Evolution of the concept of Entrepreneur

. What does the term ‘Entrepreneur’ mean?

(än´´tr pr nûr´) (KEY)  [Fr.,=one who undertakes], person who assumes the organization, management, and risks of a business enterprise. It was first used as a technical economic term by the 18th-century economist Richard Cantillon. To the classical economist of the late 18th century the term meant an employer in the character of one who assumes the risk and management of business; an undertaker of economic enterprises, in contrast to the ordinary capitalist, who, strictly speaking, merely owns an enterprise and may choose to take no part in its day-to-day operation. In practice, entrepreneurs were not differentiated from regular capitalists until the 19th cent., when their function developed into that of coordinators of processes necessary to large-scale industry and trade. Joseph Schumpeter and other 20th-century economists considered the entrepreneur’s competitive drive for innovation and improvement to have been the motive force behind capitalist development.

There are many differing views on what makes someone an entrepreneur and what an entrepreneurial venture is. In a sense the definition itself is evolving as the field itself comes into the mainstream of American business. While we speak of many of the originators of businesses in the past as entrepreneurs, it was not until the mid1970's that the concept became a prevalent enough part of our economy that definitions even were necessary. Consequently, we see in the literature a wide variety of possibilities for what this field of endeavor really is.

Looking online, the Webster's Revised Unabridged Dictionary from 1913 defined an entrepreneur as "one who creates a product on his own account." That sounds a trifle stuffy, is very limited and doesn't fit for many of the people widely known as entrepreneurs. The meaning of the word entrepreneur has certainly evolved since 1913.

Does just creating a product make you entrepreneurial if you never do anything with it? What if you take someone's product and make it a success? That is not entrepreneurial? Investorwords, a set of definitions of financial terms, defines an entrepreneur as "an individual who starts his/her own business." At what point then are you no longer an entrepreneur? When are you no longer starting up? From the Merriam-Webster Online comes a more current definition: "one who organizes, manages, and assumes the risks of a business or enterprise." Assuming risk certainly fits most entrepreneurs. This definition is definitely richer, but still lacks the sense of innovation that one usually associates with entrepreneurs.

Moving from formal definitions, Ashoka, an organization which promotes social change, calls for "social entrepreneurs," people who open up major new possibilities in education, health, the environment, and other areas of human need, "just as business entrepreneurs lead innovation in commerce, social entrepreneurs drive social change." The concept of business entrepreneurs leading innovation is appealing because it denotes more than just starting a business. An entrepreneur herself, Daile Tucker, provides her thoughts on what it takes to be an entrepreneur in Are You an Entrepreneur? She defines an entrepreneur as "a person who has decided to take

control of his future and become self-employed whether by creating his own unique business or working as a member of a team, as in multi-level marketing." She identifies work ethics and several character traits of successful entrepreneurs, ending with "Entrepreneurs compete with themselves and believe that success or failure lies within their personal control or influence." This begins to touch on motivational aspects for being an entrepreneur which may distinguish the type of person drawn to being an entrepreneur.

Mark Hendricks takes Tucker's definition a step further, acknowledging innovation, but also providing alternatives. Hendricks suggests that to be an entrepreneur you don't particularly have to be daring. Many entrepreneurs are perfectly content to sell tried-and-true products, bringing a steady income without the intensity of launching a new product. He labels these lifestyle entrepreneurs. They want to be their own boss and make a good living, but they don't need to be on the cutting edge, which entails living where one wants, working with people one likes, and doing work one wants to do.

ENTREPRENEUR VS INTREPRENEUR

Entrepreneurship is the practice of embarking on a new business or reviving an existing

business by pooling together a bunch of resources, in order to exploit new found

opportunities.

What is Intrapreneurship?: Intrapreneurship is the practice of entrepreneurship by

employees within an organization.

An entrepreneur“… is one who has a dream and builds an organization to achieve it.”

An intrapreneur is one who has a dream and tries to achieve it within an already existing

corporation

entrepreneur is starting a business while intraprenuer is developing a new product in an already existing

business

Difference between an entrepreneur and an intrapreneur:

An entrepreneur takes substantial risk in being the owner and operator of a business with

expectations of financial profit and other rewards that the business may generate. On the

contrary, an intrapreneur is an individual employed by an organization for remuneration,

which is based on the financial success of the unit he is responsible for. Intrapreneurs share

the same traits as entrepreneurs such as conviction, zeal and insight. As the intrapreneur

continues to expresses his ideas vigorously, it will reveal the gap between the philosophy of

the organization and the employee. If the organization supports him in pursuing his ideas,

he succeeds. If not, he is likely to leave the organization and set up his own business.

