Concept of

Entrepreneurship

 Concept

of Entrepreneurship As per
Wikipedia:

Entrepreneurship

is the act of being an

entrepreneur, which can be defined as
--"one who undertakes innovations, finance
and business acumen
-- in an effort to transform innovations into
economic goods".

Theory of Entrepreneurship

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The theories of Entrepreneurship may broadly

be discussed as under.
Economic Theory of Entrepreneurship
Sociological Theory of Entrepreneurship
Psychological Theory
Entrepreneurship Innovation Theory
Theory of Achievement Motivation
The Kakinada Experiment

Economic Theory of
Entrepreneurship
Entrepreneurship

and economic growth take

place when economic conditions are favourable.
Economic incentives are the main motivators of
entrepreneurial activities
Economic incentives include taxation policy,
industrial policy, source of finance and raw
material, infrastructure availability, investment
and marketing opportunities, access to
information about market conditions, technology,
etc.

Entrepreneur

According to Richard Cantillon, an Irish

French Economist, Entrepreneur as an
agent who buys factors of production at
certain prices in order to combine them
into a product with a view to selling it at
uncertain prices in future.

Sociological Theory of
Entrepreneurship
Entrepreneurship

is likely to get a boost in

a particular social culture
Societys values, religious beliefs,
customs, taboos influence the behaviour
of individuals in a society.
The entrepreneur is a role performer
according to the role expectations by the
society.

Entrepreneur:
As

per Jean Baptiste Say, an aristocratic

industrialist, Entrepreneur is one who
combines the land of one, the labour of
another and the capital of yet another to
produce a product.
By selling the product in the market he
pays interest on the capital, rent on land
and wages to labourers and what remains
is his profit.

Psychological Theory
Entrepreneurship

gets a boost when society has

sufficient supply of individuals with necessary
psychological characteristics
The psychological characteristics include need
for achievement, a vision or foresight, ability to
face opposition
These characteristics are formed during the
individuals upbringing with stress on standards
of excellence, self reliance and low father
dominance.

Entrepreneurship Innovation
Theory
Propounded

by Joseph Schumpeter
Theory emphasizes on innovation, ignoring risk
taking and organizing abilities of entrepreneur.
Innovation occurs when the entrepreneur
--Introduces a new product
--Introduces a new production method
--Opens up a new market
--Finds out a new source of raw material supply
--Introduces a new organization in any industry

Entrepreneur

According to Joseph Schumpeter, a 20 th Century

Austrian Economist,
An entrepreneur is a person who is willing and able to
convert a new idea or invention into a successful
innovation.
Entrepreneurship resulted in new industries but also in
new combinations of currently existing inputs.
Schumpeter's initial example of this was the combination
of a steam engine and then current wagon making
technologies to produce the horseless carriage. In this
case the innovation, the car, was transformational but did
not require the development of a new technology, merely
the application of existing technologies in a novel
manner.

Theory of Achievement
Motivation
David

McClelland emphasized the importance of

achievement motivation as the basis of
entrepreneurial personality and a cause of
economic and social development through
entrepreneurship by fulfilling
--Need for power
--Need for affiliation
--Need for achievement
--The Need for Achievement was highest among
Entrepreneurs as per McClelland.

Theory of Achievement
Motivation
McClelland identified two characteristics of
entrepreneurship.
--Doing things in a new and better way
--Decision making under uncertainty
Stressed that people with High Achievement Orientation
(Need to Succeed) are more likely to become
entrepreneurs.
--People are not influenced by money or external
incentives.
--Profits are only a measure of success and competency

The Kakinada Experiment

Conducted by McClelland in America, Mexico and India
(Kakinada)
Young adults were selected and put through a 3 month
training to induce achievement motivation
The course content were
--Trainees were asked to control their thinking and talk to
themselves positively
--Trainees imagined themselves in need of challenges and
success for which they were made to set planned
achievable goals.
--They tried to imitate their role models.

The achievement motivation had a

positive impact on the performance of
the participants.
It was understood that traditional belief
do not inhibit an entrepreneur.