ENTREPRENEUR: A person who sets up a business or businesses, taking on financial risks in the hope

of profit. "many entrepreneurs see potential in this market"

Someone who exercises initiative by organizing a venture to take benefit of an opportunity and, as the
decision maker, decides what, how, and how much of a good or service will be produced.
An entrepreneur supplies risk capital as a risk taker, and monitors and controls the business activities. The
entrepreneur is usually a sole proprietor, a partner, or the one who owns the majority of shares in an
incorporated venture.

According to economist Joseph Alois Schumpeter (1883-1950), entrepreneurs are not necessarily
motivated by profit but regard it as a standard for measuring achievement or success.

Schumpeter discovered that they:

#greatly value self-reliance,
#strive for distinction through excellence,
#are highly optimistic (otherwise nothing would be undertaken), and
#always favor challenges of medium risk (neither too easy, nor ruinous).

Entrepreneurship is the process of designing, launching and running a new business, which is often
initially a small business, and the people who create these businesses are called entrepreneurs.
Entrepreneurship has been described as the "capacity and willingness to develop, organize and manage a
business venture along with any of its risks in order to make a profit" .While definitions of
entrepreneurship typically focus on the launching and running of businesses due to the high risks involved
in launching a start-up, a significant proportion of businesses have to close due to "lack of funding, bad
business decisions, an economic crisis, lack of market demand – or a combination of all of these.
Entrepreneurs act as managers and oversee the launch and growth of an enterprise. Entrepreneurship is
the process by which either an individual or a team identifies a business opportunity and acquires and
deploys the necessary resources required for its exploitation. The exploitation of entrepreneurial
opportunities may include

 Developing a business plan

 Hiring the human resources

 Acquiring financial and material resources

 Providing leadership

 Being responsible for both the venture's success or failure

 Risk aversion

The economist Joseph Schumpeter (1883–1950) saw the role of the entrepreneur in the economy as
"creative destruction" – launching innovations that simultaneously destroy old industries while ushering
in new industries and approaches. For Schumpeter, the changes and "dynamic disequilibrium brought on
by the innovating entrepreneur [were] the norm of a healthy economy"
While entrepreneurship is often associated with new, small, for-profit start-ups, entrepreneurial behavior
can be seen in small-, medium- and large-sized firms, new and established firms and in for-profit and not-
for-profit organizations, including voluntary-sector groups, charitable organizations and government.
Entrepreneurship may operate within an entrepreneurship ecosystem which often includes:
 Government programs and services that promote entrepreneurship and support entrepreneurs and
start-ups
 Non-governmental organizations such as small-business associations and organizations that offer
advice and mentoring to entrepreneurs (e.g. through entrepreneurship centers or websites)

 Small-business advocacy organizations that lobby governments for increased support for
entrepreneurship programs and more small business-friendly laws and regulations

 Entrepreneurship resources and facilities (e.g. business incubators and seed accelerators)

 Entrepreneurship education and training programs offered by schools, colleges and universities

 Financing (e.g. bank loans, venture capital financing, angel investing and government and private
foundation grants).

Entrepreneurs act as managers and oversee the launch and growth of an enterprise. Entrepreneurship is the
process by which either an individual or a team identifies a business opportunity and acquires and deploys the
necessary resources required for its exploitation. The exploitation of entrepreneurial opportunities may include:
[5]

 Developing a business plan

 Hiring the human resources

 Acquiring financial and material resources

 Providing leadership

 Being responsible for both the venture's success or failure

 Risk aversion

The economist Joseph Schumpeter (1883–1950) saw the role of the entrepreneur in the economy as "creative
destruction" – launching innovations that simultaneously destroy old industries while ushering in new
industries and approaches. For Schumpeter, the changes and "dynamic disequilibrium brought on by the
innovating entrepreneur [were] the norm of a healthy economy".
While entrepreneurship is often associated with new, small, for-profit start-ups, entrepreneurial behavior can be
seen in small-, medium- and large-sized firms, new and established firms and in for-profit and not-for-profit
organizations, including voluntary-sector groups, charitable organizations and government
Entrepreneurship may operate within an entrepreneurship ecosystem which often includes:

