Block

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ENTREPRENEURSHIP: A PERSPECTIVE
UNIT 1
An Introduction to Entrepreneurship
UNIT 2
Entrepreneurial Eco-system
UNIT 3
Dimensions of Entrepreneurship
UNIT 4
Entrepreneurial Competencies

  An Introduction to
UNIT 1 AN INTRODUCTION TO Entrepreneurship

ENTREPRENEURSHIP

Structure
1.0 Objectives
1.1 Introduction
1.2 Concept and Definition of Entrepreneurship
1.3 Evolution of Entrepreneurship in India
1.4 Determinants of Entrepreneurship
1.5 Entrepreneurship and Economic Development
1.6 Models of Entrepreneurship
1.7 Theories of Entrepreneurship
1.8 Let Us Sum Up
1.9 Key words
1.10 Answers to Check Your Progress
1.11 Terminal Questions

1.0 OBJECTIVES
After studying this unit, you should be able to:
x define entrepreneurship and discuss the its evolution;
x identify entrepreneurial mindset and various factors that drive indiduals
to take up entrepreneurial journey;
x classify various entrepreneurial entities into entrepreneurship models;
x explain linkages between growth of entrepreneurship and economic
development and sustainability;
x explain the theories of entrepreneurship; and
x apply the above concepts in early stage decision making situation of a
start-up with the help of Case Study.

1.1 INTRODUCTION
Entrepreneurship, as a word, has caught the imagination of a generation who
has thrived on fables of how visionaries like Thomas Alva Edison, Henry
Ford, Walt Disney, Bill Gates, Dhirubhai Ambani, Jamsetji Tata, Ardeshir&
Pirojsha Godrej .etc revolutionised the world with their enterprising ideas. In
recent years, with the emergence of technological innovations and the usage
of the same to set forth significant change in how we perceive various
problems, individuals like Steve Jobs, Elon Musk, Jeff Bezos, etc., to name a
few, managed to identify business opportunities in new radical ideas.

In its broadest sense, traces of entrepreneurship dates back to the profit-

minded traders who had traversed the silk route, and various market places
9

 Entrepreneurship: around the world seeking profits in exchange for goods and services. So, does
A Perspective
it mean that being a business owner would make someone an entrepreneur?
The answer is far more complicated than it seems. While the popular
perception drives home the notion that an entrepreneur is someone who sets
up a business, by taking financial risks, in the hope for profits.
Manyeconomists would disagree and emphasise that similar to terms like
“strategy” and “business model”, entrepreneurship is elastic.

According to Howard H. Stevenson – the godfather of entrepreneurial studies

at Harvard Business School – entrepreneurship is the pursuit of opportunities
beyond resources controlled. This definition focuses on entrepreneurship
oppurtunities which are the most important aspect of entrepreneurship. The
entrepreneurship oppurtunities aim at manufacturing of goods and services or
trade for the creation of value. This definition escapes the limiting way of
portraying entrepreneurship as the process of creating and running a business
venture with associated risks to make a profit. This definition misses out on
the entrepreneurial action which stems out of the union of profitable
opportunities and enterprising individuals.
Entrepreneurs relentlessly focus on making tangible progress in a limited
period as observed by their sense of urgency, contrary to established
organisations. They look out for entrepreneurial opportunities, which are
novel in one or more of four ways. Such opportunities may involve
following activities:
i) spearheading wholly innovative ideas;
ii) creating more excellent and affordable versions of existing products;
iii) fabricating a new business model; and
iv) creation of a new market for an existing product – targeting of an
existing product to a new set of customers.

Moreover, entrepreneurs mobilise resources – human, social, and financial

capital, beyond their control, to act on what they believe is an opportunity.
This definition focuses on entrepreneurial actions which aims at creation of
new products or processes or services or entering into new markets. In order
to initiate action on the above newness, the entrepreneur may create new
organisation or infuse the new system in the existing organisation.
The high uncertainty in pursuing ( sensing the environment, indentifying
business opportunities and selecting one or few after evaluating) ideas entails
risks, for which entrepreneurs must use their judgement about whether to act
or not. Thus, the vital essence in understanding entrepreneurial action lies in
the analysis of two activities. The firstis assessing the uncertainties associated
with the venture and the second is the willingness of the individual to bear
those uncertainties, including the various theories, determinants, and models
of entrepreneurship. In this unit, you will learn about entrepreneurship, its
evolution, process, derterminants, models and theories of entrepreneurship.
You will also discuss why entrepreneurship is gaining paramount importance
all across the globe. How does it contribute to the socio-economic

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development of a nation.Let us now start our discussion with the evolution of An Introduction to
Entrepreneurship
entrepreneurship.

1.2 CONCEPT AND DEFINITION OF

ENTREPRENEURSHIP
Just as many other economic concepts, the terms entrepreneurship and
entrepreneur are subject to debate and do not have a single comprehensive
definition. Over two centuries, they have been defined distinctly by various
authorities and used in different senses in comparison to the one in which
they are used today.

Although the recent acclaim of the entrepreneurial attainments would tend to

show it as a twentieth or twenty-first-century phenomenon, the word
entrepreneur is derived from the French word “entreprendre”, which means,
“to undertake”. Richard Cantillon, an Irish-French economist, is regarded as
the originator of the word entrepreneur in his work dating back to the late
seventeenth and early eighteenth century. He considered an entrepreneur
to be a risk-taker who purposefully allocates resources and takes an
active role in pursuing opportunities to maximise the profits.
Late in the eighteenth century, J. B. Say, another Frenchman, extended the
definition and referred to an entrepreneur as an organiser of a business firm.
Besides risk-taking, functions such as coordination, organisation, and
supervision were highlighted. The nineteenth-century marked a prolific time
for entrepreneurial activities as industrial revolution augured continual
inventions and innovations. In the later part of the nineteenth century, the
definitions changed moderately to differentiate between suppliers of
resources who earned interest and those who benefited from the
entrepreneurial activities.

The consistency in the close tie between entrepreneurship and economics has
been emphasised, over the years, by noteworthy economists. In the mid-
1930s, Joseph Schumpeter defined the concept of entrepreneurship from
an economics point of view. He defined it as a management style where an
individual pursues an opportunity regardless of the availability of the
resources in hand. Schumpeter proposed that the entrepreneurship involved
creative destruction, which is a process wherein existing products, business,
processes, and ideas are substituted with better ones. According to him, the
entrepreneurs were at the forefront of bringing about a change through
“creative destruction” and further highlighted the essential role
“innovation” plays in entrepreneurship.

In the twentieth century, Peter Drucker, a well-known writer on management

issues, contended that entrepreneurship involves maximising opportunities –
entrepreneurs should identify and act on underdeveloped and untapped
opportunities.

In modern times, entrepreneurs are closely associated as a harbinger of

change. An enterprising action not only comprises of the ability to assess
risks in new ventures but to manage them and mobilise resources into
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 Entrepreneurship: profitability. The definition, Entrepreneurshipis a pursuit of opportunities
A Perspective
beyond resources controlled – as defined by the Howard H. Stevenson, who
is notable academician of entrepreneurial studies at Harvard Business School
– encompasses various facets of an entrepreneurial endeavour. They are the
relentless pursuit of making tangible progress in a shorter duration to attract
investors; employing novel business models for innovative products and
services; always looking for additional resources beyond those which are
already in possession to further organisational development. Chandler
(1990:8) defines entrepreneurship as dealing with uncertainty, making a
distinction between risk, which can be calculated, and uncertainty which
can’t be overcome.
After going through the definitions given by the experts, it can be
summarised that “Entrepreneurship is a process of creating an enterprise
(both for profit and not for profit) by sensing the environment, identifying
business opportunity and mobilising resources which are available and
bearing the risks thereof with the innovative interventions.” We cannot
confine entrepreneurship into some set of restricted activities. It is rather a
mindset.
Based on the definitions discussed above the following are the features of
entrepreneurship:

x creation of a new organisation or infusion of newness in existing

organisation’
x it involoves dealing with risks and uncertainities,
x it creates value,
x it generates and syustains new ideas, process and system,
x it involves manufacturing, trading and marketing of goods and services,
x it involves management activities, and
x it creates employment.

1.3 EVOLUTION OF ENTREPRENERUSHIP IN

INDIA
History of entrepreneurship in India is as early as “Rigveda”. Rigveda says
that metal handicraft exisited in the society.Craftsmanship was encouraged,
promoted and protected. This indicates that entrepreneurship in India is as old
as the human civilisation. Traces of entrepreneurship dates back to the profit-
minded traders who had traversed the silk route, and various market places
around the world seeking profits in exchange for goods and services.
Efficient artisans with their unique skill to make various useful articles are
existing since then. This Indian artisan industries were flourishing in those
days as the rulers recognised their importance and protected their skill and
promoted their businesses. However, during pre-indepence era (18th century),
this industry declined because of various reasons such as dissolution of royal
courts, indifference of British colonial government for Indian handicrafts,
imposing heavy duities on the imports of Indian goods in England, low
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priced commodities offered by the British (enjoying the economies of large An Introduction to
Entrepreneurship
scale) gave tough competition to the products of Indian handicraft, changing
taste and preferences of the Indian consumers (preference to western culture)
etc.

However, India could see some entrepreneurial growth during the colonial
period. Few communities triggered manufacturing entrepreneurship during
the time. Since then the face of entrepreneurship is changing in India. To
futher understand the evolution of entrepreneurship, you need to know how
entrepreneurship is defined by various experts and how it has emerged as a
subject of study.

1.4 DETERMINANTS OF ENTREPRENEURSHIP

Development of entrepreneurs and culture of entrepreneurship is driven by
multiple factors which can be divided into : (a) individual factors and (b)
environmental factors.You may see figure 1.0 to understand the determinants
at a glance .

Determinants of Entrepreneurship

Individual factors (individual traits) Environmental factors (also called as

external factors)
 Ability and to initiate  Conducive atmosphere
 Mobility and utilising resources  Entrepreneurial culture
 Ability to sense the environment  Political and legal environment
 Perseverance  Technological advancements
 Resilience  Socio-economic conditions
 Creative and innovative
 Problem solving behaviour
 Risk taking behaviour
 Need for achievement
 Need for power
 Need for affiliation
 Innovative attitude
 Desire to sense entrepreneurial oppurtunities
 Capability to put the entrepreneurial activities into action

Figure 1.1 Determinants of Entrepreneurship

Individual/Personal factors : These are the traits of individuals which leads

them to think and act entrepreneurial. Personal factors comprise personal
initiatives of individuals who like to do things before some body else
translates that idea into a running enterprise. Personal factors also include
ability of individuals to identify and utilise resources in wake of
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 Entrepreneurship: opportunities. These are lot of people who can sense opportunities and it is
A Perspective
usually challenging to translate those ideas into execution. Another
individual trait is perseverance, which influnces culture of entrepreneurship,
where people like to take up challenging tasks, assignments or projects and
they are less likely to be complacent about their prevailing status quo.
Another important individual factor is problem solving behaviourand quest
for solutions in a new and better way. One can find lot of entrepreneurs in
India with varying degree of success who got into entrepreneurship triggered
by this problem solving behaviour combined with few other indidual traits
mentioned above. Hence they also need access to resources including funds
at different stages of their entrepreneurial journey. They should have art of
persuation to earn investor patronisation. However, investors or partners
demand self confidence of the entrepreneur or customers and suppliers
demand confidence in the stability of the entrepreneurial set up or enterprise.
Hence ability of individuals to be confident of their decisions, take
informed decisions and being self aware is a desirable traits to audit a
good entrepreneurial culture. Above all individual risk taking behaviour is
what it takes to get into innovative entrepreneurial space.
Environmental factors: They are also called as external factors.
Environment of a place is essential ingredient of entrepreneurial eco-system
which provides conducive atmosphere or otherwise that affects growth of
entrepreneurial culture positively or negatively. It includes technological
advances, political environment, legal system, economic and social
conditions, business circumstances, etc. Political stability in a region, for
example, is important to smooth economic activity which includes catalysing
entrepreneurs to fructify their aspirations. Policy support for a market driven
competitive market encourages new player to enter markets as well as
brushes off complacency among the incumbents. For example during last
couple of decades due to increased globalisation and advances in technology,
innumerable technology ventures have come up globally including India. The
conducive atmosphere may be created by the availaibility of finance by the
financial institutions, supply chain network, ancillary industry,
entrepreneurial culture etc.
Hence, it is the individual traits and external influences that shape
entrepreneurship and its growth in a place. The entrepreneurship facilitates in
the accomplishment of goals envisaged by the individual, the organisation
and the society.
Enterpreneurship Development will take place in the society where individual
traits are supported by exciting and encouraging external factors.

1.5 ENTREPRENEURSHIP AND ECONOMIC

DEVELOPMENT INCLUDING INCLUSIVE
GROWTH
Entrepreneurship has an important role in the economic development and
growth of a state. It plays a major role in introduction of new products,
technology adavnces, technology application and catalyses market
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dynamicstowards growth. Entrepreneurs are relatively better positioned to An Introduction to
Entrepreneurship
try newer ideas, processes and business model changes versus established
incumbents because their size and agile capabilities. Hence they can take
higher risk and experiments with new solutions. Hence entrepreneurs
explore, analyze and smell opportunities in the environment and create
economic entities which strengthen prospects of economic growth. In the
process, lot of other ancillary entities also develop which cater to its
requirements for human resource, raw material, and various other services
necessary to make make these entities run their operations.

As entrepreneurship scales its roots in a place, it inspires more to join this

path and a progressive entrepreurial culture develops like silicon valley in
US, IT hubs in Bangluru, Hyderabad etc. in India Therefore, there is
multiplier effect.. This results in a process of upward change which can
positively affect overall production of goods, services and consumption.
This translates into better real per capita income of a country rises and,
hence, development of the state. More entrepreneurial activity means
higher levels of employment possibilities. Indian states with higher level of
entrepreneurial activity have demonstrated relatively higher levels of
economic development.Thus, entrepreneurial development leadsto economic
development, encourage self employment and generation of income, balance
development of an economy, important entity of supply chain activities,
important entity of supply chain activities, creation of self sufficient village,
rural entrepreneurship. Atma Nirbhar Bharat may play significant role in
creation of innovativeness, facillitatwes new ways of business operations.
The export-import firms may facilitates in earning foreign exchange.

As per economic theories, economic growth cycles can be stretched through

innovation and entrepreneurs are anchors of innovation eco-system. Hence,
entreprenurs according to these theorists plays a key role in sustainable
economic growth. Also sustainable economic growth is also dependent on
overall social welfare and entrepreneurs many times apart from state, NGOs
etc., play a crucial role particularly in the form of social entrepreneurship.

To sum it up, role of entrepreneurship in economic development of a nation

can be discussed as follows:

x Creation and distribution of wealth:they mobilise resources which

otherwise would remain idle, earn money and distribute it to society in
the form of rent such as interest to capital (Investor’s rent) Salaries and
wages to human resources, rent to other inputs of factors of production
x Employment generation: entrepreneurs while establishing and
managing their enterprises generate and provide employment to people
in the society.

x Balanced regional growth and development: Entrepreneurs locate

their businesses even in remote and less developed area this leades to
growth in industry and other businesses which further brings
improvement and development in infrastructure such as rail, road,
airports, electricity, water, schools, hospitals holds etc. That is why
entreprenurship is called as growth accelerator.
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 Entrepreneurship: x Contribution in GDP: Enterprises, especially MSMES contributes
A Perspective
significantly in the GDP of India. More business units use more
resources, resultantly National Income, and per capita income also
increases.

x Increase in standard of living: by bringing in innovation entrepreneurs

make huge contribution in improving th standard of living. Fore
example, mobile phone services are so less that each and every
household, irrespective of their economic status, is using mobile phone
services now a days which was affordable nearly tow decades ago.

x Increase in international trade: In the want of getting access to the

bigger market, enterprises cross boundaries when they feel that domestic
market is coverd and saturated and they want to expand further. They
make their reach in forign maket. This increases the export of the
country.

Check Your Progress A

1) Distinguish between Ambitious Innovators and Adaptive innovators.
2) Fill in the blanks:

i) ……………… assigned a crucial role of innovation to the

entrepreneur.

ii) ……………………. develop enterprises in the fields of healthcare,

mass education particularly for below the poverty line populations,
civil rights, climate, animal life etc.

iii) ……………….. believes in high risk taking and experimentation.

iv) ……………… are the one who are ready to adopt successful
innovations inaugurated by innovating entrepreneurs.

v) Entrepreneurs undertakes ……………….. and handles economic

uncertainity involved in an enterprise.

1.6 MODELS OF ENTREPRENEURSHIP

Discussion of various theories explaining drives, influences or factors,
internal or external to the entrepreneurs, can be argued further in terms of
various entrepreneurship models as a consequence. Some of the important
models of entrepreneurships are as follows:

Ambitious Innovators
This model of entrepreneurship believes in high risk taking,
experimentation and tolerance to failures. The entrepreneurs of this
category believe in solutions of radical nature from the current solutions.
They could be individual entrepreneurs or representatives of corporations
where there is conducive climate for trying new solutions and failures in
trying new things are not usually penalised.Ambitious innovators are
proponents of exploration and creation. Entrepreneur’s may later dilute the
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ownership or sell their venture outright and engagement may continue An Introduction to
Entrepreneurship
sometimes even after sell out. There are external positive effects created by
these ventures which could stretch to economy at a bigger scale and generate
employment opportunities. Many technology ventures in last few decades
like Google, Facebook, Oyo, Coursera etc., are examples of this type. Some
times ambitious innovators may even develop new sectors and later on many
other entrepreneurs may bring incremental innovation on top of earlier
innovation led new enterprise.

Adaptive Innovators
This type of entrepreneurship is driven by relatively lesser level of risk
taking appetite and follow incremental innovation approach. Sounds
complicated to you? Wait, let me explain incremental innovation to you first.
Incremental innovation, is a series of small improvements to the products
already existing in the market. Adaptive innovators do not take huge risk so
they follow incremental innovation approach where they do not introduce or
alter an entirely new solution (business offerings) rather they imitate
innovative entrepreneurs by making small improvements in the existing
products or business offerings (products or services). It could be also
influenced by amount of resources available or accessible partnerships, These
entrepreneurs usually tookthe path of exisiting entrepreneurswith some
tweaks or by incrementally innovating. They imitate innovative entrepreneurs
because the environment in which they operate is such that it does not permit
them to have creative and innovative ideas on their own. Adaptive innovators
are more common is places where entrepreneurial ecosysm is relatively less
mature or less conducive for initiating innovative ideas. Many bigger firms
also sometimes cultivate capabilities in an entrepreneurial framework ( own
or in partnership) or nurture new ventures which are meant to work
continuously and innovate incremently keeping pipeline line new rollouts
ready for their targeted markets. From an economic stand point these
innovations in essense are replications or tweaks of the more radical
innovations made by others. Other explanation of these incremental efforts
are many times compulsions for sustainability and expansion. Even these
innovator entrepreneurs also need to continuously explore and experiment.
While several entrepreneurs do this by understanding the market
opportunities created by the innovations of other entrepreneurs. Some
entrepreneurs develop their footprint by rolling out distinct new
functionalities or sometimes process innovations. The number of these type
of enterprises is relative larger than the ambitious innovators. These
enterprises can potentially create larger economic impact and scope for
employability. The impact could involve more competition, efficiency and
rivalry in the specific sector.

Solo Self Employed

This constitutes the largest group of entrepreneurs who are working on their
own and normally contributes maximum in terms of their numbers. These
companies have the potential to bring higher agility to their client firms
usually a higher tier firm in case of Business to Business (B2B) engagements.
These solo self-employed outfits facilitate growth of their partner companies
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 Entrepreneurship: byadding to the agile capability. However, in spite of solo self-employed may
A Perspective
outnumber other types of entrepreneurship models. They focus on self driven
entrepreneurial activities. Therefor, they may not contribute greatly in
employment generation. At times , this model is a recourse for people who
find it compulsive to do something on their own because other options are
limited.

Managerial Employers
This constitutes rest of employer entrepreneurs whoare not ambitious with
respect to firm growth. Their prime focus is sustainability or business
continuity. Mostly their efforts are focussed towards cost efficiency through
process improvements or innovations. Many times such companies may
acquire a company with radical innovation capability to sustain. Many of
these enterprises follow adaptive innovation or incremental innovation,
exploration of new resources, new partners, optimum resource management
and similar efforts to maintain their growth and scale. Their role in overall
national growth figures of states including India is dependable and important.

