What is Entrepreneurship?

“Entrepreneurship involves a wide range of activities which includes inter alia, perception of market opportunities, combining and managing the factors of production and introduction of the production technique and product.”- Peter Kilby

Entrepreneurship is the process of creating something different with value by devoting the necessary time and effort; assuming the accompanying financial, psychological, and social risks; and receiving the resulting rewards of monetary and personal satisfaction.

Entrepreneurship is a composite skill that is a mixture of many qualities and traits such as imagination, risk taking ability to harness factors of production, i.e., land, labour, technology and various intangible factors. Entrepreneurship culture implies a set of values, norms and treats that are conducive to the growth of entrepreneurship. Entrepreneurship can be defined as the propensity of mind to take calculated risk with confidence to achieve a predetermined business or industrial objective. That points out the risk-taking ability of the individual coupled with correct decision-making.

What is Entrepreneurship?

Entrepreneurship is a process. It is not a combination of some stray incidents. It is the purposeful and organised search for change, conducted after systematic analysis of opportunities in the environment. Entrepreneurship is a philosophy- it is the way one thinks, one acts and therefore it can exist in any situation be it business or government or in the field of education, science and technology or poverty alleviation or any others.

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An entrepreneur is an individual who owns a firm, business or venture and is responsible for its development. Entrepreneurship is the practice of starting a new business or reviving an existing business, in order to capitalise on new found opportunities.

Generally, entrepreneurship is a tough proposition as a good number of the new businesses fail to take off. Entrepreneurial activities differ based on the type of business they are involved in. It is also true that entrepreneurial ventures create a number of new job opportunities. A large number of entrepreneurial projects look for venture capital or angel funding for their startup firms in order to finance their capital requirements. Besides, government agencies and some NGOs also finance entrepreneurial ventures.

Entrepreneurship, therefore, is about helping other people achieve their goals. It’s not about you. Successful entrepreneurs focus on others. Take Derek Sivers, for example. As the leader of a successful touring band, he needed a way to make his CDs available to fans everywhere, all the time — not just at concerts.

Entrepreneurship is often associated with uncertainty, particularly when it involves creating something new for which there is no existing market. Even if there is a market, it may not translate into a huge business opportunity for the entrepreneur. A major aspect in entrepreneurship is that entrepreneurs embrace opportunities irrespective of the resources they have access to.

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Entrepreneurship involves being resourceful and finding ways to obtain the resources required to achieve the set objectives. Capital is one such resource. Entrepreneurs need to think out-of-the-box to improve their chances of obtaining what they need to succeed. According to management experts, the vast majority of entrepreneurs desire to be in control of their own life and they can’t find this beyond entrepreneurship. Studies have demonstrated that people derive great satisfaction from their entrepreneurial work.

A number of entrepreneurs are of the opinion that managing their own business offers far greater security than being an employee elsewhere. They feel entrepreneurship enables them to acquire wealth quickly and cushion themselves against financial insecurity. Additionally, an entrepreneur’s future is not at peril owing to the faulty decisions of a finicky employer. So, while some people feel that being employed is less risky, entrepreneurs feel that they are better off starting a business of their own.

Today, there is increasing awareness about entrepreneurship. People aren’t confining themselves to one business. They are following one business with another. Such entrepreneurs are referred to as “serial entrepreneurs.” Sometimes these entrepreneurs become angel investors and invest their money in startup companies. As a person gains greater insight into business and entrepreneurship, his chances of succeeding in business improve.

What do you mean by Entrepreneurship

Entrepreneurship means the function of creating something new, organising and coordinating and undertaking risk and acting on economic uncertainty.

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Higgins defines the term entrepreneurship as a function of seeing investment and production opportunity, organising an enterprise to undertake a new production process, raising capital, hiring labour, arranging for the supply of raw materials and getting top managers for the day to day operation of the enterprise.

Hence the true entrepreneur is one who can see possibility in a given situation where others see none and has the patience to work out the idea into schemes to which financial support can be provided.

Therefore the simulation of entrepreneurship is a function of both internal and external factors. Entrepreneurship is a discipline with a knowledge base theory. It is an outcome of complex socio-economic, psychological, technological, legal and other factors. It is a dynamic and risky process. It involves a fusion of capital, technology and human talent.

Entrepreneurship is equally applicable to big and small businesses, to economic and non-economic activities. Different entrepreneurs might have some common traits but all of them will have some different and unique features. Thus entrepreneurship is a complex phenomenon and it is an attitude of mind which calls for calculated risks.

Concept of Entrepreneurship

Like any other economic concept, entrepreneurship is also an economic concept which has been much debated and discussed. Therefore, it has been defined differently by different experts. While some have considered entrepreneurship as “innovation”, some others have viewed it as “risk-bearing” and still some others as “organising”.

Let us consider here some important definitions of the concept “entrepreneurship” in order to understand more about it.

Definitions:

“Entrepreneurship is essentially a creative activity or it is an innovation function.

The process of innovation may be in the form of:

Introduction of a new product;
Opening of a new market;
Use of a new method of production;
The conquest of new source of supplying raw material;
A new form of organisation.”

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Higgins – Entrepreneurship is meant the function of foreseeing investment and production opportunities, organising an enterprise to undertake a new production process, raising capital, hiring labour, arranging the supply of raw materials, finding site, introducing a new technique, discovering new resources or raw materials and selecting top managers for day-to-day operations of the enterprises.”

According to Peter Drucker, “Entrepreneurship is neither a science nor an art. It is a practice. It has a knowledge base. Knowledge in entrepreneurship is a means to an end. Indeed what constitutes in practice is largely defined by the ends that are by the practice.” There is less risk in entrepreneurship provided the entrepreneur is methodical, innovative and creative and does not violate elementary principles and well-known rules.

Thus, it may be observed that although each of the above stated definitions considers entrepreneurship from a little different perspective, all these definitions contain similar notions like newness, organising, creating, organising wealth and risk-taking.

Thus, entrepreneurship is a set of activities performed by an entrepreneur and therefore, entrepreneurship proceeds entrepreneur.

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Thus, entrepreneurship is concerned with the performance and co-ordination of the entrepreneurial functions.

Define Entrepreneurship

Definitions of Entrepreneurship:

“Entrepreneurship refers to the general trend of setting up new enterprises in a society.”- Pareek and Nadkarni

“It connotes innovativeness, an urge to take risk in face of uncertainty, and an intuition, i.e., a capacity of seeing things in a way which afterwards proves to be true.”- V.K. Gaikwad

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“Entrepreneurship is the investing and risking of time, money and efforts to start a business and make it successful.”- Musselman and Jackson

“Entrepreneurship is an innovative function. It is leadership rather than ownership.”- Joseph. A. Schumpeter

“Maximisation of opportunities is meaningful in business, indeed a precise definition of the entrepreneurial job.”- Peter F. Drucker

“Entrepreneurship can be described as creative and innovation response to the environment.”- Rao and Mehta

Evolution of Entrepreneurship

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We can broadly classify the evolution process into two stages:

Ancient and medieval roots and
Modern entrepreneurship thought.

1. Ancient and Medieval Roots of Entrepreneurship:

Murphy, Liao, and Welsch (2006) have vividly captured the pre-historic bases of entrepreneurship:

i. 50 BC:

Entrepreneurship started from time immemorial, however in recorded history, the oldest references can be traced back to ancient Rome around 50 BC. During that time; entrepreneurship and business activity was not considered prestigious. It was usually left to the former slaves to get into commercial activities. Wealth generation happened primarily, either by renting the land or by earning interest on loans.

ii. AD 500-1000:

Europe experienced a radically new expression of entrepreneurship during AD 500-1000. This was in the form of acquisition of land, castles, and other assets through warfare. Thus, kings and barons took winning battles and wars as an entrepreneurial means to wealth and prosperity.

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iii. AD 1000-1500:

During AD 1000-1500, Europe witnessed a drastic revamping of entrepreneurial activity, and fields like architecture, engineering, and farming provided healthy bases for entrepreneurship. A new innovation in tax collection called tax farming came into existence during this time. In this approach, bidding for tax collection on behalf of the monarch was done and the highest bidder used to get the contract. If the winner of the contract used to collect more tax than the bid offered by him, the excess amount used to be net profit for him.

iv. AD 1300-1500:

During AD 1300-1500, entrepreneurial activity experienced major setbacks in China, as the rulers used to confiscate the assets of wealthy businessmen during times of financial difficulties faced by the empire. Engaging in commercial activities was deemed as wealth accumulation and was looked down upon.

v. AD 1500-1700:

Middle and Far East Asia was witnessing the prime of experiential and skill-based knowledge during this period when the Western world was still catching up with this trend. The status of the merchant became high in the Muslim dominated Arabic countries (Middle East) and entrepreneurship flourished in this region with common language and central location in the world (in between East and the West).

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vi. AD 1725:

Richard Cantillon (1680-1734) was an Irish economist, who spent a major part of his life in France. He is credited with highlighting the role of the entrepreneur in economics. He was the first to define an entrepreneur as the “agent who buys means of production at certain prices in order to combine them into a new product”.

2. Modern Entrepreneurship Thought:

Jean Baptiste Say (1767-1832), a French economist and businessman, is known for his idea that ownership is distinct from entrepreneurship. Thus, in his view, a person can be an entrepreneur despite somebody else providing the capital for the entrepreneurship venture. He was a staunch supporter of free trade and competition.

Joseph Schumpeter (1883-1950) was an Austrian economist (he taught at Harvard in his later part of academic career), who is known for the term creative destruction coined by him. In his view, the entrepreneurs, by virtue of bringing about radical innovations/transformations, render the existing systems of established organizations obsolete. This phenomenon is termed as creative destruction.

David McClelland (1917-1998) was an American psychological theorist, who defined an entrepreneur as “an energetic, moderate risk-taker.” In his view, an entrepreneur is primarily motivated by an overwhelming need for achievement and strong urge to build. His contributions to the field of entrepreneurship focus on the attributes of an entrepreneur and the motivations behind entrepreneurial behaviour. His masterpiece “The Achieving Society” hinges on these ideas.

Peter Ferdinand Drucker (1909-2005), an Austrian-American scholar, portends that entrepreneurs maximizes opportunities. He emphasized that entrepreneurship is about taking risks.

