What Is an Entrepreneur?

An entrepreneur is an individual who creates a new business, bearing most of the risks
and enjoying most of the rewards. The entrepreneur is commonly seen as an innovator, a
source of new ideas, goods, services, and business/or procedures.

Entrepreneurs play a key role in any economy. These are the people who have the skills
and initiative necessary to anticipate current and future needs and bring good new ideas to
market. Entrepreneurs who prove to be successful in taking on the risks of a startup are
rewarded with profits, fame and continued growth opportunities. Those who fail, suffer
losses and become less prevalent in the markets.

 An entrepreneur is an individual who creates a new business, bearing most of the

risks and enjoying most of the rewards.
 An entrepreneur combines capital, land, and labor to manufacture goods or provide
services through the formation of a firm.
 In a market full of uncertainty, it is the entrepreneur who can actually help clear up
uncertainty, as he makes judgments or assumes the risk.
 Entrepreneurship is high-risk, but also can be high-reward as it serves to generate
economic wealth, growth, and innovation.
1) Characteristics of ent
1. Self-Motivation
One of the most important traits of entrepreneurs is self-motivation. When you want to
succeed, you need to be able to push yourself. You aren’t answerable to anyone else as
an entrepreneur, and that sometimes means that it’s hard to get moving without anyone
to make you. You need to be dedicated to your plan and keep moving forward — even if
you aren’t receiving an immediate paycheck.
2. Understand What You Offer
As an entrepreneur, you need to know what you offer, and how it fits into the market.
Whether it’s a product or a service, you need to know where you fit in. That means you
need to know when it’s time to tweak things a little bit. This also includes knowing
whether you are high end, middle of the road or bargain. Being able to position yourself
and then adjust as needed is an important part of entrepreneurship.
3. Take Risks
Successful entrepreneurs know that sometimes it’s important to take risks. Playing it safe
almost never leads to success as a business owner. It’s not about taking just any risk,
though. Understanding calculated risks that are more likely to pay off is an important part
of being an entrepreneur. You’ll need to be willing to take a few risks to succeed.
4. Know How to Network
Knowing how to network is an important part of entrepreneurship. Sometimes who you
know is an important part of success. Being able to connect with others and recognize
partnership opportunities can take you a long way as a business owner. Figure out where
to go for networking opportunities and make it a point to learn how to be effective.
5. Basic Money Management Skills and Knowledge
We often think of successful entrepreneurs as “big picture” people who don’t worry so
much about managing the day to day. And it’s true that you might have an accountant or
other team members to help you manage the business. However, if you want to be
successful, you should still have basic money management skills and knowledge.
Understand how money works so that you know where you stand, and so that you run
your business on sound principles.
6. Flexibility
To a certain degree, you need to be flexible as an entrepreneur. Be willing to change as
needed. Stay on top of your industry and be ready to adopt changes in processes and
product as they are needed. Sometimes, you also need flexibility in your thinking. This is
an essential part of problem-solving. You want to be able find unique and effective
solutions to issues.
7. Passion
Finally, successful entrepreneurs are passionate. They feel deeply about their product or
service or mission. Passion is what will help you find motivation when you are
discouraged and it will drive your forward. Passion is fuel for successful entrepreneurship.
If you find yourself losing your passion, that might be the clue that it’s time to move on to
something else (that stokes your passion). There are many serial entrepreneurs that
create successful businesses, sell them, and then create something else.

2)Importance/ nature of entrepreneurs

1)Free market evolution. Entrepreneurs are important in a free market
because they help the market respond to changing prices and consumer
preferences. For example, with the rise in the use of internet, an
entrepreneur may see the potential to set up a new home delivery service
which uses an app for consumers to buy. Without entrepreneurs, product
markets would become static and be slow to changes in new technology
and trends

2) Efficiency improvements . A successful entrepreneur may take revenue

from an established business. This can cause ‘creative destruction’ A
phrase used to describe changes in the economy – which in the short-term
could lead to firms going out of business and/or job losses. However, this
potential for creative destruction also creates an incentive for an
established business to adapt and increase their own efficiency. For
example, in response to Uber taxi services, it created an incentive for
established taxi-firms to develop their own apps.
 3)Dynamic efficiency. Entrepreneurs can make radical changes and
introduce new technologies which significantly move on an industry. For
example, Henry Ford’s novel use of assembly lines enabled a drastic cut in
the average cost of producing a motor car. His efficiency savings forced
other car makers to follow suit.

