Everything you need to know about the difference between entrepreneur and manager. Entrepreneurs are known for their innovative ideas and creative skills. They are the people who create something from nothing.
Professional management, of course, is characterized by concepts such as – orders, procedures, rules and regulations meant to put activities on track.
Entrepreneurial management is noted for its ability to react quickly and effectively to new business opportunities. This ability is the foundation for rapid growth of the company in its entrepreneurial stage.
Professional management is noted for medium and long-term strategic planning, which leads to controlled growth of the company during the process of establishment.
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The professional manager makes decisions after collecting detailed information and reaching operative conclusions while relying on experts both from within and outside the organization.
The entrepreneur describes his organization in terms of ‘vision’, ‘dream’, and ‘mission’ and manages to give his employees the feeling that they are working for a higher aim than just marketing a product and/or service.
Some of the difference between entrepreneur and manager on the following basis:- 1. Venture 2. Risk-Taking 3. Reward 4. Continuity 5. Innovation 6. Status-Role 7. Qualification 8. Skills 9. Authority 10. Motive.
Difference between Entrepreneur and Manager
Difference between Entrepreneur and Manager – Key Points
Difference # Entrepreneur:
1. Venture – An entrepreneur sets up a new enterprise or undertakes a venture for his personal gratification.
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2. Risk-bearing – An entrepreneur assumes risk of economic uncertainty involved in the enterprise.
3. Reward – The reward of an entrepreneur for his risk bearing role is profits. It is not only uncertain and irregular but can at times be negative also.
4. Continuity – Entrepreneurial activities are discontinuous appearing to initiate change in the production process and then disappearing until another change is initiated.
5. Innovation – In order to maximise the profits, the entrepreneur applies innovation from time to time in the enterprise. Therefore, an entrepreneur is also called a change agent.
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6. Status-Role – An entrepreneur is his own boss and enjoys an independent status as the owner of the enterprise.
7. Qualifications – In consonance with the entrepreneurial role, an entrepreneur needs prerequisites like mission, creative thinking, risk bearing ability, etc.
Difference # Manager:
1. Venture – A manager does not take a new venture and renders services in an existing enterprise.
2. Risk-bearing – A manager does not assume or share any risk involved in the enterprise he is serving.
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3. Reward – The reward of a manager for rendering his services is salary which unlike profits is fixed and regular and can never be negative.
4. Continuity – Managerial activities are mainly continuous involving an on-going coordination of business operations.
5. Innovation – On the contrary, a manager simply keeps running the enterprise on already established lines on a routine basis. That is why a manager is called the product of change brought about by the entrepreneur.
6. Status-Role – By contrast, a manager is a servant i.e. enjoys an independent status as the salaried person serving in the enterprise owner of the enterprise of someone else i.e., the entrepreneur. Thus, he is not independent but is dependent of the entrepreneur.
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7. Qualifications – But, a manager needs distinct qualifications such as knowledge of human beings, management theory, etc. Because, the managers are made not born.
Difference between Entrepreneur and Manager – On the Basis of Characteristics (With Table)
It is well worth making a distinction between an entrepreneur and a manager working in a large organization. Entrepreneurs actually run the show, as they create the organization themselves. Professional managers carry out jobs that are delegated to them by the owners. Entrepreneurship, for all practical purposes, is a one-man show. Managers, on the other hand, learn to live with ups and downs in business. Their management style is different from the ‘all-knowing’ entrepreneur.
Entrepreneurs are known for their innovative ideas and creative skills. They are the people who create something from nothing. Professional management, of course, is characterized by concepts such as – orders, procedures, rules and regulations meant to put activities on track. Entrepreneurial management is noted for its ability to react quickly and effectively to new business opportunities. This ability is the foundation for rapid growth of the company in its entrepreneurial stage. Professional management is noted for medium and long-term strategic planning, which leads to controlled growth of the company during the process of establishment.
