ENTREPRENEURSHIP-BCAS401

Chapter 1-

Entrepreneurship does not mean sticking to conventional business. It implies creating new things.
Its emphasis is not merely on idea generation but also on the promotion and implementation of a
new business environment.

Entrepreneurship-

Entrepreneurship may be defined as the visualization and realization of new ideas by insightful
individuals, who are able to-

a) use information and

b) mobilize resources to implement their vision.

Entrepreneurship is the ability (i.e., knowledge plus skills) of a person to translate ideas of
commencing a business unit into reality by setting up a business on ground to serve the needs of
society and the nation, in the hope of profits.

Entrepreneurship is the manifest ability and willingness of individuals, on their own, in teams,
within and outside existing organizations to perceive and create new economic opportunities
(new products, new production methods, new organizational schemes and new product-market
combinations), and to introduce their ideas in the market, in the face of uncertainty and other
obstacles, by making decisions on location, form and the use of resources and institutions.

Features-

i) Entrepreneurship is an economic activity done to create, develop and maintain a profit-

oriented business.

ii) It begins with identifying an opportunity as a potential to sell and make profit in the market.

iii) Entrepreneurship is the best utilization of available resources.

iv) Entrepreneurship is the ability of an enterprise and an entrepreneur to take risk.

Role and Importance of Entrepreneur in Economic Growth-

The role of entrepreneurship in economic development has nine salient takeaways:

1. Raises Standard of Living

A significant role of entrepreneurship in economic development is that it can greatly enhance the
standard of living for individuals and communities by setting up industries and creating wealth
and new positions. Entrepreneurship not only provides large-scale employment and ways to
generate income, it also has the potential to improve the quality of individual life by developing
products and services that are affordable, safe to use, and add value to their lives.
Entrepreneurship also introduces new products and services that remove the scarcity of essential
commodities.

2. Economic Independence

Entrepreneurship can be a path to economic independence for both the country and the
entrepreneur. It reduces the nation’s dependence on imported goods and services and promotes
self-reliance. The manufactured goods and services can also be exported to foreign markets,
leading to expansion, self-reliance, currency inflow, and economic independence. Similarly,
entrepreneurs get complete control over their financial future. Through their hard work and
innovation, they generate income and create wealth, allowing them to achieve economic
independence and financial security.

3. Benefits of New Firms and Businesses

Entrepreneurs identify market needs and develop solutions through their products and services
to begin their business venture. By starting new firms and businesses, entrepreneurs play a key
role in shaping the economy and creating a more dynamic and diverse business landscape.
Entrepreneurship also promotes innovation and competition, leading to new and improved
products and services that contribute to economic growth and development.

4. Creation of Jobs

Entrepreneurship is a pivotal driver of job creation. Running the operations of new businesses
and meeting the requirements of customers results in new work opportunities. Entrepreneurship
also drives innovation and competition that encourages other entrepreneurs and investments,
creating new jobs in a wide range of industries, from manufacturing and construction to service
and technology sectors.

5. Encourages Capital Formation

Capital formation is the process of accumulating resources, such as savings and investments, to
fund new business ventures and support economic growth. Entrepreneurship can encourage
capital formation by attracting investment. In addition, the creation of new businesses and the
growth of existing firms can also contribute to the development of a more diverse and dynamic
economy that encourages capital formation and opens the door to a wide range of investment
opportunities.
Rise in Standard of Economic Independence
Living

Creation of Jobs
Benefits of New
Firms

Encourages Capital Elimination of Poverty Optimal Use of

Formation Resources

6. Elimination of Poverty

Entrepreneurship has the potential to lift people out of poverty by generating employment and
stimulating economic activity. Entrepreneurship also contributes to the development of local
economies and helps improve the overall standard of living.

7. Community Development

Entrepreneurship promotes economic growth, provides access to goods and services, and
improves the overall standard of living. Many entrepreneurs also make a positive impact on their
communities and improve their well-being by catering to underserved areas and developing
environment-friendly products. Their work can help build stronger, more vibrant communities
and promote social and economic development.

