Entrepreneurship implies a set of values, norms and traits that are conducive to the growth of a business enterprise. It is the organisational culture that focuses on new opportunities and creation of an organisation where these opportunities can be perused earnestly.
An entrepreneur seeks the opportunities, looks for ways and means to capitalise on the newer opportunities by organising the structure and the resources and gaining control on them.
Some of the characteristics of entrepreneurship are:- 1. Dynamic Process 2. Innovation 3. Risk Taking 4. Decision Making 5. Accepting Challenges 6. Organisation 7. Skilful Management
8. Making the Organisation a Success 9. Economic Activity 10. Creative Activity 11. Purposeful Activity 12. Gap-Filling Function 13. Innovative Function and a Few Others.
Characteristics of Entrepreneurship
Characteristics of Entrepreneurship – Top 8 Characteristics
1. Dynamic Process:
Entrepreneurship involves a dynamic process in which new firms emerge from existing firms, grow and unsuccessful ones die. It can be thought of in terms of the Schumpeterian approach of creative destruction. The dynamism of this process is to be evaluated in terms of the rate at which businesses open and close.
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The complex and uncertain environment can create the need to change and often the entrepreneur is the person who recognises the need for change and directs it. Thus, entrepreneurship is a dynamic process which recognises the need to change and the entrepreneur becomes the key person to initiate any change.
2. Innovation:
Entrepreneurship is innovation where new products and services and more efficient production techniques are introduced by the firms that have identified new market opportunities or better ways of meeting existing demands. Innovation means “doing new things or doing the things that are already being done in a new way.”
It includes new processes of production, introduction of new products, and creation of new markets, discovery of a new and better form of industrial organisation.
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According to Schumpeter innovation may occur in the following forms:
(i) The introduction of new goods that is one which consumers are not yet familiar with or of a new quality of goods.
(ii) The introduction of new method of production, that is one not yet tested by experience in the branch of manufacture concerned, which by no means be founded upon a discovery scientifically new and can also exist in a new way of handling a commodity commercially.
(iii) The opening of a new product market that is a market into which the particular branch of manufacture of the country in question has not previously entered, whether or not this market has existed before.
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(iv) The conquest of a new source of supply of raw material or half manufactured goods, irrespective of whether this source already exists or whether it has first to be created.
(v) The carrying out of the new organisation of any industry, like the creation of a monopoly position (for example, through trustification) or the breaking-up of a monopoly position.
3. Risk Taking:
Risk bearing means making provisions for capital in order to enable the entrepreneur to reduce uncertainty in his plan of investment and expansion of the enterprise. Entrepreneurs are calculated risk takers. They enjoy the excitement of a challenge, but they do not gamble.
Entrepreneurs avoid low risk situations because there is lack of challenge and avoid high risk situations because they want to succeed. They like achievable challenges. Entrepreneurs like to take realistic risks because they want to be successful; that is they take great satisfaction in accomplishing difficult but realistic tasks by applying their own skills.
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Hence, low risk situations and high-risk situations are avoided because they are not the source of satisfaction. In short, the entrepreneurs likes a difficult but achievable challenge.
A risk situation occurs when entrepreneurs are required to make a choice between two or more alternatives whose potential outcomes are not known and must be subjectively evaluated. A risk situation involves potential success and potential loss. The greater the possible loss, the greater the risk involved.
As a risk taker and bearer, entrepreneur will have to make decisions in conditions of uncertainty, balancing potential success against loss.
In practice, selection of risky alternative or a conservative alternative depends on:
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(a) The attractiveness of each alternative;
(b) The extent to which entrepreneur is prepared to accept the potential loss;
(c) The relative probabilities of success and failure; and
(d) The degree to which entrepreneur’s efforts increase the likelihood of success and decrease the likelihood of failure.
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Entrepreneurial traits are inter related with regard to risk taking behaviour.
These interrelations are as follows:
(a) Risk taking is related with creativity and innovation and it is an essential part in turning ideas into reality.
(b) Risk taking is related to self-confidence. The more confidence entrepreneur has in his own abilities, the greater confidence entrepreneur will have in being able to affect the outcome of his decisions and a greater willingness to take what others see as risks.
