Unit- 2

An Entrepreneur (2021-22)
Topics Covered:
➢ Differentiation between various types of entrepreneurs.
➢ Competencies of an entrepreneur
➢ Meaning of Ethical Entrepreneurship
➢ Importance of Ethical Entrepreneurship
➢ Value of ethics to an entrepreneur
➢ Values, attitudes and motivation required by an entrepreneur.
➢ Differentiation between Entrepreneur and an employee.
➢ Differentiate between Entrepreneur and Intrapreneur
➢ Importance of Intrapreneurship in an organization.

Types of Entrepreneurs

In the initial stages of economic development entrepreneurs tend to be shy and humble but as the development
process picked up speed they tend to become more enthusiastic and confident. They make the business
environment healthy and development oriented. Highly enthusiastic and innovative entrepreneurs exist only in
developed countries as level of their economic and technological development has reached a certain level,
whereas in developing and under developed companies, imitative entrepreneurs are more successful.

Classification of entrepreneurs (as per C. Danhof)

Innovative Imitative Fabian Drone

Innovative entrepreneurs

• They are adventurous entrepreneurs who attempt to put attractive possibilities into practice are included
under this type.
• They utilize a chance to introduce a new technique or a new product . They mobilize sufficient capital to
start an enterprise.
• They are commonly found in developed countries.
• They are aggressive in nature
• Example: Walt Disney who started huge theme parks such as the Disney Land.

Imitative entrepreneurs

• They attempt to imitate innovative entrepreneurs.

• They imitate the techniques and activities of others.
• They contribute to the development of under developed countries. For example: The local mobile
companies using the same technology as of big companies to manufacture their products.
• They are adaptive and more flexible.

Difference between Innovative and imitative entrepreneurs

Innovative Imitative

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 They start new ventures and find new innovative ways They copy or adopt suitable innovations made by
to start an enterprise. innovative entrepreneurs.
They are found in developed nations. They are found in under developed nations.
They are creative They are adoptive

Fabian entrepreneurs

• They attribute preference to customs, religion, tradition and past habits come in this category.
• Being shy and lazy they are very cautious to accept changes and they view changes with suspicion.
• They are imitative by nature but are not having determination and also lack power.
• Reluctant to face risk and they continuously follow the footsteps of their predecessors.
• They imitate only when it becomes perfectly clear that failure to do so would result in loss of the relative
position of the enterprise. Example ; co parceners in HUF

Drone entrepreneurs

• They are unwilling to make any change in the production system even if the system causes losses again
and again and are found in under developed countries.
• They never try to rise in accordance with the opportunities or to accept the warnings given by times.
• They resist changes and hence termed as laggards.
• Such entrepreneurs are generally thrown out of the market sooner or later.

Classification of entrepreneurs (on the basis of type of business)

Business Trading Industrial Corporate Agriculture

entrepreneurs entrepreneurs entrepreneurs entrepreneurs entrepreneurs

1. Business entrepreneurs

• These are individuals who conceives an idea for a new product and then create a business to materialize
their idea into reality.
• They tap both production and marketing resources.
• Deals in both manufacturing and trading aspects of business.

2. Trading entrepreneurs

• They undertake trading only either domestically or internationally.

• They taps marketing resources and uses new ideas different from others to promote their business.
• They demonstrate their ability in pushing many ideas ahead to promote their business.
• Example ; Big Bazar, Reliance Fresh

3. Industrial entrepreneurs

• He undertakes manufacturing activities only by identifying the potential needs of the customers .
• They possess the ability to convert economic resources and technology into a profitable venture.

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 • For example: Enterprises like Hero Motorcorp and Hyundai Corporation.

4. Corporate entrepreneurs

• Such entrepreneurs are interested in management part of organization.

• They use exceptional organizing and coordinating skills to manage a corporate undertaking E.g.
Ambanis, Tatas etc.
• A trust registered under the trust Act and a company registered under Companies Act is examples of
corporate undertaking.

Agricultural entrepreneurs

• They are involved in production and marketing of agriculture inputs and outputs e.g. Horticulture ,
Forestry etc.
• They cover a broad spectrum of agricultural sector and include its allied occupations.

