Ed unit 1

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GANADIPATHY TULSI’S JAIN ENGINEERING COLLEGE.
DEPARTMENT OF MBA
BA7032 / Entrepreneurship Development (II Year / III Sem)
Unit – 1 Notes
SYLLABUS
UNIT – I ENTREPRENEURAL COMPETENCE 6
Entrepreneurship concept – Entrepreneurship as a Career – Entrepreneurial Personality - Characteristics of
Successful, Entrepreneur – Knowledge and Skills of Entrepreneur.
UNIT – II ENTREPRENEURAL ENVIRONMENT 12
Business Environment - Role of Family and Society - Entrepreneurship Development Training and Other Support
Organisational Services - Central and State Government Industrial Policies and Regulations - International Business.
UNIT – II BUSINESS PLAN PREPARATION 12
Sources of Product for Business - Prefeasibility Study - Criteria for Selection of Product - Ownership - Capital -
Budgeting Project Profile Preparation - Matching Entrepreneur with the Project - Feasibility Report Preparation and
Evaluation Criteria.
UNIT – III LAUNCHING OF SMALL BUSINESS 10
Finance and Human Resource Mobilization Operations Planning - Market and Channel Selection - Growth Strategies -
Product Launching.
UNIT – IV MANAGEMENT OF SMALL BUSINESS 5
Monitoring and Evaluation of Business - Preventing Sickness and Rehabilitation of Business Units- Effective
Management of small Business.
GTEC/MBA/Entrepreneurship Development / Notes/ Unit-1 Page 1

ENTREPRENEURIAL COMPETENCE
Unit – 1 Notes
Entrepreneur:- Owner of a concern / business.
Meaning:-
The term is derived from the French word “entreprendre” – Meaning “to undertake.”
Entrepreneur means the person who undertakes the risk of running an enterprise.
He arranged everything that required setting up an enterprise.
Eg:- fund, land, people, material etc.,
INTRODUCTION:
Entrepreneur is an economic agent who plays a vital role in the economic development of a country.
Entrepreneurial development of a country refers study growth in the incomes level. An entrepreneur is an
individual with knowledge, skills, initiative; derive spirit of innovation who aims at achieving goals.
Generally speaking, entrepreneur refers to a person who establishes his own business or industrial
undertaking with a view to making profit. An entrepreneur is considered to be an originator of a business
venture.
ENTREPRENEURSHIP CONCEPT
DEFINE THE TERM ENTREPRENEUR. (OR) EXPLAIN THE CONCEPT OF
ENTREPRENEUR?
Like other economic concepts, entrepreneurship has been a subject of much debate and discussions.
Various experts have defined the term entrepreneur in different words. Some of the definitions are as
follows:
According to J.B.Say, “an entrepreneur is the economic agent who unites all means of production,
land of one, the labour of another and the capital of yet another and thus produces a product. By selling a
product in a market he pays rent to land, wages for labours, interest on capital, and what remains his profit”.
J.A.Schumpeter, is of the overview that, “a person who introduces innovative changes is an
entrepreneur and he is an integral part of economic growth”.
According to F.H.Knight, “all entrepreneur is a person who performs dual function of risk taking
and control”.

