Entrepreneurship

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ENTREPRENEURSHIP BMS SEM VI
MODULE- I
Ø The Concept of Entrepreneurship
v Definition of Entrepreneurship
v Need for Entrepreneurship
v Factors Influencing Entrepreneurship
Ø Emergence of Entrepreneurial Class
v Introduction
v Communities that promoted entrepreneurship in India
v Causes of slow growth of Entrepreneurship in India
Family Business in India
v Stages of Evolution of Entrepreneurship
Ø Characteristics of Entrepreneurship
v Qualities of Entrepreneurship
v Entrepreneurial functions
v Classification of Entrepreneurs
Ø Difference between
v Entrepreneur & Manager
v Entrepreneur and Entrepreneurship
v Entrepreneur and Enterprises
v Entrepreneur and Administrator
v Entrepreneur & Intrapreneurship

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INTRODUCTION
The ultimate measure of a man
Is not where he stands
In moments of comfort and convenience
But where he stands
At times of challenge and controversy.
- Martin Luther King.
The words entrepreneur, intrapreneur and entrepreneurship have acquired
special significance in the context of economic growth in a rapidly changing
socio-economic and socio-cultural climates, particularly in industry, both in
developed and developing countries. Entrepreneurial development is a
complex phenomenon. Productive activity undertaken by him and constant
endeavor to sustain and improve it are the outward expression of this process
of development of his personality.
WHO IS AN ENTREPRENEUR?
An entrepreneur is a person with a dream, originality and daring, who acts as
the boss, who decides as to how the commercial organization shall run, who
co-ordinates all activities or other factors of production, who anticipates the
future trend of demand and prices of products.
An entrepreneur is one of the important segments of economic growth.
Basically he is a person responsible for setting up a business or an enterprise.
Infact, he is one who has the initiative, skill for innovation and who looks for
high achievements. He is a catalytic agent of change and works for the good
of people. He puts up new green-field projects that create wealth, open up
many employment opportunities and leads to the growth of other sectors.
The entrepreneur displays courage to take risk of putting his money into an
idea, courage to face the competition and courage to take a leap into unknown
future and create new enterprises/ business. This creative process is the life
blood of the strong enterprise that leads to the growth and contributes to the
national development.
The entrepreneur will always work towards the creation and enhancement of
entrepreneurial society.

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The best entrepreneur in any developing country is not the one who uses
much capital but an individual who knows how to organize the employment
and training of his employees.
A classic example is that of Mr. Dhirubhai Ambani because he had all the
dynamic qualities of a successful entrepreneur, as a result of which today, he
was the owner of the largest private company in India. All decisions which he
had taken to grow were instinct and no one had taught him to take decisions.
BASICS OF AN ENTREPRENEUR
We can define entrepreneur as one who innovates, raises money, assembles
inputs, choose managers and sets the organization going with his ability to
identify them.
As per Peter Drucker- “An entrepreneur is one who always searches for
change, responds to it as an opportunity. Entrepreneurs innovate. Innovation
is a specific instrument of entrepreneurship”.
As per Joseph A. Schumpeter- “Entrepreneur is one who innovates, raises
money, and assembles inputs, chooses managers and sets the commercial
organization going with his ability to identify them and opportunities which
others are not able to identify and is able to fulfill such economic
opportunities”.
Organization
Urge Innovation
Skill Risk
Vision Enterprise
Growth
Management

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As per Walker- “An entrepreneur is one who is endowed with more than
average capacities in the task of organizing and co-coordinating the various
factors of production. He should be a pioneer, a captain of industry.
The process undertaken by an entrepreneur to augment his business interests
gave birth to “ENTREPRENEURSHIP”.
THE CONCEPT OF ENTREPRENEURSHIP
Fig 1. Concept of Entrepreneurship
ENTREPRENEURSHIP DEFINED:
Entrepreneurship is an elusive concept.
“Entrepreneurship is based on purposeful and systematic innovation. It
included not only the independent businessman but also company
directors and managers who actually carry out innovative functions.”
Schumpeter
In the above definition, entrepreneurship refers to the functions performed by
an entrepreneur in establishing an enterprise. Just as management is regarded
as what managers do, entrepreneurship may be regarded as what
entrepreneurs do. In other words, entrepreneurship is the act of being an
entrepreneur. Entrepreneurship is a process involving various actions to be
undertaken to establish an enterprise. It is thus, process of giving birth to a
new enterprise. Entrepreneurship is composite skill, the resultant of a mix of
many qualities and traits- these include tangible factors as imagination,
readiness to take risks, ability to bring together and put to use other factors of
production, capital, labour, land, as also tangible factors such as the ability to
mobilize scientific and technological advances. A practical approach is
necessary to implement and mange a project by securing the required
Entrepreneur Entrepreneurship Enterprise
Person ObjectProcess of action

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licenses, approvals and finance from governmental and financial agencies.
The personal incentive is to make profits from the successful management of
the project. A sense of cost consciousness is even more necessary for the long-
term success of the enterprise. However, both are different sides of the same
coin. Entrepreneurship lies more in the ability to minimize the use of
resources and put them to maximum advantage. Without any awareness of
quality and desire for excellence, consumer acceptance cannot be achieved
and sustained. Above all, entrepreneurship today is the product of teamwork
and the ability to create, build and work as a team. The entrepreneur is the
maestro of the business orchestra, wielding his baton to which the band is
played.
The basic two elements involved in entrepreneurship are as follows;-
INNOVATION
Innovation, i.e. doing something new or something different is a necessary
condition to be called a person as an entrepreneur. The entrepreneurs are
constantly on the look out to do something different and unique to meet the
requirements of the customers. They may or may not be inventors of new
products or new methods f production but they possess the ability to foresee
the possibility of making use of the inventions for their enterprises. In order to
satisfy the changing preference of customers nowadays many enterprises
have adopted the technique of innovation. For instance, pidilite industries
innovated the new 5.rs pack of fevi quick which was accepted by the
customers as it was easy to use when it was needed. Other example would be
of the mobile enterprise which came up with the scheme for the customers of
refill pack of 999.rs which says “Zindagi bhar mobile raho” which was
accepted bye the customers. Since customers taste and preferences always
keep on changing, hence the entrepreneur needs to apply invention on a
continuous basis to meet the customers changing demand for products.
RISK- BEARING
Entrepreneurship is the propensity of mind to take calculated risks with
confidence to achieve a predetermined business or Industrial objective. The
capacity to take risk independently and individually with a view to making
profits and seizing the opportunity to make more earnings in the market-
Entrepreneurship
Innovation Risk- bearing

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oriented economy is the dominant characteristic of modern entrepreneurship.
In fact he needs to be a risk taker, not risk avoider. His risk bearing ability
enables him even if he fails in one succeed. The Japanese proverb says “Fall
seven times, stand up eight”. Though the term entrepreneur is often used
interchangeably with entrepreneurship, yet they are conceptually different.
The relationship between the two is just like the two sides of the same coin.
Thus, entrepreneurship is concerned with the performance and co-ordination
of the entrepreneurial functions. This also means that entrepreneur precedes
entrepreneurship.
NEED FOR ENTREPRENEURSHIP
Entrepreneurship promotes small business in the society. Government has
accepted the fact that small firms have a crucial role to play in the economic
development of the country. Small businesses are an essential part of our
future economic prosperity because of the following reasons-
v EMPLOYMENT GENERATION:
Entrepreneurial development is looked at as a vehicle for employment
generation through promotion of small business. India, being far more
developed and forward looking country than some of the third world
countries, can provide lead to entrepreneurial development activities.
However, India can benefit from the well- documented success experiences of
developed countries like USA, Japan and UK in the field of employment
generation and small business promotion.
Steady growth in consumer spending, expanding retail sales, a strong
housing market, continued expansion of the service sector, low rates of
inflation and of labour cost increases and failing interest rates contributed to a
healthy environment for small business.
In India, the government policies, political and economic environment greatly
encourage the establishment of new and small enterprises. Self- employment
and small scale industry schemes have been further liberalized during the last
decade. The employment in the small-sector increased from 9.00 million
people in 1984-85 to 13.9 million people in 1994-95. This indicates an increase
of 5.4% p.a in employment in this sector.
v SMALL BUSINESS DYNAMISM:
Great dynamism is one of the qualities of the small and medium enterprises.
This quality of dynamism originates in the inherent nature of the small
business. The structure of small and medium enterprises is less complex than

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that of large enterprises and therefore facilitates quicker and smoother
communication and decision- making. This allows for the greater flexibility
and mobility of small business management. Also, small enterprises, more
often make it possible for owners, who have a stronger entrepreneurial spirit
than employed mangers, to undertake risk and challenges.
v BALANCED ECONOMIC DEVELOPMENT:
Small business promotion needs relatively low investment and therefore can
be easily undertaken in rural and semi-urban areas. This in turn creates
additional employment in these areas and prevents migration of people from
rural to urban areas. Since majority of the people are living in the rural areas,
therefore, more of our development efforts should be directed towards this
sector. Small enterprises use local resources and are best suited to rural and
underdeveloped sector. This in turn will also lead to dispersal of industries,
reduction in concentration of economic power and balanced regional
development.
v INNOVATIONS IN ENTERPRISES:
Business enterprises need to be innovative for survival and better
performance. It is believed that smaller firms have a relatively higher
necessity and capability to innovate. The smaller firms do not face the
constraints imposed by large investment in existing technology. Thus they are
both free and compelled to innovate.
Entrepreneurship development is accelerating the pace of small firm’s growth
in India. An increased number of small firms are expected to result in more
innovations and make the Indian industry compete in the international
market.
FACTORS INFLUENCING ENTERPRENURESHIP
The emergence of entrepreneurs in a society depends upon closely interlinked
social, religious, cultural, psychological, and political and economic factors.
v FAMILY TRADITION:
Individuals who for some reason, initiate, establish maintain and expand new
enterprises generate entrepreneurship in society. It is observed that
entrepreneurs grow in the tradition of their families and society and accept
certain values and norms from these sources.

