Unit 2

Entrepreneurship
Entrepreneurship-concept:
Entrepreneurship is the ability and readiness to develop, organize and
run a business enterprise, along with any of its uncertainties in order to
make a profit. The most prominent example of entrepreneurship is the
starting of new businesses.

In economics, entrepreneurship connected with land, labour, natural

resources and capital can generate a profit. The entrepreneurial vision is
defined by discovery and risk-taking and is an indispensable part of a
nation’s capacity to succeed in an ever-changing and more competitive
global marketplace.

Definition:
Traditionally, the simple definition of entrepreneurship has been limited
to: starting a new business, scaling for profit and creating business
capital. For outside-of-the-box entrepreneurial thinkers that definition
was quite narrow. It leaves out the idea that entrepreneurship is a way of
thinking.
The best definition of entrepreneurship is better described as a mindset
that is opportunity obsessed, holistic in approach and leadership
balanced.
This new entrepreneurial definition is about innovation; about seeing
problems as opportunities, and about changing the world.
To bring this new entrepreneurship definition to life, we took a look at
some of the world’s top leaders and innovators, how they helped
reshape the entrepreneurship definition, and the core characteristics of
an entrepreneur.

Characteristics:
1. Innovation

 Entrepreneurs are often creative thinkers who introduce new

ideas, products, services, or processes to the market.
  Innovation can involve technological advancements, business
model changes, or improved methods of operation.

2. Risk-Taking

 Entrepreneurs are willing to take calculated risks to achieve their

goals.
 They navigate financial, personal, and market uncertainties while
balancing potential rewards.

3. Vision

 Entrepreneurs have a clear vision of what they want to achieve

and the ability to inspire others to join them.
 They focus on long-term goals while navigating short-term
challenges.

4. Opportunity Recognition

 Entrepreneurs excel at identifying unmet needs, market gaps, or

emerging trends.
 They are proactive in turning challenges into opportunities for
growth.

5. Resilience and Adaptability

 Entrepreneurs face setbacks and failures but remain determined

and adaptable.
 They learn from challenges and pivot strategies when necessary.

6. Proactivity

 Entrepreneurs take initiative and act on opportunities before

others.
 They are self-driven and often set the pace for innovation in their
industries.

7. Resourcefulness

 Entrepreneurs maximize the use of available resources to achieve

their goals.
 They are skilled at networking, securing funding, and leveraging
partnerships.

8. Leadership
  Entrepreneurs must lead teams, inspire stakeholders, and manage
operations effectively.
 Leadership skills include communication, decision-making, and
conflict resolution.

9. Goal-Oriented

 Entrepreneurs set specific, measurable, and attainable goals.

 They remain focused on achieving objectives despite obstacles.

Need of characteristics:
Entrepreneurship isn’t easy; in fact, a majority of businesses fail but that
shouldn’t stop you from pursuing your dream. It’s an instrument of social
change and has proven to provide continuous opportunities for growth. It
plays a vital role in the economy and encourages people to bring new
and innovative ideas to market. Here are several factors that highlight
the need for entrepreneurship in today’s fast-paced world.

1. Encourages Innovation
A majority of entrepreneurs solve challenges in society through
technological innovations. For example, Tartan Sense—a
Bangalore-based startup provides an AI-based Robot vehicle to be
used in farms for weed management. It reduces chemical usage
and helps farmers avoid unnecessary costs.

2. Creates Jobs
Entrepreneurship generates employment. Once a new business
gets launched, it requires people who can drive that mission and
vision forward. Entrepreneurs take the risk of employing even
themselves. As the business continues to grow, the need to hire
more people also increases. Take any leading education
technology startup for example. Some of them have become
unicorns (reached a valuation of $ 1 Million) and opened branches
across the globe.

3. Improves Standard Of Living

Entrepreneurship increases income levels, therefore improving
standards of living. Entrepreneurs identify challenges in the lives of
customers and provide appropriate business solutions. Additionally,
 they hire new employees who receive remuneration and this
income gets circulated in the economy.

4.Introduces Visible Change

You need to dream big and take risks if you want to be a successful
entrepreneur. As you progress to solving existing challenges and
gaps in society, you take responsibility for impacting various
sections of society. A majority of businesses strive to make the
world a better place by contributing to socio-economic development
through their products and services.

