CHAPTER

ENTREPRENEUR
1
CONTENTS
™ Definitions
™ Characteristics of an Entrepreneur
™ Functions of an Entrepreneur
™ Entrepreneur vs. Manager
™ Intrapreneur/Corporate Entrepreneur
™ Types of Entrepreneurs
™ Motivating Factors to Become Entrepreneur
™ Entrepreneurial Competencies
™ What Makes a Successful Entrepreneur?
™ Entrepreneur and Economic Development

All over the globe, the dream of growing number of people is to own and operate their own
businesses. The study conducted by the Global Entrepreneur Motor Monitor found that, in USA,
11.3% of the adult population, roughly, one in nine people is working to start a business. The surge in
entrepreneurial activity is found in all countries and India is no exception.
The entrepreneurial spirit is the most significant one in the recent business history. The new
entrepreneurs are reshaping the business environment. Their businesses have introduced innovative
products and services, created new jobs and opened new markets. The rate of entrepreneurial activity
determines the growth of a nation.

Who are the Entrepreneurs?

The word ‘Entrepreneur’ is derived from the French word ‘Entreprendre’ meaning to undertake.
In fact, in the 16th century, the Frenchmen who undertook military expeditions were referred to as
‘Entrepreneurs.’ Later on, in the 18th century, this term got associated with persons who started their
own enterprises. Richard Cantillon, an Irish man living in France, was the first economist who introduced
the term ‘entrepreneur’ referring to the risk-taking function of establishing a new venture.
–1–
2 Entrepreneurship Development

Definitions
Various experts have defined the term entrepreneur in different words. Some of the definitions are
as follows:
According to Collins Cobuild English Language Dictionary, 1987, “An entrepreneur is a person
who sets up business deals in order to make a profit.”
According to J.B. Say, “An entrepreneur is the economic agent who unites all means of
production”...
Richard Cantillon says, “All persons engaged in economic activity are entrepreneurs.”
In the words of Quesnay, “A rich farmer is an entrepreneur who manages and makes his business
profitable by his intelligence and wealth.”
J.A. Schumpeter is of the view that, “A person who introduces innovative changes is an
entrepreneur and he is an integral part of economic growth.”
According to Webster, “Entrepreneur is one who assumes risk and management of business.”
In the words of Walker, “True entrepreneur is one who is endowed with more than average
capacities in the risk of organising and co-ordinating various factors of production.”
Peter Drucker says, “Entrepreneur is one who always searches for change, responds to it and
exploits it as an opportunity. Innovation is a specific tool of entrepreneurs, the means by which they
exploit change as an opportunity for different business or service.”
Dewing has rightly put it as follows: “The function of entrepreneur is one that promotes ideas into
business.”
Thus, an entrepreneur is always action-oriented. He has the ability to visualise the necessary steps
involved from idea generation to its actualisation. He is both a thinker and doer; planner and worker. He
accepts risk and manages it. All the above definitions portray an entrepreneur as an initiator of action,
stimulator of social economic change and a harnesser of resources.

Characteristics of an Entrepreneur
Anybody can become an entrepreneur provided he has got a certain set of behavioural traits and
mental aptitude. His success depends more on hard work than good luck. He must be a DOER and not
a DREAMER. The success of an entrepreneur largely depends on his intelligence, imagination, capacity
to innovate and his ability to turn visions into realities. It is not necessary that he should possess a
professor’s intelligence, a prophet’s foreseeing capacity, a salesman’s persuasiveness, a banker’s financial
talent, a politician’s power, a filmstar’s magnetic personality and so on. The only capacity, very essential
to become an entrepreneur is the willingness to work hard. There are certain characteristic features
which make an entrepreneur successful in his venture. They have been briefly discussed hereunder:
1. Hard Work: A successful entrepreneur is one who is willing to work hard from the very
beginning of his enterprise. An entrepreneur with his tenacity and hard work and pervasive perseverance
can revive his business even from the verge of collapse.
Entrepreneur 3

