Concept of Entrepreneurship

Entrepreneurship is the ability and readiness to develop, organize and run a business enterprise, along with any of its uncertainties in order to make a profit. The most prominent example of entrepreneurship is the starting of new businesses.

Entrepreneurship development is the means of enhancing the knowledge and skill of entrepreneurs through several classroom coaching and programs, and training. The main point of the development process is to strengthen and increase the number of entrepreneurs.

This entrepreneur development process helps new firms or ventures get better in achieving their goals, improve business and the nation’s economy. Another essential factor of this process is to improve the capacity to manage, develop, and build a business enterprise keeping in mind the risks related to it.

In simple words, the entrepreneurship development process is about supporting entrepreneurs to advance their skills with the help of training and coaching classes. It encourages them to make better judgments and take a sensible decision for all business activities.

In a Conference on Entrepreneurship held in the United States, the term ‘entrepreneurship’ was defined as follows:

“Entrepreneurship is the attempt to create value through recognition of business opportunity, the management of risk-taking appropriate to the opportunity, and through the communicative and management skills to mobilize human, financial and material resources necessary to bring a project to fruition”.’

In the opinion ‘of A.H. Cole, “Entrepreneurship is the purposeful activity of an individual or a group of associated individuals, undertaken to initiate, maintain or aggrandize profit by production or distribution of economic goods and services”.

In all the above definitions, entrepreneurship refers to the functions performed by an entrepreneur in establishing an enterprise. Just as management is regarded as What managers do, entrepreneurship may be regarded as what entrepreneurs do. In other words, entrepreneurship is the act of being an entrepreneur.

Entrepreneurship is a process involving various actions to be undertaken to establish an enterprise. It is, thus, the process of giving birth to *new enterprise. ‘

Innovation and risk-bearing are regarded as the two basic elements involved in entrepreneurship. Let us understand what these two terms mean.

Innovation

Innovation, i.e., doing something new or something different is a necessary condition to be called a person as an entrepreneur.

The entrepreneurs are constantly on the lookout to do something different and unique to meet the changing requirements of the customers.

They may or may not be inventors of new products or new methods of production, but they possess the ability to foresee the possibility of making use of the inventions for their enterprises. Let some facts speak.

To satisfy the changing preference of customers, nowadays fruit juice is sold in small cartons (Mango Fruity) instead of bottles so that customers can carry it and throw away the container after drinking the juice. Let us take another example.

Lipton offers its tea in small packs known as ‘PUDIYAS’ to meet the requirements of its rural customers.

You may have heard of Henry Ford, the founder of the Ford Motor Company in the United States.

Remember, Henry Ford himself did not invent the automobile. Foreseeing the people’s desire to have passenger cars at somewhat lower rates, he applied new methods of mass production to offer passenger cars to the customers at an affordable price.

Since customers’ tastes and preferences always keep on changing, hence the entrepreneur needs to apply invention after invention continuously to meet the customers’ changing demands for products.

Risk-Bearing

Starting a new enterprise always involves risk and trying to do something new and different is also risky.

The reason is not difficult to seek. The enterprise may earn profits or incur losses because of various factors like increasing competition, changes in customer preferences, shortage of raw material and so on.

An entrepreneur, therefore, needs to be bold enough to assume the risk involved in the enterprise.

He needs to be a risk-taker, not a risk avoider. His risk-bearing ability enables him even if he fails in one time or one venture to persist on and on which ultimately helps him succeed.

The Japanese proverb applies to him; “Fall seven times, stand up eight.”

“Entrepreneurship entails bearing the risk of buying at a certain price and selling at uncertain prices.”- Ricardo Cantillon.

The concept focuses on the trading of goods and bearing of its associated risk as to the act of entrepreneurship.

“Entrepreneurship is any kind of innovative function that could have a bearing on the welfare of an entrepreneur.”-Joseph A. Schumpeter (1934).

Schumpeter recognizes entrepreneurship as a rewarding activity that involves any form of innovation. Innovation is doing things in a new and better way. It adds utility to existing operations or products.

“Entrepreneurship is that form of social decision making performed by economic innovators.” -Robert K. Lamb (1952).

