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What is Entrepreneurship?

Entrepreneurship is the process of designing, launching, and running a new business, i.e. a startup company offering a product, process, or service. It is the “capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit.

Concept of Entrepreneurship

The word “Entrepreneur” is derived from the French word “Entrepreneur” meaning to undertake. In fact, in the 16th century, the Frenchmen who undertook military expeditions were referred to as “Entrepreneurs”. Later on, in the 18th century, this term was associated with persons who started their own enterprises.

Richard Cantillon, an Irish man living in France, was an economist who introduced the term “Entrepreneur” referring to the risk-taking of establishing a new venture. An enterprise is created by an entrepreneur. The process of creation is called entrepreneurship.

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Definition of Entrepreneurship

These are the simple definitions of entrepreneurship explained by the authors:

Entrepreneurship refers to innovation. It is the willingness and motivation to take risks in the face of uncertainties. That is, the ability to see future events in a way that proves to be true later.

Shri V. R. Gaikwad

Entrepreneurship is the appropriation and risk taking of time, money and efforts in starting a business and making it successful.

Prof. Musselmann and Jackson

Entrepreneurship is a combination of comprehensive actions. It involves acquiring knowledge of various functions as well as opportunities, combining and managing the means of production, and adopting production techniques and goods.

Peter Kilby

Entrepreneurship can be defined as, “Entrepreneurship means the function of foreseeing investment and production opportunity, organising an enterprise to undertake a new production process, raising capital, hiring labour, arranging for the supply of raw materials and selecting top managers for the day-to-day operation of the enterprise.

Benjamin Higgins

Entrepreneurship is neither a science nor an art. It is a practice. It has a knowledge base. Knowledge in entrepreneurship is a means to an end. Indeed, what contributes knowledge in practice is largely defined by the ends, that is, by the practice.

Peter F. Drucker

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Nature of Entrepreneurship

An entrepreneur is a person who initiates a business venture. There are some essential characteristics of an entrepreneur. Let’s discuss the nature of entrepreneurship below:

1. Risk-Taking Ability
2. Ability to Innovate
3. Business-Oriented Tendency
4. Creative Activity
5. Knowledge-Based Practice
6. Not a Personality Trait, but a Behavior
7. Based on Principles, not on Intuition
8. Result of Changes
9. Environment-Oriented Activity
10. Management is Vehicle of Entrepreneurship
11. Low Risk
12. Professional Activity

Risk-Taking Ability

It is a fundamental element of entrepreneurship the sense of taking risks that the business itself has to face future uncertainties. Economic action refers to appropriating existing resources to meet future needs. But there are many risks in this work, which can be done only on the basis of courage and risk-taking ability.

Ability to Innovate

Entrepreneurship is an innovative process by which creative ideas can be implemented. Entrepreneurial business always gives place to new technology, new instruments, and new management systems in their business.

It increases consumer satisfaction and benefits of the firm with new goods, new markets, and new services. In the words of Peter Drucker, “Innovation is a unique tool of entrepreneurship.

Business-Oriented Tendency

Entrepreneurship refers to the entrepreneurial and business instincts of individuals. It inspires individuals to become entrepreneurs and to set up an enterprise. Entrepreneurship inspires the individual to visualize a business plan and start an industry. This leads to the establishment of new industries in the society.

Creative Activity

Entrepreneurship inspires individuals to discover new opportunities, to think creatively every moment, and to implement new ideas. In Schumpeter’s words, “Entrepreneurship is basically a ‘creative action’.” Due to entrepreneurship, capital formation and other creative works continue in the country.

Knowledge-Based Practice

Peter Drucker writes “Entrepreneurship is neither a science nor an art. It is a practice; knowledge is its basis. The adventurer achieves high achievement based on his knowledge and experience. Many years long only after experience and conduct, a person has the quality of courage.

Not a Personality Trait, but a Behavior

Entrepreneurship is not a Personality Trait, but a Behavior: The right decision is of utmost importance in every field, but there is a risk in decisions. Therefore, by developing decision-making ability, every person can become an entrepreneur and can be courageous. Thus, Peter Drucker says that entrepreneurship is not a trait of personality, but a behavior.

