UNIT-III: Entrepreneur: Conceptual issues. Entrepreneurship vs. Management.

Roles
& Functions of an Entrepreneur, Types of Entrepreneur, Intrapreneur - an emerging
.
Class. Stages in entrepreneurial process; Role of entrepreneurs in Economic
Development; Entrepreneurship in India; Entrepreneurship – its Barriers

Entrepreneur: The word entrepreneur has its origin in the French language. An
entrepreneur is one who organises, manages and assumes the risks of an enterprise.
Enterprise is an undertaking, especially one which involves minimum four factors (i.e. land,
labour, capital and entrepreneur) of production as indicated below.
According to Schumpeter, “Entrepreneurs are business leaders and not simple owners of
capital. They are men of vision, drive and talent, who spot out opportunities and
promptly grasp them for exploitation”.
The Entrepreneur is a change agent that acts as an industrialist and undertakes the risk
associated with forming the business for commercial use. An entrepreneur has an unusual
foresight to identify the potential demand for the goods and services.
An entrepreneur who starts new business comes with an innovative idea of making a
particular product or unique services to the society in order to serve them better or to create
ease in their lifestyle
Entrepreneurship: It is the attempt to create value through recognition of business
opportunity, the management of risk taking appropriate to the opportunity and through the
communicative and management skills to mobilize human, financial and material resources
necessary to bring a project to fruition.
According to A.H. Cole has defined entrepreneurship as “the purposeful activity of an
individual or group of associated individuals, undertaken to initiate, maintain or earn profit
by production and distribution of economic goods and services”.
According to Heggins “Entrepreneurship is meant the function of seeking investment and
production opportunity, organizing an enterprise to undertake a new production process,
raising capital, hiring labour, arranging the supply of raw materials and selecting top
managers of day-to-day operations”.
Entrepreneurship vs. Management: The following are the differences:
S.No Basis of Comparison Entrepreneurship Management
It is an overall business
It is a process of creating
activity which is getting
an enterprise by taking a
1 Meaning done through and with
financial risk in order to
people in a formally
get a profit.
organized group.
 Business start-up and Look after an ongoing
2 Function
venture operation.
3 Status Owner Employee
Salary as a reward for
4 Rewards Profit for risk-bearing
work
A risk associated with Management does not
5 Risk
entrepreneurship accept any risk.
Management implies the
6 Goal Entrepreneur set the goal. goal set by the
entrepreneur.
Make a decision after
Make a decision on
collecting detailed
7 Decision Making personal perception and
information and reaching
gut feelings.
an operative conclusion.
An entrepreneur is not
A manager may involve or
8 Fraud getting involved in
cheat by not working hard.
fraudulent behaviour.
9 Innovation Is the innovator Is the executor

Roles of an Entrepreneur: These roles are the same as the basic managerial roles. All
such roles are listed out in detail as follows –
1. Figure Head Role: The entrepreneur needs to be the Head in the organization and
participate in ceremonial duties, such as representing the organization in formal and
informal events or even being the public spokesperson whenever there is a press release,
etc.
2. Leader Role: The entrepreneur should also act as a leader because an entrepreneur
may need to bring people with dissenting views and approaches to work together as a
team. So, he needs to be good with his people management and leadership skills. He has
to lead the people by hiring, firing, training and motivating his resources as and when
necessary.
3. Liaison Role: The entrepreneur should also be the liaison officer for his organization.
He should be the source of link with the outside world and business houses, always
trying to find an opportunity of working together with other big organizations.
4. Monitor Role: The entrepreneur acts as a regulatory body too; he monitors both the
internal and the external environment of the business constantly.
5. Information Provider and Receiver Role: The entrepreneur should also act as
the organizational representative and transmit information internally and externally the
organization.
6. Spokesman Role: The manager should also act as the spokesman of the business and
transmit information internally and externally the organization. He needs to be the
source of knowledge about his company to potential investors and collaborators.
