Unit – I

 Entrepreneurship: Concept
Entrepreneur: The entrepreneur is defined as someone who has the ability and desire to
establish, administer and succeed in a startup venture along with risk entitled to it, to make
profits.

The term entrepreneur is a French word, and is derived from the French word
“enterprendre”. It means “to undertake”. It is commonly used to describe an individual
who organizes and operates a business or businesses, taking on financial risk to do so.

Around 1700 A.D. the term was used for architects and contractor of public works. In many
countries, the term entrepreneur is often associated with a person who starts his/her own new
business.

Definition

Adam Smith’s definition – “The entrepreneur is an individual, who forms an organization for
commercial purpose. She/he is proprietary capitalist, a supplier of capital and at the same time a
manager who intervenes between the labour and the consumer. “Entrepreneur is an employer,
master, merchant but explicitly considered as a capitalist”.

Characteristics of an Entrepreneur

Believer in
Independent & Opportunity Systematic
Information seeker quality and
achiever grabber planner
efficiency

Optimistic Keen learners Urge to build Initiative Persistent

Aggressive Dynamic and

Risk taker Goal setter Hard working
catalyst visionary

Well versed in
Go – getter &
Persuasive and Independent and managerial skill
High IQ, EI Never say die
networker self-confident and strong team
spirit
builder
IMPORTANCE OF ENTREPRENEURSHIP IN INDIAN ECONOMY

 Creation of Employment- Entrepreneurship generates employment. It

provides an entry-level job, required for gaining experience and training for
unskilled workers.

 Innovation- It is the hub of innovation that provides new product ventures,

market, technology, and quality of goods, etc., and increase the standard of
living of the people.

 Impact on Society and Community Development- A society becomes greater

if the employment base is large and diversified. It changes society and
promotes facilities like higher expenditure on education, better sanitation,
fewer slums, a higher level of homeownership. Therefore, entrepreneurship
assists the organization in a more stable and high quality of community life.

 Increase Standard of Living- Entrepreneurship helps to improve the standard

of living of a person by increasing the income. The standard of living means,
increase in the number of consumption of various goods and services by a
household for a particular period.

 Supports research and development- New products and services need to be

researched and tested before launching in the market. Therefore, an
entrepreneur also dispenses finance for research and development with research
institutions and universities. This promotes research, general construction, and
development in the economy

Entrepreneurship

“Entrepreneurship is a dynamic process of vision, change and creation. It requires an

application of energy and passion towards the creation and implementation of new
ideas and creative solutions.

Essential ingredients include the willingness to take calculated risks-in terms of time,
equity, or career, ability to formulate an effective venture team, creative skill to
organize needed resources, the fundamental skill of building a solid business plan and,
above all, the vision to recognize opportunity where others see chaos, contradiction,
and confusion.’’
Evolution of Entrepreneurship

In 17th century, the evolution of entrepreneurship can be related with the

relationship between risk and entrepreneurs. Entrepreneurship is the person who
signed the contract agreement with the government to provide a service or supply
products that have been determined. The contract price is fixed. Then, the
entrepreneurs are fully responsible for the gains and losses of the business. John law, a
Frenchman was one of the entrepreneurs in that period. The founder of the royal bank
of France and the Mississippi Company, which had an exclusive fanchise to trade
between France and the new world. Monopoly on French trade eventually led to
collapse of the Company. Richard Cantillion, an economist defines entrepreneurs
earlier. n his view, the entrepreneur is risk insurers. Merchants, farmers, craftsmen,
and so is an entrepreneurs. They buy things at a certain price and sell it at a price that
is uncertain, with the risks.

In the 18th century, the person with capital was differentiated from the one who
needed capital. The entrepreneur was distinguished fron the capital provider. One
reason for this differentiation was the industrialızation occurring throughout the
world. Eli Whitney was an American inventor best known for inventing the cotton
gin. This was one of the key inventions of the industrial Revolution. Thomas Edison,
the inventor of many inventions. He was developing new technologies and was unable
to finance his inventions himself. Edison was a capital user or an entrepreneur, not a
provider or a venture capitalist.

