Entrepreneurship Development & SME Management Chapter 1: Introduction to Entrepreneurship

Chapter 1: Introduction to Entrepreneurship

Entrepreneurship Development & SME Management

This chapter introduces the foundational concepts of entrepreneurship: what it means to be an

entrepreneur, how entrepreneurship is defined and practised, the different types of entrepreneurs
recognized in theory and practice, the functions entrepreneurs perform, the personal characteristics and
qualities associated with entrepreneurial success, the role entrepreneurship plays in national economic
development, and the emerging field of social entrepreneurship. Concepts are illustrated throughout with
real-world examples, including cases from Bangladesh.

Contents
• 1. Who Is an Entrepreneur? — Definitions
• 2. What Is Entrepreneurship? — The Process
• 3. Entrepreneur vs. Entrepreneurship vs. Enterprise
• 4. Types of Entrepreneurs
• 5. Role of Entrepreneurs in Business and the Economy
• 6. Characteristics of Entrepreneurs
• 7. Qualities of a Successful Entrepreneur
• 8. Importance of Entrepreneurship in Economic Development
• 9. Social Entrepreneurship
• 10. Chapter Summary
• 11. Review Questions
• 12. References
Entrepreneurship Development & SME Management Chapter 1: Introduction to Entrepreneurship

1. Who Is an Entrepreneur? — Definitions

The word entrepreneur comes from the French verb entreprendre, meaning “to undertake.” In its most
general sense, an entrepreneur is an individual who identifies a business opportunity, organizes the
resources needed to pursue it — land, labour, capital, and technology — and knowingly bears the risk of the
venture in the pursuit of profit or value creation. The concept has been refined by economists and
management scholars over nearly three centuries, and different definitions emphasize different aspects of
the role.

1.1 Classical and Modern Definitions

Richard Cantillon (1755)
Cantillon, an Irish-French economist, was the first to use the term formally in an economic sense. He defined
the entrepreneur as a person who bears uncertainty: someone who buys inputs (labour, raw materials) at a
certain, known price and sells the resulting output at an uncertain price determined later by the market. The
entrepreneur's income — profit or loss — is the reward or penalty for absorbing this uncertainty, which
distinguishes the entrepreneur from a salaried employee who receives a fixed, contracted wage.

Jean-Baptiste Say (1803)

Say extended Cantillon's idea by framing the entrepreneur as someone who shifts economic resources out
of an area of lower productivity and into an area of higher productivity and greater yield. This introduced
the idea of the entrepreneur as a coordinator and allocator of resources, not merely a risk-bearer.

Joseph Schumpeter (1934)

Schumpeter's definition is the most influential in modern entrepreneurship theory. He described the
entrepreneur as an innovator who carries out “new combinations” of productive resources. According to
Schumpeter, this can take five forms: introducing a new product or a new quality of product; introducing a
new method of production; opening a new market; conquering a new source of supply of raw materials; and
creating a new organizational structure in an industry. Schumpeter called this process of innovation
displacing old ways of doing business “creative destruction” — entrepreneurial innovation destroys existing
products, firms, and industries even as it creates new ones.

EXAMPLE — Creative Destruction in Action

The rise of ride-sharing platforms such as Uber and, in Bangladesh, Pathao, illustrates Schumpeter's creative
destruction. These ventures introduced a new method of organizing transport (app-based matching of drivers
and riders), which disrupted traditional taxi and rickshaw-based transport businesses while creating an
entirely new category of employment and consumer convenience.

Frank Knight (1921)

Entrepreneurship Development & SME Management Chapter 1: Introduction to Entrepreneurship

Knight distinguished between measurable “risk” (where probabilities are known, e.g., insurable events) and
true “uncertainty” (where outcomes cannot be predicted with any known probability). Knight argued that
entrepreneurial profit is the reward specifically for bearing this unmeasurable uncertainty — the
entrepreneur commits resources to a venture whose outcome genuinely cannot be forecast.

David McClelland (1961)

A psychologist rather than an economist, McClelland approached entrepreneurship from the standpoint of
individual motivation. He argued that entrepreneurs are distinguished by a high “need for achievement” (n-
Ach) — an internal drive to set challenging but attainable goals, take personal responsibility for outcomes,
and seek concrete feedback on performance, rather than being driven primarily by money or social status.

