2. ENTREPRENEURSHIP
Concept of Entrepreneurship and Intrapreneurship
• An entrepreneur is an individual who creates a new business, bearing
most of the risks and enjoying most of the rewards.
• The entrepreneur is commonly seen as an innovator, a source of new
ideas, goods, services, and business/or procedures.
• Entrepreneurs play a key role in any economy, using the skills and
initiative necessary to anticipate needs and bring good new ideas to
market.
• Entrepreneurs who prove to be successful in taking on the risks of a
startup are rewarded with profits, fame, and continued growth
opportunities. Those who fail, suffer losses and become less prevalent
in the markets.
• The word "entrepreneur" or "entrepreneurship" (the word
"entrepreneur" comes from the French verb Entreprendre, meaning
3. Definitions
• According to Jean Baptiste Say, “An entrepreneur is the economic agent who unties
all means of production, the labour force of the one and the capital or land of the
others and who finds in the value of the products his results from their employment,
the reconstitution of the entire capital that he utilizes and the value of the wages,
the interest and the rent which he pays as well as profit belonging to himself.”
• According to David Ricardo, a contemporary of J. B. Say, “The foremost motive of a
risk taker is to mass capital and capital accumulation is the sine qua non of
economic development.”
• J. S. Mill viewed the word entrepreneur as organizer who was paid for his non-
manual type ofwork. According to him, “Extraordinary skills acted as the bedrock in
production process that ought to be possessed by the entrepreneur.”
4. Division of Definition of Entrepreneur:
Thus, the definitions of Entrepreneur may be
divided into three parts:
•1. Based on Traditional Approach
•2. Based on Modern Approach
•3. Based on Synthesized Approach.
5. Based on Traditional Approaches:
• Alfred Marshall, “Entrepreneur is an individual who brings
together the capital and labour required for the work, who
adventures or undertakes risks, who arrange or engineer its
general plan.”
• J.B. Say, “The entrepreneur is a person who shifts economic
resources out of the area of lower yield and into an area of higher
and greater yield.”
• Frank H. Knight, “The Entrepreneur is a specialized person or
group of persons who bear risks and meet the uncertainty.”
6. Based on Modern Approaches
•Peter F. Drucker, “Entrepreneurs create something
new, something different, they change and transmute
value.”
•Arthur dewing, “Entrepreneur is one who transforms
ideas into a profitable business.”
7. Based on Synthesized Approaches
• Joseph A. Schumpeter, “Entrepreneur is a person who foresees the
opportunity and try to exploit it by introducing a new product, a new
method of production, new market, new source of raw material or new
combination of factors of production.”
• Frantz, “Entrepreneur is an innovator and promoter as well as generally he
is more than a manager.”
An entrepreneur may be defined as an individual who intends to add
value to the economy by creating a new business venture through the able
utilization of his knowledge, passion, dream, and desire.
An entrepreneur is thought to be a person who intends and evaluates the
new situation in the environment and directs the making of such
adjustments or alteration in the economic or manufacturing system as he
thinks necessary for achieving desired results
8. Entrepreneurship
• An entrepreneur is a person who undertakes a venture with some
profit potential and involving a considerable amount of risk and
therefore, entrepreneurship is the venture undertaken by the
entrepreneur.
• The most obvious example of entrepreneurship is the starting of a
new business.
• Entrepreneurship can be of varying degrees and is not necessarily
alike. It can be categorized into various subcategories, starting
with small and home businesses to multidimensional industries
that were started from the ground level
9. Characteristics of Entrepreneurship
1. Ability to take Risks: This is the first and foremost trait of entrepreneurship. Starting any
business involves a considerable amount of risk of failure. Therefore, the courage and capacity to
take the said risk are essential for an entrepreneur.
2. Innovation: In a world, where almost everything has been done, innovation is a priceless gift to
have. Innovation basically means generating a new idea with which you can start a business and
achieve a substantial amount of profits. Innovation can be in the form of a product, i.e., launching a
product that no one is selling in the market. It can also be in the form of a process, i.e., doing the
same work in a more efficient and economical way.
3. Visionary: Every entrepreneur needs to be a visionary. Without a vision for the future of his
venture, he or she would just be working aimlessly without reaching any point of success.
4. Leadership: An entrepreneur has a vision. However, it takes a lot of resources to turn that vision
into reality. One of these resources are the people that the entrepreneur hires to perform various
functions like production, supplying, accounting, etc.
