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Entrepreneurship Chapter 1

The document discusses the concept, meaning, and characteristics of entrepreneurship. It describes entrepreneurs as individuals who start new businesses and are willing to take risks to generate profits. The document also outlines some economic and non-economic factors that can affect entrepreneurial growth, such as access to capital, labor, markets, social mobility, and government policies.

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Kamlakar Sadavarte
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548 views5 pages

Entrepreneurship Chapter 1

The document discusses the concept, meaning, and characteristics of entrepreneurship. It describes entrepreneurs as individuals who start new businesses and are willing to take risks to generate profits. The document also outlines some economic and non-economic factors that can affect entrepreneurial growth, such as access to capital, labor, markets, social mobility, and government policies.

Uploaded by

Kamlakar Sadavarte
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Concept of Entrepreneurship

Entrepreneurship is the ability and readiness to develop, organize and run a


business enterprise, along with any of its uncertainties in order to make a profit.
The most prominent example of entrepreneurship is the starting of new businesses.
In economics, entrepreneurship connected with land, labour, natural resources and
capital can generate a profit. The entrepreneurial vision is defined by discovery and
risk-taking and is an indispensable part of a nation’s capacity to succeed in an
ever-changing and more competitive global marketplace.

Meaning of Entrepreneur
The entrepreneur is defined as someone who has the ability and desire to establish,
administer and succeed in a startup venture along with risk entitled to it, to make
profits. The best example of entrepreneurship is the starting of a new business
venture. The entrepreneurs are often known as a source of new ideas or innovators,
and bring new ideas in the market by replacing old with a new invention.
It can be classified into small or home business to multinational companies. In
economics, the profits that an entrepreneur makes is with a combination of land,
natural resources, labour and capital.
In a nutshell, anyone who has the will and determination to start a new company
and deals with all the risks that go with it can become an Entrepreneur.

Characteristics of Entrepreneurship:
Not all entrepreneurs are successful; there are definite characteristics that make
entrepreneurship successful. A few of them are mentioned below:

 Ability to take a risk- Starting any new venture involves a considerable


amount of failure risk. Therefore, an entrepreneur needs to be courageous
and able to evaluate and take risks, which is an essential part of being an
entrepreneur.

 Innovation- It should be highly innovative to generate new ideas, start a


company and earn profits out of it. Change can be the launching of a new
product that is new to the market or a process that does the same thing but in
a more efficient and economical way.
 Visionary and Leadership quality- To be successful, the entrepreneur should
have a clear vision of his new venture. However, to turn the idea into reality,
a lot of resources and employees are required. Here, leadership quality is
paramount because leaders impart and guide their employees towards the
right path of success.
 Open-Minded- In a business, every circumstance can be an opportunity and
used for the benefit of a company. For example, Paytm recognised the
gravity of demonetization and acknowledged the need for online transactions
would be more, so it utilised the situation and expanded massively during
this time.
 Flexible- An entrepreneur should be flexible and open to change according
to the situation. To be on the top, a businessperson should be equipped to
embrace change in a product and service, as and when needed.
 Know your Product-A company owner should know the product offerings
and also be aware of the latest trend in the market. It is essential to know if
the available product or service meets the demands of the current market, or
whether it is time to tweak it a little. Being able to be accountable and then
alter as needed is a vital part of entrepreneurship.

Importance of Entrepreneurship:

 Creation of Employment- Entrepreneurship generates employment. It


provides an entry-level job, required for gaining experience and training for
unskilled workers.
 Innovation- It is the hub of innovation that provides new product ventures,
market, technology and quality of goods, etc., and increase the standard of
living of people.
 Impact on Society and Community Development- A society becomes greater
if the employment base is large and diversified. It brings about changes in
society and promotes facilities like higher expenditure on education, better
sanitation, fewer slums, a higher level of homeownership. Therefore,
entrepreneurship assists the organisation towards a more stable and high
quality of community life.
 Increase Standard of Living- Entrepreneurship helps to improve the standard
of living of a person by increasing the income. The standard of living means,
increase in the consumption of various goods and services by a household
for a particular period.
 Supports research and development- New products and services need to be
researched and tested before launching in the market. Therefore, an
entrepreneur also dispenses finance for research and development with
research institutions and universities. This promotes research, general
construction, and development in the economy.