Peter Drucker (1985)

Drucker offered one of the most widely cited modern definitions: “The entrepreneur always searches for
change, responds to it, and exploits it as an opportunity.” For Drucker, innovation is the entrepreneur's
specific instrument, and entrepreneurship is best understood as a practice or discipline that can be learned
and applied systematically, not merely an inborn personality trait.

Hisrich, Peters & Shepherd — Contemporary Textbook Definition

A widely used modern synthesis (from the standard textbook Entrepreneurship) defines entrepreneurship as
“the process of creating something new with value by devoting the necessary time and effort; assuming the
accompanying financial, psychic, and social risks; and receiving the resulting rewards of monetary and
personal satisfaction and independence.” This definition is useful because it captures both the process
(creating something new) and the personal cost (risk across multiple dimensions, not only financial).

1.2 A Working Definition for This Course

Drawing on the definitions above, for the purposes of this course we define an entrepreneur as:

EXAMPLE — Working Definition

An individual who identifies an unmet need or opportunity in the market, innovates a product, service,
process, or business model to address it, mobilizes the necessary resources (capital, labour, technology, and
relationships), and knowingly bears the financial and personal risk of establishing and operating a new
venture in pursuit of profit and/or social value.

This working definition contains five core elements that recur throughout the chapter: (1) opportunity
recognition, (2) innovation, (3) resource mobilization, (4) risk-bearing, and (5) value creation.

1.3 Illustrative Examples

EXAMPLE — Fazle Hasan Abed — BRAC (Bangladesh)

Sir Fazle Hasan Abed left a corporate career at Shell Oil to found BRAC in 1972, initially as a small relief
operation in post-war Bangladesh. Recognizing the unmet need for scalable rural development, he
progressively built BRAC into the world's largest non-governmental development organization, combining
Entrepreneurship Development & SME Management Chapter 1: Introduction to Entrepreneurship

social programmes with commercial social enterprises. His career embodies opportunity recognition,
innovation in organizational design, and sustained risk-bearing over decades.

EXAMPLE — Kamal Quadir — bKash (Bangladesh)

Kamal Quadir identified the opportunity presented by Bangladesh's low banking penetration but high mobile-
phone penetration. He co-founded bKash in 2011 to deliver mobile financial services to the unbanked
population, mobilizing capital (including from BRAC Bank and later Bill & Melinda Gates Foundation and Ant
Financial) and bearing the risk of building trust in a novel digital-cash model. bKash is now one of the largest
mobile financial service providers in the world by customer base.

2. What Is Entrepreneurship? — The Process

Where an “entrepreneur” refers to a person, “entrepreneurship” refers to the dynamic, ongoing process
that person (or team) carries out. Entrepreneurship is the process of designing, launching, and running a
new business — identifying an opportunity, assembling and organizing resources, bearing risk, and
managing growth — in order to create economic and/or social value. Unlike a single decision or event,
entrepreneurship is best understood as a continuous cycle that repeats and evolves as a venture matures.

2.1 Stages of the Entrepreneurial Process

1. Opportunity Identification — recognizing an unmet need, inefficiency, or emerging trend in the market.
2. Idea Generation and Evaluation — developing a concrete concept for a product, service, or business
model and testing its feasibility (market, technical, and financial).
3. Resource Mobilization — raising capital, recruiting a team, securing suppliers, and acquiring technology
or premises.
4. Venture Creation — formally establishing the business (registration, initial production or service
delivery, first customers).
5. Growth and Management — scaling operations, refining the business model, and managing the
enterprise through subsequent stages of its life cycle.
6. Harvest or Renewal — eventually exiting (sale, IPO, succession) or reinvesting to launch new ventures
(as in serial entrepreneurship).

EXAMPLE — Sara Blakely — Spanx (USA)

Sara Blakely identified a specific unmet need (comfortable, seamless shapewear) while dressing for a party,
developed and patented a prototype using $5,000 of personal savings, manufactured through several
rejections from hosiery mills before finding a manufacturer willing to work with her, and grew Spanx into a
billion-dollar company without external investment. Her journey traces the full entrepreneurial process from
opportunity identification through growth.