Example of intrapreneurship: A classic case of intrapreneurs is that of the founders of

Adobe, John Warnock and Charles Geschke. They both were employees of Xerox. As

employees of Xerox, they were frustrated because their new product ideas were not

encouraged. They quit Xerox in the early 1980s to begin their own business. Currently,

Adobe has an annual turnover of over $3 billion.

Features of Intrapreneurship: Entrepreneurship involves innovation, the ability to take

risk and creativity. An entrepreneur will be able to look at things in novel ways. He will have

the capacity to take calculated risk and to accept failure as a learning point. An intrapreneur

thinks like an entrepreneur looking out for opportunities, which profit the organization.

Intrapreneurship is a novel way of making organizations more profitable where imaginative

employees entertain entrepreneurial thoughts. It is in the interest of an organization to

encourage intrapreneurs. Intrapreneurship is a significant method for companies to reinvent

themselves and improve performance.

In a recent study, researchers compared the elements related to entrepreneurial and

intrapreneurial activity. The study found that among the 32,000 subjects who participated in

it, five percent were engaged in the initial stages of a business start-up, either on their own

or within an organization. The study also found that human capital such as education and

experience is connected more with entrepreneurship than with intrapreneurship. Another

observation was that intraptreneurial startups were inclined to concentrate more on

business-to-business products while entrepreneurial startups were inclined towards

consumer sales.

Another important factor that led to the choice between entrepreneurship and

intrapreneurship was age. The study found that people who launched their own companies

were in their 30s and 40s. People from older and younger age groups were risk averse or felt

they have no opportunities, which makes them the ideal candidates if an organization is on

the look out for employees with new ideas that can be pursued.

Entrepreneurship appeals to people who possess natural traits that find start ups arousing

their interest. Intrapreneurs appear to be those who generally would not like to get

entangled in start ups but are tempted to do so for a number of reasons. Managers would do

well to take employees who do not appear entrepreneurial but can turn out to be good

intrapreneurial choices.

Examples of Intrapreneurs:

A lot of companies are known for their efforts towards nurturing their in-house talents to

promote innovation. The prominent among them is “Skunk Works” group at Lockheed

Martin. This group formed in 1943 to build P-80 fighter jets. Kelly Johnson was the director

of the project, a person who gave “14 rules of intrapreneurship”.

At “3M” employees could spend their 15% time working on the projects they like for the

betterment of the company. On the initial success of the project, 3M even funds it for further

development.

Genesis Grant is another 3M intrapreneurial program which finances projects that might

not end up getting funds through normal channels. Genesis Grant offers $85,000 to these

innovators to carry forward their projects.

Robbie Bach, J Allard and team’s XBOX might not have been feasible without the

Microsoft’s money and infrastructure. The project required 100s of millions and quality talent

to make the product.

Entrepreneur VS Manager

Distinction between an Entrepreneur and a Manager The terms Entrepreneur and Manager are considered one and the same. But the two terms have different meanings. The following are some of the differences between a manager and an entrepreneur.

· The main reason for an entrepreneur to start a business enterprise is because he comprehends the venture for his individual satisfaction and has personal stake in it where as a manager provides his services in an enterprise established by someone.

· An entrepreneur and a manager differ in their standing, an entrepreneur is the owner of the organization and he bears all the risk and uncertainties involved in running an organization where as a manager is an employee and does not accept any risk.

· An entrepreneur and a manager differ in their objectives. Entrepreneur’s objective is to innovate and create and he acts as a change agent where as a manager’s objective is to supervise and create routines. He implements the entrepreneur’s plans and ideas.

· An entrepreneur is faced with more income uncertainties as his income is contingent on the performance of the firm where as a manager’s compensation is less dependent on the performance of the organization.

· An entrepreneur is not induced to involve in fraudulent behavior where as a manger does. A manager may cheat by not working hard because his income is not tied up to the performance of the organization.

