Entrepreneurship and its Impact on Economy

This assignment delves into the world of entrepreneurship, examining various types of ventures and their profound influence on economic growth at local, regional, and national levels. It analyzes how entrepreneurship contributes to GDP, per capita income, and overall societal development. The study also explores the essential characteristics, traits, and skills required for entrepreneurial success, emphasizing that entrepreneurship is a learned endeavor rather than an innate talent.

UNIT 9
ENTREPRENEURSHIP

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Types of entrepreneurial ventures and their effects on typology of entrepreneurship.........1
P2. Differences and similarities between entrepreneurial ventures............................................3
TASK 2............................................................................................................................................5
P3. Impact of micro and small businesses on economy..............................................................5
P4. Contribution of small businesses and new start-ups to the growth of social economy........6
TASK 3............................................................................................................................................8
P5. Different characteristics, traits and skills of successful entrepreneurs.................................8
P6. Entrepreneurial motivation and mind-set............................................................................10
TASK 4..........................................................................................................................................12
P7. Examining background and experiences that can foster entrepreneurship.........................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Entrepreneurship refers to willingness of developing, organising and managing a venture
along with taking all the risk that is associated with that business venture. The main purpose of
any entrepreneur is profit making. Starting a business is an obvious example of entrepreneurship.
in the present report, types of different entrepreneurial ventures has been discussed along with
their effect on typology of entrepreneurship. Types of different ventures can be similar to each
other in some contexts and can also be different from each other in other aspects. Such
differences and similarities have also been focused in this report. A critical part of
entrepreneurship is small businesses and new start-ups, their impact on the growth of economy is
crucial which is also explained below along with characteristics, traits and skills of successful
entrepreneurs that make them different from the business managers.
TASK 1
P1. Types of entrepreneurial ventures and their effects on typology of entrepreneurship
Entrepreneurial ventures are different in their nature, size and scope. The different types
of entrepreneurial ventures are:
 Corporate entrepreneurship
 Small business entrepreneurship
 New start-ups entrepreneurship
 Social entrepreneurship Public sector Entrepreneurship
Corporate Entrepreneurship:
These are those ventures where entrepreneurial activities are carried out in large
corporations and have infinite life cycles (Bae, Qian, Miao and Fiet, 2014). Main factor that
affects the growth of these ventures are innovation and new products offering. Factors like new
technologies, change in customer taste, increasing competition forces the companies for more
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innovation and production of new products for attracting new customers and for expanding to
new market.
Small business Entrepreneurship:
The most growing sector in any economy is small business entrepreneurial ventures.
There are approx 5.8 million small businesses in UK. Examples of small business entrepreneurial
ventures are travel agents, small grocery stores, salons, electricians, etc. These ventures are
barely profitable. Main motive of these ventures is to earn enough so that they can feed their
family and can earn profit (Bhachu and et.al., 2017). They do not focus on undertaking an
industry. They raise funds through their savings, friends or small bank loans.
New start-ups entrepreneurship:
These ventures are not like small business entrepreneurship. These starts at a little larger
scale by starting a company with a mission and vision to change the world. For the purpose of
funding these ventures, entrepreneurs raise funds through attracting investors and venture
capitalists.
Social Entrepreneurship:
As the name suggest, these ventures work for the social welfare and growth. The focus of
these entrepreneurs is on innovation and creation of new products and services that can help in
solving the needs and problems of society. Their main aim is to make the world a better place to
live in. Mostly these work as not for profit organisations.
Public sector entrepreneurship:
These ventures include those activities that are carried out by state owned enterprises or
government linked companies. Mostly these organisations are formed under nation's
privatization programme. These ventures work to serve their services to public.
Entrepreneurship causes effect to economy. More the industry grows, more is the growth
of economy, it is directly associated with the development of industry (Bruton, Khavul, Siegel
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and Wright, 2015). Types of entrepreneurship can be different on different basis. For example on
the basis of capital ownership, types of entrepreneurship can be private, state and joint
entrepreneurs; on the basis of technology, it can be technical, non-technical and professional
entrepreneurs; etc. typologies of entrepreneurship is based on modes or objectives of ventures.