2. Business Acumen and Sincerity: Business acumen stands for shrewdness and ability. Again,
the success of an enterprise depends upon the sincerity of the people behind the enterprise. If a person
is sincere about his venture, he will move heaven and earth to make it a success.
3. Prudence: A successful entrepreneur must be prudent in all his dealings. He should have the
ability to work out the details of the venture from all angles, assess the favourable factors and pitfalls
and take suitable measures to overcome the pitfalls.
4. Achievement Motivation: The achievement motivation is the most important characteristic of
an entrepreneur since all other characteristics emanate from this motivation. He must have a strong
desire to achieve high goals in business. In fact, this achievement motivation helps him to surmount the
obstacles, suppress anxieties, repair misfortunes and devise plans for success.
5. Self-reliance and Independence: A successful entrepreneur wants to follow his own routine
policies and procedures and he does not like to be guided by others. He is found to be self-reliant by
acting as his own master and making him responsible for all his decisions. He does not like to work for
others.
6. Highly Optimistic: Successful entrepreneur is always optimistic about his future and he is
never disturbed by the present problems. He always expects a favourable situation for his business and
hence, he is able to run his business successfully in the midst of temporary hurdles. He does not allow
the past to obsess him.
7. Keen Foresight: An entrepreneur must have keen foresight to predict the future business
environment. He has the capacity to visualise the likely changes to take place in the market, customer’s
attitude, technological developments, Government’s policy, etc., and take timely actions accordingly.
8. Planning and Organising Ability: An entrepreneur is a firm believer in planning and systematic
work. Above all, he must have the ability to bring together all scattered resources required for starting
a new venture.
9. Innovativeness: When all is said and done, innovation becomes a different task. One should
be always innovative to satisfy the varying demands of customers. For this purpose, the entrepreneur
should initiate research and innovative activities to produce new goods and services. It is a never
ending process.
10. Risk Taking: An entrepreneur is not a gambler and hence, he should not assume high risk.
However, he must love a moderate risk situation, high enough to be exciting, but with a fairly reasonable
chance to win.
11. High Level of Energy: Entrepreneurs are more energetic than the average person. That
energy may be a critical factor, given the incredible effort required to start a company. Long hours and
hardwork are the rule rather than the exception.
12. Maintenance of Public Relations: The extent of maintenance of public relations or human
relations has a vital role to play on the success or failure of an entrepreneur. A successful entrepreneur
must have cordial relations with his customers to gain their continued patronage and support. He must
also maintain good relations with his employees with a view to motivating them to higher levels of
4 Entrepreneurship Development

efficiency. Similarly, he must maintain good relations with his suppliers, creditors and the community
at large so that he may succeed in his venture.
13. Communication Skill: Communication skill is the secret of the success of most entrepreneurs.
Good communication skill enables them to put their points across effectively and with clarity and
thereby, helps them to win customers.

Functions of an Entrepreneur
An entrepreneur is an agent who buys various factors of production with a view to combining
them into a finished product which can be sold in the market. While doing so, he has to perform the
following basic functions:
1. Risk Assumption Function
2. Business Decision Making Function
3. Managerial Function
4. Function of Innovation
1. Risk Assumption Function: An entrepreneur has to necessarily act as a ‘risk-bearing’ agent
of production since he has to bear a greater amount of uncertainties in business. The term uncertainty
refers to more than an ordinary risk. Ordinary risk can be measured and insured whereas, risk due to
uncertainty cannot be insured and it is incalculable also. For instance, risks due to the possibility of
changes in the taste of customers, change in fashion and technique of production, new inventions,
etc., cannot be ensured. But, an entrepreneur has to undertake and face such uncertainties. The
entrepreneur assumes this risk and tries to reduce these uncertainties by his initiative, skill and admirable
ability.
2. Decision Making Function: From the very inception of the business till its development, an
entrepreneur has to take decisions at various stages. He has to decide the nature and type of goods to be
produced, the size of the business, its location, technique of production, etc. A successful entrepreneur
is one who takes sound decisions at the appropriate time so that his business may succeed.
3. Managerial Function: An entrepreneur has to perform the managerial functions also. Managerial
functions are nothing but functions of coordination, organisation and supervision. An entrepreneur is
one who combines the land of one, the labour of another and the capital of yet another, and thus,
produces a product. While undertaking an enterprise, he has to perform all managerial functions starting
with planning and ending with controlling.
4. Function of Innovation: Innovation is an important function of an entrepreneur. In this context,
one should know the distinction between an investor and an innovator. The person who discovers new
methods, new materials and machines is called an inventor. But, the person who utilises these inventions
so as to make new combinations of products is called an innovator. Innovation is a never-ending
process and in fact it is an ongoing function. Thus, an entrepreneur has to be always on the lookout to
introduce a new product or a new production technology or open a new market hitherto untapped or
discover a new source of supply of new material. Innovators are always successful in their ventures.
Entrepreneur 5

