EVOLUTION OF ENTREPRENEURSHIP

In the Earliest period, definition of entrepreneurship began as early as the Marco Polo who comes to the Middle East for
trade. Marco Polo has signed an agreement with the capitalists to sell their products. In the contract merchant adventurer took a
loan at 22.5% rate including insurance. Capitalist was the passive risk bearer and merchant adventurer took the active role in
trading, bearing all physical and emotional risks. When the merchant adventurer successfully sold the goods and completed the
trip, the profits were divided with the capitalist taking most of them up to 75%, while the merchant adventurer settled for the
remaining 25%.
In middle ages, Entrepreneur is described as someone who is involved in the care and control of a large production
projects. It is possible to control the project using the resources provided by the government. In this case, the entrepreneur does
not bear any risk. Entrepreneurs in this age, is a have control and authority of construction works such as public buildings and
churches. A typical entrepreneur in the middle age was the priest.
In 17th century, the evolution of entrepreneurship can be related with the relationship between risk and entrepreneurs.
Entrepreneurship is the person who signed the contract agreement with the government to provide a service or supply products
that have been determined. The contract price is fixed. Then, the entrepreneurs are fully responsible for the gains and losses of
the business. John law, a Frenchman was one of the entrepreneurs in that period. The founder of the royal bank of France and the
Mississippi Company, which had an exclusive franchise to trade between France and the new world. Monopoly on French trade
eventually led to collapse of the company. Richard Cantillion, an economist defines entrepreneurs earlier. In his view, the
entrepreneur is risk insurers. Merchants, farmers, craftsmen, and so is an entrepreneurs. They buy things at a certain price and
sell it at a price that is uncertain, with the risks
. In the 18th century, the person with capital was differentiated from the one who needed capital. The entrepreneur was
distinguished from the capital provider. One reason for this differentiation was the industrialization occurring throughout the
world. Eli Whitney was an American inventor best known for inventing the cotton gin. This was one of the key inventions of the
industrial Revolution. Thomas Edison, the inventor of many inventions. He was developing new technologies and was unable to
finance his inventions himself. Edison was a capital user or an entrepreneur, not a provider or a venture capitalist.
In 19th and 20th century, Entrepreneurs are not always associated with the management. According to Merriam-Webster's
online dictionary, an entrepreneur is one who organizes, manages, and assumes the risk of a business or an enterprise. The
entrepreneur organizes and manages an enterprise for personal gain. The materials consumed in the business, for the use of the
land, for the services he employs, and for the capital he requires. Andrew Carnegie is one of the best examples of this
definition. Carnegie, who descended from a poor Scottish family, made the American Steel Industry one of the wonders of the
industrial world.
In the middle of the 20th Century, the function of the entrepreneurs is to recreate or revolutionize the pattern of production
by introducing an invention. Innovation, the act of introducing some new ideas, is one of the most difficult tasks for the
entrepreneur. For example, Edward Harriman, who reorganized the railroad in the United States and John Morgan, who
developed his large banking house by reorganizing and financing the nation’s industries. Besides, the Egyptian who designed and
built great pyramids out of stone blocks weighing many tons each, to laser beams, supersonic planes and space stations.

In 21st century, Entrepreneurs are known as a hero for Free Enterprise market. Entrepreneur of the century created many
products and services and is willing to face a lot of risks in the business. According to Kuratko & Hodgetts, most people say
entrepreneurs are pioneers in creating new businesses. In the year 2005 Hisrich, Peter and Shepherd regarded entrepreneur as
an organizer who controls, systematize, purchases raw materials, arranges infrastructure, throw in his own inventiveness,
expertise, plans and administers the venture.
The Future of entrepreneurship will be growth with development of technologies. The modern technologies and internet
have improved the ways of conduct business. Entrepreneurs now have the luxury of putting their business idea into action
through the click of button.