In 19th and 20th century, Entrepreneurs are not always associated with the
management. According to Merriam-Webster's online dictionary, an entrepreneur is
one who organizes, manages, and assumes the risk of a business or an enterprise. The
entrepreneur organizes and manages an enterprise for personal gain. The materials
consumed in the business, for the use of the land, for the services he employs, and for
the capital he requires. Andrew Carnegie is one of the best examples of this definition.
Carnegie, who descended from a poor Scottish family, made the American Steel
Industry one of the wonders of the industrial world.

In the middle of the 20th Century, the function of the entrepreneurs is to recreate or
revolutionize the pattern of production by introducing an invention. Innovation, the
act of introducing some new ideas, is one of the most difficult tasks for the
entrepreneur. For example, Edward Harriman, who reorganized the railroad in the
United States and John Morgan, who developed his large banking house by
reorganizing and financing the nation's industnes. Besides, the Egyptian who designed
and built great pyramids out of stone blocks weighing many tons each, to laser beams,
Supersonic planes and space stations.

In 21st century, Entrepreneurs are known as a hero for Free Enterprise market.
Entrepreneur of the century created many products and services and is willing to face
a lot of risks in the business. According to Kuratko & Hodgetts, most people say
entrepreneurs are pioneers in creating new businesses. In the year 2005 Hisrich, Peter
and Shepherd regarded entrepreneur as an organizer who controls, systematize,
purchases raw materials, arranges infrastructure, throw in his own inventiveness,
expertise, plans and administers the venture. The Future of entrepreneurship will be
growth with development of technologies. The modern technologies and internet have
improved the ways of conduct business. Entrepreneurs now have the luxury of putting
their business idea into action through the click of button.

ROLE OF ENTREPRENEURSHIP IN NATIONAL ECONOMY

1. Wealth Creation and Sharing:

By establishing the business entity, entrepreneurs invest their own resources and
attract capital (in the form of debt, equity, etc.) from investors, lenders and the
public. This mobilizes public wealth and allows people to benefit from the success
of entrepreneurs and growing businesses. This kind of pooled capital that results in
wealth creation and distribution is one of the basic imperatives and goals of
economic

2. Create Jobs:

Entrepreneurs are by nature and definition job creators, as opposed to job seekers.
The simple translation is that when you become an entrepreneur, there is one less
job seeker in the economy, and then you provide employment for multiple other
job seekers. This kind of job creation by new and existing businesses is again is
one of the basic goals of economic development. This is why the Govt. of India has
launched initiatives such as Start up India to promote and support new startups,
and also others like the Make in India initiative to attract foreign companies and
their FDI into the Indian economy.
3. Balanced Regional Development:

Entrepreneurs setting up new businesses and industrial units help with regional
development by locating in less developed and backward areas. The growth of
industries and business in these areas leads to infrastructure improvements like
better roads and rail links, airports, stable electricity and water supply, schools,
hospitals, shopping malls and other public and private services that would not
otherwise be available.

Every new business that locates in a less developed area will create both direct and
indirect jobs helping lift regional economies in many different ways. The
combined spending by all the new employees of the new businesses and the
supporting jobs in other businesses adds to the local and regional economic output.
Both central and state governments promote this kind of regional development by
providing registered MSME businesses various benefits and concessions.

4. GDP and Per Capita Income:

India’s MSME sector, comprised of 36 million units that provide employment for
more than 80 million people, now accounts for over 37% of the country’s GDP.
Each new addition to these 36 million units makes use of even more resources like
land, labor and capital to develop products and services that add to the national
income, national product and per capita income of the country. This growth in
GDP and per capita income is again one of the essential goals of economic
development.

5.Standard of Living:

Increase in the standard of living of people in a community is yet another key goal
of economic development. Entrepreneurs again play a key role in increasing the
standard of living in a community. They do this not just by creating jobs, but also
by developing and adopting innovations that lead to improvements in the quality
of life of their employees, customers, and other stakeholders in the community. For
example, automation that reduces production costs and enables faster production
will make a business unit more productive, while also providing its customers with
the same goods at lower prices.
6. Exports:

Any growing business will eventually want to get started with exports to expand
their business to foreign markets. This is an important ingredient of economic
development since it provides access to bigger markets, and leads to currency
inflows and access to the latest cutting-edge technologies and processes being used
in more developed foreign markets. Another key benefit is that this expansion that
leads to more stable business revenue during economic downturns in the local
economy.