Lamb describes entrepreneurship as an act of economic activity engaged in innovation He also points out the social orientation of entrepreneurship as it is involved with social good and welfare.

“Entrepreneurship is the dynamic process of creating incremental wealth.” – Robert C. Ronstadt (1984)

Ronstadt explains that wealth is c.eated by individuals who assume the major risks in terms of equity, time, and/or career commitment or provide value for some product or service.

The product or service may or may not be new or unique but the entrepreneur must somehow infuse value by receiving and locating the necessary skills and resources.

The Robert D. Hisrich and Michael P. Peters (1998) said,

“Entrepreneurship is 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.”

The writers conceive entrepreneurship as the devoted efforts of individuals for creating something of value to the people of society. They also believe that entrepreneurship is a rewarding activity.

It gives not only financial rewards but also freedom and personal satisfaction that are of immense reinforcement for the furtherance of entrepreneurial action. Entrepreneurship, in their view, is also a risk hearing activity.

Three types of risks are involved with it the financial, psychic and social risks. Entrepreneurship takes these risks and devoted efforts to having rewards by giving mankind something of value.

Therefore, entrepreneurship entails missionary efforts that involve risks to innovate something of value from which the entrepreneur will get financial and psychic rewards.

Ø Meaning of Entrepreneur

The entrepreneur is defined as someone who has the ability and desire to establish, administer and succeed in a startup venture along with risk entitled to it, to make profits. The best example of entrepreneurship is the starting of a new business venture. The entrepreneurs are often known as a source of new ideas or innovators, and bring new ideas in the market by replacing old with a new invention.

It can be classified into small or home business to multinational companies. In economics, the profits that an entrepreneur makes is with a combination of land, natural resources, labor and capital.

In a nutshell, anyone who has the will and determination to start a new company and deals with all the risks that go with it can become an Entrepreneur.

What are the 4 Types of Entrepreneurship?

It is classified into the following types:

Small Business Entrepreneurship-

These businesses are a hairdresser, grocery store, travel agent, consultant, carpenter, plumber, electrician, etc. These people run or own their own business and hire family members or local employee. For them, the profit would be able to feed their family and not making 100 million business or taking over an industry. They fund their business by taking small business loans or loans from friends and family.

Scalable Startup Entrepreneurship-

This start-up entrepreneur starts a business knowing that their vision can change the world. They attract investors who think and encourage people who think out of the box. The research focuses on a scalable business and experimental models, so, they hire the best and the brightest employees. They require more venture capital to fuel and back their project or business.

Large Company Entrepreneurship-

These huge companies have defined life-cycle. Most of these companies grow and sustain by offering new and innovative products that revolve around their main products. The change in technology, customer preferences, new competition, etc., build pressure for large companies to create an innovative product and sell it to the new set of customers in the new market. To cope with the rapid technological changes, the existing organizations either buy innovation enterprises or attempt to construct the product internally.

Social Entrepreneurship-

This type of entrepreneurship focuses on producing product and services that resolve social needs and problems. Their only motto and goal is to work for society and not make any profits.

Ø Characteristics of Entrepreneurship:

Not all entrepreneurs are successful; there are definite characteristics that make entrepreneurship successful. A few of them are mentioned below:

Ability to take a risk- Starting any new venture involves a considerable amount of failure risk. Therefore, an entrepreneur needs to be courageous and able to evaluate and take risks, which is an essential part of being an entrepreneur.
Innovation- It should be highly innovative to generate new ideas, start a company and earn profits out of it. Change can be the launching of a new product that is new to the market or a process that does the same thing but in a more efficient and economical way.
Visionary and Leadership quality- To be successful, the entrepreneur should have a clear vision of his new venture. However, to turn the idea into reality, a lot of resources and employees are required. Here, leadership quality is paramount because leaders impart and guide their employees towards the right path of success.
Open-Minded- In a business, every circumstance can be an opportunity and used for the benefit of a company. For example, Paytm recognized the gravity of demonetization and acknowledged the need for online transactions would be more, so it utilized the situation and expanded massively during this time.
Flexible- An entrepreneur should be flexible and open to change according to the situation. To be on the top, a businessperson should be equipped to embrace change in a product and service, as and when needed.
Know your Product-A company owner should know the product offerings and also be aware of the latest trend in the market. It is essential to know if the available product or service meets the demands of the current market, or whether it is time to tweak it a little. Being able to be accountable and then alter as needed is a vital part of entrepreneurship.

