Unit-1
Entrepreneurship
Entrepreneurship is the process of designing, launching, and managing a new business or
business enterprise, normally with the aim of solving a problem or meeting a need in the market,
while taking on financial and personal risks in track of profit, growth, and innovation.
Entrepreneurs are individuals who identify opportunities, create value, and bring a new ideas,
products, services, or business models to life.
Need for Entrepreneurship:
Economic Growth: Entrepreneurship plays a critical role in driving economic growth by
creating new businesses, which in turn create jobs, stimulate demand for goods and services, and
contribute to overall economic development.
Innovation: Entrepreneurs are often at the front position of innovation, developing new
products, services, and technologies. This not only improves the quality of life but also opens up
new industries and markets.
Job Creation: One of the primary needs for entrepreneurship is its capacity to create
employment. Startups and small businesses generate a significant number of jobs, which can
reduce unemployment and boost local economies.
Wealth Creation: Entrepreneurs build wealth by creating and scaling businesses, which benefits
not only the business owners but also investors, employees, and other stakeholders.
Scope of Entrepreneurship:
Business Creation and Management: Entrepreneurship included the creation, operation, and
management of new business ventures. It involves ideation, market research, resource
management, business planning, and financial management.
Product/Service Development: Entrepreneurs often identify unmet needs in the market and
develop products or services to address those needs. This includes everything from research and
development to marketing and sales.
Social Entrepreneurship: A growing field that focuses on using business principles to address
social or environmental challenges. This could include businesses that promote sustainability,
provide education, or improve healthcare.
Digital and Tech Entrepreneurship: The increase of digital technology has expanded the scope
of entrepreneurship to include tech startups, online businesses, and digital platforms. Areas such
as e-commerce, app development, and digital marketing are particularly thriving.
What is enterprise?
An enterprise refers to a business organization or company that engages in economic activities
to produce goods or services with the goal of generating profit. It can range from small
businesses (like a local store or startup) to large multinational corporations. An enterprise
typically involves a combination of resources—such as labor, capital, and technology—to create
value and operate in the marketplace.
Entrepreneurial competencies
Entrepreneurial competencies are the specific set of knowledge, skills, behaviors, and
attributes that an individual needs to effectively start, manage, and grow a business. These
competencies enable an entrepreneur to identify opportunities, take calculated risks, make
decisions, overcome challenges, and lead their ventures toward success.
The Entrepreneurship Development Institute of India (EDI) has identified 15 core
competencies that are essential for successful entrepreneurship. These competencies focus on the
personal and business skills that entrepreneurs need to develop and hone in order to effectively
manage and grow their ventures. The competencies are:
1. Self-Awareness: Understanding one’s own strengths, weaknesses, attitudes, and
behavior.
2. Goal Setting: The ability to set clear, realistic, and achievable business and personal
goals.
3. Opportunity Identification: The skill to identify market gaps, unmet needs, and
business opportunities.
4. Innovation and Creativity: Developing new ideas, products, services, or processes and
thinking creatively to solve problems.
5. Risk-Taking: Willingness to take calculated risks and manage uncertainties inherent in
business ventures.
6. Decision-Making: Ability to make effective decisions based on sound reasoning and
available information.
7. Leadership: Leading and inspiring teams, as well as making strategic decisions for the
growth of the business.
8. Negotiation Skills: The ability to negotiate effectively with stakeholders, clients,
partners, and suppliers.
9. Resource Mobilization: The ability to gather and efficiently utilize resources such as
finance, human resources, and material assets.
10. Financial Management: Understanding and managing financial aspects of the business,
including budgeting, accounting, and investment decisions.
11. Marketing and Sales Skills: Ability to create and implement marketing strategies and
manage sales processes.
12. Time Management: Effectively managing time and prioritizing tasks to maximize
productivity.
13. Networking: Building and maintaining relationships with business associates, mentors,
and other entrepreneurs.
14. Problem-Solving: The ability to address and resolve challenges and obstacles faced by
the business.
15. Continuous Learning: Committing to self-improvement and staying updated on new
trends, technologies, and business practices.
Factors Affect Entrepreneurship
Entrepreneurship development in India is influenced by several factors, both positive and
negative, that shape the environment for businesses. These factors can be broadly categorized
into economic, social, political, cultural, technological, and institutional influences. Here are the
key factors affecting entrepreneurship development in India:
