Unit- 1 : Introduction to Entrepreneurship

Prof. Aparajita Hembrom Dave

ENPA
Meaning; Scope and Importance of
Entrepreneurship
→ Evolution of Entrepreneurial Thought
→ Entrepreneurship as a Career Option
→ Functions; Characteristics & Skills of
Entrepreneurs
→ Entrepreneur vs. Manager
→ Creativity & Five-stage Creative
Process
→ Types of Entrepreneurs About the Chapter
→ Intrapreneurship: Concept & Types
OUTLINE
→ Entrepreneurship in different contexts:
Technopreneurship; Cultural Entrepreneurship;
International Entrepreneurship; Netpreneurship;
Ecopreneurship; Social Entrepreneurship
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Characteristics of entrepreneurship
These are few among many characteristics

Economic Activity
Profit potential
Related to innovation
Related to innovation
Risk-bearing
Value creation
Change agent
Dynamic process

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 Scope of entrepreneurship
• Entrepreneurship is the process of the development of
individual talents to provide a highly elastic supply of
entrepreneurial services. entrepreneurship is a combination
of the individual environment, sociocultural factors and the
support system.
• A wide area of interdisciplinary discourses are covered by
entrepreneurship i.e. Psychology, sociology, economics,
management, political science, commerce, history and other
social sciences. Different sociological, psychological, cultural
economic, managerial and life cycle theories highlight the
scope of discussion on the important and pioneering role of
entrepreneurship for the economic augmentation and
responses of social groups to the opportunities provided by
the commitment of the political system to industrialization.
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• In the words of Schumpeter, the task of
entrepreneurship is to reform or revise an invention or
more generally an untried technological possibility for
producing a new commodity or producing an old one
in new way by opening up a new source of supply of
materials or a new outlet for products.
Entrepreneurship as defined essentially consists in
doing things that are not generally done in the
ordinary course of business routine. According to
McClelland, “entrepreneurship involves doing things
in a new and better way it calls for decision making
under uncertainty if there is no significant uncertainty
and the action entrepreneurship it's not at all
involved”

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 Importance of
entrepreneurship
1.To the Individual

2. To the Society

3. To the Economy

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 Reduce capitalization
Capitalization is somewhat confusing for business owners because it has multiple meanings.
• Market capitalization, for example, refers to the market value of a company’s available shares.
• In accounting, capitalization occurs when an expenditure is recorded as an asset on the company’s
balance sheet rather than as an expense.
• In business, however, capitalization generally refers to the initial funding used to start or launch a
new business. Before your new business can begin producing goods or performing services for
customers, you’ll likely need to purchase a few things. Depending on the type of business you
operate, you may need to purchase inventory, insurance, office equipment and hire employees,
each of which is a business-related expense that requires a monetary investment. Capitalization is
simply the act of funding your new business so that you can cover and these other startup-related
expenses.

• Reduce capitalization: This is an era of capitalization. And capitalization rise because of some
massive entrepreneurs. But if we can develop entrepreneurship in large volumes, it can create
competition in the market and reduce capitalization.

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 What is Entrepreneurship?

It refers to a process of action an

entrepreneur undertakes
to establish his enterprise.

It is a creative and innovative

response to the environment

It is a process; how he works?

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In a nutshell, concept of entrepreneurship can be
understood as under:

• (i) Entrepreneurship involves decision making, innovation,

implementation, forecasting of the future, independency, and
success.
• (ii) Entrepreneurship is a discipline with a knowledge base
theory and is an outcome of complex socio-economic,
psychological, technological, legal and other factors.
• (iii) It is a dynamic and risky process.
• (iv) It involves a fusion of capital, technology and human
talent.
• (v) Entrepreneurship is equally applicable to big and small
businesses, to economic and non-economic activities.
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(vi) Different entrepreneurs might have some common traits but all of them
will have some different and unique qualities.
(vii) Entrepreneurship is a process. It is not a combination of some stray
incidents.
(viii) It is the purposeful and organized search for change, conducted after
systematic analysis of opportunities in the environment.
(ix) Entrepreneurship is a philosophy and is the way one thinks, one acts and
therefore it can exist in any situation, be it business or government or in the
field of education, science & technology.
(x) Entrepreneurship is a creative activity.
(xi) It is the ability to create and build something from practically nothing.
(xii) It is a knack of sensing opportunity where others see chaos and
confusion.
(xiii) Entrepreneurship is the attitude of mind to seek opportunities, take
calculated risks and derive benefits by setting up a venture.
(xiv) It is made up of activities to conceive, create and run an enterprise.
(xv) Entrepreneurship is a dynamic process of vision, change and creation.

