Entrepreneur

Meaning and definition of entrepreneur

The term “entrepreneur” is derived from the French word “entreprendre” which means, “to undertake”,
i.e., the person who under take the risk of new enterprise. In the early 16th century, the Frenchmen,
who organized and led military expeditions, were referred to as “entrepreneurs”.
The term “entrepreneur” was applied to business initially by the Irish economist
Richard Cantillon, in the 18th century, to designate a dealer who purchases the means of
production for combining them into marketable products.
• According to Richard Cantillon, “An entrepreneur is a person who buys
factor services at certain prices with a view to selling its product at
uncertain price”.
•
• According to International Labor Organization (ILO), “Entrepreneurs are
those people who have the ability to see and evaluate business
opportunities, together with the necessary resources to take advantage
of them and to initiate appropriate action to ensure success”.
•
• According to Mark Casson, “An entrepreneur is a person who
specializes in taking judgmental decision about the coordination of
scarce resources
Evolution of Concept of Entrepreneur
1) Earliest Period: An early example of the earliest definition of an

entrepreneur as a go-between is Marco Polo, who attempted to establish trade routes to the far
East. As a go-between, Marco Polo would sign a contract with a money person (forerunner of
today’s venture capitalist) to sell his goods. A common contract during this time provided a
loan to the merchant- adventurer at a 22.5 per cent rate, including insurance. While the
capitalist was a passive risk-bearer, the merchant-adventurer took the active role in trading,
bearing all the physical and emotional risks. When the merchant- adventurer successfully sold
the goods and completed the trip, the profits were divided with the capitalist taking most of
them (upto 75 per cent), while the merchant-adventurer settled for the remaining 25 per cent.

2) Middle Ages: In the middle Ages, the term entrepreneur was used to describe both an actor
and a person who managed large production projects. In such large production projects, this
individual did not take any risks, but merely managed the project using the resources provided,
usually by the Government of the Country. A typical entrepreneur in the middle ages was the
cleric – the person in charge of great architectural works, such as castles and fortifications,
public buildings, abbeys, and cathedrals.
• 3) 17th Century: The re-emergent connection of risk with entrepreneurship developed in the
17th century, with an entrepreneur being a person who entered into a contractual
arrangement with the Government to perform a service or to supply stipulated products.
Since the contract price was fixed, any resulting profits or losses were the entrepreneur’s.
One entrepreneur in this period was John Law, a Frenchman, who was allowed to establish a
royal bank. The bank eventually evolved into an exclusive franchise to form a trading
company in the New World the Mississippi Company. Unfortunately, this monopoly on
French trade led to Law’s downfall when he attempted to push the company’s stock price
higher than the value of its assets, leading to the collapse of the company.
Richard Cantillon, a noted economist and author in the 1700s, understood Law’s mistake.
Cantillon developed one of the early theories
of the entrepreneur and is regarded by some as the founder of the term. He viewed the
entrepreneur as a risk-taker, observing that merchants, farmers, craftsmen, and other sole
proprietors “buy at a certain price and sell at an uncertain price, therefore operating at a risk”.
• 4) 18th Century: In the 18th century, the person with capital was differentiated from the one
who needed capital. In other words, the entrepreneur was distinguished from the capital
provider (the present-day venture capitalist). One reason for this differentiation was the
industrialization occurring throughout the world. Many of the inventions developed during
this time were reactions to the changing world, as was the case with the inventions of Eli
Whitney and Thomas Edison. Both Whitney and Edison were developing new technologies
and were unable to finance their inventions themselves. Both Edison and Whitney were
capital users (entrepreneurs), not providers (venture capitalists). A venture capitalist is a
professional money manager who makes risk investments from a pool of equity capital to
obtain a high rate of return on the investments.
• 5) 19th and 20th Centuries: In the late 19th and early 20th centuries, entrepreneurs were
frequently not distinguished from managers and were viewed mostly from an economic
perspective:The entrepreneur organizes and operates an enterprise for personal gain. He
pays current prices for the materials consumed in the business, for the use of the land, for
the personal services he employs, and for the capital he requires. He contributes his own
initiative, skill, and ingenuity in planning, organizing, and administering the enterprise. He
also assumes the chance of loss and gain consequent to unforeseen and uncontrollable
circumstances. The net residue of the annual receipts of the enterprise after all costs have
been paid, he retains for himself.
6.Definition of Entrepreneur Today: The concept of an entrepreneur is further
refined when principles and terms from a business, managerial, and personal
perspective are considered. In particular, the concept of entrepreneurship from a
personal perspective has been thoroughly explored in this century. This
exploration is reflected in the following three definitions of an entrepreneur.
In almost all of the definitions of entrepreneurship, there is agreement that a kind
of behavior that includes:
1) Initiative-taking.
i) The organizing and re-organizing of social and economic mechanisms to turn
resources and situations to practical account.
ii) The acceptance of risk or failure.
Entrepreneurship is the dynamic process of creating incremental wealth. The
wealth is created by individuals who assume the major risks in terms of equity,
time, and/or career commitment or provide value for some product or service.
The product or service may or may not be new or unique, but value must
somehow be infused by the entrepreneur by receiving and locating the necessary
skills and resources.
Features/Characteristics of Entrepreneur
1) Need to Achieve: Entrepreneurs have got strong desire to achieve higher goals. Their inner
self motivates their behavior towards high achievement.
2) Independence: Most of the entrepreneurs start on their own because they dislike to work for
others. They prefer to be their own boss and want to be responsible for their own decisions.
3) Risk-Bearing: Entrepreneurs are the persons who take decisions under uncertainty and thus
they are willing to take risk, but they never gamble with the results.
4) Locus of Control: Entrepreneurs believe in their own ability to control the consequences of
their endeavor by influencing their socio-economic environment rather than leave everything to
luck. They strongly believe that they can govern and shape their own destiny.
5) Positive Self-Concept: Entrepreneurs are always positive in their action.

