Entrepreneurship

Mysore University

Module Contents

Nature of Entrepreneurship
Social & Cultural Factors affecting Entrepreneurship
Institutional support for Promoting Entrepreneurship
Universities, colleges, CSIR Labs

Case Study - Incubation

Module 1 Foundations of Entrepreneurship

Introduction to Entrepreneurship
Entrepreneur
A person who perceives a need and brings
together the manpower, material and capital
required to meet that need.
An individual or team that identifies the
opportunity, gathers the necessary resources,
creates a performing organization and is
responsible for the performance of the
organization
Module 1 Foundations of Entrepreneurship

More on Entrepreneur
Economics One who brings resources, labour, material and other assets in
such a way that the end result generates incremental value
Introduces changes, innovations and a new order

Psychology
A person driven by certain forces the need for achievement,
need to experiment, accomplish and the need to escape authority

Management
Creates wealth for others, finds a better way to utilize resources,
reduce waste and creates jobs
Module 1 Foundations of Entrepreneurship

So whats common?
Entrepreneurs have certain common characteristics or
traits
Personal resourcefulness
Need for achievement
Opportunity seeking
Innovativeness
Risk taking
When these elements converge at high intensities, in non
restrictive environments, it is likely to give rise to an
enterprise
Module 1 Foundations of Entrepreneurship

Entrepreneurship
Entrepreneurship
The process of creating value by bringing together a unique package of
resources to exploit an opportunity
The process of creating something new with value by devoting the
necessary time and effort, assuming the accompanying financial,
psychic and social risks and uncertainties; and receiving the resulting
rewards of monetary and personal satisfaction

Entrepreneurship involves
Creation process
Devotion of time and effort by entrepreneurs and team
Rewards for the entrepreneur are independence, personal satisfaction,
monetary reward
Assuming risks and uncertainties
Module 1 Foundations of Entrepreneurship

Types of Entrepreneurship
Opportunity based Entrepreneurship
Entrepreneur perceives a business opportunity and
explores it sufficiently well to make it a profitable
venture

Necessity based Entrepreneurship

Entrepreneur chooses to run an own venture due to
economic compulsions, ancestral compulsions etc
Module 1 Foundations of Entrepreneurship

Intrapreneur
An Intrapreneur is a person who takes risk and initiative and creates
something new within an existing organizational framework
Driven by the needs of achievement and personal satisfaction, like an entrepreneur
But opt to operate within an organizational structure, on account of loyalty to the
parent organization or any other reason

Advantage of Intrapreneurship
Existing resources People, Technology, Systems, Markets, can be made use of to
explore the new opportunity

Challenges for Intrapreneurship

Hierarchy
Rewards may be inadequate
Freedom to innovate also needs Bandwidth for independent decision making,
which may be less in existing system
Module 1 Foundations of Entrepreneurship

The Entrepreneur is essentially a Visualizer & an

Actualizer. He can Visualize something, and

when he visualizes it he sees exactly how to

make it happen.

Module 1 Foundations of Entrepreneurship

Behavioural Traits of Entrepreneurs

Individual traits affect the behaviour and actions of entrepreneurs, that in turn
affect business outcomes
Module 1 Foundations of Entrepreneurship

Entrepreneurial Mindset How

Entrepreneurs think
Entrepreneurial Decision making can be characterised by the ability
to rapidly act, sense and mobilise, even under uncertain conditions.
Some specific mental characteristics :
Entrepreneurs perform Effectuation
Cognitive Adaptability
Learn from failure

Cognitive Adaptability:

Ability to generate multiple decision making frameworks based on

understanding the changes in the environment around them. Are they
dynamic, flexible and self regulating?
To find out how cognitive adaptable an individual is, Prof Mike Haynie
has developed a survey by asking questions on the following

