Entrepreneurship An Introduction Theory and Nature Characteristics Notes
Entrepreneurship An Introduction Theory and Nature Characteristics Notes :- Hello friends in this post we are provided the materials of the b.com second part its name is fundamental of Business Entrepreneurship notes and its the first chapter of this subject and in this article you learn many more knowledge of Entrepreneurship like as Meaning and definitions of entrepreneurship, theories of entrepreneurship or entrepreneurial development models, nature and characteristics of entrepreneurship, importance significance advantages role need, or entrepreneurship,
question :- How to do you define entrepreneurship? Discus the theories of entrepreneurship?
What do you mean Entrepreneurship? Explain the different theories.
Describe in brief the economic and sociological theories of Entrepreneurship.
Define entrepreneur. Describe in brief the Psychological theories of entrepreneurship.
MEANING AND DEFINITIONS OF ENTREPRENEURSHIP
Entrepreneurship refers to a process of action which an entrepreneur undertakes to establish an enterprise. It can be defined as the propensity of mind to take calculated risks with confidence to achieve a predetermined business or industrial objective. It creates wealth by bringing together resources in new ways to start and operate an enterprise. It is the process of planning, organizing, operating and assuming the risk of a business venture. It is the ability to take risk independently to make more earnings in the market oriented economy.
Entrepreneurship multi-dimensional task and hence this term has been defined differently by different experts as follows : According. to H. W. Johnson,
“Entrepreneurship is a composite of three basic elements—invention, innovation and adaptation. ”
According to A.H. Cole, “Entrepreneurship is the purposeful activity of an individual or a group of associated individuals, under- taken to initiate, maintain and enhance prof it by production or distribution of economic goods and services. ‘
This definition states that entrepreneurship is a goal-oriented process involving production or distribution of products or services. It may be undertaken by one person or by a group of persons.
According to V.R. Gaikwad, “Entrepreneurship connotes innovativeness, an urge to take risk in face of uncertainties and an intuition, i.e., a capacity of seeing things in a way which afterwards proves to be true.’
In the words of Higgins, “Entrepreneurship is meant for the function of seeking investment and production opportunity, organising an enterprise to undertake a new production process, raising capital, hiring labour, arranging the supply of raw materials, finding site, introducing a new technique, discovering new sources of raw materials and selecting top managers for day-to-day operations of the enterprise, ‘
This definition highlights risk-taking, innovating and resource organising aspects of entrepreneurship.
According to Schumpeter, “Entrepreneurship is an innovative function. It is leadership rather than an ownership.’
Conclusion : It can be concluded from the above definitions that entrepreneurship is a dynamic process in which a person or group ox persons establish a new economic business enterprise and develop it.
It is the capacity to take risk, ability to organise and desire to diversify and make innovations in the enterprise.
THEORIES OF ENTREPRENEURSHIP OR ENTREPRENEURIAL DEVELOPMENT MODELS
To the scientists, ‘theory’ refers to the relationship between facts. In fact, theory is some orderin T principles. There are various theories of entrepreneurship which may be explained from the viewpoints of economists, sociologists and psycholocrists. Theories of entrepreneurship can broadly be classified into four categories :
- Phychological Theories,
- Sociological Theories,
- Economic Theories,
- Inteqrated Theories.
(1) Phychological Theories : The advocates of this theory argue that entrepreneurship is most-likely to ernerge when a society has a class of individuals who possess Specific psychological characteristics which motivate them to create new ventures. It is said that the true power of generating and growing any enterprise is 5 per cent technology and 95 per cent psychology. Some important psychological theories are as follows :
(i) Schumpeter’s Innovation Theory : This theory Of entrepreneurship is developed by Joseph Schumpeter. He states that the entrepreneur is mainly motivated and driven by three things :
- the desire for power and independence;
- the will to succeed;
- the satisfaction of getting things done.
According to him money is not what ultimately motivates the entrepreneurs. He describes their main psychological characteristics as follows : (a) An institutional capacity to see things in a way that later on proves to be correct; (b) Energy of will and mind to overcome fixed habits of thought; and (c) The capacityt0 withstand social opposition.
Schumpeter for the first time put the human agent at the centre of the process of economic development. According to him, “Entrepreneurship is essentially a creative activity, or it is an innovation function. The process of innovation may be in the form of (a) introduction of new product, (b) use of new method of production, (c) opening up of new market, (d) the conquest of new source of supplying raw material or (e) a new form of organisation.”
