for engineers

1. Understand the meaning of entrepreneurship

2. At the end of the session you will know:
 Meaning - Origin of the Term of Entrepreneur.
 Different Theories to the entrepreneurship concept.
 Peter Drucker’s Principles of Innovation.
 Historical Development of the Term ‘Entrepreneur’.
 Changing concept.
Chapter 1 - Understand the meaning of entrepreneurship

3. Chapter 1 - Understand the meaning of entrepreneurship
Meaning:
Entrepreneur is a person ‘who starts a business.’ He / She can also be termed as a
person who starts an enterprise, business or a firm.’ He / She works for himself / herself
and also provides employment to other. He / She is his / her own boss.
Examples of entrepreneur:
 A vegetable vendor who comes home to sell vegetables. Is he or she an entrepreneur?
 An owner of a “petty shop” of provision store. Can we call him an entrepreneur?
 Raghavendra Rao, who promoted Orchid Chemicals and pharmaceuticals.
 A mechanic having his own work shop.
 Chandrasekaran and Narayanan who run a publishing business which was started by
their father. Who is an entrepreneur here?
 Dhirubhai Ambani who had promoted a world call petroleum plant.
 Padmanabhan, a chartered accountant, offering communication programmes and does
audit work
 Prabhudeva, Cinema director and actor.
 Kamath, Chief Executive Officer of ICICI.
 Ramu, a 10 year old boy selling “sundal” on beach.

4. Chapter 1 - Understand the meaning of entrepreneurship
Origin of the Term:
The term entrepreneur is derived from the French verb entreprendre which means
“to undertake”. The original related word in English are Entry and Enterprise. These
two words are combined and the new term is developed.

5. Chapter 1 - Understand the meaning of entrepreneurship
Theories on Entrepreneurship Development:
Richard Cantillion’s Theory of ‘risk-bearing’ – Takes risk of buying at certain prices and
plans to sell at uncertain prices.
Knight’s Theory of ‘Uncertainty’ – Bearing Uncertainty which, by its very nature cannot
be insured, nor capitalised nor salaried too.
Theory of J.B.Say on ‘Co-ordination, Organisation and Supervision’ – Associates an
Entrepreneur with the functions of co-ordination, organisation and supervision.
Schumpeter’s Theory of ‘Innovation’ – Considers economic development as a discrete
dynamic change brought by an entrepreneur by instituting new combinations of
production i.e. innovations.
McClelland’s Theory of Achievement – an individual’s need for achievement (nAch)
refers to the need for personal development.
Peter Drucker’s Theory of ‘Opportunity’ – an entrepreneur is an one who always searches
for change, responds to it and exploits it as an opportunity.

6. Chapter 1 - Understand the meaning of entrepreneurship
Historical Development of the Term ‘Entrepreneur’
Vasant Desai explains the term entrepreneur on the basis of historical development in
the theory.
17th
century
Person bearing risks of profit/loss in a fixed price contract with
government.
1725: Richard Cantillon Person bearing risks is different from person supplying capital.
1797: Beaudeau
Person bearing risks, planning, supervising, organising and
owning.
1803: Jean Baptiste Say Separated profits of entrepreneur from profits of capital.
1876: Francis Walker
Distinguished between those who received profit from
managerial capabilities.
1934: Joseph Schumpeter Entrepreneur is an innovator and develops untried technology.

7. Chapter 1 - Understand the meaning of entrepreneurship
1958: Haggen
An entrepreneur is an economic man who tries to maximise his
profits by innovations.
1961: David McClelland Entrepreneurs are high achievers.
1964: Peter Drucker
Entrepreneur maximises opportunities through systematic
innovations.
1975: Albert Shapero
Entrepreneur takes initiative, organises some social, economic
mechanisms and accepts risk of failure.
1980: Karl Vesper
Entrepreneur seen differently by economists, psychologists,
business persons and politicians.
1983: Gilford Pincholt
Intrapreneur is an entrepreneur within an already established
organisation.
Historical Development of the Term ‘Entrepreneur’..Cont

8. Chapter 1 - Understand the meaning of entrepreneurship
1985: Robert Hisrich
Entrepreneurship is the process of creating something
different with value b devoting the necessary time and effort,
assuming the accompanying financial, psychological and
social risks and receiving the results-rewards of monetary and
personal satisfaction
1990: Vasant Desai
Entrepreneurial activities encompass all fields/sectors and
foster a spirit of enterprise for the welfare of mankind.
Historical Development of the Term ‘Entrepreneur’..Cont

9. Chapter 1 - Understand the meaning of entrepreneurship
Changing Concept:
The history of the thought of entrepreneur shows that a farmer, a dealer who were
regarded as entrepreneurs in earlier days, now has changed to innovators and
contributors to the economic growth. Earlier, all that was required for a person was
to start his own business and be his own boss. Currently, even an employee is
regarded as an entrepreneur and they are called as ‘intrapreneur’.

10. Chapter 1 - Understand the meaning of entrepreneurship
Changing Concept:
The history of the thought of entrepreneur shows that a farmer, a dealer who were
regarded as entrepreneurs in earlier days, now has changed to innovators and
contributors to the economic growth. Earlier, all that was required for a person was
to start his own business and be his own boss. Currently, even an employee is
regarded as an entrepreneur and they are called as ‘intrapreneur’.