5. Contributes To Research And Development

New products and services need to be tested before they can be
launched. In the process, entrepreneurs are encouraged to invest
their resources into effective research and development. Even after
businesses get funding, entrepreneurs continue to prioritize
research and development by creating educational institutes.

Advantages of characteristics:
1. Financial rewards: One of the primary benefits of
entrepreneurship is the potential for financial success.
Entrepreneurs have the ability to create their own income streams
and build a successful business that can generate significant
profits.
2. Independence: Entrepreneurship offers the opportunity to be your
own boss and work on your own terms. This freedom and flexibility
can be incredibly appealing to individuals who are tired of the
constraints of traditional employment.
3. Personal growth: Starting and running a business can be a
significant personal growth opportunity. Entrepreneurs must
develop leadership skills, problem-solving abilities, and the ability
to adapt to changing circumstances.
4. Creativity: Entrepreneurs have the ability to pursue innovative
ideas and create new products or services that can make a
significant impact in the marketplace.
5. Job satisfaction: One of the key benefits of becoming an
entrepreneur is the fact that you're the boss, and ultimately can
decide exactly what you do, your working hours and other factors.
You may also feel a highest sense of purpose and fulfillment
working on your own business.
Disadvantages of characteristics:
1. Risk: Starting a new business involves a significant amount of risk,
in terms of both personal and financial risk. There is no guarantee
of success, and entrepreneurs may face significant financial losses
if their business venture fails. Entrepreneurs have to take risks,
and knowing which risks to take relies on the experience, skills and
knowledge of the entrepreneur.
2. Long hours: Starting and running a business requires a significant
time commitment. Entrepreneurs often work long hours and may
have to sacrifice their personal time in order to make their
business venture successful, we refer to this as a poor work-life
balance.
3. Cash flow: Cash flow can be a significant challenge for
entrepreneurs, especially in the initial stages of starting a new
business. It may take time for a business to generate consistent
revenue streams, and entrepreneurs may need to rely on personal
savings or loans to fund their business venture.
4. Adaptability: Entrepreneurship requires a good level of adaptability
and proactiveness, since the business owner will need to create a
business idea, business model and growth forecast. All of this then
needs to be executed, despite the many challenges that will be
faced along the way. Usually someone with a business
administration degree has an advantage here, due to their skillset.
5. Stress: Although entrepreneurs have the freedom to work when
they want, they are 100% responsible on the success of their
business, and this ultimately causes stress. It is the role of an
entrepreneur to deal with this stress, and find wats to negate it's
impact. After-all, this is one of the largest disadvantages associated with
entrepreneurship, as it can negatively affect a person's health.

Barriers of characteristics of entrepreneurship:

1 Finances
We are all bustling with ideas that are unique and can make for an amazing
business start-up. But no matter how good your idea is, you will always
need stable finances and funding from the investors to begin the process
and take the first step towards your journey of entrepreneurship.

#2 Fear of not to be a success

We all go through the fear of failure. And if the fear is associated with the
risks and stakes taken in the stream of business and entrepreneurship, the
level of fear elevates.There is a fear if we are on the right track, is the idea
worthwhile, will there be profit, will I find investors, and various such fears
and tensions act as the Barriers to Entrepreneurship.

#3 No strategic plan in place

Lack of proper planning and strategy in place is one of the most common
Barriers to Entrepreneurship. Many of us think to build a business out of a
hobby without having any sort of long term and short term vision and plan
in mind.

Running a fully-fledged business or being an entrepreneur requires a huge

amount of skill set, passion for excelling, strategic vision, the mission to
accomplish the goals, market research, and a lot more.

#4 Human resource issues

Entrepreneurs cannot handle and run a business alone by themselves. We
require the support of human resource to carve a niche in the market.

Employees with the required knowledge, expertise, and experience are

needed for the efficiency of the business processes and high levels of
productivity.

#5 Stringent rules and regulations of the market

It is not very easy for entrepreneurs to enter the new market as there are
quite many rules and regulations imposed by the government authorities.

Plus there are various laws and compliances to be adhered to such as

taxation, environmental regulations, licenses, property rights, and much
more than act as the Barriers to Entrepreneurship.