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Gifford Pinchot is an American entrepreneur and consultant, who coined the term intrapreneurship and defined it as “an entrepreneur within an already established organization”. He is known for his best-selling book – “Intrapreneuring – Why You Don’t Have to Leave the Corporation to Become an Entrepreneur”.

Nature of Entrepreneurship

Entrepreneurship is often a difficult undertaking, as a majority of new businesses fail. Entrepreneurial activities are substantially different depending on the type of organisation that is being started. Entrepreneurship may involve creating many job opportunities, assuming the accompanying financial, psychic, social risks and receiving the resulting rewards of monetary and personal satisfaction and independence.

Many “high-profile” entrepreneurial ventures seek venture capital in order to raise capital to build the business. Many kinds of organisations now exist to support would-be entrepreneurs, including specialised government agencies, business incubators, science parks, and some NGOs.

According to Peter Drucker entrepreneurship is about taking risks. The entrepreneur is the kind of person that is willing to put his career and financial security on the line for an idea, spending his time and capital in an uncertain venture. Entrepreneurship is that it is the process of discovering, evaluating and exploiting opportunities.

Entrepreneurship is a creative human act involving the mobilisation of resources from one level of productive use to a higher level of use. “It is the process by which the individual pursues opportunities without regard to resources currently controlled.” Entrepreneurship involves willingness to lack responsibility and ability to put mind to a task and see it through from inception to completion.

Another ingredient of entrepreneurship is sensing opportunities, while others see chaos, contradiction, and confusion. Essence of Entrepreneurship is going against time with maturity and serving as a change agent. Entrepreneurship is an outcome of the development process, which also encompasses the emergence of economic and social innovations.

Nature of entrepreneurship can be summoned below:

1. 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.

2. Skill:

All of the interest and vision cannot make up for a total lack of applicable skill. As the head of a company, whether he has employees or not, an entrepreneur must be able to wear many hats and do so effectively. For instance, if he wants to start a business that creates mobile games, he should have specialised knowledge in mobile technology, the gaming industry, game design, mobile app marketing or programming.

3. Investment:

An entrepreneur must invest in her company. This investment may be something less tangible, such as the time she spends or the skills or reputation she brings with her, but it also tends to involve a significant investment of assets with a clear value, whether they be cash, real estate or intellectual property. An entrepreneur who will not or cannot invest in her company cannot expect others to do so and cannot expect it to succeed.

4. Organization and Delegation:

While many new businesses start as a one-man show, successful entrepreneurship is characterised by quick and stable growth. This means hiring other people to do specialised jobs. For this reason, entrepreneurship requires extensive organisation and delegation of tasks.

It is important for entrepreneurs to pay close attention to everything that goes on in their companies, but if they want their companies to succeed, they must learn to hire the right people for the right jobs and let them do their jobs with minimal interference from management.

5. 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.

Dimensions of Entrepreneurship

Entrepreneurship is a dynamic and multi-dimensional concept.

The following are the major dimensions of entrepreneurship:

Strategic Orientation
Commitment to Opportunity
Commitment of Resources
Resource Control
Management Structure
Reward Philosophy

1. Strategic Orientation:

This is the first and foremost dimension of entrepreneurship. Strategic orientation describes the factors that drive a company’s formulation of strategy. An entrepreneur is a person who probes, realises and grabs any opportunity creatively, innovatively and favourably. He always promotes a company’s formulation of strategy and makes use of the opportunity regardless of the resources under control.

2. Commitment to Opportunity:

An entrepreneur always creates the opportunity and grabs it for business purposes. An entrepreneurial orientation places the emphasis on opportunity. He has to act in a very short time frame and chase an opportunity quickly. Along with creative and innovative nature, an entrepreneur should have commitment to opportunity and the ability to seize any opportunity that he comes across.

3. Commitment of Resources:

Commitment of resources means multi-staged commitment of an entrepreneur with a minimum requirement of resources at each crucial stage or at any decision point. While he attempts to create maximum value with minimum resources, he should be ready to accept the risk in process.

4. Resource Control:

One of the main dimensions of entrepreneurship is control of resources. An entrepreneur should be capable of utilising the resources effectively and efficiently. He should be aware of the resources needed, and should be capable of raising and utilising the resources of other people properly.

An entrepreneur is proficient in using the skills, talents and ideas of others. This ability has become increasingly valuable in the changed business environment. An organisation may need specialised resources like Hi-tech patent rights or heavy quality equipment for a short time.

5. Management Structure:

An entrepreneur has to decide the management structure and management hierarchy. The structure should be formulated in such a way that the entrepreneur should have direct contact with all the main officers of the organisation. He should know how to progress. He should have more formal relations with executives.

Specific rights and responsibilities are assigned to them through delegation of authority. Though the managerial task is substantially different from that of the entrepreneur, management skill is essential for an entrepreneur.

6. Reward Philosophy:

Every business follows the philosophy to focus on creating or gathering values. Entrepreneurial companies are different from administratively managed companies in their philosophy regarding compensation and reward. According to start up situations, the founders as well as investors themselves invest cash and want returns as soon as possible. Entrepreneurial companies tend to base compensation on performance.

They are more often focused on maximising and distributing value. Administratively managed companies are guided by the desire to protect their own positions and security. Entrepreneurial companies are more comfortable in rewards.

Need of Entrepreneurship

The various needs of Entrepreneurship are given below:

1. Provide Innovation:

Entrepreneur is an innovator who tries new methods of production, new technology, new ways of marketing etc. He develops new business ideas and puts them into action to enhance the process of economic development.

2. Lifeline of the Nation:

Entrepreneurship is a yardstick to measure the development of any country as no country can prosper and grow without development of entrepreneurship. We can see that in the US, UK, and other developed countries, there are well developed and well established enterprises. So every Nation tries to increase its trade by having more enterprises.

3. Growth of Economy:

The entrepreneurs adapt to changes as changes take place in the environment. The changes adopted by entrepreneurs in enterprises even bring changes in the society and economy. Latest technology used by enterprises not only brings growth in the enterprises but it also brings growth of the economy at large.

4. Increase Profits:

An entrepreneur always tries to minimise cost. He always tries to get optimum utilisation of resources. The reduction of cost and increase in efficiency always result in increase in profit.

5. Social Benefits:

Entrepreneurs always try to adopt the latest technology and raise the standard of living by providing good quality products and services at lower cost. By setting up enterprises in backward areas, they try to bring balanced regional growth. By making optimum utilisation of resources, they save scarce resources of society.

6. Employment Opportunities:

Entrepreneurship not only provides the scope for self-employment but also offers employment to a large number of people as in the case of successful enterprises. Growth in entrepreneurial activities leads to more and more employment.

Features of Entrepreneurship

The key features of entrepreneurship are discussed as follows:

1. Creation of Wealth:

Entrepreneurship is the process of creating incremental wealth. Entrepreneurs exploit opportunities, deliver value to customers and thus create wealth for themselves as well as the nation

2. Creative Activity:

Entrepreneurs create new markets, new products, and new channels. They find novel ways of doing things and produce results that often surpass imagination.

3. Flexible Process:

Entrepreneurs change hats, shift gears and get into new areas in line with dynamic changes in the marketplace. They change the tracks keeping changing customer tastes and preferences in mind.

4. Risky Activity:

Entrepreneurs assume risk and face challenges head on. They have confidence in their ability to turn problems into opportunities. They try to overcome barriers that come in the way and deliver results.

5. Coordinating Activity:

Entrepreneurs basically give shape to their ideas. They create a business plan, pool resources and coordinate effort in order to produce results.

Characteristics of Entrepreneurship

Some of the characteristics of entrepreneurship are discussed below:

1. Innovation:

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.

2. Risk:

If an entrepreneur does not have the willingness to assume risk, entrepreneurship would never succeed. Entrepreneurs assume the risk factor involved and have the patience to bear the risk to enjoy the rewards.

3. Profit-earning:

Profit potential is the level of return to the entrepreneur for bearing the risks. Higher the risk involved, higher will be the profit level.

4. Dynamic:

Entrepreneurship is a dynamic activity because it operates in the business environment which is always changing due to various internal and external factors.

5. Economic Activity:

Entrepreneurship involves creation of an enterprise which, in turn, creates wealth and value for the entrepreneur.

Elements of Entrepreneurship

The word entrepreneurship derives its origin from a French term’ entrepreneur’ meaning ‘to undertake’, ‘to pursue opportunities’, ‘to fulfil needs and wants’ of people through innovation and setting up a business. An entrepreneur is the one to undertake all these activities. He assumes the responsibility to organise it, raise the capital to finance it and to undertake all the risks attached to it. Hence, entrepreneurship may be summarised as a process of giving birth to new business.

The two basic elements of entrepreneurship are:

Innovation, and
Risk bearing.

1. Innovation:

A business activity that involves an element of uniqueness and specialisation comes in the purview of entrepreneurship. In fact, a person cannot be regarded as an entrepreneur unless he introduces something new, something different in his business venture. This unique feature of standing out by introducing something different, something novel is called innovation.

The entrepreneurs are also on look out to fulfil the needs and desires of consumers by introducing something different. They may or may not be inventors of new products or new methods of production, but they are able to foresee the possibility of making use of the inventions for business.

There were other players in the market who could identify these opportunities but could not encash upon them because of their myopic vision for its practical usefulness in business or lack of the ambition or self-confidence to derive advantage of it.

Any businessman in a competitive market can succeed only through innovation. A simple adjustment to something old, or giving a service without extra charge while selling a product, or a colourful packaging, or selling a product in packets of different weights, and such types of steps may be profitable innovations.

It is obvious that if all the businessmen follow the same practices, one has to introduce something different to capture the market share. Hence, it is the creativity and imagination of the entrepreneur which helps him to secure a stable position in the marketplace. Many examples of innovations may be cited from modern markets ranging from consumer products like juices to luxury cars introduced by Mercedes or Ford.

2. Risk Bearing:

Another aspect with which every entrepreneur has to deal is risk bearing. An entrepreneur must be a risk lover. A risk averse person cannot succeed to become an entrepreneur. Any entrepreneur has to undertake huge investments in anticipation of profits in future which involves an element of risk in it.

Introducing any kind of innovation in the market also involves an element of risk of being rejected by the consumers. No new business venture is assured of the expected profits. It may fail and run into losses as well. There were many factors which may be held responsible for the failure of a business venture.

