Concept
of Entrepreneur, Entrepreneurshipship and Enterprise
The concept of
Entrepreneurship is comparatively new and dynamic. What is Entrepreneurship?
Entrepreneurship can be described as a creative and innovative response to the environment. Such responses can take place in any field of social endeavour – business, agriculture, education, social work and the like. Doing new things or doing things that are already being done in a new way is, therefore, a simple definition of entrepreneurship. In this book, however, we shall concentrate on business entrepreneurship.
It would also be advisable to understand the
individual qualities of an Entrepreneur this would help us understand the
concept better. The following eleven
qualities/ attributes are considered to be some of the important ones for a
successful entrepreneur on the basis of the research and experience of
Behavioural Science Centre, Delhi
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High level of motivation,
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Moderate Risk-taker
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Self-confident with positive self concept,
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Excellent Leadership qualities
·
Good Business acumen
·
Managerial competence
·
Problem solving attitude
·
Flexibility and adaptability
·
Realistic approach to planning
·
Independence
·
Ability to perceive opportunities and threats
Entrepreneurs are quick to see possibilities for
achievement. They are not blinded, as mangers in large, sedate organizations
often are, by the in-grown culture in which they are embedded.
As we are aware, the new ideas for new products and
services often originate in unexpected places. Entrepreneurs are the first one
to embark on these innovative ideas.
There are several examples such as
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Credit cards were not invented by banks
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Instant photography was not started by a large camera manufacturer
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Large office equipment manufacturer did not create the Xerographic
office-copying machine.
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Entrepreneurs are the people who see the need gap
and hence capitalize on the same. An entrepreneur grabs such novel ideas,
developed it and pursued its success doggedly with unflagging spirit.
Therefore, these people are successful in their venture and are entrepreneurs in
the true sense of the word. Thus, entrepreneurs are self-starters and doers who
have organize and build successful enterprises.
On the other hand we can not call an entrepreneur an
opportunist because it is not only the selfish interest that drives him but he
is also meets the need of the people. The opinion of various experts in the
area.
Global views
on Entrepreneurship:
Dr. Joseph A.
Schumpeter,
the well known experts on entrepreneurship has placed special emphasis on the
concept of innovation as being the criterion that distinguishes enterprise from
other forms of endeavour, apart from the other qualities of an entrepreneurial
venture. He called those who led enterprises, entrepreneurs. As per him, nobody
is an entrepreneur all the time; one behaves as an entrepreneur only when
carrying out innovations. He added that what counts in entrepreneurship is
getting things done. For example, the early English Entrepreneurs demonstrated
a key factor of the enterprising person – the innovative personality. They were
involved in developing inventions for commercial use and in applying new
scientific discoveries to productive purposes. In their efforts, they set a
standard basic value for entrepreneurs who were to follow - that innovation must be the central characteristic
of entrepreneurial endeavour.
However, as per Dr.
David C. McClelland, one of the key researchers in the area of
entrepreneurship, Achievement motivation is one of the most important factors
contributing to the success of an entrepreneur. In recent years, penetrating
studies on “ The Enterprising
Personality” by David C. McClelland and his associates have led to a much
clearer understanding of the characteristics of entrepreneurs. Their findings are
summarized below:
The need for achievement Prime
among the psychological drives that
motivate entrepreneurs is a high need for achievement, usually identified as N.
Ach. This need can be defined as a want of drive within the person that
motivates behavior toward accomplishment. Accomplishment, defined in an
entrepreneurial context, is the fulfillment of a goal embodying a reasonable
challenge to the individual’s competence. A task seen as an easy one therefore, carries no challenge and hence it
is not motivating.
Desire for responsibility Entrepreneurs desire personal responsibility
for accomplishment. They prefer to use their own resources in their own fashion
in working toward goals. They want to be accountable personally for the
results. They will, however, perform well in a group as long as they can
personally influence the results in some specific way.
Preference for moderate risks Entrepreneurs are not
gamblers. They prefer to set goals that require a high level of performance, a
level that they believe will demand exertion but that they are confident to
meet.
Perception of probability of
success Confidence in ability to achieve success is
a significant quality of entrepreneurial personalities. They study the facts
that can be gathered and form judgements based on them. When facts are not
fully available they fall back on their high level of self-confidence and
proceed with the task.
