CHAPTER

CGROaTH

cORPOHATION

3
SERESTART INVESTOR
0aiNCONNGTION INANCE
OFFICE
WORKING FUNDING"oIN PLAN
RESEARCHe
START
TEAMIDEAGBUSINESS
DROANIZATION
CAREERSMPANY
AEDUCATIONTEAMWORK
ODATA
UP
ANALYSIS
5INTECLIGENT

ENTREPRENEUR: MEANING
AND CHARACTERISTICS
LEARNING OBJECTIVES
O Entrepreneur - Introduction
O Entrepreneur - Meaning
O Definitions of Entrepreneur
O Characteristics of an Entrepreneur
O Functions of an Entrepreneur
O Skills to Become a Successful Entrepreneur

ENTREPRENEUR : INTRODUCTION
Industrial development of any nation is the outcome of the purposeful human activity and
entrepreneurial thrust. Entrepreneur is presently at the crest of popularity. Alarge number of people
are seeking entrepreneurship as a career option in India. Unemployed youth are getting attracted to
entrepreneurship in increasing number. They are now planning to set up their own enterprise. One of
the important elements of the development of a country is considered entrepreneurial development.
The development of entrepreneurs can solve the problems of growth, social justice and diffusion of
economic powers. Hence, it is felt that industrial activity can be generated by promoting good
entrepreneurs and a positive attitude towards entrepreneurship. The development of entrepreneurs
will optimise the use of unexploited natural resources, generate self- employment and self-sufficiency
of econonmy. It is in this direction, the planners in India have been putting efforts and stressing on the
development of entrepreneurs and entrepreneurship.
ENTREPRENEUR -MEANING
An entrepreneur is an individual who rather than working as an employee, founds and run a
small business, assuming all the risks and rewards of the venture. The entrepreneur is commonly
 and
Entropreneur : Moaning
Page .. 3.2
goods or
business
services and involves Chaprraoccedurteristleosg,
or
Entrepreneur: Meanlng and Charscterletlcs
Page ..3.3
seen as an innovator, a source of new ideas,business especially when it
profit by starting
a a new seeing basically an innovator who carries out new combinations to initiate and accelerate the
Entrepreneur is someone who starts his own
opportunity. Entrepreneur is a person who attempts
to make a
taking risks.
Hence, or by company process of economic development.
operating alone in the business world especially
businesses,
whenitinvolves risks in thehope of
taking on financial current andfuturee
is Entprofi
repret.neurThese
a person who sets up a business or to anticipate
are the people who have the skills and initiative necessary who combines capital and labour for and
needs Innovator Highly Optimistic

bring new ideas to market. An entrepreneur a person the

Risk Taker Technicaly Competent
purpose of production of goods and services.
Enterprise
Entrepreneurship Good Organiser Socially Responsible
Entrepreneur

Outcome of Self Oonfidence Strategic Planner

Actor and Act
Actor Act
Characteristics of
Decision Maker Bold and Brave
Entrepreneur

DEFINITIONS OF ENTREPRENEUR combine

a visionary Good Communicator
means of production at
certain prices in order to them *intoa
"An entrepreneur is the agent who buys uncertoin ot the moment at which he commits himself to his costs.
proauct that he is going to sell at prices that ore Hard Worker Mentally Sound
-Richard Cantillon
or land and nh
unites all means of production, the labour, the capital
An entrepreneur is the economic 48ent zwho eploument. the reconstruction of the entire capttal that he utilises Goal Seter Leadership
Jinds the vaiue of product which results from their
-J. B. Say
and the value of wages, the interest and the rent that he pays as well as profit belogig to nmse
to marimise his profits by undertaking innovattons. Innovation Change Agent
Entrepreneur is an economic man, zoho tries -E. E. Hagen Accountability
inDolbes problem solving and he gets satisfaction from using capabilities in soBving such problems.
persons who initiate, organise. manage and control the afairs of abusiness unit that combines Achievement
"Entrepreneurs are industry, trade of
the factors of production to supply goods and services, whether the business pertains to agriculture, -G. H. Evans
Orlented
profession."
"Entrepreneur is one who seeks to reform or revolutionise the pattern of production by exploiting an innovation or 2. Risk-Taker. Risk means uncertainty. It is the condition of not knowing the outcome of an
more generally, an untried technological possibility for producing a new commodity or producing an old one in a new activity or decision. An entrepreneur takes calculated risk. He faces uncertainty confidently
way, by opening up a new source of supply of material or a new outlet of products." -Joseph Schumpeter and assumes risk. Risks and reward are inseparable. Highest order of ability is needed to
"An entrepreneur is one who aluays searches for ciange, s_ponds to it ad exploits it as an opportunity. bear heavy risks and thereby earn high gains. An entrepreneur likes to take realistic risks
Innovation is considered as an instrument of entrepreneurship. An entrepreneur innovates and creates resources because he wants to be successful.
because there is no such thing as resource until somebody finds a use for something and endows, economic value to it. 3. Good Organiser. The most critical skill required for industrial development is the ability of
Innovation is being presented as adiscipline, capable of being learnt and capable of being practiced. Peter F. Drucker building a sound orgarnisation. An entrepreneur assembles, coordinates, organises and
"Entrepreneurs are those people who have the ability to see and evaluate business opportunities, together the manages the other factors namely land, labour and capital. It also refers to the ability to
necessary resources to take advantage of them and to initiate aypropriate aciion to ensure success." think out and start new business. He obtains factors of production from the society and
-International Labour Organisation supplies the finished product to the society. Enterprise serves as the orgaisational
framework within which an entrepreneur as an organiser has to decide concerning what to
| CHARACTERISTICS OF AN ENTREPRENEUR produce, how much to produce, when to produce and how to produce. Thus, entrepreneurs
are persons who initiate, organise, manage and control the affairs of a business unit that
1. Innovator. Entrepreneurs are instrumental in introducing new methods, new products, combines the factors of production to supply goods and services, whether the business
new markets, conquest new sources of raw material, and new forms of industrial unit. They pertains to agriculture, industry, trade or profession. Being an organiser, he develops
are the people who valued business as a means and sign of organisation structure, makes rules, develop policies, divide work etc.
achievement. Entrepreneur is
 Entreoreneur: Meaning and
age 4. 3Self-Confidence. It is esserntial to be a self-confident for an entrepreneur, Ho should hav
selfonfident entrepreneur
can Characteristl
trust
Entrepranour : Meaning and Characterlstlcs
Page .3.5

can delegate his authorityabilities.

