Chapter-1 notes.docx

**EVOLUTION OF ENTREPRENEURSHIP** The word \'entrepreneur\' comes from the French word \"entrepredre\" which means \"to undertake\". In the Malay language it can be defined as \"to take over\". According Histrich and Peter (1988), entrepreneurship is a dynamic process of wealth creation. Wealth is...

**EVOLUTION OF ENTREPRENEURSHIP** The word \'entrepreneur\' comes from the French word \"entrepredre\" which means \"to undertake\". In the Malay language it can be defined as \"to take over\". According Histrich and Peter (1988), entrepreneurship is a dynamic process of wealth creation. Wealth is created by the individual who bears the risk of the \'equity\', time and career commitment or provide value to a product or service. It is the process of creating something new by taking into account the time and effort to take into account the risk of financial, psychological and social. And receive the benefits in terms of financial, personal satisfaction and freedom. Besides, Kuratko and Hodgetts (2004)  define entrepreneurship as a process of innovation and creation through the four dimensions of the individual, organization, environment  and the process of collaboration with networks in government, education and institutional. EVOLUTION OF ENTREPRENEURSHIP              In the Earliest period, definition of entrepreneurship began as early as the Marco Polo who comes to the Middle East for trade. Marco Polo has signed an agreement with the capitalists to sell their products. In the contract merchant adventurer took a loan at 22.5% rate including insurance. Capitalist was the passive risk bearer and merchant adventurer took the active role in trading, bearing all 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 up to 75%, while the merchant adventurer settled for the remaining 25%.             In middle ages, Entrepreneur is described as someone who is involved in the care and control of a large production projects. It is possible to control the project using the resources provided by the government. In this case, the entrepreneur does not bear any risk. Entrepreneurs in this age, is a have control and authority of construction works such as public buildings and churches. A typical entrepreneur in the middle age was the priest.             In 17th century, the evolution of entrepreneurship can be related with the relationship between risk and entrepreneurs. Entrepreneurship is the person who signed the contract agreement with the government to provide a service or supply products that have been determined. The contract price is fixed. Then, the entrepreneurs are fully responsible for the gains and losses of the business.  John law, a Frenchman was one of the entrepreneurs in that period. The founder of the royal bank of France and the Mississippi Company, which had an exclusive franchise to trade between France and the new world. Monopoly on French trade eventually led to collapse of the company.  Richard Cantillion, an economist defines entrepreneurs earlier. In his view, the entrepreneur is risk insurers. Merchants, farmers, craftsmen, and so is an entrepreneurs. They buy things at a certain price and sell it at a price that is uncertain, with the risk. In the 18th century, the person with capital was differentiated from the one who needed capital. The entrepreneur was distinguished from the capital provider. One reason for this differentiation was the industrialization occurring throughout the world. Eli Whitney was an American inventor best known for inventing the cotton gin. This was one of the key inventions of the industrial Revolution. Thomas Edison, the inventor of many inventions. He was developing new technologies and was unable to finance his inventions himself.  Edison was a capital user or an entrepreneur, not a provider or a venture capitalist.             In 19th and 20th century, Entrepreneurs are not always associated with the management.    According to Merriam-Webster\'s online dictionary, an entrepreneur is one who organizes, manages, and assumes the risk of a business or an enterprise. The entrepreneur organizes and manages an enterprise for personal gain. The materials consumed in the business, for the use of the land, for the services he employs, and for the capital he requires. Andrew Carnegie is one of the best examples of this definition.  Carnegie, who descended from a poor Scottish family, made the American Steel Industry one of the wonders of the industrial world.             In the middle of the 20th Century, the function of the entrepreneurs is to recreate or revolutionize the pattern of production by introducing an invention. Innovation, the act of introducing some new ideas, is one of the most difficult tasks for the entrepreneur. For example, Edward Harriman, who reorganized the railroad in the United States and John Morgan, who developed his large banking house by reorganizing and financing the nation's industries. Besides, the Egyptian who designed and built great pyramids out of stone blocks weighing many tons each, to laser beams, supersonic planes and space stations.             In 21st century, Entrepreneurs are known as a hero for Free Enterprise market. Entrepreneur of the century created many products and services and is willing to face a lot of risks in the business. According to Kuratko & Hodgetts, most people say entrepreneurs are pioneers in creating new businesses. In the year 2005 Hisrich, Peter and Shepherd regarded entrepreneur as an organizer who controls, systematize, purchases raw materials, arranges infrastructure, throw in his own inventiveness, expertise, plans and administers the venture.             The Future of entrepreneurship will be growth with development of technologies. The modern technologies and internet have improved the ways of conduct business. Entrepreneurs now have the luxury of putting their business idea into action through the click of button. Characteristics of Successful Entrepreneurs: - Commitment, Determination & Perservance - Drive to achieve - Opportunity orientation - Initiative & Responsibility - Persistent Problem solving - Seeking Feedback - Internal Locus of Control - Tolerance for Ambiguity - Calculated Risk taking - Integrity & Reliability - Tolerance for Failure - High energy level - Creativity & Innovativeness - Vision - Self-Confidence & Optimism - Independence - Team building Sources of Entrepreneurship Mind-set: - Publications: Journals, Books, Autobiographies, Compendiums, Periodicals, News Letters, conferences & Govt. Publications - Direct Observation: Interviews, surveys, case studies, experiences etc.. - Presentations: Seminars, workshops etc.. **Myths of Entrepreneurship:** Please check PPT **Dark side of entrepreneurship:** **Role of entrepreneurship in economic development**: 1\. Wealth Creation and Sharing: By establishing the business entity, entrepreneurs invest their own resources and attract capital (in the form of debt, equity, etc.) from investors, lenders and the public. This mobilizes public wealth and allows people to benefit from the success of entrepreneurs and growing businesses. This kind of pooled capital that results in wealth creation and distribution is one of the basic imperatives and goals of economic development. 