THEORIES OF ENTREPRENEURSHIP 2

• THEORIES OF ENTREPRENEURSHIP 2

• FUNDAMENTAL OF ENTREPRENEURSHIP

• 
  

Ø  PETER F. DRUCKER’S THEORY OF ENTREPRENEURSHIP

• PETER DRUCKER’S BOOK INNOVATION AND ENTREPRENEURSHIP PUBLISHED IN 1985 IS A GREAT CONTRIBUTION. PETER DRUCKER REGARDS THE DEFINITION OF J.B SAY
• J.B SAY WAS OF THE OPINION THAT THE ENTREPRENEUR SHIFTS ECONOMIC RESOURCES OUT OF AN AREA OF LOWER AND INTO AREA OF HIGHER PRODUCTIVITY AND GREATER YIELD.
• PETER DRUCKER VIEWED  ENTREPRENEUR AS A UNIQUE AGENT OF CHANGE. DRUCKER WRITES THAT ENTREPRENEUR ALWAYS SEARCHED FOR CHANGE,RESPONDS TO IT AND EXPLOITS AS AN OPPORTUNITY.
• PETER F. DRUCKER’S THEORY OF ENTREPRENEURSHIP
• HE ALSO CONSIDERED THAT THE ENTREPRENEURIAL SOCIETY IS THE OUTCOME OF INNOVATIVE ENTREPRENEURSHIP COMBINED WITH GOVERNMENT FACILITATION.HIS BOOK OFFERS GUIDELINES FOR THE ENTREPRENEUR TO BECOME INNOVATOR. HE OPINED THAT INNOVATION PRACTICES ARE THE RESULT OF SYSTEMATIC HARD WORK. HE INTRODUCED S SYSTEMATIC INNOVATION AS A FRAMEWORK FOR EXPLOITING INNOVATIVE OPPORTUNITIES.
• ACCORDING TO PETER DRUCKER:-

1. ENTREPRENEUR MUST BE INNOVATOR,LEADER WHO IS CAPABLE OF ANALYZING OPPORTUNITIES AND EXPLOITING SUCCESSFULLY
2. HE SHOULD INNOVATE FOR THE PRESENT PERIOD BUT NOT FOR THE FUTURE PERIOD
3. INNOVATION MUST BE SIMPLE TO UNDERSTAND
4. MUST POSSESS THE KNOWLEDGE,DILIGENCE,PERSISTENCE AND COMMITMENT OT INNOVATION
5. PETER F. DRUCKER’S THEORY OF ENTREPRENEURSHIP
6. NEED NOT BE THE OWNER OF THE BUSINESS
7. MUST MOBILIZE THE RESOURCES AND ALLOCATE THEM TO MAKE A COMMERCIAL GAIN FROM THE OPPORTUNITIES IDENTIFIED.

• MAX WEBER’S THEORY OF SOCIAL CHANGE ( EMPHASIS ON IMPACT OF RELIGION)
• ACCORDING TO HIM,” RELIGION HAD A GREAT IMPACT ON ENTREPRENEURIAL DEVELOPMENT. THE RELIGIOUS BELIEFS AND ETHICAL VALUE ASSOCIATED WITH THE SOCIETY PLAYS A VITAL ROLE IN DETERMINING THE ENTREPRENEURIAL CULTURE.
• IN HIS THEORY SPIRIT OF CAPITALISM IS A FUNDAMENTAL CONCEPT.CAPITALISM REFERS THE ECONOMIC SYSTEM WHERE MARKET FORCES OF DEMAND AND SUPPLY ARE ALLOWED TO PLAY FREELY. SPIRIT OF CAPITALISM PROMOTE THE ENTREPRENEURSHIP

1. WEBER BELIEVED THAT HINDUISM DID NOT ENCOURAGE ENTREPRENEURSHIP. HINDUISM DID NOT PROFESS THE SPIRIT OF CAPITALISM AND WAS OBSTACLE IN THE PROMOTION OF ENTREPRENEURSHIP.
2. PROTESTANT ETHIC PROMOTE SPIRIT OF CAPITALISM AND FAVOR ENTREPRENEURSHIP

• CRITICISM

1. BASED ON UNREALISTIC ASSUMPTIONS AND INVALID ASSUMPTION
2. EMPIRICALLY INVALID
3. ALSO CRITICISED ON HIS VIEW ON HINDUISM AND ENTREPRENEURSHIP
4. HIS VIEWS ON PROTESTANT ETHIC WERE ALSO NOT COMPLETELY CORRECT.

Ø  LEIBENSTEIN’S THEORY( EMPHASIS ON X EFFICIENCY)