faith in himself and in his
OndyHeashould have the confidence to implement ana
to others. others accomplishment of excellent, innovative and risk involving task. The entrepreneurial goal
change and overcome my resistance to change. An entrepreneur should have courage of an entrepreneur can be boosted by inculcating in him the need for achievement.
11. Highly Optimistic. An entrepreneur must be optimístic. He should approach his venture
own the mistakes and correct them.
entrepreneur is to make
decisione with a hope of success and optimistic attitude. An entrepreneur attempts his task with a
5. main function of an the type of He takes optimistic attitude for success rather than with a fear of failure. The positive thinking of
Decision-Maker. Hedecides about
done and the way
decisions
The
of doing
regarding the of enterprise.
it. An
activities businessto be
entrepreneur must be innovative in decision makine
proces. The true entrepreneurship requies creative decision-making, rational approach
entreprerneur can turn the situation favourable to him. A wise entrepreneur can analyse the
chances of success by understanding the environment optimally. A highly optimistic
decision. The entrepreneur can tun unfamiliar and adverse situation to be favourable for him. Always be
quick and correctdecision-making
problem solving ability and ability to take
of enterprise directly depends
upon the proficapacitabitlyity ofanan positive.
12. Technically Competent. The success of an enterprise largely depends upon the ability,
productivity an
entrepreneur. capability and skill of an entrepreneur to cope with latest technology. Technical
following steps : competency refers to the ability to adopt and use new method of production and
As a decision maker, an entrepreneurhasto take
(a)
distribution of goods. A reasonable level of technical knowledge is required to be a
(b) Define
Collect the
the problem;
important and relevant infornation, tofind the probable cause of problem: successful entrepreneur.
others; 13. Socially Responsible. An entrepreneur should think of projects of social significance and of
(C) Discuss the problem with subordinates and potential solution; importance of others. He should expand his entrepreneurial activities, in order to help in
(a) Encourage members of groups to come up with
three or four after discussions. creating conditions for social change and for development of businesses which benefit the
(e) Try to reduce the available alternatives to society. The enterprise is considered as a social institution and an entrepreneur should
(() To select the most feasible solution consider each alternatives. expand his business activities for the betterment of the society. Such an attitude for others
(g) Implement the decision; raises the level of entrepreneurship from that of an individual activity to a mearingful
(h) Review the decision. social endeavour.

6. Visionary. Every entrepreneur has a vision for growth and development. An entrepreneuw 14. Strategic Planner. The entrepreneur is the most knowledgeable person to write the
is one who incubates new ideas starts his enterprise with these ideas and provides added business plan. Planning is really nothing more than decision making that is, deciding what
value to society based on their independent initiative. to do, how to do and when to do. It is most important for the success of a business.
Plannring is most effective way to draw out the best and eficient method to achieve
7. Hardworker. Adistinguishing feature of an entrepreneur is the willingness to work hard. maximum profitability.
The entrepreneur has to follow the principle, "hardwork is the key to success". The
successful entrepreneurs are hard workers. Driven by their desire to excel they put in 15. Bold and Brave. Entrepreneurs face the adversities boldly and bravely. They have faith in
longer hours of work. themselves and attempt to solve the problems even under pressure.
8. Goal-Setter. Entrepreneurs get happiness by setting and striving for goals. They may not 16. Good Communicator. An entrepreneur must have the quality of communicating effectively
in written and oral communication. Good communication refers that both the sender and
always achieve those goals. What is more important for an entrepreneur is that of settinga the receiver understand the message in same sense.
meaninghul goal. To entrepreneurs merely selecting anew meaningful goal is self-renewing
planning and carrying out the steps needed to reach their goal are stimulating. Reaching 17. Mentally Sound. An entrepreneur is energetic, single-minded, having a mission and a clear
one goal set by entrepreneur will lead to the setting up of another goal. vision. He should be a person of creative thinking ability and analytical thinking ability. An
9. Change Agent. An entrepreneur also acts as a change agent by entrepreneur must be intelligent, adaptable and problem solvers.
recognising the need and
requirement for change and then takes steps to initiate the change. He has to estimate the 18. Leadership. Leadership quality is the most important characteristic of entrepreneur. It is
critical factors responsible for change and study the influence of these factors on the the process of influencing and supporting others to work enthusiastically towards
prevailing and future working of the enterprise. The entrepreneurs identify the various achieving objectives. Leadership is the catalyst that transforms potential into reality,
opportunities provided by the fast changing environment and exploit them in the best problems into opportunities.
interest of the enterprise.
19. Accountability. Entrepreneurs take success or failure to their stride. Credit for success,
10. Achievement Oriented. An entrepreneur is an achievement- oriented
person. He works for blame for the failure will go to entrepreneurs. It is the profit that best tells entrepreneurs
challenge, accomplishment and service to others. how well they are doing in the market. However, profits really serve only as yard-stick of
overcome challenges, to advance and to grow.Achievement orientation is a derive to performarnce, not as a goal.
Achievement concern refers to the
IANCTIONS OF MBN

() rmetona Functans
 Ertoraneur:MleanlngandCharactet
propositon Pig.. 39
the is
3
proftable, the etrepreneurpredsmaking
Assembling the KequirementsAter
toaembe that
suretherquiements.Theerttegen
contacts
machineryand
practica Entrepreneur :Meanlng and Characteristlecs

plantand The process of Planning involves anumber of steps:

