Classification of Entrepreneurs according to the type of Business

According to the type of business, entrepreneurs shall be classified as Business Entrepreneurs,

Trading Entrepreneurs, Industrial Entrepreneurs, Corporate Entrepreneurs, Agricultural
Entrepreneurs, Retail Entrepreneurs, Service Entrepreneurs and Social Entrepreneurs.

Types of Entrepreneurs

1. Business Entrepreneurs

Business entrepreneurs we those who conceive an idea to for a new product or service and then
create a business to convert their ideas into reality. These entrepreneurs may be found in small
business units or big enterprises. They concentrate both on production and marketing activities.
Example: A Printing Press, bakery or a textile unit.

Business entrepreneur: Business entrepreneurs are individuals who conceive an idea for a new
product or service and then create a business to materialize their idea into reality. They may set up a
big establishment or a small business unit. They are called small business entrepreneurs when found
in small business units such as printing press, textile processing house, advertising agency,
readymade garments or confectionery.

2. Trading Entrepreneurs

Trading Entrepreneurs are those who undertake trading activities. These entrepreneurs do not
concentrate on manufacturing activities. They give more emphasis on distribution and marketing of
goods. They identify potential markets, create demand for the product and influence people to buy
the product. Example: Agents and Wholesalers.

Trading Entrepreneur: The trading entrepreneur 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 line and creates
a desire and interests among buyers to go in for his product line and creates a desire and interests
and buyers to go in for his product. He is engaged in both domestic and overseas trade.
Britain, due to geographical limitations has developed trade through trading entrepreneurs.

3. Industrial Entrepreneurs

Industrial Entrepreneurs are those who concentrate in industrial and production activities. Trey
identify the needs of the customers and manufacture a product according to their needs. They are
generally a product-Oriented entrepreneur. Example: A manufacturer of Automobile spare parts,
computer accessories.

Industrial Entrepreneurs: Industrial entrepreneur is essentially a manufacturer who identifies the

potential needs of customers and tailors a product or service to meet the marketing needs. He is
product- oriented man who starts in an industrial unit because of the possibility of some new
product.

4. Corporate Entrepreneur

Corporate entrepreneurs are those who exhibit innovative skills in organizing and managing
corporate undertaking. Example: A Trust registered under the Trust Act.

Corporate Entrepreneur: Corporate entrepreneur is a person who demonstrates his innovative skill
in organizing and managing corporate undertaking. A corporate undertaking is is a form of business
organization which is registered under some statue or act which gives it a separate legal entity. A
trust registered under Trust act or company registered under the companies act is examples of
corporate undertakings. A corporate entrepreneur is thus an individual who plans, develops and
manages a corporate body.

5. Agricultural Entrepreneur

An agricultural entrepreneur is one who concentrates on agricultural activities. These entrepreneurs

concentrate on activities like raising agricultural production, marketing of fertilizers etc.

Agricultural Entrepreneur: Agricultural entrepreneur are those entrepreneurs who undertake

agricultural activities as raising and marketing of crops, fertilizers and other inputs of agriculture.
They are motivated to raise agricultural through mechanization, irrigation and application of
technologies for dry land agriculture products.

6. Retail Entrepreneurs

Retail entrepreneurs are those who undertake trading activities. They have direct contact with
customers and hence they are customer oriented. Example: An entrepreneur running a
departmental store

7. Service Entrepreneur

A service entrepreneur is one who provides services to customers. They make profit by rendering
services. Example: An entrepreneur running a hotel or dry cleaning unit.

8. Social Entrepreneur

A social entrepreneur is one who provides importance to the society by serving them. He
concentrates on social issues and does not aim to make profit. Example: A person running an
orphanage.

Classification of Entrepreneur according to the Stages of Development

According to the Stages of development, entrepreneurs shall be classified as First Generation

Entrepreneurs, Modern or Innovative Entrepreneurs, Classical Entrepreneurs and Inherited
Entrepreneurs

1. First Generation Entrepreneur

A first generation entrepreneur is one who sets up an enterprise by his innovative skill. He combines
various factors of production and provides marketable product or services by adopting innovative
ideas. He is the first person to start an enterprise on his own. Though such a person may have the
family background of some business, such entrepreneurs may also establish a certain business which
may be unrelated to their family business.

2. Modern Entrepreneurs or Innovative Entrepreneurs

A modern entrepreneur is a dynamic entrepreneur. He always looks for changes and responds to the
changing demand of the market. His business ventures suits the current marketing needs.

3. Classical Entrepreneur
Classical entrepreneur is a stereo type entrepreneur. He aims at maximizing profits at a consistent
level. There may or may not be an element of growth. Survival of the firm is given more importance
by these entrepreneurs.

4. Inherited Entrepreneurs

These entrepreneurs have inherited family business or possess experience from their family
business. These entrepreneurs may like to diversify a little from their family business.

Classification of Entrepreneurs according to Motivational Aspects

According to motivational aspects, entrepreneurs shall be classified as Pure Entrepreneurs, Induced

Entrepreneurs, Motivated Entrepreneurs and Spontaneous Entrepreneurs.

1. Pure Entrepreneur

A pure entrepreneur is a person who is motivated by psychological and economic factors.

Entrepreneurial task is undertaken by them due to certain reasons. Ability to handle risk, desire to
enjoy better status, desire to get recognition in the society, thirst for making money motivates a
person to take up entrepreneurial activities.

2. Induced Entrepreneur

Induced entrepreneur are those who takes up entrepreneurial task due to the incentives and
subsides granted by the government. Financial and technical assistance provided by the government
motivates a person to start new ventures.

3. Motivated Entrepreneur

They are motivated by the desire far their self-fulfilment. They emerge because of the possibility of
producing and, selling new products. They are also motivated by economic factors.

4. Spontaneous Entrepreneur

A person, turns out to be an entrepreneur, because of the natural talent vested in him. These
entrepreneurs have self confidence and emerge as challengers. They take up entrepreneurial activity
in order to tap their talents. They have great self confidence in their talent and are highly
resourceful.

Classification of Entrepreneurs according to Technological Aspects

According to Technical Aspects, Entrepreneurs shall be classified as Technical Entrepreneurs, Non-

Technical Entrepreneurs and Professional Entrepreneurs.

