Entrepreneurship
MODULE1
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.
Entrepreneur & Entrepreneurship
• An Entrepreneur is defined as “person in effective control of commercial
undertaking; one who undertakes a business or an enterprise”.
• Entrepreneur is an innovative person who maximizes his profits by following
new strategies or venturing into new products or services.
• Entrepreneurship is the act of being an entrepreneur, who starts any
economic activity for being self-employed.
• Entrepreneurship is the process of developing, organizing, and running a new
business to generate profit while taking on financial risk
Successful and Unsuccessful Entrepreneurs
Successful Unsuccessful
• Creative and Innovative • Poor Managers
• Position themselves in shifting or • Low work ethic
new markets • Inefficient
• Create new products • Failure to plan and prepare
• Create new processes • Poor money managers
• Create new delivery
Requirements to be an Entrepreneur
[Link] Work
o Willingness to work hard distinguishes a successful entrepreneur from
unsuccessful one.
o Most of the successful entrepreneurs work hard endlessly, especially in
the beginning and the same becomes their habit for their whole life.
“... success comes only with 10% inspiration and 90% perspiration..”
2. Desire for High Achievement
o The entrepreneurs have a strong desire to achieve high goals in business.
o This high achievement motive strengthens them to surmount the obstacles,
suppress anxieties, repair misfortunes, and devise expedients and set up
and run a successful business.
3. Highly Optimistic
o The successful entrepreneurs have a positive approach toward things.
o They do not get disturbed by the present problems faced by them.
o They become optimistic for future that the situations will become
favourable to business in future.
4. Independence
o One of the common qualities of the successful entrepreneurs has been
that they do not like to be guided by others and to follow their rules.
o They resist to be pigeonholed.
o They like to be independent in the matters of their business.
5. Foresight
o The entrepreneurs have a good foresight to know about future business
environment.
o In other words, they well visualize the likely changes to take place in
market, consumer attitude and taste, technological developments, etc.
and take necessary and timely actions accordingly.
6. Good Organiser
o Various resources required for production are owned by different owners.
o It is the ability of the entrepreneur who brings together all required
resources for setting up an enterprise and then produces goods.
7. Innovative
o Production is meant to meet the customers requirements.
o In view of the changing requirements of the customers from time to time,
the entrepreneurs initiate research and innovative activities to produce
goods to satisfy the customers changing requirements and demands for the
products.
8. Perseverance
o One of the qualities of successful entrepreneurs is that they possess and
exhibit tremendous perseverance in their pursuits.
o They do not give up their effort even if they fail.
o They undergo lots and lots of failures, but do not become disheartened.
o Instead, they take failure as learning experience and make more dedicated
and serious effort on the next time.
9. Team Spirit
o Successful entrepreneurs build teams and work with teammates.
o Working in teams creates synergy and achieves success in its endeavours.
Entrepreneur and Intrapreneur
o According to Gifford Pinchot ,“Intrapreneur is an entrepreneur within an
already established organization.”
o In big organisations, the top executives are encouraged to catch hold of new
ideas and then convert these into products through research and
development activities within the framework of organisation.
o From last few years, it has become a trend that large corporations appoint
intrapreneur within the organisation to bring operational excellence and
gain competitive advantage
Difference between entrepreneur and Intrapreneur
Entrepreneur and Manager
Contd..
Growth of entrepreneurship in India
Pre-Independence
•Handicrafts entrepreneurship in India was as old as the human civilization
itself, and was nurtured by the craftsmen as a part of their duty towards the
society.
•The elaborated caste-based diversion of workers consisted of farmers,
artisans etc. The majority of the artisans were treated as village servants.
•Organized industrial activity was observable among the Indian artisans in a
few recognizable products in the cities of Banaras, Allahabad, Gaya, Puri,
and Mirzapur which were established on their river basins. Very possibly, this
was because the rivers served as a means of transportation facilities.
o These artisan industries flourished over the period because the Royal
Patronage was to them to support them. The workshops called
‘Kharkhanas’ came to existence.
o Bengal enjoyed world-wide celebrity for corah(Indian silk), Ahmedabad
for dupattas and dhotis, Nagpur for silk-bordered cloths, Kashmir for
shawls and Banaras for metal wares.
o The wave of entrepreneurial growth gained sufficient momentum after
the Second World War(1939-45). Since the entrepreneurs have increased
rapidly in numbers in the country.
