CHAPTER – 2

ENTREPRENEURSHIP

The process undertaken by an entrepreneur to augment his business interests

gave birth to “ENTREPRENEURSHIP”.

THE CONCEPT OF ENTREPRENEURSHIP

Entrepreneur Entrepreneurship Enterprise

Person Process of action Object

Introduction

Entrepreneurship is the act of being an entrepreneur, which is a French

word meaning "one who undertakes an endeavor".

Entrepreneurs assemble resources including innovations, finance and

business acumen in an effort to transform innovations into economic goods.

The most obvious form of entrepreneurship is that of starting

new businesses; however, in recent years, the term has been extended to

include social and political forms of entrepreneurial activity.

According to Robert L Schwarz, what is the basis for entrepreneurship

characteristics can be described as follows: “The entrepreneur is essentially

a visualizer and an actualizer. He can visualize something, and when he

visualizes it he sees exactly how to make it happen.”

The concept of entrepreneurship was first established in the 1700s, and the

meaning has evolved ever since. Many simply equate it with starting one's

own business. Most economists believe it is more than that.

To some economists, the entrepreneur is one who is willing to bear the risk

of a new venture if there is a significant chance for profit.

Others emphasize the entrepreneur's role as an innovator who markets his

innovation.

Still other economists say that entrepreneurs develop new goods or

processes that the market demands and are not currently being supplied.

Business expert Peter Drucker (1909-2005) took this idea further, describing

the entrepreneur as someone who actually searches for change, responds to

it, and exploits change as an opportunity.

Most economists today agree that entrepreneurship is a necessary ingredient

for stimulating economic growth and employment opportunities in all

societies.

The word is derived from the French word ‘Entrependne’ and the German

word ‘Uternchmen’ both of which refers to individuals who are

undertakers i.e. who can undertake ‘risk’ by setting up a new enterprise.

They are contractors who bear the risk of profit as well as loss. They are

soldiers of fortune, adventurers or merchants.

The concept of entrepreneurship has a wide range of meanings. On the one

extreme an entrepreneur is a person of very high aptitude who pioneers change,

possessing characteristics found in only a very small fraction of the population.

SCHUMPETER'S VIEW OF ENTREPRENEURSHIP

Austrian economist Joseph Schumpeter 's definition of entrepreneurship placed an

emphasis on innovation, such as:

1. New products

2. New production methods

3. New markets

4. New forms of organization

Wealth is created when such innovation results in new demand. From this

viewpoint, one can define the function of the entrepreneur as one of combining

various input factors in an innovative manner to generate value to the customer

with the hope that this value will exceed the cost of the input factors, thus

generating superior returns that result in the creation of wealth.

Entrepreneurship vs. Small Business

Many people use the terms "entrepreneur" and "small business owner"

synonymously. While they may have much in common, there are significant

differences between the entrepreneurial venture and the small business.

Entrepreneurial ventures differ from small businesses in these ways:

1. Amount of wealth creation ‐ rather than simply generating an income stream

that replaces traditional employment, a successful entrepreneurial venture creates

substantial wealth, typically in excess of several million dollars of profit.

2. Speed of wealth creation ‐ while a successful small business can generate

several million dollars of profit over a lifetime, entrepreneurial wealth creation

often is rapid; for example, within 5 years.

3. Risk ‐ the risk of an entrepreneurial venture must be high; otherwise, with the

incentive of sure profits many entrepreneurs would be pursuing the idea and the

opportunity no longer would exist.

4. Innovation ‐ entrepreneurship often involves substantial innovation beyond

what a small business might exhibit. This innovation gives the venture the

competitive advantage that results in wealth creation. The innovation may be in the

product or service itself, or in the business processes used to deliver it.

DEFINITION OF ENTREPRENEURSHIP

According to A.H. Cole

“Entrepreneurship is the purposeful activity of an individual or group of associated

individuals, undertaken to initiate, maintain or aggrandize profit by production or

distribution of economic goods or services”.