7. Entrepreneurial Role: This is the basic role of the entrepreneur; he/she declares
new ideas for the organizations, brainstorms it with the employees and friends and then
bears the risk of any unsuccessful implementation.
8. Disturbance Handler: The entrepreneur needs to act as the mediator and bring
people with dissenting thoughts to the table and get them motivated to work together. He
needs to handle all conflicts and get the team to focus constantly on the goal.
9. Resource Allocator: The entrepreneur needs to find out how the available resources
can be allocated between different departments of the organization to suit their demands
and necessities. This helps them achieve the organizational goals and the objectives.
10. Negotiator Role: The entrepreneur must negotiate on behalf of the organization both
internally with the staff as well as with the external investors or collaborators. At such
opportunities, the entrepreneurs need to be more focused on their role of being a ‘win-
win” deal breaker.
Functions of an Entrepreneur: The functions of entrepreneur are as follows:

1. Organizing functions: Organizing is the part of managing that involves

establishing intentional structures of a role for people in an organization. The
 entrepreneur is responsible for organizing the activities necessary for the production
of goods and services.
2. Conceptualizing new opportunities and possibilities: The entrepreneur
plays an effective role in identifying possible opportunities for production purposes.
He always looks for opportunities for investment.
3. Risk-taking: He takes risks associated with investments. He faces numerous risks
in his/her entrepreneurial endeavour. In order to encounter the risks, he/she
formulates long-term plans and policies and undertakes innovative efforts.
4. Decision-making: Entrepreneurs take a decision about investments. Investment
decision includes a selection of assets where the money would be invested. On the
other hand, business decisions include decisions about procurement of machinery and
supplies, quality of products, pricing of products, diversification of products,
determining optimal capital structure, etc
5. Technology transfer: Entrepreneurs play a very important role in transferring
technology from sources where these are available. In developing countries,
entrepreneurs try to adopt the appropriate technology.
6. Implementation of innovations: They introduce newness in the venture
activities through the innovation of new production processes, exploring new
markets, and identification of new management techniques, and so on.
7. Utilization of experience: Entrepreneurs utilize their own experience and also
the experience of others, especially or the successful entrepreneurs of other countries.
8. Managerial role:  Successful entrepreneurs are also efficient managers. They
perform the managerial functions of planning, organizing, leading, and controlling.
Types of Entrepreneurs: The following are the types of entrepreneurs:
1. Innovative Entrepreneur: These entrepreneurs are generally aggressive in
experimentation. They are found in developed countries. They are highly creative. They
do attractive things in their business. They keep introducing new techniques or products
into the market. They play a key role in rise of modern capitalism. They face the risk of
uncertainty.
Advantages: The following are the advantages:
 Get all the glory for the success of the business (and take all the arrows)
 Create the rules
 Face minimal competition during the initial days
Disadvantages: The following are the disadvantages:
 You will need a lot of capital to bring a new idea to life
 Often face resistance from shareholders
 The timeframe for success is longer
2. Adoptive / Imitative Entrepreneur: These entrepreneurs are adoptive as they are
ready to adopt successful innovations created by innovative entrepreneurs. They do not
innovate changes but imitate the technology, knowledge and skills found by others. They
are found in under developed countries as they contribute to the development of
economics. They face lesser risks and uncertainty than innovative entrepreneurs.
Advantages: The following are the advantages:
• Refining a business idea is easier and less stressful
• You can easily benchmark your performance with the original idea
• Can learn and avoid mistakes that were made by the originator
Disadvantages: The following are the disadvantages:
• Their ideas are always compared to the original idea
• Always have to play catch-up
3. Fabian Entrepreneur: These entrepreneurs are very cautious and are very lazy. They
are not ready to introduce new changes and do not adopt new methods innovated by the
most enterprising entrepreneurs. They are not interested to take risks and they follow the
footsteps of their predecessors.