1. Technical Entrepreneur

A technical entrepreneur is one who concentrates more on production activities. He has got sound
technical knowledge. He utilizes his technical knowledge and demonstrates his innovative
capabilities. He is also known as technocrat.

2. Non-Technical Entrepreneur

A non-technical entrepreneur concentrates more on marketing activities. He tries to find out new
strategies for marketing goods. He also promotes his business by employing various marketing
methods.
3. Professional Entrepreneur

Professional entrepreneur is a person who applies innovative ideas in setting up of a business. He is

interested in establishing the enterprises rather than managing it. Once the business is established.
the entrepreneur will sell the business to some one else.

Classification of Entrepreneurs According to Clarence Danhof

Clarence Danhof had classified entrepreneurs based on his study on American agriculture. He
classified entrepreneurs into four categories.

1. Innovative Entrepreneur

An innovative entrepreneur is one who introduces new product, new service or new market. An
innovative entrepreneur is also known as modern entrepreneur. An innovative entrepreneur can
work only when a certain level of development is reached. These entrepreneurs introduce new
changes and develop the business after a certain level of development is reached. They invent new
products. Such kind of entrepreneurs can be seen in developed countries, as large sum of money can
be diverted towards research and development purposes.

2. Adaptive Entrepreneur

Adaptive entrepreneur is one who adopts the successful innovations of innovative entrepreneur.
These entrepreneurs imitate the techniques and technologies innovated by others. These
entrepreneurs can be seen both in underdeveloped and developing countries. They also make small
changes in relevance to their market environment.

3. Fabian Entrepreneur

A fabian entrepreneur is one who responds to changes only when he is very clear that failure to
respond to changes would result in losses. Such entrepreneurs do not introduce new changes. They
also do not desire to adopt new methods. They are very shy and stick to old customs. They are very
cautious.

4. Drone Entrepreneurs

These entrepreneurs do not make any changes. They refuse to utilize the opportunities and may also
suffer losses. They are very conventional. They refuse to introduce changes. They even make losses
but avoid changes. Sometimes they may be pushed out of the market.

Classification 1: Solo-Service Entrepreneur

Usually a sole proprietorship (just him/herself) with friends as customers. It’s most often a service
that requires time but little or no investment. There are few opportunity costs as Solo-Service
Entrepreneur sare mostly students who are selling gum or mowing someone’s lawn. The tasks are
usually generally not original. Needless to say, they have limited experiences in entrepreneurship.

Classification 2: Commodity Entrepreneur

These are entrepreneurs who make healthy investments to start something that is somewhat
saturated in the market. This means you can find many similar businesses that do the same thing.
Most restaurants and coffee shops, as well as common commodity businesses are within this
category. They usually follow what the Opportunity Entrepreneur does after it becomes common
and adapted. When asked why they started that business, it is usually not because they see a special
demand or a better way to do things in the market, but simply because they think it would be
interesting (“I always wanted to open a flower shop”), or they are good at the technical work of that
business and want to open a business with that skill. Real Estate would be categorized as Commodity
Entrepreneurship.

Classification 3: Network Marketing & Franchise Entrepreneur

For those who don’t know, network marketing is the pyramid way of doing business, where you do
business, and you recruit other people to run divisions under you. They do the same, and you get
some commission from those under. It’s legit business as they truly create some value, as long as
they are actually selling a valuable product or service. I feel like the initialization process for this type
of entrepreneur is too easy, and the opportunity often comes to search for you with full force, not
the other way around (entrepreneurs create opportunities themselves). I feel this is more of a
salesman/manager than an entrepreneur, as even though one needs to make entrepreneurial
tactical decisions, nothing truly new is created. You just follow someone’s model, use someone’s
equipment, and have relatively small investment and risk. 80% of the business is worked out for you.
Most people can start without any past experience (as a Starting Entrepreneur). However, it is true
that the same problems with stress and creativity runs in Network Marketing, so it is still considered
entrepreneurial.

Classification 4: Opportunity Entrepreneur

Opportunity Entrepreneurs look at the newest trends, figure out what works, and do it. They usually
identify some competitive advantage and start something that exists, except better. The scale is
usually decent and initial investment is usually pretty large. Starting is difficult because one needs to
go through all regulations and registrations as well as obtain decent capital. Risk is relatively high
because it is hard to rightly evaluate which market trends can be followed and have the technical
abilities and timing to do it well. Creativity/Originality is based on how the entrepreneur picks the
business and the creative processes to get a solid edge, but it is not completely innovative. In an
Economics graph of supply and demand, these are the people that “shift the supply curve forward”
when there seems to be profit in an industry. Finally, Opportunity Entrepreneurs often have some
past experience as a Solo-Service Entrepreneur.

Classification 5: Innovation Entrepreneur

These people create something new, something no one else has ever done in an industry. They
identify something that does not exist yet is missing, and they do what it takes to make it happen.
The scale usually would be pretty big in order to bring something completely new into the market.
The difficulty in initiation is extremely high, especially in some industries. However, the strongest
characteristic about an Innovation Entrepreneur is that they think outside the box, and are willing to
take huge risks, as nothing has indicated this business would work at all!

Classification 6: High Tech Entrepreneur

The High Tech Entrepreneur can be some of the most respectable in terms of being entrepreneurial.
Instead of creating improvements or introducing something good in an industry, they create
industries. These guys invented computers and start the entire computer industry. They invented
automobiles and started the automobile industry with all its parts and accessories. As you can tell, it
is incredibly hard to initiate such a business. Investments, creativity level, and risk are all extremely
high. You are investing for something that might not even be created! (let along being tested and
proven) These companies usually need to be backed up by Venture Capitalists, and it also has a high
chance of failing due to technology competition (someone might be already almost done with what
you are trying to make when you are still mindlessly inventing).

It takes a true Entrepreneur to spend this much time, money, money forfeited elsewhere, and
energy for this huge a risk. However, there must not be a mix-up between Inventors and
Entrepreneurs. There are cases where the Inventor is also an Entrepreneur (or Entrepreneurial), but
many times simply knowing the technological work of making a new product does not make one an
Entrepreneur. Inventors create new great products, but entrepreneurs create new great businesses.

