1

A. Swarnalatha

  1. INTRODUCTION

Entrepreneur is the most important factor in the process of economic development. He occupies the central place in the growth process because he initiates development in a society and carries it forward. Even though the words entrepreneur, entrepreneurship looks similar in meaning, both are different in their actual meaning.

2. LEARNING OBJECTIVES

At the end of this module, the learners will be able to

• State the meaning and difference of entrepreneur and entrepreneurship.
• Describe the functions and characteristics of entrepreneur and  entrepreneurship.

   3.  ENTREPRENEUR

Entrepreneur is a change agent and he/she is the first and foremost a catalyst for change. In general, the person who runs a business is termed as entrepreneur. The more accurate meaning of entrepreneur is one who perceives opportunities, use the opportunities in an own innovative way and organizes, operates and assumes the risk of a business venture.

An entrepreneur is a person who indentifies a need and organizes manpower, material and capital required to meet that need. The function that is specific to entrepreneur is the ability to take the factors of production-land, labour and capital and use them to produce new goods or services.

4. CONCEPT OF ENTREPRENEUR

The word entrepreneur is derived from the French word entreprendre and its literal meaning is “to undertake”. Undertaking of enterprise is regarded as entrepreneurship and one who undertakes it- one who coordinates capital and labour for the purpose of production is an entrepreneur.

5. DEFINITION OF ENTREPRENEURS

The French economist Cantillon, the first to introduce the term entrepreneur, defined him as an agent who buys means of production at certain prices in order to combine them into a product that he is going to sell at prices that are uncertain at the moment at which he commits himself to his costs.

In this definition, Cantillion emphasized the function of risk taking and uncertainty bearing. The entrepreneur is designated as a dealer who purchases the means of production for combining them into marketable products.

Entrepreneurs perform a core function in economic development. They are referred as the human agents needed to “mobilize capital, to explore resources, to create markets and to carry on trade”. It might well be said that the entrepreneurial input spells wealth of a nation.

Number of theories have evolved to emphasize the significant role performed by an entrepreneurs. Joseph.A.Schumpeter, the first major writer who highlights the role of human agent in the process of economic development defined “entrepreneur as an individual who carries out new combines of means of production by which there occurs disequilibrium”.

He believed that the person “who aspired to promote new goods and innovative methods of production or to exploits novel sources of resources or new market” not merely for profit but also for the purpose of creating is prime agent to improve the economy of a nation. Schumpeter used the word innovation and emphasized innovation as the core function of an entrepreneur. Innovation may occur in the following forms:

The introduction of new goods-that is one which consumers are not yet familiar or of a new quality of a good

The introduction of a new method of production that one not yet tested by experience in the branch of manufacturing which no means be founded upon a discovery scientifically new. It can be a new way of handling commodities which already exists.

The opening of a new market that is entering a new market into which the company has not entered earlier whether or not it exist earlier.

The conquest of new sources of supply of raw materials or half manufactured goods irrespective of whether this source already exist or whether it has first to be created

The carrying out of the new organization of any industry, like the creation of a monopoly position or the breaking of a monopoly position

The entire change and development to the civilization to a large extent is the result of trade, commerce and industrialization. In this development, the entrepreneurs play a significant role. In general an entrepreneur is neither a financier or technician but he is an innovator.

6. MAJOR TASK OF ENTREPRENEURS

The entrepreneur performs four major tasks. They are,

• Exchange relationship
• Practical administration
• Management control and
• Technology

    6.1.EXCHANGE RELATIONSHIP

(a)Identifying opportunities in market

(b)Gaining command over limited resources

(c)Purchasing inputs

(d)Marketing of products and responding to competition

6.2. PRACTICAL ADMINISTRATION

(a)  Dealing with public bureaucracy.

(b)  Management of human relations with in the venture.

(c) Management of customer and supplier relations.

6.3.MANAGEMENT CONTROL

(a)  Financial Management

(b)  Production Management.

6.4.TECHNOLOGY

(a)  Acquiring and overseeing assembling of the factory.

(b)  Industrial engineering.

(c)  Upgrading process and product quality.