Comprehension Tasks
Connection Tasks
Strategic tasks
Reflection tasks

Module 1 Foundations of Entrepreneurship

Entrepreneurial Heuristics
Refers to the Rules of Thumb that entrepreneurs use
to base their decisions.
The unrecognised and unarticulated policies that lie at the
back of their minds and guides their actions
Successful Entrprnr

Unsuccessful Entprnr

Accept a project if it enjoys

team consensus & is viable

Accept a project will enjoy

the support of external
agencies

Minimize borrowed funds

Borrow as much funds as

possible

Test the market before

venturing out

Produce & Sell

Learn the ropes and

Module 1 Foundations of Entrepreneurship
familiarize with technology

Manage technology
through paid workers

Examples of common Heuristics

(Rules of Thumb)
Actively search for ideas from a wide range of sources
Choose partners for their ideological congruence &
complementary skills
Minimise initial investments

Module 1 Foundations of Entrepreneurship

Socio-Cultural Determinants

Legitimacy of Entrepreneurship or Social Status for Entrepreneurs

Degree of Approval or disapproval in the society for entrepreneurship. Also called Cultural Themes
and Sanctions
May require a shift or reorientation of traditional values to support entrepreneurship

Social Mobility

Ease of Geographical movement and social movement for the entrepreneur

How rigid the social hierarchies are. Need for openness in the system
Need for flexibility in role relations
Mobility channels Movement of young and educated workforce reduces entrepreneurial behaviour

Marginality

Social marginality has been found to promote entrepreneurship

Individuals/groups in the perimeter of the social system or between two social systems
Religious/ Cultural/ Ethnic/Migrant groups

Reasons Positive attitude towards entrepreneurship & high Degree of group solidarity Cohesion

Security

Entrepreneurship is likely to emerge under medium turbulence or moderate secur

Insecurity does not hinder entrepreneurship, but different kinds of insecurity results in different kind of
entrepreneurship
Module 1 Foundations of Entrepreneurship

Socio-Cultural Determinants
ENTREPRENEURS BACKGROUND & CHARACTERISTICS
Family Environment

In most cases, people follow the footstep of father, or close relatives

Traditional Entrepreneurial families

Education has no correlation with entrepreneurial spirit, if there is, it seems to be inverse.
Entrepreneurs need the Will to Succeed more than any thing else.
Indian challenges - Problems of licence, quota, inspector raj, preferrence for a govt job
trend slowly changing.

Education

Age

Normal to start as early as probably 10

Others after their retirement.
Harland David Sanders, better known as Colonel started his famous Kentucky Fried Chicken
business quite late in his varied career.
Commonly, in the age group of 25 35 and women in the age group of 30 45

Have absolutely no correlation with entrepreneurial spirit.

Physical Attributes

Marital Status

No direct correlation but going by the age group, most entrepreneurs are married.

Module 1 Foundations of Entrepreneurship

Socio-Cultural Determinants
Working History

Entrepreneurs quite often have some working experience as a salaried employee in the
field of their venture
helps to learn a little about business before putting the money in
Sindhi community

Family Contacts

Family contacts in business world reduce the risks and help the entrepreneur

Professional Contacts

Professional contacts again help.

Industry contacts
Alumni networks

Personal values

Value hardwork, Result oriented, Self driven

Lifestyle

Most entrepreneurs are fond of good things in life but are willing to wait till they strike
rich. In the interim they are willing to rough it out.

Module 1 Foundations of Entrepreneurship

Psychological Factors
McClellands Theory of Need Achievement
Personality characteristics indicating high need achievement
Can be developed through intensive training programmes

Withdrawal of Status Respect

Proposed by Hagen
Refers to loss of status by a group. Example, Japan
Developed sooner than any non western society. Samurai
groups.
Any of the four behaviours Retreatist, Ritualist, Reformist,
Innovator
Module 1 Foundations of Entrepreneurship

Phases of Entrepreneurship Process

Module 1 Foundations of Entrepreneurship

Phases of Entrepreneurship Process

Module 1 Foundations of Entrepreneurship

Types of Entrepreneurs
Based on type of Business
Trading Entrepreneur
Retailer, Wholesaler or Middlemen
Manufacturing Entrepreneur
Agricultural Entrepreneur

Based on Use of Technology

Technical Entrepreneur
Non Technical Entrepreneur

Based on Ownership
Private Entrepreneur
State Entrepreneur
Joint Entrepreneur
Module 1 Foundations of Entrepreneurship

Types of Entrepreneurs Contd.