7. Community Development:

Economic development doesn’t always translate into community development.

Community development requires infrastructure for education and training,
healthcare, and other public services. For example, you need highly educated and
skilled workers in a community to attract new businesses. If there are educational
institutions, technical training schools and internship opportunities, that will help
build the pool of educated and skilled workers.

Theory of Entrepreneurship

1. Innovation Theory of Schumpeter

A dynamic theory of entrepreneurship was first advocated by Schumpeter (1949)

who considered entrepreneurship as the catalyst that disrupts the stationary circular
flow of the economy and thereby initiates and sustains the process of development.
Schumpeter introduced a concept of innovation as key factor in entrepreneurship in
addition to assuming risks and organising factor of production. Schumpeter defines
entrepreneurship as “a creative activity”.The concept of innovation and its
corollary development embraces five functions:

1. The introduction of a new product with which consumers are not yet familiar
or introduction of a new quality of an existing product,
2. The introduction of new method of production that is not yet tested by
experience in the branch of manufacture concerned, which need by no
 means be founded upon a discovery scientifically new and can also exist in a
new way of handling a commodity commercially
3. The opening of new market that is a market on to which the particular
branch of manufacturer of the country in question has not previously
entered, whether or not this market has existed before,
4. Conquest of a new source of supply of raw material and
5. The carrying out of the new organisation of any industry.

2) Need for achievement theory of Mcclelland

According to Mcclelland the characteristics of entrepreneur has two features -

first doing things in a new and better way and second decision making under
uncertainty.

McClelland said people who have high need for achievement have tendency to
win and excel. People who have high need for achievement personally take the
responsibility of solving problems and will always try to be better than others.
He further explained that people with high need of achievement are more likely
to succeed as entrepreneur because it is the need for achievement that motivates
and promotes entrepreneurship. According to him a person acquires three types
of needs as a result of one’s life experience. These three needs are:

 Need for achievement. A drive to excel, advance and grow.

 Need for power. A drive to dominate or influence others and situations.
 Need for affiliation. A drive for friendly and close inter-personal
relationships.

The definite characteristics of a high achiever (entrepreneur) can be listed

as follows:

(i) They lay down moderate realistic and achievable goals for them.

(ii) They take planned risks.

(iii) They favor situations wherein they can get individual responsibility for
solving problems.
 (iv) They need actual feedback on how well they are doing.

3) Leibenstein’s X-efficiency Theory

X-efficiency is the degree of inefficiency in the use of resources within the

firm: it measures the extent to which the firm fails to realize its productive
potential. According to Leibenstein, When an input is not used effectively the
difference between the actual output and the maximum output attributable to
that input is a measure of the degree of X-efficiency. X-efficiency arises either
because the firm’s resources are used in the wrong way or because they are
wasted, that is, not used at all.

Leibenstein identifies two main roles for the entrepreneur:

i) a gap filler and

ii) an input completer.

These functions arise from the basic assumptions of X-efficiency theory.

The theory concludes that an entrepreneur has to act as gap filler and an input
completer if there are imperfections in markets. For using there unusual skills,
he gets profits as well as a variety of non-peculiar advantages. According to
him there are two types of entrepreneurship.

(i) Routine entrepreneurship – deals with normal business functions like

co-ordinating the business activities.
(ii) Innovative entrepreneurship – wherein an entrepreneur is innovative
in his approach. It includes the activities necessary to create an enterprise
where not all the markets are well-established or clearly defined.