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(c) Realistic knowledge of entrepreneur’s own capabilities is also important. Such realism serves to restrict entrepreneur’s activities to situations in which he can affect the outcomes.
Risk taking and creativity are two essential characteristics of entrepreneurs. By trying to be more creative he will also become aware of more productive ideas. When he is able to choose from a number of good ideas, he will be more willing to take the necessary risks to implement his most productive idea.
To some degree, everyone is creative under most circumstances, so it is possible to develop a person’s creative talents. When he has developed a creative idea, certain risks may be involved in having the idea implemented.
The risk taking ability of entrepreneurs is enhanced by:
(a) Their self-confidence,
(b) Their willing to use their capacities to the fullest extent to move the odds in their favour;
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(c) Their capacity to assess realistically the risk situation and their ability to alter the odds; and
(d) Looking at the risk situation in terms of their established goals.
4. Decision Making:
To be entrepreneurial, a person should be creative, specially when it comes to decision-making. He must strongly believe in himself and his ability to make good decisions. It is this decision-making ability that is the distinguishing mark of an entrepreneur.
Managers usually base their decisions on firm data and documentation contained in surveys, reports and committee recommendations. This information has usually been generated in a standardised manner in accordance with techniques used in solving problems.
It is possible for a major problem to be split up so that a part of it can be solved immediately—generally to meet an urgent need where the results are fairly certain. A decision is usually reached by an established procedure well understood by management and it may represent a consensus, many individuals being unwilling to accept personal responsibility for the decision in question.
Success of an entrepreneur depends on his ability to make decisions which improve the future profitability of his business. Intuitive decision-making ability, a most valuable entrepreneurial resource comes from years of experience of being exposed to making necessary decisions in increasingly complex situations.
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As environment changes, entrepreneur is required to make more judgements and intuitive decisions. Mistake will occur but he must be quick to recognise them and take corrective action. Quantitative data can support his judgement, but will not replace the intuition underlying many of more entrepreneurial decisions.
The entrepreneur may face various types of problems in his entrepreneurial behaviour. So he should pay due attention to rational aspects of decision-making. The scientific method of problem solving indicates that there are specific procedures to follow in order to solve a problem and make a decision.
These usually involve the following steps:
(i) Become acquainted with the problem in general,
(ii) Determine the key facts relating to it.
(iii) Identify major problems.
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(iv) Identify related problems,
(v) Search for possible causes of the problem.
(vi) Consider potential solutions to the problem,
(vii) Select the most feasible solution,
(viii) Implement the solution; and
(ix) Verify that the solution is correct.
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This rational approach is a logical and sensible way to solve most business problems. However, the scientific method will not guarantee that a particular solution will work. It is entrepreneurial leadership and power which are needed to implement a decision/solution successfully.
5. Accepting Challenges:
Entrepreneurship deals with challenges which are to be-faced by the entrepreneur in his behaviour. In practice, entrepreneurs face a tremendous challenge, a challenge they need to exploit as an opportunity. Biggest challenge before the entrepreneurs is to exploit the available opportunities in instable form.
Opportunities are risky and uncertain and thus entrepreneurship deals with risk and uncertain behaviour of the product, price and market. The entrepreneur is required to innovate for which he is innovator. But innovative process is also affected by risk and uncertainty as to what extent prospective customers will support the innovative product in the market.
But there is no option before the entrepreneur to avoid this types of challenge. Entrepreneurship considers ‘exceptions’ and entrepreneurs are supposed to become the exemplars.
6. Organisation:
Entrepreneurship offers people an alternative to the traditional career path. Starting an innovative new venture takes a great deal of planning, investigation, organisation and perseverance. Entrepreneurship also deals with the approaches used to get into market, the form of ownership the new organisation will adopt, the development of the business plan and sources of funding and managerial support.
In an enterprise capital is brought in by the financial institutions and banks, labour by the labourers, land by land owners and all such factors are divorced from one another. They are all separately owned and are scattered all over the country. It is the entrepreneurial process which brings them together and harnesses them to work in production.
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Thus, entrepreneurship develops talented person who specialises in the work of organising ability. The entrepreneur initiates the work, organises it, supervises it and develops support system to solve the organisational problems in proper perspective.
