UNIT - 5
ENTREPRENEUR
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
Ideas drive Economies, no wonder that Innovation &
Entrepreneurship are often seen as inseparable.

Science & Technology Students have to be Motivated &
Trained to “Think Out Of The Box” so that an Entrepreneurial
Culture is Built. The Ones feasible Ways of doing Business are
no longer Guarantees for Future Economic Success, hence, the
Govt’s around the World have started to realize that
Entrepreneurship & Innovation need to be encouraged in order
to sustain progress & improve a Country’s Economy.
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
Entrepreneurs are responsible for Industrial
Development & the fruits of Industrial
Development are greater Employment Opportunities
to the Unemployed, Increase in Income Levels of
People, Improvement in Standard of Living,
Increased Revenue to the Government in the form of
Direct & Indirect Taxes & Balanced Regional
Development.

India needs Entrepreneurs for Two Reasons :
1) To Capitalize on New Opportunities & to
Create Wealth.
2) To Create Wealth & New Jobs.
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1)
Peter F. Drucker defines Entrepreneur as One
Who Always searches for Change, Responds to it &
Exploits it as an Opportunity. Innovation is the
Specific Tool of Entrepreneurs, the Means by which,
they Exploit Change as an Opportunity for Different
Business or Service.
2)
Encyclopedia Britannica defines an
Entrepreneur as an Individual who bears the Risk of
Operating a Business in the Face Of Uncertainty
about the Future Conditions.
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3) International Labor Organization (ILO) : This
defines “Entrepreneurs as People who have the
Ability to See & Evaluate the Business Opportunities
; together with the necessary Resources to take
Advantage of them ; & to initiate Appropriate Action
to ensure Success.”
4) Dr. Poornima M. Charantimath, Professor,
Management Studies, KLS Institute of Management
Education & Research (IMER), Belgaum says “ The
World Entrepreneur is derived from a Sanskrit Word
called “Antaraprerana” ! (Urge from within or
Internal Urge).
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5) Francis A. Walker observes that the True
Entrepreneur is one who is endowed with more than
Average Capacities in the Risk of Organizing &
Coordinating the Various other factors of Production.
He is a Pioneer & Captain of Industry.
6) E. E. Haggen defines “Entrepreneur is an
Economic Man who tries to Maximize his profits by
Innovations. Innovations involve Problem Solving &
the Entrepreneur gets satisfaction from using his
Capabilities in Attacking Problems.
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
Conclusions : Definitions of an “Entrepreneur” are
divided into 3 Streams :
1) The Ones describing Roles of an Entrepreneur.
2) The Other describing Characteristics &
3) Ones Focusing on Success Factors.
Summarizing, the Entrepreneur can be described as a
Person (a) Who carries out a Role in the Economic World by
creating Added Value & who bears the Risk & Responsibility.
(b) One with a Combination of Specific Personal
Characteristics (Creative, Innovative, Dynamic etc.)
Two Conditions seem to be Vital in Order to become an
Entrepreneur : The Will to Succeed, Achieve etc., and
Opportunities for Creating Value, Innovation etc.
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
He is a Person who creates Enterprise. The Process
Creation is called as “Entrepreneurship”.