8. Optimal Use of Resources

Entrepreneurship can help identify market opportunities and allocate resources in the most
effective way possible. Entrepreneurs also play a key role in developing innovative products and
services that meet the needs of customers while optimizing the use of available resources.

9. Increases Gross National Product and Per Capita Income

Entrepreneurship can play a significant role in increasing economic growth and prosperity by
increasing Gross National Product (GNP) and Per Capita Income (PCI). GNP measures the total
economic output of a country while PCI calculates the average income per person. The increase
in GNP can lead to a rise in PCI. Entrepreneurship can contribute to GNP by creating new
businesses and industries, which can lead to job creation, increased consumer spending, and
higher tax revenue.
Entrepreneurial Behaviour-

Entrepreneurs’ behaviour is a key construct in understanding how entrepreneurs create new

organisations.

Entrepreneurial behaviour is the actions taken by the entrepreneur to reach desired goals.
Entrepreneurial behaviour is restricted to tasks that are or can be under the control of the
entrepreneur, such as the role of the board, organisation, decision making, and goals and
strategies.

Nature of Entrepreneurial Behaviour-

1. They Plan their Day in Advance:

In business, it’s easy to let other people’s priorities run your day. Phone calls, emails,
appointments, meetings – it never ends. Unstoppable entrepreneurs plan their day in
advance, before the mayhem begins. But they don’t just make any old plan – they make
sure to block out time for their most important priorities.

2. They Get Proper Nutrition and Exercise:

This simply can’t be overstated. Being a productive, unstoppable entrepreneur is about your
body just as much as your mind and will. If you don’t take care of your nutrition and daily
exercise, you aren’t going to be at your best – and you definitely won’t be unstoppable.
Drink a lot of water, eat breakfast and get your body moving. You’ll be much more
successful as a result.

3. They Position Themselves to Serve:

Those who focus only on their own success are the ones who don’t succeed at all. To be
effective as a business owner, you need to serve your customers. That might come through
in the way your products make their lives easier or the way your customer service efforts
delight them. Whatever the case may be, setting service as one of your top priorities is a
surefire way to become unstoppable.

4. They Set Clear Goals:

Every unstoppable entrepreneur has clear goals. Knowing your goals will keep you going
when things get tough and give you something to focus on when you’re not sure what to do
next.

5. They Take Calculated Risks:

People have an image of entrepreneurs as those who take crazy risks just for fun. But while
the risks we take may be crazy to those without an entrepreneurial mind, in reality, they’re
calculated. Or, at least, they should be.
Entrepreneurial Motivation-

The entrepreneurial motivation is the process that activates and motivates the entrepreneur to
exert higher level of efforts for the achievement of his/her entrepreneurial goals. 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. So to say, a
motivational entrepreneur will be willing to exert a particular level of effort (intensity), for a
certain period of time (persistence) toward a particular goal (direction).

Most of the researchers have classified all the factors motivating entrepreneurs into internal and
external factors as follows:

Internal Factors-

These include the following 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-

These include:

1. Government assistance and support.

2. Availability of labour and raw material.
3. Encouragement from big business houses.
4. Promising demand for the product.
Need for Achievement Theory-

Each person tends to develop certain motivational drives as a result of his cognitive pattern and
the environment in which he lives. David McClelland gave a model of motivation which is
based on three types of needs, namely, achievement, power and affiliation.

They are as follows:

(i) Need for achievement (n-Ach): a drive to excel, advance and grow;
(ii) Need for power (n-Pow): A drive to influencing others and situations;
(iii) Need for affiliation (n-Aft): A drive for friendly and close interpersonal relationships.

McClelland also suggests that these three needs may simultaneously be acting on an individual.
But, in case of an entrepreneur, the high need for achievement is found dominating one. In his
view, the people with high need for achievement are characterised by the following :

(i) They set moderate, realistic and attainable goals for them.
(ii) Prefer to situations in which they can find solutions for solving personal responsibility. (iii)
They need concrete feedback on how well they are doing.
(iv) They have need for achievement for attaining personal accomplishment.
(v) They look for challenging tasks.

