The Nature &

Importance
of
Entrepreneur
s

Chapter One
ENTREPRENEUR

 "Entrepreneur" is derived from a French word. "Entre" means between

and "Preneur" means to take.
 Originally to describe people who “take on the risk” between buyers and
sellers or who undertake a task such as starting a new venture.
 An entrepreneur assembles and then integrates all the resources
needed – to transform the invention into a viable business.
Successful Start up of
2021
 WHO IS THE ENTREPRENEUR?

High

Creativity Inventor Entrepreneur

and
Innovation

Promoter Manager,
Administrator
Low High
General management skills, business know-how, and networks

Timmons
ENTREPRENEURSHIP

– Is the process by which individuals pursue

opportunities without regard to resources they
currently control.
– The essence of entrepreneurial behavior is
identifying and putting useful ideas into practice.
– The task typically requires creativity, drive and
willingness to take risks that can be accomplished
by either an individual or a group.
 Historical Evolution Of Entrepreneurship

Earliest Period
 Middle Ages
 17th Century
 18th Century
 19th & 20th Century
EARLIEST PERIOD

 The earliest definition of entrepreneur may be related

to the person (merchant – adventurer) who attempted
to establish trade routes to the far east.
 They would sign a contract with money person to sell
his goods.
 The capitalist was a passive risk bearer.
 Merchant adventurer took the active role in trading
bearing all the physical and emotional risks while the
capitalist was a passive risk bearer.
 When he completes the trip, the profits divided
(capitalist – 75% , adventurer – remaining 25%).
Marco Polo
 MIDDLE AGES
– The term was used to describe both an
actor and a person who managed large
production projects.

– Did not take any risks but merely

managed using the resources provided
usually by the government of the country.

– A typical entrepreneur in the middle ages

was cleric the person in charge of great
architectural works, such as castles(fort)
and fortifications(protected wall), public
buildings, abbeys(religious house) and
cathedrals.
 17TH CENTURY

– entrepreneur being a person who entered into

contractual agreement with government to
perform a service or supply stipulated products.
since the contract price was fixed, any resulting
profit or losses were entrepreneur’s.
– During this period, one entrepreneur John
Law,– established a royal bank in france in 1976.
– This led to the first definition given by Richard
Cantillon, an economist and author.
 18TH CENTURY
– Finally , the person with capital was
differentiated from one who needed capital (in
other words the entrepreneur was
distinguished from the capital provider ).
– Many inventions developed during this time
and changed the world.
– Inventors like Eli Whitney(Inventor of cotton
gin) and Thomas Edison developed new
technologies, both raise capital from private
sources to develop and experiment (capital
users not providers).
– A venture capitalist who makes risk
investments from a pool of equity capital to
obtain a high rate of return on investments.
 19TH CENTURY
 Entrepreneurs not distinguished from
managers and were viewed from an
economical perspective.

 An entrepreneur organizes and operates for

personal gain.

 For eg., Andrew Carniege, descended from

poor Scottish family made the American steel
industry one of the wonders– invented
nothing but adapted new tech in the creation
of products to achieve economic vitality
 20TH CENTURY

– The notion of an entrepreneur as an innovator was

established.

– The concept of innovation and newness is an integral part

of entrepreneurship.

– The newness can consist of anything from a new product

to a new distributions system to a method for developing
a new organizational structures.
CONTRIBUTORS TO THE
ENTREPRENEURSHIP THEORY

– 18th Century:
– 1725: RICHARD CANTILLION ( person bearing risks is different from one
supplying capital)
– 19th Century:
– 1803: JEAN BAPTISTE SAY (separated profits of entrepreneur from profits of
capital)
– 1876: FRANCIS WALKER (distinguished between those who supplied funds and
received interest and those who received profit from managerial capabilities)
CONTRIBUTORS TO THE
ENTREPRENEURSHIP THEORY

– 20th Century:
– 1934: JOSEPH SCHUMPETER (entrepreneur is an innovator and develops untried
technology)
– 1961: DAVID McCLELLAND (entrepreneur is an energetic, moderate risk taker)
– 1964: PETER DRUCKER (maximizes opportunities)
 DEFINITIONS

Richard Cantillon

One of the early theorist, founder of the term

entrepreneurship.
He viewed the entrepreneur as a risk taker by
observing merchants, farmers, craftsmen…
“Buy at a certain price and sell at an uncertain
price , therefore operating at a risk”
 DEFINITIONS
Jean Baptiste Say

Entrepreneurs shift economic resources out of areas of lower

and into areas of higher productivity.

Joseph Schumpeter

The function is to reform or revolutionize the pattern of

production by exploiting an invitation or more generally an
untried technological method of producing a new commodity or
producing an old one in a new way , opening a new source
of supply or new outlet for products, by organizing a new industry
 DEFINITIONS

Peter Drucker

The entrepreneur always searches for change, responds to it, and

exploits it as an opportunity

Howard Stevenson

Entrepreneurship is the pursuit of opportunity without regard to

resources currently controlled.
 DEFINITIONS
Robert C. Ronstadt

Entrepreneurship is the dynamic process of creating incremental wealth. This

wealth is created by individuals who assume the major risks in terms of equity,
time, and/or career commitment of providing value for some product or service.
The product or service itself may or may not be new or unique but value must
somehow be infused by the entrepreneur by securing and allocating the
necessary skills and resources.
Robert Hisrich
Entrepreneurship is the process of creating something new
with value by devoting their necessary time and effort
assuming the accompanying financial, and social risks and
receiving the resulting rewards of monetary and personal
satisfaction and independence.
AN INTEGRATED DEFINITION