· Entrepreneur is required to have certain qualifications and qualities like high accomplishment motive, innovative thinking, forethought, risk-bearing ability etc. Conversely it’s mandatory for a manager to be educated in the fields of management theories and practices.

· An entrepreneur deals with faults and failures as a part of learning experience where as a manager make every effort to avoid mistakes and he postpones failure.

“An entrepreneur could be a manager but a manager cannot be an entrepreneur”. An entrepreneur is intensely dedicated to develop business through constant innovation. He may employ a manager in order to perform some of his functions such as setting objectives, policies, rules etc. A manager cannot replace an entrepreneur in spite of performing the allotted duties because a manager has to work as per the guidelines laid down by the entrepreneur.

On the downside, typical manager brings professionalism into working of an organization. They bring fresh perspectives, ideas and approach to trouble shooting which can be invaluable.

Lately there has been convergence of the entrepreneur and the manager in certain sectors like software. An employee is being given highly valuable stock options, which make a typical ‘manager’ a part owner.

What is entrepreneurship?

Who is an entrepreneur?

An entrepreneur is a person who develops a new idea and takes the risk of setting up an enterprise to produce a product or service which satisfies customer needs. All entrepreneurs are business persons, but not all business persons are entrepreneurs. Let us now think of why all business persons are not entrepreneurs. Think of a woman who sits by the roadside leading to your home and who has been selling the same type of food, from the same size of saucepan or pot, from the same table top, and may not have been able to change her standard of living to any appreciable extent. Such a woman may be a business person but not an entrepreneur. The

entrepreneur, on the other hand is the business person who is not satisfied with his/her performance and therefore always finds ways to improve and grow.

Now let us consider the characteristics or some special qualities and strengths which make an entrepreneur different from a business person. It is important for us to note that a successful entrepreneur possesses the following characteristics.

Initiative

An entrepreneur takes actions that goes beyond job requirements or the demand of the situation

Opportunity seeking

An entrepreneur is quick to see and seize opportunities. He/she does things before he/she is asked to work by people or forced by situation.

Persistence

An entrepreneur is not discouraged by difficulties and problems that come up in the business or his/her personal life. Once she sets a goal she is committed to the goal and will become completely absorbed in it.

Information seeking

An entrepreneur undertakes personal research on how to satisfy customers and solve problems. He/she knows that different people have different capabilities that can be of help to them. He/she seeks relevant information from his/her clients, suppliers, competitors and others. He/she always wants to learn things which will help the business to grow.

Demand for quality and efficiency

An entrepreneur is always competing with others to do things better, faster, and at less cost he/she strives to achieve excellence.

Risk taking

Are you afraid of uncertainties? Then you cannot be an entrepreneur. Entrepreneurs are not high risk takers. They are also not gamblers; they calculate their risks before taking action. They place themselves in situations involving moderate risk so they are moderate risk takers.

Goal setting

An entrepreneur sets meaningful and challenging goals for him/herself. An entrepreneur does not just dream. Him/she thinks and plans what he/she does. He/she is certain or has hope about the future.

Commitment to work

An entrepreneur will work long hours after into the night just to be able to keep his/her promise to his/her client. He/she does the work together with his/her workers to get a job done. He/she knows how to make people happy to work for him/her due his/her dynamic leadership.

Systematic planning and monitoring

An entrepreneur plans for whatever he/she expects in the business. He/she does not leave things to luck. He/she plans by breaking large tasks down into small once and puts time limits against them. Since and entrepreneur knows what to expect at anytime he/she is able to change plans and strategies to achieve what he/she aims at.

Persuasion and networking

An entrepreneur acts to develop and maintain business contacts by establishing good working relationship. Uses deliberate strategies to influence others.

Independence and self confidence

Most entrepreneurs start business because they like to be their own boss. They are responsible for their own decisions.

The importance of entrepreneurship

The role of entrepreneurship and an entrepreneurial culture in economic and social development has often been underestimated. Over the years, however, it has become increasingly apparent that entrepreneurship does indeed contribute to economic development.

Transforming ideas into economic opportunities is the crux of entrepreneurship. History shows that economic progress has been significantly advanced by pragmatic people who are entrepreneurial and innovative, able to exploit opportunities and willing to take risks.