P2. Differences and similarities between entrepreneurial ventures
Similarity:
 The only similarity between all the entrepreneurial ventures is to obtain success
and achieve their organisational goals and objectives.
 These objectives and goals can be achieved by creating value for their companies.
Even the organisational goals and objectives are different of different
entrepreneurial ventures.
 All the entrepreneurs whether from any business venture just want to achieve their
goals.
 Other similarities includes taking of decisions for short term as well as long term.
 The primary mission of all the entrepreneurs is to create economic value along
with tangible social value.
 All the types of ventures are passion-centric and mainly focuses on bringing
innovation to their business in order to successfully attain their objectives.
 Entrepreneurial ventures starts with limited resources and planning to conduct
their business operations (Chaston, 2017).
 All the types of venture provide employment opportunities to the economy.
 Another similarity among all the ventures is that they all have to pay tax to the
government at specified percent of rate.
There are many differences in entrepreneurial ventures in comparison to similarities:
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BASIS CORPORATE
SECTOR
COMPANIES
SOCIAL
ENTREPRENEURSHIP
PUBLIC
ENTREPRENEURSH
IP
Ownership These are owned by
individuals or group of
individuals.
Individuals or group of
individuals on behalf on
public.
These organisations are
owned by state
government or central
government or jointly.
Purpose Main purpose of
corporate sector
companies is profit,
growth and market
share maximisation.
Main purpose of these
ventures is to work for the
social welfare of society
and community.
Main purpose of these
ventures is to increase
profit along with
providing better
services to public at
economic rates.
Size These are large sized
companies mainly
operating in different
countries.
These are small sized
organisation mainly
operates for providing
services to single class of
public.
These can be both
either small or large
sized organisations
depending on the
purpose and nature of
the business.
Scope wide small wide
Decision taking The process of decision
taking is mainly in the
hands of board of
directors or through
ordinary resolution of
share holders.
Decision taking is done by
the members those are
handling social issues.
In these ventures
decisions are mainly
taken by the
government in charge.
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Functions Corporate companies
mainly functions for the
betterment and growth
of its stakeholders.
These organisations
function for the betterment
of community and society.
Theses ventures
functions on behalf of
government and to
serve public.
risk These companies have
high risk as purposes of
many stakeholders are
associated with
operations of the
company.
Very low risk is associated
with these organisations.
These generally operate
upto a certain level of
funds which they received
by way of donations.
All the risk associated
with these organisations
is borne by government.
TASK 2
P3. Impact of micro and small businesses on economy
Small and micro businesses are critical and major contributor towards the growth and
strength of local as well as global economy. Although, these businesses does not generate money
as much as large companies but their contribution for the betterment of economy is high. These
businesses are vital for the success of economy. Small businesses are in fact the main building
blocks of large companies that exist today. Following are the positive impacts off small and
micro businesses on economy and society of a country:
Economic Growth: Starting a small business does not mean it will remain small even after
couple of years. Most of the small businesses show a high growth in few years after
commencement. Businesses having an objective of reaching worldwide tend to initially establish
themselves in local economy and continue their contribution to the prosperity of economy.
Mapping the future: Small businesses in order to grow mainly focuses on inducing innovation to
their operations, this is the major way by which small businesses contributes towards the
economy. They trend to attract individuals who have new ideas about inventing a new product or
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improvising the existing products. Technological industries are the best example of this as all the
large tech companies are approaching for new and fresh talent. Even Microsoft Company has
grown out of a garage.
Employment opportunities: Small businesses provide employment opportunities in the local
economy at a high rate. Usually large corporations seek for experienced and skilled employees
on the other hand small businesses are the one who provide employment opportunities to freshers
(Drucker, 2014). An employee will be experienced only if he/she will get an employment
opportunity, small businesses plays vital role in providing such opportunities.
Adaptability to changing economic climate: Micro and small businesses have a capability of
quickly responding and adopting changes in the economy. The reason behind this is these
businesses are customer oriented. Customer oriented business tend to increase loyalty among
their customers and so customers stick on to these businesses at the time of economic crisis.
Loyalty of small businesses further increases the strength of the economy.
