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Addis Ababa University

Addis Ababa institute of Technology

School of Civil and Environmental Engineering

Entrepreneurship for Engineers

Instructor: Tamru T.
2019/20 2nd Sem

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Chapter 1
Introduction

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 Outline

1. Core concepts of Entrepreneurship

2. What is Entrepreneurship
3. Who is an entrepreneur?
4. Types/Classification of Entrepreneurs
5. Entrepreneurship and Innovation
6. Role and significance of Entrepreneurship in
Development

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 Why Study Entrepreneurship?
 Scientists and engineers who want to lead companies
need to know how to back up ideas with numbers

 You will learn the complex business processes

involved in commercialization

 You learn how to make trade-offs among features,

benefits, risks, price, markets, and operations

 You learn how to adapt to uncertainty and change

 You learn techniques for managing people 5
Core Concepts of Entrepreneurship

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 Core Concepts of Entrepreneurship

A. Entrepreneur:

• Although no single definition of entrepreneur exists

and no one profile can represent today‘s entrepreneur,
research is providing an increasingly sharper focus on
the subject.

• Entrepreneur is derived from the French entreprendre,

meaning ―to undertake.‖

• The entrepreneur is one who undertakes to organize,

manage, and assume the risks of a business.

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 Cont’d

• Entrepreneurs create something new, something

different; they change and transmute value.

• Entrepreneurs see change as the norm and as

healthy.

• The entrepreneurs always search for change,

responds to it, and exploits it as an opportunity

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 Cont’d Cont’d

• Entrepreneurs- are people who own, operate, and

take the risk of a business venture

• Entrepreneurs are those individuals who

establishes a new organization without the benefit
of corporate sponsorship.

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 Definitions given by different authors ....

• Entrepreneur is a person who only provides capital without taking active

part in the leading role of an enterprise (Adam Smith).

• Entrepreneurs are persons endowed with the qualities of judgment,

perseverance, and knowledge of the world as well as of business (B.
Say)

• Marx regarded the entrepreneur as a social parasite.

• Entrepreneur is a person who introduces innovative changes.

Entrepreneur is an integral part of economic growth and is a
fundamental source of economic disequilibria (Schumpeter).

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 Cont’d
• Frank Young described the entrepreneur as a change
agent.
• Francis A. Walker observed that the true
entrepreneur is one who always searches for change,
responds to it, and exploits it as an opportunity.
• Robert D. Hirsch said entrepreneur is the person who
establishes a new business venture and is a visionary
leader—a person who dreams great dreams.
• Entrepreneur is a person who organizes and manages a
business undertaking assuming the risk for the sake of
profit (Hull, et al)

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 Cont’d
• Entrepreneur is person who has the ability to see and
evaluate business opportunities, to gather the necessary
resources to take advantage of them, and to initiate
appropriate action to ensure success (Meredith, 1982).

• Entrepreneur is someone who is specialized in taking

judgmental decisions about the coordination of scarce
resources (Casson).

• Entrepreneur is a person who owns, organizes, manages and

runs an enterprise assuming the risk of a business
(NIESBUD, 1994).

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 Disciplines point of view.....

• To an economist – an entrepreneur is one who

brings resources, labor, materials and other assets
into combinations that make their value greater
than before and also one who introduces changes,
innovations and a new order.

• To a psychologist such a person is typically driven

by certain forces; need to obtain or attain
something to experiment to accomplish or perhaps
to escape authority of others.
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 Cont’d

• The same person is seen by a capitalist

philosopher as one who creates wealth for
others as well who finds better ways to
utilize resources and reduce waste and who
produces jobs others are glad to get (Karl
Vesper.)

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 Intrepreneur

• The term ‗Intrapreneur‘ was coined in the United States of

America in the late seventies.

• Gifford Pinchot defined Intrapreneurs as the persons who

resigned from their well paid executive positions to launch
their own ventures.

• Gifford devised the way by which such executives could be

retained in the industry and their entrepreneurial urge was
also satisfied by their bosses.

• So a system was devised whereby such executives would

operate as entrepreneurs with full independence and
autonomy but with in the organisation.

