate to the conditions in which an entrepreneur has to work. If the environment
that a individual is working in is unsatisfactory, that is, not conducive to his growth needs, it is
likely that the individual will quit his job and start his own business as an entrepreneur.
Unsatisfied personal needs for growth and achievement in employment conditions results in
successful entrepreneurship.
3. Political
Some researchers felt that the growth of entrepreneurship cannot be explained fully unless the
political set-up of a country is taken into consideration. Political stability in a country is
absolutely essential for smooth economic activity. Frequent political protests, strikes, etc. hinder
economic activity and entrepreneurship. Unfair trade practices, irrational monetary and fiscal
policies, etc. are a roadblock to the growth of entrepreneurship

4. Socio-Economic Factors
The entrepreneurial activity at any time and place is governed by varying combination of socioeconomic factors. The empirical studies have identified the following socioeconomic factors:

Cast/religion

Family background

Level of Education

Level of perception

Legitimacy of Entrepreneurship

Migratory character

Social Mobility

Social Security

Investment capacity

Ambition/motivation

5. Economic Factor
Factors such as availability of finance, labor, land, accessibility of customers, suppliers are the
factors that stimulate entrepreneurship. Capital is one of the most important prerequisites to
establish an enterprise. Availability of sufficient capital affects the introduction, survival and
growth of a business enterprise. Capital is regarded as lubricant to the process of production. If
we increase in capital investment, capital output ratio also tends to increases. This results in
increase in profit, which ultimately goes to capital formation. Due to this capital supply increase,
entrepreneurship also increases

6. Other Factors:

Entrepreneurial Education

More and more people with high academic attainments started joining the ranks of industrialists,
especially the professionals holding qualifications in engineering, law, medicine, cost and
chartered accounting. The newer entrepreneurs have a larger proportion of their floatation in the
traditional sector, but these professionals have by and large preferred to make their investments
in modern sector. The technicians in particular among both old and new entrepreneurs have
entered industries in the modern sector having a bearing of their academic qualifications. Many
universities and institutes are nowadays offering entrepreneurship education. A number of
institutes have set up successful entrepreneurship centers, which provide help to budding
entrepreneurs by conducting formal training and structured mentoring programs.

Impact of Services Sector

Increase in per capita income leads to a greater share of the services sector in the national

economy. The average size of firms m many sections of the services sector are relatively small.
This in turn promotes entrepreneurial activity across a number of service sector industries. Even
for some developing countries such as India, services account for over half of the total GDP.
Growing importance of services in the overall economy has paved the way for entrepreneurial
activity. New industries such as software and business process outsourcing have emerged and
these have a large number of entrepreneurial firms.

Increasing Demand for Variety

Increased wealth has led to increase in the demand for variety (Jackson 1984). The increasing

demand for new products is of advantage to smaller firms. A number of studies have shown the
comparative advantage of smaller firms in being innovative and coming up with new products .
If the products has unmet demand, it will create a market for itself. The success of
entrepreneurship is, therefore, dependent upon the extent to which the product is in demand.
Changes in consumer tastes are a major reason for growth of entrepreneurship. People are,
inclined to products that are specifically designed to meet their special needs. Mass produced
homogenous goods do not enjoy as wide an appeal anymore.

Impact of Ethical Value System

Max Weber was first to point out that the entrepreneurial growth was governed by the ethical
value system of the society concerned. He said that the spirit of rapid industrial growth depends
upon a rationalized technology, acquisition of money and its rational use for productivity and
multiplication of money. These elements depend upon a specific value orientation of individuals.
Entrepreneurship develops rapidly in those societies where ethical values provided independent
capacity of decision-making. No doubt, this view has some truth but it is not accepted
universally.

Internal Control System

Entrepreneurship largely depends upon the control system designed for controlling the business
activities. If the control system is effective they will result in optimal inventory, good quality
products and high profit margins. This will have a positive effect on the success of
entrepreneurship.

Types of Entrepreneurs

http://www.publishyourarticles.net/knowledge-hub/entrepreneurship/what-are-the-differenttypes-of-business-entrepreneurs-2/4460/
However, the various types or entrepreneur are classified as under:
(1) According to the Type of Business:
(i) Business entrepreneur
Business entrepreneurs are those entrepreneurs who conceive the idea of a new product or
service and then translate their ideas into reality. Entrepreneur examines the various possibilities
of sources of finance, supply of labor, raw-materials or finished product as the case may be.
Business entrepreneur may be undertaking the trading business or manufacturing business but
initially the size of the business is very small. As the entrepreneur flourishes, he tends to expand
his business.
(ii) Trading entrepreneur

As the very name indicates trading entrepreneur is concerned with trading activities and not
manufacturing. Trading means buying the finished product from the producer and selling off to
the customer directly or through a retailer.
A trading entrepreneur has to be creative enough as he has to identify the market. He has to
identify potential market, create demand through extensive advertisement of his product and thus
inspire people to buy his product. For this is inevitable for him to find out the desires, tastes and
choices of his customer in domestic as well as international market.
(iii) Industrial entrepreneur
As the very name indicates, an industrial entrepreneur is one who sets up an industrial unit. He
perceives the opportunity to set up his unit, complies with necessary formalities of getting
license, power connection, pollution control clearance (if the need be) arrange initial capital,
providing securities and guarantees to the financial institutions, making payment of wages and
supply necessary technical know-how. An industrial entrepreneur has the ability to convert
economic resources and technology into a considerably profitable venture. Manufacturer of
leather products, textiles, electronics, food items and the like are industrial entrepreneurs.
(iv) Corporate entrepreneur
Corporate entrepreneur is the one who plans, develops and manages a corporate body. He is a
promoter, an essential part of board of directors, an owner as well as an entrepreneur. He gets his
corporate body registered under the requisite Act which gives his company the status of separate
legal entity.
(v) Agricultural entrepreneur
Agricultural entrepreneur is the one who is engaged in the agricultural activities. He uses latest
technology to increase the productivity of agriculture and also adopts mechanisation.
(2) According to Motivation:
(i) Pure entrepreneur

Pure entrepreneur is one who may or may not possess an aptitude for entrepreneurship but is
tempted by the monetary rewards or profits to be earned from the business venture. He is statusconscious and wants recognition.
(ii) Induced entrepreneur
Induced entrepreneur is attracted by the various incentives, subsidies and facilities offered by the
government. An entrepreneur is not born this is no doubt true as every person can be trained
to become a good entrepreneur. Most of the entrepreneurs who enter into business are induced
entrepreneur as various kinds of financial, technical and managerial facilities are provided by the
government to promote entrepreneurship. An entrepreneur can develop himself much more by
attending EDPs and they can make a stand in the market. Import restrictions, allocation of
production quotas to SSIs, reservation of products for small industry etc. have forced many
young people to set up a small industry.
Non-Resident Indians (NRIs) and educated unemployed seeking self-employment or newly
married bridegrooms by taking financial support of their in-laws may be described as induced
entrepreneur. This class of entrepreneur accounts for maximum number of failures because there
is no proper screening of misfits.
(3) According to the Use of Technology:
(i) Technical entrepreneur
The strength of a technical entrepreneur is in his skill in production techniques. He concentrates
more on production than on marketing. He possesses craftsman skill in himself which he applies
to develop and to improve the technical aspect of the product.
(ii) Non-technical entrepreneur
Unlike technical entrepreneur, non-technical entrepreneur is not concerned with the technical
aspect of the product rather he spends more time in developing alternative strategies of the
marketing and distribution to promote his business. His target is not to change the production
technique but how to increase the demand of the product in which he is dealing.

(iii) Professional entrepreneur

Professional entrepreneur means an entrepreneur who is interested in floating a business but
does not want to manage or operate it . Once the business is established, he sells it out and
catches on to float a new business.
(4) According to Stages of Development

(i) First generation entrepreneur

First generation entrepreneur are those entrepreneurs who do not possess any entrepreneurial
background. They start an industrial unit by means of their own innovative skills.
(ii) Second generation entrepreneur
Second generation entrepreneur are those entrepreneurs who inherit the family business firms
and pass it from one generation to another.
(iii) Classical entrepreneur
A classical entrepreneur is a stereotype entrepreneur whose aim is to maximize his economic
returns at a level consistent with the survival of the unit but with or without an element of
growth.
(5) Classification Given by Danhof :
http://shah9il.blogspot.in/2011/06/what-are-different-types-of.html
Depending upon the level of willingness to create innovative ideas, there can be the following
types of entrepreneurs:

i) Innovative entrepreneurs
These entrepreneurs have the ability to think newer, better and more economical ideas of
business organization and management. They are the business leaders and contributors to the
economic development of a country. An innovating entrepreneur is one who introduces new
goods, inaugurates new methods of production, discovers new market and re-organizes the
enterprise. He arranges money, launches an enterprise, assembles the various factors, chooses the
competent managers and sets his enterprise go.
Inventions like the introduction of a small car Nano by Ratan Tata, organized retailing by
Kishore Biyani, making mobile phones available to the common may by Anil Ambani are the
works of innovative entrepreneurs.
Example: Steve Jobs the founder of iPod, Michael Dell, founder of Dell Computers.
ii) Imitating entrepreneurs
These entrepreneurs are people who follow the path shown by innovative entrepreneurs. They
imitate innovative entrepreneurs because the environment in which they operate is such that it
does not permit them to have creative and innovative ideas on their own. Innovative entrepreneur
is creative, while imitative entrepreneur is adoptive.
Such entrepreneurs are found in countries and situations marked with weak industrial and
institutional base, which creates difficulties in initiating innovative ideas.
In our country also, a large number of such entrepreneurs are found in every field of business
activity and they fulfill their need for achievement by imitating the ideas introduced by
innovative entrepreneurs.
Development of small shopping complexes is the work of imitating entrepreneurs. All the small
car manufacturers now are the imitating entrepreneurs.
Example: Walton BD. has introduced its motorbikes, refrigerators, televisions and other
electronic appliances in Bangladesh not being the original inventor of those products.

iii) Fabian entrepreneurs

The dictionary meaning of the term Fabian is a person seeking victory by delay rather than by
a decisive battle. Fabian entrepreneurs are those individuals who do not show initiative in
visualizing and implementing new ideas and innovations wait for some development which
would motivate them to initiate unless there is an imminent threat to their very existence. Fabian
entrepreneurs are cautious and skeptical in experimenting change in their enterprises. Such
entrepreneurs are shy, lazy and lethargic.
Example: 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. For what they
lost their leadership, having lost the leadership they have diversified the business in producing
the Digicams instead of producing Analog cameras.
iv) Drone entrepreneurs
The dictionary meaning of the term drone is a person who lives on the labor of others. Drone
entrepreneurs are those individuals who are satisfied with the existing mode and speed of
business activity and show no inclination in gaining market leadership. In other words, drone
entrepreneurs are die-hard conservatives and even ready to suffer the loss of business.
Example: Citycell Telecom Bangladesh, in spite of having knowledge about there market fall
they have not yet changed there business policy.
(6) According to Capital Ownership
(i) Private entrepreneur
When an individual or a group of individuals set up an enterprise, arrange finance, bear the risk
and adopt the latest techniques in the business with the intention to earn profits, he or the group
is called us private entrepreneur/entrepreneurs.
(ii)State entrepreneur

As the name indicates, state entrepreneur means the trading or industrial venture undertaken by
the state or the government itself.
(iii)Joint entrepreneur
Joint entrepreneur means the combination of private entrepreneur and state entrepreneur who
join hands.
(7) According to Gender and Age
(i) Man entrepreneur
(ii) Woman entrepreneur
(iii) Young entrepreneur
(iv) Old entrepreneur
(v) Middle-aged entrepreneur
(8) According to Area
(i) Urban entrepreneur
(ii) Rural entrepreneur
(9) According to Scale :
(i) Large scale industry entrepreneur
(ii) Medium scale industry entrepreneur
(i) Small scale industry entrepreneur
(ii) Tiny industry entrepreneur.

Functions of an Entrepreneur

The important functions performed by an entrepreneur are listed below:

1. Innovation
An entrepreneur is basically an innovator who tries to develop new technology, products,
markets, etc. Innovation may involve doing new things or doing existing things differently. An
entrepreneur uses his creative faculties to do new things and exploit opportunities in the market.
He does not believe in status quo and is always in search of change. Drone entrepreneurs are
characterized by a refusal to adopt opportunities to make changes in production formulae even at
the cost of severely reduced returns. They can suffer loss but are not ready to make changes in
their existing production methods. When competition increases, they are pushed out of the
market as it becomes uneconomical for them to exist and operate in a competitive market.
2. Assumption of Risk
An entrepreneur, by definition, is risk taker and not risk shirker. He is always prepared for
assuming losses that may arise on account of new ideas and projects undertaken by him. This

willingness to take risks allows an entrepreneur to take initiatives in doing new things and
marching ahead in his efforts.
3. Research
An entrepreneur is a practical dreamer and does a lot of ground-work before taking a leap in his
ventures. In other words, an entrepreneur finalizes an idea only after considering a variety of
options, analyzing their strengths and weaknesses by applying analytical techniques, testing their
applicability, supplementing them with empirical findings, and then choosing the best alternative.
It is then that he applies his ideas in practice. The selection of an idea, thus, involves the
application of research methodology by an entrepreneur.
4. Development of Management Skills
The work of an entrepreneur involves the use of managerial skills, which he develops while
planning, organizing, staffing, directing, controlling and coordinating the activities of business.
His managerial skills get further strengthened when he engages himself in establishing
equilibrium between his organization and its environment.However, when the size of business
grows considerably, an entrepreneur can employ professional managers for the effective
management of business operations.
5. Overcoming Resistance to Change
New innovations are generally opposed by people because it makes them change their existing
behavior patterns. An entrepreneur always first tries new ideas at his level.
It is only after the successful implementation of these ideas that an entrepreneur makes these
ideas available to others for their benefit. In this manner, an entrepreneur paves the way for the
acceptance of his ideas by others. This is a reflection of his will power, enthusiasm and energy,
which helps him in overcoming the societys resistance to change.

6. Catalyst of Economic Development

An entrepreneur plays an important role in accelerating the pace of economic development of a
country by discovering new uses of available resources and maximizing their utilization.To better
appreciate the concept of an entrepreneur, it is desirable to distinguish him from an entrepreneur
and promoter.

Factors impacting emergence of Entrepreneurship

http://courseblog-entrepreneurship.blogspot.in/2013/03/notes-factors-impacting-emergenceof.html
Various researchers world over have identified the factors that contribute to the development of
entrepreneurship. Economists agree that the lack of entrepreneurs is not caused by economic
conditions alone. It is also due to the whole set of socio-cultural and institutional environment
prevailing in the less developed countries. Various environmental factors influencing the
entrepreneurship are as follows:
I. Economic Factors

Economic environment exercises the most direct and immediate influence on entrepreneurship.
The economic factors that affect the growth of entrepreneurship are the following:
1. Capital
Capital is one of the most important perquisites to establish an enterprise. Availability of capital
facilitates is required to purchase the land, machine and raw material for producing goods.
Capital is therefore, regarded as lubricant to the process of production. Our accumulated
experience suggests that with an increase in capital investment, capital-output ratio also tends to
increase. This results in increase in profit, which ultimately goes to capital formation. This
suggests that as capital supply increases, entrepreneurship also increases.
2. Labor
The quality rather quantity of labor is another factor, which influences the emergence of
entrepreneurship. Most less developed countries are labor rich nations owing to a dense and even
increasing population. But entrepreneurship is encouraged if there is a mobile and flexible labor
force. And, the potential advantages of low-cost labor are regulated by the deleterious effects of
labour immobility. The considerations of economic and emotional security inhibit labor mobility.
Entrepreneurs, therefore, often find difficulty to secure sufficient labor. They are forced to make
elaborate and costly, arrangements to recruit the necessary labor. It can be dealt by utilizing
labor-intensive methods like Japan. In contrast, the disadvantage of high-cost labor can be
modified by introduction of labor-saving innovations as was done in US.

3. Raw Materials
The availability of raw materials is very important for establishing any industrial activity. In the
absence of raw materials, neither any enterprise can be established nor can an entrepreneur be
emerged.
4.Market
The fact remains that the potential of the market constitutes the major determinant of probable
rewards from entrepreneurial function.. The size and composition of market both influence
entrepreneurship in their own ways. Practically, monopoly in a particular product in a market
becomes more influential for entrepreneurship than a competitive market. However, the
disadvantage of a competitive market can be cancelled to some extent by improvement in

transportation system facilitating the movement of raw material and finished goods, and
increasing the demand for producer goods. Whether or not the market is expanding and the rate
at which it is expanding are the most significant characteristics of the market for entrepreneurial
emergence.

5.Infrastructure
Expansion of entrepreneurship depends upon properly developed communication and
transportation facilities. It not only helps to enlarge the market, but expand the horizons of
business too. Take for instance, the establishment of post and telegraph system and construction
of roads and highways in India. It helped considerable entrepreneurial activities, which took
place in the 1850s. Apart from the above factors, institutions like trade/ business associations,
business schools, libraries, etc. also make valuable contribution towards promoting and
sustaining entrepreneurship in the economy. You can gather all the information you want from
these bodies. They also act as a forum for communication and joint action. In the fast changing
world of business, entrepreneurs have to move-collectively in order to be more effective and
more efficient. They need to constantly check and influence the Governments thinking and
decision-making.
II. Social Factors
Social factors can go a long way in encouraging entrepreneurship. In fact it was the highly
helpful society that made the industrial revolution a glorious success in Europe. The main
components of social environment are as follows:
1. 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 divisions. 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. The protestant ethics in the west, the
Sammurai in Japan, the trading classes in US and the family business concerns of France have
distinguished themselves as entrepreneurs.
2. Family background
This factor includes size of family, type of family and economic status of family. Zamindar
family helped to gain access to political power and exhibit higher level of entrepreneurship.
Background of a family in manufacturing provided a source of industrial entrepreneurship.
Occupational and social status of the family influenced mobility. There are certain circumstances
where very few people would have to be venturesome. For example in a society where the joint
family system is in vogue, those members of joint family who gain wealth by their hard work
denied the opportunity to enjoy the fruits of their labor because they have to share their wealth
with the other members of the family.
3. Education
Education enables one to understand the outside world and equips him with the basic knowledge
and skills to deal with day-to-day problems. 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. 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. The
unfortunate result of it is that young men and women in our country have developed a taste only
for service. Their talents and capabilities have not been made much use of. Rather it has been
wasted in performing routine conventional jobs. 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.