Advantages: The following are the advantages:
1. Deep understanding of their market
2. Able to spot gaps where they can differentiate themselves
3. Less prone to taking risks that don’t pan out
Disadvantages: The following are the disadvantages:
1. Moves much slower
2. May dismiss ideas with potential because of the higher risks involved
3. Numbers become more important than people and relationships
4. Drone Entrepreneur: These entrepreneurs are conventional. They refuse to adopt and
use opportunities to make changes in production. They do not make changes in their
methods even if there is a loss in business. They are laggards because they try to continue
their job in their traditional way. When their products become uneconomical, they will be
pushed out of the market.
Advantages: The following are the advantages:
1. Buying an already established venture is less risky
2. Doesn’t have to worry so much about innovation
3. Can focus on building on something that has already gone through building a
foundation
4. Already has a market for your products
Disadvantages: The following are the disadvantages:
1. Usually pays a high price for good businesses
2. Will face the risk of buying businesses that have problems that you think you can turn
around.
5. Hustle Entrepreneur: Unlike innovators whose vision is the gas in their engine,
hustlers just work harder and are willing to get their hands dirty.  Hustlers often start small
and think about effort – as opposed to raising capital to grow their businesses. These types of
entrepreneurs focus on starting small with the goal of becoming bigger in the future. Hustlers
are motivated by their dreams and will work extremely hard to achieve them. They tend to be
very focused and will get rid of all forms of distractions, favouring risks over short-term
comfort. A perfect example of a hustler is Mark Cuban. He started in business very young
selling trash bags, newspapers and even postage stamps and this hustle later created a
goldmine which was acquired by internet giant Yahoo!
Advantages: The following are the advantages:
1. They will outwork most
2. Tend to have thick skin – they don’t give up easily
3. See disappointment and rejection as just a step in the process
Disadvantages:
1. Usually prone to burn out
2. Wear out their team members who don’t have the same work ethic
3. Often don’t see the value of raising capital as opposed to just working harder
Intrapreneur - an emerging Class: The word intrapreneur is coined in 1980s by a
management consultant Gifford Pinchot. Companies that are in great need of new innovative
ideas use intrapreneurs.
An intrapreneur is an inside entrepreneur, or an entrepreneur within a large firm, who uses
entrepreneurial skills without incurring the risks associated with those activities.
Intrapreneurs are usually employees within a company who are assigned to work on a special
idea or project, and they are instructed to develop the project like an entrepreneur would.
Intrapreneurs usually have the resources and capabilities of the firm at their disposal.
Intraprenuership: Intrapreneurship is defined as entrepreneurship within an already
existing organization. It is also referred to as corporate entrepreneurship. A typical example
would be that of Dr. Pawan Goenka, who designed and developed the immensely successful
Scorpio model for Mahindra and Mahindra (M&M) and redefined the way new car design
and development was done. He utilized his vast experience of working with General Motors
(GM) in the US prior to joining M&M.
Characteristics of an Intraprenuer: There are many characteristics of an
intrapreneur:
1. Creates new ventures: Giving birth to new businesses within the existing
organizations is the typical characteristic of an intrapreneur.
2. Innovates products/services: A tendency towards technological leadership by
way of continual innovation of products/services is desirable on part of an
intrapreneur.
3. Innovates processes: Under fiercely competitive business landscape, business
processes need to be reinvented time and again by the intrapreneurs for better
efficiency, productivity, and quality.
4. Proactive: Intrapreneurs attempt to lead rather than follow the competitors through
their pro-activeness.
5. Risk-taking: Intrapreneurs have a risk-taking attitude with regard to investment
decisions and strategic actions under situations of uncertainty.
 6. Renews organizations: An intrapreneur is expected to transform the orga-
nizations through renewal of key ideas on which they are built.
7. Competitively aggressive: An intrapreneur has the propensity to directly and
intensely challenge his organization’s competitors to achieve entry or to improve
position.
Need for Intraprenuership: There are numerous reasons attributing to growing interest
in Intrapreneurship based on a number of issues facing organizations.