Small businesses plays vital role in making the country great and their contribution to the
growth of economy and positive impacts on the community is easily visible. Therefore, it can be
said that an economy grows with the growth of small businesses.
P4. Contribution of small businesses and new start-ups to the growth of social economy
Small businesses and new start ups have a great influence on the social economic growth
and standard of living of the country. These businesses actually do a lot for community, region,
state and country then just providing for themselves and their family. Following are the
important roles that small and start-ups entrepreneurial ventures plays in the social economic
development of the country:
Wealth Creation and sharing: Establishing a business involves investment of own
resources as well as attracting funds from public and investors. This results in mobilization of
public wealth and also allows the public to get benefits from the success of growth of these
entrepreneurial ventures (Fayolle and Gailly, 2015). Creating wealth and distributing profits to
the public is one of the key imperative for the development of economy.
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Balanced regional development: New businesses and industries are mostly established in
less developed and backward areas that facilitates regional development. Growth of these
businesses and industries in backward areas leads to the improvement of infrastructure like stable
electricity, water supply, roads, schools, hospitals, etc. These businesses also provide direct and
indirect employment opportunities in these underdeveloped and backward areas.
GDP and per capita income: Small businesses and new start ups provides highest
employment opportunities than any other entrepreneurial ventures and also shares almost one
third towards the GDP of the country. More the establishment of these ventures more is the use
of resources like labour, capital, land etc. in order to develop and produce new products and
services that ultimately adds to the national income, per capita income and national product of
the country (Garci, Leles and Romano, 2017). Hence, the effective growth of GDP and per capita
income is one of the major goal of economy development.
Standard of living: For the purpose of social economic development, improvement in the
standard of living of people is another key goal. Entrepreneurs by establishing new ventures play
an important role in increasing and improving the standard of living of people and community.
This happens by creating new job opportunities along with adopting innovations and changing
technology that ultimately leads to improvement in the quality of life of their related stakeholders
including employees, customers, suppliers, etc.
Community Development: For the purpose of economic development, community
development is essential. Development of community takes place only if there is better
infrastructure for education institutions, training institutions, health care organisations and other
public services entities. As, high skilled and high educated entrepreneurs are required in order to
start and set-up new business ventures. Better education and training institutes enables to pool
skilled and educated entrepreneurs.
Exports: Every business in order to grow would like to expand their business outside the
country borders. Therefore, they eventually want to initiate exports of their products and services
to the foreign markets. This leads to the access of bigger markets and also initiates currency flow
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which in turn leads to development of social economy. Exports of products and services also
helps in maintaining stable revenue even in the times of downturn in local economy.
TASK 3
P5. Different characteristics, traits and skills of successful entrepreneurs
Being a successful entrepreneur is not an easy task. Entrepreneurs are not born, they are made.
What make a person a successful entrepreneur is their skills, traits and characteristics. Though
there are many entrepreneurs but not all are successful and neither all are created with the same
blueprint. All the entrepreneurs comes from different background, educational levels, social
values and income brackets (Glaeser, Kerr and Kerr, 2015). From the below mentioned
characteristics and traits successful entrepreneurs differs from business managers:
Full determination: Setting of clear goals are required along the way to become an
entrepreneur this includes expanding and growing business, hiring new employees, increasing
sales volume, etc. All these micro goals must be implemented and executed successfully. This
leads to increase in workload of entrepreneurs which ultimately stops many from pursuing the
path of entrepreneurship. Therefore, in order to become a successful entrepreneur, a person need
to be determined regarding the achievement of its business goals and objectives. On the other
hand managers carry out the operations that are ordered by their employers which only requires
determination upto the level of completing such orders.
Risk taking: Another characteristic that all the successful entrepreneurs entail is risk
taking factor. No business can grow until and unless risk is taken. It is said more the risk more
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are the returns. Mostly risk is related to the financial risk but practically financial risk is not the
only risk in the path of becoming entrepreneur. The main risk that is associated with successful
entrepreneur is initial investment (Kirzner, 2015). In order to start a venture a high amount of
investment is required. Persons who have ability to take risk and can invest a huge amount have
a greater chance to become a successful entrepreneur. While, risk taking is not at all associated
with the business managers. All the risk is borne by their employers.
