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InstituteofInformationTechnology&Management,NewDelhi
UNIT-1
(Syllabus:Introduction:TheEntrepreneur:Definition,EmergenceofEntrepreneurialClass;
TheoriesofEntrepreneurship)
MeaningandDefinitionofEntrepreneur
Thewordentrepreneurhascomefrom theFranceword“entreprendra”whichmeans to
undertake,topursueopportunitiestofulfillneedsandwantsthroughinnovationto
undertakebusiness.Intheyear1725thewordentrepreneurwasfirstbroughtinto
economicsbyasocialscientistnamedRichardcantilion.Theexpertwhoinventedthe
theoryofentrepreneurshipwasDavidMcCellionin1961.Anentrepreneurisapersonwho
isabletoexpressandexecutetheurge,skill,motivationandinnovativeabilityto
establishabusinessorindustryofhisown,eitheraloneorincollaborationwithothers.
Hismotiveistoearnprofitthroughtheproductionordistributionofgoodsorservices.
Adventurism,willingnesstofacerisks,innovativeurgeandcreativepoweraretheinborn
qualitiesofentrepreneurship.Entrepreneurshipcanalsobe explainedasaprocessof
executingaworkinanewandbetterway.
DefinitionofEntrepreneur:
AccordingtoHarbison"Anentrepreneurisnotaninnovationbutanorganizationbuilder
oronewhohastheskilltobuildanorganizationandwhomustbeabletoharnessthe
newideasofdifferentinnovatorstothebestoftheorganization."
OR
PeterF.Druckerdefines“Anentrepreneurasonewhoalwayssearchesforchange,
respondstoitandexploitsitasanopportunity.Innovationisthespecifictoolof
entrepreneurs,themeansbywhichtheyexploitchangeasanopportunityforadifferent
businessorservice”.
Characteristicsofan
Entrepreneur
1)Vision:Anentrepreneurhasadreamandhevisualizesthewaysandmeansto
achievedream.Indoingsohevisualizes:
 MarketDemands
 Socio-Economic
 TechnologicalEnvironmentandthenbasedonthesedynamic,hevisualizes
PaperCode:BBA306
Dr.GagandeepKaurGulati
Subject:EntrepreneurshipDevelopment
Course:BBA(VI)

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afutureforhisbusinessventure.

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2)Knowledge:Anentrepreneurhasfullknowledgeaboutallthetechnicalitiesofhis
business-beittechnological,operational,financialormarketdynamic.
3)DesiretoSucceed:Anentrepreneurhasastrongdesiretosucceedinlife.Their
dreamsarenotjustlimitedtoachievingonesinglegoalbuttheyconstantlywork
toachievehighergoals.
4)Independence:Anentrepreneurneedsindependenceinworkanddecision-making.
Theydon'tfollowtherulesofthumbbutmaketheirownrulesanddestiny.
5)Optimism:Entrepreneurs are highlyoptimistic aboutachieving their vision.
Entrepreneursdonotfollowtheconventionalrulesofthumb.Theyhaveaconstant
desiretointroducesomethingnewtotheexistingbusiness.Theycreate,innovate
orevenaddvaluetotheexistingproducts/services.
6)Leadership:Anentrepreneurexhibitsthequalitiesofleader.Theyaregoodplanner,
organizers,havegoodcommunicationskill,gooddecisionmakers,takeinitiative
toimplementplansandareresult-oriented.
7)Hardworking:Attimestheyarecalledworkaholics.Workisworshipforthen.They
putincontinuouseffortstoachievesuccessandknowthatthereisnosubstitute
forharkwork.
8)Risk-Taking Ability: Risk is an inherent and inseparable element of
entrepreneurship. He assumes the uncertainty offuture.An entrepreneur
guaranteesrenttothelandlord,wagestoemployeesandinteresttotheinvestorin
thehopeofearningmorethantheexpenses.
EntrepreneurshipTraits
Asuccessfulentrepreneurmustpossessthefollowingtraits:
(1)MentalAbility:Mentalabilityconsistsofintelligenceandcreativethinking.An
entrepreneurshouldbeintelligentandmusthaveananalyticalmine.Heshould
havethecapacitytoanalysestheproblemandabletostudythevarious
situationsunderwhichdecisionhavetobemade.
(2)ClearObjectives:Anentrepreneurshouldhaveaclearobjective.Without
objectiveanentrepreneurcannotsuccess.Soasuccessfulentrepreneurmust
havetoobjectivetoestablishhisproductinthemarket,makeprofitandalso
rendersocialservice.
(3)BusinessSecrecy:Anentrepreneurmustbeabletoguardbusinesssecrets.
Leakageofbusinesssecretstotradecompetitorsisaseriousmatter.Sothe
entrepreneurshouldbeabletomakeaproperselectionofhissubordinates.

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(4)HumanRelationsAbility:Anentrepreneurmusthavegoodrelationswithhis
customerstoearnprofitandwintheirconfidenceinhisproduct.Hemustalso
maintaingoodrelationwithhisemployees.
(5)EffectiveCommunication:Goodcommunicationalsomeansthatthe
entrepreneurhastheabilitytoputhispointeffectivelyandwithclarity.
Communicationabilityisthesecretofthesuccessofmostentrepreneurs.
(6)TechnicalKnowledge:Theentrepreneursaredealingwithsituationswhere
sophisticatedtechnologyisinvolved.Theentrepreneurmusthaveareasonable
leveloftechnicalknowledge.
(7)Decision-Making:Runningabusinessrequirestakinganumberofdecisions.
Henceanentrepreneurshouldhavethecapacitytoanalysesthevariousaspects
ofthebusinessforarrivingatadecision.
(8)Risk-Bearing:'Norisk,nobusiness'or'norisk,nogains'.Riskisaninherent
andinseparableelementofentrepreneurship.Heassumestheuncertainty
offuture.
(9)Self-Confidence:Entrepreneursmusthavethementalcapacitytofaceany
situation.Theyshouldalsohavetheabilitytoinspireother.Theymusthave
theconfidenceinthemselvesandthedeterminationtoachievetheirgoals.
TypesofEntrepreneur/ClassificationofEntrepreneur
(A)ClassificationontheBasisofOwnership
(1)Founderor"PureEntrepreneurs":Thoseindividualswhoarethefounderofthe
business.Theyaretheoneswhoconceptualizeabusinessplanandthenputin
effortstomaketheplanasuccess.Example:DhirubhaiAmbanioftheReliance
Group.
(2)Second-generationoperatorsoffamily-ownedbusiness:Theyareindividuals
whohaveinheritedthebusinessfromtheirfathersandforefathers.Example:
LikeMukeshAmbaniandAnilAmbanisonsofDhirubhaiAmbaniofthe
RelianceGroupnowsplitintotwo:RelianceIndustriesLimitedandReliance-
AnilDhirubhaiAmbaniGroup.
(3)Franchisees:Itisamethodofdoingbusinesswhereintheparentowner
licenseshistrademarksandtriedandprovesmethodsofdoingbusinesstoa
franchiseeinexchangeforarecurringpayment.Example:NIIThasgivenits
franchiseeoperationstolocalplayersafterthoroughscrutinyandproper
training.
(4)Owner-Manager:Whenapersonbuysabusinessfrom thefounderandthen
investshistimeandresourcesinitheiscalledtheowner-manager.Example:

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LikeSabeerBhatiaisthefounderentrepreneurofHotmail.

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(B)ClassificationOnTheBasisOfPersonalityTraitsandTheirStyleofRunningThe
Business
(1)TheAchiever:Thesetypesofentrepreneurshavepersonaldesirestoexcel.
Theonlydrivethatpushesthemisthedesiretoachievesomethinginlife,the
desiretomakeamarkinsociety,thedesiretoprovetheirexcellence.Theydo
notneedanyexternalstimulusbutareself-driven.
(2)TheInducedEntrepreneur:Thesetypesofentrepreneursareinducedbysome
externalfactorstostartabusiness.Theexternalfactorscouldbelike:
 GovernmentPolicies
 Unemployment
 FamilySupport
 FacilitatingInstitutionalSupport
(3)TheIdeaGenerator:Thesekindsofentrepreneursarehighlycreativepeoplewho
arealwaysinsearchofinnovativeideasforsettingupnewbusinessventures.
TheyenjoytheFirstMovers'Advantageandareabletoskimhigherprofitsfrom
themarket.
(4)TheRealManager:Therealmanagersrunthebusinessinasystematicmanner.
Theyanalyzebusinesssituation,assessthedemandsoffuture,bothinterms
ofopportunities and threats and then take actions based on the above
assessments.
(5)TheRealAchievers:Therealachieversarefulloflife.Theyarelookingforthe
achievementofnoteventheirgoalsbutalsoofpeopleassociatedwith
themselveslikeemployees,suppliersanddistributors.
(C)ClassificationbasedonthetypeofBusiness
(1)IndustrialEntrepreneur:Industrialentrepreneurisanentrepreneurwhois
intomanufacturingofaproduct.Heidentifiestheneedsandwantsof
customersandaccordinglymanufacturesproductstosatisfytheseneeds
andwants.
(2)TradingEntrepreneurs:Tradingentrepreneurisonewhoundertakestrading
activitiesandisnotconcernedwiththemanufacturingofproducts.Heidentifies
potentialmarkets,stimulatesdemandsandgeneratesinterestamongbuyersto
purchaseaproduct.
(3)CorporateEntrepreneur:Corporateentrepreneurisapersonwhodemonstrates
hisinnovativeskillinorganizingandmanagingacorporateundertakingwhichis
registeredundersomeactsthatgivenitaseparatelegalentity.
(4)AgriculturalEntrepreneur:Agriculturalentrepreneursarethoseentrepreneurs
whoundertakebusinessrelatedtoagriculturalactivitieslikefarmequipments,
fertilizersandotherinputsofagriculture.

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(D)ClassificationontheStagesofDevelopment

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(1)FirstGenerationEntrepreneur:Afirst-generationentrepreneurisonewhostarts
anindustrialunitbymeansofaninnovativeskill.Heisessentiallyaninnovator
combiningdifferenttechnologiestoproduceamarketableproductorservice.
(2)ModernEntrepreneur:Amodernentrepreneurisonewhoundertakesbusiness
tosatisfythecontemporarydemandsofthemarket.Theyundertakethose
ventureswhichsuitthecurrentsocio-culturaltrends.
(3)ClassicalEntrepreneur:Aclassicalentrepreneurastereo-typeentrepreneuris
onewhoseaimistomaximizetheeconomicreturnsatalevelconsistentwith
thesurvivalofthefirm,withorwithoutelementofgrowth.
(E)ClearanceDanhof’sClassifications
DanhofclassifiesEntrepreneurintofourtypes.
(1)InnovativeEntrepreneur:ThiscategoryofEntrepreneurischaracterizedbysmell
ofinnovativeness.This type ofEntrepreneur,sense the opportunities for
introductionofnew ideas,new technology,discoveringofnew marketsand
creatingneworganizations.SuchEntrepreneurcanworkonlywhencertainlevelof
developmentisalreadyachievedandpeoplelookforwardtochangeandimprove.
SuchEntrepreneurareverymuchhelpfulfortheircountrybecausetheybring
aboutatransformationinlifestyle.
(2)Adoptive orImitative Entrepreneur:Such entrepreneurs imitate the existing
entrepreneurandsettheirenterpriseinthesamemanner.Insteadofinnovation,
mayjustadoptthetechnologyandmethodsinnovatedbyothers.Suchtypesof
entrepreneurareparticularlysuitableforunder-developedcountriesforimitating
thenewcombinationofproductionalreadyavailableindevelopedcountries.
(3)FabianEntrepreneurs:Fabianentrepreneursarecharacterizedbygreatcaution
andskepticism,inexperimentinganychangeintheirenterprises.Theyimitateonly
whenitbecomesperfectlyclearthatfailuretodosowouldresultinalossofthe
relativepositionintheenterprises.
(4)DroneEntrepreneurs:Suchentrepreneursareconservativeororthodoxinoutlook.
Theyalwaysfeelcomfortablewiththeiroldfashionedtechnologyofproduction
eventhoughtechnologieshavechanged.Theyneverliketo getridoftheir
traditionalbusiness,traditionalmachineriesandtraditionalsystem ofbusiness
evenatthecostofreducedreturns.
(f)ArthurHColeClassification
ArthurHColeclassifiesentrepreneursasempirical,rationalandcognitiveentrepreneur.
(1)Empirical:Heisentrepreneurhardlyintroducesanythingrevolutionaryand
followstheprincipleofruleofthumb.