5. Open-Minded: A good entrepreneur realizes that every situation can be a business opportunity.
Thus can be utilized for the benefit of the organization. For example, Paytm realized the significance
of demonetization and recognized that the need for online transactions was more than ever during
this time and so it utilized and grew massively during this period.
10. Characteristics of Entrepreneurship
6. Confident and Well Informed:
An entrepreneur needs to be confident about his ideas and skills. This confidence
also inspires the confidence of the people working for him as well as the other
stakeholders involved in his business
7. Learn more about Stakeholders and their Information
Requirements:
This confidence comes from being well informed about the industry
and environment. Various legal and political policies enhance business
and trade opportunities, while some hinder them. Having knowledge
about these can really help an entrepreneur make the right decision at
the right time.
11. Differences between Entrepreneurship and
Intrapreneurship
Points of difference Intrapreneurship Entrepreneurship
Definition
Intrapreneurship is entrepreneurship
within an existing organization.
Entrepreneurship is the dynamic process
of creating incremental wealth
Core objective
To increase the competitive strength and
market sustainability of the
organization.
To innovate something new of socio-
economic value.
Primary motives
Enhance the rewarding capacity of the
organization and autonomy.
Innovation, financial gain tad
independence.
Activity
Direct participation, which is more than
a delegation of authority
Direct and total participation in the
process of innovation.
Risk Hears moderate risk. Bears all types of risk
Status
Organizational employees expecting
freedom at work.
The free and sovereign person doesn’t
bother with status.
Failure and mistakes
Collaborative decisions to execute
dreams.
Independent decisions to execute
dreams
Whom serves Organization and intrapreneur himself. Customers and entrepreneur himself.
12. Relationship with others
Authority structure delineates the
relation.
A basic relationship based on
interaction and negotiation.
Time orientation
Self-imposed or organizationally
stipulated time limits.
There is no time-bound.
The focus of attention On Technology and market.
Increasing sales and sustaining
competition.
Attitude towards destiny
Follows self-style beyond the given
structure.
Adaptive self-style considering
Structure as inhabitants.
Attitude towards destiny
Strong self-confidence and hope for
achieving goals.
Strong commitment to self initiated
efforts and goals.
Operation
Operates from inside the
organization.
Operates from outside the
organization.
13. Comparison of Managers, Intrapreneurs and Entrepreneurs
Features Managers Entrepreneurs Intrapreneurs
Primary Motive
Promotion and other
traditional corporate rewards,
such as office, staff, and
power.
Independence, opportunity to
create, and money
Independence and ability to
advance with the corporate
rewards
Time orientation
Short-term-meeting quota
and budgets; weekly,
monthly, quarterly, and the
annual planning horizon.
Survival and achieving 5-to
10- years growth of a
business
Between entrepreneurial and
traditional managers,
depending on urgency to
meet the self-imposed and
corporate timetable.
Activity
Delegates and supervises
more than direct
involvement.
Direct Involvement.
Direct involvement more than
delegation.
Risk Careful Moderate risk-takers Moderate risk taker
Status
Concerned with status
symbols.
No concern with status
symbols.
Not concerned with
traditional status symbols-
desires independence.
Failure and Mistakes
Tries to avoid mistakes and Deals with mistakes and Attempts to hide risky
14. Features Managers Entrepreneurs Intrapreneurs
Who serves Others Self and customers
Self, customers,
and sponsors
Family history
Family members
worked for large
organizations.
Entrepreneurial
small business,
professional, or
farm background
Entrepreneurial
small-business,
professional. or
firm background
Relationship with
others
hierarchy as a basic
relationship
Transactions and
deal-making as the
basic relationship
Transactions within
hierarchy
15. Types of Entrepreneurs
Entrepreneurs can be classified on various basis.
Clarence Denhof Classifies entrepreneurs on the basis
of stage of economic development: some others have
classified on the basis of their functions and
characteristics. In the initial stages of economic
development, entrepreneurs tend to have less initiative
and drive. As development proceeds, they become
more innovating and enthusiastic. The various types of
entrepreneurs are classified on certain parameters.
