ED - Unit 1

Entrepreneurship
Development
BBA- 4th Semester
Harshita Kaushik
Meaning of Entrepreneurship
 Entrepreneurship has been a subject of much debate
 Some call entrepreneurship as ‘risk-bearing’, others view it ‘innovating’ and
yet others consider it ‘thrill-seeking’.
Entrepreneurship is the attempt to create value through

recognition of business opportunity
 Entrepreneurship is based on purposeful and systematic innovation. It included

not only the independent businessman but also company directors and
managers who actually carry out innovative functions (Joseph Schumpeter)
 Innovation and risk-bearing are regarded as the two basic elements involved in
entrepreneurship.
Innovation
• Innovation. i.e., doing something new or something different is a necessary

condition for a person to be called as an entrepreneur.
• Entrepreneurs are constantly on the look out to do something different and
unique to meet the changing requirements of the customers
• possess the ability to foresee the possibility of making use of the
inventions for their enterprises.
Now-a-days fruit juice is sold in

small cartons (Mango Fruity, Appy etc.) instead of
bottles so that customers can carry it and throw
away the container after drinking the juice.
Risk-bearing
 Starting a new enterprise always involves risk and trying for doing
something new and different is also risky.
 The enterprise may earn profits or incur losses because of various factors
like increasing competition, changes in customer preferences, shortage of
raw material and so on
 Needs to be a risk-taker, not risk avoider.
 Risk-bearing ability enables him even if he fails in one time or one venture
to persist on and on which ultimately helps him succeed.
Oravel Stays (OYO Rooms) Founder – Ritesh Agarwal

Marketplace for Bed and breakfast , A failed venture led to
the start of OYO Rooms
Concept of Entrepreneurship
 The term ‘entrepreneurship’ is often used synonymously with the term
‘Entrepreneur’ though, they are different.
 Entrepreneurship is the indivisible process flourishes, when the interlinked
dimensions of individual psychological entrepreneurship, entrepreneur
traits, social encouragement, business opportunities
 Entrepreneurship is the process of identifying opportunities in the market
place arranging the resources required to pursue these opportunities and
investing the resources to exploit the opportunities for long term gains.
Nature and characteristics of entrepreneurship
1. Ability to create enterprise: Entrepreneurship is primarily an economic

activity because it involves creation and operation of an enterprise. It is
basically concerned with satisfying the needs of customer with the help of
production and distribution of goods and services.
2. Organizing function: An entrepreneur brings together various factors of

production for an economic use.
3. Innovation: Entrepreneurship is an automatic, spontaneous and creative

response to changes in the environment. It involves innovation of something
new to cause dynamic change and spectacular success in the economy.
Nature and characteristics of entrepreneurship
4. Risk bearing capacity: Risk is an inherent and inseparable element of

entrepreneurship. He assumes the uncertainty of future.
5. Managerial and leadership functions: An industrial entrepreneur must have

additional personality traits such as managerial and leadership skills.
Managerial and leadership qualities predominant orientation is in the direction
of productivity.
6. Gap filling: The gap filling between human needs and the available
products and services leads to Entrepreneurship. An entrepreneur identifies the
gap and takes necessary corrective measures to fill the gap, to achieve his
action oriented motive in the enterprise as an entrepreneur
Functions of Entrepreneurs
 Work with Vision and Mission- An entrepreneur must be committed to the
project with a time horizon of five to seven years. No ninety-day wonders
are allowed.
 Trouble Shooting - An entrepreneur must have an intense desire to

complete task or solve a problem. Creativity is an essential ingredient.
 Initiative and Enterprising - An entrepreneur must have initiative,

accepting personal responsibility for actions, and above all make good use
of resources.
 Facilitating - An entrepreneur must build a team, keep it motivated, and

provide an environment for individual growth and career development.
Contd.
 Goal Setting- An entrepreneur must be able to set challenging but realistic
goals.
 Calculated Risk-Taking - An entrepreneur must be a moderate risk-taker
and learn from any failures.
Entrepreneur, Entrepreneurship and
Enterprise
 Entrepreneur literally came from French language meaning someone who
undertakes an enterprise. The word enterprise is attached to self-propelled,
usually self-made businessman who thinks about a venture, dreams it,
starts it, works on it and grow with it.
 Entrepreneurship could be defined as ability of an individual or a group of

individual to introduce changes or innovate like introduction of a new
product or service, opening of a new market and carrying out a new
organization. Entrepreneur is a man who invests and risks time, money and
effort to start a business and make it successful.
 Enterprise- Any company with a relatively new idea for business, mostly a
bold and unconventional one.
To sum up so far…
Entrepreneur refers a person, entrepreneurship indicates the