Classification 7: Escape Entrepreneur

Some people go on their ventures because they simply want to make a lot of money and/or want to
be their own boss. In essence, they are entrepreneurs because they want to “escape” from
something else. These are wrong motives and usually result in a failing business (unfortunately, this
is the majority of people who start businesses, and is part of why so many businesses fail.) Often
times, these entrepreneurs fail because they realize that being an entrepreneur means working
twice as much as having a job, and getting paid 1/3 of it, especially in early years. The “grind” will
often make them lose motivation and “escape” back to their former career.

CLASSIFICATION AND TYPES OF ENTREPRENEURS.

The entrepreneurs have been broadly classified according to the type of business, use of
professional skill, motivation, growth and stages of development. The various type of entrepreneur
is as follows

Entrepreneurs according to the type of business.

Entrepreneurs are found in various types of business occupations of varying size, we may broadly
classify them as follows:

Entrepreneurs in technology

We may broadly classify these entrepreneurs on the basis of use of technology as follows:

Technical entrepreneur: A technical entrepreneur is essentially compared to a crafts man. He

develops improved quality of goods because of the craftsmanship. He concentrates more on
production than marketing.

Non technical entrepreneur: These are people who 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.

Professional entrepreneurs: Professional entrepreneurs are a person who is interested in

establishing a business but does not have interest in managing or operating it once it is established.
A professional entrepreneur is a person who is interested in establishing a business but does not
have interest in managing or operating it once it is established. A professional entrepreneur sells out
the running business and starts another venture with the sales proceeds.

Entrepreneurs and motivation

Pure entrepreneur: A pure entrepreneur is an individual who is motivated by psychological and

economic rewards. He undertakes an entrepreneurial activity for his personal satisfaction in work,
ego, and status.
Induced Entrepreneur: He is the person who is induced to take up an entrepreneurial task due to the
policy measures of the government that provides assistance, incentives, concessions, and necessary
overhead facilities to start the venture. Most of the induced entrepreneurs enter entrepreneurship
due to financial, technical and several other facilities provided to them by the state agencies to
promote entrepreneurship.

Motivated entrepreneur: New entrepreneurs are motivated by the desire for fulfillment. They come
into being because of the possibility of making and marketing some new product for the use of
customers. If the product is developed to saleable stage, the entrepreneur is further motivated by
reward in terms of profit.

Spontaneous Entrepreneur: These entrepreneurs start their business because of their natural
talents. They are persons with initiative, boldness and confidence in their ability which motivate
them to undertake entrepreneurial activity. Such entrepreneurs have a strong conviction and
confidence in their inborn ability.

Growth and Entrepreneurs

Growth Entrepreneur: Growth entrepreneurs are those who necessarily take up high growth
industry which has substantial growth prospects.

Super Growth Entrepreneurs: Super growth entrepreneurs are those who have shown enormous
growth of performance in their venture. The growth performance is identified by the liquidity of
funds, profitability and gearing.

Entrepreneurs and stages of Development:

Entrepreneurs may also be classified as the first generation entrepreneur, modern entrepreneur and
classical entrepreneur depending upon the stage of development. They are explained below:

First-generation entrepreneur: A first generation entrepreneur is one who starts an industrial unit by
innovative skills. He is essentially an innovator, combining different technologies to produce a
marketable product or service.

Modern entrepreneur: A modern entrepreneur is one who undertakes those ventures which go well
along with the changing demand in the market. They undertake those ventures which suit the
current marketing needs.

Classical entrepreneur: A classical entrepreneur is one who is concerned with the customers and
marketing needs through the development of the self supporting venture. He is a stereotype
entrepreneur whose aim is to maximize his economic returns at a level consistent with the survival
of the firm with or without an element of growth.

Others

Innovating Entrepreneurs: Men and women in this group are generally aggressive in
experimentation who exhibit cleverness in putting attractive possibilities into practice. One need not
invent but convert even old established products or services by changing their utility, their value,
and their economic characteristics into something new, attractive and utilitarian. This is the secret of
these people.

Imitative entrepreneurs: These people are characterized by readiness to adopt successful

innovations by entrepreneurs. They imitate techniques and technology innovated by others. They
are adoptive and more flexible.
By western standards, an imitative entrepreneur may be a pedestrian figure, an adopter an imitator
rather than a true innovator. He is more an organizer of factors of production than a creator. But in a
poor country attempting to industrialize, he is nevertheless a potent change producing figure. He
can set in motion the chain reaction which leads to cumulative progress.

Lecture 3

CLASSIFICATION OF ENTREPRENEURS

I. According to the Type of Business

Entrepreneurs are found in various types of business coronations of varying size. We may broadly
classify them as follows:

Business Entrepreneur:

Business entrepreneurs are individuals who conceive an idea for a new product or service and-then
creates a business to materialize their idea into reality. They tap both production and marketing’
resources in their search to develop a new business opportunity. They may set up a big
establishment or a small business unit. They are called small business entrepreneurs when found in
small business units such as printing press, textile processing house, advertising agency; readymade
garments, or confectionery. In a majority of cases, entrepreneurs are found in small trading and
manufacturing business and entrepreneurship flourishes when the size of the business is small.

Trading Entrepreneur:

Trading entrepreneur 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. He is engaged in both

domestic and overseas trade. Britain, due to geographical limitations, has developed trade

through trading entrepreneurs. These entrepreneurs demonstrate their ability in pushing many

ideas ahead to promote their business.

Industrial Entrepreneur:

Industrial entrepreneur is essentially a manufacturer, who identifies the potential needs

of customers and tailors a product or service to meet the marketing needs. He is a productoriented

man who starts in an industrial unit because of the possibility of making some new

product. The entrepreneur has the ability to convert economic resources and technology into a

considerably profitable venture. He is found in industrial units as the electronic industry, textile

units, machine tools or videocassette tape factory and the like.

Corporate Entrepreneur:

Corporate entrepreneur is a person .who demonstrates his innovative skill in organizing

and managing corporate undertaking. A corporate undertaking is a form of business’

organization, which is registered under some statute or Act, which gives it a separate legal entity.

