Entrepreneurship

Process of creating something new and

assuming the risks and rewards.
Dynamic process of creating incremental wealth.
Process of creating something new with value by
devoting the necessary time and effort,
assuming the accompanying financial, psychic,
and social risks, and receiving the resulting
rewards of monetary and personal satisfaction
and independence.

Entrepreneur
Originally French word. Means Between-taker or
Go-between.
Entrepreneur is one who reforms or revolutionize
the pattern of production by exploiting an
invention or, more generally, an untried
technological method of producing a new
commodity or producing an old one in a new
way, opening a new source of supply of
materials or a new outlet for products, by
organizing a new industry.

Entrepreneur

Entrepreneur is one who

a. Takes initiative
b. Organizes / Reorganizes social and
economic mechanisms to turn resources
and situations to practical account.
c. Accepts Risks/ Failures.

Entrepreneur
Economist defines entrepreneur as one who
brings resources, labor, materials, and other
assets into combinations that make their value
greater than before, and also one who
introduces changes, innovations, and a new
order.
To a psychologist, such a person is a typically
driven by certain forces -- the need to obtain or
attain something, to experiment, to accomplish,
or perhaps to escape the authority of others.

Entrepreneur
To one businessman, an entrepreneur
appears as a threat, an aggressive
competitor,
whereas
to
another
businessman the same entrepreneur may
be an ally, a source of supply, a customer,
or someone who creates wealth for others,
as well as finds better ways to utilize
resources, reduce waste, and provide jobs
others are glad to get.

DEFINITION OF AN ENTREPRENEUR
According to the dictionary the word Entrepreneur can be defined as one
who reorganizes and manages only enterprise specially involving high risk.
THE CHANGING DEFINITION OF ENTREPERENEUR/ENTREPRENEURSHIP
1755

Cantillon

A person bearing risk

1800

Say

Agent combining all factors of production

1921

Knight

Recipient of pure profits

1930

Weber

Innovator

1934

Joseph Schumpter

Ability to identify new opportunities

1973

Kirzner

1982

Mark Casson

Contributes to movement towards equilibrium by pursuing

opportunities through equilibrium
Judgment decision maker in co-coordinating scarce
resources

1987

Stevenson & Sahlman

1990

Gartner

1991

Bygrave & Hofer

The relentless pursuit of opportunity

Actions taken to create organization
Characteristics of the entrepreneurial process

Definition of Entrepreneurship To-day

To-days entrepreneur has two linked

perceptions of the world:
1. First, he/she sees it as a world full of
opportunities.
2. Second, as a world of actions in which
he/she can make things happen.
Hence the equation is:
Opportunity + actions = entrepreneur of
to-day

Definition of Entrepreneurship To-day

Two features typically characterize todays

entrepreneur:
Creativity and innovativeness
Other attributes of an entrepreneur are:
a. Self confidence
b. Entrepreneurs value their sense of freedom
c. Entrepreneurs are hard working and goal
oriented
d. Entrepreneurs are determined in the face of
adversity
e. Entrepreneurs manage risk

Kanters Five F

1.
2.
3.
4.
5.

According to Kanter, there are five Fs that characterize

successful entrepreneurial organizations:
Focus on essential core competencies and long term
values.
Flexible searching for new opportunities and new
internal and external synergies.
Friendly recognizing the power of alliances in search
for new competencies.
Fast able to act at the right time to get ahead of
competitors.
Fun culture which allows the people to be different
and free to express themselves.

Four Basic Aspects of

Entrepreneur
a. Creation process creating something
new of value
b. Devotion of necessary time & effort
c. Assuming the necessary risks
d. Rewards independence, personal
satisfaction, monetary.

Role of entrepreneurship in
economic development
Not just increasing per capita output and
income, but initiating and constituting
change in the structure of business and
society, e.g BPO industry in India
Wealth generation and distribution
Innovation the key in stimulating
investment

Reasons for entrepreneurial

economy
Peter Drucker :
Rapid evolution of knowledge and technology
spurred hi-tech entrepreneurial start-ups
Demographic trends such as two-income
families, higher education, aging population
spurred it further
Emergence of venture capital market
Experience in managing entrepreneurships

Winds of change
Global economy heralding profound and
substantial changes in their external and
internal environments
Restructuring of existing businesses is a
survival strategy
Emergence of the entrepreneurial
economy in the 1980s and 1990s
Corporate strategies focused heavily on
innovation

Nature and Development of

Entrepreneurship
Period

Definition

Earliest Period

Go - Between

Middle Ages

Manager of
Large Production Projects

Activity
Established Trade
Routes to Far East,
Capitalist Passive
Risks bearer
Merchant Active
Trading. Physical
& Emotional Risks
Managing project. Utilizing
Resources provided. No risk.
Cleric In charge of great
Architectural
Works Castles
Public Buildings

17th century

18th century

19th & 20th

Centuries

Contractor

Users of capital
Entrepreneurs distinguished
From capital provider

Person organizing
And operating
An enterprise for
personal gain

Contractual agreement
With Govt. Profit or Loss
that of Entrepreneur.