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 Who is
Entrepreneur?

At least a Person

Who is a Person

Any Human Being

(but human are unique and critical)

Has own
i) thinking,
ii) working style and
iii) reaction after receiving

(may be right or wrong in one’s view)

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 Entreprendre

(derived from
French word)

which means to
initiate or
undertake

The word entrepreneur is approx. 180 years old, having come into
English from French in 1828

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Here is a chronological list of definitions:
• Richard Cantillon: Businessmen are non-fixed income
earners who pay known costs of production but earn
uncertain incomes,
• Jean-Baptiste Say: An businessman is an economic agent
who unites all means of production- land of one, the labour
of another and the capital of yet another and thus
produces a merchandise. By selling the merchandise in the
market he pays rent of land, wages to labour, interest on
capital and what remains is his profit. He shifts economic
resources out of an area of lower and into an area of
higher productivity and greater yield.
• Schumpeter: Businessmen are innovators who use a
process of shattering the status quo of the existing
merchandise s and services, to set up new merchandise s,
new services. TREY
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Here is a chronological list of definitions:
• Richard Cantillon: Businessmen are non-fixed income
earners who pay known costs of production but earn
uncertain incomes,
• Jean-Baptiste Say: An businessman is an economic agent
who unites all means of production- land of one, the labour
of another and the capital of yet another and thus
produces a merchandise. By selling the merchandise in the
market he pays rent of land, wages to labour, interest on
capital and what remains is his profit. He shifts economic
resources out of an area of lower and into an area of
higher productivity and greater yield.
• Schumpeter: Businessmen are innovators who use a
process of shattering the status quo of the existing
merchandise s and services, to set up new merchandise s,
new services. TREY
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Evolution of Entrepreneurial Thought

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Cantillon’s view on entrepreneurship
Cantillon distinguished between entrepreneurs with nonfixed incomes and employees with
fixed incomes. Cantillon considered the entrepreneurs as those who undertake to bear and
overcome uncertainty by investing, paying expenses and hoping for a return. Cantillon viewed
a wide slice of society as entrepreneurial because they bear uncertainty, including:

"All the other entrepreneurs, like those who take charge of mines, theaters, buildings, the traders by sea
and land, restaurateurs, pastry cooks, innkeepers, etc., as well as the entrepreneurs of their own labor
who need no capital to establish themselves, like journeymen artisans, coppersmiths, seamstresses,
chimney sweeps, water transporters, live with uncertainty and proportion themselves to their customers.
Master craftsmen like shoemakers, tailors, carpenters, wigmakers, etc., who employ journeymen
according to the work they have, live with the same uncertainty since their customers may leave them
any day."

He uses the example of the merchant that buys farm goods at the day's price thus incurring the risk of
higher or lower prices upon arrival and sale in the city. The risk is created by uncertainty about supply
and demand which always exists in a free city. Entrepreneurial uncertainty is a fact of the decentralized
world where prices are not set in advance by a monopoly. The theory recognizes the business cycle and
turbulence that is created by unforeseen circumstances or natural forces in an economy.

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Say’s view on entrepreneurship

• Jean-Baptiste Say, a French economist who first coined the word entrepreneur in
about 1800, said: “The entrepreneur shifts economic resources out of an area of
lower and into an area of higher productivity and greater yield.” One dictionary
says an entrepreneur is “one who undertakes an enterprise, especially a
contractor acting as the intermediary between capital and labour”.

• According to him it was entrepreneurs who sought out inefficient uses of

resources and capital and moved them into more productive, higher yield areas.
Simply put, entrepreneurs seek opportunities for profit and, by doing so, create
new markets and fresh opportunities. By constantly disrupting the balance of
competition, entrepreneurs prevent monopolies from forming and create a wide
diversity of products that keep consumers consuming and producers producing.

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Menger’s view on entrepreneurship
• Carl Menger is considered the founder of the Austrian school of
economics.

• He described the entrepreneur as a coordinating agent who is both a

capitalist and a manager. The entrepreneur owns resources and decides
how they will be used.

