UNIT - II

ENTREPRENEUR – meaning of entrepreneur, characteristics of

entrepreneurs, classification and types of entrepreneurs,
various stages in entrepreneurial process, role of entrepreneurs
in economic development, entrepreneurship in India and
barriers to entrepreneurship. Identification of business
opportunities, market feasibility study, technical feasibility
study, financial feasibility study and social feasibility study.(T2)
PREPARATION OF PROJECT AND ERP - meaning of project,
project identification, project selection, project report, need
and significance of project report, contents, formulation,
guidelines by planning commission for project report.(T2)
15 Hours
Meaning of Entrepreneur
• An entrepreneur is defined as a person who innovates, organizes, operates, and
assumes the risk for a new business venture. The term entrepreneur has been derived
from old French entrependre, which means to undertake. A venture is a business
enterprise involving risk in expectation of gain.
• The above definition of entrepreneur has four components, which highlight the facets of
an entrepreneur. Firstly, an entrepreneur innovates, i.e. comes up with a new concept,
product or service. Secondly, an entrepreneur organizes a new business venture, i.e.
initiates or starts a new business enterprise. Thirdly, an entrepreneur operates, i.e. runs
a new business venture and strives hard to sustain and grow it. Fourthly, an
entrepreneur assumes the risk, i.e. takes the responsibility of the (positive or negative)
outcomes of a business enterprise.
• Whatever the type, everyone is an entrepreneur only when he actually carries out new
combinations, and loses that character as soon as he has built up his business, when he
settles down to running it as other people run their business(Schumpeter,1934, p.78). In
contrast to this view, Cantillion(1755) described the entrepreneur as a rational decision-
maker “who assumed the risk and provided the management of the firm(Kilby,1971).
According to Schumpeter, innovations-the carrying out of
new combinations-can be categorized into five groups:

• Introduction of a new good or of a new quality of a good,

• Introduction of a new method of production which is unproven,
• Opening up of a new market,
• Conquest of a new source of supply of raw materials or part-
manufactured goods, and
• Carrying out of a new organization of industry.
Evolution of the Concept
• In the early sixteenth century, entrepreneurs were thought of as Frenchmen
who undertook to lead military expeditions. The term was broadened by
1700 A.D. to include contractors who undertook to build for the military:
roads, bridges, harbors, fortifications, and the like. At that time, French
economists also used the word entrepreneur to describe people who bore
risk and uncertainty in order to make innovations(de Farcy, 1973; Berthold,
1951).
• Richard Cantillon was the first to define an entrepreneur as the “agent who
buys means of production at certain prices in order to combine them into a
new product”(Schumpeter,1951). Joseph Schumpeter in 1934 defined an
entrepreneur as an innovator, who develops untried technology. According
to David McClelland(1961), an entrepreneur is an energetic, moderate risk-
taker; while according to Peter Drucker(1970), an entrepreneur maximizes
opportunities.
Functions of an Entrepreneur
• Risk measurement and risk-taking
Palmer(1971) suggested that the entrepreneurial function primarily involves risk
measurement and risk-taking. The risks are not only in relation to the uncertainty to the
success of the new business venture, but also on the personal and professional front
like career opportunities foregone for the sake of starting the new venture, family
relations, and psychic well-being(Liles,1974; Sarachek, 1978).
Risk-taking is not a desire to try one’s gambling skills in Las Vegas. Instead
entrepreneurs prefer to take moderate risks in situations where they have some degree
of control or skill in realizing a profit. They do not prefer situations which involve either
extremes of risk or certainty(McClelland, 1961: McClelland and Winter, 1969).
• Innovate/Create/Discover
Innovation, creativity, and discovery are at the heart of the functions of an
entrepreneur. According to Schumpeter(1934), the key ingredient of entrepreneurship
is innovativeness of the individual and may not involve ownership at all. If the principal
function of the entrepreneur is to carry out new combinations of means of production,
then these “combiners” need not necessarily be owners.