1. Business Growth: There is a strong correlation between Intrapreneurship and rate
of business growth. It helps the organization to fight through competition and nurture
best talents. The employees stay motivated and align their individual goals with
organisational goals. It acts as a balancing factor. The employees put in their best to
innovate whilst being employed. It creates a win-win situation for all stakeholders.
2. Sustain Innovation: It helps organizations to innovate over the long term. Every
organization needs to adapt with changes overtime and intrapreneurs change the very
fabric of a workplace. Conducive work environment fosters creativity and helps the
firm to gain through its employees. It helps them hire and maintain the best and most
talented. It makes the employees feel “important” and leads to efficiency and positive
incremental returns.
3. To Develop Human Capital Par Excellence: It changes the way people
think and act, changing the operational aspects of an organization, and changing the
culture. Intrapreneurs have a synergy effect because it pushes the all employees to
think beyond standardized procedures and tests the limits of organizational systems
and processes. Resources aim at developing and reinventing themselves instead of
settling in set moulds. It is the way to move forward.
4. Learning Organization: The aim of intrapreneurship is to harness the
capabilities that enable organizations to change. The intrapreneurs act as catalyst for
that change and help in promoting learning spirit in the organization.
5. Receptive of Change: Change is permanent and so is human resistance.
Intrapreneurial leaders are change agents. They illuminate new traces. They become
the catalysts of change they wish to see. Employee supported change (bottom up) is
easier to implement than top down implementation.
Stages in Intrapreneurial Process: The processes of intrapreneurship involve both
analytical and creative activities. According to Pierce and Dunham, the intrapreneurial
process takes place in four sequential steps:
1. Solo Phase: During this step, the typical entrepreneur works alone. The first task for the
intrapreneur is to clearly identify the intrapreneurial idea. Then, the idea is developed and
subjected to three feasible tests.
a) Will the idea provide identifiable benefits to the customer or clients?
b) Is the idea compatible with the organization’s resources and overall strategy?
c) Is the idea and its potential implementation compatible with the entrepreneur’s
personal character and skills?
2. Network Phase: During this step the entrepreneur shares the idea with other
organizational members, seeking feedback and suggestions for improvement of the idea.
3. Boot Legging Phase: During this step, the entrepreneur begins to form a project team
and some levels of product prototype development outside the normal operational mode of
the company.
4. Formal Team Phase: During this step, the idea becomes a formal organizational

venture with formal organizational support.

Differences between Entrepreneur and Intrapreneur: The following are the

differences:
S.No Basis Entrepreneur Intrapreneur
Entrepreneur is the owner of the Intrapreneur is an executive to
1 Ownership
works under enterprise. entrepreneur.
Formation of Entrepreneur raises by the necessary Intrapreneur uses the capital
 2
Capital capital for the enterprises. raised entrepreneur
Intrapreneur has some
An entrepreneur generally has no an
experience as in an enterprise.
3 Experience executive previous experience. He
He switches over as an
starts afresh.
entrepreneur later.
Being the owner of the enterprise
Intrapreneur is an employee
4 Freedom entrepreneur has full freedom to run
and hence lack freedom.
the enterprise.
Since he is an employee,
Entrepreneur assumes the risk of his
5 Taking Risk question of bearing any risk
business enterprise.
does not arise in his case.
Entrepreneur professional turned
Professional Intrapreneur is basically an
6 generally may not have any
Qualification entrepreneur.
professional qualification.
Intrapreneur manages the
Entrepreneur manages the business
7 Management business enterprise as he is
enterprise from outside.
the manager of the unit.
 Entrepreneur does not cause brain- Intrapreneur causes brain-
8 Brain-drain
drain drain.

Stages in entrepreneurial process : The following are the stages:

1. Discovery: An entrepreneurial process begins with the idea generation, wherein the
entrepreneur identifies and evaluates the business opportunities. The identification and
the evaluation of opportunities is a difficult task; an entrepreneur seeks inputs from all
the persons including employees, consumers, channel partners, technical people, etc. to
reach to an optimum business opportunity. Once the opportunity has been decided upon,
the next step is to evaluate it.
