ENTREPRENEURSHIP

ENTREPRENEUR: The word entrepreneur is derived from the French verb enterprendre. It means “to undertake”.

An entrepreneur is a person responsible for setting up a business or an enterprise. He is one who has the initiative, skill for innovation and who looks for high achievements. He is a catalytic agent to change and works for the good of the people

ENTREPRENEURSHIP: is the propensity of mind to take calculated risks with confidence to achieve a pre-determined business or industrial objective. It is the risk taking ability of the individual broadly coupled with correct decision making.

Nature & characteristics of entrepreneurship:

It is distinct process It is purposeful activity It is an individual or a group activity It is future oriented activity Innovation and creativity is involved Proactiveness is necessary He should be able to exploit change into opportunity Risks and rewards are involved Organizing abilities are involved Facilitates social and economic development

The entrepreneur is one of the most important inputs in the economic development of the country or of regions within the country. Enterprenual competence makes

all the difference in the rate of economic growth.

Role and significance of Entrepreneurship management:

Economic Development Social development Regional Development Capital formation

Foreign Exchange Reduction in income inequalities Revenue to government Facilitates competition Consumer Welfare

Theories of Entrepreneurship:

The concept and theories of entrepreneurship evolved over more than two centuries have undergone major changes. As the concept of entrepreneurship is complex in its content , it is influenced by not only economical aspects but also by psychological, political, social, ethical, regional and cultural values. The concept also bears testimony to courage , creativity , determination , and hard working etc.

The distinctive features of entrepreneurship are Innovation A function of high achievement Organization buildings Group level activities Managerial skills and leadership Gap filling Status withdrawal Enterpreunal supply

Theories of entrepreneurship are broadly classified into Economic, Psychological ,sociological and Cultural .

1. THE ECONOMIST VIEW:

According to the economist view entrepreneurship and economic growth will take place in those situations where particular economic conditions are most favourable.

B.c. Tandon descirbes the function of entrepreneur in a developing economy in the context of environmental forces i.e. economical , rural, political , and cultural. Accodingly entrepreneur posess:a. Ability of organization and administrationb. Ability to marshall resourcesc. Technological knowledge , alertness to know opportunities , willing to accept change d. Capacity to consume riskMark casson states the relationship between demand and supply for entrepreneurs. He said

Demand for entrepreneurship is huge, and this is because of environmental change. Only entrepreneur can identify these changes and make them into opportunity.

The supply of entrepreneurship is limited due to scarcity of requisite personal qualities needed for being an entrepreneur.

Mark Casson suggested that there are various qualities required for an entrepreneur to be successful. The main qualities are imagination , which is inborn . the other qualities can be enhanced through experience and learning.

2. THE DYNAMIC THORY OF ENTERPRENEURSHIP:

This theory was first advocated by Joseph Schumpeter in 1949 who considered entrepreneurship as a catalyst that disrupts the stationary circular flow of the economy and thereby initiates and sustains the flow of development, embarking upon ‘new combinations’ of factors of production. So entrepreneur is an innovator. According to him innovation can take place in 5 forms

Introduction of new goods Introduction of new method of production Opening of new market Conquest of new source of supply of raw materials Carrying out of a new organization of any industry.

His concept of innovation included the elements of risk taking, suprintendence and co-ordination.

3. X-EFFICIENCY THOERY:

This theory was originally developed for a purpose and was adapted recently to analyze the role of an entrepreneur ( Leibenstein 1968)

The term X-efficiency refers to the degree of inefficiency in the use of resources within the firm, it measures the extent to which the firm fails to realize its productive potential.

Leibenstein states that two roles of an entrepreneur:

Entrepreneur as Input provider, in order to improve the efficiency of the firm

Entrepreneur as a gap filler

4. THEORY OF HIGH ACHIEVEMENT:

McClelland identified two characteristics, namely doing things in a new and better way and ‘decision-making under uncertainty’. McClelland there is a relationship between interest in profit and need for achievement.

Persons with high achievement are less influenced to profit or monetary rewards as compared to persons with lower need for achievement

For persons with profit is merely a measure of success and competency and not an unlimited goal.

5. THEORY OF PROFIT:

Knight identifies the entrepreneur as a recipient of pure profit . He identifies uncertainty with a situation where the profitability’s of alternative outcomes cannot be determined either by a priori reasoning or by statistical

interference. A priori reasoning is simply irrelevant to economic situation involving a unique event.Knight argues that business uncertainty can be reduced through ‘consolidation’. Consolidation is to uncertainty what insurance is to risk; it is a method of reducing total uncertainty by pooling individual instances .

6. THEORY OF ADJUSTMENT OF PRICE:

Krizner developed the theory of adjustment of price. He said that it is the main role of the entrepreneur . If the wrong price prevails in the market , than an opportunity for profit is create some where if a frustrated buyer or a seller is willing, respectively to pay a higher price or accept a lower one.

7. THEORY OF SOCIAL CHANGE:

Everett Hagen, said changes in personality (creative) of an entrepreneur facilitates economic growth. He views the entrepreneur as a creative problem solver interested in things practical and technological realm, and its driven by a duty to achieve.

Hagen considers the withdrawal of status as a trigger mechanism for the changes in personality formation. He postulates four types of

.