Entrepreneurship- Meaning, Definition, Functions & Characteristics
Meaning & Definitions of Entrepreneurship
In Narrow concept entrepreneurship implies ability to bear risk and uncertainties in organizing a business. In common parlance entrepreneurship means ability, tendency and initiative to bear risk and uncertainties. In modern and broad sense, it means ability to innovate and organize a new venture and capacity to improve and introduce change.
Some of the important definitions are given below:
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According to Robbins and Coulter-
“Entrepreneurship is the process where individual or group of individuals risk, time and money in pursuit of opportunities to create value and go through innovation regardless of the resources they currently control.”
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According to Kilby Peter-
“Entrepreneurship invalues a wide range of activities which include, inter alia, perception of market opportunities, combining and managing the factors of production, and introduction of the production technique and products.”
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According to Musselman and Jackson-
“Entrepreneurship is the investing and risking of time, money and effort to start a business and make it successful.”
Conclusion: If we analyses the above definitions we find that the entrepreneurship is concerned with the ability to bear risk and uncertainties in organizing a new venture. However, some have added one more function i.e., innovation. Rao and Mehta have also supported this view.
Functions of an Entrepreneurship
An entrepreneur performs a number of functions. His important functions are as under :
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Innovating or discovering business opportunity:
The most important functions of an entrepreneur is to innovate or discover business opportunity. It may be discovery of a new product or a new market or a new method of production or marketing of goods. It may be finding a new raw material or new source of or substitute of an existing raw material and so on.
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Detailed investigation:
Entrepreneurs undertake detailed investigation to see whether or not the innovative idea can be made commercially viable. They collect necessary information and analyses cost and revenue date to find out whether the paper planning could be put into practice. They undertake market research to analyses the marketability of the product.
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Assembly:
After the entrepreneur has conducted detailed investigation and has found the business opportunity to be commercially viable, he takes steps to assemble the various factors of production such as men, materials machines, finance, etc. He enters into contract with the suppliers of land, machines, raw materials etc.
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Establishing an enterprise:
Entrepreneur takes steps to establish a suitable type of organization to run the business. He may alone run the enterprise an a sole trader or he may associate others as partners i.e., he may establish a partnership firm. He may form a private company or a public company in case capital requirements are very large. He completes the formalities, seeks permission of various government agencies to establish an organization of his choice. For example, industrial license, clearance from Pollution Control Boards, etc., if necessary.
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Managing enterprise:
If he is a sole trader he will manage the enterprise himself. In case he has chosen partners to run the enterprise, he will manage the enterprise alongwith others. However, in case he has established a private or public company, he will choose competent persons to manage the enterprise.
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Risk taking:
The entrepreneur has to bear all the risk. It is considered that greater the risk, greater is the chance of earning profit’. However reverse is also true i.e., ‘greater the risk, the greater may be the lose. In case he has carefully selected the project, he is likely to be successful i.e., he will earn profit. However, in case he unlucky or has not carefully selected the project, he may incur losses. Thus, an entrepreneur runs a great risk whole running an enterprise.
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Growth and development:
An entrepreneur cannot be and should not be static. He should be dynamic i.e., growth and development oriented. After he has attained the goals set, he should aspire for higher and higher goals in future. Thus he must constantly strive for a higher goal i.e., growth and development.
Characteristics of an Entrepreneurship
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Leadership-
Essentially an entrepreneur is a leader K.J. Sharma, a psychologist, maintains that entrepreneurs are more who exhibit qualities of leadership in solving problems. He has to lead his team to achieve his goals. He must build a team of motivated persons and provide them a conducive environment for their growth. He must have all the qualities of a good leader. However, economist, social thinkers as well as psychologists are not unanimous as to how many traits a successful leader should possess. There is a general agreement that he should have irrelative, high energy level, self confidence, skills to develop good human relations and motivation skills coupled with creativity and a keen desire to solve problems.
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Risk taking-
Managing of risk is an important function of an entrepreneur. In fact it is the characteristics of risk taking that distinguishes an entrepreneur from a manager, an entrepreneur is a manager but he has the distinction of performing risk taking functions. A manager also does more or less the same thing but he does not taken risks.
It is remarked that greater the risk the greater is the profit. If his business idea is successful he will make fortune i.e. earn a good profit. If his business idea flops he will suffer a loss.
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Decision making-
A.H. Cole regarded an entrepreneur as a decision maker. Essentially, he is a decision maker as he has to take many decisions to put his business idea into a reality. He recognizes an idea i.e., a product, service or market. He has many alternatives before him. He has to make a choice. This involves taking a decision to choose the best alternative..
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Business Planning-
An entrepreneur has to plan his business properly. Planning is the essence of managing. No business small or big, can be successful unless it has been planned properly.. A businessman has to plan what has to be produced. How it has to be produced? From where the raw materials, machines are to be procured? Comparison of planned performance and actual performance will reveal the shortcomings so that remedial action may be taken.
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