The entrepreneurial organization is characterized by its informal, flexible structure, which allows it to adapt to changes required by its rapid growth. Professional management, on the other hand, requires a formal and fairly rigid organizational structure, which leaves no room for rapid reactions to business opportunities, but protects the organization from sudden collapse. The entrepreneur usually makes decisions, even those of critical importance for his business, on the basis of his own personal intuition and ‘gut feeling’.
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The professional manager makes decisions after collecting detailed information and reaching operative conclusions while relying on experts both from within and outside the organization. The entrepreneur describes his organization in terms of ‘vision’, ‘dream’, and ‘mission’ and manages to give his employees the feeling that they are working for a higher aim than just marketing a product and/or service.
The professional manager describes the company aims in terms of market segments, yield per worker, and profitability. Although the accepted myth is that entrepreneurs are driven by the desire for power and money, both theoretical and empirical studies have shown that typical entrepreneurs are in fact driven by the desire for success rather than power. This means that while, in the eyes of most entrepreneurs, money is a welcome by-product of their efforts; it is not the reason for their efforts.
The professional business manager, on the other hand, looks at the business he manages through ‘financial eyes’ and defines its aims (usually in the short term only) purely in financial terms. The myths describe entrepreneurs as ‘wild risk-takers’ though many studies have shown that in fact the typical entrepreneur is very good at assessing risks. On the other hand, the professional manager, who sees his task as strengthening and maintaining the company, is naturally afraid of risks and tries to maintain the status quo.
The typical entrepreneur does not usually try to define a culture for the organization he sets up, since in most cases he himself is the organization. The literature defines this situation as ‘the entrepreneurial organizational culture’, characterized by large doses of charisma and ‘manipulativeness’. The professional manager does try to establish a well-defined company culture, based on company values on one hand and commercial aims on the other (Table 1.1).
Difference between Entrepreneur and Manager
1. Innovation:
An entrepreneur initiates changes in production. These changes are innovative in nature and thereby increase productivity and profit. Manager involves himself in combining the factors of production to produce. He deals with ongoing coordination of the production process which can be visualised as a continual combining of the factors of production.
2. Risk-Taking:
An entrepreneur invests heavily in provision of products and services. However, he is expected to take necessary efforts to succeed in his business. He tackles uncertainty and assumes moderate risk. But manager is required to be careful in his decision making process. He is risk-taker and expected to transfer that risk to entrepreneur.
3. Reward:
An entrepreneur is risk-bearer and he expects a profit as a reward for his risk-bearing behaviour. However, there is every possibility that there may be loss in his uncertain but risky behaviour. But manager expects a compensation as salary for his managerial efforts.
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4. Skills:
An entrepreneur knows business intimately. He requires more business acumen than managerial skills. He further needs intuition, creative thinking and innovative abilities. But a manager earns his skill through professional training specially through business schools. He equips himself with analytical tools, people management relations and political skills.
5. Status:
An entrepreneur is job provider and not of job seeker. He is vested with powers of ownership, control and management. But a manager is just responsible for the execution of policies formulated by the owner or entrepreneur or his nominated representative or directors on t board. He is totally governed by the policies and programmes of the entrepreneur.
6. Authority:
An entrepreneur accepts organisational role models. He believes in transactions and deal making as a basis for basic relationship. He forces his own vision and is decisive and action oriented. He wants freedom, goal oriented, self-reliant and self-motivated. But a manager tries to develop a hierarchy as basic relationship. Moreover, Manager wants promotion and believes in corporate rewards. Actually, he is power motivated.
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On the basis of the above analysis, we can say that an entrepreneur is generally motivated by need for achievement. It is possible through his innovative and creative behaviour. In practice, it is not sufficient for the entrepreneur to develop entrepreneurial process but it is also important for him to manage that business in an efficient way.
Thus, he is responsible for entrepreneurial functions as well as managerial functions. An entrepreneur at the first instance, initiates innovation then.it becomes a routine affair to be handled by the manager at a later stage. Actually, entrepreneur perceives and exploits opportunity and the subsequent steps necessary for efficient governance are to be taken by the manager.