According to Peter .P. Drucker

“Entrepreneurship is neither a science nor an art. It is a practice. It is knowledge

base. Knowledge in entrepreneurship is a means to an end, that is ,by the practice”.

Schumpeter

“Entrepreneurship is based on purposeful and systematic innovation. It

included not only the independent businessman but also company

directors and managers who actually carry out innovative functions.”

NEED FOR ENTREPRENEURSHIP

Entrepreneurship promotes small business in the society. Government has accepted

the fact that small firms have a crucial role to play in the economic development of

the country. Small businesses are an essential part of our future economic

prosperity because of the following reasons-

EMPLOYMENT GENERATION: Entrepreneurial development is looked at as a

vehicle for employment generation through promotion of small business. India,

being far more developed and forward looking country than some of the third

world countries, can provide lead to entrepreneurial development activities.

However, India can benefit from the well- documented success experiences of

developed countries like USA, Japan and UK in the field of employment

generation and small business promotion. Steady growth in consumer spending,

expanding retail sales, a strong housing market, continued expansion of the service

sector, low rates of inflation and of labour cost increases and failing interest rates

contributed to a healthy environment for small business.

In India, the government policies, political and economic environment greatly

encourage the establishment of new and small enterprises. Self- employment and

small scale industry schemes have been further liberalized during the last decade.

The employment in the small-sector increased from 9.00 million people in 1984-85

to 13.9 million people in 1994-95. This indicates an increase of 5.4% p.a in

employment in this sector.

SMALL BUSINESS DYNAMISM: Great dynamism is one of the qualities of the

small and medium enterprises. This quality of dynamism originates in the inherent

nature of the small business. The structure of small and medium enterprises is less

complex than that of large enterprises and therefore facilitates quicker and

smoother communication and decision- making. This allows for the greater

flexibility and mobility of small business management. Also, small enterprises,

more often make it possible for owners, who have a stronger entrepreneurial spirit

than employed mangers, to undertake risk and challenges.

BALANCED ECONOMIC DEVELOPMENT: Small business promotion needs

relatively low investment and therefore can be easily undertaken in rural and semi-

urban areas. This in turn creates additional employment in these areas and prevents

migration of people from rural to urban areas. Since majority of the people are

living in the rural areas, therefore, more of our development efforts should be

directed towards this sector. Small enterprises use local resources and are best

suited to rural and underdeveloped sector. This in turn will also lead to dispersal of

industries, reduction in concentration of economic power and balanced regional

development.

INNOVATIONS IN ENTERPRISES: Business enterprises need to be innovative

for survival and better performance. It is believed that smaller firms have a

relatively higher necessity and capability to innovate. The smaller firms do not face

the constraints imposed by large investment in existing technology. Thus they are

both free and compelled to innovate. Entrepreneurship development is accelerating

the pace of small firm’s growth in India. An increased number of small firms are

expected to result in more innovations and make the Indian industry compete in the

international market.

STEPS IN THE PROCESS OF ENTREPRENEURSHIP:

1. Identifying opportunities

2. Establish vision

3. Persuade others

4. Gather resources (Capital, land and manpower)

5. Organize these resources to develop new product

6. Create the product

7. Adapt according to market changes.

FACTORS INFLUENCING ENTERPRENURESHIP

The emergence of entrepreneurs in a society depends upon closely interlinked

social, religious, cultural, psychological, and political and economic factors.

FAMILY TRADITION: Individuals who for some reason, initiate, establish

maintain and expand new enterprises generate entrepreneurship in society. It is

observed that entrepreneurs grow in the tradition of their families and society and

accept certain values and norms from these sources.

RELIGIOUS, SOCIAL AND CULTURAL FACTORS: Religious, social and

cultural factors also influence the individual taking up an entrepreneurial career, in

some countries there is religious and cultural belief that high profit is unethical.

This type of belief inhibits growth of entrepreneurship.