selets the factory site. deidesabout ) Gathering information ;
capital
materials, et. dedes aboutthe
entrepreneur determinethe () Laying down objectves ;
Ihe to
estinated
How much theshareProposition.
4 Finaning apialwillbeisSUed, theartypeafthesharesto beisued,andhe natue (ii) Devloping planing premises ;
saffnances
enterprise. The requirements instihutionsfora (Giv) Examining alternative courses of action;
boowinghum
fnancal
loans, whether debentures orrequirements(orshortperiodandlong
longer periad
Perioda () Evaluakon of action patterns;
are fnalised. The financial (vi) Reviewing limitatons,;
separatel;. (viü) Implementaton of plans.
anumber of persons to look after its
(C) Managerial Funcions 2. Onganising. Every business enterprise needs the service of
different aspects. Ihe entrepreneur sets up the objectives or goals to be achieved by its personnel. 1Ihe
Planning
energy of every individual is channelised to achieve the enterprise objectives. The function of
the acivities of other factors of
organising is to arrange, uide, coonidnate, direct and control objectives ot the
Oganisihy production, viz, men, material, money and machines so as to accomplish the
assocates for the
enterprise. Organisation provides the necessary framework within which people
attainment of business objectives.
Stating
The process of organization involves the following steps:
Diectng 0 To identifyjing the work to be performed;
() To dlassify or group the work ;
Leadership (iüi) To assign these groups of activiies or work to individuals;
fiv) To delegate authority and fx esponsibiity and
Managerial Communicaton (v) To coordinate these authority-responsibility relaionships of various activities.
Functions
The character and type of orgrisation depends upon the size and nature of the enterprise. There
Mohation are many types of organisations.
() Line organisaion
Sipervision (ü) Functional organisation and
(ü) Line and staff organisation
bottom. Under
Coordination In line organisation authority flows vertically from the top of the hierarchy to the
functional organisation, the work is divided into different departments. Each department deals in one
type of work and it specialises in one work only. Aworkman has awork under many superiors who
Controlng specialise in different functions. Line and staff orgarisatino provides for specialists with line
executives. It is acombination of line and functional form of organisation.
1 Planning. Planning is abasic managerial kuncton of entrepreneur. Panning helbs n 3. Staffing, The function involves manning the positions created by organisation process. IF's
determining the course acion to be followed for achieving various entrepreneural Concerned with human resources of an enterprise.
objectives. It is decision in advance, what to do, when to do, how to do and who will doa In the words of Koontz and O'Donnel, staffing is flling, and keeping illed, positions in the
pariular task. Paning is aproces which invdlves thinking betore doing. Planning s organisation structure through defining work-force requirements, appraising, selecting,
Concemed with the mental state of entrepreneur. He thinks betore undertaking a work. compensating and training."
Other managerial funcions of entrepreneurs such as organisaing statting, directing, co Thus, staffing consists of the following :
ordinating and controling are also undertaken after planing. It is aprocess of loking
ahead. (0 Manpower planning, ie, asessing manpower requirements in terms of quantity and
quality ;
 Entreprenour : Meaning and Charactorlstlee Pago .. 3.11
Page ... 3,10 Entroproneur : Moanlng and Characteristlcs
(i) Recruitment, seletion and training : 7. Motivation. The term motivation is derived from the word 'motive' which means a need or an
(ü) Placement of marn power; emotion that prompls an individual into action. Motivation is the psychological process of creating
urge among the subordinates to do certain things or behave in the desired manner. It is a very
(iv) Development, promotion, transter and appraisal ;"
important function of entrepreneur. The importance of motivation can be realised from the fact that
(v) Determination of employee's remuneration. performance of aworker depends upon his ability and the motivation. There are many strategies
adopted by entrepreneur for increasing the motivation of subordinates. Entrepreneur has to provide
MANPOWER
RECURITMENT
SELECTION AND some personal incentive to subordinates to motivate, persuade and inspire them for contributing
PLANNING TRAINING their best towards the achievement of enterprise objectives. The incentives to be proved may be
financial, such as increase in wages, or non-financial, like better working conditions, job security,
recognition, etc. Asound motivational system must be productive, competitive, comprehensive and
PLACEMENT OF
MANPOWER flexible, and it must consider the psychological, social, safety, ego and economic needs of the
workers.
DEVELOPMENT, 8. Supervision. Supervision is another important managerial function of entrepreneur. After
DETERMINATION
PROMOTION
TRANSFER AND OF REMUNERATION
issuing instructions, the entrepreneur has to see that the given instructions are carried out. This is the
APPRAISAL aim of supervision. Supervision refers to the job of overseeing subordinates at work to ensure
maximum utilisation of resources, to get the required and directed work done and to correct the
or the other, in order to oot subordinates whenever they go wrong. Sound organisational set up, effective delegation, human
Every entrepreneur has to perform the staffing function in one form entrepreneur as it approach, effective communication and management by exception make supervision effective.
things done through others. But, it is decidedly a difficult managerial function of that is why it has 9. Co-ordination. Co-ordination is one of the most important functions of entrepreneur. It is
concerns human beings whose behaviour and actions cannot be predicted, and essential to channelise the activities of various individuals in the organisation for the achievement of
become a distrinct and specialised branch of management.
4. Directing. Directing is concerned with carrying out the desired plans. It initiates organised and common goals. Every department or section is given a target to be achieved and they should
planned action and ensures effective performance by subordinate towards the accomplishment of concentrate only a their work and should not bother about the work of other organs. It is left to the
group activities. "Direction is moving to action and supplying simulative power to the group." After entrepreneur to see that the work of diferent segments is going acording to pre-determined targets
planning, organising and staffing, the entrepreneurship has to guide and supervise his subordinates. and corrective measures have to be taken if there is any deviation. Co-ordination creates ateam spirit
Directing concerns the total manner in which entrepreneur influences the actions of subordinates. It is and helps in achieving goals through collective efforts. It is the orderly arrangement of group effort to
the final action of an entrepreneur in getting others to act after all preparations have been completed. provide unity of action in the pursuit of common objectives.
5. Leadership. An entrepreneur has to issue orders instructions and guide his subordinates in 10. Controlling. Controlling can be defined as "determining what is being accomplished, that is
their work with a view to improve their performance and achieve enterprise objectives. Leadership is evaluating the performance, if necessary, applying corrective measures so that the performance takes
the process by which an entrepreneur imaginatively directs or guides and influences the work of place according to plans." Control is essential for achieving objectives of an enterprise. Control is the
others in choosing and attaining specified goals by mediating between the individual and process which enables entrepreneur to get its policies implemented and take corrective actions if
organisation in such a manner that both will get maximunm satisfaction'. Leadership is the ability to performance is not according to the pre-determined standards. If planning is the beginning of the
build up confidence and zeal among people and to create an urge in them, to be led. To be a
successful leader, an entrepreneur must possess the qualities of foresight, drive, initiative, self
entrepreneur process, controlling may be said to be the final stage. Control is not possible without
planning, planning is meaningless without control. The main purpose of control is to see that the
confidence and personal integrity. Different situations may demand different types of leadership, ie. activity is achieving the desired results. Acontrol system, to be effective, must conform to the nature
autocratic leadership, democratic leadership and free rein leadership. of activity, report deviations promptly, reflect organisation structure, assure corrective action and be
6. Communication. Communication constitutes a very important function of economical.
entrepreneur. It is
said to be the number one problem of entrepreneur today. It is established fact that entrepreneur
spend 75 to 90 percent of their working time in communicating with others. Communication is the The process of controlling involves the following steps:
means by which the behaviour of the subordinate is modified and change is effected in their () Establishing standards of performance;
It refers to the exchange of ideas, feelings, emotions and knowledge and actions.
informations between two or (ü) Measuring actual performance;
more persons. Communication is a two-way process as it involves both (iii) Comparing the actual performance with the standard ;
understanding. It may be written, oral or gestural. Communication is essential for information and
decision-making (iv) Finding variance or deviations, if any and
and planning. It increases managerial capacity and facilitates control. It
good entrepreneur are good communicators and poor has been rightly said that (v) Taking corrective action or measures.
entrepreneur are poor communicators.
Pago ., 3.12 Entroprenour :Moanng and Charactorlatlog Entropronour ; Moaning and Characteristlcs Page ... 3.13
(D) Commercial Functions concept, a point of view and a way of thinking. It is directed towards the satisfaction of consumer
wants. Marketing is not confined to selling of goods and services. It includes functions like product
Producion planning and development, standardisation and grading, buying and assembling, storage,
transportation, market financing, risk bearing, etc. Marketing research has also become an important
Financo segment of this function. An enterprise has to improve its product and devise different marketing
techniques to survive the business. The use of an appropriate marketing mix is also necessary to
Markoting improve marketing function. The price fixation, channels of distribution and promotional effect to
Commerclal
form important marketing strategies,
Funclions
Personnel 4. Personnel :This function is concerned with people at work and with their relationship with in
an organisation. It aims to bring together and develop into an effective organisation of men and
Accounting women who make up enterprise. This function is concerned with employment, development and
compensation of the personnel and the provision of working conditions and welfare measures to
maintain a good working fore in the organisation. The enterprise should endeavour to make proper
entrepreneur. The activities of
1. Production : Production functions is a key function of an small concern one person may be
utilisation of human resources. This will require an attractive wage policy, incentive plans and
undertaking, In a motivational approach. The success of a business is directly related to the effects of its man power.
production are dependent of the slze of the may e undertaken by varioue
undertaking this function whereas in large organisation this activitygoods and services, Production is the 5. Accounting : Accounting is defined as a systematic recording of entrepreneurial transactions in
individuals or eparate teams. Production is the creation of order to get a true and fair view of the results of the operations of an enterprise and the financial
equipment. I'roduction function
fabrication of a physical object through the use of men, materials and activity is concerned with
position of an enterprises. It includes :
advisory activities. Manufacturing
consists of manufacturing, ancillary and selection of factory site (0) Kkeeping up-to-date
decisions such as
the production of goods or making of products. It includes development and design of (ii) Developing an efficient system of communication
its location, design and layout; type of products to be produced, research,
the product. Ancillary activity includes all thoe activities which support or smoothen production (iüi) Keeping and maintaining records
function. It is related to production planning and control, maintenance, purchasing, store-keeping (iv) Developing time and labour saving devices in accounting.
and materials handling. The advisory aspect helps in improving production function. It includes
work study nmethod study, operational rescearch and quality control. | SKILLS TO BECOME ASUCCESSFUL ENTREPRENEUR
Production management covers the following major activities : 1. Knowledge of Organisation. An entrepreneur should have sound knowledge of his
0) Designing the products and packages enterprise. He should know well about the objectives, policies, procedure and plans of the
(i) Production administration enterprise. He should also have complete information about his subordinates i.e., their
strong and weak points, their liking and disliking and their capacity to perform the job.
(ii) Execution of plans, policies and decisions dependent services.
2. Technical Knowledge. An entrepreneur must know his job well. He should have sufficient
The success of production function is linked with proper forecasting production planning and technical competence and skills to supervise, guide and control his subordinates. He should
control. Scientific planning of production function will result in the enhanced productivity. Increase be thoroughly familiar with the machines, tools and work methods used by workers. He
in productivity will benefit all parties concerned with business. should be able to device work methods, procedure, schedules and techniques and make
2. Finance : Finance function is the most important of all enterprises. It remains a focus of all necessary improvements in them.
business activities, It is not possible to substitute or eliminate this function because the enterprise fails 3. Administrative Ability. An entrepreneur should be an able and efficient administrator. He
in the absence of finance. The need for money is continuous. It starts with the seting up of an is to get the work done from others. He must be a man of imaginative and creative thinking.
enterprise and remains at alltimes. The development and expansion of enterprise rather needs more He should possess sharp memory and self-confidence. To be successful entrepreneur one
commitnment for funds. The funds will have to be raised from various sources. The sources will be
selected in relation to the implications attached with them. The success of finance function will must be quick at making decisions. He should be aman of orderly thinking.
depend upon its planning, The receiving of money is not enough, its utilisation is more important. 4. Ability to Instruct and Inspire. The main function of an entrepreneur is to direct and guide
Finance function has a wide scope. It deals with (i) estimating financial requirements (i) deciding the workers, therefore, to be a successful entrepreneur he should have the ability to instruct
capital structure (i) selecting a source of finance (iv) selecting a pattern of investment (v) proper cash and inspire his people. Agood entrepreneur should know ; () how to instruct his workers;
management (vi) implementing financial controls. (vi) proper use of surpluses. (i) how to assign them work; (ii) how to maintain discipline; (iv) how to evaluate their
3. Marketing : Marketing is primarily concerned with the movement of goods and services from performance; () how to settle their complaints and grievance and (vi) how to reward them
entrepreneurs to the ultimate consumer. It creates place, time and possession utilities. Marketing is a suitably so as to provide job satisfaction.
Page ..3.14aEntreprenour: Moaning and Charactorlatios Entreproneur : Moaning and Charactorietcs Pags .. 3.15