7. Skilful Management:
It refers to effective and viable management of resources of the firm. It has a wide coverage of aspects of setting up objectives, goals, programmes and their management. The entrepreneurial skills include the ability of the entrepreneurs to deal with new situations, organisation, economic and social forces as available from time to time.
The entrepreneur should have skill to get positive support from administrators, policy makers, bankers and financial institutions, infrastructural agencies, customers and workers. He should be able to identify, select and develop executive who can effectively manage and control the human resources.
He is also required to stimulate, initiative and enthusiasm in the fulfilment of organisational objectives. He should believe in effective delegation of powers and responsibilities to others.
8. Making the Organisation a Success:
Business is a game of skill. Risk and return both are positively correlated. “As the ability required, service performed and the risk borne are inseparable, ability of the highest order is required to make the entrepreneurship successful.” Entrepreneurship motivates the prospective entrepreneurs to undertake the risk of an enterprise by identifying, arranging and combining the productive variables available in the environment.
It is the entrepreneurial behaviour which identifies opportunities for introducing and implementing the new ideas with regard to production technique, nature of product, expansion and diversification programme and marketing strategies. So entrepreneurship develops a background where organisation has to get result as expected by the entrepreneur.
Characteristics of Entrepreneurship
The main characteristics of entrepreneurship are as follows:
1. Economic activity – Entrepreneurship is primarily an economic function because it involves the creation and operation of enterprise. It is basically concerned with the production and distribution of goods and services.
2. Creative activity – Entrepreneurship is a creative response to changes in the environment. It involves innovation or introduction of something new and better. An entrepreneur is a change agent.
3. Purposeful activity – The entrepreneur creates and operates an enterprise to earn profits through satisfaction of customers, therefore, entrepreneurship is goal-oriented activity.
4. Function of risk-bearing – Risk is an inherent and inseparable element of entrepreneurship. An entrepreneur guarantees rent to the landlord, wages to employees, and interest to investors in the hope of earning more than the expenses. He assumes the uncertainty of future. In the pursuit of profit, there is every possibility of loss.
5. Organizing function – An entrepreneur brings together various factors of production— his co-ordination and control efforts of all the persons engaged in his enterprise. He harnesses land, labour, capital, and other resources for the benefit of mankind. Therefore, an entrepreneur is an organization builder.
6. Gap-filling function – The gap between human needs and the available products and services gives rise to entrepreneurship. An entrepreneur identifies this gap and takes necessary steps to fill the gap. He introduces new products and services, new methods of production or distribution, new source of inputs and new markets.
7. Dynamic function – Entrepreneurship is a dynamic function. Entrepreneurs thrive on change in the environment which brings about useful opportunities for business. Flexibility is the hallmark of a successful entrepreneur.
8. Innovative function – Entrepreneurship is an innovative function as it involves doing things in a new and better way. Innovation may take several forms—a new product, a new source of raw materials, a new market, a new method of production.
Characteristics of Entrepreneurship
1. Entrepreneurship is primarily an economic activity because it is basically concerned with the production and distribution of goods and services.
2. Entrepreneurship is a creative activity as it involves innovation or introduction of something new and better.
3. Entrepreneurship is an innovative function as it involves doing things in a new and better way. It may be in the form of a new product, a new source of raw material, a new market or a new method of production.
4. Entrepreneurship is a dynamic process as it operates as per changes in the society, which brings useful opportunities for business.
5. Entrepreneurship is an organising function as it brings together various factors of production i.e., land, labour, capital and other resources.
6. Entrepreneurship is a risk bearing function. Risk is an inherent and inseparable element of entrepreneurship. An entrepreneur guarantees rent to the landlord, wages to the employees and interest to the investors in the hope of earning more than the expenses. In the pursuit of profits, there is every possibility of loss.
7. Entrepreneurship is a gap filling function. The gap between the human needs and the available products and services gives rise to entrepreneurship. An entrepreneur identifies this gap and takes necessary steps to fill the gap. He introduces new products and services, new methods of production or distribution, new sources of inputs and new markets for this purpose.