These include increased level of competition, changes in consumer preferences, shortage in supply of raw materials or sudden unexpected calamities. But an entrepreneur has to be bold enough to assume all these risks involved in establishing and running an enterprise. Failure in any one venture should not affect his dedication to work further.

Theories of Entrepreneurship

Theories of Entrepreneurship are broadly classified into:

Economic,
Psychological,
Sociological and
Cultural.

The static approach of the emerging Neoclassical school did not readily accommodate a concept with such dynamic connotations as entrepreneur. Alfred Marshall, for example, laid much more stress on the routine activities of management and superintendence than he did on the innovative activity of the entrepreneur.

The phenomenon of entrepreneurship development has been viewed, explained and interpreted differently by social scientists. Among those who have stressed on the routine activities of management and superintendence than he did on the innovative activity of the entrepreneur.

The phenomenon of entrepreneurship development has been viewed, explained and interpreted differently by social scientists. Among those who have stressed on the psychological aspects as contributing to entrepreneurial success are Joseph Schumpeter, McClelland, Hagen and Kunkal.

Entrepreneurship is inhibited by the social system, which denies opportunities for creative facilities. “The forces of custom, the rigidity of status and the distinctness of new ideas and of the exercise of intellectual curiosity, combine to create an atmosphere inimical to experiment and innovation.” The theories of Weber and Cochran in this context are mainly sociological in nature.

Briefly, the concepts of entrepreneur and entrepreneurship have been investigated from economic, social, political, cultural and managerial points.

1. Economists’ Viewpoint:

Entrepreneur and entrepreneurship have been a point of interest to economics as early as 1755. The term entrepreneur seems to have been introduced into economics by Cantillon, but the entrepreneur was first accorded prominence by Say. It was variously translated into English as ‘merchant’, ‘adventurer’ and ’employer’, though the precise meaning is ‘the undertaker of a project.’ James Stuart Mill popularised the term in England.

According to economists entrepreneurship and economic growth will take place in those situations where particular economic conditions are most favourable. Economic incentives are the main drive for entrepreneurial activities. They firmly believe that a well-developed market and efficient economic policies foster entrepreneurship in a big way.

2. Psychological Theories:

The main focus of the theories of these persons is as follows:

According to psychologists, entrepreneurship is most likely to emerge when a society has sufficient supply of individuals possessing particular psychological characteristics.

The main characteristics are:

An urge to do something
To fulfil a dream,
An institutional capacity to see things in new ways (vision)
Energy of will and mind to overcome fixed habits of thought
The capacity to withstand social opposition; and
The high need for achievement.

These characteristics motivate and drive people towards entrepreneurial activities.

3. Sociological Theories:

Entrepreneurship is inhibited by the social system, which denies opportunities for creative facilities. The forces of custom, values, the rigidity of status and the distinct new ideas and of the exercise of intellectual curiosity, combine to create an atmosphere inimical to experiment and innovation. The theories of Weber and Cocharan in this context are mainly sociological in nature and worth mentioning.

Sociologists argue that entrepreneurship is most likely to emerge under a specific social culture. According to them, social sanctions, cultural values and role expectations are responsible for the emergence of entrepreneurship. Social cultural values channel economic action that gives birth to entrepreneurship.

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.

The concept of innovation and its corollary development embraces five functions – (i) Introduction of a new good, (ii) Introduction of a new method of production, (iii) Opening of a new market, (iv) Conquest of a new source of supply of raw materials and (v) Carrying out of a new organisation of any industry.

“The essence of entrepreneurship consists in the alertness of market participants to profit opportunities. A typical entrepreneur, according Kirzner (1979) is the arbitrageur, the person who discovers opportunity at low prices and sells the same items at high prices because of inter-temporal and inter-spatial demands…..”

Importance of Entrepreneurship

Entrepreneurship has significant importance for an economy in following ways:

1. Importance for the Entrepreneur:

i. Self-contentment:

Entrepreneurs have a high commitment towards their goals and they have the calibre to take charge of the situation. It gives an opportunity to an individual to contribute towards social good by his innovative ways.

ii. Financial benefits and secured life:

There is an immense probability of reaping financial rewards through better products. Entrepreneurial rewards may surpass the benefits of some of the best-paid jobs.

iii. Social acceptance and recognition:

It gives prestige and status to the individual and inspires other innovative minds to take initiatives.

2. Importance for the Economy:

i. Improves quality of life:

It increases the quantity and quality of products offered for sale in an economy. This multiplicity in choice enhances the quality of life by better communications, health sector improvements, new ways of entertainment and so on.

ii. Job creation:

Increased production activities require additional workforce at all levels of management and for all different streams. Creation of jobs is a strong indicator of sustainable economic growth.

iii. Self-reliant economy:

Small businesses help individuals to grow financially independent. This in turn leads to the development of a resurgent middle class and a self-reliant economy.

iv. Achievement of societal goals:

Better products, improved infrastructure, better means of communication, financial securities helps a government to achieve its societal goals of poverty reduction and balanced growth.

v. Export promotion:

Entrepreneurs can attempt to penetrate new markets and establish themselves as global brands.

vi. Capital formation:

Increasing revenues due to a large customer base results in positive growth of national income and per capita income.

Advantages of Entrepreneurship

The changing environment provides new opportunities for entrepreneurs and as a result entrepreneurship has positively affected the economy and society.

Following are the important economic and social advantages of entrepreneurship:

1. Creating Innovation:

Development of new enterprises plays an important role in introducing goods and services to the economy. For example as the demand for products and services continues to grow, entrepreneurs continue to innovate to meet the unfulfilled needs of customers.

2. Fuelling Economic Growth:

Development of small business is the best way to ensure economic growth, preserve competition, prevent monopolistic control of industries and assure competitive prices for quality products. Besides, small businesses also create job opportunities for others.

3. Identifying Ownership Opportunities:

Entrepreneurship helps people in identifying an option to the traditional job seeking path. Now prospective entrepreneurs try to develop their own business enterprises by identifying viable innovative opportunities. Entrepreneur-ship offers people ownership opportunities where prospective entrepreneurs are supposed to work as job providers in place of job seekers.

4. Enhancing Welfare Amenities:

Innovative new enterprises serve society by providing health care facilities, comforts, insurance etc. Entrepreneurs by their own experience try to create products and services that can help others. It is a general perception that when individuals experience personal problems or tragedy, they may discover a need for a product or service that is not being met.

These situations force the individuals to become innovative in removing their sufferings and at a later stage, this initiates ground for entrepreneurship.

Benefits of Entrepreneurship

According to Diane Wells an online entrepreneur and author, the following are the benefits of entrepreneurship:

In times when opportunities to earn money from jobs are less, you have to make opportunities for yourself through entrepreneurship. The benefits of entrepreneurship towards the economy and towards the entrepreneur himself or herself are tremendous. Starting out small and working your way up is always a good idea when it comes to entrepreneurship; small entrepreneurial activities are what keeps world economies afloat and not few big businesses. And the benefits of entrepreneurship towards an individual are no less than life changing.

First, entrepreneurship can be your ticket towards financial independence. How much you make really depends on you; you set your own goal and by it you determine how much you compensate for your efforts.

Of course there are necessary things you need in place before you could realize total financial independence, but working towards your goal is another exciting thing that you could do for yourself as a person. A study by Michael T. Childress and others in 1998 (Entrepreneurs and Small Business – Kentucky’s Neglected Natural Resource) found that entrepreneurs make more money and pay more money to their employees, than working in big businesses or corporations.

Second, entrepreneurship allows flexibility in your life. Once the necessary things are set in place and operation is properly delegated, the entrepreneur can start to experience flexibility in work schedule than working for somebody else. After all, one of the top benefits of entrepreneurship is that you are your own boss. When all aspects of your business are fully functional, you can start to do other things that you love. You can finally make time for your sport, hobby and most of all, for your family.

Moreover, entrepreneurship can open endless possibilities for the entrepreneur. Working for somebody else often forces people to do jobs they don’t like; entrepreneurship can free you from the drudgery of imposed tasks. In fact, your business should be a self-expression, a form of outlet for your creativity and the things that you love to do.

It’s simply doing the things that you love to do and making money while doing it. No longer will you be at the mercy of seniority and office politics to rise and achieve growth. Entrepreneurship will bring you to new heights that not even your limitations can hold you back if your determination is solid.

Other more noble benefits of entrepreneurship are that you’re helping to provide opportunities for other people and contribute to society through responsible business. In fact, small business owners are respected people in the community because they are responsible for spurring community development starting at creating local jobs.

Jobs provided by entrepreneurs are even more fulfilling in terms of pay and recognition compared to jobs in high-rise offices. You’re not only providing for yourself and your family, you’re also providing for the community in your own little way. No economy in the world can survive without the ingenuity, creativity and labour provided by entrepreneurs.

The best part about entrepreneurship is that it doesn’t discriminate – men, women, young, old, educated or not, everyone can become an entrepreneur through hard work and dedication to continuous learning and improvement.

Entrepreneurship Opportunities

Entrepreneurship offers scores of opportunities to the entrepreneurs, such as the following:

1. Opportunity to Create Own Destiny:

Owning an enterprise offers the entrepreneur a fair degree of independence and the opportunity to achieve something of his/her own. In fact it is they who create their own destiny by pursuing their dreams and ambitions.

2. Opportunity to Make a Difference:

Most of the time, people feel depressed and get frustrated with the dull and drab working environment when working for somebody. Entrepreneurship on the other hand allows them to be their own masters and define policies according to their vision. In other words, as entrepreneurs they can prove themselves by making a difference.

3. Opportunity to Achieve Full Potential:

Most of the time, people find their assignments boring, unchallenging and unexcited. For those who become entrepreneurs, their enterprises an- nothing but self-expression and self-actualisation. If people do something of their own, their creativity, enthusiasm, and vision gets manifested in their way of working. A person’s true strength and grit is seen when they are able to perform economic activities successfully and achieve their full potential.

4. Opportunity to Reap Impressive Profits:

Money is one of the main forces that drive people to undertake entrepreneurial activities. Profits from the business are among the main motivating factors in their decisions to take to entrepreneurship. Returns and profits from the businesses are assured. They might not be in millions but are certainly more than what one would have earned under another person’s employment.

