Understanding The Entrepreneur

Entrepreneur
The man who makes no mistakes does not usually make anything. Edward John Phelps, American lawyer and diplomat (1822-1900) "Nothing great was ever achieved without enthusiasm." Ralph Waldo Emerson Imagination is more important than knowledge Einstein "Don't be afraid to take a big step if one is indicated; you can't cross a chasm in two small jumps." David Lloyd George Most of the things worth doing in the world had been declared impossible before they were done Louis D.

Definition of Entrepreneur
Entrepreneur is derived from the French entreprendre,

meaning to undertake.
The entrepreneur is one who undertakes to organize, manage, and

assume the risks of a business.

The French men who organized and led military expeditions in the

early 16th Century were referred to as Entrepreneurs.

Around 1700A.D. the term Entrepreneur was used for architects and

contractors of public work.

Although no single definition of entrepreneur exists and no

one profile can represent todays entrepreneur, research is providing an increasingly sharper focus on the subject.

Definition
According to Oxford Dictionary

one who undertakes an enterprise, especially a contractor acting as intermediary between capital and labor
According to Peter P. Drucker

Innovation is the specific tool of entrepreneurs, the means by which they exploit changes as an opportunity for different business or a different service

 An entrepreneur in an advanced economy is an individual who introduces something new in the economy a method of production not yet tested by experience in the branch of manufacture concerned, a product with which consumers are not yet familiar, a new source of raw-materials or of new markets and the life. Accordingly to him the functions of an entrepreneur are
Schumpeter (1952)
Introduction of new product

Introduction of new methods of production

Development of new markets and finding fresh sources of

raw-materials and Making changes.

DEFINITION .
From our perspective: Any individual that sees and acts upon an

opportunity This includes introducing a new product or service, identifying new markets, or putting a twist on an existing product, process or service Also, includes the raising of capital, taking the risk and controlling the new venture Embodies creativity, aggressiveness, and determination By assembling various resources, s/he

 An entrepreneur is always action-oriented. He

has the ability to visualise the necessary steps involved from idea generation to its actualisation. He is both a thinker and doer, planner and worker. He is accepts risk and manges it.

Concept of Entrepreneur

Risk Bearer

Entreprene ur

Organize r Innovato r

Entrepreneurship
"Entrepreneurship is the process of

creating or seizing an opportunity and pursuing it regardless of the resources currently controlled" (Timmons, 1994).

The Mindset
Lets begin with why:
To get rich? Follow a passion?

Just got laid off?

To manage your own destiny?

There are lots of valid reasons to become an entrepreneur, but youd better know your reason.

Factors that Shape Future Entrepreneurs

Traits

Environment

Behavior

The Entrepreneurial Process

These factors are commonly grouped under 4 schools of thought
1.

2.

3.

Traits Approach: entrepreneurs are shaped by their character internal attributes Environmental Approach: entrepreneurs are a product of their environment external factors Behavioural/Managerial Approach : it is neither internal nor external factors but actions & behaviors that lead to

Contingency Approach
Combination of ALL factors The ability to sense the opportunity (result of E traits)

The ability/willingness to exploit (management skill)

Motivation for Becoming an Entrepreneur

Motivation varies from individual to

individual
Foreign refugees: people escaping political or

religious persecution or to seek economy with greater opportunities Corporate Refugees: people dissatisfied with corporate environment Parental refugees: children of self-employed parents Feminist Refugees: women who feel discriminated against by supervisors, peers, education system, corporate world Social Refugees: people who do not agree with certain aspects of their society -- usually start a business tied to their hobby or craft

Reasons for growth of entrepreneurship Industry structure New Technologies Deregulation and privatisation Formation of new business communities Increased demand for variety Services sector Govt incentives and subsidies Easier access to resources

Reasons for growth.

Entrepreneurial education

Return on innovation
Entrepreneur as a hero

Self-employment is highly valued

Rising dissatisfaction at job Acceptance of ex-entrepreneurs in

the job market

World famous and Successful Entrepreneurs

Sl No. Name of the successful Entrepreneurs
1.
2. 3. 4. 5.