Classification of entrepreneurs (on the basis of technology)

Technical Non technical

Technical entrepreneurs

• They are essentially compared to craftsmen. They develop improved quality of goods because of
theircraftsmenship.
• He concentrates more on production than on marketing.
• He uses his innovative capabilities in matters of production of goods and rendering of services.
• His greatest strength is his skill in production techniques.

Non technical

• They are concerned more on the marketing and distribution strategies to promote their business.
• Their greatest strength is his ability to create market of his product and reach them effectively.

Classification of entrepreneurs (on the basis of motivation)

Spontaneous Induced Motivated

entrepreneurs entrepreneurs entrepreneurs

Spontaneous entrepreneurs

• He has a strong conviction and confidence in his abilities.

• Starts his business out of natural talent.

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 • They take initiative, boldness and have confidence in his abilities to convert his ideas into an
entrepreneurial activities.
• They are natural entrepreneurs and don’t need any external motivation.

Induced entrepreneurs

• Induced due to policy measures of the government.

• Most of the induced entrepreneurs enter business due to financial, technical and several other facilities
provided to them by the state agencies to promote entrepreneurship.

Motivated entrepreneurs

• They come into being because of the possibility of making and marketing of some new products for the
use of consumers.
• They are motivated by the desire for self fulfillment.
• They are highly ambitious and are normally not satisfied by the slow progress in their jobs.

Classification of entrepreneurs (on the basis of generation)

First generation Second generation Third generation

entrepreneurs entrepreneurs entrepreneurs

First generation entrepreneurs

• This category consists of entrepreneurs whose parents or family have not been in business and were into
salaried service.
• The change of mindset of the middle class has made such entrepreneurs acceptable in the society. For
example: DirubhaiAmbani of Reliance ,Narayana Murthy of Infosys.

Second generation entrepreneurs:

• These are the entrepreneurs who get business from their parents or inherit from first generation
entrepreneurs. For example: Anil and MukeshAmbani of reliance group.
• They are highly risk averse and fear failure.

Third generation entrepreneurs:

• These are the ones who get their business from grandparents or great grand parents.
• This is commonly found model in India.

Professional entrepreneurs

• They are interested in establishing a business but does not want to run or operate it.
• After running his business for a while they sell it and starts another venture.

Competencies of an entrepreneur
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Meaning:It is defined behavior that provide a structured guide enabling the identification, evaluation and
development of the behaviours in the individual.

Why competencies are required?

✓ Venture into an enterprise
✓ Organize an enterprise able and completely.
✓ Realise the goals for which the enterprise is established.

Classsification of competencies

1. Entrepreneurial Competencies

These competencies are certain basic skills to be acquired by the entrepreneur which determine the type of
behavior expected by the entrepreneur in performing various tasks in the discharge of his function. Some of the
talents are latent while others are acquired by training and development.

2. Initiative
✓ Entrepreneurs seek opportunities and take the initiative to transform the m into business venture
enterprises.
✓ Does things before asked or forced to buy events.
✓ Acts to extend the business into new areas/ products or services.
3. Creativity and innovation
✓ Entrepreneurship demand creativity and innovation.
✓ To have an edge over the competitors the entrepreneur must use new ideas, innovative products
or services.
✓ An entrepreneur exhibits innovation while being unique and original in their solution and go for
continuous search for problems in the society

Example, changes in the packaging of potato chips.

4. Risk taking and risk management
✓ Deliberately calculate risk and evaluate alternatives.
✓ Takes action to reduce risk or control outcomes.
✓ Places self in situations involving a challenge or moderate risk.

For example, when Dhirubhai Ambani faced cash crunch he took the risk of issuing shares in
1977 to the public when they were not that aware about share market
5. Problem solving
✓ An entrepreneur must acquire the necessary mindset which will help him to understand that the
problems are part of the process and start working on the solutions.
✓ He should have ability to look for resources that would help him to solve the problems
.
For example: When an entrepreneur faces cash crunch he should look for alternative sources for receiving
funds. Ratan Tata shifted the manufacturing plant of Nano cars from Singur to Sanand due to
unforeseen complexities.

6. Systematic planning and monitoring

✓ Planning is what to do and monitoring means checking.