Innovation involves introducing something new. It is not a simple imitation, but an addition however
slight it may be.

Four Types of Innovation

Incremental Innovation
This builds on an existing idea or model, product, process or service but innovates a bit on it. The
effect is to lower the cost and increase the supply or availability. Generic bulk drugs made in India
using a route different from the original is an example.

Evolutionary Innovation
Here, the innovator builds on what is known and creates significant new value. It is the next step
to incremental. The innovation driver is market leadership. Tata Nano exemplifies this well.

Breakthrough Innovation
This involves the creation of a radically new product, service, process or business model.
Breakthroughs or novel products that are derived from experimental innovation.
The electric car Reva exemplifies this. The innovation driver here is new technologies that arise
from existing information, methods and tools.

Experimental Innovation
It is close or identical to invention. The driver here is the next practice.
— Kiran Mazumdar of Biocon Ltd.
Frugal Innovation
The ability to generate more business and social value by significantly reducing the use of scare
resources is known as frugal innovation. Resource scarcity can be a catalyst for such innovation. At
the current rate of consumption, it is estimated that by 2030 we would require two planets to supply
the resources we need and absorb the wastage. Hence there is an urgent need for innovation to reduce
the use of scarce resources.
An entrepreneur not only conceives the business idea but also combines various factors of
production such as — men, money, machines, and methods so as to get finished products which can
be sold in the market. While doing so, he performs the following functions:
1. Idea Generation and Choosing the Right Time to Business: Idea generation implies product
selection and project identification. Ideas can be generated through various sources such as
project profiles, industries, potential surveys, new product development in research laboratories,
export statistics, probability studies of selected industries, trade fairs and exhibitions, etc. It is
the function of an entrepreneur to generate as many ideas as he can from various sources for
the purpose of selecting the right line of business which can be converted into a viable business
venture.
6 Entrepreneurship Development

2. Determination of Business Objectives: Determination of the objectives of the proposed

business is the next function. An entrepreneur should decide the nature and type of business
he proposes to start. This implies whether the enterprises belong to a manufacturing unit,
service-oriented one or trading. An entrepreneur must be very clear about the nature of business.
3. Market Research: The success of any business depends upon its ability to market its products/
services. Hence, an entrepreneur should undertake market research to estimate the demand
and supply for the products, size of customers, future changes in the volume and patterns of
supply and demand for the product, etc.
4. Determination of Form of Organisation: The entrepreneur has to decide the form of
ownership/organisation for its new enterprise. The main forms of organisation are sole
proprietorship, partnership and joint stock company. An entrepreneur has to decide the
organisation based on one’s capacity to take decisions and bear the risk, the nature of business,
volume of investment, quality of human resource, size and area of operation.
5. Promotional Formalities: Completion of promotional formalities such as obtaining registration
certificate, clearances, submitting application for term and working capital loan and the like
are the next functions of an entrepreneur.
6. Raising of Funds: Finance is the most important prerequisite to start a business. An entrepreneur
has to raise funds for purchase of fixed capital as well as working capital. He must be aware
of its various sources of funds, government schemes and type of assistance provided by
financial institutions.
7. Procurement of Machinery: Procurement of machinery constitutes an important function
of an entrepreneur. He should be careful in the selection and purchase of equipment and
machinery.
8. Procurement of Raw Materials: An entrepreneur has to ensure timely and adequate availability
of raw materials for continuous production. He must identify the cheap and regular source of
supply of raw materials.
9. Recruitment of Staff: Recruitment of persons of various cadres such as skilled and unskilled
workers, supervisors, etc., and giving necessary training are the other functions of an
entrepreneur.
10. Implementation of the Project: The project identified is to be implemented in a time-bound
manner by the entrepreneur. The function of the entrepreneur is to accomplish all activities
from conception stage to commissioning stage in accordance with the schedule successfully.