Knowlodgo of tho Organlsaton

eCure the desired results,. Ability to judye people also helps an entrepreneur in evaluatinz
their performance,

Tochnical Knowledge
9, Leadership Qualities. An entrepreneur has to act as a friend, philopher and zuide to the
workerh. He should have the qualities of leadership, be able to boost up morale of his
subordinates and lead his team of workers. He should himself be able to set arn cxample
Adminlstratlve Abilty belore the workers so that they can fellow him. He should have the necessary abilities to
bolve the problems of the workers. Good leadership ensures effective management.
Ability to Instruct and Inspiro 10. Social Sensibility. An entrepreneur should be full of social sensibility. He should be honest
and a man of integrity. He should have patience and tactfulness to handle various workers.
He should also posses6 emotional stability and always give the impression that he is fully
Ablly to Communlcato satisfied with his job and working conditions.
11. Physical Qualities., Entrepreneur must always be physically energetic and mentally alert so
Ablity 1o Listen as to enable him to accomplish his heavy responsibilities towards the achievement of
Qualltles to enterprise objectives.
Bocome a
Succossful Ablity to Securo Co-operation 12. Other Qualities. An entrepreneur must have certain other qualities such as he should be
Entrepreneur able to avoid disputes between management and workers, able to develop human relations,
be respecthul to others, inteligent enough to take right decisions at right times. etc.
Abilly to Judgo Poople
QUESTIONS
Loadorship Qualitlos

Social Sensibilliy y Multiple Choice Questions

1, The person who creates an enterprlse ls called
Phyalcal Qualles (a) Managers (b) Leaders
(c) Owners (d) Entrepreneur.
Other Qualitlos 2. Whlch of the followlng ls a trait whlch an entrepreneur must possess.
(a) Monay (b) Long experience
(c) High education (d) Initiative to do something.
3. Entrepreneurs aro
5. Ability to Communicate. To be a successful entrepreneur he must have the ability to (b)Moderate risk takers
communicate eflectively. It can be rightly said that a good entrepreneur is a good (a) High risk takers
(c) Small risk takers (d) Do not take risk.
communicator and a bad manager is a bad communicator. 4. A succossful entrepreneur should have
6. Ablity to Listen, To be a good communicator one has to be a good listener. Entrepreneur (a) Dishonosty (b) Unethical habits
has to lislen to the complains, grievance, difficulties, problems and suggestions of the (c) Integrity (d)Perseverance
workers, I1e should have patience and ability to listen. 6. Whlch of the following ls not a characteristic of an entrepreneur ?
(a) Croativity (b) Innovation
7. Ability to Secure Co-operation. An entrepreneur should be able to develop a team spirit in (c) Aggrosslve (d) Selt-cortidence.
his workers. I le cannot succeed in his job unless he is able to ecure co-operation from the 6. Which one of the following is not a function of an entrepreneur ?
workers. To ensure this lhe must be lair in dealing with his subordinates and should apply (a) Risk and uncertainty bsaring (b) Arranging Finance
rules and regulationn with equality and justice. (c) Stalfing (d) Altering the governmert systern.
8. Ability to Judge leople. Entrepreneur should be able to judge his subordinates in regard to 7. An entreproneur is a
their capabilities, ntrong and weak pointn, ikings and disliking and their efficiency. Unless (a) Risk-taker (b) Innovator
(d) All the above.
he is also to judge hin people, le cannot delegate or asign duties properly and can never (c) Organizor
CHAPTER

CORPORATIOR

4
RESTART
DraN2CONNICTION EINANCE ANVESTOR
OFFICE
wORKINGFUNDING SIoN PLAN OATEGY
RESEARCH
START U.
TEAMIDEAJEUSINESS
OROANZATON GOMPANY
CAREERRDATA
EDUCATION TEAMWORK
ANALYsIS
INTELLIGENT

TYPES OF ENTREPRENEURS
LEARNING OBJECTIVES
O Major Types of
Entrepreneurs
O According to the Types of
O
Business
According to Motivation
O According to the Use of Technology
0 According to Growth
O According to Stages of Development
O Classification by Danhof
O According to Capital Ownership
O According to Gender
O According to Area
O According to Scale
O Other Categories of Entrepreneurs
O Required Competencies to Develop Entrepreneurial Mindset

