Entrepreneurs?

Samir K Mahajan

Productive Activity and Entrepreneur

Q = f (N, L, K, E)

Where,

Q is output

N is land (natural resources) . Landlord earns rent. Contractual income

L is labour. Worker earns wage. Contractual income

K is capital . Capitalist earns interest. Contractual income

E is entrepreneurship. Entrepreneur earns profit or suffer loss. Organises. Non-Contractual income (positive or negative)

Entrepreneur and Profit

J.B. Clark : Profits are dynamic surplus.

o Dynamism disrupts equilibrium between demand and supply, and thereby gives rise to profit.

o In a static society where nothing changes, there can be no profit.

o Five changes occur in dynamic society such as changes in quantity and quality of human wants, changes in method of or technique of production, changes in amount of capital changes in forms of business organisation

F. G. Hawley: A C Pigou: Entrepreneurs bears risks of undertaking production, and hence earn profit.

Entrepreneur and Profit

F H Night: All risks do not yield profit. Changes can be predictable changes and unpredictable.

Entrepreneurs has to face many risks (such as known risks and unknown) because of changes that are occurring in the economy.

But all risks do not cause uncertainty and do not give rise to profit.

Known risks are insurable risks and hence no risks. Unknown risks are non-insurable and involve uncertainty about future.

Entrepreneurs bears non-insurable risks that give rise to profit.

Dynamic and unpredictable (unforeseen) changes brings uncertainty about future. Entrepreneurs bear uncertainty and earn profits.

If there is no changes, or if the changes are foreseen and predictable, there would be no uncertainty about future and no profit.

Entrepreneur and Profit

Joseph Schumpeter: Entrepreneurs bears no risks. Risks are borne out by capitalist.

o Entrepreneurs introduces innovations to in order to earn large(monopoly) profits.

o Innovations either reduce cost of production or increase demand for product, and thereby bring profit into existence.

Cost reducing innovations:• introduction of a new or cheaper technique or process of production,

• exploitation of a new source of raw materials,

• an new and better method of organising a firm

Entrepreneur and Profit contd.

Joseph Schumpeter contd:

Demand increasing innovations:

• introducing a new product, a new variety or design of product

• a new and superior method of advertisement

• discovery of new markets

If successful innovation gets known to others (rivals and similar existing firms), and adopts similar innovation, profit tends to disappear.

New innovations are continuously introduced by entrepreneurs, and profits continue to arise out of them if these innovations are successful.

Innovations leads to economic development.

ENTREPRENEURS

are those persons (business owners) who seek to generate value, through the creation or expansion of economic activity, by identifying and exploiting new products, processes or markets (innovators)

are individuals who pursue and exploit opportunities irrespective to the resources they currently control Stevenson (1985)

manages skills to mobilise human, financial and material resources necessary to bring a project to fruition (realisation/organisier) .

ENTREPRENEURS

ENTREPRENEURS

create new organizations come into existence. Gartner (1988)

develop and exploit business opportunities to bring future goods and services” (Shane and Venkataraman 2000).

are innovator or inventors who can see opportunities and have creative ideas in form of business

undertake to initiate, maintain or aggrandise profit by production or distribution of economic goods.

introduce innovation that involves endowing existing resources with new wealth-producing capacity

Entrepreneurial TraitsWhat makes an entrepreneur, entrepreneur ?

Knowing and understanding opportunity. have determination and perseverance. Have a need to achieve and to set high standards for themselves. Goal oriented Resourceful (capable). Creative. Visionary (having great ambition, imaginary, foresighted) . Independent thinking. are able to act quickly Dreamer

Entrepreneurial Traits contd.What makes an entrepreneur, entrepreneur ?

keep up to date with technology Hard working. Optimism. Innovator. French. Entreprendre (n) – “Risk taker” A Leader. make it happen. Change agent. Don’t wait for opportunity. Create it!

