EVOLUTION OF ENTREPRENEURSHIP

The term 'entrepreneurship' is often used synonymously with the term 'Entrepreneur'
though, they are two sides of the same coin and conceptually they are different. Entrepreneurship
is the indivisible process flourishes, when the interlinked dimensions of individual psychological
entrepreneurship, entrepreneur traits, social encouragement, business opportunities, Government
policies, availability of plenty of resources and opportunities coverage towards the common
good, development of the society and economy.

Entrepreneurship is the process of identifying opportunities in the market place, arranging

the resources required to pursue these opportunities and investing the resources to exploit the
opportunities for long term gains. It involves creating wealth by bringing together resources in
new ways to start and operate an enterprise.

ENTREPRENEURSHIP: CONCEPT
The concept of entrepreneurship has been around for a very long time. In the last decades
it has resurged. The concept of entrepreneurship is an age-old phenomenon that relates to the
vision of an entrepreneur as well as its implementation by him. Entrepreneurship is a creative
and innovative response to the environment. It is also the process of setting up a new venture.
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.

Usually anyone who runs a business is called an entrepreneur. The more precise meaning
of entrepreneur is on who creates his own business i.e., a person who organizes, operates and
assumes the risk of a business venture. An entrepreneur is a person who perceives a need and
then brings together manpower, material and capital required to meet the need.

Entrepreneur implies a set of values norms and traits that are conducive to the growth of a
business enterprise. It is the organizational culture that focuses on new opportunities and creation
of an organization where these opportunities can be perused earnestly. An entrepreneur seeks the
opportunities looks fo ways and means to capitalize on the newer opportunities by organizing the
structure and the resources and gaining control on them. And against this, manager is primarily
concerned with the resources under his control, the structure of his organization and its relations
to the market. He is also concerned with matching the opportunities with organizational abilities.
The entrepreneurs are driven by the perception of opportunities. They seek changes in the
political rules, social values, consumer preferences, technology etc. On the other hand resources
like money, manpower and material they control, drive the managers. Entrepreneurship is an
elusive concept that cannot he defined precisely. However, people having different interests have
defined entrepreneurship in a number of ways.

Psychologists and sociologists are interested in why entrepreneurs act.

Economists focus on what happens when entrepreneurs act.
Management experts focus on how the entrepreneurs act, in the characteristics of
entrepreneurs and the manner in which they achieve their goals.
Richard Cantillon
The word Entrepreneur is derived from a French word entrependre, i.e., individuals who
were undertakers meaning those who undertook the risk of new enterprise. The word
entrepreneur was first used in the writings of French economist, Richard Cantillon. He described
an entrepreneur as a person who pays a certain price for a product to resell it at an uncertain price
thereby making decision about obtaining and using resources while assuming the risk of
enterprise. As per Richard Cantillon entrepreneurs function is to combine factors of production
into a producing organism. Entrepreneurs consciously make decisions about resource allocation.
Smart entrepreneurs always look for the best opportunity of using resources for high commercial
gain.

Adam Smith
As per Adam Smith, the father of political economy, the entrepreneur: has a role of an
industrialist. In his book, Wealth of Nations, he describe the entrepreneur as an individual who
forms an organization for commercial purpose. 1-Te is a proprietary capitalist, a supplier of
capital and at the same time a manager who intervenes between the labour and the consumer.
Adam Smith also treated him as an employer, master, merchant but explicitly considered him a
capitalist.

Entrepreneur is one who has unusual foresight to recognize potential demand of goods and
services. lt is a change agent who transforms demand into supply. He is one who possesses
certain arts and skills of creating new economic enterprises. He is a person with exceptional
insight into the societys needs and possesses abilities to fulfill them. He is Economic Risk
Taker of Cantillon and Industrial Manager of Adam Smith. The British economist John Stuart
Mill had described entrepreneurs as business founders and thus become fourth economic factor
with land, labour and capital.

Carl Menger
Carl Menger of Austria was of the view that economic changes do not arise from the
circumstances hut from the individuals awareness and understanding of these circumstances.
The entrepreneur, therefore, becomes a change agent who transforms resources into useful goods
and services, thus, creates the circumstances leading to industrial growth. As per Mengers
classic theory of production, resources having no direct use in terms of fulfilling human needs
were transformed into highly valuable products that directly fulfilled human needs. He saw the
entrepreneur as an astute individual who could envision this transformation and create the means
to implement it. He adds value to the original resource and this value through profits.

Joseph Schumpeter
Joseph Schumpeter, an economist described entrepreneur as one who seeks to reform or
revolutionize the pattern of production by exploiting an innovation or, more generally, an untried
technological possibility for producing a new commodity or producing an old one ii a new way,
by opening up a new source of supply of material or a new outlet of products. Entrepreneurship,
as defined, essentially consists of (10mg things that are not generally done in ordinary course of
business routine. An entrepreneur is one who innovates, raises, money, collects, inputs, organizes
talent, provides leadership and sets the organization.
Peter Drucker
As per Peter Drucker, the management guru, entrepreneurial role is one of getting and
using resources. The difference is that in an entrepreneurial role the resources must be allocated
to the opportunities, where as, in the managerial role the resources are allocated to solve the
problems. Entrepreneurship occurs when resources are redirected towards progressive
opportunities, and are not used for ensuring administrative efficiency. This redirection of
resources distinguishes between the entrepreneurial and managerial role.

According to Peter Drucker an entrepreneur is on who always searches for changes,

responds to it and exploits it as an opportunity. Innovation is an instrument of entrepreneurship.
An entrepreneur innovates and creates resources because there is no such thing as resource until
someone finds a use for something and endows economic value to it. Drucker considers
increasing the value and consumer satisfaction of a resource is an entrepreneurial activity.