MAJOR TYPESOF ENTREPRENEURS

In every economnic system, social and cultural activities, the presence of entrepreneurs are well
visualised. Entrepreneurs are found amongst artisans, artists, importers, exporters, farmers, forest
workers and supervisors. In every sort of activities, entrepreneurs are very much present. Though
their presence is inevitable in all sorts of human activities, most of entrepreneurs differ in their
ability, interest, achievements and motivation.
Entrepreneurs are broadly classified into the following types:
On the basis of types of business.
On the basis of motivation
Page ..42 Types of Entrepreneurs TYpes ofEntrepreneurs
e Page ... 4.3
On the besis of se of Tecnology. motivated to raise the agricultural outout through mechanisation, imigation and
On the basis of growth application of technologies for dry land agriculture. They cover a broad spectrum of the
On the basis of stages of derelopment agricultural sector and incude agricultural and allied occupations.
Oa the basis of capital owTership |ACCORDING TO MOTIVATION LEVEL
On he basis of gende Motivation plays an important role in determining various tvpes of entrepreneurs. Motivation
On the basis of Scale of Operation denotes that power which influence the efforts of enttrepreneurs
On the besis of Area
to achieve the goals of enterprise.
rally an entrepreneur is motivated to prove his skill and excellence in job performance. On the
hasis of motivation entrepreneurs are broadly cassified as:
I|ACCORDING TO TYPES OF BUSINESS
Pure Entrepreneurs
Business E
Entrepreneurs
On the Basis
Trading Entreprenieurs of Motivation Induced Entrepreneurs
On the basis
dTpes of Industrial Entrepreneurs
Business Spontaneous Entrepreneur
Corporate Entrepreneurs
1. Pure Entrepreneur : A pure entrepreneur is a person who is motivated by
and economic or monetary rewards. He performs an psychological
Agricultural Entrepreneurs personal satisfaction in work, ego or status. entrepreneurial activity for his
2. Induced Entrepreneur : Induced entrepreneur is an individual who is motivated to take
up
1 Business Entrepreneur : These entrepreneurs conceive the idea of new product or service an entrepreneurial task due to the policy measures of the
government that provides
assistance, incentives, concessions and necessary overhead facilities
to reate anew enterprise to translate their ideas into reality. They consider the production to set up a new
venture. Most of the entrepreneurs are induced entrepreneurs who enter business due to
and marketing resources in their search to develop a new business opportunity.
financial, technical and several other facilities provided to them by State agencies to
2. Trading Entrepreneur : Trading entrepreneur undertakes the trading activities. He is not promote entrepreneurship.
concened with the manufacturing work. These entrepreneurs purchase the finished
products from the manufacturers and sell to the customers directly or through a retailer. He 3. Spontaneous Entrepreneur : These entrepreneurs start their business out of their natural
has to identify potential market, stimulate demand for his product line and create a desire talents. They are persons with initiative, boldness and confidence their ability which
motivate them to undertake entreprerneurial activities. These entrepreneurs have a strong
among buyers to go in for his product. These types of entrepreneurs act as middlemen conviction and confidence in their own ability to make the venture successful. They are
between manufacturers and customers. They are the wholesalers, retailers, dealers etc. Creative in nature.
3. industrial Entrepreneur : Industrial entrepreneur is a manufacturer who sets up an
industrial unit. He identifies the potential needs of customers and manufactures product |ACCORDING TO USE OF TECHNOLOGY
accordingly. Industrial entrepreneur is a product-oriented man who perceives the Technology plays an important role in judging the success of an enterprise. It refers to the
opportunity to set up an industrial unit because of the possibility of making some new
product. He technical know how which are applied during the cause of operation to achieve organisational
has the ability to convert economic resources and technology into a
considerably profitable venture. They convert raw material into finished products. success. The future growth of an enterprise largely depend on new technology in entrepreneurial
activities.
4. Corporate Entrepreneur : Corporate entrepreneur is an individual who shows his So on the basis of use of technology entrepreneurs are broadly classified as :
innovative skillin organising and managing a corporate undertaking. He has to plans,
develops and manages a corporate body. He is a promoter of the unit. He gets his corporate 1. Technical Entrepreneur : A technical entrepreneur develops new and improved quality of
body registered under the requisite Act. goods with his skill, technical knowledge and craftsmanship. He concentrates more on
5. Agricultural Entrepreneur:Agricultural entrepreneurs conduct agricultural activities such manufacturing of goods. He uses his innovative capabilities in the production of goods. The
as cultivating and marketing of crops, fertilisers and other inputs of agriculture. They are skill in production techniques is the greatest strength of a technical entrepreneur to
improve the quality of product. They use new and modern methods of production.
Page .. 4.4 VoosolEnlropronours Page . 4.5
Types of Entropreneurs
So, onthebasla of stages of develapment, entrepreneurs are classifled as:
Technlcal Entreproneur

On the basls
Firo-Generaton Entroprøneur
of use of Non-echnlcal Entroprenour On tho Baoo
Techndlogy of stagos of
Modern Entroproneur
development
Professlonal Entrepreneur

Classical Entreproneur
2. Non-technical Entrepreneur : These entrepreneurs are not concerned with the technical
aspects of the product in which they deal. They are mainly concerned with developine 1. First-Generation Entrepreneur :Afirst generation entrepreneur is one who starts industrial
alternative marketing arnd distribution strategies to promote their business. He is the unit by means of an innovative skill. He is essentially an innovator,
promoter and seller of new industrial units. technologies to produce a marketable product or service. He has no
combining different
3. Professional Entrepreneur : Professional entrepreneur is an entrepreneur who is interested ground in his family. entrepreneurial back
in setting up of a business but does not have any interest in managing or operating it,. A 2. Modern Entrepreneur : A modern or second-generation entrepreneur is one who
professional entrepreneur sells out the running business and starts another venture with undertakes those ventures which go well along with the changing demand in the market.
the sales proceeds. Such an entrepreneur is dynamic and he conceives new ideas to develon They undertake those ventures which suit the current marketing needs.
alternative projects. 3. Classical Entrepreneur : Aclassical entrepreneur is stereotype entrepreneur whose aim is
to maximise his economic returns at a level consistent with the survival of the firm with or
ACCORDING TO GROWTH without an element of growth.
Entrepreneurship refers to a skill, the resultant of a mix of many qualities, traits and
Competencies. The application on skl, traits and competency by an entrepreneur is caled as Il CLASSIFICATION BY DANHOF
entrepreneurial growth.
Clarence Danhof, on the basis of his study of American agriculture, observed that at the initial
So on the basis of growth, entrepreneurs are broadly classified as :
stage of economic development entrepreneurs have less initiative and drive and as economic
development proceeds they become more innovating and enthusiastic.
Growth Entrepreneur Danhof classified entrepreneurs into four caegories :
On the basls
of Growth
Innovating Entrepreneurs
Super-Growth Entrepreneur
Imitative Entrepreneurs
On the Basis
1. Growth Entrepreneur : Growth entrepreneurs select an industry which has sustained of Danhof
Fabian Entrepreneurs
growth prospects in the future. The element of growth and expansion in always there in
their enterprise.
Drone Entrepreneurs
2. Super-Growth Entrepreneur : Super-growth entrepreneurs are those who have shown
enormous growth of performance in their venture. The growth performance is identified by
the liquidity of funds, profitability and gearing 1. Innovating Entrepreneur :An innovating entrepreneur introduces new goods, inaugurates
new method of production, discovers new market and reorganises the enterprise. These
ACCORDING TO THESTAGES OF DEVELOPMENT entrepreneurs can work only when a certain level of development is already achieved and
The growth of entrepreneurship has experienced different stages of development. At people look forward to change and improvements.
development, an entrepreneur is regarded as an innovator and subsequently they undertook venture 2. Imitative Entrepreneur : These are characterised by readiness to adopt successful
in addition to innovation.
innovations made by successful innovating entrepreneurs. They follow innovations
Page .., 4.6 Types of Entrepreneur Page ... 4.7
Types ofEntrepreneurs
originated by innovating entrepreneurs. Imitative entrepreneurs do not innovate, thev
imitate techiniques and technology innovated by others. These entrepreneurs prefer IlACCORDING TO AREA
initate the technology already existing anywhere in the world.
3. Fabian Entrepreneur : These entrepreneurs are characterised by very great caution ana Urban Entvepreneur
skepticism in experimenting any change in their enterprise. They imitate only whera According to
becontes perfectly clear that failure to do so would result in a loss of the relative positint Area
the enterprise. They are lazy and shy and lack the willto adopt new methodssof
4. Drone Entrepreneur : Drone entrepreneurs are characterised by a refusal to production. Rural Entrepreneur

