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ENTREPRENEURIALDEVELOPMENT

UNIT-I

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WHAT IS

ENTREPRENEURSHIP?It is the creation of an innovativeeconomic organization (or net work of

organizations) for the purpose ofgain or growth under conditions ofrisk and uncertainty.

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Definition of Entrepreneurship

Knight(1921) Profits from bearing uncertsinity & risk

Schumpter(1934) Carrying out of new combinations of firmorganisation-new products, new services, newsourcs, etc.,.

Hoselitz (1952) Uncertainity bearing, coordination of productive

resources, introduction of innovation & provisionof capital

Cole (1959) Purposeful activity to initiate and develop aprofit-oriented business

McClelland (1961) Moderate risk taking

Casson (1982) Decisions and judgements about the coordinationof scarce resources

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Gartner (1985) Creation of new organisatrion

Stevenson, Roberts &Grousbeck (1989)

Pursuit of opportunity without regard toresources currently controlled

Hart, Stevenson & Dial(1995)

Pursuit of oppoortunity without rgard toresources currently controlled, butconstrained by the founders previouschoices and industry-related experience.

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Qualities of a True

Entrepreneur1. Capacity to Assume Risk2. Technical knowledge and willingness to

change

3. Ability to marshal resources4. Vision & foresight5. Imagination6. Will to conquer

7. High degree of ambition

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Types of Entrepreneurs1. Innovative Entrepreneurs:

Aggressive assembly of informationand analysis of results derived fromsound combination of factors. Found

mainly in developing countries. Playsa major role in emerging markets.

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2. Adoptive or imitative

entrepreneursImitate the technology innovatedby others. Important for UDCs. He3

is more an organizer of the fourfactors of production than a creatorof new things.

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3. Fabian EntrepreneursThey are cautious and skeptical whilepracticing any change. They neitherhave the will to introduce newchanges nor the desire to adopt newmethods innovated by the mostenterprising entrepreneurs. Their

dealings are determined by custom,religion, tradition and past practices.

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4. Drone EntrepreneursTraditional, laggard and refusal toadopt and use opportunities to make

changes. When their products losesmarketability and their operationsbecome uneconomical they arepushed out of the market.

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Other Types Individual and Institutionalentrepreneurs

Entrepreneurs by Inheritance Technologist entrepreneurs

Forced entrepreneurs

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Role of Entrepreneurship inEconomic Development

ED means a process of upwardchange whereby the real percapitaincome of a country increases over a

long period of time.

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What causes economic

development

?

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HowRole played by entrepreneurs towards

ED varies depending upon theMaterial resources

Industrial climate

Responsiveness to the political system

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Under developed regionscharacterized by

1. paucity of funds

2. lack of skilled labour3. minimum existence of social &economic overheads

So here Entrepreneurs are imitatorsand not innovators

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Imitation of innovations in suchregions can bring about rapid

economic development. So imitativeentrepreneurs constitute the mainspring of development of

underdeveloped regions.

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Case with IndiaDecentralized industrial structure helps in

overcoming regional imbalance in ED.Small scale entrepreneurs plays a crucialrole in bringing balanced regionaldevelopment. SSIs provide

Immediate large scale employment Ensure equal distribution of resources &

national income

Mobilization of capital & skill

F t i fl i

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Factors influencingEntrepreneurship

The factors can be listed under 5broad areas.1. Socio-demographic2. Economic variables3. Variables of systemic linkage4. Latent characteristics5. Bio-characteristics of

entrepreneurs

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oc o- emograp cvariables

Education & technicalqualification

Emigration

Familybackground

Previousoccupation

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Economic variables

Ancestralproperty

Priorincome

Initialinvestment

Profit

utilization

LevelOf

living

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linkage

Systematic linkage comprises

expert & official contacts mutual help political affiliation social participation and personal trainingwhich influences entrepreneurs. The National Institute of Community

Development, Hyderabad, has mentioned about 2 pre-requisitesfor achieving success in establishing growth of an industry.

Contacts at higher social and governmental levels Availability of expert technical advice and guidance at all stages of

development of an industryBoth the factors are vulnerable for entrepreneurial development and

ED.

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Latent characteristicsAn entrepreneur becomes an acceptedleader of industry, if he exhibits latentqualities, a personality that shows up theelements on him-

InnovativenessRisk-bearingSelf-relianceEagerness to evaluate enterprise

Fixing long & short term goals

t st s

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o-c aracter st cs oentrepreneurs

Bio-characters that gene4rally influence anentrepreneur are

AgeMarital statusReligionCommunity

Maximum number of entrepreneurs are in the agegroup of 33

Marital status throws up challenges and stimulationsfor one to develop entrepreneurial qualities in thecourse of fulfilling family responsibility. So it is

conducive for entrepreneurial developmentCaste & religion to which a person is affiliated serve

as one of the contributory factors toentrepreneurial development.

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Functions of an

EntrepreneurCan be done as a seminar by RRN nosAmaravathi and Abdullah

E t ( i l)

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Entrepreneur-(managerial)-Kilby

1. Perceiving market opportunities2. Gaining command over scarce resources3. Purchasing inputs4. Marketing of the products & responding to competition5. Dealing with the public bureaucracy6. Managing HR within the firm

7. Managing production8. Acquiring & overseeing assembly of the factory9. Industrial engineering10. Upgrading process and product quality11. Introducing new production techniques and products

Categorized as :(1-4)-exchange relationship, (5-7)-politicaladministration, (8-9)-management control, (10-13)-technology

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Functions- Arthur H.Cole1. Fixing objectives & changing it with time2. Efficient superior subordinate

relationship3. Securing adequate financial resources4. Employing technology effectively5. Development of a market by devising new

products & anticipating consumers

demand6. Maintaining good public relationship

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Main entrepreneurial

functions1. Innovation2. Risk taking

3. Organization building

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Entrepreneurial cultureIt implies a set of values, norms and traits

that ate conducive to the growth ofentrepreneurship. It is the corporateculture that focuses on the emergence ofnew opportunities, the means ofcapitalising on them, and creation ofstructure appropriate for pursuing them.This must be different from

administrative culture.

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An ideal administrtor would ask

What resources do I control

What structure determines ourorganistions relationship to itsmarket

How can I minimise the impact ofothers on my ability to perform

What opportunity is appropriate

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An ideal entrepreneur would ask

Where is the opportunityHow can I capitalise on it

What resources do I need

How do I gain control over themWhat structure is best