This evolved from the French Word “Entreprende”
in the 12th Century. In the early 16th Century, it was
applied to those who were engaged in Military
Expeditions. In the 17th Century, it was extended to cover
Civil Engg Services. In the 18th Century, Richard
Centillon described Entrepreneur as “One Who Bears
Risk by buying at Certain Prices & selling at Uncertain
Prices” which is closer to the Terms as Applied Today.
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In 1848, the famous John Stuart Mill described
Entrepreneurship as the founding of a Private Enterprise. This
encompassed Risk Takers, the Decision Makers, & the
Individuals who desire Wealth by Managing Limited
Resources to create New Business Ventures.
Joseph Schumpeter (1934) stated Entrepreneur as one who
applies “Innovation” within the Context of the Business to
satisfy Unfulfilled Market Demand.
Peter F Drucker perceived Entrepreneurship as the
Creation of a New Organization, regardless of its ability to
Sustain itself, let alone make a Profit.
Evolution of the Concept of Entrepreneur is considered
over nearly Four Centuries Old, the Characteristics of
Entrepreneurs being Risk Taking Innovation, Organization
Creation, Creating Value, Profit or Non Profit Growth,
Uniqueness & the Owner – Manager.
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
These Views about Entrepreneur can be classified into 3
Groups viz., Risk Bearer, Organizer & Innovator. These Views
have been discussed below :
1)
Entrepreneur as a Risk Bearer :
Richard Cantillon, French Economist was the first to
introduce the term “Entrepreneur” & his Unique Risk Taking
Function in Economics in the early 18th Century. Entrepreneur is
One Who Buys Factors of Production at Certain Prices in Order to
Combine them into a Product with a View to Sell it at an Uncertain
Price. He illustrated a Farmer who pays out Contractual Incomes
which are certain to the Landlords & Laborers & sell them (the
Produce) at an Uncertain Price.
So also the Merchants who make Certain Payments in
expectation of uncertain receipts. Thus, they too are “Risk
Bearing” agents of Production.
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Thus, we can say that “Entrepreneurs” are a
Specialized Group of People who bear Uncertainty.
Uncertainty is defined as a Risk which cannot be
insured against & cannot be Calculated. Thus,
“Entrepreneur” is a Economic Functionary who
undertakes such a Responsibility of Uncertainty which
by its very nature cannot be Insured, nor Capitalized
nor Salaried too.
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2) Entrepreneur as an Organizer :
Entrepreneur is associated with the functions of
Coordination, Organization & Supervision. He is a
Person who combines the Land of One, labor of the
Other, & the Capital of Yet Another & thus produces a
Product.
By Selling a Product in the Market, he Pays
Interest on Capital, Rent on Land, & Wages to Laborers
& What Remains is his Profit. According to Jean - Baptist
Say, in the Course of Undertaking a Number of Complex
Operations like Obstacles to be surmounted, Anxieties to
be Suppressed, Misfortunes to be Overcome, &
Expedients to be devised, Three more Implicit Factors are
deemed to be essential which are as given below :
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1) Moral Qualities for Work Judgement,
Perseverance & a Knowledge about the Business
World.
2) Command Over Sufficient Capital.
3) Uncertainty of Profits.
3) Entrepreneur as an Innovator :
Innovation can be perceived simply as the
Transformation of Creative Ideas into useful
Applications by combining Resources in New or
Unusual Ways to provide Value to Society for
Improved Products, Technology, or Services.
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By adding “Innovative” features to a Product
or Service, & Setting up a Business based on these
additional features to compete in the Existing Market,
New Entrants may be able to gain a Competitive
Edge over the Existing Market Players.
Another Study stated that “Entrepreneur” is One
Who Applies “Innovation” within the Context of
Business to Satisfy Unfulfilled Market Demand.
Entrepreneur is an Innovator who implements
changes within Markets thro carrying out of the New
Combinations which can take Several Ways as
follows :
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1) The finding of a New Market.
2) The finding of a New Source of Materials Supply.
3) The introduction of a New Product or a New
Standard of Quality.
4) The introduction of a New & Best Method of
Production.
5) The Opening of a New Kind of Business in an
Industry.
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Eg : Jeff Bezos, the Founder of Amazon, the Very
Successful Book Store. He was one of the first to Sell Books
on a Large Scale using an On Line Store & also patented the
One - Click System for Online Buying.
Though Selling Books is not an Innovation in itself,
Jeff Bezos was Innovative in the Use of the Internet then as a
Viable Marketing & Sales Channel for Selling Books.
To summarize, the Concept of Entrepreneur is
closely associated with the 3 Basic Factors – Risk Bearing,
Organizing & Innovating. Thus, an Entrepreneur can be
defined as a Person who Tries to Create Something New,
Organizes Production & in the Process Undertakes Risks &
Handles Economic Uncertainty involved in his/her Enterprise.
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
An Entrepreneur performs all the Functions
necessary, right from generating the Idea for his
proposed Enterprise where there is a Need, &
Opportunity exists up to establishing his Enterprise &
Subsequently Running it Successfully & Earn Profits.
The Functions are listed below in a Sequential
Manner :
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1) Generation of Business Ideas & Choosing the
Best Suitable Idea after Necessary Scanning. Many
Entrepreneurs keep an Eye for Opportunity & start by
finding a need & quickly satisfying it. This is the most
important function of an Entrepreneur, as subsequent
success or failure of his enterprise depends on his
decision at this stage. Therefore the Entrepreneur has to
exercise great care before deciding to choose a
particular Business Idea for his proposed Enterprise.
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2) Determination of Business Objectives i.e., What
he wants to achieve in his proposed Business
Enterprise.
3) Product Analysis & MR to make sure that there
is a Good Market Potential for the proposed Product /
Service.
4) Determination of form of Ownership /
Organization. i.e., Proprietorship / Partnership / Private
Limited Company.
5) Completion of Promotional Formalities , they
are :
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Identifying a Location.

Looking for a Suitable Land / Building in the
Proposed Location.
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Obtaining Provisional Registration (PRC) from
District Industries Centre of the District in which the
proposed Business is to be established.
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Preparation of Plant Layout & Building Plan, if
reqd to be constructed.

Taking effective steps for reqd infrastructural
facilities like Power, Water, Communication Facilities
etc.

Preparing a Detailed Project Report or
Business Plan.