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 Cont’d
• Intrapreneur: - Intra … means ―with in‖ Intrapreneurs
are people who are entrepreneur employed by and
working within the constraints and support of complex
organization. An intrapreneur is a person who does
entrepreneurial work within large organizations.

• The process by which an intrapreneur affects change is

called intrapreneurship. Intrapreneurs introduce and
produce new products, processes, and services, which in
turn enable the company to grow and earn profit. It is
important to know important facts about
intrapreneurship.

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 Cont’d

• Intrapreneurs exist at all levels in an

organization. They can be factory floor
employees or research and development
scientists, lower level team leaders or high-
level managers.

• The work of intrapreneurs and the exact

process of intrapreneurship differ from
organization to organization, from idea to idea.

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 Cont’d

• The development of new products, processes, and

ideas is ―messy,‖ following no one set path.

• There is no one formula into which to place and

understand the intrapreneurial process, there are
common elements to this process and common
behaviors intrapreneurs engage in wherever they
work and whoever they are.

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 Social Entrepreneur:

• Social Entrepreneur: Social entrepreneurs drive social

innovation and transformation in various fields including
education, health, environment and enterprise development.

• They pursue poverty alleviation goals with entrepreneurial

zeal, business methods and the courage to innovate and
overcome traditional practices.

• A social entrepreneur, similar to a business entrepreneur,

builds strong and sustainable organizations, which are either
set up as not-for-profit or for-profit companies.

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 Cont’d

• According to the European Union definition of Social

Enterprise: ‗Social enterprise‘ means an enterprise
whose primary objective is to achieve social impact
rather than generate profit for owners and
stakeholders.

• It operates in the market through the production of

goods and services in an entrepreneurial and innovative
way, and uses surpluses mainly to achieve social goals.
It is managed in an accountable and transparent way, in
particular by involving workers, customers and
stakeholders affected by its business activity.

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 Cont’d

• Social entrepreneurship is about applying practical, innovative

and sustainable approaches to benefit society in general, with an
emphasis on those who are marginalized and poor.

• It is a term that captures a unique approach to economic and

social problems, an approach that cuts across sectors and
disciplines.

• It is grounded in certain values and processes that are common

to each social entrepreneur, independent of whether his/ her
area of focus has been education, health, welfare reform, human
rights, workers' rights, environment, economic development,
agriculture, etc., or whether the organizations they set up are
non-profit or for-profit entities.

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 Difference between Entrepreneur and Intrapreneur

[Link] entrepreneur is an independent person who

starts his venture and bears full risk of his
failure and enjoys the fruit of his success
whereas intrapreneur is partially independent
and is sponsored by the corporation in which he
is working. He is also not liable to bear the
losses in case of his failure.

[Link] entrepreneur raises the finance from

various sources and also guarantees their return
whereas an intrapreneur does not own
responsibility to raise the capital or to return it.

[Link] entrepreneur has no relation with any

organisation whereas an intrapreneur operates
within the organisation where he is working. 22
 Cont’d
[Link] are people that notice
opportunities and take the initiative to
mobilize resources to make new goods and
services.

[Link] also notice opportunities and

take initiative to mobilize resources, however
they work in large companies and contribute to
the innovation of the firm.

[Link] often become entrepreneurs.

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 Cont’d

[Link]: Individuals who establish a new

organization without the benefit of corporate
support.

[Link]: New-venture creators working

inside big companies; corporate entrepreneurs.

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What is Entrepreneurship

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 What is Entrepreneurship?

• Entrepreneurship is a mindset that is:

• opportunity-focused
• innovative
• growth-oriented

• Entrepreneurship- is the process of running a

business of one‘s own
• Entrepreneurship -is what an entrepreneur does.

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 Cont’d
• Entrepreneurship is the process of doing something
new and something different for the purpose of
creating wealth for the individual and adding value to
the society (RAO, 1993).

• Entrepreneurship is a creative and innovative response

to the environment where such responses can take
place in any field of social endeavor – business,
industry, agriculture, social work, and the like. It
refers to doing new things or doing things that are
already being done in a new way (Rao).

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 Cont’d
• Entrepreneurship is a quality required to perceive
opportunities, organize resources, create
facilities, and set up and run a business
successfully (NIESBUD, 1994).