Social Entrepreneur
Social entrepreneurs are focused on societal concerns including ecological
challenges. Their major focus is to solve community basied problems. Social
entrepreneurs take risk and make efforts to create positive changes in the
society. They start business for the greater social good and not only for
profits. They may develop enterprises in the fields of healthcare, mass
education particularly for below the poverty line populations, civil rights,
climate, animal life etc. Besides other sector.In the passion of an
entrepreneur, they follow poverty alleviation goals, best strategies and strive
to transcend traditional methods and innovate.

1.7 THEORIES OF ENTREPRENEURSHIP

There are multiple theories which form basis of conceptual domain of
entrepreneurship. These theories have origins in economics, psychology,
sociology, anthropology, and management. Prominent among these theories
are as follows:
1) Psychological Entrepreneurship Theory
2) Economic Entrepreneurship Theory
3) Opportunity-Based Entrepreneurship Theory
4) Sociological Entrepreneurship Theory
5) Anthropological Entrepreneurship Theory
6) Resource-Based Entrepreneurship Theory

1) Psychological EntrepreneurshipTheories

In this theory, the focus is on individual personality traits. Advocates of this
theory believes that people with certain traits are more likely to become an
entrepreneur. Need for achievement and control leads to inclination for
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innovativeness, risk taking and acceptance of initial failures in An Introduction to
Entrepreneurship
experimentation. According to traits theorists, traits necessary for
entrepreneurial capability are inborn. Personality traits are defined as
sustained qualities that an individual displays in most situations (Coon,
2004). Entrepreneurs are mostly sensing opportunities, relatively creative and
have appetite for faster learning of management skills. Locus of Control
explores individual’s perception about the reasons behind events of life
(Rotter, 1966). Entrepreneurial belief about the reasons of successis also
explained based on concept of locus of control orientation and varied
perceptions of entrepreneurs about the reasons of their success. The success
may be due to internal efforts called internal locus of control orientation or
some external support termed as external locus of control orientation.
However, it has been found that business owners have a slightly higher
internal locus of control than other populations. Individuals want to
achieve more and succeed (McClelland, 1961). Achievement theory
underline the need to achieve as the underlying motivation for inititaives
and there are evidences proving linkages between achievement need and
career decision favouring entrepreneurship. (Johnson, 1990).

Many experts believes in Psychological theory of entreprenurship which

stresses on individual personality traits. They believe that because of these
traits, entrepreneurs emerge. Three of the most popular psychological
theories of entreprenurship are given below:
x McClelland’s theory
x Rotter Locus of control theory
x Action regulation theory

David McClelland theory says that entrepreneur are guided and motivated
by three important needs viz, need for aliliation, need for power and need for
achievement. These three needs are the greatest motivators and influencers.
Rotter’s locus of control theory (formulated by Julian Rotter in 1954)
believes that people are guided by their perceived locus of control amongst
individuals. Locus of control may be internal, called as internal locus of
control or it can be created through external support, termed as external locus
of control. Entrepreneurs are found to be guided mainly by Internal locus of
control. You must be wondering what is internl and external locus of control.
Let me explain it to you. People with Internal locus of contol believe that
they can make things happen by their actions i.e., ther are capable of doing
anything or solving any problem, where as people with high external locus of
control, believe that the happening in life is beyond their control and these
happenings occur because of external factors such as fate, change etc.
Michael Frese formulated action regulation theory. In this theory it is
believed that entrepreneurship is related to planning. An individual with
planning behaviour or attitude is mor likely to be successful. Cognitive
ability is very crucial for entrepreneurs, according to this theory.

2) Economic Entreprenurship Theories

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 Entrepreneurship: Economic theories of entrepreneurship can be divided into three different
A Perspective
time periods: (i) Classical (ii) Neo-classical and (iii) Austrian market process.
Let us quickly discuss the essence of these theories.

i) Classical Theory of Entrepreneurship:

Advocates of classical theory believed that role of entrepreneur is restricted
to production and distribution of market goods in a competitive market place.
There are two noteworthy classical theories of entrepreneurship

a) Richard Cartillon Theory (1755)

b) Innovation theory by Schumpeter

a) Ricard Cartillon Theory: Ricard Cantillon was an Irish-French

economist. He is regarded as the originator of the word entrepreneur in
his work during late seventeenth and early eighteenth century. He
advocated that entrepreneur is a risk taker who conducts all exchanges
(resource allocation, and taking an active role in pursuing opportunities
to maximise his profit). He believed that entrepreneurs are not innovators
as they cannot change the demand and supply trends in the market. They
can just perceive the changes and are intelligent enough to maximise
profits and have willingness to take risk.

b) Innovation theory by Schumpeter: Innovation theory is considered to

be one of the most important economic theories of entrepreneurship. This
theory was propounded by Joseph Schumpeter.

Schumpeter underlined the key role of entrepreneurs in bringing

innovation by engaging with different actors of an economic eco-system.
His ideas on role of entrepreneurs in sustaining economic wellbeing has
been quite influential and followed by many nations. His innovation
theory is a popular theory of entrepreneurship which is used across
countries. Lot of subsequent innovation models are built around his concept
of entrepreneur as the anchor of innovation eco-system. Schumpeter stresses
that entrepreneurial creativity is major driver of an entrepreneur’s path
of specific domain. Innovation can happen through multiple ways :
x New distinct product or service
x New distinct process to produce product or service
x Address a different audience or market
x Exploring successfully a new resource input in the production process
x New business model or radically a new organisation through
transformation with newer capabilities.
To sum it up, we can say that innovation can be in the product, process or in
the services of the market offerings.

ii) Neo-classical theory of entrepreneurship

Neo Classical theorists proposed that the role of exchange in an economic
engagement along with diminishing marginal utility creates possibilities for
20 entrepreneurial role (Murphy, Liao &Welsch, 2006).

iii) Austrian Market process theory of entrepreneurship An Introduction to
Entrepreneurship
This theory focuses on entrepreneurs actions based on their information
understanding and knowledge regarding the economy. Advocates of this
theory believe that entrepreneurs responds to the changes in the dynamic
market to make profits. Their response to the changing market is based on
their ability to understand the dynamics of the market. They do product
research and development and bring technological innovations to obtain
profits. Profit seeking entrepreneurs constatntly promote the evolution of
economic structure.

3) Opportunity Based Entrepreneurship Theory

The opportunity-based theory gives a stretched space for resaerchers to
explain the becoming of an entrepreneur and its determinants. Peter Druker
(1985) argues that entrepreneurs most likely seize the opportunities arising
from changes around us with an economic prospect.Entrepreneurs keep
looking for new possibilities and problems which can be addressed through a
new or better solution than the existing solution. After identification of any
opportunity, entrepreneur responds with a solution depending on access to
the resources and capabilities (Stevenson, 1990).
Access to relevant resources directly or through partners in business are
essential to accomplish key activities of business which are fundamental to
achieve entrepreneurial business goals in context of opportunities identified
and resposes deigned by the entrepreneur (Alvarez &Busenitz, 2001). The
key activities could be operation processes, channel requiremnets or any
specific relational activities envisaged by the entrepreneur to differentiate
products or services for sustained growth and performance.

4) Sociologiocal Entrepreneurship Theory

There are some major social factors which trigger entrepreneurship
opportunities (Reynolds , 1991). Social network play a major role as trigger
as well as facilitate during various stages of entrepreneurial lifecyle . The
underlined idea is for building social relationships which enhance trust. The
entrepreneur can succeed more from cultivating and maintaining trust with
the intended audience of the entrepreneurial activity. Another factor which
reinforces trust through perceived non-opportunism as audience over time
understand the intention behind actions. This understanding further
strengthens with more and more experience by the users of goods or services.
Individual; sociological lineage is also an important determinant of
entrepreneurship. One more dimension is based on play of environmental
factor called population ecology like the political influences prevelant and
influences of all kinds of business stakehokders e.g., competitors,
suppliers, customers etc. In last several years there is a huge push for
startups in India from the government facilitated through various policy
initiatives. For example, Startup India, Make-in-India etc. Also lot of
investment from start up investors is chasing good ideas for funding support.
Many states and large firms in India have worked on setting up incubation
and accelerator facilities.
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 Entrepreneurship: 5) Anthroplogical Entrepreneurship Theory
A Perspective
Anthropologists emphasise role of culture like customs, origin, and beliefs of
a community. This theory can explain prevalence of orientation towards
business, picking a specific type of professional career etc., among certain
communities. We have seen in India, certain geographic belts with
specific culture , one can find people opting career in defense forces, or
setting up businesses or commerce orientation or towards art, music etc.
The focus is on the cultural entrepreneurship model. Culture is a function of
multiple dimensions including socio-economic, polirtical and ecological
factors which further influences attitude and subsequent intention for
entrepreneurial choices. (Shane 1994).

6) Resource Based Entrepreneurship Theory

The resource based theoryunderlines role of various types of resources
critical to success of entrepreneurial journey (Aldrich, 1999). Ability to
mobilize necessary resources enables entreprenurs tap opportunities and find
solutions of problems (Davidson & Honing, 2003). The resource need
depends on type of business model adopted by the entrepreneur. Asset heavy
firms may need more financial resources whereas asset light initiaves may
need better partnerships or human resources. To understand entrepreneurship
model you may recall entrepreneurship model explained earlier in this unit
(section 1.3).For example, an entrepreneur in the space of reverse logistics,
partnering with ecommerce platforms like amazon.in or flipkart.com, may
need more financial resources if it focuses on disposal of returned or
rejected goods. Moreover, it may need operational excellence or efficient
services if it focuses on returned goods which are sent back to ecommerce
platform sellers. However, there is sufficient evidence to show that growth of
entrepreneurs is positively associated with access to financial resources
(Blanchflower et al, 2001, Clausen, 2006). There are studies also to show that
in many situations, entrepreneurs, in early stages of development, may not
depend necessarily on financial resources accessible (Hurst &Lusardi, 2004).
Also among other resources, Social Network Theory give importance to
network or social network resources which then entrepreneurs are able to
translate into instruments of effective market penetration or competitive
collaboration which lead to sustainable entrepreneurial journey (Clausen,
2006).These theorists argue that entrepreneurs with sufficient network access
are able to better mobilise various other resources also like access to reliable
supplies or penetration into new markets. Literature on this theory shows that
stronger social ties to resource providers facilitate the acquisition of resources
and enhance the probability of opportunity exploitation (Aldrich &Zimmers,
1986).

Dear Learner, now you can actually recall and summarise the evolution of
entrepreneurship chronologically, discussed in section 1.2 of this unit.

Check Your Progress B

1) Fill in the blanks:

i) Psychological theories focus is on individual ………………… .

22

 ii) Economic growth cycles can be stretched through ……………. . An Introduction to
Entrepreneurship
iii) The anthropological entrepreneurship theory emphasise on the role
of …………………. .

iv) ……………. focus on the way individuals leverage different types

of resources to get entrepreneurial efforts on the ground.

v) The ……………… contends that entrepreneurs are one who take
advantage of possibilities created by social, cultural, economic and
technological changes.

2) State whether the following statements are True or False.

i) Resources entrepreneurs might leverage include social network and

the information they provide.

ii) Sustainable economic growth is also dependent on overall social

welfare.

iii) According to traits theorists, entrepreneurship developed because

individuals called entrepreneurs possess certain specific
competencies.
iv) Entrepreneurs responds to an opportunity with a solution depending
on their access to the resources and capabilities.
v) Individuals with external locus of control consider themselves
responsible for all the events in their life.

ACTIVITY 1
Rishi, Paramjeet and Anil have recently complete their MBA from a reputed
business school of India. They are planning together astartup, Smartbuy.com
in Gurugramcity of Haryana. They want to provide an ecommerce platform
and logistics support for local food service providers to sell goods online to
the customers in the same local catchment area. They are deliberating a
strategy to focus only on food and grocery retail in major Indian cities. They
believe that there is a huge food and grocery retail market at around 65% of
retail transaction value in India. While the share of organised retail and e-
commerce is likely to increase, the traditional retail is expected to continue
to hold a major share of the Indian Retail market. Traditional retail had 88 %
share, organised retail 8% and E-Commerce 4% in 2017 amounting to around
US$ 800 Billion. EIU report for 2021 puts projections at Traditional retail
(75%), Organised retail (18%) and E-Commerce (7%) which could amount
to around US$ 1200 Billion.

The founders of Smartbuy's board believe that in the context of the major
transformations happening in the Indian retail market, citing experts and
reports that amalgamation of the various general and modern trade channels
is the need of the hour. At the same time, the modern retailers and the e-
commerce channels still face significant challenges with regard to the last-
mile delivery and requires assistance from Kirana stores to penetrate. Proof
of model success has limited examples across both products and services
23

 Entrepreneurship: which are different stages of entrepreneurial growth stage. Grofers is an
A Perspective
example of grocery hyperlocal model. In the recent past another big Indian
retail chain ( Reliance ) has been carrying out pilots of hyperlocal online
food and grocery sales in select cities. Smartbuy is planning partnership
with local retailers and Kirana merchants to list their products on the portal
and sell them to the customers which will be supported by logistics and
payment facilitation. One of the founders, Paramjeet, is slightly
apprehensive about this model focused on food and grocery alone because
of various failures of hyperlocalstartups in food and grocery. There are
several online hyperlocal food and grocerystartups which closed down, even
some got sizeable funding, like PepperTap, Eatio, Tinyowl and Spoonjoy.
There is also a challenge to tying up with local players of food and grocery
category in the sense that logistics control and coordination in Indian
conditions is difficult because severe high temperature in summers, lack of
technical infrastructure at level of local stores and access to necessary cold
supply chain facilities.

According to reports, Indian retail market is one of the fastest growing

across the world and is the fifth largest retail destination globally. The factors
attributed to the growth are economic growth, increasing consumerism and
growing disposable income. The industry is expected to grow exponentially
to reach USD 1,200 billion by 2021 and USD 1,750 billion by 2026. The
growth is expected not only in large cities and metro, but also in Tier II and
Tier III cities. The increase in consumption expenditure also drives the
growth in the retail industry. Of the total retail market, Food and Groceries
comprise the largest share, followed by Apparel and Footwear.
Despite the rapid growth in modern trade and e-commerce over the past
years, traditional retail still holds a major share of the retail landscape in
India and expected to continue domination in the foreseeable future. Unique
offerings of traditional retail outlets such as ease of access due to locational
proximity, local community knowledge, and personal relations with
customers considered as an edge of traditional retail stores.

However, each type of stores and e-commerce platforms have their own
challenges. Challenges of Kiranas include lack of the latest technology,
working capital issues, Competition from modern retail outlets, lack of space
and lack of capital to improve store fit out/ambience. Similarly, challenges
faced by organised retail include lack of strong supply chain, getting the
right merchandise mix, unavailability of affordable real estate and
infrastructure and logistics issues. E-Commerce retailers are facing the policy
uncertainty, higher acquisition cost, infrastructure and logistic issues, high
cost of delivery, excessive returns and rejections making reverse logistics a
bleeding issue and last mile delivery challenges.

With 451 million monthly active internet users at end of financial year 2019,
India is now second only to China in terms of internet users, according to a
report by Internet and Mobile Association of India (IAMAI). However, with
only 36 per cent internet penetration, there is still much headroom for
growth, it said. The report mentions that out of 451 million monthly active
users, 385 million are over 12 years of age and 66 million are in the age
24

bracket of 5 to 11 years, who access the Internet on the devices of family An Introduction to
Entrepreneurship
members. In terms of absolute numbers, urban India with 192 million users
has almost the same number of users as rural India. However, in terms of
percentages or penetration, given the disparity of population distribution in
urban and rural India, urban India had a considerably higher penetration
level.

According to EIU report the number of online shoppers is expected to

increase from the current 15 percent of the online population to 50 percent
by 2026. The average online retail spending in India was US$ 225 per user
in 2017 and around 2 million shipments were handled daily where half of
this demand came from the metro cities. However, ecommerce is
increasingly attracting customers from Tier II and III cities, where people
have limited access to brands but have high aspirations. More than 30 percent
of online shoppers are from Tier II and below cities while the rest are from
Metros and Tier I cities. This number is expected to increase to over 55
percent for Tier II and below cities in the next three to five years. Low
servicing costs in Tier II and below cities is expected to be a key driver for
growth in these cities. Owing to the rise in demand from Tier II and below
cities, and given the challenge of last mile delivery, the e-commerce
companies can be expected to consider exploring partnerships with
traditional retail stores to reach the consumers in these cities.

According to retail research reports organised retail and e-commerce, strives

for the largest share of the Indian retail pie, the challenges hinder the growth
of these channels. According to some ecommerce experts the need of the
hour is a confluence of the retail channels, wherein each channel
complements the offerings of the other and provides a seamless shopping
service for the benefit of the consumers. Large modern brick and mortar
retailers and ecommerce players are advancing towards leveraging the
widespread network of Kirana stores to increase their retail presence and to
win over the Indian consumer. With just 3 percent of Kirana stores being
tech-enabled and the rest with the willingness to adopt technology (70
percent of Kirana stores in big cities and 37 percent of Kirana stores in Tier
II cities want to be tech-enabled), the retail giants using this opportunity to
technologically and financially empowering the Kirana stores. E-commerce
companies are collaborating with Kirana stores for increasing their outreach,
and are also providing them with an additional source of earning by way of
acting as their channel partners/distributors. For tech-enablement, Kirana
stores are provided with POS billing systems, app payments, and back-end
integration with wholesaler. To help Kirana stores cope with working capital
shortages, easy loans are provided. Additionally, to improve profit margins,
stores staff is trained on planograms, assortment selection, and product
placement.

However, many retail domain think tanks suggest that offline and online has
to move forward in a complementary format for sustainability of overall
retail industry. Confrontation could lead to policy interventions and price
wars. Some partnerships already being tried out across these formats. Given
these broader trends, mix of experiences, online retail market dynamics and
local policy challenges, Smartbuy founders need to take next steps including 25

 Entrepreneurship: a detailed business plan before hunting for investors in Bamgloru which is
A Perspective
scheduled after a couple of weeks

Case Questions
1) Discuss possible factors which may have led Smartbuy founders choose
path of entrepreneurship.

2) Where will you place Smartbuy.com across various types of

entrepreneurship models discussed in this unit? Why?

3) List out risks and challenges associated with proposed plan.

4) Do you support the envisaged plan of Smartbuy to develop a online

hyperlocal model focused on food and grocery segment? Why?

5) How can Smartbuy.com support economic growth and development of

state economies where it finally decides to operate its business?

1.8 LET US SUM UP

Entrepreneurial action lies in assessing the uncertainties associated with the
venture and the willingness of the individual to bear those uncertainties,
including the various theories, determinants, and models of
entrepreneurship.theories which form basis of conceptual domain of
entrepreneurship. Various theories contributed help explain drivers, factors,
drives for becoming an entrepreneur. These theories have roots across
economics, psychology, sociology, anthropology, and management where
can be broadly classified as Psychological entrepreneurship theory,
Economic entrepreneurship theory, Opportunity-Based entrepreneurship
theory, Sociological entrepreneurship theory, Anthropological
entrepreneurship theory and Resource-Based entrepreneurship theory.
Entrepreneurship can be mapped to models based on type of innovation and
ownership pattern as Ambitious Innovators, Adapters, Solo Self Employed
and Managerial Employers. Various factors which drive entrepreneurs, aslo
explained through various types of theories, can be individual or external
influences. Entrepreneurial culture leads to larger footprint of
entrepreneurship in a state which leads to larger economic development and
sustainability.

1.9 KEY WORDS

Entrepreneurship: Itinvolves maximising opportunities – entrepreneurs
should identify and act on underdeveloped and untapped opportunities.
Dealing with uncertainty, making adistinction between risk, which can be
calculated, and uncertainty which can’t be overcome.

Ambitious Innovators: Entrepreneurs who are high risk taking,

experimentation and tolerance to failures.

Adaptive Innovators: Entrepreneurs usually toe the pathof exixiting

entrepreneurs with some tweaks or incrementally innovate
26

Solo Self Employed: Entrepreneurs who are largest group of entrepreneurs An Introduction to
Entrepreneurship
who are working on their own and normally contributes maximum in terms
of their numbers.

Managerial Employers:Entrepreneurs who are focused on scale and

efficiency and may also take up incremental innovative steps.
Hyper Local Retail Model: Retail Model where local needs of customers are
serviced from local suppliers.

