ENTREPRENEUR

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ENTREPRENEUR

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Title: ENTREPRENEUR

1
UNIT - 5
ENTREPRENEUR
2
Introduction Think New, differently , Do
everything in a new different way Todays
Mantra of Success . Come Out Of Shell . Eliminate
Conventional Thinking A sort of R D.
challenge Try finding alternative fuel.

Ideas drive Economies, no wonder that
Innovation Entrepreneurship are often seen as
inseparable.
Science Technology Students have to be
Motivated Trained to Think Out Of The Box so
that an Entrepreneurial Culture is Built. The
Ones feasible Ways of doing Business are no
longer Guarantees for Future Economic Success,
hence, the Govts around the World have started
to realize that Entrepreneurship Innovation
need to be encouraged in order to sustain
progress improve a Countrys Economy.

Entrepreneurs are responsible for
Industrial Development the fruits of
Industrial Development are greater Employment
Opportunities to the Unemployed, Increase in
Income Levels of People, Improvement in Standard
of Living, Increased Revenue to the Government in
the form of Direct Indirect Taxes Balanced
Regional Development.
India needs Entrepreneurs for Two Reasons
1) To Capitalize on New
Opportunities to Create Wealth.
2) To Create Wealth New Jobs.

4
Definitions on Entrepreneur

1) Peter F. Drucker defines
Entrepreneur as One Who Always searches for
Change, Responds to it Exploits it as an
Opportunity. Innovation is the Specific Tool of
Entrepreneurs, the Means by which, they Exploit
Change as an Opportunity for Different Business
or Service.
2) Encyclopedia Britannica defines an
Entrepreneur as an Individual who bears the Risk
of Operating a Business in the Face Of
Uncertainty about the Future Conditions.

3) International Labor Organization (ILO)
This defines Entrepreneurs as People who have
the Ability to See Evaluate the Business
Opportunities together with the necessary
Resources to take Advantage of them to
initiate Appropriate Action to ensure Success.
4) Dr. Poornima M. Charantimath,
Professor, Management Studies, KLS Institute of
Management Education Research (IMER), Belgaum
says The World Entrepreneur is derived from a
Sanskrit Word called Antaraprerana ! (Urge from
within or Internal Urge).

5) Francis A. Walker observes that the
True Entrepreneur is one who is endowed with more
than Average Capacities in the Risk of
Organizing Coordinating the Various other
factors of Production. He is a Pioneer Captain
of Industry.
6) E. E. Haggen defines Entrepreneur is
an Economic Man who tries to Maximize his profits
by Innovations. Innovations involve Problem
Solving the Entrepreneur gets satisfaction from
using his Capabilities in Attacking Problems.

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8

Conclusions Definitions of an
Entrepreneur are divided into 3 Streams
1) The Ones describing Roles of an
Entrepreneur.
2) The Other describing Characteristics
3) Ones Focusing on Success Factors.
Summarizing, the Entrepreneur can be
described as a Person (a) Who carries out a Role
in the Economic World by creating Added Value
who bears the Risk Responsibility. (b) One
with a Combination of Specific Personal
Characteristics (Creative, Innovative, Dynamic
etc.)
Two Conditions seem to be Vital in
Order to become an Entrepreneur The Will to
Succeed, Achieve etc., and Opportunities for
Creating Value, Innovation etc.

9
Evolution of the Concept of Entrepreneurship

He is a Person who creates Enterprise. The
Process Creation is called as Entrepreneurship.
This evolved from the French Word
Entreprende in the 12th Century. In the early
16th Century, it was applied to those who were
engaged in Military Expeditions. In the 17th
Century, it was extended to cover Civil Engg
Services. In the 18th Century, Richard Centillon
described Entrepreneur as One Who Bears Risk by
buying at Certain Prices selling at Uncertain
Prices which is closer to the Terms as Applied
Today.

In 1848, the famous John Stuart Mill
described Entrepreneurship as the founding of a
Private Enterprise. This encompassed Risk Takers,
the Decision Makers, the Individuals who desire
Wealth by Managing Limited Resources to create
New Business Ventures.
Joseph Schumpeter (1934) stated
Entrepreneur as one who applies Innovation
within the Context of the Business to satisfy
Unfulfilled Market Demand.
Peter F Drucker perceived
Entrepreneurship as the Creation of a New
Organization, regardless of its ability to
Sustain itself, let alone make a Profit.
Evolution of the Concept of
Entrepreneur is considered over nearly Four
Centuries Old, the Characteristics of
Entrepreneurs being Risk Taking Innovation,
Organization Creation, Creating Value, Profit or
Non Profit Growth, Uniqueness the Owner
Manager.

These Views about Entrepreneur can be
classified into 3 Groups viz., Risk Bearer,
Organizer Innovator. These Views have been
discussed below
1) Entrepreneur as a Risk Bearer
Richard Cantillon, French
Economist was the first to introduce the term
Entrepreneur his Unique Risk Taking Function
in Economics in the early 18th Century.
Entrepreneur is One Who Buys Factors of
Production at Certain Prices in Order to Combine
them into a Product with a View to Sell it at an
Uncertain Price. He illustrated a Farmer who pays
out Contractual Incomes which are certain to the
Landlords Laborers sell them (the Produce) at
an Uncertain Price.
So also the Merchants who
make Certain Payments in expectation of uncertain
receipts. Thus, they too are Risk Bearing
agents of Production.

Thus, we can say that Entrepreneurs
are a Specialized Group of People who bear
Uncertainty. Uncertainty is defined as a Risk
which cannot be insured against cannot be
Calculated. Thus, Entrepreneur is a Economic
Functionary who undertakes such a Responsibility
of Uncertainty which by its very nature cannot be
Insured, nor Capitalized nor Salaried too.