High level of Confidence: Having a high level of confidence in entrepreneurs enables
them to get the job done very easily and effectively. Confidence is something that keeps u going
and work hard even in the situations of downturns in order to attain goals and objectives. For
being a successful entrepreneur self confidence is the greatest factor. On the other hand
managers need to be confident only for the tasks they doing.
Passionate about business: Being passionate about the business drives determination to
work hard. Passion is something that is required to undergo any activity efficiently. Passion also
helps in enjoying the work and does not makes you feel pressurised about the work.
Money Management: In order to become a successful entrepreneur, one must be able to
manage his most important resource that is money. Money management is the first thing that
should be highly focused. Having a huge amount of investments and funds for further operations
doesn’t take business to heights until and unless the art of money management is there (Morris,
2015). Managers on the other hand need not to worry about money management as they are
allotted with the fixed amount of budget for performing a particular task.
Communication skills: Another important trait that a successful entrepreneur needs to
have is a good communication skills. Running a business involves communicating with different
groups of people including, employees, clients, suppliers and all the other stakeholders. Through
good communication skills, an entrepreneur can make understand the people his requirements
and needs. Managers also need to have a good communication skill but their scope is less than
the entrepreneur, they only need to communicate with their sub-ordinates and upper
management.
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P6. Entrepreneurial motivation and mind-set
Entrepreneurs are all different in terms of personality, interest, carrier goals therefore they all
have a different entrepreneur mindset that contributes to their success. Entrepreneurs developed
such mindsets through their personality and the experiences from the field they have chosen to
work. Entrepreneurial motivation and mindsets are the combination of both personal
characteristics and cognitions. Characteristics include demographics (e.g. gender, race,
education, experiences) as well as competencies (e.g. organizational skills, technical skills,
industry skills) and traits (e.g. tenacity, passion, vision, self-efficacy, personality, regulatory
focus, need for achievement, locus of control, implicit theories). Cognition includes pattern
recognition, decision making styles, perception and heuristics (Schaper, Volery, Weber and
Gibson, 2014). Among all these entrepreneurial personality and characteristics the most
commonly explored constructs that reflects in entrepreneurial motivation and mind sets are as
follow:
1. Need for achievement
2. Risk taking
3. Tolerance for ambiguity
4. Locus of control
5. Self efficacy
6. Self confidence
Need for achievement: Need for achievement or achievement motivation is the most widely
cited characteristic of entrepreneur. High level of achievement motivation will produces more
energetic entrepreneurs who in turn, produce more rapid economic development. Such an
assertion that achievement motivation is the psychological moderator between Protestantism and
economic growth is thought to have ignited the search for the “personality characteristics’ of the
successful entrepreneur.
Risk taking: Risk propensity is the perceived probability of receiving the reward associated
with success of a proposed situation, which is required by an individual before he/she will
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subject to the consequences associated with failure. Risk propensity represents an individual’s
orientation towards taking chances in a decision making scenario. Risk propensity is more a
characteristics of an individual than their situation. Low risk propensity tended to drive
entrepreneurs to view business situations more positively.
Tolerance and ambiguity: Tolerance for ambiguity refers to the extent to which one is
comfortable and able to function in a situation where there is a high degree of uncertainty and
ambiguity as to the nature of the rules governing success or failure. In the business environment
tolerance for ambiguity for an entrepreneur or manager is that how well, he makes decision in
risky environment and handle the change and uncertain situation.
Locus of control: the concept of locus of control refers to a generalized belief that a person
can or cannot control his/her own destiny. Those who ascribe controls of events to themselves
are said to have an internal locus of control and are referred to as internals. People who attribute
controls to the outside forces are said to have an external locus of control and are termed
externals.
Self- Efficacy: Self efficacy refer to the individual’s belief in his /her own competences to
accomplish a particular task. It is an interesting personal characteristic. People differ in their
levels of self efficacy, but despite these individual differences, experienced success can shift the
distribution, making self –efficacy one of the few personal characteristics susceptible to change
through experience.