16. On the Basis of Economic Development
A. Innovating Entrepreneurs
B. Imitative Entrepreneurs (copy or adopt suitable innovations
made by the innovative entrepreneurs)
C. Fabian Entrepreneur (This type of entrepreneur has neither
will to introduce new changes nor the desire)
D. Drone Entrepreneurs (They are conventional in their
approach and stick to their set practices products, production
methods, and ideas)
17. On the Basis of Type of Business
A. Business Entrepreneurs:
• They are the entrepreneurs who conceive an idea for a new product or service
and then create a business to materialize their idea into reality
B. Trading Entrepreneurs:
• These entrepreneurs undertake trading activities and are not concerned with the
manufacturing work
C. Corporate Entrepreneurs:
• These entrepreneurs used his innovative skill in organizing and managing a
corporate undertaking
D. Agricultural Entrepreneurs:
• Who undertakes agricultural activities through mechanization, irrigation, and
application of technologies to produce the crop
18. According to the Use of Technology
A. Technical Entrepreneur:
• With the decline of joint family businesses and the rise of scientific and
technical institutions, technically qualified persons have entered the
field of business.
B. Non-technical Entrepreneur:
• Who are not concerned with the technical aspects of the product or
service in which they deal
C. Professional Entrepreneur:
• Who is interested in establishing a business but does not have interest
in managing it after the establishment
19. According to Motivation:
A. Pure Entrepreneur:
• who is motivated by psychological economical, ethical considerations.
He undertakes an entrepreneurial activity for his personal satisfaction
in work, ego or status
B. Induced Entrepreneur:
• This type of entrepreneur is one who induced to take up an
entrepreneurial task due to the policy reforms of the government that
provides assistance, incentives, concessions and other facilities to start
a venture
C. Motivated Entrepreneur:
• New entrepreneurs are motivated by the desire for self-fulfillment
20. According to Growth
Growth Entrepreneur:
•He necessarily takes up a high-growth industry and
chooses an industry that has sustained growth
prospects.
21. According to Entrepreneurial Activity
A. Novice Entrepreneur:
• who has started his/her first entrepreneurial venture. A novice entrepreneur is an
individual who has no prior business ownership experience
B. A Serial Entrepreneur:
• who is devoted to one venture at a time but ultimately starts many. It is the
process of starting that excites the starter. Once the business is established, the
serial entrepreneur may lose interest and think of selling and moving on
C. Portfolio Entrepreneur:
• who retains an original business and builds a portfolio of additional businesses
through inheriting, establishing, or purchasing them
22. Other Entrepreneurs
A. First-Generation Entrepreneurs: This category consists of those entrepreneurs whose parents or family had not been into business
and was into salaried service.
B. Modern Entrepreneur: who undertakes those businesses which go well along with the changing scenario in the market and suits
the current marketing needs
C. Women Entrepreneurs: Women as entrepreneurs have been a recent phenomenon in India
D. Nascent Entrepreneur: who is in the process of starting a new business
E. Habitual Entrepreneur: who has prior business ownership experience.
F. Lifestyle Entrepreneurs: Lifestyle entrepreneurs have developed an enterprise that fits their individual circumstances
and style of life
G. Copreneurs: It is related to married couples working together in a business
H. IT Entrepreneurs: IT entrepreneurs are creating a new business platform that takes them straight to the top
I. Social Entrepreneur: Social entrepreneur is one who recognizes the part of society which isstuck and provides new
ways to get it unstuck
J. Forced Entrepreneurs: The money-lenders of yesterday, who are thrown out of their family business because of
government legislation, the neo rich Indians returning from abroad, and the educated unemployed seeking self-
employment form this class of entrepreneurs
K. Individual and Institutional Entrepreneurs: In the small-scale sector individual entrepreneurs are dominant.
L. Entrepreneurs by Inheritance: At times, people become entrepreneurs when they inherit the family business
23. Entrepreneurial Traits and Skills
1. Leadership skills: Being a great leader means that your employees work with you,
question your moves at other times, and basically communicate well with you just to
ensure that your business reaches its goals.
2. Excellent communication skills: An entrepreneur needs to understand their
employees, know their strengths or weaknesses, then help them use these effectively,
making the business and the employee better. This is only possible through
communication
3. Ambition: To change the world with your business, you need to have ambitious projects.
4. Risk taker: An entrepreneur is the definition of a risk taker. Business growth depends on
your ability to dive into the future of uncertainty while embracing all the challenges and
the problems that will cross your path
5. Fearlessness: You cannot run a business when you are afraid of every turn you are
about to make
24. 6. Ability to listen to your gut instincts and to trust them: There isn’t one
successful entrepreneur who faults or regrets trusting their instincts.