Stimulation by feedback Entrepreneurs want to know how are they
doing, they want to get a feedback
whether it is good or bad. They are stimulated to higher levels of performance
by learning how effective their efforts are as the task progresses.
Energetic activity Entrepreneurs exhibit a much higher level
of energy than an average person. They are active and mobile. They are engaged
for a high proportion of the time, in getting tasks done in novel ways. They
tend to be acutely aware of the passage of time. This awareness stimulates them
to energetic engagement with their work.
Future orientation Optimistically oriented toward the future,
entrepreneurs plan and think ahead. They search for and anticipate
possibilities that lie beyond the present.
Skill in organizing Entrepreneurs show unusual skill in
organizing both work and people for achieving goals. They are highly objective
in choosing individuals for specific tasks. They will choose the expert over a
friend for the sake of getting the job done efficiently.
Attitude toward money For entrepreneurs, financial gain is secondary
in importance to achievement. They value money, but not for money itself. They
view it rather as a concrete symbol of a challenging objective accomplished – a
testimony to their competence.
There is considerable research on what promoted
entrepreneurship in different societies. The important factors that influence
its development according to the various researches are summarized in Table
1.1.
TABLE 1.1 FINDINGS OF SOME RESEARCHES
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Author
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Factors that contribute to development of
entrepreneurship
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1.
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Middle Ages
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Actor and person in charge of large-scale production
projects.
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2.
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17th century
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Person bearing risks of profit (loss) in a fixed-price
contract with government.
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3.
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Richard Cantillon
1725
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Person bearing risks is different from one supplying
capital.
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4.
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Jean Baptiste
Say
1803
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Separated profits of entrepreneur from profits of
capital.
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5. 1
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Schumpeter,
1934
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Suitable
environment, intuition in grasping the essential factors. Entrepreneur is an innovator and develops
untried technology.
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6. 2
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Weber, 1961
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“Protestant
Ethic” which emerged from the religious belief system of Calvinistic
Puritanism, and which is absent in oriental religious belief system.
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7.
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Peter Drucker 1964
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entrepreneur maximizes opportunities
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8. 3
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Staley
and Morse, 1965
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Quality
of services in industrial advice, managerial training and
Industrial research.
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9. 4
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Levine,
1969
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Status
mobility system where status is attained through outstanding performance,
initiative, reliance and achievement training.
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10. 5
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McClelland, 1969
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Need for achievement through self – study, goal setting, and
Inter-personal support. Keen interest in situations involving
moderate risk; desire for taking personal responsibility; concrete measures
of task performance; anticipation of
future possibilities; organizational skills; energetic and/or novel
instrumental activity.
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11. 6
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Christopher,
1969
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High
demand for product; and experience in the lines of Business/industry.
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12. 7
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Creative
personality. High need for achievement, need for order and need for autonomy.
Widespread creative problem solving ability, and a tendency to use it. Positive attitudes towards manual and
technical labor; and the physical world.
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13. 8
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Cochran,
1971
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Attitude
toward occupation, the role expectations held by sanctioning groups.
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14. 9
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Kilby,
1971
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Perception
of market opportunities, gaining command over scarce resources, and marketing
of products. Dealing with public,
bureaucratic concessions, licenses, taxes, and management of human relations
within the firm and with customers and suppliers. Financial and production
management, technological knowledge. (Kilby gives low priority to ‘need for
achievement’ and ‘moderate risk taking’.)
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15.
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Karl Vesper
1980
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entrepreneur seen differently by economists,
psychologists, business persons, and politicians
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16.
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Gifford Pinchot
1983
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Intrapreneur is an entrepreneur within an already
established organization.
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17. 10
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Nafziger,
1971
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Perceived
challenge to status; migrants, new religious sects, and reformed groups, move
towards entrepreneurship.
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18. 11
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Fox,
1973; Mines,1973; Papane, 1973
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Economic opportunities, and political conditions.
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There are four major currents of thought regarding
forces behind entrepreneurial growth. These are
(i)
the psychological
(ii)
the sociological
(iii)
the economic and
(iv)
the managerial ones.