2.2 Defining Features of Entrepreneurship as a Process

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• Opportunity-driven: begins with a gap between what exists and what could exist.
• Resource-assembling: requires organizing land, labour, capital, and technology that the entrepreneur
does not necessarily already own.
• Risk-bearing: involves financial, career, social, and psychological risk with no guaranteed return.
• Value-creating: produces new economic value (profit, jobs, tax revenue) and often social value as well.
• Dynamic and iterative: the process rarely proceeds in a straight line; it involves experimentation,
feedback, and revision.

3. Entrepreneur vs. Entrepreneurship vs. Enterprise

These three related terms are frequently confused. It is useful to be precise: the entrepreneur is the person,
entrepreneurship is the process, and the enterprise is the outcome — the actual business organization that
results.

Term What It Refers To Example

The individual who conceives the idea, takes

Entrepreneur Kamal Quadir
initiative, assembles resources, and bears risk.

The multi-year process of

The continuous process of innovating,
building bKash from
Entrepreneurship organizing, financing, and managing a new
concept to national mobile-
venture from idea to growth.
money leader

The resulting business unit, firm, or bKash Limited, the

Enterprise
organization that is created and operated. company

A useful analogy: if entrepreneurship is the journey and the enterprise is the destination, the entrepreneur
is the traveller who chooses the route, deals with obstacles along the way, and decides when and how to
arrive.

4. Types of Entrepreneurs
Entrepreneurs can be classified along several different dimensions: their attitude toward innovation, the
nature of the business activity they undertake, and, increasingly, the contemporary business models
enabled by digital technology and changing social values. Each classification highlights a different useful lens
for analysis.

4.1 Classical Classification by Innovation Stance (Clarence Danhof)

Economist Clarence Danhof classified entrepreneurs according to their willingness to adopt innovation and
new technology. This classification is especially useful for understanding why some businesses grow while
similar businesses in the same industry stagnate or fail.
Entrepreneurship Development & SME Management Chapter 1: Introduction to Entrepreneurship

Innovative Entrepreneurs
These entrepreneurs actively introduce new products, new methods of production, or new markets. They
thrive on invention, are comfortable experimenting, and are willing to take on significant risk to pioneer
change ahead of competitors.

EXAMPLE — Elon Musk — Tesla, Inc.

Musk's Tesla pioneered a new approach to electric vehicle manufacturing, direct-to-consumer sales
(bypassing traditional dealerships), and over-the-air software updates for cars — combining several
Schumpeterian “new combinations” at once. This is a textbook example of the innovative entrepreneur.

Imitative / Adoptive Entrepreneurs

These entrepreneurs do not originate new ideas themselves; instead, they copy and adapt innovations that
have already been proven successful elsewhere, often localizing them for a new market or geography.

EXAMPLE — Local Ride-Sharing Platforms

Pathao and similar Bangladeshi ride-sharing platforms adapted the ride-hailing business model pioneered
internationally by Uber and Grab, adjusting it for local conditions (motorbike rides, cash payments, local
regulatory relationships). This is imitative/adoptive entrepreneurship — the underlying model is not new, but
its local execution required real entrepreneurial effort.

Fabian Entrepreneurs
Named after the cautious, delaying military tactics of the Roman general Fabius, these entrepreneurs are
skeptical of change. They will only adopt a new practice or technology once it becomes evident that failing
to do so would put the survival of the business at serious risk.

EXAMPLE — Traditional Family Retail Businesses

Many long-established family-run shops in Old Dhaka resisted moving to digital point-of-sale systems, online
listings, or mobile payment acceptance for years — only adopting these tools once falling foot traffic and
competition from digitally enabled retailers made the shift unavoidable. This hesitant, wait-and-see pattern is
characteristic of Fabian entrepreneurship.

Drone Entrepreneurs
These entrepreneurs are the most resistant to change. They continue operating with traditional methods
even in the face of mounting losses, refusing to imitate competitors or abandon outdated technology. Left
unchecked, this pattern typically leads to business decline or failure.

