PROJECT MANAGEMENT

&
ENTREPRENEURSHIP

KHU-802

BY
DR. CHARU AGARWAL
 Content – Unit I

Introduction: Meaning, definition and concept of

entrepreneur, entrepreneurship and
entrepreneurship development. The entrepreneurial
mind-set. Common myths to becoming an
entrepreneur and how to overcome them.
Corporate entrepreneurship. Concepts of
intrapreneurship, types of entrepreneurs, functions
of entrepreneur. Family Business, Women
entrepreneurship, social and rural entrepreneurship.
 ENTREPRENEUR

An entrepreneur is often considered as a person who

sets up his own business or industry. He has
initiative, drive, skill and spirit of innovation who
aims at high goals.
The entrepreneur is the individual that identifies the
opportunity, gathers the necessary resources and is
ultimately responsible for the performance of the
organization.
Entrepreneurs are action oriented, highly motivated
individuals who take risks to achieve goals.
Entrepreneurs play a vital role in the economic
development of a country.
 The Entrepreneur

In French entreprende, which means – ‘Go

between’ or ‘to undertake’
Webster dictionary – one who organizes, manages
and assumes the risks of a business or enterprise
 Meaning
 Entrepreneur (Oxford Dictionary) – Person who
undertakes an enterprise with chances of profit or loss.
(Entrepreneur is a person who undertakes a business activity of
which he has no background and faces considerable risks in the
process. If either of the two elements, i.e., “no background” or
“considerable risk” is missing in the venture, it is no
entrepreneurship).
 Enterprise (Oxford Dictionary) – Bold Undertaking
 Entrepreneur – (New Encyclopedia Britannica) – An
individual who bears the risk of operating business in the face
of uncertainty about the future conditions.
 Entrepreneurship – It is a philosophy or process through
which an entrepreneur seeks innovation and employment.
 Entrepreneur Entrepreneurship Enterprise
Person Process or Philosophy Object
 Entrepreneur - Definition
 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.
 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 mobilizes resources and allocates them to make a
commercial gain from an opportunity, is also called an entrepreneur.
 Francis A Walker: The true Entrepreneur is one who is endowed with
more than average capacities in the task of organizing and coordinating the
various other factors of production. He should be pioneer and a captain
(Leader) of industry.
 Entrepreneur - Definition

Joseph Schumpeter: Entrepreneur is an innovator, who

carries out new combination to initiate the process of economic
development through introduction of new product, new market,
new source of raw material and establishment of new
organization.
The process of development is a deliberate and continuous
phenomenon which is actively promoted by the services of a
change agent who provide economic leadership.
To sum up, entrepreneurship may be defined as a systematic
innovation which consists of the purposeful and organized search
for changes, and a systematic analysis of the opportunities that
such change might offer for economic and social transformation.
 Evolution of Entrepreneur

Period I: Entrepreneurship in Ancient Period

 Dharma, Manusmriti
 Agriculture, Handicraft, iron, cloths, livestocks
Period II: Entrepreneurship in pre-independence era before
1850
 Agriculture, metalwork, handicraft, stone carving, jewellary designing.
Domination of parsis, Marwari's, Gujarati, Jain.
Period III: During 1850 – 1947
 Britishers started harnessing the natural resources of India to their own
advantage simultaneously developing the roads, railways, ports etc.
 Jute, Textile, Tea, Coal
 Emergence of Parsis entrepreneurs
 Swadeshi Movement
 Evolution of Entrepreneur

 Period IV: During 1947 and Onwards Post Independence

 Industrial Policy Resolution IPR, 1948
 Marwaris such as Birlas, Dalmia, Goenkas, Singhanias, Bajaj, Kirloskar
rising.
 Industrial Policy Resolution IPR, 1956
 Establishment Public Sector and heavy industries
 Nationalization of Banks.
 Formation of NSIC (National Small Industries Corporation), KVIC (Khadi
and Village Industries), MSME (Ministry of Micro, Small and Medium
Enterprises), SFC (State Funding Corporations), NIESBUD (National
Institute for Entrepreneurship and Small Business Development), EDII
(Entrepreneurship Development Institute of India) etc…
 Rising family entrepreneurs
 Evolution of Entrepreneur
 1600 – French verb – Entreprendre – to undertake.
 Middle Ages: Actor and person incharge of large scale production
project.
 1700 – Person bearing Risk or Profit in a fixed price contract (Risk)
 1725 – Richard Cantillon – Person bearing risks is different from
Capital Supplier (Risk bearer)
 1803 – Jean Baptiste Say – Shifts economic resources out from an area
of lower to higher productivity & greater yields (Organizer or
Coordinator)
 1876 – Francis Walker – Distinguish between those who supplied funds
and receive interest and those who received profit from managerial
capabilities. (Leader who mobilizing resources)
 1934 – Joseph Schumpeter – Innovator and develops untried
technology (Productivity & Innovation)
 Evolution of Entrepreneur
1961 – David McClelland – Highly motivated, energetic,
moderate risk taker (Need for achievement)
1964 – Peter Drucker – Searches for change, responds to
it & exploits as opportunity (Opportunity Focused)
1979 – Kirzner – An arbitrageur who discover
opportunity at low prize and sell at high price because of
inter-temporal and inter spatial demand (Demand
focused)
1980 – Karl Vesper – Seen differently by Economists,
Psychologists, Businessmen, Politicians (Environment)
1983 – Gifford Pinchot – Intrapreneur (an entrepreneur
within an already established organization)
 Evolution of Entrepreneur

1985 – Robert Hisrich – Creating something different

with value, devoting time & effort, assuming risks;
results– rewards and satisfaction (Leadership &
Vision)
2008 – National Knowledge Commission of India
“The professional application of knowledge, skill and
competencies and/or monetizing a new idea, by an
individual or a set of people by launching an enterprise
de novo or diversifying from an existing one, thus to
pursue growth while generating wealth, employment
and social goods.
 Charm of becoming an entrepreneur