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(2)Rational:Therationalentrepreneuriswellinformedaboutthegeneral
economicconditionsandintroduceschanges,whichlookmore
revolutionary.
(3)Cognitive:Cognitiveentrepreneuriswellinformed,drawsupontheadviceand
servicesofexpertsandintroduceschangesthatreflectcompletebreakfromthe
existingschemeofenterprise.
QualitiesofanEntrepreneur
Theentrepreneurmusthavefollowingqualities
(1)Planner:Entrepreneurhasastrongdesiretoachieveahighergoalandmaketheir
dreamscometrue.Sotheentrepreneurmusthavethesequalitytoachievethe
targetanentrepreneurcannotachievethetarget.
(2)Technician:Anentrepreneurmusthavethetechnicalknowledge.Heshould
knowthathowtousetheresourcesandachievethetarget.
(3)RiskBearingAbility:Riskisveryimportantelement.Anentrepreneurmust
havecapacitytobearingriskanentrepreneurcannotsuccess.
(4)DecisionMaker:Decisionmakingistheprocessofchoosingbestalternative
amongvariousalternatives.Anentrepreneurmusthavethesequalitiesbecause
decisionmakingaffecttheprofitabilityandreputationoftheenterprise.
(5)AbilitytofindandExploreOpportunities:Entrepreneurialpersonsarequickto
seeandseizeopportunities.Theyshowaninnovativeturnofmindandconvert
difficultiesintoopportunities.
(6)Motivator:Anentrepreneurmusthaveamotivator.Heinspirestheemployees
toachievingthetarget.Withoutmotivationanentrepreneurcannotachievethe
target.Somotivationisverynecessaryforachievingthetarget.
(7)FutureOriented:Entrepreneurshowsahighleveloffutureorientation.Theydo
notallowthepasttoobsessthem.Theyareorientedtowardspresentand
future.
(8)InterpersonalSkills:Anentrepreneurisapersonwhoduringthecourseofhis
activitiesheshouldbeapersonwholikesworkingwithpeopleandwhohasskills
ofdealingwithpeople.
(9)FacingUncertainty:Anentrepreneurisapersonwhofacesuncertainty.The
futureisuncertain.Sothedecisionofentrepreneuraffectstheprofitabilityand
reputationoftheenterprise.

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(10) Coordination:Anentrepreneurmusthaveacoordinator.Heallocates
theresourcesandutilizestheresourcesforachievingthetarget.Without
coordinationanentrepreneurcannotachievethetarget.
FunctionsofEntrepreneur
Anentrepreneurhastoperformthefollowingfunction:
(1)RisktakingandUncertaintyBearing:Thefutureisunpredictable.The
entrepreneurhastotakerisksinthesecircumstances.Iftheventuresucceeds,
theentrepreneurprofits;ifitdoesnot,lossesoccur.Thus,takingrisksformsan
importantentrepreneurialfunction.
(2)TakingBusinessDecisions:Alldecisionsconcerningbusinessaretakenbythe
entrepreneur.Hehastoformulateanactionplanregardingtheproductand
qualityoftheproducttobeproduced.Hehastoevolvethebestpossiblemethod
ofproductionwhichwouldearnhimasizeableprofit.
(3)ManagerialFunctions:Theentrepreneurperformsvariousmanagerialfunctions.
Theentrepreneurarrangesfinance,purchaserawmaterials,providesthe
necessaryinfrastructureforproduction.Theentrepreneurhasamultiphase
personalitywhenheundertakesmanagerialfunctions.
(4)Innovation:Themostimportantfunctionofanentrepreneurisinnovation.He
introducesfar-reachingimprovementsinthequantityandqualityofproduction
line.Heconsiderstheeconomicviabilityandtechnicalfeasibilityofaninvention.
(5)Coordination:Theentrepreneurcoordinatestheotherfactorsofproduction.
Coordinationinvolvesselectionoftherighttypeoffactors,employmentofeach
factorintherightquantity,useofthebesttechnicaldevices,divisionoflabor,
reductionofwasteetc.
(6)MaintainGood-Relations:Anentrepreneurmusthavegoodrelationswithhis
customertoearnprofitandwintheirconfidenceinhisproduct.Hemustalso
maintaingoodrelationswithhisemployees.
(7)AnalysistheEnvironment:Anentrepreneuranalysistheenvironment.
Environmentisthatfactorwhichaffectsthebusiness.Therearetwotypeof
environment:InternalEnvironment:Internalenvironmentarecontrollable
ExternalEnvironment:Externalenvironmentarebeyondthecontrolofthe
business.
(8)Planning:Planningisthefirstfunctionofthemanagement.Planningis
decidinginadvancewhatistobedone,howistobedone,whichistobedone,
bywhomistobedone.Itisverynecessaryfunctionofentrepreneur.Without
planninganentrepreneurcannotachievethetarget.

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(9)UtilizestheResources:Anentrepreneurallocatestheresourcesand
utilizestheresources.Anentrepreneurmustutilizetheresourcesforthe
achievementoftheobjectives.Iftheentrepreneurdoesnotutilizesthe
resourceshecannotbecomeasuccessfulentrepreneur.
DistinctionbetweenEntrepreneurandManager
Often the two terms namelyentrepreneurand managerare considered as
synonym.Howeverthetwogivedifferentmeaning.Anentrepreneurstartsaventurethen
a manager takes over to organize and co-ordinate continuous production.An
entrepreneurisbeingenterprisingaslongashestartssomethingnewthentheroutine
day-to-daymanagementofthebusiness is passedontothemanager.PeterDrucker
claims thatthe process ofentrepreneurship is directing the use ofresources to
progressiveactivitiesratherthanfor“administrativeefficiencies”.Thisreallyclarifiesthe
roleofan entrepreneurfrom thatofamanager.Pleasenotethatin mostsmall
businessestheentrepreneurwhostartstheventurealsohastoperform theroleofa
managerinnurturingitandmakingitgrowandmanagersfrequentlyhavetothinkofnew
waystocapturemarkets,facecompetitionetc.
Themajorpointsofdistinctionbetweenthetwoarepresentedhere.
Intrapreneurs
Anewbreedofentrepreneursiscomingtotheforeinlargeindustrialorganizations.They
arecalledas‘Intrapreneurs’.Inlargeorganizations,thetopexecutivesareencouragedto
catchholdofnewideasandthenconvertthem intoproductsthroughRandDactivities
withinthe frameworkoforganizations.Itisfoundindevelopedcountriesthatsuch
Intrapreneurs in large numberare leaving the organization and started theirown