EXAMPLE— Kodak and the Digital Camera

Kodak's engineers invented the digital camera in 1975, but the company's management resisted shifting
away from its highly profitable film business for decades, fearing it would cannibalize existing revenue.
Competitors that embraced digital photography captured the market, and Kodak filed for bankruptcy
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protection in 2012. Kodak's leadership is a classic cautionary case of drone-like resistance to change at the
corporate level.

4.2 Classification by Nature of Business Activity

Entrepreneurs are also commonly classified by the type of economic activity their venture is engaged in.

Type Description Example

Conceives an idea for a new product or Grameenphone's early founders

Business Entrepreneur service and converts it into a functioning identifying the opportunity for
enterprise. mobile telephony in Bangladesh

Engages in buying and selling — distribution Import-export traders operating

Trading Entrepreneur
and trade rather than manufacturing. out of Chattogram port

Beximco Group's textile and

Establishes and operates a manufacturing or
Industrial Entrepreneur pharmaceutical manufacturing
industrial production unit.
operations

Undertakes farming, agro-processing, or PRAN Group's agro-processing

Agricultural Entrepreneur
allied rural production activities. and food production business

Organizes and manages a business under a

A new-product division
formal corporate/company structure, often
Corporate Entrepreneur launched inside Unilever
within an established firm
Bangladesh
(“intrapreneurship”).

Builds ventures around delivering

10 Minute School, an ed-tech
Service Entrepreneur professional or personal services rather than
service venture
physical goods.

Entrepreneurs are also frequently classified by scale (large, medium, small, and micro/tiny-scale
enterprises), by area of operation (urban versus rural entrepreneurs), and by demographic characteristics
(such as women entrepreneurs, youth entrepreneurs, and first-generation entrepreneurs), each of which
carries policy relevance — for example, government SME financing schemes in Bangladesh often target
women entrepreneurs and rural micro-enterprises specifically.

4.3 Contemporary Types Shaping Entrepreneurship in 2026

Digital technology, changing capital markets, and shifting social expectations have given rise to newer
entrepreneurial archetypes that sit alongside (and sometimes overlap with) the classical categories above.

Serial Entrepreneur
An individual who repeatedly starts, grows, and exits multiple ventures across a career, reinvesting the
capital, networks, and lessons learned from each venture into the next.
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EXAMPLE — Elon Musk's Venture Sequence

Musk co-founded Zip2 (sold in 1999), then [Link]/PayPal (sold to eBay in 2002), then founded or led SpaceX,
Tesla, Neuralink, and The Boring Company in succession — a clear example of serial entrepreneurship, where
capital and credibility from one venture funds the risk-taking in the next.

Tech / Digital Entrepreneur

Builds ventures around software, digital platforms, or technology-enabled products, often able to scale
quickly with comparatively limited physical assets.

EXAMPLE — bKash (Bangladesh)

As discussed above, bKash built a digital mobile-financial-services platform that scaled to tens of millions of
users without requiring a traditional bank branch network — illustrating how digital entrepreneurship can
achieve reach that would be far more capital-intensive through physical infrastructure alone.

Social Entrepreneur
Pursues a business model designed primarily to solve a social or environmental problem while remaining
financially sustainable. (This type is explored in depth in Section 9.)

EXAMPLE — Grameen Bank

Dr. Muhammad Yunus founded Grameen Bank to extend small, collateral-free loans to the rural poor — a
venture whose central mission was poverty alleviation, financed through a sustainable lending model rather
than ongoing donations.

Digital Nomad Entrepreneur

Runs a location-independent business while working remotely, often relocating between countries.

EXAMPLE — Freelance SaaS Developers

A growing number of Bangladeshi software developers and designers run small SaaS (software-as-a-service)
products or freelance agencies serving international clients entirely online, allowing them to work from co-
working spaces in Dhaka, Bangkok, or elsewhere without being tied to a single office location.

Lifestyle Entrepreneur
Builds a venture around a personal passion and a desired way of life, prioritizing autonomy, flexibility, and
personal satisfaction over maximum growth or scale.

