Concept of entrepreneurship:
Entrepreneurship comes from a French word ‘entrependre’ and the German word uternehmen both means individuals who are undertakers i.e. those who risk a new venture. Entrepreneurship is a dynamic activity which helps the entrepreneur to make changes in the innovation in production, the process of production, new uses of materials, manufacturers of markets, etc. It is a mental attitude to overcome risk and uncertainty and to innovate effectively to achieve some goals.
An entrepreneur is an economic change agent with the knowledge, skills, initiative, drive, and sense of innovation to achieve goals. He identifies and seizes the opportunity for economic gain, he is a risk carrier, an organizer and an innovator.
• According to economists: An entrepreneur is one who combines labor, material and other assets of resources to produce a socially viable product, and also one that introduces change, innovation and new order.
• According to management: The person with the vision and action plan to achieve this is an entrepreneur.
Functions of entrepreneur:
• Decision making: The primary function of the entrepreneur is to decide the policy of production. An entrepreneur has to determine what to produce, how much to produce, where to produce, how to sell and what to do next. Furthermore, he has to decide the scale of production and the proportion to which he combines the various factors that he employs. In short, it is to make important business decisions related to the purchase of productive factors and the sale of finished goods or services.
• Management Control: Earlier some authors considered management control is one of the major functions of the entrepreneur. The business is managed and controlled by the entrepreneur himself. Therefore, the latter should have a high degree of management ability to select the right type of individuals to work with. However, the importance of this function has declined, as nowadays business is managed more and more by paid managers.
• Division of income: The next major task of the entrepreneur is to make the necessary arrangements for the division of total income among the various factors of production employed by him. Even if there is a loss in the business, it has to pay rent, interest, wages and other contractual income out of the actual sales income.
• Risk-taking and uncertainty-bearing: Risk-taking is the most important function of the entrepreneur. Modern production is very risky because an entrepreneur is required to produce goods or services in anticipation of their future demand. Broadly, there are two types of risks that he has to face. First, there are some risks, such as fire risks, loss of goods in transit, theft, etc., against which insurance can be done. These are known as measurable and insurable risks. Secondly, some risks cannot be insured, as their probability cannot be accurately calculated. These are called uncertainty (i.e. Competitive risk, technical risk, etc.). The entrepreneur takes both of these risks in production.
• Innovation: Another typical function of the entrepreneur, as emphasized by the Schumpeter, is to constantly invention – an invention of new products, discover new technologies and new markets – improve their competitive position and increase income.
Characteristics of entrepreneurship:
• Innovation: A businessman, who only behaves in traditional ways, cannot be an entrepreneur. Innovation involves problem-solving and the entrepreneur is a problem solver and also has critical thinking. According to Schumpeter, entrepreneurship is a creative activity. An entrepreneur is basically an innovator who brings something new to the economy.
• High Achievement: People with high need for achievement are more likely to succeed as entrepreneurs. Achievement motives are considered to be relatively stable permanent characteristics of an individual. Achievement motivation can be increased by deliberate efforts. Various studies on the psychological roots of entrepreneurship suggest the presence of high achievement among successful entrepreneurs.
• Managerial skills and leadership: According to Hauslitz, managerial skills and leadership are the most important aspects of entrepreneurship. Financial skills are of secondary importance only. A person who wants to become an industrial entrepreneur must have more than a drive for the benefit of the team. Must have the ability to lead and manage.
• Group level pattern: Entrepreneurial features are found in clusters which qualify themselves as Entrepreneur group. Entrepreneurial activity arises as a reflection of particular family backgrounds, experiences as members of certain groups, and common values.
• Organization Creation: According to Harbison Entrepreneurship means the skill of organization making. Organization building capacity is the most important skill for industrial development. This skill means ‘multiplying oneself’ by effectively delegating responsibility to others.
• Gap filling function: The most important feature of entrepreneurship is gap filling. It is the job of the entrepreneur to fill the gap or eliminate the deficiencies in knowledge above the production function forever. Some inputs such as motivation and leadership are unclear and their output is uncertain. An entrepreneur must marshal all inputs to realize the end product.
• Status Withdrawal: According to Hagen creative innovation ‘or change is a fundamental feature of economic development. An entrepreneur is a creative problem solver who is interested in things in the practical and technological sphere. He is in a state of heightened enjoyment while facing a problem. Feels emotion and tolerates disorder without discomfort. In traditional societies, instead of individual ability, position authority was given by status rather than individual ability. Hagen conceived an innovative personality, unlike the authoritarian personality.
• Functions of social, political and economic structure: Entrepreneurs are not evenly distributed in the population. Minorities provide most of the entrepreneurial talent but not all minorities are important sources of entrepreneurship. Entrepreneurship supplies four structure i.e. boundary structure, demand structure, opportunity structure, and labor structure. However, entrepreneurship depends on a specific combination of conditions that are difficult to create and easy to destroy.