Based on Principles, not on Intuition

Entrepreneurship is not merely a feeling arising out of a person’s intuition or his intuition. In fact, it is based on certain principles and ideologies. Knowledge of economics, statistics, law, social science psychology, etc. is necessary for a successful entrepreneur.

Result of Changes

Entrepreneurship is not just an economic event or action, but also the result of social, political, scientific, and technological changes taking place in society.

The attitude and thought systems of individuals are constantly changing and adventurous tendencies are developing in society due to social values, beliefs, education, science, population, government policies, etc. In the words of Peter Drucker, “The rise of a bold economy in any nation is as much a cultural and psychological event as it is an economic or technological event.”

Environment-Oriented Activity

Entrepreneurship is an external and open system linked to the environment. Entrepreneurs always manufacture goods keeping in mind the components of the social, economic, political, and physical environment and take the risk of making changes in them. Joseph Schimpiettar states that “entrepreneurship is a creative response to every external situation.

Management is Vehicle of Entrepreneurship

Management is the medium for the implementation of all bold decisions and plans in any venture. It is the management that inspires courage which brings new changes and improvements in business.

According to Peter Ducker, “Entrepreneurial management has become an indispensable part of every manager’s work today. Courageousness has developed with the increasing use of management in new ventures, actions, and unprofessional tasks.

Low Risk

It is often understood that entrepreneurship is very risky. It is true that due to rapidly changing technology and the economic-social environment, the amount of risk in business has increased.

But as Peter Drucker states entrepreneurship is extremely risky and is only an illusion, entrepreneurship is not gambling. Entrepreneurship is no longer risky if it is properly managed and organized, following appropriate research methods and principles, and based on ‘purposeful innovation’.

Professional Activity

Like developed medicine, law, and engineering, courage is also developing into a profession in developed nations. Along with managerial abilities, courageous abilities have also been developed through teaching and training.

In order to encourage adventurous interest and tendencies in developing countries, the government has started several schemes. Many courage development institutions and centers are also being established.

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Types of Entrepreneurship

Entrepreneurship is an innovative process that involves multifaceted and diversified activities for providing new things to society and civilization.

Entrepreneurship is classified into 9 types that involve multifaceted and diversified activities for providing new things to society. These are the following types of entrepreneurship given below:

1. Administrative Entrepreneurship
2. Opportunistic Entrepreneurship
3. Acquisitive Entrepreneurship
4. Incubative Entrepreneurship
5. Imitative Entrepreneurship
6. Private Entrepreneurship
7. Public Entrepreneurship
8. Individual Entrepreneurship
9. Mass Entrepreneurship

Administrative Entrepreneurship

The entrepreneurial activity under this category is centered around administrative techniques and functions. It gives a new option to handle prevailing or future situations in a more effective way that provides advantages and a competitive edge.

Total Quality Management, job redesigning, new techniques of doing things, participative management, or management by consensus are a few examples of administrative entrepreneurship that increase overall organizational efficiency and that nukes the firm success and sustainability in the competitive market environment.

The old-age pension scheme is the administrative entrepreneurship of the government of Bangladesh.

Opportunistic Entrepreneurship

There is a proverb “Hit! while the iron is hot”. It is the best exhibit of the characteristics of this category of entrepreneurship. Environmental changes always offer new opportunities.

But everybody is not equally capable of identifying and utilizing that opportunity on time. Entrepreneurship that identifies, exploits, and executes the opportunity firsthand is regarded as opportunistic entrepreneurship.

Acquisitive Entrepreneurship

The entrepreneurship that learns from other competencies is acquisitive entrepreneurship. It acquires something new of value front, the competitive environment, or achieves the competitors’ technical capacities.

It keeps entrepreneurship sustainable in a competitive environment. The failure never restraints them from acquisition but motivates them further to discover such a thing with a new visitor.

Incubative Entrepreneurship

This category of entrepreneurship generates and nurses new ideas and ventures within the organization. It productively executes them and ensures material gain for the organization.

