and

Entrepreneurship
(15ES51)
MODULE- 3
Social Responsibilities of
Business & Entrepreneurship

By
Prof. JIJESH J.J
Department of E&CE
SVCE, Bangalore
Meaning of Social
Responsibility
 Social responsibility is the manager’s
responsiveness to public agreement.
 Two types of business obligations are:
 Social-economic obligation
 The economic consequences of its action do not
affect public welfare.
 Social-human obligation
 To nurture and develop human values.
 Different views on Social Responsibility
 Communist view
 Capitalist view
 Pragmatic view
 Trusteeship view
 Social Responsibilities of
Business towards Different
Groups
 Towards the Consumers and the Community
◦ Production of cheap and better quality goods and
services
◦ Leveling out seasonal variations in employment and
production
◦ Deciding priorities of production
◦ Providing for social audit
◦ Honoring contracts and following honest trade
practices.
◦ Making real consumer needs
◦ Preventing the creation of monopolies
◦ Providing for after-sale servicing
◦ Ensuring hygienic disposal of smoke and waste
◦ Achieving better public relations
◦ Supporting education and similar programmes.
Towards Employees and Workers
 A fair wage to the workers
 Just selection, training and promotion
 Social security measures and good quality of
life
 Good human relations
 Freedom, self-respect and self-realisation.
 Increase in productivity and efficiency by
recognition of merit, by providing
opportunities for talent.
Towards shareholders and other
businesses
 Promoting good governance through internal
accountability and transparency.
 Fairness in relations with competitors.
Towards the state
 Shunning active participation in and
direct identification with any political
party.
 Observing all the laws of land.
 To provide safeguard against errant
business practices.
 To allocate limited resources according
to social priorities and preferences.
 To enforce distributive justice to weaker
selection of community.
 To implement rural uplift and secure
balanced development of the country.
 Social audit
A systematic study and evaluation of the organizations
social performance as distinguished from its economic
performance.
 Benefits
 It supplies data for comparison with the organization's social
policies and standards.
 It develops a sense of social awareness among all employees.
 It provides data for comparing the effectiveness of different types
of programmes.
 it provides information for effective response to external groups
which make demands on the organization.
 Limitations
 A social audit is a process audit rather than an audit of results. It
determines only what an organization is doing in social areas.
 They are difficult to measure.
 Their classification under good or bad is not universally accepted.
 Most of them occur outside the organization, makes difficult to
secure data.
 Business Ethics
and Corporate Governance
Business Ethics
Business ethics is the application of
moral principles to business
problems. It involves goodness or
badness of an act. The four
important factors are:
 Government legislation
 Business codes
 Pressure groups
 Personal values of the manager himself.
Corporate Governance
 In this companies run in an open and honest
manner in the best interest of all stake-holders.
The key elements are transparency and
accountability. Major recommendations of this
committee are:
 Formal selection process
 Companies should have remuneration committees
 Companies should have Audit committees
 Audit partners should be rotated.
Benefits
 It creates overall market confidence and long –term
trust in the company.
 It leads to an increase in company’s share prices.
 It ensures the integrity of company’s financial report.
 It maximizes corporate security.
 It limits the liability of top management.
 It improves strategic thinking at the top.
Entrepreneurship
Definition of Entrepreneur
 The entrepreneur is essentially a visualizer and
an actualizer. He can visualize something, and
when he visualizes it he sees exactly how to
make it happen.
 An individual who bears the risk of operating a
business in the face of uncertainty about the
future conditions.
 He is the one who innovates, and introduces
something new in the economy.
 An entrepreneur is a person who buys factor
services at certain prices with a view to selling
its product at uncertain prices.
IMPORTANCE OF ENTREPRENEURSHIP
 The significance are economic development,
industrial development, regional growth and
employment generation.
 Entrepreneur provides opportunities to
unemployed youth, increase in per capita
income, higher standard of leaving and
increased individual savings, revenue to the
government in the form of TAX.
 They invented new products. Also to
capitalize on new opportunities and to create
wealth and new jobs.
 In an entrepreneurship, it is you who set the
goals, plan the action and reap the
satisfaction and rewards of having achieved
the goal.
If you become an entrepreneur
 You will be your own boss and boss to other
people and make decisions that are critical to
the business success or failure.
 You will have the chance to put your ideas into
practice.
 You will make money for yourself rather than for
someone else.
 You will participate in every aspect of running a
business and learn and gain experience in a
variety of disciplines.
 You will have chance to work directly with your
customers.
 You will have the personal satisfaction of
creating and running a successful business.
 You will be able to work in the field or area that
Differencebetween a Manager
and an Entrepreneur.
Entrepreneur Manager
Own boss Salaried employee
Takes own decisions Executes the
decisions of the
owner
Hires employees He is an employee
Uncertain rewards Fixed rewards and
which can be salary
unlimited.
CONCEPTS OF ENTREPRENEURSHIP
 Entrepreneur is a person who creates an enterprise. The
process of creation is called as entrepreneurship.
 Entrepreneurial development is a key to socio-economic
transformation of the region.
 Entrepreneurship can be defined as a process of action
an entrepreneur undertakes to establish his enterprise.
 The word entrepreneur is derived from the French Verb
enterprendre, means to undertake. This refers to those
who undertook the risk of new enterprises.
 Entrepreneurial development process is in five stages.
 Stage 1: Perceiving, identifying and evaluating an opportunity.
 Stage 2: Drawing up a business plan.
 Stage 3: Marshalling resources.
 Stage 4: Creating the enterprise.
 Stage 5: Consolidation and management.
 CHARACTERISTICS OF A
SUCCESSFUL ENTREPRENEUR
The characteristics are:
◦ Creativity: The ability to bring
something new into existence.
◦ The creative process is
 Innovation: The act that endows resources
with a new capacity to create wealth.
 Dynamism: Dynamism constitutes a potential
contribution and revises the targets of the
enterprise.
 Leadership: Leadership is the basic quality of
an entrepreneur and takes him forward.
 Teambuilding: An entrepreneur should have
an ability to build a team. A team is group of
individuals with a common purpose. The skills
are:
◦ Wanting to feel better
◦ Identifying the problem and needs of the enterprise
◦ Creating a vision
◦ Setting goals for the group
◦ Reviewing progress
 Achievement motivation: Entrepreneurs have a
Problem solving: the ability to solve problem and not to avoid
them. The six steps are:
◦ Define a problem
◦ Gather information
◦ Identify various solutions
◦ Evaluate alternatives and select the best option.
◦ Take action
◦ Evaluate the action taken.
Goal orientation: Goal setting is the achievement of targets
and objectives for successful performance of an
entrepreneur. The three steps are:
 Definition of goal
 Specific goals
 Feedback about goal achieved
◦ Aspects of goal setting
 Clarity of goals
 Reformulation of goals
 Restating goals
 Plan of action
 Defining standards of performance and measurement
 Recognizing risk and obstacles
 Goal reaffirmation
 Goal attainment.
 Types of Goals
◦ Target oriented
◦ Achievement oriented
◦ Specific
◦ Overall
◦ Secondary
◦ Long range/ short range
◦ Personal/ social
 Risk taking and decision- making ability:
Entrepreneurs are persons who take
decisions under conditions of
uncertainty, and therefore are willing to
bear risk, but never gamble with results.
 Commitment: The amount of willpower.
 Entrepreneurial Core Competencies
 
