TOPIC ONE - INTRODUCTION TO ENTREPRENEURSHIP ✓ “The ability and readiness to develop, organize and run a business

enterprise, along with any of its uncertainties in order to make a profit”.

The word Entrepreneur originates from the French word “entreprendre”, which • Intrapreneurship: “the act of behaving like an entrepreneur while working
means to “undertake”. within a large organization”.

The word was coined by economic philosopher Jean-Baptiste Say, from French for ✓ It is a phenomenon of empowering the employees within the
"undertaker“or “adventurer” i.e. one who undertakes a new venture. organization, by valuing their ideas and converting them into a profit-
making model for the business.
In a business context, it indicates someone who undertakes an activity that
generates economic value through trade or other commercial activities.; • An intrapreneur: “an individual who works on developing new ideas and
The concept of entrepreneurship is a complex phenomenon, and it can be products within the confines of an established business”. Intrapreneurs
considered as; include any person within the company that applies entrepreneurial skills,
vision, and forward thinking into the role that they have in the company.
✓ the study of how new businesses are created,
• Social entrepreneurship: “the process of recognizing and resourcefully
✓ the process of designing, launching and running a new business, which is pursuing opportunities to create social value”. A social entrepreneur is a
often similar to a small business, or self-employment, or person who explores business opportunities that have a positive impact
on their community, in society or the world.
✓ the creation of something new or improved to seize on a commercial
opportunity – especially those innovations of product or process that are • Ecopreneurship: the process of applying principles of entrepreneurship to
substantially different. create businesses that solve environmental problems or operate
sustainably. “Ecopreneurs are entrepreneurs whose business efforts are
Entrepreneurs play a key role in any economy, using the skills and initiative
not only driven by profit, but also by a concern for the environment”.
necessary to anticipate needs and bring good new ideas to the market.

DEFINITION OF TERMS DISTINCTION BETWEEN ENTREPRENEUR AND MANAGER

• An entrepreneur: “an individual who creates a new business, bearing Often the two terms, namely entrepreneur and manager are considered as
most of the risks and enjoying most of the rewards”. The entrepreneur is synonym. However, the two give different meaning. The major points of
commonly seen as an innovator, a source of new ideas, goods, services, distinction between the two are: -
and business/or procedures.
Points Entrepreneur Manager
✓ “A person who organizes, operates, and assumes the risk for a business 1. Motive The main motive of an Main motive of a manager is
venture”. entrepreneur is to start a to render services in an
venture for his personal enterprise already set by
• Entrepreneurship: “the process by which individuals or a group of gratification. someone else.
individuals exploit a commercial opportunity, either by bringing a new 2. Status Owner Servant
product or process to the market, or by substantially improving an 3. Risk Assumes risk and uncertainty Manager does not bear any
existing good, service, or method of production. risk involved in enterprise.

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 4. Rewards Profits, which are highly Salary which is certain and 6) A Function of risk bearing: Risk is an inherent and inseparable element of
uncertain and not fixed. fixed.
entrepreneurship. An entrepreneur works under uncertainties.
5.Innovation Entrepreneur himself thinks A manager simply executes
over what and how to produce plans prepared by the 7) Entrepreneurship implies growth: Entrepreneurship is about growing a
goods to meet the changing entrepreneur.
business and pursu-ing opportunities as they arise.
needs of the customers.
Hence, he acts as 8) Managerial skill and leadership function: An entrepreneur must have the
innovator / change agent.
ability to lead and manage. He provides direction, creates work culture, and
6.Qualification An entrepreneur needs to A manager needs to possess
possess qualities and distinct qualifications in build teamwork and cohesiveness among employees.
qualifications like high terms of sound knowledge in 9) A process: It is a set of ongoing decisions and actions. Entrepreneurship is
achievement motive, management theory and
originality in thinking, practice. not a one-time phenomenon; it occurs over time.
foresight, risk bearing ability 10) Gap filling function: It seeks to fill the gap between human needs and the
etc.
available products and services. An entrepreneur determines the needs of
people and combines resources to produce goods and services of
Nature and Characteristics of Entrepreneurship
requirements.
The main features of entrepreneurship are: -
11) Dynamic process: An entrepreneur deals proactively with changing markets
1) Economic activity: It is basically concerned with the production and
and environment.
distribution of goods and services and optimally utilizes the resources
12) Organizing Function: It is the ability to bring together productive resources
towards productive use.
of society. It harnesses land, labor, capital and other resources for the
2) Entrepreneurship involves innovation: It involves changing, revolutionizing,
benefit of mankind.
transforming, and introducing new approaches. Entrepreneurship involves
doing things in a new and better way. TYPES & CLASSIFICATION OF ENTREPRENEURS