Entrepreneurs produce solutions that fly in the face of established knowledge, and they always challenge the status quo. They are risk-takers who pursue opportunities that others may fail to recognize or

may even view as problems or threats. Whatever the definition of entrepreneurship, it is closely associated with change, creativity, knowledge, innovation and flexibility-factors that are increasingly important sources of competitiveness in an increasingly globalized world economy. Thus, fostering entrepreneurship means promoting the competitiveness of businesses.

Entrepreneurship and enterprise development

Private sector development and entrepreneurship development are essential ingredients for achieving the Millennium Development Goal of reducing poverty. While sound macroeconomic policies and providing market access are crucial, emerging markets need to nurture and develop entrepreneurs able to take advantage of opportunities created by globalization.

For many developing countries, private sector development has been a powerful engine of economic growth and wealth creation, and crucial for improving the quality, number and variety of employment opportunities for the poor.

Economically, entrepreneurship invigorates markets. The formation of new business leads to job creation and has a multiplying effect on the economy.

Socially, entrepreneurship empowers citizens, generates innovation and changes mindsets. These changes have the potential to integrate developing countries into the global economy.

Role of Entrepreneur with respect to entreprenurial culture

Entrepreneurship is not an inborn skill, it is a product of the environment. It involves a complex of economic and social behaviour. To be successful, an entrepreneur has to remain dynamic and responsible to the whole environment. Entrepreneurship can hardly survive under any given circumstances. It can flourish only under the right environment. It is a part of the total system. The social values, culture, government policies, political system, technology, economic conditions, customs, laws, etc. influence the growth of entrepreneurship.

In fact, the entrepreneurship cannot be kept aloof from the changing social values, ideologies, new emerging aspirations, environmental pressures, religious beliefs, consumer wants and society needs etc. Business is a system made up of certain environmental factors which require the entrepreneur to adopt a dynamic attitude and a new strategy of their own.

Entrepreneurial culture implies a set of values, norms and traits that are conducive to the growth of entrepreneurship.

Cultural values deeply affect entrepreneurship and the level of economic development – Structural conditions make development possible – cultural factors determine whether the possibility becomes an actuality.

Culture has everything to do with the entrepreneurial process and focuses on the discovery and interpretation of opportunities, neglected by others. No entrepreneur can overlook the country’s cultural heritage and values if he wants to survive and progress. He needs to function on the basis of social expectations, desires and goals. The entrepreneur has to respect the human society, its cultural values and traditions.

Awareness and understanding of the cultural environment of business maybe useful to the entrepreneur in several ways:

i)      To better understand the behaviour and conduct of people with regard to entrepreneurship.

ii)    To predict behaviour and determine how people will act in a certain situation as regards to entrepreneurship.

iii)   It develops the sensitivity of the entrepreneur.

iv)   It facilitates change of the entrepreneur.

Understanding entrepreneurial culture is important, not only to the theoretical understanding of entrepreneurship, but also to entrepreneurship  as a practical enterprise, which can provide new and fresh ideas of entrepreneurship, by looking at innovative business behaviour in other times, in other societies and in other cultures – and also by looking at entrepreneurship from novel angles and much wider perspective.

Culture is of great importance to entrepreneurship, because it determines the ethos of people. It trains people along particular lines. It creates distinctions. It conveys a sense of identity. It enhances social system stability. It creates people, enterprising men and risk bearers. It determines goods and services. The understanding of culture enables the entrepreneur to skillfully manipulate the cultural codes of his society, balancing between the permissible and the profane, tugging moral codes into a new conformation.

The entrepreneur’s ability to “read” opportunities cannot be due to isolation or separateness, but is rather due to a higher degree of sensitivity to what others are looking for. And it is culture that gives pre-direction to the entrepreneur’s vision, enabling him to read certain things. They can pick up the sense of where their fellows in the culture stand, what values they adhere to, what purposes they pursue, what they consider beautiful and what they deem profane.

The entrepreneur’s ability to move ahead with confidence, his struggle to turn setbacks into opportunities, to advance and survive in the business world is the knowledge and instinct that comes from experience gathered in a particular cultural milieu.

Sociologists like Max Weber argue that entrepreneurship is most likely to emerge under a specific social culture. According to them, social sanctions, cultural values and role expectations are responsible for the emergence of entrepreneurship. For many researchers, modern entrepreneurship is a distinctly new variant of a timeless species created and sustained by culture and creative of it at the same time.