Areas of enterprises
Apple Computers
Microsoft Harpo inc. Harpes Arring to Publishing and media Film Industry

Steve Wozniak
Bill Gates Oprah Winfrey Michael H & Jay Arrington Steven Spielberg

6.
7. 8. 9.

Vera Wang
Donald Trump Russel Simmons Gordon Moore

Vera Wang Fashions

Trump Enterprises Pat Farm Clothing Intel Corporation

10.
11. 12. 13. 14.

Tyler Perry
Bill Hewlett Mark Burnett Larry Page & Sergey Brin Ted Turner

Tyler Perry Productions

Hewlett Packard Television Show Producer Google Turner Broadcasting

10 most famous Entrepreneurs from India

Sl No. 1. Name of the successful Entrepreneurs Tulsi Tanti

Area of enterprises (industry)

Suzlon Energy Limited

2.
3. 4. 5.

Shiv Nadar
Rahul Bajaj Dr. Pratap Reddy Naresh Goyal

Hindustan Computers Limited (HCL)

Bajaj Group Apollo Hospital Groups Jet Airways

6.
7. 8. 9. 10.

Narayana Murthy
Anil Dhirubhai Azim Premji Ekta Kapoor Kiran Mazumdar Shaw

Infosys Technology Limited

Anil Dhirubhai Ambani Groups Wipro Technologies Queen of Indian Television Biotechnology Company in India

Function of Entrepreneur Primary Function Other Functions

Functions important for developing countries
Management of Shares

Planning Diversification of Organisation Production Decision-making Expansion of the Management Enterprise Innovation Employer and Employee Risk-bearing Takling Labour Problem Uncertainty-bearing Coordination with outside agencies

Public bureaucracy
Acquiring & assembling New Product Parallel Opportunities Marketing Management Customer relations

1. Idea generation The first and the most important function of an entrepreneur is idea generation. Idea generation implies product selection and project identification. Idea generation is possible through vision, insight, keen observation, education, experience and exposure. This needs scanning of business environment and market survey.

2. Determination of business objectives Entrepreneur has to state and lay down the business objectives. Objectives should be spelt out in clear term. The entrepreneur must be clear about the nature and type of business - Whether manufacturing concern or service oriented unit or a trading business. 3. Determining form of enterprise Entrepreneur has to determine form of enterprise depending upon the nature of the product, volume of investment etc. The form of ownership are sole proprietorship, partnership, joint stock company, co-operative society etc.

4. Raising of funds All the activities of the business depend upon the finance and hence fund raising is an important function of an entrepreneur. An entrepreneur can raise the fund from internal source as well as external source. He should be aware of different sources of funds. He should also have complete knowledge of government sponsored schemes PMRY, SASY, REAP etc. He can get government assistance in the form of seed, capital, fixed and working capital for his business.

5. Market Research
Market research is the systematic collection of data

regarding the product which the entrepreneur wants to manufacture. Entrepreneur has to undertake market research persistently to know the details of the intending product i.e.

The demand for the product Size of the market/customers The supply of the product Competition The price of the product etc.

6. Procurement of machines and raw materials

Another important function of an entrepreneur

is to procure raw-materials and machines. Entrepreneur has to identify cheap and regular sources of raw-materials which will help him to reduce the cost of production and face competition boldly. While procuring machineries he should specify the technical details and the capacity. He should consider the warranty, after sales service facilities etc before procuring machineries.

7. Recruitment of manpower To carry out this function an entrepreneur has to perform the following activities Estimating man power requirement for short term and long term. Laying down the selection procedure. Designing scheme of compensation Laying down the service rules Designing mechanism for training and development.