Entrepreneur vs. Manager

Many people are of the view that the terms entrepreneur and manager means the same. It is a
wrong notion since one can find a lot of differences between these two as given below:
Entrepreneur 7

Entrepreneur Manager
1. Owner: An entrepreneur is the owner of the 1. Servant: A manager is acting in the capacity
enterprise which he establishes himself. of a servant in the enterprise.
2. Profit: The reward for an entrepreneur is 2. Salary: The reward for a manager is salary
profit which is highly uncertain. and his salary is certain and fixed.
3. Full risk bearing: As a owner, the 3. No risk bearing: As a servant, the manager
entrepreneur has to bear all risks and need not bear any risk involved in the enterprise.
uncertainties involved in running the business.
4. All functions: An entrepreneur has to 4. Managerial functions only: A manager
perform many functions in order to run the renders only the managerial services in an
enterprise successfully. enterprise.
5. Innovator: An entrepreneur mainly acts as 5. Executor: A manager mainly acts as an
an innovator and prepares plans for execution. executor of plans prepared by the entrepreneur.

Intrapreneur/Corporate Entrepreneur
In recent times, a new brand of corporate entrepreneurs called “intrapreneurs” has come into
picture. Since they emerge within the frontiers of an existing enterprise, they are called intrapreneurs.
“In” refers to “within.” In big organisations, the top executives with entrepreneurial talents are encouraged
to generate new ideas and then convert them into products through research and development carried
out within the organisation itself. If the talent inside an organisation is recognised the entrepreneur
could avoid stagnation and decline in his enterprise.
This concept of intrapreneurship has gained much popularity in developed countries like America.
If the managements are not receptive to their new ideas, they tend to leave their parent organisation and
start ventures of their own. When Steve Wozniak could not get his dream of making a small computer
fulfilled at Hewlett Packard, he left that popular company. He then teamed up with Steve Jobs to form
Apple Computers which has subsequently become a prestigious organisation. It is found that many of
such intrapreneurs have become exceedingly successful in their ventures to the extent of even causing
a threat to their parent organisation. Generally, intrapreneurs breed new and innovative ideas to the
entrepreneurs.
Companies should provide intrapreneurs with adequate financial resources and freedom so that
their ideas can be developed. Hence, selected top executives should be given a status within the
organisation similar to that of an entrepreneur in the society. What drives talent within an organisation
is not monetary gain, but, a deep desire of personal achievement. Thus, an intrapreneur is an individual,
who performs all the duties of an entrepreneur, but within an established organisation.
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Characteristics
Understand the Environment: An intrepreneur needs to understand all aspects of the environment.
To establish successful intrapreneurial venture, the individuals must be creative and have broad
understanding of the internal and external environments of the corporation.
Visionary: The person who is going to establish new intrepreneurial venture must be a visionary
leader — a person who has great dreams. The intrapreneur must have a dream and overcome all the
obstacles in achieving it.
Flexible and Create Management Options: An intrapreneur must be open to and even encourages
change. By flexibility, he can create something new in the organisational structure.
Encourage Teamwork: The intrapreneur must possess the ability to encourage teamwork and
use a multidisciplined approach.
Encourage Open Discussion: Open discussion must be encouraged in order to develop a good
team for creating something new. A successful new intrapreneurial venture can be formed only when
the team involved feels the freedom to disagree and to agree to an idea, in an effort to reach the best
solution. The degree of openness among the team depends on the degree of openness of the intrapreneur.
Build a Coalition of Supporters: Openness also leads to the establishment of a strong coalition
of supporters. The intrapreneur must encourage each team member, particularly during difficult times.
This encouragement is important as it helps to establish a new intrapreneurial venture.
Persistence: Frustration and obstacles will occur throughout the establishment of a new venture.
Only through the intrapreneur's persistence, will a new venture be created successfully.
The differences that exist between these two types of business leaders are given below:

Entrepreneur Intrapreneur

1. Independent: An entrepreneur is an 1. Dependent: On the other hand, an

independent person in his business operations. intrapreneur is completely depending on the
entrepreneur for everything in the organisation.
He cannot take any decision by himself.
2. Need not be highly educated: It is not 2. Highly educated: An intrapreneur enters into
necessary that an entrepreneur should have a an existing organisation with a high education
high education. He can learn everything by and qualification. He is indeed a business
experience provided he has the basic qualities specialist in the chosen field.
of a successful entrepreneur.
3. Fund raising: An entrepreneur himself 3. No fund raising: An intrapreneur is
raises funds necessary for starting and completely free from the botheration of raising
establishing his enterprise. funds.
4. Risk bearing: An entrepreneur has to bear 4. No risk bearing: An intrapreneur need not
all the risks involved in the business by himself. bear any risk involved in the business.
Entrepreneur 9

5. Routine work: An entrepreneur is more 5. Specialist: An intrapreneur acts as a specialist

concerned with doing routine work and in his chosen field and serves as an outside
sometimes he may not know the important professional.
details of his own business.
6. Operation from outside: An entrepreneur 6. Operation from inside: But, an intrapreneur
always operates from outside. The owner is operates from within the organisation itself. He
different and the enterprise he owns is different. is a part and parcel of the organisation.
7. Strong authoritarian: Generally, an 7. Less authoritarian: On the contrary,
entrepreneur operates with a strong intrapreneur is less authoritarian. He is more
authoritarian backup. “adaptable” in the organisation.

Copreneurs
Copreneurs are married couple who share ownership, commitment and responsibility for a business.
The concept of married couples working together in a business is as old as the family itself. In recent
times, there is a steady rise in the number of copreneurial ventures all over the world. It has been
proved that marital satisfaction increases when both husband and wife are emotionally supportive of
each other's career.

Types of Entrepreneurs
There are various ways by which entrepreneurs have been classified. Different authorities have
classified entrepreneurs differently at different times. The most popular classification has been given
by Clarence Danhof on the basis of his study of the American agriculture. According to him,
entrepreneurs may be classified as follows:
1. Innovative Entrepreneur
2. Adoptive or Imitative Entrepreneur
3. Fabian Entrepreneur
4. Drone Entrepreneur
1. Innovative Entrepreneur: An innovative entrepreneur is one who is able to foresee potentially
viable and profitable opportunities through innovation. This type of entrepreneur is highly motivated
and talented and “innovation” is his key function. According to Peter F. Drucker, an innovating
entrepreneur is one “who always searches for change, responds to it, and exploits it as an opportunity.”
He creates new values or increases the value of what already exists.
An innovative entrepreneur may exhibit his talents of innovation in any one of the following forms:
z Introduction of a new product or introduction of a new quality of an existing product.
z Introduction of a new method of production.
z Opening of a new market.
10 Entrepreneurship Development

z Discovery of a new source of supply of raw materials or semi-finished goods.