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v RELIGIOUS, SOCIAL AND CULTURAL FACTORS:
Religious, social and cultural factors also influence the individual taking up
an entrepreneurial career, in some countries there is religious and cultural
belief that high profit is unethical. This type of belief inhibits growth of
entrepreneurship.
v PSYCHOLOGICAL FACTORS:
The psychological factors like high need for achievement, determination of
unique accomplishment, self confidence, creativity, vision, leadership etc,
promote entrepreneurship among individuals. On the other hand
psychological factors like security, conformity and compliance, need for
affiliation etc restrict promotion of entrepreneurship.
v POLITICAL FACTORS:
The political and also the political stability of country influence the growth of
entrepreneurship. The political system, which promotes free market,
individual freedom and private enterprise, will promote entrepreneurship.
v ECONOMIC POLICIES:
The economic policies of the government and other financial institutions and
the opportunities available in a society as a result of such policies play a
crucial role in exerting direct influence on entrepreneurship.
In view of the haphazard development of economic zones, Government is
encouraging the entrepreneurs to establish their business in backward and
tribal areas. This is primarily to arrest the migration of people from the
villages to cities and to create employment opportunities locally. Government
is promoting such development by giving incentives like tax holidays (both
sales and income), subsidized power tariff, raw materials, transportation cost
etc.
EMERGENCE OF ENTREPRENEURIAL CLASS
From times immemorial, the Indian society has been characterized by a kind
of stratification of religious and regional sections. The Hindu society projected
a type of hierarchy in which the caste groups were separated from each other
on the basis of function. Every member of the society followed the family
occupation. This caused immobility between occupations.

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The Bania was a caste that carried on the trading and money lending
business. They specialized in trade and commerce and came from urban
areas. In fact, because of their good financial, standing, their position was an
enviable one in the urban centers. However they ranked third in the caste-
hierarchy. The Brahmins ranked first and kshatriyas second.
The caste system was so rigid, that people were afraid of ostracisation .But in
places where the caste system was relatively loose and the trading caste were
missing, people from other castes, undertook commercial activities and were
also regarded as the members of the business community.
The mid nineteenth century witnessed a fairly developed business
community in India. Saurasthra (now known as Gujarat) was the most
developed and urbanized region in the whole of India. It had a continuous
record of foreign trade, which had lasted for centuries. This tract had a
developed Bania (both Hindu and Jain) community and also large trading
communities, popularly known as the Bohras, Khojas and Kacchi, Memone.
They were converts from Hinduism. Trading was their occupation. They
mainly dealt in cotton. They also carried out overseas trade. They had
business dealing with Persian Gulf, Arabia and Africa to the west and with
Malaya (now known as Malaysia), Indonesia to the south and south east coast
India. The above trading communities are responsible for the supply of
entrepreneurs in India. Following important communities can take the credit
for the supply of entrepreneurs in India.
COMMUNITIES THAT PROMOTED
ENTREPRENEURSHIP IN INDIA
1. THE PARSIS:
Parsis migrated from Persia in the century. They performed artisans,
carpenters, weavers etc, in the 17th century. By 18th century, they became well-
known shipbuilders; they had set merchant houses in Bombay, Burma,
China and London. Their chief overseas trade comprised of yarn and opium.
They acted as brokers for the European traders at Bombay and Surat. They
were regarded as merchants and traders of repute. They emerged as the most
prominent trading and financing community or Bombay and Gujarat. Parsees
and Gujarat trading castes that controlled even foreign trade become the
wealthiest Indian communities by the 19th century.
2. TRADERS FROM SOUTH INDIA:
The trading castes of South India were the chettis. They were dividing into
various groups such as the Telugu komatia, the Tamil, Nattukottai Chettis,
and Beri- Chettis etc. The Komatia were the chief traders not only in the

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Telugu districts but also in Mysore, Coimbatore, Canara and other places. The
chief financiers are bankers of South India were the Nattukottai Chettis.
Trading in drugs grain and cloth was done by the Beri-Chettis. In the early
19th century they were known to be respectable peddlers who traveled in
caravans. The communities that traded had trade relations with South- East
Asian countries like Burma, Ceylon, and Malaya, Singapore etc. The chettiars
established connections with reputed Indian business firms and also made
good investments in and property. They became important suppliers of rural
credit. The Nattukottai Chettiars were a well- known business community in
Burma. Their working funds invested abroad were mainly employed in
Burma.
Trading was done by Syrian Christians called Nazrani Mappilas and
Mohammedan merchants known as Moplahs on the West coast in South
India. The Nazrani Mappilas financed internal trading activities of Travancore
and Cochin. Moplahs traded in Malabar and Canara. They shared the
functions of trade with the koknies who conducted banking business in the
country.
When the monopoly of the East India Company ended in 1857, a period of
boom began for the Christians who prospered as merchants. They played the
role of private bankers. The Syrian and Chaldean Christians were active in
promoting Joint Stock Banks at the end of the 19th century.
3. THE MARWARI COMMUNITY:
This important and fairly developed business community came from Marwari
in Rajasthan. The trading and money lending cases got tremendous
development in Gujarat and Rajputana on account of the famous route from
Gujarat ports to the historical center of the Great Mughal state.
Rajputana was torn by feudal strife during the first half of the 19th century. It
was not the place for large scale trading and money lending operations.
Though the local trade was good, it provided a limited scope for
development. Trade remained fairly constant and it was because of this that
investment crossed the borders of Rajputana. Trade spread in towns
throughout the north, east and west of India, especially to the commercial
centers of Bombay and Calcutta.
With the rise of British commerce, these traders gradually replaced the
Bengalis who served as British agents in Calcutta. The Brahmins and the
Kayasthas of Bengal who operated as the British agents started tuning their
attention to investments in land. They even got into 9 professions and
administrative services. But the Subarna Banika, a Bengal trading community
filled the void created by such an occurrence. But Bengal soon became the
center for political revolution. The Britishers both rulers and traders did not

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approve of this. Wherever possible, they tried to replace a Bengali by
someone who proved to be more dependable. The Rajasthani traders tried to
be more co-operative than the Bengali Commercial castes. It is because of this
that the Bengali names in business are relatively un important and where they
occur; they mostly represent the professional agent class and not the
indigenous trading class.
Besides the above trading, money- lending communities that could be
regarded as the source of entrepreneurs in India. There were the Bhatia’s and
Lohanas. These communities carried out local trade and were spread all over
the country. The “Khatris’ a community that trade not only in Punjab but also
in Afghanistan, Central Asia etc. has also been a source of entrepreneurs. In
Maharashtra the contribution of Yajurvedi Brahmins and the Chitapavan
Brahmans who took active part in trading, money lending ad indigenous
banking cannot be forgotten.
The above was on account of the origin of entrepreneurs in India.
CAUSES OF SLOW GROWTH OF ENTREPRENEURSHIP
IN INDIA
Entrepreneurship developed only in the beginning of the 19th century and
though the base for industrialization had been laid a century ago. The
following be the main reasons, which could be responsible for lack of
initiative and entrepreneurial spirit among the Indians.
1. Caste System: - This decided occupation for members from each caste.
The altitudes were restrictive and therefore there were no changes of
accumulating wealth and promoting production.
2. Agriculture: - Agriculture was the main occupation. Farmers and
cultivators were always in the clutches of the money lenders. The
zamindars, nawabs and rajahs exploited the laborers. They spent
money on enjoyment and luxury and never risked money in industry.
Banking and commercial system was also absent so even if there were
savings, they could not be utilized for productive use.
3. Educational System: - Talented young men were prepared to take
white collared jobs or join government or professional services. Many
were attracted towards politics. The result was that very few young
men got attracted towards becoming efficient, industrialists,
technicians, managers etc.

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4. Colonial Rules: - The British rulers adopted discriminatory policy Rich
Indian businessman had special connections with foreign rulers and
both satisfied their self interests. Even the few insurance and banking
services catered to the needs of some rich Indian businessman,
Britishers in India did also not encourage Industrialization.
5. Managing Agents: - There were just a handful of people who were
known to be having managerial skills. On common basis, these agents
would lend their skills to some top industries. Industrialists could not
manage their own units. They were always at the mercy of the
managing agents who filled their pockets with big chunks of the
companies’ profits and took full advantage of Indian industrialists till
the managing agency system was abolished in 1970.
6. Joint Family System: - Younger members of the family always
depended on the Head who never gave any kind of independence or
encouraged units other than family business ones. A number of young
men were discouraged from diversifying from family business and
doing something new and different.
7. Religious attitude: - Indians were very religious mi9nded. They gave
more time to religion than to earning material wealth. Religion got
priority over business. Some religions even condemned excess earnings
and indulgence I in comforts. Industrial activity was, therefore, given
secondary consideration by the religious Indians.
8. Mindset: - The mindset of the average Indian was never
entrepreneurial. Our religious literature and epics told us to have
patience and to keep on working without expecting the fruits of labor.
This also killed the drive and desire to get into entrepreneurial
activities.
9. Recognition by the society: - In earlier days, the heroes India were the
social reformers and the politicians. Now it is the era of sportsmen,
models and film stars. It is sad that successful or the struggling
entrepreneurs have never been recognized as heroes. Entrepreneurial
activity did not get due importance in the India society.
10. Family Background: - Empirical studies have shown that a good
number of entrepreneurs come from families with industrial
backgrounds. Unfortunately, only a few entrepreneurial communities
in India made entrepreneurial contribution. These communities could
also not make headway in the entrepreneurial field on account of the
colonial rule, lack of infrastructure and other facilities.
Entrepreneurship development could only take place after
independence in India.

