An entrepreneur represents the starting point of an entrepreneurial venture. He is business’ first and most valuable human resource. An entrepreneur is a person who organizes, operates and assumes the risk for a business venture.
Every successful business person is someone who can identify a problem and come up with a solution before somebody else does.
An entrepreneur is the first and foremost mindset of any business who is finding profitable solutions to problems.
An entrepreneur invests, hence he has to face risks; an entrepreneur is ambitious, so he has to be careful and an entrepreneur wants to stay in the business, hence he should have knowledge, skill and foresight.
The entrepreneurs can be classified on the basis of:
1. Ownership 2. Personality Traits and their Style of Running the Business 3. Type of Business 4. Stages of Development 5. Clarence Danhof 6. Use of Technology 7. Motivation 8. Growth 9. Stages of Development 10. Other Categories.
Some of the types of entrepreneurs are:-
1. Innovating Entrepreneurs 2. Imitating Entrepreneurs 3. Fabian Entrepreneurs 4. Drone Entrepreneurs 5. Spontaneous Entrepreneurs 6. Motivated Entrepreneurs 7. Induced Entrepreneurs 8. The Achiever 9. The Idea Generator 10. The Real Manager
11. The Real Achievers 12. Industrial Entrepreneur 13. Trading Entrepreneurs 14. Corporate Entrepreneur 15. Agricultural Entrepreneur 16. First Generation Entrepreneur 17. Modern Entrepreneur 18. Classical Entrepreneur 19. Individual and Institutional Entrepreneurs 20. Entrepreneurs by Inheritance
21. Technologist Entrepreneurs 22. Gender (Man/Woman Entrepreneur) 23. Educated/Uneducated Entrepreneur 24. Location (Urban/Rural Entrepreneur) 25. Local/Indian/Foreign Entrepreneur 26. Entrepreneurs by Inheritance 27. Technologist Entrepreneurs 28. Forced Entrepreneurs 29. Pure Entrepreneurs 30. Technical Entrepreneurs and a Few Others.
Classification of Entrepreneur
Classification of Entrepreneur – Innovating Entrepreneurs, Imitating Entrepreneurs, Fabian Entrepreneurs and Drone Entrepreneurs
The economic development of an economy depends upon the nature of entrepreneur. An entrepreneur should be innovative, skillful enough to help in the real development of an economy. When the question arises for the development of an economy the entrepreneur should be potent enough to help the development in a healthy way.
When the entrepreneur is shy and humble the environment is underdeveloped and it is developed only when he is strong, skillful and innovative. In a study of American Agriculture, Clarence Danhot has made classification of entrepreneurs according of limit.
The entrepreneur can be classified as:
1. Innovating Entrepreneurs
2. Imitating Entrepreneurs
3. Fabian Entrepreneurs, and
4. Drone Entrepreneurs.
Type # 1. Innovative Entrepreneurs:
Such entrepreneurs are aggressive in nature and they include innovation in their nature. Such entrepreneurs produce new product technologies etc. in a developed economy. Such entrepreneurs are capable of providing new and better technologies and products to an existing product and technology.
Type # 2. Imitating Entrepreneurs:
Such entrepreneurs are mere imitators. They include adoption of changes in technology and techniques. They do not but only imitate into the existing technologies of a developed economy. Such entrepreneur look forward the changes and the new innovations of a developed economy and adopt them in a developing economy. Such entrepreneurs not only adapt but also change and adjust themselves as per the changing situations.
Type # 3. Fabian Entrepreneurs:
This category of entrepreneurs include such groups of persons which neither accept the new trends, technologies and innovations nor leave the old customs, traditions and beliefs. They are neither imitators nor innovators, they are just the ones who proceed in with the situations they are in and use only traditional methods of production. Such entrepreneur are lazy and not interested in bearing risks.
Type # 4. Drone Entrepreneurs:
Such entrepreneurs exist in underdeveloped countries and refer to the category of persons who are neither interested in imitating the new technologies nor in the acceptance of already existing technologies in a developed economy. Such entrepreneurs bear losses as they keep on sticking to those technologies which are responsible for their losses.
Classification of entrepreneurship can be made on the basis of definitions which include functions of an entrepreneur. J.B. Say was the first to use the word entrepreneur. But later on Schumpeter also gave definition based on functions of an entrepreneur.
Entrepreneur is one who puts innovations into successful entrepreneurship with the help of “head-quarter of capitalism”, i.e. the capital and credit makers and who averts risks and then bears the rest of them. He is the path breaker, the leader and egoist who wants success for the sake of success. He is the top notched. There can be many other like him. Others are imitators, or those who make induced, complementary and supplementary investments. Top entrepreneurs make autonomous investments for super normal profits.
The classification on the basis of functions and that too based on definitions is not appropriate.
The classification can be done on the following basis:
1. On the basis of sectors as primary, secondary, tertiary and quaternary sectors.
2. Entrepreneurs on the basis of production, trade and business.
3. On the basis of ownership as partnerships, joint stock companies, joint or individual ventures.
4. On the basis of investments as autonomous and induced investments and linkage investment like imitator complementary and supplementary.
5. On the basis of nationality like national and multinational.
6. Entrepreneurs in collaborations, franchise etc.
7. Entrepreneurs with advantage of inheritance or self-made, by gender by proxy.
8. Good bad and indifferent.
Though we will discuss the aforesaid classification, but only the prevalent one:
1. Primary, Secondary, Tertiary and Quaternary Sections:
Entrepreneurs who are engaged in large scale operations like mining, plantations, quarrying, agro-forestry etc. are included in the primary sector entrepreneurs.
Secondary sector entrepreneur includes manufacturing whether factory or non- factory units like agriculture. Agro-business is where the outputs of agriculture are used as inputs and agri-business refers to the units which supply inputs to agriculture being a manufacture unit.
Large, medium and small scale industries, generating electricity and construction work etc. In today’s scenario entrepreneurs have greater role in secondary sector as compared to primary sector. Every country can fix financial limits for business. Like small units have less than Rs.5 crore of fixed capital, medium scale industries have Rs.5 to 50 crore, upper medium class having Rs.50-100 crore and large scale investments having more than Rs.100 crores as investment. Big property builders are also included in secondary sector.
Tertiary sector entrepreneurs include minor ventures like mobile phone companies, packers and transporters, owners of big hospitals, hotels etc. The entrepreneurs are only those who innovate.
