Entrepreneurship Development and Business

Communication
Course no. ASEE3103 Credit - 2(1+1)

1. Entrepreneur1
CONCEPT
Entrepreneur is an Economic Agent who plays a vital role in the economic development of a
country. Economic development of a country refers steady growth in the income levels. This
growth mainly depends on its entrepreneurs. An Entrepreneur is an individual with knowledge,
skills, initiative, drive and spirit of innovation who aims at achieving goals. An entrepreneur
identifies opportunities and seizes opportunities for economic benefits.
The word “Entrepreneur” is derived from the French verb ‘entrepredre’. It means ‘to undertake’.
In the early 16th century the Frenchmen who organized and led military expeditions were referred
as ‘Entrepreneurs’. In the early 18th century French economist Richard Cantillon used the term
entrepreneur to business. Since that time the word entrepreneur means one who takes the risk of
starting a new organization or introducing a new idea, product or service to society.
MEANING
An entrepreneur can be regarded as a person who has the initiative skill and motivation to set up a
business or enterprise of his own and who always looks for high achievements. He is the catalyst
for social change and works for the common good. They look for opportunities, identify them and
seize them mainly for economic gains. An action oriented entrepreneur is a highly calculative
individual who is always willing to undertake risks in order to achieve their goals.
According to J.B. Say, “An Entrepreneur is the economic agent who unites all means of
production; land of one, the labour of another and the capital of yet another and thus produces a
product. By selling the product in the market the pays rent of land, wages to labour, interest on
capital and what remains is his profit”. Thus an Entrepreneur is an organizer who combines various
factors of production to produce a socially viable product.
According to Joseph Schumepeter, “An entrepreneur in an advanced economy is an individual
who introduces something new in the economy, a method of production not yet tested by
experience in the branch of manufacture concerned, a product with which consumers are not yet
familiar, a new source of raw material or of new market and the like”.
According to Cantillon “An entrepreneur is the agent who buys factors of production at certain
prices in order to combine them into a product with a view to selling it at uncertain prices in

1
Compiled and developed by Dr. Satarupa Modak
 Richard Cantillon, an Irish man living in France introduced the term ‘entrepreneur’, called
father of Entrepreneurship.

future”. To conclude an entrepreneur is the person who bears risk, unites various factors of
production, to exploit the perceived opportunities in order to evoke demand, create wealth and
employment.
Evolution of the word Entrepreneur
1600 – Entrepreneur came from a French verb – Entreprendre – to undertake.
1700 – Entrepreneur is the person bearing Risk or Profit in a fixed price contract (Risk)
1803 – J. B. Say – Entrepreneur shifts economic resources out from an area of lower to higher
productivity & greater yields (Value Addition)
1934 – Joseph Schumpeter – Entrepreneur is innovator and develops untried technology
(Productivity & Innovation)
1961 – David McClelland – Entrepreneur is highly motivated, energetic, moderate risk taker (Need
for achievement)
1964 – Peter Drucker – Entrepreneur searches for change, responds to it & exploits as opportunity
(Opportunity Focused)
TYPES OF ENTREPRENEURS
Following are the classification of entrepreneurs on the basis of common characteristics