Capital providers or
Venture
capitalists
makes
Risks investments.
Entrepreneurs
develop
inventions
But unable to finance.
E.g. Edison

Pays for materials, land,

Services, Capital etc
Contributes initiative & sk
Net residue retained.

The Entrepreneurial Decision

Process
Decisions for a Potential Entrepreneur

Change from present

Lifestyle.
Work environment
Disruption.

Form new enterprise

Desirable
Cultural
Sub cultural
Family
Teachers
Peers
Possible
Government
Background
Marketing
Financing
Role models

The Entrepreneurial Decision

Process
Change from present lifestyle wanting to do
something new and different, retired persons,
relocated persons, VRS, those after doing
advanced course and not getting promotion.
Decision to start a new enterprise occurs when
an individual perceives that forming a new
enterprise is both desirable and possible.
Desirable results from an individuals culture,
subculture, family, teachers, peers etc.
e.g. American culture Independence , being
ones own boss.

The Entrepreneurial Decision

Process
Possible

Government
provides
infrastructure to support a new venture.
Background in terms of formal education
and previous business experience.
Understanding of markets, how to take
care of Four Ps. Financial resources
availability, Savings, Credit etc. Availability
of Risk capital.

Classification of Start-ups
Lifestyle firm privately held, modest growth,
limited R & D, just supports owners, less
opportunity for significant growth & development.
Foundation company created from R & D and
lays the foundation for a new business area.
Rarely grows public. Investment by private & not
VCs.
High potential venture also called Gazelles.
Integral to the economic development. May start
like foundation company but growth is more
rapid. Investment from public.

Role of Entrepreneurship in
Economic Development
Innovation

Developing new
Products / services

Stimulating interest
In investment

Supply side
New capital created
leads to capacity
Expansion
Results in economic development
a. Increases percapita income
b. Increases percapita output
c. Change in the structure of business & society
d. Growth & increased output

Demand side
New spending
Utilizes the
new capacity and output

Role of Entrepreneurship in Economic

Development
Product Evolution Process
Intersection of
Knowledge & social need

Product Development Process

Ordinary
Innovations

Technological
Innovations

Technology transfer
Commercialization
Through
Government
Intrapreneurship
Entrepreneurship

Breakthrough
Innovations

Intrapreneurship
Entrepreneurship within an existing business
structure
Existing businesses have financial resources,
business skills, marketing & distribution etc. With
these, innovations can be commercialized.
Businesses recognize the need for creativity and
innovation and try to establish an intrapreneurial
spirit in the organization.
One method of stimulating, and then capitalizing
on, individuals in an organization who think that
something can be done differently and better.

Entrepreneurial Careers &

Education
Many small cottage companies have been
formed.
Formation of new ventures by female
entrepreneurs.
Entrepreneurs less educated than the general
population is a Myth.
Childhood influences. The family, particularly the
father or mother, plays an important role in
establishing the desirability and credibility of
entrepreneurship as a career path.
Employment history also has an impact.

Entrepreneurial Careers &

Education
Students, while in college, think of
pursuing
entrepreneurship.
Some
immediately after education and some
after working for some time in industry.
Most universities have a course on
entrepreneurship. EDI collaborates with
some.

Entrepreneurs competency

Time, effort and skills

Passion, conviction and commitment
Market savviness
Resource generation and management

Skills Required by Entrepreneurs

Technical skills
Business management skills
Personal entrepreneurial skills

Technical Skills

Written communicati on
Oral communication
Monitoring environment
Technology
Ability to organize
Network building
Management style
Coaching
Being a team player

Business Management Skills

Planning and goal setting

Decision making
Human relations
Marketing
Finance
Accounting
Negotiation
Venture launch
Managing growth

Personal Entrepreneurial Skills

Inner control/disciplined
Risk taker
Innovative
Change oriented
Persistent
Visionary leader
Ability to manage change

The Future of Entrepreneurship

Bright since endorsed by Educational Institutions,
Government, Society etc.
Number
of
Universities
offering
courses
in
entrepreneurship increases every year.
Increase in academic research, endowment chairs,
creation of centers of entrepreneurial activity.
Incubation centers in management institutions.
Governments taking increased interest in promoting the
growth of entrepreneurship. Tax incentives, Provision of
infrastructure.
Societys support of entrepreneurship strong.
Media plays powerful & construction role in reporting the
general entrepreneurial spirit.

The Scope of Entrepreneurship in

India

In developing economies like that of India, the scope and

need of entrepreneurship are higher. The reasons are many.
Unemployment,

disguised

employment

and

underemployment, poverty are growing in the developing

nations and entrepreneurship can be an answer to all of them
as entrepreneurship not only provides employment and
source of earning to the entrepreneur but to all those who
become associated with the business enterprise. Moreover,
the increase in the number of entrepreneurs can reduce the
monopoly of rich businessmen and lead to balanced regional
development and growth of the entire economy.