The two basic elements of entrepreneurship are as follows
Innovation, i.e. doing something new or something different is a necessary condition to be called a person as an entrepreneur. The entrepreneurs are constantly on the lookout to do something different and unique to meet the requirements of the customers. They may or may not be inventors of new products or new methods of production but they possess the ability to foresee the possibility of making use of the inventions for their enterprises.
Innovation is the process of doing new things. This distinction is important. While creativity relates to the ability to conceive, the innovation is doing new things. Ideas have little value until they are converted into useful products or services. Innovation transforms creative ideas into useful applications. Hence, creativity is a pre-requisite to innovation.
As per Schumpeter a person is an entrepreneur only when he is engaged in innovative behavior. This innovative behavior is an entrepreneurial function. According to Schumpeter, entrepreneurship is a creative activity. An entrepreneur is an innovator who introduces something new in an economy. Entrepreneurship is doing things that are generally not done in the ordinary course of business. Innovation may be in:
- Introducing a new manufacturing process that has not yet been tested and commercially exploited.
- Introduction of a new product with which the consumers are not familiar or introducing a new quality in an existing product.
- Locating a new source of raw material or semi-finished product that was not exploited earlier.
- Opening a new market, hitherto unexploited, where the company products were not sold earlier.
- Developing a new combination of means of production.
In order to satisfy the changing preference of customers nowadays many enterprises have adopted the technique of innovation. For instance, pidilite industries innovated the new 5.rs pack of fevi quick which was accepted by the customers as it was easy to use when it was needed. Other example would be of the mobile enterprise which came up with the scheme for the customers of refill pack of Rs. 99 which says “Zindagi bhar mobile raho” which was accepted by the customers. Since customers taste and preferences always keep on changing, hence the entrepreneur needs to apply invention on a continuous basis to meet the customers changing demand for products.
Entrepreneurship is the propensity of mind to take calculated risks with confidence to achieve a predetermined business or Industrial objective. The capacity to take risk independently and individually with a view to making profits and seizing the opportunity to make more earnings in the market-oriented economy is the dominant characteristic of modern entrepreneurship. In fact he needs to be a risk taker, not risk avoider. His risk bearing ability enables him even if he fails in one succeed.
Entrepreneurship is a process in which the entrepreneur establishes new jobs and firms, new Creative and growing organizations associated with risk – taking by new and creative ideas and entrepreneurship identification of the new opportunities and resources mobilization. It results in introducing a new product or service to society. In Britain encyclopedia entrepreneur means “a person who organizes and manages a job or economic association and receives its risks”
The Japanese proverb says “Fall seven times, stand up eight”. Though the term entrepreneur is often used interchangeably with entrepreneurship, yet they are conceptually different. The relationship between the two is just like the two sides of the same coin. Thus, entrepreneurship is concerned with the performance and co-ordination of the entrepreneurial functions. This also means that entrepreneur precedes entrepreneurship.