EXAMPLE — Independent Café and Boutique Owners

Many small, owner-operated cafés and design boutiques in Dhaka's Gulshan, Banani, and Dhanmondi areas
are run by entrepreneurs who deliberately keep the business at a manageable scale that fits their desired
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lifestyle, rather than pursuing rapid multi-branch expansion.

Scalable Startup Entrepreneur

Designs a venture from inception to grow rapidly, typically targeting large addressable markets and seeking
outside venture investment to fund fast expansion.

EXAMPLE — Airbnb and Facebook

Both Airbnb and Facebook were designed from the outset to scale to global markets, seeking successive
rounds of venture capital investment to fund rapid user growth well before either business was consistently
profitable — the defining pattern of scalable-startup entrepreneurship.

Source: contemporary typology adapted from GoDaddy Resources, “9 Types of Entrepreneurship Explained” (updated December
2025), and standard entrepreneurship literature (Hisrich, Peters & Shepherd; Kuratko).

5. Role of Entrepreneurs in Business and the Economy

Entrepreneurs perform functions that extend well beyond running their own individual businesses —
collectively, entrepreneurial activity is one of the primary mechanisms through which economies grow,
restructure, and modernize.

Innovation Engine
Entrepreneurs introduce new products, processes, and business models that raise productivity across the
economy, often forcing incumbent firms to innovate defensively in response.

Capital Formation
By starting and growing ventures, entrepreneurs mobilize household and institutional savings into
productive investment — machinery, technology, buildings — rather than leaving capital idle.

Employment Generation
New and growing enterprises create direct jobs within the firm and indirect jobs among suppliers,
distributors, and service providers, absorbing surplus labour into the economy.

EXAMPLE — Bangladesh's Ready-Made Garment (RMG) Sector

Entrepreneurial investment in RMG manufacturing over four decades transformed Bangladesh into the
world's second-largest apparel exporter, directly employing over four million workers — the majority of them
women — and indirectly supporting millions more through associated logistics, packaging, and accessories
industries.

Wealth Creation
Entrepreneurship Development & SME Management Chapter 1: Introduction to Entrepreneurship

Successful ventures generate income, profit, and taxable value that fund both private consumption and
public goods and services through the tax base.

Balanced Regional Development

Entrepreneurs who establish ventures in underdeveloped or rural areas help reduce regional economic
disparities and slow rural-to-urban migration pressure.

Improved Standard of Living

New ventures widen the range and quality of goods and services available to consumers, often at more
competitive prices than existing alternatives.

Export Promotion
Entrepreneurs who develop internationally competitive products earn valuable foreign exchange,
strengthening a country's balance of payments and reducing reliance on imports.

EXAMPLE — IT and Freelancing Exports

Bangladesh has become one of the top countries globally for online freelancing, with tens of thousands of
individual entrepreneurs and small digital agencies exporting software development, design, and content
services — a rapidly growing, low-capital source of foreign exchange earnings.

Backward and Forward Linkages

A new venture typically stimulates the growth of supplier industries “backward” in the value chain and
distributor or complementary industries “forward” in the value chain, creating a broader web of economic
activity around the core enterprise.

6. Characteristics of Entrepreneurs
Research across psychology, management, and economics has identified a recurring set of personal
characteristics associated with entrepreneurial behaviour. These are relatively stable traits or dispositions,
distinct from the learnable skills discussed as “qualities” in Section 7.

Calculated Risk-Taking
Entrepreneurs generally accept moderate, carefully assessed risk rather than either avoiding risk altogether
or gambling recklessly. McClelland's research found that high-need-achievers prefer tasks of intermediate
difficulty — challenging enough to be meaningful, but not so improbable that success depends purely on
luck.

Self-Confidence
A strong, internalized belief in one's own ability to achieve goals despite obstacles, setbacks, or skepticism
from others.
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EXAMPLE — J. K. Rowling
Before publishing the first Harry Potter novel, Rowling's manuscript was rejected by twelve publishing
houses. Her persistence and self-belief in the value of the work — continuing to submit it despite repeated
rejection — illustrates the self-confidence and persistence characteristic of successful entrepreneurial and
creative ventures alike.