2) Entrepreneur as an Organizer
Entrepreneur is associated with
the functions of Coordination, Organization
Supervision. He is a Person who combines the Land
of One, labor of the Other, the Capital of Yet
Another thus produces a Product.
By Selling a Product in the
Market, he Pays Interest on Capital, Rent on
Land, Wages to Laborers What Remains is his
Profit. According to Jean - Baptist Say, in the
Course of Undertaking a Number of Complex
Operations like Obstacles to be surmounted,
Anxieties to be Suppressed, Misfortunes to be
Overcome, Expedients to be devised, Three more
Implicit Factors are deemed to be essential which
are as given below

1) Moral Qualities for Work Judgement,
Perseverance a Knowledge about the Business
World.
2) Command Over Sufficient Capital.
3) Uncertainty of Profits.
3) Entrepreneur as an Innovator
Innovation can be perceived
simply as the Transformation of Creative Ideas
into useful Applications by combining Resources
in New or Unusual Ways to provide Value to
Society for Improved Products, Technology, or
Services.

By adding Innovative features to a
Product or Service, Setting up a Business based
on these additional features to compete in the
Existing Market, New Entrants may be able to gain
a Competitive Edge over the Existing Market
Players.
Another Study stated that
Entrepreneur is One Who Applies Innovation
within the Context of Business to Satisfy
Unfulfilled Market Demand. Entrepreneur is an
Innovator who implements changes within Markets
thro carrying out of the New Combinations which
can take Several Ways as follows

1) The finding of a New Market.
2) The finding of a New Source of
Materials Supply.
3) The introduction of a New Product or a
New Standard of Quality.
4) The introduction of a New Best
Method of Production.
5) The Opening of a New Kind of
Business in an Industry.

Eg Jeff Bezos, the Founder of
Amazon, the Very Successful Book Store. He was
one of the first to Sell Books on a Large Scale
using an On Line Store also patented the One -
Click System for Online Buying.
Though Selling Books is not an
Innovation in itself, Jeff Bezos was Innovative
in the Use of the Internet then as a Viable
Marketing Sales Channel for Selling Books.
To summarize, the Concept of
Entrepreneur is closely associated with the 3
Basic Factors Risk Bearing, Organizing
Innovating. Thus, an Entrepreneur can be defined
as a Person who Tries to Create Something New,
Organizes Production in the Process Undertakes
Risks Handles Economic Uncertainty involved in
his/her Enterprise.

18
Functions of an Entrepreneur

An Entrepreneur performs all the
Functions necessary, right from generating the
Idea for his proposed Enterprise where there is a
Need, Opportunity exists up to establishing his
Enterprise Subsequently Running it Successfully
Earn Profits.
The Functions are listed below in a
Sequential Manner

1) Generation of Business Ideas
Choosing the Best Suitable Idea after Necessary
Scanning. Many Entrepreneurs keep an Eye for
Opportunity start by finding a need quickly
satisfying it. This is the most important
function of an Entrepreneur, as subsequent
success or failure of his enterprise depends on
his decision at this stage. Therefore the
Entrepreneur has to exercise great care before
deciding to choose a particular Business Idea for
his proposed Enterprise.

2) Determination of Business Objectives
i.e., What he wants to achieve in his proposed
Business Enterprise.
3) Product Analysis MR to make sure
that there is a Good Market Potential for the
proposed Product / Service.
4) Determination of form of Ownership /
Organization. i.e., Proprietorship / Partnership
/ Private Limited Company.
5) Completion of Promotional
Formalities , they are

Identifying a Location.
Looking for a Suitable Land / Building in
the Proposed Location.
Obtaining Provisional Registration (PRC)
from District Industries Centre of the District
in which the proposed Business is to be
established.
Preparation of Plant Layout Building Plan,
if reqd to be constructed.
Taking effective steps for reqd
infrastructural facilities like Power, Water,
Communication Facilities etc.
Preparing a Detailed Project Report or
Business Plan.

6) Making necessary arrangements for
Finance to implement the Project by approaching
State Financial Corporation for Long Term Loan
Banks for Working Capital Loan.
In addition, Entrepreneur has to
arrange his Own Financial Resources as Equity or
Margin Money for the Project. This can be 25 to
30 of the Cost of the Project.
7) Undertaking Building Construction, if
Ready Shed is not taken.
8) Plant Machinery Ordering,
Procuring, Installation.
9) Getting Electrical Power Connection
Other Utilities.
10) Arranging for Various Raw Materials
Consumables.
11) Arranging Key Managerial /
Supervisory Persons.
12) Recruiting reqd Manpower viz.,
Skilled, Semi - Skilled Helpers (Un Skilled).

13) Undertaking Trial Productions,
Overcoming Initial Teething Problems
Stabilizing the Production Operations.
14) Commencing the Commercial Business
Operations.
15) Marketing the Products.
16) Taking Feedback from the Market for
Customer Satisfaction, because Customer is the
King. Effective Remedial Steps to be taken if
there are Customer Complaints on Quality,
Performance, Delivery Schedule etc.

17) After Stabilizing the Commercial
Business Operations, Provisional Registration
Certificate (PRC) issued by District Industries
Centre has got to be converted into Permanent
Registration Certificate (PMT) by filing the
necessary reqd Application.
18) All other Statutory Licenses /
Registrations as per the Govt Regulations have to
be obtained during Implementation after
Successful Commencement of Commercial Production.
19) Approaching the District Industries
Centre for Grant of Concessions / Incentives as
per the Govt Industrial Policy Regulations. For
this, the Entrepreneur has to fill up the
Necessary Forms Submit the same to the District
Industries Centre with all the reqd Documents.

20) Entrepreneur has to always keep an
Eye on the Market Conditions be prepared to
innovate to face the Competition because Market
Conditions are Fast Changing, Customer Needs are
Changing. Success today is No Guarantee of
Success Tomorrow.
21) Entrepreneur should never be Happy
about his Achievement. He must always try for
Growth Expansion of his Business Activities. He
should Plan at least 20 to 25 growth over his
previous years performance, because stagnation in
Business leads to sickness slow death of his
enterprise.