• THE CONCEPT OF X EFFICIENCY WAS INTRODUCED BY HARVEY LEIBENSTEIN IN 1966 HIS ARTICLE ,” ALLOCATIVE EFFICIENCY VS X EFFICIENCY. HE ALSO REFER TO X INEFFICIENCY. IN GENERAL X INEFFICIENCY REFERS TO THE DIFFERENCE BETWEEN OPTIMAL EFFICIENT BEHAVIOR OF BUSINESS IN THEORY AND THE OBSERVED BEHAVIOR IS PRACTICE WHICH OCCURS OWING TO DIFFERENT FACTORS.
• X EFFICIENCY REFERS TO THE EFFECTIVENESS WITH WHICH A GIVEN A SET OF INPUTS ARE USED TO PRODUCE OUTPUTS. IF PARTICULAR FIRM IS PRODUCING THE MAXIMUM OUTPUT IT CAN GIVEN THE RESOURCES IT EMPLOYS WITH THE BEST TECHNOLOGY IT IS SAID TO TECHNICAL EFFICIENT. X INEFFICIENCY OCCURRED WHEN TECHNICAL INEFFICIENCY IS NOT ACHIEVED
• IN VIEW OF LEIBENSTEIN,IN CASE AN INPUT IS NOT UTILIZED EFFICIENTLY,THE DIFFERENCE BETWEEN THE ACTUAL PRODUCTION AND MAXIMUM PRODUCTION ATTRIBUTABLE TO THAT INPUT IS A MEASURE OF THE DEGREE OF EFFICIENCY

·         MAIN TWO ROLES OF THE ENTREPRENEUR:-

1. A GAP FILLER:- IT PUTS THE ENTERPRISE IN MOTION
2. AN INPUT COMPLETER: IT TRANSFORM THE AVAILABLE INPUTS THAT IMPROVE THE EXISTING PRODUCTION METHOD.

·         ACCORDING TO LEIBENSTEIN THERE ARE THE FOLLOWING TWO KINDS OF ENTREPRENEURSHIP:-

1. ROUTINE ENTREPRENEURSHIP:-NORMAL BUSINESS FUNCTIONS SUCH AS COORDINATING THE ENTREPRENEURIAL OPERATIONS
2. INNOVATIVE ENTREPRENEURSHIP:-IT INVOLVES THE OPERATION ELEMENTS TO CREATE AN ENTERPRISE WHERE NOT ALL THE MARKETS ARE WELL DEFINED OR CLEARLY ESTABLISHED.

• CRITICISM
• THE EXACT INFLUENCE WHICH THE X EFFICIENCY HAS ON OUTPUT OF AN ORGANIZATION CAN NT BE DETERMINED
• LESS PREDICTABLE AS COMPARED TO OTHER
• HAGEN’S THEORY OF ENTRPRENURSHIP
• HIS THEORY IS REFERRED TO AS THE” THE WITHDRAWAL OF STATUS RESPECT”
• THIS THEORY IS BASED ON GENERAL MODEL OF THE SOCIETY. HIS THEORY VIEWED THE ENTREPRENEUR AS A TROUBLE SHOOTER WHO CONTRIBUTES TO THE ECONOMIC DEVELOPMENT.THE CREATIVITY OF THE ENTREPRENEUR BRINGS ABOUT SOCIETY BRINGS ABOUT SOCIAL TRANSFORMATION AND ECONOMIC DEVELOPMENT.
• HE CONSIDERED WITHDRAWS OF STATUS IS ONE OF THE CRITICAL MOTIVATING FACTOR FOR VENTURING INTO ENTREPRENEURSHIP. STATUS IS THE SOCIAL RANK OF AN INDIVIDUAL.IT IS THE SYMBOL OF HON OUR,ACCEPTANCE AND RECOGNITION WHEN SUCH RECOGNITION IS NOT GIVEN TO THE PERSON IT IS KNOWN AS STAGE OS STATUS WITHDRAWAL. HE TURNS TO INNOVATION TO GET THE RESPECT OF THE SOCIETY. IT IS TRIGGER MECHANISM FOR CHANGE IN PERSONALITY FORMATION.
• HAGEN POSTULATES FOUR TYPES OF EVENTS:-

1. DISPLACEMENT OF A TRADITIONAL ELITE GROUP FORM ITS PREVIOUS STATUS BY ANOTHER TRADITIONAL PHYSICAL FORCE
2. DISINTEGRATION OF VALUED SYMBOLS THROUGH SOME CHANGE IN THE ATTITUDE OF THE SUPERIOR GROUP
3. INCONSISTENCY OF STATUS SYMBOLS WITH CHANGING DISTRIBUTION OF ECONOMIC POWER
4. NON ACCEPTANCE OF EXPECTED STATUS ON MIGRATION TO NEW SOCIETY

• FOUR POSSIBLE REACTIONS DUE TO WITHDRAWAL OF STATUS THAT CREATE FOUR DIFFERENT PERSONALITY TYPES:-

1. RETREALISTIC: WHO CONTINUE TO WORK BUT REMAINS INDIFFERENT TO HIS WORK STATUS
2. RITUALISTIC:- ENTREPRENEUR WHO WORK AS PER THE NORMS OF THE SOCIETY BUT WITH NO HOPE OF IMPROVEMENT IN THE WORKING CONDITIONS
3. REFORMIST:- WHO IS REBELLION AND TRIES TO BRING NEW WAYS OF WORKING IN NEW SOCIETY
4. INNOVATOR:-WHO IS INNOVATOR AND TRY TO BRING NEW WAYS OF WORKING AND SOCIETY

• CRITICISM

1. LACKS GENERAL APPLICATION.IT IS NOT ALWAYS TRUE THAT ALL THE SOCIAL GROUPS HAVE BEHAVED IN THE MANNER AS ADVOCATED IN THE THEORY
2. IGNORES VARIOUS OTHER FACTORS ACCOUNTABLE FOR THE DEVELOPMENT OF ENTREPRENEURSHIP