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 ✓ To be a good planner an entrepreneur must plan by breaking large tasks down into time constrain
sub tasks.
✓ Revise plans in the light of feedback or performance or changing circumstances.
✓ Keep financial records/ implications of your plans and use them to make business decisions.
7. Persuasion or influencing others or networking
✓ Uses deliberate strategies to influence or persuade others.
✓ Uses key people as agents to accomplish own objectives.
✓ Act to develop and maintain business contracts.
8. Leadership
✓ An entrepreneur should also be an effective leader who should have the ability to guide and
motivate his/her team.
✓ At the time of trouble, it is the will power and effective business acumen and communication
skills which oversees the success of the corporation.
9. Persistence
✓ Since entrepreneurial pursuits are new and need very close attention. To create need in the
market entrepreneur need intense perseverance.

Example: When Mahima Mehra brought out her product – Haathi Chaap, she had experimented on various other
material before using elephant dung to manufacture handmade paper
10. Quality performance
✓ One of the behavioral skills necessary is the sensitivity to and concerns for the standards and
quality of work.
11. Information seeking
✓ Information plays a very crucial role in enterprise building .
✓ The quality and extent of information collected and the way these have been used to make
various decisions decides the success and failure of any entrepreneurial venture.
Enterprise launching competencies

✓ There is no dearth of resources but very few make efforts to ensure best use of these resources.
✓ Entrepreneurs should identify and avail the facilities and resources needed to launch the enterprise.

Enterprise management competencies

✓ The success or failure of any enterprise depends upon the ability of an entrepreneur to perform
management functions.
Supplementary material
______________________________________________________
Ethical entrepreneurship

Evolution of ethics

In the early days of civilization no standards were set of what is right and what is wrong i.e when ethics were
not in place. No human behavior could be categorized as good or bad which is what lead to the development of
these standards to guide human behavior. In early phases these ethics were known as taboos that were designed
to save men from dangers, slowly and gradually these were formalized and became accepted forms of behavior .
In different forms of societies there are different set of ethics though there are some morals that are considered
to be universal and are accepted as such in all societies.

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Meaning of ethics

The word ethics has been derived from a Greek word ‘ethos’ which means norms, values or character prevailing
in the society.
Ethics clearly define what is right and what is wrong in human behaviour as approved by society in a particular
field or activity. They are a set of principles written or unwritten governing a professional human activity.

Definition of ethics

“Socially determined moral principles which govern business activities.”

Examples
Following fair trade practices, charging right price from customers, giving just treatment to the workers and
earning reasonable profits, judicious use of natural resources.

Ethical practices to be followed by an entrepreneur

• Providing quality and correct quantity of goods to consumers.

• keeping in mind the environmental issues
• Paying the minimum and correct wages to workers.
• not to use child labour in their production
Judicious use of natural resources.
•
Importance of ethical business for an entrepreneur

• Attracting customers to boost sales and profits

• Making employees wanting to stay in company , reducing labour turnover
• Attracting investors and protecting business from take overs.
• ________________________________________________________________________

Meaning of Values

➢ Values are beliefs that a person holds about things and aspects of life. These are guiding principles that
moulds anybody’s behaviour and life.
➢ Mostly the values a person holds are developed by the company he keeps and the first value he learns
are from his or her parents and later in school.
➢ All the societies have different value systems and people living in those societies are guided by these
values.
➢ Values are guiding principles and when a person is in a dilemma as to what direction he should take at
particular moment in his life. It is these values that guide his action and behaviour.

Definition of values

“Beliefs that guide actions and judgment across a variety of situations”

Milton Rokeach

Core values of an entrepreneur

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Innovation and creativity

➢ Innovation and creativity are very important values found among most of the entrepreneurs.
➢ Creativity is the ability to see new ways of doing things and innovativeness is the ability to make it work
in practice.
➢ Example: Introduction of various products in sachet, introduction of debit and credit cards in the
banking sector.
Independence or ownership

➢ Sense of independence or ownership is involved in the action plan of all significant entrepreneurial
ventures.
➢ Commitment, sense of complete identification, sincerity and hard work to achieve their mission
constitute the ingredients of ownership factor.

Respect for work

✓ Successful entrepreneurs believe that they can achieve anything through hard work.
✓ This value provides goal direction which encourages them to pursue a path and career in which the
rewards and incentives are linked to the degree and quality of hard work.
Quest for outstanding performance

✓ If you see the success stories of the entrepreneurs, you will notice that it is the value and quest of
outstanding performance which has resulted in the speedy and consistent growth of their enterprises.
✓ Challenges will be there but to motivate entrepreneurs and due to their quest for excellence, they
overcome and resolve problems under pressure.