The psychologist emphasizes certain inner,
psychic concerns as the prime movers for risk-bearing and innovation.
The sociologist stresses the society’s
value and status hierarchy as the main force governing entrepreneurial
activity.
The economist considers the structure of
economic incentives found in the market environment as relevant.
A manager’s emphasis
is on perception of market opportunities as also operational skills to run the
enterprise. These approaches based on each scholar’s field of specialization
focus on the prime determinants of entrepreneurial supply. A scholar, having
bias for his own specialization, perceives the entrepreneur responding to
limited factors in his own domain and, therefore, none of these approaches
independently appears to be adequate to explain the emergence of entrepreneurs.
An Enterprise Enterprise
Link between N-ach and economic development
Link
between N-ach and economic development
Entrepreneurs are different from other people due to
their high achievement motivation.
“The link in the key hypothesis is between need for
achievement and economic development. Was there any evidence to support the
belief that high need for achievement would tend to direct individuals towards
business success? Among a group of American
College Kaiserslatern ,
Germany
The evidence presented so far is a summary of the
information available at the time this study was begun.
Mccleland has established a correlation between
entrepreneurship and economic development. It has also been proved that
entrepreneurship can be inculcated through training programmes. Many counties
have taken up this project for children so that large number of entrepreneurs
could emerge when these grow up by opting for self-employment in business
rather than knocking doors of the government agencies like employment exchanges
to give them jobs.
Research
Investigation to relate N-ach and economic development:
It seems desirable here to describe the research
projects that were designed to study the relationships that have just been
discussed. Such a summary will indicate how we propose to try to answer the
questions raised.
Three types of research have been used. These were
as follows:
·
Groups of people, measuring N-Ach. in relation to total rates of
economic development.
·
Individual measures of motives, interests, values and performance of
both mothers and their sons in various countries.
·
The motives and behavior of actual businesspersons.
The first type of study was made possible by the fact
that the technique used to measure N-Ach. in individuals (analysis of the
content of stories) could just as easily be applied to imaginative products of
any sort.
For example, it could be applied to
samples of folk tales from various primitive cultures to see whether the tales
containing large amounts of achievement content came from tribes, which showed
a higher level of economic activity. It could also be applied to the brief
imaginative stories used to teach children to read in the third and fourth
grades of school. Scores based on the children’s reading books could then be
taken as approximate indicators of the level of N-Ach. in the country; the
scores could also be compared at various time periods with economic development of the same time
periods. Similarly, the system used for measuring whether achievement content
was more frequent prior to periods of rapid economic growth in countries like England
·
The second type of study was
focused more directly on the individual. It was designed to trade both the
origins of N-Ach. in the values and attitudes of the parents, and the effects
of N-Ach. in adolescent boys on their occupational interests and performance
under certain conditions. The identical study was conducted in four widely
different countries to guarantee that the relationships found were not due to
values or social institutions found in one particular country.
Germany was one of the countries chosen for the study because it
is an advanced western economy in which social structure and values are
different from those in the United States.
Japan was chosen because it is a country outside the Western
tradition that has shown considerable economic development;
India because it is a non-western developing country that has
shown less economic growth than Japan
Brazil because it is a developing country within the western
cultural tradition. The tests were designed to show the values of mothers and
their adolescent sons, the N-Ach. of the boys, and the degree to which boys
with high N-Ach. would be more apt to behave like businessmen and to consider
favorably a future career in business.
·
In the third type of study, businessmen who were already established in
their careers were tested to see whether they had higher N-Ach. and showed more
‘business behavior’ than other comparable groups of men. If they did, it could
be reasoned that their N-Ach. had contributed to their successful career in
business, because boys with high N-Ach. were already behaving in the same way
before they began their career. Again to be sure of avoiding cultural
tendencies, over 750 businessmen and professionals were studied in four
countries: the United States (the prime example of an advanced industrial
economy), Turkey (a developing country), Italy (a country well developed in
some regions but not in others), and Poland (a Communist country). From these
comparative studies, we hoped to be able to find out whether N-Ach. is related
to business success regardless of cultural and institutional factors and the
level of economic development.