The term “entrepreneur” has been defined as one who detects and evaluates a new situation in his
environment and directs the making of such adjustments in the economic systems, as he deems necessary. In
this process, performs one or more of the following:
 Perceives opportunities for profitable investments;
 Explores the prospects of starting such a manufacturing enterprise;
 Obtains necessary industrial licenses;
 Arranges initial capital;
 Provides personal guarantees to the financial institutions.
Thus, an entrepreneur is always action-oriented. He has the ability to visualize the necessary steps
involved from idea generation to its actualization. He is both a thinker and doer; planner and worker. He
accepts risk and manages it. All the above definitions portray an entrepreneur as an initiator of action,
stimulator of social economic change and a harnesser of resources.
EXPLAIN THE DIFFERENT TYPES OF ENTREPRENEURS.
Entrepreneurs can be classified into four major types:
1. Innovators: who produce new goods in new way and do enter into new markets by undertaking
new methods of organization.
2. Imitators: do follow the innovators and design their production.
3. Fabian Entrepreneurs: are lazy and they would follow old customs, tradition and sentiments, with
the result, they are totally uninterested in taking risk and imitating successful entrepreneurs.
4. Drone Entrepreneurs or Laggards: this type of entrepreneurs never allow any changes in their
production and the style of functioning.
DISTINGUISH ‘ENTREPRENEUR’ FROM ‘MANAGER’.
Many people are of the view that the terms entrepreneur and manager mean the same. It is a wrong
notion since one can find a lot of differences between these two as given below:
MANAGER ENTREPRENEUR
Servant: A manager is acting in the capacity of a
servant in the enterprise.
Owner: An entrepreneur is the owner of the
enterprise, which he establishes himself.
Salary: The reward for a manager is salary and his
salary is certain and fixed.
Profit: The reward for an entrepreneur is
profit, which is highly uncertain.

No risk bearing: As a servant the manager need
not bear any risk involved in the enterprise.
Full risk bearing: As an owner, the
entrepreneur has to bear all risks and
uncertainties involved in running the business.
Managerial functions only: A manager renders
only the managerial services in an enterprise.
All functions: An entrepreneur has to perform
many functions in order to run the enterprise
successfully.
Executor: A manager mainly acts as an executor
of plans prepared by the entrepreneur.
Innovator: An entrepreneur mainly acts as an
innovator and prepares plans for execution.
DEFINITION OF ENTREPRENEURSHIP
A.H. Cole has defined entrepreneurship as “The purposeful activity of an individual or group of associated
individuals, undertaken to initiate, maintain, or earn profit by production and distribution and distribution of
economic goods and services”.
DEFINITION OF INTRAPRENEURSHIP
According to Mary Coulter, “Intrapreneurship is the pursuit of entrepreneurship within the confines of a
large organization”. In big enterprises, the top-level executives are encouraged to generate new ideas and
convert them into products through research and development activities within the framework of an
organization.
“INTRAPRENEURS are the persons who resigned from their well-paid executive positions to launch their
own ventures”. Like entrepreneur, Intrapreneurs are also innovators. They are also introducing new
products, ideas and services within the framework of a company.
S.N
O.
ENTREPRENEUR INTRAPRENEUR
1. Dependency
Entrepreneur is independent
Intrapreneur is dependent on the Entrepreneur
2. Raising of Funds
Entrepreneur himself raises funds on his own
initiative to meet the requirements of the
enterprise.
Intrapreneur does not raise funds
3.
Profit
Entrepreneur enjoys the profit of the business
Intrapreneur does not take profit out of his
innovations. However, he gets a lot of perquisites
for his innovations.
4. Risk-taking Entrepreneur bears the entire
risk that is involved in the business.
Intrapreneur does not bear the risk at all.

5. Ownership
Entrepreneur is the real owner of the business.
Intrapreneur is not the owner of the business. But
the works for the business.
6. Operation
Entrepreneur operates from outside the
organization.
Intrapreneur works from within the organization
7. Nature of work
Entrepreneur converts the innovative ideas of
Intrapreneur into viable opportunities.
Intrapreneur creates innovation.
ENTREPRENEURSHIPAS A CAREER
EXPLAIN FRAMEWORK FOR ENTREPRENEURIAL CAREER.
Life space
areas
Childhood Early Adulthood Present adulthood
Work /
Occupation
Education & Childhood
Work Experience
Employment history Current Work situation
Individual /
Personal
Childhood influences on
Personality, Values & Interests.
Adult development
history
Individuals current
perspective
Non Work /
Family
Childhood family environment Adult family / Non work
history
Current family / Non
work situation
ENTREPRENEURIAL PERSONALITY
EXPLAIN SOME PERSONALITY CHARACTERISTICS OF SUCCESSFUL ENTREPRENEUR
(OR) EXPLAIN SOME ENTREPRENEURIAL PERSONALITY.
 Ability to create high morale among employees.
 Development of Interpersonal skills.
 Leadership quality.
 Obtain good business result.
 Intelligence and Creative.
 Able to guard business secrets.
 Emotional stability.
 Communication ability.