5. Opportunity to Contribute to the Society and Recognition:

Entrepreneurs are often among the most respected people in society. The profession also imbues tremendous self- confidence that arises from a sense of accomplishment and pride of having contributed to the society and its wellbeing through entrepreneurship.

6. Opportunity to do What You Enjoy:

Most of the entrepreneurs choose to enter their particular business fields because they have an inherent interest in those spheres and enjoy their labour of love. Most successful entrepreneurs are ones who made a vocation of their avocations and are glad that they did so.

Innovation and Entrepreneurship

Entrepreneurship is a new way of thinking to find opportunities for serving the customer and seeking financial remuneration based on the products or services provided. Schumpeter (1934) defined Entrepreneur as Individuals who carry out new combinations of means of production.

They are able to spot opportunities for new goods, services, materials, markets or methods which a customer finds value and is willing to pay. Entrepreneurial process involves identification as well as going after business opportunities and thus creating value for the customer by pooling other resources so that opportunity can be harnessed.

An entrepreneur must have qualities of being creative and innovative. He has to be committed and determined to achieve success with his/her ideas and should be opportunity obsessed. The last term refers to his/her ever insatiate urge to look for new opportunities to enhance his business.

Amongst other qualities an entrepreneur should be able to take risk for making his/her ideas successful. In the entrepreneurial journey he/she will be going through patches of ambiguity and uncertainty where only his/her creativity, self-reliance and ability to remain motivated in the times of failure will help.

An entrepreneur has to be creative to think for new opportunities or gaps between the existing products and services to be able to position his/her firm’s products or services. Even in well-established products and services the new entrepreneur will be able to position his products or services through new innovative features or new ways of business model.

Given all these requirements one can safely understand the importance of creativity and innovation for entrepreneurs. In the current business scenario entrepreneurs are expected to come up with new products and services, new ways to serve the customer and generate revenue other than the direct selling.

All this would require huge orientation in the minds of the entrepreneur to be creative and innovative. Entrepreneurship is all about innovation. Innovation with relation to entrepreneurship tends to economic customer needs rather than technical innovation.

While a non-entrepreneurial approach will focus on maximising the scarce resources to produce more or bringing efficiency on the already developed products, processes or services, an entrepreneurial approach would be creative and innovative.

An Entrepreneur always looks for an opportunity and is not constrained by the resources. The much used sticky notes Post-it was a creative idea for new product satisfying needs when inventors Art Fry and Spencer Silver came up with an entirely new product to serve hidden needs.

Most entrepreneurs have a very strong creative urge and are able to see opportunities in problems around the world and have the ability to solve these problems. They use their innovative approach to come to a solution, either new or by making huge improvements. An entrepreneur also finds innovative means to monetize his solution by seeking suitable reward to the product or services that he/she is rendering.

An entrepreneur is able to spot potential ideas that can be marketed. He/ she is then able to gather necessary resources and takes risk in the execution by deploying resources. He/she is then able to implement his innovative idea into a reality that also gives him/her suitable reward.

Role of Women Entrepreneurship

Women entrepreneurship begets women empowerment which is very core for a country’s development. Women entrepreneurship is both an outcome and indicator of the social, economic and political empowerment of women.

Since the prehistoric period, women have been economically active; even though their role in the workforce has undergone changes from time to time depending on the structure and pattern of the existing social order.

As we know, the term entrepreneur refers to an individual or group of individuals, who creates something new, unites various factors of production, and bears risk in the operation of a new business enterprise. Entrepreneurship is deemed to be gender neutral. A standard definition of entrepreneur encompassed women entrepreneurs without any reservations.

Globally everywhere women are becoming entrepreneurs. They are shedding their traditional limited economic roles and are endeavouring to start their own businesses. They are no longer followers but have taken the responsibility of becoming the leaders.

There are an array of factors which encourage women to undertake risk and have economic independence. They are usually motivated by the opportunity of independent decision-making in life. Besides, women engage in business activities due to family responsibility and compulsion.

The rising participation of women in the business world as entrepreneurs or business owners in the last few decades has changed the demographic and gender composition of the entrepreneurial class. Encouragement of women entrepreneurship is undoubtedly one of the most reliable means of achieving economic stability for women and their families

Role of Economic Systems in Entrepreneurship

Entrepreneurship includes the existence of the spirit of venturing into new enterprises through innovations, creation and translation of such spirit into reality in the various fields of industry and commerce by individuals with entrepreneurial qualities and with an intense desire for accomplishment or achievement in this field.

Entrepreneurship plays an important role in the economic system, which determines the nature and scope of this field. Economic systems grow and take shape under the influence of industrial policy, economic policy, and the socio-political and cultural ideas of the people. Entrepreneurship gives a fillip to new organisational forms and the economy has to adjust to these demands.

However, changes in the structure of the economy bring about economic reforms which determine other factors affecting the economy. Economic systems is a basic structure of capitalism, socialism and mixed economy in which a certain level of entrepreneurship is found.

1. Capitalism:

Capitalism has ‘freedom’ as its landmark. Free enterprise, freedom to save or to invest, free and healthy competition, lack of the dominance of central planning and consumer’s sovereignty are the main features that distinguish capitalism from other economic systems. In a free enterprise economy, the problem of what to produce is solved by the price mechanism. The goods are bought and sold in the market at a price which is freely determined by the equality between demand for and supply of goods with reference to the cost of production.

It is for this reason that entrepreneurship fully commands a price and market mechanism. On the basis of this, the entrepreneur also has the controls of the production and distribution of goods by mobilising the resources to maximise his profit. Profit motive is the main aim of the entrepreneur in a free market mechanism under capitalism.

He also distributes the goods according to the different market conditions both in domestic and overseas markets and therefore, we find he is a competitor or monopolist or a monopolistic competitor in the home market. Besides he is a cut-throat competitor in the overseas market where he allocated the amount of goods and determines the price according to his capacity to unload goods — a special case of discriminating monopoly.

2. Socialism:

Private entrepreneurship does not contribute much to an economic system but it becomes the responsibility of the economic and financial experts in the Central Authority to strategise the exploitation of resources and organise an equitable distribution of goods without any profit motive but for the social good.

Entrepreneurship exists in the form of a body consisting of the representatives nominated by the government to frame the plans for the proper mobilisation of resources, their allocation and reallocation so that most of the resources are channelised towards industries of national importance.

It is therefore, for entrepreneurs who have a complete control over the resources, the production of the goods according to the needs of the people and their distribution in the internal vis-a-vis external market. As socialism is contrary to capitalism or mixed economy, all such responsibilities are not shared by the private entrepreneur and hence his role under socialism is negligible.

3. Mixed Economy:

The entrepreneurs also play an important role in the production and distribution of goods in a mixed economy. The basic characteristics of this economy is that the government undertakes the production of mostly capital goods while the production of consumer goods is left to the private enterprises and hence they are equally responsible for the uplift of the people because they produce not only luxuries and comforts but also goods of basic requirements of the people.

Like a capitalist economy, a mixed economy also tries to solve the basic problems with the help of the price mechanism. But where the price mechanism fails to achieve the desired result, the state tries to intervene in order to find a better solution to the various problems.

When the problem of production is not solved satisfactorily by the private entrepreneur, the state tries to increase the production of essential goods and discourages that of less essential or non-essential goods. It does so by producing defense goods itself as also some basic goods like iron, steel and cement etc. and also by encouraging the private producers to increase the production of essentials like food, clothing, housing etc.

In a mixed economy, the government does a good deal to encourage the production of most essential goods and in case their production still lags behind, it may itself undertake their production and increase it by giving it top priority in its economic programme.

In a mixed economy, the government also tries to remove the evil of monopoly capitalism through restrictions. It may curb the growth of monopolies and initiate workable competition which is essential for the optimum use of the available resources. Mixed economy tries to solve the problem of distribution of goods and services in a better way than the capitalist economy.

The government tries to level up the incomes of the poor people and level down those of the rich people. This is done by fiscal measures, fixation of minimum wages and salaries and improvements-in the environment by the people.

The role played by an entrepreneur is significantly important in a mixed economy as it permits the growth of both the public and the private sector. In the private sector, profit motive acts as an incentive to the entrepreneur and market mechanism plays its own role. This establishes the role of entrepreneurs in the mixed economy.

Entrepreneurship has great importance in various economic systems. It is all the more important under capitalism and mixed economy where not only the responsibilities of entrepreneurs in production and distribution are recognised but the objective of growth of business and profit maximisation is also attained.

Therefore, the importance of entrepreneurship stands beyond challenge in every economic system except under socialism where it appears in a different form. Yet, entrepreneurship prevails in all economic systems in one form or the other.

Corporate Entrepreneurship

Contrary to popular perception, entrepreneurship can take place even in large, established, bureaucratic business organisations. But this issue is debatable. As per the definition of entrepreneurship, managers may not be excluded from being entrepreneurs. The concept implies that entrepreneurs take risks, which generally means committing personal resources to a project.

If successful, they reap major rewards; if not, they lose much or all they put at risk—personal capital or wealth. From an economic or legal viewpoint, entrepreneurs are narrowly defined as having an ownership interest in a clearly defined venture. This interpretation would exclude salaried managers or wage-earning employees.

Nevertheless, entrepreneurship does occur in established organisations. It can happen through product innovations, “spin-off” new ventures underwritten by the mother company, development of subsidiaries, and in several other ways. Managers and employees who initiate these new corporate ventures play a role that is similar to founders of independent business.

Corporate managers of entrepreneurial ventures are, therefore, expected to have vision, determination, and persistence. They are also given greater profit and loss responsibility, which can approach the autonomy enjoyed by independent business founders. They are accountable for the success or failure of a business; but avoid the monetary risk of ownership.

Still, more and more corporations are including managers in new-venture investments and this is further reducing the gap between entrepreneurial managers and entrepreneurs.

Hans Scholl hammer has classified the various ways in which entrepreneurship can be practised in an organisation.

These are as follows:

1. Administrative Entrepreneurship:

In this scenario, traditional R&D management is closely approximated in the administrative mode. The firm simply moves a step beyond the formal R&D projects to encourage greater innovation or new inventions. The distinction that makes R&D entrepreneurial may be a state of mind, a corporate philosophy of R & D personnel.

