Chapter 1 Entrepreneurship Concept Unit-I - Mohsin Dadi (Parul University)

ENTREPRENEURSHIP (2181923)CHAPTER-1 ENTREPRENEURSHIP – PART-I

MOHSIN DADIASSISTANT PROFESSOR, MECHANICAL DEPARTMENT

PARUL INSTITUTE OF TECHNOLGY, PARUL UNIVERSITY1MOHSIN DADI

TABLE OF CONTENTSObjectiveDefining EntrepreneurCharacteristic of successful entrepreneursConcept of EntrepreneurshipConcept of EntrepreneurshipKnowledge and skills requirement as an EntrepreneurCharacteristic of entrepreneurshipTypes of EntrepreneursEntrepreneurial TraitsEntrepreneurship as Career Option

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TABLE OF CONTENTS Contd. SummaryKeywords Self assessment questionsReferenceReferenceContact

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OBJECTIVE Understand the meaning of entrepreneur and entrepreneurship. Explain the characteristics of entrepreneur and entrepreneurship. Discuss the different types of entrepreneurs. Highlight the entrepreneurial traits.

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DEFINING ENTREPRENEUR Usually anyone who runs a business is called an entrepreneur. The more precise meaning of entrepreneur is one who creates his ownbusiness i.e. a person who organizes, operates and assumes the risk of abusiness venture. An entrepreneur is a person who perceives a need and then bringstogether manpower material and capital required to meet that need.together manpower material and capital required to meet that need. The concept of entrepreneurship is an age-old phenomenon that relatesto the vision of an entrepreneur as well as its implementation by him. Entrepreneurship is a creative and innovative response to theenvironment. It is also the process of setting up a new venture by the entrepreneur.

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The word ‘entrepreneur’ is derived from French word ‘entrepreneur’. In early 16th century it was applied to those who were engaged in militaryexpeditions. In 17th century the word ‘entrepreneur’ was used for civil engineeringactivities such as construction and fortification. It was applied to business for the first time in 18th century, to designate a

DEFINING ENTREPRENEUR Contd.

It was applied to business for the first time in 18th century, to designate adealer who buys and sells goods at uncertain prices. Entrepreneurship started catching up in 1980s just as professionalism inmanagement caught up during 1970s. However, confusion still prevails as to what exactly we mean by the term‘entrepreneur’. An attempt, therefore, has been made here to define entrepreneur.

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The French economist Cantillon, the first to introduce the termentrepreneur, defined him as an agent who purchased the means ofproduction for combination into marketable products. Furthermore, at themoment of the factor purchases, the entrepreneur was unaware of theeventual price which he would receive for his product. Entrepreneurs perform a vital function in economic development. They


Entrepreneurs perform a vital function in economic development. Theyhave been referred to as the human agents needed to “mobilize capital, toexplore natural resources, to create markets and to carry on trade”. Itmight well be said that the entrepreneurial input spells the differencebetween prosperity and poverty among nations. According to Say, the entrepreneur’s functions to combine the productivefactors, to bring them together. Carrying out of new combination ofproductive factors is called ‘enterprise’ which, in fact, is fundamentalphenomenon of economic development. The individual whose function isto carry them out is ‘entrepreneur’.

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Schumpeter, the first major writer to highlight the human agent in theprocess of economic development believed that the economy waspropelled by the activities of persons “who wanted to promote new goodsand new methods of production, or to exploit new sources of materials ornew market” not merely for profit but also for the purpose of creating. Schumpeter used the word innovation and emphasized innovation as the


Schumpeter used the word innovation and emphasized innovation as thefunction of an entrepreneur. The importance of entrepreneurs to progress cannot be more succinctlyexpressed than Zinkin’s statement, “No entrepreneur, no development”.

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According to Kilby, the entrepreneur performs following four major tasks:I. Exchange relationship, II. Practical administration, III. Management control, and IV. Technology.


These four tasks consist of ,1. Exchange relationship a) Perceiving opportunities in market. b) Gaining command over scarce resources. c) Purchasing inputs. d) Marketing of products and responding to competition.

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2. Practical administration a) Dealing with public bureaucracy. b) Management of human relations with in the venture. c) Management of customer and supplier relations.