Core Entrepreneurial
competenci activities
es
1. Initiative Does things before asked for or forced
to by events and acts to extend the
business to new areas, products or
services.
2. Perceiving Identifies business opportunities and
opportunities mobilizes necessary resources to
make good an opportunity.
3. Persistence Takes repeated or different actions to
overcome obstacles.
4. Information Consults experts for business and
gathering technical advice. Seeks information of
client or supplier’s needs. Personally
undertakes market research and
make use of personal contacts or
information networks to obtain useful
information.
5. Concern for States desire to produce or sell a better quality
quality work product or service. Compares his performance
favorably with that of others.
6. Commitment Makes a personal sacrifice or expands extraordinary
to effort to complete a job, accepts full responsibility in
contractual completing a job contract on schedule, pitches in with
obligations workers or work in their place to get the job done and
shows utmost concern to satisfy the customer.
7. Efficiency Finds ways and means to do things faster, better and
orientation economically.
8. Planning Various inter-related jobs are synchronized according
to plan.
9. Problem Conceives new ideas and finds innovative solutions.
solving
10. Self- Makes decisions on his own and sticks to it in spite of
confidence initial setbacks.
11. Experience Possesses technical expertise in areas of business,
finance, marketing, etc.
12. Self-critical Aware of personal limitations but tries to improve upon
by learning from his past mistakes or experiences of
others and is never complacent with success.
13. Persuasion Persuades customers and financiers to patronize his
business.
14. Use of Develops business contacts, retains influential
influence people as agents and restricts dissemination
strategies. of information in his possession.
15. Assertiveness Instructs, reprimands or disciplines for failing
to perform.
16. Monitoring Develops a reporting system to ensure that
work is completed and quality norms.
17. Credibility Demonstrates honesty in dealing with
employees, suppliers and customers even if it
means a loss of business.
18. Concern for Expresses grievances. concern for employees
employee by responding promptly to their.
welfare
19. Impersonal Places long-term goodwill over short-term gain
relationship in a business relationship.