Dynamic entrepreneurs are guided by the value of outstanding performance. It is the quest for outstanding
performance on the part of Narayana Murthy that saw the emergence and speedy growth of Infosys.
When you read the success story of Steve Jobs, which is given in the beginning of the chapter, you understand
that he always believed in outstanding performance, for example, when Apple phone was launched, he took great care to
make the package eco-friendly and light weight with 3D (Three Dimensional) images on it. Such was his dedication for
extraordinary performance
_____________________________________________________________________________

Here is one story to explain how ethics prevails in Entrepreneurship:

“Amal and Kamal, father and son respectively, had built up a thriving retail grocery shop in Haldwani
(Uttaranchal). One of their suppliers, having delivered a large consignment of rice and sugar, left the bill with
Kamal. He kept that in a small cabinet in the shop. Then both the supplier and Kamal forgot about it. After about
eight months or so, at the end of March, Amal began to clear the backlog and looked carefully into the cabinet. He
discovered the unpaid bill and informed Kamal. The latter was shocked. Amal asked Kamal to contact the supplier
immediately and clear his dues. Kamal replied: “No Father, it is the supplier‟s duty to remember and collect his
dues. Why should we chase him?” Amal replied, “Son, that is not the way honorable people do business”. It is the
innermost belief, i.e., sense of values and business ethics, which guided Kamal to pay what is due to the supplier.

Attitude
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 Meaning of attitude
It is an important psychological attribute of individuals which shape their behavior. It may be defined as the
way a person feels about something a person, a place, a commodity, a situation or an idea.

Affects behavior
Invisible
Features of attitude Acquired
Pervasive

Affects behavior
• People behave in accordance to their attitude.
• In the absence of an influence, people with certain attitude behave in an intended way.
• For instance, when you want to purchase a specific model of a certain company in the absence of
any external influence. Attractive ads displayed in the store can influence you and change your
behavior ( to purchase a different model or a phone of a different company)
Invisible
• Attitude is purely psychological and is not externally visible.
• Depending on the behavior a person exhibits towards a commodity or person or country, we can guess
the attitude of a person.
• For instance, depending upon the interest shown by a student on a specific subject, we can infer that the
student has a positive attitude towards that subject or faculty.

Acquired

• The attitude is not acquired by birth. During childhood we acquire the attitude mostly from the family
members. As we grow , we start acquiring the attitude from the society.
• We acquire the attitude gradually.
• The process of acquiring the attitude remains thoughout the life span.

Pervasive
• An individual acquires an attitude through the social interaction with different individuals in the society.
• For instance, a person may have positive and negative attitudes towards religion, politics, politicians or
countries.
Sources of attitude
Sources of attitude

Direct personal Group Influential

Experience Associations Others

Direct personal experience

• The quality of a person’s direct experience with the attitude object determines his/her attitude towards it.
• For example: if a worker finds his/her job challenging but because of the cooperative behavior of
coworkers he/she may have a positive attitude towards his/her job because of the quality of his/ her
direct personal experience with the job.
Group associations
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 • The groups that we belong to will have a great influence.
• For instance, being part of a soccer group might lead to development of negative attitude about another
sport.
Influential others
• A friend or a relative might influence you to form a positive attitude towards an object or product or
person.
• For example, your friend might influence you to develop a positive attitude towards a sport. Your
favorite star might influence you ( through ad) to develop a positive attitude towards a certain four
wheeler.

Essential attitudes of an entrepreneur

1. Have passion for the business

• One’s passion will help to overcome difficult moments and persuade people to work for you and to do
business with you.
• When it wanes, as it surely will in difficult times, take some quiet time.Take inventory of the all the
reasons one started the business, that should renew one’s passion.

2. Set an example of trustworthiness

• People have confidence in trustworthy individuals and want to work with them.

3. Be flexible, except with core values

• One’s plan and strategies will change as time goes on .
• In spite of the pressures for immediate profits, do not compromise on core values.

4. Don’t let fear of failure hold one back

• Failure is an opportunity to learn and the fear to loose should not hold u back.

5. Make timely decisions

• Procrastination should be avoided and should encash every possible opportunity.

