Introduction to Entrepreneurship PDF

Introduction to Entrepreneurship © Kalasalingam Academy of Research and Education Learning Objectives At the end of this session, you will be able to: Enterprise Entrepreneurship Entrepreneurship Development Skills of Entrepreneurship Intrapreneurship...

Introduction to Entrepreneurship © Kalasalingam Academy of Research and Education Learning Objectives At the end of this session, you will be able to: Enterprise Entrepreneurship Entrepreneurship Development Skills of Entrepreneurship Intrapreneurship E-Commerce Corporate Entrepreneurship Enterprise An enterprise is a large-scale organization with a composite structure. Enterprise companies often have multiple divisions, each with its specialized function. For instance, a multinational corporation may have a marketing department, manufacturing infrastructure, legal team, and resources for launching new projects. Enterprises tend to produce or sell several products and services, catering to multiple markets. They may sell directly to consumers, serve other businesses, or both. “Enterprise” can also refer to starting a business or undertaking a venture. Enterprise Entrepreneurship Entrepreneurship is a process of actions of an entrepreneur who is a person always in search of something new and exploits such ideas into gainful opportunities by accepting the risk and uncertainty with the enterprise. It is the process of starting a business, a startup company or other organization. The entrepreneur develops a business plan, acquires the human and other required resources, and is fully responsible for its success or failure. Entrepreneurship operates within an entrepreneurship ecosystem. According to A.H.Cole “Entrepreneurship is the purposeful activity of an individual or a group of associated individual, undertaken to initiate, maintain or aggrandize profit by production or distribution of economic goods and services”. Meaning of Entrepreneur The entrepreneur is defined as someone who has the ability and desire to establish, administer and succeed in a startup venture along with risk entitled to it, to make profits. The best example of entrepreneurship is the starting of a new business venture. The entrepreneurs are often known as a source of new ideas or innovators, and bring new ideas in the market by replacing old with a new invention Example: Hotel Saravana Bhavan Mr. P. Rajagopal Hatsun Agro Products Mr. R. G. Chandramohan Entrepreneurship development Entrepreneurship development is the means of enhancing the knowledge and skill of entrepreneurs through several classroom coaching and programs and training. The main point of entrepreneurship development process is to strengthen and increase the number of entrepreneurs. Evolution of entrepreneurship Early History: Entrepreneurship has existed throughout human history, with individuals engaging in trade, craftsmanship, and business ventures since ancient times. In agrarian societies, entrepreneurship was often centered around farming, trading goods, and providing local services. The emergence of early marketplaces and trading routes facilitated the exchange of goods and ideas, laying the foundation for entrepreneurial activity. Evolution of entrepreneurship Industrial Revolution: The Industrial Revolution marked a significant turning point in the evolution of entrepreneurship. Technological advancements, such as the steam engine, mechanization, and mass production, transformed traditional industries and created new opportunities for innovation and wealth creation. Entrepreneurs played a pivotal role in driving industrialization by establishing factories, developing new manufacturing processes, and investing in infrastructure. Evolution of entrepreneurship Rise of Capitalism: The rise of capitalism in the 18th and 19th centuries provided fertile ground for entrepreneurial activity. Capital accumulation, private property rights, and free markets incentivized individuals to take risks and invest in new ventures. Entrepreneurs, such as industrialists, inventors, and merchants, emerged as key drivers of economic growth and innovation during this period. Evolution of entrepreneurship 20th Century Entrepreneurship: The 20th century witnessed the continued expansion of entrepreneurship across various sectors and industries. The post-World War II period saw the rise of small and medium- sized enterprises (SMEs) and family-owned businesses, which played a vital role in driving economic development and employment. Technological advancements, such as the advent of computers, telecommunications, and the internet, spurred the growth of high-tech entrepreneurship and the emergence of new industries. Evolution of entrepreneurship Globalization and Innovation: Globalization has fueled the expansion of entrepreneurship by opening up new markets, facilitating international trade, and enabling the exchange of ideas and resources across borders. The digital revolution has democratized access to entrepreneurship by lowering barriers to entry, empowering individuals to launch startups, and disrupting traditional industries. Social entrepreneurship has gained prominence, with entrepreneurs leveraging business principles to address social, environmental, and humanitarian challenges. Evolution of entrepreneurship Entrepreneurship Ecosystems: The concept of entrepreneurship ecosystems has gained traction, emphasizing the importance of supportive environments that nurture and sustain entrepreneurial activity. Entrepreneurship ecosystems encompass a diverse range of stakeholders, including entrepreneurs, investors, government agencies, academic institutions, and support organizations. Cities and regions around the world are investing in building vibrant entrepreneurship ecosystems to foster innovation, attract talent, and stimulate economic growth. Evolution of entrepreneurship Future Trends: The evolution of entrepreneurship is likely to be shaped by ongoing trends such as digitalization, automation, artificial intelligence, and sustainability. The gig economy and freelance entrepreneurship are expected to continue growing, offering individuals greater flexibility and autonomy in their work. Emerging technologies, such as blockchain, 3D printing, and biotechnology, are poised to create new opportunities for entrepreneurial innovation across industries. Innovation Theory by Schumpeter According to him, innovation is the key factor in entrepreneurship in addition to risk and organizing function. He defines, Entrepreneurship as a “creative activity” and this creation may be in the form of- Introduction of new product with which customer is not familiar or introduction of new quality of the existing product. Use of new method of production which is not yet tested Opening of new market in which particular manufacturer of the country has not yet entered Conquest of new source of supplying raw material New form of organization Schumpeter is