enterpreneurship

1. SAGIR AHMED
J-13-M-324

2. THEORIES AND
APPROACHES OF
ENTREPRENEURSHIP
THEORIES AND
APPROACHES OF
ENTREPRENEURSHIP
TOPIC

3. ENTREPRENEUR
•French word “Entreprendre” means to undertake.

4. DEFINITION
An individual who bears the risk of
operating business in the face of
uncertainty about the future
conditions.
A person who organizes and manages
a business undertaking.
Individuals who introduce something
new in the market or economy

5. Entrepreneurs have:
A passion for what they do
The creativity and ability to innovate
A sense of independence and self- reliance
(Usually) a high level of self confidence
A willingness and capability (though not
necessarily capacity or preference) for taking
risks

6. ENTREPRENEUR IN THE
CONTEXT OF AGRICULTURE
A person who introduces changes with
directly or indirectly lead to hire agriculture
inputs.
A farmer becomes an entrepreneur when he
comes to be an operator of a farm business.
A rural entrepreneur is someone who is
prepared to take risk for self betterment

7. EVOLUTION
Entrepreneurs are born.
Entrepreneurs are made.
Entrepreneurs are event oriented.

9. EntrEprEnEurship
Entrepreneurship is the process of creating or
seizing an opportunity, and pursuing it regardless
of the resources currently controlled.
The Webster’s Third New International Dictionary
defines an entrepreneur to be “one who organizes,
owns, manages, and assumes the risks of a
business”

10. EntrEprEnEurship
The entrepreneur shifts resources out of an area of lower
and into an area of higher productivity and greater yield.[J.
B. Say, French economist, circa 1800]
Entrepreneurship is creative destruction. Dynamic
disequilibrium brought on by the innovating entrepreneur,
rather than equilibrium and optimization, is the norm of a
healthy economy and the central reality of economic theory
and practice. [Joseph Schumpeter, Austrian economist, 1911]
The entrepreneur searches for change, responds to it, and
exploits it as an opportunity. Innovation is the specific
tool of entrepreneurs, the means by which they exploit
change as an opportunity for a different business or a
different service[Peter Drucker, 1985]

11. EntrEprEnEurship
Creativity is at the heart of entrepreneurship, enabling entirely
new ways of thinking and working.
Entrepreneurs identify opportunities, large or small, that no
one else has noticed.
Good entrepreneurs also have the ability to apply that
creativity—they can effectively marshal resources to a single
end.
They have drive—a fervent belief in their ability to change the
way things are done, and the force of will and the passion to
achieve success.
They have a focus on creating value—they want to do things
better, faster, cheaper.
And they take risks—breaking rules, cutting across accepted
boundaries, and going against the status quo.

12. Entrepreneurship is an evolved thing. With the advancement of
science and technology it has undergone metamorphosis change
and emerged as a critical input for socio-economic development.
Various writers have developed various theories on
entrepreneurship and popularized the concept among the
common people. The theories propounded by them can be
categorized as under-
•Sociological theories
•Economic theories
•Cultural theories
•Psychological theories
Entrepreneurship is an evolved thing. With the advancement of
science and technology it has undergone metamorphosis change
and emerged as a critical input for socio-economic development.
Various writers have developed various theories on
entrepreneurship and popularized the concept among the
common people. The theories propounded by them can be
categorized as under-
•Sociological theories
•Economic theories
•Cultural theories
•Psychological theories

13. Sociological Theories
The following theories explain how sociological factors
accelerate the growth of entrepreneurs:
1-Theory of religious beliefs
2- Theory of social change
Theory of religious beliefs
Max Weber has propounded the theory of religious belief.
According to him, entrepreneurism is a function of religious
beliefs and impact of religion shapes the entrepreneurial
culture. He emphasized that entrepreneurial energies are
exogenous supplied by means of religious beliefs. the
important elements of Weber’s theory are discussed further-
Sociological Theories
The following theories explain how sociological factors
accelerate the growth of entrepreneurs:
1-Theory of religious beliefs
2- Theory of social change
Theory of religious beliefs
Max Weber has propounded the theory of religious belief.
According to him, entrepreneurism is a function of religious
beliefs and impact of religion shapes the entrepreneurial
culture. He emphasized that entrepreneurial energies are
exogenous supplied by means of religious beliefs. the
important elements of Weber’s theory are discussed further-