Ø Process of Entrepreneurship Development

The below-mentioned steps will illustrate how to build an effective entrepreneurship development program for an entrepreneur to organize and launch the new ventures.

Discover – Any new process begins with fresh ideas and objectives, wherein the entrepreneur recognizes and analyzes business possibilities. The analyzing of opportunities is a risky task, and an entrepreneur looks out for inputs from other persons, including channel partners, employees, technical people, consumers, etc. to reach an ideal business opportunity.
Evaluation – The evaluation of an opportunity can be done by asking several questions to oneself. For instance, questions like whether it is worth taking a chance and investing in the idea, will it attract the consumer, what are the competitive advantages and the risk linked with it are asked. A reasonable and sensible entrepreneur will also analyze his skills and whether it matches his entrepreneurial objectives or not.
Developing a plan – After the identification of an opportunity, an entrepreneur has to build a complete business plan. It is the most important step for new business as it sets a standard and the assessment criteria and sees if a company is working towards the set goals.
Resources – The next step in the process of entrepreneurial development is resourcing. Here, the entrepreneur recognizes the source of finance and from where the human resource can be managed. In this step, the entrepreneur also tries to find investors for his new business.
Managing the company – After the hiring process and funds are raised now its time to start the operation to accomplish the desired goals. All the entrepreneur will decide on the management structure that will be assigned to resolve the operational problems whenever it occurs.
Harvesting – The last step in this process is harvesting, where an entrepreneur determines the future growth and development of the business. Here, real-time development is compared with the projected growth, and then the business security or the extension is initiated accordingly.

Ø Management vs Entrepreneurship

The term management and entrepreneur are often misunderstood because they are the important person of a company that is involved in management, organization, administration and control the business. However, there is a major difference between the two concepts. The main feature that distinguishes these two words is the entrepreneur is the owner of the company and bears both profit and loss, whereas, the management operates and runs the company with the help of various administrative functions.

Parameters	Management	Entrepreneurship
Meaning	Management makes the entire ecosystem of a business organized and structured	Entrepreneurship is defined as someone who has the ability and desires to establish, administer, and succeed
Process	The method includes surveys, planning, and operating the business.	The process includes surveys, planning, and operating the business.
Features	Includes team management and flexible organizations.	international entrepreneurship, social entrepreneurship, business growth, and entrepreneurial cognition, etc.
Discipline	Management has a vast spectrum and includes all business functions.	Entrepreneurship is a single part of the management.

What is Management?

Management refers to the overall operational function of a business, which includes planning, creating, managing, and governing. This executive function leads to utilising physical, finance, employee, and other resources of an organisation efficiently.

Management is the foundation of any profitable organisation as it makes the entire ecosystem of a business organised and structured, which means getting the job done through the employee to achieve the company’s objective.

Depending upon the company’s management size can range from a single person in a small business or hundreds of managers in multinational companies.

What is Entrepreneurship?

Entrepreneurship is defined as someone who has the ability and desires to establish, administer, and succeed in a startup venture along with risk entitled to it, to make profits. The best example of entrepreneurship is the starting of a new business venture. In Economics, the profits that an entrepreneur make is with a combination of land, natural resources, labour, and capital.

A successful entrepreneur should have characteristics like given below:

Should be a risk-taker
Dedication and Opinionative
Ability to scrutinise
Imaginative power
Professionalism and Orderliness

Ø Role of Entrepreneurship in Economic Development

Entrepreneurship plays an influential role in the economic growth and standard of living of the country. As a startup founder or small business owner, you may think that you are simply working hard to build your own business and provide for yourself and your family. But you are actually doing a whole lot more for your local community, state, region, and the country as a whole. Here are the top 7 important roles an entrepreneur plays in the economic development of a country.

1. Wealth Creation and Sharing: By establishing the business entity, entrepreneurs invest their own resources and attract capital (in the form of debt, equity, etc.) from investors, lenders and the public. This mobilizes public wealth and allows people to benefit from the success of entrepreneurs and growing businesses. This kind of pooled capital that results in wealth creation and distribution is one of the basic imperatives and goals of economic development.