8. Entrepreneurship is a goal-oriented activity.
Characteristics of Entrepreneurship – 5 Main Characteristics
The main characteristics of entrepreneurship are as follows:
The classical economists like Adam Smith and Richard Cantillon and many others do not recognise entrepreneurship as an economic activity. However, the modern economists consider it as an economic function as it involves creation and operation of an enterprise.
Entrepreneurship is a continuous economic process which recognises the need for change. An entrepreneur is a key person to initiate any change. According to Schumpeter, all important changes in the economy are initiated by entrepreneurs.
Innovation is the process of doing new things. According to Peter Drucker, “Innovation is the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth.” Whenever a new idea occurs, entrepreneurship is essential to convert the idea into practical application.
3. Creative and Purposeful Activity:
Entrepreneurship is a creative and purposeful activity. The process of entrepreneurship involves five stages, viz. – idea germination, preparation, incubation, illumination and verification. Profit-earning is never the sole objective but introducing something new and creative is the purpose of entrepreneurship. The benefits of creativity are enjoyed by people at large. For instance, internet benefits are being enjoyed by more than 50 million people world over.
Entrepreneurship is mainly an organising activity, whereby the entrepreneur brings together various factors of production and ensures the continuing management. 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. Thus, he clearly affirms the role of an entrepreneur as an organizer.
Entrepreneurship is a risk-bearing activity in the sense that it is creating something new, orgnaising, co-ordinating, supervising and undertaking risk, and handling economic uncertainty. Cantillon describes an entrepreneur as a person who makes decisions about obtaining and using resources, while he assumes the risk of enterprise. He is a bearer of non-insurable risk, and risk-bearing forms a unique function of entrepreneurship.
Characteristics of Entrepreneurship – 8 Main Characteristics
The main characteristics of entrepreneurship are:
1. Economic Activity:
Entrepreneurship is basically an economic activity’s because it involves creation and operation because it involves creation and operation of a new enterprise. It primarily concerned with satisfying the needs of customer with the help of production a distribution of goods and services.
2. Innovation:
Entrepreneurship is an innovative and a creative activity.
It involves doing things in a new and better way. Entrepreneurship is an automatic and creative response to changes in the environment. As an innovator, entrepreneur has to –
(i) Introduce new things or goods with which the customer is not yet familiar;
(ii) Introduce new methods of production which is not yet to apply in the particular bran manufacturing;
(iii) Find out a new source of raw material;
(iv) Find a new market or customers which are not yet familiar with the product.
A businessman cannot be entrepreneurs who simply behave in old and traditional ways entrepreneur has to take innovative steps and it decisions under uncertainty and risk situation.
3. Decision-Making:
Decision-making activity of entrepreneur is one of the important features of entrepreneurship. Entrepreneur takes decisions regarding activities of the enterprise. He decides about the type of business to be done and the ways of doing it. An entrepreneur has to make decisions under uncertainty and he has to take actions with unknown and unpredictable.
4. Function of High Achievement:
Entrepreneurship is a function of high achievement. People having high need for achievement are more likely to succeed as entrepreneurs. The achievement motive is relatively stable because profit is merely a measure of success.
5. Organisation Building:
Entrepreneurship implies the skill to build an organisation. Organisation building is the most critical ability for entrepreneurial development. This skill means that one can build an organisation effectively by delegating responsibility to others. Entrepreneurs need to be good leaders and excellent administrators to be a successful organisation builder.
6. Managerial Skill:
Managerial skills and leadership are the most important characteristics of entrepreneurship. Entrepreneurship requires tactful handling of various situations involving risk and uncertainties. To be a successful entrepreneur, one must have more than the drive to earn profits and a mass wealth. The entrepreneur must have the ability and skill to lead and manage the affairs of enterprise.
7. Risk Bearing Capacity:
Risk is the part and parcel of entrepreneurship. An entrepreneur assumes the uncertainty of future. It is always risky to start a new enterprise and doing something new and differently. The functions of entrepreneurship are greatly influenced by various risky situations and factors like increase in competition, change in customer needs and taste, shortage of raw material, change in government policy, and change in technology. Thus, entrepreneur needs to be a risk-taker, not risk avoider.
