Unit- 1: Introduction to Entrepreneurship

Entrepreneurship
Meaning:
Entrepreneurship is the ability of a person to minimise the use of resources and to put them into the process and
get the maximum benefit of out it. He should take into consideration quality, excellence and consumer
awareness for the sustainability of his business.
Definition:
Entrepreneurship is the ability and readiness to develop, organize and run a business enterprise, along with any
of its uncertainties in order to make profit. The most prominent example of entrepreneurship is the starting of
new business venture.
Nature of Entrepreneurship:
Entrepreneurship is a creative and innovative action process of entrepreneur towards establishing an enterprise.
Following are some of the main characteristics of entrepreneurship:

1) Innovation the essence of Entrepreneurship: Entrepreneurship is an innovative function as it involves

doing things in a new and better way. Innovation is the process of doing new things. It can be of a new product,
a new source of raw material a new market, a new method of production, not yet applied in a particular branch
or, manufacturing etc.

2) Economic Activity: Entrepreneurship is basically concerned with the economic activities i.e production and
distribution of goods and services. It is also concerned with the optimum utilisation of available factors of
production and resources.

3) Creation of Value: Entrepreneurship is virtually a creative and a purposeful activity. It leads to creation of
new products, services, approaches, resources, technologies, and markets that contribute some value to a
community or marketplace.

4) Risk Bearing: Risk is an inseparable element of entrepreneurship. An entrepreneur assumes the uncertainty
of future. In the pursuit of profit, there is possibility of loss also.

5) Dynamic Process: Entrepreneurship is a dynamic function. Flexibility is the tool towards successful
entrepreneur. An entrepreneur should adopt all the changes in the environment which bring useful opportunities
for business.

6) Special Skills and Leadership: An entrepreneurship calls for special skills to handle the situations as it
unfolds. An entrepreneur must have the ability to lead and manage in every situation. Entrepreneurship involves
the ability to create and build something from practically nothing. It is the ability to build a founding team to
complement the entrepreneur‟s skills and talents. An entrepreneurship can grow and flourish only if its founders
have required managerial and leadership skills.

7) Human Relations: Entrepreneurship is the ability to work with other people and signing responsibility is a
key to success. It is the ability to make a team, the efforts of which would result in gaining for the enterprise in
every aspect.
Importance of Entrepreneurship

• Creation of Employment- Entrepreneurship generates employment. It provides an entry-level job,

required for gaining experience and training for unskilled workers.
• Innovation- It is the hub of innovation that provides new product ventures, market, technology and
quality of goods, etc., and increase the standard of living of people.
• Impact on Society and Community Development- A society becomes greater if the employment base
is large and diversified. It brings about changes in society and promotes facilities like higher expenditure
on education, better sanitation, fewer slums, a higher level of homeownership. Therefore,
entrepreneurship assists the organisation towards a more stable and high quality of community life.
• Increase Standard of Living- Entrepreneurship helps to improve the standard of living of a person by
increasing the income. The standard of living means, increase in the consumption of various goods and
services by a household for a particular period.
• Supports research and development- New products and services need to be researched and tested
before launching in the market. Therefore, an entrepreneur also dispenses finance for research and
development with research institutions and universities. This promotes research, general construction,
and development in the economy.

Theories of Entrepreneurship

1) 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-

o Introduction of new product with which customer is not familiar or introduction of new quality of the existing
product.
o Use of new method of production which is not yet tested
o Opening of new market in which particular manufacturer of the country has not yet entered
o Conquest of new source of supplying raw material
o New form of organization

According to Schumpeter, Entrepreneurship is innovation and can be in the form of any product, process,
method, new market etc. It brings new technological changes into the society. He also differentiated between
the innovator and inventor. Inventor is the one who invents some new methods, technology, processes etc and
Innovator is the one who uses these new inventions to offer new products in the market. 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. According to him, entrepreneur is the major mover in economic
development with his function, to innovate or bring out new combinations. To Schumpeter, entrepreneurs are
persons who are motivated by a spirit for power; their extraordinary characteristic being an innate capacity to
choose correct answers, energy, will and mind to conquer fixed talents of thoughts, and a capacity to withstand
social opposition. The factors that contribute to the development of entrepreneurship would essentially be a
suitable environment in grasping the essential facts. It can be noted that this theory‟s main figure, the
“innovating entrepreneur” has played an important role in the rise of modern capitalism. The entrepreneur has
been the prime mover - for economic development process.
Criticism:
This theory seems to be one sided as it put extreme stress on entrepreneurship only and ignores the other
functions of the entrepreneurship.

