ECT474 ENTREPRENEURSHIP

Dr. Anagha E G
Assistant Professor, Dept. of ECE, ASIET
 Syllabus
Module I
• Entrepreneurship: definition, requirements to be an entrepreneur,
entrepreneur and intrapreneur, entrepreneur and manager, growth of
entrepreneurship in India, women entrepreneurship, rural and urban
entrepreneurship.
• Entrepreneurial Motivation: motivating factors, motivation theories-
Maslow’s need hierarchy theory, McClelland’s acquired need theory,
government’s policy actions towards entrepreneurial motivation,
entrepreneurship development programmes.
 Entrepreneurial Motivation
• "Entrepreneurs are driven more by their own inner drive rather than by
external conditions.” -National Knowledge Commission.
• "What lies behind us and what lies before us are small matters to what
lies within us.“ -Ralph Waldo Emerson
 Motivation
• Latin word movere, which means "to
move“.

• Motive is an inner state of our mind

that moves or activates or directs our
behaviours towards our goals.

• Motivation is defined as “the

managerial function of ascertaining the
motives of subordinates and helping
them to realise those motives.”
• According to Fred Luthans (2010: 15), "Motivation is a process that starts with a
physiological or psychological deficiency or need that activates behaviour or a
drive that is aimed at a goal or incentive."

• Stephen P. Robbins (2010) defines motivation as “the willingness to exert high

levels of effort toward organizational goals, conditioned by the effort and ability to
satisfy some individual need.“

• Gray and Starke (1988: 104), "Motivation is the result of processes, internal or
external to the individual that arouses enthusiasm and persistence to pursue a
certain course of action."
 Entrepreneurial Motivation

• Defined as the process that activates and motivates the

entrepreneur to exert higher level of efforts for the achievement of
his/her entrepreneurial goals.

• Forces or drive within an entrepreneur that affect the direction,

intensity, and persistence of his / her voluntary behaviour as
entrepreneur.
• "While an organization is like a vehicle, entrepreneurships as driving
and the entrepreneurial motivation as fuel or power that makes the
organizational vehicle move or run."
• Motivation is internal to man.

• A Single motive can cause different behaviours.

• Different motives may result in single behaviour.

• Motives come and go.

• Motives interact with the environment

 ENTREPRENEURIAL MOTIVATING FACTORS

• Factors that motivate entrepreneurs to start enterprises

• 'push' (compulsion) and 'pull' (choice) factors
• Internal and external factors
• Internal Factors
• Desire to do something new.
• Become independent.
• Achieve what one wants to have in life.
• Be recognized for one's contribution.
• One's educational background.
• One's occupational background and experience in the relevant field.
• External Factors:

• Government assistance and support.

• Availability of labour and raw material.

• Encouragement from big business houses.

• Promising demand for the product.

• Factors motivating Entrepreneurs By B Murthy

• Ambitious factors

• Compelling factors

• Facilitating factors
 Self-Actualization
• Proposed by
• Kurt Goldstein
• Its is an individual's motive to transform his/her perception of self
into reality
• Abraham H. Maslow.
• It is the acme of human motivation to become or achieve what one
can.
• McClelland
• (i) a desire to achieve one's own targets
• (ii) desire to excel in comparison with others.
 Nature of Work

• Loaded by two components

• Desire to contribute to the good of society
• Enjoyable work
 Autonomy and Power Motive
• Autonomy implies freedom to decide about one's own matter.
• Two factors: "desire for independence" and "temperament fit between
self and business."
• Desire for independence (read as autonomy) is the prime motivator of
entrepreneurial behaviour

• Power Motive
• "desire to preside over a big business" and "flexibility of balancing work
and family life."
 Status Motive

• Standing or place of people in their society.

• Two components
• "desire for reputation and recognition" and "desire to take family
business to new heights."
 Affiliation Motive

• Affiliation refers to belongingness→ Belongingness implies

one's obligations, commitment toward the people he/ she
values

• Desire to provide greater comfort to the family" and "desire

to give financial security to one's kins
 Deontic Motive
• 'deont' means duty'
• Defined by a single component, namely, "to do business
because it is one's duty."
 THEORIES OF ENTREPRENEURIAL MOTIVATION

• Theories particularly relevant to entrepreneurship

• Maslow's Need Hierarchy Theory (1943: 370-396)
• McClelland's Need for Achievement Theory (1961)
 Maslow’s Hierarchy needs theory for entrepreneurship development