Difference between Entrepreneur and Manager
Although we define entrepreneurs mostly as those who launch new ventures, entrepreneurship, as is widely practised, entails much more than that be it in old businesses or the new ones, the big business establishments or small ones. Entrepreneurship is the capacity for innovation, investment, and expansion in new markets, products, and techniques.
This means that an entrepreneur is at work whenever someone takes risks and invests resources to make something new, design a new way of making something that already exists, or creates new markets. Although many a time used interchangeably, entrepreneurship is not the same thing as management.
The first job of a manager is to make a business perform well. The manager makes use of the given resources—personnel, money, machines, and materials—and orchestrates them into production. In contrast, the primary task of an entrepreneur is to bring about a change on purpose.
As economist Irving Kristol has suggested – ‘More and more, chief executives refer to themselves as managers sometimes even professional managers. If that indeed is what they are then they are widely overpaid. A good executive is above all an energetic and shrewd entrepreneur, seeking ou-no, creating all new opportunities for profitable economic transactions. It is only the possession of this talent that justifies the high salaries they receive.’
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Manager deals with day-to-day affairs of an on-going concern, but an entrepreneur attempts to change the factor combinations, and, thus increases profits. Time is something which cannot be saved but time is something that must be used wisely. Entrepreneurs need to manage their time effectively and the key to using time effectively is through better management.
The role of an entrepreneur is quite different from the role of the professional manager in organizations. The term entrepreneur is a person in effective control of a business unit—it underlines the adoptive nature of managerial process in the firm. It has the connotation of enterprise, opportunism, individuality, and institution, in contrast to the connotation of the term manager, which is associated with notions of organization, planning, professionalism, rationality, and the predictive management process.
Entrepreneur has both a different function from the manager and a different set of attitudes or beliefs about the nature of the management process and business in general. An administrator in the organization is primarily concerned with those activities relevant to predictive management process i.e., with activities related to production and control, whereas an entrepreneur primarily needs to perform activities relevant to adaptive management process that enable him to exploit the advantages of being an enterprise.
However, the management process, as we conceived it, is not a dichotomy. It is rather a continuum, and therefore, incorporates both an administrative element. The two sets of elements are not mutually exclusive but complementary, both within an organization and in many cases, within a particular role.
It is the emphasis that is necessarily different when considering the demands of large and small firms for these two kinds of management activities because of differences in the environment, the case of operations, in the degree of specialization, and in the professionalization of management of the small and large business organizations.
Similarly, just as the entrepreneur would emphasize on the entrepreneurial activities of the management process, so would he/she hold attitudes related to the entrepreneurial orientation, while the administrator of large units would hold attitudes related to the administrative orientation of the management process.
Difference between Entrepreneur and Manager – 6 Main Points
As per Oxford dictionary an “Entrepreneur is one who undertakes an enterprise, especially a contractor – acting as intermediary between capital and labour.” Undertaking an enterprise involves combining capital and labour for the purpose of production. Anyone who undertakes this task is an entrepreneur. This entrepreneurial class is an “employing class” as it creates job opportunity.
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The first scholar to introduce the term “entrepreneur” is Richard Clinton. As per him an “entrepreneur is an agent who buys means of production at certain prices in order to combine them into a product that he is going to sell at prices that are uncertain at the moment at which he commits himself to his costs.” He illustrates this by giving an example of farmer and businessman. He stresses the character of risk bearing in the person who wants to become entrepreneur. He is of the opinion that an entrepreneur is an individual who bears uncertainty and takes risk and the spirit of enterprise makes one as an entrepreneur.
In the words of J.B. Say, “the entrepreneur is the economic agent who unites all means of production such as labour, the capital, material, machine power etc., and who finds in the value of products which result from their employment, reconstitution of the entire capital that he utilizes and the value of the wages, the interest and the rent which he pays as well as profit belonging to himself.”
