UNIT 1 Entrepreneurship is the act of being an entrepreneur or "one who undertakes innovations, finance and business acumen in an effort

to transform innovations into economic goods". This may result in new organizations or may be part of revitalizing mature organizations in response to a perceived opportunity. It has assumed super importance for accelerating economic growth both in developed and developing countries. It promotes capital formation and creates wealth in country. It is hope and dreams of millions of individuals around the world. It reduces unemployment and poverty and it is a pathway to prosper. Entrepreneurship is the process of exploring the opportunities in the market place and arranging resources required to exploit these opportunities for long term gain. An entrepreneur : Entrepreneur is a term applied to a person who is willing to help launch a new venture or enterprise and accept full responsibility for the outcome. Environmental Enterprise refers to environmentally friendly/compatible business. Specifically, an environmental enterprise is a business that produces value in the same manner which an ecosystem does, neither producing waste nor consuming unsustainable resources. The concept is rooted in the well-enumerated theories of Natural capital, the Eco-Economy and Cradle to Cradle Design

Theories of entrepreneurship Entrepreneurship is an evolved thing. With the advancement of science and technology it has undergone metamorphosis change and emerged as a critical input for socio-economic development. Various writers have developed various theories on entrepreneurship and popularized the concept among the common people. The theories propounded by them can be categorized as under Sociological theories Economic theories Cultural theories Psychological theories Sociological Theories The following theories explain how sociological factors acclelerate the growth of entrepreneurs: 1-Theory of religious beliefs 2- Theory of social change Theory of religious beliefs Max Weber has propounded the theory of religious belief. According to him, entrepreneurism is a function of religious beliefs and impact of religion shapes the entrepreneurial culture. He emphasized that entrepreneurial energies are exogenous supplied by means of religious beliefs. the important elements of Webers theory are discussed further1- Spirit of Capitalism-

in the Webrian theory, spirit of capitalism is highlighted. We all know that capitalism is an economic system in which economic freedom and private enterprise are glorified, so also the entrepreneurial culture. 2- Adventurous SpiritWeber also made a distinction between spirit of capitalism and adventurous spirit. According to him, the former is influenced by the strict discipline whereas the latter is affected by free force of impulse. Entrepreneurship culture is influenced by both these factors. 3- Protestant ethicaccording to Max Weber the spirit of capitalism can be grown only when the mental attitude in the society is favorable to capitalism 4 -Inducement of profitWeber introduced the new businessman into the picture of tranquil routine. The spirit of capitalism intertwined with the motive of profit resulted in creation of greater number of business enterprises. In fact, this theory suited the british rulers, who desired to encourage European entrepreneursip in India. This theory was vehementaly criticized by many researchers because of the unrealistic assumpitions. Theory of Social Change Everett E. Hagen, in his theory of social change propounded how a traditional society becomes one in which continuing technical progress takes place. The theory exhorts the following feature which presumes the entrepreneurs creativity as the key element of social transformation and economic growth. Presentation of general model of the society- the theory reveals a general model of the society which considers interrelationship among physical environment, social structure, personality and culture. Economic Growth : product of social change and political change : According to Hagen, most of the economic theories of underdevelopment are inadequate. Rejection of followers syndrome : Hagen rejected the idea that the solution to economic development lies in imitating western technology. So the followers syndrome on the part of the entrepreneur, is discouraged Historic shift as a factor of initiating change- Hagen in his book, How Economic Growth Begins, depicts historic shift as the crucial force which has brought about social change technological progress thereby leading to the emergence of entrepreneurial class from different castes and communities.

Withdrawal of status respects as the mechanism for rigorous entrepreneurial activityClosely consistent with the historic shift it is the social group that plunges into rigorous entrepreneurism which experiences the status withdrawal or withdrawal of status respects. hence, Hagens creative personality is the admixture of Schumpeters innovation and McClellands high need for achievement. but Hagens analysis fails to give policy measures for backward countries which are striving for economic development as he identifies status withdrawal as the causal factor in the emergence of creative presonality. Hagens thesis of disadvantaged minority groups ha its own limitations. There are many disadvantaged minority groups in India which have not supplied a good number of entrepreneurs.