The History of the Entrepreneur

1734. Irish-French economist and author Richard Cantillon penned Essai (Essay on the Nature of Trade in General), considered
the first complete formal work on the subject of economics. In Essai, Cantillon explored the early economics idea of cause and
effect, considered monetary theories, and identified the entrepreneur as a risk-bearer. “Entrepreneurs are non-fixed income
earners who pay known costs of production but earn uncertain incomes.” Cantillon divided society into two principal classes —
fixed income wage-earners and non-fixed income earners; and while it’s considered that Jean-Baptiste Say coined the word
“entrepreneur,” it’s Cantillon who first used the word, in that classification.
1803. Say, a favorite study of mine, studied Cantillon and Adam Smith, and noted that the entrepreneur is distinct in being the
person who unites all means of production to uncover new opportunities. “By selling the product in the market he pays rent of
land, wages to labour, interest on capital and what remains is his profit.” The entrepreneur shifts economic resources out of an
area of lower and into areas of higher productivity and greater yield.
Early 1900s. Nikola Tesla introduced the notion of a “world wireless system” and visionary thinkers such as Paul Otlet and
Vannevar Bush conceived of mechanized, searchable storage systems of books and media – in the 1930s and 1940s. This, of
course, gave rise to the the internet on which we all find ourselves today and is notable to our history of entrepreneurs as this
technology has enabled everyone, everywhere, to try.
1934. Joseph Schumpeter helped establish that entrepreneurs disrupt, leading us to the notion popular today of disruption.
Entrepreneurs are innovators who use a process of shattering the status quo of the existing products and services, to set up new
products, new services. Schumpeter brought a unique perspective to bear on the power of market-creating innovation to improve
human well-being through his widely read work, Capitalism, Socialism, and Democracy.
1961. David McClelland is credited with developing Achievement Motivation Theory, commonly referred to as “need for
achievement” or n-achievement theory. He himself, an energetic and a moderate risk taker, claimed that motivation is “a
recurrent concern for a goal state or condition as measured in fantasy, which drives, directs and selects the behavior of the
individual”. He focused on three particular motives: the need for achievement (N-Ach); the need for affiliation (N-Aff); and the
need for power (N-Pow). N-Ach is the desire to excel in relation to a set of standards. It is the drive to succeed. N-Pow is the
desire to be influential and affect an organization. N-Aff is the desire for close personal relationships. The Achievement Motive
has been closely studied for impact on development of economies and entrepreneurship.
Early 1960s. MIT’s J.C.R. Licklider popularized the idea of an “Intergalactic Network” of computers; work that became ARPANET
and in turn, the internet.
1964. Management consultant and economist Peter Drucker noted that the entrepreneur searches for change, responds to it and
exploits opportunities. Innovation is a specific tool of an entrepreneur and that it, combined with Marketing, creates the most
value in the work that businesses undertake.
1971: Peter Kilby studied the critical role of the entrepreneur in developing economies in his work Entrepreneurship and
Economic Development. Kilby distinguishes the imitator entrepreneur who doesn’t innovate but imitates technologies innovated
by others; helping usher in the recognition of 2nd mover advantages and how being first to market isn’t usually the best place to
be.
The 1970s. Scientists Robert Kahn and Vinton Cerf developed Transmission Control Protocol and Internet Protocol, or TCP/IP, a
communications model that set standards for how data could be transmitted between multiple networks.
1975. Howard H. Stevenson of Harvard Business School notes that entrepreneurship is the pursuit of opportunity without regard
to resources currently controlled, reinforcing the early distinction of the entrepreneur as the risk taker in uncertain
circumstances and comfortable with fluid income.
1975. Albert Shapero reminded us that Entrepreneurs take initiative, accept risk of failure and have an internal locus of control.
His paper, The Displaced, Uncomfortable Entrepreneur resonates even more in 2020 than perhaps before.
1990s. Computer scientist Tim Berners-Lee invented the World Wide Web. Often confused with the internet, the web is the most
common means of accessing data online in the form of websites and hyperlinks.
2005. Elinor Ostrom’s work Unlocking Public Entrepreneurship and Public Economies ties entrepreneurship to public and private
sector, noting that unlocking human potential requires a rich network of institutional arrangements in both private and public
spheres. Her work solidified the need for economic collaboration on behalf of everyone; positing that opening entrepreneurship
and the complex market organization involved is a key to increasing the level and quality of private goods available to consumers.
2013. Ronald May clarifies that an Entrepreneur is someone who commercializes his or her innovation.
Entrepreneurship
Entrepreneurship is a ship on a voyage that has on board, innovative and creative men and women, who like to do all those
constructive things which nobody could lay his/her hands on before. They make a fortune out of ideas. Success never goes to
their heads and each set back makes them bold enough to carve their future, aiming for excellence. Entrepreneurship is the
freedom to do what one likes to do, with all its attendant profits and risks. Entrepreneurship is defined by results and not by
attributes. It is a passion and all about commercial risks. A true entrepreneur uses not only his/her senses one to five, but six,
seven, eight and nine. Six to nine do not really exist, but he/she develops them through his/her exposure, experience, failures and
following the concept of listening to understanding.
There are many meanings of the term ‘entrepreneurship‘. It is a system of operating business in which opportunities existing
within the scope of a market are exploited. Self-employment necessitates that any available opportunities within the economic
system should be utilized in the creation and functioning of new organizations. Entrepreneurship is a creative and innovative
response to the environment. It is also the process of setting up a new venture by the entrepreneur. Entrepreneurship is a
composite skill that is a mixture of many qualities and traits such as imagination, risk-taking, ability to harness factors of
production i.e. land, labour, technology and various intangible factors.
Entrepreneurship has evolved through the centuries and it has been viewed differently according to conditions prevailing in the
world economy. The new-age business ventures are more idea–centric and not just product-based. The key to success in business
is not just inheritance; it is creation of more wealth and the constant innovation, from the prevailing to the next best practices.
Accordingly, a wide range of small and mid-sized businesses have emerged and gained popularity with the affluent middle class,
determined to spend more, as well as derive value out of every rupee spent.
The term entrepreneurship‘ has been defined as a function which covers multiple functions such as:
• Building organizations.
• Providing self-employment
• Utilization of available resources
• Innovation applied to the novel concept
• Bringing together multiple factors of production in a tangible manner.
• Identifying and exploiting business opportunities within the available market.