3. Management Control a) Financial Management b) Production Management.

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4. Technology a) Acquiring and overseeing assembling of the factory. b) Industrial engineering. c) Upgrading process and product quality. d) Introduction of new production techniques and products.


All above fields of activities involve entrepreneur in decision-makingunder conditions of uncertainty. Thus, entrepreneur within Kilby’sproposed framework would have: (i) a determination of the types anddegrees of uncertainty confronting the performance of a particularoperation, and (ii) the ability to make the appropriate decision necessaryfor the goal attainment.

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According to Harbison, an entrepreneur is not an ‘innovator’ but an‘organisation builder’ or one who has the skill to build an organizationand who must be able to harness the new ideas of different innovatorsto the best of the organization. During early twentieth century, Dewing equated entrepreneur withbusiness promoter and viewed the promoter as one who transformed


business promoter and viewed the promoter as one who transformedideas into a profitable business. In enumerating the characteristics of asuccessful entrepreneur, Dewing wrote of the qualities of imagination,initiative, judgment and restraint. ILO (International Labour Organization) describes that entrepreneur arepeople who have the ability to see and evaluate business opportunities;to gather the necessary resources to take advantage of them; and toinitiate appropriate action to ensure success.

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Casson in his work, having considered both functional definition and anindicative definition describes an entrepreneurs as ‘someone whospecializes in taking judgemental decisions about the co-ordination ofscarce resources’. In Danhof’s analysis an entrepreneur “is primarily concerned withchanges in the formula of production ... over which he has full control ....


changes in the formula of production ... over which he has full control ....He devotes correspondingly little time to the carrying out of a specificformula”. Danhof divides the functions of the entrepreneur into three major roles:obtaining relevant information, evaluating the information with regardto profit, and setting the operation in motion. Major emphasis inDanhof’s definition is decision-making, or judgement under alternativechoices.

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Whatever be the definition, across the world entrepreneurs have beenconsidered instrumental in initiating and sustaining socio-economicdevelopment. There are evidences to believe that countries which haveproportionately higher percentage of entrepreneurs in their populationhave developed much faster as compared to countries which have lesser


have developed much faster as compared to countries which have lesserpercentage of them in the society. They discover new sources of supplyof materials and markets and establish new and more effective forms oforganizations. Entrepreneurs perceive new opportunities and seize them with supernormal will power and energy, essential to overcome the resistance thatsocial environment offers.

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F.A.Walker “Entrepreneur is one who is endowed with more thanaverage capacities in the task of organizing and coordinatingthe factors of production, i.e. land, labour capital andenterprises”.Marx Regarded entrepreneur as social parasite.


Marx Regarded entrepreneur as social parasite.Gilbraith “An entrepreneur must accept the challenge and should bewilling hard to achieve something”.Peter F. Drucker an entrepreneur as one who always searches for change,responds to it and exploits it as an opportunity. Innovationis the basic tool of entrepreneurs, the means by which theyexploit change as an opportunity for a different business orservice.

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E.E.Hagen “An entrepreneur is an economic man who tries tomaximize his profits by innovation, involve problem solvingand gets satisfaction from using his capabilities on attackingproblems”.Mark Casson “An entrepreneur is a person who specializes in taking


Mark Casson “An entrepreneur is a person who specializes in takingjudgmental decision about the coordination of scarceresources”.Frank Young An entrepreneur as a change agent.MaxWeber “Entrepreneurs are a product of particular social conditionin which they are brought up and it is the society whichshapes individuals as entrepreneurs”.

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CHARACTERISTICS OF A SUCCESFUL ENTREPRENEUR An entrepreneur is a highly achievement oriented, enthusiastic andenergetic individual, who has following characteristic:1. Entrepreneurs are action oriented, highly motivated individuals whotakes risks to achieve goals.2. Entrepreneurs will have unwavering determination and commitment.They are creative and result-oriented. They work hard in return forThey are creative and result-oriented. They work hard in return forpersonal and financial rewards.3. Entrepreneur accepts responsibilities with enthusiasm and endurance.4. Entrepreneur have self-confidence, they are dedicated, setting selfdetermined goals and markets for their ideas responding to existingmarket.5. Entrepreneurs are thinkers and doers, planners and workers.