Entrepreneurship development in India is affected by several factors. These are the key factors
affecting entrepreneurship development in India:
1. Economic Factors
Money and Funding: Getting money to start a business can be difficult. even if there are some
government schemes and loans, many people struggle to find financial help.
Government Support: The government has started programs like "Startup India" to help
businesses, but there are still some rules and regulations that can make it hard to start a business.
2. Social and Cultural Factors
Fear of Risk: Many people prefer safe, government jobs and are scared to take the risk of
starting a business.
Support from Family and Society: In some parts of India, family and society may not always
encourage entrepreneurship, especially for women or people from certain backgrounds.
3. Political Factors
Government Rules: The government’s policies can either help or make it harder to start a
business. While some policies are helpful, complicated laws and taxes can make things difficult.
Stability: If the political situation in the country is unstable, it makes people hesitant to start new
businesses.
4. Technological Factors
Technology and Innovation: New technologies make it easier for entrepreneurs to create new
products and services. The internet and smartphones also open up more opportunities for
businesses.
Digital Growth: The rise of digital tools, like e-commerce platforms and social media, helps
businesses grow faster and reach more customers.
5. Institutional Support
Incubators and Mentors: Business incubators, accelerators, and mentors can help new
entrepreneurs with advice, resources, and funding.
Business Networks: Being part of business groups or associations can provide useful contacts,
learning, and growth opportunities for entrepreneurs.
6. Financial Factors
Access to Loans: Entrepreneurs need loans to grow their business, but many struggle to get them
from banks because of high interest rates or not having enough security.
Investment: Investors who want to support businesses (like angel investors) are slowly
becoming more common in India, especially in big cities.
7. Legal and Regulatory Environment
Rules and Regulations: Starting a business in India involves many rules and paperwork, which
can make the process slow and confusing.
Protection of Ideas: Laws to protect new ideas and products (like patents) are improving, but
still pose challenges for entrepreneurs.
8. Globalization
International Opportunities: Indian entrepreneurs can now reach global markets, helping their
businesses grow.
Competition: Entrepreneurs have to compete not just with local businesses but also with
companies from other countries, which can be tough.
9. Environmental Factors
Sustainability: Entrepreneurs are increasingly focusing on businesses that are good for the
environment, such as using renewable energy or reducing waste.
Climate Challenges: Changes in weather patterns or natural disasters may affect some
businesses, especially in farming or industries related to nature.
Entrepreneurial Motivation
Entrepreneurial motivation is the motive or force that pushes a person to start and grow a
business. It comes from personal goals, such as wanting to succeed, solve problems, or earn
money, and from external factors, like opportunities or support from others. It’s what keeps
entrepreneurs focused and determined to achieve their business dreams.
Therefore, Entrepreneurial motivation can be defined as the process that directs or stimulates our
behavior to achieve the entrepreneurial goals. In other words, entrepreneurial motivation
activates the internal state of an entrepreneur to put higher level of efforts for the achievement of
the desired entrepreneurial objectives.
Motivating Factors for Entrepreneurs
Entrepreneurial motivation is important because without it, entrepreneurs cannot reach their
goals. Some factors inspire entrepreneurs, while others do not. It’s important to figure out what
motivates them. Many researchers have studied this to understand these factors. Below are the
main factors that make entrepreneurs.
1. Education background: The knowledge acquired through the various courses provided
by the institutions has motivated entrepreneurs to step into the business. Entrepreneurs
feel confident while entering into the business of their education fields.
2. Family Background: The family businesses motivate the entrepreneurs to join
businesses. In India, different entrepreneurs have continue their fore father‟s business.
For e.g.: Mukesh Ambani, Ratan Tata, Aditya Birla etc.
3. Desire to do something new: People have advise to do something new and creative. The
strong desire to be innovative and creative promotes entrepreneurship among the
population.
4. Business experience: Large experience in a particular field makes the people aware of
that field. Therefore, Entrepreneur feel motivated to enter into the fields in which they
have the rich experience.
5. 5. Government assistance and support: Government provide support to the
entrepreneurs in different ways such as providing loans at low interest rates, tax
concessions, leasing scheme, Export assistance etc. Assistance from the end of the
Government motivates people to become entrepreneurs.
6. Easy availability of raw material and labour: Easy availability of the raw material
and labour at cheap rates motivates the people to become entrepreneurs as it makes the
business little easy.