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FAMILY BUSINESS IN INDIA
In India, family business accounts for about 70prcent of the total sales and net
profits of the biggest 250 private sector companies. Big families’ have carved
up the big industries. In vehicles, for example, the Tatas make Lorries, the
Birlas make ambassador cars, the Bajaj family makes two wheelers and the
Mahindras make jeeps. They diversified into any business where they could
get a permit to operate. Borrowing, mainly from public sector institutions,
was easy, and company law makes it simple to control subsidiaries through
very small shareholdings. The Tata Empire, for example, embraces some 70
companies, making everything from tea to watches in which the parent
company’s average stake is rarely above 15 percent.
Entrepreneurship is not just a way to- increase the level of innovation and
productivity of organizations, although it will do it. More importantly, it is a
way of initiating vast business so that work becomes a joyful expression of
one’s contribution to society. The Indian entrepreneur, intrapreneur and/or
manger of the 90’s have to be molded in psycho- philosophy rooted in the
Indian context and values.
“The crisis in business is spiritual” says Prof. Sitangshu Kumar Chakraborty,
“All management ideas till now have been external directed paradigms,
developing behavior, skills, not character, and values. But meaning and
richness must flow from mind to work, not the other way. We need a
fundamental shift from the current reductionism, fragmentize and
materialistic paradigm to one which recognizes consciousness and spirit as
the right approach”.
The concept of entrepreneur and entrepreneurship incorporates basic
qualities of leadership, innovation, enterprise, hard work, vision and
maximization of profits. All his socio-economic, organizational and society
and the community. He is committed to progress. He is a catalytic agent of
development and change. Personal satisfaction and monetary rewards are
blended with social betterment and welfare of mankind.
In August 1992, with their combined savings of Rs. 25,000, Alka and Anupam
Joshi launched premier clothing as an export- oriented unit. The premier
clothing has been licensed to market, for the first time, The Disney babies’
range of products in India.
Having several information mail- order companies, not to mention store
chains, in the bag isn’t enough for Joshi. Now, he’s planning a move into the
booming readymade shirts business. As always, Joshi plans to hedge his bets:
he’s talking to some foreign companies about starting off by producing shirts

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for them. That’s clearly part of his philosophy of manufacturing for a ready-
made market. And, as in the case of the Disney babies’ line, to a readymade
mindset, either ways, it’s a premier strategy.
Chandan Sumaya look plunge in 1985 armed with only” a passion for cars”
borrowing Rs 30,000 from his mother to float Kent. This name he chose
because it rhymed with rent and had an international ring- car. Apparently,
he fell in love with the business while helping his uncle run one. Working out
of his home in Bombay’s Nepean Sea Road, Sumaya installed a desk and a
telephone in the front half of his garage; the car took up the rest. Only by the
end of the second year could he afford to invest in two more Ambassadors
cars.
He has invested in a fleet of 136 cars and concentrates on the corporate sector,
where they are market leaders. Kent Cars is now poised to drive into the
national market place through the franchising route. Whether or not he does
as well in these cities as he is in Mumbai, Chandan Sumaya has driven a long
way from the home garage he started from. And that’s the spirit of Kent.
STAGES OF EVOLUTION OF ENTREPRENEURSHIP
The evolutionary process of entrepreneurship activities may be divided into
the following broad stages:
1. Hunting Stage: - The primary stage of the evolution of the economic life
of man was hunting stage. Wants were limited and very few in numbers.
The family members themselves satisfied problems of food, clothing and
shelter. Producers were the consumers also. Robinson Crusoe, living in
the deserted island, satisfying his own requirements had no knowledge of
business. People in some parts of Africa and India still lead this type of
life. In this stage problems of production and distribution were not
complexed since wants were simple and limited.
2. Pastoral Stage: - With the progress of mankind gradually mental
understanding developed and people started realizing that instead of
killing animals, they should breed and rear them. Thus cattle breeding
encouraged the use of milk, and they had to think in terms of grazing
areas for their cattle. The surplus milk, meat and other related products
were spared of exchange. This stage can be termed as the first stage of
economic development and the beginning of commerce.
3. Agricultural Stage: - In search of grazing areas, they further realized that
they should grow plants as food for animals. They started testing some
grain products and slowly developed a taste in plants and the land was
used for cultivation. Groups of persons started living together on their

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agricultural fields, which were subsequently converted into small villages
with their farms. Free exchange of goods was started and the activities
were also divided to the extent of division of labor at the village level to
complement the needs of each other. Initially each village was self-
sufficient, but later they began small trading activities on barter basis.
4. Handicraft Stage: - In the agricultural stage, people started learning the
use of cloth made of cotton products, and they developed the segments of
the workers for different activities. Cottage scale setup was developed at
the village level to nearby villages, and in exchange they brought
requirements either to consume themselves or for their village friends.
Since the demand for gold coins, silver coins, skin and hide etc increased
the activities of cobblers, gold smiths, and blacksmiths, laborers also
rapidly increased, and caste system was also formed on the basis of
activities they did. Everybody selected their job according to their own
choice and taste.
5. Present Industrial Stage: - The use of mechanical devices and the
commonly acceptable form of monetary system accelerated the growth of
entrepreneurship activities. The progress of science and the increase in the
means of transportation and communication enabled to travel widely and
the markets were developed in the country and abroad.
QUALITIES OF ENTREPRENEURSHIP
The qualities that contribute to the success of an entrepreneur are as follows: -
1. Risk Taking: - Entrepreneurs are moderate risk takers. They enjoy he
excitement of a challenge, but they do not gamble. Entrepreneurs avoid
low- risk situations because there is a lack of challenge. They avoid
high risk situations because they want to succeed. They like achievable
challenges. They do not tend to like situations where the outcome of a
quest depends upon a chance and not on their efforts. They like to
influence the outcome of their quest by putting in more efforts and
then experiencing a sense of accomplishment. A risk situation occurs
when an entrepreneur is required to make a choice between two or
more alternatives whose potential outcomes are not known and must
be evaluated in advance, with limited information. A risk situation
involves potential gain and potential loss. As the size of the business
expands the problems and opportunities become more numerous and
complex. Business growth and development require an entrepreneur
not to be afraid of taking decisions and certain risks. Most people are
afraid to take risks because they want to be safe and avoid failure. An
entrepreneur always takes a calculated risk and is not afraid of failure.

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2. Self- Confidence: - A man with self – confidence has clear thoughts
and well- defined goals to achieve in his life. An entrepreneur gets into
business or industry with a high level of self- confidence. He is able to
evaluate his competencies and capabilities in a realistic manner. He can
set realistic and challenging goals. He is confident of achieving these
goals. He possesses a sense of effectiveness, which ultimately
contributes to success of his venture. He puts forward his case
confidently and gets needed help from concerned agencies/
authorities.
3. Optimist: - An entrepreneur is able to visualize the hidden
opportunities in the environment and translate them into business
realities. An entrepreneur exhibits a positive and optimistic attitude
towards such opportunities. The entrepreneur approaches his task
with the hope of success and not with a fear of failure. In the process of
accomplishing his task he may also fail but the failure experience does
not change his thinking. He is always an optimist in his outlook. The
positive outlook develops a drive in the entrepreneur to attempt new
things and innovate.
4. Need for achievement: - The need to excel known as achievement is a
critical factor in the personality of an entrepreneur. People with high
need for achievement have desire for success in competition with
others or with a self- imposed standard of excellence. They try to
accomplish something new and try to innovate themselves in long-
term goals. They try to accomplish challenging tasks. They know their
own strengths and weaknesses, the facilitating factors and constraints
in the environment and the resources needed to accomplish their tasks.
If the objectives are accomplished they feel elated.
5. Need for independence: - The need for independence is the prime
characteristic that has driven the entrepreneurs to start their own
business. These entrepreneurs do not like to be controlled by others.
They do not wait for direction from others and choose their own course
of action. They set their own challenging goals and put efforts to
achieve this goal. The independence provides opportunity for trying
out new ideas and helps them achieve their goals.
6. Creativity: - Entrepreneurs are highly creative people. They always try
to develop new products, processes or markets. They are innovative,
flexible and are willing to adopt changes. They are not satisfied with
conventional and routine way of doing things. They involve
themselves in finding new ways of doing the things for the better.