 Government programs and services that promote entrepreneurship and support entrepreneurs and start-
ups
 Non-governmental organizations such as small-business associations and organizations that offer
advice and mentoring to entrepreneurs (e.g. through entrepreneurship centers or websites)

 Small-business advocacy organizations that lobby governments for increased support for
entrepreneurship programs and more small business-friendly laws and regulations

 Entrepreneurship resources and facilities (e.g. business incubators and seed accelerators)

 Entrepreneurship education and training programs offered by schools, colleges and universities
  Financing (e.g. bank loans, venture capital financing, angel investing and government and private
foundation grants)

Entrepreneurship Development

Entrepreneurship development is the process of improving the skills and knowledge of entrepreneurs
through various training and classroom programs. The whole point of entrepreneurship development is to
increase the number of entrepreneurs.
By doing this, the pace at which new businesses or ventures are made gets better. On a wider level, this
makes room for employment and improves the economy of a business or country. The steps below will
explain how to create an effective entrepreneurship development program and how to go about enhancing
it.
1. Outline the objectives of the program and focus on the venture development
Entrepreneurship development aims at individuals who want to start or possibly expand a business.
Entrepreneurship development also focuses a lot on enhancing the ideas and potential of an entrepreneur.
The aims of a program have to be clearly explained otherwise the program will never reach its full
potential. The development of a venture also has to be outlined in the program. Without these two, there
will be no clear goal.
2. Select educated people who have high entrepreneurial potential
An entrepreneurship development program requires that various people be selected. However, most
programs tend to look for a specific group of educated people rather than target everyone. Ideally, you
have to look at the education and traits that you are looking for, in an entrepreneur, and match them with
the people who have applied for the program.
Most people say that public funds should be spent on people who need the most help. The resources of an
entrepreneurship development program are usually (and unfortunately) limited. It is hence better to
choose people who will prove to be really useful and benefit the entire community.
3. Select uneducated people who have high entrepreneurial potential
A development project on women’s entrepreneurship in Nepal was recently conducted. It was found that
women who couldn’t meet the essential needs of their family or themselves were usually more eager to
learn about different ways to earn money as compared to women who were better off. However, such
women usually face many problems.
Even though such women are not educated, they have great entrepreneurship potential because they have
the right motivation. Such people need to be aided by assistance packages where training can be given on
entrepreneurship. This will instill confidence and teach them the skills they need in order to provide for
their family.
4. Identify the local market and search for people who have potential in it
Entrepreneurship development programs should first identify the local market and aid potential
entrepreneurs who know a lot about it. These people need to be able analyze and then design unique ideas
based off the needs of their surroundings.
By concentrating on select local entrepreneurs, the effects of the program can be easily and quickly seen
within the community. Later on, programs can help improve their knowledge in their sector. In fact, it is
creativity and the thirst for innovation that truly matters rather than the market’s size. In later programs,
the introduction of new products and product features can be added. This will add value and increase the
size of the market
5. Provide support through private sector-based organizations
Support should be obtained from private organizations that are both financial and knowledge-based. This
helps reduce the cost of the entrepreneurship development program and increases its effectiveness.
 Private organizations that could support entrepreneurship development programs include universities,
consulting companies and various NGOs. Large enterprises are also encouraged to support
entrepreneurship development programs as this their sponsorship that will help reduce unemployment.
6. Provide an easy yet detailed methodology that will help entrepreneurs improve in the short and
long-run
Entrepreneurial development programs aim at being simple to understand and teach skills that
entrepreneurs can use after the program. It also contains courses that aim at developing their skills and
ideas. These are required if entrepreneurs wish to successfully exploit the local market.
They also need to be taught how to gather the required resources in order to meet the goals of their
venture. The program also needs to have outlined methods through which entrepreneurs can improve the
performance of their business in the long run.
Entrepreneur development training proves to be highly effective when finance, quality assurance,
marketing and productivity are linked to the training program. As an example, when development banks
are involved earlier in the process of training, an entrepreneur will easily understand credit processes and
the also praises the bank’s business plan.
7. Implement special measures to improve the usefulness of trainers and facilitators
The Success of an entrepreneurship development program also relies on the commitment and quality of
the many facilitators and trainers. Any trainer or facilitator in the program needs to understand the culture
and lifestyle of the group in order to better integrate themselves and serve the group.
The selection of proper trainers is based on the amount of business experience they have and the how
much knowledge they have about their local business environment. Training facilitators can significantly
improve their usefulness in tackling the needs of entrepreneurs.
8. The selection of areas for pilot programs must be right
Entrepreneurship development programs are usually too restricted in terms of where it is done and what
people are involved in the program. Selecting pilot target areas will usually depend on the ease at which
support institutions are available.
It will also depend on the interest people take in entrepreneurial development programs. These facts can
never be the same for any two geographical locations and hence must be considered carefully.
9. Launch pilot ED programs and develop as needed
Analyzing pilot feasibility is an effective way of launching a major entrepreneurship development
program. If the program shows signs of high promise, it can be launched on a national level. By relying
on the sponsors for support rather than donor support, the program will be able to expand past local
development while maintaining high quality. This is especially important when the support of donors
starts to fade.
10. A successful entrepreneurship development program requires government policies
Entrepreneurship helps the economy of a country grow and creates new jobs. Government policies
usually have a substantial impact on the number of entrepreneurs in a country.
While there are many governments that say they do support entrepreneurial businesses, they usually do
not have many specific policies and programs that effectively support entrepreneurial development.
Creating an effective entrepreneurship development program may not be easy but then again, it is not
impossible either. By carefully following the ten points above, you are well on your way to creating an
entrepreneurship development program that not only benefits your company in the short run but in the
long run as well.
Factors affecting Entrepreneurship
Entrepreneurship is a complex phenomenon influenced by the interplay of a wide variety of factors.
The entrepreneurial activity at any time is dependent upon a complex and varying combination of
economic, social, political, psychological and other factors. These factors may have been both
positive and negative effluences on the emergence of entrepreneurship. Positive influences constitute
facilitative and conductive conclusive for the emergence of entrepreneurship whereas negative
influences create inhibiting milieu to the emergence of entrepreneurship. Following factors contribute
to the success of entrepreneurship:

1.Personality Factors
Personality traits such as inner desire for control of their activities, tolerance for risk, high level of
tolerance to function in adverse situations and background experiences such as the family
environment, level of education, age and work history tolerance for ambiguity are important personal
characteristics that affect entrepreneurship. Individuals who are desirous of working independently;
willing to work for long hours and assume risk; are self-confident and hard-working are likely to be
more successful as entrepreneurs than those who do not posses these qualities

Personal factors, becoming core competencies of entrepreneurs, include:

(a) Initiative (does things before being asked for)

(b) Proactive (identification and utilization of opportunities)

(c) Perseverance (working against all odds to overcome obstacles and never complacent with
success)

(d) Problem-solver (conceives new ideas and achieves innovative solutions)

(e) Persuasion (to customers and financiers for patronization of his business and develops &
maintains relationships)

(f) Self-confidence (takes and sticks to his decisions)

(g) Self-critical (learning from his mistakes and experiences of others)

(h) A Planner (collects information, prepares a plan, and monitors performance)

(i) Risk-taker (the basic quality).

2. Environmental factors
These factors relate to the conditions in which an entrepreneur has to work. If the environment that a
individual is working in is unsatisfactory, that is, not conducive to his growth needs, it is likely that
the individual will quit his job and start his own business as an entrepreneur. Unsatisfied personal
needs for growth and achievement in employment conditions results in successful entrepreneurship.