20. Expansion of Reinvests a greater portion of profits to expand

capital base capital of the firm.

21. Building Concerned about the image of his products

product among consumers and does everything
image possible to establish a niche for his products
in the market.
 CLASSIFICATION OF
ENTREPRENEURS
a) Based on Functional
Characteristics
1. Innovative entrepreneur
2. Imitative or adoptive entrepreneur
3. Fabian entrepreneur
4. Drone entrepreneur
b) Based on the Development Angle
1. Prime mover
2. Manager
3. Minor innovator
4. Satellite
5. Local trading
c) Based on Types of Entrepreneurial Business.
1. Manufacturing
2. Wholesaling
3. Retailing
4. Service
d) Based on the Nine Personality Types of Entrepreneurs
1. The Improver
2. The Advisor
3. The Superstar
4. The Artist
5. The Visionary
6. The Analyst
7. The Fireball
8. The Hero
9. The Healer
e) Based on schools of Thought on
Entrepreneurship
INTRAPRENEUR:
 Intrapreneurship is the entrepreneurship with in an
existing business structure.
 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.
The differences in the entrepreneurial and
managerial domains have contributed towards
an increased need for intrapeneureship.
This need is growing due to variety of events
occurring on social, cultural and business
levels.
In social level, there is an increasing interest in
‘doing your own thing’ and doing it on one’s
own terms.
Some individuals having self confidence, self
motivation and belief in their own talent, often
desire to innovate on their own.
 They want own responsibility and to work in their own
way.
 They become frustrated if this freedom is not given to
them and get demotivated.
 Intrapreneurship is “one such method of providing
freedom, simulating and capitalizing on individuals in an
organization who think that things can be done in
different and better way”.
 The resistance against flexibility, growth and
diversification can be overcome by developing a spirit of
entrepreneurship within the organization which is called
as intrapreneurship.
 Intrapreneurship is reflected more strongly in
entrepreneurial activities and also in top management.
 Elements of intrapreneurship :
1. New business venturing:
◦ The creation of new business with in the organization.
◦ Redefining the company’s product or service,
◦ Development of new market segment.

2. Innovations:
◦ Innovation is the development of new product.
◦ Improvement of existing products,
◦ Development and simplified production methods and
procedures.
3. Self – renewal:
◦ The transformation of an organization through the
renewal of main ideas.
◦ This includes a redefinition of a business concept,
◦ Reorganization or modifications in the system with
an aim to initiate innovating.

4. Proactiveness:
◦ Proactiveness includes initiative and risk taking.
◦ Competitiveness and dashing to take new challenges.

Brief comparison of Intrapreneurs, Entrepreneurs and

Managers is given below:
Point Intrapreneur Entrepreneur manager
1. Goal Independent, Independent, stars Delegates and
management innovates new ideas new venture and leads supervises more than
direct involvement direct involvement .
2. Status Not concerned about Not concerned about Concerned about
traditional status, but status status symbol
wants recognition
3. Risk Owns moderate risk Bears all the risk and Does not bear any risk
uncertainty.
4. Rewards Gets fixed reward for Since there is risk, he Workers for salary for
his work. Many get may get profit or loss his service which is
extra for his work. depending his fixed and definite.
innovations
5.Innovation Innovative Very innovative Need not be
innovative. He
manages the ideas of
top management.
6. Decision Moderate, limited to Very much involved in Delegates the decisions
making his work. decision making. of top management.
Myths of Entrepreneurship
 Entrepreneurs are born, not made
 Entrepreneurs are academic and social misfits
 Entrepreneurs fit an ideal profile.
 All you need is money to be an Entrepreneur.
 All you need is luck to be an Entrepreneur.
 A great idea is the only ingredient in a recipe for
business.
 My best friend will be a great business partner.
 Having no boss is great fun.
 I can make lots of money
 I will definitely become successful
 Life will be much simpler if I work for myself.
 Entrepreneurial Development
Models
 The models suggested for the development of
Entrepreneurship are:
◦ Psychological Models
◦ Sociological Models
◦ Integrated Models

