Entrepreneurial Development

Unit I

Entrepreneur
Evolution:
The word entrepreneur has been taken from the French

language where it cradled and originally meant to designate an organizer of musical or other entertainments. Oxford English Dictionery (in 1897) also defined an entrepreneur in similar ways as the director or a manager of a public musical institution, one who gets up entertainment, especially musical performance. In the early 16th century, it was applied to those who were engaged in military expedition. It was extended to cover civil engineering activities such as construction and fortification in the 17th century. It was only in the beginning of the 18th century that the word was used to refer to economic aspects.

Views of Entrepreneur
As a Risk-Bearer

As an Organizer
As an Innovator

Characteristics of an Entrepreneur
Hard Work

Desire for High Achievement

Highly Optimistic Independence Foresight Good Organizer Innovative

Functions of an Entrepreneur
Idea Generation and scanning of the best suitable

idea. Determination of the business objective Product analysis and market research Determination of form of ownership/ organization Completion of promotion formalities Raising necessary funds Procuring machine and material Recruitment of men Undertaking the business operations

Types of Entrepreneur
Innovative Imitative Fabian Drone Solo operator

Active Partner
Inventor Challenger

Buyers
Lifetimers

Entrepreneurship
Entrepreneurship is the attempt to create value

through recognition of business opportunity, the management of risk-taking appropriate to the opportunity, and through the communicative and management skills to mobilize human, financial and material resources necessary to bring a project to completion. Thus, entrepreneurship refers to the functions performed by an entrepreneur in establishing an enterprise. Just as management is regarded as what managers do, entrepreneurship may be regarded as what entrepreneurs do.

Factors affecting Entrepreneurial Growth

Economic Factors Capital Labour Raw Materials Market Non Economic Factors

Sociological Factors
Legitimacy of Entrepreneurship Social Mobility Marginality Security

Psychological Factors
Need Achievement Withdrawal of Status Respect

Government Actions

Entrepreneurship & Economic Development

An increase in the number of entrepreneurs leads to an increase

in economic growth. This effect is a result of the concrete expression of their skills, and more precisely, their propensity to innovate. Schumpeter has already described this innovative activity, the carrying out of new combinations, by distinguishing five cases.
The introduction of a new good that is one with which

consumers are not yet familiar or of a new quality of a good. The introduction of a new method of production. The opening of a new market. The conquest of a new source of supply of raw materials or halfmanufactured goods. The carrying out of the new organisation of any industry: like creation of monopoly or breaking up of monopoly.

These opportunities can result from productivity increases, in

which case, their relationship to economic growth appears quite clearly.

Entrepreneurship & Economic Development

The important role that entrepreneurship plays in the economic

development of an economy is as follows:

Entrepreneurship promotes capital formation by mobilizing the

idle savings of the public. It provides immediate large-scale employment. Thus, it helps reduce the unemployment problem in the country i.e., the root of all socio-economic problems. It promotes balanced regional development. It helps reduce the concentration of economic power. It stimulates the equitable redistribution of wealth, income and even political power in the interest of the country. It encourages effective resource mobilization of capital and skill which might otherwise remain unutilized and idle. It also induces backward and forward linkages which stimulate the process of economic development in the country. Last but not the least, it also promotes countrys export trade i.e., an important ingredient to economic development.

Theory of Achievement Motivation

David

McClelland pioneered workplace motivational thinking, developing achievementbased motivational theory and models, and promoted improvements in employee assessment methods, advocating competency-based assessments and tests, arguing them to be better than traditional IQ and personality-based tests. David McClelland is most noted for describing three types of motivational need, which he identified in his 1961 book, The Achieving Society:
achievement motivation (n-ach) authority/power motivation (n-pow) affiliation motivation (n-affil)

The need for achievement (nach)

The n-ach person is 'achievement motivated' and

therefore seeks achievement, attainment of realistic but challenging goals, and advancement in the job. There is a strong need for feedback as to achievement and progress, and a need for a sense of accomplishment.

the need for authority and power (n-pow)

The n-pow person is 'authority motivated'. This

driver produces a need to be influential, effective and to make an impact. There is a strong need to lead and for their ideas to prevail. There is also motivation and need towards increasing personal status and prestige.

the need for affiliation (n-affil)

The n-affil person is 'affiliation motivated', and has

a need for friendly relationships and is motivated towards interaction with other people. The affiliation driver produces motivation and need to be liked and held in popular regard. These people are team players.

Explanation of the Theory

McClelland said that most people possess and exhibit a

combination of these characteristics. Some people exhibit a strong bias to a particular motivational need, and this motivational or needs 'mix' consequently affects their behaviour and working/managing style. Mcclelland suggested that a strong n-affil 'affiliation-motivation' undermines a manager's objectivity, because of their need to be liked, and that this affects a manager's decision-making capability. A strong n-pow 'authority-motivation' will produce a determined work ethic and commitment to the organisation, and while n-pow people are attracted to the leadership role, they may not possess the required flexibility and people-centred skills. McClelland argues that n-ach people with strong 'achievement motivation' make the best leaders, although there can be a tendency to demand too much of their staff in the belief that they are all similarly and highly achievement-focused and results driven, which of course most people are not.