However, these are only partial contributors to bringing a new product in the market or implementing a new technology. Other corporate personnel and resources help commercialise R&D innovations.

2. Opportunistic Entrepreneurship:

In this kind, formal structural ties are loosened as product champions seek out and take advantage of unique opportunities. The traditional R&D perspective is avoided in favour of encouraging individuals to pursue ideas inside and outside the organisation.

The opportunistic model suggests that the managers accept Millie’s degree of isolation from corporate halls, tread their career paths, but also work simultaneously to exploit opportunities within reasonable boundaries. In other words, they may cautiously shed the seclusion of water-tight corporate principles in pursuit of profits, but within reasonable limits. They also may share generously in rewards.

3. Acquisitive Entrepreneurship:

The acquisitive approach encourages corporate managers to look external for innovations that can lead to rapid growth and profits. Instead of developing ideas internally, corporations actively seek other firms that have invented new products or processes.

4. Imitative Entrepreneurship:

Sometimes likened to corporate espionage, imitative entrepreneurship takes advantage of other firms’ ideas and inventions.

5. Incubative Entrepreneurship:

After acquiring new products or patents, corporations must allocate resources to commercialise the acquisitions. This activity begins with an intense focus on development. The corporate pattern generally has been simultaneous creation of venture development units that nurture the new product or technology.

Challenges to Entrepreneurship

There are many challenges to entrepreneurship:

1. Lack of Effective Support:

Entrepreneurship requires the support of many institutions and agencies. For example banks, government, family etc. However in reality there may not be enough support from these segments. This poses a severe challenge to the practice of entrepreneurship.

2. Inadequate Incubation Facilities:

Incubation facility allows the entrepreneur in a protected environment to pilot his thoughts. It also provides for a good support system. Poor incubation facilities or incubation facilities that are tilted only towards technology ventures, can pose a challenge for overall practice of entrepreneurship.

3. Education and Training:

Entrepreneurship is a new area and hence awareness on the processes around entrepreneurship is limited. Also as the practice of entrepreneurship is very specific to the location, knowledge has to be created and provided locally. Absence of institutes to promote, educate and train entrepreneurs that too in the local context is a serious issue.

4. Mentoring and Coaching:

Coaching entrepreneurs is a very important aspect of building a strong entrepreneurial system. However coaching and mentoring of entrepreneurs is not as popular in India as it is in the West. Poor availability of experts to guide, advise and provide suggestions to entrepreneurs in running their firm, poses a significant challenge.

5. Infrastructure Challenges:

In India where most of the country is still under-developed and is rural, infrastructure becomes a top issue. Entrepreneurs require good infrastructure to transport their goods, technology to communicate, power to manufacture etc. Although the policy makers are working on these challenges, the speed at which it is done is somewhat frustrating from an entrepreneur’s perspective.

6. Cultural Bottlenecks:

Opting to be an entrepreneur is generally considered a risky proposition. Aspiring entrepreneurs need to convince the circle of people around them as to why they prefer to take this more risky route. Cultural and social factors stemming especially from family, friends, relatives and professional circles may not always be very much in favour of entrepreneurship.

7. Regulatory Challenges:

Entrepreneurs are individuals who are setting up a business probably for the first time in the majority of cases. If there are difficulties involved in getting approvals to start a business it will discourage them from creating a venture.

The International Finance Corporation, a member of the World Bank group periodically does a global study to rank countries or economies on the basis of ease of doing business. The study gives an indication of the level of entrepreneurial activity in a particular economy. It is worthy to note that India ranks around 130 on a scale of 181, indicating it is one of the toughest places to start a business.

8. High Entry Barrier to Working with Government:

While it is true that the government takes a number of steps to promote small-scale business and self-employment, most of the self-employed and small-scale entrepreneurs find it very difficult to work with the government directly. This could be a big problem because early-stage entrepreneurs may spend heavily on the government sector, only to experience the unfavourable manner of interactions of the government with small-scale entrepreneurs. In practice, there are irregularities hampering the entrepreneur-government interface, which has not gone well with the community of early-stage start-ups..

Problems of Entrepreneurship

Even though some entrepreneurs are successful, they face various problems at different levels and stages. The major problems are raw materials, marketing, finance, infrastructural facilities, and formalities to be completed with various government departments. As many as 20.45% of the entrepreneurs are facing infrastructural problems, financial problems (18.22%) and labour problems (18.68%), and the most significant factors troubling the entrepreneurs are facing raw material problems.

Marketing is another major problem for 14.22% of entrepreneurs. Low capacity utilisation is also considered a problem. But it seems that it is the effect of other problems, particularly marketing and power shortage. The role of Government is problematic in the case of 4.44% of entrepreneurs.

In the following sections each problem is analysed separately:

1. Raw Materials:

Getting required raw material at reasonable rates is one of the problems faced by some of the industrial units. The very objective of encouraging small scale industries by the Government is to utilise the available local resources. But when it comes to practice, many units face raw material problems. In the case of tile industrial units, almost all units face raw material problems.

This is mainly because of non-availability of the required raw material locally. These raw materials have to come either from Andhra Pradesh or Maharashtra or sometimes from Rajasthan. In the case of tiles, General Engineering, and food processing units, there is a provision for supply of raw material by the Government.

But almost all units complain that the Government quota is insufficient. As a result, they are forced to underutilize their installed capacity. The problem is more acute for those units who depend completely on Government quota. These units complain that the supply is not only inadequate but also irregular.

However, they have to pay money in advance to get the raw material well before the release of raw material. Some industrial units get the requested quantity of raw materials from the open market. But they are forced to pay high rates which have direct bearing on the cost of production as well as working problems.

Small industrial units within the small scale sector are more vulnerable because of less working capital base. Even in those industrial units where they do not depend on the Government quota they also face the problems because of non-availability of raw material locally. Consequently, production schedules are severely affected very often.

Precisely industrial units under the study face the following problems:

Non-availability of raw materials locally
Non-availability of raw materials on time
Cost of raw materials is very high and prices are fluctuating
Substandard raw materials
Advance payment for raw material
Insufficient quantity of raw material
Government quota of supply is much below the required quantity.

The perception of the entrepreneurs about the raw material problem is that there is no match between the actual requirement and the quota allotted by the Government. Entrepreneurs feel that this problem can be solved by rationale estimation of the required raw material and the allocation accordingly.

Another suggestion is that there should be some buffer stock points from where entrepreneurs can get their requirements easily. Another point is that no new unit should be encouraged to establish in the area where there is a scarcity of raw materials.

2. Labour Problems:

It is the general assumption that required skilled labour is not available, although unemployment is very high in the country.

The entrepreneurs are facing a variety of labour problems which are as follows:

Lack of required skilled labour
High labour turnover at minimum stability
High absenteeism
Inefficient labour force
Laziness is common, resulting in decline in production
Demand for more wages
Lack of sincerity on the part of labour.

3. Marketing Problems:

Marketing is one of the major hurdles for entrepreneurs.

In spite of Government intervention in providing market support to entrepreneurs, they face the following marketing problems:

Limited local market
Intensive competition
Orders for products are less
Un-remunerative prices
Difficult to go to national markets because of limited resources
Credit sales are inevitable
Delayed payment and sometimes bad debts.

4. Infrastructural Problems:

Since small industries are located in different corners of the nation, naturally they have to face certain limitations related to infrastructure.

The entrepreneurs in the study are facing the following infrastructural problems:

Lack of adequate transport
High cost of transport.

5. Financial Problems:

Problems of finance is another major hindrance of growth of small scale entrepreneurs. It has an inter-related effect on the other functional problems of the entrepreneurs like marketing, raw material, transport, etc.

The major financial problems faced by the entrepreneurs are as follows:

Limited equity base
Working capital is not adequate
High rate of interest
Lack of adequate security arrangements
Bank sanctions much below the requirement
Inordinate delay in sanctioning of loans
More time consuming and unnecessary formalities.

6. Problems with the Government:

Although the Government is trying to play a positive role, sometimes it proves to be counterproductive and goes against the interest of entrepreneurs.

Some of the problems with the Government are as follows:

Cumbersome procedures and formalities
Inordinate delay in taking decisions
Red tapism is common
Inefficiency

Factors Promoting Entrepreneurship Growth

The economic factors sometimes become more important determinants for the flourishing of the entrepreneur rather than social or psychological factors. Access to capital needed for business and the opportunity to acquire technical training have indicated their significance more in the development of entrepreneurship than purely social factors, such as caste tradition and social approval or disapproval.

Since entrepreneurial activity involves multi-dimensional factors, the following factors promote entrepreneurship given the right socio-political and economic environment:

Financial assistance from institutional sources
Accommodation in industrial estates
Business experience in the same or related line
Strong desire to do something independent in life;
Technical knowledge and manufacturing experience
Heavy demand for the various products
Availability of collaboration, both foreign and indigenous
Availability of machinery on lease or hire-purchase
Favourable attitudes of the government to help new units
Protection of industries through increased import restrictions
Encouragement from the already existing big business units
Unsound units or sick units available at an economic price
Adequate availability of finance from both government, and non-government sources;
The large objectives of industries being to help the unemployed and ill-educated youth
Sufficient profit margin
Sufficient encouragement from family, social and community groups for the entrepreneurial activities
Adequate availability of indigenous raw materials
Political influence for the purpose of economic activities.

Factors Influencing Entrepreneurship

Entrepreneurship is not random, it is a result of the environment that regulates entrepreneur’s activities.

Basically these factors influence entrepreneurship and can be classified as follows:

1. Personal Factors:

Personality traits of an individual are an important factor explaining entrepreneurial behaviour. Researches have shown that entrepreneurs have openness to experience, extrovert, and ability of risk taking, achievement motivation and locus of control.

Entrepreneurs feel that their success depends on their own efforts rather than outside forces. Besides, individuals in extended families are not sufficiently motivated to take economic risks or even to work hard. The traditional system of land division among children also causes low productivity, preventing the family from the benefits of large scale productivity.

2. Economic Factors:

These have a direct influence on entrepreneurship. Various economic factors include composition of market, availability of capital, overhead facilities, manpower skills and raw materials. If these factors are favourable, the entrepreneurial activities will increase.