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enterprises.Manyofsuch

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Intrapreneurshavebecomeexceedinglysuccessfulintheirventures.Thedifferencebetween
entrepreneursandIntrapreneursisgivenbelow
Ultrapreneurs
Throughtheentrepreneurshiphasbeenthereforalongtime,itsperformanceand
execution evolvewiththeprevalenteconomicconditionsoftheday.Theentrepreneurs
ofthe90sareadifferentbreedinrelationtotheirimmediatepredecessorsfrom the80s.
Thus,thepathofsuccessfulentrepreneurshipiseverchangingastheartandscienceof
entrepreneurship,istaking anewcolors.Now-a-daysnewproductsand servicesare
conceived,created,tested,produced andmarketedveryquicklyandwithgreatspeed.
Thereforetoday’sentrepreneursneedtohavedifferentmindsetaboutestablishingand
operatingacompany.Thismindsetiswhatiscalledultrapreneuring.
AccordingtoJamesBArkebaur,theconceptofultrapreneuringistoidentify
businessopportunity,determineitsviabilityandform acompany.Itrequiresassembling
a super competentmanagementteam whothendevelop,produceandmarket the
productorservice.Theythensellthemajorityinterestofthecompany,allofthiswith
maximum resourceleverage ofbothtalentandmoneyintheshortestoptimum time
period.Ultragrowthcompaniesarenotmadeto passonto thenextgeneration.
Ultrapreneurscreatethem andthensellout,mergeorcombine.Theirlifelongchallenge
istodoitagainandoveragain.
RoleofEntrepreneurinEconomicGrowth
Entrepreneurhashisroleinmoderneconomicdevelopmentatleastthreeaspects:
(1)Theentrepreneurco-ordinatestheotherfactorsofproduction.Thisinvolves
notonlyassemblingthefactors,butalsotoseethatthebestcombinationof
factorsismadeavailablefortheproductionprocess.

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(2)Theentrepreneurtakesrisks.Thisistheimportantfunctionoftheentrepreneur
andthequantumofprofithereceivesisdirectlyproportionatetotheriskshe
takes.Risksaregenerallybasedontheanticipationofdemand.
(3)Finallytheentrepreneurinnovates.Innovationisdifferentfrominvention.
Inventionistheworkofscientists.Innovationimpliesthecommercialapplication
ofaninvention.Asaninnovatortheentrepreneurassumestheroleofapioneer
andanindustrialleader.Theentrepreneurcanundertakeanyonetypeofthe
followingfivecategoriesofinnovation:
 Theintroductionofanewgoodoranewqualityofagood
 Theintroductionofanewmethodofproduction
 Theopeningofanewmarket
 Theconquestofanewsourceofsupplyofrawmaterials
 Thecarryingoutofaneworganizationofanyindustry
ImportanceofEntrepreneurinEconomicDevelopment:
Everycountrytriestoachievemaximumeconomicdevelopment.Theeconomic
developmentofacountrytoalargeextentdependsonhumanresources.Buthuman
resourcealonewillnotproduceeconomicdevelopment-theremustbedynamic
entrepreneurs.Importance’sofentrepreneursineconomicdevelopmentare:
(1)EmploymentGeneration:Growingunemploymentparticularlyeducated
unemploymentisanacuteproblemofthenation.Ifahundredpersonsbecome
entrepreneurtheynotonlycreateahundredjobsforthemselvesbutalsoprovide
employmenttomanymore.Theseenterprisesgrowprovidingdirectandindirect
employmenttomanymore.Thusentrepreneurshipisthebestwaytofighttheevil
ofunemployment.
(2)NationalIncome:NationalIncomeconsistsofgoods&servicesproducedinthe
countryandthoseimported.Thegoods&servicesproducedareforconsumption
withinthecountryaswellastomeetthedemandofexports.Thedomestic
demandincreaseswitheverincreasingpopulationandstandardofliving.The
exportdemandalsoincreasestomeettheneedsofgrowingimportduetovarious
reasons.Anincreasingnumberofentrepreneursarerequiredtomeetthis
increasingdemandforgoodsandservices.Thusentrepreneurshipincreasesthe
nationalincome.
(3)DispersalofEconomicPower:Whenasocietyproducesasmallnumberof
entrepreneurstheenterpriseduetolackofcompetitiongrowintoafewbig
businesshouses.Thisresultsinconcentrationofwealthinafewfamilies.This
canhaveaserioussocialandnationalimplication.Whenthenumberof
entrepreneursincreases,alargeamountofnationalwealthisalsosharedbya
largenumberofentrepreneurs,thusdispersingwealth.Thisdispersalofwealth
promotestherealsocialismandmakestheeconomyhealthy.
(4)BalanceRegionalDevelopment:Thegrowthofindustryandbusinessleadstoa

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largenumberofpublicbenefitslikeroad,transport,health,education,
entertainmentetc.Arapiddevelopmentofentrepreneurshipensuresabalanced
regionaldevelopment.When

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thenewentrepreneursgrowatafasterpace,inviewoftheincreasing
competitioninandaroundthecities,theyareforcedtosetuptheirenterprisein
thesmallertownsawayfrombigcities.Thishelpsinthedevelopmentofthe
backwardregions.
(5)EconomicIndependence:Entrepreneurshipisessentialfornationalself-reliance.
Businessmanexportgoodsandservicesonalargescaleandearnthescarce
foreignexchangeforthecountry.Suchimportsubstitutionandexport
promotionhelptoensuretheeconomicindependenceofthecountry.
(6)ImprovementinLivingStandards:Entrepreneurssetupindustrieswhichremove
scarcityofessentialcommoditiesandintroducenewproducts.Productionof
goodsonmassscaleandmanufacturehandicraftsetc.inthesmallscalesector
helptoimprovethestandardoflifeofacommonman.Theseoffergoodsat
lowercostsandincreasevarietyinconsumption.
(7)HarnessingLocallyAvailableResourcesandEntrepreneurship:Indiaisconsidered
tobeveryrichinnaturalresources.Afewlargescaleindustriesstartedby
entrepreneursfromoutsidethestateineconomicallybackwardareasmayhelp
asmodelsofpioneeringefforts,butultimatelytherealstrengthof
industrializationinbackwardareasdependsupontheinvolvementoflocal
entrepreneurshipinsuchactivities.Increasedactivitiesoflocalentrepreneurswill
alsoresultinmakinguseofabundantlyavailablelocalresources.
(8)InnovationsinEnterprises:Businessenterprisesneedtobeinnovativefortheir
survivalandbetterperformance.Entrepreneurshipdevelopmentprogramsare
aimedatacceleratingthepaceofsmallfirms'growthinIndia.Increasednumber
ofsmallfirmsisexpectedtoresultinmoreinnovationsandmaketheIndian
industrycompeteininternationalmarket.
CausesOfSuccessandFailureofEntrepreneur
Anentrepreneurmaysometimebecomesuccessfulandsometimebecomesfailure.
Therearesomecausesofsuchsuccessandfailure.Theyarenotedbelow:
1. Selectionofbusiness:Itisanimportantaspect.Thatmeansanentrepreneurhas
todeterminewhattypebusinessheisgoingtostart.Formvariouspointsofviewthe
feasibilityofthebusinessshouldbetested.
2. Properplanning:Properplanningmesalsoimportant.Forplanning,planning
premiseslikepolitical,economic,socialpremisedshouldbeconsideredfirst.Thesteps
ofplanningshouldbefollowedproperly.
3. Initialcapital:iftheinitialcapitalsarenotanoptimalleveltheorganizationwould
fall.Sowhethertheenterpriseisbigorsmalltheinitialcapitalshouldbesufficient
enough.