• Entrepreneurship may also be defined as a

purposeful activity indulged in initiating,
promoting, and maintaining economic activities for
the production and distribution of wealth. It
means the willingness to exercise initiative and to
take considerable risk to operate one‘s own
business (Mauser, et al, 1982)
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 Cont’d
• Entrepreneurship is the dynamic process of creating
incremental wealth. The wealth is created by individuals who
assume the major risks in terms of equity time and/or career
commitment or providing value for some product or service.
The product/service may or may not be new but value must
somehow be infused by the entrepreneur by allocating the
necessary skills and resources (Robert C. Ronstad.)

• Entrepreneurship is the process of creating something

different with value by devoting the necessary time and
effort assuming the accompanying financial and social risks
and reserving the resulting rewards of monetary and
personal satisfaction.

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 Cont’d

• Entrepreneurship is a dynamic process that

requires the function of talents, ideas, capital, and
know-how, the process of which can be risky,
uncertain and sometimes hazardous, but always
dynamic. (Kao)

• Insummary, a wide verity of definitions for the

term entrepreneurship exists depending on the
particular scholar‘s exposure.

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 Generally, it can be concluded that
entrepreneurship is:

• Essentially a creative activity that consists of doing things that

are not generally done in the ordinary course of business.
• Generally a trait, a skill, and a profession, which must be
developed; Considered as the personal quality that enables
people to start new business vigorously and innovatively and
expand an existing one; and
• Composed of four crucial elements:
• The ability to perceive an opportunity;
• The ability to commercialize the perceived opportunity
(both leading to innovation);
• The ability to pursue it on a sustainable basis; and
• The ability to pursue it through systematic means

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 Cont’d

• ―In almost all of the definitions of entrepreneurship there is

agreement that we are talking about a kind of behavior that
includes (1) initiative taking; (2) the organizing and
reorganizing of socially/economic mechanisms to turn
resources and situation to practical account; and (3) the
acceptance of risk or failure. (Albert Shapiro)

• Moreover, although each of these definition views

entrepreneurs from a slightly different perspective, each
contains similar notions: newness, organizing wealth, and risk
taking. Entrepreneurs are found in all professions -
education, medicine, research, law, architecture,
engineering, social work, and distribution.

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 Cont’d Cont’d
•
 A dynamic process of vision, change, and creation
• Requires an application of energy and passion towards the
creation and implementation of new ideas and creative
solutions.
 Essential ingredients include:
• The willingness to take calculated risks—in terms of time,
equity, or career.
• The ability to formulate an effective venture team; the
creative skill to marshal needed resources.
• The fundamental skills of building a solid business plan.
• The vision to recognize opportunity where others see chaos,
contradiction, and confusion.

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 Cont’d
Cont’d

• …….. (Robert C. Ronstadt)

 The dynamic process of creating incremental wealth.

 This wealth is created by individuals who assume major

risks in terms of equity, time, and/or career commitment
of providing value for a product or service.

 The product or service itself may or may not be new or

unique but the entrepreneur must somehow infuse value
by securing and allocating the necessary skills and
resources.

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 Benefits of Entrepreneurship

The opportunity to:

• Create your own destiny
• Make a difference
• Reach your full potential
• Reap impressive profits
• Contribute to society and to be
recognized for your efforts
• Do what you enjoy and to have fun at
doing it
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Drawbacks of Entrepreneurship

 Uncertainty of income
 Risk of losing your entire investment
 Long hours and hard work
 Lower quality of life until the business
gets established
 High levels of stress
 Complete responsibility
 Discouragement
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 Common Myths about Entrepreneurship
• Myth 1: Anyone can start a business.

• Myth 2: Entrepreneurs are gamblers

• Myth 3: Entrepreneurs want the whole show to themselves.

• Myth 4: Entrepreneurs are boss for their own and completely

independent.

• Myth 5: Entrepreneurs work longer and harder than managers in

big companies.

• Myth 6: Entrepreneurs experience a great deal of stress and pay a

high price.
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 Cont’d
• Myth 7: Entrepreneurs are motivated solely by the quest for
the almighty dollar.

• Myth 8: Entrepreneurs seek power and control over others.

• Myth 9: If an entrepreneur is talented, success will happen

in a year or two.