4. Risk Bearing Theory of Knight:

A key element of entrepreneurship is risk bearing. Prof. Knight and John Staurt
Mill saw risk-bearing as the important function of entrepreneurs. Some
important features of this theory are as follows:
1. Risk creates Profit: According to the risk-bearing theory, the entrepreneur
earns profits because he undertakes risks.
2. More Risk More Gain: The degree of risk varies in different industries.
Entrepreneurs undertake different degrees of risk according to their ability
ad inclination. The risk theory proposes that the more risky the nature of
business, the greater must be the profit earned by it.
3. Profit as Reward and Cost: Profit is the reward of entrepreneur for assuming
risks. Hence, it is also treated as a part of the normal cost of production.
4. Entrepreneur’s Income is Uncertain: He identifies uncertainty with a
situation where the probabilities of alterative outcomes cannot be determined
either by a priori reasoning or by statistical inference. This theory
summarizes that profit is the reward of an entrepreneur effort which arises
for bearing non insurable risks and uncertainties and the amount of profit
earned depends upon the degree of uncertainty bearing.

5. Hagen’s Theory of Entrepreneurship:

One important theory of entrepreneurial behaviour has been propounded by

Hagen which is referred to as the withdrawal of status respect. Hagen has
attributed the withdrawal of status respect of a group to genesis of
entrepreneurship. Hagen considers the withdrawal of status, of respect, as
the trigger mechanism for changes in personality formation.

Hagen postulates four types of events which can produce status withdrawal:

 Displacement of a traditional elite group from its previous status by another

traditional supply physical force.
 Denigration of valued symbols through some change in the attitude of the
superior group.
 Inconsistency of status symbols with a changing’ distribution of economic
power.
 Non-acceptance of expected status on migration to a new society.
Hagen further postulates that withdrawal of status respect would give to four
possible reactions and create four different personality types:

(a)Retreatist: Entrepreneur who continues to work in society but remains

indifferent to his work or status.

(b)Ritualist: One who works as per the norms in the society hut with no
hope of improvement in the working conditions or his status.

(c)Reformist: One who is a rebellion and tries to bring in new ways of

working and new society.

(d)Innovator: An entrepreneur who is creative and try to achieve his goals

set by himself

6. Weber’s Theory of Entrepreneurial Growth:

Max Weber in his theory says religion has a large impact on entrepreneurial
development. According to Weber some religions have basic beliefs to earn
and acquire money and some have less of it. He calls them a ‘spirit of
capitalism’ and ‘adventurous spirit’. . According to Max Weber, driving
entrepreneurial energies are generated by the adoption of exogenously-
supplied religious beliefs.
7. Thomas Cochran’s Theory of Cultural Values

The key proportions in Thomas Cochran’s theory are cultural values, role
expectations and social sanctions. According to him, the entrepreneur represents
society’s model personality. His performance is influenced by the factors of his
own attitudes towards his occupation, the role expectations held by sanctioning
groups, and the operational requirements of the job. The determinants for the
first two factors are the society’s values.

Changes over time in such variables as population, technology, and institutional

drift will impinge on the role structure by creating new operational needs.

It can be noted that various communities and castes like samurai in Japan,
family pattern in France, Yoruba in Nigeria, Kikuya in Kenya, Christians in
Lebanon, Halai Memon industrialists in Pakistan, Parsees, Marwaries and
Gujaratis in India have been the sources of entrepreneurship.
 8. Economic Theory of Entrepreneurship

. The main advocates of this theory were Papanek and Harris. According to
them economic incentives are the main forces for entrepreneurial activities in
any country. There are a lot of economic factors which promote or demote
entrepreneurship in a country.

These factors are: (a) The availability of bank credit

(b) High capital formation with a good flow of savings and investments

(c) Supply for loanable funds with a lower rate of interest.

(d) Increased demand for consumer goods ad services

(e) Availability of productive resources.

(f) Efficient economic policies like fiscal ad monetary policies

(g) Communication and transportation facilities

Types of Entrepreneurship
Based on the Business Type

Depending on the type of business, entrepreneurs are classified into the

following types:

• Trading Entrepreneur

A trading entrepreneur refers to a person who undertakes business-related

activities. These types of entrepreneurs usually buy finished products in bulk
from manufacturers at some discount. They then sell these products directly or
with the help of retailers or vendors with profits.

• Manufacturing Entrepreneur

The founder of a business to manufacture products is known as a manufacturing

entrepreneur. Manufacturing entrepreneurs transform raw materials into
finished products according to the customer's needs.