14. 1- Spirit of Capitalism-
in the Serbian theory, spirit of capitalism is highlighted. We all know
that capitalism is an economic system in which economic freedom and
private enterprise are glorified, so also the entrepreneurial culture.
2- Adventurous Spirit-
Weber also made a distinction between spirit of capitalism and
adventurous spirit. According to him, the former is influenced by the
strict discipline whereas the latter is affected by free force of impulse.
Entrepreneurship culture is influenced by both these factors.
3- Protestant ethic-
according to Max Weber the spirit of capitalism can be grown only
when the mental attitude in the society is favorable to capitalism
4 -Inducement of profit-
Weber introduced the new businessman into the picture of tranquil
routine. The spirit of capitalism intertwined with the motive of profit
resulted in creation of greater number of business enterprises.

15. In fact, this theory suited the British rulers, who desired to encourage
European entrepreneurship in India. This theory was vehemently criticized by
many researchers because of the unrealistic assumptions.
Theory of Social Change
Everett E. Hagen, in his theory of social change propounded how a traditional
society becomes one in which continuing technical progress takes place. The
theory exhorts the following feature which presumes the entrepreneur’s
creativity as the key element of social transformation and economic growth.
Presentation of general model of the society- the theory reveals a general
model of the society which considers interrelationship among physical
environment, social structure, personality and culture.
Economic Growth : product of social change and political change : According
to Hagen, most of the economic theories of underdevelopment are inadequate.
Rejection of followers syndrome : Hagen rejected the idea that the solution to
economic development lies in imitating western technology. So the followers
syndrome on the part of the entrepreneur, is discouraged.

16. Historic shift as a factor of initiating change- Hagen in his book, How
Economic Growth Begins, depicts historic shift as the crucial force which has
brought about social change technological progress thereby leading to the
emergence of entrepreneurial class from different castes and communities.
Withdrawal of status respects as the mechanism for rigorous
entrepreneurial activity-
Closely consistent with the historic shift it is the social group that plunges into
rigorous entrepreneurism which experiences the status withdrawal or withdrawal
of status respects.
hence, Hagen’s creative personality is the admixture of Schumpeter's
innovation and McClelland high need for achievement.
but Hagen’s analysis fails to give policy measures for backward countries
which are striving for economic development as he identifies status withdrawal as
the causal factor in the emergence of creative presonality. Hagen’s thesis of
disadvantaged minority groups ha its own limitations. There are many
disadvantaged minority groups in India which have not supplied a good number of
entrepreneurs.

17. ECONOMIC THEORIESECONOMIC THEORIES
Entrepreneurship and economic development are interdependent. Economic
development takes place when a country' real rational income increases overall period of
time wherein the role of entrepreneurs is an integral part.
Schumpeter’s Theory of Innovation
Schumpeter’s theory of entrepreneurship is a pioneering work of economic development.
development in his sense, implies that carrying out of new combination of
entrepreneurship is basically a creative activity. According to Schumpeter an
entrepreneur is one who perceives the opportunities to innovate, i.e. to carry out new
combinations or entreprise. In his views, the concept of new combination leading ti
innovation covers the following 5 cases-
1- The introduction of new goods, that is the one with which consumers are not yet
familiar, of a new quality.
2- The introduction of new method of production
3- The opening of new market
4- the conquest of new source of supply of raw material
5-The carrying out of new organization
Entrepreneurship and economic development are interdependent. Economic
development takes place when a country' real rational income increases overall period of
time wherein the role of entrepreneurs is an integral part.
Schumpeter’s Theory of Innovation
Schumpeter’s theory of entrepreneurship is a pioneering work of economic development.
development in his sense, implies that carrying out of new combination of
entrepreneurship is basically a creative activity. According to Schumpeter an
entrepreneur is one who perceives the opportunities to innovate, i.e. to carry out new
combinations or entreprise. In his views, the concept of new combination leading ti
innovation covers the following 5 cases-
1- The introduction of new goods, that is the one with which consumers are not yet
familiar, of a new quality.
2- The introduction of new method of production
3- The opening of new market
4- the conquest of new source of supply of raw material
5-The carrying out of new organization