 Entrepreneurship is a dynamic process of vision,

change, and creation. It requires an application of
energy and passion towards the creation and
implementation of new ideas and creative
solutions.
 Types of Start-Ups

– Lifestyle firm- A small venture that supports the owners and usually does
not grow. Less focus in research and development. Modest growth due to
nature of business. Less opportunity for expansion and growth. For Example
Ahemdabad based one Company - Mojjo Tattoo Studio.
– Foundation Company- is created from research and development that
usually does not go public. Try to implement new business idea.
– High-potential venture-has high growth potential and receives the greatest
investment interest and publicity. For Example Ptyam.
– Gazelles-very high growth ventures.
 ENTREPRENEURSHIP IN
ECONOMIC DEVELOPMENT

– More than per capita and income, it involves change in business and society.
This change is accompanied by growth and increased output, which allows
more wealth to be divided among the various participants.

– What facilitates needed change and development?

ENTREPRENEURSHIP IN ECONOMIC
DEVELOPMENT

– One theory of economic growth depicts innovation as the key not only in
developing new products but also stimulating investment interest in the
new ventures being created.
– The new capital created expands the capacity for growth.
– It is the process through which innovation develops and commercializes
through entrepreneurial activity which in turn stimulates economic growth
 Economic Impact of
Entrepreneurial Firms
1-25

– Innovation
– Is the process of creating something new, which is central to
the entrepreneurial process.
– Small firms are twice as innovative per employee as large firms.

– Job Creation
– In the past two decades, economic activity has moved in the
direction of smaller entrepreneurial firms, which may be due
to their unique ability to innovate and focus on specialized
tasks.
Entrepreneurial Firms’ Impact on
Society and Larger Firms
1-26

– Impact on Society
– The innovations of entrepreneurial firms have a dramatic
impact on society.
– Think of all the new products and services that make our
lives easier, enhance our productivity at work, improve
our health, and entertain us in new ways.
– Impact on Larger Firms
– Many entrepreneurial firms have built their entire business
models around producing products and services that help
larger firms become more efficient and effective.
Role of entrepreneurship in
Economic Development
– It involves initiating and constituting change in the structure if business and
society (i-e innovation).
Innovation

Developing new stimulating investment

products (& services) interest in the new venture
for the market

Expanding the capacity Utilizing new capacity

for growth and output
(supply side) (demand side)
Product – Evaluation process:
The process through which innovation develops and
commercializes through entrepreneurial activity,
which in turn stimulates economic growth.
Iterative (Repeating)synthesis: (The combination of
components or elements to form a connected whole.)
The critical point in the product-evaluation process is
the intersection of knowledge and a recognized
social need, which begins the product development
phase. This point is called iterative synthesis.
Ordinary innovations:
New products having little uniqueness and technology.
Technological innovations:
New products with significant technological
advancement.

Regardless of its level of technology, each innovation

evolves into and develops into commercialization
through one of the three mechanisms:
1. The government
2. Intrapreneurship or
3. Entrepreneurship
 Government as an
innovator
– Govt. is one conduit for commercializing the results of
the synthesis of social need and technology. This is
frequently called technology transfer.
– Though the govt. has the financial resources to
transfer technology but it faces the following
problems:
– It lacks business skills
– Bureaucracy and red tape
 Intrapreneurship

– Entrepreneurship with in an existing organization

– It bridges the gap between science and the
marketplace.
– Problems:-
– Bureaucratic structure
– Emphasis on short term profits
– In the present era of hyper competition organizations
need to develop the intrapreneurial spirit.
 Types of Skills required in
Entrepreneurship
– Technical skills
– Writing
– Oral communication
– Monitoring environment
– Technical business management
– Technology
– Interpersonal
– Listening
– Ability to organize
– Network building
– Management style
– Coaching
– Being a team player
– Business management skills
– Planning and goal setting
– Decision making
– Human relations
– Marketing
– Finance
– Accounting
– Management
– Control
– Negotiation
– Venture launch
– Managing growth
– Personal entrepreneurial skills
– Inner control
– Risk taker
– Innovative
– Chang oriented
– Persistent
– Visionary leader
– Ability to manage change
Ethics and Social Responsibility
of Entrepreneur

– Manager’s attitudes concerning corporate responsibility are related to

organization climate.
– Entrepreneur tends to depend on their own value system.
– Business Ethics : The study of Behaviour and morals in a business situation.
– Entrepreneur Value system also affected by Competitors, Communities etc.
– Ethics refers to “Study of whenever is right and good for humans”.
– Business Ethics : Concern itself with the Investigation of business practices in
light of human values.
– Ethics is broad field of study exploring the general nature of morals and the
specific moral choices to be made by the individual in relationship with others.
Ethics and Social Responsibility
of Entrepreneur

– English word Ethics derived from Greek word “ethos” means Custom.
– Research of Business ethics broken into four classification
– 1) pedagogically oriented inquiry including both theory and empirical
studies.
– 2)Theory Building without empirical study.
– 3) Emparical research within the business environments, measuring the
attitudes and ethical views, primary of managers within large
organization.
–