• Menger emphasized that entrepreneurs bear uncertainty and take

purposeful, decisive action according to the knowledge they have.

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Schumpeter’s view on entrepreneurship

• Entrepreneurship, as originally defined by Schumpeter, however, is much

more than just starting any new business. It is the introduction of truly
revolutionary changes in business methods and practices, including the
launching of outstanding new products, production techniques, and
organizational approaches. As such, through what Schumpeter termed its
“creative destruction,” entrepreneurship is the driving force of economic
progress. Thus, true entrepreneurs are the dynamic agents of change, the
visionaries who through their sheer ingenuity and diligence periodically
disrupt the conventional ways of doing business.
• The term creative destruction was first coined by Austrian economist Joseph
Schumpeter in 1942. Schumpeter characterized creative destruction as
innovations in the manufacturing process that increase productivity, describing
it as the "process of industrial mutation that incessantly revolutionizes the
economic structure from within, incessantly destroying the old one, incessantly
creating a new one.“
• To Schumpeter, economic development is the natural result of forces internal
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to the market and is created by the opportunity to seek profit. TREY
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Entrepreneurship as a Career Option
• A study conducted in 2013 by the International School of Entrepreneurship Education and
Development (ISEED) revealed that more than 87 percent of students surveyed aspire to become
an entrepreneur at one point in life, while about 90 percent believe that the country is full of
entrepreneurship opportunities.
Wage Employment Entrepreneurial Employment
Nature Self Saturating Self Generating
Scope Limited Unlimited
Orientation Routine types Creative
Status quo Innovative
Problem avoiding Problem solving
Dependent Independent decisions
Contribution Consumes national wealth Generates national wealth
Earning Fixed (Subsistence) Growing (Generating supplies)

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Types of Entrepreneurs
C. Danhof has broadly classified entrepreneurs into four types. These are discussed below.

1. Innovative Entrepreneur: In the early phases of economic development, entrepreneurs have the
initiative to start new ventures and find innovative ways to start an enterprise. Thus, innovative
entrepreneurs are those who introduce new products, new methods of production techniques, or
discover a new market or a new service, or re-organises the enterprise. It is the innovative
entrepreneurs who built the modern capitalism. They are commonly found in developed countries.
They are aggressive in nature who exhibit cleverness in putting attractive possibilities into practice.
• Example: Walt Disney started huge theme parks such as the Disney Land.

2. Imitative Entrepreneur: There is a second group, generally referred as imitative entrepreneurs.

They usually copy or adopt suitable innovations made by innovative entrepreneurs. They are
adaptive and more flexible. They are organisers of factors of production rather than creators. The
imitative entrepreneurs are also revolutionary and important. They contribute to the development
of underdeveloped economies.
Example: The local mobile companies use the same technology as big companies to manufacture
their products.

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Types of Entrepreneurs

• Fabian Entrepreneurs: The third type are the Fabian Entrepreneurs. Such entrepreneurs are
very shy and lazy. They are very cautious. They do not venture or take risks. They are rigid and
fundamental in their approach. Usually, they are second generation entrepreneurs in a family
business enterprise. They follow the footsteps of their predecessors. They imitate only when
they are sure that failure to do so would result in a loss of the relative position in the
enterprise.

• 4. Drone Entrepreneurs: The fourth type is the Drone Entrepreneurs, who refuse to copy or
use opportunities that come their way. They are conventional in their approach. They are not
ready to make changes in their existing production methods even if they suffer losses. They
resist changes. They may be termed as laggards.

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Intrapreneurship program
• Through this Google Intrapreneurship program, all the employees are empowered and encouraged to
spend 20% of their time on projects that interest them and that they think will benefit Google and their
customers. The Google “Innovation Time Off” Intrapreneurship program has a formal process for their
selection of entrepreneurial projects, for the formal evaluation process and the monitoring of each
Google approved entrepreneurial project. For a Google employee, to participate in the program, he/she
needs to submit a project proposal with a timeline. It is critical to note that several of Google‟s newest
products and services such as Gmail, Google news, Orkut and AdSense were all originated through this
program.
• In India also, Marico, manufacturers of Parachute Hair Oil, Saffola, Kaya Skin Clinic Industries have
institutionalised innovation awards, where they receive 30-40 entries every year for innovations across
the spectrum, including factories, brand, sales and HR, virtually covering the whole organisation. The
company believes that there will be failures and unless one is ready to fail, one can never succeed.
• Kinetic Engineering Limited is the flagship company of Firodia Group of companies, one of the
pioneering groups in automobiles in India, founded in 1972 by Mr. H. K. Firodia. The company
encourages employees to use their time efficiently for innovation in its upcoming products. The Kinetic
Zing model of bicycle was the idea of an employee working in the corporation.