McClelland's Experiment
McClelland asserted via this experiment that while

most people do not possess a strong achievementbased motivation, those who do, display a consistent behaviour in setting goals: Volunteers were asked to throw rings over pegs rather like the fairground game; no distance was stipulated, and most people seemed to throw from arbitrary, random distances, sometimes close, sometimes farther away. However a small group of volunteers, whom McClelland suggested were strongly achievementmotivated, took some care to measure and test distances to produce an ideal challenge - not too easy, and not impossible.

contd
McClelland

contrasted achievement-motivated people with gamblers, and dispelled a common pre-conception that n-ach 'achievementmotivated' people are big risk takers. On the contrary - typically, achievementmotivated individuals set goals which they can influence with their effort and ability, and as such the goal is considered to be achievable. This determined results-driven approach is almost invariably present in the character make-up of all successful business people and entrepreneurs.

.contd
McClelland suggested other characteristics and attitudes of

achievement-motivated people:
achievement is more important than material or financial reward. achieving the aim or task gives greater personal satisfaction than

receiving praise or recognition. financial reward is regarded as a measurement of success, not an end in itself. security is not prime motivator, nor is status. feedback is essential, because it enables measurement of success, not for reasons of praise or recognition (the implication here is that feedback must be reliable, quantifiable and factual). achievement-motivated people constantly seek improvements and ways of doing things better. achievement-motivated people will logically favour jobs and responsibilities that naturally satisfy their needs, i.e offer flexibility and opportunity to set and achieve goals, e.g., sales and business management, and entrepreneurial roles.

Conclusion of the Experiment

McClelland

firmly believed that achievementmotivated people are generally the ones who make things happen and get results, and that this extends to getting results through the organisation of other people and resources, although as stated earlier, they often demand too much of their staff because they prioritise achieving the goal above the many varied interests and needs of their people.

Top 10 Women Entrepreneurs of India

Dr. Kiran Mzumdar Shaw, Chairman & Managing Director of Biocon Ltd., who became Indias richest woman in 2004, was educated at the Bishop Cotton Girls School and Mount Carmel College in Bangalore. She founded Biocon India with a capital of Rs.10,000 in her garage in 1978 the initial operation was to extract an enzyme from papaya. Her application for loans were turned down by banks then on three counts biotechnology was then a new word, the company lacked assets, women entrepreneurs were still a rarity. Today, her company is the bigget biopharmaceutical firm in the country.

Ekta Kapoor, creative head of Balaji Telefilms, is the daughter of Jeetendra and sister of Tushar Kapoor. She has been synonymous with the rage of soap operas in Indian TV, after her most famous venture Kyunki Saas Bhi Kabhi Bahu Thi which was aired in 2000 on Star plus. Ekta dominates Indian Television. At the 6th Indian Telly Awards 2006, she bagged the Hall Of Fame award for her contributions.

Top 10 Women Entrepreneurs of India

Neelam Dhawan, Managing Director, Microsoft India, leads Microsoft India. She is a graduate from St. Stephens College in 1980,and also passed out from Delhis Faculty Of Management studies in 1982. Then she was keen on joining FMCG majors like Hindustan Lever and Asian Paints, both companies rejected Dhawan, as they didnot wish to appoint women for marketing and sales. Naina Lal Kidwai, was the first Indian woman to graduate from Harvard Business School. Fortune magazine listed Kidwai among the worlds top 50 Corporate Women from 2000 to 2003. According to the Economic times, she is the first woman to head the operations of a foreign bank in India. ( HSBC)

Top 10 Women Entrepreneurs of India

Indu Jain, the multi-faceted lady used to be the Chairman of the Times Group-The most powerful and largest Media house India has known. Indu Jain is known by many different identities such as that of spiritualist, humanist, entrepreneur, an educationalist but most prominently she played the role of the Chairman of Times Group. Indu Jain is the perfect picture of the successful Indian Woman entrepreneur. Priya Paul, she has a bachelors degree specialising in Economics from Wellesley College, USA. She entered her family business and is currently the Chairperson of Park Hotels.

Top 10 Women Entrepreneurs of India

Simone Tata, has been instrumental in changing a small subsidary of Tata Oil Mills into the largest cosmetic brand in India LAKME, synonymous today with Indian Fashion. She became a part of Lakme during 1961 and has been responsible for turning the company into one of the biggest brands of fashion in India. At present she is the Chairperson of Trent Limited, a subsidary of Tata Group. Mallika Srinivasan, currently the Director of TAFE- Tractors and Farm Equipment, India , was honoured with the title of Businesswoman of the Year during 2006 by the Economic Times. She joined the company in 1986 and has since been responsible for accelerating turnover from 85 crores to 2900 crores within a span of 2 decades.

Top 10 Women Entrepreneurs of India

Preetha Reddy, Managing Director of Apollo Hospitals, Chennai, one of the largest healthcare conglomerates of India, is one of the pioneer businesswoman of India in the segment of Health Care Industry.

Ranjana Kumar, currently Vigilance Commissioner in Central Vigilance Commission, after her retirement as the Chairperson of NABARD- National Bank For Agricultural and Rural Development, is a prominent Indian Banker. When the Government of India appointed her as the Chairperson and Managing Director of The Indian Bank, she became the first woman to become head of a public sector bank in India. At that time of her appointment, The Indian Bank was saddled with huge losses and during her tenure she ensured the turn around of The Indian Bank.

Problems of Women Entrepreneurs

Problem of Finance

Scarcity of Raw Material

Stiff Competition Limited Mobility Family Ties Lack of Education Male-Dominated Society Low Risk-Bearing Ability

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