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4. Determinationo0fmarketdemand:Throughresearchthedemandinthemarket
shouldbeidentified.Bothforlongtermandshorttermitshouldbeconsidered.

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5. Marketingofproduct:Ifthepromotionpolicy,channelofdestitution,
transportationisnotgoodtheenterprisewouldfall.
6. Educationandexperience:Oneoftheimportanttasksoftheentrepreneursisto
selectrightpersonfortherightpostbecausethesuccessofanenterprisedependson
therightselectionofemployees.
7. Jointinitiative:Onemayhavemuchmoneyandanothermayhavemoremerit.
Throughjointinitiativeitcanbebalanced.Butsometimeforjointinitiative
misunderstandingarise,orsometimescorruptionoccurwhichmayresultinfallof
enterprise.
8. Employment:Recruitmentandappointmentshouldbeproperlydone.Those
whohavespecializedskillshouldbeappointedtothatspecializedjob.Inefficient,
corruptedemployeesmayberesponsibleforfallofbusiness.
9. Locationofbusiness:Siteselectionisanimportantfactor.Whilestartinganew
business,anentrepreneurshouldthinkaboutthelocationofthebusiness.Inthiscase,
manyfactorsshouldbeconsideredsuchasavailabilityofrawmaterials,proper
communicationsystem,availabilityoflabor,marketingfacilitiesandsoon.
10.Qualitiesofmanagement:Themanagementmusthaveaminimumqualityto
successotherwiseitwouldfall.
Thesearethecommoncausesforwhichoneenterprisemaybecomesuccessfuland
anothermayfall.
MeaningandDefinitionofEntrepreneurship
Economicdevelopmentessentiallymeansaprocessofupwardchange.Itcanbedefine
asaprocesswherebytherealpercapitaincomeofthecountryincreasesoveralong
periodoftime.ConceptEntrepreneurshipisthetendencyofapersontoorganizethe
businessofhisownanditrunaprofitably,usingthequalityofleadership,decisions
making and managerial caliberetc. The term entrepreneurship is often used
interchangeablywithentrepreneurship.Butconceptuallytheyaredifferent
MeaningofEntrepreneurship
Entrepreneurshipreferstoaprocessofactionanentrepreneurundertakestoestablish
hisenterprise.Itisacreativeandinnovativeresponsetotheenvironment.Inother
wordsentrepreneurshipcanbedefinedasanabilitytodiscover,createorinvent
opportunitiesandexploitthemtothebenefitofthesociety,whichinturnbrings
prosperitytotheinnovatorandhisorganization.
B.Higgins,inhisbook"TheeconomicDevelopment"hassaid."Entrepreneurship
ismeantthefunctionofseekinginvestmentandproductionopportunity,organizingan

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enterpriseto

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undertakeanewproductionprocess,raisingcapital,hiringlabor,arrangingthesupply
ofrawmaterials,findingsite,introducinganewtechniqueandcommodities,
discoveringnewsourcesofrawmaterialsandselectingtopmanagersofdaytoday
operationsoftheenterprise."
AccordingtoS.S.kanaka“Entrepreneurshipsisaprocessinvolvingvariousactionsto
betakentoestablishanenterprise”.
Fromthefunctionalviewpointentrepreneurshipisdefinedasthecombinationof
activitiessuchasperceptionofmarketopportunitiesgainingcommandoverscarce
resourcespurchasinginputproducingandmarketingofproductrespondingto
competitionandmaintainingrelationwithpoliticaladministrationandpublic
bureaucracyforconcessionlicensesandtaxesetc.
Thevariousdefinitionsofentrepreneurshipidentifytwobasicelementsof
entrepreneurshipnamelyinnovationandriskbearing.
(1)Innovation:Innovationisdoingsomethingneworsomethingdifferent.
Entrepreneursconstantlylookouttodosomethingdifferentanduniquetomeet
thechangingrequirementsofthecustomers.Entrepreneursneednotbeinventors
ofnewproductsornewmethodsofproductionorservice,butmaypossessthe
abilityofmakinguseoftheinventionsfortheirenterprises.Forexample,inorder
tosatisfythechangingneedsofthecustomers,now-a-daysfruitjuice(mango,
fruitsetc.)inbeingservedintins,insteadofbottlessothatcustomerscancarryit
andthrowawaythecontainersafterdrinkingthejuice.RatanTatadidnotinvent
automobile.Foreseeingthepeoplesdesiretohavesmallcarsatlowerprice,he
appliednewmethodsofmassmanufacturing,madeuseofnew,lightsand
relativelycheapermaterials.Henceentrepreneurshipneedstoapplyinventionson
acontinuousbasistomeetcustomerschangingdemandsforproducts.
(2)Riskbearing:Givingbirthtoanewenterpriseinvolvesrisk.Doingsomethingnew
anddifferentisalsorisky.Theenterprisemayearnprofitorincurloss,which
dependsonvariousfactorslikechangingcustomerpreferences,increased
competition,shortageorrawmaterialsetc.Anentrepreneurneedstobebold
enoughtoassumetheriskinvolvedandhenceanentrepreneurisarisk-bearer
notrisk-avoider.Thisrisk-bearingabilitykeepshimtotryonandonwhich
ultimatelymakeshimtosucceed.Thoughthetermsentrepreneurand
entrepreneurshipareusedinterchangeable,yettheyareconceptuallydifferent.
Therelationshipbetweenentrepreneurandentrepreneurshiparediscussed

