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Entrepreneurship: An Introduction

Introduction

Entrepreneurial activity is increasing throughout the world. In India too, there has been a significant change in the mindset of the society. There is no doubt that entrepreneurs and entrepreneurship are playing important roles in today’s global business environment. So what is entrepreneurship? And who are entrepreneurs?

The concept of entrepreneurship is a complex phenomenon. Broadly, it relates to the entrepreneur, his vision and its implementation. Entrepreneurship refers to a process of action an entrepreneur (person) and it is a creative and innovative response to the business environment. It promotes capital formation and creates wealth, and it has the thrill of risk, change, challenge and growth. Entrepreneurship extends beyond

a conventional business and economic perspective. Entrepreneurship is a composite skill, which include imagination, readiness to take risks, ability to bring together and put to user other factors of production, capital, labour, land, as also intangible factors such as the ability to mobilize scientific and technologic advances. One of the qualities of entrepreneurship is the ability to discover an investment opportunity and to organize an enterprise, thereby contributing to real economic growth. It involves taking of risks and making the necessary investments under conditions of uncertainty and innovating, planning and taking decisions.

Defining Entrepreneurship:

Defining entrepreneurship might seem simple, but it isn’t! There are about as many definitions of entrepreneurship. Everyone seems to have his or her own views about what it is and in the same way they have defined it. Let’s look at some of the various ways in which entrepreneurship has been defined.

“Entrepreneurship is the propensity of mind to take calculated risks with confidence to achieve a predetermined business or industrial objective. In substance, it is the risk-taking ability of the individual, broadly coupled with correct decision-making.”

In another view “Entrepreneurship refers to an action process of entrepreneur towards establishing an enterprise. It is a creative and innovative process and adapting response to environment. This concept can be seen in Figure 1.1

Entrepreneurship has long been described by researchers and writers with terms such as new, innovative,flexible, dynamic, creative, and risk-taking. Many authors have said that identifying and pursuing opportunitiesare an important part of entrepreneurship.

According to Frank Knight, “It involves a specialized group or persons who bear ‘risks’ and meet the uncertainty”.

According to Musselman and Jackson, “Entrepreneurship is the investing and risking of time, money and effort to start a business and make it successful.”

Fig 1.2 A Conceptual Model of Entrepreneurship

Entrepreneur Qualities:-

Fig 1.3 Entrepreneur Qualities

Process for Entrepreneurs

In this fiercely competitive, global world, creativity is not only an important source for building a competitive advantage, but it is also a necessity for survival. When developing creative solutions to modern problems, entrepreneurs must go beyond merely relying on what has worked in the past. Ideas usually evolve through a creative process whereby imaginative people germinate ideas, nurture them, and develop them successfully. Various labels have been applied to stages in the creative process, but most social scientists agree on five stages. A model of the entrepreneur’s creative process is shown in Figure 1.4.

Fig 1.4 Entrepreneur creative Process

Nature and Characteristics of Entrepreneurship

The main characteristics of entrepreneurship are given below:

1. Economic Activity: Entrepreneurship is primarily an economic activity because it involves the creation and operation of an enterprise. It is basically concerned with the production and distribution of goods and services and optimally utilizes the resource towards productive use.

2. Entrepreneurship Involves Innovation: Entrepreneurship involves changing, revolutionizing, transforming, and introducing new approaches. Entrepreneurship is an innovative function as it involves doing things in a new and better way. Innovation may take several forms, such as a new product, a new source of raw material a new market, a new method of -production, not yet applied in a particular branch or, manufacturing etc. Drucker says, “Innovation is the specific instrument of entrepreneurship”. Entrepreneur is a change agent.

3. Goal-oriented Activity: The entrepreneur who creates and operates enterprises seeks to earn profits through satisfaction of needs of consumers; hence, entrepreneurship is a goal-oriented activity.

Entrepreneurship emphasizes results, achievements and targets achieved. It is work done not imaginary plans or paper decisions. Hence entrepreneurship is a goal oriented activity.

4. Value Creation: Next, we find that the process of creating value is a characteristic in describing entrepreneurship. Through entrepreneurship, new products, services, transactions, approaches, resources, technologies, and markets are created that contribute some value to a community or marketplace. We can also see value created when, through entrepreneurship, resources are transformed into outputs such as products or services. During this transformation process, value is created because the entrepreneur is fashioning something worthwhile and useful. Drucker says, “Until entrepreneurial act, every plant is a seed and every mineral just another rock”.

5. Enterprise Creation: The next characteristic of entrepreneurship is enterprise creation. In order to pursue the perceived opportunities for innovation and to create value, there must be organized efforts and actions. Someone must take the initiative to do something – take action to get the entrepreneurial venture up and running. Entrepreneurship is a creative response to changes in the environment. It involves innovation or introduction of something new or improved. An entrepreneuris an agent to effect change.

6. A Function of Risk Bearing: Risk is an inherent and inseparable element of entrepreneurship. An entrepreneur works under uncertainties and he assumes the uncertainty of future. In the pursuit of profit, there is possibility of loss also.

7. Entrepreneurship Implies Growth: The next characteristic in entrepreneurship is growth. One major difference between entrepreneurial ventures and other small businesses is the emphasis on growth. Entrepreneurship is about growing a business and pursuing opportunities as they arise. It’s not about standing still or being content to stay in one market or with one product.

8. Managerial Skill and Leadership Function: Managerial skill and leadership are the most important facets of entrepreneurship. An entrepreneur must have the ability to lead and manage. He provides direction, create work culture, and build teamwork and cohesiveness among employees.

9. Recognition that it is a process: The characteristics commonly found in entrepreneurship is the recognition that it is a process, very simply, is a set of ongoing decisions and actions. Entrepreneurship is not a one-time phenomenon; it occurs over time. It involves a series of decisions and actions from initial start-up to managing the entrepreneurial venture.

10. Gap Filling Function: The gap between human needs and the available products and services filled by entrepreneurship. An entrepreneur determines the needs of people and combines resources to produce goods and services of requirements.