• Based on human needs

• Needs are classified into a

sequential priority from the
lower to the higher.
Maslow’s Hierarchy needs theory for entrepreneurship
development
• Physiological needs: These are the basic needs of human life. It
includes needs for food, clothing, shelter, air, water and other
necessities of life. An entrepreneur is also a man. He also needs to
meet his physiological needs. Hence, he/she is motivated to work in
the enterprise to meet the basic needs. In order to survive as an
individual and as a species, these needs are the very basic ones and,
therefore, are first on the hierarchy.
• Safety and security needs: After satisfying the physiological needs,
the next needs felt are called safety and security needs. These are the
needs for economic security and protection. from physical dangers.
Meeting these needs requires more money. And hence, the
entrepreneur is promoted to work more in his enterprise. Like
physiological needs, these become inactive once they are satisfied.
Safety can be somewhere to stay out of the elements.
• Social needs: All individuals want to be recognized and
accepted by others. Likewise, an entrepreneur is motivated to
interact with fellow entrepreneurs, his employees and others.
• Esteem needs: These needs refer to self-esteem and self-
respect. In the case of entrepreneurs, the ownership and self-
control over enterprise satisfies their esteem needs by giving
them status, respect, reputation, and independence.

• Self-actualization: This refers to self-fulfilment. An

entrepreneur can achieve self-actualization in being a
successful entrepreneur.
 McClelland's Need for Achievement Theory

• A person feels three types of

needs as a result of one’s life
experience
• Need for affiliation

• Need for Power

• Need for achievement

ECT474 ENTREPRENEURSHIP Dept. Electronics and Communication Engineering
• Need for affiliation: These are the needs to establish and maintain
friendly and warm relations with others. A person with a high need for
affiliation derives pleasure from being loved by all and tends to avoid
the pain of being rejected.
• Need for Power: This means one’s desire to dominate and influence
others by using physical actions. The people with high power needs
seek high-level positions in the organization, so as to exercise
influence and control over others.

• Need for achievement: McClelland found that some people have an

intense desire to achieve. This refers to one’s desire to accomplish
something with own efforts.
 Government’s Policy actions towards Entrepreneurial
Motivation
• After independence, planned efforts were made in India for the development
of entrepreneurship and progressive and practical industrial policies were
formulated.
• Declaration of Progressive Industrial Policies
Established various institutions like
• SIDO (State International Development Organizations)
• National Small Industries Corporation ltd.,
• Small Industries Extension Training Institution
• National Entrepreneurship
• Small Business Development Institute
• Entrepreneurship Development Institute of India (EDII)
• Simplification of Licensing Procedure
• License obtaining procedures and various related formalities have
been simplified
• the time taken in obtaining licenses has been substantially reduced.

• Liberal Economic Policies

• Export-import policy, taxation policy, fiscal policy, and monetary
policy, etc
• Development of Industrial Estates/Areas
• The government has attracted the entrepreneurs to establish new industries in these
industrial areas by providing facilities of land, transportation, banks, warehouses,
water, and electricity, etc.

• Development of Training Facilities

• Development of Technical and Vocational Education

• technical and vocational education at the level of schools, colleges and
universities have been introduced

• Establishment of Science and Technology Parks

• Organization of Seminars and Workshops

• National Awards

• Declaration of Product Wise Polices

• Establishment of Entrepreneur Assistance Unit

• Special Schemes
• guarantee scheme for small industries
• margin money scheme
• rehabilitation of sick unit scheme
• government purchase scheme
• the scheme for the availability of machinery to entrepreneurs
• Development of Women Entrepreneur

• Preparation of Industrial Maps

• Establishment of Financial Institutions

• Availability of Subsidies

• Export Promotion Programmes

• Self Employment Scheme

• Special Incentive Schemes for Small Entrepreneurs

• Increase in Research and Development Expenditure

• Quick Approval of Project Reports

• Startup India
Make In INDIA

• Make in India (MII) was one of the first 'Vocal for Local' initiatives that
introduced the world to India's manufacturing sector.

• The Make in India initiative has made significant progress and is now
focusing on 27 sectors under Make in India 2.0
 Entrepreneurship Development Programmes

• “ Entrepreneurs are made, not born”.

• Entrepreneurship Development Programme (EDP) is a programme

which helps in developing the entrepreneurial abilities.

• The skills that are required to run a business successfully is developed

among the people through this programme.