Opportunity to create one’s own destiny

Opportunity to make differences
Opportunity to reach one’s full potential
Opportunity to reap impressive profits
Opportunity to contribute to society
Opportunity to do what one enjoys
 Pros & Cons
 You are the boss  You are alone
 All profits are yours  All decisions are yours
 There will be great variety  All losses are yours
in roles and tasks  You will need to put in
 Increases self confidence long hours
 Work can be very  Lack of success will effect
satisfying self esteem
 Success will give you  Exiting the business is
immense satisfaction difficult
 Pressures will affect social
and family life
 Enterprise

Enterprise
 An entrepreneur is a person who starts an enterprise. The
process of creation is called entrepreneurship. The
entrepreneur is the actor and entrepreneurship is the act.
The outcome of the actor and the act, is called the
enterprise. An enterprise is the business organization that
is formed and which provides goods and services, creates
jobs, contributes to national income, exports and
contributes to the overall economic development.
 Characteristics of Entrepreneur
(1) Vision :
An entrepreneur has a dream and he visualizes the ways and means to achieve dream. In doing so he
visualizes :
Market Demands
Socio-Economic Environment
Technological Environment
And then based on these dynamic, he visualizes a future for his business venture.
 
(2) Knowledge :
An entrepreneur has full knowledge about all the technicalities of his business- be it technological, operational,
financial or market dynamic.
 
(3) Desire to succeed :
An entrepreneur has a strong desire to succeed in life. Their dreams are not just limited to achieving one single
goal but they constantly work to achieve higher goals.
 
(4) Independence :
An entrepreneur needs independence in work and decision-making. They don't follow the rules of thumb but
make their own rules and destiny.
 
(5) Optimism :
Entrepreneurs are highly optimistic about achieving their vision.
 Characteristics of Entrepreneur
(6) Value Addition :
Entrepreneurs do not follow the conventional rules of thumb. They have a constant
desire to introduce something new to the existing business. They create, innovate or
even add value to the existing products/services.
 
(7) Leadership :
An entrepreneur exhibits the qualities of leader. They are good planner, organizers, have
good communication skill, good decision makers, take initiative to implement plans
and are result-oriented.
 
(8) Hardworking :
At times they are called workaholics. Work is worship for then. They put in continuous
efforts to achieve success and know that there is no substitute for hark work.
 
(9) Risk-Taking Ability :
 Risk is an inherent and inseparable element of entrepreneurship. He assumes the
uncertainty of future. An entrepreneur guarantees rent to the landlord, wages to
employees and interest to the investor in the hope of earning more than the expenses.
 Characteristics of Entrepreneur
Other characteristics are:
 
1. Mental ability
2. Clear objectives
3. Business secrecy
4. H.R. ability
5. Communication ability
6. Technical knowledge
7. Achievement– oriented
8. Perseverance
9. Ethical
10. Motivator
11. Self– confident
12. Long term involvement
13. High energy level
14. Problem solver
15. Initiator
16. Goal setter
Entrepreneur vs Entrepreneurship

The term “entrepreneur” is often used interchangeably with

entrepreneurship but, conceptually, they are different, yet they
are just like the two sides of a coin. Both the terms are co-related.
An entrepreneur is a person who bears the risks, unites various
factors of production and carries out creative innovations. He/she
is an individual or one of a group of individuals who try to create
something new. He/she always attempts to bring about change in
terms of factor proportions, which is known as innovation.
On the contrary, entrepreneurship is the set of activities
performed by an entrepreneur. It is process of identifying
opportunities in the market place and marshalling the resources
required to pursue these opportunities for long term gains. It is
the attempt to create value.
Relationship between Entrepreneur and Entrepreneurship
 Theories of Entrepreneurship

Meaning of Entrepreneurship:
Entrepreneurship refers to a process of action an
entrepreneur undertakes to establish his enterprise. It
is a creative and innovative response to the
environment. In other words entrepreneurship can be
defined as an ability to discover, create or invent
opportunities and exploit them to the benefit of the
society, which in turn brings prosperity to the
innovator and his organization.
Main theories of entrepreneurship are summarized as
follows:
 Entrepreneurship a Function of Innovation:
Joseph A. Schumpeter (1934)

 For the first time, put the human agent at the centre of the process of economic
development and assigned a critical role to the entrepreneurship in his theory of economic
development. He considered economic development as a discrete technological change.
The process of development can be generalized by five different types of events:
(i) Firstly, it can be the outcome of the introduction of a new product in the market.
(ii) Secondly, it can be the result of a new production technology or new method of
production.
(iii) Thirdly, it may arise on account of a new market.
(iv) Fourthly, it may be the consequences of a new source of supply.
(v) Fifthly, it may be due to the new organization of any industry. 
According to Schumpeter
(i) Development is not an automatic process, but it must be deliberately and actively
promoted by some agency within the system, Schumpeter called the agent who initiates
the above changes as an entrepreneur.
(ii) He is the agent who provides economic leadership that changes the initial conditions of
the economy and causes dynamic changes.
(iii) By nature, he is neither technician, nor a financier, but he is considered an innovator.
(iv) Entrepreneurship is not a profession or a permanent occupation and therefore, it cannot
formulate a social class like capitalists.
(v) Psychological, entrepreneurs are not solely motivated by profit.
Entrepreneurship : An Organization Building
Function: Fredrick Harbison (1964)

He states that the 'organisation building' ability is the most critical skill
needed for the industrial development. According to him
entrepreneurship means the skill to build an organization. Harbison
spots the crux of the entrepreneurship in his ability to multiply himself
by effectively delegating responsibilities to others. The main features
are:
(i) Unlike Schumpeter, Harbison's entrepreneur is not an innovator but
an 'organisation builder' who must be able to harness the new ideas of
different innovators to the rest of the organization.
(ii) Such persons are not always the men with ideas or men who try
new combinations of resources but they may simply be good leaders
and excellent administrators.
(iii) Harbison's definition of entrepreneurship lays more stress on the
managerial skills and creativity so far as organisation is concerned.
Entrepreneurship : A Function of Managerial
Skill and Leadership: Hoselitz