4)New markets. Entrepreneurs can often ‘redefine the rules’ of an

established industry. For example, in the 1990s, if you wanted to rent a
room, you would scour newspaper ads and have to make a decision based
on 40 words of text. However, the new service “Spareroom.co.uk” means
you can easily scan through different possibilities and have an opportunity
to get to know your potential flatmate before you move in. This has created
a new market and new service that increases the efficiency of finding a
compatible person to live with.

A similar new product is ‘Room for help.’ Where people can rent a room in return for
providing a service such as cleaning/babysitting It was created by Ms Rolando after
she came across an advert whilst looking for a room to rent. It is an example of
how entrepreneurs often set up a business in response to their individual need.

5) New Gig economy. The new technological economy offers increased

opportunities for entrepreneurs. Low start up costs, give entrepreneurs the
potential to find new niche markets to develop. Many of the current large
technological firms are relatively young and started as small start-ups –
often in someones room or garage.

6)New values . An entrepeneur is not just about price and profit. An

entrepreneur may be motivated to enter an industry to offer a more ethical
product or provide a service to a community. For example, Anita Roddick set
up Body Shop at a time when many cosmetics were tested on animals. Her
new set up eschewed animal testing. It proved a successful business
strategy and it soon became the industry standard. In other situations,
entrepreneurs may take a risk and provide a community service such as a
volunteer led railway – offering steam trains for tourists and locals.

The entrepreneur can sell his new business for more than the costs of
inputs or continued to grow and develop the business.

3) classification of ent

1)Business entrepreneur: Business entrepreneurs are individuals

who conceive an idea for a new product or service and then create
a business to materialize their idea into reality. They may set up a
big establishment or a small business unit. They are called small
business entrepreneurs when found in small business units such as
printing press, textile processing house, advertising agency,
readymade garments or confectionery.

2)Trading Entrepreneur: The trading entrepreneur is one who

undertakes trading activities and is not concerned with the
manufacturing work. He identifies potential markets, stimulates
demand for his product line and creates a desire and interest
among buyers to go in for his product line and creates a desire and
interests among buyers to go in for his product line and creates a
desire and interests and buyers to go in for his product. He is
engaged in both domestic and overseas trade. Britain, due to
geographical limitations has developed trade through trading
entrepreneurs.

3)Industrial Entrepreneurs: Industrial entrepreneur is essentially a

manufacturer who identifies the potential needs of customers and
tailors a product or service to meet the marketing needs. He is
product- oriented man who starts in an industrial unit because of
the possibility of some new product.

4)Corporate Entrepreneur: Corporate entrepreneur is a person who

demonstrates his innovative skill in organizing and managing
corporate undertaking. A corporate undertaking is is a form of
business organization which is registered under some statue or act
which gives it a separate legal entity. A trust registered under Trust
act or company registered under the companies act is examples of
corporate undertakings. A corporate entrepreneur is thus an
individual who plans, develops and manages a corporate body.

5)Agricultural Entrepreneur: Agricultural entrepreneur are those

entrepreneurs who undertake agricultural activities as raising and
marketing of crops, fertilizers and other inputs of agriculture. They
are motivated to raise agricultural through mechanization, irrigation
and application of technologies for dry land agriculture products.

4)Functions of an Entrepreneur
Function # 1. Decision Making:
The primary task of an entrepreneur is to decide the policy of
production. An entrepreneur is to determine what to produce, how
much to produce, how to produce, where to produce, how to sell
and’ so forth. Moreover, he is to decide the scale of production and
the proportion in which he combines the different factors he
employs. In brief, he is to make vital business decisions relating to
the purchase of productive factors and to the sale of the finished
goods or services.