Quaternary sector – Quaternary sector refers to the services of higher order. Quaternary refers to the services of tertiary sector but of high order.
2. Entrepreneur on Basis of Production Trade and Business:
Trade refers to things which are tangible like furniture or cash transactions, but business is connected to services like in banks or customer care desks in telephone exchange etc. Business is a wider term and includes trade but trade is a narrower term cannot include business. Entrepreneurs can be entrepreneurs only if they are of importance, but they can be of small and medium sectors or of small and medium levels.
3. Spatial Entrepreneurs:
Such entrepreneurs can belong to primary, secondary, tertiary and quaternary sector and can be of large, medium and small sizes. Such entrepreneur perform globally. They can belong to rural areas, urban areas or partially rural and partially urban nature. For example, silk sarees made in Surat and southern region in big cities but supplied to all over the globe.
4. On the Basis of Ownership:
i. Individual – Individual entrepreneurs are having small scale units and the liability is unlimited. Even the entrepreneurs are rich their size of business is small.
ii. Partnership – Such entrepreneurs perform in groups or have partners in a business. Some laws prevail regarding partnership. Like, every country has its own laws regarding number of partners in a firm. In India a maximum of 10 partners is the limit or in a bank or any other financial institution or organisation a maximum number of 20 persons is the limit. The liability is also joint in such ventures. Partnership also prevails but it is less in trends. It relates to the partnership in family members and between the kith and kins.
iii. Companies – Such entrepreneurs indulge in joint stock companies. They lead the company and earn super normal profits and provide money for the future growth and development at grand stages. The companies can be private or not but involved in industrial production. These are registered under the companies act. Entrepreneurship can be public sector monopoly and joint sector enterprises of entrepreneurs.
5. Good, Bad and Indifferent Entrepreneurs:
All entrepreneurs are at different level of success. If one is capable and innovates then the less educated can also become a successful entrepreneur. A good entrepreneur is one who with his ability and innovation helps in economic development of the economy. A bad entrepreneur is one who commits mistakes but is lazy enough and do not want to be successful. Indifferent entrepreneurs are those who are not good, nor bad but are satisfied with their present status.
Thus entrepreneurs can be classified on different basis but the fact is that the entrepreneur should be considered as an innovator helping in economic development of the economy. Even then there remains a question that whether the entrepreneur is a group or individual. This question is a controversial one. The answer to such a question will remain in controversy.
Apart from this there is other group of authors like Arthur H. Cole who stated that entrepreneurship is the purposeful activity of an individual or a group of associated individuals undertaken to initiate, maintain or aggrandize a profit- oriented business unit for production or distribution of economic goods and services.
Thus to conclude it seems that a single person can be an entrepreneur but the promoter can be a group rather than an individual.
Classification of Entrepreneur – 3 Types (Spontaneous Entrepreneurs, Motivated Entrepreneurs and Induced Entrepreneurs)
A number of factors are responsible for driving a person to entrepreneurship and his becoming an entrepreneur. However, in case of every individual some factors play a greater role than others.
Based upon their motivating factors entrepreneurs can easily be classified into three types as:
1. Spontaneous entrepreneurs,
2. Motivated entrepreneurs, and
3. Induced entrepreneurs.
1. Spontaneous Entrepreneurs:
These entrepreneurs are motivated by their desire for self-fulfillment and to achieve or prove their excellence in job performance. They are the natural entrepreneurs in any society and generally do not need any external motivation. Their strength lies in their creative abilities, which leads them to set up innovative business ventures. Such entrepreneurs can normally be identified while they are young and are fired by an ambition to be their own boss.
2. Motivated Entrepreneurs:
These entrepreneurs are motivated by their desire to make use of their technical and professional expertise and skills. They have confidence in their abilities, possess initiative and boldness, are highly ambitious and are normally not satisfied by the slow progress in their jobs. A small dose of any of the compelling reasons discussed above and a little support motivates them to start their enterprise.
They come into being because of the possibility of providing some new product or service to the consumers. If the customers accept the product or service, the financial rewards further motivate the entrepreneurs. However, they are equally likely to setup innovative or imitative business ventures.
3. Induced Entrepreneurs:
Induced entrepreneurs are those who are induced to take up entrepreneurship due to policy measures of the government promoting entrepreneurship. Generally, governments provide assistance, incentives, concessions and other facilities like infrastructure support to people setting up new ventures.
Some times prospective entrepreneurs are induced or even forced by their special circumstances, such as – loss of job or inability to find a job suitable for their talent, to adapt to entrepreneurship. Till a few years back, import restrictions and reservation of certain products for Small Scale Sector induced a large number of entrepreneurs to set up their small scale units. Presently venture funds are inducing the successful IT professionals to become entrepreneurs.
According to some studies, on the basis of their motives, entrepreneurs have been classified into three categories:
i. Managing entrepreneurs whose chief motive is security;
ii. Innovative entrepreneurs who primarily look for excitement.
iii. Controlling entrepreneurs who become entrepreneurs to fulfil their desire for power.
Classification of Entrepreneur – On the Basis of Ownership, Personality Traits, Type of Business, Stages of Development and Clarence Danhof
In the initial stages of development, entrepreneurs displayed less motivation and weaker drives. As development proceeded, they became more innovative and enthusiast.
Different experts gave different classification of entrepreneurs based upon ownership pattern, personality traits, nature of business and so on.
Entrepreneurs can therefore be classified as:
1. Classification on the Basis of Ownership:
Founders of “Pure Entrepreneurs”:
As the term suggests, they are those individuals who are the founders of the business. They are the ones who conceptualize a business plan and then put in efforts to make the plan a success. For example Dhirubhai Ambani of Reliance Group.
i. Second-Generation Operators of Family-Owned Business:
They are the individuals who have inherited the business from their fathers and forefathers. Like Mukesh Ambani and Anil Ambani sons of Dhirubhai Ambani of the Reliance Group now split into two; Reliance – Reliance Industries Limited and Reliance – Anil Dhirubhai Ambani Group.
Franchisee has been derived from a French word which means free, method of doing business wherein the parent owner (the franchiser) licenses trademarks and tried and proven methods of doing business to a franchisee in exchange for a recurring payment. Here, the franchisee has not conceptualized the business has invested his money and time in the business.