• Myth 10: Any entrepreneur with a good idea can raise

venture capital.

• Myth 11: If an entrepreneur has enough start-up capital, he

or she can‘t miss.
• . 38
 Cont’d

Myth 13: Entrepreneurs are born, not made.

Myth 14: Money is the key to entrepreneurial success.

Myth 15: You have to be young to be an entrepreneur.

Myth 16: You must have a degree in business to be an

entrepreneur.

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Ten Deadly Mistakes of Entrepreneurship

1. Management mistakes

2. Lack of experience

3. Poor financial control

4. Weak marketing efforts

5. Failure to develop a strategic plan

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Ten Deadly Mistakes of Entrepreneurship

6. Uncontrolled growth

7. Poor location

8. Improper inventory control

9. Incorrect pricing

10. Inability to make the ―entrepreneurial

transition‖
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 Putting Failure into Perspective

• Entrepreneurs are not paralyzed by the prospect

of failure.

• Failure – a natural part of the creative process.

• Successful entrepreneurs learn to fail
intelligently.

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43
Who are Entrepreneurs?

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Who are Entrepreneurs?
• Original thinkers • Self employed parents

• Risk takers • Firstborns

• Take responsibility for • Between 30-50 years

own actions old

• Feel competent and • Well educated – 80%

capable have college degree and
1/3 have a graduate
• Set high goals and enjoy
level degree
working toward them

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Cont’d

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 Internal vs. External Locus of Control

Internal Locus of Control:

 Entrepreneurs tend to hold themselves
accountable for their own successes or
failures.

External Locus of Control:

 Non-entrepreneurs tend to believe that
external circumstances, luck or fate impact
upon their worlds.
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 Successful and Unsuccessful
Entrepreneurs

• Successful
• Unsuccessful
• Creative and Innovative
• Poor Managers

• Position themselves in • Low work ethic

shifting or new markets • Inefficient
• Create new products • Failure to plan and prepare
• Create new processes
• Poor money managers
• Create new delivery

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 Functions of an Entrepreneur

There has been a great deal of confusion and contradiction in

literature on the functions of an entrepreneur.

[Link]: [Link] has made substantial

contribution to the literature of entrepreneurship. The
process of innovations may be in the form of:

a) Introduction of a new product.

b) Use of new methods of production.
c) Opening of a new market.
d) The conquest of new source of supply of raw
material.
e) A new form of organisation.
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 Cont’d

2. Risk-taking: Richard cantillon states that

entrepreneur is an agent who buys means of production
at certain prices and sells them at uncertain prices.
The entrepreneur performs the function of reducing
uncertainty in his plan of investment and expansion of
the enterprise.

J.B. Say also stresses risk-taking as the specific

function of an entrepreneur.

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 Cont’d
3. Decision Maker: Entrepreneur as a decision maker
describes the following functions of an entrepreneur.
a) The determination of objectives of an enterprise
and the change of those objectives as conditions
required or made advantageous,
b) The development of an organisation including
efficient relations with subordinates and all
employees,
c) Securing adequate financial resources, the relations
with existing and potential Investors,
d) The acquisition of efficient technological equipment
and the revision of it as new machinery appears,
e)The development of a market for the products and
the devising of new products to meet or anticipate
consumer‘s demand,
f) The maintenance of good relations with public
authorities and with society at large. 51
 Cont’d

4. Organization and Management

When the organisation grows bigger, the entrepreneur

effectively delegates authority and finds responsibility at
various levels of management.

The network of decision making becomes more complex.

The functions of organisation and management includes:

a) Planning of an enterprise,
b) Co-ordination, administration and control,
c) Routine type of supervision.

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 Entrepreneurship

 Entrepreneurship is the process of bringing together creative

and innovative ideas and actions with the management and
organizational skills necessary to mobilize the appropriate
people, money, and operating resources to meet an identifiable
need and create wealth in the process

• Inventors
• Promoters
• Administrators
• Entrepreneurs

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 Distinction between an
Entrepreneur and a Manager

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14-54
 Cont’d
ENTREPRENEURS MANAGERS
1. Status: An 1. Status: A manager is
entrepreneur is the just an employee in
owner of his the enterprise which
enterprise. He is owned and run by
makes his own
investment and entrepreneur.
owns his business.