3. Psychological Factors:

McClelland gives the level of achievement motivation to account for differences in response to similar conditions. High need for achievement drives people to become entrepreneurs. Other psychological factors are need for affiliation and need for power. People with these needs want a position of leadership in a concern.

4. Social Factors:

These factors play an important role in entrepreneurial growth. Traditionally, the caste system did not allow people born in lower castes to undertake commercial ventures. The joint family system also discouraged people to do hard work as they were denied the adequate reward for their labour. The level of education also affects entrepreneurship. Education gives basic knowledge and skills to deal with day to day problems and a better understanding of the outside world.

Factors Affecting Entrepreneurship

The development of a nation depends on the development of entrepreneurship. The emergence and development of entrepreneurship is not a spontaneous phenomenon. It depends on several economic, social, political and psychological factors. They are often regarded as supporting conditions to entrepreneurship.

These conditions may have both positive and negative influences on the emergence and growth of entrepreneurship. Positive influences constitute facilitative and conducive conditions for entrepreneurship growth, whereas negative influences inhibit the same.

A careful analysis of these factors reveals that they can be broadly classified under three major heads. viz.:

Economic factors,
Non-economic factors and
Government actions.

1. Economic Factors:

The economic factors that affect the growth of entrepreneurship in less developed countries are the following:

i. Lack of Adequate Infrastructural Facilities:

The successful implementation of an invention requires various infrastructural facilities like, transportation, communication, power supply, technical knowledge, irrigation facilities etc. The underdeveloped countries lack these facilities, and the entrepreneur has to obtain them at his own expense. This greatly affects his profit margin and discourages him.

ii. Non-Availability of Capital:

Huge amounts of capital is needed for conducting research and development activities. Capital is needed for purchasing machinery and equipment, to adopt latest innovations, to import raw materials and also to meet working capital requirements. The rate of interest charged by banks on loans affects the capital requirements of an entrepreneur. But the non-availability of adequate capital prevents the development of entrepreneurship in less developed nations.

iii. Presence of High Risk:

Risk is comparatively higher in less developed nations than in developed nations.

In less developed nations the entrepreneurs have to face the following problems:

Lack of reliable information regarding the market conditions.
Inefficiency to make correct estimates.
Lack of a strong domestic market for the product.
Instability in both domestic and foreign economic policies
Seasonal fluctuations

iv. Non-Availability of Technical Know-How and Skills:

The availability of technical know-how is the prime factor for entrepreneurial growth. A country having sufficient educational facilities in science and technology can create talented and successful entrepreneurs.

Our educational system stands as a hindrance in the development of science and technology. Every year our universities produce thousands of graduates and post- graduates. But they cannot seek self-employment as most of them have no technical education.

v. Non-Availability of Skilled Labour:

Less developed nations are labour rich nations due to the growing population. But lack of labour skills is the characteristic feature of these nations. Entrepreneurship can be encouraged only when there is a mobile and flexible labour force. Economic and emotional factors hinder labour mobility. So, the entrepreneurs often face the problem of non-availability of skilled labour.

vi. Absence of the Subject as a Programme in Academic Curriculum:

Entrepreneurship as a programme is not introduced in academic curriculum. Only when the basics of entrepreneurship are taught at schools and colleges, will students become more interested in entrepreneurship.

vii. Lengthy and Cumbersome Procedure to Start Business:

In comparison with other countries, the procedure to start a business in India is quite long and cumbersome. The procedures take more time and are expensive.

2. Non-Economic Factors:

Sociologists and psychologists are of the opinion that economic factors may be necessary conditions, but they are not sufficient for the emergence of entrepreneurship. The influence of economic factors on entrepreneurial emergence largely depends on non-economic factors in the society.

They may be classified as social, cultural, psychological and personal factors as analysed below:

i. Social Factors:

Social factors play a vital role in developing entrepreneurship.

The following are included in social factors:

a. Rational Behaviour:

A society which is rational in decision making would be favourable to entrepreneurial growth. A society is said to be rational when decisions regarding resources are based on empirical facts and critical scientific standards.

It would be non-rational if decisions regarding the use of capital, hiring of labour, designing of products etc. are based on customs and traditions. Rational behaviour is the order of the day in developed nations. Non-rational behaviour is followed by less developed nations, and is not supporting entrepreneurship.

b. Legitimacy of Entrepreneurship:

A system of norms and values within a socio-cultural setting is essential for the emergence of entrepreneurship. Such a system can be referred to as a ‘legitimacy of entrepreneurship’. Schumpeter recognized the importance of such legitimacy in terms of appropriate social climate for entrepreneurship. The social status enjoyed by entrepreneurs has been considered as one of the most important factors of entrepreneurial legitimacy.

c. Social Mobility:

It involves the degree of both social and geographical mobility. There are contradicting views about the importance of social mobility in inducing entrepreneurship. However, social mobility alone is not likely to influence entrepreneurship, but its influence is largely determined by other non-economic factors.

d. Social Marginality:

Some scholars argue that social marginality also promotes entrepreneurship. They believe that individuals or groups on the perimeter of a given social system or between two social systems provide the personnel to assume the entrepreneurial roles. They may be drawn from religious, cultural, ethnic, or migrant minority groups. Their marginal social position may have psychological effects to make entrepreneurship particularly attractive.

e. Security:

Several scholars consider entrepreneurial security as an important facilitator of entrepreneurship. But some scholars are not definite about the amount of security needed. Some scholars suggest “minimal security “while others advocate “moderate security”. However, some suggest that insecurity does not hinder entrepreneurship.

ii. Psychological Factors:

There are different theories of entrepreneurship which deal with psychological factors.

a. Need Achievement:

This is the best known psychological theory put forward by Mc Clelland known as “theory of need achievement”. According to this theory, a constellation of personality characteristics which are indicative of high need achievement greatly influence entrepreneurship development.

b. Withdrawal of Status Respect:

According to Haggen, the withdrawal of status respect of a group contributes heavily to the emergence of entrepreneurship.

He states that four types of events can produce status withdrawal:

The group may be displaced by force,
It may have its valued symbols denigrated,
It may drift into a state of status inconsistency, and
It may have lost the expected status on migration to a new social set up.

iii. Cultural Factors:

Entrepreneurial growth requires proper motives like profit making, acquisition of prestige, and attainment of social status. Ambitious and talented men will take risks and innovate if these motives are strong. The strength of these motives depends on the culture of the society. If its culture is economically or monetarily oriented, entrepreneurship will be applauded and praised, and wealth accumulation as a way of life will be appreciated.

In less developed nations, people are not economically motivated. Monetary incentives have relatively less attraction. People have ample opportunities of attaining social distinction by non-economic pursuits. They use their talents for non-economic ends.

iv. Personality Factors:

The personality factors also have an influence in entrepreneurship. In less developed countries the entrepreneur is looked upon with suspicion. It seriously affects the personality of the entrepreneur. People consider him as a profit-maker and an exploiter.

3. Government Actions:

The actions of the government can influence both economic factors and non-economic factors for entrepreneurship development. A government can assist and promote entrepreneurship through its well formulated industrial policy. It can do this by creating basic facilities, utilities and services and also by providing encouraging incentives and concessions to entrepreneurs. Thus, the supportive actions of the Government appear as the most conducive setting for entrepreneurial development.

Difference between Entrepreneur and Entrepreneurship

Entrepreneur:

Entrepreneur is a person.
Entrepreneur is an organiser.
Entrepreneur is a risk-taker.
Entrepreneur is an innovator.
Entrepreneur is a good planner.
Entrepreneur is a leader.
Entrepreneur is a decision-maker.
Entrepreneur is a visualizer.
Entrepreneur is an administrator.
Entrepreneur is an initiator.

Entrepreneurship:

Entrepreneurship is a process
Entrepreneurship is the organised form of initiative
Entrepreneurship is a risk-taking activity
Entrepreneurship is the process of innovation
Entrepreneurship is the planning for successful performance
Entrepreneurship is the crux of leadership
Entrepreneurship is nothing but a decision-making activity
Entrepreneurship is the vision
Entrepreneurship is the administration process
Entrepreneurship is taking an initiative

Difference between Business Entrepreneurship and Social Entrepreneurship

Business Entrepreneurship:

Its motive is profit.
It changes the face of business.
It finds satisfaction in establishing a new business or creating a new market for the products.
It creates entirely a new industry.
Its success is measured in terms of profit and return.

Social Entrepreneurship:

Its motive is social impact.
It acts as an agent of change by creating sustainable solutions for social problems.
It finds satisfaction in generating value in the form of transformation.
It offers new solutions to social problems and implements them for the benefit of humanity at large.
Its success is measured in terms of its impact on society.

Role of Entrepreneurship in Economic Development

Among the many definitions of the entrepreneur, that which distinguishes him as a person who undertakes to organise, manage and assume the risk of running a factory is the one generally adopted in the region. Small enterprises, like entrepreneurship, cannot be defined specifically. The concept is variously understood in different countries depending on the prevailing economic and social conditions.

Generally, the definition is based on two criteria – quantitative, which includes the size of the company in terms of number of workers, consumption of energy, capitalisation or value of sales; and qualitative, which refers to the organisation and management of the enterprise, methods of production or influence on the market.

A variety of social, economic, political and cultural factors are stimulating entrepreneurial activity and consequently generating economic development.

These stimulants are as follows:

1. An increasing focus on capital formation. Availability of capital is a stimulant to an entrepreneur to start a new firm and/or give birth to a new idea.

2. The ability to transform scientific and technical developments through new institutional development.

3. The supportive government programmes.

4. Availability of required training and inputs.

5. A collaborative relationship between business and research and their direct attempts to transfer technology to the market place will be an opportunity for entrepreneurs who commercialise their ideas.

6. Finally, an endeavour to create an environment conducive to innovation will provide a much-needed stimulant to entrepreneurial activities.

Entrepreneurship and Economic Growth:

Economic development of any region is an outcome of purposeful human activity. Men assume various roles in the development process, namely, as organiser of human capital, natural material resources, worker and consumer. He stands at the centre of the whole process of economic development.

According to Schumpeter, economic development consists of “employing resources in a different way”, bringing in a new combination of means of production. The entrepreneur looks for ideas and puts them into effect for economic development.

According to Baumol, an entrepreneur is a Schumpeterian innovator and something more than a leader. The entrepreneur, according to him, occupies a crucial place in the process of economic development.