For example, NIIT has given franchisee operations to local players after thorough scrutiny and proper training. These franchisees follow the same curriculum, use the same set of books, the same pricing strategy and award the same degree. They share the profit margin get training, curriculum design and books from the parent company i.e., NIIT.
When a person buys a business from the founder and then his time and resources in it he is called the owner-manager. Like Sabeer Bhatia founder entrepreneur of Hotmail, whereas Microsoft’s Bill Gates became its owner manager after buying it for $400 million.
2. Classification on the Basis of Personality Traits and their Style of Running the Business:
i. The Achiever:
These types of entrepreneurs have personal desires to excel. The only drive that pushes them is the desire to achieve something in life the desire to make a mark in society, the desire to prove their excellence. No matter how many hurdles come in their way, they are totally determined. They do not need any external stimulus but are self-driven.
Their characteristics a can be called go-getters. This personality often will cause them to build their business around their own personal brand. These entrepreneurs have dreams and dare to fulfill their dreams. Like Narayan Murthy, who had a settled life and was working, quit his job and venture out on his own to start Infosys.
ii. The Induced Entrepreneur:
These types of entrepreneurs are induced by some external factors to start a business. The external factors could be like supporting government policies, unemployment, family support, facilitating institutional support, etc. These types of entrepreneur rum out to be more realistic in their approach. For instance, when the government announced subsidies, tax rebates and financial support to small scale industries, several entrepreneurs started their business as SSIs.
iii. The Idea Generator:
These kinds of entrepreneurs are highly creative people who are always in search of innovative ideas for setting up new business ventures. They have the ability to sense the demand much ahead of others. They enjoy the First Movers’ Advantage and are able to skim higher profits from the market. They can rightly be given the title of ‘Essence of Entrepreneurship’. Like Bill Gates of Microsoft, who began the manufacturing of microcomputer software’s.
iv. The Real Manager:
The real managers run the business in a systematic manner. They analyze business situations, assess the demands of future, both in terms of opportunities and threats and then take actions based on the above assessments. They believe 10 incremental changes rather than radical transformations.
v. The Real Achievers:
The real achievers are full of life. They are looking for the achievement of not even their own goals but also of people associated with themselves like employees, suppliers and distributors.
i. Industrial Entrepreneur:
Industrial entrepreneur is an entrepreneur who is into manufacturing of a product. He identifies the needs and wants of customers and accordingly manufactures products to satisfy these needs and wants. It would include all the entrepreneurs essentially into manufacturing.
ii. Trading Entrepreneurs:
Trading entrepreneur is one who undertakes trading activities (buying and selling of goods and services) and is not concerned with the manufacturing of products. He identifies potential markets, stimulates demands and generates interests among buyers to purchase a product.
iii. Corporate Entrepreneur:
Corporate entrepreneur is a person who demonstrates his innovative skill in organizing and managing a corporate undertaking (which is registered under some statute or act that gives it a separate legal entity).
iv. Agricultural Entrepreneur:
Agricultural entrepreneurs are those entrepreneurs who undertake business related to agricultural activities. Like farm equipment’s, fertilizers and other inputs of agriculture. They provide supportive products that can increase the agricultural production through biotechnologies, mechanization and improvement agricultural yield.
i. First Generation Entrepreneur:
First-generation entrepreneur is one who starts an industrially by means of an innovative skill. He is essentially an innovator combining different technologies to produce a marketable produce or service.
ii. Modern Entrepreneur:
A modern entrepreneur is one who undertakes business to satisfy the contemporary demands of the market. They undertake those ventures which suit the current socio-cultural trends.
iii. Classical Entrepreneur:
A classical entrepreneurs a stereo-type entrepreneur is one whose aim is to maximize the economic returns at a level consistent with the survival of the firm, with or without element of growth.
Clarence Danhof, on the basis of his study of the American Agriculture, classified entrepreneurs into four types:
i. Innovating Entrepreneurs:
Aggressive assemblage of information and the analysis of results derived from sound combination factors characterize innovative entrepreneurship. Persons of this type are generally aggressive in experimentation and cleverly put attractive possibilities into practice. An innovating entrepreneur sees the opportunity for introducing a new technique or a new product or anew market.
He may raise money to launch an enterprise, assemble the various factors, and choose top executives and the set the organization going. Schumpeter’s entrepreneur was of this type. Such an entrepreneur introduces new products new methods of production, opens new markets and re-organizes the enterprise.
ii. Adoptive or Imitative Entrepreneurs:
This kind of entrepreneurs is ready to adopt successful innovations created by innovative entrepreneurs. Instead of innovating the changes themselves, they just imitate the technology and techniques innovated by others. Such entrepreneurs are particularly important in underdeveloped countries because they contribute significantly to the development nations because in these nations people prefer to imitate the technology, knowledge and skill already available in more advanced countries.
In highly backward countries there is shortage of imitative entrepreneurs also. People who can imitate the technologies and products to the particular conditions prevailing in these countries are needed. Sometimes, there is a need to adjust and adopt the new technologies to their special conditions. Imitative entrepreneurs help to transform the system with the limited resources available. However, these entrepreneurs face lesser risks and uncertainty then innovative entrepreneurs innovative entrepreneurs are creative, imitative entrepreneurs are adoptive.
iii. Fabian Entrepreneurs:
Entrepreneurs of this type are very cautious skeptical while practicing any change. They have neither the will to introduce new changes nor the desire to adopt new methods innovated by the most enterprising entrepreneurs. Such entrepreneurs are shy and lazy. Their dealings are determined by custom, religion, and tradition and past practices. They are not much interested in taking risk and they try to follow the footsteps of their predecessors.
iv. Drone Entrepreneurs:
Drone entrepreneurship is characterized by refusal to adopt and use opportunities to make changes in production. Such entrepreneurs may even suffer losses but they do not make changes in production methods. They are laggards as they continue to operate in their traditional way and resist changes. When their product loses marketability and their operations become uneconomical they are pushed out of the market. They are conventional in the sense that they stick to conventional products and ideas.
Other Categories of Entrepreneurs:
(i) Individual and Institutional Entrepreneurs:
In the small scale sector individual entrepreneurs are dominant. Small enterprises outnumber the large ones in every country. Such entrepreneurs have the advantages of flexibility, quick decision-making and state proton age. But a single individual can establish, operate and control an organization up to a limit. Thereafter, it becomes necessary to institutionalize entrepreneurship.