Some cultures are enormously supportive of entrepreneurship – indeed to the point where entrepreneurship develops its own culture, such as in Hong Kong. Others (such as Communist Countries) regard the entrepreneurial way of life with suspicion. The differences go a long way towards explaining why some societies are vibrant and progressive, while others stagnate.

Religion/ caste and family influences greatly determine entrepreneurial culture. Some religions are found to be conducive to entrepreneurship, while others inhibit entrepreneurship. Religious beliefs produce intensive exertion in occupational pursuits, the systematic ordering of means to an end and the accumulation of assets. It is these beliefs and the caste system that are found to influence the propensity to become an entrepreneur.

Religion often determines what business one stays out of. In India, it is religiosity that keeps many people in business and often determines what business one stays out of. The mighty Birlas chose to stay out of the hotel business because of the necessity to consider serving non-vegetarian food. Religion based norms become easy and convenient reference points for designing one’s course of actions.

Family too plays an important role in shaping entrepreneurial instincts. Family background, simply familiarity with a business environment, growing from “table talk” at home is the key to increasing the probability that an offspring will later become an entrepreneur. Entrepreneurs are very much in terms with the ‘conversations’ going on around him. Brought up in a family, where commercial activity is part of the daily household routine, it becomes a conscious battle for the entrepreneur to create viable business.

The characteristics of the family enterprises – commitment, continuity, putting a face to the company and close interaction between the family and the business – may have a strong impact on the strategic choices in the business.

Family background of business-family values, business conversations as a part of the daily household routine, family support and encouragement, has given these young entrepreneurs, the drive, the desire, and the motivation to create their own viable business unit. On the other hand, successful family business that have been forced on in heritage, has curbed the development of independent, innovative ventures.

Family enterprises also play a major role in regional and local economics – often act as the engines of their economic development as they have a positive attitude towards growth, and their growth is usually more cost efficient than of other firms. The owners that put a face to their family enterprises are committed to developing their firms as well as to their continuity.

To conclude, the influence of human institutions such as norms, values, morals, family ties and support – in other words – culture- form the framework within which individuals can pursue entrepreneurial opportunities.

Current PerspectiveIn a country like India, social (value system) and cultural issues hold their importance besides issues related to infrastructure. Any innovation to succeed in our society needs to be accepted by our value systems and cultural issues. It will not be wrong to say that Dot.com (or any innovation) will not succeed until and unless a high level of awareness is achieved and the idea is taken to the common people. An acceptance by the mass in itself is a kind of social innovation. Further, in our country, where the population is more concerned about making both ends meet, entrepreneurial activity will achieve sustainability only when support is provided both at the societal and governmental levels.

Scope of entrepreneurship development in IndiaIn India there is a dearth of quality people in industry, which demands high level of entrepreneurship development programme through out the country for the growth of Indian economy.

The scope of entrepreneurship development in country like India is tremendous. Especially since there is widespread concern that the acceleration in GDP growth in the post reforms period has not been accompanied by a commensurate expansion in employment. Results of the 57th round of the National Sample Survey Organization (NSSO) show that unemployment figures in 2001-02 were as high as 8.9 million. Incidentally, one million more Indian joined the rank of the unemployed between 2000-01 & 2001-02. The rising unemployment rate (9.2% 2004 est.) in India has resulted in growing frustration among the youth. In addition there is always problem of underemployment. As a result, increasing the entrepreneurial activities in the country is the only solace. Incidentally, both the reports prepared by Planning Commission to generate employment opportunities for 10 crore people over the next ten years have strongly recommended self-employment as a way-out for teaming unemployed youth.

We have all the requisite technical and knowledge base to take up the entrepreneurial challenge. The success of Indian entrepreneurs in Silicon Valley is evident as proof. The only thing that is lacking is confidence and mental preparation. We are more of a reactive kind of a people. We need to get out of this and become more proactive. What is more important than the skill and knowledge base is the courage to take the plunge. Our problem is we do not stretch ourselves. However, it is appreciative that the current generations of youth do not have hang-ups about the previous legacy and are willing to experiment. Theses are the people who will bring about entrepreneurship in India.