• Analyse the opportunities
An entrepreneur has to have the opportunity-seeking style of management that sparks
innovation(Peterson, 1985). The environment may throw up various types of opportunities for
an entrepreneur to take advantage of in creating a new venture. Thus, the entrepreneur needs
to analyse such opportunities from time to time and choose the most appealing one at the right
time.
• Strategize for the venture
An entrepreneur needs to strategize(Good, 1989) , i.e. perform long-term planning for the
venture to be started. (S)he has to analyse the markets to penetrate, challenge tough
competition and devise ways to reach out to the potential customers etc. Thus, the
entrepreneur should have the capability and skills to formulate strategies for the new business
venture.
• Develop a business plan
A business plan is a written document containing the details about every aspect of the proposed
business venture. It serves two purposes: to provide a road map for the people internal to the
organization, i.e. the employees, stakeholders, etc.; and to convince the potential investors and
financial institutions about the viability of the venture so that they may agree to invest in it.
Thus, the entrepreneur has to be adept in performing this critical function of drafting a
convincing and viable business plan.
• Acquire the resources
The entrepreneur has to acquire various types of resources like capital,
manpower, machinery/equipment, land, buildings, etc. to start a venture.
Many of these resources may not be easily available for the proposed new
venture. Thus, the entrepreneur needs to have suitable skills to line-up the
resources as and when required.
• Organize and start the venture
An entrepreneur should be a good organizer, i.e. he should deploy suitable
resources in the right activities at the right time in order to avoid wastages and
to optimally utilize the resources in starting-up the new venture.
• Develop and grow the venture
Just starting the venture does not complete the role of the entrepreneur, as it
is necessary to provide it with able support to develop and grow it in the times
to come. Many of the start-up ventures are not able to survive for long.
Therefore, active involvement of the entrepreneur during the development
and growth stage is important.
• Delegate, direct and lead the firm
During the growth stage of a new start-up firm, it starts growing in size
and thus, requires that the entrepreneur delegates the routine matters
to other colleagues in the organization, while providing strategic
direction to the firm as a leader. This function demands leadership skills
on part of the entrepreneur.
• Supervise and control
Delegation of authority and responsibility of routine matters to the
subordinates does not mean that the entrepreneur should not exercise
any control. In fact, it becomes imperative to have suitable control
mechanisms in place so that the entrepreneur may track the overall
health of the enterprise. Occasional personal supervision is also required
to be done by the entrepreneur to ensure that all is well with the firm
and the standard procedures created are being followed religiously by
one and all.
Types of Entrepreneurs
• Socio-cultural classification
• Immigrant entrepreneur
An individual who has a recent arrival in a country and starts a business as a means of
economic survival is called an immigrant entrepreneur. This group may involve a migration
network linking migrants, former migrants, and non-migrants with a common origin and
destination(Buttler & Greene, 1997a). For e.g., Sabeer Bhatia of Hotmail.com fame would fall
in this category of immigrant entrepreneur, as he migrated from Bangalore to the US and
started this venture there. Later, Hotmail was acquired by Microsoft and Sabeer made a good
money out of the deal.
• Ethnic entrepreneur
“A set of connections and regular patterns of interaction among people sharing common
national background or migration experiences”(Waldinger, Aldrich, and Ward, 1990, p.3). The
Marwaris who migrated long back from their native place Marwar in Rajasthan to create
businesses in West Bengal would fall in this category. Prominent Marwari entrepreneurs are
the Birlas, Singhanias, Laxmi Niwas Mittal(the Steel Baron), Kishore Biyani(of Big Bazaar), etc.
Similarly, the Parsi businesswoman in the western part of India originally hailed from erstwhile
Persia(now Iran). Tatas are the most prominent Parsi, with their founder Jamshetji Tata as the
first-generation entrepreneur.