3. Political
Some researchers felt that the growth of entrepreneurship cannot be explained fully unless the
political set-up of a country is taken into consideration. Political stability in a country is absolutely
essential for smooth economic activity. Frequent political protests, strikes, etc. hinder economic
activity and entrepreneurship. UnfairTRADE PRACTICES , irrational monetary and fiscal policies,
etc. are a roadblock to the growth of entrepreneurship

4. Socio-Economic Factors
The entrepreneurial activity at any time and place is governed by varying combination of socio-
economic factors. The empirical studies have identified the following socioeconomic factors:

 Cast/religion
 Family background
 Level of Education
 Level of perception
 Legitimacy of Entrepreneurship
 Migratory character
 Social Mobility
 Social Security
 Investment capacity
 Ambition/motivation
5. Economic Factor
Factors such as availability of finance, labor, land, accessibility of customers, suppliers are the
factors that stimulate entrepreneurship. Capital is one of the most important prerequisites to establish
an enterprise. Availability of sufficient capital affects the introduction, survival and growth of a
business enterprise. Capital is regarded as lubricant to the process of production. If we increase in
capital investment, capital output ratio also tends to increases. This results in increase in profit, which
ultimately goes to capital formation. Due to this capital supply increase, entrepreneurship also
increases.

6. Other Factors
 Entrepreneurial Education
More and more people with high academic attainments started joining the ranks of industrialists,
especially the professionals holding qualifications in engineering, law, medicine, cost and chartered
accounting. The newer entrepreneurs have a larger proportion of their floatation in the traditional
sector, but these professionals have by and large preferred to make their investments in modern
sector. The technicians in particular among both old and new entrepreneurs have entered industries in
the modern sector having a bearing of their academic qualifications. Many universities and institutes
are nowadays offering entrepreneurship education. A number of institutes have set up successful
entrepreneurship centers, which provide help to budding entrepreneurs by conducting formal training
and structured mentoring programs.

 Impact of Services Sector

Increase in per capita income leads to a greater share of the services sector in the national economy.
The average size of firms’ m many sections of the services sector are relatively small. This in turn
promotes entrepreneurial activity across a number of service sector industries. Even for some
developing countries such as India, services account for over half of the total GDP. 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.

 Increasing Demand for Variety

Increased wealth has led to increase in the demand for variety (Jackson 1984). The increasing
demand for new products is of advantage to smaller firms. A number of studies have shown the
comparative advantage of smaller firms in being innovative and coming up with new products . If the
products has unmet demand, it will create a market for itself. The success of entrepreneurship is,
therefore, dependent upon the extent to which the product is in demand. Changes in consumer tastes
are a major reason for growth of entrepreneurship. People are, inclined to products that are
specifically designed to meet their special needs. Mass produced homogenous goods do not enjoy as
wide an appeal anymore.

 Impact of Ethical Value System

Max Weber was first to point out that the entrepreneurial growth was governed by the ethical value
system of the society concerned. He said that the spirit of rapid industrial growth depends upon a
rationalized technology, acquisition of money and its rational use for productivity and multiplication
of money. These elements depend upon a specific value orientation of individuals. Entrepreneurship
develops rapidly in those societies where ethical values provided independent capacity of decision-
making. No doubt, this view has some truth but it is not accepted universally.

 Internal Control System

Entrepreneurship largely depends upon the control system designed for controlling the business
activities. If the control system is effective they will result in optimal inventory, good quality
products and high profit margins. This will have a positive effect on the success of entrepreneurship.
Entrepreneurship
Entrepreneurship is the process of designing, launching and running a new business, which is often initially
a small business, and the people who create these businesses are called entrepreneurs
Entrepreneurship has been described as the "capacity and willingness to develop, organize and manage a
business venture along with any of its risks in order to make a profit" While definitions of entrepreneurship
typically focus on the launching and running of businesses due to the high risks involved in launching a start-
up, a significant proportion of businesses have to close due to "lack of funding, bad business decisions, an
economic crisis, lack of market demand – or a combination of all of these.