Innovativeness
A consistent tendency to seek novel solutions, question established ways of doing things, and generate new
products or approaches rather than simply replicating the status quo.

Visionary Outlook
The ability to set a clear long-term direction for a venture and to anticipate future opportunities or shifts in
the market before they become obvious to competitors.

EXAMPLE — Muhammad Yunus's Vision for Microfinance

Dr. Yunus's vision — that poverty could be substantially reduced by extending small, trust-based credit
directly to the rural poor, bypassing the collateral requirements of conventional banks — was, at the time,
contrary to prevailing banking wisdom. That long-term vision, sustained over years of piloting and
refinement, ultimately produced the Grameen Bank model now replicated in over 100 countries.

Persistence and Resilience

The capacity to maintain effort over time and to recover quickly from setbacks, failed attempts, or outright
business failure, rather than abandoning the venture at the first difficulty.

Internal Locus of Control

A psychological orientation in which individuals believe that outcomes result primarily from their own
actions and decisions, rather than from luck, fate, or external forces beyond their control. Entrepreneurs
with a strong internal locus of control are more likely to take initiative because they believe their effort will
meaningfully affect the result.

7. Qualities of a Successful Entrepreneur

While characteristics (Section 6) describe relatively stable underlying traits, qualities are the applied,
learnable skills that convert those traits into effective venture performance. These qualities can be
developed through education, training, mentorship, and deliberate practice — which is precisely why
entrepreneurship can be taught and studied as a discipline.

Leadership
The ability to inspire, direct, and align a team of employees, partners, or co-founders around a shared goal,
especially important as a venture grows beyond what a single founder can manage alone.
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Sound Decision-Making
The capacity to evaluate incomplete or ambiguous information quickly and commit to a course of action
under time pressure — entrepreneurs rarely have the luxury of complete information before they must
decide.

Communication
The ability to articulate a venture's vision, value proposition, and needs clearly to investors, customers,
employees, and partners — essential for raising capital, closing sales, and building a team.

Financial Literacy
Competence in managing cash flow, preparing and following budgets, and understanding unit economics
(the cost and revenue associated with a single unit of product or service) — a frequently cited reason for
early-stage venture failure is poor financial management rather than a bad underlying idea.

Networking Ability
Skill in building and maintaining relationships that open access to resources, mentorship, suppliers,
customers, and investment opportunity.

Adaptability
The capacity to adjust strategy, product features, or the business model quickly in response to changing
market conditions, competitor actions, or customer feedback.

EXAMPLE — Netflix's Pivot from DVD Rental to Streaming

Netflix began as a DVD-by-mail rental company but adapted its business model as broadband internet
became widespread, shifting to streaming and eventually to original content production. This willingness to
cannibalize its own original business model before a competitor did so is a clear demonstration of
entrepreneurial adaptability at the corporate level.

Time Management
The ability to prioritize effectively across the many competing and simultaneous demands — product
development, sales, hiring, fundraising — that a growing venture places on a founder's limited time.

Emotional Intelligence
Skill in managing one's own stress and reactions under pressure, and in accurately reading the needs,
motivations, and concerns of employees, customers, and partners.

8. Importance of Entrepreneurship in Economic Development

Entrepreneurship is widely regarded by economists and policymakers as a primary engine of GDP growth,
productivity improvement, and structural economic transformation — not simply a source of individual
income for the entrepreneur. The scale of global entrepreneurial activity, and its documented economic
effects, are tracked systematically by research bodies such as the Global Entrepreneurship Monitor (GEM).
Entrepreneurship Development & SME Management Chapter 1: Introduction to Entrepreneurship

8.1 The Scale of Global Entrepreneurship

Indicator Figure Source

665 million+ (roughly 1 in 8 working- GEM 2024/2025 Global

Entrepreneurs worldwide
age adults) Report

Share of global GDP covered by GEM's 53 GEM 2025/2026 Global

57%
tracked economies Report

Early-stage entrepreneurs weighing GEM 2025/2026 Global

84%
social/environmental impact in decisions Report

Middle-income economies at or near GEM 2025/2026 Global

9 of 23 tracked
gender parity in startup activity Report

8.2 Channels of Economic Contribution

Employment Generation
Small and medium enterprises (SMEs) and startups typically absorb labour faster than large, established
firms, which is especially significant in developing economies such as Bangladesh, where the formal large-
firm sector cannot alone absorb the annual influx of new labour market entrants.

