Chapter 1
Fundamentals of
entrepreneurship
Dr. G.S. Sreedaya, Assistant Professor(Sr:Scale), Suma Rose Sundaran,
Revathy Chandran and Reshma Murugan (Research Scholars ) ,
Department of Agricultural extension Kerala Agricultural University,
College of Agriculture Vellayani, Thiruvananthapuram ,Kerala -695 522
Introduction
"I'm convinced that about half of what separates successful entrepreneurs from the
nonsuccessful ones is pure perseverance."
Co-founder and former chairman and CEO of Apple
Entrepreneurship is the name given to the factor of production which performs the
functions of Enterprise. In economics, Land, Labour, Capital, Organisation and Enterprise are
the five factors which are thought to be the basis of all the production activities.
Entrepreneurship in a broader sense can be considered as a process of action undertaken by
an entrepreneur (Person) to establish his enterprise. Entrepreneur is a person who sets up a
business or businesses, taking on financial risks in the hope of profit. . Entrepreneur is the
person who introduces new things in the economy and is considered as the business leader
and not as simple owner of capital. The term “entrepreneur” is a French word derived from
the verb “entreprendre”, which means to do or to undertake. It can be divided into two
parts, “entre”, meaning “between”, and “preneur” meaning “taker”. Literally, then, an
entre-preneur is a “between-taker”, or “go-between
Pioneers of entrepreneurship
The concept of entrepreneurship is mainly understood from the works of
pioneers like Richard Cantillon. He could be better described as venture capitalist ;a
venture looking for investment opportunities with better than average yields. His
perspective as an investor meant that the element of risk was a core aspect of how he
viewed entrepreneurial projects and defined what he considered to be an entrepreneur.
Richard Cantillon described the entrepreneur as a person who purchases a raw material at
a known price in order to sell it at an unknown price (Cantillon, 1755). In Cantillon’s
definition, an entrepreneur’s role lies between that of two or more other actors. He or she
is an intermediary (or go-between) who instigates a transformation.
Jean-Baptiste Say who originally belonged to an entrepreneurial family tried to
convince the importance of entrepreneurship in economic development. He regarded
entrepreneurs as being people who could do new things, people who could do more with
less, and people who would obtain more by doing something in a new or different way (Say,
1815; 1996) and thus added an element of innovation.
Joseph Alois Schumpeter postulates pointed out that the essence of
entrepreneurship lies in the perception and exploitation of new opportunities(Schumpeter:
1928) . He associated innovation by entrepreneurs with five elements:
(1) The introduction of a new good;
(2) The introduction of a new method of production;
(3) The opening of a new market;
(4) The conquest of a new source of supply of raw material;
(5) The carrying out of the new organization of any industry.
Meaning and Definition of entrepreneurship
An entrepreneurship is a combination of entrepreneur, enterprise and environment.
Fig 1 components of entrepreneurship
Entrepreneur, enterprise and environment
According to A.H. Cole, “Entrepreneurship is the purposeful activities of an individual
or a group of associated individuals undertaken to initiate, maintain or organize a
profit oriented business unit for the production or distribution of economic goods
and services”. [Link], formerly Executive Director, National Institute for
Entrepreneurship and Small Business Development (NIESBUD), New Delhi, describes
entrepreneur “as a character who combines innovativeness, readiness to take risk,
sensing opportunities, identifying and mobilizing potential resources, concerns for
excellence and who is persistent in achieving the goal. An enterprise is a continuous
process of transforming any activity or investment into an innovative venture
generating relentlessly jobs and ideas, resource and value. The third facor the
environement is responsible for a creative and innovative responses which may take
place in any field of social endeavour may be business, agriculture, social work and
education and the like. For the entrepreneur it is important to have knowledge about
the economic and political environment, more particularly about the economic
policies of the government and the financial as well as commercial institutions
As a result, entrepreenuership can occur in a range of environments. However, the
acquisition of competent characteristics for successful entrepreneurship is influenced to
some extent by one’s [Link] key components of entrepreneurship is
opportunity recognition, innovation, risk ,use of resources , action and adding value
for profit maximization.
Opportunity recognition
Innovation
risk
rrisk
Use of resources
action
Added value
Fig 1 main elements used to define the term entrepreneur (Filion,L.J. 2008).
Entrepreneur and manager-
There are so many differences between managers and entrepreneur. manager delegates
and supervises the subordinates while having least direct involvement. The entrepreneur has
more of direct involvement with lest delegation i.e. entrepreneur believe in direct
involvement with least delegation. manager avoid risk while entrepreneur ready to accept
risk. The managers are mostly concerned about the likes and dislikes of their senior
managers, the entrepreneur serves themselves and for their organization. Entrepreneur builds
strong relations with everybody around them whereas manager follow the relationship as per
the organization chart. The prime difference between them is related to their motivation,
managers are motivated by salary raise, promotion and other rewards, while independence
and scope of working creatively motivates entrepreneurs.
COMPETENCIES AND CHARACTERISTICS OF ENTREPRENEUR
Entrepreneurship Development Institute of India identified following competencies
through a research study. They are :
1. Initiation: Take action goes beyond to start a new enterprise.
2. Scanning and acting on opportunities : Utilizes the opportunities for either
personal or business growth to obtain finance , equipment, or other resource.
3. Persistence: always ready to take extreme efforts to overcome the obstacles that
prevent him or her from reaching the goal.
