Entrepreneurship: concept, types, process and competencies
Entrepreneurship is the process of spotting an opportunity, bearing risk and organising resources to create value through a new venture.
Types of entrepreneurs (Clarence Danhof, 1949)
| Type | Behaviour | Typical setting |
|---|---|---|
| Innovative | Introduces new products, methods or markets; experiments boldly | Developed economies; new technology ventures |
| Imitative (adoptive) | Copies innovations already proven elsewhere | Developing economies |
| Fabian | Very cautious; changes only when not changing would threaten survival | Tradition-bound family businesses |
| Drone | Refuses to change even when it means losses | Declining firms |
Other classifications
| Basis | Types |
|---|---|
| Type of business | Trading, manufacturing (industrial), corporate, agricultural, service |
| Use of technology | Technical, non-technical, professional |
| Motivation | Pure (self-motivated), induced (by government incentives), motivated, spontaneous |
| Generation | First-generation, inherited (family), modern |
| Gender and area | Women entrepreneurs; rural and urban entrepreneurs |
| Newer labels | Social entrepreneur, serial entrepreneur, ecopreneur, technopreneur |
The entrepreneurial process
Hisrich and Peters compress this into four stages: identify and evaluate the opportunity, develop the business plan, determine the resources required, and manage the enterprise.
Entrepreneurial competencies (from McClelland's studies, used in EDPs)
| Cluster | Competencies |
|---|---|
| Achievement | Initiative, seeing and acting on opportunities, persistence, concern for quality, efficiency, commitment, calculated risk-taking |
| Planning | Goal setting, information seeking, systematic planning and monitoring, problem solving |
| Power and influence | Self-confidence, assertiveness, persuasion, networking, use of influence strategies |
Entrepreneur vs manager
Entrepreneurship development programmes (EDPs)
- Aim: identify, train and support potential entrepreneurs, especially first-generation ones.
- Three phases: pre-training (identify and select), training (motivation, skills, business plan) and post-training (follow-up support).
- India's early EDP model began in Gujarat in the early 1970s and was later institutionalised at EDII, Ahmedabad (1983).
- Other national institutes include NIESBUD (Noida), NIMSME (Hyderabad) and IIE (Guwahati).
NET asks you to match Danhof's four types with their behaviour, to sequence the entrepreneurial process, and to separate entrepreneur from manager in a statement pair.
Typical MCQ: “An entrepreneur who adopts change only when it becomes unavoidable is called what?” Fabian (Danhof). Trap: a drone refuses to change even then.
Typical MCQ: “Name Danhof's four types of entrepreneur.” Innovative, imitative, Fabian and drone.
Danhof from boldest to most stubborn, I-I-F-D: 'Innovate, Imitate, Fear, Doze' = Innovative, Imitative, Fabian, Drone.