Function # 2. Management Control:

Earlier writers used to consider the management control one of the
chief functions of the entrepreneur. Management and control of the
business are conducted by the entrepreneur himself. So, the latter
must possess a high degree of management ability to select the right
type of persons to work with him. But, the importance of this
function has declined, as business nowadays is managed more and
more by paid managers.

Function # 3. Division of Income:

The next major function of the entrepreneur is to make necessary
arrangement for the division of total income among the different
factors of production employed by him. Even if there is a loss in the
business, he is to pay rent, interest, wages and other contractual
incomes out of the realised sale proceeds.

Function # 4. Risk-Taking and Uncertainty-Bearing:

Risk-taking is perhaps the most important function of an
entrepreneur. Modern production is very risky as an entrepreneur
is required to produce goods or services in anticipation of their
future demand.

Broadly, there are two kinds of risk which he has to face. Firstly,
there are some risks, such as risks of fire, loss of goods in transit,
theft, etc., which can be insured against. These are known as
measurable and insurable risks. Secondly, some risks, however,
cannot be insured against because their probability cannot be
calculated accurately. These constitute what is called uncertainty
(e.g., competitive risk, technical risk, etc.). The entrepreneur
undertakes both these risks in production.
Function # 5. Innovation:
Another distinguishing function of the entrepreneur, as
emphasised by Schumpeter, is to make frequent inventions —
invention of new products, new techniques and discovering new
markets — to improve his competitive position, and to increase
earnings.

6)Problems Faced by Women Entrepreneurs

1. Problem of Finance:
Finance is regarded as “life-blood” for any enterprise, be it big or small.
However, women entrepreneurs suffer from shortage of finance on two counts.

Firstly, women do not generally have property on their names to use them as
collateral for obtaining funds from external sources. Thus, their access to the
external sources of funds is limited.
Secondly, the banks also consider women less credit-worthy and discourage
women borrowers on the belief that they can at any time leave their business.
Given such situation, women entrepreneurs are bound to rely on their own
savings, if any and loans from friends and relatives who are expectedly meager
and negligible. Thus, women enterprises fail due to the shortage of finance.

2. Scarcity of Raw Material:

Most of the women enterprises are plagued by the scarcity of raw material and
necessary inputs. Added to this are the high prices of raw material, on the one
hand, and getting raw material at the minimum of discount, on the other. The
failure of many women co-operatives in 1971 engaged in basket-making is an
example how the scarcity of raw material sounds the death-knell of enterprises
run by women (Gupta and Srinivasan 2009).

3. Stiff Competition:
Women entrepreneurs do not have organizational set-up to pump in a lot of
money for canvassing and advertisement. Thus, they have to face a stiff
competition for marketing their products with both organized sector and their
male counterparts. Such a competition ultimately results in the liquidation of
women enterprises.

4. Limited Mobility:
Unlike men, women mobility in India is highly limited due to various reasons.
A single woman asking for room is still looked upon suspicion. Cumbersome
exercise involved in starting an enterprise coupled with the officials
humiliating attitude towards women compels them to give up idea of starting
an enterprise.

5. Family Ties:
In India, it is mainly a women’s duty to look after the children and other
members of the family. Man plays a secondary role only. In case of married
women, she has to strike a fine balance between her business and family. Her
total involvement in family leaves little or no energy and time to devote for
business.
Support and approval of husbands seem necessary condition for women’s
entry into business. Accordingly, the educational level and family background
of husbands positively influence women’s entry into business activities.

6. Lack of Education:
In India, around three-fifths (60%) of women are still illiterate. Illiteracy is the
root cause of socio-economic problems. Due to the lack of education and that
too qualitative education, women are not aware of business, technology and
market knowledge. Also, lack of education causes low achievement motivation
among women. Thus, lack of education creates one type or other problems for
women in the setting up and running of business enterprises.