4.Attitude of the Society

A related aspect to these is the attitude of the society towards entrepreneurship. 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 moneymaking activity. It is said, that in Russia, in the nineteenth century, the upper classes did not like
entrepreneurs. For them, cultivating the land meant a good life. They believed that land belongs
to God and the produce of the land was nothing but gods blessing.
5.Cultural Value
Motives impel men to action. Entrepreneurial growth requires proper motives like profit-making,
acquisition of prestige and attainment of social status. Ambitious and talented men would take
risks and innovate if these motives are strong. The strength of these motives depends upon the
culture of the society. 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 less developed countries, people are not economically motivated. Monetary incentives have
relatively less attraction. People have ample opportunities of attaining social distinction by noneconomic pursuits. Men with organizational abilities are, therefore, not c dragged into business.
They use their talents for non-economic ends. The absence of proper economic motives is a
general characteristic of agrarian societies in which people do not attach great value to business
talents, industrial leadership etc.
III. Psychological Factors
Many entrepreneurial theorists have propounded theories of entrepreneurship that concentrate
especially upon psychological factors. These are as follows:
1.Need Achievement
The most important psychological theories of entrepreneurship was put forward in the
early1960s by David McClelland. According to McClelland need achievement is social motive
to excel that tends to characterize successful entrepreneurs, especially when reinforced by
cultural factors. He found that certain kinds of people, especially those who became
entrepreneurs, had this characteristic. Moreover, some societies tend to reproduce a larger
percentage of people with high need achievement than other societies. McClelland attributed

this to sociological factors. Differences among societies and individuals accounted for need
achievement being greater in some societies and less in certain others. Analyzing this
phenomenon, Paul Wilken has said, entrepreneurship becomes the link between need
achievement and economic growth, the latter being a specifically social factor.
The theory states that people with high need-achievement are distinctive in several ways. They
like to take risks and these risks stimulate them to greater effort. The theory identifies the factors
that produce such people. Initially McClelland attributed the role of parents, specially the
mother, in mustering her son or daughter to be masterful and self-reliant. Later he put less
emphasis on the parent-child relationship and gave more importance to social and cultural
factors. He concluded that the need achievement is conditioned more by social and cultural
reinforcement rather than by parental influence and such related factors.
2. Withdrawal of Status Respect
There are several other researchers who have tried to understand the psychological roots of
entrepreneurship. One such individual is Everett Hagen who stresses the-psychological
consequences of social change. Hagen says, at some point many social groups experience a
radical loss of status. Hagen attributed the withdrawal of status respect of a group to the genesis
of entrepreneurship. Giving a brief sketch of history of Japan, he concludes that it developed
sooner than any non-western society except Russia due to two historical differences. First, Japan
had been free from colonial disruption and secondly, the repeated long continued withdrawal of
expected status from important groups in its society led them to the technological progress
through entrepreneurial roles.
Hagebelieves that the initial condition leading to eventual entrepreneurial behavior is the loss of
status by a group. He postulates that four types of events can produce status withdrawal:
(a) The group may be displaced by force;
(b) It may have its valued symbols denigrated;
(c) It may drift into a situation of status inconsistency; and
(d) It may not be accepted the expected status on migration in a new society.

He further postulates that withdrawal of status respect would give rise to four possible reactions
and create four difference personality types:
(a) Retreatist: He who continues to work in a society but remains different to his work and
position;
(b) Ritualist: He who adopts a kind of defensive behavior and acts in the way accepted and
approved

in his society but no hopes of improving his position;

(c) Reformist: He is a person who foments a rebellion and attempts to establish a new society;
and
(d)Innovator: He is a creative individual and is likely to be an entrepreneur.
Hagen maintains that once status withdrawal has occurred, the sequence of change in
personality formation is set in motion. He refers that status withdrawal takes a long period of
time - as much as five or more generations - to result in the emergence of entrepreneurship.
3. Motives
Other psychological theories of entrepreneurship stress the motives or goals of the entrepreneur.
Cole is of the opinion that besides wealth, entrepreneurs seek power, prestige, security and
service to society. Stepanek points particularly to non-monetary aspects such as independence,
persons self-esteem, power and regard of the society.
On the same subject, Evans distinguishes motive by three kinds of entrepreneurs:
(a) Managing entrepreneurs whose chief motive is security.
(b) Innovating entrepreneurs, who are interested only in excitement.
(c) Controlling entrepreneurs, who above all other motives- want power and authority.
Finally, Rostow has examined intergradational changes in the families of entrepreneurs. He
believes that the first generation seeks wealth, the second prestige and the third art and beauty.
4.Others

Thomas Begley and David P. Boyd studied in detail the psychological roots of entrepreneurship
in the mid 1980s. They came to the conclusion that entrepreneurial attitudes based on
psychological considerations have five dimensions:
First came need-achievement as described by McClelland. In all studies of successful

entrepreneurs a high achievement-orientation is invariably present.

The second dimension that Begley and Boyd call locus of control This means that the
entrepreneur follows the idea that he can control his own life and is not influenced by factors
like luck, fate and so on. Need-achievement logically implies that people can control their

own lives and are not influenced by external forces.

The third dimension is the willingness to take risks. These two researchers have come to the
conclusion that entrepreneurs who take moderate risks earn higher returns on their assets than

those who take no risks at all or who take extravagant risks.

Tolerance is the next dimension of this study. Very few decisions are made with complete
information. So all business executives must, have a certain amount of tolerance for

ambiguity.
Finally, here is what psychologists call Type A behavior. This is nothing but a chronic,
incessant struggle to achieve more and more in less and less of time Entrepreneurs are
characterized by the presence of Type A behavior in all their endeavors.

IV. Political Factors

An entrepreneur, however creative he/she may be, cannot function without the supportive actions
of the Government. It is for the government/society to ensure the availability of required
resources for the entrepreneurs and also the accessibility to them. This is because the successful
entrepreneur contributes to the well being of the society. Policies relating to various-economic
aspects like prices, availability of capital, labour and other inputs, demand structure, taxation,
income distribution, etc. affect growth of entrepreneurship to a large extent. Promotive
government activities such as incentives and subsidies contribute substantially to entrepreneurial
performance. At the same time, Government policies like licenses, regulations, favouritism,
government monopolies, etc. are undesirable for the growth of business enterprises. Above all, a
Government that is politically stable and united can affect entrepreneurial activities in a
significant manner. Is there a business entrepreneur in your neighborhoods? Try to gather
information on his/her views on various government policies, for example, on taxation, finance,

labour etc. Also ask him/her about the opportunities and growth prospects of a business unit.
Write down your observations.
India, all the above-mentioned environmental forces have turned in favor of enterprising men
and women. There is a visible change for the better in the highly inactive entrepreneurial field in
the country. The tight grip of religious and traditional, ideas and practices have begun to loosen.
It is encouraging the non-commercial classes to consider economic opportunities more
sympathetically. As a result, occupational division based on caste system has undergone
tremendous traditional activities, social approval etc. have become less important. More
important now, are the economic factors such as access to capital and possession of
entrepreneurial attitudes and business I knowledge.
Development of infrastructure changes in government policies in favor of business and industry
and of course, rise in demand for products manufactured are some of the other factors that have
led the Indian entrepreneurs to look for new business opportunities.

MANAGERIAL VERSUS ENTREPRENEURIAL DECISION

MAKING
The difference between the entrepreneurial style and the managerial style (administrative
domain) involves five business dimensions.
A. Strategic Orientation
1. The entrepreneurs strategic orientation depends on his or her perception of the opportunity.
2. When the use of planning systems is the strategic orientation, the administrative domain is
operant.
B. Commitment to Opportunity
1. The entrepreneurial domain is pressured by the need for action and has a short time span in
terms of opportunity commitment.
2. The administrative domain is not only slow to act on an opportunity, but the commitment is
usually for a longer time span.
C. Commitment of Resources
1. An entrepreneur is used to having resources committed at periodic intervals, often based on
certain tasks or objectives being reached.
2. In acquiring these resources the entrepreneur is forced to maximize resource use.

3. In the administrative domain, the commitment of resources is for the total amount needed.
4. Administrative-oriented individuals receive personal rewards by effectively administering the
resources under their control.
D. Control of Resources
1. The administrator is rewarded by effective resource administration and has a drive to own or
accumulate as many resources as possible.
2. The entrepreneur, under pressure of limited resources, strives to rent resources on an asneeded basis.
E. Managerial Structure
1. In the administrative domain, the organizational structure is formalized and hierarchical in
nature.
2. The entrepreneur employs a flat organizational structure with informal networks.

Traits/Qualities Of Successful Entrepreneurs

http://www.entrepreneur.com/article/243792
1. Full of determination
To be a successful entrepreneur it is important to set clear goals along the way. Growing
business, increasing sales and hiring new employees require several micro-goals within them to
be executed successfully.This type of workload and challenge is enough to stop many people
from pursuing the entrepreneurial career path. One has to be determined from the beginning to be
successful -- before you even start. If you arent fully determined to make it there is a good
chance you will crumble under the pressure.
2. Risk Taking
Some of the most successful entrepreneurs took major risks, and they paid off in a big
way. Entrepreneurs are risk takers ready to dive deep into a future of uncertainty. But not all risk
takers are successful entrepreneurs. Successful entrepreneurs have will to risk time and money
on unknowns, but they also keep resources, plans and bandwidth for dealing with "unknown" in
reserve. When evaluating risk, a successful entrepreneur always thinks that is this risk worth the
cost of career, time and money? And, what will he do if this venture doesn't pay off?
3. High level of confidence
Entrepreneurs that have a high level of confidence are able to get the job done even under the
most stressful conditions. They understand that big challenges breed big rewards. This is the
same mentality that allows successful entrepreneurs to spot an opportunity when most just see a

possible challenge. When most focus on the challenge, a successful entrepreneur focuses on the
finish line and the end reward.
4. Craves learning
Industries constantly change and evolve -- only those that are also growing through constant
learning will stay ahead. You will always have competitors breathing down your neck trying to
surpass you. There will always be someone claiming to be the next greatest thing.
Staying sharp, through constant learning, will enable you to stay ahead and avoid getting passed.
Read books and wake up earlier in the morning to read industry news -- do everything you can to
constantly learn and absorb new information.
5. Understands failure is part of the game
Failure is one of the secrets to success, since some of the best ideas arise from the ashes of a
shuttered business. If you understand that failure is part of being an entrepreneur, you will take
those failures and use them as learning experiences. Real world experience, even failing, will
teach you more than you would ever learn in a classroom.

6. Passionate about his or her business

Passion fuels the drive and determination required to be successful, whether you are building a
company from the ground up or buying an Internet business that already has a proven track
record.You have to thoroughly enjoy what you are doing -- there will be long days and nights
and at some points along the way your business will consume you. If you arent fully passionate
about what you are doing the added stress and obstacles will build up on your shoulders and
eventually be responsible for your collapse.

7. Adaptability and Flexibility

If entrepreneurs had the ability to see what was hiding around each turn it would make it much
easier -- but unfortunately that is not the case. There can be surprises around every corner, even
with a well thought out plan and strategy.If you are extremely adaptable it gives you the ability to
respond quickly in any situation. This allows you to make decisions that will navigate you out of
trouble and allow you to thrive in environments that would sink those that arent adaptable. Its
good to be passionate or even stubborn about what you do. But being inflexible about client or
market needs will lead to failure. Remember, an entrepreneurial venture is not simply about
doing what you believe is good, but also making successful business out of it. Market needs are
dynamic: changes are a recurring phenomenon. Successful entrepreneurs welcome all
suggestions for optimization or customization that enhances their offering and satisfies client and
market-needs.

8.Money Management
It doesnt matter if you are bootstrapping your business, using personal credit cards or have
millions of dollars from investors you must have excellent money management skills. Poor
financial decisions, such as overspending or allocating funds to less important tasks can quickly
ruin a business.Have a clear financial map drawn out -- what are your essential monthly expenses
and obligations? How much can you allocate monthly for items that fall outside of the
essential category? Stick to your plan and make sure all founders and shareholders are on the
same page. It takes time to get to profitability for any entrepreneurial venture. Till then, capital is
limited and needs to be utilized wisely. Successful entrepreneurs realize this mandatory money
management requirement and plan for present and future financial obligations (with some
additional buffer). Even after securing funding or going fully operational, a successful
businessman keeps a complete handle on cash flows, as it is the most important aspect of any
business.

9. Networking Abilities
A large collection of business cards and a huge contact list doesnt make you an expert at
networking. Building value-based relationships that are truly meaningful is what networking is
all about -- these are the relationships that lead to business opportunities and long-term
relationships that are mutually beneficial. Constantly networking with people that can not only
help my business currently, but also have the potential to help you in the future as well.

10. Ability to sell and promote

Knowing how to sell is an absolutely essential part of being a successful business owner.If you
cant express what it is that makes your product or service a solution to a problem, you will be in
for a rough ride.

11. Planning (But not Over-planning)

Entrepreneurship is about building a business from scratch while managing limited resources
(including time, money and personal relationships). It is a long-term commitment, and
attempting to plan as much as possible at the beginning is a noble impulse. In reality, however,
planning for everything and having a ready solution for all possible risks may prevent you from
even taking the first step. Successful entrepreneurs do keep some dry powder in reserve, but
more importantly they maintain a mindset and temperament to capable of dealing with
unforeseen possibilities.Do a feasibility analysis; identify time and capital thresholds; take the
deep dive with your limited resources. If your thresholds are crossed, look for alternatives and be
prepared
12.Creativity

to

take

the
and

next

exit.
Persuasiveness

Successful entrepreneurs have the creative capacity to recognize and pursue opportunities. They
possess strong selling skills and are both persuasive and persistent. Are you willing to promote
your business tirelessly and look for new ways to get the word out about your product or service?

13. Interpersonal Skills

Entrepreneurs are always comfortable while dealing with people at all levels. During the course
of their action,they come across a cross section of individuals with whom they have to deal. They
interact with raw material suppliers, customers,bankers etc. for different activities.As successful
entrepreneurs,they should be persons who like working with others possessing the much needed
quality of interpersonal skill to deal with people.

14. Time orientation

Entrepreneurs anticipate future trends basing upon their past experience and exposure.They stick
to the timepragmatically while doing their jobs.
15. Leadership
Entrepreneurs should posses the quality of leadership.Leadership is the ability to exert
interpersonal

influence

by means

of

communication

towards

the

achievement

of

goals.Entrepreneurs as the leaders should provide the necessary spark to motivation by

guiding,inspiring,assisting and directing the members of the group for achievement of unity of
action,efforts

and

purpose.

16. Internal Locus of Control

Successful entrepreneurs believe in themselves.They do not believe that the success or failure or
their venture will be governed by fate,luck or similar forces.They believe that their
accomplishments and setbacks are within their own control and influence and that they can affect
the outcome of their actions.
17. Tolerance for Ambiguity
Star up entrepreneurs face uncertainty compounded by constant changes that introduce
ambiguity and stress into every aspect of the enterprise. Setbacks and surprises are inevitable.A
tolerance for ambiguity exists when the entrepreneur candela with the various setbacks and
changes that constantly confront him or her.

18. Integrity and Reliability

Integrity and reliability are the glue andfiber that bind successful personal and business
relationships and make them strong.Integrity and reliability help build and sustain trust and
confidence among investors,partners,customers and creditors.Small business entrepreneurs in
particular find these two characteristics crucial to success.
19 Tolerance for Failure
Successful Entrepreneurs use failure as a learning experience.In adverse and difficult times they
look for opportunity.

The Entrepreneurial Process

http://www.smeda.mu/English/SME%20Guide/Pre%20Starting%20a%20business/Pages/TheEntrepreneurial-Process.aspx

The process of creating something different, with value, by devoting necessary time and effort by
assuming the accompanying financial, psychological and social risks, and receiving the resulting
rewards

of

monetary

The process has four distinct phases :

and

personal

satisfaction

1. Identification and evaluation of the opportunity

This is the step where the question of whether there is an opportunity worth investing in is
asked. Investment is principally capital, whether from individuals in the company or from
outside investors, and the time and energy of a set of people. But you should also consider other
assets such as intellectual property, personal relationships, etc.
The assessment of the opportunity requires answering the following questions:

What market need does it fill?

What personal observations have you experienced or recorded with regard to that market
need?

What social condition underlies this market need?

What market research data can be marshaled to describe this market need?

What patents might be available to fulfill this need?

What competition exists in this market? How would you describe the behavior of this
competition?

What does the international market look like?

What does the international competition look like?

Where is the money to be made in this activity?

2. Development of the business plan

Once you have decided that on opportunity, you need a plan for how to capitalize on that
opportunity. A plan begins as a fairly simple set of ideas, and then becomes more complex as the
business takes shape. In the planning phase you will need to create two things : strategy and
operating plan. A good business plan is essential al to developing the opportunity and
determining the resources required, obtaining those resources, and successfully managing the
resulting venture.
3. Determination of the require resources

The resources needed for addressing the opportunity must also be determined. This process
starts with an appraisal of the entrepreneurs present resources. Any resources that are critical
need to be differentiated from those that are just helpful. Care must be taken not to
underestimate the amount of variety of resources needed.
4. Management of the resulting enterprise
The operational problems of the growing enterprise must also be examined. This involves
implementing a management style and structure, as well as determining the key variables for
success. After launch, the company works toward creating its product or service, generating
revenue and moving toward sustainable performance.

Women Entrepreneurs
http://www.indianmba.com/Faculty_column/FC293/fc293.html
Women Entrepreneurs may be defined as the women or a group of women who initiate, organize
and operate a business enterprise.

Government of India has defined women entrepreneurs as an enterprise owned and controlled by
a women having a minimum financial interest of 1% of the capital and giving at least 51% of
employment generated in the enterprise to women.