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7. Imaginative: - Successful entrepreneurs possess a high degree of
imagination and foresightedness. Entrepreneurs have a great vision.
Knowing the present and the past the entrepreneur is able to predict
the future events the business more accurately than others. It is because
of their visionary nature and power of imagination that helps them in
anticipating problems and evolving actions strategies for such
problems.
8. Administrative ability: - A successful entrepreneur is always a good
administrator. He knows the art of getting things done by other people
without hurting their feelings of self- respect. He has strong motivation
towards the achievement of a task and puts in necessary efforts in
getting things done by others.
9. Communication ability: - Communication ability is the ability to
communicate effectively. Good communications also means that both
the sender and the receiver understand each other and are being
understood. An entrepreneur who can effectively communicate with
customers, employees, suppliers and bankers will always succeed in
their business.
10. Clear objectives: - An entrepreneur has clear objectives as to the exact
nature of the business, the nature of the goods to be produced and the
subsidiary activities to be undertaken. A successful entrepreneur has
the objective to establish the product to make profit or to render social
service.
11. Business Secrecy: - An entrepreneur who is successful always guards
his business secrets. Leakage of business secrets to trade competitors is
a serious matter; therefore an entrepreneur should carefully guard it.
An entrepreneur must be able to make a proper selection of his
assistant since most of the time it is the assistant who leaks the trade
secret.
12. Emotional stability: - The most important personality factors
contributing to the success of an entrepreneur are emotional stability,
personal relations, consideration and tactfulness. An entrepreneur
must maintain good relations with the customers if he wishes to enjoy
their continued patronage. He must also maintain good relation with
his employees, whom he shall motivate to perform their jobs at a high
level of efficiency. An entrepreneur who maintains good human
relations with customers, employees, suppliers and the community has
a better chance to succeed in his/ her business.
13. Open-mindedness: - Open- mindedness means a free and frank
approach in accepting one’s own errors and change for the better. An

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entrepreneur must be willing to learn from his past experience,
mistakes and moulds himself for better.
14. Technical knowledge: - Technical knowledge implies knowledge
about the product, process or technology used in manufacturing. An
entrepreneur who has reasonable level of technical knowledge will
always be successful. Technical knowledge is easy to acquire if the
entrepreneur tries hard to acquire it.
15. Patience: - Patience means ability to wait. Patience also means doing
the work and waiting for the result. A certain amount of patience is
necessary in any type of vocation. An entrepreneur should not wait for
actions but can certainly wait for result for his efforts.
16. Hard working and energetic: - Ability and willingness to work hard is
an important quality of an entrepreneur. A person having physical and
mental stamina to cope with the hard work and human relation is fit to
become a successful entrepreneur. By carrying out well- planned and
systematic work, success is always the end result.
17. Good organizer: - Entrepreneurs are good organizers of resources like
men, machines, materials and money needed to start and run the
business smoothly. They can convince the employees, investors,
customers and co- ordinate the activities of individuals and groups in
the accomplishment of business objectives. An entrepreneur works like
a coordinating force among the resources, mould and manages them
effectively.
ENTREPRENEURIAL FUNCTIONS
An entrepreneur is said to perform the following functions:
1. Assumption of risk: - Risk bearing or uncertainty bearing is the most
important function of an entrepreneur which he tries to reduce by his
initiative, skill and good judgment.
2. Business decisions: - The entrepreneur has to decide
a. To enter the industry this offers him the best prospects
b. To produce goods that he thinks will pay him the most
c. To employ those methods of production which seem to him the
most profitable.
d. To effect suitable changes in the size of the business, its location
that are needed for the development of his business.

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3. Managerial Functions: - The entrepreneur performs the managerial
functions such as
a. Formulating production plans
b. Overseeing finances
c. Dealing with the purchases of raw materials
d. Providing production facilities
e. Organizing sales
In large establishments these management functions are delegated to
professional managers an entrepreneur performs many useful functions such
as
v Undertakes a venture
v Assumes risk and
v Earns profits
v Identifies opportunities to start business either as a manufacturer or a
distributor.
The entrepreneurship exists in every field of economic endeavor.
Entrepreneurship has also been developed in the trading sector. A
manufacturing entrepreneur demonstrates his entrepreneurial talents by
bringing out new products while a trading entrepreneur performs his
entrepreneurial functions in creating demand for the business he deals.
Fig.2 Entrepreneurial function
Raising
Finance
Deciding the
Project.
Planning
Production
Risk -
Taking
Innovation
Managing
Enterprise
Earning Profits
Entrepreneur

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CLASSIFICATION OF ENTREPRENEURS
The entrepreneurs have been broadly classified according to
v Types of business
v Use of professional skill
v Motivation
v Growth
v Stages of development
ENTREPRENEURS ACCORDING TO TYPES OF BUSINESS
v Business entrepreneurs are those individuals for a new product or
service and then translate the same into business reality. Tap both
production and marketing resources to develop a new business
opportunity. Setup big establishment or small unit such as printing
press, textile processing house, advertising agency, readymade
garments or confectionery. In majority of cases, entrepreneurs are
found in small trading and manufacturing business. Entrepreneurship
flourishes when the size of business is small.
v Industrial entrepreneurs are essentially a manufacturer who identifies
potential needs of customers and products or service to meet the
marketing needs. He should have the ability to convert economic
resources and technology into a profitable venture.
v Corporate entrepreneur is an individual who demonstrates his
innovative skill in organizing and managing corporate undertaking.
He plans, develop and manage a corporate body.
v Agricultural entrepreneur are the ones who undertake agricultural
activities such as raising and marketing of crops, fertilizers and other
inputs of agriculture. They are motivated to improve agriculture
through mechanization, irrigation, and application of technologies for
dry land agricultural products.
ENTREPRENEURS IN TECHNOLOGY
v Technical entrepreneur is the one who is essentially a craftsman. He
develops improved quality of goods because of his craftsmanship. He
concentrates more on production than on marketing. He demonstrates
his innovative capabilities in matter of production of goods and
rendering of services.

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v Non- technical entrepreneur are those who are not concerned with the
technical aspects of the product in which they deal. They are concerned
only with developing alternative marketing and distribution strategies
to promote their business.
v Professional entrepreneur is interested in establishing a business but
does not have interest in managing or operating it once it is
established. He sells out the running business and starts another
venture with the sales proceeds.
ENTREPRENEUR AND MOTIVATION
An entrepreneur is motivated to achieve or prove his excellence in job
performance. He influences others by demonstrating his business acumen.
v Pure entrepreneur is an individual who is motivated by psychological
and economic rewards. He undertakes entrepreneurial activity for his
personal satisfaction in work, ego and status.
v Induced entrepreneur is one who is induced to take up an
entrepreneurial task due to policy measures of the government that
provides assistance, incentives, and concessions and other facilities to
start a venture. Enter business due to financial, technical and other
facilities provided to them by the state agencies to promote
entrepreneurship.
v Motivated entrepreneur: they come into being because of the challenge
involved in developing and marketing a new product for the
satisfaction of consumers. If the product succeeds, the entrepreneur is
further motivated for launching of newer products.
v Growth and entrepreneur are those who take up a high growth
industry which has substantial growth prospects. Super growth
entrepreneurs are those who show enormous growth or performance
in their venture.
ENTREPRENEUR AND STAGES OF DEVELOPMENT
v First generation entrepreneur is the one who starts an industrial unit
by his innovative skill. He is the one who combines different
technologies to produce a marketable product or services.
v Modern entrepreneur is one who undertakes those ventures which go
well with the changing demand in the market. He undertakes those
ventures that suit the current market needs.

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v Classic entrepreneur is one who is concerned with maximizing the
economic returns at consistent level. He is concerned more about the
survival of the firm with or without an element of growth. Apart from
the above, there are entrepreneurs who can be classified into
innovative and imitative categories.
v Innovating entrepreneurs are generally aggressive in collecting
information, analyzing and experimenting attractive possibilities into
practice. They are quick to convert old established products or services
by changing their utility, their value, their economic characteristics into
something new, attractive and utilitarian. They can see the opportunity
for introducing a new technique of production process or a new
commodity or a new service or even the reorganization of an existing
enterprise. They are very commonly found in developed countries
while there is dearth of such entrepreneurs in underdeveloped
countries. They are always creative and bringing in innovation in their
work.
v Imitative entrepreneurs are ready to adopt and are more flexible in
imitating techniques developed by others. They exploit opportunities
as they come and are mostly on a small scale. He is more of an
organizer of factors of production than a creator. In the context of a
poor country, he is definitely a change agent and hence he is important
in underdeveloped countries.
DIFFERENCE BETWEEN
A. ENTREPRENEUR & MANAGER
No. ENTERPRENEUR MANAGER
1. The main motive of an
entrepreneur is to start a venture
by setting up an enterprise. He
understands the venture for his
personal gratification.
The main motive of a manager is to
render his services in an enterprise
already set up by someone else.
2. An entrepreneur is the owner of
the enterprise.
A manger is the servant in the
enterprise owned by the entrepreneur.

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3. An entrepreneur being the owner
of the enterprise assumes all risk
and uncertainty involved in
running the enterprise.
A manger is a servant does not bear
any risk involved in the enterprise.
4. The reward an entrepreneur gets
for baring risks involved in the
enterprise is profit which is
highly uncertain.
A manger gets salary for the services
rendered by him in the enterprise.
5. Entrepreneur himself thinks over
what and how to produce goods
to meet the changing demands of
the customers. Hence, he acts as
an innovator also called as a
change agent.
A manager simply executes the plan
prepared by the entrepreneur. Thus, a
manger simply translates the
entrepreneur’s ideas into practice.
6. An entrepreneur needs to
possess qualities and
qualification like high
achievement motive, originality
in thinking, foresight, risk-
bearing, ability and soon.
On the contrary a manger needs to
possess distinct qualifications in terms
of sound knowledge in management,
theory and practice.
B. ENTREPRENEUR AND ENTREPRENEURSHIP
NO ENTREPRENEUR ENTREPRENEURSHIP
1. Refers to a person Refers to a process
2. Is a visualiser Is a vision
3. Is a creator Is a creation
4. Is an organizer Is an organization
5. Is an innovator Is an innovation
6. Is a technician Is a technology
7. Is an initiator Is an initiative
8. Is a decision- maker Involves decision making
9. Is a planner Involves planning
10. Is a leader Involves leadership

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C. ENTREPRENEUR AND ENTERPRISES
Entrepreneur is the fourth factor of enterprise
The entrepreneur and enterprise are Inter- linked. Enterprise is an offshoot of
an entrepreneur. Its success is dependent on the entrepreneur.
D. ENTREPRENEUR AND ADMINISTRATOR
No. ENTREPRENEUR ADMINSTRATOR
1. Entrepreneurship are associated
with connotations of enterprise,
opportunism, individuality
Administrations are associated
with notions of organization,
planning, professionalism,
rationality and predictive
management processes.
2. The entrepreneur of a small
business organization needs
primarily to perform activities
relevant to adaptive
management process, activities
that enable him to exploit the
advantages he has in being a
small enterprise.
The administrator in a large firm is
primarily concerned with those
activities relevant top predictive
management processes that are
with activities related to prediction
and control.
3. An entrepreneur puts emphasis
on the entrepreneurial activities
of management process, so his
hold attitudes related to
entrepreneurial orientation.
An administrator of a large
organization would hold attitudes
related to the administrative
orientation of the management
process.
ENTREPRENEUR
LABOUR ENTERPRISE CAPITAL
LAND