7. Profit margins: Many people become entrepreneurs for earning more money. So,
earning money is one of the most motivating factors.
8. Job Security: Over-population and Unemployment is the one of most challenging
problem in India. As the population is growing there is more and more risk of
unemployment. Moreover, people don‟t feel secure with their jobs because of the
availability of large number of skilled population. Therefore, People prefer to become
entrepreneurs.
9. Social prestige: In India, entrepreneurs are seen with respect. So, people get motivated to
become entrepreneurs to gain social respect.
McClelland Need for Achievement theory:
The most important motivation theory for entrepreneurs is McClelland need for achievement
theory. McClelland focused on three needs: Need for power (npow), need for affiliation (naff),
need for achievement (nach).
Need for Power (n Pow) The need for power is related to influence others, have control over
others, and push to change people. The people with high need for power want to direct others.
They want people to be dependent on them which results in supreme satisfaction to the
individuals.
Need for Affiliation (n Aff) The need for affiliation is concerned with desire to build healthy
and friendly relations with the other people. They have the strong desire to get accepted and
affiliated by others. When people recognize the individuals they get motivated.
Need for Achievement (n Ach) The need for achievement is the desire to excel, to achieve the
set goals with excellence. These needs direct the behavior of the individuals to perform better.
People with high achievement needs show better performance than the individuals with the
low achievement needs. They personally take the responsibility of achieving the set goals. They
accept challenges and generally set difficult goals than low achievers.
Conceptual model of Entrepreneurship
A conceptual model of entrepreneurship serves as a framework to understand the key elements
and processes involved in entrepreneurial activity. It usually breaks down entrepreneurship into
various components to explain how entrepreneurs recognize opportunities, gather resources,
create value, and manage risks. Here's a simple outline of the common components:
1. Opportunity Identification
Opportunity Recognition: The ability to identify unmet needs, market gaps, or new trends that
present potential for a profitable venture.
Innovation: Entrepreneurs often innovate by creating new products, services, or processes that
meet identified needs.
2. Entrepreneurial Characteristics
Risk-Taking: Entrepreneurs are willing to take calculated risks to achieve business success.
Vision: A clear idea of what the entrepreneur wants to achieve.
Creativity: The ability to generate novel solutions to problems.
Leadership: Entrepreneurs need to motivate and guide their team or stakeholders.
3. Resource Mobilization
Human Resources: Assembling a capable team to help realize the vision.
Financial Resources: Acquiring necessary funding (e.g., through loans, investments, or personal
capital).
Social Capital: Networking and building relationships that support business growth.
Physical Resources: Securing essential infrastructure or equipment.
4. Value Creation
Product/Service Development: Building a product or service that adds value to customers.
Market Fit: Ensuring the product or service meets customer needs and can scale in the market.
Business Model: Developing a clear plan on how the business will generate revenue.
5. Risk Management
Uncertainty Management: Entrepreneurs deal with market, financial, and operational
uncertainties. They often employ strategies to mitigate risks, such as diversification or lean
startup methodologies.
Decision-Making under Uncertainty: The ability to make strategic decisions despite incomplete
information.
6. Growth and Scaling
Business Expansion: The process of scaling operations, expanding into new markets, or
developing new product lines.
Sustainability: Ensuring long-term viability of the business through sound management
practices, innovation, and adaptability.
7. Feedback and Learning
Iteration: Continuous improvement of products, services, or processes through customer
feedback.
Adaptability: The capacity to pivot when necessary, based on changing market conditions or
business performance.
The terms entrepreneur and intrapreneur describe individuals with innovative, leadershipdrive roles, but they differ in terms of context and focus. Here's a breakdown:
Entrepreneur
Definition: An entrepreneur is someone who creates and manages a new business, typically
taking on financial risks in chase of profit and innovation.
Intrapreneur
Definition: An intrapreneur is an employee within an organization who is given the freedom and
resources to innovate, develop new products, or drive business transformation as if they be
running a startup within the company.
Aspect
Entrepreneur
Intrapreneur
Ownership
Owns the business
Works within an organization
Risk
High, personal financial risk
Low, risk bear by the company
Resources
Must build resources from scrape
Hold existing company resources
Autonomy
High
Moderate, under corporate
structure
Build a separate business
Innovate and drive growth within
the company
Goal
Classification of entrepreneurs:
Entrepreneurs can be classified based on different criteria such as their approach to business,
goals, industry, and style of operation. Below is a detailed classification:
Based on Innovation