 Psychological Models:
 This model signifies that psychological factors are responsible
for the development of entrepreneurial behavior in individuals.
 McClelland: Importance to achievement motives
 Latent need for achievement among adults
 Motivation-training programme to make entrepreneurs willing
and eager to exploit the opportunities provided
 Creative Personality - status withdrawal (Everett Hagen’s theory
of social change)
 John Kunkel – entrepreneurial supply as a function of the
surrounding social structure. Can be influenced by manipulating
economic and social incentives.
 Sociological models
◦ This model considers societal factors responsible for the
development of entrepreneurial behavior in individuals.
◦ Young’s theory: Change based upon Society’s incorporation
of relative subgroups
◦ Relativeness of a subgroup 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.
◦ Suggests the creation of supporting institutions in society
as the determinant of entrepreneurship
 Integrated models
 – TV Rao – Entrepreneurial disposition
◦ Need for motive
◦ Long-term involvement either at thinking level or activity
level
◦ Personal, social and material resources
◦ Suitable socio-political system for establishment and
development of enterprise
Five stages for promoting small
entrepreneurship
◦ Stimulation
◦ Identification
◦ Development
◦ Promotion
◦ Follow up
Entrepreneurial Development
Cycle
◦ The activities are:
◦ Stimulatory activities
◦ Support Activities
◦ Sustaining Activities
Stimulatory activities: These activities
ensure the emergence of
entrepreneurs in the society. The
activities are:
 Entrepreneurial education
 Planned publicity for entrepreneurial opport-unities.
 Identification of potential entrepreneurs through
scientific methods.
 Motivational training to new entrepreneurs.
 Help and guidance in selecting products and
preparing project reports.
 Making available techno-economic information and
product profiles.
 Evolving locally suitable new products and process.
 Creating entrepreneurial forums.
 Recognition of entrepreneurs.
 Support Activities : These activities help a person
to develop into an entrepreneur. They nurture and
help entrepreneurship to grow. The activities are:
◦ Registration of unit
◦ Arranging finance
◦ Providing land, shed, power, water and so on.
◦ Guidance for selecting and obtaining
machinery.
◦ Supply of scare raw materials.
◦ Getting licenses/ import licenses
◦ Providing common facilities
◦ Garneting tax relief or other subsidy.
◦ Offering management consultancy services.
◦ Help marketing the product.
◦ Providing information.
 Sustaining activities: These activities are
all those that help in the continuous and
efficient functioning of entrepreneurship.
The activities are:
◦ Help modernization
◦ Help diversification/ expansion/ substitute
production.
◦ Additional financing for full capacity
utilization.
◦ Deferring replacement/ interest.
◦ Diagnostic industrial extension/ consultancy
services.
◦ Production unit legislation/ policy change.
◦ Quality testing and approving services.
 Problems faced by Entrepreneurs
and capacity building for
Entrepreneurship.
The problems faced by entrepreneurs are:
◦ Internal Problems
◦ External Problems
◦ Specific management Problems
Internal Problem
 Planning
 Technical feasibility
 Economic viability
 Implementation
 Production
 Production management
 Labour management
 Marketing management
 Financial management
 Administrative management
External Problems
◦ Infrastructural
◦ Financial
Specific management problems
 Management deficiency
 Finance
 Manufacturing and technical problems
 Product planning
 Selection of equipment, plant and
machinery
 Human resource development
 Technical know-how
 Preparation of project report.
Capacity building for
Entrepreneurship
 To build capacity for entrepreneurship
following measures can be taken such as
availability of credit, imported raw materials,
skilled labour, technology and equipment,
infrastructural facilities, advisory services and
access to market.
 Along with to
◦ Create the right environment for success.
◦ Ensure that entrepreneurs have access to the right
skills.
◦ Ensure that entrepreneurs have access to smart
capitals.
◦ Enable networking and exchange.