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6. Entrepreneurs can for see the future, as a salesman’s persuasiveness, afinancial talent for manipulating funds, as auditor’s precision etc.7. Entrepreneur depends on the intelligence, imagination and strength ofpurpose of the individual.

CHARACTERISTICS OF A SUCCESFUL ENTREPRENEUR Contd.

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Core competencies Entrepreneurial activitiesInitiative Does things before asked for or forced to by events andacts toextend the business to new areas, products or services.Perceiving Identifies business opportunities and mobilizes necessary

CHARACTERISTICS OF A SUCCESFUL ENTREPRENEUR Contd.

Perceivingopportunities Identifies business opportunities and mobilizes necessaryresources to make good an opportunity.Persistence Takes repeated or different actions to overcome obstacles.Informationgathering Consults experts for business and technical advice. Seeksinformation of client or supplier’s needs. Personallyundertakes market research and make use of personalcontacts or information networks to obtain usefulinformation.

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CHARACTERISTICS OF A SUCCESFUL ENTREPRENEUR Contd.Core competencies Entrepreneurial activities

Concern forquality work States desire to produce or sell a better quality product orservice. Compares his performance favourably with that ofothers.Commitment to Makes a personal sacrifice or expands extraordinary effortCommitment tocontractualobligations

Makes a personal sacrifice or expands extraordinary effortto complete a job, accepts full responsibility in completinga job contract on schedule, pitches in with workers orwork in their place to get the job done and shows utmostconcern to satisfy the customer.Efficiencyorientation Finds ways and means to do things faster, better andeconomically.

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Planning Various inter-related jobs are synchronized according toplan.Problem solving Conceives new ideas and finds innovative solutions.Self-confidence Makes decisions on his own and sticks to it in spite ofinitial setbacks.Experience Possesses technical expertise in areas of business, finance,marketing,etc.Self-critical Aware of personal limitations but tries to improve upon bylearning from his past mistakes or experiences of othersand is never complacent with success.Persuasion Persuades customers and financiers to patronize hisbusiness.

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Monitoring Develops a reporting system to ensure that work iscompleted and quality norms.Concern forEmployee Expresses concern for employees by responding promptlyto their grievances.Employeewelfare to their grievances.Impersonalrelationship Places long-term goodwill over short-term gain in abusiness relationship.Expansion ofcapital base Reinvests a greater portion of profits to expand capital ofthe firm.

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QUOTES BY SUCCESFUL ENTREPRENEURS

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CONCEPT OF ENTREPRENEURSHIP The term “entrepreneurship” is often used synonymously with the“entrepreneur”. Functions of an Entrepreneur. Though they are two sides of the same coin, conceptually they aredifferent. The entrepreneur is essentially a business leader and the functionsperformed by him are entrepreneurship.performed by him are entrepreneurship. Arthur H. Cole has stated that entrepreneurship is the purposeful activityof an individual or a group of associated individuals undertaken to initiate,maintain or organize a profit-oriented business unit for the production ordistribution of economic goods and services

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The following table can be given to distinguish theentrepreneur from entrepreneurship.Entrepreneur Entrepreneurship

Refers to a person Refers to a process Visualiser Vision Creature Creation Organiser Organisation Organiser Organisation Innovator Innovation Technician Technology Initiator Initiative Decision-maker Decision Planner Planning Leader Leadership

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Entrepreneur Entrepreneurship Motivator Motivation Programmer Action Risk-taker Risk-taking Communicator Communication

From this table it is clear that entrepreneurship refers to a process of actionan entrepreneur undertakes to establish his enterprise. It is a creative andinnovative response to the environment. It is thus a cycle of actions tofurthern the interests of the entrepreneur.

Communicator Communication Administrator Administration

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CONCEPT OF ENTREPRENEURSHIP Contd. Entrepreneurship can be defined as an ability to discover, create or inventopportunities and exploit them to the benefit of the society, which, inturn, brings prosperity to the innovator and his organization. Entrepreneurship means the function of creating something new,organizing and co-ordinating and undertaking risk and handling economicuncertainty.uncertainty. D.C. McClelland has identified two characteristics of entrepreneurship.Firstly, doing things in a new and better way. Secondly, it is decision-making in conditions of uncertainty; Benjamin Higgins has defined entrepreneurship as, “entrepreneurshipmeans the function of foreseeing investment and production opportunity,organizing an enterprise to undertake a new production process, raisingcapital, hiring labour, arranging for the supply of raw materials andselecting top managers for the day-to-day operation of the enterprise”.

