Faculty: Ms.

Bhawna Sharma

BBA 6th Sem Paper Code: BBA 312 Subject: Entrepreneurship Development

Unit 3 – Entrepreneurial Behavior

 Innovation and Entrepreneur- Concept, Types
 Entrepreneurship Behaviour
 Psycho theories-Social responsibility
 Entrepreneurship Development program- Concept, Role, Relevance
 Role of Government in EDP

INNOVATION AND ENTREPRENEUR

Innovation and entrepreneurship are two closely related concepts that play crucial roles in
driving economic growth, societal progress, and technological advancements.

Innovation refers to the process of introducing new ideas, methods, products, or services that
create value, improve efficiency, or meet unmet needs. It involves converting ideas into tangible
outcomes that benefit individuals, organizations, or society at large.

Types of Innovation

1. Product Innovation: Product innovation involves the creation or improvement of goods

or services offered to customers. It can take various forms, such as:
 New Product Development: This involves introducing entirely new products to the
market. These could be based on emerging technologies, consumer trends, or identified
gaps in existing offerings.
 Product Improvement: Product innovation can also involve enhancing existing
products. This may include adding new features, improving functionality, or redesigning
components to make them more appealing or efficient.
 Line Extensions: Line extensions involve introducing variations or extensions of existing
products. This could involve offering different sizes, flavors, colors, or configurations to
cater to diverse customer preferences.
 Disruptive Innovation: Disruptive innovation refers to the creation of products that
fundamentally change the way markets operate or meet the needs of underserved
customer segments. These innovations often start in niche markets before eventually
disrupting established industries.

2. Process Innovation: Process innovation focuses on improving the methods, techniques,

or systems used to produce goods or deliver services. This can lead to increased
efficiency, reduced costs, and improved quality. Examples include:
 Automation: Automation involves the use of technology to perform tasks with minimal
human intervention. This can streamline production processes, reduce errors, and
increase output rates.
 Lean Manufacturing: Lean manufacturing aims to eliminate waste and optimize
efficiency throughout the production process. Techniques such as just-in-time inventory
management, value stream mapping, and continuous improvement are commonly used.
 Supply Chain Optimization: Process innovation can also involve optimizing supply
chain operations to reduce lead times, minimize inventory costs, and improve overall
responsiveness to customer demand.
 Quality Management Systems: Implementing quality management systems such as Six
Sigma or Total Quality Management (TQM) can lead to process improvements by
systematically identifying and addressing sources of variation and defects.

3. Business Model Innovation: Business model innovation involves rethinking the way a
business creates, delivers, and captures value. This can involve:
 Subscription Models: Implementing subscription-based pricing models where customers
pay a recurring fee for access to products or services.
 Freemium Models: Offering basic services for free while charging for premium features
or upgrades.
 Platform-Based Models: Creating platforms that connect buyers and sellers, service
providers and consumers, or users and advertisers.
 Collaborative Consumption: Facilitating sharing or rental services where individuals
can access goods or services on a temporary basis without outright ownership.
4. Technological Innovation: Technological innovation involves the development or
adoption of new technologies to create novel products, services, or processes. Examples
include:
 Digital Transformation: Embracing digital technologies such as cloud computing (Use
of the internet to store, manage and process information), artificial intelligence, internet
of things (IoT), and blockchain to improve business operations and create new digital
products or services.
 Biotechnological Advances: Innovations in biotechnology have led to the development
of new drugs, therapies, and diagnostic tools that improve healthcare outcomes.
 Clean Energy Technologies: Advancements in renewable energy technologies such as
solar, wind, and hydroelectric power are driving the transition towards a more
sustainable energy future.
 Advanced Materials: The development of new materials with unique properties, such
as graphene, carbon nanotubes, and advanced polymers, is enabling innovations in
various industries including electronics, aerospace, and healthcare.

5. Incremental vs. Radical Innovation:

 Incremental Innovation: Incremental innovation involves making small, gradual
improvements to existing products, processes, or business models. These improvements
are typically evolutionary rather than revolutionary and focus on optimizing performance
or addressing specific customer needs.
 Radical Innovation: Radical innovation, on the other hand, involves the development of
entirely new products, technologies, or business models that disrupt existing markets or
create entirely new ones. Radical innovations often require significant investments in
research and development and may involve higher levels of risk and uncertainty.
However, they also have the potential for substantial rewards and competitive
advantages.
ENTREPRENEURSHIP BEHAVIOUR AND PSYCHO THEORIES

Entrepreneurship behavior refers to the actions, attitudes, and characteristics displayed by

individuals engaged in entrepreneurial activities. These behaviors can vary widely among
entrepreneurs but often include:

1. Opportunity Recognition: Successful entrepreneurs have a keen ability to scan their

environment, identify trends, and sense opportunities that others may overlook. This
involves staying informed about market dynamics, consumer preferences, technological
advancements, and societal changes.
2. Creativity and Vision: Entrepreneurial behavior often involves creative thinking and
vision. Entrepreneurs envision possibilities, imagine solutions to existing problems, and
conceptualize innovative products, services, or business models.
3. Risk-Taking: Entrepreneurial behavior involves perceiving and evaluating risks
associated with potential opportunities. While risk-taking behavior varies among
entrepreneurs, successful ones tend to have a balanced approach, weighing potential
rewards against potential risks.
4. Risk Management: Effective entrepreneurs engage in risk management strategies such
as conducting thorough market research, diversifying investments, building contingency
plans, and seeking expert advice when necessary.
5. Proactiveness: Entrepreneurial behavior is characterized by a proactive approach to
problem-solving and goal pursuit. Entrepreneurs take initiative, seize opportunities, and
drive initiatives forward rather than waiting for circumstances to change passively.
6. Resourcefulness: Entrepreneurs demonstrate resourcefulness in overcoming obstacles
and finding creative solutions to challenges. They leverage their networks, skills, and
available resources to make things happen.
7. Resilience: Entrepreneurial behavior requires resilience in the face of setbacks, failures,
and uncertainty. Resilient entrepreneurs bounce back from failures, learn from their
experiences, and persist in pursuing their goals despite obstacles.
8. Learning Orientation: Successful entrepreneurs have a learning orientation, viewing
failures and setbacks as opportunities for growth and improvement. They adapt their
strategies based on feedback and continuously seek new knowledge and skills.
 9. Creativity and Innovation: Entrepreneurial behavior involves creative problem-solving
skills to address unmet needs or challenges in the marketplace. Entrepreneurs generate
novel ideas, think outside the box, and develop innovative solutions to create value for
customers.
10. Innovative Thinking: Entrepreneurial behavior fosters innovative thinking, encouraging
entrepreneurs to challenge conventional wisdom, explore new possibilities, and disrupt
established industries with groundbreaking ideas and approaches.
11. Networking and Relationship Building: Entrepreneurial behavior involves building and
nurturing relationships with stakeholders such as customers, suppliers, investors,
mentors, and peers. Networking provides entrepreneurs with valuable resources, support,
feedback, and opportunities for collaboration.
12. Social Capital: Effective entrepreneurs leverage their social capital to access resources,
gain market insights, receive mentorship, and expand their professional network.
Building trust and rapport with others is essential for fostering mutually beneficial
relationships.
13. Adaptability: Entrepreneurial behavior requires adaptability and agility in responding to
changes in the business environment. Entrepreneurs must be willing to pivot their
strategies, adjust to market feedback, and embrace new opportunities or challenges as
they arise.

Successful entrepreneurs adopt an iterative approach to problem-solving and decision-making,

continuously refining their strategies based on real-world feedback and market dynamics. This
iterative process allows for rapid experimentation and learning.

Psychological Theories

1. Trait Theory: Trait theory suggests that certain personality traits, such as openness to
experience, conscientiousness, extraversion, and emotional stability, are associated with
entrepreneurial behavior. Individuals with high levels of these traits are more likely to
exhibit entrepreneurial tendencies and succeed in entrepreneurial endeavors.
2. Social Cognitive Theory: Social cognitive theory emphasizes the role of observational
learning in shaping entrepreneurial behavior. Individuals learn from observing the
 behaviors, experiences, and outcomes of others in their social environment, such as
family members, peers, mentors, or role models.

Self-efficacy refers to individuals' beliefs in their own capabilities to successfully perform tasks
and achieve goals. Entrepreneurs with high levels of self-efficacy are more likely to engage in
entrepreneurial activities, persist in the face of challenges, and pursue ambitious goals.

Outcome expectations involve individuals' beliefs about the likely consequences of their
actions. Positive outcome expectations, such as expecting to achieve success or attain rewards,
can motivate individuals to pursue entrepreneurial opportunities.

3. Cognitive Adaptation Theory: Cognitive adaptation theory posits that entrepreneurs

possess cognitive schemas or mental models that shape their perceptions, interpretations,
and decision-making processes related to entrepreneurship. These mental models
influence how entrepreneurs assess opportunities, evaluate risks, and make strategic
choices.

Cognitive adaptation theory also suggests that entrepreneurs may exhibit cognitive biases, such
as overconfidence bias, confirmation bias, or framing effects, which can influence their judgment
and decision-making in entrepreneurial contexts.

