An entrepreneur is an individual with specific skills and innovative thoughts while entrepreneurship is the ability of an individual to convert the idea and thoughts into reality. Entrepreneurship is a process or course of action undertaken by an entrepreneur to successfully run an enterprise. It may be defined as the ability to take calculated risks, innovative ideas, vision to grab the opportunity.
Entrepreneurship is an important factor of industrial development of a country. It plays a crucial role in the growth of our country. Besides being the vehicle of industrial development, entrepreneurship can solve acute problems like unemployment, concentration of economic power in the hands of a very few, imbalanced regional development, increasing wastage of youth power in destructive activities, etc. It is the dream of millions of individuals around the world.
It combines many qualities such as innovation, risk-taking, combining factor of production, etc. Entrepreneurship lies more in the ability to minimise the use of factor of production and to exploit them to maximum advantages. Entrepreneurship largely depends on personal qualities like accepting the challenges and bearing the risk. This is the reason that entrepreneurship is a complete subject.
Characteristics of Entrepreneurship
(1) Economic Activity – Entrepreneurship is primarily an economic function because it involves the creation and operation of an enterprise. It is basically concerned with the production and distribution of goods and services.
(2) Innovation – According to Schumpeter, entrepreneurship is a creative activity. An entrepreneur is basically an innovator who processes something new for the economy. Innovation means the introduction of a production process which has not been applied so far in any particular manufacture branch or the discovery of a new source of a raw materials or the revealing of new market which has not been exploited so far or the finding out of a new combination of production means. Entrepreneurial role also involves doing things in a new and better way. It is an automatic and creative response to changes in the environment.
(3) Decision making – Decision making activity of entrepreneur is one of the most important features of entrepreneurship. Entrepreneur has to take decisions under uncertainty. He has to pay attention to rational aspect of decision making. Entrepreneur takes decision regarding the various activities of the business. He decides about the type of business to be done and way of doing it.
(4) Construction Skill – Frederick Harbison, the author of “Entrepreneurial Organisation – Factor in Economic Development” says that the inevitable characteristics of entrepreneurship is construction skill. An entrepreneur must be able to build up an enterprise in strict accordance with the detailed and skilled planning.
(5) Organisation Buildings – According to Haibison entrepreneurship implies the skill to build an organisation. Organisation building is the most critical skill required for industrial development. This skill means the ability to multiply itself by effectively delegating responsibility to others. Entrepreneurs need to be good leaders and excellent administrators to be a successful organisation builder.
(6) Managerial Skill – Managerial skill and the leadership are the most important characteristics of entrepreneurship. B.F. Hosclitz maintains that a person who is to become an industrial entrepreneur must have more than derive to earn profits and a mass wealth. They must have the ability to lead and manage. 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. So, an entrepreneur must be an efficient manager and leader at the same time.
(7) Function of High Achievement – Entrepreneurship is a function of high achievement. Persons having high need for achievement are likely to succeed as an entrepreneurs. McClelland explained the entrepreneur’s interest in profits in terms of a need for achievement. People with high achievement are not influenced by money reward as compared to people with low achievement.
(8) Gap Filling Function – The gap between the human need and the available products and services gives rise to entrepreneurship. An entrepreneur identifies the gap and takes necessary steps to fill the gap. He introduces new products and services, new methods of production and distribution, new sources of inputs and new markets for this purpose. An entrepreneur has to marshall all the inputs to realise final products. Thus, entrepreneurship is a function of input completing and gap filling.
(9) Risk-Bearing – Risk is an inherent and inseparable element of entrepreneurship. An entrepreneur assumes the uncertainty of future. Entrepreneurship deals with the challenges which are to be faced by entrepreneur in his behaviour. In practice, entrepreneurs face tremendous challenges. Opportunities are risky and uncertain and thus entrepreneurship deals with the risk and uncertain behaviour of the market. 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 consumer needs and tastes, shortage of raw materials, etc. Thus, entrepreneur needs to a risk-taker, not risk-avoider.
(10) Dynamic Process – Entrepreneurship is a dynamic process. Entrepreneurs thrive on change in the environment which brings useful opportunities for the business. Flexibilities are the hallmark for the success of a business.
(11) Strong Desire to Reap Benefits – Two desires act as the motivational forces behind the economic behaviour are known as entrepreneurship. They are (i) the desire to earn profits; and (ii) the desire for glory. These two motivational forces depend greatly on mental attitude of the entrepreneur. On the basis of these motivational desire, the entrepreneurs can be classified into two categories, viz. entrepreneur who strives for earning private profits and entrepreneur who desires to earn a respectable position in the society.
(12) Individual Psychological and Social Characteristics – In developing and underdeveloped societies the entrepreneur is often viewed with suspicion. The psychological and sociological characteristics of entrepreneurs are almost equal. The psychological need to reap benefits is inborn. Although this aim is purely individualistic, when it gains the halo of social good, entrepreneurship becomes a success.
Thus, it can be stated that entrepreneurship is a multi-dimensional concept. It is both an art as well as science. An entrepreneur should have good intelligence, clear cut objectives, capacity to guard business secrets, capacity to interact with the people, technical knowledge, self confidence, etc., for reaping a good harvest of business.