Problems of Women Entrepreneurs in India/Challenges faced by Women

Entrepreneurs
http://www.preservearticles.com/201101153366/problems-faced-by-women-entrepreneur.html
Women in India have faced many problems to get ahead their life in business. Women
entrepreneurs face a series of problems right from the beginning till the enterprise functions. The
problems of Indian women pertains to her responsibility towards family, society and work.
The traditions, customs, socio cultural values, ethics, motherhood, physically weak, feeling of
insecurity etc. are some peculiar problems that the Indian women are coming across while they
jump into entrepreneurship.
Women in rural areas have to suffer still further. They face tough resistance from men. They are
considered as helpers. The attitude of society towards her and constraints in which she has to live
and work are not very conducive.
Besides the above basic problems the other problems faced by women entrepreneurs are as
follows:
1. Family ties
Women in India are very emotionally attached to their families. They are supposed to attend to
all the domestic work, to look after the children and other members of the family. They are over
burden with family responsibilities like extra attention to husband, children and in laws, which
take away a lots of their time and energy. In such situation, it will be very difficult to concentrate
and run the enterprise successfully.

2. Male dominated society

Even though our constitution speaks of equality between sexes, male chauvinism is still the order
of the day. Women are not treated equal to men. Their entry to business requires the approval of
the head of the family. Entrepreneurship has traditionally been seen as a male preserve. All these
put a break in the growth of women entrepreneurs.
3. Lack of education
Women in India are lagging far behind in the field of education. Most of the women (around
sixty per cent of total women) are illiterate. Those who are educated are provided either less or
inadequate education than their male counterpart partly due to early marriage, partly due to son's
higher education and partly due to poverty. Due to lack of proper education, women
entrepreneurs remain in dark about the development of new technology, new methods of
production, marketing and other governmental support which will encourage them to flourish.
4. Social barriers
The traditions and customs prevailed in Indian societies towards women sometimes stand as an
obstacle before them to grow and prosper. Castes and religions dominate with one another and
hinders women entrepreneurs too. In rural areas, they face more social barriers. They are always
seen with suspicious eyes.
5. Shortage of raw materials
Neither the scarcity of raw materials nor availability of proper and adequate raw materials
sounds the death-knell of the enterprises run by women entrepreneurs. Women entrepreneurs
really face a tough task in getting the required raw material and other necessary inputs for the
enterprises when the prices are very high.
6. Problem of finance
Women entrepreneurs have to struggle a lot in raising and meeting the financial needs of the
business. Bankers, creditors and financial institutes are not coming forward to provide financial

assistance to women borrowers on the ground of their less credit worthiness and more chances of
business failure. They also face financial problem due to blockage of funds in raw materials,
work-in-progress finished goods and non-receipt of payment from customers in time.
7. Tough competition
Usually women entrepreneurs employ low technology in the process of production. In a market
where the competition is too high, they have to fight hard to survive in the market against the
organized sector and their male counterpart who have vast experience and capacity to adopt
advanced technology in managing enterprises
8. High cost of production
Several factors including inefficient management contribute to the high cost of production, which
stands as a stumbling block before women entrepreneurs. Women entrepreneurs face technology
obsolescence due to non-adoption or slow adoption to changing technology, which is a major
factor of high cost of production.
9.Low risk-bearing capacity
Women in India are by nature weak, shy and mild. They cannot bear the amount risk which is
essential for running an enterprise. Lack of education, training and financial support from
outsides also reduce their ability to bear the risk involved in an enterprises.
10. Limited mobility
Women mobility in India is highly limited and has become a problem due to traditional values
and inability to drive vehicles. Moving alone and asking for a room to stay out in the night for
business purposes are still looked upon with suspicious eyes. Sometimes, younger women feel
uncomfortable in dealing with men who show extra interest in them than work related aspects.
11. Lack of entrepreneurial aptitude

Lack of entrepreneurial aptitude is a matter of concern for women entrepreneurs. They have no
entrepreneurial bent of mind. Even after attending various training programmes on entrepreneur
ship women entrepreneurs fail to tide over the risks and troubles that may come up in an
organizational working.
12. Limited managerial ability
Management has become a specializedjob which only efficient managers perform. Women
entrepreneurs are not efficient in managerial functions like planning, organizing, controlling,
coordinating, staffing, directing, motivating etc. of an enterprise. Therefore, less and limited
managerial ability of women has become a problem for them to run the enterprise successfully.
13. Legal formalities
Fulfilling the legal formalities required for running an enterprise becomes an upheaval task on
the part of an women entrepreneur because of the prevalence of corrupt practices in government
offices and procedural delays for various licenses, electricity, water and shed allotments. In such
situations women entrepreneurs find it hard to concentrate on the smooth working of the
enterprise.

14. Exploitation by middle men

Since women cannot run around for marketing, distribution and money collection, they have to
depend on middlemen for the above activities. Middlemen tend to exploit them in the guise of
helping. They add their own profit margin, which result in less sales and lesser profit.
15. Lack of self-confidence
Women entrepreneurs because of their inherent nature, lack of self-confidence, which is
essentially a motivating factor in running an enterprise successfully. They have to strive hard to
strike a balance between managing a family and managing an enterprise. Sometimes she has to
sacrifice her entrepreneurial urge in order to strike a balance between the two.

How to Develop Women Entrepreneurs?/Measures for Development of

Women Entrepreneurs

Right efforts on all areas are required in the development of women entrepreneurs and their
greater participation in the entrepreneurial activities. Following efforts can be taken into account
for

effective

1.Consider

development

women

as

specific

target

of
group

for

all

women

entrepreneurs.

developmental

programmes.

2. Better educational facilities and schemes should be extended to women folk from government
part.
3. Adequate training programmes on management skills to be provided to women community.
4.

Encourage

women's

participation

in

decision-making.

5. Vocational training to be extended to women community that enables them to understand the
production

process

and

production

management.

6. Skill development to be done in women's polytechnics and industrial training institutes. Skills
are

put

to

work

in

training-cum-production

workshops.

7. Training on professional competence and leadership skill to be extended to women

entrepreneurs.
8. Training and counseling on a large scale of existing women entrepreneurs to remove
psychological

causes

like

lack

of

self-confidence

and

fear

of

success.

9. Counseling through the aid of committed NGOs, psychologists, managerial experts and
technical personnel should be provided to existing and emerging women entrepreneurs.
10.

Continuous

monitoring

and

improvement

of

training

programmes.

11. Activities in which women are trained should focus on their marketability and profitability.

12. Making provision of marketing and sales assistance from government part.
13. To encourage more passive women entrepreneurs the Women training programmes should be
organized that taught to recognize her own psychological needs and express them.
14. State finance corporations and financing institutions should permit by statute to extend purely
trade

related

finance

to

women

entrepreneurs.

15. Women's development corporations have to gain access to open-ended financing.

16. The financial institutions should provide more working capital assistance both for small
scale

venture

and

large

scale

ventures.

17. Making provision of micro credit system and enterprise credit system to the women
entrepreneurs

at

local

level.

18. Repeated gender sensitization programmes should be held to train financiers to treat women
with

dignity

and

respect

as

persons

in

their

own

right.

19. Infrastructure, in the form of industrial plots and sheds, to set up industries is to be provided
by

state

run

agencies.

20. Industrial estates could also provide marketing outlets for the display and sale of products
made

by

women.

21. A Women Entrepreneur's Guidance Cell set up to handle the various problems of women
entrepreneurs

all

over

the

state.

22. District Industries Centers and Single Window Agencies should make use of assisting
women

in

their

trade

and

business

guidance.

23. Programmes for encouraging entrepreneurship among women are to be extended at local
level.
24. Training in entrepreneurial attitudes should start at the high school level through welldesigned

courses,

which

build

confidence

through

behavioral

games.

25. More governmental schemes to motivate women entrepreneurs to engage in small scale and
large-scale

business

ventures.

26. Involvement of Non Governmental Organizations in women entrepreneurial training

programmes and counseling.

Supportive Measures for Womens Economic Activities and Women

Entrepreneurship in India

https://books.google.co.in/books?
id=3rEV5FipNmAC&printsec=frontcover#v=onepage&q&f=false
The IndianGovernment has adapted the principle of Womens equality in all spheres of life.Since
Independence several steps has been taken by the government for the progress of women through
successive Five Year Plans.
The draft of Sixth Five Year Plan for the first time,incorporated a new chapter entitled Women
and Development with a special stress on the issue of the development of women
entrepreneurship.
In order to promote women entrepreneurship,multifaceted efforts have been made in India,which
are enumerated below:
1. Direct and Indirect Financial Support
To overcome financial bottlenecks in the way of running enterprises,the National Banks,State
Finance Corporation,State Industrial Development Corporation and District Industries Centers
provide loans,subsidies and grants to women entrepreneurs.In addition,Equity Fund Schemes
provide

interest

free

loans

to

new

units

and

repayment

isallowed

for

10-12

years.Further,Differential Interest rate Scheme,Mahila Ayog Nidhi Scheme by Industrial

DevelopmentBank of India(IDBI) hasbeenintroduced for setting upof new industrial projects by
women entrepreneurs.Besides, the direct financial support, Indirect financial assistance is also
available from Small Industries Development Bank of India(SIDBI),National Small Industries
Corporation(NSIC),Industrial Finance Corporation of India(IFCI), State Small Industrial
Development

Corporations(SSIDCs),National

Bank

for

Agricultural

and

Rural

Development(NABARD), etc. which provide refinance small scale industries and rendering
assistance to women entrepreneurs.
1. Yojna,Schemes and Program
During the successive Five Year Plans,different schemes,yojna and programmes have been
launched to safeguard the interest and functioning of women entrepreneurs. Under Nehru Rojgar

Yojna,75 per cent of the funds are provided by the banks and 25 percent by the Womens Finance
Commission(WFC) out of which 20 percent is provided as a subsidy to women.Similarly,The
Prime Ministers Integrated Urban Poverty Eradication Programme, WFC provides financial
assistance to the women entrepreneurs for setting up units with less than 10 lakhs capital.
2. Technological Trainings and Awards
For stemming andimproving entrepreneurship programmes,training and awards have been
started. Entrepreneurship Development Institute of India,Ahmedabad conducts result oriented
entrepreneurship development programmes for industrially backward and rural areas especially
for women entrepreneurs. Again Stree ShaktiPackage for women entrepreneurs started by State
Bank of India(SBI),which provide concessions and special training facilities.award for women
entrepreneurship is given by Indian Institute of Marketing Management,and Womens University
of Mumbai.
3. Federations and Associations
There are Federations and associations for women, which are making continuous and valuable
efforts in the field of entrepreneurship. Large number of women entrepreneur are operating at
national and international levels to provide meeting grounds of women entrepreneurs.At national
level, some are as follows:
a) National Alliance of you of Entrepreneurs (NAYE)
b) Indian Council of Women Entrepreneurs (ICWE)
c) Self employed Womens Association (SEWA)
d) Association of Women Entrepreneurs of Karnataka (AWEK)
At International level,there are two associations:
a) Associated Country Women of the World (ACWW) with 30 million women entrepreneurs
as its members

b) World Association of Women Entrepreneur (WAWE), which is willing to collaborate with

Indian firms for joint venture.
As a result of above mentioned efforts made by the Governments and several other changes and
developments

like

education,technical

upliftment,urbanization,

economicindependence,

legislations for empowerment and so on,the women entrepreneurs have gained momentum.

Role Models of Woman Entrepreneurs/Profiles of successful Women

Entrepreneurs
Entrepreneurship Development and Small Business Enterprise
By Poornima M. Charantimath
https://books.google.co.in/books?
id=RMdQoW3v9QgC&printsec=frontcover#v=onepage&q=social%20entrepreneurship&f=false
1. Kiran Mazumdar Shaw
Kiran Mazumdar Shaw (born 23 March 1953) is an Indian entrepreneur.She is the chairman and
managing director of BioconLimited, a biotechnology company based in Bangalore (Bengaluru),
India[5] and the current chairperson of IIM-Bangalore. She is on the Financial Times top 50
women in business list.[12] As of 2015, she is listed as the 85th most powerful woman in the
world by Forbes.
2. Vidya Chhabria
Vidya Chhabria was thrust into the spotlight after the 2002 death of her husband, Indian business
tycoon Manu Chhabria. She became chairman of Jumbo Group, whose flagship company, Jumbo
Electronics, is one of the largest distributors of consumer electronics, IT and telecom in the
Middle East. It has partnerships with companies like Sony, IBM and Microsoft
3. Priya Paul
Priya Paul (born 1967) is a prominent woman entrepreneur of India, and currently the
Chairperson of Apeejay Surrendra Park Hotels The Park Hotels chain of boutique hotels. She
joined the company after finishing her studies at the Wellesley College (US) working under her
father, as Marketing Manager at The Park New Delhi, at the age of 21.
After the death of Surrendra Paul, she succeeded him in 1990 as the Chairperson of the
Hospitality Division of the Apeejay Surendra Group.

Her contributions to industry and commerce, particularly in the field of hospitality, have been
repeatedly recognized and she has received several awards and citations, including the following:

The Federation of Hotels and Restaurants Association of India conferred on her Young
Entrepreneur of the Year award (19992000),

She was nominated for The Economic Times Awards as the Businessperson of the Year
(20022003), and

Tatler magazine rated The Park Bangalore, a part of her Group, as one of the 101 Best
Hotels Worldwide in 2003.

Paul has been conferred with Padam Shriaward by Government of India on eve of the
Republic Day, January 2012

4. Swati Piramal
Swati Piramal is one of India's leading scientists and industrialists, and is involved in
healthcare, focusing on public health and innovation. Her contributions in innovations in new
medicines and public health services have touched thousands of lives. She is the Vice
Chairperson of Piramal Enterprises Ltd (formerly known as Piramal Healthcare), a leading
drug discovery company which aims to bring affordable medicines to reduce the burden of
disease globally.Born on 28 March 1956, Piramal earned her medical degree, an M.B.B.S
from Mumbai University in 1980. She is an alumnus of the Harvard School of Public
Health where she received her Master's degree in 1992.
Awards and Honours
200405 BMA Management Woman Achiever of the Year Award
2007 Rajiv Gandhi Award for Outstanding Woman Achiever by the Rajiv Gandhi
Foundation.

2012 One of India's high civilian honours, the Padma Shri award, by the President of India,
Ms. Pratibha Patil
2014 - Received the Kelvinator Stree Shakti Award
5. Lalita D. Gupte
Lalita Gupte, Joint Managing Director of ICICI Bank (Indias second largest commercial bank),
until 31 October 2006, is an important figure in Indias banking and financial services sector.
[1]

An INSEAD alumnus, Gupte was listed by the Fortune "as one of the fifty most powerful

women in international business." She is currently the Chairperson on the Board of ICICI
Venture and a board member of Nokia Corporation.On 22 June 2010 she was appointed as
member of Alstoms Board of directors.
Her contributions have been widely recognized, and the awards conferred on her include the
following:

The twenty First Century for Banking Finance and Banking award (1997) by Ladies
Wing of the Indian Merchants Chamber[4]

The Women Achievers Award (2001) from the Women graduates Association.

Women of the Year Award (2002) by the International Womens Association.

6. Ekta Kapoor
Ekta Kapoor is an Indian TV and film producer. She is the Joint Managing Director and Creative
Director of Balaji Telefilms, her production company.
Awards and Honours

2012 Asia's Social Empowerment Award- Freedom Through Education

7. Shehnaz Husain
Shahnaz Husain is the CEO of Shahnaz Herbals Inc. She is a prominent Indian female
entrepreneur, who is best known for her herbal cosmetics, particularly care products. In 2006 she

was awarded the, Padam Shreea civilian award by the Government of India in 2006,and in 1996
Success Magazine's "World's Greatest Woman Entrepreneur" award.
8. Ritu Kumar
Ritu Kumar is an Indian fashion designer. Kumar began her fashion business in Kolkata, using
two small tables and hand-block printing techniques.[2][3] Beginning with bridal wear and evening
clothes in the 1960s and 70s, she eventually moved into the international market in the
subsequent two decades.[4] As well as shops in India, Kumar's company has also opened branches
in Paris, London and New York. The London branch closed after three years, in 1999. Her
company's annual turnover at the time was the highest of any Indian fashion outlet, estimated at
around 10 billion. In 2002 she launched the "Label" line in partnership with her son Amrish.In
2013 she was given the Padma Shri award by the Government of India. [8] In addition, she was
recently featured in the Creating Emerging Markets project at the Harvard Business School,
which includes interviews with long-time leaders of firms and NGOs in Latin America, South
Asia, Turkey and Africa.

Social entrepreneurship
Social entrepreneurship is the attempt to draw upon business techniques to find solutions
to socialproblems. This concept may be applied to a variety of organizations with different sizes,
aims, and beliefs.

The social entrepreneur is a mission-driven individual who uses a set of entrepreneurial

behaviours to deliver a social value to the less privileged, all through an entrepreneurially
oriented entity that is financially independent, self-sufficient, or sustainable.

Characteristics of Social Entrepreneur

The usual ideologies and principals do not holdback social Entrepreneurs. They are
always looking at breaking them.

Social Entrepreneurs are impatient. They do not go well with the bureaucracy around
them.

Social Entrepreneurs have the patience, energy and enthusiasm to teach others.

Social Entrepreneurs combine Innovation, Resources and Opportunity to derive solutions

to Social problems.

This should be first in the list, Social Entrepreneurs DO NOT loose their FOCUS
anytime.

Social Entrepreneurs always jump in before having their resources in place. They are not
traditional.

Social Entrepreneurs ALWAYS believe that every one can Perform and have the capacity
to do so.

Social Entrepreneurs ALWAYS display DETERMINATION

Social Entrepreneurs can ALWAYS measure and monitor their results.