A trust registered under the Trust Act, or companies registered under the Companies Act are

example of corporate undertakings. A corporate entrepreneur is thus an individual who plans,

develops and manages a corporate body.

Agricultural Entrepreneur:

Agricultural entrepreneurs are those entrepreneurs who undertake agricultural activities

as raising and marketing of crops, fertilisers and other inputs of agriculture. They are motivated

to raise agriculture through mechanization, irrigation and application of technologies for dry land

agriculture products. They cover a broad spectrum of the agricultural sector and include its allied

occupations.

II. According to the Technology use

The application of new technology in various succors of the national economy is essential

for the future growth of business. We may broadly classify these. entrepreneurs on the basis of

the use of technology as follows:

Technical Entrepreneur:

A technical entrepreneur is essentially compared to a “craftsman.” He develops improved

quality of goods because of his craftsmanship. He concentrates more on production than

marketing. On not much sales generation by and does not do various sales promotional

techniques. He demonstrates his innovative capabilities in matter of production of goods and

rendering of services. The greatest strength, which the technical entrepreneur has, is his skill in

production techniques.

Non-technical Entrepreneur:

Non-technical entrepreneurs are those who 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.

Professional Entrepreneur:

Professional entrepreneur is a person who is interested in establishing a business, but

does not have interest in managing or operating it once it is established. A professional

entrepreneur sells out the running business and starts another venture with the sales proceeds.

Such an entrepreneur is dynamic and he conceives new ideas to develop alternative projects.

III. According to the Entrepreneur and Motivation

Motivation is the force that influences the efforts of the entrepreneur to achieve his

objectives. An entrepreneur is motivated to achieve or prove his excellence in job performance.

He is also motivated to influence others by demonstrating his business acumen.

Pure Entrepreneur

A pure entrepreneur is an individual who is motivated by psychological and economic

rewards. He undertakes an entrepreneurial activity for his personal satisfaction in work, ego or

status.

Induced Entrepreneur

Induced entrepreneur is one who is induced to take up an entrepreneurial task due to the

policy measures of the government that provides assistance, Incentives, concessions and

necessary overhead, facilities to start a venture. Most of the induced entrepreneurs enter business

due to financial, technical and several other facilities provided to them by the state agencies to

promote entrepreneurship. A person with a sound project is provided package assistance to his

project. Today, import restriction and allocation to production quotas to mall units have induced

many people to start a small-scale industry.

Motivated Entrepreneur

New entrepreneurs are motivated by the desire for self-fulfillment. They come into being

because of the possibility of making and marketing some new product for the use of consumers.

If the product is developed to a saleable stage, the entrepreneur is further motivated by reward in

terms of profit.

Spontaneous Entrepreneur

These entrepreneurs start their business their by Entrepreneur. They are persons with

initiative, boldness and confidence in their_- ability, which activate, them, underage

entrepreneurial activity. Such entrepreneurs have a strong conviction and confidence in their

inborn ability.

IV. According to the Growth and Entrepreneurs

The development of a new venture has a greater chance of success. The entrepreneurs a

new and open field of business. The customer’s approval to the new product gives them

psychological satisfaction and enormous profit. The industrial units are identified as units of high

growth, medium growth and low growth industries and as such we have “Growth Entrepreneur”

and “Super-Growth Entrepreneur.”

Growth Entrepreneur:

Growth entrepreneurs are those who necessarily take up a high growth industry, which

has substantial growth prospects.

Super-Growth Entrepreneur:

Super-growth entrepreneurs are those who have shown enormous growth of performance

in their venture. The growth performance is identified by the liquidity of funds, profitability and

gearing.

V. According to the Entrepreneur and Stages of Development

Entrepreneurs may also be classified as the first generation entrepreneur, modern

entrepreneur and classical entrepreneur depending upon the stage of development.

They are explained below:

First-Generation Entrepreneur:

A first-generation entrepreneur is one who starts an. industrial unit by innovative skill.

He is essentially an innovator, combining different technologies to produce a marketable product

or service. .

Modern Entrepreneur:

A modern entrepreneur is one who undertakes those ventures, which go well along with

the changing demand in the market. They undertake those ventures, which suit the current

marketing needs.

Classical Entrepreneur:

A classical entrepreneur is one who is concerned with the customers and marketing needs

through the development of a self-supporting venture. He is a stereotype entrepreneur whose aim

is to maximise his economic returns at a level consistent with the survival of the firm with or

without an element of growth.

VI. Others

Innovating entrepreneurship is characterized by aggressive assemblage in information

and analysis of results, deriving from a novel combination of factors. Men / women in this group

are generally aggressive in experimentation who exhibit cleverness in putting attractive

possibilities into practice. One need not invent but convert even old established products or

services by changing their utility, their value, and their economic characteristics into something

new, attractive and utilitarian. Therein lies the key to their phenomenal success. Such an
entrepreneur is one who sees the opportunity for introducing a new technique of production

process or a new commodity or a new market or a new service or even the reorganization of an

existing enterprise.

Classification of Entrepreneur

Classification of Entrepreneurs

1) Based on Functional Characteristics.

2) Based on Developmental Angle.

3) Based on Types of Entrepreneurial Business.

4) Based on the nine Personality Types of Entrepreneurs.

5) Based on Types of Motivation.

6) Based on Types of Area. Based on Types of Gender.

1) Based on Functional Characteristics: Based on Functional Characteristics Innovating Entrepreneur

: One who introduces new goods, inaugurates new methods of production, discovers new market
and reorganizes the enterprise. Imitative Entrepreneur : One who is ready to adopt successful
innovations inaugurated by innovating entrepreneurs. Fabian Entrepreneur : One who is very
cautious and sceptical about experimenting any change in the enterprise. Drone Entrepreneur : One
who refuses to adopt opportunities to make changes in production even at the cost of severely
reduced returns.

2) Based on Developmental Angle: Based on Developmental Angle Prime Mover: this entrepreneur
sets in motion a powerful sequence of development, expansion, and diversification of business.
Manager: Such an entrepreneur does not initiate expansion and is content just staying in business.
Minor innovator: this entrepreneur contributes to economic progress by finding better use for
existing resources. Satellite: This entrepreneur assumes a supplier’s role and slowly moves towards a
productive enterprise. Local trading: Such an entrepreneur limits his enterprise to the local market.