4. Information seeking: ready to learn from the experience of others and seek the
additional information through network and other sources.
5. Work commitment: take personal sacrifices and additional efforts to accomplish
the objectives
6. Efficiency orientation: find base to do things faster or with fewer resources.
7. Systematic planning: formation of logical and realistic business plan to achieve
goal step by step.
8. Problem solving: identification of new and potentially unique plans to reach goal
and ability to switch to alternative strategies.
9. Self confidence: strong belief in self and own abilities.
10. Assertiveness: direct confrontation of problem , communicate what expected of
others and addressing those who fail to perform as expected.
11. Persuasion : the ability to succeed in persuading others to do what she wants.
12. Efficient marketing : make sure that the work is accomplished according to the
standards set forth.
13. Concern for employees : keep concern and take proper action to improve the
welfare of the employees
Success of Entrepreneurship:
Following aspects are necessary for the successful entrepreneurship:
1. Regular inflow of information related to buyers, consumers, distributors, dealers,
retailers, transporters etc., about raw material, quality aspects, government organisations,
employees and competitors.
2. Satisfying the needs of customers.
3. Generation of adequate cash flow.
4. Regular objective assessment of the enterprise.
5. Improving productivity.
6. Maintenance of quality.
7. Use of technology of the time.
8. Be innovative.
9. Keep employees motivated.
10. Scrap or waste material be utilised properly.
11. Time management.
Benefits of Entrepreneurship
Entrepreneurship has following three benefits for society:
1. Economic Growth: These provide economic upliftment of society and generate labour
employment.
2. Productivity Improvement: It helped in improving the productivity, which means the
ability to produce more goods and services with less labour and other inputs.
3. New technologies, products and services: It helps in promoting innovative technologies,
products and services.
Training institutes in entrepreneurship development
1. The Entrepreneurship Development Institute of India (EDI) , Ahmedabad, Gujarat-It
helps in promoting micro enterprises at rural level and improvement of managerial
capabilities of small scale industries. It also provides support system to facilitate
potential and existing entrepreneurs establish and manage their enterprises.
2. The National Institute for Entrepreneurship and Small Business Development
(NIESBUD), Noida , Uttar Pradesh. -This institute is engaged in training,
consultancy, research, etc. in order to promote entrepreneurship. The major
activities of the institute are Training of Trainers, Management Development
Programmes, Entrepreneurship-cum-Skill Development Programmes,
Entrepreneurship Development Programmes and Cluster Intervention.
3. Indian Institute Of Entrepreneurship (IIE), Guwahati- Designing and organising
training activities for different target group and undertaking research in the
relevant to entrepreneurship.
[Link] Institute Of Food Technology Entrepreneurship and Management
(NIFTEM) , Haryana.-The main aim of this institute is "Skill Development and
Entrepreneurship Development" for the food technology sector.
[Link] Institute of Tool Design, Hyderabad- MSME-Tool Room, Hyderabad (Central
Institute of Tool Design) established in 1968 by the Govt. of India with the assistance of
UNDP and ILO, is a poineering Institution in the field of Tool Engineering in the Country
[Link] Of Entrepreneurship established by Kerala Veterinary and Animal
Sciences University (KVASU), Pookode , Wayanad-Entrepreneurship development,
extension, knowledge dissemination, and conducting distance learning and awareness
programmes.
6 . Kerala Institute for Entrepreneurship Development (KIED)-KIED is a premier
institute promoted by Government of Kerala and Government of India for promotion
and development of entrepreneurial activities in the State.
[Link] State Self Entrepreneur Development Mission (KSSEDM) -The main
activities is to inculcate entrepreneurship development , provide training and avail finance
from banks and other financial institutes.
[Link] Farmer’s Agribusiness Consortium (SFAC)-to undertake or assist in
undertaking programs for employment generation, growth and diversification of
agriculture & agro-based industries,To identify and promote post-harvest processing
units.
Financial institutes involved in EDP
[Link] Bank of India-provide financial assistance to all categories and professionals.
[Link] Finance Corporation Of India ( IFCI)-1948- Provide schemes for
agriculture,animal husbandry and entrepreneurship development scheme.
2. The Industrial Development Bank of India ( IDBI)-1964- Provide scheme for the medium
and small scale sector.
3. The Industrial Credit and Investment Corporation of India (ICICI)-1955- Assist in creation,
expansion and modernization of the industries.
4. National Bank for Agriculture and Rural Development (NABARD)- 1982-To provide
credit for the promotion of the agriculture, small scale industries , handicrafts and other rural
crafts.
5. The Small Industries Development Bank of India ( SIDBI)- Financing and promotion of
the small scale industries.
[Link] Small Industries Corporation (NSIC)-1955-Promotion and development of small
scale industries, financial assistance , training, providing raw materials for manufacturing and
marketing of finished products of small scale industries.
References
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Cantillon, R. (1755) Essai sur la nature du commerce en général, London: Fetcher Gyler. Also:
Edited with an English translation by Henry Higgs, London:MacMillan (1931). The manuscript was
probably written around 1720 and was published after Cantillon was murdered in 1734. It is believed
that he himself wrote the French and English versions
Cole AH. Business Enterprise in its social setting. Harvard University, Cambridge,1959; 7.
Davidsson, P. and Wiklund, J., 2007. Levels of analysis in entrepreneurship research: Current
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