2. Target: The main 2. Target: The main goal

target of an or motive of a manager
entrepreneur is to is give his services to
start his venture by an enterprise set up
setting up as a sole- by someone else i.e. an
trader or firm or a
company. entrepreneur.
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ENTREPRENEURS MANAGERS
3. Decision making: All of 3. Decision making: While all
the policies and those managerial, operational
strategic decisions, like
those comprising of
decisions which would have
expansion impact on the short-and
diversification, take- medium-term results are
over etc are taken by taken by the managers.
the entrepreneur.
4. Rectification of wrong
[Link] of wrong
decisions: Whereas the wrong
decisions: The wrong
decisions taken by the decisions taken by the
entrepreneur may not managers can be amended and
be rectificable and may rectified by the
result in losses or even entrepreneur.
closure of the unit.

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 MANAGERS
ENTREPRENEURS MANAGERS

5. Innovations: An 5. Innovations: A manager is

entrepreneur innovates merely an officer or an executive
and exploits his innovation
commercially. who is appointed for the promotion
of the unit.
6. Risk bearing: An 6. Risk bearing: A manager
entrepreneur being the doesn‘t bear any risk because he is
owner of his unit
undertakes all risks and paid fixed salary.
uncertainty of running his
enterprise.

7. Skills: The skill 7. Skills: Whereas manger

expected from an depends on public dealing abilities
entrepreneur is in the and conceptual abilities.
form of creativity,
innovation, desire for high
achievement, intuition etc.
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ENTREPRENEURS MANAGERS

8. Qualification: An 8. Qualification: On the other

entrepreneur doesn‘t hand, a manager now a days
need to have distinct need to possess degree in the
degree from a reputed stream of management theory
university. and practice.

9. Rewards: The reward 9. Rewards: A manager gets his

of an entrepreneur is monthly salary as his reward
the profit earned by for the services rendered by
him. him.

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 Entrepreneurs Vs. Inventors

• An inventor, an individual who creates something

for the first time, is a highly driven individual
motivated by his or her own work and personal
ideas

• Entrepreneur falls in love with the organization

(the new venture) and will do anything

• An inventor falls in love with the invention and will

not try modify the invention to make it more
commercially feasible. 59
 Tips to Become a Successful Entrepreneur

1. Acquire sufficient and all-round knowledge about an

enterprise you intend to start.
2. Be conservative in calculating income and lavish in calculating
expenditure.
3. Don‘t expect quick and easy returns from your venture.
4. Be prepared for delegation of work when needed.
5. Take moderate risks; neither too high nor too low.
6. Plan systematically and march ahead step by step according
to the plan to achieve your goal.
7. Time management is necessary to maximum utilization of
your resources.
8. Collect maximum information about your competitor on
continuous basis.
9. Don‘t avoid or run away from problems.
10. Take the help of experts and experienced persons or
entrepreneurs, when in doubt.
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Types of Entrepreneurs

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 Types of Entrepreneurs
According to the Type of Business
i. Business entrepreneur: Business entrepreneurs are those
entrepreneurs who conceive the idea of a new product or service
and then translate their ideas into reality.

ii. Trading entrepreneur: As the very name indicates trading

entrepreneur is concerned with trading activities and not
manufacturing.

iii. Industrial entrepreneur: As the very name indicates, an industrial

entrepreneur is one who sets up an industrial unit.

iv. Corporate entrepreneur: Corporate entrepreneur is the one who

plans, develops and manages a corporate body.

v. Agricultural entrepreneur: Agricultural entrepreneur is the one

who is engaged in the agricultural activities. 62
 Cont’d

According to Motivation
i. Pure entrepreneur: Pure entrepreneur is one
who may or may not possess an aptitude for
entrepreneurship but is tempted by the
monetary rewards or profits to be earned from
the business venture.

i. Induced entrepreneur: Induced entrepreneur

is attracted by the various incentives, subsidies
and facilities offered by the government.
63
 Cont’d

According to Use of Technology

i. Technical entrepreneur: The strength of a technical

entrepreneur is in his skill in production techniques. He
concentrates more on production than on marketing.

