Entrepreneurial Behaviour.docx

CHAPTER -- 4 ENTREPRENEURIAL BEHAVIOUR 1. What is meant by entrepreneurial behaviour? - It is the behaviour exhibited by entrepreneurs. OR - It is the way or approach to look at the physical and human resources and the society. 2\. What are the characteristics of entrepreneurial behavi...

CHAPTER -- 4 ENTREPRENEURIAL BEHAVIOUR 1. What is meant by entrepreneurial behaviour? - It is the behaviour exhibited by entrepreneurs. OR - It is the way or approach to look at the physical and human resources and the society. 2\. What are the characteristics of entrepreneurial behaviour? a. Initiative behaviour. b. Challenge accepting behaviour. c. Assertive behaviour. d. Persuasive behaviour. e. Effective monitoring. f. Looking for opportunities. g. Persistence. h. Information seeker. i. Quality consciousness. j. Commitment to work. k. Achievement motive. (Motivation to do something extraordinary so that he feels that he has achieved something) l. Desire to influence others. m. Desire for independence. n. Innovation. o. Hope for success. p. Calculated risk taking. q. Immediate feed-back. r. Self-efficacy. (The want to become the problem solver instead of problem avoider. s. Self-expression. t. Self-confidence u. Different way. v. Recognizing the importance of business relationships. i. Entrepreneurship. ii. Innovation. iii. Invention and creation. iv. Fashion trendsetters (Trendsetters are motivated by the desire to be different). v. Political revolution. 4\. Define innovation. \- According to Peter F. Drucker "Innovation is the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth". 5\. List the characteristics of innovation. i. Innovation is bringing the ideas into action. ii. Process of experimenting, changing, transforming, and revolutionizing. iii. It is a key aspect of entrepreneurial activity. iv. It is a "creative destruction". v. Leads to technological changes. vi. Leads to employment growth. vii. It is a pervasive thought. viii. It is an ongoing activity. 6\. Differentiate between innovation and creativity. \- According to Ted. Levitt, "Creativity is thinking new things and innovation is doing new things". 7\. Differentiate between innovation and invention. - [ ]. a. Creation of a new product, service or process. b. May not be commercialized. c. Can be for economic or non-economic motive. d. Can bring new changes in the organization. e. Precedes (comes before) innovation. f. Work of scientists. g. Result in new knowledge. h. All inventors are not innovators. - Innovation: a. It is the introduction of new product, service or process. b. Results into commercialization. c. Usually for economic motive. d. Brings organizational change. e. Succeeds (comes after) invention. f. Work of entrepreneurs. g. Results in products, services, or processes. h. All innovators are inventors. 8\. Discuss the main psychological theories of entrepreneurial behaviour. \(i) [Maslow's need hierarchy theory of motivation]: - Developed by Abraham Maslow. - According to him humans have unending wants. When one need is satisfied, another need emerges. - New and unsatisfied needs can motivate people to work. \(ii) [Need for achievement theory (McClelland's three need model]) - Developed by David McClelland. - According to McClelland, it is the high need for achievement that drives people towards entrepreneurship. \(iii) [Self-monitoring theory]. - Self-monitoring is a personality trait that shows a person's ability to adjust himself to external factors. - This theory states that people with high self-monitoring ability can be more successful in entrepreneurial and management jobs. \(iv) [Risk-propensity theory]: - Risk-propensity is the capacity of willingness of a person to take risks. - People with high risk-propensity can be more successful entrepreneurs. \(v) [Role models and support systems theories]: - An entrepreneur is highly influenced by his role model. - An entrepreneur needs support systems for guidance and moral support. 9\. What are the five types of needs of human beings according to Abraham Maslow? i. [Physiological needs]: - Biological or basic needs required for survival. (Eg. Water, food, clothing, etc) ii. [Safety or security needs]: - After basic needs are satisfied, a person tries to satisfy safety and protection. (Eg. Job security, insurance, etc.) iii. [Social needs]: - These needs are seen in our desire to love, friendship, affection, etc. (Eg. Friendly colleagues, informal work groups, etc) iv. [Esteem or ego needs:] - These needs are seen when a person wants self-importance and recognition from others. - Two versions of esteem needs: \(a) lower form: Need for attention and respect from others. \(b) higher form: Need for self-respect, confidence, strength, etc. v. [Self-actualization needs]: - It is the desire to become what one is capable of becoming. (highest level of need according to Maslow) 10\. What are primary needs and secondary needs in Maslow's need hierarchy? \- The first two needs (physiological and safety needs) are primary needs or lower-level needs. \- The next three needs are higher order or secondary needs. (social needs, ego needs, and self-actualization needs) 11\. What are the advantages or merits of Maslow's theory? a. Gives ideas to managers to motivate people. b. It considers interpersonal variations in human behaviour. c. This theory discusses about how needs of people have changed from economical to social to self-actualization over time. d. This theory helps the manager to know that employees have different needs. e. This theory is simple to understand. 