90  Entrepreneurship Development

90.1 Concept

Entrepreneurship = the process of designing, launching and running a new business by identifying opportunities and bearing the risk. Joseph Schumpeter (1934) — entrepreneur is an “innovator who carries out new combinations”. Peter Drucker — entrepreneur shifts resources to higher-yield areas. Howard Stevenson (HBS) — “pursuit of opportunity beyond resources currently controlled”. Richard Cantillon (1730) — first formal use of “entrepreneur”.

90.2 Evolution of Thought

TipThinkers on entrepreneurship
Thinker Contribution
Cantillon (1730) Risk-bearer
J.B. Say (1803) Coordinator of factors
Knight (1921) Bears uncertainty (vs risk)
Schumpeter (1934) Innovator — creative destruction
Kirzner (1973) Alertness to opportunities
Drucker (1985) Purposeful innovation
McClelland (1961) High need for achievement
Stevenson (HBS) Pursuit of opportunity beyond resources

90.3 Functions of an Entrepreneur

TipFunctions
  • Opportunity identification.
  • Innovation.
  • Risk-taking / Uncertainty-bearing.
  • Resource organisation.
  • Decision-making and leadership.
  • Wealth creation.
  • Employment generation.
  • Catalyst of economic growth.

90.4 Types of Entrepreneurs

TipTypes
  • Innovative — Schumpeter’s archetype.
  • Imitative / Adoptive — copy existing ideas.
  • Fabian — cautious, change reluctantly.
  • Drone — resist change.
  • Solo / Active / Inventor / Buyer / Lifestyle / Serial / Social / Tech / Net / Hi-tech / Lifestyle.
  • Necessity-driven vs Opportunity-driven (GEM).
  • Intrapreneur — within an organisation (Pinchot 1985).
  • Social entrepreneur — solve social problems (Bornstein, Yunus).
  • Eco / Green entrepreneur.
  • Women / Rural entrepreneur (Topic 91).
  • Cultural entrepreneur.

90.5 Theories of Entrepreneurship

TipTheories of entrepreneurship
  • Economic: Schumpeter (innovation), Cantillon (risk), Kirzner (alertness).
  • Sociological: Max Weber (Protestant ethic), Hagen (withdrawal of status), Cochran (cultural).
  • Psychological: McClelland (n-Ach), Rotter (locus of control), Pavlov, Hornaday.
  • Resource-Based / RBV — entrepreneurial resources.
  • Effectuation — Sarasvathy (2001) — means-driven, affordable loss.
  • Bricolage — Baker-Nelson (2005).
  • Lean Startup — Eric Ries (2011) — build-measure-learn.
  • Effectuation vs Causation.

90.6 McClelland’s n-Achievement

David McClelland (1961) in The Achieving Society: countries’ growth correlated with n-Ach in folktales / literature. Entrepreneurs have high n-Ach + moderate n-Power + low n-Affiliation.

90.7 Entrepreneurial Process

TipEntrepreneurial process — Bygrave-Hofer
  1. Idea / Opportunity recognition.
  2. Feasibility analysis.
  3. Business plan.
  4. Resources — capital, team.
  5. Launch.
  6. Growth / Harvest / Exit.

90.8 Entrepreneurship Development Programmes (EDPs)

TipEDPs
  • Launched in India by Gujarat Industrial Investment Corp 1970.
  • EDII (Ahmedabad) — Entrepreneurship Development Institute of India, est 1983.
  • NIESBUD — National Institute for Entrepreneurship & Small Business Development.
  • IIE (Guwahati).
  • MSME Development Institutes.
  • NSIC, KVIC.
  • Stages: Identification → Selection → Training → Counselling → Post-training follow-up.

90.9 Indian Entrepreneurship Ecosystem

TipIndia ecosystem
  • Startup India 2016 — DPIIT-led; tax holidays for 3 years in 10; self-certification.
  • Stand Up India 2016 — SC/ST/Women.
  • Mudra Yojana 2015 — Shishu, Kishor, Tarun.
  • Atal Innovation Mission — Niti Aayog.
  • iSTART, Atal Tinkering Labs.
  • MeitY’s Startup Hub.
  • Funds: SIDBI Fund of Funds ₹10,000 Cr.
  • Top startup hubs: Bengaluru, Delhi-NCR, Mumbai, Hyderabad, Pune, Chennai.
  • Unicorns: India had 100+ unicorns (3rd globally) — Flipkart, Paytm, OYO, Byju’s, Zerodha, Razorpay, Swiggy, Zomato, Nykaa, Mamaearth, Lenskart, PhonePe.
  • Indian Schools: ISB Hyderabad, IIM-Bangalore NSRCEL, IIT-Madras IITMRP, T-Hub Hyderabad.

90.11 Practice Questions

Q 01SchumpeterMedium

"Entrepreneur as innovator" is by:

  • ASchumpeter
  • BDrucker
  • CCantillon
  • DKnight
View solution
Correct Option: A
Schumpeter 1934.
Q 02McClellandMedium

Entrepreneurs have high need for:

  • AAchievement
  • BAffiliation
  • CConformity
  • DSecurity
View solution
Correct Option: A
McClelland's n-Ach.
Q 03EDIIMedium

EDII is located at:

  • AAhmedabad
  • BNew Delhi
  • CMumbai
  • DGuwahati
View solution
Correct Option: A
Entrepreneurship Development Institute of India, Ahmedabad (1983).
Q 04Startup IndiaEasy

Startup India was launched in:

  • A2016
  • B2014
  • C2018
  • D2020
View solution
Correct Option: A
16 January 2016.
Q 05EffectuationHard

Effectuation theory is by:

  • ASaras Sarasvathy
  • BDrucker
  • CRies
  • DStevenson
View solution
Correct Option: A
Saras Sarasvathy (2001).
Q 06Lean StartupMedium

