meaning entrepreneur -unit-1

Understand the meaning of entrepreneurship

At the end of the session you will know:

Meaning - Origin of the Term of Entrepreneur.

Different Theories to the entrepreneurship concept.

Peter Drucker’s Principles of Innovation.

Historical Development of the Term ‘Entrepreneur’.

Changing concept.

Chapter 1 - Understand the meaning of entrepreneurship


Meaning:

Entrepreneur is a person ‘who starts a business.’ He / She can also be termed as aperson who starts an enterprise, business or a firm.’ He / She works for himself / herselfand also provides employment to other. He / She is his / her own boss.

Examples of entrepreneur:

A vegetable vendor who comes home to sell vegetables. Is he or she an entrepreneur? An owner of a “petty shop” of provision store. Can we call him an entrepreneur? Raghavendra Rao, who promoted Orchid Chemicals and pharmaceuticals. A mechanic having his own work shop. Chandrasekaran and Narayanan who run a publishing business which was started by their father. Who is an entrepreneur here? Dhirubhai Ambani who had promoted a world call petroleum plant. Padmanabhan, a chartered accountant, offering communication programmes and does audit work Prabhudeva, Cinema director and actor. Kamath, Chief Executive Officer of ICICI. Ramu, a 10 year old boy selling “sundal” on beach.


Origin of the Term:

The term entrepreneur is derived from the French verb entreprendre which means “to undertake”. The original related word in English are Entry and Enterprise. These two words are combined and the new term is developed.


Theories on Entrepreneurship Development:

Richard Cantillion’s Theory of ‘risk-bearing’ – Takes risk of buying at certain prices and plans to sell at uncertain prices.

Knight’s Theory of ‘Uncertainty’ – Bearing Uncertainty which, by its very nature cannotbe insured, nor capitalised nor salaried too.

Theory of J.B.Say on ‘Co-ordination, Organisation and Supervision’ – Associates an Entrepreneur with the functions of co-ordination, organisation and supervision.

Schumpeter’s Theory of ‘Innovation’ – Considers economic development as a discretedynamic change brought by an entrepreneur by instituting new combinations ofproduction i.e. innovations.

McClelland’s Theory of Achievement – an individual’s need for achievement (nAch) refers to the need for personal development.

Peter Drucker’s Theory of ‘Opportunity’ – an entrepreneur is an one who always searchesfor change, responds to it and exploits it as an opportunity.


Historical Development of the Term ‘Entrepreneur’

Vasant Desai explains the term entrepreneur on the basis of historical development inthe theory.

17th century Person bearing risks of profit/loss in a fixed price contract with government.

1725: Richard Cantillon

Person bearing risks is different from person supplying capital.

1797: Beaudeau Person bearing risks, planning, supervising, organising and owning.

1803: Jean Baptiste Say

Separated profits of entrepreneur from profits of capital.

1876: Francis Walker

Distinguished between those who received profit from managerial capabilities.

1934: Joseph Schumpeter

Entrepreneur is an innovator and develops untried technology.


1958: Haggen An entrepreneur is an economic man who tries to maximise his profits by innovations.

1961: David McClelland Entrepreneurs are high achievers.

1964: Peter Drucker Entrepreneur maximises opportunities through systematic innovations.

1975: Albert Shapero

Entrepreneur takes initiative, organises some social, economic mechanisms and accepts risk of failure.

1980: Karl Vesper Entrepreneur seen differently by economists, psychologists, business persons and politicians.

1983: Gilford Pincholt

Intrapreneur is an entrepreneur within an already established organisation.

Historical Development of the Term ‘Entrepreneur’..Cont


1985: Robert Hisrich

Entrepreneurship is the process of creating something different with value b devoting the necessary time and effort, assuming the accompanying financial, psychological and social risks and receiving the results-rewards of monetary and personal satisfaction

1990: Vasant DesaiEntrepreneurial activities encompass all fields/sectors and foster a spirit of enterprise for the welfare of mankind.

Historical Development of the Term ‘Entrepreneur’..Cont


Changing Concept:

The history of the thought of entrepreneur shows that a farmer, a dealer who wereregarded as entrepreneurs in earlier days, now has changed to innovators and contributors to the economic growth. Earlier, all that was required for a person wasto start his own business and be his own boss. Currently, even an employee is regarded as an entrepreneur and they are called as ‘intrapreneur’.

meaning entrepreneur -unit-1

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