Introduction to Entrepreneurship-Definition, Nature, Development and Process

Introduction to Entrepreneurship

Definition of Entrepreneurship

Entrepreneurship is the process of creating the new venture by the entrepreneur by devoting his/her time, recognizing the business opportunity, managing the risk and uncertainties, and efficiently using the available resources; with the aim of getting monetary reward and personal satisfaction. It can also be regarded as the option of creating self-employment along with creating the jobs to others.

Who is Entrepreneur?

The word “entrepreneur” is derived from the French verb ‘enterprendre’, which means ‘to undertake’ the risk of establishing new enterprises. Entrepreneur is the one who creates its own business venture with the aim of earning wealth and personal satisfaction by bearing the risk and identifying the opportunities with the use of his/her creative ideas. In order to be competitive in a market, an entrepreneur should have strong desire and determination to establish a business and be able deal with all the uncertain risks which come into existence.

Nature of Entrepreneurship

Entrepreneurship aims for innovation, profitability, and growth along with the process of creating new ventures. It collects the resources required for the ventures and use it in efficient manner to achieve its targeted goal. Some of the common nature of entrepreneurship are as follows (Poudyal & Pradhan, 2020):

i. Establishment of new ventures

Entrepreneurship is mostly focused with establishing and operating with new business ventures. In order to establish a new venture an individual should be able to bear risk, apply his/her innovative ideas in day to day operation, and manage the resources.

ii. Innovation

Innovation simply refers to the generation of new ideas. The use of innovative ideas in business will help to stand as a strong competitor in the market. The use of robots in the restaurant as a waiter, replacing manually operating car with automation car, etc. are the example of innovation.

iii. Assumption of Risk

One of the major feature entrepreneurs should have is the ability to assume the risk. There is no business without risk. While establishing a new venture there exists the risk like; financial risk, career risk, social risk, psychological risk, and others. An entrepreneur must be able to assume such uncertain risk in order to meet its required target.

iv. Dedication and Hard work

Hard work is the key to success. Dedication and hard work are most for the development of entrepreneurship. Entrepreneurs should implement their business plan with full dedication and hard work for the success of their ventures.

v. Value Creation

Entrepreneurship involves creativity and innovation which contributes for the creation of value in business ventures. Entrepreneurs should use new concept and innovative ideas in their product and services in order to enhance their business and add value to its business and as well as stakeholders.

vi. Reaping of Rewards

One of the aims of entrepreneurship is to get the reward from its venture. The rewards can be categorized as financial reward and non-financial reward. Financial Reward involves earning profit and wealth maximization. Similarly, non-financial reward involves personal satisfaction, prestige, value in society, etc.

Development of Entrepreneurship

The stages of entrepreneurship development in the world are as follows (Hisrich, Peters, & Shepherd, 2007):

i. Earliest Period

In the earliest period, Marco Polo attempted to establish trade routes to the far-west. He signed a contract with a money person (capitalist) to sell his goods. In the contract, the merchant- adventurer took a loan at 22.5% rate including insurance. In this time capitalist was a passive risk bearer and the merchant took active part in trading. After the successful sale of goods, the profits were divided with the capitalist taking 75%, while merchant settled for the remaining 25%.

ii. Middle Ages

In the middle ages, entrepreneur was described as an actor and a person who can manage large production project. In such projects, individuals do not bear any risk. Entrepreneur in this time were cleric as they were in charge of great architectural works, such as castles, public buildings, abbeys, etc.

iii. 17th Century

In 17th Century, the reemergent connection of risk with the entrepreneurship was developed. Entrepreneurs entered into a contractual agreement with the government to perform a service or supply products that have been determined. In the contract the price was fixed and the entrepreneurs were responsible for any profit or loss of the business.

iv. 18th Century

In 18th Century, the person with capital was differentiated from the one who needed capital, i.e. entrepreneurs were distinguished from the capital provider. The reason for this differentiation was the industrialization occurring throughout the old.

v. 19th Century and 20th Century

In 19th and 20th centuries, entrepreneurs were not distinguished from managers and were viewed mostly from economic perspective. This period focused on the concept of newness and innovation.

vi. 21st Century

In 21st century, the concept of entrepreneur is further defined. The concept is based on the principles and terms from a business, managerial, and personal perspective. In this century entrepreneur is willing to face risks in a business by using their innovative ideas.

