Introduction to Entrepreneurship

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Entrepreneurship has become increasingly important for businesses of all sizes around

the world.

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It opens new opportunities and possibilities for the businesses to create values for themselves and for the society at large.

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Despite its popularity, studies suggest that the scope of entrepreneurship remains unknown, and therefore the prospects of entrepreneurial activities remains not fully realised.

This chapter highlights some aspects concerning the concept of entrepreneur, entrepreneurship, entrepreneurial process and finally the entrepreneurship opportunities and challenges.

Introduction to Entrepreneurship

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Entrepreneurs have always been present, however their behavioural patterns were different in different periods of time.

The word entrepreneur was derived from the French word “entreprendre”, which means “to undertake” (Kuratko, 2016).

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The usage of the term entrepreneur can be traced from 1755, wherein an entrepreneur was described to “buy the country produce from those who bring it or to order it to be brought on their account. They pay a certain price to resell wholesale or retail at an uncertain price” (Cantillon, 1931, p.51; Hamilton & Harper, 1994)

Entrepreneur from the very beginning, was principally an independent speculator of the commodity (Hamilton &

Harper, 1994)

Introduction to Entrepreneurship

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In the modern day markets, the term entrepreneur has been closely linked with economic development. An economic development can emerge due to several reasons, which includes:

1. the launch of new source of procurement for raw materials or materials
2. the introduction of a new production mechanism
3. the introduction of a new quality of product, or a novel product
4. the opening of new market
5. the re-organisation of a business.

The management of all these aspects are carried by an enterprise, and the people whose functions are to carry out these activities are called entrepreneurs (Bull & Willard, 1993)

Introduction to Entrepreneurship

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take risks whilst seeking rewards for their ventures and efforts (Kuratko, 2016)

create value through multiple stakeholders and resources

transform the opportunities into merchandisable concepts

innovators or developers who identify and capture opportunities

In contemporary markets, entrepreneur act as:

Definition of an Entrepreneur

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To date, several definitions have been penned to describe an entrepreneur. And some of them are

mentioned herewith:

Entrepreneur is someone who manages all the necessary resources to produce and market a product which responds to the market scarcity (Leibenstein, 1968; Bull & Willard, 1993).

“Entrepreneurs are individuals who recognize opportunities where others see chaos contradiction, and

confusion. They are aggressive catalysts for change within the marketplace” Kuratko (2016, p.3)

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“Entrepreneur is the person who carries out new combinations, causing discontinuity. The role is completed when the function is completed. The person may be an employee with an existing organisation or may start a new venture. An investor per se only risks capital for a return.” Bull & Willard (1993, p. 186)

Characteristics of an Entrepreneur

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The main characteristics of the entrepreneur are due to their sociological and psychological factors. Some of those

characteristics are mentioned below:

Entrepreneurs are vision-oriented people

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Entrepreneurs have a high need in achievement

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Entrepreneurs do not rely on fate or luck, however they try to control their own lives

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Entrepreneurs undertake moderate risks, which is why they look for high earning on their investments

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Entrepreneurs have the abilities to deal with several ambiguous situations in their ventures. They face these ambiguous situations and circumstances regularly because they do certain jobs and tasks which are entirely new by nature.

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Entrepreneurs have the tendency to be productive and efficient with in a given period of time. However, at times, they might be seen as inflexible individuals in team-work.

Traits of an Entrepreneur

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Some of the common traits of entrepreneurs are :

Risk takers Flexible Knowledgeable

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Independent

Energetic Creative Dynamic leader

Responsive to suggestions or criticisms

Resourceful

Initiators Persistent

Description of Entrepreneurship

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Entrepreneurship is an “act of establishing a new venture” Christensen et al, (2000, p.4)

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Entrepreneurship can also be considered as the function through which growth and development can be achieved without commencing a new business venture. It offers a process by which people either inside the companies or on their own, look for prospects without regard to the resources they presently control (Stevenson et al, 1989; Stevenson & Jarillo, 1990).