8. Implementation of the project

Entrepreneur has to develop schedule and action plan

for the implementation of the project The project must be implemented in a time bound manner. All the activities from the conception stage to the commissioning stage are to be accomplished by him in accordance with the implementation schedule to avoid cost and time overrun. He has to organize various resources and co-ordinate various activities. This implementation of the project is an important function of the entrepreneur.

MD Indo-US Ventures

Traits of Entrepreneur
High need for achievement Strong desire to do something different from

others Standard of excellence and success High self-esteem Commitment and conviction Fully commits himself to the project and rests only when achieved Leaves no effort to complete the task in time

Traits
Risk taking

Takes calculated risks

Does not like to undertake tasks

which are either very easy or impossible to achieve Undertakes tasks or makes decisions that involve a moderate probability of success and where he is sure that his efforts can influence success

Traits
Capacity to analyze

Knows that need for information, its

relevance, where and how to find it. Has a thought process for diagnosing problems, conceiving and comparing alternative courses of actions and approaches in the direction to solve rather than to avoid.

Traits
Initiative and independence Takes initiative and does not wait for others

to act first Likes to lead rather than being led Likes to act on his own rather than follow others directions High personal efficiency Has a sense of effectiveness Presents himself with ability to do things with higher degree of efficiency

Traits
Hopeful about future and search for

environment Reasonably optimistic and tends to look to future with hope Tends to search the environment in order to seek answers to questions Sets goal and plans his line of operations Perceives opportunities

Types of skills required in Entrepreneurship

Technical Skills:
Writing
Oral Communication Monitoring environment Technical Business Management

Technology
Interpersonal Listening Ability to organise

Network building
Management style Coaching Being a team player

Skills required
Business management Skills:
Planning and goal setting

Decision making
Human relations Marketing

Finance
Accounting Management Control Negotiation skill Venture launch Managing growth

Skills required
Personal entrepreneurial Skill: Inner control/ disciplined Risk taker Innovative Change oriented Persistent Visionary leader Ability to manage change

Skills required.
Technical
Writing
Oral Communication Monitoring The Environment Use Technology

Business Management
Planning
Decision Making Human Relations Marketing (Selling)

Personal
Inner Control
Risk Taking Innovative Change-Oriented Visionary

Higher order skills

Comfortable with lifestyle changes Willingness to break / bend / stretch Patience to start small Prepared to make enemies Comfort with confrontations Dealing with failure Willingness to learn

Negatives
You are alone All losses are yours All decisions are yours Work may not be satisfying Exiting the business is difficult You will need to put in long hours Lack of success will effect self esteem Pressures will affect social and family life

Positives
You are the boss

All profits are yours

Increases self confidence Work can be very satisfying Success will give you immense satisfaction There will be great variety in roles and tasks

Characteristics of Entrepreneur
ENTREPRENE U REffective communication Negotiating skills Total commitment/tactical/team man Risk-taking ability Emotional Stability/Ethical Problem solving Result oriented Energetic Net working ability - Excellence in Economics - Unambiguous Real Innovator

Accepting Challenges

Decision Making Risk Taking

Organisation

Skillful Management
Management of the enterprise A Success

Innovation

Entrepreneurship

Entrepreneurial Characteristics
Not everyone wants to be an entrepreneur and run their own business. Being an entrepreneur requires specific characteristics and skills that are often achieved through education, hard work, and planning. Risk Taker Businesses face risk. Entrepreneurs minimize risk through research, planning, and skill development. Perceptive (sensitive, insightful, observant) Entrepreneurs view problems as opportunities and challenges. Curious Entrepreneurs like to know how things work. They take the time and initiative to pursue the unknown.

Characteristics
Imaginative Entrepreneurs are creative. They imagine solutions to problems that encourage them to create new products and generate ideas.

Persistent True entrepreneurs face bureaucracy, make mistakes, receive criticism, and deal with money, family, or stress problems. But they still stick to their dreams of seeing the venture succeed.
Goal-setting Entrepreneurs are motivated by the excitement of staring a new business. Once achieved, they seek out new goals or ventures to try. Hardworking Entrepreneurs need a great deal of energy to see a venture start and succeed. Yet they are not deterred by the long hours to achieve their goal.