He says that the entrepreneur is the central figure in the development process of a count,ry. He regards innovation as a tool of entrepreneur and viewed them as the ‘engine of growth’
(ii) Achievement Theory of McClleland : Accox ding to this theory, high achievement motivation has a strong likelihood of predicting entrepreneurial behaviour. Individuals with high achievement motive tend to take keen interest in situations of high risk, desire for responsibility and a desire for a concrete measure of task performance.
McClleland has found that the combination of a moderate to high need for power and a lower need for affiliation enables people to be effective entrepreneurs—they can use power to influence and control others’ behaviour, and can make difficult decisions without undue worry of being disliked. According to him, entrepreneurs are actuated by a high need for achievement. These people are distinc- tive in several ways.
They like to take risk, through only a reasonable one. They are highly motivated by challenging and competitive work situations entrepreneurial ventures.
(2) Sociological Theories : According to sociologist entrepreneurship is most likely to emerge under a specific sociocultural environment. They hold the view that social changes, cultural values, and role expectations are responsible for the emergence of entrepreneurship. Some important sociological theories are as follows :
(i) Max Weber’s Social Change Theory : This theory of entrepreneurship is propounded by Max Weber. For the first time he tries to fell that growth of entrepreneurship depends upon the ethical value system of the society. According to him religious belief generate a drive for entrepreneurial growth. The communities who gave emphasis on capitalism and money rationality have succeeded to give birth to the entrepreneur.
(ii) Thomas Cochran’s Cultural Values Theory : Thomas Cochran (1965) says that the entrepreneur represents society’s model personality and his performance depends upon his own attitudes towards his occupations, the role expectations of the social groups, and the occupational requirements of the job. According to him, the attitudes and role expectations are mostly determined by the valus that are held by the society.
(iii) Cultural Theory of B.F. Hoselitz : According to this theory, culturally marginal groups promote entrepreneurship and economic development. Such groups because of their ambiguous position are peculiarly suited to make creative adjustments and thereby develop genuine innovations. Societies in which the values of dominant cultures are not supportive of entrepreneurial activity, someone who is relatively outside of the social system may have a particular advantage in entering an entrepreneurial activity. The restraints upon entrepreneurial activity imposed by the social system would be less effective against such a person. This situation helps him to engage in entrepreneurial activity.
(iv) Hagen’s Theory of Entrepreneurship : One important theory of entrepreneurial behaviour has been propounded by Hagen which is referred to as the withdrawal of status respect. Hagen has attributed the withdrawal of status respect of a group to genesis of entrepreneurship.
According to Hagen (1962), the creativity of a disadvantaged minority group is the main source of entrepreneurship. He developed this thesis from the case of the Samurai community of Japan. Traditionally, this community had enjoyed a high status of which it was deprived later. To regain this lost prestige, it become more active and vigorous and gave rise to many entrepreneurs.
He postulates that four types of events can produce status withdrawal :
(a) The group maybe displaced by force.
(b) It may have its valued symbols denigrated.
(c) It may drift to a situation of status inconsistency.
(d) It may not be accepted the expected status on migration in a He further postulates that withdrawal of status respect will create the following four different types of personalities from the above mentioned reactions
(i) Retreatist : He continues to work in a society but remains indifferent to his work and position.
(ii) Ritualist : He is an entrepreneur with defensive type of personality who acts in the way accepted and approved in his society. He does not hope of improving his position.
(iii) Reformist : He is a person who is a rebellion and attempts to establish a new society.
(iv) Innovator : He is an innovative type of entrepreneur who loves to create new things.
(3) Economic Theory of Entrepreneurship : G. F. Papanek and J. R. Harris are two economists who support the economic theory. According to them “Economic incentives are the main drive for the entrepreneurial activities. In some cases, it is not so evident but the persons inner drives have always been associated to the economic gains. Therefore, these incentives and gains are regarded as sufficient condition for the emergence of industrial entre bpreneurship.’
(i) Theory of Prof it : Knight identifies the entrepreneur as a receipient of pure prof it. With regard to entrepreneur, pure prof it is the result of bearing the cost of uncertainty. This theory summarises that no entrepreneur will take a risk unless there is a hope of getting prof it. Prof it is the reward of an entrepreneur which arises for bearing non-insurable risks and uncertainties and the amount of prof it earned depends upon the uncertainty bearing.