Applicability and success of this theory becomes doubtful in under developed country.
 2) Theory of High Achievement by McClelland

This theory is regarded as the most important psychological theory. McClelland wanted to find the internal
factors that motivate people to take opportunity of the trade.

According to McClelland, a person attains three types of needs as an outcome of one‟s life knowledge. 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.
The definite characteristics of a high achiever (entrepreneur) can be listed as follows:
(i) They lay down moderate realistic and achievable goals for them.
(ii) They take planned risks.
(iii) They favor situations wherein they can get individual responsibility for solving problems.
(iv) They need actual feedback on how well they are doing.
(v) Their need for achievement live not only for the sake of economic rewards or social recognition
rather personal achievement is essentially more satisfying to them.

3) 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, uncertainty 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.
 4) 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.

This theory was criticized by many researchers, as it was based on the invalid assumptions like:
(a) There is a single system of Hindu value.
(b) The Indian people learn those values and translate them to their every day behaviour, and
(c) These values remained resistant to and protected against external pressures and change. The quick growth of
entrepreneurship in India since independence shows that Hinduism is not averse to the spirit of capitalism and
to adventurous spirit but some researchers has accepted this theory but it was not universally accepted.
5) Economic theory of Entrepreneurship: This theory was propounded by Papanek and Harris. According to
them 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 favourable 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
It is further strengthened by the fact that Marwaris and Vaishyas are everywhere in the country but only Gujarati
Marwaris and Vaishyas leads in businesses because Gujarat has a more favourable economic conditions. Thus, it
is concluded that favourable business environment has impact on entrepreneurial growth.
 6) 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.

7) Political System Theory of Entrepreneurial Growth

This theory states that favourable political environment has an impact on the entrepreneurial growth because
stable political system creates infrastructure, promotes policies and encourage people towards entrepreneurship.
Commitment in the political system creates a favourable business environment and enhances creative and
entrepreneurial ability which leads to the entrepreneurial growth in the country.
Entrepreneur
Meaning: The word “entrepreneur‟ is derived from the French word “entreprendre‟ which means „to
undertake‟. Basically, Entrepreneur is a person who launches his own venture. He organizes, manages and takes
the risk of developing those new products or processes for which the market demand exists but these are not
currently being supplied in the market.
Definition:
An entrepreneur is the agent who buys means of production at certain prices in order to combine into a product
that he is going to sell at prices that are uncertain at the moment at which he commits himself to his costs.
-Richard Cantillon

An entrepreneur is the economic agent who unites all means of production, the labour, the capital or land and
who finds the value of product which results from their employment, the reconstruction of the entire capital that
he utilises and the value of wages, the interest and the rent that he pays as well as profit belonging to himself.
-J.B.Say

Characteristics/ Qualities of Entrepreneur:

1) Innovator: Entrepreneurs are generally regarded as innovators. They introduce new methods, new products,
new markets, new sources of raw material and new forms of industrial units. According to Schumpeter
entrepreneur is basically an innovator who carries out new combinations of factors of production to initiate and
accelerate the process of economic development. Even the economic development of a country depends upon
the innovativeness of its entrepreneurs. They find new solutions to old problems, new uses of existing
resources, new techniques etc. The innovative entrepreneur is playing a key role in the economic development
of a country.
2) Risk Taker: Entrepreneur assumes the risk of the business. Risk means uncertainty. It is the condition of not
knowing the outcome of a decision or activity. He takes calculated risk and faces uncertainty confidently and
assumes risk. Higher the risk, higher would be the profit is general saying about risk but it all depends upon the
ability of a person taking the decisions and thereby gains higher returns.

3) Good Organiser: Entrepreneurs have remarkable skills in organising work and people. They make objective
selection of individuals in conformity with their skill in solving specific problem. They bring together various
factors of production, minimise losses and reduce the cost of production. An entrepreneur formulates business
plans and ensures their execution. An entrepreneur is one who combines various factors of production and then
produces a product for market.

4) Optimistic: The successful entrepreneurs have a positive approach toward things. They do not get disturbed
by the present problems faced by them. They become optimistic for future that the situations will become
favourable to business in future.

5) Foresight: The entrepreneurs have a good foresight to know about future business environment. In other
words, they well visualize the likely changes to take place in market, consumer attitude and taste, technological
developments etc. and take necessary and timely actions accordingly.