21. 17
below:

22. 18
Relationshipbetweenentrepreneurandentrepreneurship:
Therelationshipbetweenentrepreneurandentrepreneurshiparediscussedbelow
Entrepreneur Entrepreneurship
1) Entrepreneurisaperson.
2) Entrepreneurisanorganizer.
3) Entrepreneurisaninnovator.
4) Entrepreneurisariskbearer.
5) Entrepreneurisamotivator.
6) Entrepreneurisacreator.
7) Entrepreneurisavisualizer.
8) Entrepreneurisaleader.
9) Entrepreneurisanimitator.
Entrepreneurshipisaprocess.
Entrepreneurshipisanorganization.
Entrepreneurshipisaninnovation.
Entrepreneurshipisariskbearing.
Entrepreneurshipisamotivation.
Entrepreneurshipisacreation.
Entrepreneurshipisavision.
Entrepreneurshipisaleadership.
Entrepreneurshipisanimitation.
TheEntrepreneurialProcess
Awiderangeoffactorscouldinfluencesomeonetobecomeanentrepreneur,
includingenvironmental,social,personalones,oracombinationofthem.Afterone
decidestobeanentrepreneur,therearefourstepsoftheentrepreneurialprocesshe/she
hastofollow:
1.Spotandassesstheopportunity.
2.Drawupabusinessplan.
3.Establishtheresourcesneededandgetthem.
4.Runthecompanycreated.
1.SpotandAssessTheOpportunity:toidentifyanopportunityand analyzeits
potential intermsof:marketneeds,competitorsandmarketpotentialand
productlifecycle.Itis importantthe entrepreneurto testhis/herbusiness
idea/conceptwithpotentialcustomers,askingiftheywouldbuytheproductor
service,doingsomeresearchtofindthemarketsizeandwhetherifitisgrowing,
stable orstagnating,finding outabout his/hercompetitors strengths and
weaknesses,threatsandopportunities.
2.Draw uptheBusinessPlan:.Thebusinessplanisanimportantpartof the
entrepreneurialprocess.A wellplanned businesswillhavemorechanceto
succeedalltheotheraspectsofthecompanybeingequal.Itiscrucialforthe
entrepreneurtoknowhow toplanhis/heractionsandlayoutstrategiesforthe
businesstobecreatedorunderexpansion.

23. 19

24. 20
3.Establishtheresourcesneededandprovidethem:Theentrepreneurshoulduse
his/herplanningabilityandbargainingskillstogettoknowthebestalternatives
onthefinancingmarketfortheirbusiness,thatis,whichwillofferthebestcost
benefitratio.
4.Runthefirmcreated:.Runningthecompanycanseemtobetheeasiestpartofthe
entrepreneurialprocess,sincetheopportunityhasbeenidentified,thebusiness
plandevelopedandthesourceoffundingprovided.Butrunningacompanyisnot
as straightforward as itseems.The entrepreneurmustrecognize his/her
limitations,recruitafirstrateteam tohelpmanagethecompany,implementing
actionstominimizeproblemsandmaximizeprofits.Thatis,thefirm hasto
producemore,withthefewestresourcespossible,combiningefficiencyand
efficacy.
EmergenceofEntrepreneurialClass/EvolutionofEntrepreneurship
HistoryofentrepreneurshipandemergenceofentrepreneurialclassinIndiamaybe
presentedintwosectionsviz.entrepreneurshipduringpre-independenceandpost-
independence.
(1)Entrepreneurshipduringpre-independence:IntheexcavationinHarappanand
Mohanjodarothehandcraftitemsandmetalmoldeditemswerefound.Itisalso
found thatthecraftsmenofthetimemade,handicraftitemsaspartoftheir
contributiontothesocietyinwhichtheylived.Theentrepreneurshiptomake
handicraftitemsexisted inIndiaaround2500B.C.Peopledevelopedtheirown
socialsystem andvillageeconomy inIndia.Indiaalsodevelopedcast-based
divisionsofwork,whichhelpedinthedevelopmentofskillsofartisans.
TheartisansindifferentpartsofIndiagroupedtogetheranddevelopedtheirown
artifactsandwerewellknownfortheirquality.ThecitieslikeBanaras,Gaya,Puri,
AllahabadandMirzapur,whichwereonthebanksofGangaRiver,establishedtheir
owntypeofhandicraftswork.Theroyalpatronagebythelocalkingsofthatperiod
helpedartisanindustriestoflourish.Thehandicraftsindustryofthetimewas
basicallyskillbasedandstartedastinysector.
ThepopulationinIndiagrewinthemiddleageandspreadtothefullgeographical
area.Thelocalkingsgavepatronagetothehandicrafts,silk,cotton-wareand
developmentofothercottagebasedindustriesforconsumptionofhighersection
ofthesociety.Thedevelopmentofagricultureproductslikespices,Ayurvedic
medicinesalsoflourishedinsomepartsofthecountryandstartedexportthem.
Spicesfrom kerala,Corahfrom Bengal,Shawlsfrom KashmirandBanaras,brass
and Bidriware,Silk from Nagpurand Mysore enjoyed prestigious status in
internationalmarkettillearlieryearsof 18th century.Thecraftsmengathered
togetherinhalls,whichwerecalled‘Karkhanas’.
UnfortunatelytheprestigiousIndianhandicraftsindustrieswhichwerebasicallya
cottageandtinysectordeclinedattheendof18thcentury,becauseofthe
followingreasons.
 Disappearanceofroyalpatronagetothehandicrafts
 LukewarmattitudeofBritishcolonialtowardsIndiancrafts

25. 21
 ImpositionofheavydutyonimportsofIndiancrafts
 LowpricedBritishmadegoods
 ChangesinthetastesandhabitsofdevelopingIndiancitizensetc.