4. Entrepreneurial Intention Theory: Entrepreneurial intention theory considers

individuals' attitudes towards entrepreneurship, including their beliefs about the
desirability and feasibility of starting a business. Positive attitudes towards
entrepreneurship are associated with higher intentions to engage in entrepreneurial
activities.

Subjective norms refer to individuals' perceptions of social pressure or influence from

significant others, such as family members, peers, or mentors, regarding their decision to pursue
entrepreneurship. Perceived social support and encouragement can positively influence
entrepreneurial intentions.

Perceived behavioral control reflects individuals' perceptions of their ability to successfully

engage in entrepreneurial activities, considering internal and external factors that may facilitate
or hinder their efforts. Higher levels of perceived behavioral control are associated with stronger
intentions to become entrepreneurs.

5. Effectuation Theory: Effectuation theory proposes that entrepreneurs adopt a means-

driven logic, focusing on leveraging their existing resources, skills, and networks to
create opportunities and achieve goals. Rather than making predictions or setting
predetermined goals, entrepreneurs iteratively explore possibilities and take action based
on what is within their control.

Effectuation theory emphasizes the principle of affordable loss, where entrepreneurs are willing
to commit resources and take risks within their acceptable limits of potential loss. This allows
entrepreneurs to experiment, learn from failures, and adapt their strategies without risking
catastrophic failure.

These theories provide valuable insights into the psychological mechanisms underlying
entrepreneurship, highlighting the interplay between individual characteristics, cognitive
processes, social influences, and environmental factors in shaping entrepreneurial behavior and
outcomes. By understanding these theories, policymakers, educators, and practitioners can better
support and foster entrepreneurial development and success.

SOCIAL RESPONSIBILITY THEORY OF ENTREPRENEURSHIP IN DETAIL.

The Social Responsibility Theory of Entrepreneurship posits that entrepreneurs have an ethical
obligation to consider the social and environmental impacts of their business activities in
addition to pursuing profit and economic growth. This theory emphasizes the importance of
integrating social and environmental considerations into entrepreneurial decision-making and
business practices. The Social Responsibility Theory of Entrepreneurship is explained in detail
as follows:

 Triple Bottom Line: At the core of the Social Responsibility Theory is the concept of
the triple bottom line, which expands the traditional focus on economic outcomes (profit)
to include social and environmental outcomes. Instead of solely maximizing financial
 returns, entrepreneurs are encouraged to consider their impact on people (social), planet
(environment), and profit (economic) simultaneously.
 Stakeholder Perspective: The theory emphasizes the importance of considering the
interests and welfare of all stakeholders affected by entrepreneurial activities, including
employees, customers, suppliers, communities, and the environment. Entrepreneurs are
encouraged to engage with stakeholders, understand their needs and concerns, and
incorporate their perspectives into decision-making processes.
 Ethical Leadership: Socially responsible entrepreneurship entails ethical leadership,
characterized by honesty, integrity, transparency, and accountability. Entrepreneurs are
expected to adhere to ethical principles and values in their interactions with stakeholders
and the broader society. This includes respecting human rights, promoting diversity and
inclusion, and fostering a culture of fairness and equity within the organization.
 Environmental Sustainability: Socially responsible entrepreneurs recognize the
importance of environmental sustainability and strive to minimize negative
environmental impacts associated with their business operations. This may involve
adopting eco-friendly practices, reducing carbon emissions, conserving natural resources,
and investing in renewable energy technologies. By integrating environmental
considerations into business strategies, entrepreneurs can contribute to a more sustainable
future.
 Social Impact: Socially responsible entrepreneurship seeks to create positive social
impact beyond financial returns. Entrepreneurs may address social issues such as poverty
alleviation, access to education and healthcare, gender equality, and community
development through innovative business models and initiatives. By leveraging their
resources and expertise, entrepreneurs can make meaningful contributions to addressing
societal challenges and improving quality of life for marginalized communities.
 Corporate Social Responsibility (CSR): The Social Responsibility Theory aligns
closely with the concept of Corporate Social Responsibility (CSR), which refers to the
voluntary actions taken by businesses to integrate social and environmental concerns into
their operations and interactions with stakeholders. CSR initiatives may include
philanthropy, employee volunteer programs, ethical sourcing practices, and sustainability
initiatives aimed at reducing environmental impact.
  Impact Investing and Social Entrepreneurship: Socially responsible entrepreneurship
encompasses impact investing and social entrepreneurship, which prioritize both financial
returns and positive social or environmental impact. Impact investors provide capital to
businesses and startups that generate measurable social or environmental benefits
alongside financial returns, while social entrepreneurs create innovative solutions to
address social or environmental challenges through sustainable business models.
 Policy Implications: The Social Responsibility Theory underscores the importance of
supportive policy frameworks and regulations that incentivize and reward socially
responsible behavior among entrepreneurs. Governments, policymakers, and regulatory
bodies play a crucial role in promoting responsible business practices through legislation,
incentives, and enforcement mechanisms.