2. Developing a Business Plan/Concept Development: Once the opportunity is
identified, an entrepreneur needs to create a comprehensive business plan. A business
plan is critical to the success of any new venture since it acts as a benchmark and the
evaluation criteria to see if the organization is moving towards its set goals. An
entrepreneur must dedicate his sufficient time towards its creation, the major components
of a business plan are mission and vision statement, goals and objectives, capital
requirement, a description of products and services, etc.
3. Resourcing: The third step in the entrepreneurial process is resourcing, wherein the
entrepreneur identifies the sources from where the finance and the human resource can
be arranged. Here, the entrepreneur finds the investors for its new venture and the
personnel to carry out the business activities.
4. Managing the company/Actualization: Once the funds are raised and the
employees are hired, the next step is to initiate the business operations to achieve the set
goals. First of all, an entrepreneur must decide the management structure or the hierarchy
that is required to solve the operational problems when they arise.
5. Harvesting: The final step in the entrepreneurial process is harvesting wherein, an
entrepreneur decides on the future prospects of the business, i.e. its growth and
development. Here, the actual growth is compared against the planned growth and then
the decision regarding the stability or the expansion of business operations is undertaken
accordingly, by an entrepreneur.
Role of entrepreneurs in Economic Development: An Entrepreneur plays a vital
role in economic growth of a country. He collects and exploits the natural and human
resources and then through innovation he utilizes these resources in an optimal manner. He
provides or generates lot of employment amongst people and bring stability in economy.
1. Organising of Society’s Productive Resources: The important role of
entrepreneurship is the optimum uses of productive resources of the country for the
benefits of the people. James Burna observes that an entrepreneur is the organiser of
society’s productive resources. While explaining the contribution of entrepreneurs Prof.
Karvar writes, the services of an entrepreneur are such which a paid manager cannot
perform. In the absence of entrepreneurs, all the productive resources remain idle.
2. Production of New Articles: Entrepreneur performs important role in producing
and presenting new products in the market. He innovates and identifies the possibility of
producing new products on the basis of innovation.
3. Development of New Production Technique: Entrepreneur uses the new
methods of production techniques, and brings in the market varieties of products at
reasonable prices. He makes efforts to bring improvement in the present technology of
production.
4. Promotes Capital Formation: In a developing economy, the entrepreneur only can
promote capital formation by investing in industrial activities. The entrepreneurial
activity is the base for the development of capital market in a country like India.
5. Contributes towards Creation of Industrial Climate: Entrepreneur plays
important role in building industrial climate in the country. He motivates other
entrepreneurs also to invest in industrial activities.
6. Contributes towards Providing Employment: Entrepreneur introduces new
products and new techniques. This results into the development, new industries, leading
to opportunities for direct and indirect employment to the people.
7. Contributes towards Increasing Standards of Living of People: The
entrepreneurs have development and diversified new techniques and new products
 according to the needs of the time. This has given opportunity for the people to consume
different kinds of items of their choice. The uses of substitute products have increased.
This way, the enterprise news has contributed towards increasing the standard of living
of the people.
8. Ambassador of Social Changes: Entrepreneurs are ambassadors of social changes
in an economy. New inventions cultivated scientific outlook among the people leaving
their traditional beliefs and attitudes.
9. Removal of Regional Disparities: Entrepreneurs contribute towards removal of
geographical imbalances and economic backwardness. Really speaking an entrepreneur
bears the risk in setting up industry in backward areas of the country in is efforts for
balanced development of the country.
Entrepreneurship in India: Entrepreneurship is our most important driver, kicking off
a virtuous cycle driving the Indian economy.
1. Entrepreneurship drives business creation: People who are entrepreneurs are
constantly innovating, finding new market opportunities and products that can serve
them. Anyone who is creating a new business is attempting to do something innovative,
pushing both technical and human capabilities.