8. Resource Mobilisation:
Gap filling is the most significant feature of entrepreneurship. The job of entrepreneur is to fill the gap or make up the deficiencies which always exist in the knowledge about the production function. These deficiencies arise because all the inputs in the production function cannot be marketed. An entrepreneur has to Marshall all the inputs to realise final products us, entrepreneurship is a function of input completing and gap filing.
Characteristics of Entrepreneurship – 14 Important Characteristics
The characteristics of an entrepreneurship are given as follows:
1. Risk bearing capacity – Richard Cantillon, “It is a functional bearing non insurable risk.”
Without risk bearing capacity, an entrepreneur cannot innovate or start a new business or thing. Here, risk means the condition of not knowing the outcome of an activity or decision.
2. Ability of Innovation – It is an important factor of entrepreneurship to stand and compete with the market. Entrepreneurship is an innovation function, which is helpful in implementing new concepts in the business. Entrepreneur gives a proper place to techniques, plants and sound management in business.
According to Peter F. Drucker, “Innovation is the instrument of entrepreneurship.”
3. Business Oriented Tendency – To expand the business or start new business because of inspiration from a channel or medium is a business oriented tendency. It indicates the entrepreneurial and commercial tendency of an entrepreneur and helpful to entrepreneur for establishing, implementing new ideas and plans in to venture.
4. Creative Activity – To modify and find new thoughts in the running of old business is a form of creative activity. Entrepreneurship motivates an entrepreneur to search for new opportunities, to enhance creativeness and implementing new views. Schumpeter says, “Entrepreneurship is basically a creative activity.”
5. Knowledge Based Practice – According to Peter F. Drucker, “Entrepreneurship is neither a science nor an art, it is a practice. It has a knowledge base.” Entrepreneur can obtain high achievement by using knowledge and experience and become a successful person.
6. Principle Based – Entrepreneurship is based on principles not on intuition. It needs methods, techniques, full knowledge of rules provisions etc. about the concerned field. For a successful entrepreneur knowledge of statistics, economics, law, sociology, political science and psychology is a must.
7. Result of Changes – Entrepreneurship is not the result of economic phenomenon. It is the result of changes in society such as changes in social values, conventions, technology, population and govt. policy. According to Peter F. Drucker, “The emergence of the entrepreneurial economy is as much a cultural and psychological as it is an economic or technological event.”
8. Essential in Every Activity – Entrepreneurship is essential in every activity such as education, medical, politics, sports and games. An entrepreneur can obtain success, in every field through entrepreneurial behaviour. According to Drucker, “Entrepreneurship is by no means confined solely to economic institution.”
9. Environment Oriented Activity – Entrepreneurship is an external and open system which is connected to external and internal environment. According to Schumpeter, “It is a creative response to every external situation.”
Here, environment relates to social, political, economic and physical.
10. Low risk – Generally, Entrepreneurship is enormously risky activity. It is true that risk has been increasing day by day to technological, social and economic changes in business. Properly managed and systematic, sound investigation method, principle based and relevant innovation based entrepreneurship has less risk.
11. Creation of Resource – According to Peter F. Drucker, “Until every plant is weed and every mineral just another rock.” Entrepreneurship provides an idea to entrepreneur to use the unused resources in proper manner.
12. Essential in all Business – Entrepreneurship is essential for all type of business. Every section of business may be successful by entrepreneurship.
13. Result Oriented Behaviour – Entrepreneurship always emphasises on result. Through efforts and hard work, entrepreneur can achieve everything because every activity is result oriented. Sound decision, concrete plans and hard work gives a proper shape to entrepreneur’s imagination.
14. Professional Activities – A person can achieve success in every field by entrepreneurial tendency such as medical, law, engineering etc. Entrepreneurship is a professional activity. It is applicable in every field. According to Schumpeter, “Entrepreneurship is by no means confined solely to economic institutions.”
Characteristics of Entrepreneurship in Today’s World
An entrepreneur attacks life head on, takes charge of his own life, and has a persistent determination to create his own path in life. According to Napoleon Hill, “An educated person is not necessarily a person with any specialized knowledge, but an educated person is one who has so developed the higher faculties of his mind that he can acquire anything he wants without violating the rights of others.”