The business will have to acquire a number of new entrepreneurial skills through a corporate body. A group of entrepreneurs has to be developed to handle the increasingly complex network of decision-making. The central function of the entrepreneur remains the same but the basic decisions, like the line of business, the amount of capital employed, etc. are taken collectively by the promoters at the helm of affairs. Thus, individual entrepreneur and institutional entrepreneur coexist and support each other. Corporate sector is the symbol of institutionalized entrepreneurship.
(ii) Entrepreneurs by Inheritance:
At times, people become entrepreneurs when they inherit the family business. In India, there are a large number of family controlled business houses. Firms in these houses are passed from one generation to another.
(iii) Technologist Entrepreneurs:
With the decline of joint family business and the rise of scientific and technical institutions, technically qualified persons have entered the field of business. These entrepreneurs may enter business to commercially exploit their inventions and discoveries. Their main asset is technical expertise. They raise the necessary capital and employ experts in financial, legal, marketing and other areas of business.
Their success depends upon how they start production and on the acceptance of their products in the market growth of banking and Government legislation. Neo-Rich Indians returning from abroad (NRIs) and educated unemployed seeking self-employment may also be describes as forced entrepreneurs.
In some cases newly married bridegrooms start business with the finance support of their in-laws. This class of entrepreneurs account for the maximum number of failures because there is no proper screening of misfits. Failure of this type of entrepreneurs can be reduced with proper training.
Classification of Entrepreneur – 13 Types
Schumpeter, made the entrepreneur the adventurous innovator who acting on his own account, introduces changes that others do not dare to experiment with. Arthur H. Cole, distinguishes between empirical, rational and cognitive entrepreneurs. The empirical entrepreneur hardly introduces anything revolutionary and follows the principle of rule of thumb.
The rational entrepreneur is well informed about the general economic conditions and introduces changes that look more revolutionary. The cognitive entrepreneur is well informed, draws upon the advice and services of experts and introduces changes that reflect complete break from the existing scheme of things.
The entrepreneurs have been briefly classified below:
1. Gender (Man/Woman Entrepreneur):
From the olden days man is supposed to organize for everything, i.e., work to get money, protect the family and also organize the welfare of the family, i.e., arranging for education of the children, finding out accommodation, etc. In business also we find that man has been dominating right from the early days and women were not allowed to do any sort of business.
The advantage of man entrepreneur is that he can run about from place-to-place to secure orders for his business, arrange for bank finance, carry out marketing activities by travelling long distances, etc. This is possible because there is no question of security in his case. But a woman entrepreneur if given proper security and chance to work independently can show better results than the man entrepreneur because of the inborn qualities in her, i.e., patience, perseverance, tolerance, etc. She has the ability to organize the people, leadership qualities to lead the people and energy to shoulder heavy responsibility. She should have the imitating or inventive qualities which will make her more prominent in the business world.
2. Educated/Uneducated Entrepreneur:
An educated entrepreneur is one who has receives the basic education at least, i.e., he can read and write. He is thus a literate person who has undergone school and/or college education. Again there are two types of education, one is formal education and the other is the specialized education. Formal education means any faculty, i.e., arts, science or commerce. Special education means technical education, i.e., degree or diploma in engineering, technology, computerization or physics, chemistry, etc.
An uneducated entrepreneur run business unit with the help of their knowledge and experience. An uneducated entrepreneur is one who is either an illiterate person or a person who even does not know how to read and write. An educated entrepreneur may have some formal education, but he may not be technically qualified.
3. Location (Urban/Rural Entrepreneur):
Urban entrepreneurs are those who work in the city areas. They set up their units in the cities due to certain location advantages. For example, if the product is sold in the urban areas we find that the urban entrepreneur sets up his factory in the urban area. Items like Refrigerator, T.V., etc., are used mostly by the urban people and, hence, we find that these factories are usually set up in the urban or city areas and not in the rural areas.
This is because the urban entrepreneur comes from the urban place and he does not like to work in the rural place as he is not used to rural life. Moreover, if the products are sold in the city areas only, the factories are put up in the urban areas so that the transportation cost is less.
The rural entrepreneur is one who comes from the rural areas, i.e., from the villages. This type of entrepreneur is not used to urban life and, hence, he puts up his factory in the rural area only. His products are also agro-based items, i.e., agricultural products, poultry products, milk products, etc.
4. Local/Indian/Foreign Entrepreneur:
Entrepreneurs can play an important role as the suppliers of various commodities for satisfying the ‘local demand’. Satisfaction of the demand at the local level with the help of the local entrepreneurs is advantages for various reasons. They are considered as the ‘Sons of the soil’. The local entrepreneurs are able to have better understanding of the nature of the products demanded.
They also know the typical local condition and the reasons as a result of which the demand is created. Sometimes, the local demands are temporary. They are either seasonal or are sporadic. In such cases, the commodities that are required for satisfying the demand are not manufactured on a very large-scale. The local entrepreneurs are satisfying their demand. Local entrepreneurs are in a position to establish good relations with their customers. The local entrepreneurs use the locally available raw materials for satisfying the local needs. They help the producers of the raw materials because they are able to mount their products near to their places and can get better prices for their products.
An Indian entrepreneur is one who is born in India and sets up his business on traditional approach. He either carries on the business of his forefathers in the similar ways as was done years back or brings about changes in the business by introducing new methods and techniques if he is qualified and has undergone suitable training in business entrepreneurship.
Hence, an Indian entrepreneur has all the qualities and if trained properly can show the best results. But in India we find that the Indian entrepreneurs do not get chance to acquire knowledge and experience due to shortage of educational and training institutions in India which impart training in entrepreneurship especially in the rural areas.
A foreign entrepreneur is one who sets up his unit in India with his skill and ability. He is the citizen of another country who sets up his unit in India. He comes to India with a new product as an idea and sometimes has collaboration/agreement with an Indian entrepreneur for conducting the business jointly. But due to various restrictions on the foreign entrepreneur, such entrepreneur are not found in plenty in India.
A foreign entrepreneur has certain qualities which he tries to utilize in the Indian industry. This helps the Indian entrepreneur to learn from their experience the new methods, techniques, etc. The foreign entrepreneur also has the advantage of investing more capital.