2. Create Jobs: Entrepreneurs are by nature and definition job creators, as opposed to job seekers. The simple translation is that when you become an entrepreneur, there is one less job seeker in the economy, and then you provide employment for multiple other job seekers. This kind of job creation by new and existing businesses is again is one of the basic goals of economic development. This is why the Govt. of India has launched initiatives such as StartupIndia to promote and support new startups, and also others like the Make in India initiative to attract foreign companies and their FDI into the Indian economy. All this in turn creates a lot of job opportunities, and is helping in augmenting our standards to a global level.

3. Balanced Regional Development: Entrepreneurs setting up new businesses and industrial units help with regional development by locating in less developed and backward areas. The growth of industries and business in these areas leads to infrastructure improvements like better roads and rail links, airports, stable electricity and water supply, schools, hospitals, shopping malls and other public and private services that would not otherwise be available.

Every new business that locates in a less developed area will create both direct and indirect jobs, helping lift regional economies in many different ways. The combined spending by all the new employees of the new businesses and the supporting jobs in other businesses adds to the local and regional economic output. Both central and state governments promote this kind of regional development by providing registered MSME businesses various benefits and concessions.

4. GDP and Per Capita Income: India’s MSME sector, comprised of 36 million units that provide employment for more than 80 million people, now accounts for over 37% of the country’s GDP. Each new addition to these 36 million units makes use of even more resources like land, labor and capital to develop products and services that add to the national income, national product and per capita income of the country. This growth in GDP and per capita income is again one of the essential goals of economic development.

5. Standard of Living: Increase in the standard of living of people in a community is yet another key goal of economic development. Entrepreneurs again play a key role in increasing the standard of living in a community. They do this not just by creating jobs, but also by developing and adopting innovations that lead to improvements in the quality of life of their employees, customers, and other stakeholders in the community. For example, automation that reduces production costs and enables faster production will make a business unit more productive, while also providing its customers with the same goods at lower prices.

6. Exports: Any growing business will eventually want to get started with exports to expand their business to foreign markets. This is an important ingredient of economic development since it provides access to bigger markets, and leads to currency inflows and access to the latest cutting-edge technologies and processes being used in more developed foreign markets. Another key benefit is that this expansion that leads to more stable business revenue during economic downturns in the local economy.

7. Community Development: Economic development doesn’t always translate into community development. Community development requires infrastructure for education and training, healthcare, and other public services. For example, you need highly educated and skilled workers in a community to attract new businesses. If there are educational institutions, technical training schools and internship opportunities, that will help build the pool of educated and skilled workers.

A good example of how this kind of community development can be promoted is Azim Hashim Premji, Chairman of Wipro Limited, who donated Rs. 27,514 crores for promoting education through the Azim Premji Foundation. This foundation works with more than 350,000 schools in eight states across India.

So, there is a very important role for entrepreneurs to spark economic development by starting new businesses, creating jobs, and contributing to improvement in various key goals such as GDP, exports, standard of living, skills development and community development.

Ø The importance and role of an entrepreneur

An entrepreneur is an individual who sets up and grows a business. They combine different factors of production (such as – land, labour and capital) to try and create a new profitable business venture. Entrepreneurs are themselves an important ‘factor of production’ and an essential aspect of a functioning free market economy.

Importance of entrepreneurs

Free market evolution. Entrepreneurs are important in a free market because they help the market respond to changing prices and consumer preferences. For example, with the rise in the use of the internet, an entrepreneur may see the potential to set up a new home delivery service which uses an app for consumers to buy. Without entrepreneurs, product markets would become static and be slow to changes in new technology and trends

Efficiency improvements. A successful entrepreneur may take revenue from an established business. This can cause ‘creative destruction’ A phrase used to describe changes in the economy – which in the short-term could lead to firms going out of business and/or job losses. However, this potential for creative destruction also creates an incentive for an established business to adapt and increase their own efficiency. For example, in response to Uber taxi services, it created an incentive for established taxi-firms to develop their own apps.