The typical characteristics that make up an entrepreneur in today’s world are:
1. The entrepreneurs have an enthusiastic vision and passion to drive the force of an enterprise.
2. The entrepreneurs express a great amount of enthusiasm in the work supported by interlocked collection of specific ideas.
3. The entrepreneur expresses a great amount of enthusiasm and promotes the vision with enthusiastic passion.
4. The entrepreneurs are goal-oriented in their quest to reach their desired outcomes.
5. The entrepreneurs have creative imagination and with their persistence and determination, develop strategies to change the vision into reality.
6. Entrepreneurs have a positive attitude when it comes to building their business and business relationships.
7. Entrepreneurs are very quick decision makers in their business endeavours and ideas.
8. An entrepreneur must have positive attitude, passionate about achieving their goals, innovative, creative, versatile, persistent, self-confident, self-reliant, have a strong sense of commitment etc.
Characteristics of Entrepreneurship – 7 Features
Entrepreneurship is characterised by the following features:
1. Economic activity – Entrepreneurship is an economic activity involving the creation and running of an enterprise with a view to create wealth by optimum utilisation of scarce resources.
2. Dynamic activity – Since it is performed continuously in an environment which is uncertain, it is regarded as the dynamic activity.
3. Innovative function – Entrepreneurship is essentially an innovative function as there is a continuous search for new ideas. The entrepreneur continuously evaluates the existing ways of doing business so that more efficient and newer means can be adopted.
4. Risk taking – Entrepreneurship is essentially a risk bearing activity. It arises out of the creation and implementation of new ideas, the results of which may not always be positive.
5. Gap filling – The job of the entrepreneur is to fill the gap which exists in the knowledge about the production process. He has to assemble all the inputs for the production of goods and services.
6. Creative activity – An entrepreneurship is a creative response to environment. Innovation is the basic element of entrepreneurship and creativity leads entrepreneur to achieve innovation. He initiates newer and better ways of doing things.
7. Managerial skills and leadership – They are the important elements of entrepreneurship. An entrepreneur must have a desire to earn profit, the ability to lead and manage.
Characteristics 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 characteristics of entrepreneurship are as follows:
1. Economic Activity:
Cantillon pointed out that entrepreneurship involves conscious decision-making about resource allocations. It also implies seeking the best opportunities for using resources for their highest commercial yields. Adam Smith viewed that there was no difference between an entrepreneur and an industrialist. He agreed that economic change could be brought through entrepreneurs.
Entrepreneurship is a continuous economic process which recognizes the need to change and an entrepreneur is a key person to initiate any change.
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.
2. Innovative Activity:
Innovation is the process of doing new things. Drucker elaborates – “Innovation….is the means by which the entrepreneur either creates new wealth- producing resources or endows existing resources with enhanced potential for creating wealth.”
Entrepreneurship is innovation where new products, services, ideas and information is produced, new efficient production techniques are introduced by the firms, new market opportunities are identified and better ways of meeting existing demands are looked into. Whenever a new idea occurs, entrepreneurial efforts are essential to convert the idea into practical application.
According to Schumpeter, innovation may occur in any of the following ways:
(i) The introduction of a new good with which the customer is not yet familiar;
(ii) The introduction of a new method of production which is not tested by experience in the branch of manufacture concerned;
(iii) The opening of a new market-the customers are not yet familiar with the product and the market for that innovative product hasn’t previously been entered;
(iv) The conquest of a new source of supply of raw-material irrespective of the fact whether that source already exists or it has been created; and
(v) The creation of a new organization of an industry-a new innovation may create the monopoly for that product or break the monopoly of similar existing product.
Thus, Joseph Schumpeter described entrepreneurship as a force of “creative destruction” whereby established ways of doing things are destroyed by the creation of new and better ways to get things done.
Entrepreneurship is often a subtle force, which challenges the order of the society through marginally small changes. Schumpeter’s entrepreneurship is extraordinarily powerful like converting the crude oil into an energy source, attempting to tap the solar energy for cooking, for automobile fuelling etc.
3. 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.
McClelland identified two features of entrepreneurship – (a) doing things in a different and better way (b) decision making under uncertainty. He found that looking at the history of industrial development, money of the pioneers who built up industrial empires is strongly motivated by need for power and achievement.
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. Researches also show that stable personality characteristic like motive is laid down in childhood.
