What is Entrepreneurship ?

SEVERAL DEFINITIONS ARE IN VOGUE ENTREPRENEURSHIP, THAT IS CONCERNED

WITH:

1. ENHANCEMENT OF VALUE
2. APPLICATION OF RESOURCES
3. INNOVATION UNDERPINNING THE STARTING OF BUSINESS
4. WEALTH CREATION AND SO ON

OR WE CAN SIMPLY SAY THAT

ENTREPRENEURSHIP IS WAY OF PUTTING ENTREPRENEURIAL THINKING TOGETHER IT

COULD BE FOR
1. PROFIT BUSINESS SECTOR 2. NON-PROFIT SOCIAL SECTOR
3. THE POLITICAL ARENA 4. PUBLIC SERVICE
 Trying to define Entrepreneurship as just the starting
up of business or putting the right ingredients together
to come with an innovative solution can be
unwarranted limitation to the study of Entrepreneurship
as a subject.
 Theories on Entrepreneurship

The discussion on theories of Entrepreneurship how domain of

entrepreneurship has evolved over a period of time. The theories
underpinning the domain knowledge gives numerous insights, inputs and
views on how society has perceived entrepreneurship and presents
society perception at various points in the history of the world.
 Contd…
 Theory of Religious Belief by Max Weber
According to max Weber, entrepreneurship or social change brought about by an
entrepreneurial culture is based on two main aspects
1. The spirit of Capitalism and
2. Protestant Ethic

The Spirit of Capitalism which is a guiding factor helps the entrepreneur

engage in various activities that brings more profit. The Profit motive coupled with the
attitude leaning towards acquisition of money, urges an individual to start a new
venture. The aspect of adventurous spirit is underscored (underlined) because of this,
along with the spirit of capitalism, can induce greater motivation and help develop
risk taking ability, leading to create wealth.
According to Max Weber, the spirit of capitalism can be grown only when the
mental attitude in the society is favoured to capitalism. The attitude can be provided
by the protestant ethic, irrespective of the background, personality and experience
 Theory of Social Change
Everett E Hagen propounded the theory that entrepreneurs are creative
problem solvers, who bring about economic development together with
political and social changes. He rejected the followers syndrome as being the
characteristics of the entrepreneur and put forward the view that
encouraged the technology as an integral part of socio-cultural
development. He was also of the view that historic shifts are a factor in
producing leading changes and creation of entrepreneur.

 Theory of Group Level Patterns

F Young has elaborated on the shortcomings of psycho-generic
interpretations of entrepreneurship and a suggested casual sequence where
transformation codes are developed by the solidarity grids to improve their
symbolic position in their large structure and thus become an entrepreneur.
 Theory of X-Efficiency

According to Harvey Leibenstein, entrepreneurial action is caused by finding

the degree of inefficiency of the use of resources within a firm. As per the theory,
X-Efficiency factors in the degree of inefficiency in the use of inputs within the
firm, occasioned either because of improper utilization of resources within a firm
or its wastages, or because of inadequate motivation of the people in the firm.

 Papanek and Harris Theory

According to the economists Papanek and Harris, when certain economic

condition become favourable, entrepreneurship and economic growth will take
place. According to these economist, it is the link between individuals inner urge
and the desired economic gains that plays a pivotal role for the development of
the entrepreneurial competencies.
 Theory of Adjustment

According to economist kirzner, the most essential entrepreneurial element is the

alertness to information rather than possession to it. The entrepreneur run its
enterprise more successfully and profitably based on the adjustment of prize in the
market.

 Theory of Achieved Motivation

David Mclelland emphasized that the need for achievement was the most
important factor for explaining economic behaviours and that individuals has strong
desire for achievement are more likely to succeed as entrepreneurs. Mclelland also
underscored two important characteristics that govern the economic behaviour of
a person when he becomes entrepreneurial: things in novel and excellent manner
and decision making under uncertainty. The theory was based on main three
aspects (a) Need for achievement (b) Need for Power (c) Need for Affliation
 Theory of Profit

Knight pointed out that entrepreneurs are the groups of persons having special talent
who bear risk and deal with the uncertainty. According to him, the supply of
entrepreneurship depends on three factors, namely (a) ability of the entrepreneur (b)
willingness of the entrepreneur (c) the power to guarantees to others. Knight also
identified that the elasticity of the supply of self-confidence is an important factor that
determines the level of profit and the size of the entrepreneur.