He states that a person who is to become an industrial

entrepreneur must have additional personality traits. In addition to
being motivated by the expectations of profit he must also have
some managerial abilities and more important he must have ability
to lead.
Hoselitz maintains that financial skills have only a secondary
consideration in entrepreneurship. According to him managerial
skills and leadership are the important facts of entrepreneurship.
He identifies three types of business leadership in the analysis of
economic development of under-developed countries:
The merchant money lender type
The managerial type
The entrepreneur type
 Entrepreneurship: A Function of High Achievement:
McClelland

 He states that a business man who simply behaves in traditional ways is not an
entrepreneur. Moreover, entrepreneurial role appears to call for decision
making under uncertainty. McClelland identified two characteristics of
entrepreneurship
 firstly "doing things in a new and better way" and secondly "decision making
under uncertainty".
 Persons with high achievement would take moderate risks. They would not
behave traditionally (no risk). The high achievement is associated with better
performance at tasks which require some imagination, mental manipulation or
new ways of putting things together, and such people do better at non routine
task that require some degree of initiative. People with high achievement are
not influenced by money reward as compared to people with low achievement.
People with low achievement are prepared to work harder for money or such
other external incentives.
 Need for Achievement (Factor responsible for entrepreneurship)
 Need for Power
 Need for Affiliation
 Entrepreneurship: A Function of Social,
Political and Economic structure: John Kunkel
 He states that the industrial entrepreneurship depends upon four structures
which are found within a society or community.
(i) Limitation Structure: The society limits specific activities to members of
particular subcultures. This limitation structure affects all the members of a
society.
(ii) Demand Structure: The limitation structure is basically social and cultural but
the demand structure is mainly economic. The demand structure is not static,
and changes with economic progress and government policies.
(iii) Opportunities Structure: This structure is necessary to increase the
probability of entrepreneurial activity. The opportunity structure constitutes
the availability of capital, management and technological skills, information
concerning production methods, labours and markets.
(iv) Labours Structure: Kunkel argues that the labours supply cannot be viewed
on par with the supply of other material conditions like capital. He states that
labours means 'men' and is a function of several variables. The supply of
factory labours is governed by available alternative means of livelihood,
traditionalism and expectations of life.
 Entrepreneurship: 'Input Completing' and 'Gap filling'
Function: Liebenstein
(Theory of X-efficiency)

He identified gap filling as an important characteristic of entrepreneurship. In

economic theory the production function is considered to be well defined and
completely known.

Itis the entrepreneurial function to make up the deficiencies or to fill the gaps. These
gaps arise because all the inputs in the production function cannot be marketed
because some inputs like motivation, leadership etc. are vague in their nature and
whose output is underminate.

This "gap-filling" activity gives rise to a most important entrepreneurial function

namely "Input-Completing". He has to marshal all the inputs to realize final products.
Routine Entrepreneur
New Entrepreneurship
Twin roles of entrepreneur
Gap Filling

Input completing
Entrepreneurship: A Function of Group Level
Pattern: Frank W. Young

He was reluctant to accept the entrepreneurial characteristics

at the individual level.
According to him, instead of individual, one must find clusters
which may qualify itself as entrepreneurial groups, as the
groups with higher differentiation have the capacity to react.
He defined 'reactiveness' or 'solidarity' as the degree to which
the members of the group create, maintain and project a
coherent definition of their situation; and 'differentiation' is
defined as the diversity, as opposed to coherence, of the social
meanings maintained by the group, it tends to intensify its
internal communication which gives rise to a unified
definition of the situation.
 Knight’s Theory of profit
Knight points out that entrepreneurs are specialized group of persons
who bears risk and deals with uncertainty. Main features of this
theory are:
 Pure Profit
 Situation of Uncertainty
 Risk Bearing Capability
 Guarantee of Specified Sum
 Identification of Socio Economic and Psychological Factors
 Use of consolidation techniques to reduce business
 Eg Bhai Mohan Singh of Ranbaxy run a profitable business for many
years had high risk bearing capability found a golden opportunity to
exit Ranbaxy and he grabbed it (Sold to Daiichi sankyo Japan, now
owned by Sun Pharma).
 Papanek and Harris Theory

Papanek and Harris propounded that when certain

economic conditions are favorable, entrepreneurship
and economic growth will take place. The highlights
of the theory are:
 Economic Incentives
 Link between economic gains and inner urge
 Economic gain
 Harvard School Theory

 Harvard School (A.H. Cole) Contemplated that entrepreneurship

involves any deliberate activity that initiates, maintains and grows a
profit-oriented enterprise for production or distribution of economic
goods or services, which is inconsistent with internal and external
forces.

Internal Forces:
 These forces refer to the internal qualities of the individual such as
intelligence, skill, knowledge experience, intuition, exposure, etc.
These forces influence the entrepreneurial activities of an individual
to a great extent.
External Forces:
 These forces refer to the economic, political, social, cultural and legal
factors which influence origin and growth of entrepreneurship in an
economy.
 Classification of theories
 Sociological theories
 Theory of religious belief – Max Weber
 Theory of Entrepreneurial Supply – Thomas Cochran
 Theory of Social Change – E.E. Hagen
 Theory of Group Level Pattern – F. Young
 Economic theories
 Schumpeter’s Theory of Innovation
 Leibenstein’s Theory of X-efficiency
 Mark Casson’s Theory
 Papanek and Harris Theory
 Harvard School Theory
 M.Kirzner’s Theory of Adjustment
 McClelland’s Theory of Achievement Motivation
 Knight’s Theory of Profit
 Hayek’s Theory of Market Equilibrium
 Cultural theories
 Hoselitz’s Theory
 Stoke’s Thoery
 Psychological theories
 Theory of Personal Resourcefulness
 Theory of Entrepreneurial Supply -  John H. Kunkel
 Models of Entrepreneurship
 Kao’s Conceptual Model
Common myths to becoming an entrepreneur