6. Caring for oneself
• One should take care of one’s health.
• One’s health is precious and more valuable than any other thing.

7. Keep one’s ego under control

• Wastage of resources of the company to impress others should be avoided.
8. Believe in oneself
• One’s confidence is contagious to one’s employees, customers, stakeholders, suppliers so one must not
lose confidence in oneself and should believe in one’s abilities.

9. Encourage and accept criticism graciously. Admitting one’s mistakes

• Should encourage employees to give honest opinions.

10. Maintaining a strong work ethic

• One’s employees will follow the lead.

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• It will also help one beat one’s competition by outworking them, particularly when the product or
service is very similar.

11. Rebound quickly from setbacks

• Ups and downs are part of the business.
• Learning from the setbacks is important.
Periodically getting out of one’s comfort zone to pursue something important
• To grow personally and professionally one needs to move out of the comfort zone.

MOTIVATION

CONCEPT OF MOTIVATION
• Motivation has been derived from the word ‘movers’ which means to move.
• Motivation may be regarded as something which prompts, compels and energizes an individual to act or
behave in a particular manner at a particular time for attaining some specific goals.
• Motivation is the driving force that inspires people to put their efforts willingly for the achievement of
organizational goals.
• It is the inner state within an individual that automatically drives him towards goal oriented activities.
• Arousal of such a feeling in the mind of an individual drives him automatically to attain the expected
goals of an organization.
• It cannot be forced on employees. It comes instinctively from the employees as it is their voluntary
willingness to do the work.
• Effective motivation of people in the organization leads to effectiveness, both at individual and
organizational level.

DEFINITION OF MOTIVATION
Motivation means stimulating people to action to accomplish desired goals. William Scott

PROCESS OF MOTIVATION

UNSATISFIED NEED
• Need is the starting point of motivation.
• The motivation process always begins when a person feels that there is some unsatisfied need in him.
TENSION
• When a unsatisfied need is recognized, a tension is created in the mind of concerned person.
DRIVE
• The tension stimulates his drives and compels him to take action to fulfill his need.
SEARCH BEHAVIOR
• These drives create a drive to search for different ways or alternatives to relieve this tension.
SATISFIED NEED
• After searching for various options , person chooses a particular option .
• After behavior as per chosen option, the concerned person evaluates whether the need is satisfied or not.
REDUCTION OF TENSION
• When the person is successful in satisfying his need, he feels motivated and tension is reduced.
• Motivation is a continuous process and it does not end by satisfaction of a particular need. So, after
fulfillment of a particular need, another need develops and the process continues.

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 MASLOW’S NEED HIERARCHY THEORY

PHYSIOLOGICAL NEEDS
• These are the basic needs of an individual which includes food, clothing, shelter, air, water, etc. These
needs relate to the survival and maintenance of human life
SAFETY NEEDS
• These needs are also important for human beings. Everybody wants job security, protection against
danger, safety of property, etc
SOCIAL NEEDS
• These needs emerge from society. Man is a social animal. These needs become important. For example-
love, affection, belongingness, friendship, conversation, etc
ESTEEM NEEDS
• These needs relate to desire for self-respect, recognition and respect from others.
SELF-ACTUALIZATION NEEDS

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 • These are the needs of the highest order and these needs are found in those person whose previous four
needs are satisfied. This will include need for social service, meditation.

ASSUMPTIONS OF MASLOW’S THEORY

• People satisfy their various needs in terms of hierarchy.
• People move to the next higher-level needs when their lower-level needs are reasonably satisfied. The
degree of reasonableness may vary from person to person.
• A satisfied need does not work as a motivator but its next higher-level need work as motivator.
• Various needs are interdependent and overlapping, with each higher-level need emerging before the
lower-level need is completely satisfied.
CRITICISM OF MASLOW’S THEORY
• It is said that the need hierarchy may not follow the sequence stated by Maslow.
• The hierarchy of needs may be different for different kinds of people.
• For example: in case of creative people like singers, painters etc. their self actualization needs may
become the dominant motivation force even before their lower order needs are satisfied.

McCelland’s Theory of motivation

According to him, people are motivated by three things:

a) Achievement - It means wish to take responsibility for finding out solutions to problems, master complex
task etc.

b) Affiliation – It means desire to belong, an enjoyment of teamwork, concern about interpersonal relationships
etc.

c) Power : It means drive to control and influence others, need to win arguments etc.