5. Innovative Entrepreneur:
An innovative entrepreneur is one who introduces new goods, finds out new methods of production, discovers new markets and makes necessary changes in the working of the enterprise. Such type of entrepreneur can work only when the business has already been developed. It means that these entrepreneurs like to find new ideas ways and means of production, of doing the jobs, etc., Hence they are not interested in the formation of the company, but are interested in the product, marketing, finance, etc., which come afterwards.
6. Imitative Entrepreneur:
An imitative entrepreneur is one who is ready for important the idea which is found out by the innovative entrepreneur. It often involves what has aptly been called subjective innovation. By western standards an imitative entrepreneur may be a pedestrian figure, an adopter and imitator rather than a true innovator. Imitative entrepreneurs do not invent themselves, but they imitate the techniques and methods, technology and inventions made by other entrepreneurs. Such entrepreneurs are found in the underdeveloped areas where they copy or imitate the ideas learnt from the developed regions.
7. Fabian Entrepreneur:
Fabian entrepreneurs are shy and docile who are generally found in the underdeveloped countries. These persons avoid risks and undertake only those works where success is sure. They take all care and caution before making any change in their work schedule. These entrepreneurs are of lazy characters and are satisfied in working more. If they want to introduce new things or take important decisions, they consider all factors, pros and cons and think twice before introducing a new idea or taking any decision.
They are influenced by old traditions, customs and superstitions. They do not deal in items of liade which according to their customs are not allowed. In India, Fabian entrepreneurs have not done any business in certain items though there was much scope and availability of natural resources. For example, dealing in poultry was considered to be a business not of a certain class of people.
The Fabian entrepreneurs like to continue their own ways of business and do not like to change their old methods and practices. This does not allow them to have progress. Fabian entrepreneurs always have negative attitude and, hence, modern methods and techniques of production cannot be applied because of which the costs cannot be reduced. Hence, the demand for their products does not increase. The only way a Fabian entrepreneur adopts is that he takes advantage of the opportunity which comes in his ways and not through any special efforts.
8. Drone Entrepreneur:
These entrepreneurs like to do routine jobs. They too do not like to go in for sophisticated production methods. They are satisfied with their old methods, policies and procedures. Hence, they are not interested in knowing what the new technology is, new management methods are, new cost saving devices are, etc. These types of entrepreneurs are therefore a peculiar type who do not consider change for better, but are satisfied with what they have. They are, in short, afraid of any change, i.e., change in product, change in organisation or change in the methods and techniques of production.
9. Individual and Institutional Entrepreneurs:
In the small-scale sector individual entrepreneurs are dominant. Small enterprises outnumber the large ones in every country. Such entrepreneurs have the advantages of flexibility, quick decision making and state patronage. But a single individual can establish, operate and control an organisation up to limit. Thereafter, it becomes necessary to institutionalize entrepreneurship.
The business will have to acquire a number of new entrepreneurial skills through a corporate body. A group of entrepreneurs has to develop to handle the increasingly complex network of decision making. The central function of the entrepreneur remains the same but the basic decisions like the line of business, the amount of capital employed, etc., are taken collectively by the group of promoters at the helm of affairs. Thus, individual entrepreneur and institutional entrepreneurs coexist and support each other. Corporate sector is the symbol of institutionalized entrepreneurship.
10. Entrepreneurs by Inheritance:
A time, people become entrepreneurs when they inherit the family business. In India, there are a large number of family-controlled business houses. Firms in these houses are passed from one generation to another.
11. Technologist Entrepreneurs:
With the decline of the joint family business and the rise of scientific and technical institutions, technically qualified persons have entered the field of business. These entrepreneurs may enter business to commercially exploit their inventions and discoveries. Their main asset is technical expertise. They raise the necessary capital and employ experts in financial, legal, marketing and other areas of business. Their success depends upon how fast they start production on the acceptance of their products in the market.
12. Forced Entrepreneurs:
Many persons become entrepreneurs on account of the circumstances. The moneylenders of yesteryears enter into business due to decline of money lending business with the growth of banking and government legislation. Neo-rich Indians returning from abroad (NRIs) and educated unemployed seeking self-employment may also be described as forced entrepreneurs.
In some cases newly married bridegrooms start business with the financial support of their in-laws. This class of entrepreneurs accounts for the maximum number of failures because there is no proper screening of misfits. Failure of this type of entrepreneurs can be reduced with proper training.
13. Based on Decision Making:
An Appealing Entrepreneur is an entrepreneur who tends to be highly energetic and outgoing person. He is quick in taking initiatives and in exploiting opportunities. Such entrepreneur shows high emotional involvement with the aspirations and needs of his followers, argues their enthusiasm and inspires them to be loyal and committed. Entrepreneur strives to gain their full confidence and influences them in such a way that they will do whatever he wants.
He mostly depends on his personality for getting things done. Domineering Entrepreneur does not give sub-ordinate’s the freedom to influence his thinking, decision or behaviour. All decision making power is centralized and does allow at all, his subordinates in the decision making process. Employee Oriented Entrepreneur allows the subordinates to take active part in the decision making process. He is more adaptive and responsive. Due importance is given to the needs, motives and feelings of the subordinates.
Classification of Entrepreneur – From the Development Angle
Another classification of entrepreneurs from the development angle has been attempted and these have been described briefly.
I. Prime Mover Type:
The entrepreneurs falling in this category are those who set in motion a powerful sequence of development, growing, expanding and diversification oriented.
II. Manager Type:
The entrepreneurs are more keen on keeping the unit running, handles the environment effectively, but does not initiate development.
III. Minor Innovator Type:
The entrepreneurs in this class contribute to economic progress by finding better use of the society’s resources although his contribution individually may be negligible.
IV. Initiator Type:
These entrepreneurs slowly enter the diffusion process of innovation and slowly development begins.
V. Satellite Type:
The entrepreneurs prefer to be ancillaries to the parent or mother units, thus assuming a supplier role, and in the course of time they may emerge independent.
VI. Local Trading Type:
These entrepreneurs are mostly confined to local market, hesitant to try beyond that.
Collins and Moore have classified entrepreneurs into administrative and independent types. Individual divisions within already existing organisations are included in the category of administrative entrepreneurs. Smith has come up with two ideal types of entrepreneurs and named them craft entrepreneurs (CE) and opportunity entrepreneurs (OE).
