Concept of

Entrepreneurship
A Primer
Evolution of Entrepreneurship from
Economic Theory
• 1. Richard Clinton – Entrepreneurs make conscious decisions about
resource allocation and thereby seeking higher return on resources.
• 2. J B Say – People having insight to fulfill social needs through risk
taking.
• 3. Adam Smith – Organiser of industrial activity.
• 4. Carl Menger – Process of converting resource into goods and
services of value to customers.
• 5. Joseph Schumpeter - Innovation
 Defining Entrepreneurship
• In Schumpeter’ words :
• To reform or revolutionize the pattern of production by exploiting or,
more generally an untried technological possibility for producing a
new commodity or producing 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 routine business.
 Defining Entrepreneurship
• Ronstadt’s definition of entrepreneurship:
• It is the dynamic process of creating incremental wealth. This wealth
is created by individuals who assume the major risks in terms of
equity, time, and/or career commitment of providing value for some
product or service. The product or service itself may or may not be
new or unique but value must somehow be infused by the
entrepreneur by securing and allocating the necessary skills and
resources.
 Major traits of Entrepreneur
• Risk Takers
• High Achievers
• Persistent Innovators
• Energetic
• Single minded Individuals
• Vision for growth
• Seek Constructive change
• Mobilizing essential resources
 Popular Myths about
Entrepreneurship
• 1. They are lucky – They are hard worker and take huge pain for
innovation. Systematic actor not gambling.
• 2. They Make or Break on the first venture – They go for gradual and
incremental change.
• 3. They are misfits – They are rebellious and challenge and disrupt
the status quo.
• 4. All you need is money – Numerous cases wherein finance is not
the constraint and need many other skills.
• 5. They are gifted – Emerge due to various factors.
 Introduction

• The terms ‘entrepreneur,’ ‘entrepreneurship’ and ‘enterprise’ can be

understood with the structure of a sentence in English language.
• Entrepreneur is the person (the subject),
• Entrepreneurship is the process (the verb) and
• Enterprise is the creation of the person and the output of the process
(the object).
 Concept of Entrepreneurship
• Entrepreneurship as a systematic, purposeful and creative activity of
identifying a need;
• Mobilising resources and organising production;
• with a view to delivering value to the customers, returns for the
investors and profits for the self ;
• in accordance with the risks and uncertainties associated with
business.
CHARACTERISTICS OF
ENTREPRENEURSHIP
• 1. Systematic Activity
• 2 .Lawful and Purposeful Activity
• 3. Innovation
• 4. Risk Taking
• 5. Mobilising the resources for productive purpose
 INTRAPRENEURSHIP
• In simple words, Intrapreneurship is the practice of entrepreneurship
by employees within an organization.
• The concept of intrapreneurship is originated where the intrapreneur
(i.e. Manager) is made the head of a given business unit and asked to
manage it for the organization while employing innovative skills.
• As an example, when a company seeks for diversification options,
they can appoint one of their managers as an intrapreneur to launch
the business venture while allowing him to share the part of the
profits made by the new business venture.
 Key Characteristics of Intrapreneurship
It promotes the managers to be more innovative and take more responsibility and
demonstrating charismatic leadership qualities.
Intrapreneurship projects are funded by large business organization and agreed
percentage of profits are remitted to the fund provider/head quarters of the
business.
Intrapreneurship will cultivate entrepreneurial skills/culture within the corporate
culture where managers will be motivated to accept more risk.
Due to the backing from the headquarters, the chances of failure are low when
compared to start ups.
It adds value to the life of the intrapreneur as he is being given the task of being an
entrepreneur while receiving necessary training from headquarters.
Business portfolio of funding organization will be expanded creating diversification.
Finally, it creates wealth for the headquarters as well as for the intrapreneur
through its profit sharing agreement.
Characteristics of Successful
Entrepreneurs
Self-Confident & Optimistic Energetic & Diligent
Able to take Calculated risk Creative – need to achieve
Respond positively to challenges Dynamic leader
Flexible & able to adapt Responsive to suggestion
Knowledgeable to Markets Take Initiatives
Able to get along well with Perseverance
others
Independent Minded Foresight
Versatile Knowledge Responsive to criticism
 RELATIONSHIP BETWEEN
ENTREPRENEURSHIP AND MANAGEMENT
• Entrepreneurship is about business start-ups and renewals.
• That is, it appears at the time of starting a new business,
• disappears for some time in the course of stabilizing the venture as an
on-going business and
• reappears in case there is a need for introducing changes in product,
market, technology, structure and so on
 Need and Importance of
Entrepreneurship
• Contribution to GDP
• Capital Formation
• Capitalising new opportunities
• Generation of employment
• Generation of business opportunities
• Increasing the scope of Economic activities
• Increasing Economic Efficiency
• Local economy development
• Fostering innovation
S. No. Basis of Differentiation Entrepreneurship Management
1. Focus Business start-up Ongoing operations of
an existing business
The entrepreneur is not
constrained by resources and A manager is constrained by
2. Resource orientation mobilises the resources resources at his disposal.