6) Visionary: Vision is the ability to see the end result of goals while striving to achieve them. Every
entrepreneur has a vision for growth and development. An entrepreneur is one who incubates new ideas, starts
his enterprise with these ideas and provides added value to society based on their independent initiative. With
persistence and determination, the entrepreneur develops strategies to change the vision into reality.

7) Self-Confident: An entrepreneur should be self confident. He must have faith in himself and in his abilities.
He should have ability to tackle the problems independently with confidence. Only a self confident entrepreneur
can trust others and can delegate authority to others. He should have the confidence to implement the change
with his relevant knowledge, skills and experience.

8) Perseverance: One of the qualities of successful entrepreneurs is that they possess and exhibit tremendous
perseverance in their pursuits. They do not give up their effort even if they fail. They are not deterred by
difficulties and problems that beset any project, rather they work hard until the whole project is successfully
accomplished. They have the willingness to keep goals in sight and work toward them despite obstacles. They
make hard efforts to get rid of obstacles coming in the way of reaching the ultimate goal.
9) Emotional Balance: There are many ups and downs in the business but entrepreneur has to be emotionally
stable. They do not get carried away by the huge profits and disappointed by the huge losses. They remain quiet
and calm at every situation.
10) Hard Work: Entrepreneurs works very hard to succeed. Most of entrepreneurs work hard in the beginning
and thus same becomes their habit for the lifetime because they believe that hard work is the key to success.
11) Decision Maker: An entrepreneur has to take various decisions in performing activities of his enterprise.
Therefore he must be innovative in decision making process. The true entrepreneurship requires creative
decision making, rational approach, problem solving ability and ability to take quick and correct decision. The
profitability and productivity of an enterprise directly depends upon the decision making capacity of an
entrepreneur.
12) Patient: Entrepreneurs are highly patient and do not get affected by the temporary failure and continue to
work hard. Entrepreneurs try again and again to achieve the success.
13) Communication Skills: Entrepreneurs are good communicator and with their good communication skills
they are able to convince others with their ideas. Good communication also means that both sender and the
receiver understand each other and are being understood. An entrepreneur who can effectively communicate
with customers, employees, suppliers and creditors will be more likely to succeed.

14) Leadership and Team Spirit: An entrepreneur must have the ability to build successful teams and thus
working in teams. He should be good at building and managing successful teams. Leadership quality is the most
important characteristic of entrepreneur. It is the process of influencing and supporting others to work
enthusiastically towards achieving objectives.

15) Interpersonal Skills: An entrepreneur is a person who comes across with different persons. He has to deal
with many types of persons. He is the person who gets the things done through with the help of others. So a
successful entrepreneur possesses the interpersonal skills of dealing with people.

16) Creative: An entrepreneur must have the qualities of creative thinker. He must be reasonably intelligent
and should have creative thinking so that he must be able to solve various problems and handle the critical
situations in order to deal with them.

Types of Entrepreneurs:
The various types of entrepreneurs are classified as under:

1. According to the Type of Business

i) Business Entrepreneur: Business entrepreneurs are individuals who conceive an idea to introduce a new
product or service in the market and then start a business to materialize their idea into reality. They tap various
resources to produce and market their product in order to develop a new business opportunity. They may set up
a big establishment or a small business unit.

ii) Trading Entrepreneur: Trading entrepreneur is one who undertakes trading activities and is not concerned
with the manufacturing work of goods. He targets the potential markets, explores the opportunities, stimulates
demand for his product line and creates a desire and interest among buyers for his product.

iii) Industrial Entrepreneur: An entrepreneur, who sets up his own industrial unit, is called Industrial
Entrepreneur. He explores the opportunities to set up his business, completes the necessary formalities of
getting statutory permissions, power connection, pollution control clearance (if the need be), arrange capital,
making payment of wages and supply necessary technical know-how. Such type of an entrepreneur knows how
to make the optimum use of resources and converts them into a profitable venture.

iv) Corporate Entrepreneur: The Entrepreneur who shows his innovative skill in organizing and managing
the activities of corporate undertaking is termed as Corporate Entrepreneur. He manages the affairs of his
corporate body and develops it with his innovative skills. He complies with all formalities to get his corporate
body registered under the requisite Act which gives his company the status of separate legal entity.

v) Agricultural Entrepreneur: These entrepreneurs raise the productivity of agriculture through

mechanization, irrigation and application of technologies for their agriculture land. They undertake such
agricultural activities as raising of money, marketing of crops, managing fertilizers etc.

