CHAPTER – 2
CHAPTER – 2
ENTREPRENEURSHIP
ENTREPRENEURSHIP
The process undertaken by an entrepreneur to augment his
The process undertaken by an entrepreneur to augment his business interestsbusiness interests gave birth to “
gave birth to “ENTREPRENEURSHIP”.ENTREPRENEURSHIP”.
THE CONCEPT OF ENTREPRENEURSHIP THE CONCEPT OF ENTREPRENEURSHIP Entrepreneur
Entrepreneur EntrepreneursEntrepreneurship hip EnterpriseEnterprise
Person
Person Process Process of of action action ObjectObject
Introduction Introduction
•
• EntrepreneurshipEntrepreneurship is the act of being anis the act of being an entrepreneur entrepreneur , which is a French, which is a French
word meaning "one who undertakes an endeavor". word meaning "one who undertakes an endeavor".
•
• EnEntrtrepeprereneneururs s asassesembmble le reresosourcurces es ininclclududining g ininnonovavatitionons, s, fifinanancnce e anandd
business acumen in an effort
•
• TThhe e momosst t oobbvviioouus s ffoorm rm oof f eennttrerepprerenneeuursrshhiip p iis s tthhaat t oof f ssttaartrtiinngg
new
new businesses businesses; however, in recent years, the term has been extended to; however, in recent years, the term has been extended to include social and political forms of entrepreneurial activity.
include social and political forms of entrepreneurial activity.
•
• AccAccordording ing to to RobRobert ert L L SchSchwarwarz, z, whawhat t is is the basis the basis for for ententrepreprenreneureurshishipp
characteristics can be described as follows: “The entrepreneur is essentially characteristics can be described as follows: “The entrepreneur is essentially a visualizer and an actualizer. He can visualize something, and when he a visualizer and an actualizer. He can visualize something, and when he visualizes it he sees exactly how to
visualizes it he sees exactly how to make it happen.”make it happen.”
•
• The concept of entreThe concept of entreprenepreneurshiurship p was first was first estabestablishelished d in the in the 17001700s, s, and theand the
meaning has evolved ever since. Many simply equate it with starting one's meaning has evolved ever since. Many simply equate it with starting one's own business. Most economists believe it is
own business. Most economists believe it is more than that.more than that.
•
• To some economists, the entrepreneur is one who is willing to bear the risk To some economists, the entrepreneur is one who is willing to bear the risk
of a new venture if there is a significant chance for profit. of a new venture if there is a significant chance for profit.
•
• Others emphasize the entrepreneur's role as an innovator who markets hisOthers emphasize the entrepreneur's role as an innovator who markets his
innovation. innovation.
•
• StStilill l ototheher r ececononomomisists ts sasay y ththat at enentrtrepeprereneneururs s dedevevelolop p nenew w gogoodods s or or
processes that the market demands and
processes that the market demands and are not currently being supplied.are not currently being supplied.
•
• Business expert Peter Drucker (1909-2005) took this idea further, describingBusiness expert Peter Drucker (1909-2005) took this idea further, describing
the entrepren
the entrepreneur as eur as someosomeone who ne who actuaactually searches for lly searches for chanchange, responds toge, responds to it, and exploits change as an opportunity.
it, and exploits change as an opportunity.
•
• Most economists today agree that entrepreneurship is a necessary ingredientMost economists today agree that entrepreneurship is a necessary ingredient
for
for stistimulmulatiating ng ecoeconomnomic ic grogrowth wth and and empemployloymenment t oppopportortuniunitieties s in in allall societies.
societies.
•
• The word is derived from the French word ‘Entrependne’ and theThe word is derived from the French word ‘Entrependne’ and the
German word ‘Uternchmen’ both of which refers to individuals who are German word ‘Uternchmen’ both of which refers to individuals who are undertakers i.e. who can undertake ‘risk’ by setting up a new enterprise. undertakers i.e. who can undertake ‘risk’ by setting up a new enterprise.
They are contractors who bear the risk of profit as well as loss. They are They are contractors who bear the risk of profit as well as loss. They are soldiers of fortune, adventurers or m
soldiers of fortune, adventurers or merchants.erchants. The concept of
The concept of entrepreneurshipentrepreneurship has a wide range of meanings. On the onehas a wide range of meanings. On the one extre
extreme me anan entrepreneurentrepreneur is a person of very high aptitude who pioneers change,is a person of very high aptitude who pioneers change, possessing characteristics found in only a very
possessing characteristics found in only a very small fraction of the population.small fraction of the population.
SCHUMPETER'S VIEW OF ENTREPRENEURSHIP SCHUMPETER'S VIEW OF ENTREPRENEURSHIP
Austrian economist Joseph Schumpeter 's definition of entrepreneurship placed an Austrian economist Joseph Schumpeter 's definition of entrepreneurship placed an emphasis on innovation, such as:
emphasis on innovation, such as: 1.
1. NeNew w prprododucuctsts 2.
2. New New proproducductiotion mn methethodsods 3.
3. NeNew mw maarkrketetss 4.
4. New New forforms oms of of orgarganiznizatiationon We
Wealalth th is is crcreaeateted d whwhen en susuch ch ininnonovavatition on reresusultlts s in in nenew w dedemamandnd. . FroFrom m ththisis viewpoint, one can define the function of the entrepreneur as one of combining viewpoint, one can define the function of the entrepreneur as one of combining various input factors in an innovative manner to generate value to the customer various input factors in an innovative manner to generate value to the customer wi
with th ththe e hohope pe ththat at ththis is vavalulue e wiwill ll exexceceed ed ththe e cocost st of of ththe e ininpuput t fafactctorors, s, ththusus generating superior returns that result in the
generating superior returns that result in the creation of wealth.creation of wealth. Entrepreneurship vs. Small Business
Entrepreneurship vs. Small Business M
Manany y pepeooplple e uuse se ththe e tetermrms s "e"entntrereprpreneneeurur" " anand d "s"smamall ll bubussinineess ss owownener"r" syn
synonyonymoumouslysly. . WhiWhile le thethey y may may havhave e mucmuch h in in comcommonmon, , thethere re are are sigsigninificaficantnt differences between the entrepreneurial venture and the small business.
differences between the entrepreneurial venture and the small business. Entrepreneurial ventures differ from small businesses in these ways: Entrepreneurial ventures differ from small businesses in these ways: 1.
1. Amount of wealth creationAmount of wealth creation
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‐
rather than simply generating an income streamrather than simply generating an income streamthat replaces traditional employment, a successful entrepreneurial venture creates that replaces traditional employment, a successful entrepreneurial venture creates substantial wealth, typically in excess of several million dollars of
2.
2. Speed of wealth creationSpeed of wealth creation
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‐
while a successful small business can generatewhile a successful small business can generateseveral million dollars of profit over
several million dollars of profit over a lifetime, entrepreneurial wealth creationa lifetime, entrepreneurial wealth creation often is
often is rapid; for exarapid; for example, within mple, within 5 years.5 years. 3.
3. Risk Risk
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‐
the risk of an entrepreneurial venture must the risk of an entrepreneurial venture must be high; otherwise, with thebe high; otherwise, with the incentive of sure profits many entrepreneursincentive of sure profits many entrepreneurs would be pursuing the idea and thewould be pursuing the idea and the opportunity no longer would exist.
opportunity no longer would exist. 4.