7. Male-Dominated Society:
Male chauvinism is still the order of the day in India. The Constitution of India
speaks of equality between sexes. But, in practice, women are looked upon as
abla, i.e. weak in all respects. Women suffer from male reservations about a
women’s role, ability and capacity and are treated accordingly. In nutshell, in
the male-dominated Indian society, women are not treated equal to men. This,
in turn, serves as a barrier to women entry into business.

8. Low Risk-Bearing Ability:

Women in India lead a protected life. They are less educated and economically
not self-dependent. All these reduce their ability to bear risk involved in
running an enterprise. Risk-bearing is an essential requisite of a successful
entrepreneur.

In addition to above problems, inadequate infrastructural facilities, shortage of

power, high cost of production, social attitude, low need for achievement and
socioeconomic constraints also hold the women back from entering into
business

7)Concepts of women ent

Women entrepreneur may be defined as a woman or group of
women who initiate, organize, and run a business enterprise. In
terms of Schumpeterian concept of innovative entrepreneurs,
women who innovate, imitate or adopt a business activity are
called “women entrepreneurs”.

Kamal Singh who is a woman entrepreneur from Rajasthan, has

defined woman entrepreneur as “a confident, innovative and
creative woman capable of achieving self-economic
independence individually or in collaboration, generates
employment opportunities for others through initiating,
establishing and running the enterprise by keeping pace with
her personal, family and social life.”

8) How will entr culture will impact economic growth /

Ent who change the face of industrial enterprise development

1. Investing in products and services people need.

What motivates a person to start a new business? According to traditional

models, entrepreneurs create new businesses in response to unmet needs and
demands in the market. That is, there is an opportunity to provide a product or
service that is not currently in existence, or otherwise available. Economists refer
to these business-starters as “opportunity” entrepreneurs in order to distinguish
these individuals from those who start businesses for lack of better work
opportunities. So-called “opportunity” entrepreneurs, who launch new enterprises
in response to market needs, are key players when it comes to fostering economic
growth in a region. They enable access to goods and services that populations
require in order to be productive. This is not to ignore “necessity” entrepreneurs
that launch enterprises because they have no other options. Both can and do
contribute to economic growth.

2. Providing employment opportunities.

New businesses need to hire employees. They create jobs and these economic
opportunities uplift and support communities through increasing the quality of
life and overall standard of living.
3. Commerce and regional economic integration.

Technology has made it possible for small, entrepreneur-led businesses to expand

into regional and global markets. When new businesses export goods and
services to nearby regions, these enterprises contribute directly to a region’s
productivity and earnings. This increase in revenue strengthens an economy and
promotes the overall welfare of a population. Economies that trade with one
another are almost always better off. Politics aside, engaging in regional and
international trade promotes investment in regional transportation and
infrastructure, which also strengthens economies. This has never been more true
than it is today, as we live in an increasingly interconnected global economy.
Even for a large and advanced economy like the United States, foreign markets
have a significant role. Foreign trade, according to some estimates, is responsible
for over 90 percent of our economic growth.

4. New technologies promote efficiency.

The ability to turn ideas into new products and services that people need is the
fount of prosperity for any developed country. Economic growth, generally
speaking, is driven by new technologies and their creative applications. Periods
of rapid innovation historically have been accompanied by periods of strong
economic growth. The impetus of innovation is the greatest natural resource of
all: the human mind. Creating innovative products and solutions requires an
educated population and an environment where collaborative work can take
place. In addition to being good for business, education increases workforce
creativity and quality of life.

5. Addressing environmental challenges.

Innovation is (and will continue to be) crucial when it comes to addressing the
enormous environmental challenges we face today: combating climate change,
lowering global greenhouse gas emissions, and preserving biodiversity in the
environment. Without power for extended periods of time, commerce comes to a
halt. Without water, we cannot live. Reliable access to these innovations (such
as irrigation technology, electricity, and urban infrastructure) increases
productivity and enhances economic development.

6. Innovation impacts socio-economic objectives.

Innovative business practices create efficiency and conserve resources.