3) Based on Types of Entrepreneurial Business: Based on Types of Entrepreneurial Business

Manufacturing: an entrepreneur who runs such a business actually produces the products that can
be sold using resources and supplies. Wholesaling: An entrepreneur with such a business sells
products to the middle man. Retailing: An entrepreneur with such a business sells products directly
to the people who use or consume them. Service: An entrepreneur in this business sells services
rather than products.

4) Based on the nine Personality Types of Entrepreneurs: Based on the nine Personality Types of
Entrepreneurs The Improver: if you operate your business predominately in the improver mode, you
are focused on using your company as means to improve the world. The Advisor: This business
personality type will provide an extremely high level of assistance and advice to customers. The
Superstar: Here the business is centered on the charisma and high energy of the superstar CEO. The
Artist: This business personality is the reserved but a highly creative type. As an artist type you’ll
tend to build your business around the unique talents and creativities that you have.
5) Based on the nine Personality Types of Entrepreneurs: Based on the nine Personality Types of
Entrepreneurs The Visionary: A business built by a visionary will often be based on the future vision
and thoughts of the founder. The Analyst: if you run a business as an Analyst, your company focus in
on fixing problems in a systematic way. Often the basis for science, engineering or computer firms,
analyst companies excel at problem solving. The Fireball: A business owned and operated by a
fireball is full of life, energy and optimism.

6) Based on Types of Motivation: Based on Types of Motivation Pure Entrepreneur : Individual who
is motivated by psychological and economic rewards. The basic objective is to earn profit. Induced
Entrepreneur : One who is induced to take up entrepreneurship due to government assistance,
rewards, concessions etc. Motivated Entrepreneur : Motivated by the desire for self-fulfilment &
self-actualization. Spontaneous Entrepreneur : These entrepreneurs start business by their natural
talent.

7) Based on Types of Gender: Based on Types of Gender Male Entrepreneur. Women Entrepreneur.

Entrepreneurs-Definition,Classification and Role in Economic Development

Entrepreneurs

Definitions

“Entrepreneurs are people who have the ability to see and evaluate business opportunities,together
with the necessary resources to take advantage of them and to intimate appropriate action to
ensure success.”

-International Labor Organization

Entrepreneur searches for change,responds to it and exploits opportunities.Innovation is the specific

tool of an entrepreneur.

-Peter F. Drucker

Entrepreneur is the one who is endowed with more than average capacities in the task of organizing
and coordinating the various factors of production.He is pioneer and captain of industry.

-Francis A.Walker

Classification of EntrepreneursDoc2_001

a) Based on Functional Characteristics

Classification Given by Danhof

1. Innovative Entrepreneur

An innovative entrepreneur is one who launches new products, discovers new markets, establishes
new methods of production and restructures the enterprise. They focus on revolutionalisation and
development.Such entrepreneurs can do well only when certain level of development has already
been achieved;they look forward to improving upon the past.

2. Imitative or adoptive entrepreneur

Imitative Entrepreneurs adopt victorious innovations launched by the innovative entrepreneurs.

They duplicate the technology and techniques innovated by others and they are suitable for
underdeveloped countries. Imitative entrepreneurs are characterized by readiness to adopt
successful innovations inaugurated by successful innovating entrepreneurs. Imitative entrepreneurs
do not imitate the changes themselves, they only imitate techniques and technologies innovated by
others. However, the talent of imitative entrepreneurs should not be under-estimated. Even
imitative entrepreneurs are revolutionary and agents of change. They have ability to do things which
have not been done before even though, unknown to them, the problem may have been solved in
the same way by others. Innovative entrepreneur is creative, while imitative entrepreneur is
adoptive.

3. Fabian Entrepreneurs

Fabian entrepreneurs are exemplified by great caution and skepticism in experimenting any change
in the organization. They imitate only in situations where it becomes necessary to do so. Such
entrepreneurs are shy, lazy and lethargic. They are imitative by nature but are not determined and
also lack power. They imitate only when it becomes perfectly clear that failure to do so would result
in a loss of the relative position of the enterprise.

4. Drone Entrepreneurs

Drone Entrepreneurs suffer losses, as they refuse to make any modifications in the existing
production methods. Drone entrepreneurs are characterized by a refusal to adopt opportunities to
make changes in production formulae even at the cost of severely reduced returns. When
competition increases, they are pushed out of the market as it becomes uneconomical for them to
exist and operate in a competitive market.

b) Based on developmental angle

1. Prime mover: This entrepreneur sets in motion a powerful sequence of development,expansion

and diversification of business.

2. Manager: Such an entrepreneur does not initiate expansion and is content just staying in business.

3. Minor innovator: This entrepreneur contributes to economic progress by finding better use for
existing resources.

4. Satellite: This entrepreneur assumes a supplier’s role and slowly moves towards a productive
enterprise.

5. Local trading: Such an entrepreneur limits his enterprise limits his enterprise to the local market.

c) Based on Types of Entrepreneurial Business

1.Manufacturing

An entrepreneur who runs such a business actually produces the products that can be sold using
resources and supplies.For example,apparel and other textile products,chemical and related
products,electronics and other electrical equipment,fabricated metal products,industrial machinery
and equipment,printing and publishing,rubber and miscellaneous plastic products,stone,clay etc.

2. Wholesaling

An entrepreneur with such a business sells products to the middle Man.

3. Retailing

An entrepreneur with such a business sells products directly to the people who or consume them.
4. Service

An entrepreneur in this business sells services rather than products.

d) Based on the Nine Personality types of Entrepreneurs

Your business personality type is the traits and characteristics of your personality that blend with
needs of the business.If you better understand your business personality,then you can give your
company the best part of you.There are 9 key types of personality and understanding.

1.The Improver

If you operate your business predominately in the improver mode,you are focused on using your
company as a means to improve the world.Your overarching motto is : morally correct companies
will be re-warded working on a noble cause. Improvers have an unwavering ability to run their
business with high integrity and ethics.

Personality Alert: Be aware of your tendency to be a perfectionist and over-critical of employees and
customers.