Examples of Social Enterprises

1. Aravind Eye Hospital & Aurolab

Social Entrepreneur: Dr.Govindappa Venkataswamy (Dr. V) & David Green

Type of Organization: Trust
Location: Madurai, India
Website: www.aravind.org
Mission: Making medical technology and health care services accessible, affordable and
financially self-sustaining
Founded in 1976 by Dr. G. Venkataswamy, Aravind Eye Care System today is the largest and
most productive eye care facility in the world. From April 2007 to March 2008, about 2.4 million
persons have received outpatient eye care and over 285,000 have undergone eye surgeries at the
Aravind Eye Hospitals at Madurai, Theni, Tirunelveli, Coimbatore and Puducherry. Blending
traditional hospitality with state-of-the-art ophthalmic care, Aravind offers comprehensive eye
care in the most systematic way attracting patients from all around the world.
2. SKS India

Social Entrepreneur: Vikram Akula

Type of Organization: For-profit
Website: www.sksindia.com

Mission: Empowering the poor to become self-reliant through affordable loans

SKS believes that access to basic financial services can significantly increase economic
opportunities for poor families and in turn help improve their lives. Since inception, SKS has
delivered a full portfolio of microfinance to the poor in India and we are proud of our current
outreach. As a leader in technological innovation and operational excellence, SKS is excited
about setting the course for the industry over the next five years and is striving to reach our goal
of 15 million members by 2012.
3. AMUL (Anand Milk Union Limited)

Social Entrepreneur: Dr. Verghese Kurien

Type of Organization: Co-operative
Website: www.amul.com
Amul has been a sterling example of a co-operative organizations success in the long term. It is
one of the best examples of co-operative achievement in the developing economy. The Amul
Pattern has established itself as a uniquely appropriate model for rural development. Amul has
spurred the White Revolution of India, which has made India the largest producer of milk and
milk products in the world.

4. Grameen Bank

Social Entrepreneur: Muhammad Yunus

Type of Organization: Body Corporate

Website: www.grameen-info.org
Grameen Bank (GB) has reversed conventional banking practice by removing the need for
collateral and created a banking system based on mutual trust, accountability, participation and
creativity. GB provides credit to the poorest of the poor in rural Bangladesh, without any
collateral. At GB, credit is a cost effective weapon to fight poverty and it serves as a catalyst in
the over all development of socio-economic conditions of the poor who have been kept outside
the banking orbit on the ground that they are poor and hence not bankable. Professor Muhammad
Yunus, the founder of Grameen Bank and its Managing Director, reasoned that if financial
resources can be made available to the poor people on terms and conditions that are appropriate
and reasonable, these millions of small people with their millions of small pursuits can add up
to create the biggest development wonder.
As of May 2009, it has 7.86 million borrowers, 97 percent of whom are women. With 2,556
branches, GB provides services in 84,388 villages, covering more than 100 percent of the total
villages in Bangladesh.
5. Shri Mahila Griha Udyog Lijjat Papad

Type of Organization: Society

Website: www.lijjat.com
Shri Mahila Griha Udyog Lijjat Papad is a Womens organization manufacturing various
products from Papad, Khakhra, Appalam, Masala, Vadi, Gehu Atta, Bakery Products, Chapati,
SASA Detergent Powder, SASA Detergent Cake (Tikia), SASA Nilam Detergent Powder, SASA
Liquid Detergent. The organization is wide-spread, with its Central Office at Mumbai and its 67
Branches and 35 Divisions in different states all over India.
The organization started of with a paltry sum of Rs.80 and has achieved sales of over Rs.300
crores with exports itself exceeding Rs. 12 crores. Membership has also expanded from an initial
number of 7 sisters from one building to over 40,000 sisters throughout India. The success of the

organization stems from the efforts of its member sisters who have withstood several hardships
with unshakable belief in the strength of a woman

The Importance of Social Entrepreneurship for Development

http://www.business4good.org/2007/04/importance-of-social-entrepreneurship.html
Especially since Muhammad Yunus, founder of the Grameen Bank and a renowned example of a
social enterprise, won the Nobel Peace Price in 2006 there is increasing interest in social
entrepreneurship for development yet the current academic literature does not provide is a
sufficient link between social entrepreneurship and economic development policies. How
important are social entrepreneurs for economic development? What value is created by social
entrepreneurship?
The social entrepreneur sector is increasingly important for economic (and social) development
because it creates social and economic values:

1. Employment Development

The first major economic value that social entrepreneurship creates is the most obvious one
because it is shared with entrepreneurs and businesses alike: job and employment creation.
Estimates ranges from one to seven percent of people employed in the social entrepreneurship
sector. Secondly, social enterprises provide employment opportunities and job training to
segments of society at an employment disadvantage (long-term unemployed, disabled, homeless,
at-risk youth and gender-discriminated women). In the case of Grameen the economic situation
of

six

million

disadvantaged

2. Innovation/ New Goods and Services

women

micro-entrepreneurs

were

improved.

Social enterprises develop and apply innovation important to social and economic development
and develop new goods and services. Issues addressed include some of the biggest societal
problems such as HIV, mental ill-health, illiteracy, crime and drug abuse which, importantly, are
confronted in innovative ways. An example showing that these new approaches in some cases
are transferable to the public sector is the Brazilian social entrepreneur Veronica Khosa, who
developed a home-based care model for AIDS patients which later changed government health
policy.
3. Social Capital

Next to economic capital one of the most important values created by social entrepreneurship is
social capital (usually understood as the resources which are linked to possession of a durable
network of ... relationships of mutual acquaintance and recognition"). Examples are the success
of the German and Japanese economies, which have their roots in long-term relationships and the
ethics of cooperation, in both essential innovation and industrial development. The World Bank
also sees social capital as critical for poverty alleviation and sustainable human and economic
development.

Investments

in

social

capital

can

start

virtuous

cycle

which stars with the inheritance of social capital and ends with returns from the investment of
social capital.
1. Endownment
The 1st job of social entrepreneur is to take whatever endownment of social capital
he is given an dto use these relationaships to create more social capital,by getting
more people and organizations involved with the project,by building a wider web
of trust and cooperation around the project.
2. Physical capital
The initial endowment of social capital often brings access to physical
capital,usually in the form of rather run-down buildings.Getting access to a
physical base is vital.It provides a focus,a base for new services and a tangible
sign that the project is achieving something.
3. Financial Capital

The initial network of supporters an dhelpers is vital to bring access to funds,through

fundraising,donations and corporate giving.The more diverse and richer the network,the easier it
wil be to raise the funds.
4. Human Capital
The project has to recruit and pull in more key people to help it move from startup into growth,creating products an d services.
5. Organisational capital
As the project grows,becomes larger and more complex,its management will need
to become more organized.It will need stronger financial systemns and legal
help.With more staff involved,people management may become more
complicated.So the project needs to develop organizational capital,a more
formalized management structure,financial systems and a stronger set of
relationships with partners.
6. Paying dividends
In the first phase of project,the social entrepreneur inherits and creates social
capital.Then he starts to accumulate more capital in the form of buildings and
finance.Then the capital is invested in creating new services and products.In the
final phase,if the investment has been successful the project starts to pay
dividends in several different forms.Perhaps the most valuable dividend is yet
more social capital,in the form of stronger bonds of trust and cooperation,within
the community and outside partners and funders.

Initial endowment
Of Social Capital

Further

Physical

Social capital

Capital

Dividends

Financial

Of interest

Capital

Organizational
Capital

Human
Capital

4. Equity Promotion
5.
Social entrepreneurship fosters a more equitable society by addressing social issues and
trying to achieve ongoing sustainable impact through their social mission rather than
purely profit-maximization. In Yunuss example, the Grameen Bank supports
disadvantaged women. Another case is the American social entrepreneur J.B. Schramm
who has helped thousands of low-income high-school students to get into tertiary
education.
To sum up, social enterprises should be seen as a positive force, as change agents
providing leading-edge innovation to unmet social needs. Social entrepreneurship is not a
panacea because it works within the overall social and economic framework, but as it
starts at the grassroots level it is often overlooked and deserves much more attention from

academic theorists as well as policy makers. This is especially important in developing

countries and welfare states facing increasing financial stress.

Concept of Social Enterprise and Social Entrepreneurship

A social enterprise is an organization that applies commercial strategies to maximize
improvements

in

human

and

environmental

well-being

this

may

include

maximizing social impact rather than profits for external shareholders.

Social enterprises are businesses whose primary purpose is the common good. They use the
methods and disciplines of business and the power of the marketplace to advance their social,
environmental and human justice agendas
A social enterprise is an organization that applies commercial strategies to maximize
improvements in human and environmental well-being - this may include maximizing social
impact rather than profits for external shareholders. Social enterprises can be structured as a forprofit or non-profit, and may take the form (depending in which country the entity exists and the
legal forms available) of a co-operative, mutual organization, a disregarded entity,[1] a social
business, a benefit corporation, a community interest company or a charity organization
Social entrepreneurship is the attempt to draw upon business techniques to find solutions to
social problems. This concept may be applied to a variety of organizations with different sizes,
aims, and beliefs. Conventional entrepreneurs typically measure performance in profit and
return, but social entrepreneurs also take into account a positive return to society. Social
entrepreneurship typically attempts to further broad social, cultural, and environmental goals
often associated with the voluntary sector. At times, profit also may be a consideration for
certain companies or other social enterprises.
Social entrepreneurship is

About applying practical, innovative and sustainable approaches to benefit society in

general, with an emphasis on those who are marginalized and poor.

A term that captures a unique approach to economic and social problems, an approach
that cuts across sectors and disciplines grounded in certain values and processes that are common

to each social entrepreneur, independent of whether his/ her area of focus has been education,
health, welfare reform, human rights, workers' rights, environment, economic development,
agriculture, etc., or whether the organizations they set up are non-profit or for-profit entities.

It is this approach that sets the social entrepreneur apart from the rest of the crowd of
well-meaning people and organizations who dedicate their lives to social improvement.
Types of social entrepreneurship
i.

The Leveraged Non-Profit:

This business model leverages resources in order to respond to social needs. Leveraged nonprofits make innovative use of available funds, in order to impact a need. These leveraged nonprofits are more traditional ways of dealing with issues, though are distinguished by their
innovative approaches.
The entrepreneur sets up a non-profit organization to drive the adoption of an innovation that
addresses a market or government failure. In doing so, the entrepreneur engages a cross section
of society, including private and public organizations, to drive forward the innovation through a
multiplier effect. Leveraged non-profit ventures continuously depend on outside philanthropic
funding, but their longer-term sustainability is often enhanced given that the partners have a
vested interest in the continuation of the venture.
ii) The Hybrid Non-Profit:
This organizational structure can take on a variety of forms, but is distinctive because the hybrid
non-profit is willing to use profit to sustain its operations. Hybrid non-profits are often created to
deal with government or market failures, as they generate revenue to sustain the operation
outside of loans, grants, and other forms of traditional funding.
The entrepreneur sets up a non-profit organization but the model includes some degree of costrecovery through the sale of goods and services to a cross section of institutions, public and
private, as well as to target population groups. Often, the entrepreneur sets up several legal
entities to accommodate the earning of an income and the charitable expenditures in an optimal

structure. To be able to sustain the transformation activities in full and address the needs of
clients, who are often poor or marginalized from society, the entrepreneur must mobilize other
sources of funding from the public and/or philanthropic sectors. Such funds can be in the form of
grants or loans, and even quasi-equity.
iii) The Social Business Venture:
These models are set up as businesses designed to create change through social means. Social
business ventures evolved through a lack of fundingsocial entrepreneurs in this situation were
forced to become for-profit ventures.
The entrepreneur sets up a for-profit entity or business to provide a social or ecological product
or service. While profits are ideally generated, the main aim is not to maximize financial returns
for shareholders but to grow the social venture and reach more people in need. Wealth
accumulation is not a priority and profits are reinvested in the enterprise to fund expansion. The
entrepreneur of a social business venture seeks investors who are interested in combining
financial and social returns on their investments.
Examples of Social Entrepreneurship
Amul Founded in 1946, Amul was established initially as a reaction to unfair milk trade
practices in India, inspiring local and marginalized farmers to form cooperatives independent
from trade cartels. With the notable help of Tribhuvandas Patel and Verghese Kurien,
the Amul cooperative model became so successful that it was eventually replicated all over India
in 1965. Amul has since:
o

Produced excellent value for money food products for customers

Created a lucrative source of income for local dairy farmers in India

Theories Of Entrepreneurship

1) X-Efficiency Theory by Leibenstein

Harvey Leibenstein was a Ukrainian-born American Jewish economist. One of his most
important contributions to economics was the concept of x-efficiency. The concept of xefficiency is also used in the theory of bureaucracy.

In economics, x-efficiency is the effectiveness with which a given set of inputs are used to
produce outputs. If a firm is producing the maximum output it can, given the resources it
employs, such as men and machinery, and the best technology available, it is said to be technicalefficient. x-inefficiency occurs when technical-efficiency is not achieved.
This theory, originally developed for another purpose, has recently been applied to analyse the
role of the entrepreneur. Basically, X-efficiency is the degree of inefficiency in the use of
resources within the firm: it measures the extent to which the firm fails to realize its productive
potential. According to Leibenstein, When an input is not used effectively the difference between
the actual output and the maximum output attributable to that input is a measure of the degree of
X-efficiency.

Leibenstein identifies two main roles for the entrepreneur: (i) a gap filler and (ii) an input
completer. These functions arise from the basic assumptions of X-efficiency theory. Thus it is
clear that if not all factors of production are marketed or if there are imperfections in markets,
the entrepreneur has to fill the gaps in the market. To put the enterprise in motion, the
entrepreneur should fill enough of gaps. The second role is input completion, which involves
making available inputs that improve the efficiency of existing production methods or facilitate
the introduction of new ones. The role of the entrepreneur is to improve the flow of information
in the market.

Imperfect competition/not well

established market

Gap filler
role of
entreprene
ur

Input
completer
role of
entreprene
ur

Fill the gap

in
imperfect
market to
put the
enterprise
in motion

Transformi
ng
available
inputs that
improve
the
efficiency
of the

Leibenstein X-efficiency Theory

The theory concludes that an entrepreneur has to act as gap filler and an input completer if there
are imperfections in markets. For using there unusual skills, he gets profits as well as a variety of
non-peculiar advantages. According to him there are two types of entrepreneurship.
(i)

Routine entrepreneurship deals with normal business functions like co-ordinating

(ii)

the business activities.

(ii) Innovative entrepreneurship wherein an entrepreneur is innovative in his
approach. It includes the activities necessary to create an enterprise where not all the
markets are well established or clearly defined.

2) Innovation Theory by Schumpeter

https://online.vmou.ac.in/oldweb/studymaterial/BBA%2012.pdf
The innovative theory is one of the most famous theories of entrepreneurship used all around the
world. The theory was advanced by one famous scholar, Schumpeter, in 1991. Schumpeter
analyzed the theory proposed by Marshall, and he concluded that the theory was wrong.
Schumpeter believes that creativity or innovation is the key factor in any entrepreneurs field of
specialization. He argued that knowledge can only go a long way in helping an entrepreneur to
become successful.
However, Schumpeter viewed innovation along with knowledge as the main catalysts of
successful entrepreneurship. He believed that creativity was necessary if an entrepreneur was to
accumulate a lot of profits in a heavily competitive market.
Many business people support this theory, and hence its popularity over other theories of
entrepreneurship.
A dynamic theory of entrepreneurship was first advocated by Schumpeter (1949) who considered
entrepreneurship as the catalyst that disrupts the stationary circular flow of the economy and
thereby initiates and sustains the process of development. Embarking upon new combinations
of the factors of production - which he succinctly terms, innovation - the entrepreneur activates
the economy to a new level of development.
Schumpeter introduced a concept of innovation as key factor in entrepreneurship in addition to
assuming risks and organizing factor of production. Schumpeter defines entrepreneurship as a
creative activity. An innovator who brings new products or services into economy is given the
status of an entrepreneur. He regards innovation as a tool of entrepreneur, The entrepreneur is

viewed as the engine of growth, He sees the opportunity for introducing new products, new
markets, new sources of supply, new forms of industrial organization or for the development of
newly discovered resources. The concept of innovation and its corollary development embraces
five functions:
The introduction of a new product with which consumers are not yet familiar or
introduction of a new quality of an existing product,
The introduction of new method of production that is not yet tested by experience in the
branch of manufacture concerned, which need by no means be founded upon a
discovery scientifically new and can also exist in a new way of handling a commodity
commercially,
The opening of new market that is a market on to which the particular branch of
manufacturer of the country in question has not previously entered, whether or not this
market has existed before,
Conquest of a new source of supply of raw material and
The carrying out of the new organization of any industry.
Schumpeter is the first major theorist to put the human agent at the center of the process of
economic development. He is very explicit about the economic function of the entrepreneur. The
entrepreneur is the prime mover in economic development; his function, to innovate or carry out
new combinations. Schumpeter makes a distinction between an innovator and an inventor. An
inventor discovers new methods and new materials. On the contrary, an innovator is one who
utilizes or applies inventions and discoveries in order to make new combinations. An inventor is
concerned with his technical work of invention whereas an entrepreneur converts the technical
work into economic performance. An innovator is more than an inventor because he does not
only originate as the inventor does but goes much farther in exploiting the invention
commercially.

Innovatio
n

New Product
New Method
New Market
New Source of
Supply
Carries out a
new
organization.