2. According to the Use of Technology

i) Technical Entrepreneur: A technical entrepreneur is essentially an entrepreneur of “craftsman type.” These

entrepreneurs focus on production rather than marketing. Technical entrepreneur possesses craftsman skill in
himself which he applies to develop and improve the technical aspect of the product.
ii) Non-Technical Entrepreneur: An entrepreneur who is not concerned with the technical aspect of the
product is called non-technical entrepreneur. He develops alternative strategies of the marketing and promotes
his business. The objective of such entrepreneur is not to change the production techniques but he stimulates the
demand of the product.

iii) Professional Entrepreneur: An entrepreneur who is interested in floating a business but does not want to
manage or operate it. Once the business is established, he sells it out and catches on to float a new business.

3. According to Motivation

i) Pure Entrepreneur: Pure entrepreneur is one who is status conscious and wants recognition. He generally
undertakes entrepreneurial activities for his personal satisfaction or for the satisfaction of his psychological
needs.

ii) Induced Entrepreneur: Induced entrepreneurs are those individuals who are induced by some external
factors to start a business. The external factors could be like supporting government policies, unemployment,
family support, facilitating institutional support etc. These types of entrepreneurs run out to be more realistic in
their approach. For instance, when the government announced subsidies, tax rebates and financial support to
small scale industries, several entrepreneurs started their business as SSIs.

iii) Motivated Entrepreneur: These entrepreneurs are ambitious to stand out. They want to achieve something
in their life and also want to make a mark in society to prove their excellence. No matter how many hurdles
come in their way, they are totally determined.

4. According to Stages of Development

i) First Generation Entrepreneur: These entrepreneurs have no entrepreneurial background. They do not
inherit entrepreneurship from their earlier generation. They are first generation entrepreneurs in their family,
e.g. Late Dhirubhai Ambani

ii) Second Generation Entrepreneur: Some persons become entrepreneurs by inheritance. They inherit
entrepreneurship from their earlier generations, e.g. Ratan Tata inherited entrepreneurship from J.R.D.Tata and
Jamshetji Tata. Due to entrepreneurial heritage these entrepreneurs have some inborn qualities of
entrepreneurship.

iii) Classical Entrepreneur: A classical entrepreneur is one who strives for maximizing economic returns of
his firm at a level consistent with the survival of the firm but with or without an element of growth.

5. Clarence Danhof
These entrepreneurs are classified into four types:

i) Innovative Entrepreneur: Innovative entrepreneurs are one who introduce new goods, innovates new
methods of production, discovers new markets and brings them together to create value. He arranges finance,
starts an enterprise, assembles the various factors of production, chooses the competent managers and sets his
enterprise go.

ii) Adoptive or Imitative Entrepreneurs: Those entrepreneurs who are ready to adopt successful innovations
created by innovative entrepreneurs are called adoptive entrepreneurs. Instead of innovating the changes
themselves, they just imitate the technology and techniques innovated by others. Such entrepreneurs are
particularly important in underdeveloped countries because they contribute significantly to the development
nations because in these nations people prefer to imitate the technology, knowledge and skill already available
in more advanced countries.

iii) Fabian Entrepreneurs: Fabian entrepreneurs are cautious in adopting and implementing any change. Their
dealings are determined by custom, religion, tradition and past practices. They are reluctant to adopt new
methods and also not ready to take moderate risks. They imitate change only when it becomes clear that they
cannot survive without doing so.

iv) Drone Entrepreneurs: Drone entrepreneurs are those who are not ready to make the changes in their
existing production methods even at the cost of severely reduced returns. They can suffer loss but are not ready
to make changes in their existing production methods. With the increase in competition they would prefer to
stay out of market rather than giving their business a competitive edge.

Role of Entrepreneur
The role of an entrepreneur is multifaceted and central to economic development, innovation, and business
growth. Here are the key roles an entrepreneur plays:

1. Innovator: Entrepreneurs create new ideas, products, or services that meet market demands or solve
problems. They drive technological and business model advancements, often disrupting existing industries.

2. Risk-Taker: Entrepreneurs take calculated risks to establish and grow their ventures.They invest time,
resources, and capital, knowing there’s no guaranteed success.

3. Business Organizer: They coordinate various factors of production (land, labor, capital) to build and run a
business. Entrepreneurs establish efficient processes to ensure productivity and profitability.

4. Decision-Maker: Entrepreneurs make critical decisions on product design, market strategy, pricing,
partnerships, and growth plans. Their choices influence the direction and success of their business.