 Self-confidence.
 Long term involvement in business.
 Reasonable level of technical knowledge.
 Complete task or solve problem.
 Goal setting ability.
 Deep knowledge of social , Political & Economic.
 Ability to infuse dynamism in organisation.
 Reacting to changing environment.
 Strong Cultural base, healthy family background.
CHARACTERISTICS OF SUCCESSFUL ENTREPRENEUR
EXPLAIN THE CHARACTERISTICS OF AN ENTREPRENEUR? (OR) DESCRIBE THE
QUALITIES OF AN ENTREPRENEUR. (OR) ESSENTIAL ELEMENTS FOR SUCCESSFUL
ENTREPRENEUR.
Anybody can become an entrepreneur provided he has got a certain set of behavioral traits and
mental aptitude. His success depends more on hard work than good luck. The success of an entrepreneur
depends largely on his intelligence, imagination, capacity, to innovate and his ability to turn visions into
realities. The only capacity, very essential to become an entrepreneur is the willingness to work hard. There
are certain characteristic features which make an entrepreneur successful in his venture. They have been
briefly discussed here under:
1. Hard work:
A successful entrepreneur is one who is willing to work hard from the very beginning of his
enterprise. An entrepreneur with his hard work and pervasive perseverance can revive his business even on
the verge of collapse.
2. Prudence:
A successful entrepreneur must be prudent in all his dealings. He should have the ability to work out
the details of the venture from all angles, assess the favorable factors and pitfalls and take the suitable
measures to overcome the pitfalls.
3. Achievement Motivation:
The achievement motivation is the most important characteristic of an entrepreneur since all other
characteristics emanate from this motivation. He must have a strong desire to achieve high goals in business.

In fact, this achievement motivation helps him to surmount the obstacles, suppress, repair misfortunes and
devise plans for success.
4. Self-reliance and Independence:
A successful entrepreneur wants to follow his own routine policies and procedures and he does not
like to be guided by others. He is found to be self-reliant by acting as his own master and making him
responsible for all his decisions. He doesn’t like to work for others.
5. Highly Optimistic:
Successful entrepreneur is always optimistic about his future and he is never disturbed by the present
problems. He always expects a favorable situation for his business and he is able to run his business
successfully in the midst of temporary hurdles. He does not allow the past to obsess him.
6. Keen Foresight:
An entrepreneur must have keen foresight to predict the future business environment. He has the
capacity to visualize the likely changes to take place in the market, customer’s attitude, technological
developments, government’s policy etc., and take timely actions accordingly.
7. Innovativeness:
When all is said and done, innovation becomes a different task. One should be always innovative to
satisfy the varying demands of customers. For this purpose, the entrepreneur should initiate research and
innovative activities to produce new goods and services. It is a never-ending process.
8. Risk Taking:
An entrepreneur is not a gambler and hence he should not assume high risk. However, he must love a
moderate risk situation, high enough to be exciting, but with a fairly, reasonable chance to win.
9. Secrecy Maintenance: A successful entrepreneur must be capable of maintaining all his business
secrets. Leakage of business secrets to trade competitors will definitely lead to the downfall of his business.
Hence, he should be very careful in selecting his subordinates.
10. Maintenance of Public Relations:
The extent of maintenance of public relations or human relations has a vital role to play on the
success or failure of an entrepreneur. A successful entrepreneur must have cordial relations with his
customers to gain their continued patronage and support. He must also maintain good relations with his
employees with a view to motivating them to higher levels of efficiency. Similarly, he must maintain good
relations with his suppliers, creditors and the community at large so that he may succeed in his ventures.
11. Communication Skills:

Communication skill is the secret of most entrepreneurs. Good communication skill enables them to
put their points across effectively and with clarity and thereby helps them to win customers.
DESCRIBE THE TYPES OF ENTREPRENEURS? (OR) EXPLAIN THE DIFFERENT
CLASSIFICATION OF ENTREPRENEURS?
There are various ways by which entrepreneurs have been classified. Different authorities have
classified entrepreneurs differently times. The most popular classification has been given by Clarence
Danhof on the basis of his study of the American agriculture. According to him an entrepreneur may be
classified as follows:
1.Innovative Entrepreneur:
An innovative entrepreneur is one who is able to foresee potentially viable and profitable
opportunities through innovation. This type of entrepreneur is highly motivated and talented and
“innovation” is his key function. According to Peter F.Drucker an innovating entrepreneur is one “who
always searches for change, responds to it, and exploits it as an opportunity.” He creates new values or
increases the value of what already exists.
An innovative entrepreneur may exhibit his talents of innovation in any one of the following forms:
o Introduction of a new product or introduction of a new quality of an existing product.
o Introduction of a new method of production.
o Opening of a new market.
o Discovery of a new source of supply of raw materials or semi-finished goods.
o Reorganization of the enterprise so as to achieve monopoly or to break up the monopoly position.
One should not confuse the terms ‘innovator’ and ‘inventor’ at this juncture. An entrepreneur is not
an inventor. An inventor discovers new methods and new materials. But an innovator commercializes
these inventions to produce new and better goods. Thus, an innovating entrepreneur implements the
inventor’s ideas.
2.Adoptive (Or) Imitative Entrepreneur:
Imitative entrepreneur is one who is ready to adopt the successful innovations already inaugurated by
innovating entrepreneurs. In other words, an imitative entrepreneur does not innovate anything by himself,
but, he only imitates techniques and technologies innovated by others. He follows the innovators after
carefully observing how the latter fare and to what extent their innovation has caught the imagination of the
society. For example, the Cochin Shipyard has been constructed by using the innovative technology
provided by the Mitsubishi Heavy Industries Ltd. of Japan.

This type of entrepreneur has a vital role to play in developing countries. Innovative entrepreneurs
are scarce in developing countries. To add fuel to fire, there is also a problem of scarcity of capital and
skilled labour in these countries, which hinder innovative entrepreneurship. In this context, the imitative
entrepreneur fills up this gap very admirably by simply imitating the technology, skill and technology
already developed by innovative entrepreneurs in developed countries. Hence, developing of their countries
with limited resources available in these countries.
3.Fabian Entrepreneur:
Fabian entrepreneur is one who adopts a great caution in introducing any change in the business.
Normally, he has neither the will to introduce any new changes nor the desire to adopt new methods. He is
ready to imitate only when it becomes perfectly clear that failure to do so would definitely result in heavy
loss for him. He is dominated more by customs, religions, traditions, and past practices and he is not ready
to take any risk at all.
4.Drone Entrepreneur:
Drone entrepreneur is one who blindly follows the traditional methods of production even when it
causes loss to him. He is not prepared to introduce any change under any circumstances in the method of
production he has already introduced. He continues to carry out his business in the traditional way even
when he suffers losses.
SOME MORE TYPES OF ENTREPRENEURS.SOME MORE TYPES OF ENTREPRENEURS.
5. Technological Entrepreneurs:
A technology entrepreneur is essentially compared to “craftsman”. He develops improved quality of
goods because of his craftsmanship. He concentrates more on production than marketing. He demonstrates
his innovative capabilities in matter of production of goods and rendering of services. The greatest strength,
which the technology entrepreneur has, is his skill in production techniques.
6. Entrepreneurs by inheritance: At times, people become entrepreneurs when they inherit the family
business. In India, there are a large number of family controlled business houses. Firms in these houses are
passed from one generation to another.
7.Forced Entrepreneurs:
A person comes out to start business by forced. These entrepreneurs are usually depended with the
source of moneylenders and NRI’s (Non-Residing Indians). These entrepreneurs do not have any proper
training and knowledge about business. It is not sure this type of entrepreneur would succeed. To minimize
the losses, they should be trained by government and others.
8. Large scale Entrepreneurs:

It denotes one who invests huge capital in the industries is few in numbers to compare small-scale
industries. The countries like U.S.A., England, etc., have developed mainly due to the large –scale
industries. They have lot of financial resources, raw materials, skilled labours, and modern technology to
start the large-scale industries.
9. Small-scale Entrepreneurs:
In a country small-scale enterprise are more than the large-scale enterprises. This classification is
especially popular in the underdeveloped countries. They need only small size of capital. Small
entrepreneurs do not possess the necessary talents and resources to initiate large scale production and
introduce revolutionary technological changes.
10. Rural Entrepreneurs:
Rural entrepreneurs denote starting the business with the local resources like manpower, material,
money and marketing. These entrepreneurs do not have large markets for their products. Rural products like
pickles, puppets, handicrafts, matchboxes, etc., the rural entrepreneurs utilized local resources, manpower
techniques and markets.
11. Urban Entrepreneur:
When urban entrepreneurs denotes doing the business in urban with same 4m’s – manpower,
material, money and marketing as like the rural entrepreneur. These entrepreneurs having some sort of
knowledge and training about the business. These entrepreneurs adopt capital from the business, NBFI’s,
moneylenders, etc.,
EXPLAIN THE MAIN FUNCTIONS PERFORMED BY THE ENTREPRENEURS?
An entrepreneur performs all the functions right from the conceiving idea up to the establishment of
an enterprise. He is an opportunity seeker. He organizes and co-ordinates the factors of production. His main
functions are discussed below:
1. Generating Business Idea: Generation of idea is the first and foremost function of an entrepreneur.
Essentially there are only two ways, in which business ideas can be created namely, (i) generating own idea,
or (ii) Developing someone else’s idea. The second is far more common because virtually every successful
business is a development of an earlier business concept.
In terms of generating business ideas, there are three sources of opportunities such as adverts, agents,
and opportunity spotting, or watching out for business that one find match his objectives. All people and
organizations have needs that they fulfill in many different ways. If a person can meet these needs better
when compared to current method, then he will almost certainly have a business opportunity.
2. Determining Business Objectives:

The next function of entrepreneur is determining business objectives. He should lay down his
objectives clearly. He should clearly state the nature of business and the type of business. In other words, he
has to specify clearly whether the business, which he decides to start, belongs to manufacturing activities or
trading or services oriented organization. It will enable him to carry on the activities without any hesitation.
3. Product Analysis:
The next important function of an entrepreneur is product analysis and market research. He should
conduct market research in order that the data regarding the product, which he likes to manufacture, can be
systematically collected. It should be carried on persistently because it gives him the information regarding
the demand for the product, supply of the product, price of the product, size of the customers etc.
4. Deciding the Form of Enterprise:
Another important function of an entrepreneur is deciding the form of an enterprise. It should be
decided by taking into account the factors such as nature of the product, volume of investment, nature of
activities, types of product, quality of product, quality of human resources etc. the various forms of
organizations that are prevalent are sole trading concerns, partnership firms, co-operative society and joint
stock companies. Before establishing an organization, the form of ownership is to be decided. Because,
based on the form of ownership only, the other legal formalities can be carried on to establish the
organization.
5. Promoting the Enterprise:
Once the form of ownership is decided, the next step is undergoing the necessary legal formalities as
required under the relevant statute if any to establish an organization. In case of sole trading concerns and
partnership firms, there are not many legal formalities when compared to joint stock companies and co-
operative societies. He has to read the relevant statute and fulfill the necessary legal formalities in
establishing the enterprise.
6. Raising Necessary Funds:
Finance is the life-blood of any business all the activities of a business depend upon it. Hence raising
of finance is considered as the most important function of an entrepreneur. He needs funds for purchasing
assets, carrying out day-to-day activities, meeting establishing expenses etc. he raises funds internally as
well as externally. He should know well about pros and cons of different sources of funds so that he can
choose the cheapest way. He should also have the full knowledge about various government-sponsored
schemes, which enables him to get assistance in the form of seed capital, working capital, etc.
7. Procurement of Machine and Material:
The next function is procuring machines and raw materials. Machines and equipments are purchased
and installed in the initial stage itself. While purchasing them he should consider the aspects like details as to
the technology adopted, installed capacity of the machines, details of manufactures and suppliers, country in