z Reorganisation of the enterprise so as to achieve monopoly or to break up the monopoly
position.
One should not confuse the terms ‘innovator’ and ‘inventor’ at this juncture. An entrepreneur is
not an inventor. An inventor discovers new methods and new materials. But an innovator commercialises
these inventions to produce new and better goods. Thus, an innovating entrepreneur implements the
inventor’s ideas.
2. Adoptive or Imitative Entrepreneur: Imitative entrepreneur is one who is ready to adopt the
successful innovations already introduced by innovating entrepreneurs. In other words, an imitative
entrepreneur does not innovate anything by himself, but he only imitates techniques and technologies
innovated by others. He follows the innovators after carefully observing the extent to which their
innovation has been successful. For example, the Cochin Shipyard has been constructed by using the
innovative technology provided by the Mitsubishi Heavy Industries Ltd., of Japan.
This type of entrepreneur has a vital role to play in developing countries. Innovative entrepreneurs
are scarce in developing countries. To add fuel to fire, there is also a problem of scarcity of capital and
skilled labour in these countries, which hinder innovative entrepreneurship. In this context, the imitative
entrepreneur fills up this gap admirably by simply imitating the technology, skill and technique already
developed by innovative entrepreneurs in developed countries. Hence, developing countries need imitators
who are responsible for the development of their countries with the limited resources available in these
countries.
3. Fabian Entrepreneur: Fabian entrepreneur is one who adopts a great caution and scepticism
in introducing any change in the business. Normally, he has neither the will to introduce any new
changes nor the desire to adopt new methods. He is ready to imitate only when it becomes perfectly
clear that failure to do so would definitely result in heavy loss for him. He is dominated more by
customs, religions, traditions and past practices and he is not ready to take any risk at all.
4. Drone Entrepreneur: Drone entrepreneur is one who blindly follows the traditional methods
of production even when it causes loss to him. He is not prepared to introduce any change under any
circumstances in the method of production he has already introduced. He continues to carry out his
business in the traditional way even when he suffers losses. For example, the coir industry in Kerala is
dominated by drone entrepreneurs.

Cole’s Classification
Arthur H. Cole classifies entrepreneurs as follows:
1. Empirical Entrepreneur,
2. Rational Entrepreneur and
3. Cognitive Entrepreneur
Entrepreneur 11

1. Empirical Entrepreneur: An empirical entrepreneur is one who never introduces anything

revolutionary in his method of production or business. He simply follows the principle of rule of
thumb. He is similar to a drone entrepreneur.
2. Rational Entrepreneur: A rational entrepreneur is one who is ready to introduce even
revolutionary changes on the basis of the general economic conditions prevailing in that area. He takes
rational decisions by himself depending upon the situation.
3. Cognitive Entrepreneur: A cognitive entrepreneur is one who takes the advices and services
of experts and introduces changes. Since he acts on the advice of experts, he is called a cognitive
entrepreneur.
The entrepreneurs may be classified on the basis of type of business, use of technology and on the
basis of motivations.

On the Basis of Type of Business

On the basis of type of business, the entrepreneurs can be classified as follows:
1. Trading Entrepreneur: An entrepreneur who undertakes trading activities only is called trading
entrepreneur. He identifies potential markets, and creates demand for his chosen product line.
2. Industrial Entrepreneur: An industrial entrepreneur is a product-oriented person who starts
his industrial unit for manufacturing some new products.
3. Business Entrepreneur: The business entrepreneur conceives idea for a new product and
create a business to materialise his idea into reality. He engages in both production and marketing
activities.
4. Agricultural Entrepreneur: These entrepreneurs undertake agricultural activities. They raise
the productivity of agriculture through modernisation and application of modern technology.