(ii) Theory of Adjustment of Price : For Kirzner, the adjustment of price is the main role of entrepreneur. He has stated, “When an individual recognises that the market for a product or service is out of equilibrium, he may purchase or produce at the prevailing price and sell to those who are prepared to buy at the highest price.”
According to Kirzner, alertness to disequilibrium is the distinguishing characteristic of an entrepreneur. Alertness enables some persons to intervene in the market by changing the price while other persons simply respond by changing their buying and selling plans in lieu of the new price.
(4) Integrated Theory : An integrated or composite theory of entrepreneurship will propose that instead of a single factor, a set of factors is responsible for generating entrepreneurship. Thus the entrepreneurship is the function of a group of economic, political, legal, social, cultural, psychological, technological and natural environmental factors. The entrepreneurs make use of certain factors as they exist, while influence some other factors to change in their own favour. Thus, there emerges a right kind of environment, based on an integrated scheme of factors, that becomes favourable or con_ ductive to the development of entrepreneurship.
(i) T. V. Rao’s Entrepreneurial Disposition Theory : This theory give importance to the entrepreneurial disposition in the development of entrepreneurship. Really speaking, the fundamen- tal of entrepreneurship is entrepreneurial disposition. If entrepreneurial disposition is withdrawn from the entrepreneur then his whole existence will come to an end. It is the entrepreneurial disposition which motivates an entrepreneur to take risk, to move forward and establish new enterprises.
He includes the following factors in the entrepreneurial disposition :
- (a) Dynamic Incentives,
- (b) Long-term Devotion,
- (c) Individual, Social and Physical Resources,
- (d) Social and Political System.
T.V. Rao clearly opine that all these factors have a dominant role in the development of entrepreneurship.
- (ii) Vesper Theory of Entrepreneurship : According to Vesper two types of factors help in the emergence of entrepreneur, viz., Economic and Non-economic. Economic factors consists of the following :
- (a) Market incentives, which present themselves in the form Of new social needs.
- (b) The occurrence of institutions such as development banks so as to direct the capital to those who want to use it for entrepreneurial projects.
- (c) To finance new enterprises so that there should be sufficient stock of capital to finance.
Non-economic factors consists of (a) Political ideology, (b) Economic ideology, (c) Social norms, (d) Social values, (e) Legal structure, and (f) Social mobility.
Define Entrepreneurship. Explain in brief the main characteristics of Entrepreneurship.
NATURE AND CHARACTERISTICS OF ENTREPRENEURSHIP
Main characteristics of entrepreneurship can be summarised as follows :
(1) An Economic Activity : Entrepreneurship is primarily an economic function because it involves the creation and operation of an enterprise. It is basically concerned with the production and distribution of goods and services.
(2) Creative Activity : Entrepreneurship is essentially a creative activity. It consists in doing such things which are not generally done in the ordinary course of business.
Entrepreneurship involves exploring new opportunities. It creates new jobs, new tasks and new ventures in the society. It creates new economic values, wealth and capital in the country.
(3) Business Oriented Tendency : It reflects the business and enterprising nature of person. It encourages people to start business, to imagine new ventures and to set up units of production. It promotes business and industries in the society.
(4) Organising Activity : It is the ability to bring together productive resources of society. Entrepreneur harnesses land, labour, capital, technology, knowledge and managerial talents for the benefit of mankind.
(5) Risk Bearing Activity : Risk is an inherent and in- separable element of entrepreneurship. An entrepreneur guaran- tees rent to the land-lord, wages . to employees and interest to investors in the hope of earning möre than the expenses. He as- sumes the uncertainty of future. In the persuit of prof its, there is possibility of loss also.
(6) A Dynamic Process : Entrepreneurship is a dynamic function. Entrepreneurs thrive on changes in the environment, which bring useful opportunities for business.
(7) Innovative Activity : Entrepreneurship is an innovative function as it involves doing things in a better way. Innovations may be in the form of a new product or a new source of raw material or a new market or a new method of production not yet applied in a par- ticular branch of manufacturing, etc.
(8) Purposeful Activity : The entrepreneur who creates and operates an enterprise seeks to earn prof its through satisfaction of needs of customers. Hence, entrepreneurship is a goal-oriented activity.
(9) A Function of High Achievement : People differ not only in their ability to do but also in their will to do, or motivation. The motivation, in turn, depends on the strength of their motives sometimes defined as needs, wants, drives or impulses within the individuals.
Thus, people having high need for achievement and power are more likely to succeed as entrepreneurs and this is a very critical factor that leads one towards entrepreneurship.