ii. Non-technical entrepreneur: Unlike technical entrepreneur,

non-technical entrepreneur is not concerned with the technical
aspect of the product rather he spends more time in developing
alternative strategies of the marketing and distribution to
promote his business.

iii. Professional entrepreneur: Professional entrepreneur means

an entrepreneur who is interested in floating a business but
does not want to manage or operate it.
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 Cont’d

Classification Given by Danhof

i. Innovating entrepreneur: Innovative entrepreneurs are generally

aggressive and possess the art of cleverly putting the attractive
possibilities into practice.

ii. Imitative entrepreneurs: Imitative entrepreneurs are characterized

by readiness to adopt successful innovations inaugurated by successful
innovating entrepreneurs.

iii. Fabian entrepreneur: Fabian entrepreneurs are cautions and skeptical

in experimenting change in their enterprises. Such entrepreneurs are
shy, lazy and lethargic.

iv. Drone entrepreneur: Drone entrepreneurs are characterized by a

refusal to adopt opportunities to make changes in production formulae
even at the cost of severely reduced returns.
65
 Cont’d

According to Capital Ownership

i. Private entrepreneur: When an individual or a group of
individuals set up an enterprise, arrange finance, bear the risk
and adopt the latest techniques in the business with the
intention to earn profits, he or the group is called as private
entrepreneur/entrepreneurs.

ii. State entrepreneur: As the name indicates, state

entrepreneur means the trading or industrial venture
undertaken by the state or the government itself.

iii. Joint entrepreneur: Joint entrepreneur means the combination

of private entrepreneur and state entrepreneur who join hands.
66
 Cont’d

According to Gender and Age According to Area

i. Man entrepreneur
ii. Woman entrepreneur
i. Urban entrepreneur
iii. Young entrepreneur
ii. Rural entrepreneur
iv. Old entrepreneur
v. Middle-aged entrepreneur

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 Cont’d

According to Scale

i. Large scale industry entrepreneur

ii. Medium scale industry entrepreneur

[Link] scale industry entrepreneur
iv. Tiny industry entrepreneur
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 Innovation
And
Entrepreneurship

69
From Creativity to Entrepreneurship

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 The Commercializing Process

1 Discovery Invention
Innovation
2 Opportunity Invention Disclosure
Concept Development
3 Feasibility Technology Feasibility
Market Feasibility
Recognition Initial Financials

Rework concept

4 Intellectual
Property &
Provisional patent decision
Non-provisional patent filing
5 Prototype
Development
Platform
Applications
6 Market/
Customer
Field test
Applications
Other intellectual property Testing Testing
Regulatory Regulatory Requirements
Test
Requirements
Refine & Redesign

7 Launch
Strategy
License
Start a Business
Sell or joint venture
8 Business
Plan
Execution Strategy
Develop operations plan
Develop marketing plan
LAUNCH
Secure needed management
Identify funding needs & sources

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 Creativity, Innovation and
Entrepreneurs

Creativity is the ability to develop new ideas and to discover

new ways of looking at problems and opportunities.

Innovation is the ability to apply creative solutions to those

problems and opportunities in order to enhance people‘s
lives or to enrich society.

Researchers believe that entrepreneurs succeed by thinking

and doing new things or old things in new ways .

72
 Cont’d

Entrepreneurship is the result of a disciplined,

systematic process of applying creativity and
innovation to needs and opportunities in the
marketplace.

Entrepreneurs are those who marry their

creative ideas with the purposeful action and
structure of a business.

73
 …..cont’d Cont’d
……cont’d

• Innovation is the creation of new products or processes

through the development of new knowledge or from new
combinations of existing knowledge

• Innovation is the initial commercialization of invention by

producing and selling a new product, service, or process
• Product innovation
• Service innovation
• Process innovation

74
…..cont’d Cont’d
……cont’d

 Schumpeter‘s five types of innovation

 New product or substantial change in
existing product
 New process
 New market
 New sources of supply
 Changes in industrial organization

 Incremental innovation = improvements on

existing products
 Disruptive innovation = game changers 75
Cont’d

76
 Cont’d

• Incremental innovation refers to simple

changes or adjustments in existing products,
services, or processes

• Continuous improvement, what in Japanese is

called kaizen, is the process of relentlessly
trying to find ways to improve and enhance a
company‘s products and processes from design
through assembly, sales, and service