22) Finally, a Very Important Function of
an Entrepreneur is dealing with People because
Business is People. An Entrepreneur has to
maintain a Very Cordial Healthy Relationship
with his Managers, Supervisors, Workmen,
Customers, Materials, Suppliers, Vendors,
Bankers, Financial Institutions, Govt Officials
all those who are connected Directly or
Indirectly with his Business Enterprise.
Now we can summarize that, the
Functions of an Entrepreneur have to incorporate
Coordination of the Business Management of the
Enterprise, Risk Taking, Controlling the
Enterprise, Innovation for Change, Motivation
Other Related Activities. In reality, an
Entrepreneur has to carry out a Combination of
these in keeping with Time Environment. He has
to consider New Ideas, Demands Exploit the
Opportunities thereby contribute to the
Technical Economic Progress . He is thus the
Nucleus of High Growth of the Enterprise. The
Entrepreneurial Functions are depicted
Schematically as Shown below

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Types of Entrepreneur

There are Different Types of
Entrepreneurs so also the Important
Classifications of Entrepreneurs. Some of the
Important Classifications of Entrepreneurs
Different Types of Entrepreneur in each
Classification are enumerated below
I) Classification of Entrepreneurs
based on Functional Characteristics
a) Innovative Entrepreneur.
b) Imitative or Adoptive
Entrepreneur.
c) Fabian Entrepreneur.
d) Drone Entrepreneur.

II) Classification of Entrepreneurs on the
Development Angle
a) Prime Mover.
b) Manager.
c) Minor Innovator.
d) Satellite.
e) Local Trading.
III) Classification of Entrepreneurs based
on Types of Business
a) Manufacturing.
b) Wholesaling.
c) Retailing.
d) Service.

IV) Classification of Entrepreneurs as per
the Behavioral Scientists
a) Solo Operators.
b) Active Partners.
c) Inventors.
d) Challengers.
e) Buyers.
f) Life Timers.

I) a) Innovative Entrepreneurs Such an
Entrepreneur introduces New Goods / Products /
Services or New Methods of Production or
discovers New Markets or Reorganizes his
Enterprise. Entrepreneurs in this Group are
Characterized by an aggressive collection of
information for trying out Novel Combination of
Factors. Such Entrepreneurs do well when a
certain level of development is already achieved
they look forward to improve upon the Past.
b) Imitative or Adoptive
Entrepreneurs
Such Entrepreneurs do not Innovate
themselves, but Imitate or Copy Techniques
Technology innovated by other Innovative
Entrepreneurs. They are Characterized by their
readiness to adopt Successful Innovations by
other Entrepreneurs. They are particularly
suitable for Under Developed Regions as Adoption
saves Costs of Trial Error.

c) Fabian Entrepreneur
They display great caution
skepticism in experimenting with any change in
their Enterprise. They adopt changes only when
there is an imminent threat to the very Survival
of their Enterprise.
d) Drone Entrepreneur
These Entrepreneurs are
characterized by a Die Hard Conservative
Attitude. They do not easily seize opportunities
to make changes in their production techniques or
the Technology employed, even at the Cost of Low
Returns on their Investments compared to other
similar enterprises. Such entrepreneurs may even
incur Huge Losses but they will not be ready to
make Changes in their existing production
techniques.

II) a) Prime Mover This Entrepreneur
sets into Motion a Powerful Sequence of
Development, Expansion Diversification of
Business.
b) Manager Such an Entrepreneur
does not initiate Expansion is content just
Staying in Business.
c) Minor Innovator
He contributes to Economic
Progress by finding better use for Existing
Resources.
d) Satellite The Entrepreneur
assumes a Suppliers Role slowly moves towards
a Productive Enterprise.

e) Local Trading Such an Entrepreneur
limits his enterprise to the Local Market.
III) a) Manufacturing Entrepreneur is
involved in Production of Value Added Goods by
using Various Inputs Raw Materials,
Consumables, Labor, Power Other utilities.
Goods can be a Variety of Products like Castings,
Forgings, Soaps, Detergents, Various chemicals,
Textiles, Plastic Components, Footwear, School
Bags, Electronic Electrical Items, Computer
Related Products etc. etc.,

b) Wholesaling An Entrepreneur with
such a Business sells Products to the Middle Men
or Retailers.
c) Retailing An Entrepreneur with
such a Business sells Products directly to the
Consumers or End Users.
d) Service An Entrepreneur in this
Business sells Services not the Products.

IV) a) Solo Operators Such
Entrepreneurs usually Work Alone if needed at
all, employ a few employees to assist. Most of
the Entrepreneurs begin their Entrepreneurial
Career in this fashion.
b) Active Partners These
Entrepreneurs start their enterprise in
Partnership. All the Partners actively
participate in the Operation of the Enterprise.
Entrepreneurs who only contribute funds to the
enterprise but do not actively involve in
Business Activity are called simply Partners.

c) Inventors Such Entrepreneurs with
their Competence Inventive Nature, Invent New
Products. Their Basic Interest lies in Research
Innovative Activities.
d) Challengers Such Entrepreneurs
plunge into Business because of the Challenges it
Presents. When One Challenge is satisfied, they
will be on the lookout for New Challenges.
e) Buyers Such Entrepreneurs do not
wish to bear much Risk. Hence, in order to reduce
Risk involved in establishing a New Enterprise,
they wish to buy an Ongoing One.
f) Life Timers Such Entrepreneurs take
Business as an Integral Part of their Life.
Usually, the Family Enterprise Businesses which
call for Personal Skills fall in this Category of
Entrepreneurs.

38
Intrapreneur - An Emerging Class.

These New Breed of Entrepreneurs are
emerging from Big Companies.
In this Case the Entrepreneurial Spirit of
Small Companies is transferred to Big Companies.
Such Entrepreneurs of Big Companies are
called as Intrapreneurs, an Emerging Class of
Entrepreneurs.
Intrapreneurship is a Method of
Stimulating then Capitalizing on Individuals in
an Organization who think that something can be
done differently better.