ECONOMIC FACTORS AFFECTING ENTREPRENEURIAL GROWTH

Essentially, these factors are responsible for ensuring the economic growth and
development of a nation. Such factors provide a conducive economic environment
as well as economic security for the enterprise to flourish. These economic factors
influencing entrepreneurship growth are of different types, as follows:
 

1. CAPITAL
Capital is a crucial requirement while initiating an entrepreneurial activity.
It is capital which is essential to procure land, material, machines etc. An
entrepreneur is able to procure all the necessities of production when
adequate capital is available with them. This, in turn, leads to
entrepreneurial growth.
2. LABOR
To carry out successful business, inexpensive as well as skilled labor is
essential. This will increase the overall productivity of the venture, leading
to the growth and development of the entrepreneur’s venture.
3. RAW MATERIAL
Another factor affecting entrepreneurship development is the availability
of quality raw material at affordable costs. If the raw material is readily
available and is within the manufacturing unit’s proximity, it will help
reduce the cost of production. However, this problem can be solved by
ensuring a strong supply chain, but this might increase the cost of
manufacture.
4. MARKET
In simple terms, a market is a place where both producers and customers
interact. This is where actual selling and buying takes place. The market is
the place where the future course of the business rests. If a consumer isn’t
willing to buy a product offered by the entrepreneur, then the venture is
bound to fail. However, if the entrepreneur’s product is able to serve the
purpose and solve the problems of the customers, this means that the
demand for the product is present in the market. This will increase sales of
the business, which will lead to entrepreneurial growth.

NON-ECONOMIC FACTORS AFFECTING ENTREPRENEURIAL GROWTH

1. SOCIAL FACTORS AFFECTING ENTREPRENEURIAL GROWTH


Taking care of the economic factors alone is not sufficient to ensure
entrepreneurial growth. According to social scientists, the following are some of
the social factors affecting entrepreneurship development:
 

 Social Mobility
Social mobility is one of the social factors affecting entrepreneurship
development. It involves social as well as geographical mobility. It has
been observed in the past that an entrepreneurial venture has the ability to
grow more in places where the environment is flexible and liberal.
Therefore, we observe that there are certain regions where more
entrepreneurial activity is taking place as compared to others.
 Entrepreneurship Legitimacy
Every society formulates its own norms, rules and regulations. These
values, in turn, act as a social environment for entrepreneurial activities.
Therefore, the entrepreneur should always try to work keeping in mind that
the social values and rules are complied with while fulfilling business
objectives, or earning profits through the new idea. 
 
2. PSYCHOLOGICAL FACTORS
Along with the abovementioned factors, psychological factors also act as
crucial factors influencing entrepreneurship. Regardless of the fact that the
economic and social environment is positive and in favor of a business, it will be
of no use if individuals associated with the venture are not self-motivated. The
following are some of the psychological factors affecting entrepreneurship
development:
 

 Status Respect
It has been observed that withdrawal of status encourages the dissatisfied
people belonging to a society to opt for another unique product option.
This creates room for entrepreneurial development. When an individual is
not content with the present situation, then they look for innovations. This
drives entrepreneurial growth.
 Motivation For High Achievement
The theory of need achievement propounded by D. McClelland states that
entrepreneurial growth or development is dependent on the need or
motivation for high achievement. He has mentioned that it is the level of
motivation that decides whether a venture or an entrepreneur is bound to
succeed or fail. To ensure a high level of motivation, both employees and
the entrepreneur can undergo appropriate training. 

3. POLITICAL FACTORS AFFECTING ENTREPRENEURSHIP


All of these factors are either directly or indirectly impacted by government action.
The government frames policies and laws while keeping in mind entrepreneurs,
because they understand that development of entrepreneurship in the country will
bring significant benefits to the economy. Therefore, the government extends
support to entrepreneurs constantly by creating special economic zones, subsidies,
social schemes, industrial areas etc. Political factors are one of the most
significant factors influencing entrepreneurship growth around the globe.
 

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