ENTREPRENEURIAL ENTREPRENEURIAL DEVELOPMENTDEVELOPMENT

ENTREPRENEURIAL ENTREPRENEURIAL DEVELOPMENTDEVELOPMENT

UNIT-IUNIT-I

WHAT IS ENTREPRENEURSHIP?

It is the creation of an innovative economic organization (or net work of organizations) for the purpose of gain or growth under conditions of risk and uncertainty.

Definition of Entrepreneurship

Knight(1921) Profits from bearing uncertsinity & risk

Schumpter(1934) Carrying out of new combinations of firm organisation-new products, new services, new sourcs, etc.,.

Hoselitz (1952) Uncertainity bearing, coordination of productive resources, introduction of innovation & provision of capital

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

McClelland (1961)

Moderate risk taking

Casson (1982) Decisions and judgements about the coordination of scarce resources

Gartner (1985) Creation of new organisatrion

Stevenson, Roberts & Grousbeck (1989)

Pursuit of opportunity without regard to resources currently controlled

Hart, Stevenson & Dial (1995)

Pursuit of oppoortunity without rgard to resources currently controlled, but constrained by the founders’ previous choices and industry-related experience.

Qualities of a True Entrepreneur

1. Capacity to Assume Risk2. Technical knowledge and willingness

to change3. Ability to marshal resources4. Vision & foresight5. Imagination 6. Will to conquer 7. High degree of ambition

Types of Entrepreneurs1. Innovative Entrepreneurs:

Aggressive assembly of information and analysis of results derived from sound combination of factors. Found mainly in developing countries. Plays a major role in emerging markets.

2. Adoptive or imitative entrepreneursImitate the technology

innovated by others. Important for UDC’s. He3 is more an organizer of the four factors of production than a creator of new things.

3. Fabian Entrepreneurs

They are cautious and skeptical while practicing any change. They neither have the will to introduce new changes nor the desire to adopt new methods innovated by the most enterprising entrepreneurs. Their dealings are determined by custom, religion, tradition and past practices.

4. Drone EntrepreneursTraditional, laggard and refusal to adopt and use opportunities to make changes. When their products loses marketability and their operations become uneconomical they are pushed out of the market.

Other Types • Individual and Institutional

entrepreneurs • Entrepreneurs by Inheritance• Technologist entrepreneurs • Forced entrepreneurs

Role of Entrepreneurship in Economic Development

ED means a process of upward change whereby the real percapita income of a country increases over a long period of time.

What causes economic development

?

HowRole played by entrepreneurs

towards ED varies depending upon the

Material resourcesIndustrial climateResponsiveness to the political

system

Under developed regions

characterized by

1. paucity of funds 2. lack of skilled labour3. minimum existence of social &

economic overheadsSo here Entrepreneurs are imitators

and not innovators

Imitation of innovations in such regions can bring about rapid economic development. So imitative entrepreneurs constitute the main spring of development of underdeveloped regions.

Case with IndiaDecentralized industrial structure helps in overcoming regional imbalance in ED. Small scale entrepreneurs plays a crucial role in bringing balanced regional development. SSIs provide

• Immediate large scale employment• Ensure equal distribution of resources &

national income• Mobilization of capital & skill

Factors influencing Entrepreneurship

The factors can be listed under 5 broad areas.

1. Socio-demographic2. Economic variables3. Variables of systemic linkage4. Latent characteristics5. Bio-characteristics of

entrepreneurs

Socio-demographicvariables

Education & technical qualification

Emigration

Familybackground

Previous occupation

Economic variables

Ancestralproperty

Prior income

Initialinvestment

Profitutilization

Level Of

living

Variables of systemic linkage

Systematic linkage comprises • expert & official contacts• mutual help• political affiliation• social participation and • personal training which influences entrepreneurs. The National Institute of

Community Development, Hyderabad, has mentioned about 2 pre-requisites for 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.

Latent characteristicsAn entrepreneur becomes an accepted leader of industry, if he exhibits latent qualities, a personality that shows up the elements on him-

InnovativenessRisk-bearingSelf-relianceEagerness to evaluate enterpriseFixing long & short term goals

Bio-characteristics of entrepreneurs

Bio-characters that gene4rally influence an entrepreneur are

AgeMarital statusReligionCommunityMaximum number of entrepreneurs are in the age

group of 33Marital status throws up challenges and stimulations

for one to develop entrepreneurial qualities in the course of fulfilling family responsibility. So it is conducive for entrepreneurial development

Caste & religion to which a person is affiliated serve as one of the contributory factors to entrepreneurial development.

Functions of an Entrepreneur

Can be done as a seminar by RRN nos Amaravathi and Abdullah

Functions of an Entrepreneur-

(managerial)-Kilby1. 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 firm7. Managing production8. Acquiring & overseeing assembly of the factory9. Industrial engineering10. Upgrading process and product quality11. Introducing new production techniques and productsCategorized as :(1-4)-exchange relationship, (5-7)-political

administration, (8-9)-management control, (10-13)-technology

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 demand

6. Maintaining good public relationship

Main entrepreneurial functions

1. Innovation2. Risk taking3. Organization building

Entrepreneurial cultureIt implies a set of values, norms and traits that ate conducive to the growth of entrepreneurship. It is the corporate culture that focuses on the emergence of new opportunities, the means of capitalising on them, and creation of structure appropriate for pursuing them. This must be different from administrative culture.

An ideal administrtor would askWhat resources do I controlWhat structure determines our

organistion’s relationship to its market

How can I minimise the impact of others on my ability to perform

What opportunity is appropriate

An ideal entrepreneur would askWhere is the opportunityHow can I capitalise on itWhat resources do I needHow do I gain control over themWhat structure is best