We can take the example of Vikas Kedia - one of India's most eligible entrepreneurs; he was barely 21 when he had turned his back on a possible $ 100,000-a-year job. Vikas Kedia, a graduate from the Indian Institute of Management-Bangalore, is much in demand. He has also created history of sorts in the IIM circuit by starting his own dot-com company in Bangalore, now he has his own company which is a California and Kolkata based GRMtech.

At present, there are various organizations at the country level & state level offering support to entrepreneurs in various ways. The Govt. of India & various State Govts. have been implementing various schemes & programmes aimed at nurturing entrepreneurship over last four decades. For example, MCED in Maharashtra provides systematic training, dissemination of the information & data regarding all aspects of entrepreneurship & conducting research in entrepreneurship. Then there are various Govt. sponsored scheme for the budding entrepreneurs.

Recognizing the importance of the entrepreneur development in economic growth & employment generation, Maharashtra Economic Development Council (MEDC) has identified entrepreneurial development as the one of the focus area for Council activities two years ago.

Various Chambers of Commerce & apex institutions have started organizing seminars & workshops to promote entrepreneurship. Incidentally, various management colleges have incorporated entrepreneurship as part of their curriculum. This is indeed a good development. This shows the commitment of the Govt. & the various organizations towards developing entrepreneurial qualities in the individuals.

Promoting Entrepreneurship

In India, where over 300 million people are living below the poverty line, it is simply impossible for any government to provide means of livelihood to everyone. Such situations surely demand for a continuous effort from the society, where the people are encouraged to come up with their entrepreneurial initiative.

Encouragement at attitudinal and social level

In the future, innovation and entrepreneurship needs to be encouraged at Social levels, Governmental levels and Managerial levels. There must be a social attitude that views innovations with positive attitude and reject an innovation only when it is not acceptable.

Encouragement at physical level

At this level the encouragement will refer to two aspects necessary for

entrepreneurship to thrive, one is the provision of venture capital and the other being infrastructural support. A real example is Export Processing Zones which are performing extremely well when given the support.

Entrpreneurship and Economic Development

Entrepreneurship helps in the process of economic development in the following ways :

1) Employment Generation :

Growing unemployment particularly educated unemployment is the problem of the nation. The available employment opportunities can cater only 5 to 10 % of the unemployed. Entrepreneurs generate employment both directly and indirectly. Directly, self employment as an entrepreneur and indirectly by starting many industrial units they offer jobs to millions. Thus entrepreneurship is the best way to fight the evil of unemployment.

2) National Income :

National Income consits of the goods and services produced in the country and imported. The goods and services produced are for consumption within the country as well as to meet the demand of exports. The domestic demand increases with increase in population and increase in standard of living. The export demand also increases to meet the needs of growing imports due to various reasons. An increasing number of entrepreneurers are required to meet this increasing demand for goods and services. Thus entrepreneurship increases the national income.

3) Balanced Regional Development :

The growth of Industry and business leads to a lot of Public benefits like transport facilities, health, education, entertainment etc. When the industries are concentrated in selected cities, development gets limited to these cities. A rapid development . When the new entrepreneurers grow at a faster rate, in view of increasing competition in and around cities, they are forced to set up their enterprises in the smaller towns away from big cities. This helps in the development of backward regions.

4) Dispersal of economic power :

Industrial development normally may lesd to concentration of economic powers in a few hands. This concentration of power in a few hands has its own evils in the form of monopolies. Developing a large number of entrepreneurers helps in dispersing the economic power amongst the population. Thus it helps in weakening the harmful effects of monopoly.

5) Better standards of living :

Entrepreneurers play a vital role in achieving a higher rate of economic growth. Entrepreneurers are able to produce goods at lower cost and supply quality goods at lower price to the community according to their requirements.When the price of of the commodies decreases the consumers get the power to buy more goods for their satisfaction. In this way they can increase the standard of living of the people.

6) Creating innovation :

An entrepreneur is a person who always look for changes. apart from combining the factors of production, he also introduces new ideas and new combination of factors. He always try to introduce newer and newer technique of production of goods and services. An entrepreneur brings economic development through innovation.

Entrepreneurship also helps in increasing productivity and capital formation of a nation. In short, the development of the entrepreneurship is inevitable in the economic development of the country. The Role played by the entrepreneurship development can be expressed in the following words :

" Economic development is the effect for which entrepreneurship is a cause "