Dynamic efficiency. Entrepreneurs can make radical changes and introduce new technologies which significantly move on an industry. For example, Henry Ford’s novel use of assembly lines enabled a drastic cut in the average cost of producing a motor car. His efficiency savings forced other carmakers to follow suit.

New markets. Entrepreneurs can often ‘redefine the rules’ of an established industry. For example, in the 1990s, if you wanted to rent a room, you would scour newspaper ads and have to make a decision based on 40 words of text. However, the new service “Spareroom.co.uk” means you can easily scan through different possibilities and have an opportunity to get to know your potential flatmate before you move in. This has created a new market and new service that increases the efficiency of finding a compatible person to live with.

· A similar new product is ‘Room for help.’ Where people can rent a room in return for providing a service such as cleaning/babysitting It was created by Ms Rolando after she came across an advert whilst looking for a room to rent. It is an example of how entrepreneurs often set up a business in response to their individual need.

New Gig economy. The new technological economy offers increased opportunities for entrepreneurs. Low start-up costs give entrepreneurs the potential to find new niche markets to develop. Many of the current large technological firms are relatively young and started as small start-ups – often in someone’s room or garage.

New values. An entrepreneur is not just about price and profit. An entrepreneur may be motivated to enter an industry to offer a more ethical product or provide a service to a community. For example, Anita Roddick set up Body Shop at a time when many cosmetics were tested on animals. Her new set up eschewed animal testing. It proved a successful business strategy and it soon became the industry standard. In other situations, entrepreneurs may take a risk and provide a community service such as a volunteer led railway – offering steam trains for tourists and locals.

The entrepreneur can sell his new business for more than the costs of inputs or continued to grow and develop the business.

Motives of entrepreneurs

· Profit. Profit is the biggest incentive. If the business is successful, the entrepreneur can pay themselves a large dividend or sell the product

· Income. Unemployed may feel self-employment is the best opportunity to gain an income.

· Overcome a particular need. Sometimes, entrepreneurs set up a business to deal with a missing market. For example, Louis Braille was completely blind – this led him to invent the braille system to communicate and read.

· Non-financial motives. Mixed up with profit motive may be other objectives

· Ethical stance. An entrepreneur may wish to do a different type of business, e.g. an organic farm which doesn’t harm the environment.

· Independence. An entrepreneur may also be motivated by non-financial factors, such as independence to work for themselves or to choose the hours and not have to listen to another boss.

· Social entrepreneurship. Entrepreneurs don’t always act alone. They may form partnerships with other entrepreneurs to create a stronger business or develop a social enterprise which aims at serving the community.

Ø Entrepreneurship Functions-Functions Makes an Entrepreneur Successful

Entrepreneurship, as we know, is the pivotal factor for new initiatives that give momentum and prosperity to our civilization.

Entrepreneurs are those who perceive what others haven’t seen and act upon that perception.

Therefore, Entrepreneurs performs multivariate functions in all the societies irrespective of their level of development.

Peter Kilby, Albert Shapiro, John Burch, and others have prescribed different functions of entrepreneurship or entrepreneur from which we can derive distinct but common functions of entrepreneurship.

Functions of a successful entrepreneur are;

Taking Initiative
Organizing Resources
Identifying Opportunities and Prospects
Risk-Taking
Decision Making
Technology Transfer and Adaptation
Innovation
Fostering Autonomy
Social Responsibility
Public Relations
Experience Sharing
Managerial Roles
Balanced Economic Development

These are explained below;

1. Taking Initiative

Entrepreneurship is a pro-active activity that takes such actions, which others can’t even perceive.

This unique function of entrepreneurship provides our civilization with a wide variety of products, ways of actions, production techniques, etc.

Therefore, taking initiative with such end and qualification is the prime function of entrepreneurship in every economy.

2. Organizing Resources

Organizing entails identifying those resources that are required to transform a particular idea into reality. The resources include human and nonhuman resources.

Organizing in entrepreneurship will increase productivity, promote new ventures, distribute and supervise work and responsibility, and will remove barriers to work.

Entrepreneurship, thus, is the taping tool fur assuming indigenous skills and resources for the productive purpose.