7.Visionary: You cannot take on the entrepreneurship bull by the head and ride it
without falling over or getting it to trample on you if you have a solid vision in mind.
Perceptive and creative business visionaries tend to twist normal views, distorting
reality and eventually changing the way people see the world
8. Motivation and passion: The most important trait ingrained in successful
entrepreneurs is passion for what one does and the motivation to hit the big
business storms every day without giving up
9. Tech savviness: You don’t have to be a pro in all matters tech and programming
but in this digital age, you should have the least possible capacity to market your
products or services online and to connect to your customers, competitors, or
suppliers through social media platforms
10. Good financial management skills: You need to manage your money. Even
when you have a CFO, you still have to control things and help in making business
decisions concerning money
Entrepreneurial Traits and Skills
26. Motivation for the Entrepreneurship
• Motivation is a behaviourial related general phenomenon, but to
motivate entrepreneurs there are some social goals which are listed
hereunder:
• 1. Achievement
• 2. Power
• 3 Affiliation
• 4. Independence
• 5. Extension
• 6. Personal achievement
• 7. Social achievement, etc.
27. From the above listed goals for entrepreneurship
development, the following three goals are very
important
• 1. Need for achievement: - A strong desire of an individual to
achieve the standard of excellence.
• 2. Need for power: - Some persons are crazy for power. One
can motivate them by giving them
• more and more power or authority. Such persons can be a
manager or supervisor.
• 3. Need for affiliation:-Some persons desire to create, increase
and maintain the relations with others. Such persons are
generally devotee and always try to avoid the conflicts.
28. Types of Ownership of small business
•Various forms of business organisations from which one can
choose the right one include:
•(a) Sole proprietorship,
•(c) Partnership,
•(d) Cooperative societies, and
•(e) Joint stock company.
29. Sole Proprietorship
• Sole proprietorship is a popular form of business organisation and is
the most suitable form for small businesses, especially in their initial
years of operation. Sole proprietorship refers to a form of business
organisation which is owned, managed and controlled by an
individual who is the recipient of all profits and bearer of all risks.
• This form of business is particularly common in areas of
personalised services such as beauty parlours, hair saloons and
small scale activities like running a retail shop in a locality
30. Features
(i) Formation and closure: There is no separate law that governs sole
proprietorship.
(ii) Liability: Sole proprietors have unlimited liability.
iii) Sole risk bearer and profit recipient: The risk of failure of business is borne
all alone by the sole proprietor
(iv) Control: The right to run the business and make all decisions lies
absolutely with the sole proprietor. He can carry out his plans without any
interference from others
(v) No separate entity: In the eyes of the law, no distinction is made between
the sole trader and his business, as business does not have an identity
separate from the owner
(vi) Lack of business continuity: The sale proprietorship business is owned
and controlled by one person, therefore death, insanity, imprisonment,
physical ailment or bankruptcy of the sole proprietor will have a direct and
detrimental effect on the business and may even cause closure of the
business
32. Partnership
•The inherent disadvantage of the sole proprietorship in
financing and managing an expanding business paved
the way for partnership as a viable option. Partnership
serves as an answer to the needs of greater capital
investment, varied skills and sharing of risks.
•The Indian Partnership Act, 1932 defines partnership
as “the relation between persons who have agreed to
share the profit of the business carried on by all or any
one of them acting for all.
33. Features
(i) Formation: The partnership form of business organisation is governed by the Indian Partnership Act, 1932
(ii) Liability: The partners of a firm have unlimited liability. Personal assets may be used for repaying debts in case
the business assets are insufficient. Further, the partners are jointly and individually liable for the payment of
debts.
iii) Risk bearing: The partners bear the risks involved in running a business as a team. The reward comes in the
form of profits which are shared by the partners in an agreed ratio
(iv) Decision making and control: The partners share amongst themselves the responsibility of decision-making
and control of day to day activities. Decisions are generally taken with mutual consent
(v) Continuity: Partnership is characterised by a lack of continuity of business since the death, retirement,
insolvency or insanity of any partner can bring an end to the business
(vi) Number of Partners: The minimum number of partners needed to start a partnership firm is two. According to
section 464 of the Companies Act 2013, a maximum number of partners in a partnership firm can be 100, subject
to the number prescribed by the government. As per Rule 10 of The Companies (miscellaneous) Rules 2014, at
present the maximum number of members can be 50
vii) Mutual agency: The definition of partnership highlights the fact that it is a business carried on by all or any
one of the partners acting for all. In other words, every partner is both an agent and a principal
35. Cooperative society
• The word cooperative means working together and with others for a
common purpose.
