1. Amity Global Business School
Entrepreneurship Development
BBA - VI
Entrepreneurship
“Entrepreneurship is a process of giving birth to an enterprise”.
Economist Joseph Schumpeter has given a significant contribution in understanding the
concept of entrepreneurship. According to him, “An entrepreneur is a person who is willing and
able to convert a new idea or invention into a successful innovation.” In the view of Schumpeter
an entrepreneur employs “the gale of creative destruction.” Creative destruction can be defined
as the process of creating new product, business model, or other business innovations by
replacing the old ones. Thus, new products and technologies developed by entrepreneurs over
time make current products and technologies obsolete. For example, before the advent of
mobile phones, pagers were very popular among people, but with the invention of mobile
phones, pagers became obsolete. Therefore, Schumpeter held the argument that creative
destruction is the main factor behind economic growth and industry dynamism. He also held a
view that entrepreneurship results not only in new industries, but also in new combinations of
currently existing inputs. Schumpeter exemplified this concept with the invention of a steam
engine, which was used to develop a horseless carriage. Further, the horseless carriage was
transformed into a car. This formation of car from steam engine was not the development of a
new technology, but the application of existing technologies in a novel manner.
Thus, we can say that entrepreneurship is an act of bearing risks, bringing innovation,
generating employment, and mobilizing resources.
Entrepreneurs and entrepreneurship play a significant role in the socio-economic development
of a nation. Entrepreneurs set up enterprises and generate employment for people in their
enterprises. This helps in reducing unemployment, which is the main cause of all socio-
economic problems as well as results in increasing the total income of a country. Moreover,
goods and services produced by entrepreneurs, after meeting the domestic demand, are
exported to foreign countries to earn foreign exchange. In this way, entrepreneurs play a
significant role in the country‟s growth and prosperity in terms of production, employment
generation, and export. The significance of entrepreneurship is explained in the following
points:
Raises productivity through technical and other forms of innovation
Generates employment opportunities by establishing new enterprises
Facilitates the transfer of technology
Plays a strategic role in commercializing new inventions and products
Facilitates the proper utilization of resources
Improves the standard of living
Plays a crucial role in the restructuring and transforming economy
Facilitates a balanced economic development
Brings dynamism in industries by launching innovative products and services
Creates new markets and facilitates expansion into international markets

2. Entrepreneurship is the pursuit of market opportunities to produce innovative goods and
services. Once the enterprise gets established, the entrepreneurial process becomes effectively
a recurring progress of opportunities. It becomes the process of allocating scarce resources
judiciously to pursue the value-adding opportunities. The steps involved in the entrepreneurial
process are explained as follows:
Deciding to become an entrepreneur: Refers to the first step of the entrepreneurial process in
which an individual decides to start his/her own enterprise. The desire to become an
entrepreneur may be triggered by any on the following factors:
Arising of an innovative idea backed up the ability to start a business
Inheriting wealth and skills to establish an enterprise
Prevailing problems in current jobs
Willing to become own boss
Pursuing own ideas
Realizing the need of earning money
Identifying and evaluating the opportunity: Refers the second stage of the entrepreneurial
process. In this process, the entrepreneur recognizes potential opportunities. Sometimes, the
set mechanisms, such as entrepreneurship development training programs and government
policies to promote entrepreneurs, help potential entrepreneurs in identifying the
opportunities. The entrepreneurs keep on scanning the environment to gather useful
information for identifying opportunity in the form of a potential product or service. Further,
they evaluate and screen the identified opportunity. The evaluation of the identified
opportunity helps entrepreneurs in assessing whether the opportunity is realistic and the
returns of the opportunity are as per the resources required.
Developing a business plan: Involves developing a successful business plan to exploit the
identified opportunity. Developing a business plan involves setting goals, standards, methods,
and techniques of achieving those set goals. A well drafted business plan serves as a road map
to the entrepreneur to guide and monitor his/her activities towards the set goals.
Determining the required resources: Involves determining the resources required to meet the
identified opportunity. In this step, the entrepreneur assesses the available resources and the
resources that are essential to convert the identified opportunity into a reality. The
entrepreneur needs to be careful while determining the amount and quality of resources
required as insufficient or inappropriate resources can hamper the success of the opportunity.
Next, he/she needs to acquire the resources required in a timely manner, while focusing on
right quality and quantity.
Converting the idea to an enterprise: Refers to the most important step of the entrepreneurial
process in which the entrepreneur develops his/her own enterprise to execute the identified
opportunity. In this step, the entrepreneur brings the set business plan into practice. He/she
arranges the resources that are identified in the previous step. Moreover, he/she takes into
consideration all internal and external environmental forces, while developing the enterprise.
Managing and growing the enterprise: Refers to the final stage of the entrepreneurial process.
Once the resources are acquired, the entrepreneur uses them efficiently to carry out the