• Minority entrepreneur
Is an entrepreneur who is not of the majority population. U.S. Federal
categories include Black, person of Hispanic or Latin American ancestry,
and person of Asian, Pacific Islander, American Indian, or Alaska Native
descent(U.S. Department of Commerce, 1997). There are many Indian
entrepreneurs in the U.S., who fall in this category. Amar Gopal Bose, a
professor at MIT and the founder of immensely successful Bose
Corporation(manufacturing leading-edge audio systems) would qualify to
fall in this category.
• Women entrepreneur
Shri Mahila Griha Udyog Lijjat Papad is one such organization. They pride
themselves in being a women’s organization-of the women, by the
women, and for the women. It was started in 1959 with seven lady
members with a borrowed sum of Rs.80 at Girgaum in Mumbai. Another
typical example of this type of entrepreneur is Kiran Majumdar Shaw.
• Motivational classification
Broadly, this classification has two categories, namely first-generation entrepreneur and family-business
entrepreneur.
• First-generation entrepreneur
Does not have any family business prior to starting his/her own business venture. Dhirubhai
Ambani(Reliance), Kiran Majumdar Shaw(Biocon), N.R. Narayana Murthy(Infosys), Naresh Goyal(Jet
Airways) all being to this category.
First-generation entrepreneurs are of two types:
• Self-actualizer entrepreneurs- are those who started their business driven by a thirst for achievement
and a sense of independence and autonomy(Dubini, 1989). For example, Sunil Bharti Mittal(Airtel) is
driven by self-actualization.
• Discontented entrepreneur- is the one who is unhappy with the present working conditions in the
organization where he is serving and decides to move on to start his own enterprise(Dubini, 1989).
The erstwhile MD of Taj Hotels, Ajith Kerkar was ousted unceremoniously by Ratan Tata in 1997 due
to the growing discontent between the two. Immediately afterwards, Kerkar set up Tulip Star Hotels
as an entity to manage and own properties. In a short span after he quit the Taj group in 1997, the
Tulip Star either owns, manages or markets a number of properties that include the Bogmallo Beach
Resort and the Nizmar Resort in Goa, the Kumarakom Lake Resort, the Aquaserene, Siena Village in
Munnar, Renaissance, Cochin which are all in Kerala. Other properties under Tulip Star is Capitol in
Bengaluru, Tulip Manohar in Hyderabad, and Revival in Baroda. It also has stakes in the Juhu Centaur,
• Family-business entrepreneur
Are the followers of family tradition role models(Dubini, 1989). A typical example
is that of Aditya Vikram Birla(1944-1995), who created about 75 factories for his
business group in a career span of 25 years(Piramal, 1997). Aditya Birla was the
son of industrialist Basant Kumar Birla(popularly known as BK). His group is now
known after him(Aditya Birla Group) and managed by his son Kumar Mangalam
Birla.
• Entrepreneurial experience classification
There are two broad categories in this classification-novice and habitual
entrepreneurs.
• Novice entrepreneur-can be viewed as individuals with no prior minority or
majority business ownership experience, either as a business founder, an
inheritor, or a purchaser of an independent business, but who currently own a
minority or majority equity stake in an independent business that is new,
purchased, or inherited(Westhead, Ucbasaran, and Wright,2003). N.R.Narayana
Murthy was a novice entrepreneur when he founded Infosys on July 2,1981
along with six of his colleagues.
• Habitual entrepreneur- are most often described as persons who have experience owning at
least two different firms whether temporarily(serial entrepreneurship) or
simultaneously(portfolio entrepreneurship)(Hall, 1995; Westhead and Wright, 1998).
-Serial entrepreneur- can be viewed as individuals who have sold/closed a business in which they
had a minority or majority ownership stake, and they currently have a minority or majority
ownership stake in a single independent business that is either new, purchased, or
inherited(Westhead, Ucbasaran, and Wright,2005).