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However, “an entrepreneurial organisation is that which pursues opportunity, regardless of resources currently controlled” Stevenson & Jarillo (1990, p.23).

Definition of Entrepreneurship

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“Entrepreneurship is the creation of organisations. What differentiates entrepreneurs from non-entrepreneurs is that entrepreneurs create organisation, while non-entrepreneurs do not. In behavioural approaches to the study of entrepreneurship, an entrepreneur is seen as a set of activities involved in organisation creation, while in trait approaches an entrepreneur is a set of personality traits and characteristics” Gartner (1988, p.11)

Types of Entrepreneurship

Achievement entrepreneur

Salesman entrepreneur

Technology entrepreneur

Manager

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There are generally four entrepreneurial types:

Source: Adapted from Carsrud & Brannback, 2007)

Types of Entrepreneurship

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Achievement entrepreneur

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Primarily associated with the desire to achieve.

These types of individuals are usually having an enormous amount of energy and capabilities to take charge.

They take initiatives and do not wait for things to happen.

They often possess the leadership qualities and have a great sense of commitment and responsibility in their ventures.

These types of individuals are good in several in several business related aspects and they try to accomplish

their objectives, whilst heading their missions. (Carsrud & Brannback, 2007).

Types of Entrepreneurship

Salesman entrepreneur:

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• These individuals possess skills to interact with people and have very good soft side of the management aspects.
• These people are typified for having the feelings of the consumers’ needs and wants.
• They usually use the soft sales approach whilst pursuing the growth of their ventures.
• They have enormous talent for connecting with people and spend most of their time in marketing their

products/services and permit other people to manage their businesses.

• These individuals therefore devote their time to understand who and how are the consumers in the market.
• They develop a proper vision for marketing and sales practices to reach wider consumer groups. (Carsrud & Brannback, 2007).

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Types of Entrepreneurship

Technology entrepreneur:

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• Individuals belong to this category, are generally idea developers.
• These individuals often possess great ideas
• They have the capabilities to develop innovative processes and invent novel products or services for niche markets.
• As these individuals possess qualities to create several ideas they have a good analytical intelligence and

take calculated risks in their ventures

• Although these individuals possess good analytical intelligence to make way through several situations, however, at times their missions can become a bit idealistic. (Carsrud & Brannback, 2007).

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Types of Entrepreneurship

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Manager:

• These types of individuals possess the qualities of taking charge of the missions.
• Individuals belonging to this type of entrepreneurship are very competitive by nature but not as co- operative as one would expect in a team work.
• They are usually found to take positions of high authority, such as external investors or sometimes act as board of directors.
• They prefer to work in larger organisations than small entrepreneurial businesses.
• They seek comfort in making effective marketing strategies, but not necessary selling products or services.
• Their ways to sell are different, they employ logic and carefully thought persuasions, as mechanisms to sell their ideas.
• They have rich experiences, strong management skills and possess strength in managing existing businesses

(Carsrud & Brannback, 2007).

Enrepreneurship Process

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Identify an

opportunity

Establish a vision

Persuade others

Gather resources

Create new venture,

product or market

Change/adapt with

time

The process of entrepreneurship can be observed through the six- stage process:

Source: Lall & Sahai (2007, p.16)

Entrepreneurship opportunities

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Entrepreneurship offers several opportunities and some of those opportunities are:

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1. expansion of entrepreneurial activities through the advent of the internet and the

explosion of e-commerce on a global scale.

2. Integration in social and political fabrics in several emerging economies.
3. increasing economic situations in middle income house-holds in several economies.
4. increase in cross-border engagements and market entry mechanisms such as strategic alliances, subsidiaries, joint ventures etc.
5. evolving trends in channel structures among the developed world.
6. increased engagements in global markets concerning social responsibility and ethics (Ramachandran &

Gokila, 2012).