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CONCEPT OF ENTREPRENEURSHIP Contd. According to Peter F. Drucker; “Entrepreneurship is neither a science noran art. It is a practice. It has a knowledge base. Knowledge inentrepreneurship is a means to an end. Indeed, what contributesknowledge in practice is largely defined by the ends, that is, by thepractice”. In Drucker’s view, entrepreneurship is considerably less risky, if the In Drucker’s view, entrepreneurship is considerably less risky, if theentrepreneur is methodical and does not violate elementary and wellknown rules. There is no doubt that entrepreneurship is a complex phenomenon. But asystematic and disciplined approach can help entrepreneurship to growand develop.

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Modern writers have identified the following three phasesin entrepreneurship development:

a) Initial Phase Creation of awareness about theentrepreneurial opportunities basedon survey.b) Development Phase Implementation training programmesto develop motivation andto develop motivation andmanagerial skill.c) Support Phase Infrastructural support of counselling-assisting to establish a new enterpriseand to develop existing units.

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CHARACTERISTICS OF ENTREPRENEURSHIP Above study of entrepreneurship has shown that the process ofentrepreneurship is indeed complex and also when we say entrepreneur iswhat an entrepreneur does. Experts have enlisted the characteristics ofentrepreneurship as follows: In Drucker’s view, entrepreneurship isconsiderably less risky, if the entrepreneur is methodical and does notviolate elementary and well known rules.violate elementary and well known rules. Ability to create enterprise: Entrepreneurship is primarily an economicactivity because it involves creation and operation of an enterprise. It isbasically concerned with satisfying the needs of customer with the help ofproduction and distribution of goods and services. Organising function: An entrepreneur brings together various factors ofproduction for an economic use. He co-ordinates and controls the factorsof production, efforts of the persons engaged in his enterprise.

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CHARACTERISTICS OF ENTREPRENEURSHIP Contd. Innovation: Entrepreneurship is an automatic, spontaneous and creativeresponse to changes in the environment. It involves innovation ofsomething new to cause dynamic change and spectacular success in theeconomy, and create conditions for growth of the economy. Risk bearing capacity: Risk is an inherent and inseparable element ofentrepreneurship. He assumes the uncertainty of future. An entrepreneurentrepreneurship. He assumes the uncertainty of future. An entrepreneurguarantees rent to the landlord, wages to employees and interest to theinvestors in the hope of earning more than the expenses. Managerial and leadership functions: An industrial entrepreneur musthave additional personality traits such as managerial and leadership skills.Managerial and leadership qualities predominant orientation in thedirection of productivity, working relation and creative integration alongwith desire to make profit. Entrepreneurship demands tactful handling ofrisk and uncertainties because new commodity and its acceptability areuncertain.

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CHARACTERISTICS OF ENTREPRENEURSHIP Contd. Gap filling: The gap filling between human needs and the availableproducts and services leads to entrepreneurship. An entrepreneuridentifies the gap and takes necessary corrective measures to fin the gap,to achieve his action oriented motive in the enterprise as an entrepreneurwith the help of entrepreneurship process.

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KNOWLEDGE AND SKILLS REQUIREMENT AS AN ENTREPRENEUR Self-confidence: If you are thinking that you would like to be anentrepreneur, do you have confidence in your ability to succeed? Everyentrepreneur encounters problems, and you have to believe you canovercome them. Ability to Plan: The ability to plan is a key skill for entrepreneurs. Theymust be able to develop plans to meet goals in a variety of areas, includingmust be able to develop plans to meet goals in a variety of areas, includingfinance, marketing, production, sales and personnel (hiring andmaintaining productive and satisfied employees). Communication Skills: Entrepreneurs should be able to explain, discuss,sell and market their good or service. It is important to be able to interacteffectively with your business team. Additionally, entrepreneurs need tobe able to express themselves clearly both verbally and in writing. Theyalso should have strong reading comprehension skills to understandcontracts and other forms of written business communication.