1.10 ANSWERS TO CHECK YOUR PROGRESS

A. 2. i. Joseph A. Schumpter ii. Social entrepreneurs iii.ambitious
innovators iv. adaptive entrepreneurs v.Risk

B. 1. i.personality traits ii. innovation iii. culture iv. Resource based theory
v. opportunity-based entrepreneurship theory

2. i. true ii. true iii. true iv. true v. false

1.11 TERMINAL QUESTIONS

1) Define the term entrepreneurship and and discuss its evolution.
2) Write a brief note on different models of entrepreneurship.
3) Disscuss in detail the Pyschologicaltheories of Entrepreneurship.
4) Critically evaluate the different theories of entrepreneurship.
5) Discuss the factors which drive the development of entrepreneurship.
6) Explain the importance of entrepreneurship in a developing country.

Note: These questions will help you to understand the unit better. Try to
write answers for them. But do not submit your answers to the University for
assessment. These are for your practice only.

FURTHER READING
x Aldrich, H. E. (1999). Organizations evolving. London: Sage

x Aldrich, H., & Zimmer, C. (1986).Entrepreneurship through social

networks. In D. Sexton, &R. Smilor (Eds.), The art and science of
entrepreneurship. Cambridge, MABallinger.
x Alvarez, S. A., &Busenitz, L. W. (2001).The entrepreneurship of
resource-based theory.Journal of management, 27(6), 755-775.
x Blanchflower, D. G., Oswald, A., &Stutzer, A. (2001). Latent
entrepreneurship across nations.European Economic Review, 45(4-6),
680-691.
x Chandler, A. (1990). Entrepreneurship and Economic Growth.
Cambridge, HarvardUniversity Press.
27

 Entrepreneurship: x Clausen, T. H. (2006). Who identifies and exploits entrepreneurial
A Perspective
opportunities. Oslo: TIK, University of Oslo.
x Coon, C. S. (2004). Principles of anthropology (Vol. 1). Genesis
Publishing Pvt Ltd.
x Davidson, P., & Honing, B. (2003), “The role of social and human
capital among nascent entrepreneurs”, Journal of Business
Venturing,20,121
x Druker, P. (1985). Innovation and entrepreneurship: Practice and
principles. NY: Harper& Row.
x Hurst, E., &Lusardi, A. (2004).Liquidity constraints, household wealth,
and entrepreneurship.Journal of political Economy, 112(2), 319-347.
x Johnson, B. R. (1990). Toward a multidimensional model of
entrepreneurship: The case of achievement motivation and the
entrepreneur. Entrepreneurship Theory and practice, 14(3), 39-54.
x McClelland, D. C.(1961), The Achieving Society.(Princeton, New Jersey:
Van, Nostrand.
x Rotter, J. B. (1966).Generalized expectancies for internal versus external
control of reinforcement. Psychological monographs: General and
applied, 80(1), 1.

x Say, J. (1816). A treatise on political economy. London: Sherwood,

Neeley and Jones.
x Shane, S. (1994), Cultural Values and the Championing Process.
Entrepreneurship Theory & Practice, 18, 25-41.
x Simpeh, K. N. (2011). Entrepreneurship theories and Empirical research:
A Summary Review of the Literature. European Journal of Business and
Management, 3(6), 1-8.

x Stevenson, L. (1990). Some methodological problems associated with

researching women entrepreneurs. Journal of business ethics, 9(4-5),
439-446.
x Wennekers, S., & van Stel, A. (2017). Types and roles of productive
entrepreneurship: a conceptual study. The Wiley Handbook of
Entrepreneurship, 37-69.

28

  Entrepreneurial
UNIT 2 ENTREPRENEURIAL ECO- Eco-System

SYSTEM

Structure
2.0 Objectives
2.1 Introduction
2.2 Entrepreneur, Entrepreneurship and Enterprise
2.3 Ecosystem
2.3.1 Entrepreneurial Ecosystem
2.3.2 Entrepreneurship and Ecosystem
2.3.3 Factors Influencing Entrepreneurial Ecosystem
2.4 Entrepreneur, Innovation and Ecosystem
2.5 Ecosystem Challenges
2.6 Development of Conducive Ecosystem
2.7 Let us sum up
2.8 Key words
2.9 Answers to Check Your Progress
2.10 Terminal Questions

2.0 OBJECTIVES
After studying this unit, you should be able to:
x explain the importance ecosystem;
x identify the enabling factors which create a conducive environment for
an entrepreneur;
x discuss the requisites for an entrepreneur become an entrepreneur;
x explain the linkages between various entities and their roles in
facilitating entrepreneurship in a country; and
x examine challenges and facilitation support required at various stages of
early entrepreneurship.

2.1 INTRODUCTION
Majority of the policy makers understand the need to identify the entities and
instruments which facilitate growth of entrepreneurship in a state or location.
This has led to increased interest in ecosystems as an approach for
understanding the climate for growth of entrepreneurship. This approach
suggests that entrepreneurship spreads and scales in an environment which
considers various stakeholders who play different roles. These roles may be
with varied goals, and expands on consideration of only entrepreneurs
responsible for driving growth. This approach considers interdependence of
various stakeholders and factors that facilitate entrepreneurship growth in a
specific location. There has been a lot of debate about the standardized
29

 Entrepreneurship: specification of an entrepreneurial ecosystem. However, there is a larger
A Perspective
consensus among researchers to view it from a systems perspective. Higher
degree of associations among the elements of this ecosystem entails this
perspective. It helps measurement and subsequent comparison of prevalent
ecosystems required to make policy interventions, in case there are structural
deficiencies necessary to facilitate entrepreneurs through instruments of
policy.

2.2 ENTREPRENEUR, ENTREPRENEURSHIP

AND ENTERPRISE
In order to understand entrepreneurial ecosystem, you need to know: who is
an entrepreneur? What is enterprise? And what is entrepreneurship? Let us
understand these terms first.

Entrepreneur: This is a description of an entrepreneur in a classic term. This

explains entrepreneur as a business founder and a small business owner.
However, there is much more than that. Every business founder or owner
may not necessarily be an entrepreneur. They are the visionaries, the risk
takers, the innovators, the leaders and much more. They are basically
individuals or groups having unique characteristics and personality types. Let
us briefly describe their characteristics.

Characteristics of an Entrepreneur
Definition of an entrepreneur is not permanent, we can only understand and
keep on defining the term by learning more about different types of
entrepreneurs, what do they do, why do they do and how do they do. Given
below are the characteristics found usually in entrepreneur:
x They are visionaries and agile.
x They are innovative and creative.
x They try to solve a problem.
x They are passionate about their business and work.
x They are the risk takers and have the appetite for taking calculated risk
x They have perseverance and resilience
x They are determined and have ability to overcome hardship.
x They are the leaders.
x They are focused and action oriented
x They are accountable and responsible.
x They have the ability to sense the environment and convert adversity or
problem into an opportunity by providing solution to it.

Entrepreneurship: Simply speaking, entrepreneurship is what an

entrepreneur does including the process and ways of doing it. The
entrepreneur is central to entrepreneurship and enterprise.

30

The entrepreneur is the key stakeholder and entrepreneurship is the process to Entrepreneurial
Eco-System
set up an enterprise. The term entrepreneur/s is generally used to describe
individual or group of individuals who set up and manage their own business.
The entrepreneur is central to the next concept, entrepreneurship, which
makes things happen for the entrepreneurs. (a) According to most popular
definition with innovation focus and important of conducive conditions ,
“HQWUHSUHQHXUVKLS LV WKH  SXUVXLW RI PDUNHW RSSRUWXQLWLHV WR FUHDWH IXWXUH
LQQRYDWLYHJRRGVDQGVHUYLFHVGLVFRYHUHGHYDOXDWHGDQGH[SORLWHGWRH[WUDFW
VRFLDO DQG HFRQRPLF YDOXH IURP WKH HQYLURQPHQW OHDGLQJ XOWLPDWHO\ WR QHZ
LQGHSHQGHQW EXVLQHVV  YHQWXUH FUHDWLRQ” (Shane & Venkataraman, 2000).
They extended the analysis of entrepreneurship by offering an overarching
conceptual framework that explains the different parts of the entrepreneurial
process – the opportunities, the people who pursue them, the skills and
strategies used to organize and exploit opportunities, and the environmental
conditions favorable to them – in a coherent way. "(QWUHSUHQHXUVKLSLVWKH
SURFHVV RI FUHDWLQJ RU VHL]LQJ DQ RSSRUWXQLW\ DQG SXUVXLQJ LW UHJDUGOHVV RI
WKHUHVRXUFHVFXUUHQWO\FRQWUROOHG" (Timmons, 1994). Peter Drucker defines
entrepreneurship again based around innovation as ‘a systematic innovation,
which consists in the purposeful and organized search for changes, and it is
the systematic analysis of the opportunities such changes might offer for
economic and social innovation.’ The analysis of this definition reflects:
x Entrepreneurship involves systematic innovation.
x There is a purposeful or organized service.
x It focuses on systematic analysis of opportunities.
x These changes offer economic or social innovation.

Entrepreneurship is the process influenced by factors like social economic,

economic, psychological and other factors. The process involves visioning,
mobilization of resources and setting up of an enterprise by an entrepreneur.
Entrepreneurs aim at leveraging the identified opportunity and capture value.
From a measurement perspective, entrepreneurship is an abstract concept
depending on the focus of definition. If we look at entrepreneurship from a
policy perspective, the complexity and dynamics of processes involved can
depend on the level taken which can infuse more abstraction as level goes up.
Entrepreneurship requires passion and commitment towards the development
of solutions for the problem/opportunity identified or targeted. It needs risk
taking, team formation, planning, financing, operations monitoring, scaling
competencies and other capacities to start and sustain a commercial outfit.

Enterprise: An enterprise is the outcome, once formed transacts products

and services, creates employment opportunities, and contributes to the
national income of the state. The core work of an entrepreneur starts with
intent of enterprise development, which is not a one-time activity. The
objective of the enterprise development process is to bring a positive societal
change by stimulating economic activity. Rather, it is a series of activities
that start with investing time and knowledge into understanding the needs of
the venture. The creation of venture involves: attracting investment, building
business linkages, planning and setting up systems and processes and
31

 Entrepreneurship: deploying resources for enterprises so that they can compete and grow on a
A Perspective
continuous basis.

2.3 ECOSYSTEM
Arthur Tansley coined the term ecosystem in 1935 in the domain of
ecological sciences while referring to interactions of organisms with its
surroundings in a spatial unit responsible for the sustainability of that unit.
The ecosystem relevant to context of economic entities can be seen as whole
set of stakeholders, resources and processes with their interdependencies, at
varied stages of lifecycles. The lifecycles may consist of all matters of
interest in the relevant space, characterized by intrinsic and extrinsic factors
which influence stakeholder in focus. The ecosystem is characterized by
internal and external factors which have interdependency and has been
responsible for dynamic nature of the ecosystem evolution. For example,
resource limitations affect the growth and behavior of organisms in a habitat
which over time can affect the resources in the external environment. The
goals of ecosystem approach and ecosystem management has been to achieve
sustainability of the focus entities or the stakeholders within the ecosystem.
The ecosystem approach or systems view can be used from a locational
perspective or process perspective. There is more inclination among
researchers to use the process view in a specific context to demarcate
stakeholders of interest. For example, understanding entrepreneurial growth
in India who are innovating to participate in global value chain in a free trade
context will lead us to see the ecosystem from a process perspective spread
across multiple locations including India.

2.3.1 Entrepreneurial Ecosystem

The ecosystem is a built on dynamic interaction of social, political, economic
and cultural elements within a region. The Entrepreneurship Ecosystem
means various constituents like entrepreneurs, organizational
stakeholders, employees and other individuals, and organizations etc.,
which facilitate or limit the development of entrepreneurs in a location /
region of interest. These constituents of the system like institutions,
individuals aspiring to be entrepreneurs, entrepreneur’s groups/associations,
other complementary factors etc. these factors may influence the progress of
current entrepreneurs, individuals aspiring to be entrepreneurs, individuals
who could be candidates for entrepreneurship in future etc., are called
stakeholders. There can be other stakeholders like policy institutions,
educational set ups, financial institutions and investors, R & D centers, civil
society outfits, industry associations, unions, legal institutions,
multinationals, etc. In spite of multiplicity of these factors in the ecosystem
driving or hindering entrepreneurship, certain factors may have relatively
more influence than others. For example, we can see certain cities in India
like Bengaluru, Hyderabad and few other states have seen more
entrepreneurial activity compared to many other Indian cities. It may also
depend on the stage of ecosystem evolution in specific places meaning a
mature ecosystem is likely to foster more entrepreneurship. Also these
32

facilitating factors need to work in tandem to cultivate the right ambience for Entrepreneurial
Eco-System
the growth.
All these entities and stakeholders are connected directly or indirectly,
formally or informally, accelerating or decelerating performance in the given
environment. 7KHLQWHUDFWLRQVEHWZHHQWKHVHYDULRXVVXEV\VWHPVKHOSDFKLHYH
WKH HFRV\VWHP SXUSRVH (Mason & Brown, 2014). The conductive ecosystem
encourages innovation and risk taking which are key factors for startup
growth.

2.3.2 Entrepreneurship and Ecosystem

Entrepreneurship ecosystem is the social and economic environment that
affects entrepreneurship. It is an interaction amongst the set of
independent actors and factors that lead to encourage, nurture and
promote entrepreneurship in any area.
To understand the entrepreneurship ecosystem, we need to known the
elements or factors that are responsible to nurture entrepreneurship in a
society and help entrepreneurs to thrive. If you look at the process and
various stages of entrepreneurship developments, you will observe that the
ecosystem comprises of the following:
x Entrepreneurs (traits, characteristics and skills)
x Social Culture
x Educational Programmes
x Infrastructure
x Markets
x Policies (Government Policies)

¾ Government agencies
x Institutional Support
¾ Incubators and accelerators
¾ Coworking spaces
¾ Mentors
¾ Co-founders
¾ Consultants/freelancers
¾ Events by industry association and chamber of commerce
x Availability of Human and Non Human Resources
x Availability of wealth and capital

A detail discussion of these factors are given in section 2.6

Toappreciating this highly complex multi-level construct (Theodoraki&

Messeghem, 2017), requires one to diligently study the numerous factors and
agents that give rise to the various specific elements of Entrepreneurship
Ecosystem. This also includes the complex and unique interactions created by
33

 Entrepreneurship: them. Process view (process of entrepreneurship) is preferred way to assess
A Perspective
ecosystems and, therefore, help compare entrepreneurial performances along
with reasons across regions. It brings in focus all the stakeholders and
agencies at play in the creation of an enterprise by entrepreneurs.

In a nutshell we can say that all the stakeholders and the agencies, both
government and private that has a role to play in creation of an
enterprise by the entrepreneurs form part of the ecosystem.
Various researchers and domain think tanks have suggested different process
frameworks to systematically understand entrepreneurial lifecycle which can
be kept in consideration while examining the ecosystem. A general
understanding is that the process starts with identification and leveraging an
opportunity and translate the idea into a business set up to creates, sustain and
capture the value so created through the entrepreneurial operation. The
operation could be aimed at creation of services or products. According to
Gruber( 2002), there are three phases of the startup entrepreneurial journey.

i) First phase is pre-founding stage (opportunity identification and

evaluation),
ii) Second stage is founding stage (business plan, resource gathering,
incorporation and market entry), and

iii) Third stage is early development stage (building the company and
market penetration).

Hisrich et al. (2017)suggest four stages as:

i) identifying and evaluating the opportunity,
ii) developing the business plan,
iii) determining the resources required, and
iv) managing the resulting enterprise .

Four stage view is also supported by other researchers who classify these
stages as opportunity finding, technology application, firm set up and the
product/service transaction.

One way to comprehend the ecosystem influences is by looking at the

entrepreneurship process across stages of innovation, triggering event,
implementation and growth (Hirsch et al. 2017). Opportunity identification
is an innovative act which is a function of personal factors like achievement
motivation, risk taking capacity, personal values, education, experience and
locus of control. Innovation can be also triggered by awareness about
opportunities and influence of role models, networks, family traditions, etc.
For example, proliferations of startups in India in last decades with many
extraordinary successes by some entrepreneurs, who are also followed as role
models by the younger generation. The successes creates force in action
among many and inspire them to take a plunge into entrepreneurship.
Personal factors influence triggering event stage like job satisfaction,
joblessness, age along with some policy support or incentives, can accelerate
or trigger the process. Environmental factors like competition, availability of
34

resources, incubation facilities, government support etc., influences stages, Entrepreneurial
Eco-System
Triggering event and Implementation. Commitment, leadership and
managerial competencies become important factors during implementation as
well as growth. Important factors of the ecosystem which influence both
implementations as well growth are government policies and access to
suppliers, market, partnerships and financers.

It is needless to mention here that for the entrepreneur to grow and succeed it
is vital to have a strong ecosystem in a country.

2.3.3 Factors Influencing Entrepreneurial Ecosystem

From getting the idea to opportunity identification, solution development, its
evaluation and final implementation, successful entrepreneurship requires
host of skills. These can be summed up as technical skills, commercial
competencies, communication skills, opportunity identification, problem-
solving ability, planning skills, organizing skills, operational management,
financial management, human resource mobilization, governance skills,
innovation and networking skills, with the ability to take calculated risks.
According to the “Entrepreneurial ecosystems around the globe and company
growth dynamics” report by World Economic Forum (2013), three areas of
entrepreneurial ecosystems matter most for entrepreneurs and they are access
to markets, human capital/workforce and finance. Though there are major
differences in entrepreneurial ecosystems that exist from one part of the
world to another, there are also similarities in the issues facing entrepreneurs
around the globe – particularly when it comes to early-stage companies.
There is a potential alignment issue among these early stage companies with
governments who often adopt a strong country/regional focus in their
entrepreneurial ecosystem policies.

Isenberg (2011) has categorized these various elements into six main
activities. These activities are: policy, finance, culture, institutional and
infrastructural supports, human capital and markets. Let us learn them in
detail:

1) Policy: The government regulatory domain plays a pivotal role in

deciding the structure of the entrepreneurial ecosystem to the extent that
governmental policy can make or break the ecosystem. The regulatory
policy framework element consisting of components such as the ease to
start a new business with respect to licenses and registrations required,
tax incentives including tax holidays available to new start-ups, laws that
are conducive to business growth, determines the ability to open and
expand new businesses. The government policy helps in attracting the
entrepreneurs to initiate the venture. If ease of doing business is
favourable, the entrepreneur may be encouraged to start the new venture.

2) Finance: The supply and accessibility of financial reserves for

entrepreneurs is crucial not only at the initial incubation stage but also
help in maintaining their growth trajectory. Finance is required when the
entrepreneurs need to acquire more resources like recruiting people, or
buying or leasing capital assets as well as raw materials, or investing in
35

 Entrepreneurship: marketing and sales. These financial reserves can range from the
A Perspective
traditional sources like friends and family to the relatively modern forms
like angel investors, private equity partners or venture capital as well as
access to debt from banks/FIs or open markets. Needless to add that a
wider and greater availability of financial resources accelerates the
scaling up of the business growth.

3) Culture: The culture of any region is the soul of the entrepreneurial

ecosystem that takes form in the region. It is said that an entrepreneurial
ecosystem without a strong cultural support for entrepreneurship lacks
the impetus to carry ahead for long. Cultural aspects like cultivating a
positive image of entrepreneurship, having an inherent spirit of self-
reliance with a preference for self-employment, tolerance of failure of
entrepreneurship by developing adequate risk-appetite, culture of
research and innovativeness and celebrating the success stories of role
models provide the support system for the entrepreneurial ecosystem to
prosper.
4) Institutional and Infrastructural Supports: The institutional and
infrastructural supports consist of the various formal and informal
agencies that help in business creation and their expansion. These may
be physical infrastructures like transportation in the form of roadways,
railways and air connectivity which provide the requisite accessibility.
Similarly the internet connectivity to the World Wide Web which serves
as the medium for information exchange. Besides this the support system
consists of agents providing professional services like financial planning,
accounting, human resources, legal advisers etc. which team up to form
the entrepreneurial networks.

5) Human Capital: The human capital represents the quality and quantity
of the workforce available at the disposal of the entrepreneur. Human
capital is a multifaceted element and depending on the specific skill set
that the workforce possess, gives shape to the type of working
environment that it can generate. The various components of this domain
are the management and technical talent pool available, the level of
education and training especially technical education and training that
the workforce holds, the experience the entrepreneurs possess, ease of
access to immigrant workforce etc. Nurturing of the human capital is
essential to sustenance of the ecosystem.

6) Markets: A receptive market setup consisting of customers who create

the requisite demand is essential for the businesses to grow.
Entrepreneurial ecosystems need access to such markets with the
presence of the appropriate customers who are willing to pay for the
entrepreneur’s products and services. These markets can be domestic as
well as foreign markets, wholesale or niche markets, small, medium or
large markets where individuals, businesses as well as institutional
market participants can interact and transact.