Importance of Entrepreneurship
• Creation of job opportunities- Entrepreneurship firms contributed a large share of new jobs. It provides entry-level
jobs so necessary fur training or gaining experience for unskilled workers. The small enterprises are the only sector that
generates a large portion of total employment every year. Moreover, entrepreneurial ventures prepare and supply
experienced labor to large industries.
• Innovation- Entrepreneurship is the incubator of innovation. Innovation creates disequilibria in the present state of
order. It goes beyond discovery and does implementation and commercialization, of innovations. “Leapfrog” innovation,
research, and development are being contributed by entrepreneurship. Thus, entrepreneurship nurses innovation that
provides new ventures, products, technology, market, quality of good, etc. to the economy that increases Gross Domestic
Products and standard of living of the people.
• Impact on community development- A community is better off if its employment base is diversified among many small
entrepreneurial firms. It promotes abundant retail facilities, a higher level of homeownership, fewer slums, better,
sanitation standards and higher expenditure on education, recreation, and religious activities. Thus, entrepreneurship
leads to more stability and a higher quality of community life.
• Political and economic integration of outsiders- Entrepreneurship is the most effective way of integrating those who
feel disposed of and alienated into the economy. Minorities, migrants, and women are safely integrated into
entrepreneurship that will help to develop a well-composed plural society.
 • Enhances the standard of living- The standard of living is a concept built on an increase in the amount of consumption
of a variety of goods and services over a particular period by a household. So it depends on the availability of diversified
products in the market. Entrepreneurship provides enormous kinds of a product of various natures by their innovation.
Besides, it increases the income of the people who are employed in entrepreneurial enterprises. That also capable
employed persons to consume more goods and services. In effect, entrepreneurship enhances the standard of living of
the people of a country.
• Promotes research and development- Entrepreneurship is innovation and hence the innovated ideas of goods and
services have to be tested by experimentation. Therefore, entrepreneurship provides funds for research and
development with universities and research institutions. This promotes the general development, research, and
development in the economy.
• Inflow of Foreign Capital
• Growth of infrastructure
• Increase Per Capita Income
• Optimization of Capital
• Mobilization of Local Resources

The Concept of Entrepreneurship

Entrepreneur - Person (Subject)
Entrepreneurship Process or action (Verb)
Enterprise – Outcome (Object)

An entrepreneur is a person responsible for setting up a business or an enterprise. He has the initiative, skill for innovation and
who looks for high achievements. He is a catalytic agent of change and works for the good of people. He puts up new green field
projects that create wealth, opens up many employment opportunities and leads to growth of other sectors.
An entrepreneur is a person who starts an enterprise and converts a situation into opportunity. He/she searches for change and
responds to it. A number of definitions have been given of an entrepreneur. The economists view him/her as the fourth factor of
production, along with land labour and capital.

