What is Entrepreneurship and its importance and features ?

Entrepreneurship is the tendency of a person to organize the business of his own and to run it profitably, using all the qualities of leadership, decisions making and managerial caliber etc. The term “entrepreneur” is often used interchangeably with “entrepreneurship”. But conceptually they are different.

In a way, entrepreneur precedes entrepreneurship. It is concerned with the development and co-ordination of entrepreneurial functions.

Entrepreneurship is an abstraction and entrepreneurs are tangible persons. Well designed and controlled research studies on entrepreneurship are very few. If we view entrepreneurship as opposed to management, it becomes still more difficult to define entrepreneurship.

Entrepreneurship is a role played by or the task performed by the entrepreneur. The central task of the entrepreneur is to take moderate risk and invest money to earn profits by exploiting an opportunity. For this he must posses far-sightedness to perceive an opportunity so that he can exploit it well in time. Although an entrepreneur has to perform diverse functions yet he must manifest many qualities in himself to be a good entrepreneur.

Entrepreneurship can be defined as the propensity of mind to take calculated risks with confidence to achieve a pre-determined business or industrial objective. That points out the risk taking ability coupled with decision making.

The word 'entrepreneurship' typically means to undertake. It owes its origin to the western societies. But even in the west, it has undergone changes from time to time. In the early 16th century, the term was used to denote army leaders. In the 18lh century, it was used to denote a dealer who buys and cells goods at uncertain prices. Towards 1961, Schumpeter, used the term innovator, for an entrepreneur. Two centuries before, the concept of entrepreneurship was shady. It is only in the recent years that entrepreneurship has been recognized widely all over the world like in USA, Germany, Japan and in the developing countries like ours. Gunnar Myrdal rightly pointed out that Asian societies lack entrepreneurship not because they lack money or raw materials but because of their attitudes. Till recently, in the west, the entrepreneurship is mainly an attribute of an efficient manager. But the success achieved by entrepreneurs in developing countries demolishes the contention that entrepreneur is a rare animal and an elusive character. In India, the definition of 'an entrepreneur being the one who undertakes to organize, own and run a business' has been accepted in a National Seminar on Entrepreneurship organized in Delhi in 1975. Still there has been no consensus on the definition of entrepreneurship and qualities of entrepreneurship.

Importance of Entrepreneurship :

Entrepreneurship being an intangible factor is the moving force and development is the consequence. It has an important role in the context of a developing nation like India which is confronted with major socio-economic problems. Entrepreneurship can play an important role not only in the industrial sector of a country but in the farm and service sectors also.

India is being attacked by baffling problems of over population, unemployment, under-employment, poverty and the like. Entrepreneurship is consistently equated with the establishment and management of small business enterprises and setting up these units is the solution to these baffling problems.

Concentration of economic power, regional imbalances, exploitation by monopolists, and many other giant problems find their solutions in the development of small scale industry which is another name of entrepreneurship in the developing countries. Mahatma Gandhi also asserted the same, entrepreneur ship has not grown much in India but it is gaining importance fast. The factors which retard the success of entrepreneurship in India are inadequate infrastructural facilities, shortage of capital, technical knowledge, and transport, absence of cheap and good quality raw material and shortage of power etc. The government has been taking significant steps to encourage entrepreneurship as entrepreneurship is the only solution to various problems of developing countries. Entrepreneurship caught strong waves during the last three decades and became a worldwide movement spreading across countries, regardless of their level of development. Even in Europe and United States, revival of small business has been seen for more than a decade. Constant change and innovations are simply a necessity of entrepreneurship and is becoming essential to survive in a global economy. An American magazine 'The Economist' (1999) recently put it, "Innovation has become the industrial religion of the late 20th Century." It is being increasingly realized that' day's managers and businessmen need not only managerial skills but entrepreneurial skills as well. Entrepreneurship needs to be demystified and transformed into a skill by teaching and practicing. Skill of entrepreneurship knows how to turn an ordinary corporation, managed in a routine manner, into an entrepreneurial organization. People within the organization can be trained to :

(i) detect the opportunities

(ii) Pursue the opportunities and rewarded

(iii) to lesson the consequences of failing.

Features of Entrepreneurship :

Entrepreneurship is the tendency of a person to organize the business of his own and to run it profitably, using various traits like leadership, decision making, innovation, managerial caliber etc. Entrepreneurship is a set of activities performed by an entrepreneur In a way, entrepreneur precedes entrepreneurship. The main features of entrepreneurship are as follows :

(i) Economic Activity : Although classical economists like Adam Smith and Richard Cantillon and many others didn't recognize entrepreneurship as an economic activity but since last few decades entrepreneurship is catching up and is primarily becoming an economic function because it involves creation and operation of an enterprise.

Schumpeter's argument was that all important changes in the economy are set off by an entrepreneur and then these changes slowly work themselves through economic system, in the form of a business cycle.

(ii) Innovative Activity : According to Schumpeter, entrepreneurship is essentially a creative and an innovative activity. There are five ways of being innovative.

(a) The introduction of a new good ;

(b} The introduction of a new method of production ;

(c) Opening of a new market ;

(d) The conquest of a new source of supply of raw-material ;

(e) The creation of a new organization of an industry.

Schumpeter's entrepreneur combines already existing materials and thereby produces something novel and innovative. It is only at that very moment when some one actually puts together such a combination that he is engaged in entrepreneurship. He suggests that it is very useful to study the constitutive parts of entrepreneurship, different motives that drive the entrepreneur and the main types of innovative behavior that entrepreneurship may result in.

Entrepreneurs tend to tackle the unknown; they do things in new and different ways' they weave old ideas into new patterns; they offer more solutions than exercises. However, just to be innovative is not enough unless that innovation is carried into production to benefit consumers.

(iii) A Function of High Achievement : McClelland identified two features of entrepreneurship, (a) doing things in a different and better way; (b) decision making under uncertainty. People having high need for achievement are more likely to succeed as entrepreneurs. Psychological theories assert that people's capacity for entrepreneurship is decisively influenced by the way they are socialized as children.

David McClelland stressed that entrepreneurs are highly motivated by challenging and competitive work situations.

(iv) Creative and Purposeful Activity : Entrepreneurship is virtually a creative, and purposeful activity. Entrepreneurship is a creative response to the changing environment. Earning profit may not be the sole objective but introduction of something creative and new is the purpose of entrepreneurship. The benefit of this creativity must be enjoyed by people at large.

(v) Entrepreneurship : An Organizing Function : As J.B. Say says : The entrepreneurs function is to combine the productive factors, to bring them together. According to him, an entrepreneur is one, who combines the land of one, the labour of another, and capital of yet another, and thus, produces a product. By selling the product in the market, he pays interest on capital, rent on land, wages to labourers and what remains is his profit. Thus, J.B. Say clearly distinguishes between the role of a capitalist as a financer and the entrepreneur as an organiser.

Marshall also advocated the significance of organisation among the services of special class of business undertakers.

(vi) Entrepreneurship : A function of Risk-Bearing : Richard Cantillon, an Irishman living in France, defined entrepreneur who buys factors of production with a view to sell it at uncertain prices in future. Cantillon concerned of an entrepreneur as a bearer of non-insurable risk. Thus, Cantillon introduces elements of direction and speculation into the function of entrepreneurship.

Entrepreneurship is a dynamic and multi-dimensional concept. It is both an art as well science. It is more an art than science. In short, Entrepreneurship is what entrepreneurs do.