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According to McCelland, the presence of these motives in an individual indicates a predisposition to behave in
certain ways. Therefore, an entrepreneur should recognize which need is dominant in a particular employee in
order to motivate him for the benefit of business.

Difference between entrepreneur and an employee

Basis Entrepreneur Employee

To start an enterprise for personal Provide service in an enterprise of their choice and
satisfaction and to commercially exploit work as per their aptitude and get a secured
Motive their innovative products or services employment.
Owner of the enterprise and the sole
Role decision maker. Servant in an enterprise with limited authorities.

They bear all the risk and constantly working They do not bear the risk and work for only
Responsibilities for the enterprise. specified work hours.
They take fixed salary. Sometimes they get bonus,
They take all the profits earned by the if any, during special occasions or depending on
enterprise. The profit is uncertain at times. their performance. Their takeawayincome is
In addition to this they enjoy the success of limited. They cannot have the sense of ownership
Benefits the enterprise. of the enterprise.
They are constantly watching for the
changes in the market and the environment
to innovate better products or services and They perform their day today activitiesof the job
innovation to drive the organisation towards its goal. and meet the targets set by the business.
They should possess the entrepreneurial
qualities likeself motivated, creative and They should have an educational qualification
innovative, ability to gauge the future, risk depending on the nature of the job. For instance,
Qualification taking etc. an engineer should have a degree in Btec/ Mtech .

Intrapreneurship

Concept of Intrapreneurship
An intrapreneur is a person , who has entrepreneurial competencies and who innovate the products or services
for the organization he/she is working for. The intrapreneur is usually an employee of a large organization who
uses the resources and capabilities of the organization, rather than their own, to put innovative ideas to practice
and align their goals to the organizational goals. The concept of intrapreneurship or corporate entrepreneurship
was coined by Gifford Pinchot in 1980’s.

Differences between Entrepreneurship and Intrapreneurship

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Points of Intrapreneurship Entrepreneurship
difference
Definition Intrapreneurship is the Entrepreneurship is the dynamic
entrepreneurship within an existing process of creating incremental wealth.
organization.

Core objective To increase the competitive strength To innovate something new of socio-
and market sustainability of the economic value.
organization.

Primary motives Enhance the rewarding capacity of the Innovation, financial gain tad
organization and autonomy. independence.

Activity Direct participation, which is more Direct and total participation in the
than a delegation of authority. process of innovation. _

Risk Hears moderate risk. Bears all types of risk.

Status Organizational employees expecting The free and sovereign person doesn’t
freedom at work. bother with status.

Failure and mistakes Keep risky projects secret unless it is Recognizes mistakes and failures to
prepared due to high concern for take new innovative efforts.
failure and mistakes.

Decisions Collaborative decisions to execute Independent decisions to execute

dreams. dreams.

Whom serves Organization and intrapreneur himself. Customers and entrepreneur himself.

Family heritage May not have or a little professional Professional or small business family
post. heritage.

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 Relationship with Authority structure delineates the A basic relationship based on
others relation. interaction and negotiation.

Time orientation Self-imposed or organizationally There is no time-bound.

stipulated time limits.

The focus of on Technology and market. Increasing sales and sustaining

attention competition.

Attitude towards Follows self-style beyond the given Adaptive self-style considering
destiny structure. Structure as inhabitants.

Attitude towards Strong self-confidence and hope for Strong commitment to self-initiated
destiny achieving goals. efforts and goals.

Operation Operates from inside the organization. Operates from outside the organization.

Why is intrapreneurship necessary?

• To retain talented staff.
• Win-win situation for both organization and the employee.

Google’s Intrapreneurship program

“Innovation time off” is a motivation process, used by Google to encourage the employees. In this program
every employee spends 20% of their time to work on projects that interest them. This intrapreneurship program
involves.
a. Select a project and submit the proposal
b. Evaluate the project.
c. Approval of the project.
d. Monitor the progress of the project.
Several of Google’s products and services like Gmail, Orkut and adsense are the products of “Innovation time
off” Intrapreneurship program.According to an announcement, half of the new products or services from
Google were from this program.
In India the enterprises like Marico and kinetic Engineering Limited has introduced similar programs.

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Activity:
Prepare a Power Point presentation of the success story of two young entrepreneurs.

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