According to Smith, the differences between the two classes of entrepreneurs are related to breadth of education and training, higher social awareness, involvement and ability to deal with economic and social environment and time orientation. Gilmore has reported that OE was found more often among successful entrepreneurs than among CE.
Hundal has attempted to classify entrepreneurs into distinct types based on the nature of industry they owned as fast progressive (textile, hosiery) and slow progressive (foundry, steel) industries. Hundal found significant differences among the entrepreneurs belonging to the two types of industries with regard to their individual and behavioural characteristics.
Venkatapathy proposed that entrepreneurs could possibly be classified as First Generation entrepreneurs and Second Generation Entrepreneurs. The classification stems from the results of various investigations carried out to study the psychological characteristics of the said cross-section of entrepreneurs before formulating them as distinct types.
Despite the existence of various types of entrepreneurs, the fact remains that the basic objective in developing entrepreneurship and multiplying these in the society, has been to generate productive human resources, mobilize and sustain the same in subsequent process of development. The spontaneity and continuity of the process would depend on the kind of people that can be promoted and groomed in the entrepreneurial career.
Classification of Entrepreneur – According to the Type of Business, Use of Technology, Motivation, Growth and Stages of Development
The entrepreneurs in business have been broadly classified as follows:
1. According to the Type of Business:
a) Business Entrepreneurs – Business entrepreneurs are individuals who conceive an idea for new products or service and combine the resources to set up a big or small business unit to put their idea into reality. Example – Readymade garments, confectionaries, etc. In a majority of cases entrepreneurs are found in trading and manufacturing business and entrepreneurship flourishes when the size of the business is small.
b) Industrial Entrepreneur – He is a manufacturer who identifies the potential needs of customer and tailors the product or service to meet the market needs. Example – Electronic industry, textile units, machine tools etc.
c) Trading Entrepreneur – He is one who undertakes trading activities and is not concerned with the manufacturing work. He identifies potential markets, stimulates demand for his product line and creates a desire and interest among buyers to go in for his product.
d) Corporate Entrepreneur – He is a person who demonstrates his innovative skill in organizing and managing a corporate undertaking. It is a form of business organization which is registered under some statute or act. Example – A trust registered under trust act, a company registered under company act.
e) Agricultural Entrepreneur – Agricultural entrepreneurs are those entrepreneurs who undertake such agricultural activities as producing and marketing of crops, fertilizers and other inputs and of agriculture.
2. According to the Use of Technology:
a) Technical entrepreneur – A technical entrepreneur is essentially an entrepreneur of ‘craftsman’ type. He develops new and improved quality of goods because of his craftsmanship. He concentrates more on production than marketing. The greatest strength which the technical entrepreneur has is his skills in production techniques.
b) Non-technical entrepreneur – Non-technical entrepreneurs are not concerned with the technical aspects of the product in which they deal. They are concerned only with developing alternative marketing and distribution strategies to promote their business.
3. According to Motivation:
a) Pure entrepreneur – He is an individual who is motivated by psychological and economic rewards. He works for his personal satisfaction, ego or status.
b) Induced entrepreneur – He is one who is induced to take up a task due to the policy measures of the government that provides assistance, incentives, concessions etc.
c) Motivated entrepreneur – He is motivated by self-fulfillment desire.
d) Spontaneous entrepreneur – They are persons with initiative, boldness and confidence in their ability which motivates them to undertake entrepreneurial activity. They start their business out of their natural talents.
4. According to Growth:
a) Growth entrepreneur – They are those who have shown high growth in an industry which has sustained growth prospects.
b) Super growth entrepreneur – Are those who have shown enormous growth of performance in their venture.
5. According to Stages of Development:
a) First generation entrepreneur – He is one who starts an industrial unit by means of an innovative skill. He is essentially an innovator combining different technologies to produce a marketable product or service.
b) Modern entrepreneur – He is one who undertakes those ventures which go well along with the changing demand in the market.
c) Classical entrepreneur – He is one who is concerned with the customers and market needs through the development of a self-supporting venture.
a) Innovative Entrepreneur- Innovative entrepreneurship is characterized by aggressive assemblage of information and analysis of results, deriving from a novel combination of factors. He uses the opportunities for introducing a new technique of production process or a new commodity or a new market or a new service or even re-organisation of an existing enterprise. Innovative entrepreneurs are found very commonly in developed countries. Such entrepreneurs can emerge and work only when a certain level of development is already achieved and people look forward to change and progress.
b) Adoptive or Imitative Entrepreneur- This kind of entrepreneur is ready to adopt successful innovations created by innovative entrepreneurs. Such entrepreneurs are particularly important in under developed countries because they contribute significantly to the development of such economics. He is merely an organizer than creator.
c) Fabian Entrepreneur- They are very cautious and doubtful of adopting any changes. They have neither the will to introduce new changes nor the desire to adopt new methods innovated by others. They are not interested in taking risk and they try to follow the footsteps of their predecessors. Their dealings are determined by custom, religion, tradition and past practices. They change only when there is an imminent threat to the very existence of business.
d) Drone Entrepreneurs- They refuse to adopt and use opportunities to make changes in production, even if they suffer losses. They continue to operate in their traditional way and resist changes. When their product marketability and operations become uneconomical they are pushed out of the market. They are conventional in the sense that they stick to conventional products and ideas.
e) Entrepreneur by Inheritance- At times, people become entrepreneurs when they inherit the family business.
f) Individual and Institutional Entrepreneur- In the small-scale sector, individual entrepreneurs are dominant. Such entrepreneurs have the advantages of flexibility, quick decision-making etc. But a simple individual can establish, operate and control an organization up to a limit. Therefore it becomes necessary to institutionalize entrepreneurship.
Classification of Entrepreneur – Innovative, Adoptive, Fabian, Drone and Other Types of Classification
Entrepreneurs are classified under four major heads are:
1. Innovative Entrepreneurs:
As per Schumpeter, only the innovating persons are designated as entrepreneurs. The ordinary producers repeat the same production for years whereas innovators produce new goods in new ways and enter into new markets by undertaking new methods of organisation. Such people are found mostly in developed countries like USA, UK, Japan etc.
Innovative entrepreneur is one who always looks at providing an opportunity for introducing a new technique of production process or a new commodity or a new market or arranges reorganisation. Schumpeter’s concept of Entrepreneur was of this type.