There are strong similarities between
Intrapreneurs Entrepreneurs as strongly
contrasted with the Characteristics of
traditional Managers.
In Large Organizations, the Senior Level
Executives are encouraged to develop New Ideas
then convert their innovative ideas into New
Products thro Research Development Activities
within the Frame Work of the Organization.
This Concept of Intrapreneurship is gaining
Great Popularity in Developed Countries like the
USA. In fact, Increasing Number of Intrapreneurs
are leaving their Jobs in Big Organizations are
starting their Own Enterprises.
Many of such Intrapreneurs have become very
successful in their newly established enterprises
in fact are competing with their Parent
Organizations are even posing as a Business
Threat to them.

40
Differences between Entrepreneurs Intrapreneurs

41
Concept of Entrepreneurship its Evolution

According to Peter F Drucker,
Entrepreneurship is neither a Science nor an
Art, it is a Practice.
It has a Knowledge Basis. Knowledge in
Entrepreneurship is a Means to an End, Indeed
what constitutes Knowledge in Practice is largely
defined by the Ends, that is by Practice.
There are Several Definitions of
Entrepreneurship, important ones being some of
the Following

1) It is a Purposeful Activity of an
Individual or a Group of Associated Individuals,
undertaken to initiate, Maintain or increase
Profit by Production or Distribution of Economic
Goods Services.
2) It is an attempt to Create Value thro
Recognition of Business Opportunity, the
Management of Risk Appropriate to Opportunity
thro the Communicative Management Skills to
mobilize Human, Financial Material Resources
necessary to bring a Project to fruition.

3) Entrepreneurship is the ability to
create build a Vision from practically nothing.
It is a Dynamic Process of Creating Incremental
Wealth.
4) According to One Study, the
Definition is Entrepreneurship is based on
Purposeful Systematic Innovation. It includes
not only the independent businessman but also
company direction managers who actually carry
out innovative functions.

44
Summary

Entrepreneurship can exist in Different
Kinds of Business, on all levels of Company size
in different functions.
In all above definitions,
Entrepreneurship refers to the activities
performed by an Entrepreneur in establishing an
Enterprise. We can therefore say that
Entrepreneurship is the Act of being an
Entrepreneur. It is a Process involving various
Activities to be undertaken to establish an
Enterprise.

The Two Basic Elements involved in
Entrepreneurship are Innovation Risk
Bearing.
These Two Factors are Given Below
1) Innovation This refers to coming out
with a New Product or Process or doing something
differently. This is a Basic Characteristic of
Every Entrepreneur. There are a Few Innovations
New Products developed as given in the Egs below

Egs 1) Bisleri introduced Packaged
Drinking Water, every one was wondering whether
this Business Idea would ever succeed. Now you
can see several other Entrepreneurs have copied
this idea have set up Enterprises to
manufacture Packaged Drinking Water. In fact,
many of them have been successful too. The reason
being, People are Health Conscious are ready to
pay Extra Money for sake of their Health. Hence,
a Good Market has developed for this Product.

2) Introduction of Taj Mahal Tea Bags
(Dip Tea) for use by Travelling Public, by
various Big Manufacturers of Tea Powder.
3) Various Ready to Cook Packaged Food
Items introduced by MTR Ltd., Bangalore to
cater to the needs of Working Couples in Bigger
Cities Metros other Consumers.
4) The Rs 1.00 Lakh Nano Car released
by Tata Motors recently to meet the needs of 4
Wheelers for the Middle Class people in the
Country who cannot afford Expensive Vehicles
who wish to switch to 4 Wheelers from 2 Wheelers.

From the above Egs, We can infer that
the Entrepreneurs need to innovate continuously
to come out with Newer products to meet the
Changing Demands of the Customers.
2) Risk Bearing
Any Business Proposition has an element
of Risk, the Reason being very obvious that, an
Enterprise may Earn Profits or Incur Losses
because of Various Factors beyond the Control of
the Entrepreneur like Increasing Competition,
Labor Unrest. He needs to be Courageous to face
the Risk Challenges involved in running the
Enterprise. His ability to Sustain Risk
ultimately helps him to be a Successful
Entrepreneur, against All Odds.

49
The Terms Entrepreneur
Entrepreneurship are often used Interchangeably
but they are Conceptually Different. Relationship
between these Two Terms are given below
50
As seen from the above Relationship,
Entrepreneurship is concerned with Performance
Coordination of the Entrepreneurial Functions.
This also means that Entrepreneur precedes
Entrepreneurship. To give clarity to the concept
of Entrepreneurship, the same is represented in
Fig., below
51
Development of Entrepreneurship

Introduction
Down the Years, many Myths have been
created about Entrepreneurship. Some of the
Important Myths are
1) Entrepreneurs are Born, not made.
2) All you need is Money to be an
Entrepreneur.
3) All you need is Luck to be an
Entrepreneur etc.

Such Myths do not hold good any more
at present, as Emperical (Experimental Study)
have shown that Entrepreneurs are made can be
developed thro a Process of Entrepreneurship
Development, Training Activities.
Development of Entrepreneurship is a
Key to achieve overall Economic Development thro
an increased level of Industrialization. This is
a Process in which Persons are injected with
Motivational Drives of Achievement insight to
tackle Uncertain Risky Situations especially in
Business Undertakings.
The Process of Entrepreneurial
Development focuses on Training, Education, Re
Orientation Creation of Conducive healthy
Environment for the Growth of the Enterprises.

53
EDP

This is designed to help a person in
strengthening fulfilling his Entrepreneurial
Motive in acquiring reqd skills capabilities
to become a successful Entrepreneur.
Towards this end, it is necessary to
promote his understanding of Motives
Motivational Pattern, their Impact on Behavior
Entrepreneurial Value. A Program which seeks to
do that can be called an Entrepreneurial
Development Programme (EDP).

