Evolution of Entrepreneurship

EVOLUTION OF ENTREPRENEURSHIP The term 'entrepreneurship' is often used synonymously with the term 'Entrepreneur' though, they are two sides of the same coin and conceptually they are different. Entrepreneurship is the indivisible process flourishes, when the interlinked dimensions of individual psychological entrepreneurship, entrepreneur traits, social encouragement, business opportunities, Government policies, availability of plenty of resources and opportunities coverage towards the common good, development of the society and economy. Entrepreneurship is the process of identifying opportunities in the market place, arranging the resources required to pursue these opportunities and investing the resources to exploit the opportunities for long term gains. It involves creating wealth by bringing together resources in new ways to start and operate an enterprise. ENTREPRENEURSHIP: CONCEPT The concept of entrepreneurship has been around for a very long time. In the last decades it has resurged. The concept of entrepreneurship is an age-old phenomenon that relates to the vision of an entrepreneur as well as its implementation by him. Entrepreneurship is a creative and innovative response to the environment. It is also the process of setting up a new venture. Entrepreneurship is a composite skill that is a mixture of many qualities and traits such as imagination, risk, taking, ability to harness factors of production, i.e. land, labour, technology and various intangible factors. Usually anyone who runs a business is called an entrepreneur. The more precise meaning of entrepreneur is on who creates his own business i.e., a person who organizes, operates and assumes the risk of a business venture. An entrepreneur is a person who perceives a need and then brings together manpower, material and capital required to meet the need. Entrepreneur implies a set of values norms and traits that are conducive to the growth of a business enterprise. It is the organizational culture that focuses on new opportunities and creation of an organization where these opportunities can be perused earnestly. An entrepreneur seeks the opportunities looks fo ways and means to capitalize on the newer opportunities by organizing the structure and the resources and gaining control on them. And against this, manager is primarily concerned with the resources under his control, the structure of his organization and its relations to the market. He is also concerned with matching the opportunities with organizational abilities. The entrepreneurs are driven by the perception of opportunities. They seek changes in the political rules, social values, consumer preferences, technology etc. On the other hand resources like money, manpower and material they control, drive the managers. Entrepreneurship is an elusive concept that cannot he defined precisely. However, people having different interests have defined ‘entrepreneurship’ in a number of ways.    Psychologists and sociologists are interested in why entrepreneurs act. Economists focus on “what happens when entrepreneurs act. Management experts focus on how the entrepreneurs act, in the characteristics of entrepreneurs and the manner in which they achieve their goals. Richard Cantillon The word Entrepreneur is derived from a French word entrependre, i.e., individuals who were ‘undertakers’ meaning those who undertook the risk of new enterprise. The word entrepreneur was first used in the writings of French economist, Richard Cantillon. He described an entrepreneur as a person who pays a certain price for a product to resell it at an uncertain price thereby making decision about obtaining and using resources while assuming “the risk of enterprise”. As per Richard Cantillon entrepreneur’s function is to combine factors of production into a producing organism. Entrepreneurs consciously make decisions about resource allocation. Smart entrepreneurs always look for the best opportunity of using resources for high commercial gain. Adam Smith As per Adam Smith, the father of political economy, the entrepreneur: has a role of an industrialist. In his book, Wealth of Nations, he describe the entrepreneur as an individual who forms an organization for commercial purpose. 1-Te is a proprietary capitalist, a supplier of capital and at the same time a manager who intervenes between the labour and the consumer. Adam Smith also treated him as an employer, master, merchant but explicitly considered him a capitalist. Entrepreneur is one who has unusual foresight to recognize potential demand of goods and services. lt is a change agent who transforms demand into supply. He is one who possesses certain arts and skills of creating new economic enterprises. He is a person with exceptional insight into the society’s needs and possesses abilities to fulfill them. He is “Economic Risk Taker” of Cantillon and “Industrial Manager” of Adam Smith. The British economist John Stuart Mill had described entrepreneurs as business founders and thus become fourth economic factor with land, labour and capital. Carl Menger Carl Menger of Austria was of the view that economic changes do not arise from the circumstances hut from the individual’s awareness and understanding of these circumstances. The entrepreneur, therefore, becomes a change agent who transforms resources into useful goods and services, thus, creates the circumstances leading to industrial growth. As per Menger’s classic theory of production, resources having no direct use in terms of fulfilling human needs were transformed into highly valuable products that directly fulfilled human needs. He saw the entrepreneur as an astute individual who could envision this transformation and create the means to implement it. He adds value to the original resource and this value through profits. Joseph Schumpeter Joseph Schumpeter, an economist described entrepreneur as one who seeks to reform or revolutionize the pattern of production by exploiting an innovation or, more generally, an untried technological possibility for producing a new commodity or producing an old one ii a new way, by opening up a new source of supply of material or a new outlet of products. Entrepreneurship, as defined, essentially consists of (10mg things that are not generally done in ordinary course of business routine. An entrepreneur is one who innovates, raises, money, collects, inputs, organizes talent, provides leadership and sets the organization. Peter Drucker As per Peter Drucker, the management guru, entrepreneurial role is one of getting and using resources. The difference is that in an entrepreneurial role the resources must be allocated to the opportunities, where as, in the managerial role the resources are allocated to solve the problems. Entrepreneurship occurs when resources are redirected towards progressive opportunities, and are not used for ensuring administrative efficiency. This redirection of resources distinguishes between the entrepreneurial and managerial role. According to Peter Drucker an entrepreneur is on who always searches for changes, responds to it and exploits it as an opportunity. Innovation is an instrument of entrepreneurship. An