Innovation

Creativity

Exploiting
Profitable
Business
Opportuniti
es

Entrepreneurshi
p

Sustainable Economic
Development

Innovation Theory Of Entrepreneurship

To Schumpeter, entrepreneurs are individuals motivated by a will for power; their special
characteristic being an inherent capacity to select correct answers, energy, will and mind to
overcome fixed talents of thoughts, and a capacity to withstand social opposition. The factors
that contribute to the development of entrepreneurship would essentially be a suitable
environment in grasping the essential facts. It can be noted that this theorys main figure, the
innovating entrepreneur has played an important role in the rise of modem capitalism. The
entrepreneur has been the prime mover - for economic development process. On the criticism
side, this theory seems one-sided as it puts too much emphasis on innovative functions. It ignores
the risk taking and organizing aspects of entrepreneurship. An entrepreneur has not only to
innovate but also assemble the resources and put them to optimum use. While stressing upon the
innovative function of the entrepreneur, Schumpeter ignored the risk-taking function, which is
equally important. When an entrepreneur develops a new combination of factors of production,
there is enough risk involved. In spite of these lacking, the theory supports the enterprising
spirit of entrepreneur to innovate. It is the act that endows resources with a new capacity to
create wealth. Drucker says, Innovation, indeed, creates a resource. It endows it with economic

value. Schumpeters views are particularly relevant to developing countries where innovations
need to be encouraged. The transformation of an agrarian economyinto an industrial economy
required a great deal of initiative and changes on the part of businessmen and managers.
https://online.vmou.ac.in/oldweb/studymaterial/BBA%2012.pdf
3) Need for Achievement Theory of McClelland
According to McClelland the characteristics of entrepreneur has two features - first doing things
in a new and better way and second decision making under uncertainty. McClelland emphasizes
achievement orientation as most important factor for entrepreneurs. Individuals with high.
Achievement orientation is not influenced by considerations of money or any other external
incentives. Profit and incentives are merely yardsticks of measurement of success of
entrepreneurs with high achievement orientation. People with high achievement are not
influenced by money rewards as compared to people with low achievement. The latter types are
prepared to work harder for money or such other external incentives. On the contrary, profit is
merely a measure of success and competency for people with high achievement need. Professor
David McClelland, in his book The Achieving Society, has propounded a theory based on his
research that entrepreneurship ultimately depends on motivation. It is the need for achievement,
the sense of doing and getting things done, that promote entrepreneurship. According to him, NAch is a relatively stable personality characteristic rooted in experiences in middle childhood
through family socialization and child-learning practices which stress standards of excellence,
material warmth, self-reliance training and 30 low father dominance.
According to David McClelland, regardless of culture or gender, people are driven by three
motives:
Achievement,
Affiliation

Power

Need for Achievement

A drive to excel, advance and grow. The need for achievement is characterized by the wish to
take responsibility for finding solutions to problems, master complex tasks, set goals, get
feedback on level of success.

Need for Affiliation

A drive for friendly and close inter-personal relationships. The need for affiliation is
characterized by a desire to belong, an enjoyment of teamwork, a concern about interpersonal
relationships, and a need reduce uncertainty.
Need for Power
A drive to dominate or influence others and situations. The need for power is characterized by a
drive to control and influence others, a need to win arguments, a need to persuade and prevail.
McClelland found that certain societies tended to produce a large percentage of people with high
achievement. He pointed out that individuals, indeed whole societies that possess N-ach will
have higher levels of economic well-being than those that do not. McClellands work indicated
that there are five major components to the N-ach trait: (a) responsibility for problem solving, (b)
setting goals, (c) reaching goals through ones own effort, (d) the need for and use of feedback,
and (e) a preference for moderate levels of risk-taking. The individual with high levels of need
achievement is a potential entrepreneur. The specific characteristics of a high achiever
(entrepreneur) can be summarized as follows:
i. They set moderate realistic and attainable goals for them.
(ii) They take calculated risks.
(iii) They prefer situations wherein they can take personal responsibility for solving problems.
(iv) They need concrete feedback on how well they are doing.
(v)

Their need for achievement exist not merely for the sake of economic rewards or social
recognition rather personal accomplishment is intrinsically more satisfying to them.

According to McClelland, motivation, abilities and congenial environment, all combine to

promote entrepreneurship. Since entrepreneurial motivation and abilities are long run
sociological issues; he opined it is better to make political, Social and economic environments
congenial for the growth of entrepreneurship in underdeveloped and developing countries.

4) Theory of Profit by Knight

This theory is propounded by Knight. According to this theory, profit is reward for bearing
uncertainty. Uncertainty is due to unforeseeable or non-insurable risk. A key element of
entrepreneurship is risk bearing. Prof. Knight and John Staurt Mill saw risk bearing as the
important function of entrepreneurs. Some important features of this theoryare as follows:
1. Risk creates Profit: According to the risk-bearing theory, the entrepreneur earns profits
because he undertakes risks.
2. More Risk More Gain: The degree of risk varies in different industries. Entrepreneurs
undertake different degrees of risk according to their ability ad inclination. The risk theory
proposes that the more risky the nature of business, the greater must be the profit earned by it.
3. Profit as Reward and Cost: Profit is the reward of entrepreneur for assuming risks. Hence, it
is also treated as a part of the normal cost of production.
4. Entrepreneurs Income is Uncertain: He identifies uncertainty with a situation where the
probabilities of alterative outcomes cannot be determined either by a priori reasoning or by
statistical inference. A priori reasoning is simply irrelevant to economic situation involving a
unique event. This theory summarizes that profit is the reward of an entrepreneur effort which
arises for bearing noninsurable risks and uncertainties and the amount of profit earned depends
upon the degree of uncertainty bearing. Knight argues that business enterprises the level of
uncertainty can be reduced through consolidation. Consolidation is to uncertainty is what
insurance is to risk; it is a method of reducing total uncertainty by pooling individual instance.
The elasticity of the supply of self-confidence is the single most important determinant of the
level of profit and the number of entrepreneurs.

5) Hagens Theory of Entrepreneurship

One important theory of entrepreneurial behaviour has been propounded by Hagen, which is
referred to as the withdrawal of status respect. Hagen has attributed the withdrawal of status
respect of a group to genesis of entrepreneurship. Hagen considers the withdrawal of status, of
respect, as the trigger mechanism for changes in personality formation. Status withdrawal occurs
when members of some social group perceive that their purposes and values in life are not
respected by the groups in the society they respect, and whose esteem they value. Hagen
postulates four types of events, which can produce status withdrawal:

Displacement of a traditional elite group from its previous status by another traditional

supply physical force.

Denigration of valued symbols through some change in the attitude of the superior group.
Inconsistency of status symbols with a changing distribution of economic power.
Non-acceptance of expected status on migration to a new society.

Hagen further postulates that withdrawal of status respect would give to four possible reactions
and create four different personality types:
(a)Retreatist: Entrepreneur who continues to work in society but remains indifferent to his work
or status.
(b)Ritualist: One who works as per the norms in the society hut with no hope of improvement in
the working conditions or his status.
(c)Reformist: One who is a rebellion and tries to bring in new ways of working and new
society.
(d)Innovator: An entrepreneur who is creative and try to achieve his goals set by himself.
According to Hagen, the creativity of a disadvantaged minority group is the main source of
entrepreneurship. He developed this thesis from the case of the samurai community of Japan.
Traditionally, this community had enjoyed a high status of which it was deprived later. To regain

this lost prestige, it became more active and vigorous and gave rise to many entrepreneurs.
McClelland supported this thesis by admitting that a suppressed community had more creativity.
He said that Jains could be successful entrepreneurs because of their consciousness of their
majority and superiority complexes. McClelland had modified Hagens thesis slightly in order to
explain such cases. He stated that the subordination of minority group could arouse achievement
motivation in its members but its extent depended upon the initial level of motivation and the
means

available

to

the

group

to

active

its

achievement

motivations.

External Influences on Entrepreneurship Development

Environment plays a very important role insupply and development of entrepreneurship. The
growth of entrepreneurship in any country is the resultof several environmental factors such as
social, economic, cultural, personal and political.
1.

Economic Factors

Capital, labour, raw materials and market are the main economic factors.
(a) Capital:
Capital is one of the most important prerequisites to establish an enterprise. Availability of
capital helps an entrepreneur to bring together the land of one, machine of another and raw
material of yet another to combine them to produce goods. Therefore, capital is regarded as
lubricant to the production process. Basically, capital is the lifeblood of any activity. If capital is
available, people who have innovative ideas would like to put them into reality. Without having
any obstacles, if capital is available, it will act as a lifeline to entrepreneurs. So, if capital is
available, entrepreneurial activities will increase.
(b) Labour:
The quality and quantity of labour is another factor which influences the emergence of
entrepreneurship. Availability of labour makes entrepreneurship attractive. More than abundantly
available labour, the presence of skilled labour force is very important because such a workforce
is generally less mobile than other resources. If entrepreneurial activities are initiated near areas
where labour is available, then it is easy to carry out the business more comfortably and
profitably at low cost.
(c) Raw Materials:

Raw materials are required for establishing any industrial activity and therefore has an influence
in the emergence of entrepreneurship. In the absence of raw materials, neither any enterprise can
be established nor an entrepreneur can emerge. In some cases technological innovations can
compensate for raw material inadequacies. The supply of raw materials is not influenced by
themselves but becomes influential depending upon other opportunity conditions. The more
favourable these conditions are, the more likely is the raw material to have its influence on
entrepreneurial emergence.
(d) Market:
It is not only the availability of capital, labour and raw materials but a readily available market
that attracts entrepreneurial activities. Ultimately, it is the market that fetches revenue for any
business. If sufficient market is not there, people will naturally hesitate to do business in a sector
where there is no market. In addition to market opportunities, it is equally important to ensure
future market opportunities for the emergence of entrepreneurial activities.
2. Social Factors
Development of entrepreneurship in a society may take place not just because of better economic
factors but because of the presence of positive social factors. The following social factors
influence the development of entrepreneurship in a society.
(a) Social norms and values:
A society sets certain norms and values for the behaviour of people who are part of that society.
If people violate or overstep these norms and values, certain restrictions are likely to be imposed
on them. As a result, many people are forced to accept certain types of jobs and tasks that reflect
the social environment. If the society has an open and flexible approach towards various types of
jobs and works, then people will feel free to do whatever they like and even go in for innovation
and creativity. When there is more openness and flexibility, entrepreneurship will not only
emerge but also thrive.
(b) Role models:

Societies that celebrate entrepreneurship and felicitate successful entrepreneurs in a way

encourage many future generations to take up entrepreneurial activities. This is because
successful businessmen prove to be role models for the society at large. For instance, states like
Gujarat, Maharashtra and to some extent Tamil Nadu and Haryana have experienced better
industrial development as a result of higher concentration of entrepreneurs compared to lesserindustrialized states such as Orissa, Chhattisgarh, Madhya Pradesh and other Northeastern states.
(c) Social pressure:
At times, entrepreneurship can emerge in a society due to social restriction too. If a society is
orthodox, close and imposes a lot of restrictions, then it is likely to backfire. People who are at
the receiving end are likely to react strongly and go in for change. In other words, because of
negative pressure, more number of people would like to become entrepreneurs as a means of
improving their status. It has been noticed that where people were marginalized, they became
entrepreneurs just to prove their abilities and establish an identity in the society.
3. Personal Factors:
McClelland assumes that achievement motivation is the immediate cause of the origin of
entrepreneurship. He explained entrepreneurial growth in terms of need for achievement
motivation. Thus, he found high correlation between need for achievement and successful
economic activities. Personality traits such as inner desire for control of their activities, tolerance
for risk, high level of tolerance to function in adverse situations and background experiences
such as the family environment, level of education, age and work history tolerance for ambiguity
are important personal characteristics that affect entrepreneurship. Individuals who are desirous
of working independently; willing to work for long hours and assume risk; are self-confident and
hard-working are likely to be more successful as entrepreneurs than those who do not posses
these qualities.
4. Political Factors
A football player might possess exceptional talent. But, his contribution to the nation and the
world of sports would remain negligible, if his performance is restricted to the courtyard of his
own house. He needs a football ground to practice on and resources to buy the accessories. He

also requires encouragement and support from those in authority so that he could freely play with
others and prove his talent. In the same way, an entrepreneur, however creative he/she may be,
cannot function without the supportive actions of the Government. It is for the
government/society to ensure the availability of required resources for the entrepreneurs and also
the accessibility to them. This is because the successful entrepreneur contributes to the well
being of the society. Policies relating to various-economic aspects like prices, availability of
capital, labour and other inputs, demand structure, taxation, income distribution, etc. affect
growth of entrepreneurship to a large extent. Promotive government activities such as incentives
and subsidies contribute substantially to entrepreneurial performance. At the same time,
Government policies like licenses, regulations, favouritism, government monopolies, etc. are
undesirable for the growth of business enterprises. Above all, a Government that is politically
stable and united can affect entrepreneurial activities in a significant manner. Is there a business
entrepreneur in your neighborhoods? Try to gather information on his/her views on various
government policies, for example, on taxation, finance, labour etc. Also ask him/her about the
opportunities and growth prospects of a business unit. Write down your observations.

Forms of Business Ownership

The perspective entrepreneurs need to identify the legal structure that will best suit the demands
of the venture before deciding how to organize an operation for business. For establishing a
business the most important task is to select a proper form of organization as the conduct of
business, its control, acquisition of capital, extent of risk, distribution of profit, legal formalities,
etc. all depend on the form of organization. The necessity for choosing a suitable form derives
from changing tax laws, the availability of capital or fund, liability situations, and the complexity
involved in formation of business. The most important forms of business organization are as
follows:
Sole Proprietorship
Partnership
Company
Franchising

Sole Proprietorship:
A sole proprietorship is owned by only one person. This is the most common form of business
ownership. It can include small retail stores, mechanic services and even inventors or musicians
seeking to sell their products online. It is fairly easy to establish a sole proprietorship, and the
process of running them is fairly simple.
advantages of sole proprietorships
1. ease of starting and ending the business
2. being your own boss.

3. pride of ownership as sole proprietors have taken the risk and deserve the credit.
4. leaving a legacy behind for future generations.
5. retention of company profit
6. no special taxes

b. disadvantages of sole proprietorships.

1. unlimited liability is the responsibility of business owners for all of the debts of the
business.
2. limited financial resources. funds available are limited to the funds that the sole owner can
gather.
3. management difficulties. many owners are not skilled at record keeping.
4. overwhelming time commitment. the owner has no one with whom to share the burden.
5.

few fringe benefits. fringe benefits can add up to 30% of a workers income.

6.

limited growth

7.

limited life span. if the sole proprietor dies or leaves, the business ends.

Partnership:
A partnership is similar to sole proprietorship, except more than one person is involved. Two or
more people come together to work at a given business and share in the profits (or losses) or that
business. Like sole proprietorship, a partnership is relatively easy to set up and doesn't have to
pay the sort of taxes that larger corporations do. However, the partners themselves are
responsible for business losses and liabilities, and partnerships founded on informal agreements
may run into interpersonal problems when the company struggles.

advantages of partnerships
1.

more financial resources. two or more people pool their money and credit.

2.

shared management and pooled/ complementary knowledge. partners provide different

skills and perspectives.

3.

longer survival. partners are four times as likely to succeed as sole proprietorships.
6. no special taxes. all profits of partners are taxed as personal income of the owners.

disadvantages of partnerships
1. unlimited liability.
a. each general partner is liable for the debts of the firm, no matter who was responsible for
causing those debts.
b. you are liable for your partners' mistakes as well as your own.
2.

division of profits. sharing profits can cause conflicts.

3.

disagreements among partners.

a.

disagreements can arise over division of authority, purchasing decisions, and so on.

b.

because of such potential conflicts, all terms of partnership should be spelled out in
writing to protect all parties.

4.

difficult to terminate. for example: Who gets what and what happens next?

Company:

A company is a business, which is considered a separate entity from owner; even having the
legal rights of a person.

advantages of corporations.
1. limited liability.
Limited liability is probably the most significant advantage of corporations. Limited liability
means that the owners of a business are responsible for losses only up to the amount they invest.
2. More money for investment.
To raise money, a corporation sells ownership (stock) to anyone interested or corporations can
also raise money from investors through issuing bonds. Corporations may also find it easier to
obtain loans.
.
3.

Size.

Corporations have the size and resources to take advantage of opportunities anywhere in
the world.

4.perpetual life
the death of one or more owners does not terminate the corporation.
5.

ease of ownership change. selling stock changes ownership.

6.

ease of drawing talented employees. corporations can offer benefits such as stock
options.

7. separation of ownership from management. corporations can raise money from investors
without getting them involved in management.

c.

disadvantages of corporations.

1.

extensive paperwork.

a.

a corporation must prove all its expenses and deductions are legitimate.

b.

a corporation must keep detailed records.

2.

double taxation.

a.

corporate income is taxed twice.

b.

the corporation pays tax on income before it can distribute any to stockholders.

c. the stockholders pay tax on the income they receive from the corporation.
d.

states often tax corporations more harshly than other enterprises.

3.

two tax returns: a corporate owner must file both a corporate tax return and an
individual tax return.

4.

size: large corporations sometimes become inflexible and too tied down in red tape.

5.

difficulty of termination.

6.

possible conflict with stockholders and board of directors. since the board chooses the
company=s officers, an entrepreneur can be forced out of the very
company he or she founded.
7.

initial cost.

a.

incorporation may cost thousands of dollars and involve expensive lawyers and
accountants.

b.

there are less expensive ways of incorporating in certain states.

8.

many businesspeople feel the hassles of incorporation outweigh the advantages.

Franchising:
Franchising is a business arrangement in which the owner of a trademark, trade name, or
copyright has licensed others to use it in selling goods or services. It can be sole proprietorship,
partnership or company form.

advantages of franchises:
1. management and marketing assistance, including an established product, help in choosing a
location, and assistance in all phases of operation.
2. personal ownership: you are still your own boss, although you must follow the rules,
regulations, and procedures of the franchise.
3. nationally recognized name: you get instant recognition and support.
4. financial advice and assistance.
a. franchisees get assistance arranging financing and learning to keep records.
b. some franchisors will even provide financing to potential franchisees.
5. lower failure rate.
a. historically, the failure rate for franchises has been lower than that of other business
ventures.
b. you should carefully research any franchise before investing.

c. disadvantages of franchises.
1. large start-up costs.
a. most franchises will demand a fee to obtain the rights to the franchise.
b.

start-up costs can be as high as $2 million for a krispy kreme franchise.

2.

shared profit: the franchisor often demands a large share of the profits, or royalty, based
on sales not profit.

3.management regulation.
a. some franchisees may feel burdened by the company=s rules and regulations.
b. in recent years franchisees have been banding together to resolve their grievances with
franchisors.
4. coattail effects.
a. the actions of other franchisees have an impact on the franchise=s future growth and level of
profitability, a phenomena known as a coattail effect.
b. franchisees must also look out for competition from fellow franchisees.
5. restrictions on selling.
a.

many franchisees face restrictions in the reselling of their franchises.

b.

franchisors often insist on approving the new owner, who must meet their standards.

6.

fraudulent franchisors.

a.

most franchisors are not large systems; many are small, obscure companies.

b.

there has been an increase in complaints to the ftc about franchisors that delivered little
or nothing that they promised.