which the machines are manufactured i.e. whether they made domestically or in a foreign country,
availability of after-sales service facilities and warranty period given etc. this will enable entrepreneurs to
buy quality machines at cheaper rates.
8. Recruiting Men:
Recruiting of suitable personnel for the various activities of the enterprise is another important
function of an entrepreneur. First of all, entrepreneur has to estimate the manpower need of the enterprise.
Then he has to lay down the selection procedure. He should devise suitable method of compensation.
Arrangements should be made for giving training to personnel to the jobs for which they have been
recruited.
9. Undertaking the Activities:
This is the stage of implementing the project. It should be done in a time-bound manner. He should
perform it as per schedule. This will enable him to avoid cost and time over run and also competition.
KNOWLEDGE AND SKILLS OF ENTREPRENEUR
EXPLAIN ESSENTIAL KNOWLEDGE AND SKILLS OF ENTREPRENEUR.
I) Technical skills
* Writing, oral communications.
* Monitoring environment.
* Technical business environment.
* Technology, interpersonal, listening.
* Ability to organize, network building.
* Management style, coaching, team player.
II) Business Management Skills
* Planning and Goal setting.
* Decision making, Human Relations, Marketing.
* Finance, Accounting, Management, Control.
* Negotiation, Venture launch, Managing growth.
III) Personal Entrepreneurial Skills

* Inner control / disciplined.
* Risk taker, Innovative, Change oriented.
* Persistent, Visionary leader.
* Ability to manage change.
WHAT ENVIRONMENTAL FACTORS DO INFLUENCE THE EMERGENCE AND
DEVELOPMENT OF ENTREPRENEURSHIP?
There are certain major factors that affect the growth of entrepreneurship. In many of the less
developed countries, most of their inventions either lies in idle conditions or flow out to the more prosperous
nations. On the one hand entrepreneurs do not seem to come; on the other hand, those who are present tend
to leave their countries in search of better opportunities. Several factors are affecting the growth of
entrepreneurship. They can be studied under the following heads:
A. Economical Factors.
B. Social Factors.
C. Cultural Factors.
D. Personality Factors.
E. Psychological and Sociological Factors.
A. ECONOMICAL FACTORS.
The economic factors that affect the growth of entrepreneurship in the less developed countries are:
(a) Lack of Adequate Basic Facilities: Certain basic or overhead facilities like modern transport and
communication, adequate irrigation and power facilities, latest technology etc. are very essential for
undertaking innovative activities. They provide external economies by increasing the output and reducing
the cost of production. Unfortunately, these facilities are not adequately available in less developed
countries. Hence, entrepreneurs have to provide these facilities themselves or obtain them at lowest costs.
An entrepreneur cannot set up his own power project for undertaking innovative activities. Hence,
entrepreneurs are discouraged from going for innovations.
(b) Non- availability of Capital:
Innovations generally require huge capital investment on capital equipments. Capital equipments
have to be imported which involves heavy shipping and insurance expenses. Sometimes, even the basic
expertise has to be imported. Imports also involve the use of considerable amount of foreign exchange,