In fact, an entrepreneur is an economic leader who possesses the ability to recognize opportunities for the successful introduction of new product, new source of supply, new technique of production etc., and who assembles the necessary resources and organizes them into a going concern.
Noah Webster writes that an entrepreneur is “one who assumes the risk and management of business”. In United States, an entrepreneur is one start his own, new and small business. In Germany, an entrepreneur is defined as one who has power and property i.e. a person who owns and runs business.
Evans states that “entrepreneurs are the persons who initiate, organize, manage, and control the affairs of a business unit that combines the factors of production to supply goods and services, whether the business pertains to agriculture, industry, trade or profession.”
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What is the Difference between Entrepreneur and Managers?
The terms Entrepreneur and Manager are considered one and the same. But the two terms have different meanings.
The following are some of the differences between a manager and an entrepreneur:
1. The main reason for an entrepreneur to start a business enterprise is because he comprehends the venture for his individual satisfaction and has personal stake in it whereas a manager provides his services in an enterprise established by someone.
2. An entrepreneur and a manager differ in their standing, an entrepreneur is the owner of the organization and he bears all the risk and uncertainties involved in running an organization whereas a manager is an employee and does not accept any risk.
3. An entrepreneur and a manager differ in their objectives. Entrepreneur’s objective is to innovate and create and he acts as a change agent whereas a manager’s objective is to supervise and create routines. He implements the entrepreneur’s plans and ideas.
4. An entrepreneur is faced with more income uncertainties as his income is contingent on the performance of the firm whereas a manager’s compensation is less dependent on the performance of the organization.
5. An entrepreneur is not induced to involve in fraudulent behaviour whereas a manager does. A manager may cheat by not working hard because his income is not tied up to the performance of the organization.
6. Entrepreneur is required to have certain qualifications and qualities like high accomplishment motive, innovative thinking, forethought, risk-bearing ability etc. Conversely it’s mandatory for a manager to be educated in the fields of management theories and practices.
7. An entrepreneur deals with faults and failures as a part of learning experience whereas a manager makes every effort to avoid mistakes and he postpones failure.
“An entrepreneur could be a manager but a manager cannot be an entrepreneur”. An entrepreneur is intensely dedicated to develop business through constant innovation. He may employ a manager in order to perform some of his functions such as setting objectives, policies, rules etc. A manager cannot replace an entrepreneur in spite of performing the allotted duties because a manager has to work as per the guidelines laid down by the entrepreneur.
On the downside, typical manager brings professionalism into working of an organization. They bring fresh perspectives, ideas and approach to trouble shooting which can be invaluable.
Lately there has been convergence of the entrepreneur and the manager in certain sectors like software. An employee is being given highly valuable stock options, which make a typical ‘manager’ a part owner.
The difference between entrepreneurs and managers may not seem very large, but they are. A successful manager may make a terrible entrepreneur, and a great business owner may not be a great manager.
One of the major differences is in the level of responsibility that each has. No one will argue that a manager does not have a lot of responsibility. They are generally in control of a group of people, and most often they have deadlines and quotas that need to be met.
An entrepreneur may or may not be in control of employees depending on the nature of the business. Even without employees to watch over, an entrepreneur has a great deal of responsibility.
A manager is concerned about the level of production only as far as his/her job security is concerned. However, even if his quotas are not met, a manager still gets his weekly paycheck. An entrepreneur on the other hand is completely responsible for his livelihood. If he does not perform he does not earn any money.
This is why it takes more courage to take the entrepreneurial path. With no guarantee of success and therefore no guarantee of profit or income, the entrepreneur is often taking a chance, a chance that many people do not have the courage to take.
Very often entrepreneurs and managers are used as interchangeable terms. For instance, Kao’s model of entrepreneurship does not treat the manager and the entrepreneurs as distinct species within the business world. According to the model people may behave in a managerial or entrepreneurial style depending upon the demands of the task, the characteristics of the environment, and their own personal predispositions.