Characteristics
Self-confident Entrepreneurs believe in themselves. Their self-confidence takes care of any doubts they may have. Flexible Entrepreneurs must be flexible in order to adapt to changing trends, markets, technologies, rules, and economic environments.

Independent An entrepreneurs desire for control and the ability to make decisions often makes it difficult for them to work in a controlled environment.

Characteristics.
Marketability Entrepreneurs need to ask themselves the following questions about their product, service, or charity: Does your target market want this product? Prove it. What is you competition? How much of the market do they own already? How will you take it away from them? Are you competitively priced? Is this a short-term venture? How long will it last? What do you offer that no other product, service, or charity offers? Why would a customer pay money for what you provide? Profitability To expect a profit, an entrepreneur must ensure that revenue exceeds all costs. Listing expected revenue and expenses can help to achieve this.

Characteristics Often Attributed to Entrepreneurs

Source: John A. Hornaday, Research about Living Entrepreneurs, in Encyclopedia of Entrepreneurship, ed. Calvin Kent, Donald Sexton, and Karl Vesper, 1982, 2627. Adapted by permission of Prentice-Hall, Englewood Cliffs, NJ.

Twenty-First Century Characteristics of Entrepreneurs

Source: Soo Ji Min, Made Not Born, Entrepreneur of the Year Magazine (fall 1999): 80.

Entrepreneurs vs. Managers

Reward System Reward System -

Doing what they like. Independence. Activity - Direct involvement. Risk - Moderate risk taker. Status - Not concerned about status symbols.

Corporate rewards. Promotion, staff, office, money. Activity - Delegates and supervises. Risk - Avoids risk. Status - Concerned about status symbols.

Entrepreneurs vs. Managers

Mistakes - Deals and Mistakes - Avoids or

learns from them. Decisions - Follows dreams with decisions. Who serves - Customers and self. Relationships - Dealmaking and reciprocity. Time orientation - 5 - 10 years.

shifts blame. Decisions - Agrees with those above them. Who serves - Others. Relationships Hierarchy. Time orientation - Shortterm.

Comparing Entrepreneurs to Managers and Leaders

Entrepreneur Innovates Creates Sees opportunities Manager Administers Maintains See problems Leader Innovates Develops Sees the future

Asks how and when Asks how and when Asks what and why
Makes it happen Builds the team Does things right Relies on control Uses influence Inspires trust

Types of entrepreneurs
According to Danhof Entrepreneurs are classified into four types
Entrepreneur

Innovative Entrepreneur

Imitating or Adoptive Entrepreneur

Fabian Entrepreneur

Drone Entrepreneur

Types
Innovative Entrepreneurs Innovative Entrepreneurs Adventurous entrepreneurs who attempt to put attractive possibilities in to practice are included under this type. They utilize a chance to introduce a new technique or a new product. They mobilize sufficient capital to start an enterprise befitting to this possibility. This type of Entrepreneurs introduce new product and new production techniques and find out the new markets for their product.

Types
Imitative Entrepreneurs.:

This type of Entrepreneurs

attempts to imitate innovative entrepreneur. They imitate the techniques and activities of others . The Entrepreneur of the developing countries belong to this type.

Types
FABIAN ENTREPRENURE: FABIAN ENTREPRENURE - Entrepreneur who attribute preference to
Customs Religion

Tradition and
Past habits

Being shy and lazy this type of entrepreneur are very

cautious to accepts changes and they view changes with suspicion. Being Reluctant to face risk, they continuously follow the foot steps of their predecessors

Types
Drone Entrepreneur (whine, go on about)

These entrepreneur are unwilling to make any

change in the production system, even if the system causes losses repeatedly. They never try to rise in accordance with the opportunities or to accept the warning given by times. Even if their products have lost marketability and the activities of the enterprise have been proved to be uneconomical and the enterprise has been thrown out of the market.