ECONOMIC THEORIES Entrepreneurship and economic development are interdependent. Economic development takes place when a country' real rational income increases overall period of time wherein the role of entrepreneurs is an integral part. Schumpeters Theory of Innovation Schumpeters theory of entrepreneurship is a pioneering work of economic development. development in his sense, implies that carrying out of new combination of entrepreneurship is basically a creative activity. According to Schumpeter an entrepreneur is one who perceives the opportunities to innovate, i.e. to carry out new combinations or entreprise. In his views, the concept of new combination leading ti innovation covers the following 5 cases1- The introduction of new goods, that is the one with which consumers are not yet familiar, of a new quality. 2- The introduction of new method of production 3- The opening of new market 4- the conquest of new source of supply of raw material 5-The carrying out of new organization In view of the above, Schumpeterian theory of entrepreneurship has got the following features1- Distinction between invention and innovation

Schumpeter makes a distinction between innovation and invention. Invention means craetion of new things and innovation means applical of new things onto practical use 2- emphasis on entrepreneurial function- Schumpeter has given emphasis on the role of entrepreneurial functions in economic development.in his views, development means basic tranformation of the economy that is brought about by entrepreneurial functions. 3- presentation of disequilibrium situation through entrepreneurial activitythe entrepreneurial activity represents a disequilibrium situation, a dynamic phenomenonand a break from the rotine or a circular flow or tendenct towards equilibrium. 4- entrepreneuralism dream and the will to found a private kingdom- the motives of creating things and applying these things into practice inspire the entrepreneur to undertake innovation.

CRITICAL EVALUATION SCHUMPETERS THEORY OF INNOVATION IS CRITICIZED ON THE FOLLOWING GROUNDS1- THE THEORY HA STHE SCOPE OF ENTREPRENEURISM IN THE SENSE THAT IT HAS INCLUDED THE INDIVIDUAL BUSINESSMAN ALONG WITH THE DIRECTORS AND MANAGERS OF THE COMPANY. 2- Schumpeters innovating entrepreneurs represents the enterprise with the R & D and innovative character. But developing countries lack these character. 3 the theory emphasizes on innovation and excludes the risk taking and organizing aspects. 4. Schumpeters entrepreneurs are large scale businessman who introduce new technology, method of production 5- Schumpeter remained silent about as to why some economics had more entrepreneurial talent than others. However, despite the above criticisms, Schumpeterian theory is regarded as one f the best theories in the history of entrepreneurial development.

CULTURAL THEORIES Advocates of cultural theories point out that entrepreneurship is the product of culture. Entrepreneurial talents come from cultural values and cultural system embedded into the cultural environment. Hoselitzs Theory

Hoselitz explains that the supply of entrepreneurship is governed by cultural factors, and culturally minority groups are the spark-plugs of entrepreneurial and economic develoment.in many countries, entrepreneurs have emerged from a particular socio-economic class. He emphasized the role of culturally marginally groups like Jews and the Greeks in medieval Europe, the Chinese in south Africa and Indian in east Africa in promoting economic development. Psychological Theories Psychological theories centre's around the psychological characteristic so the individual in a society. Psychological characteristics affect the supply of entrepreneurs in the society. DRUCKER ON ENTREPRENEURSHIP Peter F. Drucker opined that an entrepreneur is one who always searches for change, responds to it and exploits it as an opportunity. he laid emphasis on two important factors innovation and resource- that led to emergence of entrepreneurship. According to him, innovation is the real hub of entrepreneurship which creates resource. A thing is regarded as resource when its economic value is recognized. For example, mineral oil was considered worthless until the discovery of its use. Similarly, purchasing power was considered an important resource by an American innovative entrepreneur who invented installment buying. According to Drucker, successful entrepreneurship involves the following things Value and satisfaction obtained from resource by the consumer are increased New values are created Material is converted into a resource or exiting resources are combined in a new or more productive configuration Entrepreneurship is the practice which has a knowledge base. Entrepreneurship is not confined to big businesses and economic institutions, it is equally important to small business and non-economic institutions Entrepreneurship behavior rather than personality trait is more important to enhance entrepreneurship The foundation of entrepreneurship lies in concept and theory rather than in intuition. Thus, Drucker has given his views that an entrepreneur need not be a capitalist or an owner. A banker who mobilizes others money and allocates

it in areas of higher yield is very much an entrepreneur though he is not the owner of the money.