EDP is primarily meant for developing
those First Generation Entrepreneurs who on their
Own cannot become Successful Entrepreneurs, it
covers 3 Major Variables
i) Location ii) Target Group iii)
Enterprise (Entrepreneurial Activities).
In fact, any one of the above three
variables can be used as a Starting Point for
initiating implementing an EDP. The remaining
Two then will follow by making the proper
synthesis with the first.

Eg 1 If the Object is to develop
Backward North Karnataka Regions, then the
Potential Target Group feasible Entrepreneurial
Ventures must follow.
Eg 2 If the Objective is to Promote IT
based Enterprises, suitable Target Group
Location must Match.
EDP by itself mainly aims at
achieving Specific Objectives of the Programmes
therefore cannot create any Magical Result. It is
a Continuous Process of Training Motivating
then to set up Profitable Enterprises in Large
Nos.

56
Entrepreneurial Development Models

The Models suggested for the
Development of Entrepreneurship fall into the
Following Categories
1) Psychological Models.
2) Sociological Models.
3) Integrated Models.

57
1) Psychological Models

Many Researchers, while Identifying
Determinants of Entrepreneurship, have given more
importance to Achievement Motives.
Change in Motivation is seen
primarily as a Result of Ideological Arousal of
the Latent Need for Achievement among Youths.
Hence Achievement Orientation has
been identified as the Key Variable in the
Development of Entrepreneurship therefore, Mc
Clelland suggests Motivation Training Programme
as the Policy Measure, which will make
Entrepreneurs really willing eager to exploit
the New Opportunities Provided.

Another Model suggested by John Kunkel
(1965) for Entrepreneurship Development is a
Behaviorist Model. According to him,
Entrepreneurial Behavior is a Function of the
surrounding Social Structure both Past Present
can really be influenced by manipulating
Economic Social Incentives. Thus, John Kunkels
Model is based on the Experimental Psychology,
which identifies Sociological Variables as the
Determinants of Entrepreneurship Development.

59
2) Sociological Models

Frank W. Youngs Theory of
Entrepreneurship is a Theory of Change based upon
Incorporation of Relative Sub Groups in the
Society.
The Relativeness of a Sub Group which
has a Low Status in a Larger Society will lead to
Entrepreneurial Behavior if the Group has better
Institutional Resources than others in the
Society at the same level.
Youngs Model of Entrepreneurship
suggests that the Creation of Supporting
Institutions in Society as the Determinant of
Entrepreneurship.

60
3) Integrated Models

T.V Rao (1975) identifies the following
factors as the Determinants of Entrepreneurship
a) Need for motive is the Dynamic
which, for the Prospective Entrepreneur, has the
greatest possibility of achieving the Goals if
one performs those activities.
b) Long Term involvement is the
Goal either at thinking level or at activity
level in Entrepreneurial Activity that is viewed
as a Target to be fulfilled.
c) Personal, Social, Material
Resources which are related to entry success in
the area of Entrepreneurial Activity.
d) Socio - Political System to be
perceived as suitable for establishment
development of his enterprise.

All the above factors together, with
their Optimal Presence lead to the entry point of
Entrepreneurship. This in turn leads to
acquisition of Material Resources Commencement
of Business.
B.S Venkata Rao (1975) suggested
the following Five Stages for the Promotion of
Small Entrepreneurs.
1) Stimulation The Stage includes
the Creation of an Industrial Environment, Policy
Statement emphasizing the Role of Small
Enterprises in Economic Development, giving Wide
Publicity to Industrial Development Programmes
Announcing Special Schemes Promotion of Support
Organizations. This Stage is necessary to
stimulate interest of the Backward Regions in
Industrial Activity to create awareness.

2) Identification This stage is
necessary to identify the prospective
entrepreneurs such as Rural Artisans, Skilled
Factory Workers, Technocrats Graduates in
Business Administration Management.
3) Development This Stage would
include Organization of Motivation Managerial
Training Workshops along with Identification of
Prospective Projects, Locations for settling up
these Enterprises giving Technological Inputs.

4) Promotion This Stage includes Govt
Policy Initiatives for promoting Small
Entrepreneurs.
5) Follow Up This Stage includes
Reviewing the Policies Programmes of the Govt
Seeking Follow Up with a View to making them
more effective.

Appropriate Design for Entrepreneurial
Development Programme
They can be developed thro
appropriately designed Entrepreneurship
Development Programmes based on 3 Entrepreneurial
Development Models, Viz Psychological Models,
Sociological Models, Integrated Models.
These Programmes broadly envisage 3
Tiered Approach Developing Achievement
Motivation Sharpening of Entrepreneurial Traits
Behavior, Project Planning Development
Guidance on Industrial Opportunities, Incentives
Facilities Rules Regulations Developing
Managerial Operational Capabilities. Various
Techniques have been evolved to achieve these
Objectives keeping in View the Target Groups
or the Target Areas.

Methodology for Selection of the
Prospective Entrepreneurs the support services
after the Training have a profound effect on the
Success of the Entrepreneurial Development
Programme.
Stages in Entrepreneurial Development
Process (EDP)
Entrepreneurial Potential
All of us have Entrepreneurial
Potential. Degree might differ. It is just a
matter of Developing that Potential.
The 3 Main Stages of EDP are as
follows
1) Pre Training Identification,
Selection Initial Motivation of Potential
Entrepreneurs.

2) Training of Potential Entrepreneurs
3) Post Training Support Follow
Up Services.
Any successful EDP Strategy has to be
comprehensive should avoid any exclusive or
lopsided preference for one or the other stage.
Stage 1 Pre Training
Three important aspects of work at
the first stage of an EDP are
1) Selecting Potential Entrepreneurs.