4. InnovationInnovation
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‐
entrepreneurship often involves substantial innovation beyondentrepreneurship often involves substantial innovation beyond what a small business might exhibit. This innovation gives thewhat a small business might exhibit. This innovation gives the venture theventure the
competitive advantage that results in wealth creation. The innovation may be in the competitive advantage that results in wealth creation. The innovation may be in the product or service itself, or in the business processes used to deliver it.
product or service itself, or in the business processes used to deliver it.
• •
DEFINITION OF ENTREPRENEURSHIP DEFINITION OF ENTREPRENEURSHIP According to A.H. Cole
According to A.H. Cole
“Entrepreneurship is the purposeful activity of an individual or group of
“Entrepreneurship is the purposeful activity of an individual or group of associatedassociated individuals, undertaken to initiate, maintain or aggrandize profit by production or individuals, undertaken to initiate, maintain or aggrandize profit by production or distribution of economic goods or services”.
distribution of economic goods or services”. According to Peter .P. Drucker
According to Peter .P. Drucker
“Entrepreneurship is neither a science nor an
“Entrepreneurship is neither a science nor an art. It is a art. It is a practice. It is knowledgepractice. It is knowledge base. Knowledge in entrepreneurship is a means to an
base. Knowledge in entrepreneurship is a means to an end, that is ,by the practice”.end, that is ,by the practice”. Schumpeter
Schumpeter
“Entrepreneurship is based on purposeful and systematic innovation. It “Entrepreneurship is based on purposeful and systematic innovation. It included not only the independent businessman but also company
included not only the independent businessman but also company directors and managers who actually carry out
directors and managers who actually carry out innovative functions.”innovative functions.”
NEED FOR ENTREPRENEURSHIP NEED FOR ENTREPRENEURSHIP
Entrepreneurship promotes small business in the society.
Entrepreneurship promotes small business in the society. Government has acceptedGovernment has accepted the fact that small firms have a crucial role to play in the economic development of the fact that small firms have a crucial role to play in the economic development of th
the e cocoununtrtry. y. SmaSmall ll bubusisinenesssses es arare e an an esessesentntiaial l papart rt of of ouour r fufututure re ececononomomicic prosperity because of the following
prosperity because of the following reasons-EMPLOYMENT GENERATION:
EMPLOYMENT GENERATION: Entrepreneurial development is looked at as aEntrepreneurial development is looked at as a vehicle for employment generation through promotion of small business. India, vehicle for employment generation through promotion of small business. India, being far more developed and forward looking country than some of the third being far more developed and forward looking country than some of the third
wor
world ld coucountrntriesies, , can can proprovidvide e lealead d to to ententrepreprenreneureurial ial devdeveloelopmepment nt actactiviivitieties.s. However, India can benefit from the well- documented success experiences of However, India can benefit from the well- documented success experiences of de
devevelolopeped d cocoununtrtrieies s lilike ke USUSA, A, JaJapapan n anand d UK UK in in ththe e fifieleld d of of ememplployoymementnt generation and small business promotion. Steady growth in consumer spending, generation and small business promotion. Steady growth in consumer spending, expanding retail sales, a strong housing market, continued expansion of the service expanding retail sales, a strong housing market, continued expansion of the service sector, low rates of inflation and of labour cost increases and failing interest rates sector, low rates of inflation and of labour cost increases and failing interest rates contributed to a healthy environment for small business.
contributed to a healthy environment for small business. In
In IndiaIndia, , the governmenthe government t policpolicies, politicaies, political l and and econeconomic environmeomic environment nt greatgreatlyly encourage the establishment of new and small enterprises. Self- employment and encourage the establishment of new and small enterprises. Self- employment and small scale industry schemes have been further liberalized during the last decade. small scale industry schemes have been further liberalized during the last decade. The employment in the small-sector increased from
The employment in the small-sector increased from 9.00 million people in 1984-859.00 million people in 1984-85 to 13.9 million people in 1994-95. This indicates an increase of 5.4% p.a in to 13.9 million people in 1994-95. This indicates an increase of 5.4% p.a in employment in this sector.
employment in this sector. SMALL BUSINESS
SMALL BUSINESS DYNAMISMDYNAMISM:: Great dynamism is one of the qualities of theGreat dynamism is one of the qualities of the small and medium enterprises. This quality of dynamism originates in the inherent small and medium enterprises. This quality of dynamism originates in the inherent nature of the small business. The structure of small and medium enterprises is less nature of the small business. The structure of small and medium enterprises is less co
compmplelex x ththan an ththat at of of lalargrge e enenteterprprisrises es anand d ththererefeforore e facfacililititatates es ququicickeker r anandd sm
smoooothther er cocommummuninicacatition on anand d dedecicisisionon- - mamakikingng. . ThThis is alallolows ws fofor r ththe e grgreaeateter r flexibility and mobility of small business management. Also, small enterprises, flexibility and mobility of small business management. Also, small enterprises, more often make it
than employed mangers, to undertake risk and challenges. than employed mangers, to undertake risk and challenges. BALANCED ECONOMIC
BALANCED ECONOMIC DEVELOPMENT:DEVELOPMENT: Small business promotion needsSmall business promotion needs relatively low investment and therefore can be easily undertaken in rural and relatively low investment and therefore can be easily undertaken in rural and semi-urban areas. This in turn creates additional employment in these areas and prevents urban areas. This in turn creates additional employment in these areas and prevents migration of people from rural to urban areas. Since majority of the people are migration of people from rural to urban areas. Since majority of the people are living in the rural areas, therefore, more of our development efforts should be living in the rural areas, therefore, more of our development efforts should be directed towards this sector. Small enterprises use local resources and are best directed towards this sector. Small enterprises use local resources and are best suited to rural and underdeveloped sector. This in turn will also lead to dispersal of suited to rural and underdeveloped sector. This in turn will also lead to dispersal of industries, reduction in concentration of economic power and balanced regional industries, reduction in concentration of economic power and balanced regional development.
development. INNOVATI
INNOVATIONS ONS IN IN ENTERPRISESENTERPRISES:: Business enterprises need to be innovativeBusiness enterprises need to be innovative fo
for r susurvrvivival al anand d bebetttter er peperforformarmancnce. e. It It is is bebelilieveved ed ththat at smsmalalleler r fifirms rms hahave ve aa relatively higher necessity and capability to innovate. The smaller firms
relatively higher necessity and capability to innovate. The smaller firms do not facedo not face the constraints imposed by large investment in existing technology. Thus they are the constraints imposed by large investment in existing technology. Thus they are both free and compelled to innovate. Entrepreneurship development is accelerating both free and compelled to innovate. Entrepreneurship development is accelerating the pace of small firm’s growth in India. An increased number of small firms are the pace of small firm’s growth in India. An increased number of small firms are expected to result in more innovations and make the Indian industry compete in the expected to result in more innovations and make the Indian industry compete in the international market.
international market.
STEPS IN THE PROCESS OF ENTREPRENEURSHIP: STEPS IN THE PROCESS OF ENTREPRENEURSHIP: 1. Identifying opportunities
1. Identifying opportunities 2. Establish vision
3. Persuade others 3. Persuade others
4. Gather resources (Capital, land and manpower) 4. Gather resources (Capital, land and manpower) 5. Organize these resources to develop new product 5. Organize these resources to develop new product 6. Create the product
6. Create the product
7. Adapt according to market changes. 7. Adapt according to market changes.
FACTORS INFLUENCING ENTERPRENURESHIP FACTORS INFLUENCING ENTERPRENURESHIP
The emergence of entrepreneurs in a society depends upon closely interlinked The emergence of entrepreneurs in a society depends upon closely interlinked social, religious, cultural, psychological, and political and
social, religious, cultural, psychological, and political and economic factors.economic factors. FAMILY
FAMILY TRADITIOTRADITION:N: IndIndiviividuaduals ls who who for for somsome e reareasonson, , ininitiitiateate, , estestablablishish maintain and expand new enterprises generate entrepreneurship in society. It is maintain and expand new enterprises generate entrepreneurship in society. It is observed that entrepreneurs grow in the tradition of their families and society and observed that entrepreneurs grow in the tradition of their families and society and accept certain values and norms from these sources.
accept certain values and norms from these sources.