• Sometimes, people may have skills but it requires polishing and

incubation.
• Small Industries Extension and Training Institute (SIET 1974), now
National Institute of Small Industry Extension Training (NISIET),
Hyderabad defined EDP as
• "an attempt to develop a person as entrepreneur through structural training.
The main purpose of such entrepreneurship development programme is to
widen the base of entrepreneurship by development achievement motivation
and entrepreneurial skills among the less privileged sections of the society."
• According to N. P. Singh (1985),
• "Entrepreneurship Development Programme is designed to help an individual
in strengthening his entrepreneurial motive and in acquiring skills and
capabilities necessary for playing his entrepreneurial role effectively. It is
necessary to promote this understanding of motives and their impact on
entrepreneurial values and behaviour for this purpose."
 Need for EDP’s

• Traits or competencies are underlying characteristics of the

entrepreneurs which result in superior performance.

• People appreciate the need for and importance of the entrepreneurial

training to induce motivation and competence among the young
prospective entrepreneurs
 Objectives of EDP’s
• Develop and strengthen their entrepreneurial quality
• Analyse environmental set up relating to small industry and business
• Select product
• Formulate project for the product
• Understand the process and procedure
• Know the sources of help and support available
• Acquire the necessary managerial skills
• Appreciate the needed entrepreneurial discipline
 Other important objectives
• Let the entrepreneur set or reset the objectives and strive for their
realization
• Prepare to accept the uncertainty involved
• Enable to take decisions
• Develop a broad vision
• Make him subscribe to industrial democracy
• Develop passion for integrity and honesty
• Make him learn compliance with Law
 Course contents and Curriculum of EDP’s
• General introduction to Entrepreneurship
• Factors affecting small scale industries
• the role of entrepreneurs in economic development
• entrepreneurial behaviour
• the facilities available for establishing SSI
• Motivation training
• Efforts are made to inject confidence
• positive attitude and behaviour among participants towards business
• Management skills-
• Knowledge of managerial skills enables an entrepreneur to run his/her
enterprise smoothly and successfully.
• Support system and Procedure
- support available from different institutions and agencies for setting up
and running small scale enterprises

• Fundamentals of Project Feasibility study

• provide guidelines on the effective analysis of feasibility or viability of
the particular project.

• Plant visits
• to familiarize the participants with real life situations in small business
,plant visits are also arranged
 Phases of EDPs

• Pre- training phase

• Training phase

• Post- training phase

 PRE- TRAINING PHASE
• Selection of entrepreneurs
• Arrangement of infrastructure Tie-up of Guest faculty for the training
purposes
• Arrangement for inauguration of the programme
• Selection of necessary tools and techniques
• Formation of selection committee
• Arrangement for publicity and campaigning
• Development of application form
• Finalization of training syllabus-Pre-potential survey of opportunities
available
• Selection Procedure for EDP Trainees
• Psychological tests like Thematic Appreciation Tests (TAT), risk-taking,
personal efficiency;
• Finding out the social-economic/educational background of the candidates;
• Personal interviews.

• Assessment the suitability of the trainees

• Analysis of the application blank
• Psychological tests
• Group planning exercise (added dimension)
• Personal interview
 Psychological Tests

• TAT (Thematic Appreciation Test)

• It is basically a semi- projective test in the sense that in this test six
deliberately thematic pictures are shown the candidate for a short period of
usually 30 seconds.
• the candidate is asked to write a story about each picture within a short time of
five minutes.
• Ring Toss Game
• Blind Risk-takers (BR)
• Calculated and Moderate Risk-takers
• Low Risk-takers (LR)
• Locus of Control
• administering a well structured and developed questionnaire consisting of 29
pairs of statements representing internal and external locus of control
 TRAINING PHASE
• Need for achievement :A trainer should see the following changes in
the behaviour of the trainees
• attitudinally tuned very much towards his proposed project ideas
• motivated to plunge into entrepreneurial career and bear risk
• How should he behave like an Entrepreneur
• What kinds of Entrepreneurial traits he lacks the most
• Whether he possess the knowledge of technology and resources
• Does he possess the required skill in selecting the viable product; mobilizing
the required resources at the right time
 POST-TRAINING PHASE: (Follow-up)

• Review the pre-training work

• Review the process of training programme

• Review past training approach

 Assessing the Effectiveness of EDPs
• Activity level of the respondents
• New enterprise established
• Total investments made
• Investments in the fixed assets made
• Number of people employed
• Number of jobs created Increase in profit
• Increase in sales
• Quality of product/ service improved
• Quicker repayment of loans
 EDPs measured with Entrepreneurial behaviour

• Planning orientation

• Achievement orientation

• Expansion orientation

• Management orientation
 Problems faced by EDP
• Trainer motivations are not found up to the mark in motivating the trainees
to start their own enterprises.

• ED organizations lack in commitment and sincerity in conducting the EDPs

• Non conducive environment and constraints make the trainers-motivator

role ineffective.

• The antithetic attitude of the supporting agencies.

• Selection of wrong trainees also leads to low success rate of EDP