Decline in cottage and small sector industry at the end of
18thcentury
o Disappearance of the Indian Royal Courts, who patronized the crafts earlier.
o The lukewarm attitude of the British Colonial Government towards the Indian crafts,
o The imposition of heavy duties on the imports of the Indian goods in England
o Low-priced British-made goods produced on a large scale which reduced the competing
capacity of the products of the Indian handicrafts
o Development of transport in India facilitating the easy access of British products even
to far-flung remote parts of the country.
o Changes in the tastes and habits of the Indian, developing craziness of foreign
products.
o The unwillingness of the Indian craftsmen to adapt to the changing tastes and needs of
the people.
Post-Independence
o Government came forward with the first Industrial Policy in 1948 which was
revised from time to time.
o The Government identified the responsibility of the State to promote, assist
and develop industries in the national interest.
o It also explicitly recognized the vital role of the private sector in
accelerating industrial development and, for this, enough field was reserved
for the private sector.
Contd..
The Government took three important measures in the industrial resolutions
1. To maintain a proper distribution of economic power between the
private and public sector
[Link] encourage the tempo of industrialization by spreading entrepreneurship
from the existing centres to other cities, towns and villages.
[Link] disseminate the entrepreneurship acumen concentrated in a few
dominant communities to a large number of industrially potential
people of varied social strata.
o In the Third Five Year Plan(1961-1966), the Government started to
provide various incentives and concessions in the form of capital, markets and
land to the potential entrepreneurs to establish industries in the industrially
potential areas to remove the regional imbalances in development.
o Several institutions like Directorate of Industries, Financial Corporations,
Small Scale Industries Corporations, and Small Industries Service Institute
were also established by the Government to facilitate the new
entrepreneurs in setting tip their enterprises.
o Expectedly, the small-scale units emerged very rapidly in India
witnessing a tremendous increase in their number from 121,619 in 1966
to 190,727 in 1970 registering an increase of 17,000 units per year during
the period under reference.
o Some entrepreneurs grew from small to medium-scale and from medium to
large-scale manufacturing units during the period.
o The family entrepreneurship units like Tata, Birla, Mafatlal, Dalmia,
Kirloskar, and others grew beyond the normally expected size and also
established new frontiers in business in this period.
Women entrepreneurship
o Women entrepreneur may be defined as a woman or group of women who
initiate, organize, and run a business enterprise.
o A women who innovate, imitate or adopt a business activity are called
“women entrepreneurs”.
o The Government of India has defined women entrepreneur as ,
“an enterprise owned and controlled by a women having a minimum
financial interest of 51 per cent of the capital and giving at least 51 per cent
ofmthe employment generated in the enterprise to women.”
Contd..
o Kerala is a state with highest literacy reflecting a congenial atmosphere
for the emergence and development of women entrepreneurship in the
State.
o On the whole, proper education of women in Kerala resulted in high
motivation among them to enter into business.
o The financial, marketing and training assistance provided by the State
Government also helped motivate women to assume entrepreneurial
career.
Problems of Women entrepreneurship
1. Problem of Finance
2. Scarcity of Raw Material
3. Stiff Competition
4. Limited Mobility
5. Family Ties
6. Lack of Education
7. Male-Dominated Society
Rural & Urban
Entrepreneurship
Rural entrepreneurship
o Rural entrepreneurship is the process of starting and running a business in a
rural area.
o This can include anything from opening a small dairy to starting a
manufacturing company.
Rural industries in India
o As per Khadi and Village industries commission, village or rural industry is
any industry located in rural area, village or town with a population of
20.000 or below and an investment of Rs 3 Crore or below in in plant and
Machinery.
o All village industries have been grouped into seven major categories
1. Mineral based Industry
2. Forest based Industry
3. Agro based Industry
4. Polymer and chemical-based Industry
5. Engineering and non conventional industry
6. Textile industry (including Khadi)
7. Service Industry
Benefits or rural entrepreneurship
1. Resources Utilization
2. Employment Generation
3. Avoid the Migration of Rural Population
4. Artistic Activities Promotion
5. Check on Social Evils
6. Encourage the Rural youth
7. Stimulate Economic Development
8. Entrepreneurial Development
9. Standard of Living
Risks in rural entrepreneurship
Technical Risks
1. Technical Risks
2. Economic Risks
3. Social Risks
4. Environmental Risks
Rural entrepreneurship vs Urban
entrepreneurship
Entrepreneurial motivation
Entrepreneurial motivation: Motivating factors
o Motivation may be defined as one’s willingness to exert high level of
efforts towards the accomplishment of goal or fulfilment of need.
o Accordingly, the entrepreneurial motivation may be defined as the
process that activates and motivates the entrepreneur to exert higher
level of efforts for the achievement of his/her entrepreneurial goals.
o In other words, the entrepreneurial motivation refers to the forces or
drive within an entrepreneur that affect the direction, intensity, and
persistence of his / her voluntary behaviour as entrepreneur.
o “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.”