RELIGIOUS, SOCIAL AND CULTURAL FACTORS:
RELIGIOUS, SOCIAL AND CULTURAL FACTORS: Religious, social andReligious, social and cultural factors also influence the individual taking up an entrepreneurial career, in cultural factors also influence the individual taking up an entrepreneurial career, in some countries there is religious and cultural belief that high profit is unethical. some countries there is religious and cultural belief that high profit is unethical. This type of belief inhibits growth of
This type of belief inhibits growth of entrepreneurship.entrepreneurship. PSYCHOLOGICAL FACTORS:
PSYCHOLOGICAL FACTORS: The psychological factors like high need for The psychological factors like high need for achievement, determination of unique accomplishment, self confidence, creativity, achievement, determination of unique accomplishment, self confidence, creativity, visio
vision, n, leadeleadership etc, rship etc, promotpromote e entreentreprenepreneurshiurship p among individamong individuals. On uals. On the the other other hand psychological factors like security, conformity and compliance, need for
hand psychological factors like security, conformity and compliance, need for affiliation etc restrict promotion of entrepreneurship.
affiliation etc restrict promotion of entrepreneurship. POLITICAL FACTORS:
POLITICAL FACTORS: The political and also the political stability of countryThe political and also the political stability of country influence the growth of entrepreneurship. The political system, which promotes influence the growth of entrepreneurship. The political system, which promotes fr
free ee mamarkrkeet, t, iindndivivididuaual l ffrereededom om anand d prprivivaate te enenttererppririsese, , wwilill l pproromomotete entrepreneurship.
ECONOMIC POLICIES:
ECONOMIC POLICIES: The economic policies of the government and other The economic policies of the government and other financial institutions and the opportunities available in a society as a result of such financial institutions and the opportunities available in a society as a result of such policies play a crucial role in exerting direct
policies play a crucial role in exerting direct influence on entrepreneurship.influence on entrepreneurship. In
In viview ew of of ththe e hahaphphazazarard d dedevevelolopmpmenent t of of ececononomomic ic zozonenes, s, GoGovevernrnmement nt isis encouraging the entrepreneurs to establish their business in backward and tribal encouraging the entrepreneurs to establish their business in backward and tribal areas. This is primarily to arrest the migration of people from the villages to cities areas. This is primarily to arrest the migration of people from the villages to cities and to create employment opportunities locally. Government is promoting such and to create employment opportunities locally. Government is promoting such dev
develoelopmepment nt by by givgiving ing incincententiveives s liklike e tax tax holholidaidays ys (bo(both th salsales es and and incincomeome),), subsidized power tariff, raw materials, transportation cost etc.
subsidized power tariff, raw materials, transportation cost etc. FACTORS AFFECTING ENTREPRENEURIAL GROWTH FACTORS AFFECTING ENTREPRENEURIAL GROWTH 1.
1. ECONOMIC FACTORSECONOMIC FACTORS a)
a) Lack of adequate overhead Lack of adequate overhead facilities:facilities: Profitable innovations require basic f
Profitable innovations require basic facilities like transportation, communicationacilities like transportation, communication power supply etc. They reduce cost of
power supply etc. They reduce cost of production and increase profit.production and increase profit. b)
b) Non availability of capitalNon availability of capital
Inventions are capital oriented. In less developed countries most capital equipment Inventions are capital oriented. In less developed countries most capital equipment have to be imported which involves foreign exchange which acts as
have to be imported which involves foreign exchange which acts as a difficulta difficult problem.
problem. c)
c) Great risk Great risk
Risk is high in case of less developed countries as there is lack of reliable Risk is high in case of less developed countries as there is lack of reliable information, markets for good and services is small etc.
information, markets for good and services is small etc. d)
d) Non availability of labor and skillsNon availability of labor and skills
Though there is abundant labor supply there is
Though there is abundant labor supply there is generally scarcity of skills at allgenerally scarcity of skills at all levels.’
levels.’ 2.
A society that is rational in decision m
A society that is rational in decision making would be favorable for decisionaking would be favorable for decision making. Education, research and training is given less importance in
making. Education, research and training is given less importance in lessless developed countries therefore there is very little vertical mobility of
developed countries therefore there is very little vertical mobility of labor.labor. 3. CULTURAL FACTORS
3. CULTURAL FACTORS
Religious, social and cultural factors also influence the individual taking up an Religious, social and cultural factors also influence the individual taking up an entrepreneurial career, in some countries there is religious and cultural belief that entrepreneurial career, in some countries there is religious and cultural belief that high profit is unethical. This type of belief
high profit is unethical. This type of belief inhibits growth of entrepreneurship.inhibits growth of entrepreneurship. 4.
4. PERSONALITY FACTORSPERSONALITY FACTORS
In less developed countries the entrepreneur is looked upon
In less developed countries the entrepreneur is looked upon with suspicion. Publicwith suspicion. Public opinion in the less developed nations sees in the entrepreneur
opinion in the less developed nations sees in the entrepreneur only a profit maker only a profit maker and exploited.
and exploited. 5.
5. MOTIVATIONMOTIVATION
Motivation is the act of stimulating someone or
Motivation is the act of stimulating someone or oneself to get a desired course oneself to get a desired course of of action, to push the right button to get the
action, to push the right button to get the desired results.desired results. MOTIVATING FACTORS
MOTIVATING FACTORS 1.
1. EdEducucatatioion n babackckgrgrououndnd 2.
2. OccOccupaupatiotional nal expexperieeriencence 3.
3. FaFamimily ly babackckgrgrououndnd 4.
4. DesirDesire to work e to work indepindependenendently in mtly in manufaanufacturincturing lineg line 5.
5. AssisAssistance tance from from finanfinancial cial instiinstitutiotutionn 6.
6. AvaAvailailabilbility ity of teof technchnoloologygy 7.
7. OtOtheher fr facactotorsrs
FACTORS INFLUENCING ENTREPRENEURSHIP FACTORS INFLUENCING ENTREPRENEURSHIP
1.
1. FaFamimily ly TrTradadititioion.n. 2.
2. ReligReligious, ious, SociaSocial Al And nd CultCultural ural FactoFactors.rs. 3.
3. PsyPsychochologlogicaical l FacFactortors.s. 4.
5.
5. EcEcononomomic Pic Pololicicieies.s.
CAUSES OF SLOW GROWTH OF ENTREPRENEURSHIP IN INDIA CAUSES OF SLOW GROWTH OF ENTREPRENEURSHIP IN INDIA
Entrepreneurship developed only in the beginning of the 19th century and though Entrepreneurship developed only in the beginning of the 19th century and though the base for industrialization had been laid a century ago. The following be the the base for industrialization had been laid a century ago. The following be the main reasons, which could be responsible for lack of initiative and entrepreneurial main reasons, which could be responsible for lack of initiative and entrepreneurial spirit among the Indians.
spirit among the Indians. 1.