Peter F. Drucker opines that the innovation has the following principles:
i. Systematic and objective analysis of various opportunities, to explore the possibilities of project ideas.
ii. For effective innovation, it has to be simple and easy. Otherwise, decisions would be difficult.
iii. Complete, comprehensive trial of opportunities for better choice.
iv. Invention should be based on certain concepts.
v. Innovation emerges from the deep and wide insight to problems.
vi. Innovation should result in a bundle of knowledge, a purposeful activity creating profitability of the market.
2. Adoptive or Imitating Entrepreneurs:
What these persons do is to just imitate the successful entrepreneurs in techniques, technology innovated by others. Due to lack of funds, technology and technical skills, the entrepreneurs in developing nations would find it most convenient to imitate rather than to innovate and hence these persons imitate the successful innovators of developed nations. Further, Innovation takes more time.
3. Fabian Entrepreneurs:
These are traditionally bounded entrepreneurs who would always be cautious and they neither introduce new changes nor adopt new methods innovated by the most enterprising entrepreneurs. They are lazy, follow old customs, traditions, sentiments etc. Hence they are totally uninterested in taking risk and imitating successful entrepreneurs.
4. Drone Entrepreneurs:
These entrepreneurs never allow any change in their production and the style of functioning. They never explore opportunities nor are prepared to take any risk. They may even meet losses due to obsolete methods of production but do not change their production methods and continue to adopt traditional ways in the production processes. Also called as ‘Laggards’, who would be pushed out of the market when the product loses its marketability.
Other Types of Classifications of Entrepreneurs:
(i) This can be on the following basis:
a. According to the type of business handled
b. According to the use of technology
c. According to the motivation
d. According to the growth
e. According to the stages of development
f. According to the area
g. According to the sex and age
(ii) Another type of classification is based on:
a. Institutional entrepreneurs
b. Entrepreneurs by Inheritance
c. Technologist entrepreneurs
d. Forced entrepreneurs.
Some of the explained below briefly:
(i) Business Entrepreneurs:
These are the ones who conceive an idea for a new product/service and then create a business to materialise their idea into reality.
(ii) Trading Entrepreneurs:
These are the ones who take up trading activities and are not concerned with the manufacturing.
(iii) Industrial Entrepreneurs:
These are the ones who manufacture, identify the potential needs of customers and tailor product or service to meet the marketing needs.
(iv) Corporate Entrepreneurs:
These are the ones who demonstrate their innovative skills in organising and managing a corporate undertaking.
(v) Agricultural Entrepreneurs:
These are the ones who undertake agricultural activities as raising and marketing of crops, fertilisers and other inputs of agriculture.
(vi) Technical Entrepreneurs:
These are the ones who develop new and improved quality of goods because of their craftsmanship. They concentrate more on production than marketing.
(vii) Non-Technical Entrepreneurs:
These are the ones who are not concerned with the technical aspects of the product.
(viii) Professional Entrepreneurs:
These are the ones who are interested in establishing a business but do not like to manage or operate, once established. They would like to sell and start another venture with the sales proceeds.
(ix) Pure Entrepreneurs:
These are the ones who are interested in psychological and economic rewards (undertake these activities for personal satisfaction in work, ego, and status).
(x) Induced Entrepreneurs:
These are the ones who are induced to take up entrepreneurial activities attracted by policy measures of the government providing assistance, incentives, concessions, infrastructural facilities offered etc.
(xi) Motivated Entrepreneurs:
These are the ones who are motivated by the desire for self-fulfillment.
(xii) Spontaneous Entrepreneurs:
These are the ones who start their business out of their natural talents (initiative, boldness, confidence in their ability, strong conviction etc.).
(xiii) Growth and Super-Growth Entrepreneurs:
Growth Entrepreneurs are those who necessarily take up a high growth industry whereas super growth entrepreneurs show enormous growth of performance in their venture.
(xiv) First Generation Entrepreneurs:
These are the ones who start industrial units by means of innovative skills (combining different technologies to produce marketable products/services).
(xv) Modern Entrepreneurs:
These are the ones who undertake those ventures which go well along with the changing demand in the market.
(xvi) Classical Entrepreneurs:
These are the ones who are concerned with customers and marketing needs through the development of a self-supporting venture.
(xvii) Innovating Entrepreneurs:
These are the ones who are characterised by aggressive assemblage of information and analysis of results, deriving from a novel combination of factors.
(xviii) Institutional Entrepreneurs:
These are the ones who are created by the government through various financial and promotional institutions (a requirement in a developing nation).
(xix) Inheritance Entrepreneurs:
These are the ones where the family members inherit or in a usual way accept entrepreneurship as a vocation (down the ladder from the fathers, grandfathers,…..forefathers) Entrepreneurship spreads when the joint family breaks further.
(xx) Technologist Entrepreneurs:
These are the technical persons who start business and become technologist entrepreneurs. Government provides them finance and other resources to use their talents.
(xxi) Forced Entrepreneurs:
These are the persons who are driven out from other vocations and are forced to start business to run their life.
Classification of Entrepreneur
There are a number of ways through which Entrepreneurs can be classified. They can be classified on the basis of the type of business, use of technology, gender, motivation, organization and many more.
Clarence Danhof, on the basis of his study of American agriculture, classified entrepreneurs in the manner that at the initial stage of economic development entrepreneurs have less initiative and drive and as economic development proceeds, they become more innovating and enthusiastic.
Based on this, he classified entrepreneurs into four categories:
1. Innovating Entrepreneurs:
Prevalent in developed countries, an innovating entrepreneur is the one who introduces new goods and services, inducts new methods of production, experiments with new processes, discovers new market and restructures the enterprise. It is important to note that such entrepreneurs can work only when certain level of development is already achieved, and people look forward to change and improvement.
2. Imitative Entrepreneurs:
Mostly found in developing/underdeveloped countries, this class of entrepreneurs is characterized by their readiness to adopt successful innovations already inaugurated. They enjoy the existing innovations originated by innovating entrepreneurs, may be in developed economies. Imitative entrepreneurs do not innovate the changes themselves, they only imitate techniques and technology innovated by others.
3. Fabian Entrepreneurs:
Fabian entrepreneurs are ones who lack the will to adopt to new methods of productions. They exhibit great vigilance and apprehensions is experimenting any change in their enterprise. They imitate only when it becomes perfectly clear that failure to do so would result in a loss of the relative position of their enterprise. They are sluggish and diffident in adopting even the successful innovations.