(d)  Introduction of new production techniques and products

7. FUNCTIONS OF AN ENTREPRENEUR

An entrepreneur expected to perform the following broad functions.

7.1. INNOVATION

Innovation implies not only creating new things; it is also means doing already existing things in a new way. However, there is distinction between creativity and innovation. Creativity is the ability to bring something new into existence. Practically it is the ability not the activity of bringing something new into existence. The ideas generated in the mind of a man have little value until they are converted into new products, services or processes. But “innovation is the transformation of creative ideas into useful applications but creativity is a prerequisite to innovation”. Innovation is the development process. It translates an idea into an application. New innovations are required to grow our national economy.

7.2. RISK –TAKING

The risk is the condition of not knowing the outcome of an activity or decision. Risk taking is the specific function of an entrepreneur. Two types of risks are there – insurable and non-insurable.

The possibilities of changes in the preference of the customers, techniques of production and so on are the non-insurable risks. These risks are often due to uncertainty.

Actually business game consists of great risks and rewards are also great when risks are successfully covered. The ability to perform services and the risks involved are inseparable. Therefore for successfully covering the risks highest order of ability is required.

7.3. ORGANISATION AND MANAGEMENT

The process of organization and management includes planning of an enterprise co-ordination, control and supervision.

To run the business effectively, the entrepreneurs need to develop a effective system of organization and management. They have to interact with the employees directly and have to exchange information about what is going on in the firm.

They tend to be directly involved in their organisational’s operational activities to ensure effective control. They are expected to formulate plans, production strategies, financial management and develop marketing channels and management of personnel.

7.4. BUSINESS DECISIONS

All decisions related to the business are taken by the entrepreneur. The decisions with regard to what to produce, how to produce and for whom to produce are to be taken by the entrepreneur.

Once the entrepreneur is convinced with the particular line of production which has large prospects of profit, he has to formulate best possible action plan which would earn him sizable profit. Selection of human resource, location, capital investment, market strategies and everything that is needed for the development business has to be decided by the entrepreneur.

The entrepreneur is an institution himself and he performs functions related with organization development and management control. He is supposed to bear the risk, manage, innovate organize and take decisions with regard to his business empire.

8.  GENERAL KINDS OF ENTREPRENEURS

• Innovative entrepreneurs
• Imitating entrepreneurs
• Fabian entrepreneurs
• Drone entrepreneurs
• Social entrepreneur

  8.1. INNOVATIVE ENTREPRENEUR

The innovative entrepreneurs are high motivated and talented and is able to foresee potentially profitable opportunities. They are those who may raise money to launch an enterprise, assemble the various factors, select top executives and set the organizational operational. They are who always search for change, responds to it and crab it as the opportunity.

They identify the opportunity for introducing a new technique or a new commodity or a new market with which the consumers are not familiar or introduce creative change in already existing products.

They are quite aggressive in experimentation and putting attractive or viable possibilities into practice. Thus, innovative entrepreneurs are one who believe in introducing new goods, adopt new method of production, develop new market and restructure the organization under their command

The innovative entrepreneur is need not be a inventor, he must have the ability to transfer the inventors ideas into economic performance.

8.2.IMITATING ENTREPRENEURS

These entrepreneurs are those entrepreneurs who are unable to innovate the changes themselves but they are capable enough to imitate the techniques and technology innovated by innovating entrepreneurs.

These types of entrepreneurs are always ready to adopt successful innovation executed by innovating entrepreneurs.

Developing economies and underdeveloped economies need this type of entrepreneurs. These imitating entrepreneurs have the capacity to adjust the new technologies with respect to their conditions.

8.3.FABIAN ENTREPRENEURS

Fabian entrepreneurs are neither having a will to introduce new change nor the desire to imitate the new technology. They are always believe in tested routes of production and not interested in taking risk. Actually they are habitutal of following the paths directed by earlier entrepreneurs.

Their dealing are guided by the customs, religion, tradition and past practices. They avoid in taking challenges in production system and that is why they are unable to maximize the fruits of entrepreneurial actions.

8.4.DRONE ENTREPRENEUR

Drone entrepreneurs always follow the traditional methods of production. These entrepreneurs are those who are not inclined to bring changes in their production system as demanded by the change in consumer preferences, technological innovation, economic and social behavior of the prospective customers.

