Types of Entrepreneurs - Study Notes

Lesson summary

Entrepreneur is a general term, but entrepreneurs are called by different names depending on the function they perform, the business they engage in, the technology they adopt, the area of the venture, its development stage, type of ownership and the motivation behind it. The chapter opens with Thirukkural 472.

24.01 Types of entrepreneurs (chart)

24.02 Classification according to function

• Innovating: always focussed on introducing a new project or something new in a running venture; observes the environment, collects and analyses information. Innovation may be a brand new or upgraded product, an untapped market, a new method of production or distribution, reengineering, or simplifying a complex process.
• Imitative: imitates skill, knowledge or technology already in place in advanced countries; reengineers or redesigns products to suit local conditions (electronic products, expensive medicines).
• Fabian: conservative, sceptical about change, risk-averse; guided by customs, religion, tradition and past practices of ancestors; adapts to change only as a last resort when non-adaptation would lead to loss or collapse.
• Drone: totally opposed to change; operates in a niche market; like the fabian follows conventional practices, but never adapts to change.

24.03 Classification according to type of business

• Business entrepreneur: called solo entrepreneur; conceives an idea for a new product or service and sets up a small or large enterprise; takes up production, operations and marketing.
• Trading entrepreneur: only buys and sells finished goods, in domestic or international trade; strength lies in distribution and marketing; earns by commission.
• Industrial entrepreneur: manufactures products to meet unfulfilled needs; may be small, medium or large; mobilises resources; adds utility, termed value addition.
• Corporate entrepreneur: called promoter; starts an entity in corporate form and fulfils the formalities under company law; assembles resources and installs a team of experts; ownership and management are separated.
• Agricultural entrepreneur: raises farm products using labour, fertilizer, insecticide and water, and markets them; includes allied products such as poultry, fish, honey, flowers, silk and prawn.
• Retail entrepreneur: distributes the end-product to the final consumer; buys small quantities from numerous wholesalers and offers different brands under one roof.
• Service entrepreneur: supplies service products such as banking, insurance, financial services, repair, transport, advisory, advertising and manpower supply.

24.04 Classification based on technology adopted

• Technical: craftsmen such as welders, fitters, draughtsmen, carpenters, potters, weavers, sculptors, tailors and photographers who start small ventures; produce high quality goods; focus on production rather than marketing; strength lies in skill.
• Non-technical: no technical competence to produce, but special talent to market and distribute the products of technical entrepreneurs to channel members and end consumers.
• Professional: rich expertise in starting a venture but no interest in continuing as manager or owner; sells the venture after its successful take-off and conceives new projects.

24.05 Classification in terms of motivation

24.06 Classification based on development stage

• First generation: starts a venture by his own knowledge, skill and talent; no family background or prior exposure; self made.
• Modern: watches market dynamics with an eagle eye, identifies unfilled gaps and starts a venture to meet unmet needs.
• Classical: starts his own venture as a family business; comes from a business family, for example the son of a provision merchant starting his own provision shop.

24.07 Classification according to area

• Urban: starts activity in urban areas such as the State capital, district headquarters and municipalities; may be industrial, corporate or retail.
• Rural: starts ventures in rural locations; gets economic and fiscal incentives meant to check the exodus of rural people to cities in search of jobs; low cost of material and labour keeps operating cost low.

24.08 Classification according to ownership

• Private: started by individuals singly or collectively at their own risk to earn profit.
• State: trading or industrial ventures started by the Government as a company, corporation, department or board.
• Joint: started and owned by both private individuals and the Government.