PSYCHOLOGICAL FACTORS: The psychological factors like high need for

achievement, determination of unique accomplishment, self confidence, creativity,

vision, leadership etc, promote entrepreneurship among individuals. On the other

hand psychological factors like security, conformity and compliance, need for

affiliation etc restrict promotion of entrepreneurship.

POLITICAL FACTORS: The political and also the political stability of country

influence the growth of entrepreneurship. The political system, which promotes

free market, individual freedom and private enterprise, will promote

entrepreneurship.

ECONOMIC POLICIES: The economic policies of the government and other

financial institutions and the opportunities available in a society as a result of such

policies play a crucial role in exerting direct influence on entrepreneurship.

In view of the haphazard development of economic zones, Government is

encouraging the entrepreneurs to establish their business in backward and tribal

areas. This is primarily to arrest the migration of people from the villages to cities

and to create employment opportunities locally. Government is promoting such

development by giving incentives like tax holidays (both sales and income),

subsidized power tariff, raw materials, transportation cost etc.

FACTORS AFFECTING ENTREPRENEURIAL GROWTH

1. ECONOMIC FACTORS

a) Lack of adequate overhead facilities:

Profitable innovations require basic facilities like transportation, communication

power supply etc. They reduce cost of production and increase profit.

b) Non availability of capital

Inventions are capital oriented. In less developed countries most capital equipment

have to be imported which involves foreign exchange which acts as a difficult

problem.

c) Great risk

Risk is high in case of less developed countries as there is lack of reliable

information, markets for good and services is small etc.

d) Non availability of labor and skills

Though there is abundant labor supply there is generally scarcity of skills at all

levels.’

2. SOCIAL FACTORS

A society that is rational in decision making would be favorable for decision

making. Education, research and training is given less importance in less

developed countries therefore there is very little vertical mobility of labor.

3. CULTURAL FACTORS

Religious, social and cultural factors also influence the individual taking up an

entrepreneurial career, in some countries there is religious and cultural belief that

high profit is unethical. This type of belief inhibits growth of entrepreneurship.

4. PERSONALITY FACTORS

In less developed countries the entrepreneur is looked upon with suspicion. Public

opinion in the less developed nations sees in the entrepreneur only a profit maker

and exploited.

5. MOTIVATION

Motivation is the act of stimulating someone or oneself to get a desired course of

action, to push the right button to get the desired results.

MOTIVATING FACTORS

1. Education background

2. Occupational experience

3. Family background

4. Desire to work independently in manufacturing line

5. Assistance from financial institution

6. Availability of technology

7. Other factors

FACTORS INFLUENCING ENTREPRENEURSHIP

1. Family Tradition.

2. Religious, Social And Cultural Factors.

3. Psychological Factors.

4. Political Factors.

5. Economic Policies.

CAUSES OF SLOW GROWTH OF ENTREPRENEURSHIP IN INDIA

Entrepreneurship developed only in the beginning of the 19th century and though

the base for industrialization had been laid a century ago. The following be the

main reasons, which could be responsible for lack of initiative and entrepreneurial

spirit among the Indians.

1. Caste System: - This decided occupation for members from each caste. The

altitudes were restrictive and therefore there were no changes of accumulating

wealth and promoting production.

2. Agriculture: - Agriculture was the main occupation. Farmers and cultivators

were always in the clutches of the money lenders. The zamindars, nawabs and

rajahs exploited the laborers. They spent money on enjoyment and luxury and

never risked money in industry. Banking and commercial system was also absent

so even if there were savings, they could not be utilized for productive use.

3. Educational System: - Talented young men were prepared to take white

collared jobs or join government or professional services. Many were attracted

towards politics. The result was that very few young men got attracted towards

becoming efficient, industrialists, technicians, managers etc.

4. Colonial Rules: - The British rulers adopted discriminatory policy Rich Indian

businessman had special connections with foreign rulers and both satisfied their

self interests. Even the few insurance and banking services catered to the needs of

some rich Indian businessman, Britishers in India did also not encourage

Industrialization.