process adopted by him and enterprise is the work place where in
he adopts his entrepreneurial skilled.
Types of Entrepreneurs/ Entrepreneurial Structure
Innovators
 Aggressive and look for results deriving from novel combination of

factors
 Experimental in their approaches.
 Exhibits smartness in putting attracting possibilities into practice.
 May raise money to launch an enterprise, assemble the various
factors, choose top managers and set the organization going.
 Commonly found in developed nations
 Uses new methods of production.
 Directs the new Organization in any industry.
Adoptive/Imitating/Copying
• Characterized by readiness to adopt successful innovation inaugurated by
innovating entrepreneurs.
• Imitators follow the innovators later after observing how the latter functions.
• These groups are also revolutionary entrepreneurs with the difference that
they do not innovate the changes themselves. They just imitate techniques
and technology innovated by others
• Particularly important in developing countries because they contribute
significantly to the development of such economies.
• The reason for the backwardness of the underdeveloped countries lies in the
fact that they are deficient in innovating and imitating entrepreneurs when
they are found in abundance in developed countries.
• Developing countries primarily need imitators who are responsible for
transforming the system with the limited resources they possess.
Fabian Entrepreneurs
• Fabian entrepreneurship is characterized by great caution and skepticism in
practicing any change.
• Shy and lazy, unwilling to introduce any kind of change.
• Dealings are determined by customs, religion, tradition and past practices.
• Aren’t much interested in taking risk and they try to follow the footsteps of
their predecessors.
• these do imitate the successful innovations, but with required caution.

Drone entrepreneur
• Does not want to accept any type of innovation or change.
• When the entrepreneur becomes indifferent towards innovations and wants
to lead a comfortable living alone, then he is called a drone or inactive
entrepreneur.
• In the course of time, he starts feeling tired in entrepreneurial activities
• Such entrepreneurs are interested only to continue their business anyway.
• He remains away from innovations, although it may be much advantageous
to him.
• In the long run, such entrepreneurs face business failures.
• He does not like to take any risks and to take any challenging work in the
operation of his business.
Broad classification of the types of Entrepreneurs
Entrepreneur Vs. Manager
Factors Affecting Entrepreneurial Growth
1. Economic conditions- Economic conditions includes the capital, labor, raw material and market
infrastructure.
 Capital: It is the essence of enterprise. Availability of capital facilitates mobility of land, machine,
material etc.
 Labor: Quality and quantity of labor influence the entrepreneurship. Low cost and skilled work
force influences entrepreneurship. (Labor Unions)
 Raw Material: raw material consisting of natural resources is also an essential product required for
any industry. In some countries this raw material is available through the market by paying a fair
price.
 Infrastructure- Lastly, there are some services which are required by almost every industry to
flourish. These services would include transport, electricity etc. Since these services are so basic,
they can be referred to as the infrastructure which is required to develop any business.
2. Non- Economic conditions- Social conditions, Psychological conditions and Political or
Governmental action.
 Social conditions- Norms & values, Degree of approval/disapproval, Family

background, Education, Financial stability etc.
 Psychological conditions- Need of achievement, Degree of motivation etc.
 Political /Governmental Action- Incentives and concessions, Government interest in

economic development of the society.
 Entrepreneurial education- More and more people with high academic attainments are
joining the ranks of industrialists .
 Increasing demand for variety- Increased wealth has led to an increase in demand for
variety making things easier for smaller firms. Change in consumer taste provides a
base for entrepreneurship.

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Entrepreneurship

Entrepreneurship is the attempt to create value through

 Entrepreneurship is based on purposeful and systematic innovation. It included

• Innovation. i.e., doing something new or something different is a necessary

Now-a-days fruit juice is sold in

Oravel Stays (OYO Rooms) Founder – Ritesh Agarwal

1. Ability to create enterprise: Entrepreneurship is primarily an economic

2. Organizing function: An entrepreneur brings together various factors of

3. Innovation: Entrepreneurship is an automatic, spontaneous and creative

4. Risk bearing capacity: Risk is an inherent and inseparable element of

5. Managerial and leadership functions: An industrial entrepreneur must have

 Trouble Shooting - An entrepreneur must have an intense desire to

 Initiative and Enterprising - An entrepreneur must have initiative,

 Facilitating - An entrepreneur must build a team, keep it motivated, and

 Entrepreneurship could be defined as ability of an individual or a group of

Entrepreneur refers a person, entrepreneurship indicates the

 Aggressive and look for results deriving from novel combination of

• Shy and lazy, unwilling to introduce any kind of change.

• Dealings are determined by customs, religion, tradition and past practices.

• these do imitate the successful innovations, but with required caution.

 Social conditions- Norms & values, Degree of approval/disapproval, Family

 Psychological conditions- Need of achievement, Degree of motivation etc.

 Political /Governmental Action- Incentives and concessions, Government interest in

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