Entrepreneurship is a complex term that's often defined simply as running your own business. But there's
a difference between a "business owner" and an "entrepreneur," and although one can be both, what
distinguishes entrepreneurship is a person's attitude.

"Entrepreneurship is much broader than the creation of a new business venture," said Bruce
Bachenheimer, a clinical professor of management and executive director of the Entrepreneurship Lab at
Pace University. "At its core, it is a mindset – a way of thinking and acting. It is about imagining new
ways to solve problems and create value."
Passion is the real drive, wrote Juan Jose de la Torre for Entrepreneur Middle East. An entrepreneur
possesses an interior fuel and stamina that drives their actions, he said. This superior energy helps to
overtake and surpass the different challenges, and it injects strength to continue pursuing goals when
difficulties arise.
In another Business News Daily article, Jenny Ta, CEO and founding partner at VCNetwork.co, said
successful entrepreneurs are typically confident and self-motivated. They are tenacious but understand
their own limitations. Instead of following the status quo, entrepreneurs have a healthy disrespect for
established rules and often set out to do things that others may not have the courage to pursue. They are
also willing to fail and start over again, internalzing the lessons they've learned to create something new
and improved.
"An entrepreneur is someone who can take any idea, whether it be a product and/or service, and have the
skillset, will, and courage to take extreme risk to do whatever it takes to turn that concept into reality and
not only bring it to market but make it a viable product and/or service that people want or need," said MJ
Gottlieb, co-founder of consulting firm Hustle Branding and author of "How to Ruin a Business Without
Really Trying" (Morgan James Publishing, 2014).
Entrepreneurship is classified in Nine Types;
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.

1. 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 competitive edge.
Total Quality Management, job redesigning, new techniques of doing things, participative management or
management by consensus is a few of the examples of administrative entrepreneurship that increases
overall organizational efficiency and that nukes the firm successful and sustainable in the competitive
market environment.
The old age pension scheme is such an administrative entrepreneurship of the government of Bangladesh.
2. Opportunistic entrepreneurship
There is a proverb “Hit! while the iron is hot”. It is the best exhibit of the characteristic of this category of
entrepreneurship. Environmental changes always offer new opportunities. But everybody is not equally
capable of identifying and to utilize that opportunity on time.
The entrepreneurship that identifies, exploits and executes the opportunity in the first hand regarded as
opportunistic entrepreneurship.
3. Acquisitive entrepreneurship
The entrepreneurship that learns from others competencies is acquisitive entrepreneurship.
It acquires something new of value front, the competitive environment or achieves the competitors’
technical capacities. It keeps the entrepreneurship sustainable in the competitive environment.
The failure never restraints them from acquisition but motivates them further to discover such a thing
with a new visitor.
4. Incubative entrepreneurship
This category of entrepreneurship generates and nurses new ideas and ventures within the organization. It
executes them in a productive manner and ensures material gain for the organization.
They pursue and help to get differentiated technologies to promote creations and innovations Microsoft,
Nokia etc. always incubates new varieties types of product and creates product differentiation in the
market.
5. Imitative entrepreneurship
The entrepreneurship that imitates a good or service operating in the market under a franchise agreement
is the imitative entrepreneurship. It is the medium that spread technology over the world.
It adopts an existing technology in countries over the world. It also adopts an existing technology with
minor modification appropriate to the local condition.
6. Private Entrepreneurship
The entrepreneurship that is initiated under 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
7. 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.
8. Individual entrepreneurship
The entrepreneurship that is undertaken by an individual or a family with the personal initiative is
individual entrepreneurship.
9. Mass Entrepreneurship
This type of entrepreneurship emerges in an economy where a favorable climate of motivation and
encouragement exist for developing a wide range of entrepreneurship among general mass is mass
entrepreneurship.’ It increases small and medium enterprises in a country.
Hans Schollhammer (1980) has classified entrepreneurship into five categories such as administrative,
opportunistic, acquisitive, incubative and imitative entrepreneurship. But with the change of time
Entrepreneurship classification has increased.
11 Types of Entrepreneurs
1. Self-Employed
Individuals who perform all the work and keep all the profit. This includes everything from family-run stores,
agents, repair persons, accountants, to physicians and lawyers. It can be a full-time job because no one else is
involved.