5. Managing Agents: - There were just a handful of people who were known to be

having managerial skills. On common basis, these agents would lend their skills to

some top industries. Industrialists could not manage their own units. They were

always at the mercy of the managing agents who filled their pockets with big

chunks of the companies’ profits and took full advantage of Indian industrialists till

the managing agency system was abolished in 1970.

6. Joint Family System: - Younger members of the family always depended on

the Head who never gave any kind of independence or encouraged units other than

family business ones. A number of young men were discouraged from diversifying

from family business and doing something new and different.

7. Religious attitude: - Indians were very religious mi9nded. They gave more time

to religion than to earning material wealth. Religion got priority over business.

Some religions even condemned excess earnings and indulgence I in comforts.

Industrial activity was, therefore, given secondary consideration by the religious

Indians.

8. Mindset: - The mindset of the average Indian was never entrepreneurial. Our

religious literature and epics told us to have patience and to keep on working

without expecting the fruits of labor. This also killed the drive and desire to get

into entrepreneurial activities.

9. Recognition by the society: - In earlier days, the heroes India were the social

reformers and the politicians. Now it is the era of sportsmen, models and film stars.

It is sad that successful or the struggling entrepreneurs have never been recognized

as heroes. Entrepreneurial activity did not get due importance in the India society.

10. Family Background: - Empirical studies have shown that a good number of

entrepreneurs come from families with industrial backgrounds. Unfortunately, only

a few entrepreneurial communities in India made entrepreneurial contribution.

These communities could also not make headway in the entrepreneurial field on

account of the colonial rule, lack of infrastructure and other facilities.

Entrepreneurship development could only take place after independence in India.

STAGES OF EVOLUTION OF ENTREPRENEURSHIP

The evolutionary process of entrepreneurship activities may be divided into

the following broad stages:

1. Hunting Stage: - The primary stage of the evolution of the economic life of

man was hunting stage. Wants were limited and very few in numbers. The family

members themselves satisfied problems of food, clothing and shelter. Producers

were the consumers also. Robinson Crusoe, living in the deserted island, satisfying

his own requirements had no knowledge of business. People in some parts of

Africa and India still lead this type of life. In this stage problems of production and

distribution were not complexed since wants were simple and limited.

2. Pastoral Stage: - With the progress of mankind gradually mental understanding

developed and people started realizing that instead of killing animals, they should

breed and rear them. Thus cattle breeding encouraged the use of milk, and they had

to think in terms of grazing areas for their cattle. The surplus milk, meat and other

related products were spared of exchange. This stage can be termed as the first

stage of economic development and the beginning of commerce.

3. Agricultural Stage: - In search of grazing areas, they further realized that they

should grow plants as food for animals. They started testing some grain products

and slowly developed a taste in plants and the land was used for cultivation.

Groups of persons started living together on their agricultural fields, which were

subsequently converted into small villages with their farms. Free exchange of

goods was started and the activities were also divided to the extent of division of

labor at the village level to complement the needs of each other. Initially each

village was selfsufficient, but later they began small trading activities on barter

basis.

4. Handicraft Stage: - In the agricultural stage, people started learning the use of

cloth made of cotton products, and they developed the segments of the workers for

different activities. Cottage scale setup was developed at the village level to nearby

villages, and in exchange they brought requirements either to consume themselves

or for their village friends. Since the demand for gold coins, silver coins, skin and

hide etc increased the activities of cobblers, gold smiths, and blacksmiths, laborers

also rapidly increased, and caste system was also formed on the basis of activities

they did. Everybody selected their job according to their own choice and taste.

5. Present Industrial Stage: - The use of mechanical devices and the commonly

acceptable form of monetary system accelerated the growth of entrepreneurship

activities. The progress of science and the increase in the means of transportation

and communication enabled to travel widely and the markets were developed in

the country and abroad.