3. Identifying Opportunities and Prospects

Entrepreneurship searches those activities of value that have an economic and social contribution.

It identifies new opportunities in the socio-economic arena which have got profitable prospects therefore, entrepreneurs are called searchers of hopes into blind spots and this function enormously indebted our society to entrepreneurship.

4. Risk-Taking

Entrepreneurship takes the risk for the new venture.

For innovative actions in the field of production technology for new products in a volatile market and new raw materials used in production.

Moreover, it also takes the risk for theft, robbery, snatching market fall and hooliganism that may be involved with new entrepreneurship This is a major function of entrepreneurship in developing countries.

5. Decision Making

Entrepreneurship is a new initiative therefore, it has to decide multivariate issues that affect new ventures.

Entrepreneurship has to decide upon equipment to be used quality, price and its variation, deficiency, capital structure, the feasibility of the project, organizational structure, philosophy of management, etc. that will guide, run and prosper the new venture or distinct attempt for entrepreneurship.

We know that decision-making is a process and entrepreneurship to make n a success, goes through this process.

6. Technology Transfer and Adaptation

Entrepreneurship throughout the world brings invented technology from different comers of the world and makes it appropriate by making required adjustments for local conditions.

This function of entrepreneurship involves identifying appropriate technology with market potentials and adapts it into the local environment.

Sometimes, the technology uses indigenous materials that reduce cost and wastage of resources. This entrepreneurial function virtually makes the world united in terms of homogeneous technology.

7. Innovation

Entrepreneurship innovates a new production process or technology, market, sources of new materials, management, strategy or technique, investment opportunity, etc. that Schumpeter (1934) calls as the fundamental characteristics of entrepreneurship.

Under the context of the changing environment, the entrepreneur locates the most feasible opportunity for the venture as well as improved or distinct technology that gives competitive advantages or a new opportunity to prosperity.

Innovation is a creative means to add new utilities to existing situations or products. Entrepreneurship through innovation creates innovative products or operations for human society.

8. Fostering Autonomy

Entrepreneurship is an exposure of creative faculty that provides personal satisfaction and independence. The unique freedom to think differently is the impetus for entrepreneurship.

Thus, entrepreneurship Fosters autonomy to advent something new of value by the application of devoted efforts and time.

9. Social Responsibility

Entrepreneurship with its innovative technology somehow promotes human efforts. It restarts closed industries with innovative managerial strategies and techniques

It also motivates new entrepreneurs and attracts them to engage into an entrepreneurial venture.

Entrepreneurship provides new products or ideas that give momentum and diversity into society.

Therefore, entrepreneurship performs social responsibility that protects the welfare, benefit and economic gain of the society. It also promotes the community standard by providing jobs and amenities.

10. Public Relations

Entrepreneurship is a new venture that requires social acceptance by the regulatory bodies and the public at large.

The government, as well as the persons’ who will be subject to entrepreneurship, would be convinced through public relations to accept and to allow the entrepreneur to execute an entrepreneurial venture.

History tells that many entrepreneurs were disregarded, coerced and even eliminated for their entrepreneurial activities. Failure is costly and therefore, public relation is a significant function of entrepreneurship.

11. Experience Sharing

Entrepreneurship may spread in society through publishing and sharing its success stories.

Thus, entrepreneurship holds workshops, industrial visits through which the entrepreneurial experience in different counties may be shared with a widespread adaptation of success.

This function will benefit the economies of the countries as well as the world bodies,

12. Managerial Roles

Entrepreneurs perform several managerial roles to keep their venture functioning with success.

The roles are interpersonal roles that consist of a figurehead role, leadership role, and liaison role; informational roles that include recipient role, disseminator role, and the spokesperson role; decisional roles that consist of an entrepreneurial role, disturbance-handler role, resource allocator role, and the negotiator role.

The entrepreneur also does the associated managerial functions such as planning, organizing, leading and controlling.

13. Balanced Economic Development

Sustainable economic development requires a balanced development among various regions and sectors of a country. Every country tries to ensure such a situation that makes industrialization throughout the country “possible.

Entrepreneurs make it possible by establishing business ventures in various parts of the country in various sectors of the industry.

What is entrepreneurship? process and function all concept?