“While these research plans were designed primarily
to study the importance of N-Ach. in economic development, they also permit an
investigation of the importance of ‘need
for power’ (N-power), which might be more important for business success in a
country where there is very little development. We also have measures of their
‘need for affiliation’ (for association or fellowship). The need for
affiliation (N-Affiliation) might be more important in a complex industrial
economy like the United. While the chief interest in these studies was
originally the N-Ach. hypothesis, this research was comprehensive enough to discover
any other factors which, with N-Ach. or without it, might precede or accompany
economic growth.
Research
Conclusions:
Almost every one of these results could have been interpreted in some other
way. Nevertheless, the evidence is based on experience and observation; and
looked at as a whole, the evidence tends to support the belief that achievement motivation is an important
factor affecting the rate of economic development.
Achievement language is a
source of motivation for economic development in individuals, groups,
communities and nations. Research by psychologists has indicated that when
think idly or are made to react to neutral stimuli, their thought process are
likely to indicate some dominant concerns and psychological needs. When people were
aroused by deprivation and were shown ambiguous pictures they perceived objects
relating to the need that was aroused in them. For example people deprived of
food started seeing food-related objects in such ambiguous pictures. This made
psychologists to conclude that:
·
The Fantasy material of people is indicative of
the dominant needs and concerns acting in them and their personality.
·
Such needs and concerns are likely to be
projected by them when they are asked to produce imaginative material in response
to neutral stimuli; and
·
An analysis of their fantasy material so
produced can reveal their dominant concerns or motive profiles.
Based on these conclusions,
behavioral scientists started researching to develop techniques, which will
help in assessing and quantifying these concerns or motives in people.
The first experiments with the
need for achievement involved a Thematic Appreception Test (TAT). Commonly
referred to as TAT. Here an individual is shown a series of ambiguous pictures.
Different sets of pictures are used for tapping separately achievement,
affiliation and power imageries.
While administering TAT, the
test is introduced to the subject as a test of imagination and creative
thinking. Each picture is exposed for a brief of 20 seconds. This is followed by a write up of 5-7
minutes for an individual to write a story. Then the next picture is exposed
followed by story writing, as in the previous case. The process continues till
stories on all the six pictures are written.
Before the picture is exposed
to the respondents, they may have to be instructed on the following lines:
“You are now going to
participate in a test of imagination and thinking. This test assesses how well
and creatively you can write stories in response to somewhat ambiguous
pictures. You will be shown a set of 6 pictures one by one with a 5-minute
interval after each picture. During these five minutes you have to write a
story based on picture, you have seen. For writing story, you may have to think
about:
·
Who are the people?
·
What happened in the past?
·
What is being done now?
Advantages of
Developing and Encouraging Entrepreneurship:
Developing and encouraging Entrepreneurship is very vital
for the growth and economic advancement of region. Hence it becomes imperative
for the Developing Nation to do so. Let us now see how do entrepreneurs add to
economic advancement;
1.
Employment
Generation: The entrepreneurial ventures are generally started in
small-scale, utilizing the labor intensive techniques. Therefore, these venture
generate a lot of employment for the regional manpower. These ventures not only
generate employment but also stop the displacement of labor due to over
crowding on the agricultural land.
2.
Distribution of
Economic power: Small-scale Business are the seed-bed for entrepreneurship
therefore they help in equitable distribution of economic power instead of it
getting concentrated in the hands of certain big industrialists.
3.
Optimum
utilization of regional resources: The small-scale entrepreneurs generally
rely on the regional resources for their production needs. For example; they
utilize local labor and raw material for their entrepreneurial venture
resulting in optimum utilization of local resources.
4.
Meeting the
demand gap by seizing appropriate opportunity: Entrepreneurs have the knack
of seizing the opportunities existing in the environment as pointed out
earlier. Therefore they always study the demand gap keenly and utilize their
entrepreneurial ventures too meet such demand gaps.
5.
Export
potential: Whenever entrepreneurial ventures are the results of innovations, they create an opportunity for
export. As we are aware a number of entrepreneurial ventures are the results of
innovation. Hence, they always add to the export potential.
6.
Regional
Development: Regional development is one of the key advantage of
entrepreneurial ventures. This is very important for a nation like ours where
the regional development disparities are very wide.
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