Self confidence: It refers to a person’s perceived ability to tackle situations successfully
without leaning on others and to have a positive self evaluation (Bhachu and et.al., 2017). It is
the ability to act effectively in a situation to overcome obstacles and to get thing go all right. It is
a necessary entrepreneurial characteristic and that it is related to other psychological
characteristics. Entrepreneurs have a higher degree of self-confidence relative to non-
entrepreneurs.
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TASK 4
P7. Examining background and experiences that can foster entrepreneurship
Background and experiences of a person can influence entrepreneurship in several ways. They
can either hinder or can foster the growth of any business. Background gives social values to the
person and experiences are something from which a person can learn. Every entrepreneur comes
from diverse backgrounds that have a diverse effect on their values, characteristics and traits
(Factors Having an Impact on Starting and Operating a Business, 2017).
Influence of cultural factors on entrepreneurship:
 Different custom practices and beliefs build a culture. These have a significant impact on
perception, behaviour, preferences and basic values of people.
 Entrepreneurship and cultures intervene with each other in many ways.
 People who come from a business background entail a pro business attitude and disregard
themselves for working as an employee.
 Many people come from the culture of independence and therefore working as an
employee hinders their independence. Hence, these opt for becoming an entrepreneur.
 Students who have got education from business schools exhort themselves to become an
entrepreneur even in the situation of high opportunity cost.
 People from service class background do not generally motivate themselves for risk
taking so even if they choose to become an entrepreneur they usually do not succeed.
Affects of past experiences on entrepreneurship:
Past experiences create a path for future. Entrepreneurs have different past experiences that
can be either positive or negative. Positive experiences enables entrepreneur to work more hard
in order to attain goals and objectives. However, Negative past experiences can either hinder or
foster the growth of business. Person those who understand that set backs are part of business
does not get affected with bad experiences and keep themselves determined and passionate about
their business. On the other hand who are unable to handle bad experiences, loses all the
motivation and hence had to bear a huge loss that ends their entrepreneurship.
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CONCLUSION
From the above study it has been concluded that entrepreneurial ventures can be of different
types that have a significant impact on the growth and improvement of community, state, country
economy, GDP and per capita income of the country. The above report concludes that
entrepreneurs to become successful need to possess various different characteristics, traits and
skills. Not every person can become an entrepreneur and neither entrepreneurs are born, they are
made.
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REFERENCES
Books and Journals
Bae, T. J., Qian, S., Miao, C. and Fiet, J. O., 2014. The relationship between entrepreneurship
education and entrepreneurial intentions: A meta‐analytic review. Entrepreneurship
theory and practice. 38(2). pp.217-254.
Bhachu and et.al., 2017. Immigration and entrepreneurship: culture, capital, and ethnic
networks. Routledge.
Bruton, G., Khavul, S., Siegel, D. and Wright, M., 2015. New financial alternatives in seeding
entrepreneurship: Microfinance, crowdfunding, and peer‐to‐peer
innovations. Entrepreneurship Theory and Practice. 39(1). pp.9-26.
Chaston, I., 2017. Entrepreneurship. In Technological Entrepreneurship (pp. 1-24). Springer
International Publishing.
Drucker, P., 2014. Innovation and entrepreneurship. Routledge.
Fayolle, A. and Gailly, B., 2015. The impact of entrepreneurship education on entrepreneurial
attitudes and intention: Hysteresis and persistence. Journal of Small Business
Management. 53(1). pp.75-93.
Garcia, D. H., Leles, A. D. and Romano, R. R., 2017. Program Entrepreneurship and
Innovation: Education as the Core of Innovation. In Advances in The Human Side of
Service Engineering (pp. 235-244). Springer International Publishing.
Glaeser, E. L., Kerr, S. P. and Kerr, W. R., 2015. Entrepreneurship and urban growth: An
empirical assessment with historical mines. Review of Economics and Statistics. 97(2).
pp.498-520.
Kirzner, I. M., 2015. Competition and entrepreneurship. University of Chicago press.
Morris, M. H., 2015. Entrepreneurship as Experience. Wiley Encyclopedia of Management.
Schaper, M. T., Volery, T., Weber, P. C. and Gibson, B., 2014. Entrepreneurship and small
business.
Online
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