IMPORTANCE OF ENTREPRENEURSHIP

The importance of entrepreneurship to any economy is like that of

entrepreneurship in any community. Entrepreneurial activity and the resultant

financial gain are always of benefit to a country. If you have entrepreneurial skills

then you will recognize a genuine opportunity when you come across one.

Now the reasons why entrepreneurship holds a dominant position in the society?

The following reasons are responsible for the same:‐

1) Provides employment to huge mass of people:‐ people often hold a view that

all those who do not get employed anywhere jump into entrepreneurship, a real

contrast to this is that 76% of establishments of new business in the year 2003 were

due to an aspiration to chase openings. This emphasizes the fact that

entrepreneurship is not at all an encumbrance to an economy. What’s more is that

approximately 34 million of fresh employment opportunities were created by

entrepreneurs from the period of 1980. This data makes it clear that

entrepreneurship heads nation towards better opportunities, which is a significant

input to an economy.

2) Contributed towards research and development system:‐ almost 2/3% of all

innovations are due to the entrepreneurs. Without the boom of inventions the world

would have been a much dry place to live in. Inventions provide an easier way of

getting things done through better and standardized technology.

3) Creates wealth for nation and for individuals as well:‐ all individuals who

search business opportunities usually, create wealth by entering into

entrepreneurship. The wealth created by the same play a considerable role in the

development of nation. The business as well as the entrepreneur contributes in

some or other way to the economy, may be in the form of products

or services or boosting the GDP rates or tax contributions. Their ideas, thoughts,

and inventions are also a great help to the nation.

4) Sky‐scraping heights of apparent prospects:‐ the individual gets maximum

scope for growth and opportunity if he enters into entrepreneurship. He not only

earns, the right term would be he learns while he earns. This is a real motivating

factor for any entrepreneur as the knowledge and skills he develops while owning

his enterprise are his assets for life time which usually, lacks when a person is

under employment. The individual goes through a grooming process when he

becomes an entrepreneur. In this way it not only benefits him but also the economy

as a whole.

5) It is a challenging opportunity for the people:‐ although entrepreneurship is a

challenging task but in most of the cases the rewards it gives are much more than

what one anticipates. It does not only reward an entrepreneur at financial levels but

also on individual level. It provides self satisfaction to the entrepreneur.

6) Entrepreneurship provides self sufficiency:‐ the entrepreneur not only

become self sufficient but also provide great standards of living to its employees. It

provides opportunity to a number of people working in the organization. The basic

factors which become a cause of happiness may be liberty, monetary rewards, and

the feeling of contentment that one gets after doing the job. Therefore the

contribution of entrepreneurs makes the economy an improved place to live in.

IMPORTANCE OF ENTREPRENEURSHIP IN DEVELOPED ECONOMY

The nature of a developing economy is quite different from a developed

economy.

The developing economy can be an agricultural country moving towards the

industrialization or it may be the one where in the industry may be in its

infancy lacking advance technology.

The modern era is an era of changes. The whole world is becoming a village

due to the industrial revolution and fast developing communication

technology. The globalization of industry and commerce is bringing a vast

change in various aspects of life.

Economic development of a country is the outcome of purposeful human

activity.

The modern era is an era of changes. The whole world is becoming a village

due to the industrial revolution and fast developing communication

technology. The globalization of industry and commerce is bringing a vast

change in various aspects of life.

Economic development of a country is the outcome of purposeful human

activity.

Economic development is a highly dynamic process characterized by the

pattern of demand shifts, new products are needed, appear for the production

of goods within a country.

A developing country needs entrepreneurs who are competent to perceive

new opportunities and are willing to incur the necessary risk in exploiting

them.

A developing economy is required to be brought out of the vicious circle of

low income and poverty.

Entrepreneur can break this vicious circle.

Entrepreneurs and helping government can change a developing economy in

developed economy.

Entrepreneurship and economic growth / development: economic

development of any region is the outcome of purposeful human activities.