Innovation and Technology Diffusion

New ventures commercialize research and spread new technology into everyday production and service
delivery, often faster than large incumbent organizations constrained by existing processes and legacy
investment.

Poverty Reduction
Micro and small enterprises raise household income directly and reduce dependency on subsistence
agriculture or informal, low-productivity labour.

Balanced Regional Development

Rural and semi-urban ventures reduce migration pressure toward already-congested capital cities and
spread economic growth more evenly across a country's regions.

Women and Youth Empowerment

Entrepreneurship broadens economic participation among groups historically underrepresented in formal
employment. The GEM 2025/2026 report finds narrowing gender gaps in startup activity in several
economies, though disparities persist in many regions and warrant continued policy attention.

Trade and Foreign Exchange

Export-oriented enterprises earn valuable foreign currency and reduce a country's reliance on imports — as
seen in both Bangladesh's RMG sector and its growing IT/freelancing exports discussed in Section 5.
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EXAMPLE — Bangladesh's SME Sector

SMEs are estimated to contribute a substantial share of Bangladesh's GDP and the majority of non-
agricultural employment. Government policy instruments such as the SME Foundation, refinancing schemes
through Bangladesh Bank, and targeted credit quotas for women entrepreneurs reflect the recognized
centrality of entrepreneurship to national economic development strategy.

9. Social Entrepreneurship
Social entrepreneurship applies the same core entrepreneurial principles — opportunity recognition,
innovation, and resource mobilization — to ventures whose primary mission is to solve a social or
environmental problem, while still remaining financially sustainable. It represents one of the fastest-growing
and most influential entrepreneurial models of the past two decades, and is of particular relevance in
Bangladesh given the country's globally recognized leadership in this field.

9.1 Defining Features

Dual (or Blended) Mission
Success is measured by both social or environmental impact and financial viability — neither dimension
alone is sufficient.

Innovation-Led Solutions
Social entrepreneurs typically address the root causes of a social problem through new operating models,
rather than providing only short-term charitable relief.

Financial Sustainability
Social enterprises generate earned revenue from the sale of goods or services, rather than relying solely on
donations, grants, or government subsidy — which allows them to scale independently of fundraising cycles.

Measurable Impact
Social enterprises deliberately track social or environmental outcomes (such as number of lives improved,
emissions reduced, or households lifted above the poverty line) alongside conventional financial metrics.

9.2 Social Entrepreneurship vs. Traditional Enterprise

Dimension Social Enterprise Traditional Enterprise

Primary goal Social or environmental value Profit maximization

Success metric Impact combined with sustainability Revenue and market share

Use of profit Reinvested into the mission Distributed to owners/shareholders

Grants, impact investors, and earned

Typical funding source Equity, debt, and retained earnings
revenue
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9.3 Case Studies

EXAMPLE — Grameen Bank (Bangladesh)

Founded by Dr. Muhammad Yunus, Grameen Bank pioneered collateral-free microfinance for the rural poor,
demonstrating that credit could be extended sustainably to borrowers excluded by conventional banking
requirements, using peer-group lending structures to manage repayment risk without physical collateral. The
model was awarded the Nobel Peace Prize in 2006 for its contribution to economic and social development
“from below,” and has since been replicated by microfinance institutions across more than 100 countries.

EXAMPLE — BRAC (Bangladesh)

Founded by Sir Fazle Hasan Abed, BRAC is the world's largest non-governmental development organization
by scale. It combines development programmes in education, health, and legal services with commercial
social enterprises — including dairy, seed, and retail businesses — whose earned revenue helps fund BRAC's
poverty-reduction and social-development work at a national scale.