#6 Fewer opportunities
Even though there is a lot of talent pool in the market with the aspiring
entrepreneurs buzzing with the ideas, but the opportunities presented to
them are quite less and fewer.

#7 Lack of capacity
Even if there are opportunities presented to the aspiring entrepreneurs,
there is a lack of capacity in some them to embrace the opportunities with
open arms. The reasons can vary from lack of knowledge, lack of
education, lack of willingness, lack of strategic knowledge, and cultural
hindrances amongst others; but the factor of motivation and zeal gets
missing.

#8 Less market experience

The experts always mention that one should never rush in setting up a
business. It is quite necessary to gain a relative amount of work experience
by working in the industry domain or sector of choice and as per the
education levels. It also helps to sharpen the required expertise and find
the ground in the career graph.

Theories of characteristics:
1) Economic Entrepreneurship Theory
The Economic Theories of Entrepreneurship focus on the economic
factors which help in shaping Entrepreneurial activities. Classical
economists highlight the importance of the Entrepreneur as a risk-taker
and an organiser. The recent economic theories, emphasise on the
element of innovation and the Entrepreneur's ability to disrupt markets.

2) Sociological Entrepreneurship Theory

The Sociological Theories examine how social structures and community
networks and cultures influence Entrepreneurial behaviour. This point of
view suggests that Entrepreneurship is not only an individual endeavour.
It is shaped, or rather influenced by the social environment.

3) Entrepreneurship Innovation Theory

The Innovation Theory is primarily associated with Joseph Schumpeter.
It says that Entrepreneurship is fundamentally based on innovation.
Entrepreneurs drive economic development by creating new products
and processes. This also includes various business models that has the
ability to disrupt existing markets. This theory says that the
Entrepreneur's role is of an innovator.

4) Psychological Entrepreneurship Theories

The Psychological Theories focus on the individual characteristics and
mental processes. According to this theory, these factors drive
Entrepreneurial behaviour. There are certain key traits associated with
successful Entrepreneurs. These include a high need for achievement,
internal locus of control, risk-taking propensity, and resilience.

5) Cultural Theory
The Cultural Theories of Entrepreneurship look after how cultural values,
beliefs, and practices build Entrepreneurial activities. Different cultures
foster varying levels of entrepreneurial spirit based on their attitudes
toward risk, innovation, and individualism.

6) Resource-based Theory
The Resource-based Theory emphasises the importance of access to
resources in the success of entrepreneurial ventures. This theory
suggests that Entrepreneurs with unique resources or capabilities, such
as financial capital, human talent, or proprietary technology, have a
competitive advantage in the marketplace.

7) Effectuation Theory
The Effectuation Theory was developed by Saras Sarasvathy. It focuses
on the decision-making processes of Entrepreneurs. Unlike traditional
workings that stresses on predictive planning. This theory speaks about
Entrepreneurs starting with available means and continuously adjust
their goals according to emerging opportunities and constraints.

8) Social Network Theory

The Social Network Theory examines the role of social relationships and
networks in entrepreneurial activities. Entrepreneurs rely on their
networks. These networks are used for accessing information,
resources, and support. Strong social ties can provide valuable
mentorship, funding opportunities, and business partnerships.

Entrepreneur v/s Entrepreneurship:

Aspect Entrepreneur Entrepreneurship

 An individual who initiates and operates a The concept, mindset, and process of creating
Definition
business venture a business
Driven by personal vision, passion, and Driven by innovation, identifying opportunities
Motivation
ambition problems
Plays an active and hands-on role in the Represents the collective qualities and charac
Role
business entrepreneurs
Takes calculated risks to pursue business Embraces uncertainty, takes risks, and adapts
Risk-taking
opportunities circumstances
Uses creativity and innovation to develop new Encourages and fosters creativity and innovat
Creativity
ideas ventures
Assumes leadership and decision-making Advocates for leadership, initiative, and taking
Leadership
responsibilities ideas
Directly influences the success or failure of the Shapes industries, economies, and societal p
Impact
business entrepreneurial activities
Seeks growth and scalability for the business Drives economic growth and job creation thro
Growth
venture entrepreneurial endeavours
Possesses an entrepreneurial mindset and
Mindset Reflects a culture of innovation, resilience, an
mindset traits
Personal Encourages calculated risk-taking while mana
Bears personal financial and professional risks
Risk risks