opportunities to make changes in production formula even at the cost of severely redPtadopt
returns relative to other like producers. Such entrepreneurs may even suffer losses but th On the basis of area, there are following types of entrepreneurs :
are not ready to make changes in their existing production methods. They struggle to exi 1. Urban Entrepreneur : Urban entrepreneur is a person who sets up an enterprise in urban
not to grow.Thus, they are laggards as they continue lo operate in their traditional way an and developed area.
resist changes. 2. Rural Entrepreneur : Rural erntrepreneur is a person who sets up an enterprise in rural and
backward area.
|ACCORDING TO CAPITAL oWNERSHIP
ACCORDING TO SCALE
Private Entrepreneur On the basis of scale, the entrepreneurs are classified into following categories:
According to 1. Large Scale Industry Entrepreneur : The characteristics of large scale industry
Capital State Entrepreneur entrepreneur are :
Ownership
(a) Large number of workers;
Joint Entrepreneur (b) Power driven machines;
(c) Continuous supply of raw materials; and
Ihe entrepreneurs are classified on the basis of capital ownership, such as: (d) One organisation.
1. Private Entrepreneur : When the enterprise is set up by individual or group of individuals 2. Medium Scale Industry Entrepreneur: These entrepreneurs are those persons who are
privately by arranging finance, by bearing the risk and by adopting the latest techniques in engaged in industries which are working on optimum size where there is maximum
the business with the intention to earn profits, that is known as private entrepreneurs. efficiency in production.
2. State Entrepreneur : State entrepreneur means the trading or industrial venture js 3. Small Scale Industry Entrepreneur : An undertaking having an investment in plant and
undertaken by the State or government itself. machinery of not more than R1crore.
3. Joint Entrepreneur : Joint entrepreneur means the combination of private
State entrepreneur who join hands. entrepreneur and lOTHER CATEGORIES OF ENTREPRENEURS
Besides the above classification, there are some other categories of entrepreneurs. These are :
ACCORDING TO GENDER 1. Individual Entrepreneur : Individual entrepreneur denotes a type of entrepreneur who set
up an enterprise, adopt latest techniques, arranges finance and takes up all sorts of risks
Male Entrepreneur with a view to earn profit. It is found in small scale industrial enterprises.
According to 2. Institutional Entrepreneur: Sometimes a group of entrepreneurs or institutional
Gender entrepreneurs set up enterprises ; arranges finance and bear all sorts of risks. These are
Female Entrepreneur called as institutional entrepreneurs. Institutional entrepreneurs are needed in a state of
business involving complex decisions.
According to gender, there are two types of entrepreneurs. 3. Entrepreneur by Inheritance: These are atype of entrepreneurs who inherit the business of
1. Male Entrepreneur: The enterprise owned, family through inheritance. As these categories of entrepreneurs inherit family business,
controlled and managed by a male is known as these are sometimes called as second generation entrepreneurs.
male entrepreneur.
2. Female Entrepreneur: Female 4. Forced Entrepreneurs : Sometimes circumstances compel some persons to become
entrepreneur is also known as woman entrepreneur, when a entrepreneurs. These entrepreneurs are called as forced entrepreneurs. Forced
woman controls, manages, and organises an entrepreneurs are not successful because lack of proper training and understanding.
enterprise.
Page ... 4.8 Types of Entrepreneurs
Individual Entrepreneur

Institutional Entrepreneur

Entrepreneur by Inheritance

Forced Entrepreneurs

Industrial Entrepreneurs
Other Categories
of Entrepreneurs. Corporate Entrepreneurs

Agricultural Entrepreneur

Motivated Entrepreneurs

Professional Entrepreneurs

5. Industrial Entrepreneurs : A type of entrepreneurs who estimates customers need and

desire and undertakes production work to cater their needs, are called Industrial
entrepreneurs.
6. Corporate Entrepreneurs :A type of entrepreneur who promotes corporation having
separate legal entity is called as industrial entrepreneur.
7. Agricultural Entrepreneur: A type of entrepreneur engaged in the process of raising crops,
marketing crops, fertilisers and other inputs of agriculture is called as agricultural
entrepreneur.
8. Motivated Entrepreneurs : A type of entrepreneur motivated by government or other Non
government agencies are called motivated entrepreneurs.
9. Professional Entrepreneurs : A type of entrepreneur who makes
entrepreneurship as a
profession. They develop a business is called as agricultural as profession.
10. Edupreneurs :An edupreneur or education entrepreneur markets their expertise and skills
to public or private educational institutions using a learning platform. There professionals
are educators who share their knowledge. They are also entrepreneurs because they sell
their knowledge. Edupreneurs consider education to be an economic resource because it
impacts the perceived and actual success of educated individuals. To be an edupreneur
requires an entrepreneurial mindset. It gives them the motivation to approach improvíng
education as a business.
 CHAPTER

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TEAMWORK
INTELLIGENT

CREATIVITY AND
ENTREPRENEURSHIP
LEARNING OBJECTIVES
O Meaning of Creativity
ODefinitions of Creativity
OTypes of Creativity
O Phases of Creativity
O Developing Organisational Creativity
OCreativity Process
O Constituents of Creative Abilities