2. Opportunistic Entrepreneurs:
Those who start a business and expand as fast as possible in order to be able to hire other employees. Usually,
these additional employees have the necessary expertise that the owner does not have.

3. Inventors
Those with particular inventive abilities who design a better product and then create companies to develop,
produce and sell the item. High-technology companies of this type are a new trend.

4. Pattern Multipliers:
Those who look for an idea someone else has already had so that they can then create their own business based
on this model. Franchise operation or chain stores are a form of this approach.
5. Economy of Scales Exploiters
Those who benefit from a large volume of sales by offering discount prices and operating with very low
overhead.

6. Acquirers
Those who take over a business started by somebody else and use their own ideas to make it successful. This
often happens when there is a financial problem in the current operation. Fresh management ideas may save
the business.

7. Buy-Sell Artists:
Those who buy a company for the purpose of improving it so that they can sell it again for a profit.

8. Speculators
Those who purchase a commodity and resell it for a profit. Real estate, art, antiques and crops are typical
speculator items.
9. Internal Entrepreneurs (Intrapreneurs):
Those who create new ideas and turn them into a successful project within an existing business. Although they
have neither the profit nor the personal financial risk of their own business, they need to use the same methods
of operation as an entrepreneur.

10. Franchisee
A franchisee is an individual who starts a business for which a widely known product image has already been
established. The franchisee owns the business and assumes its operating responsibilities subject to
specifications set out by the franchisor.

11. Necessity Entrepreneur:

Unemployed person who needs to establish his/her own business in order to survive, e.g a cobbler, micro-
trading.

Some other Types of Entrepreneur and their features:

Business Entrepreneurs - It is refers to the individuals who conceive an idea for the product or service and
makes the business around it. For example - Pen production and marketing. The establishment of the business
can be of big and small in size.
Trading Entrepreneurs - It refers to the person who is not considered with manufacturing but only undertakes
trading activities. He is the one who identifies market, stimulates demand for product line among buyers.
Industrial Entrepreneurs - Essentially a manufacturer, a person who identifies the need of a customer and
tailors a product. They are the one who converts economic resources and technological resources in to
profitable ventures. for example electronic industry and textile units.
Corporate Entrepreneurs - A person who demonstrates his innovative skill in organising and managing
corporate undertaking.
Agriculture Entrepreneur - It refers to the person who undertakes agricultural activities as raising and
marketing of crops, fertilizers etc. Example - agricultural tourism and manufacturing and marketing of
fertilizers.
Technical Entrepreneurs - Its can be considered as a craftsman. They concentrate more on production and less
or negligible on sales.

The Entrepreneurial Process

Entrepreneurship is a process, a journey, not the destination; a means, not an end. All the successful

entrepreneurs like Bill Gates (Microsoft), Warren Buffet (Hathaway), Gordon Moore (Intel) Steve Jobs

(Apple Computers), Jack Welch (GE) GD Birla, Jamshedji Tata and others all went through this process.
To establish and run an enterprise it is divided into three parts – the entrepreneurial job, the promotion,

and the operation. Entrepreneurial job is restricted to two steps, i.e., generation of an idea and preparation

of feasibility report. In this article, we shall restrict ourselves to only these two aspects of entrepreneurial

process.