36

 Entrepreneurial
2.4 ENTREPRENEUR, INNOVATION AND Eco-System
ECOSYSTEM
The rates of startup failures are much more than successes. Innovation is the
key factor for effective entrepreneurial success. Innovation is the
application of knowledge to produce new knowledge. :KDW GHILQHV DQ
HQWUHSUHQHXU LV WKHLU DWWLWXGH WR FKDQJH µWKH HQWUHSUHQHXU DOZD\V VHDUFKHV
IRU FKDQJH UHVSRQGV WR LW DQG H[SORLWV LW DV DQ RSSRUWXQLW\¶ 7R H[SORLW
FKDQJH HQWUHSUHQHXU LQQRYDWHV (Drucker 2014). Channels and sources of
innovation and its commercial acceptability lies in the better understanding of
the whole system or ecosystem. It is pertinent to understand innovation, its
sources and its linkages with prevailing entrepreneurial ecosystem being the
key factor in growth of startup firms. Innovation has an anchor role to find
solutions for problems we face in our day to day life as individual,
society, states or any stakeholder of interest. Various known researchers in
economics literature put innovation as a default conditions for growth of
effective entrepreneurship. Schumpeter defined an entrepreneur as an
innovator. In his words, “The 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 manufacturing, a
product with which consumers are not yet familiar, a new source of raw
material or of new markets and the like”.

Hence, entrepreneurs are mostly actors who create innovation to find

solutions.The innovation, creativity and risk bearing are an integral part
of being an entrepreneur. It involves the ability to create and conceptualize
something new, which can consist of anything from a new product to a new
distribution system to method for developing a new organizational structure.
Entrepreneurship centers on novelty and the generation of variety in the
marketplace and means that the processes of innovation are at work.
Innovation can take various forms like new product introduction, new
services, new methods of operation and production, exploration of new
markets, re-imagination of business models, reorganization of industry
structure through disruptive strategies etc.
Innovation can happen through multiple ways. They are:

x Invention: Invention means development of a new product, service or

process, also termed as radical innovations.

x Duplication: Duplication means replication of existing product, tweaked

to create a new look, feel or utility. This is also called as incremental
innovation.
x Extension: Extension is augmentation in existing product, service or
idea to stretch the scope of usage or utility.
x Synthesis: Lastly, the creation of new item or service based on collage
of existing multiple innovations, concepts and elements.

Innovation happens usually as a struggle to solutions to unresolved problems

or gaps in the existing solution. Sometimes happens through unexpected 37

 Entrepreneurship: occurrennces. Entrepreneurs find ideas from the customer feedback and
A Perspective
sometimmes from the competitors. Many times whilee grappling with process
issues, nnew process ideas come up from the proccess owners or business
partners. In a constantly changing market new ideas are always presenting.

From thhe above, it should be evident that sou urces of innovation, its
fructificaation into a viable product or service and commercial
c acceptability
has lot to do with the prevailing ecosystem before it can be fully launched as
a producct or a service in the targeted marketplace.

Process of Innovation
The folllowing diagram summarizes the processs of innovation in an
organizaation:

/ĚĞŶƚŝĨŝĐĂƚŝŽŶĂŶĚ
'ĞŶĞĂƌƚŝŽŶŽĨ ĞǀĞůŽƉ
ƉŵĞŶƚŽĨ
džƉĞƌŝŝŵĞŶƚĂŝŽŶ ǀĂůƵĂƚŝŽŶ ^ĞůĞĐƚŝŽŶŽĨŵŽƐƚ ŽŵŵĞƌĐŝůŝƐĂƚŝŽŶ
/ĚĞĂƐ WƌŽƚŽƚLJƉĞ
ƐƵŝƚĂďůĞŝĚĞĂƐ

Figure 2.1 Process of Innovation

n

Check Y
Your Progress A
1) Fill in the blanks
nterprise.
i) ……………… is the process to set up an en
ii) ………………………….. means variou us constituents which
facilitate or limit the development of entreepreneurs in a location /
region of interest.

iii) …………………… represents the quality y and quantity of the

workforce available at the disposal of the en
ntrepreneur.

iv) …………………….. can happen throug gh multiple ways like

invention, duplication, extension and synthesis.

v) ………………… is augmentation in existting product, service or

idea to stretch the scope of usage or utility.

2) Mattch the Examples given in Column 1 with

h the Innovation type in
Coluumn 2

E
Examples Innovatio
on type
i) Wal-mart a) inven
ntion
ii) Light bulb b) exten
nsion
iii) FedEx c) dupliccation
iv) Facebook d) synth
hesis

38

 Entrepreneurial
2.5 ECOSYSTEM CHALLENGES Eco-System

Though entrepreneurship and entrepreneurial ecosystem are a necessity for

the growth of trade and economy and the overall progress of the nation, yet
there are many barriers that hamper their growth. The challenges are:

1) Policy Barriers: The area of concern include regulatory or policy

barriers, identified by bureaucratic red tape, tax compliance burdens,
regulatory requirements and policy indecisiveness and weaknesses in the
overall business environment.

2) Access to technology and Intellectual Property Rights issues: Access

to technology, patent and copyright issues, are some of the other
problems plaguing entrepreneurs, in addition to problems caused by lack
of access to markets, effective transport, communication and supply
chain and distribution systems, cultural and social barriers and weak or
inefficient judicial process.

3) Intrinsic challenges: The challenges can also be categorised as intrinsic

and extrinsic. The intrinsic reasons consist of factors like societal bias
towards specific groups/communities, illiteracy and lack of capability,
limited family backing, etc.
4) Extrinsic Challenges: The extrinsic factors include organizational
challenges such as access to financing and investment, natural resources,
limited market or access to potential market, human resource etc. There
are also environmental factors that form part of the extrinsic factors and
they can be categorised into socio-cultural factors like beliefs, attitudes
and values of a society towards the subject of entrepreneurship are
known as the entrepreneurial culture of that society. In addition to this
are regulatory factors and government licensing and policies and
associated factors like bribery, corruption etc.
Since no single person own the ecosystem as there are multiple
stakeholders of varied types, their goals also vary depending on the
nature of their role and scope in the system. Hence, we cannot say that
entrepreneurial success or job creation is the only goal for states to
develop a conducive entrepreneurial ecosystem. For government it may
be state revenues and job creation. For financial institutions it may be
their own profitability and growth. For larger corporates, it may be their
own sustainability and to assure new technology solutions in their
targeted markets or for their clients which are getting developed, tested
and tried in various technology incubation centers or accelerator sites.
Hence multiple stakeholders must benefit in order for an
entrepreneurship ecosystem to be self-sustaining.

39

 Entrepreneurship:
A Perspective 2.8 DEVELOPMENT OF CONDUCIVE
ECOSYSTEM
There are multiple ways and responses to overcome above challenges and
make ecosystem conducive for enterprise development. The features of
development of conducive ecosystem are:
x Infrastructure
x Finance
x Ancillary Industry
x Single window operations and approval
x Ease of doing business
x Development of clusters of industries
x Development of MSMEs
x Favourable Government Policies
x Incentives

Let us discuss few of those one by one.

1) Better access to capital and financing avenues: Better access to capital
and financing avenues, adequate skilling and training, strengthening
support systems by ensuring a transparent coordination and cooperation
at different stages of entrepreneur support is important.
According to World Bank, which calculates the annual ease of doing
business index, there are 12 areas of business regulation that are taken
into account while measuring the ease with which business can be done.
Ten of these areas are starting a business, dealing with construction
permits, getting electricity, registering property, getting credit,
protecting minority investors, paying taxes, trading across borders,
enforcing contracts, and resolving insolvency - are included in the ease
of doing business score and ease of doing business ranking. The ease of
doing business also measures regulation on employing workers and
contracting with the government, though they are not included in the
ease of doing business score and ranking (World Bank, 2020).

2) Greater Government spending: Higher corporate governance, greater

government spending creates strong institutions that promote equity and
reduce chances of corruption.

3) Low rates of taxes and incentives: Low rates of taxes and incentives on
entrepreneur-driven business creation are some of the other ways barriers
to entrepreneurship development can be overcome.

4) Use of technology: The use of technology through online digital

initiatives also goes a long way in reducing bottlenecks and delays and
streamlining and procedures. As stated by Mason & Brown (2013) in
their report “Entrepreneurial ecosystems and growth oriented
entrepreneurship” published by OECD, policy intervention should be a
40

 holistic approach focusing on “entrepreneurial actors within the Entrepreneurial
Eco-System
ecosystem; the resource providers within the ecosystem; entrepreneurial
connectors within the ecosystem and the entrepreneurial environment of
the ecosystem”.

5) Inclusion in educational programmes: Introducing entrepreneurship as

a course in the curriculum of schools and colleges will create awareness
amongst students and seed of entrepreneurial thinking/mindset can be
sown at early childhood. Various steps are being taken in this line.
Entrepreneurship is now being introduced in schools as well.

6) Recognition and appreciation to young entrepreneurs and start ups:

Different award ceremonies should be conducted to recognize and
appreciate the hard work of the entrepreneurs on regular basis. This will
have twofold benefit. It will give encouragement to the entrepreneurs, on
the other hand it will motivate others to take up entrepreneurship as a
preferred career option and not as last resort.

It is therefore of prime importance that governments and policy-makers

ideate and develop suitable metrics that can measure individual
ecosystems for their strengths and weaknesses so that it helps in
assessment and taking suitable corrective measure on a dynamic basis.

Check Your Progress B

1) Distinguish between intrinsic and extrinsic ecosystem challenges.

2) List the areas of business regulation that are taken into account by World
Bank while measuring the ease of doing business.

2.7 LET US SUM UP

Entrepreneurship is the process which an entrepreneur goes through to
fructify ideas, competencies and commitment of entrepreneurs into an
enterprise. Entrepreneurship is the process influenced by Factors like social
economic, economic, psychological and other factors. The process involves
visioning, mobilization of resources and setting up of an enterprise by an
entrepreneur or entrepreneurs which is meant to leverage the identified
opportunity and capture value. There is increased interest in ecosystems as an
approach for understanding the climate for growth of entrepreneurship. The
understanding of this interdependency helps entrepreneurs and other
stakeholders especially policy makers understand process modalities in the
whole context. Important buckets of influence include policy, finance,
culture, institutional and infrastructural supports, human capital and markets.
Innovation is the key factor for effective entrepreneurial success and its
sources and acceptability lies in the better understanding of the whole system
or ecosystem. There are challenges in managing and making this ecosystem
conducive as the goals of the stakeholders are varied, opportunities have a
window and resources are mostly limited. Hence states should effectively
monitor ecosystems for their strengths and weaknesses so that it helps in
assessment and taking suitable corrective measure , including all necessary
stakeholders, on a dynamic basis. 41

 Entrepreneurship:
A Perspective 2.8 KEY WORDS
Duplication: The replication of existing product, tweaked to create a new
look, feel or utility.

Entrepreneurship: The pursuit ofmarket opportunities to create future

innovative goods and services discovered, evaluated and exploited to extract
social and economic value from the environment, leading ultimately to new
independent business / venture creation.

Ecosystem: The ecosystem relevant to context of economic entities can be

seen as whole set of stakeholders, resources and processes with their
interdependencies, at varied stages of lifecycles of all matters of interest in
the relevant space, characterized by intrinsic and extrinsic factors which
influence stakeholder in focus.
Entrepreneurialecosystem: The Entrepreneurship Ecosystem means various
constituents like entrepreneurs, other individuals, and organizations etc.,
which facilitate or limit the development of entrepreneurs in a location /
region of interest.

Extension: The augmentation in existing product, service or idea to stretch

the scope of usage or utility.

Innovation: The application of knowledge to produce new knowledge and

bringing newness and change.
Invention: The development of a new product, service or process.

Synthesis: The creation of new item or service based on collage of existing

multiple innovations, concepts and elements.

2.9 ANSWERS TO CHECK YOUR PROGRESS

A. 1) i. Entrepreneurship ii. Entrepreneurial ecosystem iii. Human capital
iv. Innovation v. Extension
2) i. c ii. a iii. d iv. b

2.10 TERMINAL QUESTIONS

1) Discuss the entrepreneurial ecosystem in context of venture capitalists
and entrepreneurs.

2) What are the challenges for the policy makers to make the ecosystem
conducive for startups in India?
3) How does the ecosystem vary for startups in technology and low
technology domains?
4) What are six buckets to comprehend the role of entrepreneurial
ecosystem?

42

5) Discuss the importance of innovation in startup growth? What are the Entrepreneurial
Eco-System
linkages between innovation application and entrepreneurial ecosystem?

Note: These questions will help you to understand the unit better. Try to
write answers for them. But do not submit your answers to the University for
assessment. These are for your practice only.

FURTHER READING
x Drucker, P. (2014). Innovation and entrepreneurship. Routledge.
x Gruber, M. (2002). Transformation as a challenge: New ventures on their
way to viable entities. 193–201.
x Hisrich, R., Peters, M., & Shepherd, D. (2017). Entrepreneurship (10th
ed.). McGraw-Hill Education.
x Isenberg, D. J. (2011). The Entrepreneurship Ecosystem Strategy as a
New Paradigm for Economic Policy: Principles for Cultivating
Entrepreneurships. The Babson Entrepreneurship Ecosystem Project,
1(781), 1–13. http://www.innovationamerica.us/images/stories/2011/
The-entrepreneurship-ecosystem-strategy-for-economic-growth-policy-
20110620183915.pdf
x Mason, C., & Brown, R. (2013). Entrepreneurial Ecosystems and growth
oriented entrepreneurship. Background Paper Prepared for the Workshop
Organised by the OECD LEED Programme and the Dutch Ministry of
Economic Affairs on Entrepreneurial Ecosystems and Growth Oriented
Entrepreneurship.https://www.oecd.org/cfe/leed/Entrepreneurial-
ecosystems.pdf
x Shane, S., &Venkataraman, S. (2000). The Promise of Entrepreneurship
as a field of Research. Academy of Management Review, 25(1), 217–
226. https://doi.org/10.2307/259271
x Tansley, A. G. (1935). The use and abuse of vegetational concepts and
terms. Ecology, 16, 284–307. https://doi.org/10.1111/j.1468-
0483.1963.tb00727.x
x Theodoraki, C., &Messeghem, K. (2017). Exploring the entrepreneurial
ecosystem in the field of entrepreneurial support: A multi-level
approach. International Journal of Entrepreneurship and Small Business,
31(1), 47–66. https://doi.org/10.1504/IJESB.2017. 083847
x Timmons, J. A., Spinelli, S., & Tan, Y. (1994). New venture creation:
Entrepreneurship for the 21st century (Vol. 4). Burr Ridge, IL: Irwin.
x World Bank. (2020). Doing Business 2020: Comparing Business
Regulation in 190 Economies. In World Bank Group. Washington, DC:
World Bank. https://doi.org/10.1596/978-1-4648-1440-2
x World Economic Forum. (2013). Entrepreneurial Ecosystems Around the
Globe and Company Growth Dynamics. Report Summary for the Annual
Meeting of the New Champions 2013, September, 36.
http://www3.weforum.org/docs/WEF_EntrepreneurialEcosystems
Report_ 2013. pdf

43

 Entrepreneurship:
A Perspective UNIT 3 DIMENSIONS OF
ENTREPRENEURSHIP

Structure
3.0 Objectives
3.1 Introduction
3.2 Rural Entrepreneurship
3.3 Women Entrepreneurship
3.4 Social Entrepreneurship
3.5 Ecopreneurship
3.6 Cultural Entrepreneurship
3.7 Techno Entrepreneurship
3.8 Heritage and Tourism Entrepreneurship
3.9 International Entrepreneurship
3.10 Let Us Sump Up
3.11 Key Words
3.12 Answers to Check Your Progress
3.13 Terminal Questions

3.0 OBJECTIVES
After studying this unit, you should be able to:
x discuss various areas where entrepreneurship is flourishing;
x discuss about rural entrepreneurship and its significance in an economy;
x explain the need for women entrepreneurship and social
entrepreneurship;
x explain ecopreneurship and explain various eco-friendly ventures created
by ecopreneurs;
x explain the details of cultural entrepreneurship and technopreneurship;
and
x describe the increasing trend of heritage and tourism entrepreneurship
and international entrepreneurship.

3.1 INTRODUCTION
In units 1 and 2, you have learnt about the theories, models, concepts and
importance of entrepreneurship. You have also learnt about the
entrepreneurial ecosystem and its components. You have developed an
understanding about the factors that can make the environment and
ecosystem conducive where entrepreneurs can work and thrive. In this unit,
you will learn about the various dimensions of entrepreneurship such as rural
entrepreneurship, women entrepreneurship, social entrepreneurship,
44

ecopreneurship, cultural entrepreneurship, technopreneurship, heritage and Dimensions of
Entrepreneurship
tourism entrepreneurship, and international entrepreneurship.

3.2 RURAL ENTREPRENEURSHIP

Rural entrepreneurship is looked as a means to increase income and
employment as well as providing stability and growth in rural communities.
It is defined as “the creation of a new organization that introduces a new
product, serves or creates a new market, or utilizes a new technology in a
rural environment”. Here the entrepreneur tries to look at the problems and
opportunities of solving problems in the rural areas. To put it in simple
words, we can say that entrepreneurship emerging in rural areas is called
rural entrepreneurship.
Thus, entrepreneurship emerging at village level which can take place in
a variety of fields of endeavour such as business, industry, agriculture
and acts as a potential factor for economic development. In other words,
the rural entrepreneur is one who is staying in village producing goods and
services mainly with local resources. He organizes factors of production and
takes risk. In India nearly 70 per cent of the population lives in villages
depending mainly on agriculture and allied activities. There is widespread
unemployment and underemployment with labour abundance and capital
shortage. Hence, the development of rural entrepreneurship is very important
for creating employment opportunities in rural areas and rural development.

Rural migration to the urban areas has become a common phenomenon. The
rural people migrate to urban areas due to concerns of livelihood,
unemployment, smaller land holdings, relatively more opportunities of
earning and stability in urban areas, peer pressure and so on.One of the major
challenges of entrepreneurial growth in rural space is lack of supportive
ecosystem for individual growth, culture and enterprise support. Hence, it is a
major policy concern to address this issue. Boost for rural entrepreneurship
and equitable development is a much desirable impact any state would like to
ensure through its policy interventions. The interventions must facilitate the
development of rural entrepreneurship culture in the rural areas for the
empowerment of rural people.

These entrepreneurs utilise local natural and physical resources to produce

products like processed food, handicrafts, intermediate artifacts etc., and
services like tourist services, input labour services for bigger companies
based in remote areas and so on. These entrepreneurs are rooted in the rural
set up and majority of direct stakeholders, particularly on input side, belong
to the rural areas.

Through this self employment route, raw material and labour resources can
be efficiently utilised. The efficient utilisation of resources helps to improve
socio-economic condition of the people living in rural and remote areas. Lack
of rural entrepreneurship may result in wastage of resources available in these
remote areas. Moreover, it may add to the cost of goods in urban areas
because in many sectors, logistics cost and supply chain management
challenges will be more if entrepreneurs based in urban areas utilise these
45

 Entrepreneurship: resources. This creates possibilities of relatively more value addition early in
A Perspective
the production process within the rural space as compared to value realisation
for processes in urban space. It drives opportunities of better economic
wellbeing through better margin percentages, better utilisation of local
resources, social balance and overall sustainability.

While there are benefits, there are also several challenges for entrepreneurs to
risk projects in rural areas. There could be bigger concerns of securing
financial resources for sizeable rural start up as there would confidence issues
for investors. Similarly, getting unskilled resources may be easier in rural
areas, but sustaining even few high skilled resources can be quite
challenging.

Concerns and Challenges for Rural Entrepreneurship

Rural entrepreneurship triggers development of other facilitating institutions,
entities and service providers. Growth of financial ecosystem and fintech in
rural sector can be seen associated positively to the growth of rural
entrepreneurship. It helps to decrease migration from rural to urban places as
people in rural areas can accommodate relatively lower wages and
remuneration because of lower cost of living, lifestyle habits and vicinity to
their relations.

Government Support for Rural Entrepreneurship in India

Various government schemes have been launched from time to time to
encourage rural entrepreneurship. There have been various schemes to
support cluster development in various areas which many times involves
engaging non-governmental organisations (NGOs) as well. For example, one
such scheme call Ambedkar Hast Shilp Vikas Yojna was launched in
early 2000 to develop handicraft clusters across India wherein women
artisans can create their self help groups (SHGs) at the village level and
several SHGs together will collaborate together to form a cluster. NGOs were
required to support capacity building, access to markets and hand hold
clusters for a specific period after which they were to withdraw so that
Clusters can run the handicraft enterprise on their own. A cluster is a group of
enterprises located within an identifiable and as far as practicable, contiguous
area and producing same/similar product/services.