(10) Prof essional Activity : Today in competitive age, entrepreneurship is adopted as a prof ession like engineering or law. Entrepreneurial qualities, like managerial abilities, are also being developed by experts. They provide training to the persons of enterprising nature and risk-bearing attitude.
(11) Not a Personality Trait, but a Behaviour : Entrepreneurship is not a born personality trait, but it emerges out of risk-bearing decisions and enterprising behaviour of a person.
(12) Knowledge-based Practice Drucker writes, “Entrepreneurship is neither a science nor an art.” It is practice. It has a knowledffe base. The enterprising quality is generated after a long practice of risk-bearing behaviour.
(13) A managerial Skill and Leadership Function : Managerial skills and leadership are the most important facets of entrepreneurship. An entrepreneur must have the ability to lead and manage.
(14) Based on Principles, not on Intuition : Entrepreneur- ship is not based on inner feeling or intuition. Rather, it is developed through certain principles. It is improved with the knowledge Of economics, sociology, psychology, and various other subjects.
Discuss the major types of Entrepreneurship.
Economic and social conditions and level of development is varied in different nations. Therefore, there found different types of entrepreneurship.
Major types of entrepreneurship can be discussed as follows:-
(1) On the basis of Centralisation : On the basis of centralisation entrepreneurship can be of following two types :
- (i) Centralised Entrepreneurship : When due to availability of special facilities, industries are centralised at a particular place, then it is known as centralised entrepreneurship. This type of entrepreneurship create imbalanced regional growth and unequal distribution of income and wealth.
- (ii) Decertralised Entrepreneurship : In the case of decentralised entrepreneurship ventures are situated at different places. Government encourages to the decentralisation of the industries. The government provides land for the entrepreneurs and also provides grant and marketing facilities :
- Advantages of Decentralised Entrepreneurship:
- Development of industrially and economically backward areas.
- Encouragement to equal distribution of wealth in the society.
- Increase in the employment opportunities.
- Proper implementation of five year plans.
(2) On the Basis of Size : On this base, entrepreneurship can be of following two types :
- (i) Big Entrepreneurship : When huge capital is invested and production is made at the large scale, it is termed as big entrepreneurship. In this type of entrepreneurship, equipments and machines are used extensively, production system is complex and business enterprise is managed by the prof essional managers. In India, Tata, Birla, Ambani etc. are comes under this category.
- (ii) Small Entrepreneurship : Size of business enterprises is relatively small in the small enterprises. ‘In this type of entrepreneurship, business concern is mainly labour oriented and production system is simple. This type of entrepreneurship helps in the development of small and cottage industries and reduce ine- qualities of distribution of wealth and income.
(3) On the basis of Capital Ownership : On this basis entrepreneurship can be of following types :
(i) Private entrepreneurship : When an individual or a group of individuals set up an enterprise, arrange finance, bear the risk and adopt the latest techniques in the business with the intention to earn prof its, he or the group is called as private entrepreneur/entrepreneurs.
(ii) State entrepreneurship : As the name indicates, state entrepreneur means the trading or industrial venture undertaken by the state or the government itself. This type of entrepreneurship is established with a view of social welfare of the public.
(iii) Joint Entrepreneurship : It is the combined form of private entrepreneurship and state entrepreneurship. To motivate the new entrepreneurs and to make industrial development of theback-ward regions, many industries are established in joint entrepreneurship in India.
(iv) Co-operative Entrepreneurship : When some people establish a business enterprise with the mutual co-operation and for mutual interest, it is termed as co-operative entrepreneurship.
(4) On the Basis of Attitude towards changes or Development : On this basis Entrepreneurship can be of following types .
(i) Traditional or Evolutionary Entrepreneurship : When Production methods are traditional and changes have taken place at slow speed in the field of business system, it is termed as traditional entrepreneurship. This type of entrepreneurs believes in taking less risks and pay no attention to the innovations. In India, mostly entrepreneurs is of such nature.
(ii) Modern or Revolutionary Entrepreneurship : An revolutionary entrepreneur is one who introduces new goods, in- augurates new methods of production, discovers new market and re- organises the enterprise. He arranges money, launches an enterprise, assembles the various factors, chooses the competent managers and sets his enterprise go.
Innovating entrepreneur played a key role in the rise of modern capitalism, through their enterprising spirit, hope of making money, and ability to recognise and exploit opportunities.
Explain the various concepts of entrepreneurship.
