COMPABTech70563rEntrAP ED4

ENTREPRENEURSHIP DEVELOPMENT
UNIT-I
FUNCTIONS AND IMPORTANCE OF ENTREPRENEURSHIP
LECTURE NOTES PREPARED BY:
Dr. REETIKA THAKUR (ASSISTANT PROFESSOR)
Functions of Entrepreneurship-
(i) Innovation and Creativity – Innovation generally refers to changing processes or
creating more effective processes, products and ideas. For businesses, this could mean
implementing new ideas, creating dynamic products or improving your existing services.
Creativity is defined as “the tendency to generate or recognize ideas, alternatives, or
possibilities that may be useful in solving problems, communicating with others.
Creativity and innovation have always been recognized as a sure path to success.
Entrepreneurs think outside of the box and explore new areas for cost-effective business
solutions.
(ii) Risk taking and Achievement – Entrepreneurship is a process in which the

entrepreneur establishes new jobs and firms, new Creative and growing organization
which is associated with risk, new opportunities and achievement. It results in
introducing a new product or service to society. In general, entrepreneurs accept four
types of risks namely Financial Risk, Job Risk, Social & Family Risk & Mental & Health
Risk, which are as follows:
(a) Financial Risk – Most of entrepreneurs begin by using their own savings and
personal effects and if they fail, they have the fear of losing it. They take risk of failure.
(b) Job Risk – Entrepreneurs, not only follow the ideas as working situations, but also
consider the current risks of giving up the job & starting a venture. Several entrepreneurs
have the history of having a good job, but gave it up, as they thought that they were not
cut out for a job.
(c) Social and Family Risk – The beginning of entrepreneurial job needs a high energy
which is time consuming. Because of these undertakings, he/she may confront some
social and family damages like family and marital problems resulting on account of
absence from home and not being able to give adequate time to family.
(d) Mental Health Risk – Perhaps the biggest risk that an entrepreneur takes it is, the risk
of mental health. The risk of money, home, spouse, child, and friends could be adjusted
but mental tensions, stress, anxiety and the other mental factors have many destructive
influences because of the beginning and continuing of entrepreneurial activity. This can
even lead to depression, when faced with failure.
(iii) Organization and Management – The entrepreneurial organization is a simple

organizational form that includes, one large operational unit, with one or a few
individuals in top management. Entrepreneurial management means the skills necessary
to successfully develop and manage a business enterprise. A small business start-up under
an owner-manager is an example of an entrepreneurial organization. Here, the owner-
manager generally maintains strict control over business operations. This includes
directing the enterprise’s core management functions. According to Mintzberg, these
include the interpersonal roles, informational roles and decision-making roles. The
smaller the organization, the more concentrated these roles are in the hands of the owner-
manager. The entrepreneurial organization is generally unstructured.
(iv) Research – An entrepreneur is a practical dreamer and does a lot of ground-work

before taking a leap in his/her ventures. In other words, an entrepreneur finalizes an idea
only after considering a variety of options, analysing their strengths and weaknesses by
applying analytical techniques, testing their applicability, supplementing them with
empirical findings, and then choosing the best alternative. It is then that he/she applies the
ideas in practice. The selection of an idea, thus, involves the application of research
methodology.
(v) Overcoming Resistance to Change – New innovations are generally opposed by

people because it makes them change their existing behaviour patterns. An entrepreneur
always first tries new ideas at his/her level. It is only after the successful implementation
of these ideas that an entrepreneur makes these ideas available to others for their benefit.
His/her will power, enthusiasm and energy help him/her in overcoming the society’s
resistance to change.
(vi) Catalyst of Economic Development – An entrepreneur plays an important role in

accelerating the pace of economic development of a country, by discovering new uses of
available resources and maximizing their utilization. Today, when India is a fast-
developing economy, the contribution of entrepreneurs has increased multi-fold.
Importance of Entrepreneurship-
 Drives economic growth and creates new jobs.
 Encourages innovation by bringing new ideas, products and services to the
market.
 Contributes to social change by developing products or services that reduce
people’s dependence on outdated technologies.
 Addresses social and economic issues by creating solutions that meet the needs of
society.
 Enables competition which improves business efficiency and lowers prices for
consumers.

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ENTREPRENEURSHIP DEVELOPMENT

(ii) Risk taking and Achievement – Entrepreneurship is a process in which the

(iii) Organization and Management – The entrepreneurial organization is a simple

(iv) Research – An entrepreneur is a practical dreamer and does a lot of ground-work

(v) Overcoming Resistance to Change – New innovations are generally opposed by

(vi) Catalyst of Economic Development – An entrepreneur plays an important role in

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