2) Target Groups.
3) Validation for Selection.
i) Selecting Potential Entrepreneurs
The Entrepreneur Identification
Selection Mechanism which precedes training is
based on the following Key Assumptions
a) Not everybody can become an
Entrepreneur must have traits.
b) Such traits are identifiable
measurable thro some psychological behavioral
tests supported by social indices.
c) People possessing these traits or
showing evidence of these traits (Entrepreneurial
Aptitude) can be developed to acquire necessary
dimensions of Entrepreneurship.

This has led to a 3 Step Selection
Process which begins with preliminary screening
of those responding to the intensive promotional
effort undertaken in the location by the Trainer
Motivator.
A specially devised form which
screens out those who are only casually
interested in the Programme is used for this
purpose. It is followed by an assessment of
Candidates Entrepreneurial Trait level by
applying Behavioral Science Techniques. The
process ends with individual interviews for over
all assessment about candidates suitability to
undertake Manufacturing Activity or Business,
together with an understanding of his specific
needs for Training.

The Entrepreneurial Traits assessed in
the Course of Behavioral Tests include
a) The Need to Achieve This can be seen
in an Individuals desire to compete with some
standard of excellence success in performance.
b) Risk Taking Entrepreneurs are found
to have an inclination to take Calculated,
Moderate, Intelligent Risks. They tend to avoid
Extremes of both Easy Risky Situations.
c) Positive Self Concept Includes Self
Confidence as well as Self-Efficacy (Success)
a Positive Image of Ones Abilities
Achievements.

d) Initiative Independence
Such people not only show initiative
but also Independence in their Day to Day
Behavior. They like to act on their own rather
than Follow Directions.
e) Problem Solving A tendency to
approach problems in order to solve them.
f) Hopeful about Future Despite
Dissatisfaction with Present Working Conditions.
g) An Interest in Environment Scanning
To Seek Answers to present Questions.
h) Urge for Goal Setting Time Bound
Planning
With Desire to fulfill Time Bound
Plans.

In the Selection Process, Persons
Possessing a Minimum (developable) level of
Entrepreneurial Traits (Normally decided by a Cut
Off Point in the Scores) are selected.
However, there are No Conditions of
Minimum Education Length of Experience,
Occupational Background or Income.
Despite Good Training, Liberal
Finance other supportive assistance, it is
found that not everyone or anyone can be
successful in Industry. To Avoid Wastage of
Scarce Resources for Optimal utilization of
Limited Training Development Facilities,
Inclination on Quality rather than on Quantity
(Number) is deemed Critical at the first stage in
the Strategy.

ii) Target Groups
The Large Target Groups are
Technical Non Technical Employees
in Industry, Trade Commerce such as, Mechanics,
Machine Operators, Supervisors, Salesmen, Store
Keepers, Middle Level Management, Small Traders,
Fresh Graduates from Technical Non Technical
Colleges, College Dropouts, Artisans Craftsmen,
Govt Employees, Teachers, Ex Servicemen, Women,
Tribals Under Privileged Castes.

The Profiles of New Entrepreneurs
reveal a Diverse Mix of Characteristics in terms
of Education (7th Standard to Post Graduation) ,
age (18 to 45), Occupation Family Background
(From Unemployed to Doctors Chartered Accounts
or from Agricultural Workers to Technicians)
Financial Position (Mostly Income of Rs 500 to Rs
3000 per Month).
This Diversity results from a Key
Belief underlying the Programmes foundation
that Latent Entrepreneurial Spirit is lying
dormant in a wide variety of men women that a
desire to be on their own to improve their
Economic lot is humane well spread. Many,
however, lack self confidence fail to come out
of their shells.
Their enterprise is not fully
developed or nurtured the motivation to take
Risk is not strong enough, despite frustrations
of their current Economic Position, Employment or
Occupation. Some need Opportunity Counseling
(What Business to take up), while others, the
Information or Know how for setting up an
Industrial Enterprise. These needs are to be met
by a Comprehensive Entrepreneurship Development
Programme (EDP) by filling the Gaps in the
Information, Motivation Skill Base. When
Where this Task has been performed effectively,
many New Entrepreneurs have been developed with
Competence to Set Up Operate tiny or Small
Manufacturing or Industrial Service Enterprises
Successfully.

iii) Validation of Selection Process
Preliminary findings of Studies
(Gujarath Experience) on the Validation of the
Selection Process for EDP reveal as under
i) The proportion of those
starting New Ventures from amongst the rejected
Applicants are quite low (17) as compared to the
Group of Candidates Selected (44).
ii) The Number of Persons involved
in Entrepreneurial Movement (i.e., those
starting a Commercial or Industrial Enterprise
from a previous occupation as an Employee or
Unemployed) was much less (13) among those
rejected by behavioral science tests than those
rejected by the alternative aid of Interviews
alone (26).

Stage II Training
Training occupies a Central Place
in the entire EDP Strategy, but we have to
careful about Identification Selection of
Potential Entrepreneurs so that training efforts
are not wasted.
Moreover, we have again to be
equally careful to see that there is no further
wastage for want of reqd support guidance after
the Main Training if the Objective viz., Setting
up of New Ventures is to be realized.

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77
Training Inputs

Let us briefly discuss the same
basically divide them into Three Basic Categories
i) Achievement Motivation.
ii) Business Opportunity Guidance
iii) Business Management.

i) Achievement Motivation
For the development of selected
trainees into Well Rounded Competitive
Entrepreneurs, the programme provides training
inputs as follows
An Intensive Training Programme thro
a Five Day Programme (40 - 50 Hrs) is given to
develop Entrepreneurial Traits such as, need to
Achieve, Risk Taking, Initiative etc.
The Motivation Inputs serve to
a) Increase the Persons need for
Achievement.
b) Help Participants define their
Goals realistically work towards their
achievements
c) Heighten their Self Awareness.
The above is called as
Achievement Motivation Training (AMT). It is a
Crucial Dose of Behavioral, Psychological Input.