| MEANING OF CREATIVITY
Creativity is the process of performing new or existing activities in some different way. It is the
end product of research and development activities of the organization. Creativity in
entrepreneurship may be defined as introduction of new products, entry in new markets, use of new
means of production and distribution, identification of new and better sources of raw materials and
other inputs. Research based knowledge acts as the foundation of innovation. Hence, creativity is the
transformation of innovative idea into useful applications.
DEFINITIONS OFCREATIVITY
"Entrepreneurs are creatives who are the process of shatter the statuesque through new combinations of resources
and new method of commerce. It includes new process of production, introduction of new products, creation of new
markets, discovery of anew and better form of industrial organisation". -Schumpeter
"Creativity is the specific tool of entrepreneurs the means of which they exploit change as an opportunity for a
different business or a different service. It is capable of being presented as a discipline, capable of being learned, capable
of being practiced. Entrepreneurs need search purposefully for the source of innovations, the changes and their
symptoms that indicate opportunities for successful creativity." Peter Drucker
 creatlvityandEntrepraneurahlo
Page . 5.2 Croatlvty and Entrepreneurshlp 800 .5.3
Page
ATolerate failure. Many a times new ideas fail and prove
TYPES OF CREATIVITY tolerate the adverse results of new impractical. Entrepreneurs Snouu
Creativity is of the folowing two types : fact that time and resources will be idea. Effective entrepreneurswithaccept and allow for the
invested in experimenting new ideas that do not
() Technical Creativity. Technical creativity is related to the creativity in the production work out properly.
processes and the products. It is also known as pure creativity. New technology or products 5. Provide clear aims and liberty to
are created or developed in this category of creativity. Technical creativity is also popularly guideline of. aim and direction of achieve them. Entrepreneurs must provide a clear
called as product oriented creativity. It involves development of new goods and services for innovation to all members
idea about the future prospects of organisation. Every member
in orcanization must have an of
Recognition. Innovator employees are encouraged toenterprise.
the benefits of customers.
6. Offer
process creativity under which
(ü) Non-Technical Creativity. Non-technical creativity is calledmanagement, work hard on areas that
strategies. interest them. They should properly
new ideas related to entrepreneurial missions, styles ofdeveloped. The growth
main aim of thie
awarded for a well done by them. Entrepreneurs
demonstrate that creative behaviours and innovativework
management systems and organisational structure are offering recognition in such tangible thinking is valued in the enterprise by
creativity is to make existing enterprise more efficient and competitive. Small changes in forms bonuses and salary increase.
as
made to
design, product formulation and manufacturing, materials and service delivery are existino" I|CREATIVITY PROCESS
the product and to cut down their cost. Improvements are made to
upto date
products, production or other organisational process. Three steps are involved in the innovation
process in an enterprise :
1 Generation of Idea. Creation of new ideas depends upon the flow of
I|PHASES OF CREATIVITY information between the enterprise and its environment in an people and
There are two phases of creativity: contacts greatly stimulate the greneration of ideas. The organisation external
) Design Phase generation of idea is more likely to
promote innovations when these ideas issue from the ground level of the
(ii) Implementation Phase member of the unit should be encouraged to initiate new ideas within unit. Every
the context of a
) Design Phase. Design phase involves divergent thinking and creativity brainstorming, supportive environment.
search for alternatives. This phase of creativity requires great administrative flexibility and 2. ldea Development. The organisational culture
authority exercised by the expert in agiven situation open discussions, sharing information and processes plays important role in idea
etc. development. Organisational characteristics, values and processes are essential to
and use the creative ideas. develop
(ii) (). Implementation Phase. This phase of creativity refers to implement the idea into 3.
exercise which is developed into design phase. In this phase, there is no need of creative Implementation. This stage includes all those steps which play an important role to bring a
thinking on the part of management for divergent creative thinking as selected innovation invention to the market place e.g. engineering, tooling, manufacturing, test marketing and
in put into work. promotion are main steps for manufactured goods.
| DEVELOPING ORGANISATIONAL CREATIVITY t I|cONSTITUENTS OF CREATIVE ABILITIES
The following conditions are required to develop organisational creativity : Creativity is acluster of qualities and abilities,such as:
1. Develop an acceptance of change. Entrepreneurs should try to develop the faith in 1. Fluency. Fluency measures the abilityy of a person to come up with a different solutions of a
members of organisation that change will benefit them and the entrepreneurial unit. This given problem. Ideationally fluent person is that who comes with a large number of
trust is more likely to arise if employees are provided a chance to participate in solutions.
management in making decisions. When changes are planned and implemented the issues
related enmployees like job security must be handled carefully. 2. Flexibility. Innovator must be a dynamic personality. It is the quality to provide a large
2. Encourage new ideas. Entrepreneur must make it clear in word and writen that new number of solutions of a problem in a changing environment from a variety of viewpoints.
approaches and ideas are heartly welcomed. Entrepreneurs must give due weightage to the 3. Originality. Originality is the quality to bring some unusual but unique idea.
suggestions of employees to motivate them to creative thinking. 4. Problem Sensitivity. It is the ability to sense or notice the problems.
3. Exchange of information. A friendly environment is created by providing
individuals the 5. Elaborateness. It is the quality to elaborate the issue in problem. It is the difference between
opportunity to interact with members of their department and other departments. This type
of communication motivate the exchange of new, creative and useful information on the an idea and a full-fledged training programme to increase creativity of that idea.
prevailing8 problem in unit. 6. Problem Restructuring. It is quality to analyse the real features of aproblem.
 CHAPTER

6
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ANALYSIS
NTELLIGENT

INNOVATION AND INVENTIONS

LEARNING OBJECTIVES
O Innovation - Meaning
O Definition of Innovation
OTypes of Innovation
DPhases of Innovation
ODeveloping Organisational Innovation
O Innovation Process
D Constituents of Innovation Abilities

INNOVATION - MEANING
Innovation and entrepreneurship are essential ingredients in building a successful com1nercial
venture. Innovation isthe process of performing new or existing activities in some different way. It is
the end product of research and development activities of the organization. Innovation in
entrepreneurship may be defined as introduction of new products, entry in new markets, use of new
means of production and distribution, identification of new and better sources of raw materials and
other inputs. Research based knowledge acts as the foundation of innovation. Innovation is the
transformation of creative idea into useful applications. Innovation involves deliberate application,
imagination and initiative in deriving greater or different values from resources, and includes all
processes by which new ideas generated and converted into useful products. In business, innovation
often results when ideas are applied by the company in order to further satisfy the needs and
expectations of the customers.
Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an
opportunity for a different business or different services. Entrepreneurs need to search purposefully
for the resources of innovation, the change and their symptoms that indicate opportunities for a
successful innovation. An innovation is the way of doing something differently and better.
Page .. 62 Innovatlon and Inventione innovatlon and Inventlong
6.3
new concepts and knowledge into new products,
I|DEFINITIONS OF INNOVATION customer value in the market place. services or processes that deiver ic
"Iunetim He àntrtatin of noevetty àn agten mardet or industry. such as new prodtucts, services, methods, 4. Create Value : The change to create value. The change must increase value,
-Fredrik Hacklin value or producer value. Innovations are intended to make customer
w eti to ontiruOUs roe and renew an enterprise twith new or better products, more succession of many innovations grows the whole someone better off and the
Te
-Walter 6. Opportunity : Entrepreneurial individuals enableeconomy.
Itin cm de deinei s the desir enmtion dervlopment and/or inplemnentation of new or altered products for it today having ideas, turning ideas into tomorrow's value creation by exploring
marketable insights and seeking ways to meet
s stms entrerenerial structures r businesN mdels for the purp0se of creating new value for opportunities.
csters fhzml retars fr the fir." -Innovation Measurement 6. Seeking Advantage : The value is created for the
economy, society and the individual itself
"EntrerNrs e xOtors oare the r s fsatter the statuesque through new combinations of resources through innovation.
t amnero. t nchds ne gns of prduction, introduction of new products, creation of ne
ttr form of iniustrial organisation". - Schumpeter
ts dry fmee
"batim te s c ofentrreneurs the mets of uich they exploit change as an opportunity for o
DEVELOPING ENTEPRENEURIAL INNOVATION
1, Develop an Acceptance of Change. Entrepreneurs should try to
ret stes ora rent srrie tà phe of being presented as a discipline, capable of being leaned, capable
and their members of organisation that change will benefit them and the develop the faith in
ef beie gractica. Extregrmers nat serch purposfully for the source of inovations, the changes
g t s tlat nioate prtuntis fr succesful innocation."
- Peter Drucker trust is more likely to arise if employees are provided a entrepreneurial unit. This
chance to participate in
management in making decisions. When changes are planned and implemented the issues
Therefore innovation is regular and development process. Innovation converts an idea into an related employees like job security must be handled carefully.
application.
Innovation = Creativity +Exploitation Developing Entrepraneurial Innovation
IlFEATURES OF INNOVATION Develop on Acdeptance of Change
1. Process: Innovation is a prooess. It can be learned and managed. It is the application or
introduction of a new product, technology or method for doing something that helps an Encourage New ldeas
entrepreneur remain competitive and meet customer demands.
Exchange of Information
Process
Tolerate Failure
Intentional Activity Clear Aims and liberty to Achieve