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- 25 -
E. ENTREPRENEUR & INTRAPRENEURSHIP
No. ENTREPRENEUR INTRAPRENEURSHIP
1. An entrepreneur is independent
in his operations
An intrapreneur is dependent on
the entrepreneur i.e. the owner
2. An entrepreneur himself raises
funds required for the
enterprise.
The intrapreneur does not raise
funds.
3. Entrepreneur bears the risk
involved in the business.
An intrapreneur does not fully
bear the risk involved in the
enterprise.
4. An entrepreneur operates from
outside.
An intrapreneur operates from
within the organization itself.
END OF MODULE I

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MODULE – II
THEORIES OF ENTREPRENEURSHIP
Ø Knight on the Role of Uncertainty
Ø Schumpeter on Innovation
Ø Mc Clelland’s Achievement and Motivation theory
Ø Peter Druckers views on Entrepreneurship

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KNIGHT ON THE ROLE OF UNCERTAINTY
Knight identifies the entrepreneur as a recipient of pure profit. Profit is the
residual income available after all contractual payments have been deducted
from the revenues of the enterprise. It is the reward to the entrepreneur for
bearing the costs of uncertainty.
Knight identifies uncertainty with a situation where the probabilities of
alternative outcomes cannot be determined either by a priori reasoning or by
statistical interference. A priori reasoning is simply irrelevant to economic
situations. Statistical interference is impossible because the situation involves
a unique event. It does not belong to a larger population of identical events. In
particular there is no precedent for it, so that no assessment of probability can
be made on the basis of relative frequency. This is the foundation for Knight’s
distinction between uncertainty and risk.
Uncertainty is a ubiquitous aspect of business decisions because production
takes time. Decisions on inputs must be made now in order to create output
for the future. Households as factor owners demand spot payment for their
services. At the same time they are unwilling to commit themselves on future
demand for the product because they anticipate that unforeseeable changes
will occur.
But the consumer does not even contract for his goods in advance, generally
speaking. A part of the reason might be the consumer’s uncertainty as to his
ability to pay the end of the period, but this does not seem to be important in
fact. The main reason is that he does not know what he will want, and how
much, and how badly. Consequently, he leaves it to producers to create goods
and hold them ready for his decision when the time comes. The clue to the
apparent paradox is of course in the law of large numbers. The consolidation
of risks (or uncertainties). The consumer is to himself only one to the producer
he is a mere multitude in which individuality is lost. It turns out that an
outsider can foresee the wants of am multitude with more ease and accuracy
than an individual can attain with respect to his own. This phenomenon gives
us the most fundamental feature of the economic system, production for a
market.
Knight is mainly concerned to show how markets, together with
institutions such as the large corporation, contribute to specializing
uncertainty-bearing in the hands of those best equipped to make decisions
under uncertainty. The main quality required for making production
decisions is foresight they have, and competition ensures that individuals

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with the greatest degree of foresight (relative to other abilities) specialize in
making production decisions.
However, it does not follow that individuals with foresight will become self-
employed and make decisions on their own behalf. They may instead become
managers of a large firm. Knight argues that business uncertainty can be
reduced through ‘consolidation’. Consolidation is to uncertainty what
insurance is to risk: It is a method of reducing total uncertainty by pooling
individual instances and allowing each individual to hold a share of the pool.
It is widely recognized today that an individual’s exposure to uncertainty can
be reduced through portfolio diversification in the equity market. Knight
recognizes this possibility which he calls ‘diffusion’ but he does not accord it
much prominence as a vehicle for the reduction of uncertainty. He believes
that uncertainty is reduced mainly through the pooling of uncertainties by the
large firm.
The gains in uncertainty- reduction from large scale organization are, in
Knight’s view, quite considerable. So much so, that the most important
uncertainties relate not to producing for a market itself, but to the selection
of suitable mangers to take production decisions. Once the firm has
recruited a person with foresight much of the uncertainty in producing of a
market is eliminated. The crucial decisions made within the large firm are
decisions about personal recruitment. The pure profit generated by a firm is
compensation to people for bearing uncertainty that they have delegated
decisions to the wrong sort of person.
Knight does not seem to anticipate that there will be much difficulty in
ensuring that managers with foresight exercise it properly on the stockholders
behalf. The moral hazard problem is negligible. Presumably, because close
supervision of the manager is possible. Much greater moral hazard arises
with the directors of the firm who recruit the managers and supervise them
on the stock holder’s behalf. The unavoidable moral hazard involved in
delegating direction means that directors cannot possibly be fully insured
against the consequences of their decisions. They must operate under profit
related incentives and so effectively they must become stock holders in the
firm. Thus, directors who make decisions under uncertainty also bear the
consequences of those decisions and are ipso facto recipients of pure profit.
Some people have good judgment of other people’s abilities and others do
not. But no one can be certain of his or her own judgment of other people’s
abilities. As a result, confidence in his own judgment is perhaps the most
important characteristic of the entrepreneur. This has to be coupled with a
low version to risk, as reflected in a disposition to back up his judgment with
his own capital. The elasticity of supply of self- confident people is, in
Knight’s view, the single- most important determinant of the level of profit
and of the number of entrepreneurs.

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The income of nay particular entrepreneur will, in general, tend to be larger
(i) as he himself as ability and good luck but (ii) perhaps more important , as
there is in the society a scarcity itself- confidence combined with the power to
make effective guarantees to employees. The abundance or scarcity of mere
ability to mange business successfully exerts relatively little influence on
profit. The main thing is the rashness or timidity of entrepreneurs (actual and
potential) as a class in bidding up the prices of productive services.
Entrepreneur’s income, being residual, is determined by the demand for these
other services, where demand is a matter of the self- confidence of
entrepreneurs as a class, rather than upon a demand for entrepreneur services
in a direct sense. We must see at once that it is perfectly possible for
entrepreneurs as a class to sustain a net loss, which would merely have to be
made up out of their earnings in some other capacity. This would be the
natural result in a population combining low ability with high courage. On
the other hand, if men generally judge their own abilities well, the general
rate of profit will probably be low, whether ability itself is low or high, but
much more variable and fluctuating for a low level of real capacity. The
condition for large profit is a narrowly limited supply of high- grade ability
with a low level of initiative as well as ability.
Knight’s analysis exhibits very clearly the difficulties in theorizing about
entrepreneurship, and in particular the problems of structuring the analysis in
a coherent way. As a result, Knight’s views have been widely misinterpreted
in the past. Many parts of the present work are simply a reformulation of
ideas first presented by Knight. The concepts of probability and judgment are
slightly different but the basic view of the way that market system allocates
judgmental decision- making to entrepreneurs is the same both in cases.
SCHUMPETER ON INNOVATION
Schumpeter, perhaps more than any other writer, is very explicit about the
economic function of the entrepreneur. The entrepreneur is the prime mover
in economic development and his function is to innovate or to carry out new
combinations. Five types of innovation are distinguished the introduction of
new good (or an improvement in the quality of an existing good); the
introduction of anew method of production; the opening of an new market, in
particular, a export a market in a new territory the ‘conquest of a new source
of supply of raw materials or half- manufactured goods’ and the creation of
a new type of industrial organization, in particular, the formation of a trust or
some other type of monopoly.

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Anyone who performs this function is an entrepreneur whether he is at
independent businessman or a “dependent” employee of a company such as a
manager or a director. Not all businessmen are entrepreneurs; the typical
entrepreneur is the founder of a new firm rather than the manager of an
established one.
Schumpeter is adamant that the entrepreneur is not a risk- bearer. Risk
bearing is the function of the capitalist who lends his funds to the
entrepreneur. The entrepreneur bears risk only in so far as he acts as his own
capitalist. Unlike Knight, Schumpeter does not perceive much problem of
moral hazard for a capitalist lending to an entrepreneur.
Entrepreneurs spend a lot of heir time doing non-entrepreneurial things:
The entrepreneur of earlier times was not only as a rule a capitalist too; also
he was also often- as he is still today in the case of small concerns- his own
technical expert, in so far as a professional specialist was not called in for
special cases. Likewise he was (and is) often his own buying and selling
agent, the head of his office, his own personal manager, and sometimes, even
though as a rule he, of course employed solicitors, his own legal advisor in
current affairs. And it was performing some or all of these functions that
regularly filled his days.
The carrying out of new combinations can no more be a vocation than the
making and execution of strategically decisions, although it is this function
and not his routine work that characterizes the military leader. Therefore, the
entrepreneur’s essential function must always appear mixed with other kinds
of activity which as a rule must be much more conspicuous than the essential
one. Hence, the Marshallian definition of the entrepreneur, which simply
treats the entrepreneurial function as ‘management’ in the widest meaning,
will naturally appeal to most of us. We do not accept it, simply because it
does not bring out what we consider to be the salient point and the only one
which specifically distinguishes entrepreneurial from other activities.
The climate most favorable to innovation is when the economy is approaching
in equilibrium for then the future seems relatively easy to foresee. The first
innovations made by the most talented entrepreneurs prove successful and
this encourages less talented entrepreneurs to follow suit in a swarm. Because
they are adapting ideas which are pioneers have already tried out the risks
that the capitalists perceive in backing the less talented entrepreneurs are
relatively low.
A wave of innovation follows which then, for a variety of reasons quickly
recedes.
Schumpeter believed that talented entrepreneurs were very scarce breed.
Their scarcity lays not so much in their alertness or their professionalism as in