 Theory of Marginal Men

According to Hoselitz, marginal men, because of their ambiguous position in social

and culture contexts displays a mind-set particulary suited for making a creative
adjustment to situation and changes. And they develop genuine innovations,
particulary in social behaviour. The Second aspect of Hoselitz theory involves
possession of personality trait namely those related to manegerial and leadership skills.
 Theory of Entrepreneur as a risk taker

Cantillon coined he French term “Entrepreneur” and used it to describe a person who
served as a go-between a person with money or venture capitalist, and a person who
create an enterprise by taking up the opportunity. He suggested that this made the
entrepreneur as an active risk taker because he became an agent who bought at a
certain price to sell at an uncertain price in future.

 Theory of Separating Profits of Entrepreneurship and Investment

Jean Bapatiste defined the term entrepreneur as referring to a person who

coordinated and manage land, labor and capital is belonging to a different person in
order to produce a product. Jean Bapatiste indicated that the profits of the
entrepreneur were separated from the profit of ownership of capital. This concept of
theory has been evolved over centuries to distinguish between the supplier of capital
and those whose to gain or profit by their entrepreneur capabilities.
 Theory of creative destruction
According to Joseph A. entrepreneurship as an activity mainly concerned with
innovations and the use of you untried technologies. He called this process of
replacing an existing products, processes, market, source of that supply of raw
material and existing business with better one as creative destruction.
 Types of entrepreneurship
1. by chance
2. by need
3. by choice
4. by force
 Entrepreneurship by chance
While studying entrepreneurship find in practice that not all entrepreneur started
because of finding innovative product of solution. In many cases entrepreneur
those who became enterprise creator on job creators merely because an
opportunity was offered to them.

 Entrepreneurship by need
In a growing economy because of a variety of reasons people may or may not find
enough a positive work in a large enterprise. When things go beyond a certain point
people often find new way to make money either to support themselves or
supplement income of their family in both the case is an individual by a strong
survival it start small business small scale units, shop, kirana store to provide for the
family and another number of entrepreneurs in this category typically address the
financial need of self immediate family and possibly a few people.
 Entrepreneurship by choice

This is the category that receive maximum attention of observer because in this
case it is the personal interest and passion of the entrepreneurs that enables the
identification of an opportunity and Conjuring up a compelling idea to exploit it.

 Entrepreneurship by force

In this category one can put cases where individual fall in line with family- business
requirements. They are entrepreneurs who are second generation owner of
business the situation reflect the case is let people are put into practice of
entrepreneurship by force, this is, without any person interest in creating outgoing
an enterprise by identifying opportunities
 Global Entrepreneurship Monitor (GEM)

The Global entrepreneurship monitor is report is an annual survey of the entrepreneurial

attitude, activities and aspiration around the world conducted by consortium of academic
research across the globe.

The finding of the survey state implication in make some suggestion that can serve as an eye
opener for various economies
The GEM report groups the participating economies into three type: factor driven, efficiency
driven and innovation driven.
Factor driven - economies having a heavy reliance on labour and natural resources.
Efficiency driven- economies with increased reliance on economies of scale and capital
intensive large organisations being are more dominant.
Innovation driven- economies which are more knowledge intensive and where service sector
shows expansion.
 GEM Implications and Suggestions
 The quality of entrepreneurship is what makes an impact on the economy and not
just the quantity that is a number of entrepreneurs
 Economic system need to create conducive environment for entrepreneurs
starting up due to necessity. The environment should be able to create
entrepreneurs from those who already have other job options by enticing them to
take a opportunity driven entrepreneurship.
 Entrepreneurship needs both dynamism and stability.
 The step taken from the and enhancement of entrepreneurship should be based
on the level of economy of the country
 Every member of the society should have entrepreneurial outlook and should co-
operate and support it. This include especially the non- entrepreneurial member as
there acceptance of entrepreneurs individually will result in a collective higher
level of societal approval of entrepreneurship.
 It is important to track the growth trends in other geography and in countries of
the same economic level so as to learn from their successes and failures
GEM’s Findings on India

 The job-growth expectations for early-stage entrepreneurship

activity n the period (2009-2010) is less than 15% and this places
India as the second-lowest in the list. The majority of cases indicate
employment of only five to nine extra workers for every member.
 India ranks fourth-lowest in terms of innovation for early-stage
entrepreneurship activity amongst the factor-driven economies.
 India shows a low (less than 25%0 international orientation when
compared to other economies having a land-mass as large as
India.
 Myth concerning entrepreneurship

There are number of popular myth surrounding entrepreneurship that

has been present for many years. Entrepreneurship is not practiced by a
majority of individual since only a minority of individual choose
entrepreneurial parts the creation of myth around it easy.
 Myth 1: entrepreneurship is all about Passion

True entrepreneurship is chosen as a root fuelled by passion but it is not only

the passion that is at work.