18. In view of the above, Schumpeterian theory of entrepreneurship has got the
following features-
1- Distinction between invention and innovation
Schumpeter makes a distinction between innovation and invention. Invention
means craetion of new things and innovation means applical of new things
onto practical use
2- emphasis on entrepreneurial function- Schumpeter has given emphasis on
the role of entrepreneurial functions in economic development.in his views,
development means basic tranformation of the economy that is brought about
by entrepreneurial functions.
3- presentation of disequilibrium situation through entrepreneurial activity-
the entrepreneurial activity represents a disequilibrium situation, a dynamic
phenomenonand a break from the rotine or a circular flow or tendenct
towards equilibrium.
4- entrepreneuralism dream and the will to found a private kingdom- the
motives of creating things and applying these things into practice inspire the
entrepreneur to undertake innovation.

20. 5- Schumpeter remained silent about as to why some economics had more
entrepreneurial talent than others.
However, despite the above criticisms, Schumpeterian theory is regarded as one f
the best theories in the history of entrepreneurial development.
CULTURAL THEORIES
Advocates of cultural theories point out that entrepreneurship is the product of
culture. Entrepreneurial talents come from cultural values and cultural system
embedded into the cultural environment.
Hoselitz’s Theory
Hoselitz explains that the supply of entrepreneurship is governed by cultural
factors, and culturally minority groups are the spark-plugs of entrepreneurial
and economic develoment.in many countries, entrepreneurs have emerged from
a particular socio-economic class. He emphasized the role of culturally
marginally groups like Jews and the Greeks in medieval Europe, the Chinese in
south Africa and Indian in east Africa in promoting economic development.
Psychological Theories
Psychological theories centre's around the psychological characteristic so the
individual in a society. Psychological characteristics affect the supply of
entrepreneurs in the society.

21. DRUCKER ON ENTREPRENEURSHIP
Peter F. Drucker opined that “an entrepreneur is one who always searches for
change, responds to it and exploits it as an opportunity.” he laid emphasis on two
important factors – innovation and resource- that led to emergence of
entrepreneurship. According to him, innovation is the real hub of
entrepreneurship which creates resource. A thing is regarded as resource when
its economic value is recognized. For example, mineral oil was considered
worthless until the discovery of its use. Similarly, purchasing power was
considered an important resource by an American innovative entrepreneur who
invented installment buying.
According to Drucker, successful entrepreneurship involves the
following things-
•Value and satisfaction obtained from resource by the consumer are increased
•New values are created
•Material is converted into a resource or exiting resources are combined in a new
or more productive configuration
•Entrepreneurship is the practice which has a knowledge base.
•Entrepreneurship is not confined to big businesses and economic institutions, it
is equally important to small business and non-economic institutions
•Entrepreneurship behavior rather than personality trait is more important to
enhance entrepreneurship
•.

22. Thus, Drucker has given his views that
“an entrepreneur need not be a
capitalist or an owner. A banker who
mobilizes other’s money and allocates it
in areas of higher yield is very much an
entrepreneur though he is not the owner
of the money.

23. APPROACHES TO
ENTERPRISE
Great person school
Management school
Leadership school
Intrapreneuship school

24. Entrepreneurial
model
Focus Assumption Skills
• Great person
school
The entrepreneur
has an intuitive
ability
Without inborn
intuition the
individual would be
like other mortals
Intuations,vigour,en
ergy,self esteem
• Management
school
Organizers of an
economic venture
Trained in technical
function of
management
Planning,organising
and budgeting etc.
• Leadership school Individuals are
leaders of people.
Entrepreneur
cannot accomplish
his/her goals alone
depends on other.
Motivating,
directing and
leading.
• Intrapreneurship
school
Development of
independent unit to
create market and
expand service.
Intrepreneurial
activity leads to
organizational
building &
entrepreneurs
becoming managers.
Alertness to
opportunity,
maximizing
decision

25. THANK YOU