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their psychology. While entrepreneurs are rational economic men, their
objective is not to the pursuit of consumption in the usual sense of that word.
The motivating factors are three fold:
First of all there is the dream and the will to found a private kingdom usually
though not necessarily also a dynasty. The modern world really does not
know any such positions but what may be maintained by industrial or
commercial success is still the nearest approach to medieval lordship possible
to modern man. Its fascination is especially strong for people we have no
other chance of achieving social distinction.
Then there is the will to conquer- the impulse to fight, to prove one superior
to others, to succeed for the sake, not of the fruits of success itself. From this
aspect economic action becomes akin to sport- there are financial races, or
other boxing- matches.
Finally, there is the joy of creating of getting things done or simply of
exercising one’s energy and ingenuity. Our type seeks out difficulties,
changes in order, delight in ventures. This group of motives is the distinctly
anti-hedonist among the three.
The precursor to innovation is invention, which is a field of imaginative
activity outside the province of the entrepreneur. The process of invention
forms no part of Schumpeter’s theory, but one of the attractive features of the
theory is how easily the dynamics of invention can be grafted on it.
Schumpeter recognized that invention could be an endogenous process
stimulated by the desire to alleviate pressing scarcities, but his attitude is
basically to regard it as autonomous.
The possibility of grafting on a theory of invention may be illustrated as
follows. It is often suggested that modern economic growth related to the
innovation of the mass market. Multipurpose goods, such was the typical
consumer durable. The innovation of these goods often depends critically
upon the invention of components from which they can be made up.
Innovation of a new multi-purpose good is possible when the design of each
of the constituent components has involved sufficiently providing the
requisite standards of compactness, reliability and performance.
If an autonomous random process of invention generates improvements in
component design then there will come a critical point at which mass
production of themulti- purpose good becomes viable. This is the point at
which each of the components has jus evolved to the requisite standard. This
may trigger of a major innovation, such as the railway or the motorcar, whose
repercussions are sufficiently widespread to stimulate a wave of subsidiary
innovations. This wave of innovations uses up the outstanding stock of

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inventions, which were pending adoption and lead to a subsequent fall in
invention until the stock of inventions builds up again to a threshold level.
Schumpeter himself was very cautious about relying upon major innovation
and their consequent economies and spins off as an explanation for the
clustering of innovation observed during the business cycle. Basically, he
regarded wave of innovation and their creative destruction as a basic
phenomenon of capitalist economic development so much that he dated the
origin of capitalist from the first appearance of these waves. He recognized
that the waves could take different forms in different times and places. He
was concerned to offer analytical frame work for the interpretation of varied
historical experience rather than to formulate a narrow theory to which all
historical experience was alleged to conform.
MC CLELLAND’S THEORY OF ACHIEVEMENT
AND MOTIVATION
David McClelland has developed an achievement motivation theory.
According to this theory, an individual’s need for achievement refers to the
need for personal accomplishment. It is the drive excel, to strive for success
and to achieve in relation to a set standards. People with high achievement
motive like take calculated risks and want to win; they like to take on
personal responsibility for solving problems and want to know how well they
are doing. High achievers are not motivated by money; but instead employ
money as a method of keeping sure of the achievements. Such people strive
for personal achievement rather than the rewards of success. They want to do
something better and more efficiently than has been done before.
Need for achievement is simply the desire to do well not so much for the sake
of social recognition or prestige but for the sake of an inner feeling of personal
accomplishment. It is the need for achievement that motivates people to take
risk. People with high need for achievement behave in an entrepreneurial
way. Need for achievement stimulates the behavior of a person to be an
entrepreneur.
The following psychological factors contribute to an entrepreneurial
motivation:
1. Need for achievement through self- study, goal setting and inter-
personal support.
2. Keen interest in situations involving moderate risk.
3. Desire for taking responsibility.

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4. Concrete measures of task performance.
5. Anticipation of future responsibilities.
6. Energetic or novel instrumental activity
7. Organizational skills, etc.
Some societies produce a large percentage of people with high need for
achievement. Entrepreneurship becomes the link between need achievement
and economic growth.
Mc Clelland considers the need for achievement to be most critical to a
nation’s economic development. He held that a strong ‘inner spirit’ in
individuals to attain is a measurable variable arising from a need, which the
individual develops mainly in childhood and seeks to satisfy throughout his
life. This ‘inner spirit’ which he called need for achievement, if higher, would
produce more energetic entrepreneurs capable of generating rapid economic
development. High need for achievement or ambition motivates an
entrepreneur to take risks, work hard, find new things, save more, and
reinvest the savings in industry and so on. The limited empirical evidence
supports the hypothesis that need for achievement contributes to
entrepreneurial success.
Mc Clelland rated the achievement motivation of different countries on the
basis of ideas related to need for achievement contained in the children’s
stories. This has come to be known as n-factor rating. He established a
correlation between n- factor rating and the prosperity of the countries a
generation ahead.
The criterion on n- factor rating was the inherent concern for achievement or
non- induced achievement motivation.
Mc Clelland found that achievement motivation was lower among people
under developed countries than among these of developed nations. Even in
USA only about ten percent of the people were actually high achievers. It is
the level of aspirations or ambitions that explains the lack of enterprise
underdeveloped countries. Ambition is the level of all motives and aimless
life a goal- less game. Ambitions motivate men, activate them, broaden their
vision and make life meaningful. Ambition builds up achievement pressure in
the individual and provides the base for Mc Clelland’s n- factor. Ambition is
the lever of all motives. The initiative intentions of an individual are directed
by his ambitions. It is the ambition electrifies man’s actions. Therefore, what
matters are not merely the people are their aspirations and the means to
achieve the goals? Therefore, it is the duty leaders and teachers to build up
ambitions into the minds of the young people however ambitions differ greed
and windfall. Greed results in disaster a windfall makes one speculator
.Sometimes personal ambitions may come in way of family aspirations or

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national aspirations. Unfulfilled ambitions passed to the next generation who
may chase the goal with redoubled effort and vigor
Thus, ambition nourishes achievement motivation and brings economic
growth. The biggest obstacle to economic progress in countries like India is
perhaps the limited ambition of people. The initiative of an individual is
directed by his ambitions, which nourish the entrepreneurial spirit and bring
about economic development. Hence, what matters are not merely the people
and then talents but their aspirations? However, ambitions differ among
individuals on the basis of environment in which they are born and brought
up. Galbraith has also attributed the backwardness of many Asian and
African countries to lack ambition.
PETER DRUCKERS VIEW ON
ENTREPRENEURSHIP
Peter Drucker has aptly observed that, “Innovation is the specific tool of
entrepreneur’s, the means by which they exploit changes as an opportunity
for a different business or a different service. It is capable of being presented
as a discipline, capable of being learned and practiced. Entrepreneurs need to
search purposefully for the sources of innovation, the changes and their
symptoms that indicate opportunities for successful innovation. And they
need to know and apply the principles of successful innovation.”
Systematic innovation, according to him, consists in the purposeful and
organized search for changes and in the systematic analysis of the
opportunities such changes might offer scope for economic and social
innovation.
According to Drucker, three conditions have to be fulfilled.
1. Innovation at work. It requires knowledge and ingenuity. It makes
great demands on diligence, persistence and commitment.
2. To succeed, innovation must build on their strengths
3. Innovation always has to be closed to the market focused on the
market, indeed market- driven.
Specially, systematic innovation means monitoring sources for innovative
opportunity.
The first three sources lie within the enterprise, whether it be a business or
a public service institution or within an industry or service sector. They

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are therefore, visible primarily to people within that industry or service
sector. They are basically symptoms. But they are highly reliable indicators
of changes that have already occurred or can be made to occur with little
effort.
These four source areas are:
1. The unexpected success, the unexpected failure, the unexpected
outside event.
2. The incongruity between reality as it actually is and reality as it is
assumed to be or as it “ought to be”.
3. Innovation in industry structure or market structure that catches
everyone unawares.
4. The second set of sources for innovative opportunity, a set of three,
involves changes outside the enterprise or industry:
Ø Demographics (population changes).
Ø Changes in perception, mood and meaning.
Ø New knowledge, scientific and non- scientific.
END OF MODULE II

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MODULE –III
BUSINESS PLAN PROJECT
MANAGEMENT
Ø Search of a Business Idea.
Ø Selection of a Product.
Ø Adoption Process.
Ø Concept of Project and its
Classification.
Ø Basic Components of a
Project.
Ø Introduction
Ø Writing a Business Plan
Ø Contents of a Business Plan
Ø Failure of a Business Plan

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INTRODUCTION TO BUSINESS PLAN
The business plan is written document prepared by the entrepreneur that
describes all the relevant external and internal involved in starting a venture.
Entrepreneur should consult with many other sources in its preparation like
lawyers, accountants, marketing consultants and engineers. Business plan
could take more than 200 hrs to prepare but varies from person to person
according to their knowledge and experience, with purpose about a new
venture to a potential investor.
CONTENTS OF A BUSINESS PLAN
I. INTRODUCTORY PAGE
A. Name and address of business.
B. Name(s) and address (es) of principals.
C. Nature of business.
D. Statement of financing method.
E. Statement of confidentiality of report.
II. EXECUTIVE SUMMARY
Three to four pages summarizing the complete business Plan.
III. INDUSTRY ANALYSIS
A. Future outlook and trends.
B. Analysis of competitors.
C. Market Segmentation.
D. Industry forecasts.
IV. DESCRIPTION OF VENTURE
A. Product(s)
B. Service(s)
C. Size of business.
D. Office equipment and personnel.
E. Background of entrepreneurs.

