Need for Entrepreneurship – Explanation
Entrepreneurship as a discipline does not have any real definition. Some scholars accept the study as business formation while others highlight it as an entrepreneurial opportunity that recognises dimension.
The definition of entrepreneurship is viewed as a change, this includes other values other than the economic ones. Narrower definitions of entrepreneurship are described as the process of designing, launching and running a new business.
Entrepreneurship and Management are closely related terms in business, there is a definite difference between both these processes. In this article, you will learn more about these two terms.
Entrepreneurship and Management Entrepreneur
Management talks about the span of organizational studies. Simply speaking, management explains each aspect of the organization which discusses the organization and coordinates the activities to achieve a destined set of objectives. Harold Koontz, the great scholar, highlighted management as the art which talks about how to achieve the things done by people. He also pointed out the importance of formal groups in this process.
Thus, the management discusses the overall organizational function which is to achieve the desired objectives. This also tells that the interconnection between management and entrepreneurship is a set because the entrepreneurship proceeds to the management level. In general, entrepreneurship features the business creation whose management is required to target the objectives of an entrepreneurial venture.
Entrepreneurship and its Scope
The scope of entrepreneurship is far-reaching.
Entrepreneurship moves even beyond the closed system of an enterprise.
Entrepreneurship in its capacity stimulates the economy which enables societal change not only for fulfilling a need but also to generate revenue for the entrepreneur, entrepreneurship thus provides jobs for the society and develops communities.
Entrepreneurship instigates a lot more than the mere creation of business.
Entrepreneurship promotes the new business and provides opportunities to improve the new business sectors.
In the long back, when washing machines were not invented, women had to spend their time washing clothes without energy resources or water resources. This once inspired a new company to sell low energy washing machines. This would save time which in turn utilised the extra time to educate themselves.
Need of Entrepreneurship
The need for entrepreneurship is detailed down in the following section:
Passion, Perseverance & Persistence
Passion is a strong and uncontrollable emotion that is based on something higher to achieve than what the person is carrying within himself. Perseverance is a mature emotion that comes through experiences gathered and analysed. While persistence is the sail that will row the boat of an entrepreneur through the toughest of climates.
Big Dreamer
Dreaming big further strengthens an entrepreneur with his ability to dream and see the wide picture. This is the very first step that sets the path to self-discovery.
Learning
Learning is never to stop irrespective of age and thus arming oneself with education does play a vital role in forming leadership qualities when needed.
Good Listener
The ability to contribute will only come once we have abundance in ourselves, and this comes by absorbing the words of others. The ability to truly listen to the customers and employees is actually what makes a difference. This very skill leads to a successful venture.
Financing Partner
Choosing a financing partner who understands the business needs is very much essential. This is as critical as choosing the business which the entrepreneur wants to pursue. Also, a business loan from the right lender will for sure play a pivotal role in realizing the dreams of becoming a successful entrepreneur.
Role of an Entrepreneur in the Process of Nation-Building
Entrepreneurs play a very important role in the process of nation-building, especially in a developing country like India. entrepreneurs start many entrepreneurial ventures which in turn hire many people thereby giving them employment, livelihood and vocational opportunities. These people earn money in the form of salaries, wages, stipends, etc. Also, entrepreneurs borrow money from banks, shareholders, investors, etc. who earn interest, dividends, profits, etc. All this money is indirectly used in the economic development of the nation. Thus entrepreneurs facilitate the economic development of the nations. And economic development is a very important component of nation-building.
Conclusion
After reading this article we understand the meaning of entrepreneurship, its scope, the various roles played by an entrepreneur and what are the needs of an entrepreneur. Apart from this, you will also learn about the crucial role entrepreneurs play in the process of nation-building and economic development.
Reading this article will help you get your basics clear on the topic and you can study advanced leveled concepts related to entrepreneurship in the future. Reading this article will help Class 11 and Class 12 students to come out with flying colors in their respective exams.