3. business plan successfully. He/she also strives to identify and examine operational problems,
and solve them. Apart from this, the entrepreneur needs to implement an effective control
system to identify and resolve problem areas on time. The growth of the enterprise depends on
the selection of an appropriate target market. The entrepreneur needs to take into account the
four Ps, product, price, promotion, and place of marketing, for the growth and development of
the enterprise.
Entrepreneur
According to Encyclopedia Americana (1988), “An entrepreneur is a businessman who assumes
the risk of bringing together the means of production including capital, labor and material and
receives his reward in profit from the market value of his product”.
An entrepreneur takes the risk and organizes resources to establish and operate his/her
enterprise. He/she identifies and traps the existing opportunities in the market, converts idea
into action, bears the risk and uncertainties involved, and takes promotional activities to launch
the enterprise. In addition, they strive for excellence in their field. Some of the functions of an
entrepreneur are described as follows:
1. Idea Generation: Implies that an entrepreneur identifies business opportunities, selects
the most suitable business opportunity, and converts that opportunity/idea into a
successful business venture.
2. Promotion: Indicates that in today’s time the activities of entrepreneurs are not only
limited to establish an enterprise. Nowadays, entrepreneurs are also involved in various
other activities, such as promoting for setting up a new enterprise, attracting the
investors, expanding the existing enterprise, and combining two or more enterprises. As
a promoter, an entrepreneur conducts feasibility studies, decides the form of
organization, assembles the required resources, such as capital and human resource, and
shapes up the enterprise.
3. Risk and Uncertainty Bearing: Implies that an enterprise needs to bear risks involved in
establishing a new enterprise or starting a new business venture. He/she should be ready
to bear the losses that may arise because of unforeseen situations in future. He/she does
not hesitate in doing new things and adopting new methods of production.
4. Arranging Finance: Indicates that entrepreneurs arrange finance for setting up the
enterprise. An entrepreneur is an individual, who provides initial capital to start the
venture and arranges additional funds required to carry on activities and expand the
business.
5. Staffing: Signifies that an entrepreneur needs to employ individuals with the required
skill-sets for operating in the different functions of the organizations

4. Entrepreneurial leaders and Manager
Differences between Entrepreneurial Leaders and Managers
Entrepreneurial Leaders Managers
Areas of Differentiation
Position They are their own bosses They are salaried
employees
Risk Bearer They are the owner of They are the employees of
enterprises; therefore, the organization and need
bear all the risks and the not bear any risk
uncertainties involved in
the business
Objectives Their objective is to Their objective is to
introduce innovations and supervise and create
act as change agents routines as well as
implement entrepreneur’s
plans and ideas
Pays and Rewards Their income is not fixed They get fixed salaries and
and depends on the rewards for performing
performance of the well
enterprise
Faults and Failures They believe in They put efforts to avoid
experimenting new ideas; mistakes
therefore, may experience
faults and failure. They
also believe to learn from
their failures.
Decision Making They take own decisions They execute the decision
of the owner

5. Entrepreneur and Intrapreneur
Differences between Entrepreneurs and Intrapreneur
Areas of Differentiation Entrepreneurs Intrapreneurs
Area of Activity They work inside as well They are bound to
as outside the enterprise perform within the
enterprise
Idea An entrepreneur An intrapreneur adopts
generates ideas the idea generated by an
entrepreneur and makes it
better
Employment An entrepreneur employs An intrapreneur are paid
intrapreneur and pays for using their creative
them in exchange of their thinking and
services implementing the ideas
Sense of Responsibility An entrepreneur works An intrapreneur works
overtime to run his/her overtime helping to run
own business someone’s else business
for the enterprise’s future
Rewards The rewards of An intrapreneur is a
entrepreneurs depend on person employed by an
the success and profit organization whose
margins of the enterprise compensation is fixed