Marco Polo

Steve Jobs

Walt Disney

Bill Gates

THE TWENTY SOMETHING ENTREPRENEURS

Founders of Google: Sergey Brin (25) & Larry Page(25)Founders of Apple: Steve Jobs (21) & Steve Wozniak (26)Founders of Microsoft: Bill Gates (20) & Paul Allen (22)Founder of Facebook: Mark Zuckerberg (20)Founder of Wal-Mart: Sam Walton (26)

“Around here, however, we don’t look backwards for very long. We keep moving forward, opening up new doors and doing new things… And curiosity keeps leading us down new paths.”

–Walt Disney

Dhirubhai Ambani says….

“Only when you dream it you can do

it."

"If you work with determination and with perfection, success will

follow."

"Our dreams have to be bigger. Our ambitions higher. Our

commitment deeper. And our efforts greater. This is my

dream for Reliance and for India."

"Pursue your goals even in the face of difficulties,

and convert adversities into opportunities."

"You do not require an invitation to make profits."

"Don't give up, courage is my conviction."

The Question Still Persists Who Is An Entrepreneur ?

CONTINUUM OF ENTREPRENEURIAL ACTIVITY

Robin Lowe talks about the following classes of entrepreneurs.

Necessity Conventional Creative Serial Opportunist

Source: Robin Lowe, Sue Marriott-Enterprise_ Entrepreneurship and Innovation_ Concepts, Contexts and Commercialization (2006)

CONTINUUM OF ENTREPRENEURIAL ACTIVITY

Necessity: Reluctantly thrust into self-employment through circumstances. Ekes out a living but would prefer to be employed. It may be for a brief period of time; circumstances require self-employment.

Conventional: Self-employed, but sticks with conventional products and ideas to meet lifestyle needs.

Source: Robin Lowe, Sue Marriott-Enterprise_ Entrepreneurship and Innovation_ Concepts, Contexts and Commercialization (2006)

CONTINUUM OF ENTREPRENEURIAL ACTIVITY

Creative: Seeks success, but within the limits of personal or professional values, e.g. artistic entrepreneurs, social entrepreneurs.

Serial: Constantly challenging assumptions, developing new products/services, seeks rapid growth, however defined.

Opportunist: Spots opportunity and pursues growth to support personal status needs, e.g. financial success, social impact.

Source: Robin Lowe, Sue Marriott-Enterprise_ Entrepreneurship and Innovation_ Concepts, Contexts and Commercialization (2006)

Intrapreneur Entrepreneur Social Entrepreneur

You are working for somebody else, but you have initiative to start something new.

You are the business owner. Period.

You have your own business and you use it for good cause. In short, you are everyday superhero.

Entrepreneurship is key feature of a dynamic economy. In static traditional society, entrepreneurial activities are few.

Enterprise

Enterprise embraces many diverse themes including:

■ entrepreneurship, starting up your own company and becoming self-employed;

■ intrapreneurship, being an entrepreneur in an existing organization;

■ being innovative in exploiting personal and organization opportunities, by adopting a particular approach to work, study or life in general; and

■ being enterprising and becoming more independent and self-reliant throughout life, by gaining the necessary knowledge, skills and attitudes.

A Dream Entrepreneur change agent value creator job provider

Entry Barriers to Entrepreneurship

Source: Sunil Shukla, EDI

How many of you are for Business after B.Tech. / M.Tech. or any other form of education ?

CAREER PLANS

How many of you are for Business after getting a job ?

CAREER PLANS

Reconsidering Business Career?

How many of you are ready for entrepreneurship, if helped for:

Finance

Project Idea

Training for business and management

Why say no to entrepreneurship?

Source: Sunil Shukla, EDI

1) No Interest in Business/ Distinct preference for service

Job offers secured income & access to power Satisfaction with current job Lack of achievement motivation

2) Desire to wait for some more time

To gain experienceTo arrange financial resourcesTo try for a good job first

3) Lack of Confidence in Business

Lack of business idea Lack of knowledge of business opportunityLack of ability to take riskLack of managerial skillLack of knowledge of procedure & formalities

4) Disapproval of Family/Friends

No risk bearing capacity of the familyNo affiliation to business communityFamily pressure to earn money through job