Myth #1: Entrepreneurs don’t have a personal life

Myth #2: Entrepreneurs take lots of risks
Myth #3: Entrepreneurs are only motivated by money
Myth #4: Entrepreneurs raise money from venture
capitalists
Myth #5: Entrepreneurs have great ideas
Myth #6: Anyone can be an Entrepreneur
Myth #7: Entrepreneurs have formal training and
education
Myth #8: Entrepreneurs are young
Myth #9: Entrepreneurs don’t quit until they succeed
Myth #10: Entrepreneurship is genetic
Myth #1: Entrepreneurs don’t have a
personal life
Myth #2: Entrepreneurs take lots of risks
Myth #3: Entrepreneurs are only motivated by money
Myth #4: Entrepreneurs raise money from venture
capitalists
Myth #4: Entrepreneurs raise money from venture
capitalists
Myth #5: Entrepreneurs have great ideas
Myth #6: Anyone can be an Entrepreneur
Myth #6: Anyone can be an Entrepreneur
Myth #7: Entrepreneurs have formal training and
education
Myth #8: Entrepreneurs are young
Myth #8: Entrepreneurs are young
Myth #9: Entrepreneurs don’t quit until they succeed
Myth #9: Entrepreneurs don’t quit until they succeed
Myth #10: Entrepreneurship is genetic

You are not born an entrepreneur.

Here’s a breakdown of family-owned businesses by
generation.
30% survive to the second generation
12% survive to the third generation
3% survive to the fourth generation
 Classification of Entrepreneurs

Clarence Danhof (1949) classifies entrepreneurs

into four types –
Innovative

Imitative

Fabian and

 Drone
 Classification of Entrepreneurs

Innovating entrepreneurs : Innovative entrepreneurship is

characterized by aggressive assemblage of information and the analysis
of results derived from sound combination of factors.
Persons of this type are generally aggressive in experimentation and
cleverly put attractive possibilities into practice.
An innovating entrepreneur sees the opportunity for introducing a new
technique or a new product or a new market.
He or she may raise money to launch an enterprise, assemble the
various factors, choose top executives and set the organization goals.
Schumpeter’s entrepreneur was of this type. Such an entrepreneur
introduces new products and new methods of production, opens new
markets and re-organises the enterprise.
 Classification of Entrepreneurs

Adoptive or imitative entrepreneurs: This kind of

entrepreneurs are characterised by readiness to adopt successful
innovations created by innovative entrepreneurs.
These type of entrepreneur are revolutionary entrepreneurs with the
difference that instead of innovating the changes themselves, they
just imitate the technology and techniques innovated by others.
These entrepreneurs are most suitable for developing countries
because such countries prefer to imitate the technology, knowledge
and skill already available in more advanced countries.
Imitative entrepreneurs are most suitable for the underdeveloped
nations because in these nations people prefer to imitate the
technology, knowledge and skill already available in more advanced
countries.
 Classification of Entrepreneurs

Fabian entrepreneurs : Entrepreneurs of this type

are very cautious and skeptical while practicing
any change. They have neither the will to introduce
new changes nor the desire to adopt new methods
innovated by the most enterprising entrepreneurs.
Such entrepreneurs are shy and lazy. Their dealings
are determined by custom, religion, tradition and past
practices.
They are not much interested in taking risk and they
try to follow the footsteps of their predecessors or
follow only after they are satisfied with its success rate.
 Classification of Entrepreneurs

Drone entrepreneurs : Drone entrepreneurship is characterized

by a refusal to adopt and use opportunities to make changes in
production methods.
Such entrepreneurs may even suffer losses but they do not make
changes in production methods. They are laggards as they continue
to operate in their traditional way and resist changes. When their
product loses marketability and their operations become
uneconomical they are pushed out of the market.
They are conventional in the sense that they stick to conventional
products and ideas.
The traditional industries of Kerala are characterized by drone
entrepreneurs.
The coir and bamboo industries are still in the hands of laggards
who refuse to innovate.
 Classification of Entrepreneurs

According to the types of business

 Trading Entrepreneurs
 Wholesale, Retail, Import, Export etc
 Industrial Entrepreneurs
 Corporate Entrepreneurs
 Agricultural Entrepreneurs
 Dairy, Forestry, Animal husbandry, horticulture etc
 Retail Entrepreneurs
 Service Entrepreneurs
 Social Entrepreneurs
 Classification of Entrepreneurs

According to the use of technology

 Technical Entrepreneurs
 Non-technical Entrepreneurs
 High-tech Entrepreneurs
 Low-tech Entrepreneurs
 E- Entrepreneurs
 Business process outsourcing
According to the motivation
 Pure Entrepreneurs
 Forced Entrepreneurs
 Accidental Entrepreneurs
 Induced Entrepreneurs
 Classification of Entrepreneurs

According to the Stages of development

 First Generation Entrepreneurs
 Classical Entrepreneurs
 Inherited Entrepreneurs
According to Area
 Rural Entrepreneurs
 Artisan, Khadi, Village industries, handicraft
 Urban Entrepreneurs
 Global Entrepreneurs
 Local Entrepreneurs
According to Organization
 Individual & Group Entrepreneurs
 Private & Government Entrepreneurs
According to gender and age
 Men & Women Entrepreneurs
 Young & old Entrepreneurs
 Unclassified Entrepreneurs

Intrapreneur
Foodapreneur
Technopreneur
Momapreneur
Artapreneur
Edupreneur
 Manager v/s Entrepreneur

 An Entrepreneur and a Manager make an interest comparison.