David McClelland also stressed that entrepreneurs are highly motivated by challenging and competitive work situations.
4. Creative and Purposeful Activity:
Creativity is “the ability to bring something new into existence.” The definition emphasizes on “ability” and not the “activity” of bringing something new into existence. A person may conceive of something new and also visualize its usefulness but unless he takes necessary action to convert it into reality, his ideas will not be termed as creative. Innovation is the process of doing new things. Innovation, therefore, is the transformation of creative ideas into useful applications, but creativity is a prerequisite to innovation.
Entrepreneurship is virtually a creative and a purposeful activity. The entrepreneur passes through the five stages during the process of entrepreneurship viz., idea germination, preparation, incubation, illumination and verification. Earning profits is never the sole objective but to introduce something new and creative is the purpose of entrepreneurship. The benefits of his creativity are enjoyed by people at large. E.g., Internet benefits are being enjoyed by more than 50 million people world over.
5. Entrepreneurship – an Organizing Function:
J. B. Say describes entrepreneurship as an organizing function 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 labor 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 laborers 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 organizer. Marshall also advocated the significance of organization among the services of special class of business undertakes.
6. Entrepreneurship:
A function of risk-bearing. Richard Cantillon, an Irishman living in France is credited with giving the concept of entrepreneurship. Cantillon described in his book published in 1755, an entrepreneur as a person who buys things at a certain price and sells them at an uncertain price. Thus, he makes decisions about obtaining and using resources while consequently assuming the risk of enterprise.
Thus, Cantillon conceived of an entrepreneur as a bearer of non-insurable risk. According to him, risk-bearing forms a unique constitutive function of entrepreneurship. He gives the example of a farmer. The farmer pays out contractual incomes which are ‘certain’ to the landlords and laborers and sells at prices that are ‘uncertain’.
Thus, entrepreneurship is meant to be something new, organizing, co-coordinating, supervising and undertaking risk and handling economic uncertainty. As per Higgin, “Entrepreneurship is meant as the function of seeing investment and production opportunities, organizing an enterprise to undertake and production process, raising capital, hiring labor, arranging the supply of raw-materials, finding site, introducing a new technique and commodities, discovering new sources of raw-materials and selecting top managers for day- to-day operations of the enterprise.”
Characteristics of Entrepreneurship
The main characteristics of Entrepreneurship are:
1. Economic Activity:
Entrepreneurship is basically an economic activity because it involves creation and operation because is involves creation and operation of a new enterprise. It is primarily concerned with satisfying the needs of customer with the help of production and distribution of goods and services.
2. Innovation:
Entrepreneurship is an innovative and a creative activity.
It involves doing things in a new and better way. Entrepreneurship is an automatic and creative response to changes in the environment.
As an innovator, entrepreneur has to:
(i) Introduce new things or goods with which the customer is not yet familiar;
(ii) Introduce new methods of production which is not yet to apply in the particular brand of manufacturing;
(iii) Find out a new source of raw material;
(iv) Find a new market or customers which are not yet familiar with the product.
A businessman cannot be entrepreneurs who simply behave in old and traditional ways. An entrepreneur has to take innovative steps and it decisions under uncertainty and risk situation.
3. Decision-Making:
Decision-making activity of entrepreneur is one of the important features of entrepreneurship. Entrepreneur takes decisions regarding activities of the enterprise. He decides about the type of business to be done and the ways of doing it. An entrepreneur has to make decisions under uncertainty and he has to take actions with unknown and unpredictable results.
4. Function of High Achievement:
Entrepreneurship is a function of high achievement. People having high need for achievement are more likely to succeed as entrepreneurs. The achievement motive is relatively stable because profit is merely a measure of success.
5. Organisation Building:
Entrepreneurship implies the skill to build an organisation. Organisation building is the most critical ability for entrepreneurial development. This skill means that one can build an organisation effectively by delegating responsibility to others. Entrepreneurs need to be good leaders and excellent administrators to be a successful organisation builder.
6. Managerial Skill:
Managerial skills and leadership are the most important characteristics of entrepreneurship. Entrepreneurship requires tactful handling of various situations involving risk and uncertainties. To be a successful entrepreneur, one must have more than the drive to earn profits and a mass wealth. The entrepreneur must have the ability and skill to lead and manage the affairs of enterprise.
