Session 4

ED

1. Types of entrepreneurs An entrepreneur is an adventurous innovator who acts on his own account, and introduces changes that others do not dare to experiment with. Every entrepreneur gives his business a means for the achievement of certain objectives. On the basis of these objectives, Clarence Danhof classifies the entrepreneurs into 4 categories. Innovative entrepreneurs Adoptive or imitating entrepreneurs Fabian entrepreneurs Drone entrepreneurs

2. Innovative entrepreneurs Is one who introduces new goods and new methods of production, discover new markets and recognizes better combination of an enterprise. Among the different types of entrepreneurs, the innovative entrepreneur is the most vigorous type of entrepreneurs. According to Peter F. Drucker, the innovative entrepreneur is one who always searches for change, responds to it, and exploits every opportunity. Eg . Elon Musk

3. Adoptive or imitating entrepreneurs Adoptive entrepreneurs are adopting or imitating the successful innovations made by other entrepreneurs. They play a vital role in developing countries, where innovative entrepreneurs are scarce. In developing countries scarcity of capital and skilled labor act as a hinderance in the path of innovative entrepreneurship. Adoptive entrepreneurs are the most suited for developing countries because such countries can adopt technology, knowledge and skill already available in advanced countries. Eg . Cochin Shipyard has adopted the technology of Mitsubishi Heavy industries Ltd. Of Japan. Flipkart OLA

4. Fabian entrepreneurs Fabian entrepreneurship is characterized by great caution in introducing any change. These entrepreneurs have neither the will to introduce new changes nor the desire to adopt new methods. Fabian entrepreneurs are shy and lazy. Their dealings are determined by customs, religion, tradition and past practices. Being not interested in taking risks, they follow the foot steps of their predecessors. E.g. Kodak, a company that happened to be the market leaders in producing analog cameras but they did not realize the change and the introduction of the Digicam . 

5. Drone entrepreneurs A drone entrepreneur follows the traditional method of production. Under no circumstances he will change the method of production that he has introduced. He sticks on to his existing position even at the cost of losses. He is hesitant to deviate from the traditional method of functioning. In majority cases, drone entrepreneurs are thrown out of market due to poor marketability of their products. E.g. Traditional industries of Kerala like bamboo and coir industries There is a tobacco making industry which is still making tobaccos entirely by hand. Not willing to use the machines.

6. Types of entrepreneurs in Indian context In the Indian context, entrepreneurs are classified as follows. Entrepreneurs by inheritance Individual entrepreneurs Institutional entrepreneurs Technologist turned entrepreneurs Self employed entrepreneurs Foreign returned entrepreneurs Non-resident Indian entrepreneurs (NRI entrepreneurs)

7. Entrepreneurs by inheritance In India, such entrepreneurs are very common. Most of these enterprises are family controlled business units and their management is passed from one generation to another. Only a minor portion of such entrepreneurs are innovative and a majority of them want to conduct business as drone entrepreneurs Eg . Wipro Individual entrepreneurs This type of entrepreneurs are seen mainly in the small scale sector. As an individual, he encounters many limitations like lack of sufficient finance, lack of efficient hands in marketing the products, delay in the implementation of decision etc. In a highly populated country like India, where unemployment is the main problem, individual entrepreneurship has got great scope.

8. Institutional entrepreneurs Institutional entrepreneurship can co-ordinate different types of personal skill, ability and risk bearing capacity. Such entrepreneurs act as a corporate body where decision making is done after discussing with each other. The combined skill and ability of the group is maximized. The business can enjoy financial prosperity to a certain extent Technologist turned entrepreneurs They are technically qualified persons who find their own employment opportunities as self-made entrepreneurs. They commercially exploit their inventions and technical knowledge by establishing their own business units.

9. Self employed entrepreneurs Most of these entrepreneurs are educated but employed. They need financial assistance from the govt. or from other financial institutions. They are also called Govt. sponsored entrepreneurs. The circumstances force them to act as entrepreneurs. The success of self employed entrepreneurs paves the way for the speedy economic development of the country Foreign returned entrepreneurs This type of entrepreneurs are many in India, especially in Kerala. People who were employed in foreign countries could earn attractive amounts. On return, some of them seek employment and business opportunities here. But, foreign returned entrepreneurs face many difficulties in making their business a success. Lack of technical knowledge, inefficiency in exploring markets, lack of knowledge in analyzing market conditions etc. are some of the problems which they usually face. Many of them face severe setbacks within a short time.

10. Non-resident Indian entrepreneurs ( NRI entrepreneurs) They are another type of entrepreneurs having foreign connection. They are persons with Indian citizenship residing outside India. Our government extends attractive incentives to NRIs to start business in India and to utilize their savings in a better way. Now-a-days, the central and state governments persuade the NRI to make investments in India. SO the NRI entrepreneurs are also known as persuaded entrepreneurs. Examples Ravi Pillai Yusaf Ali

11. The entrepreneurs have also been classified on the basis of: Type of business Motivation Growth Stages of development, and Scale of operations

12. Based on the Type of Business: 1. Trading Entrepreneur: As the name itself suggests, the trading entrepreneur undertake the trading activities. They procure the finished products from the manufacturers and sell these to the customers directly or through a retailer. These serve as the middlemen as wholesalers, dealers, and retailers between the manufacturers and customers 2. Manufacturing Entrepreneur: The manufacturing entrepreneurs manufacture products. They identify the needs of the customers and, then, explore the resources and technology to be used to manufacture the products to satisfy the customers’ needs. In other words, the manufacturing entrepreneurs convert raw materials into finished products.