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KNOWLEDGE AND SKILLS REQUIREMENT AS AN ENTREPRENEUR Contd. Marketing Skills: A business’s success or failure is very dependent onwhether the business reaches the market (its potential customers),interests the market and results in those in the market deciding to buy.Many entrepreneurs who failed started with an innovative good or servicethat with proper marketing could have been very successful. Goodmarketing skills—that result in people wanting to buy your good ormarketing skills—that result in people wanting to buy your good orservice—are critical for entrepreneurial success. Interpersonal Skills: Entrepreneurs constantly interact with people,including customers and clients, employees, financial lenders, investors,lawyers and accountants, to name a few. The ability to establish andmaintain positive relationships is crucial to the success of theentrepreneur’s business venture.

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KNOWLEDGE AND SKILLS REQUIREMENT AS AN ENTREPRENEUR Contd. Basic Management Skills: The entrepreneur must be able to manageevery component of a business. Even if entrepreneurs hire managers toattend to daily details, they must understand if their business has the rightresources and if those resources are being used effectively. They mustensure that all the positions in their business are occupied by effectivepeople.people. Personal Effectiveness: In order to handle the pressures of their busylifestyles, entrepreneurs must have the ability to manage time well and totake care of personal business efficiently. Because first impressions are soimportant, entrepreneurs must also pay attention to such things aspersonal appearance and telephone skills. For example, think of thedifference in the impression made by someone who answers the phone bysaying, “Yeah?” versus saying, ”Computer Support Services, this is Alex.How may I help you?”

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KNOWLEDGE AND SKILLS REQUIREMENT AS AN ENTREPRENEUR Contd. Team Building Skills: Because entrepreneurs usually assemble a team ofskilled people who help them achieve business success, they must be ableto effectively develop and manage the team. Leadership Skills: One of the most important leadership skills anentrepreneur must have is the ability to develop a vision for the companyand to inspire the company employees to pursue that vision as a team.and to inspire the company employees to pursue that vision as a team.The expression “people would rather be led than managed” appliesespecially well to an entrepreneurial venture.

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TYPES OF ENTREPRENEURS Today various types of Entrepreneurs are found engaged in different typesof activities, not only in industrial activities but also in agriculture andcommercial activities. Today we can recognize Entrepreneur in industry,service and business sectors which are technically called as ISB sectors.Entrepreneurs are classified in a number of ways as discussed below.

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CLEARANCE DANHOF’S CLASSIFICATIONSDanhof classifies Entrepreneur into four types. Innovative entrepreneur: This category of Entrepreneur is characterizedby smell of innovativeness. This type of Entrepreneur, sense theopportunities for introduction of new ideas, new technology, discoveringof new markets and creating new organizations. Such Entrepreneur canwork only when certain level of development is already achieved andwork only when certain level of development is already achieved andpeople look forward to change and improve. Such Entrepreneur are verymuch helpful for their country because they bring about a transformationin life style. Adoptive or imitative entrepreneur: Such entrepreneurs imitate theexisting entrepreneur and set their enterprise in the same manner. Insteadof innovation, may just adopt the technology and methods innovated byothers.

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CLEARANCE DANHOF’S CLASSIFICATIONS Contd. Fabian entrepreneurs: Fabian entrepreneurs are characterized by greatcaution and scepticism, in experimenting any change in their enterprises.They imitate only when it becomes perfectly clear that failure to do sowould result in a loss of the relative position in the enterprises. Drone entrepreneurs: Such entrepreneurs are conservative or orthodox inoutlook. They always feel comfortable with their old fashioned technologyoutlook. They always feel comfortable with their old fashioned technologyof production even though technologies have changed. They never like toget rid of their traditional business, traditional machineries and traditionalsystem of business even at the cost of reduced returns.

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ARTHUR H COLE CLASSIFICATION Empirical: He is entrepreneur hardly introduces anything revolutionaryand follows the principle of rule of thumb. Rational: The rational entrepreneur is well informed about the generaleconomic conditions and introduces changes, which look morerevolutionary. Cognitive: Cognitive entrepreneur is well informed, draws upon the advice Cognitive: Cognitive entrepreneur is well informed, draws upon the adviceand services of experts and introduces changes that reflect completebreak from the existing scheme of enterprise.