• The cooperative society is a voluntary association of persons, who join
together with the motive of the welfare of the members. They are driven
by the need to protect their economic interests in the face of possible
exploitation at the hands of middlemen obsessed with the desire to earn
greater profits.
• The cooperative society is compulsorily required to be registered under
the Cooperative Societies Act 1912. The process of setting up a
cooperative society is simple enough and at the most what is required is
the consent of at least ten adult persons to form a society. The capital
of a society is raised from its members through the issue of shares. The
society acquires a distinct legal identity after its registration.
36. Features
(i) Voluntary membership: The membership of a cooperative society is voluntary. A person is free to join a
cooperative society, and can also leave anytime as per his desire. There cannot be any compulsion for him
to join or quit a society
(ii) Legal status: Registration of a cooperative society is compulsory. This accords a separate identity to
the society which is distinct from its members.
(iii)Limited liability: The liability of the members of a cooperative society is limited to the extent of the
amount contributed by them as capital. This defines the maximum risk that a member can be asked to
bear.
(iv) Control: In a cooperative society, the power to take decisions lies in the hands of an elected managing
committee. The right to vote gives the members a chance to choose the members who will constitute the
managing committee and this lends the cooperative society a democratic character
v) Service motive: The cooperative society through its purpose lays emphasis on the values of mutual help
and welfare
38. Joint stock company
• A company is an association of persons formed for carrying out
business activities and has a legal status independent of its members. A
company can be described as an artificial person having a separate legal
entity, perpetual succession, and a common seal. The company form of
organization is governed by The Companies Act, 2013. As per section
2(20) of Act 2013, a company means a company incorporated under this
Act or any other previous company law.
• The shareholders are the owners of the company while the Board of
Directors is the chief managing body elected by the shareholders.
Usually, the owners exercise indirect control over the business. The
capital of the company is divided into smaller parts called ‘shares’ which
can be transferred freely from one shareholder to another person (except
in a private company).
39. Features
(i) Artificial person: A company is a creation of law and exists independent of its members. Like
natural persons, a company can own property, incur debts, borrow money, enter into contracts, sue and
be sued but unlike them it cannot breathe, eat, run, talk and so on. It is, therefore, called an artificial
person.
ii) Separate legal entity: From the day of its incorporation, a company acquires an identity, distinct from
its members. Its assets and liabilities are separate from those of its owners. The law does not recognise
the business and owners to be one and the same
(iii) Formation: The formation of a company is a time consuming, expensive and complicated process. It
involves the preparation of several documents and compliance with several legal requirements before it
can start functioning. Incorporation of companies is compulsory under The Companies Act 2013 or any
of the previous company law, as state earlier. Such companies which are incorporated under companies
Act 1956 or any company law shall be included in the list of companies
(iv) Perpetual succession: A company being a creation of the law, can be brought to an end only by law.
It will only cease to exist when a specific procedure for its closure, called winding up, is completed.
Members may come and members may go, but the company continues to exist
40. (v) Control: The management and control of the affairs of the company are undertaken by the Board of
Directors, which appoints the top management officials for running the business. The directors hold a
position of immense significance as they are directly accountable to the shareholders for the work of the
company. The shareholders, however, do not have the right to be involved in the day-to-day running of the
business.
(vi) Liability: The liability of the members is limited to the extent of the capital contributed by them in a
company. The creditors can use only the assets of the company to settle their claims since it is the company
and not the members that owes the debt. The members can be asked to contribute to the loss only to the
extent of the unpaid amount of share held by them
(vii) Common seal: The company being an articial person cannot sign its name by itself. Therefore, every
company is required to have its own seal which acts as official signature of the company. Any document
which does not carry the common seal of the company is not a binding on the company.
(viii) Risk bearing: The risk of losses in a company is borne by all the share holders. This is unlike the case
of sole proprietorship or partnership firm where one or few persons respectively bear the losses. In the face
of financial difficulties, all shareholders in a company have to contribute to the debts to the extent of their
shares in the company’s capital. The risk of loss thus gets spread over a large number of shareholders
Features
