ENTREPRENEURSHIENTREPRENEURSHIPP

Prof. B.S.Sudhakara Prof. B.S.Sudhakara RaoRaoSr. ConsultantSr. Consultantni-msmeni-msme

Earlier Viewpoints (1700-Earlier Viewpoints (1700-1950s)1950s)

• The word entrepreneur comes from The word entrepreneur comes from French word French word ‘entreprendre’‘entreprendre’

• ““Entreprendre”Entreprendre” – individuals who – individuals who undertake (the risk of new ventures).undertake (the risk of new ventures).

• ““Entrepreneurs are Entrepreneurs are economic economic agentsagents who who transform resources transform resources into goods and servicesinto goods and services, thereby , thereby creating an environment conducive creating an environment conducive to industrial growth” [Carl Menger, to industrial growth” [Carl Menger, 1871, 1871, Principles of EconomicsPrinciples of Economics] ]

• ““The entrepreneur was said to The entrepreneur was said to influence society by forming influence society by forming enterprisesenterprises and was in turn and was in turn influenced by society to recognise influenced by society to recognise needs and to fulfil through skilful needs and to fulfil through skilful management of resources”management of resources”

[Jean Babtiste Say, 1903, French [Jean Babtiste Say, 1903, French Economist]Economist]

EntrepreneurEntrepreneur

• Entrepreneur Entrepreneur investsinvests, , transformstransforms and makes (and makes (profit or lossprofit or loss) )

[Richard Cantillon, French economist][Richard Cantillon, French economist]– In other words, goods are bought at a In other words, goods are bought at a

certain price, value is added by certain price, value is added by transforming (transforming (the least being to the least being to repackrepack) the goods, and the goods are ) the goods, and the goods are then sold at an uncertain price.then sold at an uncertain price.

• ““The task of forming an organisation The task of forming an organisation for commercial purposes” for commercial purposes”

[Adam Smith [Adam Smith 1977]1977]

““The ability to foresee potential The ability to foresee potential through changes in the economy, and through changes in the economy, and to act on the demand thereby to act on the demand thereby created”created”

Alfred Marshall(1800):Alfred Marshall(1800):• An ability to forecast changes in supply

and demand;• A willingness to take on the risk of these

forecasts without being fully informed;• Expert industry knowledge;• Natural leadership; and• Rare and limited talents, so rare in fact

that the skills are in limited supply.

David McClleland: An entrepreneur is a person with a high need for achievement [N-Ach]. He is energetic and a moderate risk taker.

Peter Drucker: An entrepreneur searches for change, responds to it and exploits opportunities. Innovation is a specific tool of an enterpreneur hence an effective enterpreneur converts a source into a resource.

Entrepreneurship and Entrepreneurship and Economic DevelopmentEconomic Development

• Employment Generation• National Income• Balanced Regional Development• A Rapid Development• Dispersal of economic power• Better standards of living• Creating Innovation

Socio-Economic Benefits from Socio-Economic Benefits from EntrepreneurshipEntrepreneurship

• Entrepreneurship creates employment• Entrepreneurship improves the quality of life• Entrepreneurship contributes to a more equitable

distribution of income• Entrepreneurship utilizes resources• Entrepreneurship brings social benefits through

the government

Definition of EntrepreneurshipDefinition of Entrepreneurship

“ Entrepreneurship is the ability to create and build a vision from practically nothing. Fundamentally, it is a human, creative act. It is the application of energy to initiating and building an enterprise or organization, rather than just watching or analyzing. This vision requires a willingness to take calculated risks – both personal and financial, and then to do everything possible to reduce the chances of failure.

Entrepreneurship also includes the ability to build an entrepreneurial or venture team to complement your (the entrepreneur) own skills and talents. It is the knack for sensing an opportunity where others see chaos, contradiction, and confusion. It is possessing the know-how to find, marshal and control resources, often owned by others.”

Professor Jeffrey Timmons (1990)

Entrepreneurs Are Made and Not Entrepreneurs Are Made and Not BornBorn

“The entrepreneurial mystique? It’s not magic, it’s not mysterious and it has nothing to do with the genes. It is a discipline. And like any discipline, it can be learned.”

…Peter Drucker

• Entrepreneurs are not necessarily born• They can be developed through

systematic training • Strong positive linkage between

entrepreneurship development and economic development

• Any person irrespective of caste, religion, region can learn to become successful entrepreneurs.

David C. McClelland’s StudyDavid C. McClelland’s Study

SIETS Integrated Model of SIETS Integrated Model of EntrepreneurshipEntrepreneurship

Creating awareness

Systematic selection

In-plant training

Entrepreneurship development

Inter-disciplinary approach

Training of local

bodies

GEMGEM Conceptual ModelConceptual Model

Social, Cultural,Political context

Entrepreneurial Frame work Conditions•Availability of Financing•Supporting government policies•Cultural & Social Norms•R & D transfer•Commercial & legal infrastructure•Internal & legal infrastructure•Access to physical infrastructure

Entrepreneurialopportunities

EntrepreneurialCapacity•Skills•Motivation

Business dynamics

NationalEconomic

growth

Grain in field has very low value

Milled flour for baker has high

value

Bulk grain from farmer has low

value

Bread at bakery for sale has high

value

Delivered baked bread is highest

value use

Priority 8

Priority 7

Priority 3

Priority 2

Priority 1

Intermediate steps in transformation

Menger’s Model of Value-Added Transformation of Resources

Four levels of Four levels of entrepreneurship theories entrepreneurship theories