• Agricultural Entrepreneur

Agricultural entrepreneurs refer to the types of entrepreneurs who primarily do

agricultural work. They participate in a wide range of agricultural activities
such as farming, irrigation, agricultural produce, mechanization, technology,
etc.

Based on the Technology

Based on technology, entrepreneurs are classified into the following types:

• Technical Entrepreneur

Such entrepreneurs are called technology entrepreneurs who use to start and
continue industries primarily based on science and technology. These
entrepreneurs develop new ideas and turn those ideas into technology-based
innovations and inventions.

• Non-Technical Entrepreneur
As the name suggests, entrepreneurs who do not set up and run enterprises
based on science and technology are known as non-technical entrepreneurs. In
short, non-tech entrepreneurs are those who work for innovations using
traditional methods. They typically use alternative and exemplary marketing
methods and follow non-technical delivery strategies to engage directly with
customers.

Based on Ownership

Based on ownership, entrepreneurs are classified into the following types:

• Private Entrepreneur

When an entrepreneur starts something personal of his or her own, such as

setting up an enterprise, he/she is called a private entrepreneur. A private
entrepreneur is the only person who plays the sole proprietor role for a business
venture and bears the risk associated with it.

• State Entrepreneur

When a state or government does a business or industrial undertaking, it is

referred to as a 'state entrepreneur'. In this case, the government is the sole
owner of the enterprise and will bear all the profits and losses involved with it.

• Joint Entrepreneurs

When a business or industrial undertaking is established and operated jointly by

the private entrepreneur and the government, it is called joint entrepreneurship.
The parties involved are called joint entrepreneurs. In this case, risk and profits
are shared by both parties.

Based on Gender

Based on gender, entrepreneurs are classified into the following types:

• Men Entrepreneurs
When any business venture is formed, managed and operated by men, these
men are referred to as men entrepreneurs.

• Women Entrepreneurs

When any business venture is formed, managed and operated by women, these
women are referred to as women entrepreneurs. Besides, if women have a
minimum 51 percent share of the capital, they can also be known as women
entrepreneurs.

Based on the Enterprise size

Based on the size of the enterprise, entrepreneurs are classified into the
following types:

• Small-Scale Entrepreneur

If an entrepreneur has invested up to a maximum of 1 crore in starting an

enterprise, including plant and machinery, such entrepreneur is called Small
Scale Entrepreneur.

• Medium-Scale Entrepreneur

If an entrepreneur has invested a minimum of 1 crore to a maximum of 5 crores

in starting an enterprise, including plant and machinery, then such entrepreneur
is called Medium Scale Entrepreneur.

• Large-Scale Entrepreneur

If an entrepreneur has invested more than 5 crores in starting an enterprise,

including plant and machinery, such an entrepreneur is called a large-scale
entrepreneur. This includes any investment above 5 crores.

Based on Clarence Danhof Study

An interesting distinction about types of entrepreneurs is the one proposed by

the author Clarence Danhof, which classified entrepreneurs into four groups
based on economic development. He based his classification on his study of
American agriculture, and he observed that entrepreneurs could be classified
depending upon the level of willingness to create innovative ideas; so there can
be the following types of entrepreneurs:

1) Innovative
2) Imitative
3) Fabian
4) Drone

Innovative: These entrepreneurs have the ability to think newer, better and
more economical ideas of business organization and management. They are
characterized by the smell of innovativeness, and they are aggressive in
experimentation and in putting attractive possibilities into practice. An
innovative entrepreneur sees the opportunity for introducing a new technology,
a new product or a new market. Schumpeter’s entrepreneur was of this type.
They are business leaders and contributors to the economic development of a
country, as they are very much helpful for their country because they bring
about a transformation in life style.

2)Adoptive/Imitative: the imitative entrepreneurs copy or adopt suitable

innovations made by the innovative entrepreneurs. These entrepreneurs imitate
the existing entrepreneurs and setup their enterprise in the same manner. Instead
of innovating, they just imitate the technology and methods innovated by
others. These entrepreneurs face lesser risks and uncertainty then innovative
entrepreneurs. Imitative entrepreneurs are most suitable for the developing
regions because in such countries people prefer to imitate the technology,
knowledge and skill already available in more advanced countries. Imitative
entrepreneurs help to transform the system of those countries with the limited
resources available.