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 Intrapreneurs/Corporate Entrepreneur
• An inside entrepreneur, or an entrepreneur within a large firm, who uses entrepreneurial skills without
incurring the risks associated with those activities. Intrapreneurs are usually employees within a company
who are assigned a special idea or project and are instructed to develop the project like an entrepreneur
would. Intrapreneurs usually have the resources and capabilities of the firm at their disposal. The
intrapreneur's main job is to turn that special idea or project into a profitable venture for the company.
Also called corporate entrepreneurship.
• Coined in the 1980’s by management consultant Gifford Pinchot, entrepreneurs are used by companies
that are in great need of new, innovative ideas. An Intrapreneur is someone who has an entrepreneurial
streak but chooses to align his/her talents with a large organisation in place of creating his/her own. To the
classic entrepreneur, this may be puzzling, but these are a growing class of 21st-century employees.

Difference Entrepreneur Intrapreneur

Dependency
Raising of funds
Risk
Operation

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Types of Intrapreneur- By Hans Schollhammer

INTRAPRENEURS

Administrative Opportunistic Incubative Imitative

Entrepreneurshi Acquisitive
Entrepreneurshi Entrepreneurshi Entrepreneurshi
p Entrepreneurship p
p p

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 Corporate Entrepreneurs/Intrapreneurship

• Administrative Entrepreneurship
• Opportunistic Entrepreneurship:
The entrepreneurial activity under this category is
• Ability to catch at the right time the fruits of the
centered around administrative techniques and functions.
internal as well as external technological
It gives a new option to handle prevailing or future
developments.
situations in a more effective way that provides
advantages and competitive edge. • Detecting at the very first time the promising
innovative achievements and taking the opportunity to
Total Quality Management, job redesigning, new
adopt the same for raising the quality, reducing the
techniques of doing things, participative management or
cost and thus marching ahead of many of the
management by consensus is a few of the examples of
competitors.
administrative entrepreneurship that increases overall
organizational efficiency and that nukes the firm • Environmental changes always offer new
successful and sustainable in the competitive market opportunities. But everybody is not equally capable of
environment. identifying and to utilize that opportunity on time.
This is in fact, the traditional R & D management • The entrepreneurship that identifies, exploits and
approach. It is the joint efforts of both the general executes the opportunity in the first hand regarded as
management and scientific-technical personnel to opportunistic entrepreneurship.
identify areas for R& D and the development of new
products, techniques, or the improvement of the existing
ones.

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• Incubative Entrepreneurship: • Acquisitive Entrepreneurship:
• The ability to initiate and nurture new venture • This is one kind of internal management ability
developments within the original company with special to acquire a business competitor’s technical
care. capability.
• This category of entrepreneurship generates new ideas • Acquisitive entrepreneurs make accelerated
and ventures within the organization.
growth, diversification through horizontal or
• It productively executes them and ensures material vertical integration by gaining access to others’
gain for the organization. technological developments.
• They pursue and help to get differentiated • The entrepreneurship that learns from other
technologies to promote creations and innovations like competencies is called acquisitive
Microsoft, Nokia, etc. always incubates new varieties
types of product and creates product differentiation in entrepreneurship.
the market. • It acquires something new of value front, the
• These venture development units are intended as competitive environment or achieves the
incubators for innovative, high-risk business endeavors competitors’ technical capacities. It keeps
and for providing an environment that is supportive of entrepreneurship sustainable in a competitive
entrepreneurial efforts. environment.

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 • Imitative Entrepreneurship:
• In essence, it is an innovative imitation and the internalization of externally made
technological developments.
• The entrepreneurship that imitates a good or service operating in the market under a
franchise agreement is the imitative entrepreneurship. It is the medium that spread
technology over the world.
• It adopts an existing technology in countries over the world. It also adopts an existing
technology with minor modifications appropriate to the local condition.
• For example, Sachin Bansal and Binny Bansal, founder of Indian e-commerce giant Flipkart,
adopted the business model of American e-commerce firm, Amazon (founded by Jeff Bezos).