Being an achiever, they direct their fantasies and dreams towards achievement of worthwhile
goals and sets extraordinary standard of excellence in what they are doing. This is based upon
their awareness of SWOT analysis.
6) Hope of Success: Hope of success is a significant quality of entrepreneurial personality.
Entrepreneurs set their goals with a hope of success rather than fear of failure. This is because
they set their goals on the basis of facts and their ability to make a plan.
7) Flexibility: Most of the successful entrepreneurs measure the pros and cons of a decision
and tend to change if the situation demands. They never feel reluctant to revise their decisions.
8) Analytical Ability of Mind: Entrepreneurs are unaffected by personal likes
and dislikes. At the time of their need they select experts rather than friends and relatives to
assist them. They usually avoid emotional and sensitive attitude towards their business or
problem.
9) Confronting Uncertainty: Successful entrepreneurs are always optimistic
and take every odd as the opportunity. They deal their environment in such a way that the
works get accomplished rationally. Thus, they win by the application of their extraordinary
insight and skill.
10) Interpersonal Skills: Entrepreneurs are always comfortable while dealing with people at all
levels. During the course of their action, they come across a cross section of individuals with
whom they have to deal. They interact with raw material suppliers, customers, bankers, etc. for
different activities.
Successful entrepreneurs, they should be persons who like working with others possessing the
much needed quality of interpersonal skill to deal with people.
11) Stress Takers: Entrepreneurs are capable of working for long hours and solving different
complexities at the same time. As the captain of an industry or an enterprise, an entrepreneur
faces a number of problems and in right moment they takes right decisions which may involve
physical as well as mental stress.
12) Innovators: Successful entrepreneurs are innovators. They constantly put their efforts in
introducing new products, new method of production, opening new markets, new source of
supply and reorganizing the enterprise.
13) Business Communication Skill: In order to motivate others in the business, entrepreneurs
must possess good communication skill. Both written and oral communication skills are
necessary for the entrepreneurs for running enterprise efficiently.
14) Leadership: Entrepreneurs should possess the quality of leadership. Leadership is the
ability to exert interpersonal influence by means of communication towards the achievement.
Of goals. Entrepreneurs as the leaders should provide the necessary spark to motivation by
guiding. Inspiring, assisting and directing the members of the group for achievement of unity of
action, efforts and purpose
• 15) Ability to Mobilize Resources: Entrepreneurs must have the ability to mobilizeall the
inputs to obtain the end product. They have to mobilize 6 Ms, i.e. Man, Money, Material,
Machinery, Market and Method effectively to realize the final product as entrepreneurship is
a function of gap filling and input completing.
• 16) Self-Confidence: Entrepreneurs must have self-confidence to accomplish the task
effectively and efficiently. They must take decisions on their own in uncertain and risky
situation and should stick to it confidently even if an initial setback is occurred .
 Qualities of an Entrepreneur
• 1) Self-Motivation: People who start their own businesses have typically.
worked in a larger organization and have enjoyed the amount of control and autonomy
that self-employment gives them, when they see the direct rewards for their labor,
they are motivated to setup their own business. Money is also a big motivator. Many top entrepreneurs have ha
unhappy experiences in childhood, and are motivated by something negative. They want to go on and prove tha
they can succeed, and are driven by control and
power. And while those negative experiences may drive many to set up their own businesses
in the first place, motivation grows with the enterprise; those who run small businesses
generally do so because their work is also their passion.