 To succeed as an entrepreneur, one is required to possess great
managerial skills and more. Therefore, there are a lot of commonalities
between the two in terms of planning, organizing, directing and
controlling abilities which are essential qualities of a manager.
 However, there are great deals of differences as well. The differences
primarily lie in approach to various issues.
Manager v/s Entrepreneur
 Manager v/s Entrepreneur

Manager Entrepreneur
Skills Professional training, B-school Knows business intimately
trained
Educational Highly Educated May be less educated in earlier
level studies
Attention Primarily on events inside Primarily on technology and market
corporation place
Action Delegate action, supervising and Gets hand dirty, may upset
reporting employees by suddenly doing their
work
Failure and Strive to avoid mistakes and Deals with mistakes and failures as
mistakes surprises learning exercise
Problem Works out problems within Deals problems in large and formal
solving system structure
style
 Intrapreneurship
Gifford Pinchot discover the word “Intrapreneur”
in 1982.
Intrapreneurship is defined as entrepreneurship
within an existing business set up.
That is to say – Intrapreneurship is corporate
entrepreneurship.
When a corporation indulges in entrepreneurial
activities, like diversification into new businesses, it
is called Intrapreneurship.
 Intrapreneurship

Intrapreneur is a manager who focuses on

innovation and creativity; who brainstorms, dreams
and puts ideas into profitable venture by operating
within the organizational environment.
It is a tool for capitalizing the entrepreneurial spirit
of employees in the organization.
It gives managers the freedom to try new ideas by
employing firm’s resources in a unique way.
 Intrapreneurship

 Google’s Intrapreneurship program:

 Through this Google Intrapreneurship program, all the employees are
empowered and encouraged to spend 20% of their time on projects that
interest them and that they think will benefit Google and their
customers.
 The Google “Innovation Time Off” Intrapreneurship program has a
formal process for their selection of entrepreneurial projects, for the
formal evaluation process and the monitoring of each Google approved
entrepreneurial project.
 For a Google employee, to participate in the program, he/she needs to
submit a project proposal with a timeline.
 It is critical to note that several of Google’s newest products and
services such as Gmail, Google news, Orkut and AdSense were all
originated through this program.
 Intrapreneurship

In India also, Marico, manufacturers of Parachute

Hair Oil, Saffola, Kaya Skin Clinic Industries have
institutionalized innovation awards, where they
receive 30-40 entries every year for innovations
across the spectrum, including factories, brand,
sales and HR, virtually covering the whole
organization.
 Consequences of not encouraging Intrapreneurship:

A classic case of entrepreneurs is that of the founders

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

Hurdles in Intrapreneurship:
Need for organization alignment
Dependence on company resources
Dependence on existing business model
Inability to move beyond past successes
Low risk appetite
Level of integration
Short term vs long term results
 Benefits of Intrapreneurship

Identification of opportunities
Attracting entrepreneurial talent
Increased ROI from long range investments
Expansion of business design
Ensuring competitive advantage
 Entrepreneur Vs Intrapreneur

Basis Entrepreneur Intrapreneur

Primary Independence, opportunity to Corporate rewards

Motive create wealth
Dependency An entrepreneur is But, an Intrapreneur is
independent in his operations dependent on the
entrepreneur
Raising the An entrepreneur himself Funds are not raised by the
fund raises funds required for the Intrapreneur
enterprise
Risk Entrepreneur bears the risk An Intrapreneur does not fully
involved in the business bear the risk involved in the
enterprise
Operation An entrepreneur operates On the contrary, an
from out-side Intrapreneur operates from
within the organization itself.
Failure and Deals with Failure and Attempt to hide risky projects
mistakes mistakes until ready
 Role of Entrepreneurship in Economic Development
Entrepreneurs play a significant role in economic development of a
country. According to ‘Harbison’ entrepreneurs are prime movers of
innovation & growth. The important roles are:
1. Innovator in economic growth
2. Generation of employment opportunities
3. Complementing and supplementing economic growth
4. Balancing social stability
5. Balanced regional development
6. Export promotion
7. Import substitution
8. Augmenting and meeting local demand
9. Helps to reduce concentration of economic power
10. Establishment of backward and forward linkages
11. Mobilizing resources like finance, peoples money, human resource,
natural resources etc
 Problem of Entrepreneurship

Internal
Choice of an Idea
Faulty Planning
Poor management of enterprise
Marketing
Financial Crunch
Labor Problems
Capacity utilization
Inadequate training and skill
Lack of motivation
Poor coordination among employees
 Problem of Entrepreneurship
External
Infrastructural sickness (location, power, water, communication)
Financial (Capital, working capital, recovery, long term fund, seed capital, startup
capital) {angel investor}
Taxation (Income tax, Sales Tax, Excise, VAT, import duty, LBT etc)
Raw material
Industrial and financial regulation
Inspections
Technology
Government Policy (Bureaucracy)
Administrative Hurdle (eg security)
Corruption
Competitive and volatile environment
Licensing (Inspector Raj)
Gray Markets products (unbilled items)
Secular Country (Holidays)
 Women Entrepreneurship

DEFINITION: Women Entrepreneurs may be defined

as the women or a group of women who initiate,
organize and operate a business enterprises.
Government of India has defined women
entrepreneurs as an enterprise owned and controlled
by a women having a minimum financial interest of
51% of the capital and giving at least 51% of
employment generated in the enterprise to women.
 QUALITIES OF A WOMEN ENTREPRENEUR

Ability to learn quickly from her abilities,

Her persuasiveness- quick learner.
Open style of problem solving.
Willingness to take risks and chances.
Ability to motivate people.
Knowing how to win and lose gracefully
Creative
 Characteristics of Woman Entrepreneur

Management and Control

Employment to Women
Risk-taking
Good organizer
Self confidence
Decision–maker
Visionary
Hard worker
Achievement oriented
Optimistic
Technically competent
Bold and brave
Mentally sound
Leadership
 FACTORS AFFECTING WOMEN ENTRERENEURSHIP

Economic Independence
Establishing Identity
Motivation
Family Support
Availability Of Funds
Greater Freedom And Mobility
Developing Risk Taking Ability
Building Confidence
 WHY DO WOMEN TAKE-UP EMPLOYMENT?