Based on the Size of the Enterprise
Small Scale Total Investment in P&M < 1Cr
Medium Scale - Total Inv in P&M between 1Cr and 5 Cr
Large Scale - Total Inv in P&M greater than 5 Cr

Based on Classification by Clarence Danhof

Classifies based on economic success and enthusiasm

Innovating Entrepreneurs
Imitative Entrepreneurs
Fabian Entrepreneurs Great Caution and Skepticism
Drone Entrepreneurs Refusal to adopt opportunities to make
changes in production even at the cost of reduced returns relative to
other competitors

Module 1 Foundations of Entrepreneurship

Types of Entrepreneurs Contd.

Other behavioural classifications

Solo Operators
Active Partners
Inventors
Challengers
Buyers
Life Timers

Module 1 Foundations of Entrepreneurship

Case Study Saras Sarasvati

Module 1 Foundations of Entrepreneurship

Causal Process
A Process that starts with a desired outcome and
focuses on the means to generate the outcome.
It finds out the causes or factors responsible for the
particular outcome
Application
Research and Development of new products
Medical researches and Studies
Investigation
Module 1 Foundations of Entrepreneurship

Effectuation
A Process that starts with what one has (that is who
they are, what they know and whom they know) and
selects among possible outcomes.
Providing a practical means to accomplish something.

Module 1 Foundations of Entrepreneurship

Effectuation
Has 5 Principles under it
The patchwork quilt principle
This is a principle of means-driven (as opposed to goal-driven) action. The emphasis here is
on creating something new with existing means than discovering new ways to achieve
given goals.

The affordable loss principle

This principle prescribes committing in advance to what one is willing to lose
rather than investing in calculations about expected returns to the project.
The bird-in-hand principle
This principle involves negotiating with any and all stakeholders who are willing to make
actual commitments to the project, without worrying about opportunity costs, or carrying
out elaborate competitive analyses.
Furthermore, who comes on board determines the goals of the enterprise. Not vice versa.

Module 1 Foundations of Entrepreneurship

 The lemonade principle

This principle suggests acknowledging and
appropriating contingency by leveraging surprises
rather than trying to avoid them, overcome them, or
adapt to them.
The pilot-in-the-plane principle
This principle urges relying on and working with human
agency as the prime driver of opportunity rather than
limiting entrepreneurial efforts to exploiting exogenous
factors such as technological trajectories and socioeconomic trends.
Module 1 Foundations of Entrepreneurship

Differences
Both have an inverse relationship
Causal

Effectuation

Begin with the effect or result

Work with the inputs or

determinants.

Working out various ways to reach

the result

Works out various combinations of

results

Use Predictive strategies

Use logic of action. Non predictive

Decision based

Design based

Based on the premise:

To the extent we can predict the
future, we can control it

Effectual logic is based on the

premise:
To the extent we can control the
future, we do not need to predict it.

Module 1 Foundations of Entrepreneurship

Institutional Support to
Entrepreneurs

Module 1 Foundations of Entrepreneurship

Need for Institutional Support

Finance Life Blood of Business
Minimum Level of prior Infrastructure
Need for Development funds on soft and liberal
conditions
Perks for developing industries in Backward Areas
Compensate for deficiencies in Transport and
Communication
There are always plenty of resources for those who create practical plans for
using it
- N Hill
Module 1 Foundations of Entrepreneurship

Institutions Profiled
Central Level Institutions

SSI Board
NSIC
SIDO
KVIC (Khadi and Village Industries Commission)
NPC
IIE

State Level Institutions

DICs (District Industries centres)