On the Basis of Use of Technology

1. Technical Entrepreneurs: The entrepreneurs who are technically qualified or experienced are
known as Technical Entrepreneurs. Engineering graduates, diploma holders from polytechnic, etc.,
who use their technical knowledge in production techniques and persons with experience who use
their skills in production process, when they start their venture, are technical entrepreneurs.
2. Non-technical Entrepreneurs: The non-technical entrepreneurs are concerned with the non-
technical aspects of business such as developing marketing and distribution strategies to promote sales
creating demand for their goods and services and the like.
3. Professional Entrepreneurs: These entrepreneurs take active part in establishing new
enterprises but never stay in the business for long time. Such entrepreneurs identify innovative ideas
and convert them into commercially viable projects. Once the business takes off, they sell out the
existing one and start new ventures.
 12

Classification of Entrepreneurs

On the On the On the On the On the On the On the Others

basis of basis of basis of basis of basis of basis basis of
type of use of motivation of growth stages of of scale gender
business technology development of enterprise and age

z Business z Technical z Pure z Growth z Classical z Small-scale z Men z Immigrant

Enterpreneur Entrepreneur Entrepreneur Entrepreneur Entreprenuer Entrepreneur Entre- Entrepreneur
z Trading z Non- z Induced z Super z Modern z Large-scale preneur z Urban
Entrepreneur technical Entrepreneur Growth Entreprenuer Entrepreneur z Women Entrepreneur
z Industrial Entrepreneur z Spontaneous Entrepreneur Entre- z Rural
Entrepreneur z Professional Entrepreneur preneur Entrepreneur
z Agricultural Entrepreneur z Bureaucratic
Entrepreneur z Hi-tech Entrepreneur
z Private Entrepreneur z Intrapreneur
Entrepreneur
z Public
Entrepreneur
Entrepreneurship Development
Entrepreneur 13

On the Basis of Motivation

Pure Entrepreneurs: Guided by motive, these entrepreneurs start new business, apply their business
skills and prove their excellence in business.
Induced Entrepreneurs: In order to motivate potential businessmen to start their own ventures,
the Central and State Governments provide facilities and incentives and offer subsidies in the form of
land at cheap rate, loans at concessional rate, tax exemption, supply of scarce raw materials, subsidy
on capital investment, etc. Induced by the incentives and concessions, the entrepreneurs set up their
own business units. Such entrepreneurs are called induced entrepreneurs.
Spontaneous Entrepreneurs: The inner urge and strong desire to become an entrepreneur,
drive people to start their own business. Such entrepreneurs have self-confidence and inborn talent to
run the business successfully. They set up their industrial units spontaneously with no motivation from
others or inducement from promotional agencies.

Other Classification
1. The New Entrepreneurs: Larry C. Farrell in his work “Searching for the Spirit of Enterprise”
has introduced a new type of entrepreneurs called “The New Entrepreneurs.” According to him, most
of the self-inspired entrepreneurs are very ordinary persons except a few. Most of them have emerged
as entrepreneurs only due to circumstances like being very poor; or full of frustration; or losing a job
and similar other reasons. They are basically very ordinary people who find themselves in extraordinary
situations in a later period and hence, they are called ‘The New Entrepreneurs.’
2. Academic Entrepreneurs: Teachers are referred to as academicians. If they design new
courses or make innovations either in curriculum or teaching methods or devise new methods of
teaching, they are called as academic entrepreneurs. They attract students by acting as academic
entrepreneurs and make the course programme viable and profitable.
3. Educational Entrepreneurs: In recent times, many entrepreneurs have come up with new
ideas to engage children during summer vacation. They have novel ways to keep youngsters busy
during vacations by organising a varieties of short-term courses to suit the varied requirements of
children and students. Many parents also prefer them because they believe that summer schools help in
occupying their children’s time in a fruitful way. These entrepreneurs are called educational entrepreneurs
and they have, in fact, changed the concept of the term vacation. Some of the prominent courses
organised are:
(a) Short-term courses on computer languages and electronics.
(b) Courses on marketing, export management, personality development, etc.
(c) Courses on fine arts like painting, music, flower arrangement, hairdressing, etc.
(d) Coaching classes for entrance examinations of professional courses.
4. Paper Entrepreneurs: After liberalisation, financial operations are taking place on a global
scale. A new class of entrepreneurs have emerged in this field also for buying and selling of shares,
buying and selling of companies, master-minding takeovers, mergers, etc. These entrepreneurs are
14 Entrepreneurship Development