4. Drone Entrepreneurs:
Drone entrepreneurs are referred to the ones who refuse to adopt opportunities to make changes in the existing methods of production, despite the fact that they are earning extremely reduced returns compared to other producers, who have adopted new and technologically advanced methods.
Sometimes such entrepreneurs may even suffer losses but they are not ready to make changes in their existing production methods. They struggle to exist, not to grow. Thus they are dawdlers as they choose to continue working in their conventional way and resist changes.
Naidu and Rao (2008) have very comprehensively classified the entrepreneurs on the basis of majorly four parameters:
1. Socio Cultural Classification:
On the basis of Socio Cultural Classification, the entrepreneurs can be put into four categories. Immigrant Entrepreneur is an individual who has a recent arrival in a country and starts a business as a means of his survival in the country. For example Sabeer Bhatia of Hotmail who migrated to US from. Bangalore and created his venture there, which was later, sold to Microsoft.
Ethnic entrepreneurs have a set of common connections and regular patterns of interaction among people sharing common national backgrounds or migration experiences e.g. Parsis, Sindhis and Marwaris. Minority entrepreneurs are the ones who don’t belong to majority population, e.g., any entrepreneur of Indian origin in US would fall into this category e.g. Amar Gopal Bose (founder of Bose Corporation) and Sabeer Bhatia of Hotmail. Women Entrepreneurs, as the name suggests, would include Shahnaz Hussain, Kiran Majumdar Shaw etc.
2. Motivational Classification:
On the basis of motivation to start a new venture, entrepreneurs can be put into four categories. First-generation entrepreneur is the one who starts afresh, does not have any family business prior to establishing his new venture. N.R. Narayanmurthy (Infosys), Kiran Majumdar Shaw, Dhirubhai Ambani, Shahanaz Hussain etc., will fall in this category.
Self-actualizer entrepreneurs are the ones who want to self-actualize themselves, want to they achieve something are capable of, just for the sake of independence and autonomy. e.g., Sunial Bharti Mittal (Airtel). Discontented entrepreneur are the one who are unhappy with the organization, they worked with and decide to start a new venture.
Ajit Kerkar, the ex MD of Taj Hotels, started with Tulip Star hotels in 1997, after he was unceremoniously ousted by Ratan Tata. Family business entrepreneurs are the ones who inherit their family business and expand it further, e.g. Aditya Birla, Anil Ambani, Mukesh Ambani, Azim Premji etc.
3. Entrepreneurial Experience Classification:
On the basis of Entrepreneurial Experience Classification, the entrepreneurs can be put into two broad categories, Novice and Habitual Entrepreneurs. Novice entrepreneurs are the individuals who don’t have any business ownership experience in past (neither as a founder nor as inheritor) but now they own an independent business, for example N. R. Narayanmurthy.
Habitual Entrepreneurs are the ones who have the experience of owning at least two or more different firms, one at a time (Serial Entrepreneurs e.g., Sunial Bharti Mittal of Airtel) or simultaneously (Portfolio entrepreneur, e.g. Kishore Biyani of Big Bazaar and Pantaloons)
4. Technical Experience Classification:
A technical experience entrepreneur is defined as the founder and current owner manager of technology based business. They can be the “Research” Technical entrepreneur with a prior experience of technological research, prior to starting his own technical venture (e.g. Amar Gopal Bose of Bose Corporation).
The “producer” technical entrepreneur is the one who has a history of involvement in direct commercial production, prior to starting his own venture (Subroto Bagchi of MindTree Ltd.).
The “User” technical entrepreneur is the one who had been involved as an end user of the specific product/technology (Tulsi Tanti of Suzlon). The “Opportunist” technical entrepreneur, who has identified and visualized a technology based opportunity and grabbed it to set up his technology based venture (Azim Premji of Wipro ventured into IT from his oil based business).
Classification of Entrepreneur – Innovative Entrepreneurs, Adoptive Entrepreneurs, Fabian Entrepreneurs and Drone Entrepreneurs
Different authorities have classified entrepreneurs on different basis. The most popular classification has been given by Clarence on the basis of his study on the American agriculture.
Thus, according to his view, entrepreneurs are broadly classified into the following 4 types:
1. Innovative Entrepreneurs
2. Adoptive or Imitating Entrepreneurs
3. Fabian Entrepreneurs
4. Drone Entrepreneurs
1. Innovative Entrepreneur:
An innovating entrepreneur is one who introduces new products, inaugurates new method or process of production, discovers new market and re-organises the enterprise. In the words of Peter Drucker “an innovating entrepreneur is one who always searches for change, responds to it, and exploits it as an opportunity”. He introduces new changes, adds new values or increases the value of a product which already exists in the market.
It should be observed that innovative entrepreneurs initiate their action only when a certain level of development is already achieved and people anticipating a further change and improvement.
Generally, the innovative entrepreneurs initiate their actions in any one of the following forms:
i. Introduction of a new product or introduction of a new quality to a product already existing.
ii. Introduction of a new method/process of production
iii. Exploring a new market
iv. Discovering a new sources of supply of raw materials or other inputs
v. Discovering the new line of distribution etc.
2. Imitative Entrepreneur:
An imitative entrepreneur is one who adopts successful innovations inaugurated by innovating entrepreneurs. In other words, an imitative entrepreneur do not innovate the changes by himself, he only imitate techniques and technology innovated by others in this field. Imitative entrepreneurs are generally found in developing countries. Due to lack of funds, technology and technical skills, the entrepreneurs in developing countries would find it more convenient to imitate rather to innovate. They play a very vital role in the development of a nation.
3. Fabian Entrepreneur:
Fabian entrepreneur is one who adopts a great caution and skepticism in experimenting any change in his enterprise. He imitate only when it becomes perfectly clear that failure to imitate would result in a loss of the relative position in the enterprise. He is dominated more by customs, religions, traditions and past practices. In general, he is a person who is not ready to take any risk in his life.
4. Drone Entrepreneur:
Drone Entrepreneur is one who does not want to allow any change in his production technique and style of functioning. He blindly follows the traditional methods of production even it causes losses to him. He never explores opportunities nor prepared to take any risk. He is also called “Laggard’, who would be pushed out of the market when the product loses its marketability.