Types
Following is a list of Entrepreneur who are not

included in the definition Formulated by DANHOF:

INDIVIDUAL ENTREPRENEURS And

INSTITUTIONAL ENTREPRENEURS TECHNOLOGICAL ENTREPRENEURS INHERITED ENTREPRENEURS INSTIGATED ENTREPRENEURS

Types
INHERITED ENTREPRENEUR:

Sometimes people become entrepreneur

when they inherit family business. Entrepreneur of large scale business concern like TATA, RELIANCE, BIRLA, KHAITAN

Types
Individual Entrepreneur and Institutional

Entrepreneur: Majority of Entrepreneur belonging to the small scale industry sector are individual entrepreneur. Entrepreneur of this type are found in plenty in any country. They enjoy the benefits of flexibility, Quick decision making . Individual Enterprise are not able to grow or develop beyond a limit. So its become necessary to institutionalize enterprises. When entrepreneurial skills are to be coordinated , it becomes necessary for a team of entrepreneur to work united and the enterprise gains an institutions nature.

Types
TECHNOLOGICAL ENTREPRENEUR

Educated young men and youth for self

employment began to pour into business sector at a time when the problem of unemployment become a threat to the society and technical and scientific advancements started creating changes in the economic structure of the nation.

Types
Instigated Entrepreneurs:

Person who have become entrepreneur due

to the pressure exerted on them by circumstances are termed as instigated entrepreneurs. For example traditional handicraft products and business men are forced to enter into business on account of the decline of usages of handicraft goods.

Types
1. 2. 3. 4. 1. 2. 3. 4. 5. 6. 7. Innovative Entrepreneur Imitative Entrepreneur Fabian Entrepreneur Drone Entrepreneur Business Entrepreneur Trading Entrepreneur Industrial Entrepreneur Corporate Entrepreneur Agricultural Entrepreneur Retail Entrepreneur Service Entrepreneur

Stages of economic Development

Types of Business

Types
Use of Technology

1. Technical Entrepreneur 2. Non-technical Entrepreneur 3. Professional Entrepreneur 4. High-tech Entrepreneur 5. Low-tech Entrepreneur

According to Area

1. Urban Entrepreneur 2. Rural Entrepreneur

Gender and Age

1. Men Entrepreneur 2. Women Entrepreneur 3. Young Entrepreneur 4. Old Entrepreneur

Growth Rate

1. Growth Entrepreneur 2. Super growth Entrepreneur

Stage of Development

1. Classical Entrepreneur 2. Modern Entrepreneur

Scale of Entrepreneur

1. Small Scale Entrepreneur 2. Medium Scale Entrepreneur 3. Large Scale Entrepreneur

Entrepreneur VS. Intrapreneur

Entrepreneur VS. Intrapreneur: A new brand of Corporate entrepreneurs called Intrapreneur. In Big Organization, the top executives with Entrepreneurial talents are encouraged to generate new ideas and then convert them into products through research and development carried out within the organization. This concept of Intrapreneurship has gained popularity in Developed countries like America. If the managements are not receptive to their ideas then, they tend to leave their parent organization and start Ventures of their own.

Entrepreneur VS. Intrapreneur

ENTREPRENEUR Independent Need not to be Highly Educated INTRAPRENEUR Dependent Highly Educated

Fund Raising Risk Bearing Routine Work

Operation From Outside Strong Authorities

No Fund Raising No Risk Bearing Specialist

Operation from Inside Strong Authorities

Factors
Dependency

Entrepreneur

Intrapreneur

An Entrepreneur is an independent An Intrapreneur is completely depend on person in his business operation entrepreneur i.e. owner An entrepreneur himself raises funds An Intrapreneur does not raise funds required for the enterprise starting from any sources no botheration of and establishing raising funds He bears full risks of the business He does not fully bear the risk of the develops & operates business he operates It is not necessary that an An Intrapreneur enters into an existing entrepreneur should have a high organisation with a high education and education learns from others qualification business specialist He is more concerned with routine An Intrapreneur is a specialist in his work chosen field and serve as an outside professional He is always operated both inside He operates within the organization and outside of organization With a strong authority Less authority