26. 22
InotherwordsEastIndiaCompanyhandicappedIndiancottageandtiny
sectors.ThecompanyinjectedvariouschangesintheIndianeconomyby
exportingrawmaterialsandimportoffinishedgoodsinIndia.‘Parsis’established
goodreportwithcompany.Thecompanyestablishedthefirstshipbuilding
industryinSurathandfrom1673Parsisstartedmanufacturingvesselsforthe
company.In1677ManjeeDhanjeewasgiventhecontractofbuildinglargegun-
powder-millinBombay.In1852aParsiforemanwhowasworkinginthegun
factorystartedsteelindustryinBombay.ThatistosayEastIndiaCompanymade
somecontributiontowardentrepreneurialgrowthinIndia.
Theactualemergenceofmanufacturingenterprisecanbenoticedinthe
secondhalfofnineteenthcentury.In1854CowasjeeNanabhoystartedtextilemill
atBombay,R.Chotelalstartedtextilemillin1861inAhamdabad,andin1880
NawrojeeWadiaopened amillinBombay.JamshadjeeTataestablishedfirst
steelindustryin1911.Thoughlate,othercommercialcommunitynamelyjains,
vaishyaschangedtheirattitudefrom commercialentrepreneurshiptoindustrial
entrepreneurship.The‘swadeshi’campaignprovidedaseedbedforinculcating
anddevelopingnationalism inthe country.JamshadjeeTatawasinfluencedby
thisandnamedhisfirstmill‘swadeshimill’andKrishnainitsadvertisementmade
the appeal“ourconcern is financed bynative capitaland is undernative
managementthroughout”.
AfterthefirstworldwartheIndiansagreedto‘discriminating’protectionto
certainindustriesandmadecompaniesshouldberegisteredinIndiawithrupees
capitalandhaveaproportiontheirdirectorsasIndians.Thesemeasureshelpedin
establishingandextendingthefactorymanufacturinginIndiaduringthefirstfour
decadesof20
th
centuryduringwhichtherelativeimportanceofParsisdeclined
and Gujarati’s,Marawaris,and Vaishyas gained theirimportance in India’s
entrepreneurialscene.Theemergenceofmanagingagencysystem triggered
Indianentrepreneurship.In1936Carr,Tagore&Coassumedthemanagementof
Calcuttasteam tugassociation.DwarakanathTagoreencouragedotherstoform
joint-stockcompaniesinwhichmanagementremainsinthehandsof‘firm’rather
than‘individual’.TheEuropeanmanagementagencyhouses,afterEastIndia
Companyloosingitsmonopolyenteredbusiness,tradeandbanking.Itisstated
thatthemanagingagencyhousesweretherealentrepreneursandtheseagency
housesemergedtoovercomethelimitationsimposedbyshortageofventure
capitalandentrepreneurialacumen.
(2)Entrepreneurshipduringpost-independence:In1948Indian government came
forwardwiththefirstIndustrialpolicy,whichwasrevisedfrom timetotime.The
governmentidentified theresponsibilityofthestateto promote,assistand
developindustriesinthenationalinterestandrecognizedtheroleofprivatesector
inacceleratingindustrialdevelopment.
Thegovernmenttookthreeimportantmeasuresnamely:
 Tomaintainaproperdistributionofeconomicpowerbetween
privateandpublicsector.
 Toencourageindustrializationfromexistingcenterstoothercities,

27. 23
townsandvillages.

28. 24
 Todisseminatetheentrepreneurshipacumenconcentratedina
fewdominantcommunitiestoalargenumberofindustrially
potentialpeopleofvariedsocialstate.
Toachievethis,governmentaccordedemphasisondevelopmentofsmallscale
industriesinthecountrybyprovidingvariousincentivesandconcessionsintheform of
capital,technicalknow-howmarketsandlandtotheentrepreneursinthepotentialareas
toremovetheregionalimbalancesindevelopment.Tofacilitatethenewentrepreneursin
settingsuptheirenterprises,GovernmentestablishedseveralinstitutionslikeDirectorate
ofIndustries,FinancialCorporations,smallscaleindustriescorporations,smallindustry
serviceinstitutesetc.Becauseofthissmall-scaleunitsemergedveryrapidlyandtheir
numberincreasedfrom 1,21,619in1966to1,90,727in1970.Therearealsoexamples
thatsomeentrepreneursgrewfrom smalltomedium-scaleandfrom medium tolarge
scalemanufacturingunitsduringtheperiod.
Withtheinventionofdigitalcomputer,informationtechnologyerastartedin1970.
IBM wasoneofthepioneersinthisfield.Thesoftwaredevelopmentscreatednew
opportunitiesandtheserviceindustriesstartedgrowingfasterthan manufacturing
industryafter1980.Thehighgrowthofnewindustriesalsohadhighrisks.Thenewtop
rated entrepreneurship opportunities arose such as communication,food services,
entertainment,merchandising,cosmetics,andapparelwiththeelectroniccommunication
reducing the distances to a GlobalVillage.The marketsize is growing and the
entrepreneurhastobenchmarkhimselfwiththeglobalstandards.
BarrierstoEntrepreneurship
Alargenumberofentrepreneursparticularlyinthesmallenterprisesfailduetoseveral
problemsandbarriers.Thegreatestbarriertoentrepreneurshipisthefailureofsuccess.
Karl.H.Vesperhasidentifiedthefollowingentrepreneurshipbarriers:
1.Lackofaviableconcept
2.Lackofmarketknowledge
3.Lackoftechnicalskills
4.Lackofseedcapital
5.Lackofbusinessknowhow
6.Complacency—lackofmotivation
7.Socialstigma
8.Timepresenceanddistractions
9.Legalconstraintsandregulations
10.Monopolyandprotectionism
11.Inhibitionsduetopatents