Entrepreneurship avenues

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Firstly, entrepreneurs can seek information to understand the balance of trade relationships between the exports in potential markets and the merchandising imports.

Secondly, entrepreneurs can conduct extensive research to understand the political aspects of the global economy to seek other outlines for strategic and operational aspects concerning barriers to enter a market.

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Thirdly, entrepreneurs can understand the developments of any domestic market of a country and comprehend how these nations protect their industry by establishing tariffs, quotas, boycotts, non-tariff, monetary and market barriers (Ramachandran & Gokila, 2012).

Contemporary markets offers several avenues for entrepreneurial activities:

Entrepreneurship challenges

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Although entrepreneurship activities are beneficial, however they come with certain challenges. Some of those

challenges are mentioned herewith:

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Knowledge gap between the developed, emerging, frontier and under developed markets for conducting business

Difference in accounting systems in several countries

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Variable rates of return

Non-convertibility of the currencies Communication gaps

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Language barriers

Source: Adapted from Ramachandran & Gokila (2012).

Entrepreneurship challenges

In addition, to the previously mentioned challenges, there are also some other challenges commonly found in

entrepreneurship

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Political unrest and legal

concerns

Cultural differences Discrepancies in the use of

technology

Complexity in the markets

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Supply chain concerns

Lack of specific infrastructure in some countries or regions

Financial markets and their volatility

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Source: Adapted from Ramachandran & Gokila (2012).

(meaning

The term 'Entrepreneur' -French word 'Entreprendre’ to undertake certain activities)

1. Produces a product
2. Sells & market the product
3. Bear overheads like :-

*Pays rent of Land and building

*wages to labor

*interest on capital

*later generate profit

Working Definition

An entrepreneur is a person who combines various factors of production, processes raw material, converts the raw material into a finished product and creates utility and sells the produce in the market to earn profit.

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ENTREPRENEURS ARE MADE AND NOT BORN.

ENTERPRISE :

Entrepreneurial activity, especially when accompanied by initiative and resourcefulness.

ENTREPRENEURSHIP

may defined in various ways, but the four key elements involved in it are:

1. Innovation.
2. Risk-taking.
3. Vision.
4. Organizing skill.

The capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit. The most obvious example of entrepreneurship is the starting of new businesses.

Types of Participants

• DOERS : Achievers
• DREAMERS : Doing something but not their dream project
• DWADLERS : Undecided
• DUDS : Abandoned their ideas of being entrepreneur

Entrepreneurial Characteristics

Being an entrepreneur requires specific characteristics and skills that are often achieved through education, hard work, and planning.

Risk Taker

Businesses face risk. Entrepreneurs minimize research, planning, and skill development.

risk

through

Perceptive

Entrepreneurs view problems as opportunities and challenges.

Curious

Entrepreneurs like to know how things work. They take the time and initiative to pursue the unknown.

Entrepreneurial Characteristics

Imaginative

Entrepreneurs are creative. They imagine solutions to problems that encourage them to create new products and generate ideas.

Persistent

True entrepreneurs face bureaucracy, make mistakes, receive criticism, and deal with money, family, or stress problems. But they still stick to their dreams of seeing the venture succeed.

Goal-setting

Entrepreneurs are motivated by the excitement of staring a new business. Once achieved, they seek out new goals or ventures to try.

Entrepreneurial Characteristics

Self-confident

Entrepreneurs believe in themselves. Their self-confidence takes care of any doubts they may have.

Flexible

Entrepreneurs must be flexible in order to adapt to changing trends,

markets, technologies, rules, and economic environments.

Independent

An entrepreneur’s desire for control and the ability to make decisions

often makes it difficult for them to work in a controlled environment.

Hardworking

Entrepreneurs need a great deal of energy to see a venture start and succeed. Yet they are not deterred by the long hours to achieve their goal.

• Stage One – The Dreamer.

This is where the idea for a business is born. The dream is the culmination of the entrepreneur’s life experiences and passions.