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CLASSIFICATION BASED ON THE SCALE OF ENTERPRISE Small scale: These entrepreneurs do not posses the necessary talents andresources to initiate large-scale production and to introduce revolutionarytechnological changes. Large scale: They possess the necessary financial and other resources toinitiate and introduce new technological changes. They possess talent andresearch and development facilities.research and development facilities.

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OTHER CLASSIFICATION Solo operators: These are the entrepreneurs who essentially work alone,introduce their own capital and if essential employ very few employees. Inthe beginning most of the entrepreneurs start their enterprises like them. Active partners: Such entrepreneurs jointly put their efforts andresources. They actively participate in managing the daily routine of thebusiness concern. Entrepreneurs who only contribute their funds but notbusiness concern. Entrepreneurs who only contribute their funds but notactively participate in the business are called simply ‘Partners’. Inventors: Such entrepreneurs are creative in character and feel happy ininventing new products, technologies and methods of production. Theirbasic interest lies in research and innovative activities. Buyers: These are the entrepreneurs who do not like to face the hassles ofbuilding infrastructure and other facilities. They simply purchase theexisting one and by using their experience and expertise try to run theenterprise successfully.

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OTHER CLASSIFICATION Contd. Challenge: According to such entrepreneurs, if there is no challenge in life,there is no charm in life. Such entrepreneurs plunge into industry/businessbecause of the challenge it presents. When one challenge seems to bemet, they begin to look for new challenges. They convert odds andadversities into opportunities and make profit. Life timers: Such entrepreneurs take business as an integral point of their Life timers: Such entrepreneurs take business as an integral point of theirlife. Family enterprises, which mainly depend on exercise of personal skill,fall in this category. Industrial entrepreneurs: Such entrepreneurs engage in manufacturingand selling products. Service entrepreneurs: Such entrepreneurs engage in service activities likerepair, consultancy, beauty parlor etc where entrepreneurs provide serviceto people.

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OTHER CLASSIFICATION Contd. Business entrepreneurs: They are also called as trading entrepreneurswhich buy and sell goods. Agricultural entrepreneurs: They engage themselves in agriculturalactivities like horticulture, floriculture, animal husbandry, poultry etc. Corporate entrepreneurs: Corporate entrepreneurs undertake theirbusiness activities under legally registered company or trust.business activities under legally registered company or trust. Rural entrepreneurs: Entrepreneur’s selecting rural-based industrialopportunity in either khadi or village industries sector or in farmentrepreneurship are regarded as rural entrepreneurs. According to khadiand village industry commission (KVIC) Village or rural industry means anyindustry located in rural area, population of which do not exceed 10,000which produces any goods or services in which fixed investment of anartisan or a worker does not exceed one thousand rupees.

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OTHER CLASSIFICATION Contd. Women entrepreneurs: According to government of India anentrepreneurs is defined as an enterprise owned and controlled by 16 awoman and having minimum financial interests of 51% of the capital andgiving at least 51% of the employment generated in the enterprise towomen. Women entrepreneurs play an important role in economyespecially in rural areas.especially in rural areas.

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ENTREPRENEURIAL TRAITS The true entrepreneur is one who is endowed with more than averagecapacities in the task of organizing and co-ordinating the various otherfactors of production. He should be a pioneer, a captain of industry. The supply of such entrepreneurship is, however, quite limited and all arenot endowed with such talent.not endowed with such talent. The modern entrepreneur is one who detects and evaluates a newsituation in his environment and directs the making of such adjustments inthe economic system as he deems necessary. He conceives a new industrial enterprise, displays considerable initiative,grit and determination in bringing his project to fruition.

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ENTREPRENEURIAL TRAITS Contd. Thus, a successful entrepreneur must possess the following traits:1. Mental Ability: Mental ability consists of intelligence and creativethinking. An entrepreneur should be intelligent and must have ananalytical mind. He should have the capacity to engage in the analysis ofvarious problems and situations in order to deal with them. Theentrepreneur should anticipate changes and must be able to study theentrepreneur should anticipate changes and must be able to study thevarious situations under which decisions have to be made.2. Clear Objectives: An entrepreneur should have a clear objective as to theexact nature of the business, nature of the goods to be produced andancillary activities to be undertaken. A successful entrepreneur musthave the objective to establish his product in the market, make profit andalso render social service.