3. Approach to the task Informal Formal

4. Primary motivation Achievement Power

5. Status vis-à-vis the Owner Employee

enterprise

6. Primary economic reward Profit Salary

7. Innovation orientation Challenges the Maintains the

status quo, that status quo
is, the existing

8. Risk orientation Risk-taker Risk-averse

Logic, courage and
9 Approach to decision Making determination Logic and research
10 Primary skill Opportunity searching, initiative, Organising and operating procedures
11 Specialisation Generalist Specialist
Basis of Difference Manager Entrepreneur Intrapreneur
Status Check Concerned about status Not Concerned about Not Concerned about
status status

Failure & Mistakes Minimizes mistakes Deals with mistakes Reduces risky activities
Decision Agrees with top Follows a dream Gets help from others to
management achieve the dream
Availability of Resources Readily available Needs to arrange Provided by entrepreneur
Constituencies Served Upper management & Oneself and customer Oneself, customer and
Customer firm
Competitors No One Other entrepreneurs Within the organization
outside firm
Amount of risk bearing Conservative Extreme Moderate
McClelland Achievement
Motivation Theory
• David McClelland is most noted for describing three types of
motivational need, which he identified in his 1961 book, The
Achieving Society:
• achievement motivation (n-ach)
• authority/power motivation (n-pow)
• affiliation motivation (n-affil)
 The need for achievement (n-ach)

• The n-ach person is 'achievement motivated' and therefore seeks

achievement, attainment of realistic but challenging goals, and
advancement in the job. There is a strong need for feedback as to
achievement and progress, and a need for a sense of accomplishment
• McClelland contrasted achievement-motivated people with gamblers,
and dispelled a common pre-conception that n-ach 'achievement-
motivated' people are big risk takers.
• On the contrary - typically, achievement-motivated individuals set
goals which they can influence with their effort and ability, and as
such the goal is considered to be achievable.
• This determined results-driven approach is almost invariably present
in the character make-up of all successful business people and
entrepreneurs.
 Characteristics of achievement-
motivated people
• Achievement is more important than material or financial reward.
• Achieving the aim or task gives greater personal satisfaction than receiving praise or
recognition.
• Financial reward is regarded as a measurement of success, not an end in itself.
• Security is not prime motivator, nor is status.
• Feedback is essential, because it enables measurement of success, not for reasons of
Praise or recognition (the implication here is that feedback must be reliable,
quantifiable and factual).
• Achievement-motivated people constantly seek improvements and ways of doing
things better.
• Achievement-motivated people will logically favour jobs and responsibilities that
naturally satisfy their needs, ie offer flexibility and opportunity to set and achieve
goals, eg., sales and business management, and entrepreneurial roles