Push Factors
 Death of bread winner
 Sudden fall in family income
 Permanent inadequacy in income of the family
Pull Factors
 Women’s desire to evaluate their talent
 To utilize their free time or education
 Need and perception of Women’s Liberation, Equity etc.
 To gain recognition, importance and social status.
 To get economic independence
 An urge to do something new
Self-employed entrepreneurs
Rural entrepreneurs
 CATEGORIES OF WOMEN ENTREPRENEURS

Women in organized & unorganized sector

Women in traditional & modern industries
Women in urban & rural areas
Women in large scale and small scale industries.
Single women and joint venture.
 CATEGORIES OF WOMEN
ENTREPRENEURS IN PRACTICE IN INDIA
First Category – Established in big cities – Having
higher level technical & professional qualifications –
Non traditional Items – Sound financial positions
Second Category – Established in cities and towns –
Having sufficient education – Both traditional and non
traditional items – Undertaking women services -
kindergarten, crèches, beauty parlors, health clinic etc.
Third Category – Illiterate women – Financially week –
Involved in family business such as Agriculture,
Horticulture, Animal Husbandry, Dairy, Fisheries, Agro
Forestry, Handloom, Pottery etc.
 SOME EXAMPLES

Shri Mahila Grih Udyog - 7 ladies (President by Jyoti Nayak) started in

1959: Lizzat Pappad
Lakme - Simon Tata (step mother to Ratan Tata)
Herbal Heritage - Ms. Shahnaz Hussain
Balaji films - Ekta Kapoor
Naina Lal Kidwai, Investment Banker (HSBC), Fortune magazine listed
her as one of the world’s most powerful business women in 2003.
Indra Krishnamurthy Nooyi, chairman and executive officer of PepsiCo
Kiran Mazumdar Shaw, CMD, Biocon
Chanda Kochar, MD ICICI Bank
Sulajja Firodia Motwani, Kinetic Motors
Mallika Srinivasan, TAFE (Tractor and Farm Equipment)
PROBLEMS OF WOMEN ENTREPRENEURS

Dual role to play at workplace & at home place

Subordinate to men: Male dominated society
Being women: De-motivated by society
Non-awareness of facilities provided by government
Competition with large scale units
Problems related to marketing
Financial Problems
Credit Facilities
Problem of Middlemen• Lack of Access to technology•
Lack of self-confidence• Lack of training
 DIRECT & INDIRECT FINANCIAL SUPPORT
 Nationalized banks
 State finance corporation (SFC)
 State industrial development corporation (SIDC)
 District industries centers (DIC)
 Mahila Udyug Nidhi scheme
 Small Industries Development Bank of India (SIDBI)
 State Small Industrial Development Corporations
(SSIDCs)
 Self Employed Women’s Association (SEWA)
 World Association of Women Entrepreneurs (WAWE)
 Associated Country Women of the World (ACWW)
 FICCI Ladies Organization (FLO)
 Federation of Indian Women Entrepreneurs (FIWE)
 Factors affecting entrepreneurial development

 It is important to know and understand each and every components of

business environment that may affect the functioning of enterprise or
business. These components may be internal to entrepreneurs or
external.  Factors that affect entrepreneurship growth are divided into
various groups so that strategies according to each group of factors can be
devised. These factors are classified into following categories/ groups:
 Economic Factors
 Social Factors
 Psychological Factors
 Government/Political Factors
 Other factors
 All the factors listed above are interconnected and mutually dependent on
each other. No single factor can facilitate the complete growth of
entrepreneurship. For the effective functioning and speedier growth of
entrepreneurship, all the factors must contribute in positive manner.
 Factors affecting entrepreneurial development…

 Economic factors are those which contribute in the economic

development of the economy. From economic point of view, these
factors create conducive environment for the economic development of
country and also account for the establishment and development of
entrepreneurship.
 These factors actually provide the economic security and favourable
environment to an enterprise. Some of the major economic factors that
affect entrepreneurship growth are discussed as follow:
 i. Capital
 ii. Labour
 iii. Raw Material
 iv. Market
 Factors affecting entrepreneurial development…

 b.      Social Factors

 Social scientists support that economic factors alone are not
sufficient to boost entrepreneurship in any region.
 An entrepreneur can never be successful where society fails.
 Advocates of social theory state that influence of economic factors
on entrepreneurship growth depends on social factors also.
 Some of the social factors that affect entrepreneurship growth are
discussed here under:
 i. Entrepreneurship Legitimacy
 ii. Social Mobility
 iii. Social Marginality
 Iv.Security
 Factors affecting entrepreneurial development…

 c.       Psychological Factors

 Along with economic and social factors psychological factors also
contribute in the growth of entrepreneurship. If an economy
provides best economic environment and society also supports
entrepreneurial endeavour but, if individuals are not self
motivated then all economic and social support will be wasted.
There are various psychological theories of entrepreneurship
which propounded that for entrepreneurship development
positive attitude and motivation is crucial. Following are the
psychological factors that affect entrepreneurial growth:
 Motivation for high achievement
 Status Respect
 Factors affecting entrepreneurial development…

 d.      Government/Political Approach

 All above discussed economic, social and psychological factors directly or
indirectly influenced by the actions of government.
 To achieve the developmental objectives, government through its various
policy initiatives tries to provide congenial environment to entrepreneurs.
 These policy measures may be in the form of economic policies, social
schemes, and various training programmes.
 Government can facilitate the establishment and growth of
entrepreneurship by creating basic facilities and services to the
entrepreneurship.
 Entrepreneurial growth is affected by various government actions such as
development of special economic zones, industrial areas, industrial estates,
and favourable policy initiatives.
 Other factors are also influenced by the government actions and
approaches towards entrepreneurship development.
 Factors affecting entrepreneurial development…

 In India, government is trying to provide favourable

entrepreneurial environment by enacting MSMED Act 2006,
establishing separate ministry for MSME sector and by launching
various attractive schemes for entrepreneurs.
 If government is not active or least interested in the economic
development of society, no growth in entrepreneurship will be
there.
 e.       Other Factors
 Besides economic, social, psychological, and
government/political factors, there are many other factors
that affect the emergence and development of
entrepreneurship. Few of them are discussed below:
 Factors affecting entrepreneurial development…

i. Infrastructural Development

ii. Environmental Scanning
iii. Training
 Entrepreneurial motivation (Mc Clellend’s Achievement motivation
theory)