13. 3. Agricultural Entrepreneur: The entrepreneurs who undertake agricultural pursuits are called agricultural entrepreneurs. They cover a wide spectrum of agricultural activities like cultivation, marketing of agricultural produce, irrigation, mechanization, and technology.

14. Based on the Use of Technology: 1. Technical Entrepreneur: The entrepreneurs who establish and run science and technology-based industries are called ‘technical entrepreneurs.’ Speaking alternatively, these are the entrepreneurs who make use of science and technology in their enterprises. Expectedly, they use new and innovative methods of production in their enterprises. 2. Non-Technical Entrepreneur: Based on the use of technology, the entrepreneurs who are not technical entrepreneurs are non-technical entrepreneurs. The forte of their enterprises is not science and technology. They are concerned with the use of alternative and imitative methods of marketing and distribution strategies to make their business survive and thrive in the competitive market.

15. Based on Ownership: Private Entrepreneur: A private entrepreneur is one who as an individual sets up a business enterprise. He / she it’s the sole owner of the enterprise and bears the entire risk involved in it. Example: Yusuf Ali 2. State Entrepreneur: When the trading or industrial venture is undertaken by the State or the Government, it is called ‘state entrepreneur.’ Example: Indian Railway 3. Joint Entrepreneurs: When a private entrepreneur and the Government jointly run a business enterprise, it is called ‘joint entrepreneurs.’ Example: Cochin International Airport Limited – CIAL

16. Based on Gender: 1.   Men Entrepreneurs: When business enterprises are owned, managed, and controlled by men, these are called ‘men entrepreneurs.’ 2.   Women Entrepreneurs: Women entrepreneurs are defined as the enterprises owned and controlled by a woman or women having a minimum financial interest of 51 per cent of the capital and giving at least 51 per cent of employment generated in the enterprises to women.

17. Based on the Size of Enterprise: 1. Small-Scale Entrepreneur: An entrepreneur who has made investment in plant and machinery up to Rs 1.00 crore is called ‘small-scale entrepreneur.’ 2. Medium-Scale Entrepreneur: The entrepreneur who has made investment in plant and machinery above Rs 1.00 crore but below Rs 5.00 crore is called ‘medium-scale entrepreneur.’ 3. Large-Scale entrepreneur: The entrepreneur who has made investment in plant and machinery more than Rs 5.00 crore is called ‘large-scale entrepreneur.’

18. Role of entrepreneur in economic development Entrepreneurs play a vital role in the economic development of a country. The economic resources alone will not produce development. There should be dynamic entrepreneurs with vision, initiative and drive to make changes in the economic field. It is often said that “ India is a rich country inhibited by the poor”. India is endowed with plenty of natural resources and good climate. In spite of these blessings, our country is only a developing one. The main reason of this under development is the lack of sufficient number of dynamic entrepreneurs. A country can achieve economic development only when it is able to utilize its natural resources effectively.

19. Economic development and entrepreneurship Economic development essentially means a process of upward change by which the real per capita income of a country increases over a long period of time. Entrepreneurship is a very significant factor which brings about this change. The economic history of the presently developed countries like America, Russia, Britain, France and Japan bears testimony to the fact that entrepreneurship is an inevitable cause for their economic development. The entrepreneurs played a prominent role in the economic development of these countries. The people of underdeveloped and developing countries are now aware of the importance of entrepreneurship for economic development. Now they have realized that for achieving economic development it is necessary to develop entrepreneurial mentality among their people.

20. The following points elucidate the pivotal role played by the entrepreneurs in the economic development. Capital formation Capital formation involves making of more capital goods such as machines, tools, factories, transport equipment, materials, electricity, etc., which are all used for future production of goods. One single individual will not be able to contribute the entire capital required for a big business concern. So, the entrepreneur mobilizes the small and scattered savings from the households and this will lead to capital formation. Generating employment opportunities The most important socio-economic problem faced by the developing countries is unemployment. The entrepreneurs by setting up new business concerns can generate employment opportunities. Most of the entrepreneurial concerns are labor oriented and they provide large scale employment opportunities to the unemployed. Which will result in the improvement in the standard of the people.

21. Balanced regional development Setting up of business concerns in the rural or under developed areas will help to achieve a balanced regional development of the nation. Small business concerns can be set up at places where raw materials & labor forces are available. Encourages the effective utilization of capital & natural resources Entrepreneurs help in the effective utilization of idle fund in the society. They can also profitably utilize the natural resources at their place of operation. In the absence of entrepreneurs these funds & resources will be kept idle. Reduces the concentration of economic power Entrepreneurship reduces the accumulation of economic power in a few hands. It ensures a wider distribution of economic power among the people.

22. Promotes export trade Exports are necessary for earning foreign exchange. So the countries follow a policy of export promotion & import substitution. Entrepreneurs setting up their business as EOUs (Export Oriented Units) at EPZs (Export Promotion Zones) will help to increase the exports of the nation. Level of exports is one of the vital ingredients of economic development. Promotes the equitable distribution of wealth & national income Entrepreneurship helps to achieve the socialistic objective of the nation. It helps to reduce disparity in income & wealth of people. It creates wealth, generates employment & income & increases the standard of living of the people.