2) Self-Confidence: Every entrepreneur needs to be confident in themselves, their product and their
business. One's needs to know that his product can truly help people and the price is charged are
fair to him and his clients.
• 3) Ethics and Morals: Ethics and morals are the foundation of every good entrepreneur. Early on one
must decide what he and his business will stand for and what lines he will refuse to cross. Many
entrepreneurs close their doors because the dollar outshines their morals. If one stray too far from his
morals he will give himself and his business a bad name. No one wants to do business with someone
who will not stand up for his own morals.
• 4) Time Management: One should schedule his day and stick to that schedule,This cannot be
emphasized enough. New entrepreneurs need to realize that every minute is valuable. When first
starting out, most likely one will not have enough “work” to fill an eight hour day. This does not mean
that he has time to take a three hour lunch with friends. He should utilize this time to learn more skills
related to his business, find ways to advertise and contact potential clients.
• 5) Sales: No matter how much you do not like the idea of it, every business has to work with sales. Each
industry and business has a unique way of handling its sales. As an entrepreneur, it is his job to figure
out what type of sales he will prefer and what type is best for his services or products. If he had ever
worked in retail sales or advertising he already has an edge on most other hopeful business people. All
entrepreneurs will benefit from sales seminars, books and motivational programs.
• 6) Administration Skills: If you can afford to hire an assistant who will organize your office
space and file your papers and mails, lucky you! However, most start-up entrepreneurs
cannot afford such luxuries. Over and above the tasks of managing, marketing and planning
your business, you also need to possess a great deal of administration skills. You need to file
your receipts so tax time will not be a trip to Hades. You need to do all the work in terms of
billing, printing invoices, collecting payments, and managing your receivables.
• 7) Financial Knowhow: When in business, knowledge of finance is a must.
•
• Knowing how to balance a check-book and keep track of numbered invoices
is all most small businesses need to start out. The most important aspect of
small business finance is scheduling time specifically for the finance
management. Granted it helps to have an accounting degree or extensive
quick books knowledge but these skills are not mandatory.
•
• 8) Vision and Leadership Skills: Many entrepreneurs go beyond focusing on
objectives relating to task performance (i.e., carrying-out specific tasks).
Instead they focus on vision on what they want to achieve, and what their
business can become. The lead entrepreneur would employ, amongst others,
communication skills to communicate this vision clearly to employees and
others, as this can greatly help the growth of new ventures. If the whole team
is working towards a shared vision, that vision can be reached .
• 9) Conflict and Consensus Management Skills: In management science terms, conflict is generally
defined as a process in which one person perceives that another person has taken or will soon take
actions that are incompatible with his/her interests, and this takes two basic forms:
•
• 1) Emotional/Affective Conflict: In this a strong element of anger or dislike is introduced into the
situation. Here, the people involved take the conflict personally. This form of anger generally produces
negative results.
•
• Ii) Cognitive Conflict: It is in contrast, one in which individuals become
•
• aware of contrasting ideas, perspectives or interests, and focus on these issues and not on one another
as people. In other words, those involved do not take the conflict personally. Research indicates that
cognitive conflict can be constructive, and can result in a solution that is acceptable to both sides.
•
• 10) Interpersonal Skills: Entrepreneur deal with people at all level and work with group which require
interpersonal skills.
• 11) Communication Skills: Businesspeople communicate by writing letters and memos, talking on the telephone, and