12\. What are the criticisms or demerits of Maslow's theory? a. The hierarchy of need is not always present. b. There are many other determinants of behaviour other than needs and desires. c. The hierarchy of needs may be different in different countries. d. A person maybe motivated by many needs at the same time. e. The same need does not same response to all individuals f. After fulfilling one need a person may not want to raise to another higher need. g. Many people become happy fulfilling lower needs only. h. Managers may nit have time to check where an employee stands in Maslow's hierarchy. i. Need hierarchy may not follow the sequence given by Maslow. 13\. What are the five major components of the need for achievement trait? a. Responsibility for solving problems. b. Setting goals. c. Reaching goals through one's own efforts. d. The need for feedback, and using it. e. Preference for moderate levels of risk-taking. 14\. What are the three types of needs according to David McClelland? i. [Need for achievement]: - It is the desire to grow, advance and excel. ii. [Need for power]. - A person's desire to influence and dominate others. iii. [Need for affiliation]. - A person's desire to establish and maintain friendly relationship with others. 15\. Define social-responsibility. \- According to Kieth Davis, "Social responsibility is the obligation of the decision makers (management), to take decision which protect and improve the welfare of the society as a whole along with their own interests" OR - Social responsibility is the obligation of entrepreneurs to protect and improve both, the welfare of the society and the interest of the company. 16\. Give arguments in favor of social responsibility. i. Long run profits. (when a company helps the society by doing social responsibilities, people will like the company which brings profit in the long-run) ii. Prevents government intervention. iii. Possession of resources. (If the people around the firm, likes the company, they will allow the company to possess resources) iv. Better environment. (better quality of life can created by solving social problems) v. Socio-cultural norms (helps to keep the social and cultural values of the society) 17\. Give arguments against social responsibility. i. Violation of profit maximization. (if the company focuses on solving social problems, it cannot concentrate on profit maximization) ii. Costs. (Solving social problems require money which is achieved by increasing the price of goods. This will be a disadvantage to the society) iii. Too much power. (Businessmen already have a lot of power in the society. They may gain too much power in the society if they start solving social problems) iv. Lack of skills. (managers lack skills to solve social problems) v. Lack of public support. (The public may not support the companies, thinking that the businessmen are trying to dominate the society by helping them) 18\. Discuss the responsibilities of an entrepreneur towards different sections of the society. i. [Responsibilities towards shareholders and stakeholders]: (co-owners and other investors in the company) a. Provide fair return. b. Give complete information about the working and progress of the company. c. Protect shareholders' investments and rights. d. Maintain the share value in the market. e. Ensure growth, innovation and diversification. \(ii) [Responsibilities towards employees or workers]: a. Provide jobs to employees. b. Pay fair wage (salary). c. Provide a clean and safe working environment. d. Provide canteen, transport, etc. e. Give proper education and training. f. Provide job security. g. Assure opportunities for promotion, growth and development. h. Develop friendly relationship with the employees. \(iii) [Responsibilities towards customers]: a. Treat customers fairly. b. Understand the customer's needs and satisfy them. c. Provide good quality goods at reasonable price. d. Give only true information through advertisements. e. Ensure availability of goods and services. f. Have a good relationship with the customers. g. Do not indulge in adulteration, hoarding, black marketing, etc. \(iv) [Responsibilities towards creditors and suppliers]: a. Provide true information about the company's financial health. b. Give reasonable price for the articles supplied. c. Do the payments quickly. d. Ensure fairness in the dealings. e. Place orders at the correct time. f. Treat the creditors and suppliers as business partners. \(v) [Responsibilities towards the government]: a. Obey the rules and regulations. b. Pay taxes and dues honestly. c. Follow fair trade policies and practices. d. Do not bribe the government officers. e. Co-operate with the government to implement social activities. f. Invest funds in government bond, infrastructural bonds, etc. vi. [Responsibilities towards society/community ] [and environment]. a. Provide employment. b. Provide good and services. c. Help in environmental protection. d. Reduce pollution. e. Set up industries in backward areas. f. Conserve national resources. g. Participate in community activities. h. Promote culture and art. i. Promote education. j. Open hospitals. k. Provide relief to victims of natural disaster. 