1. Caste System: -Caste System: - This decided occupation for members from each caste. TheThis decided occupation for members from each caste. The altitudes were restrictive and therefore there were no changes of accumulating altitudes were restrictive and therefore there were no changes of accumulating wealth and promoting production.
wealth and promoting production. 2.
2. Agriculture: -Agriculture: - Agriculture was the main occupation. Farmers and cultivatorsAgriculture was the main occupation. Farmers and cultivators were always in the clutches of the money lenders. The zamindars, nawabs and were always in the clutches of the money lenders. The zamindars, nawabs and rajahs exploited the laborers. They spent money on enjoyment and luxury and rajahs exploited the laborers. They spent money on enjoyment and luxury and neve
never r riskerisked d money in money in induindustry. Bankinstry. Banking g and commerciaand commercial l systesystem m was also was also absenabsentt so even if there were
so even if there were savings, they could not be utilized for productive use.savings, they could not be utilized for productive use. 3.
3. Educational System:Educational System: - - TaTalelentnted ed yoyounung g memen n wewere re prprepeparared ed to to tatake ke whwhititee collared jobs or join government or professional services. Many were attracted collared jobs or join government or professional services. Many were attracted towards politics. The result was that very few young men got attracted towards towards politics. The result was that very few young men got attracted towards becoming efficient, industrialists, technicians, managers etc.
becoming efficient, industrialists, technicians, managers etc. 4.
4. Colonial Rules:Colonial Rules: - The British rulers adopted discriminatory policy Rich Indian- The British rulers adopted discriminatory policy Rich Indian businessman had special connections with foreign rulers and both satisfied their businessman had special connections with foreign rulers and both satisfied their self interests. Even the few insurance and banking services catered to the needs of self interests. Even the few insurance and banking services catered to the needs of so
some me ririch ch InIndidian an bubusisinenessssmaman, n, BrBrititisishehers rs in in InIndidia a didid d alalso so nonot t enencocoururagagee Industrialization.
Industrialization. 5.
5. Managing Agents:Managing Agents: - There were just a handful of people who were known to be- There were just a handful of people who were known to be having managerial skills. On common basis, these agents would lend their skills to having managerial skills. On common basis, these agents would lend their skills to
some top industries. Industrialists could not manage their own units. They were some top industries. Industrialists could not manage their own units. They were always at the mercy of the managing agents who filled their pockets with big always at the mercy of the managing agents who filled their pockets with big chunks of the companies’ profits and
chunks of the companies’ profits and took full advantage of Indian industrialists tilltook full advantage of Indian industrialists till the managing agency system was abolished in 1970.
the managing agency system was abolished in 1970. 6.
6. Joint Family System:Joint Family System: - Younger members of the family always depended on- Younger members of the family always depended on the Head who never gave any kind of independence or encouraged units other than the Head who never gave any kind of independence or encouraged units other than family business ones. A number of young men were discouraged from diversifying family business ones. A number of young men were discouraged from diversifying from family business and doing something new and
from family business and doing something new and different.different. 7.
7. Religious attitude:Religious attitude: - Indians were very religious mi9nded. They gave more time- Indians were very religious mi9nded. They gave more time to religion than to earning material wealth. Religion got priority over business. to religion than to earning material wealth. Religion got priority over business. Some religions even condemned excess earnings and indulgence I in comforts. Some religions even condemned excess earnings and indulgence I in comforts. Industrial activity was, therefore, given secondary consideration by the religious Industrial activity was, therefore, given secondary consideration by the religious Indians.
Indians. 8.
8. Mindset:Mindset: - The mindset of the average Indian was never entrepreneurial. Our - The mindset of the average Indian was never entrepreneurial. Our religious literature and epics told us to have patience and to keep on working religious literature and epics told us to have patience and to keep on working without expecting the fruits of labor. This also killed the drive and desire to get without expecting the fruits of labor. This also killed the drive and desire to get into entrepreneurial activities.
into entrepreneurial activities. 9.
9. Recognition by the society:Recognition by the society: - In earlier days, the heroes India were the social- In earlier days, the heroes India were the social reformers and the politicians. Now it is the era of sportsmen, models and
reformers and the politicians. Now it is the era of sportsmen, models and film stars.film stars. It is sad that successful or the struggling entrepreneurs have never been recognized It is sad that successful or the struggling entrepreneurs have never been recognized as heroes. Entrepreneurial activity did not get due importance in
as heroes. Entrepreneurial activity did not get due importance in the India society.the India society. 10.
10. Family Background:Family Background: - Empirical studies have shown that a good number of - Empirical studies have shown that a good number of entrepreneurs come from families
entrepreneurs come from families with industrial backgrounds. Unfortunately, onlywith industrial backgrounds. Unfortunately, only a
a few few entreentrepreneupreneurial rial commucommunitinities es in in IndiIndia a made made entreentreprenepreneurial contributurial contribution.ion. These communities could also not make headway in the entrepreneurial field on These communities could also not make headway in the entrepreneurial field on ac
accocoununt t of of ththe e cocololoninial al rurulele, , lalack ck of of ininfrfrasastrtrucuctuture re anand d ototheher r fafacicililititieses.. Entrepreneurship development could only take place after independence in India. Entrepreneurship development could only take place after independence in India.
STAGES OF EVOLUTION OF ENTREPRENEURSHIP STAGES OF EVOLUTION OF ENTREPRENEURSHIP
The evolutionary process of entrepreneurship activities may be divided into The evolutionary process of entrepreneurship activities may be divided into the following broad stages:
the following broad stages: 1. Hunting Stage:
-1. Hunting Stage: - The primary stage of the evolution of the economic life of The primary stage of the evolution of the economic life of man was
man was huntihunting stage. Wants were limited and ng stage. Wants were limited and very few in very few in numbenumbers. The rs. The familfamilyy members themselves satisfied problems of food, clothing and shelter. Producers members themselves satisfied problems of food, clothing and shelter. Producers were the consumers also. Robinson Crusoe, living in the deserted island, satisfying were the consumers also. Robinson Crusoe, living in the deserted island, satisfying his own requirements had no knowledge of business. People in some parts of his own requirements had no knowledge of business. People in some parts of Africa and India still lead this type of life. In this stage problems of production and Africa and India still lead this type of life. In this stage problems of production and distribution were not complexed since wants were simple and limited.
distribution were not complexed since wants were simple and limited. 2. Pastoral Stage:
-2. Pastoral Stage: - With the progress of mankind gradually mental understandingWith the progress of mankind gradually mental understanding developed and people started realizing that instead of killing animals, they should developed and people started realizing that instead of killing animals, they should breed and rear them. Thus cattle breeding encouraged the use of
breed and rear them. Thus cattle breeding encouraged the use of milk, and they hadmilk, and they had to think in terms of grazing areas for their cattle. The surplus milk, meat and other to think in terms of grazing areas for their cattle. The surplus milk, meat and other related products were spared of exchange. This stage can be termed as the first related products were spared of exchange. This stage can be termed as the first stage of economic development and the beginning of commerce.
stage of economic development and the beginning of commerce. 3. Agricultural Stage:
-3. Agricultural Stage: - In search of grazing areas, they further realized that theyIn search of grazing areas, they further realized that they should grow plants as food for animals. They started testing some grain products should grow plants as food for animals. They started testing some grain products and slowly developed a taste in plants and the land was used for cultivation. and slowly developed a taste in plants and the land was used for cultivation. Groups of persons started living together on their agricultural fields, which were Groups of persons started living together on their agricultural fields, which were subsequently converted into small villages with their farms. Free exchange of subsequently converted into small villages with their farms. Free exchange of goods was started and the activities were also divided to the extent of division of goods was started and the activities were also divided to the extent of division of labor at the village level to complement the needs of each other. Initially each labor at the village level to complement the needs of each other. Initially each village was selfsufficient, but later they began small trading activities on barter village was selfsufficient, but later they began small trading activities on barter basis.
basis.