ENTREPRENEUR is a person who:

 Develops and owns his own enterprise.
 Is a moderate risk taker and works under uncertainty for achieving the goal.
 Is innovative.
 Is a persuader of deviant pursuits.
 Reflects a strong urge to be independent.
 Persistently tries to do something better.
 Is dissatisfied with routine activities.
 Is prepared to withstand the hard life.
 Is determined, but patient.
 Exhibits a sense of leadership.
 Exhibits a sense of competitiveness.
 Takes personal responsibility.
 Is oriented towards the future.
 Tends to persist in the face of adversity

Definitions of an entrepreneur
Richard Cantillon: As a person, who pays a certain price to a product to resell it at an uncertain price, thereby making decisions
about obtaining and using the resources while consequently admitting the risk of enterprise.
Adam Smith: An individual, who undertakes the formation of an organization for commercial purposes by recognizing the potential
demand for goods and services, and there by acts as an economic agent and transforms demand into supply.
Joseph Schumpter: Entrepreneurs are innovators, who use the process of entrepreneurship to shatter the status quo of the existing
products and services, to set new products, new services. He describes entrepreneurs as innovators.
Peter F. Drucker: An entrepreneur is one who always searches for changes, responds to it and exploits it as an opportunity. He
believes in increasing the value and consumer satisfaction. Thus, a professional manager who mobilises resources and allocates them
to make a commercial gain from an opportunity, is also called an entrepreneur.

Characteristics/Traits of an Entrepreneur

An entrepreneur is a highly achievement oriented, enthusiastic and energetic individual, who has following characteristic:
• Entrepreneurs are action oriented, highly motivated individuals who takes risks to achieve goals.
• Entrepreneurs will have unwavering determination and commitment.
• They are creative and result-oriented. They work hard in return for personal and financial rewards.
• Entrepreneur accepts responsibilities with enthusiasm and endurance.
• Entrepreneurs are thinkers and doers, planners and workers.
• Entrepreneur have self-confidence, they are dedicated, setting self determined goals and markets for their ideas
responding to existing market.
• Entrepreneurs can for see the future, as a salesman’s persuasiveness, a financial talent for manipulating funds, as
auditor’s precision etc.
• Entrepreneur depends on the intelligence, imagination and strength of purpose of the individual.
 • An entrepreneur must be a moderate risk-taker(calculated risk-taking ability) and learn from any failures.
• Entrepreneur has a facilitating character i.e. must build a team, keep it motivated, and provide an environment for
individual growth and career development
Functions
• According to Kilby, the entrepreneur performs following four major tasks:
• Exchange relationship
– Perceiving opportunities in market.
– Gaining command over scarce resources.
– Purchasing inputs.
– Marketing of products and responding to competition.
• Practical administration
– Dealing with public bureaucracy.
– Management of human relations with in the venture.
– Management of customer and supplier relations.
• Management Control
– Financial Management
– Production Management.
• Technology
– Acquiring and overseeing assembling of the factory.
– Industrial engineering.
– Upgrading process and product quality.
– Introduction of new production techniques and products.
Types of Entrepreneurs

Clarence Danhof classified entrepreneurs in the following categories:

• Innovative Entrepreneurs: They are generally aggressive on experimentation and cleverly put attractive possibilities
into practice. An innovative entrepreneur, introduces new goods, inaugurates new methods of production, discovers new
markets and reorganizes the enterprise. Innovative entrepreneurs bring about a transformation in lifestyle and are
always interested in introducing innovations.
• Adoptive or Imitative Entrepreneurs: Imitative entrepreneurs do not innovate the changes themselves, they only
imitate techniques and technology innovated by others. They copy and learn from the innovating entrepreneurs. While
innovative entrepreneurs are creative, imitative entrepreneurs are adoptive.
• Fabian Entrepreneurs: Fabian entrepreneurship is characterized by great caution and skepticism in practicing any
change. Such entrepreneurs have neither the will to introduce new changes nor the desire to adopt new methods. Such
entrepreneurs are shy and lazy. Their dealings are determined by customs, religion, tradition and past practices. They
are not much interested in taking risks and they try to follow the footsteps of their predecessors.
• Drone Entrepreneurs: Drone entrepreneur is one who follows the traditional methods of production. Under no
circumstances will a drone entrepreneur change the method of production he has introduced. Such entrepreneurs may
even suffer losses, but even then they refuse to adopt and use new methods. They are laggards because they continue in
their traditional ways of operation. Very often their products lose their marketability and their operation becomes
uneconomical leading to their being pushed out of the market.
Entrepreneurs may be classified in a number of other ways.
ON THE BASIS OF TYPE OF BUSINESS
• Business Entrepreneur: He is an individual who discovers an idea to start a business and then builds a business to give
birth to his idea.
• Trading Entrepreneur: He is an entrepreneur who undertakes trading activity i.e., buying and selling manufactured
goods.
• Industrial Entrepreneur: He is an entrepreneur who undertakes manufacturing activities.
• Corporate Entrepreneur: He is a person who demonstrates his innovative skill in organizing and managing a corporate
undertaking.
• Agricultural Entrepreneur: They are entrepreneurs who undertake agricultural activities such as raising and marketing
of crops, fertilizers and other inputs of agriculture. They are called agripreneurs.
ON THE BASIS OF USE OF TECHNOLOGY:
• Technical Entrepreneur: They are extremely task oriented. They are of craftsman type. They develop new and improved
quality goods because of their craftsmanship. They concentrate more on production than on marketing.
• Non-Technical Entrepreneur: These entrepreneurs are not concerned with the technical aspects of the product. They
develop marketing techniques and distribution strategies to promote their business. Thus they concentrate more on
marketing aspects.
• Professional Entrepreneur: He is an entrepreneur who starts a business unit but does not carry on the business for long
period. He sells out the running business and starts another venture.
ON THE BASIS OF MOTIVATION:
• Pure Entrepreneur: They believe in their own performance while undertaking business activities. They undertake
business ventures for their personal satisfaction, status and ego. They are guided by the motive of profit.
• Induced Entrepreneur: He is induced to take up an entrepreneurial activity with a view to avail some benefits from the
government. These benefits are in the form of assistance, incentives, subsidies, concessions and infrastructures.
• Motivated Entrepreneur: These entrepreneurs are motivated by the desire to make use of their technical and
professional expertise and skills. They are motivated by the desire for self-fulfillment.
• Spontaneous Entrepreneur: They are motivated by their desire for self-employment and to achieve or prove their
excellence in job performance. They are natural entrepreneurs.
ON THE BASIS OF STAGES OF DEVELOPMENT:
• First Generation Entrepreneur: He is one who starts an industrial unit by means of his own innovative ideas and skills.
He is essentially an innovator. He is also called new entrepreneur.
• Modern Entrepreneur: He is an entrepreneur who undertakes those ventures which suit the modern marketing needs.
• Classical Entrepreneur: He is one who develops a self supporting venture for the satisfaction of customers’ needs. He is a
stereo type or traditional entrepreneur.
ON THE BASIS OF ENTREPRENEURIAL ACTIVITY:
• Novice: A novice is someone who has started his/her first entrepreneurial venture.
• Serial Entrepreneur: A serial entrepreneur is someone who is devoted to one venture at a time but ultimately starts
many. He repeatedly starts businesses and grows them to a sustainable size and then sells them off.
• Portfolio Entrepreneurs: A portfolio entrepreneur starts and runs a number of businesses at the same time. It may be a
strategy of spreading risk or it may be that the entrepreneur is simultaneously excited by a variety of opportunities.
Entrepreneur Vs Intrapreneur
BASIS FOR ENTREPRENEUR INTRAPRENEUR
COMPARISON

Meaning Entrepreneur refers to a person who Intrapreneur refers to an employee of

set up his own business with a new the organization who is in charge of
idea or concept. undertaking innovations in product,
service, process etc.

Approach Intuitive Restorative

Resources Uses own resources. Use resources provided by the

company.

Capital Raised by him. Financed by the company.

Enterprise Newly established An existing one

Dependency Independent Dependent

Risk Borne by the entrepreneur himself. Taken by the company.

Works for Creating a leading position in the Change and renew the existing
market. organizational system and culture.

Entrepreneurs Vs Managers

BASIS FOR ENTREPRENEUR MANAGER

COMPARISON

Meaning Entrepreneur refers to a person who Manager is an individual who takes

creates an enterprise, by taking the responsibility of controlling and
financial risk in order to get profit. administering the organization.
 Focus Business start-up On-going operations

Primary Achievement Power

motivation

Approach to task Informal Formal

Status Owner Employee

Reward Profit Salary

Decision making Intuitive Calculative

Driving force Creativity and Innovation Preserving status quo

Risk orientation Risk taker Risk averse

Entrepreneurs Vs Enterprise