A. Clarence Danhof Classification:

1. Innovative: Innovative entrepreneur is one who assembles and synthesis information and
introduces new combinations of factors of production. They are characterized by the smell of
innovativeness. These entrepreneurs sense the opportunities for introduction new ideas new
technology, new markets and creating new organizations. Innovative entrepreneurs are very much
helpful for their country because they bring about a transformation in life style.
2. Imitative/ Adoptive: Imitative entrepreneur is also known as adoptive entrepreneur. He simply
adopts successful innovation introduced by other innovators. These entrepreneurs imitate the
existing entrepreneurs and setup their enterprise in the same manner. Instead of innovating, they
just imitate the technology and methods innovated by others. These entrepreneurs are very helpful
in less developed countries as they contribute significantly in the growth of enterprise and
entrepreneurial culture in these countries. Further by adopting the technology, which is already
tested, they generate ample employment avenues for the youth and therefore they are treated as
agent of economic development.
3. Fabian: The Fabian entrepreneur is timid and cautious. He imitates other innovations only if he
is certain that failure to do so may damage his business. They are very much skeptical in their
approach in adopting or innovating new technology in their enterprise. They are not adaptable to
the changing environment. They love to remain in the existing business with the age-old techniques
of production. They only adopt the new technology when they realize that failure to adopt will
lead to loss or collapse of the enterprise.
4. Drone: These entrepreneurs are conservative or orthodox in outlook. They never like to get rid
of their traditional business and traditional machinery or systems of the business. They always feel
comfortable with their old fashioned technology of production even though the environment as
well as the society have undergone considerable changes. Thus, drone entrepreneurs refuse to
adopt the changes. They are laggards as they continue to operate in their traditional way and resist
changes. His entrepreneurial activity may be restricted to just one or two innovations. They refuse
to adopt changes in production even at the risk of reduced returns.
B. Arthur H. Cole Classification:
1. Empirical: He is an entrepreneur hardly introduces anything revolutionary and follows the
principle of rule of thumb.
2. Rational: The rational entrepreneur is well informed about the general economic conditions
and introduces changes which look more revolutionary.
3. Cognitive: Cognitive entrepreneur is well informed, draws upon the advice and services of
experts and introduces changes that reflect complete break from the existing scheme of enterprise.
C. Classification on the Basis of Ownership:
1. Private: Private entrepreneur is motivated by profit and it would not enter those sectors of the
economy in which prospects of monetary rewards are not very bright.
2. Public: In the underdeveloped countries government will take the initiative to share enterprises.
D. Classification Based on the Scale of Enterprise:
1. Small scale: This classification is especially popular in the underdeveloped countries. Small
entrepreneurs do not possess the necessary talents and resources to initiate large scale production
and introduce revolutionary technological changes.
2. Large scale: In the developed countries most entrepreneurs deal with large scale enterprises.
They possess the financial and necessary enterprise to initiate and introduce new technical
changes. The result is the developed countries are able to sustain and develop a high level of
technical progress.
In recent years, some new classifications have been made regarding entrepreneurs, which are
discussed further.
1. Solo operators: These entrepreneurs prefer to set up their business individually. They introduce
their own capital, intellect and business acumen to run the enterprise successfully They operate
their business mainly in the form of proprietorship type of concern.
2. Active partners: Entrepreneurs of this type jointly put their efforts to build enterprise pooling
together their own resources. They actively participate in managing the daily routine of the
business concern. As such, the business houses or the firms which are managed by the active
partners become more successful in their operation.
3. Inventors: These entrepreneurs primarily involve themselves in Research and Development (R
and D) activities. They are creative in character and feel happy in inventing new products,
technologies and methods of production
4. Challengers: Entrepreneurs of this type take challenges to establish business venture as mark
of achievement. They keep on improving their standard and face boldly the odds and adversities
that come in their way. They use their business acumen and talent to convert the odds into
opportunities thereby making profit. According to them, if there is no challenge in life, there is no
charm in life. Challenges make them bold, and thus, they never hesitate to plunge themselves into
uncertainties for earning profit.
5. Buyers (entrepreneurs): These entrepreneurs explore opportunities to purchase the existing
units which may be seized or are in running condition. If the units they purchase are sick they turn
them around using their experiences, expertise and business acumen. By purchasing these units
they make themselves free from the hassles of building infrastructures and other facilities.
6. Life timers: These entrepreneurs believe that business is the part and parcel of their life. They