3) Fabian: This type of entrepreneurs are not interested in introducing new

changes or desiring to adopt new methods of production innovated by the most
entrepreneurs. They are very much skeptical in their approach in adopting or
innovating new technology in their enterprise and they love to remain in the
existing business with the age-old techniques of production. They adopt new
technologies only when there are not options left to survive in the business
venture. Usually they are second-generation entrepreneur in a business family
enterprise.

4)Drone: Drone entrepreneurs refuse to copy or use opportunities that come on

their way. In fact, these entrepreneurs are very conservative; they always feel
comfortable with their old-fashioned technology of production even though the
environment as well as the society have undergone considerable changes and
they are even ready to suffer the loss of their business. They are laggards as
they continue to operate in their traditional way and resist changes.

Traits of Successful Entrepreneur

As entrepreneur is more a true leader and less a manager. He innovates and

keeps eye on the horizon. He has long perspective in his work. He focuses on
people and inspires trust.

1.Visionary – An entrepreneur understands the environment, being visionary

and future-oriented. To establish a successful venture, he must be creative and
have board understanding of internal and external environment. He must be
visionary leader-a person who dreams great dreams.

2. Urge to achieve – Entrepreneurial leaders are challenged by opportunity.

They are willing to work hard to achieve something.

3. Sense of Purpose – Being a leader, entrepreneur sets the stage for top
performance. Agreeing on a mission builds strength.

4. Teamwork – An entrepreneurial leader builds teamwork.

5. Persistence – Through the establishment of any new venture, frustration and

obstacles will occur. Only through the entrepreneur’s persistence will anew
venture be created.

6. Open discussion – An entrepreneurial leader encourages open discussion in

order to develop a good team for creating something new.
7. Strategic expertise – The entrepreneur’s success as a leader is related to his
ability to link his enterprise or project to the strategy of the business.

8. Risk Taking Quality - Risk taking is the specific function or the

entrepreneur. He is motivated to undertake the risks of business. He is an
enterprising genius to assume risks involved in introducing new ideas, ventures
and new plans. He visualizes new opportunities. He makes plans for expansion
of business. All this requires the talent of highest order.

Differences Between Entrepreneur and Manager

The difference between entrepreneur and manager can be drawn clearly on the
following grounds:

1. A person who creates an enterprise, by taking a financial risk in order to get

profit, is called an entrepreneur. An individual who takes the responsibility
of controlling and administering the organization is known as a manager.
2. An entrepreneur focuses on business startup whereas the main focus of a
manager is to manage ongoing operations.
3. Achievements work as a motivation for entrepreneurs. On the other hand,
the primary motivation is the power.
4. The manager’s approach to the task is formal which is just opposite of an
entrepreneur.
5. An entrepreneur is the owner of the enterprise while a manager is just an
employee of the company.
6. A manager gets salary as remuneration for the work performed by him.
Conversely, profit is the reward for the entrepreneur.
7. An entrepreneur’s decisions are driven by inductive logic, courage, and
determination; that is why the decision making is intuitive. On the contrary,
the decision making of a manager is calculative, as they are driven by
deductive logic, the collection of information and advice.
8. The major driving force of an entrepreneur is creativity and innovation. As
against this, a manager maintains the existing state of affairs.
9. While entrepreneur is a risk taker, the manager is risk averse.

Intrapreneurship

• The term intrapreneurship refers to a system that allows an employee to

act like an entrepreneur within a company or other organization.
Intrapreneurs are self-motivated, proactive, and action-oriented people
who take the initiative to pursue an innovative product or service.

• Intrapreneur meaning refers to the ambitious employees in an organization,

who have a passion, skill, and drive to convert unique ideas and concepts
into new products and services, which would add to the list of offerings of
their employer.

Definition:

• Pinchot defined intrapreneurs as “dreamers who do. Those who take hands-
on responsibility for creating innovation of any kind, within a business”.