They pursue and help to get differentiated technologies to promote creations and innovations Microsoft, Nokia, etc. always incubate new varieties types of products and create product differentiation in the market.

Imitative Entrepreneurship

Entrepreneurship that imitates a good or service operating in the market under a franchise agreement is imitative entrepreneurship. It is the medium that spreads technology over the world. It adopts an existing technology in countries all over the world. It also adopts an existing technology with minor modifications appropriate to the local condition.

Private Entrepreneurship

The entrepreneurship that is initiated in the private sector is private entrepreneurship. The government gives various support services through private and public concerns that encourage private initiative in taking entrepreneurial ventures. A layer and mutual relationship between private and public sectors would make economic development speedy and balanced.

Public Entrepreneurship

The entrepreneurship that is undertaken by the government through its various development agencies is public entrepreneurship.

All countries, developed or underdeveloped, take a public initiative in venture ideas to fulfill the initial deficiency of private entrepreneurs.

Individual Entrepreneurship

The entrepreneurship that is undertaken by an individual or a family with personal initiative is individual entrepreneurship.

Mass Entrepreneurship

This type of entrepreneurship emerges in an economy where a favorable climate of motivation and encouragement exists for developing a wide range of entrepreneurship among the general mass is mass entrepreneurship. It increases small and medium enterprises in a country.

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Role of Entrepreneurship in Economy

Entrepreneurs are the backbone of any economy. The prosperity of a nation has a direct relation to the development of its economy. It is the responsibility of every nation to ensure economic development to improve the standards of living of the people and eliminate poverty and backwardness.

The economic development process involves enhancement in Gross National Product and it depends on the way physical natural resources are utilized by human resources to realize the productive potential of the nation.

The growth of a nation needs an increase in production and level of consumption. The significant reasons why entrepreneurship holds an imperative role in an economy are as follows:

1. Creates Wealth for Both Individuals and for Nation
2. Provides Employment to Huge Mass of People
3. Contributes Towards Research and Development System
4. Creates Challenging Opportunity for Individuals
5. Makes Sources of Self-Sufficiency
6. Provides Immense Evident Prospects for Self-development

Creates Wealth for Both Individuals and for Nation

Generally, all individuals who seek business opportunities create wealth by entering into entrepreneurship. The wealth created by entrepreneurs undoubtedly plays a substantial role in the development of the nation.

The business and the entrepreneur contribute in some way to the economy may be in the form of products or services boosting the GDP rates or lax contributions. Their ideas, thoughts, and inventions are also of great help to the nation.

Provides Employment to Huge Mass of People

It is very often said that people who do not get employed anywhere start up the entrepreneurial venture. Both the new and the existing entrepreneurial establishments are sources of employment for a large number of people.

This emphasizes the fact that entrepreneurship is not at all a burden to an economy. Entrepreneurship heads a nation towards better opportunities, which is a significant input to an economy.

Contributes Towards Research and Development System

Contemporary business needs new ideas so entrepreneurs are often involved in innovations. Without numerous inventions, the world would have been a much tougher place to live in. The curiosity of entrepreneurs to do something unique often gives rise to new products. This ultimately improves technology and assists people in completing work easily.

Creates Challenging Opportunity for Individuals

Despite being a challenging task, entrepreneurship provides rewards much more than what one anticipates. Entrepreneurs not only enjoy rewards at the financial level but also on an individual level. It is a source of self-satisfaction for the entrepreneur.

Makes Sources of Self-Sufficiency

Entrepreneurs not only become self-sufficient but also the source of improving the standards of living of their employees by providing the salary for their work. Entrepreneurs provide the opportunity for individuals to work in their organizations.

As individuals get jobs, they get the opportunity of self-sufficiency that is derived in the form of monetary rewards, liberty, and the feeling of contentment from the jobs.

Provides Immense Evident Prospects for Self-development

Individuals get the maximum scope for growth and opportunity if they enter into entrepreneurship. Entrepreneurs get motivated by the knowledge and skills they derive from experience.

Individuals who work as employees are usually deprived form such self-development opportunities. Individuals aspiring to become entrepreneurs also go through a grooming process when they become entrepreneurs.

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