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• Stage Two – The Architect.

This stage is where the dream is interpreted into a business model which becomes the blueprint of the venture. The Dreamer typically does not make a good Architect.

Stage Three – The Builder.

This is the stage where the dream can first become reality.

The Builder then literally turns the dream into reality. We are now at a critical juncture of the venture.

Stage Four – The Cultivator.

This is the growth stage. Once the business is launched the Cultivator’s primary role is to guide the business

through the various levels of growth.

Classification of Entrepreneur

Innovative entrepreneur : -

Such entrepreneurs introduce new goods or new methods of production or discover new markets or reorganize the enterprise. Examples of first movers include innovative companies such as eBay and Coca-Cola. eBay was the first company to take the auction process online, kicking off operations in 1995.

Imitative or adoptive entrepreneur :-

Such entrepreneurs don’t innovate, they copy technology or technique of others.. Such entrepreneurs are significant for under-developed economies because they put such economies on high rate of economic development`EX: Chinese mobiles.

Prime mover :-

This entrepreneur sets in motion a powerful sequence of development expansion and diversification of business.

Ambani

Manager :-

EX:

Such an entrepreneur doesn’t initiate expansion and its content in just staying in business.

The artists:-

Are highly creative type, very conscious about business.

EX: Aamir Khan, Michael Dell (Dell), Deep Kalra (Make my trip)

The visionary:-

Too focused on dreams with little focused on reality.

EX: Jack Welch(GE), Bill Gates (Microsoft), Kishore Biyani(Future Group), Warren Buffet (Berkshire Hathaway), Sam Walton(Wall Mart).

Problems of Entrepreneurship Development Programmes (EDPs) are:

1. No Policy at the National Level. Though Government of India is fully aware about the importance of entrepreneurial development, yet we do not have a national policy on entrepreneurship. It is expected that the government will formulate and enforce a policy aimed at promoting balanced regional development of various areas through promotion of entrepreneurship.

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• Problems at the Pre training Phase. Various problems faced in this phase are — identification of business opportunities, finding & locating target group, selection of trainee & trainers etc.

3. Over Estimation of Trainees. Under EDPs it is assumed that the trainees have aptitude for self employment and training will motivate and enable the trainees in the successful setting up and managing of their enterprises. These agencies thus overestimate the aptitude and capabilities of the educated youth. Thus on one hand the EDPs do not impart sufficient training and on the other financial institutions are not prepared to finance these risky enterprises set up by the not so competent entrepreneurs.
4. Duration of EDPs. An attempt is made during the conduct of EDPs to prepare prospective entrepreneurs thoroughly for the various problems they will be encountering during the setting up and running of their enterprises. Duration of most of these EDPs varies between 4 to 6 weeks, which is too short a period to instill basic managerial skills in the entrepreneurs. Thus the very objective to develop and strengthen entrepreneurial qualities and motivation is defeated.

5. Non Availability of Infrastructural Facilities. No prior planning is done for the conduct of EDPs. EDPs conducted in rural and backward areas lack infrastructural facilities like proper class room suitable guest speakers, boarding and lodging etc.

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• Improper Methodology. The course contents are not standardized and most of the agencies engaged in EDPs are themselves not fully clear about what they are supposed to do for the attainment of pre-determined goals. This puts a question mark on the utility of these programmes.

Need of Entrepreneurship

• Increases national production
• Balanced area development
• Dispersal of economic power
• Reinvestment of profit for the welfare of the area of profit generation
• Development is a function of motivation and human resource
• Entrepreneurial awareness

Steps to Promote Entrepreneurship

• Setup Entrepreneurial Development Institutes in every state.
• Recognize and celebrate entrepreneurship among youth as a preferred career.
• Enhance access to finance for start-ups in every possible way.
• Reduce the time of starting a business and ease down the complex procedures of Govt licensing and other such activities like finance and banking etc.
• Promote entrepreneurship among women and other

underprivileged.

Thank You So Much