Strictly speaking, however, an entrepreneur is different from a manager.
The main points of difference are:
Difference # Entrepreneur:
1. Innovation – The entrepreneur does not live with status quo. He works to change in accordance with his or her personal vision and values. He is more than an inventor. An inventor only originates the invention. But entrepreneur goes much further by exploiting the invention commercially. An entrepreneur changes the factors combination and thereby increases productivity and profit. An entrepreneur is a change agent. An entrepreneur is not a mere executive though he may also be appointed as one for promotion of his company.
2. Risk Taking – An entrepreneur takes calculated risk. He is not a gambler, but he faces uncertainty and assumes risk. He may jeopardize his own financial security and the security of others.
3. Reward – An entrepreneur is motivated by profits. The gains of an entrepreneur are uncertain, irregular and at times can be negative.
4. Skills – The role of entrepreneur and manage demand different types of personal skills. An entrepreneur needs intuition, ability among other skills, creative thinking and innovative.
5. Status – An entrepreneur is self-employed and he is his own boss.
6. Response to Authority – This fact distinguishes between managers from entrepreneurs in their ability to identify in a positive constructive way with authority figures using them as role models. This type of behaviour largely absent in entrepreneurs. Case histories of many entrepreneurs suggest that it was their inability to submit to authority and accept organizational roles that drove to become entrepreneurs. In a sense they are misfits and who have to enact their won environment.
Difference # Manager:
1. Innovation – On the other hand the manager keeps running a business on established lines. He is neither an inventor nor an innovator. Manager only deals with day-to-day affairs of a going concern. A manager is product of change.
2. Risk Taking – The manager is less tolerant of uncertainty. He does no face uncertainty of new venture with its potential for failure and financial loss. He does not share in business risks.
3. Reward – Manager is motivated by externally imposed goals and rewards. The salary of a manager is on the contrary, fixed and regular and can never be negative.
4. Skills – A manager depends on more on human relations and conceptual abilities.
5. Status – Manager is a salaried person and he is not independent of his employer, the entrepreneur.
6. Response to Authority – Managers will work as subordinates to the promoter of the business and work to safeguard the interests of promoter.
Difference between Entrepreneur and Manager
The terms Manager and Entrepreneur are often used synonymously. But in the strict sense, an entrepreneur is entirely different from a manager.
The major differences between them may be shown as below:
Difference # Entrepreneur:
1. Motive – His main motive is to start a venture by setting up an enterprise.
2. Status – He is the owner of enterprise.
3. Risk bearing – He assumes all the risk and uncertainties involved in the business.
4. Reward – The reward for the entrepreneur is profit and it is highly uncertain.
5. Innovation – An entrepreneur acts as an innovator.
6. Qualification – An entrepreneur needs to possess qualities and qualifications like high achievement motive, thinking, foresight and risk bearing.
7. Skills – The role of entrepreneur demands different types of personal skills.
Difference # Manager:
1. Motive – His main motive is to render services in an enterprise already set up.
2. Status – He is an employee in the enterprise.
3. Risk bearing – He does not bear any risk involved in the business as he is only an employee.
4. Reward – The reward for the manager is salary and it is fixed and certain.
5. Innovation – A manager is simply an executer of the plans prepared by entrepreneur.
6. Qualification – The manager needs to possess distinct qualification in terms of sound knowledge in management theory and practice.
7. Skills – A manager depends more on human relations and conceptual abilities.
Difference between Entrepreneur and Manager
Manager deals with day-to-day affairs of an on-going concern, but an entrepreneur attempts to change the factor combinations, and, thus increases profits. Time is something which cannot be saved but time is something that must be used wisely. Entrepreneurs need to manage their time effectively and the key to using time effectively is through better management.
The role of an entrepreneur is quite different from the role of the professional manager in organizations. The term entrepreneur is a person in effective control of a business unit-it underlines the adoptive nature of managerial process in the firm.