Lean Startup is by:

  • AEric Ries
  • BSteve Blank
  • CPinchot
  • DSarasvathy
View solution
Correct Option: A
Eric Ries (2011).
Q 07KnightHard

Knight (1921) distinguished entrepreneur as bearer of:

  • AUncertainty
  • BRisk
  • CProfit
  • DWage
View solution
Correct Option: A
Frank Knight — uncertainty (un-measurable) vs risk.
Q 08MudraEasy

Mudra Yojana stages are:

  • AShishu · Kishor · Tarun
  • BSmall · Medium · Large
  • CA · B · C
  • DBronze · Silver · Gold
View solution
Correct Option: A
PMMY 2015.
Q 09CantillonHard

"Entrepreneur" first used by:

  • ARichard Cantillon (1730)
  • BSay
  • CSchumpeter
  • DDrucker
View solution
Correct Option: A
Cantillon.
Q 10KirznerHard

Entrepreneur as "alert opportunity-spotter" is by:

  • AIsrael Kirzner
  • BSchumpeter
  • CMcClelland
  • DKnight
View solution
Correct Option: A
Kirzner (1973).
Q 11DroneMedium

Entrepreneurs who resist change are:

  • ADrone
  • BInnovative
  • CFabian
  • DImitative
View solution
Correct Option: A
Drone (Clarence Danhof typology).
Q 12Stand Up IndiaEasy

Stand Up India targets:

  • ASC/ST and Women
  • BTech only
  • CNRI startups
  • DForeign founders
View solution
Correct Option: A
Stand Up India 2016.
Q 13SIDBIMedium

"Fund of Funds for Startups" is managed by:

  • ASIDBI
  • BNABARD
  • CRBI
  • DSEBI
View solution
Correct Option: A
SIDBI Fund of Funds ₹10,000 Cr.
Q 14DruckerMedium

"Innovation and Entrepreneurship" (1985) is by:

  • APeter Drucker
  • BSchumpeter
  • CMcClelland
  • DDrucker-Stevenson
View solution
Correct Option: A
Drucker 1985.
Q 15MatchHard

Match:

(i) Innovation (a) Kirzner
(ii) Alertness (b) Schumpeter
(iii) n-Ach (c) Sarasvathy
(iv) Effectuation (d) McClelland
  • A(i)-(b), (ii)-(a), (iii)-(d), (iv)-(c)
  • B(i)-(a), (ii)-(b), (iii)-(c), (iv)-(d)
  • C(i)-(d), (ii)-(c), (iii)-(a), (iv)-(b)
  • D(i)-(c), (ii)-(d), (iii)-(b), (iv)-(a)
View solution
Correct Option: A
Innovation—Schumpeter; Alertness—Kirzner; n-Ach—McClelland; Effectuation—Sarasvathy.

90.11.1 Advanced Format Questions

AR 1Assertion-ReasonHard

A: Schumpeter saw entrepreneurs as innovators.
R: They drive "creative destruction" by introducing new combinations.

  • ABoth true; R explains A
  • BBoth true; R does not explain A
  • CA true, R false
  • DA false, R true
View solution
Correct Option: A
S 1Statement-basedMedium

Theories: (i) Schumpeter (innovation). (ii) Kirzner (alertness). (iii) McClelland (n-Ach). (iv) Sarasvathy (effectuation).

  • AAll four
  • B(i) and (ii) only
  • C(iii) and (iv) only
  • D(i) only
View solution
Correct Option: A
S 2Statement-basedHard

India schemes: (i) Startup India (2016). (ii) Stand-Up India (2016). (iii) PMMY (2015). (iv) AIM.

  • AAll four
  • B(i) and (ii) only
  • C(iii) and (iv) only
  • D(i) only
View solution
Correct Option: A

90.12 Quick Recall

ImportantQuick recall
  • Thinkers: Cantillon (1730 risk) · J.B. Say (coordinator) · Knight (uncertainty 1921) · Schumpeter (innovator 1934) · Kirzner (alertness 1973) · Drucker (1985) · McClelland (n-Ach 1961) · Stevenson (opportunity beyond resources).
  • Functions: opportunity · innovation · risk · resources · decisions · wealth · jobs.
  • Types: Innovative · Imitative · Fabian · Drone (Danhof); Necessity vs Opportunity (GEM); Intrapreneur (Pinchot 1985); Social (Yunus, Bornstein); Eco; Women; Rural.
  • Theories: Economic (Schumpeter, Cantillon, Kirzner); Sociological (Weber, Hagen); Psychological (McClelland, Rotter); RBV; Effectuation (Sarasvathy 2001); Bricolage (Baker-Nelson 2005); Lean Startup (Ries 2011).
  • Process (Bygrave): Idea → Feasibility → Plan → Resources → Launch → Growth/Harvest.
  • EDP institutions: EDII Ahmedabad (1983) · NIESBUD · IIE Guwahati · MSME-DI · NSIC · KVIC.
  • India: Startup India 2016 · Stand Up India 2016 · PMMY Mudra 2015 (Shishu/Kishor/Tarun) · Atal Innovation Mission · SIDBI FoF ₹10,000 Cr.
  • Unicorns: 100+ — Flipkart · Paytm · OYO · Byju’s · Zerodha · Razorpay · Swiggy · Zomato · Nykaa · Mamaearth · Lenskart · PhonePe.
  • Modern: VC (Peak XV ex-Sequoia, Accel, Nexus, Blume, Kalaari); Angel networks (IAN, Mumbai Angels); bootstrapping; crowdfunding; Lean Startup, Customer Dev (Blank); pivot; DPI advantage; Gen-AI · climate · women-led · tier-2/3 hubs.