the first major theorist to place the human at the centre of the process of economic development. He is very clear about the economic function of the entrepreneur. Theory of High Achievement by McClelland Three needs are: Need for Achievement: A drive to excel, advance and grow. Need for Power: A drive to dominate or influence others and situations. Need for Affiliation: A drive for friendly and close inter- personal relationships. According to the McClelland, people who have high need for achievement have tendency to win and excel. People who have high need for achievement personally take the responsibility of solving problems and will always try to be better than others. He further explained that people with high need of achievement are more likely to succeed as entrepreneur because it is the need for achievement that motivates and promotes entrepreneurship. Leibenstein’s X-Efficiency Theory Leibenstein identifies two roles for the entrepreneur: gap filler and an input completer. Thus, if not all the inputs will be used there will be market imperfections and entrepreneur has to fill the gaps to correct the market imperfections. The other role is of input completer, to make available the inputs required for the efficient outputs. According to him there are two types of entrepreneurship. (i) Routine entrepreneurship – deals with normal business functions like coordinating the business activities. (ii) Innovative entrepreneurship – wherein an entrepreneur is innovative in his approach. It includes the activities necessary to create an enterprise where not all the markets are well-established or clearly defined. Risk bearing theory of Knight: According to Knight, the most important feature of entrepreneurship is Risk bearing. Some important features of the theory are: Risk Creates profit: As entrepreneur bears risk, therefore he earns profit. More Risk more Gain: Entrepreneurs face different types of risks according to their ability and interests. This theory states that more the risk more will be the returns. Profit as Reward and cost: Profit is the reward of bearing risk. Therefore, it is also called as normal cost of production. Entrepreneur’s income is uncertain: According to knight, unce rtainty is the important element of entrepreneurship. There are two types of the risk: insurable and non-insurable. Entrepreneur earns profit because he bears non– insurable risk which is uncertain. Max Weber’s theory of entrepreneurial growth: Max Weber believes that religion has a large impact on the entrepreneurial development of the country because some religion has basic faith to earn more money whereas some has less. He calls them „spirit of capitalism‟ which can be enhanced in the country if there will be favourable attitude towards capitalism in the country. It is the religious beliefs that develop the sense of capitalism in the individual which generates the feeling of occupational chase and the addition of assets. This theory states that Hinduism, Buddhism and Islam do not encourage entrepreneurship which was criticized by various sociologists. Hagen’s theory of entrepreneurship Hagen‟s has propounded a theory of withdrawal of status respect. According to him, withdrawal of status respect leads to the entrepreneurship. It occurs when the member in the group perceive that their efforts and purposes in the life are not valued by the other members. He further stated that withdrawal of the status respect would give rise to following: (a) Innovator: An entrepreneur who is innovative and try to attain his objectives set by himself (b) Retreatist: Entrepreneur who keeps on working in society but remains apathetic to his work or status. (c) Ritualist: One who works as per the rules of the society but has no hope in the improvement in his status. (d) Reformist: One who is a revolting and tries to carry new ways of working and develops new society. Economic theory of Entrepreneurship: If economic incentives are available in the country then there will be entrepreneurship. Economists believe that entrepreneurship and economic growth exists where economic conditions are favorable to the business environment. There are large numbers of economic factors which helps in upgrade or degrade entrepreneurship in a country. Following are the factors: (a) The availability of bank credit (b) High capital formation with a good flow of savings and investments (c) Supply for loanable funds with a lower rate of interest. (d) Increased demand for consumer goods and services (e) Availability of productive resources. (f) Efficient economic policies like fiscal and monetary policies (g) Communication and transportation facilities Exposure Theory of Entrepreneurship This theory states that exposure to new ideas and opportunities leads to innovation and creativity thus creates a new enterprise. An Individual‟s education, cultural values, motivation, economic factors, need for achievement, religious beliefs and risk bearing capacity helps in exposing him/her towards the new ideas and opportunities and thus leading to innovation and creativity. Innovation is the most important factor entrepreneurship. Characteristics and Skills of Entrepreneurship Ability to take risk Innovation Visionary and Leadership quality Open minded Flexible Finance Networking Adaptability Communication Problem Solving Time Management Emotional Intelligence Resilience Intrapreneurship Intrapreneurship is the system wherein the principles of entrepreneurship are practiced within the boundaries of the firm. An intrapreneur is a person who takes on the responsibility to innovate new ideas, products and processes or any new invention within the organization. An intrapreneur is the individual who thinks out if the box and possess the leadership skills and does not fear from risk. Thus, an intrapreneur possesses the same traits as that of an entrepreneur. Emerging trends in Internet & E-Commerce Augmented Reality (AR) and Virtual Reality(VR) Artificial Intelligence (AI) and Machine Learning (ML) Voice commerce: The rise of conversational Shopping Mobile Commerce (M-Commerce) Blockchain Technology Social Commerce Subscription-Based Models Corporate Entrepreneurship Definition: Corporate entrepreneurship refers to the process by which established companies foster innovation, creativity, and entrepreneurial behavior within their organizational structures to pursue new opportunities and drive growth. In today's dynamic business environment, corporate entrepreneurship is crucial for companies to stay competitive, adapt to change, and capitalize on emerging trends. Key components of Corporate Entrepreneurship Culture of Innovation Organizational Structure Leadership Support Strategic alignment Resource Allocation Risk Management External Collaboration Summary In this session, you have learned about: Entrepreneur Enterprise Entrepreneurship Evolution Theories of Entrepreneurship Intrapreneurship Corporate Entrepreneurship