Traits of An Entrepreneur 5 Characteristics That Lead To Success

There are certain character traits that are common among successful people which plain and simply state that these traits are really keys to success. Many of these come naturally for some, while others have to be learned and woven into your very DNA. In order to reach your true potential you may have to change some of your ways. Now that may sound counter-intuitive, since we always talk about people being themselves, but this IS being yourself. Its a matter of reprogramming you to be you. Moving through the list below and self-reflecting on how each of these fits into todays version of you, the things that need to be adopted or strengthened become quite clear. 1. A Positive Attitude Without this characteristic its already game over. Having a positive attitude allows us to deal with the ups and downs of daily life while maintaining a great outlook for what the future holds. It means you just do not believe in long-term negativity. Its about overcoming challenges and maintaining high values and thoughts that lead to success. There are many ways that this may manifest itself but they all point to moving forward. Here are just a few; a. Thinking creatively b. Believing that you have what it takes c. Being optimistic d. Being persistent and never giving up I personally think there is tremendous power in having a positive attitude, which leads to a strong drive, high energy and ultimately success. Attitudes are like magnets, often attracting what you think and believe. High self-esteem and thinking well of your abilities, without being boastful, keeps you heading in the right direction. 2. Highly resourceful Surviving in a business environment often requires you to be quite resourceful, tapping into various techniques and using tools that have been proven to deliver successful results. When these are not available for a particular situation, using your creative energy becomes a must. There are always several ways to make things happen and being resourceful often produces great results. 3. Great networkers Getting out there and networking and interacting with others in the business community can establish you as one of those positive contributors, someone others are happy to work with.

Building relationships is critical in todays environment and the result of doing so will often lead to many other opportunities. 4. Helpful people As a member of the business community, reaching out to others and providing assistance and helpful advice is one of the most valuable things you can do. Many make the mistake of seeing every other business person as competition. This is an extremely short-sighted approach. Successful business people recognize the value of being helpful. 5. Action takers No matter what you know, have read or learned, failing to take action will leave you exactly where you are today. Successful entrepreneurs are those who have made a habit of taking the necessary actions required to move them closer to making their dreams a reality. This sounds so simple on the one hand but the truth is the vast majority of people fall flat in this particular area.

: Entrepreneurship and intrapreneurship: advantages and disadvantages ENTREPRENEURSHIP Advantages Disadvantages You are your own boss - independency The income increases You have the chance to be original You have part of excitement and adventure There are a lot of possibilities Salary potential you decide upon your own salary Money pressure giving up on the security of a regular paycheck Less benefits as the business is new Long working hours Mistakes are magnified All decisions must be made alone INTRAPRENEURSHIP Advantages Disadvantages Ability to stay in a friendly, well known

environment Practicing your skills within an organization lower risk Using companies resources, good name, knowledge Access to customers, infrastructure Reward may not be up to expectation Innovation may not be appreciated accordingly You can be innovative but to a certain limit you are not your own Boss

Entrepreneur Vs Entrepreneurship Entrepreneurship is the practice of starting new organizations, particularly new businesses generally in response to identified opportunities. Entrepreneurship is often a difficult undertaking, as a majority of new businesses fail. Entrepreneurial activities are substantially different depending on the type of organization that is being started. Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only part-time) to major undertakings creating many job opportunities. An entrepreneur (a loanword from French introduced and first defined by an Irish economist named Richard Cantillon) is a person who undertakes and operates a new enterprise or venture and assumes some accountability for the inherent risks. Entrepreneurship is often difficult, as many new ventures fail. In the context of the creation of for-profit enterprises, entrepreneur is often synonymous with founder. Most commonly, the term entrepreneur applies to someone who establishes a new entity to offer a new or existing product or service into a new or existing market, whether a for profit or not-for-profit outcome. Business entrepreneurs often have strong beliefs about a market opportunity and are willing to accept a high level of personal, professional or financial risk to pursue that opportunity. Business entrepreneurs are viewed as fundamentally important in U.S. culture as critical components of its capitalistic society.