take up the business to reunite successfully as a matter of ego satisfaction. They have a strong
desire for taking personal responsibility. Family enterprises which thrive due to high personal skill
are included under this category.
According to the Type of Business
Entrepreneurs are found in various types of business occupations of varying size. We
may broadly classify them as follows:
Business Entrepreneur
Business entrepreneurs are individuals who conceive an idea for a new product or service and then
create a business to materialize their idea into reality. They tap both production and marketing
resources in their search to develop a new business opportunity. They may set up a big
establishment or a small business unit. Trading entrepreneur is one who undertakes trading
activities and is not concerned with the manufacturing work. He identifies potential markets,
stimulates demand for his product line and creates a desire and interest among buyers to go in for
his product. He is engaged in both domestic and overseas trade.
Industrial Entrepreneur
Industrial entrepreneur is essentially a manufacturer who identifies the potential needs of
customers and tailor product or service to meet the marketing needs. He is a production-oriented
person who starts in an industrial unit because of the possibility of making some new product.
Corporate Entrepreneur
Corporate entrepreneur is essentially a manufacturer who identifies the potential needs of
customers and tailor product or service to meet the marketing needs. He is a product-oriented man
who starts in an industrial unit because of the possibility of making some new product. Corporate
entrepreneur is a person who demonstrates his innovative skill in organizing and managing a
corporate undertaking. A corporate undertaking is a form of business organisation which is
registered under some statute or Act which gives it a separate legal entity.
Agricultural Entrepreneur
Agricultural entrepreneurs are those entrepreneurs who undertake such agricultural activities as
raising and marketing of crops, fertilizers and other inputs of agriculture.
According to the use of Technology.
Technical Entrepreneur
A technical entrepreneur is essentially an entrepreneur of “Craftsman type”. He develops a new
and improved quality of goods because of his craftsmanship. He concentrates more on production
than marketing. He does not care much to generate sales by applying various sales promotional
techniques. He demonstrates his innovative capabilities in matters of production of goods and
rendering services.
Non-technical Entrepreneur
on-technical entrepreneurs are those who are not concerned with the technical aspects
of the product in which they deal. They are concerned only with developing alternative
marketing and distribution strategies to promote their business.
Professional Entrepreneur
Professional entrepreneur is a person who is interested in establishing a business but does not have
interest in managing or operating it once it is established.
According to Motivation
Motivation is the force that influences the efforts of the entrepreneur to achieve his objectives. An
entrepreneur is motivated to achieve or prove his excellence in job performance. He is also
motivated to influence others by demonstrating his power thus satisfying his ego.
Pure Entrepreneur
A pure entrepreneur is an individual who is motivated by psychological and economic rewards.
He undertakes an entrepreneurial activity for his personal satisfaction in work, ego or status.
Induced Entrepreneur
Induced entrepreneur is one who is being induced to take up an entrepreneurial task due to the
policy measures of the government that provides assistance, incentives, concessions and necessary
overhead facilities to start a venture. Most of the entrepreneurs are induced entrepreneurs who
enter business due to financial, technical and several other several other provided to them by the
state agencies to promote entrepreneurship.
Motivated Entrepreneur
New entrepreneurs are motivated by the desire for self-fulfillment. They come into being because
of the possibility of making and marketing some new product for the use of consumers. If the
product is developed to a saleable stage, the entrepreneur is further motivated by reward in terms
of profit and enlarged customer network.
Spontaneous Entrepreneur
These entrepreneurs start their business out of their natural talents and instinct. They are persons
with initiative, boldness and confidence in their ability which motivate them to undertake
entrepreneurial activity.
Growth Entrepreneur
Growth entrepreneurs are those who necessarily take up a high growth industry. These
entrepreneurs choose an industry which has substantial growth prospects.
Super-Growth Entrepreneur
Super-growth entrepreneur is those who have shown enormous growth of performance in their
venture. The growth performance is identified by the liquidity of funds, profitability and gearing.
According to Stages of Development
First-Generation Entrepreneur
A first-generation entrepreneur is one who starts an industrial unit by means of an innovative skill.
He is essentially an innovator, combining different technologies to produce a marketable product
or service.
Modern Entrepreneur
A modern entrepreneur is one who undertakes those ventures which go well along with the
changing demand in the market. They undertake those ventures which suit the current marketing
needs.
Classical Entrepreneur
A classical entrepreneur is one who is concerned with the customers and marketing needs through
the development of a self-supporting venture. He is a stereotype entrepreneur whose aim is to
maximize his economic returns at a level consistent with the survival of the firm with or without
an element of growth.