Each form has its advantages and disadvantages. And the choice of form of business ownership
will directly affect how much taxes owner have to pay and what business licenses and documents
are required. In majority of cases and is perfectly acceptable that small businesses start as one
form of ownership and changes to another with its growth. Entrepreneur is not bounded by their
first choice of form of business. Entrepreneur can decide to hire help form a lawyer or an
attorney who specializes in small businesses and will help an entrepreneur to choose a form of
business ownership and ensure him about getting all the required permits and license.

Entrepreneurial Process:
Entrepreneurship is a process, a journey, not the destination; a means, not an end. All the
successful entrepreneurs like Bill Gates (Microsoft), Warren Buffet (Hathaway), Gordon Moore
(Intel) Steve Jobs (Apple Computers), Jack Welch (GE) GD Birla, Jamshedji Tata and others all
went through this process.
To establish and run an enterprise it is divided into three parts the entrepreneurial job, the
promotion, and the operation. Entrepreneurial job is restricted to two steps, i.e., generation of an
idea and preparation of feasibility report.

1
Idea Generation

1.

Idea

To generate an
idea,

the

Germination
(Recognition)

Preparation
(Rationalization)

Incubation
(Fantasizing)

Generation

Verification
(Validation)

Illumination
(Realization)

Feasibility
(Study)

entrepreneurial process has to pass through three stages:

a. Germination:
This is like seeding process, not like planting seed. It is more like the natural seeding. Most
creative ideas can be linked to an individuals interest or curiosity about a specific problem or
area of study.

b. Preparation:
Once the seed of interest curiosity has taken the shape of a focused idea, creative people start a
search for answers to the problems. Inventors will go on for setting up laboratories; designers
will think of engineering new product ideas and marketers will study consumer buying habits.
c. Incubation:
This is a stage where the entrepreneurial process enters the subconscious intellectualization. The
sub-conscious mind joins the unrelated ideas so as to find a resolution.
2. Feasibility study:
Feasibility study is done to see if the idea can be commercially viable.
It passes through two steps:
a. Illumination:
After the generation of idea, this is the stage when the idea is thought of as a realistic creation.
The stage of idea blossoming is critical because ideas by themselves have no meaning.
b. Verification:
This is the last thing to verify the idea as realistic and useful for application. Verification is
concerned about practicality to implement an idea and explore its usefulness to the society and
the entrepreneur.

Challenges faced by new Entrepreneurs

http://www.ehow.com/info_12039482_three-problems-entrepreneurship.html
http://www.ijcrar.com/vol-3/R.S.Kanchana,%20et%20al.pdf

An entrepreneur is one who plays significant role in the economic development of a country.
Basically an entrepreneur can be regarded as a person who has the initiative, skill and motivation
to set up a business or an enterprise of his own and who always looks for high achievement.
Entrepreneurs have to face numerous challenges on the road to success, in particular with regard
to access to finance. All entrepreneurs will at some point feel overwhelmed with the many
responsibilities that fall on their shoulders. The common challenges faced by entrepreneurs are
Overestimating Success, Misplaced Purpose,. Negative Mindset, Poor Organization, Jack of All
Trades, Employee Motivation, Lack of Support.
1. Finance
Entrepreneurship means having access to capital, understanding business finance and building
successful relationship with lenders. When starting a venture, however, an unprepared
entrepreneur may encounter cash flow problems when he doesnt have a network of dependable
lenders or investors. Any successful entrepreneur needs a list of people in and out of the business
world to depend on. An entrepreneur must understand business finance, or risk overpricing
offered services. Overpricing your product causes insufficient sales and cash.

2. Business Management
About one-quarter of entrepreneurs cited management problems as another challenge with
entrepreneurship, explains Researching Small Business and Entrepreneurship. A successful
entrepreneur needs passion to get a business started and make it stable. Thus, personal problems,
such as not setting goals, measuring performance and controlling your time can prohibit your
from managing your business properly. In addition, an entrepreneur must have access to useful

business information. Starting a business venture involves learning as much about your business
and product as you can before securing capital. Managing a business also mean finding and
retaining qualified employees.

3. Marketing the Business

Whether an entrepreneur plans to sell products like computers or services like repairing
computers, she needs to market the business. Entrepreneurship problems can arise when an
effective marketing plan doesnt exist or you dont have the ability to actually sell the products or
services. Another problem involves using effective advertising. In a society where placing flyers
on street poles may not gain a customers attention, you need an effective and thorough
marketing plan to inform people about your business.
4. Finding the Right Business
Location finding a good business location at the right place is definitely not easy. An efficient
location that has a rapidly growing population, good road network and other amenities at a good
place
5. Unforeseen Business Challenges and Expenses
Just as a sailor prepares for unexpected storm, just as a pilot is always on the watch for
unpredictable bad weather and thunderstorms, so must an entrepreneur prepared for whatever
comes in the form of:
Unexpected lawsuits
Inconsistent government policy
Not being able to make payroll
Unpaid bills and taxes
Unexpected resignation of staff from sensitive office
Bad debts from customers
Loss of market share
Dwindling working capital
Inadequate stock or inventory.

6. Finding Good Customers

The sixth challenge an entrepreneur will face in the process of starting a small business from
scratch is finding good customers. In the process of building a business, an entrepreneur will
come to find out that there are good customers as well as bad customers.. Good customers are
really hard to find. A good customer will be loyal to the company and will be willing to forgive if
the business make a mistake and apologize. A good customer will try to do the right thing that
will benefit both him and company mutually.
7. Keeping Up With Industrial Changes and Trends
Change in trends is a challenge an entrepreneur must be prepared for when starting a small
business. Trends have made and broken lot of businesses. Profitable businesses that have been
wiped out by slight industrial changes and trends. A typical example is the Dot com trend, where
many established industrial based businesses were wiped out by new web based dot com
companies. Seasoned entrepreneurs know that trend is a friend and are always willing to swiftly
adjust their business to the current trend.
8. Focus
One of the biggest mistakes entrepreneurs make in their early days is trying to be all things to all
people. They attempt to sell their product or service to too wide of a market. Entrepreneurs also
face another challenge in this area. They focus on the wrong things. They spend too much time
building their product without validating that the marketplace wants needs and will actually pay
for it.
9. Finding Good Employees
Most writers and managers crank up the process of finding good employees as an easy task. They
define the process of finding an employee as simply presenting the job description and the right
employee will surface. Business owners know how difficult it is to find a hardworking,
trustworthy employee. Most employees want to work less and get paid more. Finding a good
employee who will be passionate about delivering his or her services is quite difficult. Finding
good employees is a minor task compared to the business challenge of forging the hired
employees into a team.
10. Assembling a Business Team

The third business challenge that an entrepreneur will face in the course of starting a small
business from scratch is assembling the right business management team. The process of
building a business team starts even before the issue of raising initial start-up capital arises. Most
brilliant ideas and products never get funded because the entrepreneur is trying to raise capital as
an individual. A business team is a vital, yet often ignored key to raising venture capital
successfully.

SPECIFIC ENTREPRENEURSHIP CHALLENGES IN

INDIA
1. Family Challenges:
Convincing to opt for business over job is easy is not an easy task for an individual. The first
thing compared is Will you make more money in business of your choice or as a successor of
family business. This is where it becomes almost impossible to convince that you can generate
more cash with your passion than doing what your Dad is doing.
2. Social Challenges:

Family challenges are always at the top because that is what matter the most but at times social
challenges also are very important. This is also a big challenge before Indian entrepreneurs. They
must balance between earning high profit and doing social-welfare activities. They must use
modern machines without causing unemployment and harm to the environment. They must earn
a profit without reducing quality of their goods and services. They must earn a profit without
charging high prices for their products. They must not cause any type of pollution in the society.
They must accept their communal responsibilities and donate a small part of their profit (money)
for social causes. They must pay all their taxes and duties. They must not use unfair and
unethical practices to fight cutthroat competition.
3. Technological Challenges:
With each passing day, Science and Technology are developing rapidly. Modern
technology not only improves quality of produced goods and services, but it also
helps to reduce their cost of production. It speeds up their process of production.
High-quality commodities, lower cost of production, and faster production rate
makes any company a highly competitive one. Therefore, it becomes mandatory for
every company to keep pace with new emerging technologies and adapt it regularly
to remain as cutthroat as possible.
So, it is always better to replace outdated technology with the new technology. Old
machines must be replaced by modern machines. This is a big challenge before an
Indian entrepreneur. If he has a financial problem, then he must try to maintain a
good balance between old and new technology. He also has a challenge to train his
staff well to make them able to use (handle) the modern machines and technology
properly.
4. Financial Challenges
Finance is the life blood of a business. It can either make a business or break it. Undercapitalization and Over-capitalization are very harmful to the business. Managing the
finance of his business is a big challenge for an Indian Entrepreneur. He must manage
both Fixed and Working capital properly. He must borrow money from the right source.
He must manage his Cash Flow properly. He must invest his excess funds correctly. He
must create sufficient Reserves and surpluses. He must provide enough depreciation for
his fixed assets, so that he can replace them when they become old and outdated. He

must provide for repairs and maintenance of machines. He must also take steps to
provide for but avoid bad debts.
5. Policy Challenges:

now and then there is lot of changes in the policies with change in the
government problems of raising equity capital problems of availing rawmaterials,Problems of obsolescence of indigenous technology, increased
pollutions ecological imbalanced, Exploitation of small and poor countries,
etc.

http://www.journal.bonfring.org/papers/iems/volume1/BIJIEMS-01-1004.pdf

6. Challenge of globalization
A few years back the Indian entrepreneurs had to fight regional and national competition.
However, today, the scenario has changed and become much more complex than what it
was earlier. Now, almost all countries have opened up their economies, and the world
(globe) has become one giant global market.
To survive this competitive era of globalization, Indian entrepreneurs must prepare
themselves with new, better, and innovative business tactics and skills. They must accept
this global challenge willingly and try their best to seek business opportunities to
establish their dominant place in this ever-changing and always challenging open market.
7. Hiring right talent
During the earlier days of our start-up, the biggest challenge was to find the right
team who share a common vision about the goals and work towards making that a
reality

Problems faced by Entrepreneurs

Entrepreneurs face a number of problems in the promotion of units and during
production,marketing,distribution,procurement of raw material,and availing of incentives offered
by the State government.
The problems of entrepreneurs may be divided into two groups-external and internal.External
problems are those, which result from factors beyond the control of entrepreneurs while internal
problems are those, which are not influenced by external factors.
The problems of industries,whether in the small sector or in organized sector are almost
identical.However,given that the organized industry is financially very strong and its resources
large,it can therefore,face its problems more effectively.Owing to its weak financial structure,the
resources of the small sector are limited.While the large sector can employ trained and
experienced managers,in the small industry,its proprietor or partners or if the unit is a company,
its director or directors themselves have to take care of all the problems.The large sector can
influence its raw material suppliers,its customers and at times even the government in framing its
policies, but the small entrepreneur is helpless in this respect.
Internal Problems of Entrepreneurs
1. Planning
a) Technical feasibility
Inadequate technical know-how.
Locational disadvantage
Outdated production process
b) Economic viability

High cost of input.

Break-even point too high
Uneconomic size of project
Choice of idea
Feeble structure
Faulty planning

Poor project implementation

Lack of strategies
Lack of vision
Inadequate connections
Lack of motivation
Underestimation of financial requirements
Unduly large investment in fixed assets
Overestimation of demand

2. Implementation
Cost over-runs resulting from delays in getting licenses,sanctions and so on and inadequate
mobilization of finance.
3. Production
a) Production management
Inappropriate product mix
Poor quality control
Poor capacity utilization
High cost of production
Poor inventory maintenance and replacement
Lack of timely and adequate modernization and so on
High wastage
Poor production
b) Labour management
Excising high wage structure
Inefficient handling of labour problems
Excessive manpower
Poor Labour productivity
Poor labour relations
Lack of trained skilled labour or technically competent personnel
c) Marketing Management
Dependence on a single customer or a limited number of customers/single or a limited

number of products.
Poor sales realization
Defective pricing policy
Booking of large orders at fixed prices in an inflationary market
Weak market organization
Lack of market feed back and market research
Unsrupulous sale purchase practices

d) Financial management

Poor resource management and financial planning

Faulty costing
Dividend policy
General financial indiscipline and application of funds for unauthorized purposes
Deficiency of funds
Over trading
Unfavourable gearing or keeping adverse debt equity ratio
Inadequate working capital
Absence of cost consciousness
Lack of effective collection machinery

e) Administrative management

Over centralization
Lack of professionalism
Lack of feedback to management (management Information System)
Lack of timely diversification
Excessive expenditure on R&D

II. External Problems of Entrepreneurs

a) Infrastructure

Location
Power
Water
Post Office and so on
Communication
Non-availability or irregular supply of critical raw materials or other inputs
Transport bottlenecks

(b)Financial

Capital
Working capital
Long term funds
Recovery
Marketing Taxation
Raw material
Industrial and financial regulations
Inspections

Technology
Government policy Administrative hurdles
Rampant corruption
Lack of direction
Competitive and volatile environment

Specific Management Problems

Besides internal and external problems of entrepreneurs, some specific problems faced by the
entrepreneurs are discussed:
a)Management deficiency
It is well known factor that management deficiency is one of the main reasons for poor
performance and sickness of small enterprises.The new entrants in the field of small industries in
general do not have any prior training or background in the management of their units. With
growing sophistication and modernization of market requirements for their products,it is very
important for entrepreneurs to employ modern methods of management.Entrepreneurship is not
only inborn gift; it can be cultivated through application and training.
b)Finance
Financial inadequacy is alsoreported to be one of he most important causes leading to sickness of
small scale units. Critical issues in financial management require to be constantly borne in mind
to ensure that a small scale business enterprise remains healthy.Planning for profits must be
ensured at all times by resorting to periodical performance evaluation and while reporting such
performance actual or planned the merits of being conservative should not be lost sight of.Poor
utilization of various assets is critical to profit maximization.Along with credibility,solvency and
liquidity are essential for enterprise growth.
c)Manufacturing and technical problems
Most units face production problems due to lack of raw material availability,skilled labour
shortage,under utilization of capacity and time and cost overrun.Manufacturing and technical
problems arise right at the stages of project planning and feasibility report preparation.Problem
areas are product pricing,selection of right equipment,plant and machinery,selection of personnel

and training them,technical know how,technology transfer,industrial engineering,production

engineering use of standard quality control and use of high tech equipment.

d)Product planning
The election of product depends on technical know-how,infrastructure facilities and managerial
abilities of entrepreneurs to complete a project successfully.
Selection of equipment,plant and machinery.No detailed scrutiny is done before selecting
equipment,plant and machinery.However,this needs to be done and while doing so, entrepreneurs
should give importance to production capacity,process capability,accuracy requirements and
other supporting facilities.They are required to look for alternative and appropriate high tech
equipment if they are technology-economically feasible.
e)Human Resource Development
Selecting the right person for the right job would contribute for smooth and efficient working of
the enterprise.After selecting the right personnel on scientific lines,it is very essential to train
them at appropriate organizations so that they have both theoretical and on the job training in
improving the productivity of the enterprise.Entrepreneurs should know that it is not the machine
alone that work but the people behind the machines who make it work.
f)Technical know how
Most small scale units are neither technical equipped nor do the possess technical know-how.
While there are numerous ways of doing a job, there is only one way of doing it in a manner that
is more effective,efficient and highly productive. Many entrepreneurs do not realize that their
trial and error method wastes time,money,energy and other resources.

Entrepreneurial Competency
Meaning
The business operation is considered to be very complex in a competitive business
environment, which is constantly changing with fast technological advancements. An
entrepreneur is expected to interact with these environmental forces which require him to
be highly competent in different dimensions like intellectual, attitudinal, behavioral,
technical, and managerial aspects. Entrepreneurs are therefore permanently challenged to
deploy a set of competencies to succeed in their entrepreneurial endeavors.
Entrepreneurial competencies are defined as underlying characteristics possessed by a
person, which result in new venture creation. These characteristics include generic and
specific knowledge, motives, traits, self-images, social roles, and skills that may or may
not be known to the person. That is, these characteristics may be even unconscious
attributes of an individual. Some of these competencies are innate while others are
acquired in the process of learning and training and development.
Defintion
Entrepreneurial competencies can bedefined as underlying characteristics such as generic
and specific knowledge, motives, traits, self-images, social roles, and skills that result in
venture birth, survival, and/or growth.
- Bird (1995)
Total ability the entrepreneur to perform this role successfully. Several studies have
found positive relationship between existences of competencies and venture
performance.
- Man, Lau& Chan

Types of Competencies
https://books.google.co.in/books?
id=2iGKJ6XxC8IC&pg=PA73&lpg=PA73&dq=entrepreneurial+competency+definition
&source=bl&ots=wPPADOWAaj&sig=EK1GNWG98TN1F2OQUwIEQwz6oD4&hl=en
&sa=X&ved=0ahUKEwiS89blJrKAhVMB44KHdbaD704ChDoAQhFMAc#v=onepage&q=entrepreneurial
%20competency%20definition&f=false

Small Business and Entrepreneurship

By S. Anil Kumar
The competencies may be classified into following categories:
1.Personal entrepreneurial competencies
2.Venture initiation and success competencies
a) Enterprise launching competencies
b) Enterprise management competencies
1.Personal Entrepreneurial competencies
It is the personal characteristics of an individual who possess to perform the task effectively and
efficiently.Personal entrepreneurial competencies include the following:
a) Initiative
The entrepreneur should be able to take actions that go beyond his job requirements and to act
faster. He is always ahead of others and able to become a leader in the field of business.He Does
things before being asked or compelled by the situation and acts to extend the business into new
areas, products or services.
b) Sees and acts on opportunities
An entrepreneur always looks for and takes action on opportunities. He Sees and acts on new
business opportunities and Seizes unusual opportunities to obtain financing, equipment, land,
work space or assistance.