 McClelland’s need theory is closely associated with learning theory,

because he believed that needs are learned or acquired by the kinds of
events people experience in their environment and culture.
 He found that people who acquire a particular need behave differently
from those who do not have.His theory focused on Murray’s three
needs: achievement, power, and affiliations.
 In the literature, these three needs are abbreviated as “n Ach”, “n Pow”,
and “n Aff” respectively.
Need for Achievement (“n Ach”):
 This is the drive to excel, to achieve in relation to a set “standard, and
to strive to succeed. In other words, need for achievement is a
Behaviour directed towards competition with a standard of excellence.
 McClelland found that people with a high need for achievement
perform better than those with a moderate or low need for
achievement, and noted regional, national differences in achievement
motivation.
 Mc Clellend’s Achievement motivation theory…

 Through his research, McClelland identified the

following six characteristics of high need achievers:
 1. High-need achievers have a strong desire to assume personal
responsibilities for performing a task or finding a solution to a
problem.
 2. High need achievers tend to set moderately difficult goals and
take calculated risks.
 3. High need achievers have a strong desire for performance feedback.
 4. They have need for achievement for attaining personal
accomplishment.
 5. They look for challenging tasks.
 6. The high need-achievement individuals are not buck-passers.
 Mc Clellend’s Achievement motivation theory…

 Need for Power (“n Pow”):

 The need for power is concerned with making an impact on others, the
desire to influence others, the urge to change people, and the desire to
make a difference in life.
 People with a high need for power are people who like to be in control
of people and events. These result in ultimate satisfaction to man.

People who have a high need for power are characterized by:
 1. A desire to influence and direct somebody else.
 2. A desire to exercise control over others.
 3. A concern for maintaining leaders-follower relations.
 Mc Clellend’s Achievement motivation theory…

 Need for Affiliation (“n Aff”):

 The need for affiliation is defined as a desire to establish and maintain
friendly and warm relations with other people. The need for affiliation,
in many ways, is similar to Maslow’s social needs.
 1. They have a strong desire for acceptance and approval from others.
 2. They tend to conform to the wishes of those people whose friendship
and companionship they value.
 3. They value the feelings of others.

 As regards the above three needs, McClelland holds the view that
all three needs may simultaneously be acting on an individual.
But, in case of an entrepreneur, the high need for achievement is
found dominating one.
 EDP – Top 3 Models:

 Entrepreneurship helps in generating employment

opportunities, earning foreign exchange, and increasing the
total income of a country.
 The development of entrepreneurship requires proper attention
and supervision by the entrepreneur.
 It can be performed efficiently by using various models.
 Schumpeter was the first who introduced the dynamic model of
entrepreneurship.
 The three types of models are discussed as follows:
 Psychological,
 Sociological and
 Population-Ecology Model (PEM)
 1. Psychological Model:
 Psychological model signifies that psychological factors are responsible for the
development of entrepreneurial behavior in individuals. Need for achievement
may be described as the internal stimulus in an individual that incites him/her
to achieve something. McClelland played a significant role in the
identification of factors responsible for entrepreneurship development.
 He focused on actors (entrepreneurs) rather than the act
(entrepreneurship) in his work on entrepreneurship (1961). In this model,
McClelland in association with D. G. Winter stated that need for achievement is
the prime factor for entrepreneurship development. He also asserted that a
society with a high level of need for achievement comparatively produces more
entrepreneurs.
 After identifying the need for achievement as a prime factor for
entrepreneurship development, he stated that the need of achievement can be
aroused in individuals by increasing their motivation level. He suggested that
motivation can be inculcated in individuals by rewarding the best performers
and generating interest in excellence.
 McClelland also asserted that motivation-oriented training programs inspire
individuals to take up entrepreneurship as a career and make them willing and
eager to exploit new opportunities.
 2. Sociological Model:
 Sociological model considers societal factors responsible for the
development of entrepreneurial behavior in individuals. Some
entrepreneurship scholars have emphasized the importance of socio-
cultural surrounding in the development of entrepreneurs.
 They stated that socio-cultural history has accounted for the
development of entrepreneurship and the performance of
entrepreneurial activities. Different societies with differing interests,
attitudes, and systems of arranging people in to different classes are
likely to produce different kinds of entrepreneurs and different patterns
of entrepreneurial behavior.
 The sociological model given by Frank W. Young is based on the theory
of entrepreneurship, which is based on society’s system of
stratification. The model explains that a sub-group that has a low
status in a larger society leads to entrepreneurial behavior, if the
institutional resources are provided by the government to the sub-
group. The model suggests the creation of supporting institutions in the
society to promote entrepreneurship.
 3. Population-Ecology Model (PEM):

 Hannan and Freeman's (1977) population ecology theory hangs on the

assumption that environments can only handle a fixed number of organizations
of each type. After a certain point is reached, there are diminishing returns to
density that eventually balance out through the mortality of organizations.

 The theory is about the tension between the need to be considered as legitimate
in order to compete, but also the need to be competitive.

 This model considers environment as the important determinant for the

survival of the enterprise rather than individuals with status and personality
traits.

 In addition, it focuses on the presence, characteristics, composition, and change

in a population or in ecological circumstances in a particular society for
developing entrepreneurial activity.
 Population-Ecology Model (PEM)…

 As more organizations enter the market, they become increasingly

legitimate, but this leads to greater competition making survival more
challenging. Thus, the early market is dominated by the need for legitimacy,
while the later market is dominated by competitive forces of selection.
 As environments change, often due to innovations introduced by
organizations within them, mortality rates increase for organizations
experiencing high levels of resistance to change.
 Inertial forces guarantee that most innovations will come from new
entrants and not from incumbents resisting change. Organizational inertia
is caused by a combination of internal (e.g., sunk costs, impaired
managerial cognition, or organizational culture and history) and external
restraints (e.g., government regulations, groupthink, or barriers to entry
and exit).
 John Kao’s Conceptual Model
 As shown in the figure, four factors are involved in
entrepreneurship development.
 1. The Person