Internal Factors
1. Desire to do something new
2. Become independent
3. Achieve what one wants to have in life
4. Be recognized for one’s contribution
5. One’s educational background
6. One’s occupational background and experience in the relevant field
External Factors
1. Government assistance and support
2. Availability of labour and raw material.
3. Encouragement from big business houses
4. Promising demand for the product.
Maslow’s Need Hierarchy Theory
o Maslow's hierarchy of needs is a theory of motivation which states that five
categories of human needs dictate an individual’s behaviour. Those needs
are,
1. Physiological needs
2. safety needs
3. love and belonging needs
4. esteem needs
5. self-actualization needs
Maslow’s Need Hierarchy Theory
o Maslow's theory presents his hierarchy of needs in a pyramid shape, with
basic needs at the bottom of the pyramid and more high-level, intangible
needs at the top.
1. Physiological needs
o The lower needs on Maslow's hierarchy are physiological needs.
o These most basic human survival needs include food and water, sufficient
rest, clothing and shelter, overall health, and reproduction.
o Maslow states that these basic physiological needs must be addressed
before humans move on to the next level of fulfilment.
2. Safety needs
o Next among the lower-level needs is safety.
o Safety needs include protection from violence and theft, emotional
stability and well-being, health security, and financial security.
3. Love and belonging needs
o The social needs on the third level of Maslow’s hierarchy relate to human
interaction and are the last of the so-called lower needs.
o Among these needs are friendships and family bonds— both with biological
family (parents, siblings, children) and chosen family (spouses and
partners).
4. Esteem needs
o The higher needs, beginning with esteem, are ego-driven needs.
o The primary elements of esteem are self-respect (the belief that you are
valuable and deserving of dignity) and self esteem(confidence in your potential
for personal growth and accomplishments).
5. Self-actualization needs
o Self-actualization describes the fulfilment of your full potential as a person.
o Sometimes called self-fulfilment needs, self-actualization needs occupy the
highest spot on Maslow's pyramid.
o Self-actualization needs include education, skill development—the refining of
talents in areas such as music, athletics, and broader goals like learning a new
language, traveling to new places, and winning awards.
Limitations of Maslow’s theory
o Needs are dynamic and keep changing with circumstances. For example,
some cultures appear to place social needs before any others.
o There is little evidence to suggest that people are motivated to satisfy
only one need level at a time, except in situations where there is a
conflict between needs.
o The model of Maslow is based on oversimplification of human needs.
o Behaviour is not influenced by needs alone. Factors such as
expectations, experiences and perceptions also have a great impact on
behaviour.
McClelland’s acquired need theory
o Acquired needs theory, also known as McClelland's Needs Theory, Three-
Needs theory, Achievement Motivation Theory, or Learned Needs theory.
o This theory that is based on the notion that people's needs are acquired as
they live their lives or through experiences of life.
o Acquired Needs Theory was proposed by a psychologist David McClelland.
o He proposed that an individual's needs are a result of experience acquired
through life.
o Leaders can motivate subordinates by understanding the individual needs
and finding ways to foster acquiring those needs.
According to McClellan, there are only three needs,
[Link]
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Need for Achievement (“n Ach”)
o This is the drive to excel, to achieve goals and to do things better.
o In other words, need for achievement is a behaviour directed towards
competition with a standard of excellence.
o McClelland found that people with a high need for achievement perform
better than those with a moderate or low need for achievement, and noted
regional, national differences in achievement motivation.
o This prefers personal responsibility.
o Eg: A person who sets high targets and feels satisfied only when results are
achieved.
Need for Power (“n Pow”)
o The need for power is concerned with making an impact on others, the
desire to influence others, the urge to change people, and the desire to
make a difference in life.
o People with a high need for power are people who like to be in control of
people and events.
o These result in ultimate satisfaction to man.
o Personal Power- Controlling Others
o Institutional/social power- Influencing for organizational goals.
o Eg: A manager who enjoys directing teams and making important decisions.
Need for Affiliation (“n Aff”)
o The need for affiliation is defined as a desire to establish and maintain
friendly and warm relations with other people.
o The need for affiliation, in many ways, is similar to Maslow’s social needs.
o McClelland holds the view that all three needs may simultaneously be acting
on an individual.
o But, in case of an entrepreneur, the high need for achievement is found
dominating one
McClelland identified the following six characteristics of high need
achievers
1. High-need achievers have a strong desire to assume personal responsibilities
for performing a task or finding a solution to a problem.