Results in change Offer Recognition

Features of
Innovation
2. Encourage New Ideas. Entrepreneur must make it clear in word and written that new
Create Value
approaches and ideas are heartily welcomed. Entrepreneurs must give due weightage to
the suggestions of employees to motivate them to creative thinking.
Opportunity 3. Exchange of Infornmation. A friendly environment is created by providing individuals the
opportunity to interact with members of their department and other departments. This type
Seeking Advantage of communication motivates the exchange of new, creative and useful information on the
prevailing problem in unit.
2. Intentional Activity : Innovation is an intentional activity. Innovation is with an objective. 4. Tolerate Failure. Many atimes new ideas fail and prove impractical. Entrepreneurs should
It isa deliberate, intentional intervention to bring in something different. tolerate the adverse results of new idea. Effective entrepreneurs accept and allow for the
fact that time and resources will be invested in experimenting with new ideas that do not
3. Results in Change : Innovation brings some kind of change. Innovation can be defined work out properly.
simply as a new idea, device or method. Innovation helps in the successful conversion of
 entrepreneur.
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atleting tlhe nevds o eustomerN Or (onallv atanvinv (or cuntonera to have oportuiy
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quwvtionaite r lovwn Tle dean OF O)piNion generated from the target audience must be t0
a(x0sting
lange extet ieent eough market lo Nuport anew businea or expand aetion ol an
lusinews,
2 om Existing l'oduct and Servieen, ixisting poducts and ervicen could be carefully
nonitored
and evaluated to ulcOver wavs to inprove them, This might rosult n a new
poduet or service that has nore market appeal and better sales and profit ypotential. In this
eriod ot advaement in information comuncation lechnology (ICT), creative and
innovative approach of lCT can have far-eaching cffoct on oxisting products and services.
I'hospetive entrepreneurs can thereforo take advantage of information communication
tomology to build new variant of old products or services with a more market appeal,
better sales and profit potentials.
1, From Marketing8 Distribution Channels, For a product that involve a marketing
distribution channel (sale representative group), members of such distribution channels are
also evcellent soures for new business ideas, because of their familiarity with the needs of
R olletion of Intomation, Market intrnnation is making known the new ideas about the narket. deas gotten from such analysis could beconme a source of
innovation and
dtnent uies in the market. the suplv and emand. A lot ot intormation abou rativity that will lead to a better idea in narketing.
the s l e s an pdets can leobtained in several ditterent varieties and tormats i 4, From Research and Development. The greatest source of a new business idea is the
sals brhus, catakgues, adiertisments, publiitr posters. Thev mav sometimes trigver entrepreneur's own etfort in rescarch and development. The quest to gather information,
ask questions from existing entrepreneurs, analyze cconomic data and information within
4 Getting help fom Entrepreneurs. To attrat the oporate entrepreneurs, a number of the market can lead to a unique business concept.
minars and nteres ar onducti eriodically. These businesS Meetings plav a
sgniant part to get some usetul business tips tor new ventures. I|NEED AND IMPORTANCE OF INNNOVATION
5 Personal Hobbies. Personal hobbies of an individual also assist in generating new ideas.
Some susul pojts have materialized by entrepreneus from their personal interest Economic Growth
and hothies
6. Day Dreaming and Fantasizing. Dav dreaming and fantasizing is another very important Future Jobs
soure of generating new idea. New entrepreneurial opportunity are generated when
entrepreneurs fantasize about product and servies they would love to have in their lives. Increased Wel-Being
Manv inventions are bom out of dreams of persons.
Reduced Sickness, Poverty and Hunger
I|soURCES OF INNOVATION
The conaept of generating a new business idea is not only essential for intending or prospective Need and Importance Environmental Sustainability
entrepreneurs, existing business owners also requine to understand how a new business ideas can of Innovatlon
hane the level of business operations that invariably will lead to greater productivity and success. It is Competitive Advantage
an stablished fact that for anv existing business to experience growth and expansion, idea
generation,
creativitv and innovation are three neessarv factors that must come together is use and practice. increased Productivity
The folowing are some of the more frequentlv used sources of idea for existing and prospective
entrepreneurs: Positive Impact on Enterprise Culture
1. From Consumer or Target Audience. Everv creative and innovative
entrepreneur must pay
close attention to potential customers, client or consumers on a continuous basic. This ind Personal Development
of attention can take an informal approach of personally monitoring potential ideas
Page .. 6.8 Innovation and Inventigne
considered as a main source d
1. Economic Growth. Innovation in entrepreneurship is inflation-adjusted mare
economic growth. Economic growth refers to the increase in theover time. It is traditionalt
value of the goods and services manufactured by an economy
measured as the percent rate of increase in real GDP.
2. Future Jobs. Innovation advancement and increased output meansmillion major charnges for
careers. According to new world economic forum report, nearly 133 new jobs mav
be created by 2022. New skill sets are required in both old and new occupations. There wál
be more demand for experts.
3. Increased Well-Being. Innovation and economic growth increases well-being because
living standards rise. According to experts, average life satisfaction is higher in countris
with greater GDP per capital. A rise in real GDP means greater income and wealth
inequality.
4. Reduced Sickness, Poverty and Hunger. Developing countries depend upon innovation as
new digital technologies and innovative solutions create huge opportunities to fight
sickness, poverty and hunger.
5. Environmental Sustainability. Sustainability and environmental issues such as climate
change, are challenges that require a lot of work and innovative solutions now and in the
future.
6. Competitive Advantage. Competitive advantage means the necessary advancements in
capabilities that provide an edge in comparison to competitors of the entrepreneurship.
Successful, innovative businesses are able to keep their operations, services and products
relevant to their customers needs and changing market conditions.
7. Increased Productivity. Economic growth is driven by innovation and technological
improvements which reduce the costs of production and enable higher output.
8. Positive Impact on Enterprise Culture. Innovation also has a positive impact on enterprise
culture as it increases the ability to acquire, create and make the best use of competencies,
skills and knowledge.
9. Personal Development. Innovation practices can help to build a
culture of
learning, growth and personal development. This type of innovative environmentcontinuous
can again
motivate people to constantly improve the way they and their team work.

QUESTIONS
Multiple Choice Questions
1. Which of the folowing best defines innovatlon in
entrepreneurship ?
(a) Copying existing ideas and seling them (b) Creating
something new and addling value
(c) Avoiding risks in business (d) Following strict business rules
2. Which type of innovation involves making
(a) Disruptive Innovation
Improvements to existing products or processes?
(b) Incremental Innovation
(c) Radical Innovation (d) Social Innovation
3. What type of innovation disrupts existing markets by
(a) Incremental Innovation
creating new ones ?
(b) Disruptive Innovatlon
(c) Sustaining Innovation (d) Process Innovation