meeting with customers, suppliers, bankers, employees, and others. To succeed as an entrepreneur, he will need to develop
his writing, speaking, and listening skills because he will use them everyday:
1) Writing Skills: As an entrepreneur, a person will have to frequently communicate in writing with customers, suppliers, and
employees, among others. To do so effectively, he will need to develop his business writing skills. Good business
writing communicates ideas clearly. It also gets results by being positive and persuasive and by convincing readers that they
should accept what the writer is communicating.
Ii) Speaking Skills: Much of our communication as a business owner will be conducted verbally either over the telephone or
face-to-face. How we present yourself will have a big impact on the people with whom we deal.
Iii) Listening Skills: Problems in business often occur because people fail to listen to each other.
12) Problem-Solving Skills: Many entrepreneurs make decisions casually or base them on intuition. As a result,
their decisions are based on faulty as- sumptions or illogical thinking. The best entrepreneurs use formal
problem-solving mechanisms to gather information and evaluate different options. For many kinds of problems,
a person will need to make decisions alone. For other kinds of decisions, however, involving other people in the company in
brainstorming and consensus-building techniques can make the most of group decision-making.
• 13) Technical Skills: Technical skill enable the entrepreneurs to understand,communicate with, and lead the
• technical staff of their organization, and they really need to be able to understand the technical language spoken
• by the staff and have a very good general understanding of what is faced by the team and organization to be able
• to effectively lead. This does not mean that the entrepreneur needs technical skills that are superior to the
• technical staff, but the level of technical understanding is important to the organization to provide the best results of the
team efforts.
Possessing or nurturing these skills before going into business will help to ensure a successful outcome. So long as one has
an excellent.
 Importance of entrepreneur
• 1) Develop New Markets: Under the modern concept of marketing, markets are people who are willing and able
to satisfy their needs. In Economics, this is called effective demand. Entrepreneurs are resourceful and creative.
They can create customers or buyers. This makes entrepreneurs different from ordinary businessmen who only perform traditional
functions of management like planning, organization, and coordination.
2) Discover New Sources of Materials: Entrepreneurs are never satisfied with traditional or existing sources of materials. Due to
their innovative nature, they persist on discovering new sources of materials to improve their enterprises. In business, those who
can develop new sources of materials enjoy a comparative advantage in terms of supply, cost and quality.
3) Mobilize Capital Resources: Entrepreneurs are the organizers an coordinators of the major factors of production, such as land,
labor and capital. They properly mix these factors of production to create goods and services.Capital resou.ces, from a layman’s view,
refer to money. However, in economics, capital resources represent machines, buildings, and other physical productive resources
Entrepreneurs have initiative and self- confidence in accumulating and mobilizing capital resources for new business or business
expansion.
4) Introduce New Technologies: Aside from being innovators and reasonable risk-takers, entrepreneurs take advantage of business
opportunities, and transform these into profits. So, they introduce something new or something different. Such entrepreneurial spirit has
greatly contributed to the modernization of economies. Every year, there are new technologies and new products. All of these are intended to
satisfy human needs in a more convenient and pleasant way.
5) Create Employment: The biggest employer is the private business sector.Millions of jobs are provided by the factories,
service industries, agricultural enterprises, and the numerous small-scale businesses.
Meaning and Definition of Entrepreneurship