CONCEPTS OF ENTREPRENEURSHIP
With the pace of economic development, concept of entrepreneurship have also changed. Different authors have define the concepts of entrepreneurship in the different ways. Some important concepts of entrepreneurship are as follows :
(1) Concept as to Risk-bearing Capacity : Risk taking is an important concept of entrepreneurship. An entrepreneur is always ready to face uncertainties and risk which occur due to unforeseen contingenices of future.
Starting a new venture always involves a lot of risks. Similarly trying for doing something new or different is also risky. Thus, the environment of entrepreneurship is uncertain and therefore full Of risks. These risks take a variety of fbrms, depending on the field Of effort of the entrepreneur.
Business is a game of skill wherein risks and rewards both are of oreat importance. However, successful entrepreneur are neitherhigh risk takers nor gambler. They prefer to take moderate and calculated risks where the chances of winning are neither so small nor so large to be a sure thing.
According to Nelson and Neck, “Entrepreneurs are calculated risk:takers. They enjoy the excitement of a challenge, but they don’t gamble. Entrepreneurs avoid low-risk situations because there is the lack of challenge and they avoid high-risk situations because they want to succeed. They like achievable challenges.” Economists like Cantillon, J.B. Say and others stressed risk taking as the specific function of the entrepreneur.
This entrepreneurial concept is a most important concept, since it has significant implications for the ways decisions are made, and thus, for the success or failure öfhusiness.
(2) Concept as to Innovation : Schumpeter expressed the theory of entrepreneurship in the new perspective and he adds the notion of innovation. In the view of them an entrepreneur is an in- novator and creates untried technique. Its purpose is to generate wealth or resources.
In the view of J. Schumpeter an entrepreneur acts as an in- novator. He creates new thing. He also works as a ‘change agent’. An entrepreneur pursuades the consumers to change their demands in favour of new innovations.
Entrepreneurship is a creativc function. It includes such things which are generally not done in the ordinary course of business routine. Thus entrepreneurship includes introducing something new.
According to Joseph A. Schumpeter an entrepreneur in an advanced economy is an individual who introduces something new in the -economy, a method of production not yet tested by experience in the branch of manufacture concerned a product with which consumer are not yet familiar, a new source of material, or of new markets and the like.
Drucker elaborates : “Innovation….is the means by which the entrepreneur either creates new wealth-producing resources or en- dows existing resources with enhancedpotential for creating wealth. ” In essence, innovation is creating something new of value. The creation has valuable to the entrepreneur as well as to the consumers for whom it is developed.
(3) Concept as to Organisation Building Capacity : J.B. Say describes entrepreneurship as an organising activity whereby the entrepreneur brings together various factors of production,ensures the continuing management and renders risk-bearing function as well. According to J. B. Say, 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 prof it. 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 undertakes.
(4) Concept as to Managerial and Leadership Skill : J.S. Mill, B.F. Hoselitz and Alfred Marshall etc. have supported the concept of entrepreneurship as to managerial and leadership skills.
B.F. Hoselitz express entrepreneurship as a managerial skill of direction. J. S. Mill says, “It is the ability of superintendence, direc- tion and control. It is the ability to implement and manage a project to make prof its from the successful management of the enterprise. It is the ability to use resources in a creative and productive way. It is the ability to build teamwork and work as a team.” Vasant Desai writes, “The entrepreneur is the Maestro of the business orchestra, wielding his baton to which the band is played. ‘
Leadership is alsoean important concept of entrepreneurship. Leadership is the process of influencing the activities of an in- dividual or a group for goal achievement in a given situation. In this sense, entrepreneur is a leader who guides the activities of his staff to achieve the desired goal or objective.
As a leader, entrepreneur motivates his employees for high performance and creates necessary confidence on account of which the desired objectives are achieved within the specified time,
(5) High Achievement Capacity Concept : According to McClelland, the entrepreneurship is the ability to a something high. Individuals with high achievement motive tend to take keen interest in situations of high risk, desire for responsibility and a desire for a concrete measure of task performance. He identified three features of entrepreneurs that were related to their need for (I) desire to accept responsibility for solving problems, setting goals and reaching the goals; (2) a willingness to accept moderate risks; (3) a desire to know the OUtcomes of their decisions.
(6) Result oriented concept : This is a new concept Of entrepreneurship. This concept emphasis on results, achievements and targets achieved. According to this concept it is not important
what are you doing for achieving a goal, what amount you are spending on the project and how much you laboured for the success but the important is what is the results of your activities and the goal is achieved or not. If the goal is achieved, it is entrepreneurship otherwise it is considered as wastage of time and money.