4. Handicraft Stage:
-4. Handicraft Stage: - In the agricultural stage, people started learning the use of In the agricultural stage, people started learning the use of cloth made of cotton products, and they developed the segments of the workers for cloth made of cotton products, and they developed the segments of the workers for
different activities. Cottage scale setup was developed at the
different activities. Cottage scale setup was developed at the village level to nearbyvillage level to nearby villages, and in exchange they brought requirements either to consume themselves villages, and in exchange they brought requirements either to consume themselves or for their village friends. Since the demand for gold coins, silver coins, skin and or for their village friends. Since the demand for gold coins, silver coins, skin and hide etc increased the activities of cobblers, gold smiths, and blacksmiths, laborers hide etc increased the activities of cobblers, gold smiths, and blacksmiths, laborers also rapidly increased, and caste system was also formed on the basis of activities also rapidly increased, and caste system was also formed on the basis of activities they did. Everybody selected their job according to their own choice and taste.
they did. Everybody selected their job according to their own choice and taste. 5. Present Industrial Stage:
5. Present Industrial Stage: - The use of mechanical devices and the commonly- The use of mechanical devices and the commonly acceptable form of monetary system accelerated the growth of entrepreneurship acceptable form of monetary system accelerated the growth of entrepreneurship activ
activitiesities. . The progress of The progress of scienscience ce and the increase in and the increase in the means of the means of transtransportaportationtion and communication enabled to travel widely and the markets were developed in and communication enabled to travel widely and the markets were developed in the country and abroad.
the country and abroad.
IMPORTANCE OF ENTREPRENEURSHIP IMPORTANCE OF ENTREPRENEURSHIP T
Thhe e iimmppoortrtaanncce e oof f eennttrerepprerenneeuurrsshhiip p tto o aanny y eeccoonnoomy my iis s lliikke e tthhaat t oof f ent
entrepreprenreneureurshiship p in in any any comcommunmunityity. . EntEntrepreprenreneureurial ial actactiviivity ty and and the the resresultultantant financial gain are always of benefit to a country. If you have entrepreneurial skills financial gain are always of benefit to a country. If you have entrepreneurial skills then you will recognize a genuine opportunity when you come across one.
then you will recognize a genuine opportunity when you come across one.
Now the reasons why entrepreneurship holds a dominant position in the society? Now the reasons why entrepreneurship holds a dominant position in the society?
The following reasons are responsible for the
1) Provides employment to huge mass of people:
1) Provides employment to huge mass of people:‐‐ people often hold a view that people often hold a view that all those who do not get employed anywhere jump into entrepreneurship, a real all those who do not get employed anywhere jump into entrepreneurship, a real contrast to this is that 76%
contrast to this is that 76% of establishments of new business in the of establishments of new business in the year 2003 wereyear 2003 were d
due ue to to an an aaspspiiraratition on to to cchahase se opopeenininngsgs. . TThihis s ememphphasasiizezes s tthe he fafacct t ththaatt entrepreneurship is not at all an encumbrance to an economy. What’s more is that entrepreneurship is not at all an encumbrance to an economy. What’s more is that approximately 34 million of fresh employment opportunities were created by
approximately 34 million of fresh employment opportunities were created by
eennttrerepprerenneeuurs rs ffrroom m tthhe e ppeerriiood d oof f 11998800. . TThhiis s ddaatta a mmaakkees s iit t cclleeaar r tthhaatt entrepreneurship heads nation towards better opportunities, which is a significant entrepreneurship heads nation towards better opportunities, which is a significant input to an economy.
input to an economy.
2) Contributed towards research
2) Contributed towards research and development system:and development system:‐‐ almost 2/3% of allalmost 2/3% of all innovations are due to the entrepreneurs.
innovations are due to the entrepreneurs. Without the boom of inventions the worldWithout the boom of inventions the world would have been a much dry place to live in. Inventions provide an easier way of would have been a much dry place to live in. Inventions provide an easier way of getting things done through better
getting things done through better and standardized technology.and standardized technology. 3) Creates wealth for nation and for individuals as well:
3) Creates wealth for nation and for individuals as well:‐‐ all individuals whoall individuals who se
seararcch h bubusisineness ss opoppoportrtuuninitities es ususuualallly, y, crcreaeate te wweaeallth th by by eentntererining g iintntoo entrepreneurship. The wealth created by the same play a considerable role in the entrepreneurship. The wealth created by the same play a considerable role in the development of nation. The business as well as the entrepreneur contributes in development of nation. The business as well as the entrepreneur contributes in some or other way to the economy, may be in the form of products
some or other way to the economy, may be in the form of products
or services or boosting the GDP rates or tax contributions. Their ideas, thoughts, or services or boosting the GDP rates or tax contributions. Their ideas, thoughts, and inventions are also a great help
and inventions are also a great help to the nation.to the nation. 4) Sky
4) Sky‐‐scraping heights of apparent prospects:scraping heights of apparent prospects:‐‐ the individual gets maximumthe individual gets maximum scope for growth and opportunity if he enters into entrepreneurship. He not only scope for growth and opportunity if he enters into entrepreneurship. He not only earns, the right term would be he learns while he earns. This is a real motivating earns, the right term would be he learns while he earns. This is a real motivating factor for any entrepreneur as the knowledge and skills he develops while owning factor for any entrepreneur as the knowledge and skills he develops while owning his enterprise are his assets for life time which usually, lacks when a person is his enterprise are his assets for life time which usually, lacks when a person is under employment. The individual goes through a grooming process when he under employment. The individual goes through a grooming process when he
becomes an entrepreneur. In this way it not
becomes an entrepreneur. In this way it not only benefits him but also the economyonly benefits him but also the economy as a whole.
as a whole. 5) It is a
5) It is a challenging opportunchallenging opportunity for the people:ity for the people:‐‐ although entrepreneurship is aalthough entrepreneurship is a challenging task but in most of the cases the rewards it gives are much more than challenging task but in most of the cases the rewards it gives are much more than what one anticipates. It does not only reward
what one anticipates. It does not only reward an entrepreneur at financial levels butan entrepreneur at financial levels but also on individual level. It provides self satisfaction to
also on individual level. It provides self satisfaction to the entrepreneur.the entrepreneur. 6)
6) EntEntrepreprenreneureurshship ip proprovidvides es selself f sufsufficficieniency:cy:‐‐ ththe e enentretreprpreneneueur r nonot t ononlyly become self sufficient but also provide great standards of
become self sufficient but also provide great standards of living to its employees. Itliving to its employees. It provides opportunity to a number of people working in the organization. The basic provides opportunity to a number of people working in the organization. The basic factors which become a cause of happiness may be liberty, monetary rewards, and factors which become a cause of happiness may be liberty, monetary rewards, and th
the e fefeelelining g of of cocontntenentmtmenent t ththat at onone e gegets ts aftafter er dodoining g ththe e jojob. b. ThThererefeforore e ththee contribution of entrepreneurs makes the economy an improved place to
contribution of entrepreneurs makes the economy an improved place to live in.live in.
IMPORTANCE OF ENTREPRENEURSHIP IN DEVELOPED ECONOMY IMPORTANCE OF ENTREPRENEURSHIP IN DEVELOPED ECONOMY
•
• The nature of a developing economy is quite different from a developedThe nature of a developing economy is quite different from a developed
economy. economy.