FAQs on Why Entrepreneurship Is Necessary for Economic Growth
1. Why is entrepreneurship fundamentally necessary for the economic growth of a country?
Entrepreneurship is necessary for economic growth because it acts as a primary engine for innovation, job creation, and capital formation. Entrepreneurs identify unmet needs in the market and introduce new products, services, and technologies. This process not only generates employment opportunities but also increases competition, enhances productivity, and contributes directly to the Gross Domestic Product (GDP), leading to an overall improvement in the standard of living.
2. What are the key ways entrepreneurship boosts a nation's economy?
Entrepreneurship boosts a nation's economy in several significant ways:
- Job Creation: New ventures require manpower, directly reducing unemployment rates.
- Capital Formation: Entrepreneurs mobilise public savings and convert them into productive investments for their ventures.
- Innovation and New Technology: They introduce new goods, services, and more efficient production methods, driving industrial progress.
- Balanced Regional Development: By setting up enterprises in less-developed areas, entrepreneurs help reduce regional economic disparities.
- Increase in Per Capita Income: The creation of wealth and employment leads to a higher per capita income for the population.
- Growth of Ancillary Industries: The success of one enterprise often leads to the growth of other businesses that support it, creating a ripple effect in the economy.
3. How does entrepreneurship specifically contribute to the economic development of India?
In India, entrepreneurship is a critical driver of economic development by promoting self-reliance and leveraging the country's demographic dividend. Entrepreneurs contribute by starting ventures that align with national initiatives like 'Make in India' and 'Start-up India'. They help in commercialising indigenous technology, reducing import dependence, increasing exports, and creating businesses that solve local problems, thereby fostering sustainable and inclusive growth across various sectors.
4. What are the primary roles of an entrepreneur in a developing economy?
In a developing economy, an entrepreneur plays multiple critical roles. They act as an agent of change by identifying and exploiting new opportunities. Their primary roles include mobilising capital, generating immediate large-scale employment, promoting balanced regional growth by establishing industries in backward areas, and contributing to the national exchequer through taxes. They also help build the country's export capabilities, bringing in valuable foreign exchange.
5. Beyond just starting a business, what does 'entrepreneurship' mean in the context of economic development?
In the context of economic development, entrepreneurship is much more than just starting a business. It is a dynamic process of creating incremental wealth by identifying opportunities, taking calculated risks, and combining resources in innovative ways. It involves a continuous search for change, responding to it, and exploiting it as an opportunity. This process disrupts existing market equilibrium and creates a new, higher-level equilibrium, which is the essence of economic progress.
6. How are entrepreneurship and management related yet distinct concepts in business?
While related, entrepreneurship and management are distinct. Entrepreneurship is about innovation, opportunity-seeking, and risk-taking to create a new venture. Its focus is on starting and building. Management, on the other hand, is about optimisation, efficiency, and administration to run an existing venture smoothly. An entrepreneur is the one who creates the business, while a manager is the one who maintains and grows it. Effective ventures require both strong entrepreneurial vision and sound managerial execution.
7. Why is entrepreneurship often described as a process of 'creative destruction'?
The term 'creative destruction', coined by economist Joseph Schumpeter, describes how entrepreneurship fuels economic progress. Entrepreneurs introduce new innovations (the 'creative' part) that displace older, less efficient technologies, products, or business models (the 'destruction' part). For example, the rise of digital streaming services disrupted the traditional DVD rental industry. This constant cycle of destroying the old to make way for the new is what drives long-term economic growth and improves efficiency.
8. What is the difference between a conventional business owner and an entrepreneur in terms of economic impact?
The key difference lies in the element of innovation and scale of impact. A conventional business owner typically operates within an existing market with an established business model, focusing on operational efficiency and profit. Their economic impact is often linear and localised. An entrepreneur, however, introduces a new product, process, or market. Their focus is on disruptive innovation and high growth, creating new value chains and potentially transforming entire industries, leading to a more significant, non-linear economic impact.