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V. PRODUCTION PLAN
A. Manufacturing process (amount subcontracted)
B. Physical Plant.
C. Machinery and Equipment.
D. Names of Suppliers of raw materials.
VI. MARKETING PLAN
A. Pricing.
B. Distribution.
C. Promotion.
D. Product forecasts.
E. Controls.
VII. ORGANIZATIONAL PLAN
A. Form of ownership.
B. Identification of partners or principal shareholders.
C. Authority of principals.
D. Management- team background.
E. Roles and responsibilities of members of organization.
VIII. ASSESSMENT OF RISK
A. Evaluate weakness of business.
B. New technologies.
C. Contingency Plans.
IX. FINANCIAL PLAN
A. Proforma income statement.
B. Cash Flow Projections.
C. Proforma balance sheet
D. Break-Even analysis.
E. Sources and application of funds.
X. APPENDIX (contains backup material)
A. Letters.
B. Market Research Data.
C. Leases or contracts.
D. Price lists from suppliers.

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HOW TO WRITE A BUSINESS PLAN
The business plan can take more than 200 hours to prepare, depending on the
experience and knowledge of the entrepreneur as well as the purpose it is
intended to serve. It should be comprehensive enough to give any potential
investor a complete picture and understanding of the new venture and will
help the entrepreneur clarify his or her thinking about the business. Many
entrepreneurs incorrectly estimate the length of time that an effective plan
will take to prepare. Once the process has begun, however, the entrepreneur
will realize that it is invaluable in sorting out the business functions of a new
venture. Each of the items in the contents of the business plan is explained in
detail as follows.
INTRODUCTORY PAGE:
This is the title page or cover that provides a brief summary of the venture
and should include the following things:
Ø Name and address of the company.
Ø Name of the entrepreneur(s) and telephone number.
Ø Description about the company and also stating nature of
business.
Ø Stating their financial requirements.
Ø A statement of the confidentiality of the report.
EXECUTIVE SUMMARY:
This is prepared after total plan is written. This about 3 to 4pages in length,
this summary should stimulate the interest of the potential investor. This
highlight concise and convincing manner the key point in the business plan
stating the nature of the venture, financing needed, market potential, and
supports to why it will succeed.
INDUSTRIAL ANALYSIS:
This reviews industry trends and competitive strategies. The industry
outlook, including future trends and historical achievements, insight of new
product developments in this industry. Competitor should be identified, with
appropriate strengths and weakness described and how will it affect the new
ventures potential success in the market.

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DESCRIPTION OF VENTURE:
It states the product produced by venture which includes patent, copyright,
or trademark status. It also gives a brief idea where the business will be
located including the construction of building, leased or owned. In
description of venture the type of office equipment will be required whether it
will be purchased or leased. He (entrepreneur) should also look at the
management experience, stating their education, age, special abilities and
interest.
PRODUCTION PLAN:
This includes details of manufacturing process a product, which is very
necessary. If the manufacturing is to be carried out in whole or in part by the
entrepreneur, he or she will need to describe to physical plan layout: the
machinery and equipment needed to perform the manufacturing operations:
raw material and suppliers names, addresses, and the terms; costs of
manufacturing and any future capital equipment needs. It should also include
state subcontractors name and addresses; costs of subcontracted
manufacturing; raw material required for manufacturing.
MARKETING PLAN:
The marketing plan represents a significant element in the business plan for a
new venture. Marketing planning should be an annual activity that focuses on
implementing decisions related to the marketing mix variables (product,
price, distribution, and promotion). Like the annual budgeting cycle, market
planning has also become an annual activity and should be incorporated by
all the entrepreneurs, regardless of the size or type of the business. These
marketing plans must be monitored frequently, especially in the early stages
of start up.
ORGANIZATIONAL PLAN:
The organizational plan describes the venture form of ownership i.e. whether
it is proprietorship, partnership or a corporation. If the venture is a
partnership, the term of partnership should be included, name of partners,
term of agreement, specimen signatures of the partners etc. If it is a
corporation venture than it is important to detail the shares of the stock
authorized, share options, names and address, resumes of the directors and
officers of the corporation. If it is an incorporation venture than it should state
the principal shareholders and shares owned by them; type and number of
shares stating voting or non-voting stocks have been issued, members of
board of directors, check signing authority or control. The plan also states
how many members are there in management team and their background,
their roles and responsibilities stating their salaries, bonuses or other forms of

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payment for each members of the management team. This is also helpful to
provide an organization chart indicating the line of authority and
responsibilities of the members of the organization. This information provides
the potential investor with a clear understanding of who controls the
organization and how other members will interact in performing their
management functions.
ASSESSMENT OF RISK:
All ventures face some potential hazards, given the particular industry and
competitive environment. An entrepreneur should make assessment of risk
and prepare an effective strategy to deal with them. Even if these factors
present no risks to the new venture, the business plan should discuss why
that is the case. Contingency plans and strategies illustrate to the potential
investor that the entrepreneur is sensitive to important risks and is prepared
should any occur.
FINANCIAL PLAN:
The financial plan should include proforma income statements, break -even
analysis, proforma cash flow, proforma balance sheet, and proforma sources
and uses of funds.
APPENDIX:
It generally contains business plan generally back up material that is not
necessary in the text of the document. Reference to any of the documents in
the appendix should be made in the plan itself. Letters from customers,
distributors or subcontractors are examples of information that should be
included in the appendix. Any documentation of information that is
secondary data or primary research data used to support plan decisions
should also be included. Leases, contracts or any others types of agreement
that have been initiated may also are included in the appendix. It should also
include price lists from suppliers and competitors may be added.
CONCLUSION
A business plan is a crucial component for an entrepreneur. A business plan is
presented to a bank to obtain funds in the initial stage of a project. It is a
monetary rule that a business plan has to be presented to a bank before the
release of funds by the financial institutions. Hence, business plan is a
stepping- stone for an entrepreneur in the commencement of a project.

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WHY BUSINESS PLANS FAIL?
Generally a poorly prepared business plan can be blamed on one or more of
the following factors:
v Goals set by the entrepreneur are unreasonable.
v Goals are not measurable.
v The entrepreneur has not made a total commitment to the business or
to the family.
v The entrepreneur has no experience in the planned business.
v The entrepreneur has no sense of potential threats or weaknesses to the
business.
v No customer need was established for the proposed product or service.
Setting goals requires the entrepreneur to be well informed about the type of
business and the competitive environment. Goals should be specific and not
so mundane as to lack any basis of control. For example, the entrepreneur
may target a specific market share, units sold, or revenue. These goals are
measurable and be monitored overtime.
In addition, the entrepreneur and his or her family must make a total
commitment to the business in order to be able to meet the demands of a new
venture. For example, it is difficult to operate a new venture on a part- time
basis while still holding on to a full- time position. And it is difficult to
operate a business without an understanding from family members as to the
time and resources that will be needed. Lenders or investors will not be
favorably inclined toward a venture that does not have full- time
commitment. Moreover, lenders or investors will expect the entrepreneur to
make a significant financial commitment to the business even if it means a
second mortgage or a depletion of savings.
Generally, a lack of experience will result in failure unless the entrepreneur
can either attain the necessary knowledge or team up with someone who
already has it. For example, an entrepreneur trying to start a new restaurant
without any experience or knowledge of the restaurant business would be
disastrous.
The entrepreneur should also document customer needs before preparing the
plan. Customer needs can be identified from direct experience, letters from
customers, or from marketing research. A clear understanding of these needs
and how the entrepreneur’s business will effectively meet them is vital to the
success of the new venture.

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PROJECT MANAGEMENT
WHAT IS A PROJECT MANAGEMENT ?
It is a specialized branch of management that includes variety of factors such
as organization structure, the process of planning and control, human
relations etc. It is executed as under:
a) Decide the scheme of operations.
b) Break down work into series of operations.
c) Evolve an orderly sequence or programme.
Every project has three basic attributes, namely
v The input characteristics
v Output characteristics, and
v Social cost benefit characteristics
The input characteristics define what the project requires such as raw
materials, energy, manpower, financial resources and organizational
structure.
The output characteristics define what the project will generate viz.
production of additional goods, provision of additional services etc. The
social cost benefit aspect affects the equilibrium of availabilities and non-
availabilities in an economy. Thus the benefits which will be accrued to the
society have to be carefully evaluated.
The project idea needs to be evaluated for its feasibility and the setting up of
an enterprise should be based on careful and sound evaluation. Project
appraisal brings credibility to a project and projects from in built weaknesses
and consequently a healthy and viable industry comes up.
SEARCH FOR A BUSINESS IDEA
CHOOSING AN IDEA
To get established as a successful entrepreneur depends to a large extent on a
good idea.
Idea must not only be good for the market, but good for the project and good
for the entrepreneurs.

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Further, it should be manageable without much dependence on others and
should provide satisfactory results to the entrepreneur.
In the idea stage, suggestions for new products are obtained from all possible
sources viz. customers, competitors, R&D, distributors and company
employees. Essentially the entrepreneur needs to scan the environment.
THE VARIOUS SOURCES ARE
Ø Personal Informal Sources
a. Family
b. Customers
c. Friends
d. Colleagues
e. Salesman
f. Social Contacts
g. Employees
Ø Personal Formal Sources
a. Bankers
b. Business Consultants
Ø Impersonal Written Sources
a. Magazines
b. Journals
c. Books
d. Newsletter
e. Newspapers
f. Catalogues
Ø Impersonal Oral Sources
a. Trade Shows
b. Seminars/ Workshops
c. Professional Organizations
d. Small Business Organizations
e. Suppliers/ Dealers
One should use as many resources as possible for the purpose of scanning the
environment.