Overall, the Social Responsibility Theory of Entrepreneurship emphasizes the

interconnectedness of economic, social, and environmental goals and advocates for a holistic
approach to entrepreneurship that considers the well-being of all stakeholders and the planet. By
embracing social responsibility, entrepreneurs can contribute to sustainable development, foster
inclusive growth, and create value for society beyond mere financial profit.

ENTREPRENEURSHIP DEVELOPMENT PROGRAM (EDP)

An Entrepreneurship Development Program (EDP) is a structured initiative aimed at fostering

the growth and success of entrepreneurs by providing them with the necessary knowledge, skills,
resources, and support to start, manage, and scale their businesses effectively. EDPs are typically
offered by government agencies, educational institutions, non-profit organizations, or
private entities and can take various forms, including training workshops, seminars, mentorship
programs, incubators, accelerators, and access to funding opportunities.

The primary objectives of EDPs include:

1. Skill Enhancement: EDPs aim to enhance the entrepreneurial skills, knowledge, and
competencies of participants through comprehensive training programs covering various
 aspects of entrepreneurship, including business planning, marketing, finance, operations,
and leadership.
2. Empowerment: EDPs empower aspiring and existing entrepreneurs by providing them
with the necessary tools, resources, and support to start, manage, and grow successful
businesses. This includes access to mentorship, coaching, technical assistance, and
networking opportunities.
3. Ecosystem Development: EDPs contribute to the development of a conducive ecosystem
for entrepreneurship by fostering collaboration between stakeholders such as
government agencies, educational institutions, industry partners, investors, and
community organizations. This ecosystem approach promotes innovation, knowledge
exchange, and economic development.
4. Job Creation and Economic Growth: By fostering entrepreneurship, EDPs contribute
to job creation, income generation, and economic growth. Entrepreneurial ventures
stimulate economic activity, attract investment, and drive innovation, leading to the
creation of new businesses, industries, and employment opportunities.

Role: The role of Entrepreneurship Development Programs encompasses various functions

and responsibilities:

1. Education and Training: EDPs provide participants with formal education and practical
training on entrepreneurial concepts, skills, and tools. This includes workshops, seminars,
courses, and mentoring sessions tailored to the needs of aspiring and existing
entrepreneurs.
2. Mentorship and Coaching: EDPs offer mentorship and coaching services provided by
experienced entrepreneurs, industry professionals, and subject matter experts. Mentors
provide guidance, advice, and support to entrepreneurs, helping them navigate
challenges, make informed decisions, and achieve their business goals.

3. Access to Resources: EDPs facilitate access to essential resources required for

entrepreneurship, including funding, capital, infrastructure, technology, market
 information, and business support services. This access to resources lowers barriers to
entry and enables entrepreneurs to launch and grow their ventures more effectively.
4. Networking and Collaboration: EDPs create networking opportunities for
entrepreneurs to connect, collaborate, and share experiences with peers, mentors,
investors, and other stakeholders. Networking events, forums, and platforms foster
knowledge exchange, partnerships, and community building within the entrepreneurial
ecosystem.
5. Monitoring and Evaluation: EDPs conduct monitoring and evaluation activities to
assess the effectiveness, impact, and outcomes of program interventions. This includes
tracking participant progress, measuring key performance indicators, and gathering
feedback to continuously improve program delivery and relevance.

Relevance: Entrepreneurship Development Programs are highly relevant for several

reasons:

1. Promoting Entrepreneurship Culture: EDPs play a vital role in fostering a culture of

entrepreneurship by encouraging individuals to explore entrepreneurial opportunities,
take risks, and pursue their business ideas. This cultural shift towards entrepreneurship
stimulates innovation, creativity, and enterprise development within society.
2. Addressing Unemployment: EDPs help address unemployment and underemployment
by creating opportunities for individuals to start their businesses, become self-employed,
and generate income. Entrepreneurship offers an alternative path to traditional
employment, particularly for youth, women, and marginalized communities.
3. Driving Economic Development: EDPs contribute to economic development by
fostering the growth of small and medium-sized enterprises (SMEs), which are engines of
economic growth and job creation. Entrepreneurial ventures stimulate investment,
innovation, productivity, and competitiveness, leading to overall economic prosperity.
4. Harnessing Innovation and Creativity: EDPs harness the innovation and creativity of
entrepreneurs to solve societal challenges, address market needs, and seize new
opportunities. Entrepreneurial ventures introduce new products, services, and business
models that drive technological advancements, social progress, and sustainable
development.
 5. Building Resilient Communities: EDPs build resilient communities by empowering
individuals with the skills, resources, and support needed to withstand economic shocks,
adapt to change, and thrive in dynamic environments. Entrepreneurship fosters resilience,
adaptability, and self-reliance, strengthening the social fabric of communities.