Raising of funds

Risk bearing

Education & qualification

Routine work

Operation from outside Strong Authoritarian

Important functions of an Entrepreneur 1. Idea generation 2. Determination of business objectives 3. Raising of funds 4. Procurement of machines and materials 5. Market research 6. Determining the form of enterprise 7. Recruitment of manpower 8. Implementation of the project.

IMPORTANCE OF ENTREPRENEURSHIP

The nature of a developing economy is

quite different from a developed economy. The developing economy can be an agricultural country moving towards the industrialization or it may be the one where in the industry may be in its infancy lacking advance technology.

IMPORTANCE The modern era is an era of changes. The whole world is becoming a village due to the industrial revolution and fast developing communication technology. The globalization of industry and commerce is bringing a vast change in various aspects of life. Economic development of a country is the outcome of purposeful human activity.

IMPORTANCE
Economic development is a highly

dynamic process characterized by the pattern of demand shifts, new products are needed, appear for the production of goods within a country. A developing country needs entrepreneurs who are competent to perceive new opportunities and are willing to incur the necessary risk in exploiting them.

IMPORTANCE. A developing economy is required to be brought out of the vicious circle of low income and poverty. Entrepreneur can break this vicious circle. Entrepreneurs and helping government can change a developing economy in developed economy.

Entrepreneurial failure

Lack of experienced management Few trained or experienced manpower Poor financial management Rapid growth Lack of business linkages Weak marketing efforts Lack of information Incorrect pricing Improper inventory control Short term outlook

The Myths of Entrepreneurship Myth #1

Get Rich Quick!

Truth is Life as an entrepreneur is not about money. Success rarely happens overnight. It's about what you want to do with your life.

Myth # 2
You must be born an entrepreneur

(trait theory)
Truth is: some of the most successful entrepreneurs are the most unlikely. It is a lifestyle choice, not an accident.

Myth # 3
You must be at the right place at the right

time (environment theory)

Truth is: successful entrepreneurs operate whatever the macroeconomic and structural factors are

Myth # 4
"I'll have all this free time" Truth is entrepreneurs work many

hours advantages are:

control of time

variety of tasks

Myth # 5
It get easier. Truth is it gets more challenging

must work faster, smarter & longer

must enjoy the battle

Myth # 6
If you build it, they will come.

Truth is building your business is just

the start.
Next is the real work: planning timing strategizing and more.

Myth # 7
It's all about the bottom line.

Truth is that the bottom line is

necessary but not sufficient

purpose and meaning to the business inspire customers and employees

Myth # 8
Entrepreneurs are risk takers Truth Entrepreneurs are calculators

Studies show entrepreneurs are only

moderate risk takers

Myth # 9
You have to have a great idea Truth

Your idea must be good

Your idea must be doable Your idea must be wanted or needed Your idea must be priced right

Myth # 10
It takes a lot of money Truth Over 50% start for under

Rs.500,000 Also look for

Certain business types

Turn-around situations
Possibility of using other peoples money

THEORIES OF ENTREPRENEURSHIP

THEORIES OF ENTREPRENEURSHIP
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

THEORIES OF ENTREPRENEURSHIP 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 Webers theory are -

Sociological Theories

Spirit of Capitalism In the Weber 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.

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 (desire). Entrepreneurship culture is influenced by both these factors.

 Mental attitude According to Max Weber the spirit of capitalism can be grown only when the mental attitude in the society is favorable to capitalism
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.

Sociological Theories
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 entrepreneurs 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.

Sociological Theories.
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 and 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, Hagens creative personality is the

admixture of Schumpeters innovation and McClellands high need for achievement. But Hagens 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 personality. There are many disadvantaged minority groups in India which have not supplied a good number of entrepreneurs.