•
• The developing economy can be an agricultural country moving towards theThe developing economy can be an agricultural country moving towards the
•
• industrialization or it may be the one where in the industry may be in itsindustrialization or it may be the one where in the industry may be in its
infancy lacking advance technology. infancy lacking advance technology.
•
• The modern era is an era of changes. The whole world is becoming a villageThe modern era is an era of changes. The whole world is becoming a village
du
due e to to ththe e ininduduststririal al revrevololututioion n anand d fafast st dedevevelolopiping ng cocommummuninicacatitionon technology. The globalization of industry and commerce is bringing a vast 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 humanEconomic development of a country is the outcome of purposeful human
activity. activity.
•
• The modern era is an era of changes. The whole world is becoming a villageThe modern era is an era of changes. The whole world is becoming a village
du
due e to to ththe e ininduduststririal al revrevololututioion n anand d fafast st dedevevelolopiping ng cocommummuninicacatitionon technology. The globalization of industry and commerce is bringing a vast technology. The globalization of industry and commerce is bringing a vast change in various aspects of life.
change in various aspects of life.
•
• Economic development of a country is the outcome of purposeful humanEconomic development of a country is the outcome of purposeful human
activity. activity.
•
• Economic development is a highly dynamic process characterized by theEconomic development is a highly dynamic process characterized by the
pattern of demand shifts, new pr
pattern of demand shifts, new products are needed, appear for the oducts are needed, appear for the productionproduction of goods within a country.
of goods within a country.
•
• A developing country needs entrepreneurs who are competent to perceiveA developing country needs entrepreneurs who are competent to perceive
new opportunities and are willing to incur the necessary risk in exploiting new opportunities and are willing to incur the necessary risk in exploiting them.
them.
•
• A developing economy is required to be brought out of the vicious circle of A developing economy is required to be brought out of the vicious circle of
low income and poverty. low income and poverty.
•
• Entrepreneur can break this vicious circle.Entrepreneur can break this vicious circle.
•
• Entrepreneurs and helping government can change a developing economy inEntrepreneurs and helping government can change a developing economy in
developed economy. developed economy.
E
Entntrrepeprerenneueursrshhip ip anand d ececoononomimic c grgrowowth th / / dedevevellopopmmenentt: : eecoconnomomicic de
devevelolopmpmenent t of of anany y regregioion n is is ththe e ououtctcomome e of of pupurprpososefeful ul huhumaman n acactitivivititieses.. Acc
Accordording ing to to SchSchumpumpterter, , the the ecoeconomnomic ic devdeveloelopmepment nt conconsissists ts of of empemployloyinging resources in a different way bringing in new factors of production or combination resources in a different way bringing in new factors of production or combination of the factors. The entrepreneur looks for innovative ideas and puts them into of the factors. The entrepreneur looks for innovative ideas and puts them into effect for economic development. The entrepreneur occupies a crucial place in the effect for economic development. The entrepreneur occupies a crucial place in the
process of economic development by acting as a trigger head to give spark to process of economic development by acting as a trigger head to give spark to economic activities. Some of the development activities are as follows: 1.increase economic activities. Some of the development activities are as follows: 1.increase in the income. 2. Brings change in the structure of business and society. 3. Wealth in the income. 2. Brings change in the structure of business and society. 3. Wealth creation. 4. New products, services and business. 5. Generation of
creation. 4. New products, services and business. 5. Generation of employment. 6.employment. 6. Increase in the standard of
Increase in the standard of living.living.
ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT
The industrial health of a society depends on the level of entrepreneurship existing The industrial health of a society depends on the level of entrepreneurship existing in it. A country might remain backward not because of lack of natural resources or in it. A country might remain backward not because of lack of natural resources or d
deaeartrth h oof f cacappitital al [a[as s it it is is mamany ny titimemes s bbelelieievevedd] ] bubut t bebecacauuse se oof f lalack ck of of entrepreneurial talents or it inability to tap the latent entrepreneurial talents existing entrepreneurial talents or it inability to tap the latent entrepreneurial talents existing in that society. Entrepreneurs historically have altered the direction of national in that society. Entrepreneurs historically have altered the direction of national economies, industry or markets- Japan, Singapore, Korea, T
economies, industry or markets- Japan, Singapore, Korea, Taiwan to name a few.aiwan to name a few. 1.4.1 ENTREPRENEURSHIP AND ECONOMIC
1.4.1 ENTREPRENEURSHIP AND ECONOMIC DEVELOPMENDEVELOPMENTT
Entrepreneurship is basically concerned with creating wealth through production of Entrepreneurship is basically concerned with creating wealth through production of goods and services. This results in a process of upward change whereby the real goods and services. This results in a process of upward change whereby the real p
per er cacapipita ta inincocome me of of a a cocoununtrtry y ririseses s ovovertertimime e or or in in ototheher r wowordrds s ececononomomicic development takes place. Thus ntrepreneurial development is the key to economic development takes place. Thus ntrepreneurial development is the key to economic de
devevelolopmpmenent. t. In In fafact ct it it is is onone e of of ththe e momost st crcrititicical al ininpuputs ts in in ththe e ececononomomicic de
devevelolopmpmenent t of of a a reregigionon. . It It spspeeeeds ds up up ththe e prprococesess s of of acactitivavatiting ng fafactctorors s of of production leading to a higher rate of economic growth, dispersal of economic production leading to a higher rate of economic growth, dispersal of economic activities and development of backward regions. If a region is unable to throw up a activities and development of backward regions. If a region is unable to throw up a suf
sufficficienient t numnumber ber of of ententrepreprenreneureurs s thethen n alialien en ententrepreprenreneureurs s usuusuallally y stestep p in in toto provide goods and services needed by the people. However the profits earned by provide goods and services needed by the people. However the profits earned by these entrepreneurs are usually not ploughed back but repatriated to their place these entrepreneurs are usually not ploughed back but repatriated to their place oforigin. As a result
refers to this practice as ‘The Leech Effect’. The above reiterates the importance of refers to this practice as ‘The Leech Effect’. The above reiterates the importance of en
entrtrepeprereneneururshship ip dedevevelolopmpmenent t fofor r fufuelelliling ng ececononomomic ic grgrowowth th of of a a reregigionon.. Ent
Entrepreprenreneureurshiship p begbegets ets and and alsalso o injinjectects s ententrepreprenreneureurshiship p by by stastartirting ng a a chachainin reaction when the entrepreneur continuously tries to improve the quality of existing reaction when the entrepreneur continuously tries to improve the quality of existing goods and services and add new ones. E.g. when computers came into the market goods and services and add new ones. E.g. when computers came into the market there was continuous improvement in the models, their functions etc. like first there was continuous improvement in the models, their functions etc. like first generation computers, personal computers, laptops, palmtops etc. Not only had this generation computers, personal computers, laptops, palmtops etc. Not only had this foste
fostered red the the devedevelopmelopment nt of of the the softwsoftware are indusindustry, try, compucomputer ter educeducation institutation institutes,es, com
computputer er maimaintentenannance ce and and stastatiotionernery y uniunits ts etcetc. . but but alsalso o othother er indindustustrieries s liklikee ba
bankinking, ng, rairailwalways, ys, edueducatcationion, , tratravelvel, , filfilms, ms, medmedicaical l and and leglegal al tratranscnscripriptiotions,ns, b
bususininesess s prprococesess s ououtstsouourcrcining g [B[BPOPOs] s] etetc. c. In In ththis is mamannnner er by by haharnrnesessising ng ththee en
entretreprepreneneururiaial l tatalelent nt a a sosocicietety y cocomemes s ouout t of of tratradidititiononal al leleththarargy gy to to momodedernrn industrial culture. India needs entrepreneurs to capitalize on new opportunities and industrial culture. India needs entrepreneurs to capitalize on new opportunities and to create wealth and new jobs.
to create wealth and new jobs.