5. Job Creator: By starting and expanding businesses, entrepreneurs generate employment opportunities,
contributing to community and economic growth.

6. Catalyst for Economic Development: Entrepreneurs contribute to GDP growth by producing goods and
services. They enhance the flow of capital, attract investments, and promote regional development.

7. Problem Solver: Entrepreneurs identify gaps in the market and create solutions, addressing societal or
customer needs. Many focus on solving global challenges like sustainability, healthcare, or education.

8. Leader and Motivator: Entrepreneurs lead their teams, inspire others, and build organizational culture.
Their vision and leadership set the tone for achieving long-term goals.

9. Market Expander: They explore and tap into new markets, often contributing to globalization.
Entrepreneurs expand customer bases and create demand for innovative products.

10. Contributor to Social Change: Social entrepreneurs, in particular, address societal challenges and aim to
improve quality of life. Entrepreneurs often drive inclusion, sustainability, and other social goals.
Difference between Entrepreneur and Intrapreneur

Basis Entrepreneur Intrapreneur

Intrapreneur is an individual
An entrepreneur is an individual
having entrepreneurial skills
Meaning having a new and exclusive idea
who works at a previously
to establish something new.
established company.

An intrapreneur’s motive is to
An entrepreneur’s motive is to
Motive grow the business and make it
bring change to the world.
better.

Intrapreneurs are innovative in

Entrepreneurs are innovative in
Nature nature but less than
nature.
entrepreneurs.

Intrapreneurs are willing to take

Entrepreneurs are willing to
Risk Factor risks but less than
take risks.
entrepreneurs.

Intrapreneur’s goals are to get

Entrepreneurs focus on long-
Goals appraisals, appreciation, and
term profits.
promotions.

Entrepreneurs face low Intrapreneur faces high

Competition
competition for their business. competition in the market.

Entrepreneurs are founders of a Intrapreneurs are employees of

Position
company. a company.

Entrepreneurs operate activities Intrapreneurs use

Approach to Operate
using innovative methods. entrepreneurial skills.

Women Entrepreneur

Women entrepreneurs may be defined as the women or a group of women who set up and operate her own
enterprise. In other words women entrepreneurs are self employed individuals who establish their enterprise and
involve themselves for economic activities.

Problems faced by Women Entrepreneurs:

Women entrepreneurs faced many problems in their efforts to develop the enterprise they have established.
Basically, women entrepreneurs encounter two types of problems: general problems of entrepreneurs and
problems specific to women entrepreneurs. The main problems faced by women entrepreneurs may be analyzed
as follows:
1) Problems of Finance: Finance is regarded as the ‘life-blood’ for any organization whether it is big or small.
Obtaining bankers’ support, managing the working capital, deficiency of credit resources are the problems
which still remain in the domain of males. Studies have shown that even educated modern women entrepreneurs
in advanced and developing economies experienced difficulties in obtaining loans. Banks discourage women
borrowers believing that they will leave their business and become
again. Although the procedure of obtaining the loan has been simplified to a great extent but for women it still
remain a challenge. Thus, women entrepreneur fall due to the shortage of finance.

2) Scarcity of Raw material: women entrepreneurs find it difficult to obtain raw materials and other necessary
inputs. The failure of many co-operatives in 1971, such as those engaged in business basket making was mainly
due to the insufficient availability of forest-based raw material. High prices of raw materials and getting raw
material at the minimum of discount are the major problems which are faced by entrepreneurs.

3) Competition: Many of the women enterprise has unorganized set up. They have to face severe competition
from well settled industries. So this type of cut- throat competition, results in the liquidation of women
enterprise.

4) Lack of Education: In India literacy percentage among women is very low. Due to lack of proper education
majority of women are not aware about the latest technological developments, marketing knowledge, innovative
schemes, alternative markets etc. Lack of information and experience creates problems in setting up and
running of business enterprises.

5) Low Risk-bearing Ability: Women have as compare to men, low ability to bear economic and other risks
because they have led a protected life. Many times they face bias attitude in the selection of entrepreneurial
training. All these dim their capacity to bear risk involved in carrying an enterprise. Risk- bearing is an essential
requisite of a successful entrepreneur.

6) Family Responsibilities: in India, it is mainly a duty of women to look after the kids and other members of
the family. Her commitment in family leaves little energy and time for business. In case of married women, she
has to maintain a balance between her business and family. Their success in this regard also depends upon
supporting husband and family. Without the support and approval of husband, the female entrepreneur cannot
succeed. Accordingly, the educational level and family background of husband positively influence women
entry into business.