29. 25
TheoriesofEntrepreneurship
Maintheoriesofentrepreneurshiparesummarizedasfollows:
(1) Entrepreneurship:AFunctionofInnovation:JosephA.Schumpeter(1934),forthe
firsttime,putthehumanagentatthecentreoftheprocessofeconomicdevelopment
and assigned a criticalrole to the entrepreneurship in his theory ofeconomic
development.Heconsideredeconomicdevelopmentasadiscretetechnologicalchange.
Theprocessofdevelopmentcanbegeneralizedbyfivedifferenttypesofevents:
(i) Firstly,itcanbetheoutcomeoftheintroductionofanewproductinthemarket.
(ii) Secondly,itcanbetheresultofanewproductiontechnology.
(iii) Thirdly,itmayariseonaccountofanewmarket.
(iv) Fourthly,itmaybetheconsequencesofanewsourceofsupply.
(v) Fifthly,itmaybeduetotheneworganizationofanyindustry.
AccordingtoSchumpeter
(i) Developmentisnotanautomaticprocess,butitmustbedeliberatelyandactively
promotedbysomeagencywithinthesystem,Schumpetercalledtheagentwho
initiatestheabovechangesasanentrepreneur.
(ii) Heistheagentwhoprovideseconomicleadershipthatchangestheinitial
conditionsoftheeconomyandcausesdiscontinuousdynamicchanges.
(iii) Bynature,heisneithertechnician,norafinancier,butheisconsideredaninnovator.
(iv) Entrepreneurshipisnotaprofessionorapermanentoccupationandtherefore,it
cannotformulateasocialclasslikecapitalists.
(v) Psychological,entrepreneursarenotsolelymotivatedbyprofit.
(2) Entrepreneurship:AnOrganizationBuildingFunction:FredrickHarbisonstatesthat
the'organizationbuilding'abilityisthemostcriticalskillneededfortheindustrial
development.Accordingtohim entrepreneurship means the skill to build an
organization.Harbisonspots thecruxoftheentrepreneurshipinhisabilitytomultiply
himselfbyeffectivelydelegatingresponsibilitiestoothers.Themainfeaturesare:
(i) Unlike Schumpeter,Harbison's entrepreneur is not an innovator but an
'organizationbuilder'whomustbeabletoharnessthenewideasofdifferentinnovators
totherestoftheorganization.
(ii) Suchpersonsarenotalwaysthemenwithideasormenwhotrynew
combinationsofresourcesbuttheymaysimplybegoodleadersandexcellent
administrators.
(iii) Harbison'sdefinitionofentrepreneurshiplaysmorestressonthemanagerialskills
andcreativitysofarasorganizationisconcerned.
(3) Entrepreneurship:AFunctionofManagerialSkillandLeadership:Hoselitzstates
thata personwho is to becomean industrialentrepreneurmusthave
additionalpersonalitytraits.Inadditiontobeingmotivatedbytheexpectationsofprofit
hemustalsohavesomemanagerialabilitiesandmoreimportanthemusthaveabilityto

30. 26
lead.Hoselitzmaintains

31. 27
thatfinancialskills have only a secondary consideration inentrepreneurship.
According to him managerialskills and leadership are the importantfacts of
entrepreneurship.Heidentifiesthreetypesofbusinessleadershipinthe analysis of
economicdevelopmentofunderdevelopedcountries:
□ Themerchantmoneylendertype
□ Themanagerialtype
□ Theentrepreneurtype.
(4) Entrepreneurship:A FunctionofHighAchievement:McClellandstatesthata
businessmanwhosimplybehavesintraditionalwaysisnotanentrepreneur.Moreover,
entrepreneurialroleappearstocallfordecisionmakingunderuncertainty.McClelland
identifiedtwocharacteristicsofentrepreneurshipfirstly"doingthingsinanewandbetter
way"and secondly"decisionmakingunderuncertainty".Personswithhighachievement
wouldtakemoderaterisks.Theywouldnotbehavetraditionally(norisk).Thehigh
achievement is associatedwithbetterperformanceattaskswhichrequiresome
imagination,mentalmanipulationornew waysofputtingthingstogether,andsuch
peopledobetterat nonroutine taskthatrequiresomedegreeofinitiativeoreven
inventiveness.Peoplewithhighachievement arenotinfluencedbymoneyrewardas
comparedtopeoplewithlowachievement.Peoplewithlowachievementarepreparedto
work harderformoney orsuch otherexternalincentives.Forpeople with high
achievement,profitisameasureofsuccessandcompetency.
(5) Entrepreneurship:AFunctionofSocial,PoliticalandEconomicstructure:John
Kunkelstatesthattheindustrialentrepreneurshipdependsuponfourstructureswhich
arefoundwithinasocietyorcommunity.
(i) Limitation Structure:The society limits specific activities to members of
particularsubcultures.Thislimitationstructureaffectsallthemembersofasociety.
(ii) DemandStructure:Thelimitationstructureisbasicallysocialandculturalbutthe
demandstructureismainlyeconomic.Thedemandstructureisnotstatic,andchanges
witheconomicprogressandgovernmentpolicies.Demandstructurecanbeimprovedby
providingmaterialrewards.
(iii) OpportunitiesStructure:Thisstructureisnecessarytoincreasetheprobabilityof
entrepreneurialactivity.Theopportunitystructureconstitutestheavailabilityofcapital,
managementand technologicalskills,information concerningproductionmethods,
labours andmarkets.Alltheactivitiesassociatedwiththeeffectiveplanningand
successfuloperationofindustrialenterprises.
(iv) LaborsStructure:Kunkelarguesthatthelaborssupplycannotbeviewedon
parwiththe supply ofothermaterialconditions like capital.Hestatesthatlabors
means 'men'andisafunctionofseveralvariables.Thesupplyoffactorylaborsis
governedbyavailablealternativemeansoflivelihood,traditionalism andexpectationsof
life.
(6)Entrepreneurship:'InputCompleting'and 'Gap filling' Function: Liebenstein
identifiedgapfillingasanimportantcharacteristicofentrepreneurship.Ineconomic
theorytheproductionfunctionisconsideredtobewelldefinedandcompletelyknown.
Butthetheoryissilentaboutthekeeperoftheknowledgeofproductionfunction.Where
andtowhom inthefirm thisknowledgeissupposedtobeavailableisneverstated.Itis

32. 28
theentrepreneurialfunctiontomakeupthedeficienciesortofillthegaps.Thesegaps
arisebecausealltheinputsinthe

33. 20
productionfunctioncannotbemarketedbecausesomeinputslikemotivation,leadership
etc.arevagueintheirnatureandwhoseoutputisunderminate.This"gap-filling"activity
givesrisetoamostimportantentrepreneurialfunctionnamely"Input-Completing".He
hastomarshalalltheinputstorealizefinalproducts.
(7) Entrepreneurship:AFunctionofGroupLevelPattern:FrankW.Youngwasreluctant
toaccepttheentrepreneurialcharacteristicsattheindividuallevel.Accordingtohim,
insteadofindividual,onemustfindclusterswhichmayqualifyitselfasentrepreneurial
groups,as thegroupswithhigherdifferentiationhavethecapacitytoreact.Hedefined
'reactiveness'orsolidarity'asthedegreetowhichthemembersofthegroupcreate,
maintainandproject acoherentdefinitionoftheirsituation;and'differentiation'is
definedasthediversity,asopposed tocoherence,ofthesocialmeaningsmaintainedby
thegroup,whenagrouphasahigherdegree ofinstitutionalandoccupationaldiversity,
relativetoitsacceptance,ittendstointensifyitsinternalcommunicationwhichgivesrise
toaunifieddefinitionofthesituation.