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6) Making necessary arrangements for Finance to
implement the Project by approaching State Financial
Corporation for Long Term Loan & Banks for Working
Capital Loan.
In addition, Entrepreneur has to arrange his Own
Financial Resources as Equity or Margin Money for the
Project. This can be 25 to 30% of the Cost of the Project.
7)
Undertaking Building Construction, if Ready Shed is
not taken.
8)
Plant & Machinery : Ordering, Procuring, &
Installation.
9)
Getting Electrical Power Connection & Other Utilities.
10)
Arranging for Various Raw Materials & Consumables.
11)
Arranging Key Managerial / Supervisory Persons.
12)
Recruiting reqd Manpower viz., Skilled, Semi - Skilled
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& Helpers (Un – Skilled).
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13) Undertaking Trial Productions, Overcoming
Initial Teething Problems & Stabilizing the Production
Operations.
14) Commencing the Commercial Business
Operations.
15) Marketing the Products.
16) Taking Feedback from the Market for Customer
Satisfaction, because “Customer is the King”.
Effective Remedial Steps to be taken if there are
Customer Complaints on Quality, Performance,
Delivery Schedule etc.
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17) After Stabilizing the Commercial Business Operations,
Provisional Registration Certificate (PRC) issued by District
Industries Centre has got to be converted into Permanent
Registration Certificate (PMT) by filing the necessary reqd
Application.
18) All other Statutory Licenses / Registrations as per the
Govt Regulations have to be obtained during Implementation
& after Successful Commencement of Commercial
Production.
19) Approaching the District Industries Centre for Grant of
Concessions / Incentives as per the Govt Industrial Policy
Regulations. For this, the Entrepreneur has to fill up the
Necessary Forms & Submit the same to the District Industries
Centre with all the reqd Documents.
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20)
Entrepreneur has to always keep an Eye on
the Market Conditions & be prepared to innovate to
face the Competition because Market Conditions are
Fast Changing, Customer Needs are Changing.
Success today is No Guarantee of Success
Tomorrow.
21)
Entrepreneur should never be Happy about
his Achievement. He must always try for Growth &
Expansion of his Business Activities. He should Plan
at least 20 to 25% growth over his previous years
performance, because stagnation in Business leads to
sickness & slow death of his enterprise.
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22) Finally, a Very Important Function of an
Entrepreneur is dealing with People because
“Business is People.” An Entrepreneur has to
maintain a Very Cordial & Healthy Relationship with
his Managers, Supervisors, Workmen, Customers,
Materials, Suppliers, Vendors, Bankers, Financial
Institutions, Govt Officials & all those who are
connected Directly or Indirectly with his Business
Enterprise.
Now we can summarize that, the Functions of
an Entrepreneur have to incorporate Coordination of
the Business Management of the Enterprise, Risk
Taking, Controlling the Enterprise, Innovation for
Change, Motivation & Other Related Activities. In
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There are Different Types of Entrepreneurs &
so also the Important Classifications of
Entrepreneurs. Some of the Important Classifications
of Entrepreneurs & Different Types of Entrepreneur
in each Classification are enumerated below:
I)
Classification of Entrepreneurs based on
Functional Characteristics :
a) Innovative Entrepreneur.
b) Imitative or Adoptive Entrepreneur.
c) Fabian Entrepreneur.
d) Drone Entrepreneur.
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II) Classification of Entrepreneurs on the Development
Angle :
a) Prime Mover.
b) Manager.
c) Minor Innovator.
d) Satellite.
e) Local Trading.
III) Classification of Entrepreneurs based on Types of
Business :
a) Manufacturing.
b) Wholesaling.
c) Retailing.
d) Service.
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IV) Classification of Entrepreneurs as per the
Behavioral Scientists :
a)
b)
c)
d)
e)
f)
Solo Operators.
Active Partners.
Inventors.
Challengers.
Buyers.
Life Timers.
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I) a) Innovative Entrepreneurs : Such an Entrepreneur
introduces New Goods / Products / Services or New
Methods of Production or discovers New Markets or
Reorganizes his Enterprise. Entrepreneurs in this Group are
Characterized by an aggressive collection of information for
trying out Novel Combination of Factors. Such Entrepreneurs
do well when a certain level of development is already
achieved; they look forward to improve upon the Past.
b) Imitative or Adoptive Entrepreneurs :
Such Entrepreneurs do not Innovate themselves, but
Imitate or Copy Techniques & Technology innovated by other
Innovative Entrepreneurs. They are Characterized by their
readiness to adopt Successful Innovations by other
Entrepreneurs. They are particularly suitable for Under
Developed Regions as Adoption saves Costs of Trial & Error.
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c) Fabian Entrepreneur :
They display great caution & skepticism in
experimenting with any change in their Enterprise. They adopt
changes only when there is an imminent threat to the very
Survival of their Enterprise.
d)
Drone Entrepreneur :
These Entrepreneurs are characterized by a Die –
Hard Conservative Attitude. They do not easily seize
opportunities to make changes in their production techniques
or the Technology employed, even at the Cost of Low Returns
on their Investments compared to other similar enterprises.
Such entrepreneurs may even incur Huge Losses but they will
not be ready to make Changes in their existing production
techniques.
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II) a) Prime Mover : This Entrepreneur sets into
Motion a Powerful Sequence of Development,
Expansion & Diversification of Business.
b) Manager : Such an Entrepreneur does not
initiate Expansion & is content just Staying in
Business.
c) Minor Innovator :
He contributes to Economic Progress by
finding better use for Existing Resources.
d) Satellite : The Entrepreneur assumes a
Supplier’s Role & slowly moves towards a
Productive Enterprise.
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e) Local Trading : Such an Entrepreneur limits his
enterprise to the Local Market.
III) a) Manufacturing : Entrepreneur is involved in
Production of Value Added Goods by using Various
Inputs – Raw Materials, Consumables, Labor, Power &
Other utilities. Goods can be a Variety of Products like
Castings, Forgings, Soaps, Detergents, Various
chemicals, Textiles, Plastic Components, Footwear,
School Bags, Electronic & Electrical Items, Computer
Related Products etc. etc.,
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b) Wholesaling : An Entrepreneur with such a
Business sells Products to the Middle Men or Retailers.
c) Retailing : An Entrepreneur with such a
Business sells Products directly to the Consumer’s or
End Users.
d) Service : An Entrepreneur in this Business sells
Services & not the Products.
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IV) a) Solo Operators : Such Entrepreneurs
usually Work Alone & if needed at all, employ a few
employees to assist. Most of the Entrepreneurs begin
their Entrepreneurial Career in this fashion.
b) Active Partners : These Entrepreneurs start
their enterprise in Partnership. All the Partners
actively participate in the Operation of the Enterprise.
Entrepreneurs who only contribute funds to the
enterprise but do not actively involve in Business
Activity are called simply “Partners”.
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c) Inventors : Such Entrepreneurs with their Competence
& Inventive Nature, Invent New Products. Their Basic Interest
lies in Research & Innovative Activities.
d) Challengers : Such Entrepreneurs plunge into Business
because of the Challenges it Presents. When One Challenge is
satisfied, they will be on the lookout for New Challenges.
e) Buyers : Such Entrepreneurs do not wish to bear much
Risk. Hence, in order to reduce Risk involved in establishing a
New Enterprise, they wish to buy an Ongoing One.
f) Life Timers :Such Entrepreneurs take Business as an
Integral Part of their Life. Usually, the Family Enterprise &
Businesses which call for Personal Skills fall in this Category
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These “New Breed” of Entrepreneurs are emerging from
Big Companies.

In this Case the Entrepreneurial Spirit of Small Companies
is transferred to Big Companies.

Such Entrepreneurs of Big Companies are called as
“Intrapreneurs”, an Emerging Class of Entrepreneurs.