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Creativity, Innovation, invention- CONCEPTS

Entrepreneurship is an act of identifying, evaluating, and exploiting opportunities to introduce new products/services,
processes, etc. that previously had not existed, through organized efforts of the entrepreneur. This concept involves
bringing ‘something new’ into this world thereby enabling an entrepreneur to embrace innovation and creativity
• Innovation and creativity happen to be very closely associated with each other. Creativity is known to play a crucial
role in the success of innovation.
• Innovation in a business sense is the introduction of novelty in a specific market or industry such as introduction of
new products/services, adoption of new processes of production or service delivery, identification of new sources
of supply in order to fulfill the needs of the customers.
• The goal of innovation is to continuously evolve and renew an enterprise with new or better products, efficient
processes or enhance business models thereby adding value to all their products, services, processes as well as to
their customers.
• It is the innovative factor, which distinguishes an entrepreneur from others. One of the traits of a successful
entrepreneur is his creativity which is applied in various aspects of a venture. This creativity, when coupled with the
assumption of risk leads to innovation.

INNOVATION RISK-TAKING
CREATIVITY ABILITY
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 INNOVATION Vs INVENTION

• An invention is referred to as the creation of a product or introduction of a process for the first time. For instance,
the first practical telephone was invented in 1876 by Scottish-born Alexander Graham Bell.
• Innovation on the other hand occurs if an individual improves on or makes a significant contribution to an existing
product, process, or service. Taking the example of the first iPhone which is a classic example of innovation. By
harnessing new technology Apple was able to bring a fundamentally new product to the market thus creating new
demand.

INVENTION The creation of something new Results in new knowledge

The transformation of an idea or Results in new

INNOVATION
resources into useful application product/services/processes…etc

Microprocessors were first invented by Ted Hopps along with his visionary colleagues at Intel. A microprocessor is
an advanced product component that has minimal use on its own as it is nothing more than a piece on a circuit
board. It is actually, what is done with the piece of the microprocessor where thousands of products, processes, and
services have evolved from the invention which required innovation.

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The process of Creativity- David Holt

PREPARATION INCUBATION
IDEA GERMINATION
(Conscious search for (Subconscious assimilation
(Seeding stage of a new idea)
knowledge) of information)
RECOGNITION
RATIONALISATION FANTASIZING

VERIFICATION ILLUMINATION
(Application or test to prove (Recognition of an idea as
that idea has value) being feasible)
VALIDATION REALISATION

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Revision
• the term entrepreneurship is derived from ----------- words entre and prendre
• The term entrepreneurship first appeared in the year ---------------------
• In the modern context the term entrepreneurship is supposed to have been used for the first time by ---
---------
• Mark Zuckerberg founder of social networking site Facebook is a ------------------------
• entrepreneurs have been classified into innovative imitative Fabian and drone entrepreneurs by-------------
• which of the following is not an element of entrepreneurship
• A. opportunity b. family background c. innovation d. none of this

• Innovation Results in new products, service or

processes

• When creativity leads to the implementation of a new to the world product that is something that has
never been done or heard of it in the past which is called an -------------------------------

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 Revision
• --------------------------------- Is the process of introduction of novelty in a specific market on industry such as the
introduction of new products or services in the market, adaptation of new processes of production of service,
delivery in order to fulfil the needs of the customers.
• The process of creativity occurs from five different phases, they are -----------------------------
• In a family business the ----------------member occupies the highest decision-making post. and channelize is the forms
policies in the mutual interest of the family and business.
• In the context of entrepreneurship stimulation means to providing -----------------to budding entrepreneurs.
• the importance of -------------- lies in the fact that this activity provides an entrepreneurial spark and arouses the
interest in entrepreneurship among individuals.
• ------------ Show the funds required for the acquisition of the assets that are to be used over and over for a long
period of time.
• ------------------ Refers to the process which provides a nurturing informative and reassuring environment for the
entrepreneurs during the critical stages of starting a new business venture.
• ----------------- are usually high net worth individuals who happened to invest their personal wealth in small or medium
scale business start-ups often exchange foreign ownership stake in the organization.

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