Entrepreneurship Development notes, SEC II, Subject Code 502S3A, M.A English, 2nd Year 3rd Semester, University of Madras

 

2^nd M.A ENGLISH

3^rd SEMESTER

SEC II - ENTREPRENEURSHIP DEVELOPMENT

Subject Code - 502S3A

UNIT	TOPICS
I	Introduction Meaning and Importance Evolution of term ‘Entrepreneurship’ Factors influencing Entrepreneurship - Psychological Factors – Social Factors - Economic Factors - Environmental factors.

Unit - I

Introduction

A person who starts a business based on an existing idea and gains a market through work is an entrepreneur. An entrepreneur, on the other hand, introduces an original idea and creates a new market for his business. The key difference between the two is the entrepreneur's innovation and ability to create new market opportunities, as opposed to an entrepreneur who builds on existing ideas.

Meaning of Entrepreneur

The French verb enterprendre, which meaning "to undertake," is where the English word "entrepreneur" originates from. This is a reference to those who "undertake" the risk of starting small businesses. One definition of an entrepreneur is someone who is a starter, a challenger, and a driver. 

Concept of Entrepreneurship

An entrepreneur is a person who creates a new product or service or otherwise takes action in the market by using innovation and creativity. An entrepreneur initiates and organizes a business to take advantage of emerging opportunities. As a decision-maker, the entrepreneur determines what goods or services will be produced or distributed, where and when they will be produced, and in what quantities. Entrepreneurship is the process of combining resources, such as capital, land, and labor, to produce goods or provide services by establishing a business. In situations of great market turmoil, the entrepreneur has the ability to clarify doubts by making decisions and taking risks. Although entrepreneurship involves high risk, it also carries the potential for high profits, which can lead to the creation of economic prosperity, growth, and innovation.

Evolution of term ‘Entrepreneurship’

Early Period: Marco Polo is credited as the first person to define an entrepreneur as an agent connecting different entities. One of his goals was to establish a trade route to the Far East. In the past, he would make deals with investors to sell his products, with the investors bearing the financial risk. The role of the trader was seen as that of an adventurer. Once the journey was complete and the products were successfully sold, the profits were divided between the investor and the trader.

Middle Ages: A person responsible for managing large-scale initiatives is called an entrepreneur. Instead of taking risks, he focuses on efficiently using available resources to complete projects. A good example of this approach is a clergyman who oversees the construction of significant architectural structures such as cathedrals, public buildings, and castles. This type of management emphasizes the importance of planning and organization in implementing ambitious projects.

17th Century: In the past, a person who entered into a contract with the government for services or goods was considered an entrepreneur, responsible for profits and losses. This definition focused on financial risk and responsibility for results. Today, the entrepreneur's role also includes innovation and value creation in various sectors.

18th Century: Richard Cantillon, a French economist, is credited with first using the term "entrepreneur" in a business context. He defined an entrepreneur as a person who buys the services of factors of production at fixed rates, with the intention of selling them at unspecified prices in the future. His approach emphasizes risk and uncertainty in business activities, making entrepreneurship a key element of economic analysis.

19th Century: Managers and entrepreneurs were not distinguished from each other, which suggests that their roles overlap. The analysis of their actions was based mainly on the economic perspective. The entrepreneur is characterized by a willingness to take risks and proactivity in initiating actions. His activities are carefully planned and organized, which emphasizes the importance of management skills in entrepreneurship.

20th Century: Dewing, who lived in the early 20th century, defined an entrepreneur as a business promoter who transforms ideas into profitable ventures. Joseph Schumpeter was the first to use the term "entrepreneur" in the context of "innovator", emphasizing that an entrepreneur is a person who creates untested technologies.

21th Century: De Bone researchers noted that an entrepreneur can be not only a person who creates new ideas, but also one who introduces incremental improvements to existing products or services. Innovation by adding value is as important as creating new ideas, which means that entrepreneurship also includes improving and adapting existing solutions.

Factors influencing Entrepreneurship

Entrepreneurship is influenced by various factors that shape the decisions, opportunities, and challenges faced by entrepreneurs.

Psychological factors:  Psychological aspects play a key role in starting and maintaining a business. An individual’s state of mind, including risk tolerance, need for achievement, self-confidence, creativity, and resilience, are central to an entrepreneur’s ability to cope with business challenges. A strong desire to succeed often motivates individuals to overcome obstacles, while creativity and innovative thinking enable them to discover new opportunities in the marketplace. Resilience, the ability to adapt in the face of adversity, and the willingness to take calculated risks are psychological traits that contribute to entrepreneurial success.

Social factors: Social factors have a significant impact on entrepreneurship, as support from family, friends, and peers can shape an entrepreneur’s path. Family support often provides emotional and financial support in the early stages of a business. Social networks, including mentors and industry professionals, provide critical advice and open doors to financing and business opportunities. Cultural norms and societal attitudes toward risk-taking, innovation, and failure affect how individuals perceive and are willing to engage in entrepreneurship.

Economic factors: Economic factors are key to the success of businesses. Access to capital, which can come from savings, loans, venture capital, or crowdfunding, is essential to starting and growing businesses. The economic environment, including market demand, inflation, and interest rates, influences business decisions. Demand increases in a growing economy, while inflation and higher interest rates can discourage investment. Government policies and tax regulations can both support and hinder entrepreneurs.

Environmental factors: Environmental factors such as technological progress, legal and regulatory frameworks, and the level of competition have a significant impact on entrepreneurship. Technological progress opens up new opportunities for innovation and market expansion, allowing entrepreneurs to develop innovative products and reach global markets. On the other hand, legal and regulatory factors, including intellectual property laws and company registration processes, can both facilitate and complicate the entrepreneur's journey. 

All these factors—psychological, social, economic, and environmental—interact to create a dynamic and ever-changing environment in which entrepreneurship thrives.

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