7. Risk Bearing Capacity:
Risk is the part and parcel of entrepreneurship. An entrepreneur assumes the uncertainty of future. It is always risky to start a new enterprise and doing something new and differently. The functions of entrepreneurship are greatly influenced by various risky situations and factors like increase in competition, change in customer needs and taste, shortage of raw material, change in government policy, and change in technology. Thus, entrepreneur needs to be a risk-taker, not risk avoider.
8. Resource Mobilisation:
Gap filling is the most significant feature of entrepreneurship. The job of entrepreneur is to fill the gap or make up the deficiencies which always exist in the knowledge about the production function. These deficiencies arise because all the inputs in the production function cannot be marketed. An entrepreneur has to market all the inputs to realise final products as entrepreneurship is a function of input completing and gap filing.
Characteristics of Entrepreneurship – 10 Main Characteristics
The characteristics of entrepreneurship are:
1. Economic and commercial activity – The entire process of entrepreneurship has economic implications. Entrepreneurship involves the establishment of enterprises which helps is better utilization of resources and contributes to the process of economic growth of an economy.
2. Goal-oriented process – The process of entrepreneurship emphasizes on outcomes, accomplishments and target achievements. The entrepreneur works in order to convert the vision into reality.
3. Dynamism – Entrepreneurship as a process is active amidst the business environment which is very dynamic and filled with uncertainties. Hence, entrepreneurship should be dynamic.
4. Accepts challenges – Entrepreneurship involves taking up challenges. The entire process involves numerous challenges owing to the uncertainty of the ever changing business environment.
5. Decision making – Every step in the process of entrepreneurship involves decision making. The entrepreneur has to choose the best alternative available at each step. Correct decision making in inevitable for success.
6. Innovation – Innovation is an intrinsic characteristic of entrepreneurship. Innovation enables entrepreneurs to thrive. The innovation increases the prospects of the entrepreneurs to flourish and also contributes in improving the lives of customers.
7. Bearing Risk – Entrepreneurship involves risk bearing. The business environment is filled with uncertainties. The process of entrepreneurship in intricately associated with risk bearing.
8. Mobilization of the factors of production – The crux of entrepreneurship involves resource mobilization. The process of entrepreneurship in involved in bringing all the factors of production into a single platform to start an enterprise.
9. Skillful management – The process of entrepreneurship requires skillful management of events and resources. Entrepreneurship involves various activities and processes which require skillful management.
10. Creation of value – Entrepreneurship involves creation of new products, new services, and employment opportunities which directly and indirectly create some value to a community or the economy at large.
Characteristics of Entrepreneurship
Entrepreneur is a person who sets up a business or businesses, taking on financial risks in the pursuit of profit.
Entrepreneurship is the act of being an entrepreneur, which is a French word meaning “one who undertakes an endeavour”. Entrepreneurship may be defined as the process by which either an individual or a team identifies a business opportunity and acquires and deploys the necessary resources required for its exploitation.
Entrepreneurship development seeks to equip a person with the necessary knowledge and skills needed for successfully starting and running the enterprise.
The features of entrepreneurship of outline below:
1. Economic activity – An entrepreneur seeks to satisfy the needs of the society by offering appropriate goods and services. Entrepreneurship is regarded as an economic activity because it is concerned with setting up a business enterprise in pursuit of earning profit.
2. Dynamic – Since a business operate in an ever changing environment. Entrepreneurship is dynamic in nature as the success of an entrepreneur depends upon the ability to innovate constantly in the light of changing situations.
3. Risk – Risk is inherent in every business activity regardless of its nature and size. Entrepreneurship therefore, involves assuming risks of varied kinds and proportion in order to realise desired goals.
4. People with high competence – The success of an enterprise greatly depends upon the proficiency of the entrepreneur. Therefore, entrepreneurship is suitable for those people who are equipped with the required knowledge and skills to work under challenging and innovative situations.
5. Purposeful activity – Entrepreneurship is a meaningful activity. Entrepreneurship involves identification and implementation of new business ideas with the purpose of benefitting the people at large.