One of the recent schemes, specific to rural entrepreneurship, A Scheme for

Promotion of Innovation, Rural Industries and Entrepreneurship
(ASPIRE) was launched by Ministry of Micro, Small and Medium
Enterprise (MSME). This scheme aims at setting up a network of technology
centres and to set up incubation centres to accelerate entrepreneurship and
also to promote start-ups for innovation in agriculture industry. In addition
there are several other schemes to facilitate the efforts individuals and groups
to develop ventures which directly or indirectly support rural
entrepreneurship.

46

Importance of Rural Entrepreneurs Dimensions of
Entrepreneurship
Rural entrepreneurs play a vital role in the overall economic development of
the country. The growth and development of rural industries facilitate self-
employment, results in wider dispersal of economic and industrial activities
and helps in the maximum utilisation of locally available raw materials and
labour. Following are some of the important role which rural industries play
in ameliorating the socio-economic conditions of the rural people in
particular and the country in general:

1) Generates Employment Opportunities: Rural entrepreneurs play a

vital role in generating employment opportunities in the rural areas
where there is already disguised and seasonal unemployment. They make
use of surplus labour which is abundant in Indian rural areas.

2) Earning Foreign Exchange: A rural entrepreneur helps in protecting

and promoting arts and crafts and preserves the rich heritage of rural
India. They also helps to foreign exchange as Indian handicrafts are
famous all over the world.

3) Developing Rural Youth: Rural entrepreneurship helps and provokes

rural youths to stand away from crowd and not become an addition to the
que of unemployed people. As rural entrepreneurs they may give
employment to others and work for the growth and development of their
village.
4) Improved Standard of Living: By generating employment
opportunities in rural areas will also increase the earnings of the people
of these areas thereby increasing the standard of living of the people of
rural areas.
5) Balanced Regional Growth: Rural entrepreneurs also facilitates in
promoting balanced regional growth in India. These day industries are
being set up in these areas, which will lead to development of these
areas. The establishment of industries helps in raising income or raises
the standard of living of the people of these areas with respect to urban
areas. Thus, the balanced regional growth may be promoted.

6) Checking Migration: Rural entrepreneurship also helps in checking

migration activities of people from rural to urban areas in search for
work as the work will already be available in their areas with the
development of rural entrepreneurship.

Some Examples of Rural Entrepreneurship

Kameshwar Prasad from village of Taraiya, in Saran district, Bihar started
trading rechargeable solar lanterns in his village after he learnt about
Villgro’s Energy Entrepreneur Incubation Programme. Considering the
electricity situation in his village he knew that the rechargeable solar lanterns
were bound to have a market. He wanted to do something on his own rather
than migrating to some city for livelihood which many of his community
members did to sustain themselves. He invested a small capital of Rs.15000
which was required as deposit money. Initially he gave free lanterns for trial
47

 Entrepreneurship: to some households which helped him to get word of mouth. With support of
A Perspective
Villgro and Saija finance, he investigated about the market potential and
found a positive response. He realised that the alternative source of kerosene
based light energy was costly (about Rs.8-10 per day for village households)
and quality of light was also poor.. He got networked with other support
institutions with the help of Villgro. He is able to get continuous orders and
started charging rent on use basis at Rs.7 per day. He started making profits
which he now feels is good enough and expects to scale his business to other
villages as well.

“Mitticool” Fridge founded by Mansukhbhai who grew up in the family of

clay-makers near Rajkot is a good example of rural entrepreneurs. He started
his journey from a tea stall and reached a point in life where he took a loan of
Rs 30,000 for setting up his own earthen plate manufacturing factory. But his
success came with a time frame and the devastating earthquake of 2001
destroyed half of his products but also sparked an idea which led to the birth
of “Mitticool” fridge. This was made up of terracotta and worked on a simple
Physics principle of circulating and evaporating water, keeping the contents
cool and fresh for up to five days. Mitticool, today, makes and exports fridge,
non-stick tawa, low cost water filters, thermal water bottles etc. and has also
won many awards.

3.3 WOMEN ENTREPRENEURSHIP

The percentage of female population in India is around 48%. But if you see
the percentage of women entrepreneurs in India, it is alarmingly less. Women
entrepreneurship development seeks attention here. The importance of
discussion on women entrepreneurs is important for the reason that women
face many more challenges than their counterparts to start businesses and yet
they are able to succeed and perform. Women are influenced more by socio-
cultural complexities compare to male counterparts to become an
entrepreneur in developing countries. Women still face restrictions in
mobility in many parts due to various reasons in spite of so much
advancement which make entrepreneurial role tougher for them. They are
also deep rooted into the family ties and home issues management. Women,
despite such challenges and deterrents, in developing countries including
India, have shown they can manage such challenges and run enterprises
successfully. To discuss women entrepreneurship further, let us first
understand what women entrepreneurship is?

Women entrepreneurs may be defined as “a woman or a group of women

who initiate, organise and run a business concern”. Women
entrepreneurship is an entrepreneur process with the aim of creating a
business entity, taking the necessary risk, organizing resources, planning and
managing the entity by women. The state policy definition for women
entrepreneurship is, “A Woman enterprise is the one owned and
controlled by a woman having minimum financial interest of 51% of the
capital and giving at least minimum 51% of generated employment to
women”. Famous economist J. Schumpeter defines women entrepreneur as a,
48

“Women who innovate, initiate or adopt business actively are called women Dimensions of
Entrepreneurship
entrepreneurs.”A woman entrepreneur has to perform all the functions
involved in setting up and managing an enterprise. These functions include
all necessary steps in the entrepreneurial journey from ideation, business
planning, resource mobilization including funds, setting up organisation type,
marketing, selling and liaison with the regulatory organizations.

To sum it up, you can say that women entrepreneurs are those women (s)
who initiate and create a business venture by organizing, combining and
managing the factors of production, own and run it successfully by their
acumen.

Factors Influencing Women Entrepreneurship

In last couple of decades there has been growth of woman entrepreneurship
in India. This has been due to increase in literacy levels among females and
genuine recognition of their competence. They have started taking up bigger
challenges, management skills and leadership. Innovative women with
entrepreneurial talent are likely to plunge into entrepreneurship provided they
get favourable opportunities and facilitation. They are inclined to take up
small business or industry to translate their innovative talent, ambitions, and
risk taking attitude into a position of entrepreneurship instead of employment.

There are personal and external factors that influence women entrepreneurs’
success (ILO, 2006).

x The personal factors comprise commitment, competencies, ideas,

markets and access to resources.
x The external factors comprise business development organizations,
broader enabling environment, economic/market environment and socio-
cultural context.
¾ The business development organizations factor includes engagement of
government, NGOs, private sector, membership organizations and
donors.

¾ The broader enabling environment factor underlines regulations, policies,

institutions and processes.
¾ The economic/market environment factor means opportunities and
threats (e.g., inflation, interest rates, economic trends etc.).

¾ Lastly the socio-cultural context factor considers attitudes, aspirations,

confidence etc., of the women foraying into entrepreneurship.

Family business could be a driving factor in many cases of female

entrepreneurship. They want to contribute alongside other members of the
family, share in efforts and outcomes. Many times success stories of relatives
and friends, other women etc., influences to pursue entrepreneurial path.
Such motivations prevail not only in the manufacturing sector but service
sector as well.

49

 Entrepreneurship: Government Support for Women Entrepreneurship Development
A Perspective
The Government and non-government bodies are engaging and encouraging
women and groups to attempt income generation opportunities through self-
employment and business ventures. There are several policies and incentives
to encourage women including various forms of mentorship support and hand
holding. These factors encourage women to become entrepreneurs and
explore commercial opportunities. Access to finance is a key requirement and
challenge. Such facilities are now available on priority through banks and
development finance institutions with certain relaxations to assist women
entrepreneurs. These facilities reduce deterrents in their journey towards
entrepreneurship. Various policy instruments of facilitation have been
introduced towards helping women to enter the entrepreneurial space. Most
of the entrepreneurial growth initiatives underline the importance of
promoting women entrepreneurship and include provision of support to
address this agenda. Not only in India, but all over the globe, women
entrepreneurs are taking new challenges in commercial world in leadership
roles as professionals as well as entrepreneurs. The Central and State
Governments have provided capacity building programmes for women so as
to empower them to become entrepreneurs. These programmes are packaged
with other supplementary facilities to help women to kick start their own
businesses. The government can also give special grants and subsidies to the
women entrepreneurs. The Women Entrepreneurship Platform (WEP) is
one such state supported scheme at present for women. It comprises
support to encourage and motivate, capacity building and hands on support.
Women at the ideation stage and established startups can register for the
scheme. It also supports early stage incubation and acceleration support.

Recent Trends in Women Entrepreneurship

With the raising awareness and support from government, institutions and
individuals, face of women entrepreneurship development is witnessing
positive and encouraging trends. Let us discuss that.
One of the common reasons for women to take up entrepreneurship is to lead
an independent life with self-confidence and self-respect. Other reasons
include aspiration for economic independence, management and technical
literacy, family support, economic necessity, community influence, NGO
influence, family business and government support. Growing literacy and
professional skills of women in technical, vocational, industrial, commercial
etc., drives women to take risks with confidence and set up businesses. They
are also motivated to acquire specialised education so as to qualify
themselves to be self-employed in some kind of trade, occupation, vocation
or business. For example many women after becoming professionally
qualifiedin medical sciences, engineering, etc. set up their own clinics or set
up to provide services. They acquire training in the areas of weaving,
stitching, grooming etc. and set up their own business. Sometimes family
circumstances create reasons for females to carry on businesses and many
times they spin off new entities or scale legacy businesses to new heights.
Similarly, there are lot of women entrepreneurs in smaller towns or even in
bigger cities who independently or mostly in groups set up cottage firms and
50

produce products which require competencies they already have like snack Dimensions of
Entrepreneurship
items, pickles, packed food, parlors, etc.

Some Examples of Women Entrepreneurs

Shri MahilaGriha Udyog LijjatPapad society is one of such drive which was
established to aim at women entrepreneurship and empowerment. LijjatPapad
Company is brain child of seven semi-literate women of Gujrat who started
from the roof of a residential building of Mumbai in 1959 from Gujrat and
grew to a workforce of around forty five thousand. The brand is a leader in its
category and exported as well. They wanted to create a livelihood source for
their families and developed this product based on what they could do with
their own skills i.e., cooking. They realized their abilities once they got the
exposure to possibilities. In their initial journey they got initial mentoring
from Mr.Parekh as well as small credit support to initiate their work. These
women entrepreneurs understood importance of trust in business and quality
being the key factor in food consumption; they kept product quality above
everything else.

There are several other inspiring examples of women entrepreneurs who

inspire potential youth to take up entrepreneurship. Kiran Mazumdar-Shaw
is an Indian billionaire entrepreneur. She is the founder of Biocon
Limited, a biotechnology company based in Bangalore, India. She founded
Biocon India in the late 70s with an initial seed capital of few thousand
rupees in rented premises in Bengaluru. She led Biocon’s from an industrial
enzymes manufacturing company to a fully integrated bio-pharmaceutical
company. She was won several prestigious awards for her extra ordinary
contribution towards the progress of science, growth of commerce and
inspiration for millions of people who want to pursue entrepreneurship. She
is on the Financial Times’ top 50 women in business list, ranked at 68th as
powerful woman in Forbes and in 2019, EY World Entrepreneur of the Year
2020. Some of the other popular women entrepreneurs of India include
Radhika Ghai Aggarwal – Co-Founder & CMO, Shopclues.com, Vandana
Luthra – The founder of VLCC, Vani Kola – Founder, Kalaari Capital, Ritu
Kumar – The Fashion designer, Suchi Mukherjee – Founder & CEO of
Limeroad. Aditi Gupta – The Co-founder of Menstrupedia.

3.4 SOCIAL ENTREPRENEURSHIP

Social entrepreneurs bring about transformative changes in society and
economy by filling gaps and addressing unmet needs. They improve
productivity and create value and wealth.

Zahra et al. (2008) further define social entrepreneurship as the activities

and processes undertaken to discover, define, and exploit opportunities
to enhance social wealth by creating new ventures or managing existing
organizations in an innovative manner. Social enterprises keep social
concerns in priority alongside organisations own sustainability. Both works
in tandem as sustainable organisations can empower the entrepreneur sustain
outreach to areas of social concern and appreciation of social benefit attracts
51

 Entrepreneurship: funding for the cause. Hence, capital accumulation is meant essentially for
A Perspective
self reliance and ensures long term support for intended beneficiaries.

Features of Social Entrepreneurs

1) Social entrepreneurs are change agents in the social sector.

2) Social entrepreneurs pursue social value in addition to the private value.

3) They identify new opportunities to explore possibilities of service for the
society and planet.

4) They pursue innovation to find solutions to existing unsolved social

problems.

5) They adapt their capability models and organizational structures to

respond to the social challenges.
6) They are open to new insights in their endeavor for new solutions and
fulfill their vision.

7) Social entrepreneurs also exhibit a heightened sense of accountability to

the intended audience of their services and solutions.
8) The target beneficiaries of such enterprises could be mostly people in
lowest base of pyramid, discriminated communities, ecologically
important constituencies important for overall sustainability, orphans, old
age people, economically weaker and sick people, physically challenged
and so on.

9) Types of innovations deployed include new products/services, new

methods of production, new markets, new inputs or new organizational
forms.

Some Examples of Social Entrepreneurs

Goonj is an example of a social enterprise which was founded in 1999 by
Anshu Gupta. Goonj is engaged in disaster relief, humanitarian aid and
community development in India. Goonj leverages unaddressed need of
clothing for its targeted beneficiaries. Goonj collaborates with partners and
communities to build facilitating infrastructure in the villages in the form of
wells, clean ponds, road repair, schools etc. In 2004, Goonj found the need
for addressing hygiene concerns of women in villages and slums who cannot
afford costly branded sanitary napkins. They rolled out affordable and fully
biodegradable cloth pads, MyPads, for women in villages and slums. Mr.
Anshu Gupta, was bestowed India's Social Entrepreneur of the Year 2012 by
Schwab Foundation and awarded the Ramon Magsaysay Award in 2015. It
undertakes social innovation and non-profit entrepreneurial orientation at the
organizational level to explore opportunities to create social wealth.

Similarly, Husk Power Systems is a startup located in Bihar which services

rural population in Bihar with electricity with the use of proprietary
technology. They use biomass gasifier which uses rice husk, a waste from
chaff of the rice, to generate energy. He realises that lot of husk has been
52 coming out as waste during rice processing in Bihar. He could sense the

 possibility of an enabling technology to process this waste into a valuable Dimensions of
Entrepreneurship
energy service which could address the electricity problems of rural
population. They claim that this is around 30% cheaper than the traditional
option and uses of local raw material. This is a case of combined rural and
social entrepreneurship.

Another example is Bungroo, a do-it-yourself well for dry farmlands by

Naireeta Service Pvt Ltd. Bhungroo has irrigated 2.2 lakh hectares in seven
districts of the state, a report by Gujarat Ecology Commission says. It
supplies abundant water in the dry months and also lessens the salt content in
the soil.

Check Your Progress A

1) What do you mean by rural entrepreneurship?

2) List out the factors influencing the success of women entrepreneurs in
India.

3) What is social entrepreneurship?

4) Fill in the blanks:

i) ……………….. utilise local natural and physical resources to
produce products like processed food, handicrafts, intermediate
artifacts etc.
ii) A …………… is the one owned and controlled by a woman having
minimum financial interest of 51% of the capital and giving at least
minimum 51% of generated employment to women”
iii) ……………… pursue social value in addition to the private value.

iv) ASPIRE was launched by …………………….. for promotion of

innovation, rural industry & entrepreneurship.
5) State whether the following statements are True or False:

i) Ambedkar Hast Shilp Vikas Yojna was launched to develop

handicraft clusters across India.

ii) WEP provides early stage incubation and acceleration support to

women owned startups.

iii) Social enterprises only consider social concerns and ignore their
organization own sustainability.
iv) Women are influenced less by socio-cultural complexities compare
to male counterparts to become an entrepreneur in developing
countries.
6) List Indian Social Entrepreneurs, one each working for the following
cause:
i) Education …………….
ii) Children welfare ……………..
53

 Entrepreneurship: iii) Poor & needy ……………..
A Perspective
iv) Sustainable energy ………………
v) Healthcare …………….

3.5 ECOPRENEURSHIP
Ecopreneurship means entrepreneurial processes where entrepreneur
ventures into producing goods and services which focus on
environmental benefits like recyclable products to depletion of natural
resources, greener products which save energy consumption, services
that care for pollution, animal life, trees, flora and fauna and so on.
These entrepreneurs set up businesses that solve environmental problems or
operate sustainably. Schuyler, Gwen (1998) defines ecopreneurs as
“entrepreneurs whose business efforts are not only driven by profit, but also
by a concern for the environment.”It is also known as environmental
entrepreneurship and eco-capitalism. It is becoming more widespread as a
new market-based approach to identifying opportunities for improving
environmental quality and capitalizing upon them in the private sector for
profit. There is growing trend globally towards society and state wanting
goods and services producers to be more responsible towards ecological
challenges. In many states in India there is ban on use of plastic bags and
encouragement for use of ecofriendly products and adoption of environment
friendly processes. Hence, there is a growing market segment which creates
opportunities for commercial entities to sustain economically as well as
address ecological concerns.

Factors Driving Ecopreneurship

There are several other factors driving such ventures.

x With the growing population and depletion of resources, there is a

growing realization to address this scarcity issue. Like water scarcity is
well known concern globally including India. It is going to be more
severe in times to come.

x Another factor is climate change and its impact on lives and livelihood
on the planet.

Hence, firms who take up this challenge and develop a vision for greener
world are worthy of appreciation. To sustain, these firms need to strategise
profits and eco sustainability simultaneously.

Many ecopreneurs leverage technological advances to find ways of reducing

ecological risks.These entrepreneurs set up ventures and cater to the planet at
the same time for sustainable ways and greener practices to enable businesses
to achieve sustainability as well as profitability using enabling technologies.

There are also regulatory requirements to stay greener in general and many
states have long term agendas to scale the size of eco-friendly ventures. There
are various state commitments and agreements at the global level which has
prompted such state plans. States also provide incentives and support for such
54

ventures. Like, there are many schemes for entrepreneurs venturing into Dimensions of
Entrepreneurship
renewable energy sector like solar projects, windmill projects etc. Hence, it
serves as a combined opportunity to stay within norms, benefit society and
commercially become profitable.

Examples of Ecopreneurship
An eco-friendly project in Assam uses bamboo for producing water bottles.
There is also a entrepreneurial project to package natural spring water
beverage packaged in recyclable aluminum cans. Spektron Solar Private
Limited, a company that conducts development and training programmes for
small-scale solar entrepreneurs. Spektron Solar is a capacity building set up
by a young entrepreneur in the areas of solar energy offering services to
capacitate stakeholders in different areas of installation and use. He found
this opportunity after he realized competency challenge in this sector and
government push for solar energy. He helps entrepreneurs set up these
projects. Another example is of an ecopreneur who started iKheti in 2011
based in Mumbai to empower people to carry out sustainable farming in
cities. The firm promotes farming in cities and offers services and resources.

3.6 CULTURAL ENTREPRENEURSHIP

Cultural Entrepreneurs are visionaries who mobilise cultural and other
production factors to structure a business model which sustains through
revenues from a cultural activity. Aageson (2008) defines cultural
entrepreneurs as risk takers, agents of change, and creative thinkers who
receive income from durable and creative cultural activities and
organizations, improve the quality of life, and create cultural values for
both creative manufacturers and consumers of cultural products and
services. Their innovative services and products create a value proposition
for market segments who appreciate such offers. It is about creation of any
product or service that primarily targets tastes of its targeted segments. As a
result, these organizations can sustain if the size of such segments is
sufficient and growing. The development of cultural entrepreneurship
facilitates in the creation of economically sustainable cultural enterprises that
enhance livelihoods and create cultural value and wealth for both creative
producers and consumers of cultural services and products.

Features of Cultural Entrepreneurship

1) Cultural Entrepreneurship is an outcome based of entrepreneurial
journey of people who prioritise cultural values alongside ambitions for
entrepreneurship. Culture is defined as “the enduring set of values of a
nation, a region, or an organization” and entrepreneurship as “the act and
process by which societies, regions, organizations, or individuals identify
and pursue opportunities to create wealth”. Hence, this combination
drives cultural entrepreneurship.