entrepreneur innovates and creates resources because there is no such thing as resource until someone finds a use for something and endows economic value to it. Drucker considers increasing the value and consumer satisfaction of a resource is an entrepreneurial activity. Rebert Ronstand Rebert Ronstand had described entrepreneurship as a dynamic process of creating incremental wealth. This wealth is created by persons who assume the major risk, in term of equity, time and/or career commitment of providing value for some product or service. Product or service itself may or may not be unique but value must be infused by entrepreneur through allocating of necessary skills and resources. Encyclopedia Britannica defines entrepreneur as “an individual who bears the risk of operating a business in the face of uncertainty about future conditions.” Cole ENTREPRENEURSHIP DEVELOPMENT Entrepreneurship is the purposeful activity of an individual or a group of associated individuals undertaken to initiate, maintain and aggrandize profit by production or distribution of economic goods and services". Higgins Entrepreneurship is meant the function of foreseeing investment and production opportunities, organizing an enterprise to undertake a new production process, raising capital, hiring labour, arranging the supply of raw materials, finding site, introducing a new technique, discovering new resources or raw materials and selecting top managers for day to day operations of the enterprise. The above definitions highlights risk bearing, innovating and resource organizing aspects and an individual or group of people achieve goal through production or distribution of products or services. To conclude entrepreneurship is set of activities performed by an entrepreneur thus, entrepreneur proceeds entrepreneurship. FIVE CORE ELEMENTS OF ENTREPRENEURSHIP From various definitions referred to in previous pages it emerges that entrepreneurship primarily consists of five main elements: 1. Key part of entrepreneurship is to identify opportunities that no one has earlier noticed. Such opportunities need not be large; these can even be small ones. Creativity and innovation 2. 3. 4. 5. from the core of entrepreneurship that enables the entrepreneur to think entirely new ways of working. Creative people are receptive to new ideas generated by other. The entrepreneurs have an ability to apply the creativity to business problems. They understand the people and environment around them. They can effectively material resources for the same. It is not enough to think creatively to think creatively, successful entrepreneurship demands that thoughts be translated into action and result. They need an ability of getting thing done. Entrepreneur always takes rise. Their main task is evaluating rise for cutting across accepted boundaries, breaking rules and doing things in a different manner. Thus entrepreneur focus on creating value by doing things in a cheaper, better and faster manner. They have a sound belief in their ability to change the status quo- the way the things are being done presently. With their drive and passion to achieve success they change the way things are being performed. Thus, entrepreneurship can be defined as “creating of value by people working together to implement an idea through the application of drive and a willingness to take risk”. In brief, the concept of entrepreneurship includes three phases namely: o Initial entrepreneurial phase or inception phase which is related to perception of an opportunity to establish the business. o Operational phase which includes the theory and practice of management functions in the organization of a business unit. o Managerial phase which includes the profitable application of the mental executive health in taking relevant managerial decisions to run the business unit as a profitable, going and growing concern. ENTREPRENEUR PHILOSOPHY To some extent, success of an entrepreneur depends on ones willingness to accept responsibility for one’s own work. One must learn an great deal about oneself if one intends to pursue the goals, which are compatible with what one wants most in life. Even though the risk of failure is always present, entrepreneurs take risk by assuming responsibility for their actions. Failure must be accepted as learning experience. Some entrepreneurs succeed only after experiencing failure Learning from past experience helps channelize ones actions to obtain more positive results and success results from persistent efforts. Pursue goals related to ones skills and abilities. Accept oneself as one is and try to emphasize on ones strengths and play down ones weakness. By pursuing ones goals honestly and sincerely, one can achieve positive results. Being goal oriented brings out the best qualities. Acceptable results are more important than perfect results, so do not waste time in achieving perfection. In the context of employment generation, the three terms i.e., Income Generation, Selfemployment and Entrepreneurship are often used interchangeably. Entrepreneurship refers to identification of innovative ideas, setting up of a new enterprise. Whereas, self-employment refers to full time involvement in one’s own occupation. One may or may not be bearing the rise, mobilizing inputs, organizing production and marketing the product or service. Income generating activities, on the other hand, are part time, causal and practiced with a view of raising additional income. All entrepreneurs are self-employed and income generating persons. But all self-employed and income generating persons may not be entrepreneurs. MODELS FOR ENTREPRENEURSHIP Based on government involvement in economy and the way society values individual and collective action Accenture developed 3 illustrative models for conditions under which entrepreneurship can flourish. THE FREE MARKET MODEL: EX: UNITED STATES AND CANADA  Role of government is limited.  Public policy can create basic conditions required for Entrepreneurial Culture.UAL But the rest is up to the private Sector/ entrepreneur.  This model thrives in such culture where entrepreneurial success is celebrated rather than denigrated.  The tax structure rewards initiative & financial gain.  Degree of social protection is less. GUIDED INDIVIDUALISM MODEL: EX: SINGAPORE & TAIWAN  It is based on encouragement of individual enterprise.  Public policy determinesbroad sweep of entrepreneurialactivity by sectors / industries in which entrepreneurial energies can be directed. signaling SOCIAL DEMOCRAT MODEL: EX: SWEDEN & GERMANY  It combines encouragement of enterprise with emphasis on social protection.  Countries create a sort of social partnership with agreed up on conomic and social frame work by all partners. INDIA- THE MIXED ECONOMY MODEL  Marked preference to state owned enterprise.  Entry in to big industries was possible through licensing.  Small scale industries were encouraged - 40% contribution to national industrial output with 80% share in industrial employment.  System created grate disparities in wealth.  Success in business was looked upon with suspicion.  Creating wealth was not considered a virtue. ___________________