c) Persistence
An entrepreneur is able to make repeated efforts or to take different actions to overcome an
obstacle that get in the way of reaching goals. An entrepreneur takes repeated or different actions
to overcome an obstacle and Takes action in the face of a significant obstacle.
d) Information Seeking
An entrepreneur is able to take action on how to seek information to help achieve business
objectives or clarify business problems.They do personal research on how to provide a product
or service.They seek information or ask questions to clarify what is wanted or needed.They
personally undertake research and use contacts or information networks to obtain useful
information.
e) Concern for High Quality of Work
An entrepreneur acts to do things that meet certain standards of excellence that gives him greater
satisfaction. An entrepreneur states a desire to produce or sell a top or better quality product or
service. They compare own work or own company's work favorably to that of others.
f)Commitment to Work Contract
An entrepreneur places the highest priority on getting a job completed.They make a personal
sacrifice or take extraordinary effort to complete a job.They accept full responsibility for
problems in completing a job for others and express concern for satisfying the customer.
g)Efficiency Orientation
A successful entrepreneur always finds ways to do things faster or with fewer resources or at a
lower cost.They look for or finds ways to do things faster or at less cost.An entrepreneur uses
information or business tools to improve efficiency. He expresses concern about costs vs.
benefits of some improvement, change, or course of action.

h)Systematic Planning
An entrepreneur develops and uses logical, step-by-step plans to reach goals.They plan by
breaking a large task into subtask and develop plans,then anticipate obstacles and evaluate
alternatives.They take a logical and systematic approach to activities.
i) Problem Solving
Entrepreneurs identify new and potentially unique ideas to achieve his goals.They generate new
ideas or innovative solutions to solve problems and they take alternative strategies to solve the
problems.
j) Self-Confidence
Entrepreneur with this competency will have a strong belief in self and own abilities.They
express confidence in their own ability to complete a task or meet a challenge.They stick to their
own judgment while taking decision.
k) Assertiveness
An entrepreneur confronts problems and issues with others directly.Entrepreneur with this
competency vindicate the claim to asset their own rights on others.They demand recognition and
disciplines those failing to perform as expected.They asset own competence,reliability or other
personal or companys qualities.They also assert strong confidence in own companys or
organizations products or service.
l) Persuasion
Entrepreneurs with this competency successfully pursue others to perform the activities
effectively and efficiently.An entrepreneur can persuade or influence others for mobilizing
resources, obtaining inputs, organizing productions and selling his products or services.
m)Use of Influence Strategies

An entrepreneur is able to make use of influential people to reach his business

goals.Entrepreneurs with this competency influence the environment (Individuals/Institution) for
mobilizing resourcesorganizing production and selling goods and services to develop business
contacts.
n)Monitoring
Entrepreneurs with this competency normally monitor or surprise all the activities of the concern
to ensure that the work is completed by maintaining good quality.
o)Concern for Employee Welfare
Entrepreneurs with this competency take action to improve the welfare of employees and take
positive action in response of employees personal concerns.
2.Venture Initiation and success Competencies
In addition to personal competencies Entrepreneur must also possess the competencies required
to launch the enterprise and for its growth and survival.
It is further divided into two categories of competencies:
1. Enterpriselaunching competencies
2. Enterprisemanagement competencies
a) Enterpriselaunching competencies

Competency to understand the nature of business

To analyze the personal advantage of owning a small business.
To analyze the personal risks of owning a small business.
To analyze how to maximize the opportunities and minimize the risks of owning a
business.

Competency to determine the potential as an entrepreneur

 To consider the personal qualification and abilities needed to manage own

business.
To evaluate the own potentials for decision-making,problem solving and
creativity.
To determine own potential for management,planning,operations,personnel and
public relations.

Competency to develop a business plan

To identify how a business plan helps the entrepreneur.
To recognize how a business plan should be organized.
To identify and use the mechanisms for developing a business plan.

Competency to obtain technical assistance

To prepare for using technical assistance.
To select professional consultants.
To work effectively with consultants.

Competency to a choose the type of ownership

To analyze the type of ownership of business.
To follow the steps necessary to file for ownership of the business.
To define politics and procedures for a successful multi-owner.

Competency to plan the market strategy

To use goods classification and life cycle analysis as planning tools for
marketing.
To develop and modify marketing mixes for a business.
To use decision making tools and aid in evaluating marketing activities.
To evaluate operations to improve decision making about marketing.

Competency to locate the business

To analyze customer transportation,access,parking and so forth. i.e. relative to
alternative site locations.
To complete a location feasibility study for the business.
To determine the cost of renovating or improving a site for the business.
To prepare an occupancy contrast for the business.

Competency to finance the business:

To describe the source of information available to help in estimating the
financing necessary to start a new business.
To determine the finance necessary to start a new business.
To prepare a project profit and loss statement and a projected cash flow
statement for the new business.
To prepare a loan application package.

Competency to deal with the business

To determine the need for legal assistance.
To select the provisions that is desired in the lease.
To prepare sales contract(such a s credit sales or long term sales) tht may be
utilized in the contracts
To evaluate contracts.
To determine the need for protection of ideas and intentions.

Competency to comply with government regulations

To appraise the effects of various regulations on the business operations.
To acquire the information necessary to comply with the various rules and
regulations affecting the business.
To develop policies for the business to comply with the Government rules and
regulations.

b) Enterprise Management Competencies

Competency to manage the business

To plan goals and objectives for the business.
To develop a diagram showing the organizational structure for the business.
To establish control practices and procedures for the business.

Competency to manage human resources

To write a job description for a position in the business.
To develop a training programme online for employees.
To develop a list of personnel for employees in the business.
To develop an outline for an employee evaluation system.

 To plan a corrective interview with an employee concerning a selected

problem.

Competency to promote the business

To create a long-term promotional plan.
To describe the techniques used to prepare advertising and promotion
To analyze competitive promotional activities.
To evaluate promotional effectiveness.
To plan a community relations programme.

Competency to manage sales efforts.

To develop a sales plan for the business.
To develop policies and procedures for serving the customers.
To develop a plan for training and motivating sales people.

Competency to keep business records

To determine who will keep the books for the business and how they will be
maintained.
To describe double-entry bookkeeping.
Select the types of journals and ledges that you will use in the business.
To identify the types of records that will be used in the business to record
sales,cash

receipts,cash

disbursements,accounts

receivable,accounts

payable,payroll,petty cash,inventory,budgets and other items.

To evaluate the business records.
To identify how a micro-computer may be used to keep he business records.

Competency to manage the finances

To explain the importance of cash flow management.
To identify financial control procedures.
To describe how to find cash flow patterns.
To analyze trouble spots in financial management.
To describe how to prepare an owners equity financial statement.
To analyze financial management ratios applicable to a small business.
To identify the components of breakeven point problem.
To review microcomputer application for financial management.

Competency to manage customer credit and collection

To analyze the legal rights and resource of credit guarantors.

To develop a series of creditcollection reminders and the follow up activities.

To develop various credit and collection policies.
To prepare a credit promotionplan.
To discuss information resources and systems that apply to credit and
collection procedures

Competency to protect the business

To prepare policies for the firm that will help minimize losses due to employee
theft,vendor theft,bad cheques,shoplifting,robbery, injury or product liability.
To determine the kinds,amounts and costs of insurance needed by the firm.

Entrepreneurial Motivation
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id=2iGKJ6XxC8IC&pg=PA102&lpg=PA102&dq=Venture+Initiation+and+success+Compete
ncies&source=bl&ots=wPPADPUDbe&sig=7KY_utHckTrJklJ73qR8KkE97XU&hl=en&sa=
X&ved=0ahUKEwi67OL2s5rKAhUGjo4KHdjfCRYQ6AEIKDAC#v=onepage&q=Venture
%20Initiation%20and%20success%20Competencies&f=false

Small Business and Entrepreneurship

By S. Anil Kumar
Meaning
The entrepreneurial motivation is the process that activates and motivates the entrepreneur to
exert higher level of efforts for the achievement of his/her entrepreneurial goals. In other words,
the entrepreneurial motivation refers to the forces or drive within an entrepreneur that affect the
direction, intensity, and persistence of his / her voluntary behaviour as entrepreneur. So to say, a
motivational entrepreneur will be willing to exert a particular level of effort (intensity), for a
certain period of time (persistence) toward a particular goal (direction).
Definition
Motivation is regarded as the inner state that energizes activities and directs or channels
behavior towards the goal.
Motivation is the process that arouses action, sustains the activity in progress and that regulates
the pattern of activity.

Nature of Motivation

The nature of motivation emerging out of above definitions can be expressed as follows:

1. Motivation is internal to man

Motivation cannot be seen because it is internal to man. It is externalized via behavior. It
activates the man to move toward his / her goal.
2. A Single motive can cause different behaviors
A person with a single desire or motive to earn prestige in the society may move towards to join
politics, attain additional education and training, join identical groups, and change his outward
appearance.
3.Different motives may result in single behaviour
It is also possible that the same or single behaviour may be caused by many motives. For
example, if a person buys a car, his such behaviour may be caused by different motives such as
to look attractive, be respectable, gain acceptance from similar group of persons, differentiate the
status, and so on.
4.Motives come and go
Like tides, motives can emerge and then disappear. Motives emerged at a point of time may not
remain with the same intensity at other point of time. For instance, an entrepreneur overly
concerned about maximization of profit earning during his initial age as entrepreneur may turn
his concern towards other higher things like contributing towards philanthropic activities in
social health and education once he starts earning sufficient profits.

5.Motives interact with the environment

The environment in which we live at a point of time may either trigger or suppress our motives.
You probably have experienced environment or situation when the intensity of your hunger
picked up just you smelled the odour of palatable food.
You may desire an excellent performance bagging the first position in your examination but at
the same time may also be quite sensitive to being shunned and disliked by your class mates if
you really perform too well and get too much of praise and appreciation from your teachers.
Thus, what all this indicates is that human behaviour is the result of several forces differing in
both direction and intent.

Entrepreneurial Motivating Factors

Most of the researchers have classified all the factors motivating entrepreneurs into internal and
external factors as follows:

Internal Factors
These include the following factors:

1. Desire to do something new.

2. Become independent.
3. Achieve what one wants to have in life.
4. Be recognized for ones contribution.
5. Ones educational background.
6. Ones occupational background and experience in the relevant field.

External Factors
These include:

1. Government assistance and support.

2. Availability of labour and raw material.
3. Encouragement from big business houses.
4. Promising demand for the product.

Entrepreneurship Development Program

As the term itself denotes, EDP is a programme meant to develop entrepreneurial abilities among
the people. In other words, it refers to inculcation, development, and polishing of entrepreneurial
skills into a person needed to establish and successfully run his / her enterprise. Thus, the
concept of entrepreneurship development programme involves equipping a person with the
required skills and knowledge needed for starting and running the enterprise.
The entrepreneurship development programme is designed to promote small enterprise by
tapping the latent talents of potential entrepreneurs through training. The Entrepreneurship
development Institute of India(EDII) and National Institute of Entrepreneurship and small
Business Development(NIESBD) play an important role in training the prospective
entrepreneurs.

Entrepreneurship development programme emphasizes more on operational aspects than

academic training to meet the specific need of participants.The EDP trains the participants to set
up an enterprise and tailors its techniques and strategies depending on the environment in which
he operates the business.

Objectives of Entrepreneurship Development Programmes

1. Understand the need of entrepreneurial discipline.
2. To let the entrepreneur set or reset the objectives of his business and work individually and
along with his group.
3. Analyze the environment set up relating to small industry and business.
4. Develop passion for integrity and honesty.
5. Develop and strengthen the entrepreneurial quality, i.e. motivation or need for achievement.
6. Understand procedure of small scale industries.
7. Develop wide vision about the business
8. Develop passion for integrity and honesty
9. To analyze active investment of finance.
10. To help in assessing industrial development of rural and less developed areas where local
entrepreneurship is not readily available and to which entrepreneurs from nearby cities and town
are not easily attached.
11. To understand rules,process,procedure and regulations for running the enterprise.
12. To enhance managerial capacities of the entrepreneurs.
13. To develop feeling of social responsibility on entrepreneurs.

14. To develop industries in rural and backward areas.

15. To help in balanced regional development.

Need for Entrepreneurial Development Programme in India

http://www.publishyourarticles.net/eng/articles2/essay-on-the-need-for-entrepreneurialdevelopment-programme-in-india/2803/
The trained and successful entrepreneur becomes ideal for others. The talents of entrepreneurs
can be raised by undertaking Entrepreneurship Development Programme (EDP). The need for
EDP can be visualized from the following explanations:
i. EDP facilitates in removal of industrial slums because it leads for decentralization of
industries.
ii. It facilitates in harnessing of locally available resources, which are abundant by providing
training and education to entrepreneurs.
iii. In defuses social tension by diverting unemployed youths for self employment. Young youths
feel frustrated in the absence of employment.EDPs for various target groups can create
employment opportunities and thereby surplus labour force as well as avenues for productive
self-employment can be exploited.This will reduce the acute unemployment problem.
iv. Entrepreneur mobilizes idle savings of the people into productive investment and thereby
helps in the state of capital formation.
v. EDP helps in improving standard of living of the people because innovation leads to
production of goods and services in a wide sphere.
vi. It facilitates balanced regional development as it enables development of entrepreneurs in
different areas of the state or county.

vii. EDPs develop entrepreneurial qualities through education,training and orientation

programmes.

Measures to boost the Entrepreneurship Development Programme in India

Small Business and Entrepreneurship
By S. Anil Kumar
Entrepreneurship Development
By S. Anil Kumar
Government of India has made an excellent attempt through various reforms and schemes to
boost the development of new entrepreneurship in India.
The following strategies for entrepreneurship development in India may be suggested.
1. Creating Awareness Of Entrepreneurship
In order to shift the trend from wage employment to self employment the individual will have to
be groomed at an early age by creating the awareness of self employment and by incorporating
the vocational subjects in educational system starting from primary education only.
2.Entrepreneurship Development Training Programme by Government/Private Institutions
a) Entrepreneurship Motivation Programme:
This programme is required to create the awareness among the people in general and providing
guidelines to the interested individuals for setting up the new business units in particular.
b) Special programme:
There may be need of planning special programmes separately for different types of
entrepreneurs for example the technician entrepreneur is comfortable with the problems relating
to production,designing and technology but he may not be comfortable in the are of market
,finance etc.Hence this category of entrepreneurs need to undergo special training in the area of

market, finance etc.However the persons having trading business background finddifficulty in
the area of production and technology these persons need to be trained in technology and
production.
c) Guidance for trading and servicing business:
The persons interested in setting up trading/service unit should be imparted training separately.A
special training programme is required to be made and more emphasis should be given to cover
the subject on marketing of service.
d) Follow up action:
Institutions/Organizations conducting the entrepreneurship programme should have a system to
monitor the progress of their students in all the stages of business life cycle and provide them the
guidance as and when asked for.
3.Simplifying loan Procedure
Inspite of various reforms being incorporated by the government to set up the new units,still
there are number of formalities required by the entrepreneur to undergo before getting the
loans.These formalities need a fresh look, which should be reduced to the bare minimum
requirements of the bank so that minimum time,after the project has been finalized, is taken to
bring it in operational stage.The loan procedure should be streamline so that entrepreneur does
not experience harassment before setting up his enterprise.
4.Development of Backward regions /areas
The programmes for the development of backward regions should be formulated and effectively
implemented.Such programmes await new entrepreneurs whose technical expertise and
managerial competence would bring about the desired development and fulfill social needs.
5.Practical Outlook of special Schemes

The schemes like Prime Minister Rozgar Yojna(PMRZ) and District Rural Industrial Project
(DRIP) should be executed in true in true spirit of their organization.A special independent and
competitive authority should be assigned to implement these programmes.Economic
administration by the state should be improved and made more effective so that economic
policies may fully achieve their objectives. Improvement in business climate by state through its
well designed economic policies be it fiscal,commercial,industrial or agricultural

would

facilitate healthy development of entrepreneurship.

6.Marketing Oriented Entrepreneurship
Marketing oriented entrepreneurship has a strong positive effect on firms market performance.
Market-oriented firms gather, share and respond to market intelligence about customers and
competitors.However there is need to develop the marketing oriented entrepreneurship.

Importance/Need of entrepreneurship development programme (EDP)

Entrepreneurship: Commerce
By Dr. S. K. Singh & Sanjay Gupta
Importance of entrepreneurship development programme (EDP) is to enable entrepreneurs
initiating and sustaining the process of economic development in the following ways1. Creation of Employment Opportunities
Unemployment is one of the most important problems confronting developing and
underdevelopment countries, EDPs enable prospective entrepreneurs in the setting up of their
own units, thus enabling them to get self employment. With the setting up of more and more
units by entrepreneurs, both on small and large scale, numerous job opportunities are created for
the others.

Entrepreneur in this way get an opportunity to lead an independent and honorable life and at the
same time they enable others in getting gainful employment. Several schemes like Nehru Rozgar
Yojna, National Rural Employment Programme (NREP), Integrated Rural Development
Programme (IRDP) etc. have been initiated by the government, of India in this direction. The
thrust of all these schemes is to eliminate poverty and generate gainful employment opportunities
for the unemployed. Thus entrepreneur can play an effective role in reducing the problem of
unemployment.
2. Capital Formation
It is not possible to set up an enterprise without adequate funds. Entrepreneur as an organizer of
factors of production employs his own as well as borrowed resources for the setting up of his
enterprise. Entrepreneur mobilizes idle savings of the public and put them to productive use. In
this way he helps in capital formation, which is so essential for the industrial and economic
development of a country. Various development banks like ICICI, IFCI, IDBI; SFCs, SIDCs take
initiative in promoting entrepreneurship through assistance to various agencies involved in EDP
and by providing financial assistance to new entrepreneurs.

3.Balanced Regional Development

Small scale units can be set up in industrially backward and remote areas with limited financial
resources. Successful EDPs assist in accelerating the pace of industrialization in the backward
areas and reduce the concentration of economic power in the hands of a few, Entrepreneurs feel
like taking advantage of the various concessions and subsidies offered by the state and central
government. Success story of entrepreneurs set right example for others to follow and this
accelerates the pace of industrialization in the backward areas. Setting up of more units leads to
more development of backward areas and balanced regional development.

4. Use of Local Resources

In the absence of any initiative local resources are likely to remain unutilized. Proper use of
these resources can result in the progress or development of the area and that too at lower cost.
Alert entrepreneurs seize the opportunity and exploit it in the best interests of the area and
industry. Effective EDPs can help in the proper use of local resources by providing guidance,
assistance, education and training to the prospective entrepreneurs.