It has the connotation of enterprise, opportunism, individuality, and institution, in contrast to the connotation of the term manager, which is associated with notions of organization, planning, professionalism, rationality, and the predictive management process.
Entrepreneur has both a different function from the manager and a different set of attitudes or beliefs about the nature of the management process and business in general. An administrator in the organization is primarily concerned with those activities relevant to predictive management process i.e., with activities related to production and control, whereas an entrepreneur primarily needs to perform activities relevant to adaptive management process that enable him to exploit the advantages of being an enterprise.
However, the management process, as we conceived it, is not a dichotomy. It is rather a continuum, and therefore, incorporates both an administrative element. The two sets of elements are not mutually exclusive but complementary, both within an organization and in many cases, within a particular role.
It is the emphasis that is necessarily different when considering the demands of large and small firms for these two kinds of management activities because of differences in the environment, the case of operations, in the degree of specialization, and in the professionalization of management of the small and large business organizations.
Similarly, just as the entrepreneur would emphasize on the entrepreneurial activities of the management process, so would he/she hold attitudes related to the entrepreneurial orientation, while the administrator of large units would hold attitudes related to the administrative orientation of the management process.
Difference between Entrepreneur and Manager – 6 Key Points
In general, both the terms are synonyms (same meaning), however both the terms are entirely different and are related with economic concepts.
The major distinction between them are presented below:
Difference # Entrepreneur:
1. Motive – To land to a venture by starting an enterprise. This venture is for his personal gratification.
2. Status – He is the owner of an enterprise.
3. Risk Bearing – Assumes all risks and uncertainty involved in smooth functioning of the enterprise.
4. Rewards – A profit which is highly uncertain.
5. Innovation – He is self-thinker for the betterment of the enterprise. He may change/alter as per the demand and supply.
6. Qualification – He must possess high qualities and qualification to achieve high motive, originality in thinking, foresightedness and risk bearing ability.
Difference # Manager:
1. Motive – To render his services to an enterprise who employees him, should be loyal to someone else.
2. Status – He is just a servant of the enterprise.
3. Risk Bearing – No risk involvement.
4. Rewards – It come as incentives, bonus and free services.
5. Innovation – Execution of the plans prepared by an entrepreneur. He should only translate the ideas generated by an entrepreneur.
6. Qualification – He must have sound technical and management knowledge to solve a problem.
At times, an entrepreneur may act as a manager, however the vice versa is not true.
Difference between Entrepreneur and Manager – 7 Main Points of Distinction
An entrepreneur and a manager are always considered as same and are used as interchangeable terms. When a person likes to control all aspects of a situation, then he is generally called as a manager, whereas if any person works through problems with people then he is more likely an entrepreneur.
A manager is someone who directs a team and an entrepreneur is someone who organizes, manages, and assumes the risks of a business or enterprise.
The main points of distinction between an entrepreneur and a manager are summarized below:
Difference # Entrepreneurs:
1. An entrepreneur can be a manager.
2. An entrepreneur is the owner of an enterprise.
3. An entrepreneur is motivated by personal satisfaction and achievements.
4. An entrepreneur gets reward for the risk bearing role he is taking, i.e., profit, which is by nature, irregular and uncertain
5. An entrepreneur asks to himself, “Given what I want to achieve, what resources do I need to acquire.”
6. An entrepreneur simply gets things through an entrepreneurial way.
7. An entrepreneur always sets up a new enterprise.
Difference # Managers:
1. A manager cannot be an entrepreneur.
2. A manager is a salaried employee of an enterprise.
3. A manager is motivated by promotion, recognition and pay revision.
4. A manager gets reward for the services rendered to the organisation i.e. salary, which is by nature, regular and certain.
5. A manager asks to himself “Given the resources under my control, what can I achieve.”
6. A manager simply gets things done through others.
7. A manager doesn’t take a new venture.