Entrepreneurial motivation may be defined as a set of motives such as high need to achieve,
moderate need for power and low affiliation motive which induce people to set up and run their
own enterprises. Apart from these, entrepreneurs have other behavioural dimensions such as,
tolerance for ambiguity, problem solving, creativity, etc.
Risk- taking Behavior of An Entrepreneur-

Entrepreneurship, by its very nature, is an endeavour fraught with uncertainty. Each decision,
whether big or small, can have a multitude of outcomes—some desirable and others not so
much. This inherent uncertainty brings to the fore the significance of risk-taking, a trait closely
linked with entrepreneurship.

So, what makes risk-taking such an indispensable part of entrepreneurial success?

1. Innovation and Differentiation:

Risk-taking often acts as a catalyst for innovation. Entrepreneurs who are willing to take risks
venture into uncharted territories, trying out novel ideas and breaking away from conventional
approaches. This innovation not only aids in setting their products or services apart from the
competition but also can provide them with a distinct competitive advantage. By not being
afraid to do things differently or try something new, entrepreneurs can introduce ground-
breaking products and services that might redefine entire industries.

2. Learning from Failures:

While it's natural to associate risk with potential failure, it's essential to recognize that even
failed risks provide invaluable lessons. They offer insights into what doesn't work, helping
entrepreneurs pivot and refine their strategies. Moreover, failure often builds resilience, which is
a vital trait for any entrepreneur navigating the volatile world of start-ups and business.

3. Unearthing Unique Strategies:

Taking risks can sometimes lead entrepreneurs to discover strategies that are unique to their
situations, giving them a tailored approach to overcoming challenges. By not following the
beaten path, entrepreneurs can devise solutions that might not be apparent to others, giving them
a distinctive edge in the market.

4. Breaking out of Comfort Zones:

Many individuals avoid risks to remain in their comfort zones. However, for entrepreneurs,
comfort can be a trap. Only by pushing boundaries and taking chances can they realize the full
potential of their ideas and businesses. Embracing risks can often lead to significant rewards and
growth opportunities that wouldn't be possible otherwise.

5. Risk as a Necessity:

When diving into entrepreneurship, many are already taking a significant risk. This could mean
leaving a stable job, investing personal savings, or putting one's reputation on the line. This
inherent risk-taking nature sets the stage for an entrepreneurial journey filled with challenges
and opportunities alike.
For successful entrepreneurs, risk-taking is not merely a choice; it's an intrinsic part of the
journey, a testament to their belief in their vision, and an unwavering commitment to bringing
their ideas to fruition.

Innovation in Entrepreneur/Entrepreneurship-

Entrepreneurship and innovation are closely related but distinct concepts. While innovation
involves introducing something new, such as a business model, product, idea, or service,
entrepreneurship focuses on turning a great idea into a viable business opportunity.

Innovation is the starting point for entrepreneurship, as it involves the creation of new and
valuable ideas. However, entrepreneurship goes further by taking on the risk and responsibility
of bringing those ideas to market and building a successful business.

Innovative entrepreneurship is crucial for identifying emerging trends and market demands,
allowing businesses to create new and appealing goods or services for their target audience. To
stay relevant in a competitive landscape, businesses must continue to innovate by developing
innovative products, and services, and evolving their brand. Innovation plays a central role in
entrepreneurship as it involves the replacement or improvement of existing offerings, enabling
entrepreneurs to meet market trends and satisfy customer demands with innovative strategies.

Innovation and entrepreneurship are distinct yet interconnected concepts that play vital roles in
the success of businesses. Some may think they mean the same thing, but using them
interchangeably is an error. While they centre around the same idea, it is important to
understand their differences.

Innovation is the embodiment of creative thinking, driving the development of unique solutions
and ideas. It encompasses the introduction of technological or digital advancements that unlock
new possibilities and capabilities.
Entrepreneurial Traits-

While entrepreneurs have in common certain characteristics and skills, there is a wide range of
individuality among them. In sports, some athletes do well because they love a sport and are
trained to play it. They have developed their skills. Others are full of natural talent and require
much less special training. Still others simply find their own successful approach to playing a
sport even though they may not have been trained.