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ENTREPRENEURIAL TRAITS Contd.3. Business Secrecy: An entrepreneur must be able to guard businesssecrets. Leakage of business secrets to trade competitors is a seriousmatter which should be carefully guarded against by an entrepreneur.Here the entrepreneur should be able to make a proper selection of hissubordinates.4. Human Relations Ability: The most important entrepreneurial traits4. Human Relations Ability: The most important entrepreneurial traitscontributing to his success are emotional stability, personal relations,consideration and tactfulness. In other words maintenance of publicrelations or human relations most often makes the difference betweensuccess and failure of an entrepreneur An entrepreneur must have goodrelations with his customers in order to gain their continued patronageand win their confidence in his product. He must also maintain goodrelations with his employees, if he is to motivate them to higher levels ofefficiency.

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ENTREPRENEURIAL TRAITS Contd.5. Effective Communication: The “gift of the gab” is a must for a successfulentrepreneur. Good communication also means that the entrepreneurhas the ability to put his point across effectively and with clarity.Communication must be to the point, crisp and convincing.Communication ability is the secret of the success of most entrepreneurs.6. Technical Knowledge: The entrepreneurs are dealing with situations6. Technical Knowledge: The entrepreneurs are dealing with situationswhere sophisticated technology is involved. The entrepreneur must havea reasonable level of technical knowledge. This is one trait whichentrepreneurs can acquire if they try hard enough.7. Decision making: Running a business requires taking a number ofdecisions. Hence, an entrepreneur should have the capacity to analysethe various aspects of the business for arriving at a decision.

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ENTREPRENEURIAL TRAITS Contd.8. Energy: As constant attention is required for the successful running ofthe business, an entrepreneur must have sufficient energy to work hardfor long periods.9. Risk-bearing: ‘No-risk, no business’ or ‘no-risk, no gains’. There is anelement of risk in every business, hence an entrepreneur should beprepared to accept failure in its proper perspective and view failure as aprepared to accept failure in its proper perspective and view failure as achallenge and opportunity. Apart from these basic traits, Robert D. Hisrich has identified a few moreentrepreneurial traits. In his opinion the entrepreneur must haveadequate commitment, motivation and skill to start and build a business.

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ENTREPRENEURIAL TRAITS Contd.a. Motivation: An entrepreneur must built an efficient team, keep itmotivated and provide an environment for individual growth and careerdevelopment.b. Self-confidence: Entrepreneurs must have the mental capacity to faceany situation. They should also have the ability to inspire others. Theymust have the confidence in themselves and the determination tomust have the confidence in themselves and the determination toachieve their goals.c. Long-term involvement: Entrepreneurs must be committed to long-termprojects which require continuous and consistent involvement.d. High energy level: Success of an entrepreneur demands the ability towork long hours for sustained periods of time.e. Trouble-shooter: The entrepreneur must possess the trait of theproverbial “trouble-shooter”. He must have the ability to identify where aproblem is and suggest on the spot solutions.

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ENTREPRENEURIAL TRAITS Contd.f. Initiative: The entrepreneur must have initiative, accepting personalresponsibility for actions and above all make good use of resources. It isthis trait which gives the entrepreneur the courage to risk and learn fromfailures.g. Goal-setter: An entrepreneur must be able to set challenging, butrealistic goals. This personal traits can go a long way in the all roundrealistic goals. This personal traits can go a long way in the all roundprogress of a nation. These personal traits make an entrepreneur a successful person.However, it must be stated that no entrepreneur possesses all thesestrengths. No entrepreneur is born with all these traits. It is possible for him toacquire these traits if the environment is suitable for this purpose.