Intrapreneurship is a Method of Stimulating & then
Capitalizing on Individuals in an Organization who think that
something can be done differently & better.
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



There are strong similarities between “Intrapreneurs” &
“Entrepreneurs” as strongly contrasted with the Characteristics
of traditional Managers.
In Large Organizations, the Senior Level Executives are
encouraged to develop New Ideas & then convert their
innovative ideas into New Products thro Research &
Development Activities within the Frame Work of the
Organization.
This Concept of Intrapreneurship is gaining Great
Popularity in Developed Countries like the USA. In fact,
Increasing Number of Intrapreneurs are leaving their Jobs in
Big Organizations & are starting their Own Enterprises.
Many of such Intrapreneurs have become very successful in
their newly established enterprises & in fact are competing
with their Parent Organizations & are even posing as a
Business Threat to them.
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
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According to Peter F Drucker,
“Entrepreneurship” is neither a Science nor an
Art, it is a Practice.
It has a Knowledge Basis. Knowledge in
Entrepreneurship is a Means to an End, Indeed
what constitutes Knowledge in Practice is largely
defined by the Ends, that is by Practice.
There are Several Definitions of
“Entrepreneurship”, important ones being some of
the Following :
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1) It is a Purposeful Activity of an Individual or a
Group of Associated Individuals, undertaken to
initiate, Maintain or increase Profit by Production or
Distribution of Economic Goods & Services.
2) It is an attempt to Create Value thro
Recognition of Business Opportunity, the
Management of Risk Appropriate to Opportunity &
thro the Communicative & Management Skills to
mobilize Human, Financial & Material Resources
necessary to bring a Project to fruition.
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3) Entrepreneurship is the ability to create & build
a Vision from practically nothing. It is a Dynamic
Process of Creating Incremental Wealth.
4) According to One Study, the Definition is
“Entrepreneurship is based on Purposeful &
Systematic Innovation”. It includes not only the
independent businessman but also company direction &
managers who actually carry out innovative functions.
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Entrepreneurship can exist in Different Kinds
of Business, on all levels of Company size & in
different functions.
In all above definitions, Entrepreneurship refers
to the activities performed by an Entrepreneur in
establishing an Enterprise. We can therefore say that
Entrepreneurship is the Act of being an Entrepreneur.
It is a Process involving various Activities to be
undertaken to establish an Enterprise.
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The Two Basic Elements involved in
Entrepreneurship are “Innovation” & “Risk Bearing”.
These Two Factors are Given Below :
1) Innovation : This refers to coming out with a New
Product or Process or doing something differently. This
is a Basic Characteristic of Every Entrepreneur. There
are a Few Innovations & New Products developed as
given in the Egs below :
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
Egs : 1) “Bisleri” introduced Packaged Drinking
Water, every one was wondering whether this Business
Idea would ever succeed. Now you can see several
other Entrepreneurs have copied this idea & have set
up Enterprises to manufacture Packaged Drinking
Water. In fact, many of them have been successful too.
The reason being, People are Health Conscious & are
ready to pay Extra Money for sake of their Health.
Hence, a Good Market has developed for this Product.
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2) Introduction of “Taj Mahal Tea Bags” (Dip
Tea) for use by Travelling Public, by various Big
Manufacturers of Tea Powder.
3) Various Ready to Cook Packaged Food Items
introduced by “MTR” Ltd., Bangalore to cater to the
needs of Working Couples in Bigger Cities & Metros
& other Consumers.
4) The Rs 1.00 Lakh “Nano” Car released by
Tata Motors recently to meet the needs of 4 Wheelers
for the Middle Class people in the Country who
cannot afford Expensive Vehicles & who wish to
switch to 4 Wheelers from 2 Wheelers.
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From the above Egs, We can infer that the Entrepreneurs
need to innovate continuously to come out with Newer
products to meet the Changing Demands of the Customers.
2) Risk Bearing :
Any Business Proposition has an element of Risk, the
Reason being very obvious that, an Enterprise may Earn
Profits or Incur Losses because of Various Factors beyond the
Control of the Entrepreneur like Increasing Competition,
Labor Unrest. He needs to be Courageous to face the Risk &
Challenges involved in running the Enterprise. His ability to
Sustain Risk ultimately helps him to be a Successful
Entrepreneur, against All Odds.
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Introduction :
Down the Years, many Myths have been
created about Entrepreneurship. Some of the
Important Myths are :
1) Entrepreneurs are Born, not made.
2) All you need is Money to be an Entrepreneur.
3) All you need is Luck to be an Entrepreneur
etc.
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Such Myths do not hold good any more at present, as
Emperical (Experimental Study) have shown that
Entrepreneurs are made & can be developed thro a Process of
Entrepreneurship Development, Training & Activities.
Development of Entrepreneurship is a Key to achieve
overall Economic Development thro an increased level of
Industrialization. This is a Process in which Persons are
injected with Motivational Drives of Achievement & insight
to tackle Uncertain & Risky Situations especially in Business
Undertakings.
The Process of Entrepreneurial Development focuses on
Training, Education, Re Orientation & Creation of Conducive
& healthy Environment for the Growth of the Enterprises.
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This is designed to help a person in
strengthening & fulfilling his Entrepreneurial
Motive & in acquiring reqd skills & capabilities to
become a successful Entrepreneur.

Towards this end, it is necessary to promote
his understanding of Motives & Motivational
Pattern, their Impact on Behavior & Entrepreneurial
Value. A Program which seeks to do that can be
called an Entrepreneurial Development Programme
(EDP).

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EDP is primarily meant for developing those
First Generation Entrepreneurs who on their Own
cannot become Successful Entrepreneurs, it covers 3
Major Variables :
i) Location ii) Target Group iii) Enterprise
(Entrepreneurial Activities).
In fact, any one of the above three variables
can be used as a Starting Point for initiating &
implementing an EDP. The remaining Two then will
follow by making the proper synthesis with the first.
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
Eg 1 : If the Object is to develop Backward
North Karnataka Regions, then the Potential Target
Group & feasible Entrepreneurial Ventures must
follow.