According to Ryan(2000), serial entrepreneurs thrive off the psychological reward of making an
impact as opposed to the wealth to be gained from operating successful ventures. These
entrepreneurs are risk takers, having built sufficient wealth(relative to their comfort level); they
will invest their money on new ventures that often tend to be vague visions of an unsolved
problem. They view failure as an experience, which will make them stronger and bolder to take on
new risks. Some entrepreneurs seem to thrive on the gruelling early stages of starting and building
a business, and prefer to hand it over for others to manage while they return to the start-up
process(Fraone, 1999). Sunil Bharti Mittal(of Bharti Airtel) would qualify for the category of serial
entrepreneur.
-Portfolio entrepreneur-can be viewed as individuals who currently have minority or majority
ownership stakes in two or more independent businesses that are either new, purchased, and/or
inherited(Westhead, Ucbasaran, and Wright, 2005). Kishore Biyani can be categorized into this
category of entrepreneurs, as he owns Big Bazaar, Pentaloon and Central supermarkets(all
• Technical experience classification
Jones-Evans(1995) came up with his classification based upon the previous
occupational background of the entrepreneurs in the technology sector. A technical
entrepreneur is defined as the founder and current owner-manager of a technology-
based business, i.e. primarily responsible for its planning and establishment, and
currently having some management control of the organization.
• The “research” technical entrepreneur
These entrepreneurs are involved in technological research activities at an academic
institution or a research laboratory prior to creating their own venture. Professor Amar
Gopal Bose of Massachusetts Institute of Technology is a typical example of this
category.
• The “producer” technical entrepreneur
These entrepreneurs have a history of involvement in direct commercial production or
development of a product or process, usually in a large organization. A typical e.g. for
this type of entrepreneur is-Subroto Bagchi, the co-founder of MindTree Ltd. Bagchi
worked as the Chief Executive of Wipro’s Global R&D before co-founding MindTree in
1999, MindTree generated a revenue of Rs.12375 million in the financial year 2008-09.
• The “user” technical entrepreneur
Such entrepreneurs may have been involved as an end-users in the application of the
specific product or technology(perhaps in support services such as technical support),
but without direct involvement in the actual development of the technology.
A typical e.g. is that of Tulsi Tantri, the founder of wind power major Suzlon. Tantri was
into his family business of textiles, when power shortages prompted him to install two
wind turbines as captive power. Later, buoyed by the success of this technology, he
decided to switch-over from textiles to wind power generation. Hence, Suzlon Energy
was born.
• The “opportunist” technical entrepreneur
This kind of entrepreneur is an individual who has identified a technology-based
opportunity and, while initiating and managing a small technology-based venture, either
has little or no technical experience or whose previous occupational experience was
within non-technical organizations.
For e.g., Azim Hasham Premji inherited Wipro from his father, who was into oil business.
Later, Premji realized the potential of information technology and ventured into this
business. Rest is the history as Wipro is today known as one of India’s It powerhouses.
 Intrapreneur-An emerging class
• Intrapreneurship is defined as entrepreneurship within an already existing
organization(Pinchot, 1985). It is also referred to as corporate entrepreneurship.
• A typical e.g., would be that of Dr.Pawan Goenka, who designed and developed
the immensely successful Scorpio model for Mahindra & Mahindra and
redefined the way new car design and development was done. He utilized the
vast experience of working with General Motors in the US prior to joining M&M.
• Under his leadership, M&M launched a slew of new products such as Pik-up,
Marshal, Armada 98, Bolero, and Loadking. His best acknowledged contribution
is that of the Scorpio project, which brought laurels to M&M. the company built
this brand-new vehicle with virtually 100 percent supplier involvement from
concept to reality for $120 million, including improvements to the plant. This is
about one-fifth of the cost incurred to design and develop a car from scratch
anywhere else in the world.
Characteristics of an Intrapreneur
• Creates new ventures: Giving birth to new businesses within the existing organizations is
the typical characteristic of an intrapreneur.
• Innovates products/services: A tendency towards technological leadership by way of
continual innovation of products/services is desirable on part of an entrepreneur.
• Innovates processes: Under fiercely competitive business landscape, business processes
need to be reinvented time and again by the intrapreneurs for better efficiency,
productivity, and quality.