Innovative Entrepreneurs: Focus on introducing new ideas, technologies, products, or
processes.
Imitative Entrepreneurs: Adapt and improve upon existing ideas or businesses.
Based on Ownership



Solo Entrepreneurs: Start and manage businesses independently.
Partnership Entrepreneurs: Collaborate with one or more individuals to run the
business.
Corporate Entrepreneurs: Work within existing corporations to innovate (similar to
intrapreneurs).
3. Based on Scale of Operations


Small-scale Entrepreneurs: Operate businesses with limited resources and a local focus.
o Example: Local retail shops, small-scale artisans.
Large-scale Entrepreneurs: Manage large, resource-intensive enterprises with
significant market influence.
o Example: CEOs of multinational companies.
4. Based on Economic Sector



Agricultural Entrepreneurs: Focus on farming, farm animals, and related industries.
o Example: Organic farming startups.
Industrial Entrepreneurs: Operate in manufacturing or industrial sectors.
o Example: Car manufacturers.
Trading Entrepreneurs: Engage in buying and selling goods and services.
o Example: E-commerce businesses.
5. Based on Motivation


Opportunity Entrepreneurs: Start businesses by identifying and capitalizing on market
opportunities.
Necessity Entrepreneurs: Enter entrepreneurship out of a lack of alternatives, such as
unemployment.
6. Based on Technology Adoption

Tech-savvy Entrepreneurs: Leverage advanced technologies to innovate or disrupt
industries.
o Example: Founders of AI or blockchain startups.

Non-tech Entrepreneurs: Operate in traditional industries without heavy reliance on
technology.
o Example: Handmade goods producers.
7. Based on Social Impact


Social Entrepreneurs: Focus on addressing social or environmental problems through
business.
o Example: Muhammad Yunus (Grameen Bank, microfinance).
Commercial Entrepreneurs: Aim for profit maximization with a focus on financial
gains.
8. Based on Risk-Taking