Entrepreneurship is the act of being an entrepreneur, which is French word meaning “to
undertake”. Entrepreneurs assemble resources including innovations, finance and business
acumen in an effort to transform innovations into economic goods. This may result in new
organizations or may be part of revitalizing mature organizations in response to a perceived
opportunity. The most obvious form of entrepreneurship is that of starting new businesses;
however, in recent years, the term has been extended to include social and political forms of
entrepreneurial activity. When entrepreneurship is describing activities within a firm or large
organization, it is referred to as intrapreneurship and may include corporate venturing, when
large entities start spin-off organizations.

In a Conference on Entrepreneurship held in United States, the term ‘entrepreneurship’ was

defined as, “Entrepreneurship is the attempt to create value through recognition of business
opportunity, the management of risk-taking appropriate to the opportunity, and through the
communicative and management skills to mobilize human, financial and material resources
necessary to bring a project to fruition”.

According to A. H. Cole, “Entrepreneurship is the purposeful activity of an individual or a group

of associated individuals, undertaken to initiate, maintain or aggrandize profit by production or
distribution of economic goods and services”.
• Entrene urship = Entreprene ur + Enterprise
(Process) ( person) ( Object)

Characteristics of Entrepreneurship
1) Economic Activity: Entrepreneurship involves the creation and operation of an enterprise.
Therefore, it is essentially an economic activity concerned with of value or wealth.
2) Purposeful Activity: Entrepreneurship is the purposeful activity of an individual or a group of
individuals who seek to earn profits through the production and distribution of economic
goods and services.
3) Decision Making: A decision is a course of action which is consciously chosen from among a
multiple of alternatives to achieve the desired result. As entrepreneurship involves both risk
and uncertainty, decision making is crucial on the part of the entrepreneurs to establish and
run the enterprise successfully.
• 4) Accepting Challenges: Entrepreneurship means accepting challenges amidst risk and
uncertainty. While accepting entrepreneurship as a career, the entrepreneur accepts the
challenges of all odds and puts his efforts to convert the odds into viable business
opportunities by pooling together the resources for building and running the enterprise.
• 5) Risk Taking: This characteristic feature implies assuming the responsibility for loss that
may occur due to unforeseen contingencies of the future. Entrepreneur, by his deep insight
and scientific approach, analyses the situation objectively and reduces the risk considerably
on one hand and enhances the profit factor on the other.
• 6) Building Organization: Entrepreneurship presupposes the initiative and skill on building
organization. It is by delegation of authorities and proper leadership that organization can be
built up. As per the views of Harbison, organization building is the most critical skill needed
for entrepreneurship as it facilitates the economic use of other innovations.
• 7) Dynamic Process: Entrepreneurs thrive on the changing environment which brings new
opportunities for business. Flexibility is the hallmark of a successful entrepreneur
• 8) Gap Filling Function: It is the job of an entrepreneur to fill the gaps between needs and
goods and services. They have to complete the inputs and provide the knowledge about the
production process.
• 9) Skillful Management: For effective management of an enterprise, the role of an
entrepreneur to initiate and supervise design of organization-improvement projects in
relation to upcoming opportunities is very much important.
• 10) Innovation: David McClelland identified two important
characteristics of entrepreneurship-first doing things in a new and
better way, which is synonymous to innovation given by J. A.
Schumpeter, and second, decision making under uncertainty. So
innovation is one of the most important characteristics of
entrepreneurship.
• 11) Mobilization of Resources: Resources are the help needed to carry
out activities resulting in accomplishment of goal. They are found in
scattered Manner in the environment and required to be perceived,
identified and mobilized by entrepreneurs to attain business goal.
Thus, entrepreneurs make themselves distinct from the rest of
population because of their innate capability to mobilize resources.
• Freedom to save and invest, free competition, consumer sovereignty and very less interference from the government) Price
of the product will be determined on the basis of the force of demand and supply with reference to cost of production. The
entrepreneur controls all the activities with reference to the process of production and distribution. Entrepreneurs play vital
and prominent role in the enterprise because, they controls domestic market by assuming the role of a competitor.
• 2) Socialism: Private entrepreneurship is absent in a socialist economic system. Economic and financial experts play
important role in the development of entrepreneurship in the system. Such entrepreneurship is there mainly to serve the
society not to mint money or to make profit only. Central Authority in the socialism economy is appointed by the
Government to make policies, frame plans and procedures for the proper and efficient mobilization of resources, and
mobilization and allocation of resources into those industries of national prominence. In this system of economy private
entrepreneur has neither a role nor responsibility.
• 3) Mixed Economy: The mixed economy is characterized by coexistence of both the private and public sectors in the same
line of production. Consumer goods are left to the private enter-prises. Government undertakes the production of capital
goods,In a mixed economy, restrictions are placed by the Government to eliminate the problems of monopoly capitalism.
Government under this type of economy curbs the growth of monopolies and encourages competition. Mixed economy has
built-in stabilizers, which solve the problems of production, pricing and distribution in a better manner, apart from satisfying
and helping in the various enterprise goals, mixed economy also helps in reducing of inequality of incomes among people,
fixation of minimum wages, etc., in an efficient and effective way. Thus entrepreneurship plays a great and vital role in all
major economic systems. Its importance stands beyond challenges and making of huge profit in every economic system.
 Importance of Entrepreneurship
1) Increase in National Income: National Income consists of the goods and
services produced in the country and imported. The goods and services produced are for consumption within the country as well as to
meet the demand of exports. The domestic demand increases with increase in population and increase in standard of living. The export
demand also increases to meet the needs of growing imports due to various reasons. An increasing number of entrepreneurs are
required to meet this increasing demand for goods and services. Thus, entrepreneurship increases the national income.
2) Balanced Regional Development: The growth of industry and business leads to a lot of public benefits like transport facilities, health,
education,entertainment, etc. When the industries are concentrated in selected cit development gets limited to these cities. A rapid
development, when the ne entrepreneur grow at a faster rate, in view of increasing competition in around cities, they are forced to set-
up their enterprises in the smaller tow away from big cities. This helps in the development of backward regions.