First levelFirst levelThe economic theoryThe economic theory

- Productivity - Productivity - Job creation- Job creation- Facilitates transfer of technology- Facilitates transfer of technology- Commercialisation of new inventions and - Commercialisation of new inventions and productsproducts- Restructuring and transformation of - Restructuring and transformation of economyeconomy- Informal sector - Informal sector - Low cost strategy of economic development, - Low cost strategy of economic development, job creation and innovation job creation and innovation

Four levels of Four levels of entrepreneurship theories entrepreneurship theories

Second levelSecond level

HHuman qualities / psychological uman qualities / psychological approach approach - High need for achievement - High need for achievement - personnel responsibility - personnel responsibility - Moderate risk taking - Moderate risk taking - Concrete knowledge of the results - Concrete knowledge of the results of of their decision their decision

Four levels of Four levels of entrepreneurship theories entrepreneurship theories

Third levelThird level

Entrepreneurial activity addresses of Entrepreneurial activity addresses of the market consequences the market consequences

Fourth levelFourth level

Market consequences are common Market consequences are common

TechnopreneurTechnopreneur

• They are entrepreneurs who used They are entrepreneurs who used “technology” as their driven factor in “technology” as their driven factor in transforming resources into transforming resources into goods and servicesgoods and services, creating an , creating an environment conducive to industrial environment conducive to industrial growth”…growth”…

TechnoprenuerTechnoprenuer

A technoprenuer is an entrepreneur who is technology savvy, creative, innovative, dynamic, dares to be different and take the unexplored path, and very passionate about their work. They take challenges and strive to lead their life with greater success. They don't fear to fail. They take failure as a learning experience, a stimulator to look things differently and stride for next challenge. Technoprenuers continuously go through an organic process of continual improvement and always try to redefine the dynamic digital economy.

Enterpreneur vs. Enterpreneur vs. ManagerManager

• An enterpreneur is evolved with the start-up process

• An enterpreneur assumes financial, material and psychological risks

• An enterpreneur is driven by perception of opportunity

• An enterpreneur is his own boss

• An enterpreneur gets uncertain rewards

• A Manager with running the business over a long period of time

• A manager does not have to bear risks

• A Manager by the resources he currently possesses

• A Manager follows rules & procedures

• A Manager is hired employee• A Manager gets fixed rewards

and salary

Technoprenuers - Required Capabilities

• Should have insatiable thirst for knowledge of all technological developments

• An expert in his chosen line • Familiar with the intricacies of technology he promotes • Configures all possible new directions and gives definitive

shape • Long term oriented • Takes unexplored path• No fear of failure

Mentoring

• Role model• Nurture • Care giver

Mentoring relationship

Functions of mentoring

Teach Sponsor Encourage Counsel Befriend model protect affirm listen accept inform support inspire probe relate confirm/ promote challenge advise clarify disconfirm prescribe question

Mentoring Activities

• Demonstration lessons • Observations and feed back

Leading incrementally

Expressing care and concern

Opening ourselves

Basic components of mentoring

• Mentoring relationship is seen as one in which the mentee views the mentor as a role model and where the mentor nurtures and cares for the mentee.

• Function of mentoring the mentoring relationship also serves five basic functions which can be broken down in to related behaviours.

• Mentoring activities demonstration lessons. Observation and feedback and support meetings

Intrapreneurship / Corporate Entrepreneurship

• Established through several studies • Medium and large organizations gain

substantially through entrepreneurial approach

• Growth is possible through absorbing corporate entrepreneurship in the enterprise

• Corporate entrepreneurship is more of training with a positive frame of mind and also the enrichment of the way of managing and leading an enterprise

• Corporate entrepreneurship is of greater relevance for any type of organisation

Model of Corporate Model of Corporate Entrepreneurism Entrepreneurism

Focus of Entrepreneurship; Organisational (structure and systems), Teams and Individuals

Evaluation of alternatives;

vision etc

Implementation through people

Outcome; capability to adapt and survive

Monitoring to assess effectiveness

External and internal

opportunities

Business IncubatorsBusiness Incubators• Flexible space and leases, many times at very

low rates• Fee-based business support services, such as

telephone answering, bookkeeping, secretarial, fax and copy machine access, libraries and meeting rooms

• Group rates for health, life and other insurance plans

• Business and technical assistance either on site or through a community referral system

• Assistance in obtaining funding • Networking with other entrepreneurs

Social Entrepreneurship Social Entrepreneurship • To harness skills to solve social problems and sow

the seeds for changing unjust or inefficient social systems

• Entrepreneurs also transform social sector such as cooperatives, health, education etc.,

Social Entrepreneurs are those:

• who have an original idea for solving an important social problem

• have the creative and entrepreneurial drive to put the idea into action

• do not rest until their idea has achieved far reaching social impact

Comprehensive Comprehensive entrepreneurship Programmeentrepreneurship Programme

• Inclusion of entrepreneurship as a component of curriculum of technical and business education

• The development of curriculum, teaching resources and new teaching models that emphasize student –centered learning

• Professional development of Trainees• Building of resources centers and networks for the

exchange of best practice• Business – education partnerships;• Entrepreneurial orientation of schools and administrations• Opportunities for students to experiment with venture

projects and activities.• Student venture programmes and student business loans• Commitment from the Ministry of MSME and other

Ministries

• Target group • Selection of entrepreneurs• Entrepreneurship Development

Programme - design and content• Training methods• Programme evaluation• Follow-up

Entrepreneurship development Entrepreneurship development processprocess