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 Incremental Innovation

1. Define quality and

customer value 6. Adopt an error-free attitude

2. Develop a customer 7. Get the facts first

orientation
8. Encourage every manager
3. Focus on the company‘s and employee to participate
business processes
9. Create an atmosphere of
4. Develop customer and total involvement
supplier partnerships
10. Strive for continuous
5. Take a preventive improvement
approach

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 Breakthrough Innovation

• A breakthrough innovation is an innovation in a

product, process, technology, or the cost
associated with it that represents a quantum
leap forward in one or more of those ways

• Breakthrough approaches to innovation are

inherently more risky than incremental
innovation approaches

79
 Risks Associated with Innovation

• Innovation involves creating something

that doesn‘t now exist
• Long odds for success
• Market risk
• Technology risk

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 Ways to Lower Risk

• Product teams

• Cross-functional groups

• Joint ventures

• Cooperation with lead users

• ―Do it yourself‖ innovation

• Acquiring innovation

• Outsourcing innovation
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 Idea Factors

• Need spotting
• Solution spotting
• Mental inventions
• Random events
• Market research
• Trend following

82
Role and Significance of Entrepreneurship

in

Development

83
Role and Significance of Entrepreneurship
in Development

[Link] growth
[Link] industry formation
[Link] creation

84
 1. The Roles of Entrepreneurs within the
Economy

• The role of entrepreneurship in economic

development involves more than just
increasing per capita output and income; it
involves initiation and constituting change in
structure of business and society.

• Thischange is accompanied by growth and

increased output, which allows more to be
divided by the various participants.
85
 Cont’d
• Entrepreneurship is one of the most effective methods
for bridging the gap between science and technology
and the market place, creating new enterprises, and
bringing new products and services to market.

• These entrepreneurial activities significantly affect

the economy of an area by building the economic base
and providing jobs.

• There is a wide range of significant contributions that

entrepreneurs and entrepreneurship can make to the
development process.

86
 Cont’d
• Entrepreneurship raises productivity through technical and other
forms of innovation.

• Entrepreneurship is powerful tool of job creation.

• Entrepreneurship facilitates the transfer of technology.

• Entrepreneurs play a strategic role in commercializing inventions

and products.

• Entrepreneurs play a critical role in restructuring and

transformation of economy.

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 Cont’d
• Entrepreneurship and entrepreneurial behavior can breathe
vitality into the life of large corporations and government
enterprises.

• Entrepreneurs make markets more competitive and thereby

reduce both static and dynamic market inefficiencies.

• Entrepreneurs improve the social welfare of a country by

harnessing dormant, previously overlooked talent.

• Entrepreneurs create new markets and facilitate expansion

into international markets.
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 2. New Industry Formation

• New industries are born when technological change

produces a new opportunity that an enterprising
entrepreneur seizes.

• Disruptive or metamorphic technologies that destroy

previous technologies and create new industries display
a different pattern of behavior.

• The pattern of growth, shakeout, stabilization, and

decline of industry can be interrupted at any time by
the entry of another disruptive technology.

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 3. Job Creation

• The important role that an entrepreneurship plays

in the economic development of an economy can be
put in a more systematic manner as follows:

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 Cont’d
Cont’d..

• Entrepreneurship promotes capital formation

by mobilizing the idle saving of the public.

• It provides immediate large-scale

employment. Thus it helps to reduce
unemployment in the country.

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 Cont’d

• It provides balanced regional development.

• Ithelps reduce the concentration of economic

power.

• It stimulates the equitable redistribution of

wealth, income and even political power in the
interest of the country.

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 Cont’d
6. It encourages effective resources
mobilization of capital and skill which might
otherwise remain unutilized and idle.

7. It also induces backward and forward linkages

which stimulated the process of economic
development in the country.

8. It promotes country‘s export trade i.e. an

important ingredient for economic
development.
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To Summarize….

An entrepreneur performs various type of

functions. Growth of his enterprise
depends upon the way, he performs various
functions like innovation, risk-taking,
decision-making, organization and
management.

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Thank You !!!

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