Intrapreneur

• Meaning: An intrapreneur is an employee of a company who uses their

entrepreneurial skills within the business to innovate in company processes,
services, and products.
• Objective: To directly enhance the sustainability and strength of the
company that they work for.
• Primary Motives: To bolster the revenues and profits of the company they
work for by making substantial changes to the company and how they
operate.
• Risk: Most of the risk is taken on by the company. However, poor ideas and
changes for the business may cause intrapreneurs to be fired.
• Capital and Resources: All capital and resources that are needed for the
project at hand are provided by the company.
• Works For: An intrapreneur works for an organization. However, they will
have some of the freedoms that entrepreneurs have. For instance,
intrapreneurs typically have complete control over a specific project.

Women Enterpreneur

• Women entrepreneurs are those women who think of a business enterprise,

initiate it, organize and combine factors of production, operate the enterprise
and undertake risks and handle economic uncertainty involved in running it.

• The female owned businesses increasing at a rate of 5% since 1997.

• World over 1/3rd of the entrepreneurial ventures are run by woman

entrepreneurs. Due to economic progress, better access to education,
urbanization, spread of liberal and democratic culture and recognition by
society, there has been a spurt in woman entrepreneurship in India.

Women Entrepreneurship – Definitions

• Schumpeter – “Women entrepreneurs are those women who innovate,

initiate or adopt a business activity”.
• Government of India – “A woman entrepreneur is defined as an enterprise
owned and controlled by a woman having a minimum financial interest of
51 percent of the capital and giving at least 51 percent of the employment
generated in the enterprise to women.”

Rural Enterpreneur

• Rural entrepreneurship is a term that relates to the establishment of new

business units and industries in rural areas. It involves carrying out
entrepreneurship activities in the rural economy which results in the overall
development of the nation.
• Rural entrepreneurship helps countries in achieving the equitable
advancement and development of all areas.
• It serves as a key tool for overcoming all gaps in between urban and non-
urban areas whether in terms of infrastructure, job opportunities, health,
education etc. The similar growth and development opportunities are
provided to the people of village as one available to peoples of cities.

Need For Rural Entrepreneurship

1.High potential of creating employment- Rural entrepreneurship brings in

large number of employment opportunities for people living in rural areas.
Industries in rural parts are mostly labor-intensive where many people are
engaged in distinct activities both directly and indirectly. Rise in unemployment
is one of the basic and most highlighted problem of every nation in today’s era.
Rural entrepreneurship can be very effective in tackling this problem in positive
way by bringing in more job opportunities for people.

2.Brings down income disparity- Rural industries possess a high potential of

generating large amount of income for rural population. Establishment of new
business setup and industries result in giving better job opportunities with
adequate salaries and wages.

3.Proper utilization of resources- The rural entrepreneurship helps in effective

utilization of resources available in remote areas. The resources are present in
sufficient quantity among rural areas which may remain lie idle if rural
entrepreneurship does not exist. When industries will run via rural
entrepreneurship programme, then the use of all these resources will enhance
productivity thereby favoring nation in some way. In addition to this, labor
available in villages also get some work in these types of entrepreneurships.

4.Reduce migration of villagers- Migration of people from rural areas to urban

areas is one of the critical issues being faced by every nation in today’s time.
Rural urbanization works on removing this gap in terms of development among
urban and non-urban areas. It helps in creating similar growth and development
opportunities for peoples of villages as are available in urban areas. When
people have access to job opportunities in their native areas, they would like to
remain at their home instead of migrating to some other places.

5.Earns foreign exchange- Rural market serve as an important source of

earning foreign revenue for nation. The products which are manufactured in
rural areas are in high demand and exported to several countries all over the
world. These products comprise of handicrafts, artifact, handlooms and various
other agricultural products.

6. Foster economic development- The economic development of remote areas

across the nation is increased to great extent by rural entrepreneurship. It
focuses on achieving equitable growth and development in both urban and rural
areas. More capital is brought into the rural market by establishing new
ventures and industries. All this also results in eliminating the differentiation
among areas as slums, town, cities etc.