Innovation in agriculture is especially relevant for addressing socioeconomic
challenges (in addition to encouraging economic growth). In the U.S., for
instance, we waste billions of dollars annually due to inefficiencies and
uncompetitive practices in our healthcare system. Hopefully, new ideas and
innovations in the future will address these problems, resulting in further
reforms. When this occurs, Americans’ overall health and quality of life will
benefit, and so will our economy if our wasteful healthcare costs also decrease.

7. Innovation happens where there is competition.

In essence, there is a positive feedback loop among innovation, entrepreneurship,

and economic development. New and growing businesses represent the principal
sources of job creation and innovative activity in an economy, two factors that
generally result in the rising standards of living for all.

9) Qualities Of Successful Entrepreneurs

1) Self-Discipline The first trait that all successful entrepreneurs must

possess is self-discipline. Self-discipline is the single most important
quality for success in life and business. If you can discipline yourself to
do what you should do, whether you feel like it or not, your success is
virtually guaranteed. Self-discipline requires self-mastery, self-control,
self-responsibility, and self-direction.

2) Integrity

Perhaps the most valued and respected quality you can develop is a
reputation for absolute integrity. Be perfectly honest in everything you
do and in every transaction and activity. Never compromise your
integrity. Remember that your word is your bond and your honor is
everything when it comes to your business. All successful business is
based on trust.
Your success in becoming an entrepreneur will be determined solely by
the number of people who trust you, are willing to work for you, give
you credit, lend you money, buy your products and services, and help
you during difficult times. Your character is the most important asset
that you develop in your entire life, and your character is based on the
amount of integrity you practice.
3) Persistence

The third trait that all successful entrepreneurs must possess is

persistence. Persistence is the iron quality of character. Persistence is
to the character of man as carbon is to steel. It is an indispensable
quality that goes hand in hand with all great success in life.

Resolve in advance that you will never give up, no matter what
happens. The courage to persist in the face of adversity and
disappointment is the one quality that, more than anything, will
guarantee your success.

Your greatest asset can be your willingness to persevere longer than

anyone else. In fact, your persistence is a true measure of your belief in
yourself and your ability to success.

4) A Clear Sense Of Direction

The fourth trait that all successful entrepreneurs must possess is a

clear sense of direction. Because of the turbulence and rapid change in
today’s marketplace, most business owners have been reduced to
operating day-by-day, almost like firefighters.

They are totally preoccupied with short-term problems and the need to
get short-term sales and profits. They intend to spend more time
thinking and planning for the future, but they don’t ever seem to get
around to it.

This is not for successful business owners. You need to set clear
targets for yourself and for every part of your business. In fact, perhaps
your most important responsibility to your people is to give them a clear
sense of direction in their work.

5) Decisive And Action Oriented

The final trait that all successful entrepreneurs must possess is

being decisive and action-oriented. They must think and make
decisions quickly. They discipline themselves to take action and to carry
out the decisions they have made. They move fast and they get quick
feedback from their actions. If they find they have made a mistake, they
quickly self-correct and try something else.
Unit-2 Entrepreneurship

The capacity and willingness to develop, organize and manage a business

venture along with any of its risks in order to make a profit. The most obvious
example of entrepreneurship is the starting of new businesses.
In economics, entrepreneurship combined with land, labor, natural resources
and capital can produce profit. Entrepreneurial spirit is characterized by
innovation and risk-taking, and is an essential part of a nation's ability to
succeed in an ever changing and increasingly competitive global marketplace.
1)Role of Entrepreneurship in economic development
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 development.
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 StartupIndia 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. All this in turn creates
a lot of job opportunities, and is helping in augmenting our standards to a
global level.
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.
2)Policies which are governing entrepreneurs

1. Intellectual Property Rights

The protection of intellectual property is important to promote

innovation by protecting ideas. If innovators are not protected
legally then they are least likely to share their ideas or give them
the opportunity to grow. Entrepreneurs will not be willing to
take the risk of allowing their solutions/innovations/ideas to
develop if they fear that they will be appropriated.