FUNCTIONS OF ENTREPRENEURS
An entrepreneur is an opportunity seeker. He is also the organizer and coordinator of the agents of
production. He has to execute many a good functions while establishing a small scale enterprise.
He not only perceives the business opportunities but also mobilizes the other resources like 5 Ms-
man, money, machine, materials and methods. However, the main functions of the entrepreneurs
are discussed further.
1. Idea generation: This is the most important function of the entrepreneur. Idea generation can
be possible through the vision, insight, observation, experience, education, training and exposure
of the entrepreneur. Idea generation precisely implies product selection and project identification.
Ideas can be generated through environmental scanning and market survey. It is the function of
the entrepreneurs to generate as many ideas as he can for the purpose of selecting the best business
opportunities which can subsequently be taken up by him as a commercially-viable business
venture.
2. Determination of objectives: The next function of the entrepreneur is to determine and lay
down the objectives of the business, which should be spelt out on clear terms. In other words,
entrepreneur should be very much clear about the following things:
(i) The nature of business
(ii) The type of business
This implies whether the enterprise belongs to the category of a manufacturing concern or a service
-oriented unit or a trading business, so that the entrepreneurs can very well carry on the venture in
accordance with the objectives determined by him.
3. Raising of funds: Fund raising is the most important function of an entrepreneur. All the
activities of a business depend upon the finance and its proper management. It is the responsibility
of the entrepreneur to raise funds internally as well as externally. In this matter, he should be aware
of the different sources of funds and the formalities to raise funds. He should have the full
knowledge of different government sponsored schemes such as PMRY, SGSY, REGP, etc. by
which he can get Government assistance in the form of seed capital, fixed and working capital for
his business.
4. Procurement of raw materials: Another important function of the entrepreneur is to procure
raw materials. Entrepreneur has to identify the cheap and regular sources of supply of raw
materials, which will help him to reduce the cost of production and face the competition boldly.
5. Procurement of machinery: The next function of the entrepreneurs is to procure the
machineries and equipments for establishment of the venture. While procuring the machineries,
he should specify the following details:
(a) The details of technology
(b) Installed capacity of the machines
(c) Names of the manufacturers and suppliers
(d) Whether the machines are indigenously made or foreign made
(e) After-sales service facilities
(f) Warranty period of the machineries
All these details are to be minutely observed by the entrepreneurs.
6. Market research: The next important function of the entrepreneur is market research and
product analysis. Market research is the systematic collection of data regarding the product which
the entrepreneur wants to manufacture. Entrepreneur has to undertake market research persistently
in order to know the details of the intending product, i.e. the demand for the product, the supply
of the product, the price of the product, the size of the customers, etc. while starting an enterprise.
7. Determination of form of enterprise: The function of an entrepreneur in determining the form
of enterprise is also important. Entrepreneur has to decide the form of enterprise based upon the
nature of the product, volume of investment, nature of activities, types of product, quality of
product, quality of human resources, etc. The chief forms of ownership organizations are sole
proprietorship, partnership, Joint Stock Company and cooperative society. Determination of
ownership right is essential on the part of the entrepreneur to acquire legal title to assets.
8. Recruitment of manpower: Entrepreneur has to perform the following activities while
undertaking this function:
(a) Estimating manpower need of the organization
(b) Laying down of selection procedure
(c) Devising scheme of compensation
(d) Laying down the rules of training and development
9. Implementation of the project: Entrepreneur has to work on the implementation schedule or
the action plan of the project. The identified project is to be implemented in a time-bound manner.
All the activities from the conception stage to the commissioning stage are to be accomplished by
him in accordance with the implementation schedule to avoid cost and time overrun, as well as
competition. Thus, implementation of the project is an important function of the entrepreneur.
To conclude with, all these functions of the entrepreneur can precisely be put into the following
categories:
(i) Innovation
(ii) Risk bearing
(iii) Organization and
(iv) Management
CHARACTERISTICS OF ENTREPRENEUR
Entrepreneur is a key figure in economic progress. He is the person who introduces new things in
the economy. He is considered as the business leader and not as simple owner of capital. He is a
person with telescopic faculty, drive and talent who perceives business opportunities and promptly
seizes them for exploitation. M.M.P. Akhouri, formerly Executive Director, National Institute for
Entrepreneurship and Small Business Development (NIESBUD), New Delhi, describes
entrepreneur “as a character who combines innovativeness, readiness to take risk, sensing
opportunities, identifying and mobilizing potential resources, concerns for excellence and who is
persistent in achieving the goal.” To be successful, an entrepreneur should have the following
characteristic features.
1. Hard work: Willingness to work hard distinguishes a successful entrepreneur from
unsuccessful one. The entrepreneur with his/ her tedious, sweat-filled hours and
perseverance revive their business even from on verge of failure. In nut-shell, most of the
successful entrepreneurs work hard endlessly, especially in the beginning and same
becomes their whole life.
2. Desire for High Achievement: Entrepreneurs have got strong desire to achieve higher
goals. Their inner self motivates their behaviour towards high achievement: most of the
people dream of success but do not take any action towards achieving these dreams.
Entrepreneurs with high n-Ach factor act continuously to achieve the goal and make their
dreams come true. For them, winning is achievement.
3. Highly optimistic: The successful entrepreneurs are not disturbed by the present problems
faced by them. They are optimistic for future that the situation will become favourable to
business in future. Thus, they can run their enterprise successfully in future.
 4. Independence: Most of the entrepreneurs start on their own because they dislike to work
for others. They prefer to be their own boss and want to be responsible for their own
decisions.
5. Foresight: The entrepreneurs have a good foresight to know the future business
environment. In the other word, they well visualize the likely changes to take place in
market, consumer attitude, technological development, etc. and take timely actions
accordingly.
6. Good Organiser: Different resources required for production are divorced from each
other. It is the ability of the entrepreneurs that brings together all resources required for
stating up an enterprise and then to produce goods.
7. Innovative: Successful entrepreneurs are innovators. They constantly put their efforts in
introducing new products, new method of production, opening new markets and
recognizing the enterprise.