1.4.2 ENTREPRENEURSHIP AND EDUCATION 1.4.2 ENTREPRENEURSHIP AND EDUCATION
Towards the end of the sixties, two significant contributions were made in the field Towards the end of the sixties, two significant contributions were made in the field o
of f enentrtrepeprerenneueursrshihip p .O.Onne e wawas s ththaat t tthehere re iis s a a popossititivive e lilinnkakagge e bebettweweenen ent
entrepreprenreneureurshiship p and and ecoeconomnomic ic devdeveloelopmepment nt and and the the othother er was was regregardarding ing thethe emergence of a strong hypothesis that entrepreneurship can be developed through emergence of a strong hypothesis that entrepreneurship can be developed through p
plalannnned ed efeffofortrts1s1. . CoConsnseqequeuentntly ly plplananneners rs rerealalizized ed ththat at ababsesencnce e of of a a ststrorongng entrepreneurial base acts as a serious handicap in the industrial development of a entrepreneurial base acts as a serious handicap in the industrial development of a reg
regionion. . The The ideidentintificficatiation on and and devdeveloelopmepment nt of of firsfirst t gengeneraeratiotion n ententrepreprenreneureurss through Entrepreneurial Development Programmes is an important strategy. There through Entrepreneurial Development Programmes is an important strategy. There is a growing realization that presence of resources and favourable government is a growing realization that presence of resources and favourable government po
policlicies ies cancannot not autautomaomaticticallally y manmanufaufactucture re ecoeconomnomic ic devdeveloelopmepment. nt. It It is is thethe entrepreneurial spirit of the people, which can transform the economy of that entrepreneurial spirit of the people, which can transform the economy of that
region. Both the quantity and quality of entrepreneurs are of utmost significance region. Both the quantity and quality of entrepreneurs are of utmost significance for achieving the goal of economic development. The myth that entrepreneurs are for achieving the goal of economic development. The myth that entrepreneurs are born with some innate traits is fortunately no longer held. You will learn more born with some innate traits is fortunately no longer held. You will learn more
about this in the lesson
about this in the lesson on motivation. Many research studies have on motivation. Many research studies have brought out thatbrought out that entrepreneurship can be taught and learned. Entrepreneurship is a discipline and entrepreneurship can be taught and learned. Entrepreneurship is a discipline and like all disciplines it has models, processes and case studies, which can help an like all disciplines it has models, processes and case studies, which can help an in
indidivividudual al to to ststududy y ththis is susubjbjecect. t. ThThe e nenececessssarary y cocompmpetetenencicies es rereququireired d of of aa su
succccesessfsful ul enentrtrepeprereneneur ur cacan n be be acacququirired ed ththrorougugh h tratraininining g anand d dedevevelolopmpmenent.t. Nu
Numeromerous us coucourserses s in in ententrepreprenreneureurshiship p are are beibeing ng tautaught ght all all oveover r the the worworld ld inin schools and colleges, seminars and conferences are being organized and EDPs are schools and colleges, seminars and conferences are being organized and EDPs are being conducted. The thinking today is why just create managers why not create being conducted. The thinking today is why just create managers why not create people who can absorb managers. One can acquire the traits and learn the skills for people who can absorb managers. One can acquire the traits and learn the skills for becoming an entrepreneur e.g. a person can learn to be achievement oriented, becoming an entrepreneur e.g. a person can learn to be achievement oriented,
self-confi
confident, persevdent, perseverant etc. which are erant etc. which are all part all part of of the charactthe characteristieristics cs of a of a succesuccessfulssful entrepreneur.
entrepreneur.
Usually the model used for
Usually the model used for entrepreneuriaentrepreneurial education has l education has three phasesthree phases:: Stim
Stimulatoulatory ry PhasPhasee- - ThiThis s phaphase se invinvolvolves es plaplannenned d pubpubliclicity ity for for oppopportortuniunitieties,s, motivation training and help and guidance in selection of product or service.
motivation training and help and guidance in selection of product or service. Support Phase
Support Phase- This provides help in registration of units, arrangement of finance- This provides help in registration of units, arrangement of finance as well as land, sheds, power, water, common facility centres etc. Help is also as well as land, sheds, power, water, common facility centres etc. Help is also provided in marketing of products.
provided in marketing of products. Sust
Sustenanenance ce PhaPhase-se- OnOnce ce ththe e enenteterprpririse se is is seset t up up ththen en hehelp lp is is prprovovidided ed fofor r modernization, diversification, additional finance etc.
Difference Between Difference Between
E
ENNTTRREEPPRREENNEEUURR EENNTTRREEPPRREENNEEUURRSSHHIIPP P
Peerrssoonn PPrroocceessss V
Viissuuaalliizzeerr VViissiioonn C
Crreeaattoorr CCrreeaattiioonn O
Orrggaanniizzeerr OOrrggaanniissaattiioonn IInnnnoovvaattoorr IInnnnoovvaattiioonn
P
Pllaannnneerr PPllaannnniinngg L
Leeaaddeerr.. LLeeaaddeerrsshhiipp..
ROLE OF ETHICS AND SOCIAL RESPONSIBILITY IN CONTEXT OF ROLE OF ETHICS AND SOCIAL RESPONSIBILITY IN CONTEXT OF ENTREPRENEURSHIP
•
• An entrepreneur must take risks with his or her own capital in order to sellAn entrepreneur must take risks with his or her own capital in order to sell
and deliver products and services while expanding greater energy than the and deliver products and services while expanding greater energy than the average businessperson in order to innovate.
average businessperson in order to innovate.
•
• A manager’s attitudes concerning corporate responsibility are related to theA manager’s attitudes concerning corporate responsibility are related to the
organizational climate perceived to be supportive of laws and professional organizational climate perceived to be supportive of laws and professional codes of ethics.
codes of ethics.
•
• On On ththe e ototheher r hahandnd, , enentretreprepreneneururs s wiwith th a a rerelalatitive ve wiwith th a a relrelatativivelely y neneww
company who have few role models usually develop an
company who have few role models usually develop an internal ethical code.internal ethical code.
•
• Entrepreneurs tend to depend on their own personal value systems muchEntrepreneurs tend to depend on their own personal value systems much
more than
more than otheother r managmanager er when determinwhen determining ethicalling ethically y appropappropriate course of riate course of action.
action.
•
• Ethics refer to the “study of whatever is right ands good for human being”,Ethics refer to the “study of whatever is right ands good for human being”,
business ethics concerns itself with the investigation of business practices in business ethics concerns itself with the investigation of business practices in
light of human values. light of human values.
•
• Ethics is the broad field of study exploring the general nature of morals andEthics is the broad field of study exploring the general nature of morals and
the specific moral choices to
the specific moral choices to be made be made by the by the indivindividuaiduals ls in his in his relatirelationshionshipp with others.
with others.
•
• Business ethic is the study of Business ethic is the study of behavior and morals in a business behavior and morals in a business situation.situation.
•
• Business ethics is “any business decision that creates value for customer byBusiness ethics is “any business decision that creates value for customer by
matching quality and price.” matching quality and price.”