Figure 4.1: The Entrepreneurial Process

1. Idea Generation:
To generate an idea, the entrepreneurial process has to pass through three stages:

a. Germination:
This is like seeding process, not like planting seed. It is more like the natural seeding. Most creative ideas
can be linked to an individual’s interest or curiosity about a specific problem or area of study.

b. Preparation:
Once the seed of interest curiosity has taken the shape of a focused idea, creative people start a search for
answers to the problems. Inventors will go on for setting up laboratories; designers will think of
engineering new product ideas and marketers will study consumer buying habits.

c. Incubation:
This is a stage where the entrepreneurial process enters the subconscious intellectualization. The sub-
conscious mind joins the unrelated ideas so as to find a resolution.

2. Feasibility study:
Feasibility study is done to see if the idea can be commercially viable.

It passes through two steps:

a. Illumination:
After the generation of idea, this is the stage when the idea is thought of as a realistic creation. The stage
of idea blossoming is critical because ideas by themselves have no meaning.

b. Verification:
This is the last thing to verify the idea as realistic and useful for application. Verification is concerned
about practicality to implement an idea and explore its usefulness to the society and the entrepreneur.

Entrepreneurial motivation

The entrepreneurial motivation refers to the forces or drive within an entrepreneur that affect
the direction, intensity, and persistence of his / her voluntary behaviour as entrepreneur.

entrepreneurial goals. In other words, the entrepreneurial motivation refers to the forces or drive within an
entrepreneur that affect the direction, intensity, and persistence of his / her voluntary behaviour as
entrepreneur. So to say, a motivational entrepreneur will be willing to exert a particular level of effort (intensity),
for a certain period of time (persistence) toward a particular goal (direction).

Definition
Motivation is regarded as “the inner state that energizes activities and directs or channels behavior towards the
goal”.

Motivation is the process that arouses action, sustains the activity in progress and that regulates the pattern of
activity.

Nature of Motivation
The nature of motivation emerging out of above definitions can be expressed as follows:

1. Motivation is internal to man

Motivation cannot be seen because it is internal to man. It is externalized via behavior. It
activates the man to move toward his / her goal.

2. A Single motive can cause different behaviors

A person with a single desire or motive to earn prestige in the society may move towards to join
politics, attain additional education and training, join identical groups, and change his outward
appearance.

3.Different motives may result in single behaviour

It is also possible that the same or single behaviour may be caused by many motives. For
example, if a person buys a car, his such behaviour may be caused by different motives such as
to look attractive, be respectable, gain acceptance from similar group of persons, differentiate
the status, and so on.

4.Motives come and go

Like tides, motives can emerge and then disappear. Motives emerged at a point of time may not
remain with the same intensity at other point of time. For instance, an entrepreneur overly
concerned about maximization of profit earning during his initial age as entrepreneur may turn
his concern towards other higher things like contributing towards philanthropic activities in social
health and education once he starts earning sufficient profits.

5.Motives interact with the environment

The environment in which we live at a point of time may either trigger or suppress our motives.
You probably have experienced environment or situation when the intensity of your hunger
picked up just you smelled the odour of palatable food.

You may desire an excellent performance bagging the first position in your examination but at the same time
may also be quite sensitive to being shunned and disliked by your class mates if you really perform too well
and get too much of praise and appreciation from your teachers. Thus, what all this indicates is that human
behaviour is the result of several forces differing in both direction and intent.

Entrepreneurial Motivating Factors

Most of the researchers have classified all the factors motivating entrepreneurs into internal and external
factors as follows:

Internal Factors
These include the following factors:

1. Desire to do something new.

2. Become independent.
3. Achieve what one wants to have in life.
4. Be recognized for one’s contribution.
5. One’s educational background.
6. One’s occupational background and experience in the relevant field.
External Factors
These include:

1. Government assistance and support.

2. Availability of labour and raw material.
3. Encouragement from big business houses.
4. Promising demand for the product.

Entrepreneurial barriers

First: Corrupt and unsupportive business environment

Lack of supportive and market-augmenting governmental regulations serve as a barrier to

entrepreneurship. Russia leads all other large nations in having an unsupportive business environment

because they lack rule of law, have poorly defined contract and property laws, enforce regulations

inconsistently, allow rampant corruption and bribing, allow regulatory authorities and inspectors to act in

a predatory nature which therefore requires friendly ties with government officials and bureaucrats to

smooth the way for businesses to operate. China has similar issues. See the accompanying list where

pictured is Russian dissident-businessman, Boris Berezhovsky, now exiled in London, England.