19\. Define entrepreneurship development programmes. \- Entrepreneurship development programmes can be defined as a "Programme designed to help an individual in strengthening his entrepreneurial motive and acquiring skills necessary for playing his entrepreneurial role effectively". 20\. What are the objectives of entrepreneurial development programmes? \- The objectives can be divided into two: Long-term objectives and short-term objectives. - [Short-term objectives]: (Objectives that must be achieved immediately after the completion of the project) a. To help in selecting project/product. b. To help in formulation of project. c. To help the participants understand the process and procedure of setting up of business enterprise. d. To know and influence the sources of help needed for setting up enterprise. e. To prepare the person mentally for the entrepreneurial venture. - [Long-term objectives]: a. To identify and train potential (capable) entrepreneurs. b. To develop knowledge and skill in the participants. c. To develop basic managerial understanding. d. To develop small and medium scale industrial sectors. e. To know the pros and cons (advantages and disadvantages) of being an entrepreneur. f. To industrialize backward areas. g. Provide self-employment to the youth. 21\. Explain the three phases of EDP. i. [Initial or pre-training phase]: - Activities required to launch the training programme. - Main activities include: a. Creation of infrastructure. b. Creation of training syllabus. c. Arrangement of innaugration of the programme. d. Designing techniques for selecting the trainees. e. Publicity campaign for the programme. f. Development of application form. ii. [Training or development phase]: - Training is given to the participants to develop motivation and skills. iii. [Post-training or follow-up phase]: - This phase involves assessment, to check how much the objectives of the programme have been achieved. 22\. List the steps in EDP. i. Selection of potential entrepreneurs. ii. Identifying entrepreneurial trait. iii. Identification of enterprise. (to identify the suitable enterprise or project for the participant) iv. Providing a package of training inputs. - Main training inputs are: a. Technical knowledge and skill. b. Achievement motivation training. c. Support system and procedures. d. Actual conduct of market survey. e. Management skills. f. Project preparation. v. Support system. (information about the available support systems are given to the participants). vi. Monitoring and follow up. 23\. Discuss the role of EDPs. i. [Stimulatory role]: (It refers to all the efforts that stimulate emergence of entrepreneurship) - These include: a. Entrepreneurial education. b. Planned publicity fofr entrepreneurial opportunities. c. Identification of potential entrepreneurs through scientific methods. d. Motivational training to new entrepreneurs. e. Guidance in selecting products and preparing project reports. f. Providing techno-economic information and project reports. g. Developing locally suitable products and processes. h. Providing entrepreneurial counselling. i. Creating entrepreneurial forum. ii. [Supportive role]: (Role of helping the entrepreneurs in setting up the enterprise by group support activities). - These include: a. Registration of unit. b. Arranging finance. c. Providing land, power, water. d. Guidance for selecting and obtaining machinery. e. Supply of scarce raw materials. f. Providing common facilities. g. Granting tax relief and other subsidies. h. Providing information. i. Helping in marketing. j. Offering management consultancy. iii. [Sustaining role]: (activities that help the entrepreneurs in running the company on a sustained basis) a. Helping in modernization. b. Helping in diversification. c. Quality testing and improving services. d. Need-based common facilities. vi. [Socio-economic role]: a. Improving the hidden talents of participants. b. Utilizing hidden and unused resources like hoarded wealth for building the enterprise. c. Helping in dispersal of industries. d. Creating employment opportunities in small enterprises. e. Ensuring equitable distribution of national income and wealth. 24\. Discuss the relevance of EDPs. OR discuss the importance of EDPs. a. EDPs have shown that entrepreneurs can be made and they are not. b. EDPs bring economic and social change in the entrepreneur's behaviour. c. EDPs can convert ordinary people into risk takers, innovators, and leaders of business. d. EDPs can develop people to become economic emancipator, upon whom the economic well-being of the society depends. e. EDPs can increase innovation of a person. f. EDPs help in capital formation of the country, by helping the trainee entrepreneurs to convert their idle savings into productive investment. g. EDPs help entrepreneurs to start businesses that are good for the environment. h. EDPs create a sense of social responsibility in the minds of new entrepreneurs. i. EDPs provide Achievement Motivation Training (ATM), which is important for entrepreneurship development. j. EDPs develop social responsibility in entrepreneurs. k. EDPs improve the knowledge and efficiency of prospective entrepreneurs. 