DISTINCTION BETWEEN AN ENTREPRENEUR AND A MANAGER

Point for Distinction Entrepreneur Manager
1. Goal An entrepreneur starts a venture by But the main aim of a
Management setting up a new enterprise for his manager is to render his
personal gratification service in an enterprise
already set up by someone.
2. Status Entrepreneur is the owner of enterprise A manager is the servant in
the enterprise.
3. Risk An entrepreneur bears all risks and A manager being a servant
uncertainty involved in the enterprise. does not bear any risk
involved in the enterprise.
4. Rewards Entrepreneur for his risk bearing role A manager receives salary as
he receives profits. It is not only reward for service rendered
uncertain and irregular but can at times which is fixed and regular can
be negative. never be negative
5. Innovation As an entrepreneur, individual need to A manager needs to execute
be innovative to meet changing needs plans of an entrepreneur
of customer demands

Intrapreneur: The entrepreneurs emerging from within the confines of organization are called
‘intrapreneur’. The intrapreneurs are top executives encouraged to catch hold of new ideas to
convert them into products. Intrapreneurship serves as a seed-bed for the development of
innovative entrepreneurship. Innovation is the hallmark of entrepreneurship.
Extrapreneur: A person who is passionate about an idea and convinces others to make it happen
Ultrapreneur: Individual who needs to have different mindset about establishing and operating a
company.
Mobile Entrepreneur: Entrepreneur leaves the venture when it reaches it final stage of venture
creation and looks for a new opportunity to create another one
Eg. Sam Pitoda, who revolutionized Tele-Communication in India
Managerial Entrepreneur: Entrepreneur who continue in the same venture by assuming the
responsibility of managing and maintaining the venture, rather than continuing in the innovative
and creative role
Eg. Md. Yunus, founder of Grameen Bank in Bangladesh
Empire Builder: Entrepreneur goes on creating a chain of new ventures one after another and
builds a sort of empire.
Eg. G.D. Birla, J.N. Tata, Dr. V. Kurien of Amul