•
• Although the English word ethics is generally recognized as stemming fromAlthough the English word ethics is generally recognized as stemming from
the Greek ethos, meaning “custom and usage”, it is more properly identified the Greek ethos, meaning “custom and usage”, it is more properly identified as originating from swedhethos, in which
as originating from swedhethos, in which the concepts of individual moralitythe concepts of individual morality and behavioral habits are related and identified as an essential quality of and behavioral habits are related and identified as an essential quality of existence.
existence.
ETHICAL DECISIONS ETHICAL DECISIONS::
1.
1. ProvidProvide the cuse the customer witomer with valith valid data abod data about the prout the product anduct and servicd service.e. 2.
2. EnablEnable the cue the customestomer to make a fr to make a free and iree and informenformed choicd choice, ande, and 3.
3. GeneGenerate custorate customer commitmer commitment to the proment to the product anduct and the organid the organizatiozation thatn that provides it.
provides it.
VIOLATIONS OF THESE THREE RULES PRODUCE UNETHICAL VIOLATIONS OF THESE THREE RULES PRODUCE UNETHICAL BEHAVIOR :
BEHAVIOR : 1.
1. InvInvalialid ad and nd falfalse se datdata,a, 2.
2. CoercCoerced aed and nd manipmanipulateulated dd decisiecisions, ons, andand 3.
3. low ilow integrintegrity anty and pood poor reputr reputation ation for the for the firm.firm.
In summary the ethics
In summary the ethics and responsibilities of entrepreneurs are:and responsibilities of entrepreneurs are: 1.
1. Support law and professional code:Support law and professional code: The entrepreneurs have to follow the rulesThe entrepreneurs have to follow the rules and regulations of the country. They should also follow the
and regulations of the country. They should also follow the code of conductcode of conduct prepared by their professional association.
prepared by their professional association. 2.
2. Follow business ethics:Follow business ethics: Ethics refers to what is right and good for the humanEthics refers to what is right and good for the human beings and society. The business practices should be developed and used which beings and society. The business practices should be developed and used which
will be favorable for the human
will be favorable for the human values and norms.values and norms. 3.
3. Involve in pedagogical Involve in pedagogical Inquiry:Inquiry: The entrepreneurs have to inquire about theThe entrepreneurs have to inquire about the theoretical and empirical aspect of entrepreneurship. They should involve in theoretical and empirical aspect of entrepreneurship. They should involve in research and development studies to find out the techniques and ideas
research and development studies to find out the techniques and ideas of goodof good entrepreneurship.
entrepreneurship. 4.
4. Environmental Research:Environmental Research: The entrepreneurs should involve in externalThe entrepreneurs should involve in external environmental research and collect the data of different
environmental research and collect the data of different variables. It will help newvariables. It will help new entrepreneurs for finding out the feasibility of their
entrepreneurs for finding out the feasibility of their undertaking.undertaking. 5.
5. Imparting ethical insight to the business students:Imparting ethical insight to the business students: The entrepreneurs shouldThe entrepreneurs should help the academicians while imparting the ethical insights to the students. They help the academicians while imparting the ethical insights to the students. They
should provide financial support to the students who involve in entrepreneurial should provide financial support to the students who involve in entrepreneurial research.
research. 6.
6. Create Create EmploymenEmployment:t: Entrepreneurs should create and develop newEntrepreneurs should create and develop new opportunities for job to the people of the
opportunities for job to the people of the country. They should try to reduce thecountry. They should try to reduce the unemployment problem of the country.
unemployment problem of the country. 7.
7. Mobilization of the idle Mobilization of the idle resources:resources: The natural resources of the The natural resources of the country shouldcountry should be mobilized. While mobilizing the natural resources, the optimum use of
be mobilized. While mobilizing the natural resources, the optimum use of suchsuch resources should be confirmed so that
resources should be confirmed so that they can be conserved for future they can be conserved for future generations.generations. 8.
8. Increase favorable attitude of people:Increase favorable attitude of people: The earning of the enterprise shouldThe earning of the enterprise should facilitate the society’s people. It should share its
facilitate the society’s people. It should share its benefit with the society in thebenefit with the society in the form of community development programs, health and sanitation programs, form of community development programs, health and sanitation programs, opening of schools and colleges etc.
opening of schools and colleges etc.
ENTREPRENEUR
ENTREPRENEURIAL IAL DEVELOPMENTDEVELOPMENT
INTRODUCTION INTRODUCTION
Do you know that there are millions of unemployed youth in the country and by Do you know that there are millions of unemployed youth in the country and by the time you graduate, this number would have increased substantially? Do you the time you graduate, this number would have increased substantially? Do you want to be part of that group which keeps knocking from pillar to post, checking want to be part of that group which keeps knocking from pillar to post, checking with employment exchanges, relatives, friends, and neighbours and still not able to with employment exchanges, relatives, friends, and neighbours and still not able to get a job to their liking and then settle for a second or third rate job? You can also get a job to their liking and then settle for a second or third rate job? You can also choose to be like Mr. Patel of Nirma who was a chemist’s assistance and has a Rs. choose to be like Mr. Patel of Nirma who was a chemist’s assistance and has a Rs. 25
2500 00 crcrorore e cocompmpanany y totodaday. y. DiDid d yoyou u knknow ow ththat at ththe e oriorigiginanal l MrMr. . BaBata ta wawas s aa cobbler? And now has stores in more than 30 countries all over the world. Or you cobbler? And now has stores in more than 30 countries all over the world. Or you could be like Dhiru bhai Ambani who started life
could be like Dhiru bhai Ambani who started life as a clerk in as a clerk in a French company ina French company in Aden. He was not born into a business family nor did he possess an MBA degree Aden. He was not born into a business family nor did he possess an MBA degree and yet, he is a household name in India and figures in the Forbes list of the richest and yet, he is a household name in India and figures in the Forbes list of the richest Asians. Lakshmi Mittal, the steel giant, Satbir Bhatia
Asians. Lakshmi Mittal, the steel giant, Satbir Bhatia of Hotmail fame and Narayanof Hotmail fame and Narayan Murthy of Infosys are some other names in the endless list you could choose from. Murthy of Infosys are some other names in the endless list you could choose from. And let us remind you tha
And let us remind you that this t this opportunity is not opportunity is not only for boys but also for girls -only for boys but also for girls -all those girls who think smart, are ready to act and script the story of their own life all those girls who think smart, are ready to act and script the story of their own life - like Shehnaz Hussain or Ritu
- like Shehnaz Hussain or Ritu Kumar or Kiran Majumdar Shaw.Kumar or Kiran Majumdar Shaw.
ENTREPRENEU
ENTREPRENEURSHIP AS RSHIP AS A CAREER A CAREER OPTIONOPTION
After finishing your graduation you will be at the crossroads of life. You will face After finishing your graduation you will be at the crossroads of life. You will face the dilemma of choosing what you have to do in life. The vast majority of human the dilemma of choosing what you have to do in life. The vast majority of human be
beingings s dirdirect ect thetheir ir actactiviivitieties s towtowardards s earnearning ing a a livlivinging, , gengeneraeratinting g weawealth lth andand improving their standard of living. You can choose your career from two broad improving their standard of living. You can choose your career from two broad categories of options – Wage Employment or Entrepreneurship. The term ‘career’ categories of options – Wage Employment or Entrepreneurship. The term ‘career’ signifies a continuous, ever evolving, ever expanding opportunity for personal as signifies a continuous, ever evolving, ever expanding opportunity for personal as well as business growth and development. We may define entrepreneurship as a well as business growth and development. We may define entrepreneurship as a