7) Male-dominated Society: The constitution if India speaks of quality between male and female. But in
reality, women are looked upon as weak section of society in all respects. Womens are not treated equal to men.
Thus, in turn, serves as a barrier to women entry into business.

8) Absence of Entrepreneurial Aptitude: as per study, involvement of women in the small scale sector as
owners stands at mere 7 percent. Many women take the training by attending the Entrepreneurship
Development Programmes without an entrepreneurial bent of mind.

9) Inefficient Arrangements for Marketing and Sale: For marketing the products women entrepreneurs have
to be dependent upon middlemen who add heavy profit of margin and that is the main reason for higher selling
prices of their product. Although the middlemen exploit the women entrepreneur, elimination of middlemen is
difficult, because it involves a lot of running about. Further, women entrepreneur find it difficult to capture the
market and make their products popular. In order to make company successful and profitable, the entrepreneur
must be able to sell his product and services. To attain this purpose access of market is essential as access to
finance. Women entrepreneurs, by and large continue to face the problem of marketing of their products. So it is
one of the main problems for women entrepreneurs.
Factors promoting an Entrepreneur

1) Economic Factors: Capital is one of the most important prerequisites to establish an enterprise. Availability
of finance, labour, land, accessibility of customers, suppliers are some of the factors that contribute to the
introduction, survival and growth of a business enterprise.

2) Socio-Economic Factors: The socio economic factors which contribute towards the success of
entrepreneurship are
Cast/religion Family background Level of Education Level of perception Social Mobility
Social Security
3) Political Factors: Political environment prevalent in the country also contributes towards the success of
entrepreneurship. A sound and stable political environment is very important for the growth of
entrepreneurship.

4) Work Environment: The work environment in which the employees are working, if it is not satisfactory
then the unsatisfied personal needs for growth and achievement in employment conditions results in successful
entrepreneurship.

5) Government Incentives and Subsidies: Government policies with regard to incentives and subsidies to the
entrepreneurs also contribute to the success of entrepreneurship in the economy.

6) Impact of Services Sector: Growing importance of services in the overall economy has paved the way for
entrepreneurial activity. New industries such as software and business process outsourcing have emerged and
these have a large number of entrepreneurial firms.

Role of Entrepreneurship in Economic Development:

The major role of entrepreneurship in economic development of an economy is discussed as follows:

1) Promotes Capital Formation: Entrepreneurial growth encourages capital formation. It helps in mobilising
idle savings of the public through issue of securities which ultimately results in productive utilisation of
resources. Entrepreneurs raise capital by borrowing funds from external sources like banks and financial
institutions and convert the savings of general public into capital.

2) Employment Generation: Entrepreneurship generates employment opportunities in the country by

promoting small scale business. It not only results in self employment but provides opportunity for others to get
the jobs according to their skills, knowledge and capabilities.

3) Balanced Regional Development: Entrepreneurs help to remove regional disparities through setting up of
industries in less developed and backward areas. In a way they get the advantage of government‟s grants,
subsidies and other benefits by promoting the industry in the backward areas by providing large number of
benefits like road transport, education, health, entertainment etc to the public. Setting up of industries to develop
the backwards areas promotes balanced regional growth.

4) Wealth Creation: Entrepreneurship stimulates equitable redistribution of wealth and income in the interest
of the country to more people and geographic areas thereby giving benefit to larger sections of the society.
Entrepreneurial activities also generate wealth in the economy and give a multiplier effect.

5) Increase Per Capital Income: Entrepreneurship contributes to economic development by increasing the per
capita income through efficient utilisation of national resources. It creates an environment in which everybody
earns more and the average income of people increases. By converting the idle resources into productive
channels, it helps to increase NNP as well as per capital income of the country.
6) Increase in Productivity: Entrepreneurship helps to increase the productivity of the factors of production. It
also coordinates all factors of production and ensures that such factors are made available economically for each
of the production process. This reduces the wastages of factors and increases the productivity.

7) Improvement in Standard of Living: Entrepreneurs play a pivotal role in improving the standard of living
of the people by adopting latest technology and innovations in the production of goods and services in large
scale that too at a lower cost. This enables the people to avail better quality goods at lower prices which results
in the improvement of their standard of living.

8) Increase in Government Revenue: With the development of entrepreneurship the income of people
increases and hence results in more government revenue in the form of taxes. This revenue can be utilised for
the welfare of nation and for promotion of industry, trade and commerce which leads to overall economic
development.