An entrepreneur is someone who looks for change and reacts to it by launching a business. According to Adam Smith, an entrepreneur is a person who creates a company for commercial purposes after determining there may be a market for their goods and services. By doing this, the entrepreneur serves as an economic agent and changes the relationship between supply and demand. The process through which an entrepreneur creates an entity to make his business ideas a reality is known as entrepreneurship.
What are the types of Entrepreneurs?
What is the need of Entrepreneurship?
is called wage or salary employment, wherein people are employed in government service,
public and private sectors and get fixed wage or salary. The other career option is
entrepreneurial employment under which people set up their new ventures.
employment does not generate resources and is organized which in the existing wealth. Wage
employment is self-saturating. Once availed, it blocks the employment opportunity to others
for another 10 years. On the other hand, the latter contributes towards national wealth and has
a unique characteristic of self-generation.
employment opportunities. Entrepreneurship promotes small saving amongst middle class
individuals for investment into new ventures. It also provides an outlet that creates an urge
among individuals to attain excellence in product design and related innovation. Thus,
entrepreneurship provides a lasting solution to the acute problem of unemployment.
and imported. The goods and services produced are for consumption within the country as well
as to meet the demand of exports.
population and improving standard of living. The export demand also increases to meet the
needs of growing import due to various reasons. An increasing number of entrepreneurs are
required to meet this increasing demand for goods and services. Thus, entrepreneurship
increases the national income.
an acute problem of the nation. The available employment opportunities can cater to only 5 to
10 per cent of the unemployed.
create a hundred jobs for themselves but also provide employment to many more. As the time
passes these enterprises growth providing direct and indirect employment to many more. Thus,
entrepreneurship is the best way to fight the evil of unemployment.
number of public benefits like road transport, health, education, entertainment etc.
industries are concentrated in selected cities, the development gets limited to these cities. Till
late sixties, 50 per cent of industrial enterprises were located in only six cities of India. A rapid
development of entrepreneurship ensures a balanced regional development.
entrepreneurs grow at a faster pace, in view of the increasing competition in and around the
cities, they are forced to set up their enterprises in the smaller towns away from big cities. This
helps in the development of the backward regions.
always been two types of power, i.e., muscle power and economic power. In the modern age,
the muscle power has lost its relevance and the world is ruled by the economic power.
development normally can lead to concentration of economic power in few hands. This
concentration of power in few hands has its own evils in the form of monopolies.
large number of entrepreneurs helps in dispersing the economic power amongst the
population. This in turn causes hindrance to the growth of monopolies, which exist partly
because of lack of sufficient number of entrepreneurs. Setting up of a large number of
enterprises for the goods helps in weakening the harmful effects of monopoly.
What is the role of Entrepreneurship in Economic Development?
industrial securities. Investment of public savings in industry results in productive utilization of
national resources. Rate of capital formation increases which is essential for rapid economic
growth. Thus, an entrepreneur is the creater of wealth.
convert the latest and idle resources like land, labour and capital into national income and
wealth in the form of goods and services. They help to increase. Net National Product and per
capita income in the country, which are important yardsticks for measuring economic growth.
indirectly. Directly, self-employment as an entrepreneur offers the best way for independent
and honourable life. Indirect, by setting up large and small scale business units they offer jobs
to millions. Thus, entrepreneurship helps to reduce the unemployment problem in the country.
remove regional disparities in economic development. They set up industries in backward areas
to avail of the various concessions and subsidies offered by the Central and State Governments.
put the hitherto unknown places on the international map.
essential commodities and introduce new products. Production of good on mass scale and
manufacture of handicrafts, etc., in the small scale sector help to improve the standard of life of
a common man. These offer goods at lower costs and increase variety in consumption.
Industrialists help to manufacture indigenous substitutes of hitherto imported products thereby
reducing dependence on foreign countries.
large scale and thereby earn the scarce foreign exchange for the country. Such import sub-
situation and export promotion help to ensure the economic independence of the country
without which political independence has little meaning.
reaction. Setting up of an enterprise has several backward and forward linkages. For example,
the establishment of a steel plant generates several ancillary units and expands the demand for
iron ore, coal, etc. these are backward linkages.
facilitates the growth of machine building, tube making, untensil manufacturing and such other
How Entrepreneurship and Innovation related to each other?
combinations of means of production. Entrepreneurship is a creative activity and the entrepreneur
introduces something new in any branch of economic activity.
implies employment of productive means in a changed form. It is not necessary that new combination is
carried out by people who control the product or commercial process. A new combination can be
carried out by employing both unused and used means of production.
forsees the potentially profitable opportunity and tries to exploit it. He is a problem solver and gets
satisfaction by attacking problems.
Some people believe that innovations are carried out by big firms.
innovations are the handiwork of small firms. Large firms may have strong organisation
structures and management skills but they lack flexibility. Due to their intrinsic flexibility small
firms can react rapidly to new demands and easily exploit new ideas.
under the constraints of size and competition tends to perfect existing lines of production in
order to increase profits. On the other hand, a small firm tries to exploit the gaps in the
production system. Unlike the giant, it is not obliged to engage in expensive conversion and can
launch itself on new, narrow or risky markets.