Risk-Takers: Willing to take high risks for high rewards.
o Example: Venture capital-backed startups.
Risk-Averse Entrepreneurs: Focus on low-risk, steady-growth ventures.
Classification of entrepreneurs
The classification of entrepreneurs can be based on various criteria such as their behavior, type
of business, nature of the business environment, scale of operations, and more. Below are some
of the most common classifications of entrepreneurs:
1.
2.
3.
4.
Based on the Type of Business
Based on Use of Technology:
According to the Entrepreneur and Motivation
Based on Ownership
Based on the Type of Business:
(i)Business entrepreneurs
Business entrepreneurs are individuals who envision a new product or service and establish a
business to bring their idea to life. They utilize both production and marketing resources in their
pursuit of developing new business opportunities. Entrepreneurs may create large enterprises or
small business units. When operating in smaller ventures, such as a printing press, textile
processing house, advertising agency, ready-made garment shop, or confectionery, they are
known as small business entrepreneurs. In most cases, entrepreneurs are found in small trading
and manufacturing businesses, where entrepreneurship thrives due to the smaller scale of
operations.
(ii)Industrial Entrepreneur:
An industrial entrepreneur is primarily a manufacturer who recognizes the needs of customers
and creates products or services to meet those demands. Focused on production, they start an
industrial business to introduce new products. These entrepreneurs have the skill to turn
resources and technology into profitable ventures. They are typically found in industries like
electronics, textiles, machine tools, or videocassette tape manufacturing, among others.
(iii)Agricultural Entrepreneur:
Agricultural entrepreneurs are individuals who engage in farming-related activities such as
growing and selling crops, fertilizers, and other agricultural inputs. They focus on improving
agriculture through the use of machinery, irrigation, and advanced technologies, particularly for
dry land farming. These entrepreneurs work across a wide range of agricultural fields and related
occupations.
(iv) Corporate Entrepreneur:
Corporate entrepreneur is a person .who demonstrates his innovative skill in organizing and
managing corporate undertaking. A corporate undertaking is a form of business’ organization,
which is registered under some statute or Act, which gives it a separate legal entity. A trust
registered under the Trust Act, or companies registered under the Companies Act are example of
corporate undertakings. A corporate entrepreneur is thus an individual who plans, develops and
manages a corporate body.
Based on Use of Technology:
The application of new technology in various succors of the national economy is essential for the
future growth of business. We may broadly classify these. Entrepreneurs on the basis of the use
of technology as follows:
(i)Technical Entrepreneur:
A technical entrepreneur is essentially compared to a “craftsman.” He develops improved quality
of goods because of his craftsmanship. He concentrates more on production than marketing. On
not much sales generation by and does not do various sales promotional techniques. He
demonstrates his innovative capabilities in matter of production of goods and rendering of
services. The greatest strength, which the technical entrepreneur has, is his skill in production
techniques.
(ii) Non-technical Entrepreneur:
Non-technical entrepreneurs are those who are not concerned with the technical aspects of the
product in which they deal. They are concerned only with developing alternative marketing and
distribution strategies to promote their business.
(iii) Professional Entrepreneur:
Professional entrepreneur is a person who is interested in establishing a business, but does not
have interest in managing or operating it once it is established. A professional entrepreneur sells
out the running business and starts another venture with the sales proceeds. Such an entrepreneur
is dynamic and he conceives new ideas to develop alternative projects.
According to the Entrepreneur and Motivation:
Motivation is the driving force that pushes an entrepreneur to work towards achieving their
goals. An entrepreneur is motivated by the desire to excel in their work and to prove their
abilities. They are also inspired to influence others by showcasing their business skills and
expertise.
(i)Pure Entrepreneur:
A pure entrepreneur is an individual who is motivated by psychological and economic rewards.
He undertakes an entrepreneurial activity for his personal satisfaction in work, ego or status.
(ii) Induced Entrepreneur:
An induced entrepreneur is someone who starts a business because of government policies that
offer assistance, incentives, concessions, and essential facilities to support new ventures. Most of
these entrepreneurs are encouraged to enter business due to financial, technical, and other
benefits provided by government agencies to promote entrepreneurship. Individuals with solid
business ideas receive support packages for their projects. Today, import restrictions and
production quotas for small businesses have motivated many people to start small-scale
industries.
(ii)Motivated Entrepreneur:
New entrepreneurs are motivated by the desire for self-fulfillment. They come into being
because of the possibility of making and marketing some new product for the use of consumers.
If the product is developed to a saleable stage, the entrepreneur is further motivated by reward in
terms of profit.
(iv)Spontaneous Entrepreneur:
These entrepreneurs start their business their by Entrepreneur. They are persons with initiative,
boldness and confidence in their_- ability, which activate, them, underage entrepreneurial
activity. Such entrepreneurs have a strong conviction and confidence in their inborn ability.
Based on Ownership:
Individual Entrepreneurs:
Those who operate their business individually, taking on all responsibility and risk.
Partnership Entrepreneurs:
These entrepreneurs work in partnership with others to form and run the business together.
Corporate Entrepreneurs (Intrapreneurs):
Employees who take on entrepreneurial roles within a large organization to innovate and drive
new projects, products, or services.
Entrepreneurship Development Program:
Entrepreneurship Development Program (EDP) is Program which helps in developing
entrepreneurial abilities. The skills that are required to run a business successfully is developed
among the students through this Program. Sometimes, students may have skills but it requires
polishing and incubation. This Program is perfect for them. This Program consists of a
structured training process to develop an individual as an entrepreneur. It helps the person to
acquire skills and necessary capabilities to play the role of an entrepreneur effectively.
EDP is an effort of converting a person to an entrepreneur by passing him through thoroughly
structured training. An entrepreneur is required to respond appropriately to the market and he/she
is also required to understand the business needs. The skills needed are varied and they need to
be taken care in the best possible way. EDP is not just a training Program but it is a complete
process to make the possible transformation of an individual into an entrepreneur. This Program
also guides the individuals on how to start the business and effective ways to sustain it
successfully.
Objectives of EDP
The objective of this program is to motivate an individual to choose the entrepreneurship as a
career and to prepare the person to exploit the market opportunities for own business
successfully. These objectives can be set both in the short-term and long-term basis.
Short-term objectives: These objectives can be achieved immediately. In the short-term, the
individuals are trained to be an entrepreneur and made competent enough to scan the existing
market situation and environment. The person, who would be the future entrepreneur, should
first set the goal as an entrepreneur. The information related to the existing rules and regulations
is essential at this stage.
Long-term objectives: The ultimate objective is that the trained individuals successfully
establish their own business and they should be equipped with all the required skills to run their
business smoothly.
The overall objectives of EDP are mainly to help in the rapid growth of the economy by
supplying skilled entrepreneurs. This program primarily aims at providing self-employment to
the young generation.