According to Schumpter, the economic development consists of employing

resources in a different way bringing in new factors of production or combination

of the factors. The entrepreneur looks for innovative ideas and puts them into

effect for economic development. The entrepreneur occupies a crucial place in the

process of economic development by acting as a trigger head to give spark to

economic activities. Some of the development activities are as follows: 1.increase

in the income. 2. Brings change in the structure of business and society. 3. Wealth

creation. 4. New products, services and business. 5. Generation of employment. 6.

Increase in the standard of living.

ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT

The industrial health of a society depends on the level of entrepreneurship existing

in it. A country might remain backward not because of lack of natural resources or

dearth of capital [as it is many times believed] but because of lack of

entrepreneurial talents or it inability to tap the latent entrepreneurial talents existing

in that society. Entrepreneurs historically have altered the direction of national

economies, industry or markets- Japan, Singapore, Korea, Taiwan to name a few.

1.4.1 ENTREPRENEURSHIP AND ECONOMIC DEVELOPMENT

Entrepreneurship is basically concerned with creating wealth through production of

goods and services. This results in a process of upward change whereby the real

per capita income of a country rises overtime or in other words economic

development takes place. Thus ntrepreneurial development is the key to economic

development. In fact it is one of the most critical inputs in the economic

development of a region. It speeds up the process of activating factors of

production leading to a higher rate of economic growth, dispersal of economic

activities and development of backward regions. If a region is unable to throw up a

sufficient number of entrepreneurs then alien entrepreneurs usually step in to

provide goods and services needed by the people. However the profits earned by

these entrepreneurs are usually not ploughed back but repatriated to their place

oforigin. As a result development in that region cannot take place. Dr. M.M.Akhori

refers to this practice as ‘The Leech Effect’. The above reiterates the importance of

entrepreneurship development for fuelling economic growth of a region.

Entrepreneurship begets and also injects entrepreneurship by starting a chain

reaction when the entrepreneur continuously tries to improve the quality of existing

goods and services and add new ones. E.g. when computers came into the market

there was continuous improvement in the models, their functions etc. like first

generation computers, personal computers, laptops, palmtops etc. Not only had this

fostered the development of the software industry, computer education institutes,

computer maintenance and stationery units etc. but also other industries like

banking, railways, education, travel, films, medical and legal transcriptions,

business process outsourcing [BPOs] etc. In this manner by harnessing the

entrepreneurial talent a society comes out of traditional lethargy to modern

industrial culture. India needs entrepreneurs to capitalize on new opportunities and

to create wealth and new jobs.

1.4.2 ENTREPRENEURSHIP AND EDUCATION

Towards the end of the sixties, two significant contributions were made in the field

of entrepreneurship .One was that there is a positive linkage between

entrepreneurship and economic development and the other was regarding the

emergence of a strong hypothesis that entrepreneurship can be developed through

planned efforts1. Consequently planners realized that absence of a strong

entrepreneurial base acts as a serious handicap in the industrial development of a

region. The identification and development of first generation entrepreneurs

through Entrepreneurial Development Programmes is an important strategy. There

is a growing realization that presence of resources and favourable government

policies cannot automatically manufacture economic development. It is the

entrepreneurial spirit of the people, which can transform the economy of that

region. Both the quantity and quality of entrepreneurs are of utmost significance

for achieving the goal of economic development. The myth that entrepreneurs are

born with some innate traits is fortunately no longer held. You will learn more

about this in the lesson on motivation. Many research studies have brought out that

entrepreneurship can be taught and learned. Entrepreneurship is a discipline and

like all disciplines it has models, processes and case studies, which can help an

individual to study this subject. The necessary competencies required of a

successful entrepreneur can be acquired through training and development.

Numerous courses in entrepreneurship are being taught all over the world in

schools and colleges, seminars and conferences are being organized and EDPs are

being conducted. The thinking today is why just create managers why not create

people who can absorb managers. One can acquire the traits and learn the skills for

becoming an entrepreneur e.g. a person can learn to be achievement oriented, self-

confident, perseverant etc. which are all part of the characteristics of a successful

entrepreneur.