EXAMPLE — TOMS Shoes (USA)

TOMS built its business around a “one-for-one” giving model, in which the sale of each pair of shoes funded
the donation of a pair to a child in need. While the model has since evolved in response to critiques about
donation-based aid, it remains a widely studied early example of embedding social impact directly into a for-
profit product's business model.

EXAMPLE — [Link] (Global)

[Link] designs and distributes affordable solar-powered lighting and power products for households without
reliable access to the electrical grid, primarily across Africa and South Asia, generating both commercial
revenue and measurable improvements in health, safety, and educational outcomes for off-grid households.

EXAMPLE — Aravind Eye Care System (India)

Aravind operates a cross-subsidization model in which paying patients fund free or heavily subsidized
cataract and other eye surgeries for patients who cannot afford to pay, using highly efficient, high-volume
surgical processes (inspired partly by manufacturing assembly-line principles) to keep costs low while
maintaining clinical quality. Aravind is frequently cited in management and public-health literature as a
model for scalable, financially self-sustaining healthcare delivery to low-income populations.

According to the GEM 2025/2026 Global Report, 84% of early-stage entrepreneurs worldwide now report
considering social and/or environmental impact in their business decisions — indicating that social
entrepreneurship is moving from a specialized niche toward a mainstream expectation across
entrepreneurial activity generally.
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Entrepreneurship Development & SME Management Chapter 1: Introduction to Entrepreneurship

10. Chapter Summary

7. An entrepreneur identifies opportunity, innovates, organizes resources, bears risk, and creates value —
a role defined across theory by Cantillon, Say, Schumpeter, Knight, McClelland, and Drucker, among
others.
8. Entrepreneurship is a continuous process (idea → evaluation → resource mobilization → venture
creation → growth), distinct from both the entrepreneur (the person) and the enterprise (the resulting
business unit).
9. Entrepreneurs are classified by innovation stance (innovative, imitative, Fabian, drone), by business
activity (business, trading, industrial, agricultural, corporate, service), and by contemporary digital-era
models (serial, tech, social, digital nomad, lifestyle, scalable startup).
10. Entrepreneurs perform essential economic functions: innovation, capital formation, employment
generation, wealth creation, balanced regional development, improved living standards, export
promotion, and backward/forward linkages.
11. Entrepreneurial success rests on both inherent characteristics (calculated risk-taking, self-
confidence, innovativeness, vision, persistence, internal locus of control) and learnable qualities
(leadership, decision-making, communication, financial literacy, networking, adaptability, time
management, emotional intelligence).
12. Entrepreneurship is a central driver of economic development — GEM data show over 665 million
entrepreneurs worldwide, contributing employment, innovation diffusion, poverty reduction, regional
balance, inclusion, and foreign exchange earnings.
13. Social entrepreneurship blends financial sustainability with a deliberate social or environmental
mission, exemplified powerfully by Bangladesh's own Grameen Bank and BRAC, among global peers
such as TOMS, [Link], and Aravind Eye Care.

12. References
• Cantillon, R. (1755). Essai sur la Nature du Commerce en Général.
• Say, J.-B. (1803). A Treatise on Political Economy.
• Schumpeter, J. A. (1934). The Theory of Economic Development. Harvard University Press.
• Knight, F. H. (1921). Risk, Uncertainty and Profit. Houghton Mifflin.
• McClelland, D. C. (1961). The Achieving Society. Van Nostrand.
• Drucker, P. F. (1985). Innovation and Entrepreneurship. Harper & Row.
• Hisrich, R. D., Peters, M. P., & Shepherd, D. A. (latest ed.). Entrepreneurship. McGraw-Hill.
• Kuratko, D. F. (latest ed.). Entrepreneurship: Theory, Process, Practice. Cengage Learning.
• Global Entrepreneurship Monitor (2026). GEM 2025/2026 Global Report: From Uncertainty to
Opportunity. [Link]
Entrepreneurship Development & SME Management Chapter 1: Introduction to Entrepreneurship

• Global Entrepreneurship Monitor (2025). GEM 2024/2025 Global Report. [Link]

• GoDaddy Resources (2025). “9 Types of Entrepreneurship Explained.” [Link]
• Yunus, M. Grameen Bank official publications; [Link]
• BRAC official publications; [Link]