ENTREPRENEURIAL DEVELOPMENT

UNIT-I

WHAT IS ENTREPRENEURSHIP?
It is the creation of an innovative economic organization (or net work of organizations) for the purpose of gain or growth under conditions of risk and uncertainty.

Definition of Entrepreneurship
Knight(1921) Schumpter(1934) Profits from bearing uncertsinity & risk Carrying out of new combinations of firm organisation-new products, new services, new sourcs, etc.,. Uncertainity bearing, coordination of productive resources, introduction of innovation & provision of capital Purposeful activity to initiate and develop a profit-oriented business

Hoselitz (1952)

Cole (1959)

McClelland (1961)
Casson (1982)

Moderate risk taking

Decisions and judgements about the coordination of scarce resources

Gartner (1985) Stevenson, Roberts & Grousbeck (1989) Hart, Stevenson & Dial (1995)

Creation of new organisatrion Pursuit of opportunity without regard to resources currently controlled Pursuit of oppoortunity without rgard to resources currently controlled, but constrained by the founders previous choices and industry-related experience.

Qualities of a True Entrepreneur

1. Capacity to Assume Risk 2. Technical knowledge and willingness to change 3. Ability to marshal resources 4. Vision & foresight 5. Imagination 6. Will to conquer 7. High degree of ambition

Types of Entrepreneurs
1. Innovative Entrepreneurs: Aggressive assembly of information and analysis of results derived from sound combination of factors. Found mainly in developing countries. Plays a major role in emerging markets.

2. Adoptive or imitative entrepreneurs

Imitate the technology innovated by others. Important for UDCs. He3 is more an organizer of the four factors of production than a creator of new things.

3. Fabian Entrepreneurs
They are cautious and skeptical while practicing any change. They neither have the will to introduce new changes nor the desire to adopt new methods innovated by the most enterprising entrepreneurs. Their dealings are determined by custom, religion, tradition and past practices.

4. Drone Entrepreneurs
Traditional, laggard and refusal to adopt and use opportunities to make changes. When their products loses marketability and their operations become uneconomical they are pushed out of the market.

Other Types
Individual and Institutional entrepreneurs Entrepreneurs by Inheritance Technologist entrepreneurs Forced entrepreneurs

Role of Entrepreneurship in Economic Development

ED means a process of upward change whereby the real percapita income of a country increases over a long period of time.

What causes economic development

?

How
Role played by entrepreneurs towards ED varies depending upon the Material resources Industrial climate Responsiveness to the political system

Under developed regions

characterized by

1. paucity of funds 2. lack of skilled labour 3. minimum existence of social & economic overheads So here Entrepreneurs are imitators and not innovators

Imitation of innovations in such regions can bring about rapid economic development. So imitative entrepreneurs constitute the main spring of development of underdeveloped regions.

Case with India

Decentralized industrial structure helps in overcoming regional imbalance in ED. Small scale entrepreneurs plays a crucial role in bringing balanced regional development. SSIs provide Immediate large scale employment Ensure equal distribution of resources & national income Mobilization of capital & skill

The factors can be listed under 5 broad areas. 1. Socio-demographic 2. Economic variables 3. Variables of systemic linkage 4. Latent characteristics 5. Bio-characteristics of entrepreneurs

Factors influencing Entrepreneurship

Socio-demographic variables
Family background Education & technical qualification

Emigration

Previous occupation

Economic variables
Initial investment
Ancestral property

Level Of living Prior income

Profit utilization

Variables of systemic linkage

Systematic linkage comprises expert & official contacts mutual help political affiliation social participation and personal training which influences entrepreneurs. The National Institute of Community Development, Hyderabad, has mentioned about 2 pre-requisites for achieving success in establishing growth of an industry. Contacts at higher social and governmental levels Availability of expert technical advice and guidance at all stages of development of an industry Both the factors are vulnerable for entrepreneurial development and ED.

Latent characteristics
An entrepreneur becomes an accepted leader of industry, if he exhibits latent qualities, a personality that shows up the elements on himInnovativeness Risk-bearing Self-reliance Eagerness to evaluate enterprise Fixing long & short term goals

Bio-characters that gene4rally influence an entrepreneur are Age Marital status Religion Community Maximum number of entrepreneurs are in the age group of 33 Marital status throws up challenges and stimulations for one to develop entrepreneurial qualities in the course of fulfilling family responsibility. So it is conducive for entrepreneurial development Caste & religion to which a person is affiliated serve as one of the contributory factors to entrepreneurial development.

Bio-characteristics of entrepreneurs

Functions of an Entrepreneur
Can be done as a seminar by RRN nos Amaravathi and Abdullah

1. Perceiving market opportunities 2. Gaining command over scarce resources 3. Purchasing inputs 4. Marketing of the products & responding to competition 5. Dealing with the public bureaucracy 6. Managing HR within the firm 7. Managing production 8. Acquiring & overseeing assembly of the factory 9. Industrial engineering 10. Upgrading process and product quality 11. Introducing new production techniques and products Categorized as :(1-4)-exchange relationship, (5-7)-political administration, (8-9)-management control, (10-13)technology

Entrepreneur-(managerial)Kilby

1. Fixing objectives & changing it with time 2. Efficient superior subordinate relationship 3. Securing adequate financial resources 4. Employing technology effectively 5. Development of a market by devising new products & anticipating consumers demand 6. Maintaining good public relationship

Functions- Arthur H.Cole

Main entrepreneurial functions

1. Innovation 2. Risk taking 3. Organization building

It implies a set of values, norms and traits that ate conducive to the growth of entrepreneurship. It is the corporate culture that focuses on the emergence of new opportunities, the means of capitalising on them, and creation of structure appropriate for pursuing them. This must be different from administrative culture.

Entrepreneurial culture

An ideal administrtor would ask What resources do I control What structure determines our organistions relationship to its market How can I minimise the impact of others on my ability to perform What opportunity is appropriate

An ideal entrepreneur would ask Where is the opportunity How can I capitalise on it What resources do I need How do I gain control over them What structure is best