Usually the model used for entrepreneurial education has three phases:

Stimulatory Phase- This phase involves planned publicity for opportunities,

motivation training and help and guidance in selection of product or service.

Support Phase- This provides help in registration of units, arrangement of finance

as well as land, sheds, power, water, common facility centres etc. Help is also

provided in marketing of products.

Sustenance Phase- Once the enterprise is set up then help is provided for

modernization, diversification, additional finance etc.

Difference Between

ENTREPRENEUR ENTREPRENEURSHIP

Person Process

Visualizer Vision

Creator Creation

Organizer Organisation

Innovator Innovation

Planner Planning

Leader. Leadership.

ROLE OF ETHICS AND SOCIAL RESPONSIBILITY IN CONTEXT OF

ENTREPRENEURSHIP

An entrepreneur must take risks with his or her own capital in order to sell

and deliver products and services while expanding greater energy than the

average businessperson in order to innovate.

A manager’s attitudes concerning corporate responsibility are related to the

organizational climate perceived to be supportive of laws and professional

codes of ethics.

On the other hand, entrepreneurs with a relative with a relatively new

company who have few role models usually develop an internal ethical code.

Entrepreneurs tend to depend on their own personal value systems much

more than other manager when determining ethically appropriate course of

action.

Ethics refer to the “study of whatever is right ands good for human being”,

business ethics concerns itself with the investigation of business practices in

light of human values.

Ethics is the broad field of study exploring the general nature of morals and

the specific moral choices to be made by the individuals in his relationship

with others.

Business ethic is the study of behavior and morals in a business situation.

Business ethics is “any business decision that creates value for customer by

matching quality and price.”

Although the English word ethics is generally recognized as stemming from

the Greek ethos, meaning “custom and usage”, it is more properly identified

as originating from swedhethos, in which the concepts of individual morality

and behavioral habits are related and identified as an essential quality of

existence.

ETHICAL DECISIONS:

1. Provide the customer with valid data about the product and service.

2. Enable the customer to make a free and informed choice, and

3. Generate customer commitment to the product and the organization that

provides it.

VIOLATIONS OF THESE THREE RULES PRODUCE UNETHICAL

BEHAVIOR :

1. Invalid and false data,

2. Coerced and manipulated decisions, and

3. low integrity and poor reputation for the firm.

In summary the ethics and responsibilities of entrepreneurs are:

1. Support law and professional code: The entrepreneurs have to follow the rules

and regulations of the country. They should also follow the code of conduct

prepared by their professional association.

2. Follow business ethics: Ethics refers to what is right and good for the human

beings and society. The business practices should be developed and used which

will be favorable for the human values and norms.

3. Involve in pedagogical Inquiry: The entrepreneurs have to inquire about the

theoretical and empirical aspect of entrepreneurship. They should involve in

research and development studies to find out the techniques and ideas of good

entrepreneurship.

4. Environmental Research: The entrepreneurs should involve in external

environmental research and collect the data of different variables. It will help new

entrepreneurs for finding out the feasibility of their undertaking.

5. Imparting ethical insight to the business students: The entrepreneurs should

help the academicians while imparting the ethical insights to the students. They

should provide financial support to the students who involve in entrepreneurial

research.

6. Create Employment: Entrepreneurs should create and develop new

opportunities for job to the people of the country. They should try to reduce the

unemployment problem of the country.

7. Mobilization of the idle resources: The natural resources of the country should

be mobilized. While mobilizing the natural resources, the optimum use of such

resources should be confirmed so that they can be conserved for future generations.

8. Increase favorable attitude of people: The earning of the enterprise should

facilitate the society’s people. It should share its benefit with the society in the

form of community development programs, health and sanitation programs,

opening of schools and colleges etc.

ENTREPRENEURIAL DEVELOPMENT

INTRODUCTION

Do you know that there are millions of unemployed youth in the country and by

the time you graduate, this number would have increased substantially? Do you

want to be part of that group which keeps knocking from pillar to post, checking

with employment exchanges, relatives, friends, and neighbours and still not able to

get a job to their liking and then settle for a second or third rate job? You can also

choose to be like Mr. Patel of Nirma who was a chemist’s assistance and has a Rs.