Entrepreneur example: Anita Roddick,Founder of the Body Shop.

2. The Advisor

This business personality type will provide an extremely high level of assistance and advice to
customers. The advisor’s motto is : the customer is right and we must do everything to please
them.Companies built by advisors become customer focused.

Personality Alert: Advisors can become totally focused on the needs of their business and customers
that they may ignore their own needs and ultimately burn out.

Entrepreneur example: John W. Nordstrom,Founder Nordstrom.

3. The Superstar

Here the business is centered on the charisma and high energy of the Superstar CEO.This personality
often will cause you to build your business around your own personal brand.

Personality Alert: Superstars can be too competitive and workaholics.

Entrepreneur example: Donald trump,CEO of Trump Hotels and Casino Resorts.

4.The Artist

This business personality is the reserved but a highly creative type. Often found in businesses
demanding creativity such as web design and ad agencies.As an artist type you’ll tend to build you
business around the unique talents and creativities that you have.

Personality Alert: You may be overly sensitive to your customer’s responses even if the feedback is
constructive.Let go the negative self image.

Entrepreneur example: Scott Adams,Creator of Dilbert.

5. The Visionary
A business built by a Visionary will often be based on the future vision and thoughts of the
founder.You will have a high degree of curiosity to understand the world around you and will set up
plan to avoid the land mines.

Personality Alert: Visionaries can be too focused on the dream with little focus on reality.Action
must proceed vision.

Entrepreneurial example: Bill Gates,Founder of Microsoft Inc.

6. The Analyst

If you run a business as an analyst,your company focus is on fixing problems in a systematic

way.Often the basis for science,engineering or computer firms,Analyst companies excel at problem
solving.

Personality Alert: Be aware of analysis paralysis.Work on trusting others.

Entrepreneurial example: Intel Founder,Gorden Moore.

7. The Fireball

A business owned and operated by a Fireball is full of life, energy and optimism. Your company is
life-energizing and makes customers feel the company has a get it done attitude in a fun playful
manner.

Personality Alert: You may over commit your teams and act to impulsively. Balance your
impulsiveness with business planning.

Entrepreneurial example: Malcolm Forbes, Publisher, Forbes Magazine.

8.The Hero

You have an incredible will and ability to lead the world and your business through any challenge.
You are the essence of entrepreneurship and can assemble great companies.

Personality Alert: Over promising and using force full tactics to get your way will not work long term.
To be successful, trust your leadership skills to help others find their way.

Entrepreneurial example: Jack Welch, CEO GE.

9. The Healer

If you are a Healer, you provide nurturing and harmony to your business. You have an uncanny
ability to survive and persist with an inner calm.

Personality Alert: Because of your caring, healing attitude toward your business, you may avoid
outside realities and use wishful thinking. Use scenario planning to prepare for turmoil.

Entrepreneurial example: Ben Cohen, Co-Founder Of Ben & Jerry’s Ice Cream.

Role of an Entrepreneur in Economic Development

The entrepreneur who is a business leader looks for ideas and puts them into effect in fostering
economic growth and development. Entrepreneurship is one of the most important inputs in the
economic development of a country. The entrepreneur acts as a trigger head to give spark to
economic activities by his entrepreneurial decisions. He plays a pivotal role not only in the
development of industrial sector of a country but also in the development of farm and service
sector. The major roles played by an entrepreneur in the economic development of an economy is
discussed in a systematic and orderly manner as follows.

(1) Promotes Capital Formation

Entrepreneurs promote capital formation by mobilizing the idle savings of public. They employ their
own as well as borrowed resources for setting up their enterprises. Such type of entrepreneurial
activities lead to value addition and creation of wealth, which is very essential for the industrial and
economic development of the country.

(2) Creates Large-Scale Employment Opportunities

Entrepreneurs provide immediate large-scale employment to the unemployed which is a chronic

problem of underdeveloped nations. With the setting up of more and more units by entrepreneurs,
both on small and large-scale numerous job opportunities are created for others. As time passes,
these enterprises grow, providing direct and indirect employment opportunities to many more. In
this way, entrepreneurs play an effective role in reducing the problem of unemployment in the
country which in turn clears the path towards economic development of the nation.

(3) Promotes Balanced Regional Development

Entrepreneurs help to remove regional disparities through setting up of industries in less developed
and backward areas. The growth of industries and business in these areas lead to a large number of
public benefits like road transport, health, education, entertainment, etc. Setting up of more
industries lead to more development of backward regions and thereby promotes balanced regional
development.

(4) Reduces Concentration of Economic Power

Economic power is the natural outcome of industrial and business activity. Industrial development
normally leads to concentration of economic power in the hands of a few individuals, which results
in the growth of monopolies. In order to redress this problem a large number of entrepreneurs need
to be developed, which will help reduce the concentration of economic power amongst the
population.

(5) Wealth Creation and Distribution

It stimulates equitable redistribution of wealth and income in the interest of the country to more
people and geographic areas, thus giving benefit to larger sections of the society. Entrepreneurial
activities also generate more activities and give a multiplier effect in the economy.

(6) Increasing Gross National Product and Per Capita Income

Entrepreneurs are always on the look out for opportunities. They explore and exploit opportunities,,
encourage effective resource mobilization of capital and skill, bring in new products and services and
develops markets for growth of the economy. In this way, they help increasing gross national
product as well as per capita income of the people in a country. Increase in gross national product
and per capita income of the people in a country, is a sign of economic growth.

(6) Improvement in the Standard of Living

Increase in the standard of living of the people is a characteristic feature of economic development
of the country. Entrepreneurs play a key role in increasing the standard of living of the people by
adopting latest innovations in the production of wide variety of goods and services in large scale that
too at a lower cost. This enables the people to avail better quality goods at lower prices, which
results in the improvement of their standard of living.

(7) Promotes Country’s Export Trade

Entrepreneurs help in promoting a country’s export-trade, which is an important ingredient of

economic development. They produce goods and services in large scale for the purpose earning
huge amount of foreign exchange from export in order to combat the import dues requirement.
Hence import substitution and export promotion ensure economic independence and development.