3) Goal-oriented activity: It seeks to earn profits through satisfaction of needs Entrepreneurs are found in all spheres of life, and not only in economic activities,
of consumers. including agri-business, socio-cultural activities, artisans, philosophy, professions,
4) Value creation: It leads to creation of new products, services, transactions, entertainment, etc. Regardless of the field of entrepreneurship, they are
approaches, resources, technologies, and markets that contribute some classified on the following basis: -
value to the community or marketplace. Value is also created when, I. Based on Clarence Danhof
resources are transformed into outputs such as products or services. II. Based on type of business
5) Enterprise creation: In order to pursue the perceived opportunities for III. Based on stage of development
innovation and to create value, there must be organized efforts and actions. IV. Based on motivation
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I. Based on Clarence Danhof (ii) Trading Entrepreneur
(i) Innovative Entrepreneurs Refers to a person who undertakes trading activities. These entrepreneurs do not
These are innovators. They invest their time and money in research and concentrate on manufacturing activities. They procure the finished products from
development and introduce new ideas or innovations. They create new products, the manufacturers and sell these to the customers directly or through a retailer.
find new production methods, create new markets and restructure the business. They give more emphasis on distribution and marketing of goods. They identify
(ii) Imitative/Adoptive Entrepreneurs potential markets, create demand for the product and influence people to buy the
These are 'copy cats’. They are those who adopt the successful innovations of product.
innovative entrepreneurs. Imitative entrepreneurs apply strategy from other (iii) Industrial/Manufacturing Entrepreneur
enterprises in a manner where all core fundamentals of the original business These are manufacturers. They identify the needs of the customers and then,
model are replicated, and all efficiencies are retained. explore the resources and technology to be used to manufacture the products to
(iii) Fabian Entrepreneurs satisfy those needs. In other words, they convert raw materials into finished
Those entrepreneurs who generally do not seek to implement changes in their products.
enterprise techniques. They are very careful and cautious in exercising any change. (iv) Corporate Entrepreneur
They imitate only when it becomes perfectly clear that failure to do so would be Those who exhibit innovative skills in organizing and managing a corporate
detrimental for their business. undertaking. They manage organizations which a separate legal entity.
(iv) Drone Entrepreneurs
Entrepreneurs who do not make any changes. They strictly follow their traditional III. Based on stage of development
strategies or methods for development, production or marketing. These (i) First generation entrepreneurs
entrepreneurs feel or experience pride and tradition in the old ways of doing Those who do not possess any entrepreneurial background and instead set up an
business. They can suffer losses, yet they do not adopt changes in their current enterprise by their innovative skills. They combine various factors of production
methods, and sometimes they may be pushed out of the market. and provide marketable product or service. They are the first person to start an
enterprise on their own.
II. Based on type of business (ii) Second generation entrepreneurs
(i) Business entrepreneurs Those who take over the reins of an already existing business. They inherit the
Those who conceive an idea for a new product or service and then create a family business.
business to convert their ideas into reality.

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(iii) Modern entrepreneurs entrepreneurial decisions. Entrepreneurship contributes in economic
This is a dynamic entrepreneur. They always look for changes and respond to the development in following ways:
changing demand of the market. Their business ventures suit the current 1. Job creation: By setting up industries, it creates demand for labor, which
marketing needs. creates employment opportunities.
(iv) Classical entrepreneur 2. Wealth creation and distribution: It stimulates equitable redistribution of
This is a stereo type entrepreneur. They aim at maximizing profits at a level wealth and income to more people and geographic areas, thus giving benefit
consistent with the survival of the firm, with or without an element of growth. to larger sections of the society.
3. Economic growth: It contributes to increased gross national product as well
IV. Based on motivation as per capita income of the people in a country.
(i) Pure entrepreneur 4. Improvement in the standard of living: Entrepreneurs produce a wide
A person who is motivated by psychological and economic factors. Entrepreneurial variety of goods and services in large scale and at a lower cost. This avails
task is undertaken by them due to certain reasons such as profits, personal better quality goods at lower prices.
satisfaction, ego, etc. 5. Promote capital formation: Entrepreneurs promote capital formation by
(ii) Induced entrepreneur mobilizing the idle savings of public.
Those who take up entrepreneurial task due to the incentives and subsides 6. Promotes balanced regional development: Entrepreneurs help to remove
granted by the government e.g., financial and technical assistance. regional disparities through setting up of industries in less developed and
(iii) Spontaneous entrepreneur backward areas.
A person, turns out to be an entrepreneur because of the natural talent vested in 7. Promotion of Exports: Entrepreneurs reduce the pressure on the country’s
them. They take up entrepreneurial activity in order to tap their talents. They have balance of payments. By exporting their goods/services they earn valuable
self-confidence and emerge as challengers. foreign exchange to the country.
8. Mobilization of local resources: It exploits and makes use of idle and
ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT unutilized local resources.
Economic development is the creation of wealth from which community benefits 9. Growth of infrastructure: The growth of enterprises influences the
are realized. It is the process by which the economic well-being and quality of life government to develop infrastructure.
of a nation, region, local community, or an individual are improved. An 10. Facilitates overall development: Entrepreneurs act as catalytic agent for
entrepreneur acts as a trigger head to give spark to economic activities by his change which results in chain reaction. Once an enterprise is established, the
process of industrialization is set in motion.