2. High need achievers tend to set moderately difficult goals and take
calculated risks.
3. High need achievers have a strong desire for performance feedback.
4. They have need for achievement for attaining personal accomplishment.
5. They look for challenging tasks.
6. The high need-achievement individuals are not buck-passers.
Government’s policy actions towards
entrepreneurial motivation
o Government play a vital role in encouraging and motivating
entrepreneurship through supportive policies, programs and institutions.
o These actions reduce risk, provide resources and create a favorable
business environment.
o Some of the policies are,
o Atal Incubation Centre (AIC), NewGEN IEDC, MSME Market Development
Assistance, Women Entrepreneurship Platform (WEP) etc.
1. Atal Incubation Centre (AIC)
o Started by the NITI Aayog in 2016, AIC is an innovative funding scheme to
promote entrepreneurs by covering their capital operational costs.
o The selected startups will be granted funding up to Rs 10 crore over a
period of five years.
o Students, researchers or newly formed organisations from fields including
transport, health, energy, education, agriculture, water and sanitation can
apply.
NewGEN IEDC
o In 2017, the Department of Science & Technology (DST) introduced the New
Generation Innovation And Entrepreneurship Development Centre (NewGen
IEDC) programme.
o It promotes “knowledge-based and technology-driven start-ups” through
mentorship, guidance and support.
o The NewGen IEDCs are established in academic institutions where students
can work on innovative projects over a period of five years.
MSME Market Development Assistance
o Startups, MSME and retailers registered with Directorate of Industries
can avail this scheme to expand their businesses across the world
through international trade fairs and exhibitions.
o Companies registered with Directorate of Industries/District Industries
Centre can get up to 100 per cent reimbursement on air-fares and cost
of placing their stalls in such fairs/exhibitions, all over the world.
Women Entrepreneurship Platform (WEP)
o Launched by the NITI Aayog, the WEP is for budding and existing women
entrepreneurs across India.
o It is divided into three aspects:
1. Iccha Shakti: motivating women entrepreneurs to start their business
2. Gyaan Shakti: Provides knowledge and ecosystem
3. Karma Shakti: Provides hands-on support to entrepreneurs to set up or
scale business
Self Employment Lending Schemes Credit Line 2 –
Micro Financing Scheme
o The National Minorities Development & Finance Corporation (NMDFC)
scheme provides loan at the doorstep of the beneficiaries.
o Only NGOs and Self- Help Groups (SHGs) are eligible to apply
o Persons from the lower economic background and women from the
minorities will be given preference.
o Applicants should belong to households with an annual income of Rs 6 lakh.
Swarojgar Credit Card
o Small artisans including micro-entrepreneurs, Handloom weavers, Service
sector, Fishermen, self-employed persons, rickshaw owners, other micro-
enterprises are eligible for the Swarojgar Credit Card.
o Under this scheme, a loan of Rs 25,000 will be given per person and the
interest and margin will be as per RBI’s norm.
Entrepreneurship development
programmes (EDP)
o EDP’s are structured training initiatives designed to cultivate an
entrepreneurial mindset and equip individuals with the skills and
confidence to start, manage, and grow their own ventures
o It also helps in transforming ideas into successful businesses while
fostering innovation and job creation.
o These programs, offered by government bodies (like India's MSME) and
institutions, guide aspiring entrepreneurs from idea generation to
establishment
o It often focusing on specific demographics (women, youth, tech graduates)
and providing mentorship and resources.
EDP Objectives
o The major objectives of the Entrepreneurship Development Programmes (EDPs)
are to:
1. Develop and strengthen the entrepreneurial quality, i.e. motivation or need
for achievement.
2. Analyse environmental set up relating to small industry and small business.
3. select the product
4. Formulate proposal for the product.
5. understand the process and procedure involved in setting up a small
enterprise.
Contd..
6. Know the sources of help and support available for starting a small-scale
industry
7. Acquire the necessary managerial skills required to run a small-scale
industry.
8. Know the pros and cons in becoming an entrepreneur.
9. Appreciate the needed entrepreneurial discipline.
Assignment: Entrepreneurial Journey Analysis
Select one Indian entrepreneur (male or female).
Study the Background, Motivation factors, Challenges faced and the Growth
of the venture.
Conclude whether the person fits Maslow or McClelland theory more.
Thank You