In summary, Entrepreneurship Development Programs play a crucial role in promoting

entrepreneurship, driving economic development, and building resilient communities. By
providing education, mentorship, resources, and networking opportunities, EDPs empower
individuals to unleash their entrepreneurial potential, create value, and contribute to positive
societal change.

ROLE OF GOVERNMENT IN EDP

The role of government in Entrepreneurship Development Programs (EDPs) is multifaceted and

crucial for fostering a conducive environment for entrepreneurship and supporting the growth
and success of entrepreneurs. Here are several key roles that governments typically play in
EDPs:

1. Policy Development and Regulation: Governments formulate policies and regulations

that support entrepreneurship, innovation, and small business development. This includes
creating favorable regulatory frameworks, reducing bureaucratic barriers, and
streamlining administrative processes for starting and operating businesses. They
establish policies related to intellectual property rights, taxation, labor laws, licensing,
permits, and business registration to provide clarity and certainty for entrepreneurs.
2. Financial Support and Incentives: Governments provide financial support and
incentives to encourage entrepreneurship and stimulate business growth. This includes
grants, loans, subsidies, tax breaks, and venture capital funding targeted at startups,
SMEs, and innovative ventures. They establish government-backed financing programs,
venture capital funds, and angel investor networks to facilitate access to capital for
entrepreneurs, particularly those with limited resources or facing barriers to traditional
financing.
3. Education and Training: Governments invest in education and training programs to
equip aspiring and existing entrepreneurs with the knowledge, skills, and competencies
needed to succeed in business. This includes funding entrepreneurship courses,
workshops, mentoring programs, and vocational training initiatives. They collaborate
with educational institutions, industry associations, and vocational training centers to
develop curricula, design training modules, and deliver practical entrepreneurship
education tailored to the needs of different target groups.
4. Business Incubation and Acceleration: Governments establish and support business
incubators, accelerators, and innovation hubs to provide startups and early-stage ventures
with infrastructure, resources, and support services. This includes affordable office space,
shared facilities, networking opportunities, mentorship, coaching, and access to funding.
They allocate funding, grants, and resources to incubators and accelerators, monitor their
performance, and facilitate collaboration between incubators, research institutions,
industry partners, and investors to promote innovation and commercialization of
technology.
5. Market Access and Export Promotion: Governments facilitate market access and
export promotion initiatives to help entrepreneurs reach domestic and international
markets. This includes providing market information, trade facilitation services, export
financing, and export promotion programs aimed at SMEs. They support participation in
trade fairs, exhibitions, trade missions, and export consortia, provide assistance with
market entry strategies, market research, and export documentation, and negotiate trade
agreements to create opportunities for businesses to expand globally.
6. Networking and Collaboration: Governments foster networking and collaboration
among entrepreneurs, industry stakeholders, academia, research institutions, and support
organizations to build vibrant entrepreneurial ecosystems. This includes organizing
networking events, conferences, forums, and matchmaking sessions to facilitate
knowledge exchange, collaboration, and partnership building. They establish
entrepreneurship networks, innovation clusters, and industry associations to promote
collaboration, share best practices, advocate for policy reforms, and address common
challenges facing entrepreneurs in specific sectors or regions.
 7. Monitoring and Evaluation: Governments monitor and evaluate the effectiveness,
impact, and outcomes of EDPs to ensure accountability, transparency, and continuous
improvement. This includes collecting data, conducting surveys, and analyzing key
performance indicators to assess the reach, relevance, and quality of EDP interventions.
They use evaluation findings and feedback from stakeholders to adjust policies, reallocate
resources, and refine program design and delivery to better meet the needs of
entrepreneurs and achieve desired outcomes.

In summary, the role of government in Entrepreneurship Development Programs is pivotal for

creating an enabling environment for entrepreneurship, fostering innovation and economic
growth, and building resilient and inclusive societies. By providing policy support, financial
assistance, education and training, infrastructure, market access, and networking opportunities,
governments can empower entrepreneurs to unleash their potential, create jobs, and drive
sustainable development.