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ENTREPRENEURSHIP AS CAREER OPTION An educated person has broadly two career options. One is called wageor salary employment, wherein people are employed in governmentservice, public and private sectors and get fixed wage or salary. The other career option is entrepreneurial employment under whichpeople set up their new ventures. Wage employment does not generate resources and is organized within Wage employment does not generate resources and is organized withinthe existing wealth. Wage employment is self-saturating. Once availed, it blocks the employment opportunity to others for another10 years. On the other hand, the latter contributes towards national wealth andhas a unique characteristic of self-generation. This starts a chain of activities that create unending employmentopportunities.

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ENTREPRENEURSHIP AS CAREER OPTION Contd. Entrepreneurship promotes small saving amongst middle classindividuals for investment into new ventures. It also provides an outlet that creates an urge among individuals to attainexcellence in product design and related innovation. Thus, entrepreneurship provides a lasting solution to the acute problemof unemployment.of unemployment. In the context of employment generation, the three terms i.e. IncomeGeneration, Self Employment and Entrepreneurship are often usedinterchangeably. Entrepreneurship refers to identification of innovative ideas, setting up ofa new enterprise. Whereas, self-employment refers to full timeinvolvement in ones own occupation.

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ENTREPRENEURSHIP AS CAREER OPTION Contd. One may or may not be bearing the risk, mobilizing inputs, organizingproduction and marketing the product or service. Income generating activities, on the other hand, are part time, casual andpracticed with a view of raising additional income. All entrepreneurs are self-employed and income generating persons. But all self-employed and income generating persons may not be But all self-employed and income generating persons may not beentrepreneurs.

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DIFFERENCE BETWEEN WAGE EMPLOYMENT AND ENTREPRENEURIAL EMPLOYMENTWage Employment Entrepreneurial Employment

Nature Self Situating Self GeneratingScope Limited Unlimited

Orientation•Routine Types •Creative•Status Quo •Innovative•Problem Avoiding •Problem Solving•Dependent •Independent Decisions

Contribution Consumes NationalWealth Generates NationalWealthEarning Fixed (Subsistence) Growing (GeneratingSurplus)

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SUMMARY Entrepreneur is an economic agent, buys factors of production andconverts it into product with a view to sell it in the market for price,through which he earns profit. The main characteristics of entrepreneurs are planning, organizing,decision-making, risk and uncertainty bearing. Entrepreneurship is the process of identifying opportunities in the Entrepreneurship is the process of identifying opportunities in themarket place, arranging the resources required to pursue theseopportunities and investing the resources to exploit the opportunities forlong term gains. Entrepreneurs may be classified into empirical, rational and cognitive,private and public, small scale and large scale, innovative, imitative,fabian and drone entrepreneurs. Entrepreneurial employment differs from wage employment on variouscounts.

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KEYWORDS Entrepreneur: Entrepreneurs are agents of change and growth in amarket economy and they can act to accelerate the generation,dissemination and application of innovate ideas. Entrepreneurship: It refers to a process of action an entrepreneurundertakes to establish his enterprise. Innovative Entrepreneur: Innovative entrepreneurs are entrepreneurs Innovative Entrepreneur: Innovative entrepreneurs are entrepreneurswho aggressively pursue innovation in new products throughexperimentation and search new markets. Drone Entrepreneur: Drone entrepreneur is one who follows thetraditional methods of production.

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SELF ASSESSMENT QUESTIONS1. Define entrepreneur and explain characteristics of an entrepreneur.2. What do you mean by entrepreneurship? Discuss its main features.3. Explain the various types of entrepreneurs giving examples.4. “Developing countries need imitative entrepreneurs rather thaninnovative entrepreneurs”. Do you agree? Give reasons.

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REFERENCES Sharma, K.L., Entrepreneurial Performance in Role Perspective, AbhinavPublications, New Delhi. Bhanushali, S.G., Entrepreneurial Development, Himalaya PublishingHouse, Delhi. Khanka, S.S. Entrepreneurial Development, S. Chand and Sons, NewDelhi.Delhi. Rao, N.G., Entrepreneurship and Growth of Enterprise in Industrial Estate,Deep & Deep Publications, New Delhi. M.C.Garg, Entrepreneurial Development. Veerabhadrappa Havinal, Management & Entrepreneurship, New AgeInternational Publishers.

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CONTACT 9033678354 [email protected] [email protected]

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Chapter 1 Entrepreneurship Concept Unit-I - Mohsin Dadi (Parul University)

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