Joseph A. Schumpeter (1934) for the first time put the human agent at: the centre of the process of economic development and assigned a critical role to entrepreneurship in his theory of economic development.

According to Schumpeter – “Entrepreneurship is essentially a creative activity or it is an innovative function. The process of innovation may be in the form of – (a) Introduction of new product, (b) Use of new method of production, (c) Opening of new market, (d) The conquest of new source of supplying raw material or (e) A new form of organisation.”

Hence he depicted an entrepreneur not only a premier agent of production who brings together all factors of production but also provides sound management and control for the survival as well as the growth of the production unit.

Schumpeter further says that economic growth depends on the rate of applied technical progress (i.e., innovation) and rate of technical progress in the economic field which in turn depends on the supply of entrepreneurs in the society. Thus the entrepreneur is the agent of change in society.

In the Schumpeterian model, an entrepreneur is an innovator, and the existence of “innovative entrepreneurs” depends on the necessary social and economic overheads. These economic and social overheads are very poor in backward regions which cause a short supply of entrepreneurs.

In this connection, we can refer to David McClelland who explained the development of entrepreneurship in terms of human motivation to achieve or need for achievement (n Ach). His hypothesis is that a society with a generally high level of achievement will produce more energetic entrepreneurs, who in turn will accelerate the process of economic development.

In the Indian context, entrepreneurship has yet another dimension. An entrepreneur may not necessarily be an innovator but an “imitator” who would copy the organisation, technology, and products of innovators from other developed regions. His role as an imitator is likely to be guided and controlled by various constraints and conditions peculiar to his area of operation and the factors under which he conducts his minimal modest industrial activity.

Other social scientists, notably Max Weber, have talked of the importance of entrepreneurship and expressed the view that creative and entrepreneurial energies are generated by the adoption of exogenously supplied beliefs which in turn produce intense efforts in occupational pursuits and accumulation of productive assets leading to the manufacture of goods and service.

According to him, entrepreneurs are a product of the particular social conditions in which they live and it is social conditions which shape the personality of individual entrepreneurs.

John Kunkel believes that the behavioural pattern of individuals is important for development and such a pattern can be influenced by external stimulus so as to alter it in the manner we want it. In other words, if we want more people in society to behave as entrepreneurs, we can bring about such behaviour on their part by appropriate alterations in the social environment so as to influence them to take to entrepreneurial pursuits.

Like Weber, Cocharan and Young underscore the importance of the role society plays in shaping the entrepreneurial personality and consider the scarce ingredients which are essential in the emergence of potential entrepreneurs’ cultural values, role expectations, social tensions and inter-group relations in society. Entrepreneurs are an important source of economic development.

It becomes imperative that there exists a motivational training programme including measures to modify the environment to stimulate entrepreneurial behaviour among individuals. There are thinkers who believe that the “Schumpeterian entrepreneurs are needed in underdeveloped countries or rapid economic development” is only through entrepreneurs that substantial development can be brought about.

Entrepreneurship Skills

Seven of the most important such skills are explained as follows, along with techniques to acquire them:

1. Estimation:

Entrepreneurs need to develop the ability to judge potential outcomes of a chosen course of action or decision. Estimation is a fundamental aspect of starting a new business. Entrepreneurs need to develop fairly realistic and believable estimates for time to completion of key business start-up tasks, their associated costs, the level of effort and external help needed, what might be the hidden dangers that could stall or put a stop to work. Interestingly, seasoned entrepreneurs do not tend to estimate potential earnings at the early stage of their start-up. However, they do tend to develop estimates of potential earnings to attract investment.

It is difficult to develop accurate estimates or forecasts, which require peering into the future for which there is no data. Data is only available for the past, and using past data to try and look into the future is fraught with problems that philosophers of science have long struggled with and have been unable to resolve.

However, successful entrepreneurs have been able to cultivate good estimation skills by using various devices (separately or together), such as mental reference points (e.g., Richard Branson’s famous test ‘if it is simple enough for my mother to understand, then it is worth doing’), relying on gut feeling or instinct and by talking to a wide variety of people.

2. Vetting Partners:

This is the ability to find and include individuals into a new venture who will best fill in your knowledge and skill gaps. The start-up histories of a large proportion of businesses will highlight that it usually takes two or more individuals to get the new venture off the ground. It is nearly impossible for a single individual to possess the entire range of technical knowledge and personal skills needed and to bear the tremendous workload involved in the creation and growth of new businesses.

In instances where one finds a prominent and charismatic front person leading a new firm, upon digging into the venture’s start-up history, one would find that there are a few key individuals in the background, the silent heroes or entrepreneurs in the shadows, without whose involvement the entire start-up operation would have folded in on itself.

3. Selling:

To be able to sell is perhaps the single most important skill any successful entrepreneur could possess. Sales activity is responsible for generating new revenue for an enterprise. Selling not only includes the ability to acquire new customers but also to inspire confidence in the general public of the new enterprise’s vision. Selling yourself—as in presenting yourself in the best possible light—is also important for attracting investors, partners and potential stakeholders to further the interests of the new enterprise.

A minority of individuals have an innate ability to almost effortlessly inspire trust and confidence in others with their speech and mannerisms, and they can channel this ability to generate new sales activity. Such individuals are often referred to as ‘natural salesmen’. The clear majority, however, can learn the techniques associated with selling to hone their skills to acquire new customers. It does take a lot of perseverance and grit to close a deal, often requiring patience and tact, because there is only a fine line to cross into ‘hard or aggressive selling’.

Hard or aggressive selling may yield some returns in the short term, but in the medium to long terms it can negatively impact your reputation and ability to attract referrals. In most businesses, word-of-mouth (WOM) customers or referrals contribute the largest proportion of revenue. To increase chances of a prospect converting into a customer through sales to make a positive referral to your enterprise, it is crucial to adopt the right attitude during the sales process.

4. Communication:

Being able to articulate ideas and relay well-formed arguments that attract value for your enterprise would be a key skill contributing to entrepreneurial success. Enterprise creation requires a degree of mastery over communication techniques, in not just English but also in one’s mother tongue. There are various aspects of communication which the would-be entrepreneur must practise; these include active listening, public speaking, writing succinctly and non-verbal behavioural cues. Effective communication’s importance cannot be stated enough, and its link to the other entrepreneurship skills in this table is quite pronounced.

Active listening requires the practitioner to adopt a demeanour where listening and responding to another person improves mutual understanding. This requires that one’s mind is tuned to block out distractions when engaging in a dialogue with any individual. To be avoided is the usual half-listening and half-thinking demeanour, where the mind might be occupied in formulating a response and not tuned into what is being said.

Watch expert debaters on YouTube (like Hamza Tzortzis) or in real life, observe the manner in which they focus their undivided attention to what their opponent is saying, nodding, taking written notes, waiting for their opponent to finish and then systematically responding to their opponent’s arguments.

Although debating is about winning an argument and not usually about creating mutual understanding, absorb what you learn and to practise choose any contemporary topic and set up a debate with someone who has experience. Active listening is difficult and by putting yourself in a debate scenario, your mind will have no choice but to adopt the active listening demeanour.

5. Trial and Error:

Entrepreneurs use their ability to solve problems by repeatedly trying out one solution after another iteratively, while eliminating errors or causes of failure. It is important to internalise that the very first iteration of any new enterprise will be a failure. On average, entrepreneurs, irrespective of background or geography, fail at least twice before succeeding in business. With this understanding, new entrepreneurs can ‘prepare to fail’, through enlightened trial and error. The crucial element would be to protect from very large potential losses—to have a clear maximum and known potential loss, which would be bearable, so as to allow further trials.

Trial and error relies on several assumptions about the nature of defining ‘problems’ and ‘solutions’. First, that no solution is ever perfect; the solution can be optimised to only deliver a certain number of potential outcomes whilst deoptimized for others. For example, it is quite difficult to achieve both low cost and high quality or high speed and high accuracy in any solution. Second, in every failed trail there are important clues about making the subsequent trial more successful. Third, being prepared to accept the unexpected, because it is nearly impossible to predict the outcomes of any trial.

Trial and error can be exhausting and demotivating for some individuals; it requires patience and grit to take a proposed solution through successive trial after trial in the search of the best optimised outcome(s).

6. Research:

Being able to put together a well thought through, convincing, reliable and verifiable case for new manoeuvres to grow your enterprise is an important skill for you to master. Market research is less useful in the early stages of starting up a new enterprise— entrepreneurs tend to rely on intuition guided by trial and error to define the problem and then to design a deliverable and commercially viable solution. Once the enterprise is set up, however, and a certain period has elapsed—say a year or maximum two—then the new enterprise is no longer a start-up; it has morphed into a ‘going concern’.

At this stage, if the entrepreneur has had early success or signs of it, then it would be crucial to take the next steps to grow the business on only robust and well-reasoned grounds which are linked to undertaking and presenting findings from research. Being able to undertake such research is especially important when it comes to attracting new investment or to gain access from ‘gatekeepers’, like a licence from a government agency. Without adequate backing up of the viability of growth options, manoeuvers made to grow the business would carry too much risk, and potential losses from taking the wrong steps might lead to irrecoverable failure.

There are two broad categories of market research: primary and secondary. Secondary research relies on already published materials—reports, newspaper articles, books, journal papers and so on. Primary research is based on wholly new and original data collected by the researcher through traditional or non-traditional approaches (interviews, observations, surveys, focus groups, important blogs online or netnography). In both cases, there is a need to develop a set of objectives or research questions.

The entrepreneur-manager needs to realise a few important things about market research; first, it is time-consuming and expensive, second, it could produce unintended or wrong results if not done following proper protocols or the data not analysed properly, third, it will have limitations as the conclusions of the research will only be valid when a certain number of conditions are met. Finally, the quality of the research’s outcome(s) will depend on the experience of the researcher.

7. Technological Prowess:

The final entrepreneurship skill requires that you develop the ability to assess the impact and use of science and engineering for commercial problem-solving. Solutions to most commercial problems have a science and engineering dimension. The role of the new entrepreneur is to devise solutions that bring about efficiencies which ultimately upends the ‘status quo’.