There are millions small businesses that keep the economic ticking that are run
by entrepreneurs who take a fair measure of risk job opportunities come with a
creative solution on carry on innovation but these are done for a reason that go
beyond just Passion.

When an individual take cognition of this myth and believe it to be true they
are likely to distance cancel from considering entrepreneurship for lack of strong
drive from within.
 Myth 2: Entrepreneurship is a sure way to Riches

Entrepreneurship is all about taking some risk to create wealth for

oneself. There is a lot of aura around successful, wealthy Entrepreneurs.
These entrepreneurs are only a few where there are number of
entrepreneur who failed in their venture.

There are several entrepreneurs who are in what can be termed as living
dead modes and somehow just some sustaining their ventures prolonging
their existence.
 Myth 3: Entrepreneurship success with Financial Backing

The venture capital industry has a lot of impact on entrepreneurship where there
is an easier access to highest capital there are more entrepreneurs. However
ability of evident capital is not always the prime reason for starting a enterprise or
why it succeeds. Many of todays successful enterprise did not enjoy a financial
backing when they start.
When an individual begin to place a lot of dependence on availability of capital
to start of there are likely to miss profitable business capital but less capital intensive
opportunities and it also stopped are talented individuals from exposing intelligent
option to gain a capital

 Fact: less than 1% of entrepreneurs come from a extremely rich or extremely

poor background the rest 99% come from mediocre family background
 Myth 4: Entrepreneurship is for Moneyed Class

This is more often a fall out of previous myth. There is an prevalent view that
entrepreneurship is for people with money this view unfortunately cited to convince
in people that general abundant finance is a prerequisite for starting an enterprise
an individual who belongs to the working class or in the middle class or as far as
social status concerned believe that without enough capital it is not possible to start
an enterprise to be dismissed since in today's world there is plenty of opportunities to
start an Enterprises without a lot of capital.

Capital to start an enterprise can be got from outside sources Such as Bank, or
from government bodies, private body sector. The corporate entrepreneur can
have access to the resources from within the Enterprise in which he worked as well
 Myth 5: Entrepreneurship is for Influential people

Another popular view is that entrepreneurship is for influential people having

connections with the powerful people in society. This View Supports contention that
having a network with the right people who can pull string make it easy for a
practice of entrepreneurship. Definitely networking is good for entrepreneurship but
it is not prime reason for starting an enterprise.

 Myth 6: Depends only on the Entrepreneurs for success

A successful enterprise does not hinge on just the personality of the

Entrepreneur who founded the enterprise. Reality tells us that no enterprise
can run successfully buy just one individual, there is a team created in the
enterprise which work for it success. There is no born entrepreneur and
entrepreneur is no exceptionally gifted person endowed by god with a
wonderful ability.
 Entrepreneurship challenges:

 Lack of Effective Support:

Entrepreneurship operates in its own ecosystem having a number of player who plays
their individual part.
For example the banking sector can ensure the easy availability of cash facilities and
the possession of loan application other bodies in the ecosystem can you give grant or
subsidies to support entrepreneurship. the ecosystem can enable access to venture
capital without difficulty this they can play an active role in an encouraging
entrepreneurship.

In practice however it is seen that this component of the ecosystem do not always
operate with efficiency.
 Education and training
Research and literature on entrepreneurship project that the majority of
aspects of entrepreneurship can be learnt.
However access to education about entrepreneurship for Aspiring
entrepreneurs is limited. Our need to understand that practice of
entrepreneurship sits within the context of where the business is
geographical located or rather where the entrepreneurship is practised.
While research done on the area like science and technology can make
an immense sense when knowledge about them is transferred across
countries, knowledge of entrepreneurship demands a definitive local slant.
In a social domain such as Entrepreneurship which depends a lot on local
Geography, the transfer of research may not provide benefit. Due to
unavailability of information on local issues and nuances, entrepreneurs in
the Indian Context find little benefit despite having access to seemingly
vast knowledge repositories of developed nations.
 Other Entrepreneurship's challenges are:
 Inadequate Incubation facilities
 Mentoring and Coaching
 Infrastructures challenges
 Cultural bottlenecks
 Regulatory challenges
 High entry barrier to working with government