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 1800 1921 1930 1934 1973 1982 1987 1990 1991 Cantillon Say Knight Weber Joseph Schumpter Kirzner Mark Casson Stevenson & Sahlman Gartner Bygrave & Hofer A person bearing risk Agent combining all factors of production Recipient of pure profits Innovator Ability to identify new opportunities Contributes to movement towards equilibrium by pursuing opportunities through equilibrium Judgment decision maker in co-coordinating scarce resources 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 Activity

Earliest Period

Go - Between

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

Middle Ages

Manager of Large Production Projects

17th century

Contractor

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

18th century

Users of capital Entrepreneurs distinguished From capital provider

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

19th & 20th Centuries

Person organizing And operating An enterprise for personal gain

Pays for materials, land, Services, Capital etc Contributes initiative & s Net residue retained.

The Entrepreneurial Decision Process

Decisions for a Potential Entrepreneur Form new enterprise Desirable Cultural Sub cultural Family Teachers Peers Possible Government Background Marketing Financing Role models

Change from present Lifestyle. Work environment Disruption.

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

Demand side New spending Utilizes the new capacity and output

Results in economic development a. Increases percapita income b. Increases percapita output c. Change in the structure of business & society d. Growth & increased output

Role of Entrepreneurship in Economic Development

Product Evolution Process

Intersection of Knowledge & social need

Product Development Process

Ordinary Innovations

Technological Innovations

Breakthrough Innovations

Technology transfer Commercialization Through Government Intrapreneurship Entrepreneurship

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 communication 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.