2) It is an outcome of individual values shaped by geographic and cultural

factors. It could be event managing firm who promote a certain type of
culture, art etc., or innovate through a cultural change process for
55

 Entrepreneurship: audience who appreciate change. Examples of cultural entrepreneurship
A Perspective
are entrepreneurs who sustain enterprise with revenues sought directly or
indirectly from specialized services like entertainment events about
cultural aspects, exhibitions, festivals, shows, events etc.

3) Apart from usual risks of entrepreneurship, one of the risks for cultural
entrepreneurs is change of individual taste and appreciation because
taste and appreciation is the driver for sustainability of such ventures.
We have several successful movie producers flop over time as they could
not adapt with changing audience taste. Same audience earlier liked their
services.

3.7 TECHNO ENTREPRENEURSHIP

Techno-entrepreneurs use technologies as core of their business model
and capture economic value by offering better solutions for existing
problems or solutions for unresolved problems. It requires identification of
opportunities, capabilities, mobilization of resources and engagement with
right market segment through right channels to capture value. Since
technology advances is happening at a rapid pace and many technologies
keep disrupting, the biggest challenge for techno entrepreneurs is dealing
with this uncertainty. Hence techno entrepreneurs should be able to anticipate
changes and have the agility to respond in time.

Features of Techno Entrepreneurship

1) For key activities and resource, in most cases technology enterprise,
entrepreneurs need the networks and partnerships to complete the
requisite capabilities to stay competitive in highly competitive
technology solutions. The competition in this market is intense as
majority of the today’s start ups are engaged in technology supported
ventures. Need of collaborations, partnerships etc., also arises because
many technology solutions have dependencies or require complementary
support to capture value.

2) Technology entrepreneurs ideate, develop a plan and execute it which

could be in stages from incubation, proof of concept to commercial
rollout of product or service. They need to demonstrate the utility and
market viability of their solution to instill confidence of their partners,
collaborators and above all their investors.
3) Standardisation of new technologies is an important milestone and trials
during this period keep happening with regard to design, processes,
product etc., till final standards are agreed by various stakeholders of that
technology domain including regulators.
4) Since R &D and innovation plays a key role in technology
entrepreneurship, Intellectual property rights is another important
ingredient of technology ventures. Patent holders need assurance of
value capture for their efforts and suitable patent regime to ensure
protection from any infringement. Also, process of filing to award of
56 patent is a complex process and timelines vary across states. Novelty

 brings alongside uncertainty and the subjective creative characteristics of Dimensions of
Entrepreneurship
the opportunity recognition process. The sufficient awareness and
knowledge of technology trends, regulations, consumer trends and agile
innovative organization management are critical factors for the success
of the techno entrepreneurship. In many sectors, techno-entrepreneurs
sustain through partnerships like carrying out R&D and innovation only
while commercial production and marketing may be taken care of by the
larger partners. This is a common phenomenon in Pharma sector.

5) Another challenge is retentions of key technology experts who can create
a situation of vulnerability some times as competitors influence these
resources and hurt viability prospectus of the firm. This may be because
the technology anchors the entire value creation and domain experts are
the fuel of that technological edge or solution.
6) About the market, techno-entrepreneurs must calibrate technological
opportunities with market opportunities regularly across its journey. It is
required to have relevant applications, services and products which
enable value capture. These entrepreneurs many times need to figure out
which technological options and applications to pursue without having
much reliable information to gauge projections about market and
technology itself.

Support to Techno Entrepreneurship

There are various state instruments in terms of policy, facilitation and
encouragement to take up techno entrepreneurship in India. There is
technology incubation hubs like T- hub in Hyderabad which has incubated
more than hundred potential techno entrepreneurs working with variety of
technologies like block chain, AI, additive manufacturing and so on. Here,
ambitious entrepreneurs are supported with guidance, network opportunities,
investor meets, training and several other facilities besides affordable hosting.
Similarly, there are special technology parks to encourage techno ventures
and start up venture funding facilities from government. Another positive
factor is large technical talent pool in India and growing startup culture in
cities like Bengaluru, Gurugram, and Hyderabad etc. Among the
entrepreneurs, techno-entrepreneurs are going to a dominant share among
new entrants alongside technology advancements in times to come.

3.8 HERITAGE AND TOURISM

ENTREPRENEURSHIP
Entrepreneurs can explore economic and social opportunities through
heritage tourism ventures. It can facilitate overall development by getting
attention of state government and investors on things and places which
otherwise may not be getting desirable attention. The importance and
attention of heritage tourism is going to increase more in coming years. It
includes business models which position heritage tourism services in the
form of travel experience which is valued by the target customers and
stakeholders. Example include tours related sites of archaeology,
57

 Entrepreneurship: architecture, art, religious places, historic tours, museums, military history,
A Perspective
music festivals, opera, pilgrimages etc.
Since states are also interested to promote development of underdeveloped
areas, any opportunity of exploring heritage tourism in such areas could help
address the issue. The heritage tourism services to such areas are going to
create an economic growth and development ecosystem around such services.
Once tourist flow starts, other complementary services start appearing like
transportation services, hospitality services, healthcare, infrastructure,
maintenance, etc. Hence, such entrepreneurial efforts can be multipliers as it
opens many more opportunities for new ventures which complement each
other. Some countries like Mali, Mauritius, Switzerland and many other
countries rely a lot on international tourists for state revenues. The tourists
coming to visit places spend money for things other than at heritage tourist
spots during their journey cycle. This boosts national income and overall
development.
There is often variety of heritage tourism services which could be packaged
by these entrepreneurs in innovative ways to get more traction among the
targeted customers. But to engage with target customers, they need to engage
effectively at various stages of the customer journey cycle. The journey cycle
may involve search, selection, time, and other facilities, mode of transport,
security and revisit. Since much of this journey happens online now days,
heritage tourism entrepreneurs need to leverage information technology
solutions for being there at all important moments of customer journey.
Social network also have a major role. Many tourist look for feedback of
earlier visitors and tourists about places and service providers which is
nowadays common on social networks, review sites, blogs etc. The target
customers get more interested in use of new technologies. The technologies
facilitate in the exploration of many places before selection of spots.
Enterprises offer technology solutions to experience closer to real in a virtual
stream remotely to bring authenticity and trust in the promise of experience.
For effective delivery of marketing communication mix in the online
environment, these entrepreneurs need to equally concentrate on digital
marketing, enriching the marketing-mix at lower costs, quicker response and
personalized content. Hence, digital smartness is a major competency
required for success of heritage tourism entrepreneurship.

Access and infrastructure plays a big role in heritage tourism and there are
numerous potential places in India and many other developing and
underdeveloped countries to explore which lack such facilities. Hence, there
is need for strengthening more this facilitation and identify more deserving
places to give boost to tourism which can open avenues for more heritage
tourism entrepreneurs and consequently development and economic
wellbeing of these places.

3.9 INTERNATIONAL ENTREPRENEURSHIP

International entrepreneurship means the process where an
entrepreneur is offering products and services beyond state borders. It
58

can comprise global trade, manufacture products or service base in other Dimensions of
Entrepreneurship
countries, collaborative projects and any other model where entrepreneur can
create or capture value beyond country boundaries. Some firms start its
international operation from the beginning where as some start later. Many
entrepreneurs in various countries, including India, first establish themselves
in local market and then stretch its footprint to other countries. There is
relatively higher risk in international business and corresponding
opportunities as well. Risks could be due to currencies, political issues, and
regulation about ownerships, protectionism, and higher level of competition,
stricter standards and so on. In some countries, outside entrepreneurs are
compelled to have local partnerships or sometimes agree for technology
transfer in case of technology ventures which could lead to compromises.
Also cost of engagement may be high like in case of services venture who
wants to participate in tendering process, in a B2B scenario. They have to
incur high cost in the pre-bid stage with highly uncertain outcome. In some
international ventures, the global markets explored may have unfavorable
social conditions like in some African countries; there are security concerns
for outside employees.

It is important for international entrepreneurs to understand the maze of

agreements between countries at different levels like general agreements,
regional agreement, bilateral agreements etc. the detailed understanding helps
in analysing the implications for cost, restrictions, and opportunities.
International trade is relatively more regulated than domestic trade and
violations can be costly.
For global entrepreneurial aspiration, entrepreneurs should have high level of
commitment and readiness for taking higher level of risk. They need to be
smart enough to network and plan an effective strategy as cost of failure
could be high. However, e-commerce venture or entrepreneurs using digital
channels can offset these challenges to some extent provided they are able to
understand target customers through reliable channels and provide distinct
competitive solution at a better offer. Many entrepreneurs develop local
partnerships to make effective distribution and sales channels in international
markets. For example, many coir product manufacturer exporters in India had
in past local partnerships in European countries and other countries of west to
develop markets in those countries. Similarly, many IT solutions companies
have created partnerships for gaining access to markets of other countries.

There are several policy instruments in India to support international

entrepreneurship for different stages of the business like market promotion,
development, credit financing, insurance etc. Also there are export
promotional councils which facilitate networking, opportunity identification,
marketing, capacity building etc., like Export Promotional Council for
Handicrafts (EPCH) based in Delhi assists international handicraft
entrepreneurs once they get registered with the council. ECGC (Export Credit
and Guarantee Corporation) helps in the credit risks management, FIEO
(Federation of Indian Export Organisation) may be helpful in getting
information about the global market and global products.

59

 Entrepreneurship: Check Your Progress B
A Perspective
1) List out the factors driving the ecopreneurship.

2) What do you mean by cultural entrepreneurship?

3) List out the challenges of techno entrepreneurship.

4) What do you mean by heritage and tourism entrepreneurship?

5) Fill in the blanks:

i) ………………. is also known as environmental entrepreneurship.

ii) Entrepreneurs in specialized services like entertainment events about

cultural aspects, exhibitions, festivals, shows, events etc. are
example of ……………………. .

iii) The heritage and tourism entrepreneurs offer services in the form of
……………………….. .

iv) R &D and innovation plays a key role in ……………………

entrepreneurship.
v) ………………. assists international handicraft entrepreneurs once
they get registered with the council.

3.10 LET US SUMP UP

Rural entrepreneurship is a means to increase income and employment as
well as providing stability and growth in rural communities. These
entrepreneurs utilise local natural and physical resources to produce products
like processed food, handicrafts, intermediate artifacts etc., and services like
tourist services, input labour services for bigger companies based in remote
areas and so on. One of the major challenges of entrepreneurial growth in
rural space is lack of supportive ecosystem for individual growth, culture and
enterprise support. Various government schemes have been launched from
time to time to encourage rural entrepreneurship.
In last couple of decades there has been growth of woman entrepreneurship
in India. A Woman enterprise is the one owned and controlled by a woman
having minimum financial interest of 51% of the capital and giving at least
minimum 51% of generated employment to women. There are several
policies and incentives to encourage women including various forms of
mentorship support and hand holding.
Social enterprises keep social concerns in priority alongside organisations
own sustainability. Social entrepreneurs are change agents in the social
sector. The target beneficiaries of such enterprises could be mostly people in
lowest base of pyramid, discriminated communities, ecologically important
constituencies important for overall sustainability, orphans, old age people,
economically weaker and sick people, physically challenged and so on.

60

There is growing trend globally towards society and state wanting goods and Dimensions of
Entrepreneurship
services producers to be more responsible towards ecological challenges.
Ecopreneurs set up businesses that solve environmental problems or operate
sustainably.

Cultural Entrepreneurs are visionaries who mobilise cultural and other

production factors to structure a business model which sustains through
revenues from a cultural activity. Examples of cultural entrepreneurship are
entrepreneurs who sustain enterprise with revenues sought directly or
indirectly from specialized services like entertainment events about cultural
aspects, exhibitions, festivals, shows, events etc.

Since technology advances is happening at a rapid pace and many

technologies keep disrupting, Techno-entrepreneurs use technologies as core
of their business model and capture economic value by offering better
solutions for existing problems or solutions for unresolved problems. They
must calibrate technological opportunities with market opportunities
regularly across their journey. There are various state instruments in terms of
policy, facilitation and encouragement to take up techno entrepreneurship in
India.
Entrepreneurs can explore economic and social opportunities through
heritage tourism ventures.Heritage and tourism entrepreneurship includes
business models which position heritage tourism services in the form of
travel experience which is valued by the target customers and stakeholders.
Example include tours related sites of archaeology, architecture, art,
religious places, historic tours, museums, military history, music festivals,
opera, pilgrimages etc.
International entrepreneurship means the process where an entrepreneur is
offering products and services beyond state borders. It can comprise global
trade, manufacture products or service base in other countries, collaborative
projects and any other model where entrepreneur can create or capture value
beyond country boundaries. There is relatively higher risk in international
business and corresponding opportunities as well.

3.11 KEY WORDS

Cultural Entrepreneurs: Entrepreneurs who mobilise cultural and other
production factors to structure a business model which sustains through
revenues from a cultural activity.

Ecopreneurs: Entrepreneurs whose business efforts are not only driven by

profit, but also by a concern for the environment.
Heritage and Tourism Entrepreneurship: It includes business models
which position heritage tourism services in the form travel experience which
is valued by the target customers and stakeholders.

International entrepreneurship: The process where an entrepreneur is

offering products and services beyond state borders.

61

 Entrepreneurship: Rural Entrepreneurship: The creation of a new organization that introduces
A Perspective
a new product, serves or creates a new market, or utilizes a new technology
in a rural environment.
Social Entrepreneurship: the activities and processes undertaken to
discover, define, and exploit opportunities to enhance social wealth by
creating new ventures or managing existing organizations in an innovative
manner.

Techno-entrepreneurs: They use technologies as core of their business

model and capture economic value by offering better solutions for existing
problems or solutions for unresolved problems.

Women Entrepreneurs: A woman or a group of women who initiate,

organise and run a business concern.

3.12 ANSWERS TO CHECK YOUR PROGRESS

A) 4. i. Rural entrepreneurs ii.Woman enterprise iii. Social entrepreneurs iv.
Ministry of Micro, Small and Medium Enterprise (MSME)

5.i. true ii. true iii. false iv. false

B) 4. i. Ecopreneurship ii. cultural entrepreneurship iii. travel experience iv.
technology v. Export Promotional Council for Handicrafts (EPCH)

3.13 TERMINAL QUESTIONS

1) Discuss the role of government in promoting rural entrepreneurship in
India.
2) What factors do influence the emergence and development of social
entrepreneurship? Discuss them with examples.
3) Explain the challenges faced by women entrepreneurs in establishing and
developing their enterprises.
4) Write short notes on the following:
5) Ecopreneurship
6) Heritage and tourism entrepreneurship
7) Explain the role that techno entrepreneurs fulfill in the development of
the country.
8) Entrepreneurs dealing across national boundaries undertake relatively
higher risk. Comment.

Note: These questions will help you to understand the unit better. Try to
write answers for them. But do not submit your answers to the University for
assessment. These are for your practice only.

62

 Dimensions of
FURTHER READING Entrepreneurship

x Aageson, T. (2008), Cultural entrepreneurs: Producing cultural value and

wealth. In: Anheier, H.K., Isar, Y.R., editors. The Cultural Economy.Los
Angeles: SAGE. p92-107.
x Ahuja, V., Akhtar, A., & Wali, O. P. (2019).Development of a
comprehensive model of social entrepreneurial intention formation using
a quality tool.Journal of Global Entrepreneurship Research, 9(1), 41.
x Geneva:International Labor Organization. Available: http://www.
cartierwomensinitiative.com/docs/Ethiopian_women_entrepreneurs_ILO
.
x ILO (2006). Vulnerability and young women entrepreneurs: A case study
of Ethiopian informal economy.
x Klamer, A. Cultural entrepreneurship.Rev Austrian Econ 24, 141–156
(2011).https://doi.org/10.1007/s11138-011-0144-6
x Ravi “Top 10 Famous Women Entrepreneurs in India” The CEO Story
January 14, 2021 retrieved from https://theceostory.in/blog/top-10-
famous-women-entrepreneurs-in-india/ on 21-1-2021
x Rani, A. (2016). Women spirit wins: A case study of LijjatPapad.
International Journal of Applied Research, 2(2).
x Ratten, V. (2011) ‘Social entrepreneurship and innovation in sports’,
International Journal ofSocial Entrepreneurship and Innovation, Vol. 1,
No. 1, pp.42–54.
x Swedberg, R. (2009). Rebuilding Schumpeter’s theory of
entrepreneurship. Marshall and Schumpeter on evolution, 188-203.
x Schuyler, G. (1998). Merging Economic and Environmental Concerns
through Ecopreneurship. Digest Number 98-8.
x Tanaya Singh,” How a 25-Year-Old Delhi Boy Is Creating Solar
Entrepreneurs in Rural India” The Better India 24-10-2016 retrieved
fromhttps://www.thebetterindia.com/72824/solar-entrepreneurs-lakshey-
sehgal-energy-delhi/ on 21-01-2021
x Vishal Dutta, “ Bhungroo technology: A do-it-yourself well for dry
farmlands”, Economic Times 2-1-2014 retrieved from economictimes.
indiatimes.com/news/economy/agriculture/bhungroo-technology-a-do-it-
yourself-well-for-dry-
farmlands/articleshow/28256319.cms?utm_source=contentofinterest&ut
m_medium=text&utm_campaign=cppst on 19-1-2021
x Zahra, S. A. (2008). The virtuous cycle of discovery and creation of
entrepreneurial opportunities. Strategic Entrepreneurship Journal, 2(3),
243-257.
x https://en.wikipedia.org/wiki/Goonj_(NGO) retrieved on 20-01-2021
x https://en.wikipedia.org/wiki/Kiran_Mazumdar-Shaw retrieved on 20-01-2021
x https://shaktifoundation.in/wp-content/uploads/2014/02/010415-villgro-
EEIP-report_FINAL.pdfretrieved on 20-01-2021

63

 Entrepreneurship:
A Perspective UNIT 4 ENTREPRENEURIAL
COMPETENCIES

Structure
4.0 Objectives
4.1 Introduction
4.2 Entrepreneurial Competencies: An Overview
4.3 Entrepreneurial Aptitude
4.4 Creativity
4.5 Innovation
4.6 Inter personal skills
4.7 Business leadership
4.8 Problem solving
4.9 Communication
4.10 Negotiation
4.11 Risk management
4.12 Let us sum up
4.13 Key words
4.14 Answers to Check Your Progress
4.15 Terminal Questions

4.0 OBJECTIVES
After studying this unit, you should be able to:
x describe the evolution of competencies;
x appreciate the role of various competencies for entrepreneurial
performance;
x discuss specific competency areas;
x analyse linkages of specific competencies with the enterprise success;
and
x explain the interdependencies between various competencies.

4.1 INTRODUCTION
An enterprise is a brain child of the entrepreneur. Growth and success of
business depends on the competency of the entrepreneur. Entrepreneurial
competencies are very important for entrepreneurship development as well.
Lack of entrepreneurial competencies may lead to low entrepreneurial
activity in the society. We have already discussed in Unit 1 that
entrepreneurship play a very important role in the economic development of
the nation. We have also discussed that how an ecosystem is responsible for
encouraging and motivating entrepreneur. In this unit, you will learn various
64
entrepreneurial competencies such as creativity and innovation, interpersonal Entrepreneurial
Competencies
skills, business leadership, problem solving, communication, negotiation and
risk management etc. that are crucial for nurturing and promoting
entrepreneurial activity.

4.2 ENTREPRENEURIAL COMPETENCIES: AN

OVERVIEW
Since we are going to talk about various entrepreneurial competencies here,
let us begin with understanding what competencies are? Competencies are
primarily combination of skills, knowledge and attitude that determines the
effectiveness of your performance. For example, if you are going to give a
musical performance (singing) on stage, its success will depend upon how
melodious your voice is, along with your performance style, musical
instruments, background decor of the stage etc. Similarly, when we talk about
entrepreneurial competencies, we are trying to describe all the skills and traits
of an entrepreneur that effects the business growth.

Competencies are not tasks but enablers which help individuals to

accomplish a task. Most common understanding of competency is that it is
blend of skills, knowledge and attitude which leads to superior performance.
Stoof (2005) and Tibb (1990) have defined competency as “an ability to
perform certain tasks for which knowledge, skills, attitudes and motivations
are necessary.” The entrepreneurial competences are the high level
characteristics which define the prospect of success at different stages of
entrepreneurial journey. The competency focus captures the human element
of the entrepreneurship. The competencies help leverage opportunities and
address issues at various stages of the enterprise development and
sustainability. Hence, strength of competencies of an entrepreneur is
associated with business outcome of the entrepreneurial endeavour.
Competencies of people develop over time once they possess the knowledge
and develop skills to apply that knowledge. More and more application helps
gain experience and expertise. Expertise gives confidence and improves level
skill. In most cases it brings a positive attitude towards that skill which the
person applies in right situations. Hence, competence is combination of
knowledge, skills and attitude which any person possesses.