Such efficiencies could make ways of doing things either less expensive, more accessible, less complicated or better in some other way. Think about online ordering, applying for passports through e-government sites, new types of genetically modified seed varieties which improve crops’ yields and resistance to pests—all these ‘technologies’ rely on science and engineering to deliver efficiencies or conveniences to various kinds to end users.

Access to technology is constantly improving due to the availability of digital search and other media platforms— think about how finding the latest technological solutions has become easier due to tools such as mobile broadband and smartphones, web search engines, social media platforms, online communities, crowdsourcing platforms and IP registers.

The best way to develop technological prowess is by first identifying the broad spheres of commercial or even social activity that most interests you, for example, adult education, child health or culinary art. The next step would be keeping abreast with technological advancements by reading about advances in your interest area(s) on specialist websites, watching expert talks or attending relevant events such as trade shows and conferences. Knowing what is possible or the state of the art from an engineering and science dimension can give you the mental space of possibility to exercise your creativity for devising solutions.

Another often overlooked way of developing technological prowess is to become comfortable with searching IP registers. Many amazing new inventions developed by your home country’s scientists and engineers go unnoticed and are never put to real-world use. This is because scientists and engineers are good at science and engineering and not usually E&E—two very different skill sets. Plan a visit to the local patent or IP office and seek their assistance to search for IP files in your areas of interest (going back 15-20 years), for instance, new types of fertilisers, renewable energy-based mini power units and so on.

Ignore patents or design rights filed by large multinational corporations; focus instead on IP filed by local inventors. If you believe that some of the search results might be relevant solutions, then acquire the contact details of the inventors and approach them for negotiating the use of their IP. You will need their help in setting up the solution from a technical standpoint; and for their assistance you could either licence-in their technology by paying them a yearly fee, make them an equity partner in your new venture or pay them a royalty on the income you generate as a result of using their technology.

Sometimes inventive individuals do not file for IP protection because they might be unaware, or the process might be too cumbersome and expensive. If you cannot find registered IP then do not give up, search for relevant departments or individual researchers at higher education institutions and get in touch with them. They would be, in most instances, willing to help you design and develop your technological solution(s).

Myths about Entrepreneurship

To avoid confusion, the terms ‘small business owner’ and ‘entrepreneur’ have been used in this text in an interchangeable manner; however, there are some important differences between the two. The principal goals of an entrepreneur are innovation, profitability, and growth. Entrepreneurial ventures are characterised by novel practices and sustained growth.

If the idea proves successful, the venture could grow rapidly and outshine competition quickly. Small businesses, on the other hand, are independently owned and operated. They are generally not the dominant players in their area of operation, follow a less aggressive approach and prefer to have a steady and stable growth. Small business owners are not known for their aggression and market beating practices. In this book, however, such differences are ignored and both terms have been used interchangeably.

Some popular myths about entrepreneurs are discussed below:

1. Entrepreneurs are Gamblers:

Successful entrepreneurs take calculated risks. They do not deliberately seek to take more risk, or to take unnecessary risk, nor do they shy away from unavoidable risk.

2. Entrepreneurs are born, not made:

There is nothing mystical about entrepreneurship. Entrepreneurs do not possess any magical powers that defy logic and understanding. Entrepreneurship has models, processes and case studies that help prospects to learn and grow. This discipline, like many others, can be taught and developed through classroom training.

3. Entrepreneurs are Like Wolves and cannot Work with Others:

Most successful entrepreneurs proved to be great leaders as well. They were able to build teams, nurture good relationships with employees, develop excellent rapport with other stakeholders (suppliers, customers, investors, shareholders etc.,), and deliver outstanding value to customers consistently.

4. Entrepreneurs are doers, not Thinkers:

Entrepreneurship is a happy combination of novel thinking and innovative actions. Entrepreneurs live by clear plans and precise action steps.

5. Entrepreneurs are always Inventors:

Not necessarily. Ray Kroc, for example, did not invent the fast-food franchise, but his novel ideas turned McDonald’s into a global fast food giant.

6. Entrepreneurship is all about ‘Luck’:

Completely wrong. Entrepreneurship is all about following the dream and converting into a concrete business through perseverance, hard work, dedication, and commitment. That is the point where preparation meets opportunity—where one is well prepared to exploit a gap or an opportunity better than others.

7. Entrepreneurship is nothing but a Quest for the Mighty Dollar:

Entrepreneurs want to be in control of their own destinies. They set goals, convert these into meaningful targets and do everything possible to realise them. They are primarily driven by challenging goals and seemingly impossible dreams. When the journey is complete, they get rewarded for the risks that they have absorbed. Money is viewed as a tool and a way of keeping score in the entrepreneurial journey.

8. Entrepreneurs are Academic and Social Misfits:

Most successful entrepreneurs turn out to be school dropouts and hence the popular misconception that they seem to dislike academic environment and social life. This cannot be generalised simply because we also have a large number of success stories of entrepreneurs who have built great businesses after successfully completing their formal education.

9. Entrepreneurship is a Sordid Story of Missteps and Failed Initiatives:

Yes, entrepreneurship requires perseverance, dedication and commitment. If the preparation is inadequate and the entrepreneur fails to appreciate why the market has rejected the idea, then the end result is failure. The maxim here is to try, try and try. Anyone quitting the arena midway in frustration would be forced to write the obituary column about a failed venture sooner than expected.

10. Anyone can start a Business:

Yes, the easiest part is starting, but the intense hardships of starting are followed by the challenge of surviving, sustaining and building a great business that can realise great returns.

Reasons for the Lack of Entrepreneurship in India

When we speak of barriers of entrepreneurship in India we hear some common words like -“Revamp education system”, “Lack of funding”, “No ecosystem”, “No product companies”, “Indian Mindset and culture”, “Bureaucratic red-tape”, and many other such reasons. Many writers write that the entrepreneurship in India would be that it is more type than happening. The awareness about entrepreneurship is definitely increasing incredibly, but not enough converts yet.

Some of the most commonly attributed reasons for the lack of entrepreneurship in India are:

1. Lack of Funding:

The lack of funding that much of a big deal really? The cost to do a technology startup has gone down drastically. Reduced hardware costs, bandwidth costs have dropped, cloud computing and open source technologies make it really cheap to launch a technology startup. Unless you are launching a capital- intensive business, why should you really need outside funding for doing a startup?

In fact in India, where education is not geared up to induce entrepreneurial talent in the young people and poverty dominates the lower strata of population, definitely starting up without capital is a major problem. Even if a meager start-up capital is provided, it will be used to solve family problems and his attempt is a failure.

2. No Ecosystem:

No doubt the government of India is taking measures to promote entrepreneurship as a career by conducting awareness camps in university campuses to create awareness among educated people to take up entrepreneurship as their career. But the educated people want an easy life and to earn their livelihood through well placed jobs through campus interviews. Their mind is not bent towards risk taking ventures.

3. Bureaucratic Red-Tape:

Red-tape in officials and corruption in bureaucracy is very common and the first line entrepreneurs have to face trouble in starting their venture and get frustrated and go for other jobs.

4. Revamping Education:

Education, innovation and entrepreneurship must go hand in hand. The present education system should be re-designed so that the entrepreneurial education must be given from the primary standard of education and innovative knowledge must be injected into young minds from the secondary level of education, so that when the student reaches college level he will be in a position to think of his career as entrepreneur. Recently the Government of India has introduced a course in Environmental Science at college level to create awareness about the environment.

This only created an additional burden on students. Introducing the subject at college level will never create awareness about the environment, because the mature minds will not give much importance to it. If environmental science is made a subject from primary level, at least in another 20 years we can expect a generation with full awareness of the environment. Similarly, if we want entrepreneurship as a career, young minds must be prepared to accept entrepreneurship as a career. And the parents also encourage their children to take up entrepreneurship as his livelihood.

5. Lack of Good Mentors:

There are no good mentors for mentoring the next generation of entrepreneurs. We have business schools, industrial corporations etc. Their work is routine in nature and goal oriented. Hence, India needs committed, purposeful mentors to develop entrepreneurship in India.

Frequently asked Questions on Entrepreneurship

Q1. Who is an entrepreneur?

Ans. Entrepreneur is considered as “an individual who bears the risk of operating a business in the face of uncertainty about the future conditions”. An entrepreneur is one who innovates, raises money, assembles inputs, chooses managers and sets the organisation going with his ability to identify them.

Q2. What is entrepreneurship?

Ans. Entrepreneurship is a composite skill that is a mixture of many qualities and traits such as imagination, risk taking ability to harness factors of production, i.e., land, labour, technology and various intangible factors. Entrepreneurship culture implies a set of values, norms and treats that are conducive to the growth of entrepreneurship. Entrepreneurship can be defined as the propensity of mind to take calculated risk with confidence to achieve a predetermined business or industrial objective. That points out the risk-taking ability of the individual coupled with correct decision-making.

Q3. What are some important characteristics of entrepreneurship?

Ans. Some important characteristics of entrepreneurship are:-

Economic Activity
Purposeful Activity
Creative Activity
Risk Taking
Dynamic Function
Organizing Function
Gap-Filling Function

Q4. Why do we need entrepreneurship?

Ans. We need entrepreneurship because it provides innovation, the lifeline of the nation, growth of the economy, increased profits, social benefits and employment opportunities.

Q5. What are some important qualities of an entrepreneur?

Ans. Some important qualities of an entrepreneur are:-

Strong Desire to be a Winner
‘Stick-to-it’ Quality
Moderate and Calculated Risk-Taking
Alertness to Opportunities—Seizing and Converting them to your Advantage
Analytical Ability
Using Feedback
Hope for Success
Independence
Systematic Planning
Coping with Stress
Positive Self Concept

Q6. What are the important functions of an entrepreneur?

Ans. The important functions of an entrepreneur are:-

Innovation
Risk-bearing
Organising

Q7. What are the steps in the process of entrepreneurship?

Ans. The steps in the process of entrepreneurship are:-

Self-Discovery
Identifying Opportunities
Generating and Evaluating Ideas
Planning
Raising Start-Up Capital
Start-Up
Growth
Harvest

Q8. What are the benefits of entrepreneurship?

Ans. The benefits of entrepreneurship are:-

Opportunity to Create Own Destiny
Opportunity to Make a Difference
Opportunity to Achieve Full Potential
Opportunity to Reap Impressive Profits
Opportunity to Contribute to the Society and Recognition
Opportunity to Do What You Enjoy