Eg 2 : If the Objective is to Promote IT based
Enterprises, suitable Target Group & Location must
Match.
EDP by itself mainly aims at achieving
Specific Objectives of the Programmes & therefore
cannot create any Magical Result. It is a Continuous
Process of Training & Motivating & then to set up
Profitable Enterprises in Large Nos.
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The Models suggested for the Development of
Entrepreneurship fall into the Following Categories :
1) Psychological Models.
2) Sociological Models.
3) Integrated Models.
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Many Researchers, while Identifying Determinants of
Entrepreneurship, have given more importance to
Achievement Motives.
Change in Motivation is seen primarily as a Result of
Ideological Arousal of the Latent Need for Achievement
among Youths.
Hence Achievement Orientation has been identified as
the Key Variable in the Development of Entrepreneurship &
therefore, Mc Clelland suggests Motivation Training
Programme as the Policy Measure, which will make
Entrepreneurs really willing & eager to exploit the New
Opportunities Provided.
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
Another Model suggested by John Kunkel (1965)
for Entrepreneurship Development is a Behaviorist
Model. According to him, Entrepreneurial Behavior
is a Function of the surrounding Social Structure both
Past & Present & can really be influenced by
manipulating Economic & Social Incentives. Thus,
John Kunkel’s Model is based on the Experimental
Psychology, which identifies Sociological Variables
as the Determinants of Entrepreneurship
Development.
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Frank W. Young’s Theory of Entrepreneurship is a Theory of
Change based upon Incorporation of Relative Sub Groups in the
Society.
The Relativeness of a Sub Group which has a Low Status
in a Larger Society will lead to Entrepreneurial Behavior if the
Group has better Institutional Resources than others in the
Society at the same level.
Young’s Model of Entrepreneurship suggests that the
Creation of Supporting Institutions in Society as the Determinant
of Entrepreneurship.
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T.V Rao (1975) identifies the following factors as the
Determinants of Entrepreneurship :
a)
Need for motive is the Dynamic which, for the
Prospective Entrepreneur, has the greatest possibility of
achieving the Goals if one performs those activities.
b)
Long Term involvement is the Goal either at
thinking level or at activity level in Entrepreneurial Activity
that is viewed as a Target to be fulfilled.
c)
Personal, Social, & Material Resources which are
related to entry & success in the area of Entrepreneurial
Activity.
d)
Socio - Political System to be perceived as suitable
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for establishment & development
of his enterprise.
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All the above factors together, with their Optimal
Presence lead to the entry point of Entrepreneurship. This in
turn leads to acquisition of Material Resources &
Commencement of Business.
B.S Venkata Rao (1975) suggested the following Five
Stages for the Promotion of Small Entrepreneurs.
1)
Stimulation : The Stage includes the Creation of an
Industrial Environment, Policy Statement emphasizing the
Role of Small Enterprises in Economic Development, giving
Wide Publicity to Industrial Development Programmes &
Announcing Special Schemes & Promotion of Support
Organizations. This Stage is necessary to stimulate interest of
the Backward Regions in Industrial Activity & to create
awareness.
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2) Identification : This stage is necessary to
identify the prospective entrepreneurs such as Rural
Artisans, Skilled Factory Workers, Technocrats &
Graduates in Business Administration & Management.
3) Development : This Stage would include
Organization of Motivation & Managerial Training
Workshops along with Identification of Prospective
Projects, Locations for settling up these Enterprises &
giving Technological Inputs.
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4) Promotion : This Stage includes Govt
Policy Initiatives for promoting Small Entrepreneurs.
5) Follow Up : This Stage includes Reviewing
the Policies & Programmes of the Govt & Seeking
Follow Up with a View to making them more effective.
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Appropriate Design for Entrepreneurial
Development Programme :
They can be developed thro appropriately designed
Entrepreneurship Development Programmes based on 3
Entrepreneurial Development Models, Viz : Psychological
Models, Sociological Models, & Integrated Models.
These Programmes broadly envisage 3 Tiered Approach ;
Developing Achievement Motivation & Sharpening of
Entrepreneurial Traits & Behavior, Project Planning &
Development & Guidance on Industrial Opportunities,
Incentives & Facilities & Rules & Regulations & Developing
Managerial & Operational Capabilities. Various Techniques
have been evolved to achieve these Objectives keeping in
View the Target Groups & or the Target Areas.
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Methodology for Selection of the Prospective
Entrepreneurs & the support services after the
Training have a profound effect on the Success of the
Entrepreneurial Development Programme.
Stages in Entrepreneurial Development Process
(EDP) :
Entrepreneurial Potential
* All of us have Entrepreneurial Potential.
Degree might differ. It is just a matter of Developing
that Potential.
The 3 Main Stages of EDP are as follows :
1) Pre – Training : Identification, Selection &
Initial Motivation of Potential Entrepreneurs.
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2) Training of Potential Entrepreneurs ; &
3) Post – Training : Support & Follow – Up
Services.
Any successful EDP Strategy has to be
comprehensive & should avoid any exclusive or
lopsided preference for one or the other stage.
Stage – 1 : Pre – Training :
Three important aspects of work at the first stage
of an EDP are :
1) Selecting Potential Entrepreneurs.
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2) Target Groups.
3) Validation for Selection.
i)
:
Selecting Potential Entrepreneurs
The Entrepreneur Identification & Selection Mechanism
which precedes training is based on the following Key
Assumptions :
a) Not everybody can become an Entrepreneur must have
traits.
b) Such traits are identifiable & measurable thro some
psychological & behavioral tests supported by social indices.
c) People possessing these traits or showing evidence of
these traits (Entrepreneurial Aptitude) can be developed to
acquire necessary dimensions of Entrepreneurship.
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This has led to a 3 Step Selection Process which
begins with preliminary screening of those responding to
the intensive promotional effort undertaken in the
location by the Trainer – Motivator.
A specially devised form which screens out those
who are only casually interested in the Programme is
used for this purpose. It is followed by an assessment of
Candidate’s Entrepreneurial Trait level by applying
Behavioral Science Techniques. The process ends with
individual interviews for over all assessment about
candidate’s suitability to undertake Manufacturing
Activity or Business, together with an understanding of
his specific needs for Training.
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The Entrepreneurial Traits assessed in the
Course of Behavioral Tests include :
a) The Need to Achieve : This can be seen in an
Individual’s desire to compete with some standard of
excellence & success in performance.
b) Risk Taking : Entrepreneurs are found to have
an inclination to take Calculated, Moderate,
Intelligent Risks. They tend to avoid Extremes of
both Easy & Risky Situations.
c) Positive Self Concept : Includes Self
Confidence as well as Self-Efficacy (Success) & a
Positive Image of One’s Abilities & Achievements.
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d) Initiative & Independence :
Such people not only show initiative but also
Independence in their Day to Day Behavior. They
like to act on their own rather than Follow Directions.
e) Problem – Solving : A tendency to approach
problems in order to solve them.
f) Hopeful about Future : Despite
Dissatisfaction with Present Working Conditions.
g) An Interest in Environment Scanning : To
Seek Answers to present Questions.
h) Urge for Goal Setting & Time – Bound
Planning :
With Desire to fulfill Time Bound Plans.