3) Bringing Change in Structure of Business and Society: New enterprise and new products change the way we do the business. T he
entrepreneuria activity gives a new direction to the business and the way it is done. The classic example is that of India taking-up in a
big way Information Technology (IT), Information Technology-Enabled Services (ITES), Bio Technology (BT), and Research and
Development (R&D) Services. Such avenues or services were not available 25 years ago. The new opportunities have been chosen by
Indian entrepreneurs and thus bringing changes in the structure of Indian business, economy, and the way the society looks at them.
4) New Products, New Services, and New Business: An entrepreneur brings new ideas for business, production techniques, and
services for horizontal, i.e., varieties and vertical, i.e., increase in volume and money growth of business.
5) Knowledge and Social Need Filling: An entrepreneur does the job ofiterative synthesis, i.e., the combined role of social needs and
product development process.
• 6) Dispersal of Economic Power: Industrial development normally may lead to concentration
of economic powers in a few hands. This concentration of power in a few hands has its own
evils in the form of monopolies. Developing a large number of entrepreneur helps in
dispersing the economic power amongst the population. Thus, it helps in weakening the
harmful effects of monopoly.
• 7) Better Standards of Living: Entrepreneur plays a vital role in achieving ahigher rate of
economic growth. Entrepreneur is able to produce goods at lower cost and supply quality
goods at lower price to the community according to their requirements. When the price of
the commodities decreases the consumers get the power to buy more goods for their
satisfaction. In this way, they can increase the standard of living of the people.
• 8) Creating Innovation: An entrepreneur is a person who always looks for changes. Apart
from combining the factors of production, they also introduce new ideas and new
combination of factors. They always try to introduce newer and newer technique of
production of goods and services. An entrepreneur brings economic development through
innovation.
• 9) Production Evolution Process: Entrepreneur understands and takes-up product evolution
process. This is a process where innovation develops and an entrepreneur commercializes
the new products. Here an entrepreneur combines different technologies and fuses them
into products and services which turn into marketable items.
• 10) Enhancing Welfare Amenities: Innovative new enterprises serve society by providing
healthcare facilities, comforts, insurance, etc. Entrepreneurs by their own experience try to
create products and services that can help others. It is general perception that when
individuals experience personal problems or tragedy, they may discover a need for product
or service that is not being met. These situations force the individuals to become innovative
in removing their sufferings and at a later stage, this initiates ground for entrepreneurship.