There are several competencies which have been identified as effective inputs
to the performance of processes taken up by the entrepreneur. The
competencies of the entrepreneur required for new or smaller enterprise may
not be same as required in case of a larger enterprise. Various researchers
have categorized competencies of the entrepreneurs based on specific
dimensions like stage of enterprise, sector, and phase of entrepreneurial
journey of the individual itself etc.

Entrepreneurial competencies can also be seen from the perspective of

enterprise stage- start up and enterprise sustainability. The competencies like
risk-taking propensity, negotiation, communication, need for achievement
can be critical for initial break through whereas negotiation, interpersonal
skills, opportunity identification and networking skills help firms to adapt
65
 Entrepreneurship: and respond to variety of business challenges it faces to sustain and scale. It
A Perspective
has been seen in various studies that competencies can have direct impact on
the entrepreneurs performance in the short as well as long-run.
It is essential to understand that competencies are learnable and
understanding the competency need for specific type of ventures, at specific
stage of the venture can be of utility from the perspective of policy, capacity
building or training, self-assessment and investment. These perspectives
will try to analyse the fitment or potential of fulfilment before they show a
buy-in for proposed new projects. Some common competencies identified
comprise the following:
x Creativity,
x Innovation,
x Inter personal skills,
x Business leadership,
x Problem solving,
x Communication,
x Negotiation and
x Risk management.
Individual family background, education and experience can influence the
strength of these competencies in an individual. Hence, it is helpful to have a
more understanding of these types so that one can work on these to elevate
the strength of these competencies.
In a nutshell, entrepreneurial competencies are:

1) A set of abilities and skills that are required to be in a budding

entrepreneur for success of the venture. They may possess these skills
and abilities or acquire these.

2) Set of skills and abilities that encourage them to take initiative and be
creative and innovative.

3) Ability to develop, organise and manage a business venture that is

established by the entrepreneur.
4) Ability to foresee risks, analyse them and take calculated risk.

5) Abilities and skills to negotiate network and make effective

communication.

6) Interpersonal skills and hunger for achievement, affiliation and power.

7) Ability and skill to sense the environment and identify an opportunity
which is workable and profitable.

8) Leadership skills, problem solving attitude and strength to manage risk.

66
 Entrepreneurial
4.3 CREATIVITY Competencies

Creativity is one of the important competencies for successful entrepreneurs

which has the potential to generate new ideas, new solutions, see new
perspectives and give confidence to the entrepreneur for sustained agility in
innovation. Creativity is defined as the tendency to generate or recognize
ideas, alternatives, or possibilities that may be useful in solving
problems, communicating with others, and entertaining ourselves and
others. The analysis of above definition shows that creativity refers to:
x Generation and recognition of ideas
x Development of alternatives for solving the problems
x Communication with others
x Entertaining ourselves or entertaining others

It is a phenomenon whereby something somehow new and somehow valuable

is formed which can be a tangible product or an intangible product like an
idea, composition etc. Creative capacity usually is not a finite matter which
dries up with use. It is about ability to generate novel, distinct and
unresolved useful connections.
Most of the successful entrepreneurs come up with new ideas, new solutions
and novel ways to address problems in a better way or solve unresolved
problems. It helps thinking in creative ways to manage internal or external
processes of the organisations, structures, engagements, partnerships,
resource management and other aspects of entrepreneurship. These processes
help the enterprise to attain the advantageous position then place the
enterprise in a position of advantage versus its competitors with a
differentiation and edge.

Creative competencies allow entrepreneurs to offer promises to their

stakeholders of being consistently innovative. The innovativeness gives their
partners confidence to invest as investors or trust as a partner or reason for
likeability for customers to be front runner with new introductions. Many
large technology intensive firms are known for consistent innovation who bet
on partner entrepreneurs in their network. They are assure that the innovative
firms are creative enough to be consistent in bringing out new solutions on
demand for their bigger partners who handle commercial part. In-house
dependable creative competencies can encourage entrepreneurs to have scope
for building their brand on a powerful plank of consistent innovation because
innovation can be more routine if dependable creative competencies are
accessible. It may be difficult for organisations to have a brand promise of
being an innovative firm if it cannot roll out innovative products in timely
manner which itself depends to a larger extent on its creative base or
dependable creative networks.

Benefits of creativity to entrepreneur: The benefits of creativity can be

seen as:
1) Creativity enables effective management.
67
 Entrepreneurship: 2) It caan address problems in a better way.
A Perspective
3) It caan solve unresolved problems.
4) It ennsures and enables effective utilisation of avaailable resources.
5) It heelps in overcoming the weaknesses.
6) It leeads to innovation and innovative ideas.
7) It giives an edge vis-a-vis the competitors in the market.
m

4.4 INNOVATION
Innovatiion and Creativity go hand in hand. While W creativity means
conceptualising something new, innovation is appllication of new or novel
things to develop new product or a service. Innovation translates
creativitty into a utility. One of the earliest definitioons includes ³,QQRYDWLRQ
LV WKH JJHQHUDWLRQ DFFHSWDQFH DQG LPSOHPHQWDWLRQ RI QHZ LGHDV SURFHVVHV
SURGXFWVV RU VHUYLFHV” (Thompson, 1965). Some researchers have later
tweakedd the definition as ³,QQRYDWLRQ FDQ EH GHILQHG
G DV WKH HIIHFWLYH
DSSOLFDWWLRQRISURFHVVHVDQGSURGXFWVQHZWRWKHRUUJDQL]DWLRQDQGGHVLJQHG
WR EHQHIILW LW DQG LWV VWDNHKROGHUV´ (Wong et al., 2008).
2 It is possible that
innovatoors may have the ability to transform creative ideas into a
commerrcially successful product or service but maay not have capacity to
bring creeative ideas. Innovation is the key ingredien nt of productive thinking
besides opportunity identification, risk taking and d creativity to find new
solutions. Successful entrepreneurs recognise opportunities
o and find
innovative responses. They require innovative comp petencies to manage and
ways to sustain these competencies.
Process of Innovation: The process of innovation haas five basic steps. These
steps aree summarized in Figure 4.1 below:

Idea Generation Advocacy and

Experimentation
and Mobilisation Screening

Diffusion and
Commercialisation
Implementation

Figure 4.1 Process of Innovation

n

68
Innovation by entrepreneurs varies by the extent of novelty brought in by the Entrepreneurial
Competencies
new solution. There may be three types of innovations. They are:

1) Incremental Innovation

2) Radical Innovation
3) Disruptive Innovation.
Let us try to understand these types of innovation one by one.

At the basic level, it may be incremental innovation. It requires quick

learning, foresight and experience of experimenting and deploying new
features, additional utilities, and tweaks in functionalities and so on. As you
have already discussed in Unit 1 that adaptive innovators do incremental
innovation. Incremental innovation is a series of small improvements to the
existing products. There is less risk in this type of innovation.

Innovation competencies can also drive a radical improvement in current

technology solutions or processes for roll out. We have already learnt that
ambitious entrepreneurs do radical innovations (Unit 1). In this kind of
innovation, the existing business or system is destroyed and an entirely new
business or system replaces it. A new brand is created and positioned. In this
innovation, undoubtedly high risk is involved. It is a transformative business
model. It converts the existing business, system, design or innovation into a
brand new one. These innovations may push out other businesses to an end.
Innovative competencies can also bring a disruptive innovation. Disruptive
innovation has the potential to replace the adoption of existing solutions and
potential to affect the existing market equilibrium for current solution
stakeholders. It forces the stakeholders to adapt new innovation to sustain.
Hence, deeper innovative competencies are required by entrepreneurs to
disrupt as well as find ways to face disruptions in times of speedy
technological advances. It is quite similar to radical innovation. In this a new
business is created to sell into an existing market, whereas, in radical
innovation an entirely new market for radically innovated products and
services is created and catered to.
Entrepreneurs leverage various innovative paths to succeed like product
innovation, service innovation, process innovation, marketing
innovation, business model innovation etc. Innovation may involve a
variety of changes subject to organization’s strategy, need, resources but
importantly innovation competencies. Competencies for product innovation
require sufficient research and development capabilities for various stages of
new product development and commercialization. Depending on the type of
product, it may include: competencies across design, architecture, prototype
development, testing, procurement, production, and commercial roll out.
Process innovation could be a project of business process reengineering
where radical changes in the existing processes are carried out for radical
gains. Hence, innovative competencies do not only understand existing
solutions or process goals but it also requires ability to find alternate viable
solutions and challenge existing assumptions.

69
 Entrepreneurship: The composite innovation led capability model could be based on an
A Perspective
individual or few partners in a new start up or several competent people in a
mature enterprise or across firms in a joint venture.
Benefits of Innovative Competency: Having innovative competency offers
the following benefits to the enterprise:
1) Mostly, an innovative competency across functions and processes helps
entrepreneurs to perform better in a competitive situation.

2) It helps to sustain because innovative competencies across functions

gives a larger scope for enterprise to sustain based on innovation.

3) In a highly competitive market situation, competitors need to

consistently differentiate to retain, penetrate and scale. Hence, it
becomes important to have innovative competency to offer something
different.
4) To sustain in the global market one must make strategic and innovative
moves.
5) Innovation is important and critical to ensure smooth running of
organisations due to evolving work place dynamics.
6) As you are aware that the tastes and preferences of customers keep on
changing, therefore, innovation facilitates in satisfying the consumers in
new ways.
It has been observed that many technology startups flop because of the
lack of innovative competencies in managing commercial success or
business governance or partnership management, and other aspects of
running an enterprise in spite of their competencies to find an innovative
product or service.

Challenges of Innovation: It is true that innovation is important but it also

has certain challenges and risks associated with it.

1) Technological failure is one of the major challenges of innovation. To

overcome this challenge, it is important for the entrepreneurs to carry out
number of trials for the new product before it is implemented.

2) The other risk is the financial burden on the business enterprise.
Innovation comes with a cost. Usually an innovative product gives the
returns in the long run, therefore the enterprise face a major challenge of
finance. The enterprises, therefore, are required to assess their financial
position before taking up any innovative procedure.

3) The other challenge is the market failure. It is very much possible that an
innovative product despite many trials does not give the returns as
expected. Redundancy is another challenge for an innovative product.
The market changes constantly with new technology coming up every
now and then. By the time the innovative product is launched in the
market, it becomes redundant due to technological upgradation.

70
 Therefore, it is imperative for the entrepreneurs to keep abreast with the Entrepreneurial
Competencies
technology to avoid such risks.
4) Lack of structural and financial capacity of implementation is another
challenge for entrepreneurs. This challenge is usually for the start-ups as
they do not have a sound base. In this case they can look for the partners
who are sound. Organisational risks are associated with innovation.

5) Sometimes the entrepreneurs tend to focus all its attention on the
innovation. This hinders day to day activities of their enterprise.
Therefore, it is important for entrepreneurs to have separate innovation
centres so that the daily activities of the enterprise are not hindered.

6) There are unforeseen risks associated which are unprecedented like
political events etc. The entrepreneurs need to have a contingency plan
for the same rather than being over ambitious.

The challenges are definitely a part and parcel of a business venture but
when overcome, these turn into opportunities. Innovation does help the
entrepreneurs in many ways. Innovation does provide name and
recognition to the innovating entrepreneurs.

4.5 INTERPERSONAL SKILLS

Interpersonal skills are generic types of skills which can be helpful across
levels of any organisation including entrepreneurial ventures. It is defined as
the behavioral and tactical skills a person uses to motivate, influence and
interact with others effectively. Interpersonal skills help entrepreneurs
to manage host of other things which are key for success of venture.
Interpersonal competencies drive effective communication, networking, and
partnership management. Interpersonal skills are driven by the individual
need for involvement and expression while engaging with other people. It has
been observed that one of the key competencies of successful entrepreneurs is
an interpersonal skill which helps them manage their goals effectively.
Interpersonal skills may include:
x Conflict resolution
x Empathy
x Positive communication
x Active listening
x Adaptability
x Confidence
x Patience
x Collaboration or teamwork
x Flexibility
x Diplomacy

Importance of Interpersonal Skills: The importance of having and

developing interpersonal skills are discussed below: 71
 Entrepreneurship: 1) Entrepreneurs need to persuade various stakeholders including
A Perspective
customers, clients, investors, suppliers, competitors, and service
providers at various stages of their journey. At the early stages of
entrepreneurship, interpersonal skills are a key competency to get
the entire start-up team aligned to the organisation objectives. They
should be able to convince others and make them confident about the
success potential of the venture.

2) Entrepreneurs need to identify and hire right set of people which requires
ability to appreciate and assess requisite competencies and skills in order
to attract the talent to join their venture.

3) Interpersonal skills are required for job performance, sustain meaningful
dialogue and lead goal oriented engagement.

4) People with strong interpersonal skills tend to build good relationships
and can work well with others as they understand others well. This could
help in developing good relationships with clients and employees.

5) Interpersonal skills help in resolving issues and disagreements in the

workplace, whether they involve the entrepreneur and employee or other
parties.

6) When entrepreneurs help their employees to learn, motivate them and
ask them for their feedback and ideas it increases the productivity of the
enterprise.

7) One of the early challenges of most entrepreneurs is financing support.

Apart from an attractive and viable business plan, team credibility and
other requisites, investors give lot of emphasis on the interpersonal skill
competency. The display of such competencies gives investor
confidence about entrepreneurs ability to govern, lead, find right
resources, partners, liaison smartly with the regulators and so on.
8) Networking is one of the major goals of successful entrepreneurs. Smart
entrepreneurs continuously nurture networks which become source for
potential opportunities, value enhancing partnerships and influence.
Development of strong networks rides on the competency of
interpersonal skills. Entrepreneurs should have the ability to leverage
nurtured networks into productive relationships. Entrepreneurs need to
have negotiation skills, emotional management and interpersonal
engagement skills to make their networks more productive.
Certain interpersonal skills can be learnt by individuals wanting to get in
to entrepreneurship. These skills can be groomed which may include:
suitably designed learning and use of methods like collaborative
learning, experiential learning, and cooperative learning methods which
cultivates such competencies.

Effective interpersonal engagement is also a key attribute of smart and

successful leaders which is again important for entrepreneurs.

72
 Entrepreneurial
4.6 BUSINESS LEADERSHIP Competencies

As mentioned above, entrepreneurs should have leadership competency

to lead their teams effectively. Focus on managerial competency for
entrepreneurs have been there since long. However there is sufficient
evidence to show that leadership competence differentiates scale of success.
Business leadership is defined as the ability of an individual, group or
organization to "lead", influence or guide other individuals, teams, or
entire organizations to achieve the shared goals.
Entrepreneurs should have ability to inspire and convince others. They
need to carry a persona and conviction about the enterprise strength to
achieve the set goals. That should have ability to transfer this conviction
across the enterprise members to have the necessary motivation required to
face uncertainties and challenges.

Entrepreneurs, besides other qualities, resources and good business plan,

should be able to lead their teams. They should take up the challenges where
the entire team is supportive of the initiatives taken by the leader and can put
their trust in their leader.

Characteristics of Business Leadership: Business leadership has the

following characteristics:
1) It is a continuous process whereby the entrepreneur influences, guides
and directs the behaviours of his team, employees and key partners.
2) The entrepreneur is able to influence his team and partners behaviour at
work due to the quality of his own behaviour as leader.

3) The purpose of business leadership is to get willing cooperation of the

work group in the achievement of specified goals.

4) The success of a entrepreneur as leader depends on the acceptance of his

leadership by the team, employees and partners.

5) Business leadership requires that while group goals are pursued,
individual goals are also achieved.
Importance of Business Leadership: Leadership competency plays an
important role in the success of entrepreneur which has been discussed
below:

1) Entrepreneurs face challenges, particularly, in its initial stages to face the
reality of the competitive markets. This requires adjustments, reworking,
change and frequent transformation. Frequent transformation is a rule for
entrepreneurial set ups in its initial stages rather than an exception. They
need to adapt to the prevailing ecosystem as they do not have the size
and scale to influence structures. It leads to situations where management
and employees look up to the leadership for assurances about the future
of enterprise.

73
 Entrepreneurship: 2) Key partners and other stakeholders also prefer to associate with the
A Perspective
enterprise headed by competent leadership for the sake of their own
sustainability and long term relationship.
3) Goal setting is an important activity in any enterprise which is translated
into various performance indicators for the team members to achieve. To
pursue and achieve ambitious goals and gather more momentum for high
performance, leadership competency plays an important role. Effective
leader are able to get the entire team aligned to their vision and mission
which heightens the motivation among the members to achieve the
extraordinary. They are able reassure members and partners that their
efforts are valuable and goals are worth putting that effort.

4) Having leadership competency helps entrepreneur to build congenial

work-environment keeping in view the subordinates competence, needs
and potential.

5) Where the subordinates face problems in connection with their

performance at work, the leadership competency helps entrepreneur to
guide and advise the subordinates.
6) Strong leadership strengthens the spirit of the team members and key
partners.

Check Your Progress A

1) What do you mean by entrepreneurial competencies?
2) List out three benefits of creativity.
3) What do you mean by interpersonal skills?
4) Fill in the blanks:
i) …………. an ability to perform certain tasks for which knowledge,
skills, attitudes and motivations are necessary.
ii) …………….. means conceptualizing something new
iii) Development of strong networks rides on the competency of
………………. .
iv) …………….. is the ability of an individual, group or organization to
lead, influence or guide other individuals, teams, or entire
organizations to achieve the shared goals.
v) …………….. is application of new or novel things.
5) State whether the following statements areTrue or False:
i) Disruptive innovation has the potential to replace the adoption of
existing solutions.
ii) Creativity is about ability to generate novel, distinct and unresolved
useful connections.
iii) Interpersonal skills consist of behavioral skills only.
iv) Individual family background, education and experience can
influence strength of the competencies in an individual.
74 v) Leadership competence differentiates scale of success.
 Entrepreneurial
4.7 PROBLEM SOLV
VING Competencies

In any field, including entrepreneuurship, problem solving competency is the

key competency to cruise ahead othherwise chances of stagnation and reversal
are higher. Problem solving compettency is required to:
x Understand problems well.
x Understand alternative options as well as assumptions.
x To have awareness of risks annd decision which can be executed within
the context.

The fact that entrepreneurs must taake risks means there is a higher chance of
decisions going wrong and see faailures. These failures teach us and bring
lessons as well and help future enndeavors. At the same time, the impact of
bad decisions or escapism can be m more severe and decision making process
could be put to more scrutiny by the stakeholders in the current situation they
are operating. Hence, effective problem-solving competency holds an
important place in the competency ggrid of an entrepreneur.
Problem solving attitude sits on thee conviction that there can be a solution for
most of the problems faced. It requiires:
x capability to identify context,
x identify the relevant factors of influence, and
x practical solution among the m
multiple solutions explored for a problem.

Competent problem solvers normallly explore several alternate paths to arrive

at most feasible one. They see thee feasibility of resources and operational
capacity to arrive at the right deciision. The Process of Problem Solving is
summarized in the figure 4.2:

Identify the Analyze the Look For Root

Problem Problem Causes

Evaluate and Develop

Implement the
Select the best Alternate
Solution
possible Solution Solutions

Measure the
Reasults

Figure 4.2 Proccess of Problem Solving

75
 Entrepreneurship: Benefits of Problem Solving Competency: Problem solving competency
A Perspective
has the following benefits to the entrepreneur and his/her enterprise:
1) Entrepreneurs who have problem solving skills can observe, judge, and
act quickly when difficulties arise. Moreover, they are not afraid of the
unknown, and are well equipped to handle anything.
2) Problem solvers are not just equipped to deal with the problem at hand
but are also able to anticipate problems that will arise in the future based
on trends, patterns, experience, and current events.
3) Problem solving of competencies of entrepreneur helps him/her to
overcome the interruptions of business and thus allow the business to
operate smoothly.
4) The speed of problem solving is a key factor of success in most of the
start-ups. When the start-ups entrepreneurs are quick in their response to
situations which arise frequently during the execution of the business
plan, then they definitely take lead over their competitors otherwise if
they are slow, the competitors are usually there to take the lead.
Challenges in Problem Solving: Problem solving competency has the
following challenges:

1) The challenge of problem solving competency is the need for

understanding the larger picture as well as micro level understanding of
the decision situation. It requires understanding of all relevant internal
and external factors of major influence and their interdependencies.
2) One should have the knowledge of capabilities available and capabilities
which can be sourced and trusted.
3) There should be understanding of the extent of outcome and impact in
both cases if solution is right or otherwise. Hence, the entrepreneurs
need to have agility and speed in problem solving.
4) A larger enterprise or organization may usually have procedures and
protocols to follow in most of the decision situations, but small
entrepreneurs may not have these elaborate procedures to follow. One
side it provides facility to take speedy decisions but elevates the level of
risk accordingly.