ENTREPRENEUR vs. MANAGER Entrepreneur Manager An entrepreneur is involved with the start-up process A manager with running the business over a long period of time An entrepreneur assumes financial, material and psychological risks

A manager does not have to bear risks An entrepreneur is driven by perception of opportunity A manager by the resources he currently possesses An entrepreneur initiates change A manager follows rules & procedures An entrepreneur is his own boss A manager is a hired employee An entrepreneur gets uncertain rewards A manager gets fixed rewards and Salary

What is the Role of an Entrepreneur in Economic Development

The entrepreneur who is a business leader looks for ideas and puts them into effect in fostering economic growth and development. Entrepreneurship is one of the most important input in the economic development of a country. The entrepreneur acts as a trigger head to give spark to economic activities by his entrepreneurial decisions. He plays a pivotal role not only in the development of industrial sector of a country but also in the development of farm and service sector. The major roles played by an entrepreneur in the economic development of an economy is discussed in a systematic and orderly manner as follows. (1) Promotes Capital Formation: Entrepreneurs promote capital formation by mobilising the idle savings of public. They employ their own as well as borrowed resources for setting up their enterprises. Such type of entrepreneurial activities lead to value addition and creation of wealth, which is very essential for the industrial and economic development of the country. (2) Creates Large-Scale Employment Opportunities:

Entrepreneurs provide immediate large-scale employment to the unemployed which is a chronic problem of underdeveloped nations. With the setting up.of more and more units by entrepreneurs, both on small and large-scale numerous job opportunities are created for others. As time passes, these enterprises grow, providing direct and indirect employment opportunities to many more. In this way, entrepreneurs play an effective role in reducing the problem of unemployment in the country which in turn clears the path towards economic development of the nation. (3) Promotes Balanced Regional Development: Entrepreneurs help to remove regional disparities through setting up of industries in less developed and backward areas. The growth of industries and business in these areas lead to a large number of public benefits like road transport, health, education, entertainment, etc. Setting up of more industries lead to more development of backward regions and thereby promotes balanced regional development. (4) Reduces Concentration of Economic Power: Economic power is the natural outcome of industrial and business activity. Industrial development normally lead to concentration of economic power in the hands of a few individuals which results in the growth of monopolies. In order to redress this problem a large number of entrepreneurs need to be developed, which will help reduce the concentration of economic power amongst the population. (5) Wealth Creation and Distribution: It stimulates equitable redistribution of wealth and income in the interest of the country to more people and geographic areas, thus giving benefit to larger sections of the society. Entrepreneurial activities also generate more activities and give a multiplier effect in the economy. (6) Increasing Gross National Product and Per Capita Income: Entrepreneurs are always on the look out for opportunities. They explore and exploit opportunities,, encourage effective resource mobilisation of capital and skill, bring in new products and services and develops markets for growth of the economy. In this way, they help increasing gross national product as well as per capita income of the people in a country. Increase in gross national product and per capita income of the people in a country, is a sign of economic growth. (6) Improvement in the Standard of Living: Increase in the standard of living of the people is a characteristic feature of economic development of the country. Entrepreneurs play a key role in increasing the standard of living of the people by adopting latest innovations in the production of wide variety of goods and services in large scale that too at a lower cost. This enables the people to avail better quality goods at lower prices which results in the improvement of their standard of living. (7) Promotes Country's Export Trade: Entrepreneurs help in promoting a country's export-trade, which is an important ingredient of economic development. They produce goods and services in large scale for the purpose earning huge amount of foreign exchange from export in order to combat the import dues requirement. Hence import substitution and export promotion ensure economic independence and development. (8) Induces Backward and Forward Linkages: Entrepreneurs like to work in an environment of change and try to maximise profits by innovation. When an enterprise is established in accordance with the changing technology, it induces backward and forward linkages which stimulate the process of economic development in the country. (9) Facilitates Overall Development: Entrepreneurs act as catalytic agent for change which results in chain reaction. Once an enterprise is established, the process of industrialisation is set in motion. This unit will generate demand for various types of units required by it and there will be so many other units which require the output of this unit. This leads to overall development of an area due to increase in demand and setting up of more and more units. In this way, the entrepreneurs multiply their entrepreneurial activities, thus creating an environment of enthusiasm and conveying an impetus for overall development of the area.