SISIs (Small Industries Service Institutes)
SFC

Other Agencies

NABARD
HUDCO
NGOs
Industry Associations
EPC
SIDBI

Module 1 Foundations of Entrepreneurship

National Small Industries Corporation

(NSIC)
NSIC, an ISO 9000 certified company, founded in 1955
Promoting the growth of SSI
Functions

Provide machinery on hire purchase scheme to SSIs

Provide equipment leasing facility
Help in exporting the products
Participate in bulk purchase program
Distribute raw materials through raw material adopts
Impart training in industrial trades
Set up industrial estates

Module 1 Foundations of Entrepreneurship

Area Specific Support of NSIC

Marketing Support
Consortia and Tender marketing
Helps in procurement by forming consortia of units producing
same products
Single Point Registration under Government Purchase
Programme

Issue tenders free of cost

Exemption from payment of earnest money
Advance intimation of tenders issued by DGS&D
Issue competency certificate for high value orders above the
specified limit
Exhibitions and Technology Fairs
Buyer Seller Meets

Module 1 Foundations of Entrepreneurship

Area Specific Support of NSIC

Credit Support

Equipment Financing
Tie-ups with commercial banks
Financing for procurement of Raw Materials (Short Term)
Financing of Marketing Activities
Performance and Credit Rating Scheme for Small Industries

Technology Support
Setting up of Science Technology Parks/ Business
Incubators
Module 1 Foundations of Entrepreneurship

Small Scale Industries Board

Constituted in 1954
Lead Institution to coordinate inter institutional
linkages
Apex Advisory body to render advice to the
government on all issues on SSI sect
Broad areas :

Policies and Programmes

Devpt of industries in specific regions like North East
Credit facilities, taxation, modernisation
Industrial sickness

Module 1 Foundations of Entrepreneurship

Small Industries Devpt Organization

(SIDO)
SME (Small and Medium sector) Fastest growing
sectors across the world
Need for SME Devpt Agency to focus on this core
sector
In India, Office of Devpt Commissioner (small scale
industries) also called SIDO is the Nodal Devpt Agency
for small industries
Functions under Ministry of SSI

Module 1 Foundations of Entrepreneurship

Institutional Network
DC SSI heads SIDO, which has the following Institutions
under it
Br. SISI(28)
SISI(30)
FTS(4)
DC SSI
RTC (4)
HTI (2)

Module 1 Foundations of Entrepreneurship

TR/TDI(10)

Inst Network contd..

Small Industries Service Institutes (SISIs) operational
throughout the country.
Main Functions

Interface between central and state govts

Technical Support and Consultancy Services
EDPs
Promotional Programmes
Regional Testing Centers 4 RTCs in the four metros. They
support 8 field Testing Stations
Hand Tool Institutes Equipped with Electronic, HEA, Computer
Labs

Tool Rooms and Tool Design Institutes (TR/TDI)

Product-cum-Process Devpt Centers
Module 1 Foundations of Entrepreneurship

Services Provided by SIDO

Entrepreneurship Devpt and Management Training

Extension and Training Services
Skill Development
Entrepreneurship Development Institutes (EDI) Grant
of upto 5 million per EDI
Preparation of Project Profiles
Plant Modernisation Studies
Prototype Development and Training Centre

Module 1 Foundations of Entrepreneurship

SIDO Schemes
Credit Linked Capital Subsidy Scheme for Technology
Upgradation @ 12% upto 4.8 lacs for individual SSIs
Credit Guarantee Scheme Collateral free loans upto
25 lakhs
ISO 9001/ISO14001 Certification Reimursement Scheme
Full subsidy on space rent and shipment of exhibits for
SSI units
Integrated Infrastructure Development (IID): Assitance
to state govt or industry assocs
One time grant for procurement of hardware
Module 1 Foundations of Entrepreneurship