• Proactive: Intrapreneurs attempt to lead rather than follow the competitors through
their proactiveness.
• Risk-taking: Intrapreneurs have a risk-taking attitude with regard to investment decisions
and strategic actions under situations of uncertainty.
• Renews organizations: An intrapreneur is expected to transform the organizations
through renewal of key ideas on which they are built.
• Competitively aggressive: An intrapreneur has the propensity to directly and intensely
challenge his organization’s competitors to achieve entry or to improve position.
Development Entrepreneurship
• The origin of programmes for the development of entrepreneurs in India can
be traced to the pioneering efforts of the Small Industry Extension Training
Institute, now known as the National Institute for Micro, Small and Medium
Enterprises with whose collaboration, Professor David McClelland of Harvard
University attempted to establish that achievement motivation could be
developed among adults. Under his guidance, six experimental training
programmes on achievement motivation were conducted during 1964-65
with the active involvement of SIET faculty.
• According to Prahalad(2004), inability and inconsistencies in enforcing laws,
bureaucratic interpretation of rules, lack of firm political commitment, lack
of accountability, hooliganism and political musclemanship, lack of rule of
law, lack of control of corruption are significant deterrents to
entrepreneurship development in developing countries.
Governmental/non-governmental support
bodies
• The National Institute for Entrepreneurship and Small Business Development was
established in 1983 by the Ministry of Industry(now Ministry of Micro, Small, and
Medium Enterprises), Government of India, as an apex body for coordinating and
overseeing the activities of various institutions/agencies engaged in
entrepreneurship development, particularly in the area of small industry and small
business.
• In 1983, the Entrepreneurship Development Institute of India, an autonomous body
and not-for-profit institution, was set up. It was sponsored by apex financial
institutions, namely the IDBI Bank Ltd., IFCI Ltd., ICICI Ltd., and the State Bank of
India.
• A 1984 sample study of forty units set up by trained entrepreneurs in the state of
Gujarat revealed that ED-trained entrepreneurs had less than a 10 percent business
closure rate as compared to 20 to 25 percent among other small enterprises.
Furthermore, the profit and loss analysis revealed that 80 percent of the trained
entrepreneurs were making profits, as opposed to 60-70 percent of other small
enterprises.
• Incubation facilities
An incubator is a facility designed to assist start-up companies, generally with respect to
providing knowledge and technical assistance. For e.g. Nadathur S Raghavan Centre for
Entrepreneurial Learning at the Indian Institute of Management Bangalore provides such
incubation facilities in the form of an office, computing and telecommunication facilities, and
faculty consultancy support at nominal charges. Similarly, Wadhwani Centre for
Entrepreneurship Development at the Indian School of Business, Hyderabad, has established
an incubation center called K-Hub with the support of the Government of Andhra Pradesh.
• Educational Programmes
With an aim to undertake training, research and consultancy activities in the small industry
sector focusing on entrepreneurship development, the Indian Institute of Entrepreneurship
was established in the year 1993 at Guwahati by the erstwhile Ministry of Industry,
Government of India, as an autonomous national institute.
• Entrepreneurship networks
TiE-The Indus Entrepreneurs-was founded in Silicon Valley in 1992 by successful entrepreneurs
and professionals with roots in the Indian subcontinent(the Indus region). TiE is also known as
Talent Ideas and Enterprise and is today spread over 53 chapters in 12 countries. It has over
12000 members and 1800 plus charter members-including top entrepreneurs, venture
capitalists, private equity, angels, law firms, technology and management professionals. It
claims itself to be the world’s largest not-for-profit organization for entrepreneurs.
The National Entrepreneurship Network, founded in 2002, is a not-for-profit
initiative of the Wadhwani foundation, working to inspire, educate and support
the next generation of high-growth entrepreneurs in India. NEN was co-
founded by five of India’s premier academic institutions: IIT Bombay, IIM
Allahabad; SP Jain Institute, Mumbai; IBAB, Bangalore; and BITS Pilani. NEN
works with over 425 top-tier academic institute members; has developed a
pool of more than 950 entrepreneurship faculty members, growing the number
from an initial group of about 50 across the country; has launched more than
350 student e-cells; and reaches over 400000 young people across 30 cities in
India. NEN has more than 65000 individual members, representing the largest
group of new and future entrepreneurs in India.