Market always provides opportunities to the entrepreneurs but this type of entrepreneurs generally fail to use these opportunities in profitable way. Due to this reason they fail to earn profit or even suffer loss

8.5.SOCIAL ENTREPRENEUR

Social entrepreneurs are driven by social innovation and transformation in different fields including education, health, poverty, environment etc. He identifies a problem in the society and takes that as an opportunity and finds solution through his enterprise activity.

His primary objective is not profit; it is to solve a social problem. In other enterprises, the primary objective is the profit, but for the social enterprise, profit is the secondary objective.

The entrepreneurs are also classified based on their business, motivation, growth, stages in development.

9.CLASSIFICATION BASED ON BUSINESS

9.1.BUSINESS ENTREPRENEURS: These types of entrepreneurs convert their ideas into reality and deals with both manufacturing and trading aspects of business.

9.2.TRADING ENTREPRENEURS: These types of entrepreneurs deals with trading of commodities in domestic market as well as international market.

9.3.INDUSTRIAL ENTREPRENEUR: The entrepreneurs under take manufacturing activities only is termed as industrial entrepreneurs. They develop new technology and new products. (Eg.Textile , electronic industries)

9.4.CORPORATE ENTREPRENEUR: Corporate entrepreneurs develop new ideas and opportunities within large or established businesses, directly leading to the improvement of organizational profitability and an enhancement of competitive position or the strategic renewal of an existing business. (Ambani, TATA families)

9.5.AGRICULTURE ENTREPRENEUR: The entrepreneurs deal with production of agriculture inputs and outputs are termed as agriculture entrepreneurs. (eg.Dairy, horticulture )

10. CLASSIFICATION BASED ON MOTIVATION

10.1.PURE ENTREPRENEURS: Pure entrepreneurs are motivated by psychological and motivational rewards.

10.2.INDUCED ENTREPRENEURS: Induced entrepreneurs are motivated by the benefits, subsidies and incentives offered by the government schemes on entrepreneurship development. Their business idea is induced by the concessions given through the schemes.

10.3.MOTIVATED ENTREPRENEURS: These type of entrepreneurs are motivated by the sense of achievement and fulfillment. Entrepreneurs are motivated by many things, It differs from one individual to another. Some are motivated by financial wealth, independence, society benefits or having authority.

10.4.SPONTANEOUS ENTREPRENEUR: These entrepreneurs start their enterprise with their inborn traits of initiative, vision, boldness and confidence in their ability. They are creative and innovative in nature.

11. CLASSIFICATION BASED ON STAGES IN DEVELOPMENT

11.1.FIRST GENERATION ENTREPRENEURS: The first generation entrepreneurs are the person who enters first among the family members in to business. They start their business through their own innovative skills. They do not possess business background.

11.2.SECOND GENERATION ENTREPRENEURS: These second generation entrepreneurs are those possess business family background. They take up business from one generation to other.

11.3.CLASSIC ENTREPRENEURS: A classical entrepreneur is a stereotype entrepreneur whose aim is to maximize his economic returns at a level consistent with the survival of the unit but with or without an element of growth

12. ENTREPRENEURSHIP

Entrepreneurship is the process of initiating a new venture, organizing the resources it requires and assuming the risk it entails. Though the entrepreneur and entrepreneurship are two sides of the same coin, they are different in their concept. The function performed by the entrepreneur is called as entrepreneurship. Entrepreneurship is the dynamic process of creating incremental wealth. This wealth is created by individuals who assume the major risks in terms of equity, time and or career commitment of providing value for some product or service.

According to John Kao, entrepreneurship is an attempt to create value through recognition of business opportunity, the management of risk taking appropriate to the opportunity and through the communicative and managerial skills to mobilize human, financial and material resources necessary to make a successful project.