ii) Business Opportunity and Project
Selection
While Opportunity Project
Selection is initiated engaged in the initial
stage itself, a more intensive treatment is
reserved for Phase II. Guidance sessions are
held on selecting an appropriate industrial
opportunity for each trainee consistent with his
experience, competence financial resources.
Perceiving a profitable
opportunity for commercial exploitation is an
essential quality of an Entrepreneur.
By providing information
counseling on various feasible industrial
opportunities in the area thro a Team of Experts
(Successful Industrialists, Leading Traders,
Merchants, Technical Experts from Industry,
Financial Institutions consultancy
organizations) by Spot Surveys, each Trainee
Entrepreneur gets tied up with a Business
Opportunity which turns to his goal.
Inadequate Knowledge of an
Opportunity or absence of a Clear Project
Proposal, therefore, need not be a Handicap in
aspiring to be an Owner Entrepreneur. In fact,
the Training Culminates in the Completion of a
Project Report prepared by each Trainee. Finally,
it also constitutes a way in which the finance
for the Project is raised thereby links up
completion of training with the support of
Financial Institutions for Implementation.

iii) Business Management
The Small Scale Entrepreneur
has to be a Good Manager also since he cannot
afford Specialists to look after Multiple
Business Decisions of Sales, Finance, Purchase,
Personnel etc.
Though Rounded Managerial
Experience is essential for better performance,
the New (Trainee) Entrepreneur emerging from the
Ranks of Employees Fresh Graduates usually
possess familiarity with or experience in only
one area, Viz., Production or Sales or
Supervision. The Overall Managerial Understanding
is therefore developed thro the Business
Sessions.
The Syllabus can be evolved in
Consultation with Operating Entrepreneurs,
practicing trade industry experts past
trainees, leaving it to the trainer to make
modifications to suit the Target Group Local
Conditions. This enables the Participants to look
at an Enterprise in its totality introduces
them to the elements of Planning, Budgeting
Control as aids to Good Management.

Faculty
Normally, no full time faculty is
used for the Training Programme except the
Trainer or Project Leader supported by Project
Formulation Expert.
Most of the Business Inputs are
given thro Management/Professional Practitioners,
Business Industry Executives, Experts of State
Industrial Agencies, Bankers, Technical
Consultancy Organizations etc.
A Full Time Project Leader In
Charge of the Training Centre is the Back Bone of
EDP. He acts as a Friend, Philosopher, Guide
Personnel Counselor taking care of the Needs of
the Trainees. He Organizes Administers the
Programmes is responsible for the entire
training process.

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Stage III Post Training

Each Group of Entrepreneurs in an
Entrepreneurship Programme is looked after by the
Entrepreneur Trainer Motivator. He is
responsible for Organizing Post Training
Support also. This involves
a) Follow up on Loan Application for
Finance.
b) Facilitating Infrastructure such as
Land, Factory Shed, Power etc finally,
c) Trouble Shooting.
His Counseling, Resourcefulness
Liaison Skills come handy in expediting Project
Application.
Occasional Visits by the Trainer
for Trouble Shooting may well help. Whenever an
Entrepreneur needs help, he needs to be
encouraged to approach the Trainer.

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Role of Entrepreneurs in Economic Development

The Importance of Entrepreneurial
Resource as a Crucial Input in the Process of
Economic development has now been widely
recognized by eminent scholars, economists
policy makers.
With Growing Emphasis on the Role of
Small Scale Medium Scale Enterprises in view of
their contributions to employment generation,
regional development overall economic growth, a
wide range of schemes programs aimed at
accelerating the tempo of new activities in the
decentralized sector has been devised in many
developing countries.
India is a Developing Economy aiming at
Decentralized Industrial Structure to overcome
Regional Imbalances in levels of Economic
Development. Small Scale Entrepreneurs in such
Industrial Structure play a very vital role to
achieve Balanced Regional Development. It is a
well established fact that Small Scale
Enterprises provide immediate Large Scale
Employment ensuring a more equitable distribution
of National Income, Generate Large Scale Indirect
Employment opportunities in support organizations
around the Industrial Clusters / Estates, Improve
Living Standards of People also most important,
facilitate an effective resource mobilization of
capital skills which might otherwise remain
idle.

Role of Entrepreneurs in Economic
Development (A Summary )
Entrepreneurship promotes effective Capital
formation by mobilizing the idle savings of the
Public.
It provides Large Scale Direct Indirect
Employment to the Unemployed Youth in the Country
thereby helps the Govt to overcome Socio
Economic Problems.
Improves Standard of Living.
Promotes Balanced Regional Development.
Helps reduce the Concentration of Wealth
Economic Power in the hands of a few people.
It stimulates equitable distribution of
Material Resources, Wealth, Income even
political power in the interest of the Country.
Encourages effective Resource Mobilization
of Capital Skill which might otherwise remain
unutilized idle.
Helps in Harnessing Vast Natural Material
Resources of the Country for Economic Growth.
Promotes Backward Forward linkages which
in turn, stimulates the process of Economic
Development in the Country.
Contributes substantially in Countrys Export
Trade thereby helps the Country to earn Vital
Foreign Exchange.
Helps the Country in Overall Development
improving its Status in the World.

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Entrepreneurship in India

Entrepreneurship is regarded as
closely associated with the Economic History of
India. This is traced way back to even as early
as Rig Veda, when Metal Handicrafts manufacturing
cottage small enterprises existed in the
Country.
It has passed thro several Ups
Downs. The important ones include the Decline of
Indian Handicrafts Industry towards the end of
the 18th Century, entry of the East India Company
of the Britishers in Indias Business
Activities. The Swadeshi Campaign for Indian
Manufactured Goods, the First World War,
Emergence of the Indian Managing Agency Systems
by promoting Joint Stock Companies, the Second
World War, Partition of Undivided India
undertaking planned development of
Entrepreneurship in the Country by Govt of India
after Independence in 1947.
For the purpose of encouraging
Entrepreneurship, the Govt of India brought out
the First Industrial Policy Resolutions in 1948
which was subsequently revised from Time to Time.
The Govt of India in order to promote , assist
develop industries in the National Interest has
taken the following Three Important Resolutions
in the Industrial Resolutions

i) To maintain a proper distribution of
economic power between Private Public Sector.
ii) To encourage Rapid Industrialization
by moving the concept of Entrepreneurship from
existing centers to other cities, towns rural
areas.
iii) To disseminate the Entrepreneurship
acumen concentrated in a few dominant communities
to a large number of Industrially Potential
People of varied Social Background.