2\. Create Jobs: Entrepreneurs are by nature and definition job creators, as opposed to job seekers. The simple translation is that when you become an entrepreneur, there is one less job seeker in the economy, and then you provide employment for multiple other job seekers. This kind of job creation by new and existing businesses is again is one of the basic goals of economic development. This is why the Govt. of India has launched initiatives such as Startup India to promote and support new startups, and also others like the Make in India initiative to attract foreign companies and their FDI into the Indian economy. All this in turn creates a lot of job opportunities, and is helping in augmenting our standards to a global level. 3\. Balanced Regional Development: Entrepreneurs setting up new businesses and industrial units help with regional development by locating in less developed and backward areas. The growth of industries and business in these areas leads to infrastructure improvements like better roads and rail links, airports, stable electricity and water supply, schools, hospitals, shopping malls and other public and private services that would not otherwise be available. Every new business that locates in a less developed area will create both direct and indirect jobs, helping lift regional economies in many different ways. The combined spending by all the new employees of the new businesses and the supporting jobs in other businesses adds to the local and regional economic output. Both central and state governments promote this kind of regional development by providing registered MSME businesses various benefits and concessions. 4\. GDP and Per Capita Income: India's MSME sector, comprised of 36 million units that provide employment for more than 80 million people, now accounts for over 37% of the country's GDP. Each new addition to these 36 million units makes use of even more resources like land, labour and capital to develop products and services that add to the national income, national product and per capita income of the country. This growth in GDP and per capita income is again one of the essential goals of economic development. 5\. Standard of Living: Increase in the standard of living of people in a community is yet another key goal of economic development. Entrepreneurs again play a key role in increasing the standard of living in a community. They do this not just by creating jobs, but also by developing and adopting innovations that lead to improvements in the quality of life of their employees, customers, and other stakeholders in the community. For example, automation that reduces production costs and enables faster production will make a business unit more productive, while also providing its customers with the same goods at lower prices. 6\. Exports: Any growing business will eventually want to get started with exports to expand their business to foreign markets. This is an important ingredient of economic development since it provides access to bigger markets, and leads to currency inflows and access to the latest cutting-edge technologies and processes being used in more developed foreign markets. Another key benefit is that this expansion that leads to more stable business revenue during economic downturns in the local economy.   7\. Community Development: Economic development doesn't always translate into community development. Community development requires infrastructure for education and training, healthcare, and other public services. For example, you need highly educated and skilled workers in a community to attract new businesses. If there are educational institutions, technical training schools and internship opportunities, that will help build the pool of educated and skilled workers. A good example of how this kind of community development can be promoted is Azim Hashim Premji, Chairman of Wipro Limited, who donated Rs. 27,514 crores for promoting education through the Azim Premji Foundation. This foundation works with more than 350,000 schools in eight states across India.  Benefits of Corporate Entrepreneurship in organizations perspective: - Company's ability to compete - Improve competitive positioning and transform corporations - Employ a range of strategies, often in unique combinations - Build layers of advantage by combining distinctive bases for competitive superiority - Improve a company's growth and profitability - Company's proactiveness and willingness to take risks by pioneering the development of new products, processes, and services Benefits of Corporate Entrepreneurship in employees' perspective: - profit sharing incentive - expectation of success - positive relationship between profit sharing incentive - The positive relationship between expectation of success and the likelihood that employees will participate in a new venture Issues Relating to Corporate Entrepreneurship Following are the obstacles and limitations in fostering corporate entrepreneurial behaviour amongst employees: - Lack of appropriate timing which is the timing of allocation of resources. Traditional manager's act too slow on handling resources causing entrepreneurial project to fail. - Lack of urgency, which is the element of fear. Fear can be good and bad. Positive fear can be good motivators that enhance the maintaining and creation of passion. On the other hand, negative fear such as the fear of punishment can be a pullback of innovativeness. - Lack of personal renewal which is the overconfidence on projects on hand and resist creating something new. Such situation often happens in a big, successful company. Rupert Murdoch quotes, "Big will not beat small anymore. It will be the fast beating the slow." Companies that resist change and development will fail. - Lack of energy and shared enthusiasm, which suggests lack of support from peers. Inertia is created by obstacles such as direct threat, disaffection, competition, distraction and indifference. - Lack of sponsors which are the coaches for entrepreneurs. Sponsor is a supporter on a higher level in the organization that offers guidance and support. - Lack of open ownership which represents departments in the organization which prioritize on protecting their turf rather than co-operating to develop new ideas that benefit the organization. - Lack of 'seed' capital where the corporate entrepreneur faces challenges of allocation of initial resources to boost up entrepreneurial work. - Lack of legitimacy, which stands for the barriers to get sufficient resources when the new entrepreneur is untested. There is no track record and people may be unwilling to offer assistance as success probability is at doubt. - Lack of people development skills, which means the traditional manager are not prone to accept his/her subordinates to develop better innovative idea than him. - Lack of incentive to innovate. Corporate may offer rewards and incentive to foster corporate entrepreneurial activities but the rewards may be insufficient to motivate the behaviour considering the barriers (e.g.: politics in company) or the reward isn't the main motivator for the employee. - Lack of time, as employees have a lot of everyday jobs and less free time given the intensity of the modern age. This will make employees to have less time to make new experiments and therefore kills innovativeness.