Question: What is meant by entrepreneurial business?
Explain with
examples? 2014 (characteristics, significance& examples).
Entrepreneurship business is an important engine of growth in the economy. The
entrepreneur business key characteristics and significance of successful entrepreneur
business with some of the examples are given below.
Characteristics of Entrepreneurship Business:
Entrepreneurship is characterized by the following features:
1. Economic and dynamic activity: Entrepreneurship is an economic activity because it
involves the creation and operation of an enterprise with a view to creating value or wealth
by ensuring optimum utilisation of scarce resources. Since this value creation activity is
performed continuously in the middle of uncertain business environment, therefore,
entrepreneurship is regarded as a dynamic force.
2. Related to innovation: Entrepreneurship involves a continuous search for new
ideas. Entrepreneurship compels an individual to continuously evaluate the existing
modes of business operations so that more efficient and effective systems can be
evolved and adopted. In other words, entrepreneurship is a continuous effort for
synergy (optimization of performance) in organizations.
3. Profit potential: “Profit potential is the likely level of return or compensation to the
entrepreneur for taking on the risk of developing an idea into an actual business venture.”
Without profit potential, the efforts of entrepreneurs would remain only an abstract and a
theoretical activity.
4. Risk bearing: The essence of entrepreneurship is the ‘willingness to assume risk’ arising
out of the creation and implementation of new ideas. New ideas are always tentative and
their results may not be instantaneous (sudden) and positive.
An entrepreneur has to have patience to see his efforts bear fruit. In the intervening period (time
gap between the conception and implementation of an idea and its results), an entrepreneur has to
assume risk. If an entrepreneur does not have the willingness to assume risk, entrepreneurship
would never succeed.
Significance/ Importance of Entrepreneurship
Entrepreneurship offers the following benefits:
1. Development of managerial capabilities
The biggest significance of entrepreneurship lies in the fact that it helps in identifying and
developing managerial capabilities of entrepreneurs. An entrepreneur studies a problem,
identifies its alternatives, compares the alternatives in terms of cost and benefits implications,
and finally chooses the best alternative. This exercise helps in sharpening the decision-making
skills of an entrepreneur. Besides, these managerial capabilities are used by entrepreneurs in
creating new technologies and products in place of older technologies and products resulting in
higher performance.
2. Creation of organizations
Entrepreneurship results into creation of organizations when entrepreneurs assemble and
coordinate physical, human and financial resources and direct them towards achievement of
objectives through managerial skills.
3. Improving standards of living
By creating productive organizations, entrepreneurship helps in making a wide variety of goods
and services available to the society, which results into higher standards of living for the people.
Possession of luxury cars, computers, mobile phones, rapid growth of shopping malls, etc. are
pointers to the rising living standards of people, and all this is due to the efforts of
entrepreneurs.
4. Means of economic development
Entrepreneurship involves creation and use of innovative ideas, maximization of output from
given resources, development of managerial skills, etc., and all these factors are so essential for
the economic development of a country.
5. Job Creation
We know that job creation is vital to the overall long-term economic health of communities,
regions, ad nations. Entrepreneurial ventures play very important role in it. Small business
create more jobs than large business do. During economic recession, when large companies are
on their way to retrenchment of their work force, individuals whose jobs are eliminated find
employment with small business. The creation of jobs by small businesses is expected to
continue into the future as new firms start small and grow.
6. Innovation
Innovating is a process of creating, changing, experimenting, transforming and revolutionizing.
Innovation is one of the key distinguishing characteristics of entrepreneurial activity. Without
these new ideas, economic, technological, and social progress would be slow indeed. The
“creativity” process of innovation leads to technological changes and employment growth.
Entrepreneurial firms act as these “agents of change” by providing an essential source of new
and unique ideas.
7. Other Contribution
Entrepreneurship in small businesses helps in distribution of products of large business.
They, thus, support the large business houses.
It offers business paths to women and minorities. Women and minorities are allowed
the benefit of financial independence and a chance to exhibit the ability to manage
business enterprises.
Distribution of economic activities to different sectors of economy and identifying new
paths of growth.
Improvement of the standards of living of different weaker sections in the society.
Bring socio political change in the society.
Develop technological know-how.
Improve culture of business and expand commercial activities.
Entrepreneurship acts as a change agent to meet the requirements of the changing
markets and customer preferences.
Develop a culture of achievement orientation.
It helps in bringing about change and development of the civilization through change in
trade and industrialization.
It arouses the need for achievement in individuals, which brings about a change in the
economic scenario through economic development and growth.
It results in exploitation of economy’s resources, such as labour, capital and technology
to the fullest extent.
Examples of Entrepreneurs
Bill Gates, founder of Microsoft. There are probably not many people that have not
been touched by one of his products, such as Microsoft Windows, Microsoft Office and
Internet Explorer.
Steve Jobs, co-founder of Apple computers, which produces Macs, iPods and iPhones, as
well as Apple TV.
Mark Zuckerberg, the founder of Facebook.
Pierre Omidyar, founder of eBay.
Arianna Huffington, founder of the Huffington Post, a well-known online news site.
Caterina Fake, co-founder of Flikr, which hosts images and videos on the Internet.