There are three phases in entrepreneurship development. They are 

INITIAL PHASE: Indentifying the entrepreneurial opportunities based on survey reports

DEVELOPMENT PHASE: Gaining knowledge, entrepreneurial motivation and managerial skills through proper training

SUPPORT PHASE: Getting infrastructural support to establish a enterprise and to develop the existing units

13.CHARACTERISTICS OF ENTREPRENEURSHIP

Following are the main characteristics of entrepreneurship:

• Dynamic process
• Innovation
• Risk taking
• Decision making
• Organization
• Skilful management
• Gap filling

13.1.DYNAMIC PROCESS: Entrepreneurship involves a dynamic process in which new firms emerge from existing firms, grow and unsuccessful ones die. The dynamism of this process is to be evaluated in terms of the rate at which business open and close. Often the entrepreneurship is the person who recognizes the need for change and directs it. Thus , entrepreneurship is a dynamic process which recognizes the need to change and the entrepreneur becomes the key person to initiate any change.

13.2.INNOVATION: Entrepreneurship is innovation where new products and services and more efficient production techniques are introduced by the firms that have identified new market opportunities or better ways of meeting existing demands.

13.3.RISK TAKING: Risk is an inherent and inseparable element of entrepreneurship. Entrepreneurs are calculated risk takers. They like to take realistic risk because they want to be successful; that is they take great satisfaction in accomplishing difficult but realistic tasks by applying their own skills.

13.4.DECISION MAKING: Success of an enterprise depends on the entrepreneurs’ ability to make decisions which improve the future profitability of his business. Intuitive decision making ability, a most valuable entrepreneurial resource comes from years of experience of being exposed to making necessary decisions in increasingly complex situations.

13.5.ORGANIZATION: Entrepreneurship need proper planning, investigation, organization and perseverance. To start an enterprise, various factors of production need to be bring together for an economic use. All the activities involved in the entrepreneurship should be well coordinated in a organizational manner.

13.6.SKILLFUL MANAGEMENT: It refers to effective and viable management of resources of the firm. It has wide coverage of aspects of setting up objectives, goals, programmes and their management. The entrepreneur should have skill to get positive support from administrators, policy makers, bankers and financial institutions, infrastructural agencies, customer and workers.

13.7.GAP FILLING: Entrepreneurship fills the gap between the human needs and the available products and services. An entrepreneur identifies the existing gap and considers that as an opportunity and takes needed measure to fill the gap with the help of entrepreneurship process.

14.ENTREPRENEUR AND ENTREPRENEURSHIP

Even though the words entrepreneur and entrepreneurship looks similar, both are conceptually different. Entrepreneur is a person who is a visualiser, creator, innovator, decision maker, risk taker and leader.

Entrepreneurship is a process of action to be completed by the entrepreneur. It refers to a process by which entrepreneur is required to complete the innovative process by initiation new or latest technology, idea or perception.

Enterprise is the tool to achieve the objectives of entrepreneurship. Actually enterprise is a tool to pursue the business objectives and with the help of an enterprise.

15.INTRA-PRENEURSHIP

Intra-preneurship is the innovative act of developing new corporate divisions or subsidiary ventures in established larger firms. In a developed firm, the managers and employees are given freedom to explore new ideas which may be proved to as boon in future for the firm. Actullay these individuals are expected to create something new within the context of their assignments without having any responsibility of personal stake is their creations. There is no assumption of personal risk, no assumption of profit and no assumption of loss. In certain cases, the larger enterprises welcome creative or new ideas and try to motivate their managers and employees to create something new to enlarge the scope of corporate entrepreneurship.

16.SUMMARY

Entrepreneur and entrepreneurship has an important role to play in economic development of country like India. The entrepreneur is an economic leader and change agent. The degree and quality of entrepreneurship differ from entrepreneurs to entrepreneurs. Developing country like India needs more innovative entrepreneurs to solve its existing problems like unemployment and poverty.

Web links

• https://www.investopedia.com/terms/e/entrepreneur.asp
• https://www.entrepreneur.com/article/305240
• tudy.com/academy/lesson/what-is-an-entrepreneur-definition-characteristics-examples.html
• https://bizztor.com/successful-indian-entrepreneurs-stories/
• https://economictimes.indiatimes.com/slideshows/biz-entrepreneurship/
• ttps://www.youtube.com/watch?v=WmfB1h-zOaU
• https://www.youtube.com/watch?v=q0W7B68ohnA