Entrepreneurial Process

The fulfillment of well-defined steps in order to establish a new venture is known as entrepreneurial process. Some of the process that should be considered for the entrepreneurial development are as follows:

i. Idea Generation

It is the beginning process of entrepreneurship. In this step, entrepreneurs identify and evaluate the business opportunities. In order to generate ideas for the business, a creative and motivated entrepreneur gets input from the various stakeholders and through close observation of the environment.

ii. Identifying opportunities

The next step after the generation of the idea is identifying the opportunities. It is required to identify the opportunity for the feasibility of the product and service; and this can be done through pilot study. If pilot study gives positive result than the further process can be proceed, otherwise new opportunity should be searched.

iii. Developing a business plan

After identifying the opportunity, business plan should be developed. Business plan shows the clear picture of future activities and outcomes. It should involve the elements like, making the elements available, source the funds, price acquisition, market research and execution of strategies in the market. This plan will help for the effective execution of business activities.

iv. Resourcing and Evaluation

The process of identifying the sources from where the financial resource and human resource can be gained is known as resourcing. Similarly, the evaluation of the project is done on the basis of resources availability, profitability, risk and uncertainty, potentiality, etc. for the investment decision. If the evaluation appears to be feasible and the resources is acquired then an entrepreneur can start a new business.

v. Starting the business

It is the process of implementing the business plan in action. If the entrepreneur realizes his/her new venture is feasible and profitable and identify the source of the resources s/he requires in the project, then s/he will start the business.

vi. Management and Control

It is the final step of entrepreneurial process. When all the resources are arranged, an entrepreneur should provide proper guidance and instruction to its employees for the implementation of plan. S/he should form proper organizational structure with proper delegation of authority along with the rules and regulations. On a certain period of time, it is necessary to measure the actual performance with the planned performance and take corrective action if there is deficiency in actual performance.

Ethics and Responsibility of Entrepreneurs

The set of rules, regulations, and moral principles which is determined on the basis right or wrong for guiding an individual’s behavior is known as ethics. In order to sustain in a market as strong competitor, an entrepreneur should maintain its entrepreneurial ethics. Entrepreneurial ethics can be defined as the standard of norms, values and behavior which guides the entrepreneurs in their work with justice. In the process of conducting business activities, entrepreneurs should fulfill the laws and regulations amended by the government, follow the social standards, work as per the interest of its stakeholders, and so on. If s/he does not work ethically his/her long earned fame will fall down in a moment. Previously, the ‘gudpak bhandar’ of newroad was very famous for its product. But now, because of their unethical practice of adulteration in its product has shown them downfall in their business. Some of the significance of entrepreneurial ethics are as follows:
i. Promotes Goodwill
ii. Helps in improving work environment
iii. Promotes fair competition
iv. Less government interference

Responsibility of Entrepreneurs

Some of the responsibilities of entrepreneurs are as follows:

i. Serve the Consumers: Entrepreneurs should serve the customers with qualitative goods and services in time. They should provide the service in ethical manner by avoiding unfair practices and sell the products in fair price.
ii. Create value for the Investors: Entrepreneurs should create value for the investors by maximizing the wealth and providing them with the fair and regular return
iii. Payment of tax: It is necessary to pay the value added tax, custom duty, income tax, etc. to the government by the entrepreneur in order maximize the government revenue; which ultimately contributes for economic development.
iv. Welfare to employees: The entrepreneurs should ensure welfare to its employees by providing them with job securities, financial incentives, and providing with good working environment.
v. Protect Environment: While conducting the business activities, entrepreneurs should take necessary precautions for the safety and protection of the environment.
vi. Generate Employment Opportunity: Entrepreneurs are the job creators. They must generate employment opportunity to the various manpower on the basis of their skills and qualification; in order to reduce the rate of unemployment in the nation.

Promoting Entrepreneurship in Nepal

There are some government, semi-government and non-government institutions that promotes entrepreneurship in Nepal by providing financial and logistic support. Its main aim is to support for establishment and operation of business entities. The supporting agencies of Nepal is classified into two categories i.e. government agencies and specialized and consultancy agencies (Poudyal & Pradhan, 2020).

i. Government Agencies

This agency enacts various laws, rules, and regulations for running the business activities in a systematic manner for the development of a country. It involves ministry, departments and institutions that provide logistic support for the development of entrepreneurship. The government agencies that support entrepreneurship development are as follows:
• Ministry of Industry, Commerce and Supplies
• Department of Industry, Commerce & Supplies
• Department of Cottage and Small Industries
• Office of the Company Registrar
• Nepal Bureau of Standards and Metrology

ii. Specialized and Consultancy Agencies:

There are some government and non-government institutions that are specialized and consultancy agencies, which have been playing important role for the promotion of entrepreneurship in the nation. The following are some of the specialized and consultancy agencies:
• Nepal Industrial Developed Corporation
• Industrial District Management Limited
• National Productivity& Economic Development Centre
• Industrial Promotion Board
• Nepal Tourism Board
• Investment board of Nepal
• Trade and Export Promotion Centre

Bibliography

Hisrich, R. D., Peters, M. P., & Shepherd, D. A. (2007). Entrepreneurship. New Delhi: Tata McGraw-Hill Publishing Company Limited.
Poudyal, S. R., & Pradhan, G. M. (2020). Fundamentals of Entrepreneurship. Kathmandu: Advanced Saraswati Prakashan.

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Smirti

(Founder of Management Notes)
MBA,BBA.

I am Smirti Bam, an enthusiastic edu blogger with a passion for sharing insights into the dynamic world of business and management through this website.

I hold a MBA degree from Presidential Business School, Kathmandu, and a BBA degree with a specialization in Finance from Apex College,

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Introduction to Entrepreneurship – Definition, Nature, Development and Process | Fundamentals of Entrepreneurship