To achieve these Objectives the Govt
accorded emphasis on the Development of Small
Scale Industries in the Country. Since the 3rd
Five Year Plan, the Govt announced various
Incentives Concessions in the form of Capital,
Technical Know How, Reservation of Certain Items
for Exclusive Manufacture in Small Scale Sector
Tax Concessions, Provision of Infrastructural
Facilities like Developed Land, Sheds, Roads,
Communication etc for Promotion of Enterprises
in the Country etc.
This has helped in Speedy Economic
Development in all the States in the Country to
a great extent has minimized regional imbalances.
National Common Minimum Programme
(NCMP) describes Small Scale Enterprises as the
Most Employment Intensive Segment. At the
beginning of the 10th Plan, (2002 2003), the
Segment provided gainful employment to 24.9
Million People in the Rural Urban Areas of the
Country thro 10.5 Million Units, engaged in
Manufacturing providing a Wide Range of Goods
Services. If the Units in Khadi Village
Industries are also taken into account, the
Employment would rise to 332 Million. Thus this
is rightly called as the segment which provides
employment next only to Agriculture. The
Contribution of Small Enterprises Segment to the
Economic Development of the Country is very
significant. Nearly 39 of the Gross
Manufacturing Output 34 of the Exports of
India arise from these Enterprises.

Yet a large number of
Entrepreneurs are facing lots of Challenges. In
order to assist them to fully harness their
potential by availing of the increasing
opportunities generated by Trade Liberalization,
it is necessary to not only build an enabling
Policy Environment but also supplement the former
with a specific set of measures to address the
continuing challenges.
Therefore Ministry of Micro, Small
Medium Enterprises, Govt of India has announced
a package for Promoting such enterprises in Feb
07 to provide full support in the Areas of
Credit, Technological Up gradation, Marketing
Infrastructural Up gradation in Major Industrial
Infrastructure etc.

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Entrepreneurship Its Barriers.

The Slow pace of Growth of
Entrepreneurship is mainly due to existence of a
tangible set of Barriers prohibiting the Process
of Entry into, Continuity in an eventful exit
from a Business Venture of a Would be
Entrepreneur if it is a function of forces that
one may view as Barriers limiting Full Fledged
Business Performance. These may be Entry
Barriers, Survival Barriers, Exit Barriers.
Entry Barriers are those forces
limiting access to identified business
opportunities capitalization of these
Opportunities. Survival Barriers are constraints
on the conditions essential for the Small
Business Entity. Exit Barriers are constraints
limiting the termination of Small Industrial
Ventures that have outlived their Business
Viability or the Growth of such ventures to a
different size category.

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Entry Barriers

Following is the Presentation of
the Study on Entry Barriers to Entrepreneurship
as perceived by Youth sponsored by NEDB,
Ministry of SSI, Govt of India, Study was
conducted in 2002, by Dr. Sunil Shukla, Dr.
Dinesh Awasthi , Entrepreneurship Development
Institute of India, Ahmedabad.
Following are its findings

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What keeps Youths away from Entrepreneurship ?

1) No interest in Business / Distinct
Preference for Service
Reasons
Job Offers secured income access to
Power.
Satisfaction with Current Job.
Lack of Achievement Motivation.

2) Desire to wait for some more time
Reasons
To gain experience.
To arrange for financial resources.
To try for a Good Job First.
3) Lack of Confidence in Business
Reasons
Lack of Knowledge of the Business
opportunity.
Lack of Ability to take Risk.
Lack of Managerial Skill.
Lack of Knowledge of Procedure
Formalities to establish Business.

4) Disapproval of Family / Friends
Reasons
No Risk bearing Capacity of the Family.
No affiliation to Business Community.
Family Pressure to earn money thro Job.
Reconsidering Business Career
58.3 of those 80.8 who had no
Business Plans were ready for Entrepreneurship,
if helped for

Finance.
Project Idea
Training for Business Management.
Critical Needs of those Planning for
Entrepreneurship
Timely adequate Finance.
Knowledge Skill Training.
Encouragement by Family.

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Major Recommendations for Overcoming
Entry Barriers

1. The First requirement is to change the
mindset.
2. Entrepreneurship to be introduced in
Education (It is heartening to note that VTU,
Belgaum, has introduced Management
Entrepreneurship as a Core Subject for V / VI
Semester Engg. Students of all branches from the
academic year 2008 2009.)
3. Need for Resource Material
Handbooks.
4. Entrepreneurship Business
Development Cell (EBDC) to be established on
Campuses.
5. Faculty Development Programmes on
Entrepreneurship Development.
6. Counseling Guidance Cells for VRS
Employees.
7. Fellowship / leave with Half Pay for
Young Employees having feasible business plans.
8. Special Incentives, Hassle free
credit to be given to increase female
participation in business.
9. Industry Academic Linkage to be
strengthened.

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EBDC on Campuses

NEDB to set up EBDCs on Campuses.
Functions
Organize Entrepreneurship Awareness Camps
(EACs) , Workshops Entrepreneurship
Development Programmes (EDPs).
Sensitize the Environment develop
Network.
Conduct Potential Surveys to develop a
Basket of Viable Business Opportunities.
Act as a Focal Point for Information
Dissemination on Opportunities, Market,
Technologies etc.
Conduct need based Research Studies.
Organize performance improvement growth
programs for entrepreneurs to strengthen local
entrepreneurial base.
Any other activity necessary for
inculcating entrepreneurship in Stud