ECONOMIC THEORIES
Entrepreneurship and economic development are

interdependent. Economic development takes place when a countrys real rational income increases over a long period of time wherein the role of entrepreneurs is an integral part.

Schumpeters Theory of Innovation

Schumpeters 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 enterprise.

 In his view, the concept of new combination

leading to innovation covers the following 5 cases: The introduction of new goods, that is the one with which consumers are not yet familiar, or a new quality. The introduction of new method of production The opening of new market The conquest of new source of supply of raw material The carrying out of new organization

Economic Theories
In view of the above, Schumpeterian theory of

entrepreneurship has got the following features Distinction between invention and innovation Schumpeter makes a distinction between innovation and invention. Invention means creation of new things and innovation is application of new things onto practical use Emphasis on entrepreneurial function- Schumpeter has given emphasis on the role of entrepreneurial functions in economic development. In his views, development means basic transformation of the economy that is brought about by entrepreneurial functions.

 Presentation of disequilibrium situation

through entrepreneurial activity - the entrepreneurial activity represents a disequilibrium situation, a dynamic phenomenon and a break from the routine or a circular flow or tendency towards equilibrium. Entrepreneurialism 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.

Critical evaluation
Schumpeters theory of innovation is criticized on

the following grounds The theory has the scope of entrepreneurism in the sense that it has included the individual businessman along with the directors and managers of the company. Schumpeters innovating entrepreneurs represent the enterprise with the R & D and innovative character. But developing countries lack these character.

 Schumpeter remained silent about as to why

some economies had more entrepreneurial talent than others. The theory emphasizes on innovation and excludes the risk taking and organizing aspects. Schumpeters entrepreneurs are large scale businessmen who introduce new technology, method of production, etc. However, despite the above criticisms, Schumpeterian theory is regarded as one of 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.

Hoselitzs 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 development. In many countries, entrepreneurs have emerged from a particular socio-economic class. He emphasized the role of culturally marginalized groups like Jews and the Greeks in Medieval Europe, the Chinese in South Africa and Indians in East Africa in promoting economic development.

 Psychological theories centers around

the psychological characteristics of the individual in a society. Psychological characteristics affect the supply of entrepreneurs in the society.

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 noneconomic institutions Entrepreneurship behavior rather than personality trait is more important to enhance entrepreneurship The foundation of entrepreneurship lies in concept and theory rather than in intuition

 Thus, Drucker has given his views that an

entrepreneur need not be a capitalist or an owner. A banker who mobilizes others money and allocates it in areas of higher yield is very much an entrepreneur though he is not the owner of the money.

Difficult Personality Types

Shotgun Sam Simplicity Sue
Quickly Identifies New/Promising Opps. But Rarely Follows Through Thinks Everything Is A Lot Simpler Than Is, Feels Can Create Business Easily

Prima Donna Paul

Ralph The Rookie Meticulous Mary

So In Love With Own Idea Feels Everyone Out to Steal It And Take Advantage Of Him
Well-Grounded In Theory But Lack Real-World Business Experience Used To Having Things Under Control, Cant Handle Catastrophe, Ambiguity

Underdog Ed Hidden Agenda Harry

Inventor Irving

Not Comfortable Actually Transforming Invention Into Tangible Business Success

Does Not Have Right Motives/Objectives For Developing Expediting New Enterprise More Inventor Than Entrepreneur. More Concerned With Invention Itself.

Sources of Innovation
Source
Incongruities

Examples
Overnight Package Delivery

Success: Apple Computer Unexpected Occurrences Failure: Ford Edsel Sugar-Free Products, Caffeine-Free Coffee, Microwave Ovens
Health Care Industry Changing to Home Health Care Rest Homes/Retirement Centers for Older People Exercise (Aerobics) & Growing Concern for Fitness Video Industry: Robotics

Process Needs
Industry/Market Change Demographic Changes Perception Change Knowledge-Based Concepts