which is also scarce in less developed countries. Hence, innovations are scarce to developing countries and
thus, non-availability of capital hampers entrepreneurial growth.
(c) Non-availability of Raw Materials and Finished Goods:
Again, raw materials supply is not uniform throughout the year. Hence, they have to be stocked in
plenty during the periods of their supply. Moreover, large stocks of inventories have to be kept to ensure
adequate industrial supplies. Hence the amount of working capital required is increased considerably in less
developed countries pushing up the cost of production. Borrowed capital either for fixed or working capital
requirements involves high interest rates also. Hence, the entrepreneurial growth is affected very much in
these countries.
(d) Greater Risks Involved in Business:
Risks are greater in less developed countries than developed nations due to the following reasons:
 There is considerable instability in both domestic and foreign economic policies.
 There is instability in the market due to seasonal fluctuations of demand.
 The domestic market is also small that inhibits new investments.
 There is lack of information on cost, market demand, overhead facilities etc; hence, an entrepreneur
cannot make correct estimates of his proposed venture.
B. SOCIAL FACTORS.
Social factors also play a decisive role in encouraging entrepreneurship in a country. In fact, the
favourable social factors that prevailed in Europe during the 17th
and 18th
centuries led to the very emergence
of the ‘entrepreneur’ as a factor of production. Some of these factors are:
(a) Customers and Traditions:
If customs and traditions play a dominant role in production decision-making rather than the critical
assessment of facts, then entrepreneurship will not be encouraged. It is so because an entrepreneur will be
guided more by customers than his individual initiative and drive. In fact, in Europe, people rejected
customs and traditions.
(b) Rationality of the Society:
A society is said to be rational when decisions regarding resource utilization are based on empirical
facts and critical scientific standards. While rational behaviour is the order of the day in the developed
nations, a majority of the less developed countries are characterized by a non-rational society, which is
unsuitable to entrepreneurship.
(c) Social System:

The social system prevailing in a locality also affects entrepreneurship. For instance, in a society
where the joint family system is in vogue, entrepreneurship cannot be developed. It is so because those
members of the joint family who gain wealth by their labour, since they have to share their wealth with the
other members of the family.
(d) Social Set-up:
The social set–up in some countries in hostile to entrepreneurship. For instance, in some societies,
education, research and training are given very little importance. Such societies cannot expect entrepreneurs
to emerge and take up new ventures.
C. CULTURAL FACTORS.
The cultural factors prevailing in a country decide the level of entrepreneurial activities in that
country. If the culture does not attach great value to business talents, industrial leadership etc. then people
may not prefer any business ventures.
Again, entrepreneurial growth requires motives. In less developed countries, people are not
economically motivated and they have greater scope for attaining social status by non-economic pursuits.
Hence entrepreneurship is not developed.
D. PERSONALITY FACTORS.
(a) Support Personality:
In the less developed countries, the entrepreneur is looked upon with suspicion. People tend to see in
the entrepreneur a suspect personality. They see the entrepreneur only as profit maker and an exploiter. Thus,
the public opinion has become hostile to entrepreneurship.
(b) Emergence of Planning:
In developed countries, people favour direct state activity in the economy rather than private
entrepreneurship due to suspect personality factors. Hence, many countries have resorted to planning as a
means of achieving economic progress and the state has been given vital role. Planning imposes controls and
this goes against the very personality of the entrepreneurs.
E. PSYCHOLOGICAL AND SOCIOLOGICAL FACTORS.
There are many psychological and sociological factors that affect entrepreneurship. Many theories
have been put forth by psychologists and sociologists to explain the root of entrepreneurship. They can be
summarized as follows:

o According to McClelland “need achievement” motives induces entrepreneurship. This is confirmed
by Paul Wilken who says “entrepreneurship becomes the link between need achievement and
economic growth”.
o This need achievement is influenced not only by social and cultural factors, but also by parental
influence.
Referred From:
1. Hisrich, Entrepreneurship, Tata McGraw Hill, New Delhi, 2001.
2. S.S.Khanka, Entrepreneurial Development, S.Chand and Company Limited, New Delhi,2001.
END OF UNIT I

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