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In the Selection Process, Persons Possessing a Minimum
(developable) level of Entrepreneurial Traits (Normally
decided by a Cut – Off Point in the Scores) are selected.
However, there are No Conditions of Minimum
Education & Length of Experience, Occupational Background
or Income.
Despite Good Training, Liberal Finance & other
supportive assistance, it is found that not everyone or anyone
can be successful in Industry. To Avoid Wastage of Scarce
Resources & for Optimal utilization of Limited Training &
Development Facilities, Inclination on Quality rather than on
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Quantity (Number) is deemed Critical
at the
first
stage in the
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Strategy.
ii) Target Groups :
The Large Target Groups are :
Technical & Non Technical Employees in
Industry, Trade & Commerce such as, Mechanics,
Machine Operators, Supervisors, Salesmen, Store
Keepers, Middle Level Management, Small Traders,
Fresh Graduates from Technical & Non Technical
Colleges, College Dropouts, Artisans & Craftsmen,
Govt Employees, Teachers, Ex Servicemen, Women,
Tribals & Under Privileged Castes.
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The Profiles of New Entrepreneurs reveal a Diverse Mix of
Characteristics in terms of Education (7th Standard to Post Graduation) ,
age (18 to 45), Occupation & Family Background (From Unemployed to
Doctors & Chartered Accounts or from Agricultural Workers to
Technicians) & Financial Position (Mostly Income of Rs 500 to Rs 3000
per Month).
This Diversity results from a Key Belief underlying the Programmes
foundation : that Latent Entrepreneurial Spirit is lying dormant in a wide
variety of men & women & that a desire to be on their own & to improve
their Economic lot is humane & well spread. Many, however, lack self
confidence & fail to come out of their shells.
Their enterprise is not fully developed or nurtured & the motivation
to take Risk is not strong enough, despite frustrations of their current
Economic Position, Employment or Occupation. Some need Opportunity
Counseling (What Business to take up), while others, the Information or
Know how for setting up an Industrial Enterprise. These needs are to be
met by a Comprehensive Entrepreneurship Development Programme
(EDP) by filling the Gaps in the Information, Motivation & Skill Base.
When & Where this Task has been performed effectively, many New
Entrepreneurs have been developed with Competence to Set Up &
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Successfully.
iii) Validation of Selection Process :
Preliminary findings of Studies (Gujarath Experience)
on the Validation of the Selection Process for EDP reveal as
under :
i) The proportion of those starting New Ventures from
amongst the rejected Applicants are quite low (17%) as
compared to the Group of Candidates Selected (44%).
ii) The Number of Persons involved in “Entrepreneurial
Movement” (i.e., those starting a Commercial or Industrial
Enterprise from a previous occupation as an Employee or
Unemployed) was much less (13%) among those rejected by
behavioral science tests than those rejected by the alternative
aid of Interviews alone (26%).
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Stage II : Training :
Training occupies a Central Place in the entire
EDP Strategy, but we have to careful about
Identification & Selection of Potential Entrepreneurs so
that training efforts are not wasted.
Moreover, we have again to be equally careful
to see that there is no further wastage for want of reqd
support & guidance after the Main Training if the
Objective viz., Setting up of New Ventures is to be
realized.
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Let us briefly discuss the same & basically divide
them into Three Basic Categories :
i) Achievement Motivation.
ii) Business Opportunity Guidance &
iii) Business Management.
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i) Achievement Motivation :
For the development of selected trainees into “Well
Rounded” Competitive Entrepreneurs, the programme
provides training inputs as follows :
An Intensive Training Programme thro a Five Day
Programme (40 - 50 Hrs) is given to develop Entrepreneurial
Traits such as, need to Achieve, Risk Taking, Initiative etc.
The Motivation Inputs serve to :
a) Increase the Person’s need for Achievement.
b) Help Participant’s define their Goals realistically &
work towards their achievements &
c) Heighten their Self Awareness.
The above is called as Achievement Motivation
Training (AMT). It is a Crucial Dose of Behavioral,
Psychological Input.
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ii)
Business Opportunity and Project Selection :
While Opportunity & Project Selection is initiated & engaged in the initial
stage itself, a more intensive treatment is reserved for Phase – II. Guidance sessions
are held on selecting an appropriate industrial opportunity for each trainee
consistent with his experience, competence & financial resources.
Perceiving a profitable opportunity for commercial exploitation is an
essential quality of an Entrepreneur.
By providing information & counseling on various feasible industrial
opportunities in the area thro a Team of Experts (Successful Industrialists, Leading
Traders, Merchants, & Technical Experts from Industry, Financial Institutions &
consultancy organizations) & by Spot Surveys, each Trainee Entrepreneur gets tied
up with a Business Opportunity which turns to his goal.
Inadequate Knowledge of an Opportunity or absence of a Clear Project
Proposal, therefore, need not be a Handicap in aspiring to be an Owner –
Entrepreneur. In fact, the Training Culminates in the Completion of a Project
Report prepared by each Trainee. Finally, it also constitutes a way in which the
finance for the Project is raised thereby links up completion of training with the
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iii) Business Management :
The Small Scale Entrepreneur has to be a Good Manager also
since he cannot afford Specialists to look after Multiple Business Decisions
of Sales, Finance, Purchase, Personnel etc.
Though ‘Rounded Managerial Experience’ is essential for better
performance, the New (Trainee) Entrepreneur emerging from the Ranks of
Employees & Fresh Graduates usually possess familiarity with or
experience in only one area, Viz., Production or Sales or Supervision. The
Overall Managerial Understanding is therefore developed thro the Business
Sessions.
The Syllabus can be evolved in Consultation with Operating
Entrepreneurs, practicing trade & industry experts & past trainees, leaving
it to the trainer to make modifications to suit the Target Group & Local
Conditions. This enables the Participants to look at an Enterprise in its
totality & introduces them to the elements of Planning, Budgeting &
Control as aids to Good Management.
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Faculty :
Normally, no full time faculty is used for the
Training Programme except the Trainer or Project Leader
supported by Project Formulation Expert.
Most of the Business Inputs are given thro
Management/Professional Practitioners, Business &
Industry Executives, Experts of State Industrial Agencies,
Bankers, Technical Consultancy Organizations etc.
A Full Time Project Leader In – Charge of the
Training Centre is the Back Bone of EDP. He acts as a
“Friend, Philosopher, Guide & Personnel Counselor”
taking care of the Needs of the Trainees. He Organizes &
Administers the Programmes & is responsible for the
entire training process.
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
Each Group of Entrepreneurs in an Entrepreneurship
Programme is looked after by the Entrepreneur Trainer –
Motivator. He is responsible for Organizing Post – Training
Support also. This involves :
a) Follow up on Loan Application for Finance.
b) Facilitating Infrastructure such as Land, Factory Shed,
Power etc & finally,
c) Trouble Shooting.
His Counseling, Resourcefulness & Liaison Skills
come handy in expediting Project Application.
Occasional Visits by the Trainer for Trouble Shooting
may well help. Whenever an Entrepreneur needs help, he
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needs to be encouraged to approach
the Trainer.
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The Importance of Entrepreneurial Resource as a Crucial Input in the
Process of Economic development has now been widely recognized by eminent
scholars, economists & policy makers.
With Growing Emphasis on the Role of Small Scale & Medium Scale
Enterprises in view of their contributions to employment generation, regional