2500 crore company today. Did you know that the original Mr. Bata was a

cobbler? And now has stores in more than 30 countries all over the world. Or you

could be like Dhiru bhai Ambani who started life as a clerk in a French company in

Aden. He was not born into a business family nor did he possess an MBA degree

and yet, he is a household name in India and figures in the Forbes list of the richest

Asians. Lakshmi Mittal, the steel giant, Satbir Bhatia of Hotmail fame and Narayan

Murthy of Infosys are some other names in the endless list you could choose from.

And let us remind you that this opportunity is not only for boys but also for girls -

all those girls who think smart, are ready to act and script the story of their own life

- like Shehnaz Hussain or Ritu Kumar or Kiran Majumdar Shaw.

ENTREPRENEURSHIP AS A CAREER OPTION

After finishing your graduation you will be at the crossroads of life. You will face

the dilemma of choosing what you have to do in life. The vast majority of human

beings direct their activities towards earning a living, generating wealth and

improving their standard of living. You can choose your career from two broad

categories of options – Wage Employment or Entrepreneurship. The term ‘career’

signifies a continuous, ever evolving, ever expanding opportunity for personal as

well as business growth and development. We may define entrepreneurship as a

career in your own business [YOB] rather than wage employment [JOB] .If you

opt for a job then you will work for others. In case you opt for entrepreneurship

you will be your own boss. In case of wage employment one is engaged in routine

work carried on for others for which he receives salary or wages. He has to fol low

instructions and execute plans laid down by his superior. One can choose to be employed in

Government Service or the Public Sector or the Private sector. Some of the main differences between

entrepreneurship and wage employment career options are as under-

WAGE EMPLOYMENT

1. Work for Others

2. Follow Instructions

3. Routine Job

4. Earning is fixed, never negative

5. Does not create wealth

6. Can choose from-

Government service

Public Sector,

Private Sector

ENTREPRENEURSHIP

1. Own Boss

2. Make own plans

3. Creative activity

4. Can be negative

sometimes,generally surplus

5. Creates Wealth, contributes to

GDP

6. Can choose from-

Industry

Trade

Service Enterprise

In the context of employment generation the three terms- Income generation, Self-

employment and Entrepreneurship are often used interchangeably.

Income generation is the initial stage in the entrepreneurial process in which one

tries to generate surplus or profit. They are often taken on part- time or casual basis

to supplement income e.g. a man with some surplus money might put his money in

a fixed deposit account in a bank or a chit -fund to earn some interest.

Self-employment is the second stage in the entrepreneurial process and refers to

an individual’s fulltime involvement in his own occupation. e.g. a person who

starts a tea shop and remains happy and satisfied and has no plans to add on any

other items like samosas, buns, soft drinks etc. or to grow in any other manner[e.g.

supplying tea/coffee/sandwiches to others in the vicinity].

Entrepreneurship is the terminal stage of the entrepreneurial process wherein

after setting up a venture one looks for diversification and growth. We will learn

more about entrepreneurship a little latter in the lesson. An entrepreneur is always

in search of new challenges. An entrepreneur is not a routine businessman he

might not have resources but he will have ideas. He is innovative and creative. He

can convert a threat into an opportunity. Small businessmen might shut-down or

change his business if he anticipates losses but an entrepreneur will try again after

analyzing the situation. On the other hand an entrepreneur can leave a perfectly

running business to start another venture if he so desires.

Functionally all entrepreneurs are self-employed and income generating persons

but the reverse is not true- all self-employed and income generating persons are not

entrepreneurs. If seen on a continuum, income generation, self-employment and

entrepreneurship can be considered as the initial, middle and final stages of the

entrepreneurial growth process. Income generating experience encourages self-

employment, which in turn facilitates graduating into entrepreneurship.