Stages in Entrepreneurial Process
Barringer and Gresock(2008) identified various stages in the entrepreneurial process.
• Genesis of a business idea
This is the first step in the entrepreneurial process and requires critical thinking on part of the
entrepreneur to select the most viable business ideas from a set of available options. This not only
includes critical analysis of the merits and demerits of the innovative product/service created by the
entrepreneur, but also includes the study of the market potential(the existing and potential
competitors), marketing, finance, human resources, and operational issues related to the business idea.
• Conduct preliminary feasibility
The preliminary feasibility involves a quick assessment about the potential of the business ideas and
screening out an idea with the highest potential. This step is necessary to ensure that comprehensive
and detailed feasibility analysis(which involves considerable time and effort) to be conducted in the
next step is done only for the single best idea. A checklist proposed by Timmons and Spinelli(2004)
helps in selecting the high-potential idea within a couple of hours on the basis of the following four
criteria:
• Market and market related issues
• Competitive advantages
• Value creation and realization issues, and
• Overall potential
• Detailed feasibility analysis
Having screened out an idea with high potential, it is subjected to the detailed feasibility
analysis which may take a couple of days or weeks. The detailed analysis is helpful in making
suitable modifications in the business idea before taking it to the business plan stage.
• Product/service feasibility
The feasibility of the product/service(which is in the concept/idea stage only) is performed
by concept testing, i.e. showing the concept or idea to a sample group of potential
customers to gauge their reaction, to take their suggestions for further development of the
concept and to assess its sales potential. A prototype or a sample unit of the product can
also be created in simple form depending upon the cost involved. Otherwise, computer
simulation or design can be used. A rough assessment of the production/service delivery
process to be followed should also be done to avoid abrupt revelation about infeasibility of
production at a later stage when substantial investment of time and effort have been made.
• Industry/Market feasibility
The feasibility analysis of industry/market involves three considerations. Firstly, how
attractive is the market for the new business idea or concept. A market segment
experiencing growth, with high profit margins and less competition would naturally be
attractive for the entrepreneur. Secondly, efforts should be expanded to identify the niche
within a large market, i.e a narrow segment of customers with a common expectation from
the product or service.
• Organizational feasibility
Two issues should be addressed here: an assessment about the organizational
prowess or capability of the initial management team, and the availability of
non-financial resources(like office space, talent pool in the area where the
venture would be started, etc.). Organizational prowess means passion for
the new business idea, professional managerial qualifications, prior
experience and understanding of the market in which the venture would be
created.
• Financial feasibility
The total initial cash needed for starting the venture and overall financial
attractiveness of the investment are at the heart of financial feasibility. Very
clear identification about the source of sufficient funds to cover all the
capital(long-term like land, building, machinery) expenditures and
operating(recurring) expenses to generate first unit of the sales should be
done. Financial attractiveness of investment should be assessed by estimating
the expected rate of return on investment.
• Write a business plan
A business plan is a written document containing the details about
every aspect of the proposed business venture. It serves two purposes:
to provide a “road map” for the people internal to the organization, i.e.
the employees, stakeholders, etc. and to convince the potential
investors and financial institutions about the viability of the venture so
that they may agree to invest in it. It should preferably include details
about the screening process and feasibility studies conducted by the
entrepreneur to augment its authenticity and appeal.
• Launch the venture
Due to the uncertainties of the business environment, the
entrepreneur should be prepared to face hurdles and challenges during
the launching of the venture as well as in the subsequent periods of
time.