development & overall economic growth, a wide range of schemes & programs
aimed at accelerating the tempo of new activities in the decentralized sector has
been devised in many developing countries.
India is a Developing Economy aiming at Decentralized Industrial Structure
to overcome Regional Imbalances in levels of Economic Development. Small
Scale Entrepreneurs in such Industrial Structure play a very vital role to achieve
Balanced Regional Development. It is a well established fact that Small Scale
Enterprises provide immediate Large Scale Employment ensuring a more
equitable distribution of National Income, Generate Large Scale Indirect
Employment opportunities in support organizations around the Industrial
Clusters / Estates, Improve Living Standards of People & also most important,
facilitate an effective resource mobilization of capital & skills which might
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otherwise remain idle.
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Role of Entrepreneurs in Economic Development (A Summary ) :
Entrepreneurship promotes effective Capital formation by mobilizing the idle
savings of the Public.
It provides Large Scale Direct & Indirect Employment to the Unemployed
Youth in the Country & thereby helps the Govt to overcome Socio – Economic
Problems.
Improves Standard of Living.
Promotes Balanced Regional Development.
Helps reduce the Concentration of Wealth & Economic Power in the hands of a
few people.
It stimulates equitable distribution of Material Resources, Wealth, Income &
even political power in the interest of the Country.
Encourages effective Resource Mobilization of Capital & Skill which might
otherwise remain unutilized & idle.
Helps in Harnessing Vast Natural Material Resources of the Country for
Economic Growth.
Promotes Backward & Forward linkages which in turn, stimulates the process of
Economic Development in the Country.
Contributes substantially in Country’s Export Trade & thereby helps the Country
to earn Vital Foreign Exchange.
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Helps the Country in Overall Development improving its
Status in the World.
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Entrepreneurship is regarded as closely associated with the Economic
History of India. This is traced way back to even as early as Rig Veda, when
Metal Handicrafts manufacturing cottage & small enterprises existed in the
Country.
It has passed thro several Ups & Downs. The important ones include
the Decline of Indian Handicrafts Industry towards the end of the 18th Century,
entry of the East India Company of the Britisher’s in India’s Business
Activities. The Swadeshi Campaign for Indian Manufactured Goods, the First
World War, Emergence of the Indian Managing Agency Systems by promoting
Joint Stock Companies, the Second World War, Partition of Undivided India &
undertaking planned development of Entrepreneurship in the Country by Govt
of India after Independence in 1947.
For the purpose of encouraging Entrepreneurship, the Govt of India
brought out the First Industrial Policy Resolutions in 1948 which was
subsequently revised from Time to Time. The Govt of India in order to promote
, assist & develop industries in the National Interest has taken the following
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Three Important Resolutions in the Industrial
Resolutions
:
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i) To maintain a proper distribution of economic
power between Private & Public Sector.
ii) To encourage Rapid Industrialization by moving
the concept of Entrepreneurship from existing centers
to other cities, towns & rural areas.
iii) To disseminate the Entrepreneurship acumen
concentrated in a few dominant communities to a large
number of Industrially Potential People of varied Social
Background.
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To achieve these Objectives the Govt accorded emphasis on the
Development of Small Scale Industries in the Country. Since the 3rd Five
Year Plan, the Govt announced various Incentives & Concessions in the
form of Capital, Technical Know How, Reservation of Certain Items for
Exclusive Manufacture in Small Scale Sector Tax Concessions, Provision
of Infrastructural Facilities like Developed Land, Sheds, Roads,
Communication etc for Promotion of Enterprises in the Country etc.
This has helped in Speedy Economic Development in all the States in
the Country & to a great extent has minimized regional imbalances.
National Common Minimum Programme (NCMP) describes Small
Scale Enterprises as the Most Employment Intensive Segment. At the
beginning of the 10th Plan, (2002 – 2003), the Segment provided gainful
employment to 24.9 Million People in the Rural & Urban Areas of the
Country thro 10.5 Million Units, engaged in Manufacturing & providing a
Wide Range of Goods & Services. If the Units in Khadi Village Industries
are also taken into account, the Employment would rise to 332 Million.
Thus this is rightly called as the segment which provides employment
next only to Agriculture. The Contribution of Small Enterprises Segment
to the Economic Development of the Country is very significant. Nearly
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arise from these Enterprises.
Yet a large number of Entrepreneurs are facing lots of
Challenges. In order to assist them to fully harness their
potential by availing of the increasing opportunities
generated by Trade Liberalization, it is necessary to not only
build an enabling Policy Environment but also supplement the
former with a specific set of measures to address the
continuing challenges.
Therefore Ministry of Micro, Small & Medium
Enterprises, Govt of India has announced a package for
Promoting such enterprises in Feb 07 to provide full support in
the Areas of Credit, Technological Up gradation, Marketing &
Infrastructural Up gradation in Major Industrial Infrastructure
etc.
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The Slow pace of Growth of Entrepreneurship is mainly
due to existence of a tangible set of Barriers prohibiting the
Process of Entry into, Continuity in & an eventful exit from a
Business Venture of a Would be Entrepreneur if it is a function
of forces that one may view as Barriers limiting Full Fledged
Business Performance. These may be Entry Barriers, Survival
Barriers, & Exit Barriers.
Entry Barriers are those forces limiting access to
identified business opportunities & capitalization of these
Opportunities. Survival Barriers are constraints on the
conditions essential for the Small Business Entity. Exit
Barriers are constraints limiting the termination of Small
Industrial Ventures that have outlived
their Business Viability
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Following is the Presentation of the Study on
“Entry Barriers to Entrepreneurship as perceived by
Youth” sponsored by NEDB, Ministry of SSI, Govt of
India, Study was conducted in 2002, by Dr. Sunil
Shukla, Dr. Dinesh Awasthi , Entrepreneurship
Development Institute of India, Ahmedabad.
Following are its findings :
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1) No interest in Business / Distinct Preference for
Service :
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Reasons :
Job Offers secured income & access to Power.
Satisfaction with Current Job.
Lack of Achievement Motivation.
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2)
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Desire to wait for some more time :
Reasons :
To gain experience.
To arrange for financial resources.
To try for a Good Job First.
3)
Lack of Confidence in Business :
Reasons :
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Lack of Knowledge of the Business opportunity.
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Lack of Ability to take Risk.
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Lack of Managerial Skill.
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Lack of Knowledge of Procedure & Formalities to
establish Business.
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4)
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Disapproval of Family / Friends :
Reasons :
No Risk bearing Capacity of the Family.
No affiliation to Business Community.
Family Pressure to earn money thro Job.
Reconsidering Business Career :
58.3% of those 80.8% who had no Business
Plans were ready for Entrepreneurship, if helped for :
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Finance.
Project Idea &
Training for Business & Management.
Critical Needs of those Planning for
Entrepreneurship :