actually indulging in financial speculation at the cost of actual production. In most cases, their offices
can be seen as independent of any national economy or Government. This type of entrepreneurs are
said to indulge in “paper entrepreneurship” and they are called paper entrepreneurs.
5. Ontrepreneur/Netpreneur: In these days of information technology, one can become an
entrepreneur very easily by launching ‘online business.’ The internet has changed the concept of
everything including the business. It has reduced the task of entering into a business. With a meagre
investment, any person can set up a website and look for potential customers in the line of business that
he offers. An individual who launches a new business or an innovation through the internet has been
called by Adam Bryant as the “Ontrepreneur” or “Online entrepreneur.” He can also be called
‘Netpreneur.’

Social Entrepreneur
A social entrepreneur uses his entrepreneurial talent to create positive social change value for the
society at large. A social entrepreneur has a unique ability to recognise the complexities of social-
environmental problems. He identifies situational multiplexity as factors that lead to innovative ideas
and make large-scale benefit to the society.
Commercial entrepreneurs identify and address unfulfilled market needs and wants. The motive is
to increase personal as well as shareholder's wealth. The social entrepreneurs identify and address
long-standing unsolved social problems. The innovation, competition and profits are driving force for
commercial entrepreneurs. Social entrepreneurs foster innovation and inclusiveness which enable them
to bring about a positive social change in the society.
Customer satisfaction, corporate social responsibility and brand image are the secondary goals of
corporate entrepreneurial ventures whereas, growth through economic sustainability and social change
are the secondary goals of social entrepreneurial ventures.
A social entrepreneur involves in all stages of the venture such as identification of social problem,
idea generation, implementation and evaluation. He is, therefore, a transformational leader. A commercial
entrepreneur involves in all stages of the venture such as identification of an opportunity, idea generation,
implementation and evaluation. He is a Transactional leader.

Designpreneurs
National Institute of Design, Hyderabad is meant to encourage entrepreneurs focussed on design.
It aims to foster a culture of entrepreneurship in designers so that they come with products and
services that will find a good response in the market. The objective is to create a new class of entrepreneurs
called designpreneurs.

Motivating Factors to Become Entrepreneur

There are varied approaches to understanding why some individuals decide to venture into
entrepreneurship. There are no well-defined psychological attitudes of profiles that all entrepreneurs or
characteristics to which entrepreneurs generally conform.
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The National Knowledge Commission Study confirms that there is no motivating factor that
triggers the decision to become an entrepreneur. The significant motivating factors are:
1. Independence – Freedom to do one’s own thing
2. Market opportunity
3. Family background
4. New idea
5. Challenge
6. Desire to become an entrepreneur.
According to the study, for female entrepreneurs, the ‘Independence’ as well as the identification of
'marketable idea’ are the most important motivators. Male entrepreneurs were found to be most significantly
influenced by ‘family background’ and ‘independence’.
‘Idea driven’ motivators are more significant for entrepreneurs above the age of 35. ‘Market
opportunity’ is a far significant motivating factor for the below-35 age group.
‘Independence’ is the powerful motivator for the first generation entrepreneur.
‘Market opportunity’ has become an increasingly significant motivating factor since the economic
liberalisation gathered momentum. It is the most important trigger for those with more than 10-year
work experience.

Entrepreneurial Competencies
Competence is a combination of knowledge, skill and appropriate motives or traits that an individual
must possess to perform a given task. The entrepreneur needs to have certain knowledge, skill and
traits to plan, implement and manage the small enterprises. All these characteristics put together is
known as competence.

Knowledge
Knowledge means the collection of information and retained facts that an individual possess and
also skills to translate that knowledge into actions.

Skill
Skill is the ability to perform functions that are related to attaining goal.

Motives and Traits

Motive is a recurrent concern for a goal which drives and directs behaviour of a person.
Trait is a quality which includes thoughts and psychological activities related to a general category
of events.

Kinds of Competencies
Competencies are of two kinds:
1. Hard-skill competencies
2. Soft-skill competencies