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OBSERVATIONS
Ø With constant observation, entrepreneurs target potential market,
consumers, products and availability raw materials and widening of
market demand.
Ø Entrepreneurs get tempted to step into the field that profit potential
and is socially acceptable.
SELECTION OF A PRODUCT
Very essential for being success in business venture. The various factors that
influence the entrepreneur in selecting the right product are:
v The import restrictions or whether the import of the selected items is
banned- In case of banned item, the domestic market will offer
considerable scope for selling as the demand for such a product would
not be met by import.
v Whether the entrepreneur or his partners have substantial experience
in the manufacture and marketing of certain products. Most often, the
items selected are of those lines of products in which entrepreneur or
his colleagues have gathered enough experience.
v Degree of profitability that rules in the market. Such information can
be obtained from the banks or the financial corporations or the market
itself.
v Concessions available from the government for producing a product
that may be import substitution. Entrepreneur will select a particular
product that enjoys a substantial amount of incentives, concessions,
liberal taxation policies etc.
v Products belonging to priority industries or small- scale sector- certain
products are listed by the government for purchasing exclusively from
the small- sector.
v Market for the product – if the product also has an export market, it
widens the scope of marketing and hence the success of the enterprise.
v Certain products are permitted for production only if the others belong
to de- licensed category. Hence a product belonging to licensed

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category or de- licensed category is also considered before selecting the
product.
v Products enjoying specific advantages such as locations viz, if
produced in free trade zone in a backward area.
v Product belonging to an ancillary unit serves as a major component for
the OEM- provides a ready demand and hence ensures easy
marketability.
v Finally, whether the machinery and raw materials required to
manufacture the product would be imported or indigenous,
requirement of skilled/ unskilled labor, indigenous technical know-
how or foreign collaboration. The study of project idea is the starting
point of the feasibility analysis.
THE ADOPTION PROCESS
A process to bring about a change in buyer’s attitudes and perception. A
consumer invariably undergoes the following steps in determining the
feasibility of buying the new products
1. Awareness
2. Interest
3. Evaluation or mental trial
4. Trial- physical
Awareness:
A consumer learns about anew idea or a product and obtains limited
information about its qualities, usefulness, performance through
advertisements etc.
Interest:
Once the consumer develops an interest in the innovation, he demands
detailed information about the new products, its utility, its performance, etc.
He gets more information through jingles on radio or TV ads and teaches
through sales- persons, opinion leaders, peers, friends etc.
Evaluation:
The consumer tries to weigh the value of the new product in relation to the
benefits obtained from it i.e. conducts a mental trial of the new product.

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Trial:
The consumer is now ready to put the idea into practice. Competent
assistance may become necessary to put the innovation to use.
Adoption:
1. The consumer mow decides to adopt the new idea or a product for
continued use.
2. Depending the post- purchase experience the consumer becomes a
repeat buyer and consequently the advocate for the innovation.
PRODUCT INNOVATION
Product Innovation takes place through the process of product planning and
development.
Covers search for new products and innovations as well as the improvement
of existing products.
PRODUCT INNOVATION
INTERNAL DEVELOPMENT
Discovering and developing new products by the firm itself a desirable
means.
LICENSING
Securing right to produce the product from a patent holder i.e. contractual
arrangement e.g. coca cola.
ACQUISITION
Buying the firm that developed or patented the product- a costly means.
Internal
Development
Licensing Acquisition

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CONCEPT OF PROJECT AND ITS CLASSIFICATION
CONCEPT OF PROJECT
The term “project” connotes programme of action. Project is always
interwoven with all socio- economic and cultural activities the project
involves a scheme and a speculative imagination.
The kinds of projects
1. Agricultural projects- relating to
a. Land development
b. Irrigation
c. Soil- conservation
d. Fertilizers, and
e. Seeds etc.
2. Research projects
Definition of “Project”- According to World Bank, project can be defined as
“An approval for a capital investment to develop facilities to provide goods
and services”.
Little and Mireless defines project as “A scheme or a part of scheme for
investing resources which can be reasonably analyzed and evaluated as an
independent unit”. “It is an appraisal for investment with the definite aim of
producing a flow of output over a specific period of time”.
Gittinger has defined it as the whole gamut of activities involved in using
resources to gain benefits.
According to Dr. Albert O. Hirchman” The development project connotes
purposefulness, some minimum size, a specific location, the introduction of
something qualitative new, and the expectation that a sequence of further
development will be set in motion”.
Project can be defined as a scientifically evolved work plan devised to achieve
a specific objective with a specified period of time. The three basic attributes
of a project are
1. A course of action
2. Specific objectives, and
3. Definite time perspective.

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CLASSIFICATION OF PROJECTS
Establishment of a new business unit to manufacture some product or arrange
for the distribution of products of another company poses a challenge to the
entrepreneur.
Ø Helps in expressing and highlighting the essential features of the
project.
Ø Project includes all activities aimed at:
a. Increased production of goods and/ or services.
b. Increasing the capability of existing projects and
c. Increasing the productivity of these goods/ services.
The projects can be classified as under:
1. Quantifiable and Non- quantifiable projects
v Quantifiable projects- quantitative assessment of benefits can be
made. Concerned with industrial development, power
generation, and mineral development.
v Non- quantifiable projects- where quantitative assessment is not
possible. Concerned with health, education, defense etc.
2. Sectoral Projects
In India planning commission has accepted the Sectoral basis as the criterion
for classification
v Agriculture & Allied sector
v Irrigation and power sector
v Industry and Mining sector
v Transport and communication
v Social service sector
v Miscellaneous
Useful in resource allocation at macro level
3. Techno- Economic Projects
Based on their techno- economic characteristics

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(a) Factor intensity- oriented classification
v Capital intensive
v Labour- intensive
(b) Causation-oriented classification
v Demand based or,
v Raw materials based
Dominant reasons for starting a project
Ø Non- availability of certain goods or services and consequent demand
for such goods or services.
Ø Availability of certain raw materials, skills or other inputs.
(c) Magnitude- oriented classification- based on the size of the investment.
v Large- scale.
v Medium- scale.
v Small- scale.
Techno- economic classification facilitates the process of project feasibility
appraisal.
4. Financial Institution Classification
All India and state financial institutions classify projects according to their
age, experience and the purpose.
v New projects
v Expansion projects
v Modernization projects
v Diversification projects
These projects are invariably are profit- oriented.
5. Services Projects
v Welfare projects
v Service projects
v Research and development projects
v Educational projects

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BASIC COMPONENTS OF A PROJECT
Conceptual Framework of a Project
v A productive activity, which can be analyzed appraised and monitored
independently.
v A specific objective in terms of a geographic location, specific starting
and end point
v Serve the target population by achieving good returns on investment.
v Has an organization to implement it.
PHASES OF PROJECT MANAGEMENT
Objective
Size
A Scheme
Organization
Internal rate of
return
Social
Benefits
Start Identification Formulation Appraisal
Selection Implementation Management

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v Identification: - Careful scanning of the environment for investment
opportunity and the ROI.
v Formulation: - Translation of idea into a concrete project, scrutiny and
preparation of feasibility report.
v Appraisal: - Analysis and evaluation of market, technical, financial and
economic variables, return on investment and break- even point.
v Selection: - Rational choice considering objectives and limitations.
v Implementation: - Expeditious completion within allocated resources.
v Management: - Operation of an enterprise with maximum of net
present value, maximization of return. Increase in rate of return at low
risk.
To summarize, it can be said that
v Project is a scheme for investing resources in an enterprise.
v It can be a massive scheme like a multipurpose river valley project or a
venture with small investment.
v It provides complete details and analysis of technical, marketing and
economic aspects.
v To an entrepreneur it opens up a programme for action, profitability
and economic viability.
v A sound project will definitely contribute towards economic
development.
END OF MODULE III

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MODULE- IV
WOMEN ENTREPRENEURSHIP
Ø Concept of Women entrepreneurship
Ø Growth of women entrepreneurship
Ø Problems of women entrepreneurship
Ø Special schemes for women entrepreneurship

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CONCEPT OF WOMEN ENTREPRENEURSHIP
Based on the general concept of entrepreneurship women entrepreneurs may
be defined as a woman or group of women who initiate, organize and run a
business enterprise. In terms of Schumpeterian concept of innovative
entrepreneurs, women who innovate, imitate or adopt a business activity are
called “women entrepreneurs”. The government of India has defined women
entrepreneurs based on women participation in equity and employment of a
business enterprise. Accordingly, a women entrepreneur is defined as an
“enterprise owned and controlled by a women having a minimum financial
interest of 51 percent of the capital and giving at least 51 percent of the
employment generated in the enterprise to women”. However, this definition
is subject to criticism mainly on the condition of employing more than 50
percent women workers in the enterprises owned and run by the women.
In nutshell, women entrepreneurs are those women who think of a business
enterprise, initiate it, organize and combine the factors of production, operate
the enterprise and undertake risks and handle economic uncertainty involved
in running a business enterprise.
GROWTH OF WOMEN ENTREPRENEURS
Women entrepreneurs in India accounted for 9.01% of the total value 11.70
million entrepreneurs during 1988-89.
A cross country comparison reveals that emergence and development of
entrepreneurship is largely caused by the availability of supporting
conditions in a country. To quote, with improving supporting conditions, the
share of women owned enterprises in the United States has risen from 7.1% in
1977 to 32% in 1990. It is likely to reach to 50% by the turn of the 20th century.
In India, women entry into business is a new phenomenon. Women entry into
business, or say, entrepreneurship is traced out as an extension of their
kitchen activities mainly to 3 Ps viz, pickles, powder and pappad. Women in
India plugged into business for both pull and push factors. Pull factors imply
the factors, which encourage women to start an occupation or venture with an
urge to do something independently. Push factors refer to those factors,
which compel to take up their own business to tide over their economic
difficulties and responsibilities.
With growing awareness about business and spread of education among
women over the period, women have started shifting from 3 Ps to engross to 3
modern E’s, viz. Engineering, Electronics and Energy. They have excelled in
these activities. Women entrepreneurs manufacturing solar cookers in

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