2. Inclusion of entrepreneurship within school curricula

Government should create policies that encourage the

incorporation of entrepreneurship curricula within various levels
of education. Promoting entrepreneurship at the educational
level will create a culture of innovative, solution-orientated
individuals who will grow to start their own businesses and
contribute to the economy.

3. Reduced burden on business formation

It is easier for entrepreneurs to start their businesses in

environments that do not have burdensome barriers of entry.
Entrepreneurship thrives when entrepreneurs are able to start
their businesses without steep requirements for their businesses
to operate. These steep requirements can range from
operational taxes to registration processes. Government can
ensure that business entry requirements are attainable at
multiple levels to support both formal and informal business.

4. Access to funding for SME’s and Start-ups

A major challenge that entrepreneurs face is the access to

capital and investment. Governments can assist in this area by
encouraging local banks to work with start-ups and small
business by providing loans or investment. Government can
offer state loans that target small-business, start-ups or female
entrepreneurs. These are incentives that encourage
entrepreneurship within the ecosystem.

5. Incentivised Tax Laws

It is important for governments to continually reform their tax

policies so that they promote small business growth. A country’s
tax code can be key in promoting small business. Reducing
corporate tax or reforming tax laws to benefit small business
can have a positive ripple effect on the economy by increasing
the likelihood of new venture start-ups.

3)Rural entrepreneurship problem

Lack of infrastructural facilities:

Rural areas are characterized by poor infrastructural farcicalities in the field of
roads, electricity, street lighting, road transport etc. which hampers the smooth
movement of various industrial activities. This is a major problem faced by rural
entrepreneurs.:

Financial constraints:
Most of the rural entrepreneurs face financial crunch in setting up rural industries
because of the non-supportive attitude of financial institutions and banks which
work more on papers. The procedures and conditions to avail a loan is so time
consuming that its delay often disappoints the entrepreneur. Due to this, the
entrepreneurs are forced to take credit from village money lenders who charges
exorbitant rate of interest.

Lack of technical know-how:

As rural industries are labour intensive, they cannot afford to introduce
sophisticated techniques and methods of production which is very expensive. Lack
of technical know-how, appropriate technology and training create immense
problem in the growth of rural industries. Without this, productivity and increased
profit is a distant dream.
 Marketing problems:
Marketing of rural products has not been well developed. Promotion, distribution
and implementation of customer feed-back is lacking. Rural industries cannot
compete with their urban counterparts. Dealers exploit the rural industries in the
traditional sector. Lack of proper communication facilities and marketing
information adds to the problem to large extent.

Lack of adequate knowledge and information:

Though information technology has substantially developed in the modern world
and has penetrated into the rural areas through internet, rural people hardly availed
its benefits. Because, rural people do not have adequate information avenues. They
are not knowledgeable, trained and motivated to achieve more and more in their
own sphere.:

Raw materials:
Rural industries face a tough task in procuring and storing raw materials. Since
rural industries are small they procure raw materials from middlemen at higher
prices. Lack of warehousing facilities in the rural sector also costs more towards
storing of raw materials.

Legal problems:
Rural industries need compliance of various legal formalities in obtaining the
government’s approval and license for carrying out industrial activities. But rural
entrepreneurs find it extremely difficult to comply with various legal formalities
due to sometimes complex legal provisions or illiteracy and ignorance.

Besides the above problems, lack of awareness and knowledge about the
importance of rural industries stand as a major problem before rural entrepreneurs.
Added to this another problem crops up relates to the disinterest shown by rural
people to assume rural entrepreneurship as career. The ninth plan has also sorted
out the problems of rural industries as follows:

 Inadequate flow of credit

 Use of obsolete technology, machinery and equipment
 Poor quality standards
 Inadequate infrastructural facilities.
Mark Casson Theory (Economic Theory):
Mark Casson felt that there was no established economic theory of the
entrepreneur. Except for the discipline of Economics, all the social sciences
had a definition of entrepreneur. He felt that there were two main reasons for
the non-existence of an economic theory of the entrepreneur. These reasons
were related to the limitations of the two main schools of economic thought
prevalent at that point of time. First reason was that the neoclassical school of
economics made extreme assumptions regarding the access to information.
Individuals with similar taste but with different information may take
different decisions. The entrepreneur exhibits this phenomenon. The
entrepreneur will decide in one way which would be very different from what
everyone else would decide. The entrepreneur considers that the totality of the
information available to him/her with respect to some decision is unique. The
entrepreneur’s perception of the situation has a profound influence on the
allocation of resources. The entrepreneur expects to earn profit from the
difference in perception by ‘taking a position’ vis-a-vis other people
Mark Casson suggested that unlike neoclassical assumptions in reality
transaction involves a significant resource cost. It is important for the
entrepreneur’s success that the entrepreneur minimizes the transaction cost
incurred in establishing any given volume of trade.

McClelland’s theory(achievement) of needs is one such theory that explains

this process of motivation by breaking down what and how needs are and how
they have to be approached. David McClelland was an American Psychologist
who developed his theory of needs or Achievement Theory of Motivation which
revolves around three important aspects, namely, Achievement, Power And
Affiliation. This theory was developed in the 1960’s and McClelland’s points
out that regardless of our age, sex, race or culture, all of us possess one of these
needs and are driven by it. This theory is also known as the Acquired Needs as
McClelland put forth that the specific needs of an individual are acquired and
shaped over time through the experiences he has had in life
 Dominant
Characteristics of This Person
Motivator

 Has a strong need to set and accomplish challenging goals.

 Takes calculated risks to accomplish their goals.
 Likes to receive regular feedback on their progress and
achievements.
 Often likes to work alone.
Achievement

 Wants to belong to the group.

 Wants to be liked, and will often go along with whatever
the rest of the group wants to do.
 Favors collaboration over competition.
 Doesn't like high risk or uncertainty.
Affiliation

 Wants to control and influence others.

 Likes to win arguments.
 Enjoys competition and winning.
 Enjoys status and recognition
Power
Social Change:
The word “change” denotes a difference in anything observed over some period
of time. Social change, therefore, would mean observable differences in any
social phenomena over any period of time.

Jones. “Social change is a term used to describe variations in, or modifications

of, any aspect of social processes, social patterns, social interaction or social
organisation.”

The main characteristics of the nature of social change are as follows:

(i) Social change is a universal phenomenon:
Social change occurs in all societies. No society remains completely static. This
is true of all societies, primitive as well as civilized. Society exists in a universe of
dynamic influences.

The population changes, technologies expand, material equipment changes,

ideologies and values take on new components and institutional structures and
functions undergo reshaping. The speed and extent of change may differ from
society to society. Some change rapidly, others change slowly.

(ii) Social change is community change:

Social change does not refer to the change in the life of an individual or the life
patterns of several individuals. It is a change which occurs in the life of the entire
community. In other words, only that change can be called social change whose
influence can be felt in a community form. Social change is social and not
individual.

(iii) Speed of social change is not uniform:

While social change occurs in all societies, its speed is not uniform in every
society. In most societies it occurs so slowly that it is often not noticed by those
who live in them. Even in modern societies there seems to be little or no change
in many areas. Social change in urban areas is faster than in rural areas.

(iv) Nature and speed of social change is affected by and related to time
factor:
The speed of social change is not uniform in each age or period in the same
society. In modern times the speed of social change is faster today than before
1947. Thus, the speed of social change differs from age to age.

The reason is that the factors which cause social change do not remain uniform
with the change in times. Before 1947 there was less industrialization in India,
after 1947 India has become more industrialized. Therefore, the speed of social
change after 1947 is faster than before 1947.

(v) Social change occurs as an essential law:

Change is the law of nature. Social change also is natural. It may occur either in
the natural course or as a result of planned efforts. By nature we desire change.
Our needs keep on changing. To satisfy our desire for change and our changing
needs social change becomes a necessity. The truth is that we are anxiously
waiting for a change. According to Green, ‘The enthusiastic response of change
has become almost a way of life.”