The individual is the key factor in entrepreneurial

activity.
He is a creative personality and makes things
happen.
Entrepreneur has distinct personality, certain skills
and experience and has motivation.
The success of entrepreneurial venture depends
largely on the personality of the entrepreneur.
Entrepreneurs requires a variety of skills ranging
from intuition to analytical ability
 The Task & The Environment

 2. The Task: An entrepreneur has to perform several tasks. First he

has to perceive opportunity and then bring together necessary
resources to give life to the idea. He has to provide the environment.
 3. The Environment: entrepreneur and his organization are part of
the environment.
 The environment influences, facilitates or hinders the growth of
entrepreneurship and the viability of the enterprise.
 He draws resources from the environment, and his output goes to the
environment.
 The environment consists of several elements such as economic,
socio-cultural, political, legal and others.
 The entrepreneurs will keep on acting and reacting to various
environmental changes. He tries to understand the environment well.
 4. The Organization:

 The entrepreneur builds the organization and his creative work

takes place in it.
 It includes the organization structure, rule, policies, culture,
human resources systems and communication systems.
 The organization should fit best with personal vision, with key
task to be preformed and with the environment leadership. His
leadership qualities will attract and retain people with him.
 Entrepreneurship Development Programme

Entrepreneurship development programme is a

programme meant to develop entrepreneurial
abilities among the people.
The concept of entrepreneurship development
programme involves equipping a person with the
required skills and knowledge needed for starting and
running the enterprise.
EDP is an effective way to develop entrepreneurs
which can help in accelerating the pace of socio-
economic development, balanced regional growth,
and exploitation of locally available resources.
 Entrepreneurship Development Programme  – Objectives
Entrepreneurship Development Programme (EDP) in India has many objectives.
The expert group constituted by the NIESBUD accepted that it must be
able to help selected entrepreneurs to:

(1) Develop and strengthen their entrepreneurial quality/motivation;

(2) Analyse environment related to small industry and small business;
(3) Select project/product;
(4) Formulate projects;
(5) Understand the process and procedure of setting up of small enterprise;
(6) Know and influence the source of help/support needed for launching the
enterprise;
(7) Acquire the basic management skills;
8) Know the pros and cons of being an entrepreneur; and
(9)Acquaint and appreciate the needed social responsibility/entrepreneurial
disciplines.
 Entrepreneurship Development Programme – Need

 Following are the various needs for EDPs:

 (i) Eliminates Poverty and Unemployment

 (ii) Balanced Regional Development and Growth
 (iii) Prevents Industrial Slums
 (iv) Harnessing Locally Available Resources
 (v) Defuses Social Tension
 (vi) Capital Formation
 (viii) Facilitating Overall Development
 EDP – Phases: Pre-Training, Training and Post-Training Phases
 The entrepreneurship development programme
(EDP) normally runs through three important
phases followed by EDP evaluation:
 1. Pre-Training Phase:
 This is a preparatory phase for launching the programme. It is a
planning phase where all requisite arrangements are made to deliver a
content based and useful EDP. This stage lays the foundation for a
strong EDP that can deliver desired results.
 It encompasses:
 i. Identification of promising area having good commercial prospects.
 ii. Selection of project faculty/course coordinator who is a visionary and
has relevant experience.
 iii. Arrangement of infrastructural facilities for the programme like
location, availability of internet, computers, food and lodging
arrangements (if participants are expected to be from different cities).
 Pre-Training Phase…

iv. Conducting industrial survey/environmental scanning

for identification of good business opportunities.
v. Designing the course contents.
vi. Getting support from various agencies such as DICs,
SFCs, SISI etc.
vii. Advertising and publicity of EDP to reach prospective
minds. Promotional campaigns through either with the
help of print or electric media, leaflets, posters, etc.
viii. Selection of participants for the training program.
 2. Training Phase:

 Training phase of EDP includes:

 i. Management:
 They should be taught basic principles of management and their applications in
real life scenarios to realise the benefits and significance of the management
functions like planning, organizing, staffing, directing, controlling and
coordinating. The various techniques involved in the management process
must be explained. The trainer can use case studies, management games, role-
plays and simulations to polish the skills acquired by the trainees.
 ii. Technical Competence:
 Focus should be laid upon acquiring technical competence suitable to the area
selected. Industry experts may be called upon to share their experiences. It’s
important for the trainees to understand the basics of technology, rate of
technological change in that industry and challenges ahead. A comparative
analysis of present state of technology in developed and developing nations
may be relevant at this stage.
 2. Training Phase:

2. Training Phase…

 iii. Motivation and Stress Management:

 The entrepreneurial training programs are designed to elevate and
sustain the motivation levels of the trainees.
 Stress management is an important component of EDPs as
entrepreneurs have to struggle through different phases before finally
getting results.
 They should be taught stress management techniques and should also
be counseled to hold-on to their beliefs and ideas. The importance of
family members need to highlighted here.
 3. Post Training or Follow-up Phase:

Post training support services are rendered to the participants who

have successfully completed the entrepreneurship.
This phase may comprise of the following steps:
(i) Assistance in registration of the enterprise.
(ii) Loan procedures and documentation.
(iii) Facilitating infrastructure like land, plant layout, purchase of
plant and machinery, power connection etc.
(iv) Securing subsidies and grants and utilizing incentives given by
Centre and State government.
(v) Management consultancy and trouble shooting.
(vi) Providing up-to-date information on the industry.
(vii) Meeting with EDP organizers and participants.
 Important Questions – Unit 1
Q.1. “The entrepreneur is an economic agent who left the economic
resources of an area of lower productivity to an area of higher
productivity and greater yield.” Comment.
Q.2. What do you understand by entrepreneurship? Explain the
characteristics and functions of an entrepreneur.
Q.3. What are the different basis for classification of entrepreneurship?
Q.4. Give a brief account of various theories of entrepreneurship in detail.
Q.5. Explain the barriers to entrepreneurship, especially in the context of
India.
Q.6. Who is an Intrapreneur? Differentiate between Entrepreneur and
Intrapreneur.
Q.7. Differentiate between Entrepreneur and Manager.
Q.8. Describe the evolution of entrepreneurship from ancient times to
current era.