(8) Induces Backward and Forward Linkages

Entrepreneurs like to work in an environment of change and try to maximize profits by innovation.
When an enterprise is established in accordance with the changing technology, it induces backward
and forward linkages, which stimulate the process of economic development in the country.

(9) Facilitates Overall Development

Entrepreneurs act as catalytic agent for change, which results in chain reaction. Once an enterprise is
established, the process of industrialization is set in motion. This unit will generate demand for
various types of units required by it and there will be so many other units which require the output
of this unit. This leads to overall development of an area due to increase in demand and setting up of
more and more units. In this way, the entrepreneurs multiply their entrepreneurial activities, thus
creating an environment of enthusiasm and conveying an impetus for overall development of the
area.

Entrepreneurs are classified into different types based on different classifications as mentioned
below:

Based on the Type of Business:

1. Trading Entrepreneur:

As the name itself suggests, the trading entrepreneur undertake the trading activities. They procure
the finished products from the manufacturers and sell these to the customers directly or through a
retailer. These serve as the middlemen as wholesalers, dealers, and retailers between the
manufacturers and customers.

2. Manufacturing Entrepreneur:

The manufacturing entrepreneurs manufacture products. They identify the needs of the customers
and, then, explore the resources and technology to be used to manufacture the products to satisfy
the customers’ needs. In other words, the manufacturing entrepreneurs convert raw materials into
finished products.

3. Agricultural Entrepreneur:

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The entrepreneurs who undertake agricultural pursuits are called agricultural entrepreneurs. They
cover a wide spectrum of agricultural activities like cultivation, marketing of agricultural produce,
irrigation, mechanization, and technology.

Based on the Use of Technology:

1. Technical Entrepreneur:

The entrepreneurs who establish and run science and technology-based industries are called
‘technical entrepreneurs.’ Speaking alternatively, these are the entrepreneurs who make use of
science and technology in their enterprises. Expectedly, they use new and innovative methods of
production in their enterprises.

2. Non-Technical Entrepreneur:

Based on the use of technology, the entrepreneurs who are not technical entrepreneurs are non-
technical entrepreneurs. The forte of their enterprises is not science and technology. They are
concerned with the use of alternative and imitative methods of marketing and distribution strategies
to make their business survive and thrive in the competitive market.

Based on Ownership:

1. Private Entrepreneur:

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A private entrepreneur is one who as an individual sets up a business enterprise. He / she it’s the
sole owner of the enterprise and bears the entire risk involved in it.

2. State Entrepreneur:

When the trading or industrial venture is undertaken by the State or the Government, it is called
‘state entrepreneur.’

3. Joint Entrepreneurs:

When a private entrepreneur and the Government jointly run a business enterprise, it is called ‘joint
entrepreneurs.’
Based on Gender:

1. Men Entrepreneurs:

When business enterprises are owned, managed, and controlled by men, these are called ‘men
entrepreneurs.’

2. Women Entrepreneurs:

Women entrepreneurs are defined as the enterprises owned and controlled by a woman or women
having a minimum financial interest of 51 per cent of the capital and giving at least 51 per cent of
employment generated in the enterprises to women.

Based on the Size of Enterprise:

1. Small-Scale Entrepreneur:

An entrepreneur who has made investment in plant and machinery up to Rs 1.00 crore is called
‘small-scale entrepreneur.’

2. Medium-Scale Entrepreneur:

The entrepreneur who has made investment in plant and machinery above Rs 1.00 crore but below
Rs 5.00 crore is called ‘medium-scale entrepreneur.’

3. Large-Scale entrepreneur:

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The entrepreneur who has made investment in plant and machinery more than Rs 5.00 crore is
called ‘large-scale entrepreneur.’

Based on Clarence Danhof Classification:

Clarence Danhof (1949), on the basis of his study of the 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 types:

These are discussed in seriatim:

1. Innovating Entrepreneurs:

Innovating entrepreneurs are one who introduce new goods, inaugurate new method of production,
discover new market and reorganise the enterprise. It is important to note that such entrepreneurs
can work only when a certain level of development is already achieved, and people look forward to
change and improvement.

2. Imitative Entrepreneurs:

These are characterised by readiness to adopt successful innovations inaugurated by innovating

entrepreneurs. Imitative entrepreneurs do not innovate the changes themselves, they only imitate
techniques and technology innovated by others. Such types of entrepreneurs are particularly
suitable for the underdeveloped regions for bringing a mushroom drive of imitation of new
combinations of factors of production already available in developed regions.

3. Fabian Entrepreneurs:

Fabian entrepreneurs are characterised by very great caution and skepticism in experimenting any
change in their enterprises. They imitate only when it becomes perfectly clear that failure to do so
would result in a loss of the relative position in the enterprise.

4. Drone Entrepreneurs:

These are characterised by a refusal to adopt opportunities to make changes in production formulae
even at the cost of severely reduced returns relative to other like producers. Such entrepreneurs
may even suffer from losses but they are not ready to make changes in their existing production
methods.

Following are some more types of entrepreneurs listed by some other behavioural scientists:

1. Solo Operators:

These are the entrepreneurs who essentially work alone and, if needed at all, employ a few
employees. In the beginning, most of the entrepreneurs start their enterprises like them.

2. Active Partners:

Active partners are those entrepreneurs who start/ carry on an enterprise as a joint venture. It is
important that all of them actively participate in the operations of the business. Entrepreneurs who
only contribute funds to the enterprise but do not actively participate in business activity are called
simply ‘partners’.

3. Inventors:

Such entrepreneurs with their competence and inventiveness invent new products. Their basic
interest lies in research and innovative activities.
4. Challengers:

These are the entrepreneurs who plunge into industry because of the challenges it presents. When
one challenge seems to be met, they begin to look for new challenges.

5. Buyers:

These are those entrepreneurs who do not like to bear much risk. Hence, in order to reduce risk
involved in setting up a new enterprise, they like to buy the ongoing one.

6. Life-Timers:

These entrepreneurs take business as an integral part to their life. Usually, the family enterprise and
businesses which mainly depend on exercise of personal skill fall in this type/category of
entrepreneurs.