Rebert Ronstand
Rebert Ronstand had described entrepreneurship as a dynamic process of creating
incremental wealth. This wealth is created by persons who assume the major risk, in term of
equity, time and/or career commitment of providing value for some product or service. Product
or service itself may or may not be unique but value must be infused by entrepreneur through
allocating of necessary skills and resources. Encyclopedia Britannica defines entrepreneur as an
individual who bears the risk of operating a business in the face of uncertainty about future
conditions.

Cole ENTREPRENEURSHIP DEVELOPMENT

Entrepreneurship is the purposeful activity of an individual or a group of associated
individuals undertaken to initiate, maintain and aggrandize profit by production or distribution of
economic goods and services".

Higgins
Entrepreneurship is meant the function of foreseeing investment and production
opportunities, organizing an enterprise to undertake a new production process, raising capital,
hiring labour, arranging the supply of raw materials, finding site, introducing a new technique,
discovering new resources or raw materials and selecting top managers for day to day operations
of the enterprise.

The above definitions highlights risk bearing, innovating and resource organizing aspects
and an individual or group of people achieve goal through production or distribution of products
or services. To conclude entrepreneurship is set of activities performed by an entrepreneur thus,
entrepreneur proceeds entrepreneurship.

FIVE CORE ELEMENTS OF ENTREPRENEURSHIP

From various definitions referred to in previous pages it emerges that entrepreneurship
primarily consists of five main elements:
 1. Key part of entrepreneurship is to identify opportunities that no one has earlier noticed.
Such opportunities need not be large; these can even be small ones. Creativity and
innovation from the core of entrepreneurship that enables the entrepreneur to think
entirely new ways of working. Creative people are receptive to new ideas generated by
other.
2. The entrepreneurs have an ability to apply the creativity to business problems. They
understand the people and environment around them. They can effectively material
resources for the same. It is not enough to think creatively to think creatively, successful
entrepreneurship demands that thoughts be translated into action and result. They need an
ability of getting thing done.
3. Entrepreneur always takes rise. Their main task is evaluating rise for cutting across
accepted boundaries, breaking rules and doing things in a different manner.
4. Thus entrepreneur focus on creating value by doing things in a cheaper, better and faster
manner.
5. They have a sound belief in their ability to change the status quo- the way the things are
being done presently. With their drive and passion to achieve success they change the way
things are being performed.

Thus, entrepreneurship can be defined as creating of value by people working together to

implement an idea through the application of drive and a willingness to take risk. In brief, the
concept of entrepreneurship includes three phases namely:
o Initial entrepreneurial phase or inception phase which is related to perception of
an opportunity to establish the business.
o Operational phase which includes the theory and practice of management
functions in the organization of a business unit.
o Managerial phase which includes the profitable application of the mental
executive health in taking relevant managerial decisions to run the business unit
as a profitable, going and growing concern.

ENTREPRENEUR PHILOSOPHY
To some extent, success of an entrepreneur depends on ones willingness to accept
responsibility for ones own work. One must learn an great deal about oneself if one intends to
pursue the goals, which are compatible with what one wants most in life. Even though the risk of
failure is always present, entrepreneurs take risk by assuming responsibility for their actions.
Failure must be accepted as learning experience. Some entrepreneurs succeed only after
experiencing failure Learning from past experience helps channelize ones actions to obtain more
positive results and success results from persistent efforts.

Pursue goals related to ones skills and abilities. Accept oneself as one is and try to
emphasize on ones strengths and play down ones weakness. By pursuing ones goals honestly and
sincerely, one can achieve positive results. Being goal oriented brings out the best qualities.
Acceptable results are more important than perfect results, so do not waste time in achieving
perfection.

In the context of employment generation, the three terms i.e., Income Generation, Self-
employment and Entrepreneurship are often used interchangeably. Entrepreneurship refers to
identification of innovative ideas, setting up of a new enterprise. Whereas, self-employment
refers to full time involvement in ones own occupation. One may or may not be bearing the rise,
mobilizing inputs, organizing production and marketing the product or service. Income
generating activities, on the other hand, are part time, causal and practiced with a view of raising
additional income. All entrepreneurs are self-employed and income generating persons. But all
self-employed and income generating persons may not be entrepreneurs.

MODELS FOR ENTREPRENEURSHIP

Based on government involvement in economy and the way society values individual and
collective action Accenture developed 3 illustrative models for conditions under which
entrepreneurship can flourish.

THE FREE MARKET MODEL: EX: UNITED STATES AND CANADA

Role of government is limited.
Public policy can create basic conditions required for Entrepreneurial Culture.UAL
But the rest is up to the private Sector/ entrepreneur.
This model thrives in such culture where entrepreneurial success is celebrated rather
than denigrated.
The tax structure rewards initiative & financial gain.
Degree of social protection is less.

GUIDED INDIVIDUALISM MODEL: EX: SINGAPORE & TAIWAN

It is based on encouragement of individual enterprise.
Public policy determines broad sweep of entrepreneurial activity by signaling
sectors / industries in which entrepreneurial energies can be directed.

SOCIAL DEMOCRAT MODEL: EX: SWEDEN & GERMANY

It combines encouragement of enterprise with emphasis on social protection.
Countries create a sort of social partnership with agreed up on conomic and social
frame work by all partners.

INDIA- THE MIXED ECONOMY MODEL

Marked preference to state owned enterprise.
Entry in to big industries was possible through licensing.
Small scale industries were encouraged - 40% contribution to national industrial
output with 80% share in industrial employment.
System created grate disparities in wealth.
Success in business was looked upon with suspicion.
Creating wealth was not considered a virtue.
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