Role of entrepreneurs in Economic
Development
From the fall of Rome(AD 476) to the eighteenth century, there was virtually no increase
in per capita wealth generation in the west. With the advent of entrepreneurship,
however, per capita wealth generation and income in the West grew exponentially by 20
percent in the 1700s, 200 percent in the 1800s, and 740 percent in the 1900s(Drayton,
2004).
• Create employment opportunities
Within the last 15 years, Fortune 500 companies and large corporations have endured
major retrenchment and eliminated millions of jobs, whereas discoveries in the
entrepreneurial sector have yielded an average of 60000 new incorporations per year
and generated millions of job opportunities.
• Inspire others towards entrepreneurship
The team created by an entrepreneur for his new venture often provides the
opportunity for the employees-cum-teammates to have a first-hand experience of
getting involved in an entrepreneurial venture. This often leads eventually for these
employees to become entrepreneurs themselves after being inspired by their earlier
experience of working for an entrepreneur.
• Create knowledge spillovers
When a scientist, an engineer, or a knowledge worker(i.e. an economic
agent with endowments of new economic knowledge) leaves an
organization to create a new firm, knowledge acquired by her in the
organization gets spilled over to the new firm.
• Augment the number of enterprises
When new firms are created by entrepreneurs, the number of enterprises
based upon new ideas/concepts/products in a region(say, a city, state, or
country) increases. Greater competition across firms also facilitates the
entry of new firms specializing in a particular new product niche.
• Provide diversity in firms
Entrepreneurial activity in a region often results into creation of a variety
of firms in a region. These firms operate into diverse activities and it has
been found that it is this diversity in firms which fosters economic
development and growth rather than homogeneity.
Entrepreneurship-Its Barriers
• Macroeconomic environment- conducive to entrepreneurship is dependent
upon the policies of the government in supporting private participation in
business. Macro means large and the term macroeconomic means the larger
view of the economy. It is different from the micro view which concerns a
firm or a company in the market.
• Legal and regulatory environment- for entrepreneurship is formed by
registration and licensing procedures, commercial and contractual laws,
property right laws, bankruptcy and collateral law, real estate regulations and
labour laws. If the administrative procedures and laws are unclear, time-
consuming and cumbersome, they would pose barriers to entrepreneurship.
• Corruption and unfair competition-A corrupt economy can lead to unfair competition,
which in turn can become a major deterrent to entrepreneurial activity.
• Financial obstacles- It has been observed that in many economies, banks are reluctant to
give loans to small start-up firms.
• Tax burden- In many regions, the government charges high taxes from even small start-up
ventures and has tedious procedures for compliance of tax submission formalities.
• Challenges in attracting talent- The best of talent in engineering, management and other
disciplines wants to work for multinational corporations rather than for small start-ups.
• Difficulty to source raw material- For entering a market with a product, an entrepreneur
has to identify if the suppliers of raw materials and components existing in the market
have adequate capacity or are willing to expand capacity to meet the requirements of a
new player in the industry. If not, then it becomes imperative to establish new suppliers in
the market, which may be cumbersome for the entrepreneur.
• Expensive to access proprietary technology- Big companies like Texas Instruments invent
breakthrough technologies which have the potential of applications in many fields. They
give licenses of such state-of-the-art technology to other companies worldwide to develop
and market products based upon it. They charge hefty license fee from such companies in
return.
Review Questions
• Define an entrepreneur and briefly explain the various facets of the definition.
• Define entrepreneurship. How did this concept evolve over the period of time?
• Enumerate and explain the various functions of an entrepreneur.
• Explain with a schematic diagram the different types of entrepreneurs with suitable
classification.
• How is a serial entrepreneur different from a portfolio entrepreneur? Explain.
• Define intrapreneurship. What are the various characteristics of an intrapreneur?
• What are the steps taken in our country for the development of entrepreneurship?
• What are the different stages in entrepreneurial process? Explain with the help of a
schematic diagram.
• Explain the role of entrepreneurship in economic development.
• Describe how entrepreneurship evolved in India.
• Explain the various barriers to entrepreneurship, especially in the context of our
country.