Berezhovsky was one of the Russian oligarchs who acquired massive wealth by taking control of state

assets after the fall of communism. He also has links to the poisoned Russian spy Alexander Litvinenko.

Tied for second: Employee related difficulties

Building an employee asset base for the enterprise is one of the more daunting and sometimes overlooked

tasks. Entrepreneurs must find and select the best-qualified employees who are motivated and willing to

grow with the venture. Then they must ensure the employees do not leave. The professors say this task

becomes a barrier when employees’ expectations increases, governmental regulations related to labor

employment is hardened, and employee costs grow. Employee cost is more than pay. It includes

healthcare, workers’ compensation, social security tax, and health and safety regulations.

Just ask Charles “Chip” Starnes, who was recently held hostage by his own employees in a plant in

China. It has been widely reported that Starnes was held hostage by current employees who did not

receive severance pay that 30 workers received because they were being laid off. Starnes was moving a

plastic-injection-molding division to Mumbai, India, where production costs are lower. After being

barricaded in the plant for almost a week, Starnes reached an agreement after nearly a week to pay two

months’ wages, totaling almost $300,000, to the remaining 97 employees.

Tied for second: Severe market entry regulations

Governmental rules, taxation, environmental regulations, lending requirements and licensing are all

barriers to entrepreneurship. Most countries, the United States included, proscribe or license market entry

and the creation of new firms to protect incumbents in certain industries and professions. Entry
procedures, or “red tape,” vary such that entrepreneurs need one day to register an enterprise in one

country and up to 20 weeks in another. Other barriers to entrepreneurship are predatory tax behavior of

authorities, lack of property rights and tax disadvantages.

Tied for second: Shortage of funds and resources

Finding the money to start up an enterprise is a leading barrier to entrepreneurship. Without funds, any

person cannot begin to organize, train, develop and sell product.

Fifth: Lack of Entrepreneurship Opportunities

Venture creation requires existing marketplace opportunities with possibilities known to the entrepreneur

and favorable odds for success for entrepreneurial “spirit” to succeed.

Sixth: Lack of Entrepreneurial Capacity

Opportunities go untried until someone comes along with an eye for possibility and a can-do attitude.

Some cultures may discourage entrepreneurial capacity resulting in a low rate of new firm entrance. It is

like having an oil well field without knowledgeable people to mine the wells. Entrepreneurial capacity is

the existence of people with entrepreneurship qualities, willingness and motivation to initiate new

ventures.

Seventh: Lack of Adequate Entrepreneurship Training

Training and education can be a robust incubator for new ventures. This includes training in technical

skills, managerial skills, entrepreneurial skills and entrepreneurship.

Tied for eighth: Lack of Appropriate Technical and Practical Skills

People tend to use the skills they have acquired to pursue entrepreneurial initiative. Lacking the

appropriate skills and knowledge inhibits economic development.

Tied for eighth: Lack of Market Experience

The essence of leadership is first learning and doing before leading. Therefore, the capability to start a

business is propelled by previous education and work experience. Rushing into a new market because it

looks attractive and rewarding without having some experience and background in it can be fatal.

Experience in a related business before start-up is positively correlated to the probability of success.

Tenth: Fear of Failure

Entrepreneurs have to decide whether to take action so they don’t miss the boat, while knowing that hasty

action may cause them to sink the boat.

Eleventh: Aversion to Risk

A psychological barrier closely related to the fear of failure is aversion to risk. Entrepreneurs must take

initiative, create structure with a social-economic mechanism and accept risk of failure. Entrepreneurs

have to be risk takers while those who are risk averse will seek the security if an existing establishment.

(Rest of the topics are provided in the classes)