(7) Prof essional Concept : Now-a-days entrepreneurship is accepted as a prof essional concept. Like other prof essions, entrepreneurship is also a prof essional activity which can be developed with the help of education and training. Due to this, many entrepreneurship development programmes are conducted by the government and private institutions to develop the entrepreneurship skills. Experts provide training to the persons of enterprising nature and risk-bearing attitude.
“Entrepreneurship is a risk-bearing, innovative ability as well as strategic advantage ability.” Explain and discuss the need and importance of entrepreneurship. or
“Without vision, the people perish, without entrepreneurship the economy and business stagnate.” Explain.
Basically the entrepreneurial task is a combination of perceiving opportunity, risk-taking, innovating marshalling of resources and providing leadership. The main task of the entrepreneur is to recognise and exploit the opportunities carrying from various sources. As we know the entrepreneur is both doer and dreamer. As a doer, he has the ability to attend the details and as dreamer, he has the capacity of seeing opportunities coming in his way.
Thompson and Strickland define entrepreneurship as a strategic ability. Entrepreneur select the appropriate strategy keeping in view of his organisational strength and weaknesses to gain the strategic advantages. Thus entrepreneurship is a risk-bearing and innovative ability as well as strategic advantage ability.
IMPORTANCE/SIGNIFICANCE/ADVANTAGES/ROLE/NEED OF ENTREPRENEURSHIP
Entrepreneurship plays an important role in promoting development of an economy. It fosters economic growth, increases productivity, create new technologies, products and services.Entrepreneurs serve asacatalystsin the process of industrialisation and economic growth. The significance of entrepreneurshipis explained under the following headings :
(1) Establishment of Viable Units : Entrepreneurship is important as it starts new ventures in the economy. This activity makes the business units more prof it able and efficient. In fact, entrepreneurs identify opportunities and possible competitive ad- vantages.
(2) Increase in Employment Opportunities Entrepreneurship activity increase the employment opportunity in the country. By setting up large and small scale business units they of fer jobs to millions. They create capital and resources as well which are the basis of job creation.
(3) Optimum Utilisation of Resources : Entrepreneurship is the ability to produce more goods and services with less inputs. It promotes innovative technologies and production techniques.
Entrepreneur also focus on costs and efficiency. Thus it help to make the optimum utilisation of resources.
(4) Balanced Growth : Entrepreneurship proves helpful to remove the development gaps and economic backwardness found in the different regions. Entrepreneurs set up industries in backward areas to avail of the various concessions and subsidies of fered by the government. Prof . Nurkse says that entrepreneurs make the way for the balanced economic development.
(5) Establishing Self-sufficient Society : Entrepreneurship is essential for national self-reliance. Industrialists help to manufacture indigenous substitutes of hitherto imported products thereby reducing dependence on foreign countries and saving precious foreign exchange. Businessmen also export goods and services on a large scale and thereby earn the scarce foreign exchange fbr the country.
(6) Promotes Capital Formation : Entrepreneurs mobilize the idle savings of the public through t.he issues of corporate securities and public deposits. Investment of public savings in industry results in productive utilisation of national resources. Rate of capital formation increases, which is essential for rapid economic growth. Thus, an entrepreneur is the creator of wealth.
(7) Rapid Economic Growth : Entrepreneurship constituteS an important input in the process of economic development It channelises resources, capital and men for economic growth. It is the best alternate to over the problem of unemployment and poverty. It provides businessman with a realistic basis to identify, analyse and exploit a businesS opportunity. It takes most challenging decisions to help towards the building of a rapid growth and financially sound enterprise.
(8) Promote Innovations : Innovation is a key aspect of entrepreneurial activity. It brings technological changes and provide something new and different. Entrepreneurship firms act as ‘agents of chance’. The innovations of new product may imply the employment of productive mean s in a modified form.
(9) Promotes Service Economy : Entrepreneurs are also entering in service sector which produces 92 percent of the jobs and 85 percent of the gross domestic product in advanced countries. It is a sharp rise from just a decade ago. Service economy is a fastest-growing segment due to entrepreneural effort.
(10) Search and Development of New Markets Entrepreneurship plays an important role in searching and development of new markets. Entrepreneurs conduct market research and collect data to search the new markets. The shift to a global economy has also opened the door to tremendous business opportunities for entrepreneurs willing to reach across the globe.