Timely & adequate Finance.
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Knowledge & Skill Training.
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Encouragement by Family.
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1. The First requirement is to change the mindset.
2. Entrepreneurship to be introduced in Education (It is heartening to
note that VTU, Belgaum, has introduced Management & Entrepreneurship
as a Core Subject for V / VI Semester Engg. Students of all branches from
the academic year 2008 – 2009.)
3.
Need for Resource Material & Handbooks.
4.
Entrepreneurship & Business Development Cell (EBDC) to be
established on Campuses.
5.
Faculty Development Programmes on Entrepreneurship
Development.
6.
Counseling & Guidance Cells for VRS Employees.
7.
Fellowship / leave with Half Pay for Young Employees having
feasible business plans.
8.
Special Incentives, Hassle free credit to be given to increase female
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9.
Industry – Academic Linkage to be strengthened.
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NEDB to set up EBDC’s on Campuses.
Functions :
Organize Entrepreneurship Awareness Camps (EAC’s) , Workshop’s &
Entrepreneurship Development Programmes (EDPs).
Sensitize the Environment & develop Network.
Conduct Potential Surveys to develop a Basket of Viable Business
Opportunities.
Act as a Focal Point for Information Dissemination on Opportunities,
Market, Technologies etc.
Conduct need based Research Studies.
Organize performance improvement & growth programs for
entrepreneurs to strengthen local entrepreneurial base.
Any other activity necessary for inculcating entrepreneurship in
Student’s Community.
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Faculty Development Programs for University &
College Teachers.
Teaching Material Development for Students &
Handbook for Teachers.
Organize EAC’s & EDP’s.
Finally, Introduction of Entrepreneurship in
Regular Curricula.
Efforts to be made at Secondary Education Level
as well.
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A Behavioral Pattern that could impair basic managerial
practices.
Constraining Practices within the Capital Market.
The threatening shadow of changing technology.
Increasing Competition from the New Players in the field.
Limited Learning.
Management of Resources.
Failure of Guidance agencies to guide.
Scarce Information & limited dissemination of that
information.
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The emotional commitment of the entrepreneur to
his venture.
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Specialized assets, sunk funds.
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The increasing demand for Managerial Skills.
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Fear of Failure.
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