25\. What are the aspects of a good Entrepreneurship Development Programme? \- A good Entrepreneurship Development Programme should be carried out in a committed fashion and must have: i. Adequate professional staff. ii. Better selection and training inputs. iii. Well-organized institutional support for project selection. iv. Timely funding support from the government and the development financing institutions. v. Proper coordination with banks. vi. Effective follow-up by the ED institutions and promotional agencies of the government. 26\. List the problems involved in organizing and conducting EDP. OR What are the reasons for the low level of performance in EDP. a. Shortage of committed organizations. b. Shortage of trainer motivators. c. Identification and selection of wrong projects. d. Lack of entrepreneurial environment. e. Apathetic attitude of support agencies. f. Lack of forward and backward linkages. g. Selection of wrong persons for training. h. Improper identification of projects. i. Inadequate counselling support after training. j. Lack of continuous follow-up. 27\. List the criteria for assessment or evaluation of EDPs. OR What are the criteria used by the behavioural scientists to assess the effectiveness of EDPs? a. New enterprise creation. b. Employment generation. c. Creation of job opportunities both directly and indirectly. d. Increase in sales and profit. e. Enterprise expansion. f. Enterprise transformation. g. Improvement in quality of product or service. h. Repayment of loans. i. Capacity utilization. j. Rural development. k. Export promotion. 28\. Give suggestions to make EDPs successful. i. Emphasis on stimulating, supporting and sustaining activities. ii. Model based EDPs. iii. Focus on achievement motivation. iv. Designing of viable projects. v. Selection of trainees. vi. Training of trainers. vii. Organizing part time programmes. viii. Duration of EDPs. 29\. What is the role of government in organizing EDPs? i. Establishment of specialized institutions in ii. Establishment of district industry centre (DIC). iii. Introduction of entrepreneurship courses. iv. Financial support provided by the government, development banks, nationalized public sector banks, ect. v. Funding support by the government or development bankers, to conduct seminars, workshops and industrial potential survey. 30\. List the specialized organizations set up by the government of India to promote entrepreneurship, and discuss their functions. i. [National Institute for small industry extension and training]. - Functions: a. To give training to the people engaged in SSI (Small Scale Industry) sector. b. To undertake Entrepreneurship Development Training Programme (EDP) or Management Development Training Programme (MDP). c. To do research studies about small scale sector. d. To provide consultancy services to small and medium scale industries. ii. [Entrepreneurship Development Institute of India]: - Functions: a. Conducting EDPs. b. Conducting seminars and workshops. c. Conducting research studies. d. Providing training facilities. e. Build institutions. f. Performance improvement programmes. iii. [National Institute for Entrepreneurship and Small Business Development (NIESBD]). - Functions: a. Conducting EDPs. b. Offering training facilities. c. Holding seminars, workshops, and conferences for officers of the field of entrepreneurship and small-scale business development. d. Conduct research in entrepreneurship. iv. [National Alliance of Young Entrepreneurs (NAYE).] - Functions: - Same as above. v. [Technical Consultancy Organizations (OCT)] - Functions: a. Industrial potential surveys. b. Preparation of profiles and feasibility studies. c. Evolution of projects. d. Conducting EDPs. e. Assisting in modernization, technical upgradation and rehabilitation programmes, etc. f. Conducting market research and surveys. g. Offering merchant banking serviced. vi. [Small Industries Service Institute]. - Functions: a. Provides economic information and guidance to industrialists. b. Conducts EDPs. c. Initiates and modernization of selected industries. d. Helps to develop ancillary industry. e. Conducts studies and surveys. f. Advises government of India on policy matters relating to small scale industries. g. Prepare designs for production equipments and accessories. h. Provides technical guidance on efficient use of scrap. i. Helps small scale industries to get financial support. 31\. What is meant by DIC? Discuss its functions. - DIC (District Industry Centre), was a programme launched for the effective promotion of cottage and small industries in small towns. - Each district has a DIC at it's headquarters. - Functions: a. Identifies and develops new entrepreneurs by conducting entrepreneurial motivation programmes in the district. b. Gives technical advice to new entrepreneurs. c. It issues provisional SSI registration which is important for getting financial assistance. d. Sponsors the loan applications to SIDCO (Small Industries Development Corporation) and National Banks for the purchase of land and building. e. DIC sanction margin money payable to other financial agencies for the purchase if plant and machinery. f. It takes initiative to get clearances from other departments and takes follow-up measures to get power connections fast. g. Helps get financial assistance from lead bank of the district to village artisans and handicrafts. h. It helps the small-scale industries to get subsidies. i. Gives training to rural entrepreneurs. j. It introduced the scheme of self-employment for unemployed educated youth in 1983-84.