While there is no recipe for be- coming a successful entrepreneur, certain characteristics/traits
are associated with entrepreneurial success. Here are several important ones-

Passion-One of the most important qualities associated with successful entrepreneurship is

passion.

Self-Reliant-Entrepreneurs are self-reliant. They do not wait for others to tell them what to do.
They are self-starters and feel confident making decisions.

Risk Taking-Entrepreneurs are willing to take a risk. While most people try to avoid risk.

Competitive Behaviour-Entrepreneurs tend to thrive on competition. While they may actively

compete with others, they are more likely to compete against themselves.

Creativity-Although they may not realize it, most entrepreneurs are creative. This does not mean
they paint pictures or write poetry (though it can);rather, it means they find innovative ways to
problem solve.

Finally, entrepreneurs are willing to learn. They are information seekers. They may already
know a great deal, yet they recognize that no one knows everything, and that they can learn
valuable information from others. Entrepreneurs who are not open to learning often compromise
the degree of success they will be able to achieve.

Characteristics of Entrepreneur-

Great entrepreneurs come from all walks of life. In Entrepreneurship Essentials, it’s noted that
“there’s no single personality profile, and it’s important to pay attention to the entrepreneurial
team, rather than focus on the individual.”

And while that's true, there are certain characteristics and skills that are particularly important
for entrepreneurs to have when starting and leading a venture-
1. Curiosity-Successful entrepreneurs have a distinct personality trait that sets them apart from
other organizational leaders: a sense of curiosity.

2. Willingness to Experiment-Along with curiosity, entrepreneurs require an understanding of

structured experimentation, such as design thinking.

3. Adaptability-Entrepreneurship is an iterative process, and new challenges and opportunities

present themselves at every turn.

4. Decisiveness-To be successful, an entrepreneur has to make difficult decisions and stand by

them.

5. Self-Awareness-A great entrepreneur is aware of their strengths and weaknesses. Rather than
letting shortcomings hold them back, they build well-rounded teams that complement their
abilities.

6. Risk Tolerance-Entrepreneurship is often associated with risk. While it’s true that launching a
venture requires an entrepreneur to take risks, they also need to take steps to minimize it.

7. Comfort with Failure-In addition to risk-management and calculated decision-making,

entrepreneurship requires a certain level of comfort with failure.

8. Persistence-While many successful entrepreneurs are comfortable with the possibility of

failing, it doesn’t mean they give up easily. Rather, they see failure as an opportunity to learn
and grow.

9. Innovative Thinking-Innovation often goes hand-in-hand with entrepreneurship.

While innovation in business can be defined as an idea that’s both novel and useful.
 10. Long-Term Focus-Most people associate entrepreneurship with starting a business. While
the early stages of launching a venture, such as securing funding, are critical to its success, the
process doesn’t end once the business is operational.

Types of Entrepreneur-

Innovators Hustler Imitators

Researcher Buyers

[Link]-Innovators are the types of entrepreneurs who come up with completely new ideas
and turn them into viable businesses.

In most cases, these entrepreneurs change the way people think about and do things. Such
entrepreneurs tend to be extremely passionate and obsessive, deriving their motivation from the
unique nature of their business idea.

2. Hustler Entrepreneur-Unlike innovators whose vision is the gas in their engine, hustlers just
work harder and are willing to get their hands dirty. Hustlers often start small and think about
effort – as opposed to raising capital to grow their businesses. These types of entrepreneurs
focus on starting small with the goal of becoming bigger in the future.

3. Imitators-Imitators are the types of entrepreneurs who copy certain business ideas and
improve upon them. They are always looking for ways to make a particular product better so as
to gain an upper hand in the market.

Imitators are part innovators and part hustlers who don’t stick to the terms set by other people
and have a lot of self-confidence.

4. Researcher-Even after having an idea, researchers will take their time to gather all the relevant
information about it. To them, failure is not an option because they have analysed the idea from
all angles.
5. Buyers-One thing that defines buyers is their wealth. These types of entrepreneurs have the
money and specialize in buying promising businesses.

Buyer entrepreneurs will identify a business and assess its viability, proceed to acquire it and
find the most suitable person to run and grow it.