2. Businesses creation drives value addition: Businesses create products and
services that add a lot of economic value. They solve problems for businesses or
consumers, and the activities they engage in add value. This value is captured in the GDP
and is reflected in the market value - for e.g. venture capital backed companies account
for 4.3 trillion of US market cap.
3. Value addition drives job creation: For a country with more than 50% of
its population below the age of 25, generating employment is critical. India has a
troubling issue where more than 30% of the youth is unemployed - creating jobs is the
only solution to this problem which can be destabilizing. Companies that are able to
generate value will hire more people to generate even more value.
4. Job creation drives consumption: Once people find employment and have jobs,
they have a steady stream of income. With income comes the ability to purchase and
consume - a country that has more employed people is also able to spend and consume
more.
5. Consumption drives entrepreneurship: As people begin to consume more, a
larger market is created. Higher consumption also means varied consumption, people
 have more evolved needs and wants. Who serves these more complex, large, new needs?
Entrepreneurs.
Entrepreneurship – its Barriers: The barriers are classified into following types:
1. Environmental Barriers: The following are the important environmental barriers
to entrepreneurship:
a) Non-Availability of Raw Material: Non-availability of raw materials
especially during peak season is one of the obstacles inhibiting entrepreneurship. This
leads to competition for raw material.
b) Lack of Skilled Labour: This is the most important resource in any
organization. Unfortunately, desired manpower may not be available in an
organization. This is either due to the lack of skilled labour or due to lack of
committed or loyal employees in the organization.
c) Lack of Good Machinery: Good machines are required for the production of
goods, because of rapid technological developments, machines become obsolete very
soon. Small entrepreneurs find it difficult to get large amount of cash for installing
modern machinery.
d) Lack of Infrastructure: Lack of infrastructure facilities is a major barrier to the
growth of entrepreneurship particularly in under developed and developing
economies. The infrastructural facilities include land and building, adequate and
cheap power, proper transportation, water and drainage facilities etc.
e) Lack of Fund: There are various methods by which an entrepreneur arranges for
funds, e.g., own savings, borrowings from friends and relatives, banks and other
financial institutions. Many people do not enter into entrepreneurial activities because
of lack of funds.
f) Other Environmental Barriers: Lack of business education, Lack of
motivation from government, corruption in administration, high cost of production
etc. are the other environmental barriers that inhibit the growth of entrepreneurship in
underdeveloped countries.
2. Personal Barriers: Personal barrier are those barriers that are caused by emotional
blocks of an individual. Some of the personal barriers may be outlined as below:
a) Unwillingness to Invest Money: Even though people have money, still they do
not come in entrepreneurship. They are not willing to take the risk of investing money
in business.
 b) Lack of Confidence: Many people thing that they lack what it takes to become an
entrepreneur. They feel that they could not master all the skills. Thus, most people are
reluctant to become entrepreneurs.
c) Lack of Motivation: When an individual starts a new venture, he is filled with
enthusiasm and drive to achieve success. But when he faces the challenges of real
business or bears loss, or his ideas don’t work, he loses interest or motivation.
d) Lack of Patience: The desire to achieve success in the first attempt or to become
rich very soon is the prime motivating factor of modern youth. When such dreams do
not come true, they lose interest. This gradually drives to fail in business.
e) Inability to Dream: Entrepreneurs, who are short on vision or become satisfied
with what they achieve, sometimes lose interest in further expansion/growth of
business.
3. Social Barriers: The social attitude inhibits many people even from thinking of
starting a business. The important social barriers are as follows.
a) Low Status: The society things that entrepreneurs are the people who exploit the
society. Thus, the attitude of the society towards entrepreneurs is not positive.
b) Custom and Tradition of People: Most people want a real job. Even parents
who are entrepreneurs wouldn’t like their children to be entrepreneurs. Thus, lack of
support from society and family hinders the growth of entrepreneurs.