Problem Solving skills should be prevalent across the team members of

the enterprise so that the speedy problem solving should not be limited to
a specific function in any enterprise including a start-up.

4.8 COMMUNICATION
Another important determinant for successful performance of an entrepreneur
is his/her ability to communicate effectively. Entrepreneurs can miss
opportunities if they are not able to communicate properly with
investors, clients, team members, market and so on. It includes both,
verbal as well as non verbal flow. In many scenarios, the audience reads
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more from non-verbal cues than verbal messages. The competency includes Entrepreneurial
Competencies
ability to hear the response and respond right to the audience response.
Communication requires understanding of audience, level, context and
limitations.

One to one person communication is different than communication with a

group of people or large numbers. Communication context for an
entrepreneur making a funding offer with a venture capitalist is different than
interaction with a business magazine correspondent for coverage of the start
up in the magazine. Communication with team members at senior level is
different than communication with 40-50 new hires that have recently
graduated from an engineering college or management school and want to
contribute in a startup. Across all these cases, an effective communicator has
to be a good listener who can empathise and manage expectations of the
targeted audience.

Effective communication competency helps share vision and ideas which can
be easily comprehended by the intended audience. Communication is defined
as ³WKH WUDQVIHU RI LGHDV IURP WKH VHQGHU WR WKH UHFHLYHU´ Nwachukwu
(1988). Communication is important glue for host of managerial functions
like planning, organizing, monitoring, coordinating etc. to be carried out
efficiently and effectively. It affects both, bottom line as well as top line, of
the entrepreneurial project. Entrepreneurs require right communication skills
to share goals with intended stakeholders. At every phase of entrepreneurship
journey, there is need to communicate with the market which need to be done
with right articulation to attract intended market players, investors interest,
lobbying for the right influence, regulators etc.

Importance of Communication: Communication plays a very important

role in the success of a business enterprise which has been discussed below:

1) In early stages of venture funding, investors allow very less time to
make investor pitches where entrepreneur have to communicate their
entire business proposal in a smaller time slot sometimes in few
minutes. Hence, articulation of the proposal in fewer slides requires
smartest skills of communication to attract the investor’s interest.

2) Similarly, while negotiating agreements with the partners,

communication skills can make a big difference. Right selection of
words, responses, body language and articulation can help make deals
more favourable.

3) It facilitates putting the right organizational structure in place by

allocation of roles and responsibilities communicated in a manner which
is convincing, appreciating and gives sense of ownership.

4) Effective communication contributes a great deal to higher efficiency in

job performance. It ensures willing cooperation of others due to the close
understanding of ideas and instructions established through
communication. Indeed a direct relationship exists between the
effectiveness of communication and efficiency in an organization.

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 Entrepreneurship: 5) Successful entrepreneurs follow good branding practices as a long term
A Perspective
strategy for growth and sustainability. Communication competency is the
key ingredient to develop good public relations or desirable brand
influence for the organization. Branding covers all aspects of business
enterprise. The branding promise needs to be followed through action in
terms of efforts, product attributes and processes of the organisation to
stick to the promise made. Hence, external and internal communication
needs to be in synergy to have compelling brand effect and secure a
positive attitude towards the enterprise products and services.

6) Communication is also key competency within the competency grid and
most of the other competencies have dependencies on this competence.
For example, leadership competence, negotiation skills and interpersonal
skills are dependent on communication competency.
Effective Communication for Success of an Enterprise: The principles or
guidelines to making communications effective are of a general nature,
operationally speaking, a number of more specific suggestions can be made
to ensure the effectiveness of communications.

1) Regulating the flow of communications: Planning communication

should involve determining the priority of messages to be communicated
so that entrepreneurs may concentrate on more important messages of
high priority. Similarly, incoming communication should be edited and
condensed, if possible, to reduce the chances of overlooking or ignoring
important messages received.

2) Feedback: Along with each communication there is need for feedback,
that is, communication of the response or reaction to the initial message.
Feedback may include the receiver’s acceptance and understanding of
the message, his action or behavioural response, and the result achieved.
Two way communications is thus considered to be more helpful in
establishing mutual understanding than one-way communication.
3) Language of the message: Use of appropriate language is essential for
effective communication. While preparing the message, the sender must
keep in view the climate, as well as the ability of receiver to interpret the
message accurately. Abstract ideas should be explained and vague
expressions avoided. He must keep in view tire semantic problem, that
is, the possibility of particular words having more than one meaning.
Experimental studies have shown that oral communication accompanied
by its written version is more effective in bringing about the desired
response.

4) Importance of listening carefully: Listening to verbal messages

carefully implies an active process. Half-hearted attention to the
communication is often the cause of misunderstanding and confusion.
An entrepreneur has to be patient, mentally composed, and avoid
distractions while receiving the message. He should be in a position to
concentrate on the message and seek clarification, if necessary. On the
other hand, the sender of the message must also be prepared to listen to
78 what the receiver has to say, and respond to his questions, if any.
5) Restraint over emotion: Strong feelings and emotional stress on the Entrepreneurial
Competencies
part of either the sender or receiver of messages are serious handicaps in
the communication process. To avoid any negative impact of emotion on
the content of the message, the sender may defer the communication for
sometime or consult to exercise restraint over his psychological feelings
to avoid misinterpreting the message and to be able to respond to it with
a composed mind.

6) Non-verbal signals of compliance: Verbal messages are generally

accepted orally by the receiver. But whether action will follow the
acceptance of the message is not certain. It is, therefore, suggested that in
the case of verbal communication the sender should observe the action of
the receiver to ascertain whether the actions are in conformity with the
intent and understanding of the message.
7) Mutual trust and faith: No amount of seriousness of the parties
involved can make the process of communication effective unless there
is mutual trust and faith between them. Entrepreneurs have to cooperate
for the purpose so that individuals feel free to make suggestions and
correct each other’s views without misunderstanding.

4.9 NEGOTIATION
Entrepreneurs require negotiation competencies for variety of deal making
situations and at different stages of the enterprise growth. It is a dialogue
between two or more people or parties intended to reach a beneficial
outcome over one or more issues where an interest of conflict exists with
respect to at least one of these issues. It starts right from the initiation of the
idea and business proposal. Whether it is making of a partnership or securing
funds, there will be scenarios of negotiation. Whether it is assignment of
roles or agreement of the governance structure or the template for the
business model, negotiation competencies play a key role to have things in
favour for an entrepreneur. Same is case of developing partnerships, hiring
key employees and so on.

Effective Negotiation for Success of an Enterprise: The following

principles or guidelines may be followed to develop effective negotiation
competency:

1) In any deal making scenario or agreement to decide appropriation of

benefits and liabilities, there is tendency to put one’s interest first. This
looks logical and entrepreneurs are no exception. In order to be an
effective negotiator, it is important to look at these situations objectively.
It could be futile or waste of effort and cost if the negotiation fails and,
hence, would be mostly the last thing one would desire. Good
negotiators have the skills to balance these contrasting goals of parties on
both sides and still help their enterprise develop and stay competitive.

2) Negotiation competence requires knowledge, skills, and experience to

understand deeply about what are we offering and what do we want from
the other side. One need to gauge what are the options and band width
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 Entrepreneurship: for parties on both sides and what could be the limiting point. It is not a
A Perspective
standard recipe. It takes time and experience for people to develop these
skills which helps them to have the right approach in a given situation
and gives them an upper hand in that negotiating situation.

3) Good negotiators do sufficient due diligence and home work about the
case in hand and about the other side before they come to the negotiating
table as they need to plan and prepare. Hence this competence is
complemented by the research skills of a person to dig sufficient relevant
information before the negotiation.

4) This competence is also dependent on communication skills as already

mentioned before. Smart negotiators are excellent articulators and good
at use of bogy language.

5) Smart negotiators understand the strengths and weaknesses of both sides
and able to place and time their offers and resistance to reduce
undesirable outcome. Competent negotiators exhibit sufficient emotional
control. It requires flexibility in approach and judgment to understand
other side possibilities. It helps to look at the situation objectively and
avoid undesirable deal failures which could otherwise happen and good
opportunities may be missed out.

6) Entrepreneurs need to have strategic thinking and see long term while
negotiating deals. Many deals by smart entrepreneurs are necessarily not
made for immediate gains in the short run or medium term. They look at
longer term horizon; build productive networks which can be leveraged
for larger gains in the longer run. Sometimes it may also make sense to
walk away from the negotiation in the interest of long term strategy.

4.10 RISK MANAGEMENT

Identifying risks and vulnerabilities of any business proposal and planning
mitigation is essential for any sound business plan. Risk management is the
identification, evaluation, and prioritization of risks followed by
coordinated and economical application of resources to minimize,
monitor, and control the probability or impact of unfortunate events or
to maximize the realization of opportunities. The analysis of above
definitions shows that entrepreneurs:
x identify, evaluate and prioritize risks,
x coordinate and economize the resources,
x manage unfortunate events, and
x maximise the realisation if opportunities.

Hence competencies to manage risk are crucial for an entrepreneur and the
team managing the enterprise.
Identification of risks can be explored through deeper review of assumptions
which are basis of the business plan and operations envisaged to realise
entrepreneurship goals. This helps in developing scenarios or possibilities
80
which can give the sense of how extreme situations like possibility of losing Entrepreneurial
Competencies
entire liquidity or situation of bankruptcy or brand related problems are to be
handled. Entrepreneurs should have understanding of likelihood of risks to
plan a measured response based on capabilities. Response could be
mitigation, avoidance, bypassing and face off.

Hence, competencies to understand risks and develop response plan requires

a spectrum of competencies cutting across various functions. These functions
include: technical skills to calibrate possibilities, impact and prioritise. Much
of this competence to be put in practice requires sufficient information,
measurement skills and relevant technical skills to figure out variety of risks
entrepreneurs face.

Some of the specific risks could be about the:

x Product design acceptability.
x Material availability.
x Resource availability.
x Key talent attrition.
x Predatory pricing by competitors and so.
x One of the major risks could be concerning regulations and political
volatility.

Importance of Risk Management: Risk management competency is

important because of the following:
1) Risk management has perhaps never been more important than it is now.
The risks to which the modern organizations are exposed to have grown
more complex, fueled by the rapid pace of globalization.
2) It makes entrepreneur confident as well as gives confidence to the
stakeholders like investors, insurers, or partners that the organisation can
handle adverse situations.
3) Entrepreneurs need to have the awareness of various scenarios possible
which can affect the planned course of action and expected outcomes.
They should be able to assess the impact of such events and prioritise
and develop contingency response actions in case of such events happen.

4) New risks are constantly emerging, often related to and generated by the
now-pervasive use of digital technology. Technology intensive sectors
and Information technology sector based enterprises are highly
influenced by the technical standards adopted by firms. Many times, due
to speed of innovation in the sector, things get disrupted or standards
take time to get universally adopted. In such cases, the things are in flux
and entrepreneurs who have ventured in that sector are at the risk of
possible solution redundancy.

5) Similarly, lack of local regulation can also affect investors’ confidence
and enhance the risk level for the proposed business plan. For example,
many states are yet to come up with complete regulatory policy for block
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 Entrepreneurship: chain technology application which elevates the risk level for many
A Perspective
startups in such states whose planned ventures are built around
application of this technology.

Check Your Progress B

1) What do you mean by entrepreneurial problem-solving?

2) List out three benefits of communication.

3) Write three benefits of risk management.

4) Differentiate between verbal and non-verbal communication.

5) State whether the following statements are True or False:

i) Problem solving attitude sits on the conviction that there can be a
solution for most of the problems faced.

ii) Communication includes only verbal flow.

iii) The only risk an entrepreneur face is financial risk.

iv) Negotiation is a dialogue between two or more people or parties
intended to reach a beneficial outcome over one or more issues
where a conflict exists with respect to at least one of these issues.

v) Development of contingency response actions is not important for an

entrepreneur.

ACTIVITY 1
Mr. Raj has voluntarily resigned from a technology firm after spending 12
years. He is a software engineer and a management graduate from a leading
business of India. He wants to start an online retail start-up to sell sports
shoes targeted mainly at youth segment in India. He has set up a small office
in Noida and completed basic formalities like registration, account etc. He
has tied up with some shoe manufacturers to use their spare capacities to
manufacture sports shoes. Initials trials of selling product using Amazon.in
platform have shown positive results. Now he wants to set up his own online
shop which could be accessed through web and mobile apps. He has to make
a business plan and figured out funding requirements for his project. He has
also got appointments with few investors in Bengaluru next month for
funding support. Ramanathan is close college friend who is now working as
financial consultant in a leading consultancy, has shown keen interest to
partner and ready to leave his job if the partnership materializes. Raj is also
positive towards this possible partnership and both want to have a discussion
in couple of days to take final call on partnership.
x What are the challenges for Raj and what all competencies he need to
have which will be helpful for him to achieve his immediate goals i.e.,
now onwards till he can expect roll out of his venture pan India?

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 Entrepreneurial
4.11 LET US SUM UP Competencies

Entrepreneurs along with their teams need various competences during their
journey to realise their vision and goals. Competency is combination of
skills, knowledge and attitude which leads to superior performance. Skills
grow with experience. It is important for prospective entrepreneurs to
appreciate importance of various competencies and realise their
interdependencies. There are host of competencies which could help
entrepreneurs tread the right track.

Essential set of entrepreneurial competencies include: Creativity, Innovation,

Interpersonal skills, Business leadership, Problem solving, Communication,
Negotiation and Risk management. Depending on stage of entrepreneurial
journey, context, audience and capabilities, specific competencies may be
relatively essential to seize opportunity or fight threats.

Creativity is one of the important competencies for successful entrepreneurs

which has the potential to generate new ideas, new solutions, see new
perspectives and give confidence to the entrepreneur for sustained agility in
innovation. It is about ability to generate novel, distinct and unresolved useful
connections.

Innovation and Creativity go hand in hand. While creativity means

conceptualising something new, innovation is application of new or novel
things to develop new product or a service. Innovation translates creativity
into a utility. Innovation by entrepreneurs varies by the extent of novelty
brought in by the new solution. There may be three types of innovations.
They are: Incremental Innovation, Radical Innovation, and Disruptive
Innovation.

Interpersonal competencies drive effective communication, networking, and

partnership management. Entrepreneurs need to persuade various
stakeholders including customers, clients, investors, suppliers, competitors,
and service providers at various stages of their journey Development of
strong networks rides on the competency of interpersonal skills.

To pursue and achieve ambitious goals and gather more momentum for high
performance, leadership competency plays an important role. Effective leader
are able to get the entire team aligned to their vision and mission which
heightens the motivation among the members to achieve the extraordinary.
They are able reassure members and partners that their efforts are valuable
and goals are worth putting that effort.

Problem solving competency is required to: understand problems well,

understand alternative options as well as assumptions, and to have awareness
of risks and decision which can be executed within the context. Competent
problem solvers normally explore several alternate paths to arrive at most
feasible one. They see the feasibility of resources and operational capacity to
arrive at the right decision.
Entrepreneurs can miss opportunities if they are not able to communicate
properly with investors, clients, team members, market and so on. It includes
83
 Entrepreneurship: both, verbal as well as non verbal flow. Communication requires
A Perspective
understanding of audience, level, context and limitations.
Entrepreneurs require negotiation competencies for variety of deal making
situations and at different stages of the enterprise growth. It is a dialogue
between two or more people or parties intended to reach a beneficial outcome
over one or more issues where an interest of conflict exists with respect to at
least one of these issues. It starts right from the initiation of the idea and
business proposal.

Identifying risks and vulnerabilities of any business proposal and planning

mitigation is essential for any sound business plan. Entrepreneurs need to
have the awareness of various scenarios possible which can affect the
planned course of action and expected outcomes. They should be able to
assess the impact of such events and prioritise and develop contingency
response actions in case of such events happen.

4.12 KEY WORDS

Business leadership: The ability of an individual, group or organization to
"lead", influence or guide other individuals, teams, or entire organizations to
achieve the shared goals.

Communication: The transfer of ideas from the sender to the receiver

through verbal and non-verbal means. Communication is important glue for
host of managerial functions like planning, organizing, monitoring,
coordinating etc. to be carried out efficiently and effectively.
Competency: It is blend of skills, knowledge and attitude which leads to
superior performance.
Creativity: Creativity is defined as the tendency to generate or recognize
ideas, alternatives, or possibilities that may be useful in solving problems,
communicating with others, and entertaining ourselves and others.
Innovation: Innovation can be defined as the effective application of
processes and products new to the organization and designed to benefit it and
its stakeholders
Inter personal skills: The behavioral and tactical skills a person uses to
motivate, influence and interact with others effectively.

Negotiation: It is a dialogue between two or more people or parties intended

to reach a beneficial outcome over one or more issues where a conflict exists
with respect to at least one of these issues.

Problem solving: The competency to understand problems well, alternative

options as well as assumptions, awareness of risks and decision which can be
executed within the context

Risk management: Risk management is the identification, evaluation, and

prioritization of risks followed by coordinated and economical application of

84
resources to minimize, monitor, and control the probability or impact of Entrepreneurial
Competencies
unfortunate events or to maximize the realization of opportunities.

4.13 ANSWERS TO CHECK YOUR PROGRESS

A) 4. i. Competency ii. creativity iii. Interpersonal skills iv. business
leadership v. innovation

5. i. true ii. true iii. false iv. true v. true

B) 5. i. true ii. false iii. false iv.true v.false

4.14 TERMINAL QUESTIONS

1) What is the meaning of managerial competency?
2) What are the various types of competencies which can help
entrepreneurs to realise their goals?
3) How can entrepreneurs leverage various competencies at different stages
of entrepreneurship process?
4) Discuss scenarios to illustrate interdependence between various
competencies.
5) Discuss the importance of risk management competency in success of an
enterprise.
6) “Entrepreneurs may miss opportunities if they are not able to
communicate effectively”. Elaborate.
7) What do you understand by creativity? Discuss its advantages.
8) Discuss the different types of innovations.
9) What are interpersonal skills? How they help entrepreneurs to manage
their goals effectively.

Note: These questions will help you to understand the unit better. Try to
write answers for them. But do not submit your answers to the University for
assessment. These are for your practice only.

FURTHER READING
x Bergevoet, R. H., &Woerkum, C. V. (2006). Improving the
entrepreneurial competencies of Dutch dairy farmers through the use of
study groups. Journal of Agricultural education and extension, 12(1), 25-
39.

x Gasse, Y., d'Amboise, G., Simard, G., & Lasker, K. (1997).

Entrepreneurial–managerial competencies and practices of growing
SMEs—Summary of results from an empirical study (preliminary).
Centre for Entrepreneurship and SME and Entrepreneiuriat Laval,
Universite Laval, Quebec, Canada.

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 Entrepreneurship: x Man, T. W., Lau, T., & Chan, K. F. (2002). The competitiveness of small
A Perspective
and medium enterprises: A conceptualization with focus on
entrepreneurial competencies. Journal of business venturing, 17(2), 123-
142.

x Nwachukwu, C. C. (1988). Management theory and practice. Onitsha:

Africana FEPPublishers
x Stoof, A. (2005). Tools for the identification and description of
competencies.
x Thompson, V.A. (1965), “Bureaucracy and innovation”, Administrative
Science Quarterly, Vol. 10,pp. 1-20.
x Tobias Foster “Negotiation Skills Every Entrepreneur Must Have”
ENTREPRENEURS10 26-6-20 retrieved from
bhttps://addicted2success.com/entrepreneur-profile/10-negotiation-skills-
every-entrepreneur-must-have/ on 22-2-2021

x Wong, A., Tjosvold, D. and Liu, C. (2008), “Innovation by teams in

Shanghai, China: cooperative goals for group confidence and
persistence”, British Journal of Management, available at:
www3.interscience.wiley.com/cgi-
bin/fulltext/120123993/HTMLSTART
x https://en.wikipedia.org/wiki

x 7 Communication Skills Every Entrepreneur Must Master,

COMMUNICATION STRATEGIES retrieved from
https://www.entrepreneur.com/article/239446 on 29-1-2021

x 5 Ways to Unlock Your Entrepreneurial Creativity retrieved from

https:// www. entrepreneur. com / article/ 332213 on 29-1-2021

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