5.Improvement in per Capital Income

Entrepreneurs are always on the look out for opportunities. They explore and exploit the
opportunities. Entrepreneurs take lead in organizing various factors of production by putting
them into productive use through the setting up of enterprises. More enterprises will lead to more
production, employment and generation of wealth in the form of goods and services. It will result
in the increase in the overall productivity and per capita income in the country. EDPs play a
positive role in the setting of more units and thus help in generation of more employment and
income.

6.Improvement in the Standard of Living

Entrepreneurs by adopting latest innovations help in the production of wide variety of goods &
services. By making efficient use of the resources, they start producing more of better quality and
that too at lower costs. This enable them to ensure easy availability of better quality products at
lower prices to the consumers which result in the improvement in the standard of living of the
people. EDPs provide the necessary support to entrepreneurs by educating them about the latest
innovations and market trends.
7.Economic Independence
Entrepreneurs enable a country to produce wide variety of better quality goods & services and
that too at competitive prices. They develop substitutes of the goods being imported and thus
prevent over-dependence on foreign countries and at the same time help in the saving of precious

foreign exchange. Through sale of their surplus products in foreign market entrepreneurs enable
a country to earn foreign exchange, which is so essential for meeting developmental needs of the
economy. Export promotion and import substitution thus help in promoting economic
independence of the economy.

8.Preventing Industrial Slums

Industrially developed areas are faced with problem of industrial slums, which result in over
burdening of civic amenities and adverse impact on the health of people. Dispersal of industries
can help in the overcoming of this grave problem. EDPs can help in preventing spread of
industrial slums by providing various incentives, subsidies and infrastructural support to
entrepreneurs for setting up their enterprises in industrially backward areas. This will also help in
reducing pollution and overtaxing of civic amenities.

9.Reducing Social Tension

Unemployment amongst the young and educated people is emerging as the major cause of social
unrest. People are bound to feel frustrated if they fail to get gainful employment after completion
of their education. EDPs can help in channelizing the talent of this section of society in the right
direction by providing proper guidance, training and assistance for setting up their enterprises.
This results in generation of self employment and prevention of social tension, unrest etc.

10.Facilitating Overall Development

An entrepreneur acts as a catalytic agent for change which results in chain reaction. With the
setting up of an enterprise the process of industrialization is set in motion. This unit will generate
demand for various types of inputs required by it and there will be so many other units which
will require the output of this unit. This leads to overall development of an area due to increase in

demand and setting up of more and more units there. Moreover success of one entrepreneur sets
the right type of example for others to follow. Entrepreneurs, thus, create an environment of
enthusiasm and convey a sense of purpose. This gives future impetus to the overall development
of that area.

11. Helps in searching and exploiting opportunities

There

are

many

opportunities

for

entrepreneurs

in

various

fields

like-

Electronics,medicine,engineering,agriculture,food technology and packing,communication etc.

EDPs help in searching such opportunities and provide necessary information,guidance and
assistance in the search and exploiting these opportunities.

12.Enhancing managerial abilities.

Entrepreneur development programmes help the entrepreneurs to enhance their organizing and
managerial abilities so that they can run their enterprise efficiently and successfully.This is done
through organizing educational,management,training and orientation programmes.Various
specialized agencies like National Institute for Entrepreneurship and small Business
Development(NIESBUD),New

Delhi

and

Entrepreneurship

Development

Institute

of

India(EDII),Ahmedabad are engaged in entrepreneurship programmes.

Phases of EDPs
Entrepreneurship: Commerce
By Dr. S. K. Singh & Sanjay Gupta
https://books.google.co.in/books?
id=IuYyBgAAQBAJ&pg=PA49&lpg=PA49&dq=Need+for+EDPs&source=bl&ots=Y_kaoTzqE

t&sig=kL14KAHWqVjXlWelEUmRsKC01cY&hl=en&sa=X&ved=0ahUKEwj7pqL_4ZzKAh
WLBI4KHdNTDsM4ChDoAQhKMAY#v=onepage&q=Need%20for%20EDPs&f=false
(Page 59)

It is said that an economy is an effect for which entrepreneurship is a cause. Entrepreneurship

development has, therefore, become a matter of great concern in all developed and developing
countries all over the world. But the real problem is how to develop entrepreneurship.
Entrepreneurship development programme(EDP) are deemed to offer the solution of this
problem.
EDP pass through following three stages:
a. Initial or Pre-training phase
b. Training or Development phase
c. Post training or follow-up phase
a. Pre-Training
Pre-training phase consists of all activities and preparation to launch training programme. Pretraining phase of EDP consists of the following activities :
I.Designing course-curriculum for training
It is essential for any EDP that whatever material for study or training is designed should fulfill
the needs or purpose of the EDP.The main objectives to be kept in mind while designing the
course curriculum are as follows:
a) To provide knowledge and information regarding entrepreneurship, role of entrepreneur in
economic development and available facilities regarding establishment of enterprise to
perspective entrepreneurs.

b) To provide motivation training to the prospective entrepreneurs in order to develop right

approach and behavior towards business.
c) To provide and arrange for necessary course material important for management and technical
information.
d) To collect and provide information regarding various agencies engaged in providing assistance
to entrepreneurs to establish and run the enterprises.
e) To provide various project reports so that they can study and analyze the feasibility of various
projects with regard to marketing,technical and financial aspects.
f) Arranging plant visits so that they may become familiar with real life situations.This will help
in inculcating the right behavior and thoughts and in developing a strong personality.
II. Selection of faculty
The success of an EDP depends upon able or well qualified experienced faculty or resource
persons.Thus selection of the proper faculty is an important part of pre-training phase.For this
teacher from various universities,professional institutes, banks,research and development fields
are invited.
III. Advertisement
Next important task is giving advertisement for EDP to be conducted. So that maximum number
of candidates can participate.Advertisement can be given in local newspaper,educational
institutes or employment exchange.
IV. Selection of potential or perspective Entrepreneurs
For the success an EDP it is essential that only those participants take part who really have
qualities to be potential entrepreneurs.The selection of prospective entrepreneurs can be made on
following basis:
i. On the basis of information available from application form.

ii. On the basis of written examination to check the aptitude.

iii. On the basis of personal interview of the candidate.

b. Training phase
The main objective of this phase is to bring desirable change in the behaviour of the trainees. The
purpose of training is to develop need for achievement i.e. motivation among the trainees.
Accordingly, a trainer should see the following changes in the behaviour of trainees:

Is he or she attitudinally tuned very much towards his or her proposed

project idea?

Is the trainee motivated to plunge into entrepreneurial career and beer

risks involved in it?

How should he or she behave like an entrepreneur?

What kinds of entrepreneurial traits the trainee lacks the most?

Does the trainees possess the required skill in selecting the viable project,
mobilizing the required resources at the right time?

There are number of methods to provide Training:

Lecture method
In this method the instructor directly communicates with the participant
with regard to theory and practice tobe followed.The advantage of this
method is that queries or doubts in the mind of candidates are clearedon
the spot.

Written instructions method

Under this method written material is provided to the participants for their
use.All important factors or elements required for setting up and running
an enterprise are provided in written form.

Demonstration or practical method

For better understanding of the candidates everything related to
entrepreneurship is aught by demonstrations.Every minute detail is
explained by giving demonstrations for the practical performance of the
work.

Conferences
Under conference method,experts in various fields are invited to share
their ideas with the participants.The aim is to provide knowledge to
trainees for improving their effectiveness.

Meetings
Meetings provide opportunities to candidates to discuss various problems
faced by them.They discuss exchange ideas on various issues at firm
conclusion

Individual training
Under these circumstances where one person is to be given information or
knowledge on a particular aspect,then individual training is imparted.
Group training

This method of training is best suited where group of individuals has to do similar
type of work and where similar type of instructions are to be given to all of them.

c. Post-trainingphase
The ultimate objective of the entrepreneurship development programme is to
prepare the participants to start their enterprise. The success of the EDP can
be judged from the objectives it has achieved,that is how many participants
actually started their own enterprise after getting training. This phase involves
assessment to judge how far the objectives of the program have been achieved.
This is called Follow-up. In follow up following three things come:

Was the programme conducted as per plans?

If not what were the deviations, loopholes in the plan?

Taking Corrective action to improve the weaknesses after identifying

them?

Role of Government in promoting Entrepreneurship

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id=IuYyBgAAQBAJ&pg=PA75&lpg=PA75&dq=critical+evaluation+of+entre
preneurial+development+programmes+in+india&source=bl&ots=Y_kaqPwrIt
&sig=0LHjTUDWtbyT6_K1gG1HZIf886g&hl=en&sa=X&ved=0ahUKEwjgI6xq6HKAhWCBI4KHfWXDHQQ6AEISjAH#v=onepage&q=Role%20of
%20Government%20in%20promoting%20Entrepreneurship&f=false
Entrepreneurship: Commerce
By Dr. S. K. Singh & Sanjay Gupta
Page (60)
Government

plays

very

important

role

in

developing

entrepreneurship.Governmentdevelop industries in rural and backward areas by

giving

various

facilities

with

the

objective

of

balances

regional

development.The government set programmes to help entrepreneurs in the field

of technique,finance,market and entrepreneurial development so that they help
to accelerate and adopt the changes in industrial development.Various
institutions were set up by the central and state governments in order to fulfill
this objective.

A) Institutions set up by Central Government

1. Small industries development organization (SIDO)

SIDO was established in October 1973 now under Ministry of Trade, Industry and
Marketing. SIDO is an apex body at Central level for formulating policy for the
development of Small Scale Industries in the country,headed by the Additional
Secretary & Development Commissioner(Small Scale Industries)under Ministry
of Small Scale Industries Govt. of India.SIDO is playing a very constructive role
for strengthening this vital sector, which has proved to be one of the strong pillars

of the economy of the country. SIDO also provides extended support through
Comprehensive plan for promotion of rural entrepreneurship.
2. Management development Institute(MDI)
MDI is located at Gurgaon(Haryana).It was established in 1973 and is sponsored
by Industrial Finance Corporation Of India,with objectives of improving
managerial effectiveness in the industry.It conducts management development
programs in various fields.In also includes the programmes for the officers of
IAS,IES,BHEL,ONGC and many other leading PSUs.
3. Entrepreneurship development institute of India(EDI)
Entrepreneurship Development Institute of India (EDI), an autonomous and notfor-profit institute, set up in 1983, is sponsored by apex financial institutions - the
IDBI Bank Ltd., IFCI Ltd., ICICI Bank Ltd. and the State Bank of India
(SBI). EDI has helped set up twelve state-level exclusive entrepreneurship
development centers and institutes. One of the satisfying achievements, however,
was taking entrepreneurship to a large number of schools, colleges, science and
technology institutions and management schools in several states by including
entrepreneurship inputs in their curricula. In the international arena, efforts to
develop entrepreneurship by way of sharing resources and organizing training
programmes, have helped EDI earn accolades and support from the World Bank,
Commonwealth Secretariat, UNIDO, ILO, British Council, Ford Foundation,
European Union, ASEAN Secretariat and several other renowned agencies. EDI
has also set up Entrepreneurship Development Centre at Cambodia, Lao PDR,
Myanmar and Vietnam and is in the process of setting up such centers at
Uzbekistan and five African countries.
4. All India Small Scale Industries Board(AISSIB)
The Small Scale Industries Board (SSI Board) is the apex advisory body
constituted to render advise to the Government on all issues pertaining to the
small scale sector.It determines the policies and programmes for the development
of small industries with a Central Government Minister as its president and the
representatives

of

Government,National

various
Small

organization
Industries

i.e.

Central

Government,State

Corporations,State

Financial

Corporation,Reserve Bank of India,State Bank of India,Indian Small Industries

Board,Non government members such as Public Service Commission,Trade and
Industries Members.
5. National Institution of Entrepreneurship and Small Business
Development(NIESBUD),New Delhi
It was established in 1983 by the Government of India.It is an apex body to
supervise the activities of various agencies in the entrepreneurial development
programmes.It is a society under Government of India Society Act of 1860.The
major activities of institute are:
a) To make effective strategies and methods
b) To standardize model syllabus for training
c) To develop training aids,tools and manuals
d) To conduct workshops,seminars and conferences.
e) To evaluate the benefits of EDPs and promote the process of Entrepreneurial
Development.
f) To help support government and other agencies in executing entrepreneur
development programmes.
g) To undertake research and development in the field of EDPs.
6. National Institute of Small Industries Extension Training
It was established in 1960 with its headqyarters at Hyderabad.The
main objectives of national Institute of Small Industires Extension
Training are:
a) Directing and Coordinating syllabi for training of small
entrepreneurs.
b) Advising managerial and technical aspects.
c) Organizing seminars for small entrepreneurs and
managers.
d) Providing

services

regarding

research

documentation.
7. Natioanl Small Industries Corporation Ltd. (NSIC)

and

The NSIC was established in 1995 by the Central Government

with the objective of assisting the small industries in the
Government purchase programmes.The corporation provides a
vast-market for the products of small industries through its
marketing network.It also assists the small units in exporting their
products in foreign countires.
8. Risk Capitla and Technology Finance Corporation Ltd.(RCTFC):
RCTFC was established in 1988 with an authorized capital of 15
crores rupees.The main objectives of RCTFC are provision of risk
capital for the extension and expandion of entrepreneurial
development and venture capital for the projects with high
techniques for technology development and transfer.
9. Natioanl Research and development corporation(NRDC)
NRDC was established in 1953 under Department of Science and
Industrial Researh under Government of India.Its main objectives
are:
i.
ii.
iii.

Providing assistance in technology transfer

Transfer of technology
Establishing relations with various technology
institutions and collecting various indigenous
techniques developed by them.

10. Indian Investment Centre

This is an autonomous organization established by Central
Government.Its main objective is to assist in promoting foreign
cooperation with Indian entrepreneurs and providing necessary
information to foreign entrepreneurs.
11. Khadi and village industries Commision(KVIC)
Khadi and Village Industries Comminsion established by an Act of
Parliament in 1956.It is a service organization engaged in
promotion and development of kHadi and Village Industires in
rural areas. Its main objectives are:
ii.
Providing employment in rural areas.
iii.
Improvement of skills
iv.
Rural Industrialisation
v.
Transfer of Technology

vi.

Building strong rural community base and self reliance

among rural people.

12. Indian Institute of Entrepreneurship(IIE)
It was established by the Department of Small Scale Industires and
Agro and Rural Industries in 1953.It is autonomous organization
with its headquarters at Guwahati.Its main objective is to undertak
research,training and consultancy activities in the field of small
industry and entrepreneurship.
13. Miscellaneous Organisation
In addition to above various organizations at all India level are
assisting and are engaged in entrepreneur development.These
include ICICI,IFCI,SIDBI,UTI,IDBI,IIBI etc.
14. National Alliance of Young Entrepreneurs(NAYE)
It has sponsored number of entrepreneurial development acheme in
collaboration with various public sector banks.The main objective
of the scheme is to encourage young entrepreneurs to explore
investment and self employment opportunities .It arranges for
their training and assists them in procuring necessary finance.In
1975 NAYE also set up a Womens Wing to make women selfrelaint and to raise their status.
15. Centre for Entrepreneurial Development(CED) Ahmedabad
It was sponsored by the Government of gUjrat and public financial
institutuions operating in the State.It conducts entrepreneurial
development programmes at various centres.The important
features of training programme are:
i)
Training programmes were conducted after
ii)

survey for opportunities was made.

Appropriate linkage was established with
supporting agencies supplying finance,factory

iii)

sheds,raw materials, etc.

Behavioural tests were conducted to select the

iv)

entrepreneurs.
Training programmes covered theoretical and
practical aspects.

v)

Full time project leader took follow up action

after the traing wae over.

16. Institute for Entrepreneurial Development (IED)
It was set up by the IDBI in association with other financial
institutions,public sector banks and the State Governments.The
IEDs wew set up to fulfil the entrepreneurial development needs of
the industrially backward States in the country.
17. Technical Consultancy Organiation (TCOs)
A network of tCOs ha sbeen established by All India Financial
Institutions and State Government throughout the country.These
organizations have been set up to provide comprehensive package
of services to entrepreneurs in general and to small business
entrepreneurs in particular.Their main functions include the
following:
a) Identifying potential industrial project.
b) Preparing project reports,feasibility reports and preinvestment status.
c) Identifying potential entrepreneurs.
d) Providing technical and administrative support.
e) Conducting techno-economic studies of the projects.
f) Conducting market research and surveys.
g) Rendering advice to set up laboratories and design centre.
18. Public Sector Banks.
Public sector bakns in association with Naye have been conducting
entrepreneurial development programmes.The main thrust of these
banks has been to identify potential entrepreneurs in rural and
backward areas.For example Punjab Natioanl Bank started
entrepreneurial assistance programme in March 1977 in th States
of West Bengal and Bihar.Similarly,Bank of India started
entrepreneurial assistance programme since August 1972 in the
States of Punjab,Rajasthan ,Himachal Pradesh,J& k and the Union
Terrotiries of Chandigarh and Delhi.
The important Forms of entrepreneurial assistance are:
i)
Identifying potential entrepreneurs
ii)
Identifying viable projects.
iii)
Assisting in preparation of project profiles
iv)
Helping in project evaluation.

v)
vi)

Arranging practical training.

Financing the projects.

B) Institutions set up at State Level

There are a number of institutions establishes at state level
for organizing,developing,developing,assisting and making
successful

entrepreneurial

development

programmes.Prominent among these are:

i.
Small Industires Service Insitute (SISI)
ii.
State Financial Corporation (SFC)
iii.
State Small Industires Corporation (SSIC)
iv.
District Industries Centres(DIC)
v.
Technical Consulting Organisation Ltd. (TCO)
vi.
Industrial Directorates
vii.
Commercial and Cooperative Banks
viii. State Industrial Development Corporation
ix.
Industrial Estates
x.
State Industries Corporation
The above mentioned State and Central level Institutions have provided a number
of concessions and facilities to promote entrepreneur development in India.They
have also played an important role in balanced industrial development in the
country.