The Creators

These are the long-haul variety. They have a tremendous desire to have a scalable model with which
they slog for the first couple of years in developing the required infrastructure. They aren’t driven
with wealth or goodwill goals, but a sincere hunger of going further than the math says. Expert
hunters for talent, investors & customers, the Creators keep a personal check on all activities in the
organization. Shifting personalities and controlling temperaments are hallmarks of the Creators.

The Seers

These are the ones who know the markets and read trends very well. They are supremely talented in
finding unseen opportunities and then building the required ecosystem to take the model up several
notches, aided with a personal flair for positioning. They measure successes in incomes both residual
& renewal, making them impulsive decision makers. They know exactly when to latch onto an
opportunity and when to let go.

The Scholars

These are the educated & trained lots, who study & analyse a subject well, before giving their all for
an untapped need- and that is also limited to set goals. Very risk-averse, the Scholars spend a lot of
their efforts on developing the product/idea. And once they hit their personal goals, they shift to
service & renewal models. To them a product can only stretch till a particular niche and cannot be
tailored to different need segments. These are setups, which most often get picked up by the Look-
Outs and the Scholars.

The Pioneers

These are extreme specialists. They start with something they love, which then gets propped as an
Entrepreneurial opportunity. They simply do what they love doing. They are always making the
product better, improving the user experience and adding in more touch-points where they think an
impact can be made. To a Trailblazer, running a business and developing the product are entirely
separate entities. They would be more fruitful in the development teams than at the business end of
the spectrum. Their definition of wealth & profits are the impacts their products have on the social &
psychological structure, rather than balance sheets.

Because every Entrepreneur is a different individual, every venture leads to a different outcome.
Where a Facebook or a Tesla impacts social structure and conditioning, an Apple impacts the
physical environment of a user. Similarly, where a Virgin leads to flamboyance in the product
delivery, a Tata leads to a long-term association with the user. While it is not difficult to identify
what type an Entrepreneur is, it is very important what kind of an Entrepreneur would you want to
be when you strike on the path.

Danhof classifies Entrepreneur into four types.

1. Innovative entrepreneur

This category of Entrepreneur is characterized by smell of innovativeness. This type of Entrepreneur,

sense the opportunities for introduction of new ideas, new technology, discovering of new markets
and creating new organizations. Such Entrepreneur can work only when certain level of
development is already achieved and people look forward to change and improve. Such
Entrepreneur are very much helpful for their country because they bring about a transformation in
life style.

2. Adoptive or imitative entrepreneur

Such entrepreneurs imitate the existing entrepreneur and set their enterprise in the same manner.
Instead of innovation, may just adopt the technology and methods innovated by others. Such types
of entrepreneur are particularly suitable for under-developed countries for imitating the new
combination of production already available in developed countries.

3. Fabian entrepreneurs

Fabian entrepreneurs are characterized by great caution and skepticism, in experimenting any
change in their enterprises. They imitate only when it becomes perfectly clear that failure to do so
would result in a loss of the relative position in the enterprises.

4. Drone entrepreneurs

Such entrepreneurs are conservative or orthodox in outlook. They always feel comfortable with their
old fashioned technology of production even though technologies have changed. They never like to
get rid of their traditional business, traditional machineries and traditional system of business even
at the cost of reduced returns.

Arthur H Cole Classification

Arthur H Cole classifies entrepreneurs as empirical, rational and cognitive entrepreneur.

Empirical

He is entrepreneur hardly introduces anything revolutionary and follows the principle of rule of
thumb.

Rational

The rational entrepreneur is well informed about the general economic conditions and introduces
changes, which look more revolutionary.

Cognitive

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 enterprise.

Classification Based on the Scale of Enterprise

Small scale

These entrepreneurs do not possess the necessary talents and resources to initiate large-scale
production and to introduce revolutionary technological changes.

Large scale

They possess the necessary financial and other resources to initiate and introduce new technological
changes. They possess talent and research and development facilities.

Other Classification

Following are some more types of entrepreneurs listed by behavior scientists.

Solo operators

These are the entrepreneurs who essentially work alone, introduce their own capital and if essential
employ very few employees. In the beginning most of the entrepreneurs start their enterprises like
them.

Active partners

Such entrepreneurs jointly put their efforts and resources. They actively participate in managing the
daily routine of the business concern. Entrepreneurs who only contribute their funds but not actively
participate in the business are called simply ‘Partners’.

Inventors

Such entrepreneurs are creative in character and feel happy in inventing new products, technologies
and methods of production. Their basic interest lies in research and innovative activities.

Challengers

According to such entrepreneurs, if there is no challenge in life, there is no charm in life. Such
entrepreneurs plunge into industry/business because of the challenge it presents. When one
challenge seems to be met, they begin to look for new challenges. They convert odds and adversities
into opportunities and make profit.

Buyers

These are the entrepreneurs who do not like to face the hassles of building infrastructure and other
facilities. They simply purchase the existing one and by using their experience and expertise try to
run the enterprise successfully.

Life timers

Such entrepreneurs take business as an integral point of their life. Family enterprises, which mainly
depend on exercise of personal skill, fall in this category.

Industrial entrepreneurs

Such entrepreneurs engage in manufacturing and selling products.

Service entrepreneurs

Such entrepreneurs engage in service activities like repair, consultancy, beauty parlor etc where
entrepreneurs provide service to people.
Business entrepreneurs

They are also called as trading entrepreneurs which buy and sell goods.

Agricultural entrepreneurs

They engage themselves in agricultural activities like horticulture, floriculture, animal husbandry,
poultry etc.

Corporate entrepreneurs

Corporate entrepreneurs undertake their business activities under legally registered company or
trust.

Rural entrepreneurs

Entrepreneur’s selecting rural-based industrial opportunity in either khadi or village industries sector
or in farm entrepreneurship are regarded as rural entrepreneurs. According to khadi and village
industry commission (KVIC) Village or rural industry means any industry located in rural area,
population of which do not exceed 10,000 which produces any goods or services in which fixed
investment of an artisan or a worker does not exceed one thousand rupees.

Women entrepreneurs

According to government of India an entrepreneurs is defined as an enterprise owned and

controlled by 16 a woman and having minimum financial interests of 51% of the capital and giving at
least 51% of the employment generated in the enterprise to women. Women entrepreneurs play an
important role in economy especially in rural areas.

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