Traits / Qualities of an Entrepreneur or Entrepreneurial Competencies

Top 7 Personal Competencies of an Entrepreneur

Posted by Amitabh Shukla on August 25, 2009 in Entrepreneurship
An entrepreneur has to have certain cultivated and inherent qualities in him or her in order to
make a success of his or her venture. Not any person can be a successful businessman or woman.
Hard work and determination to win have made many successful business people to reach their
aspired goals.
Personal competencies of a successful businessman or woman

Leadership qualities A businessman or woman must be able to lead his or her staff
members as well as other associates. He or she must be able to guide others in carrying
out business and make a success of it.
Decisive A successful businessman or woman has to be very decisive. He or she has to
take many decisions sometimes on the spur of the moment. Any vacillation in decisions
could affect their business. They have to be very firm in their decisions. Also, while
taking decisions they must not get influenced by others. They should be able to take
decisions independently.
Risk-taking Business involves many risks, which a business person must not hesitate to
take. Lot of financial involvement is there and obviously one has to be careful with
investments. Yet risks have to be taken in money matters as well. Sometimes a
businessman may lose out on his or her venture, but when he or she make a success of it
then he or she has much to gain, both financially and from a personal satisfaction point
of view.
Confident Achieving success in business requires confidence. A businessman or
businesswoman has to be sure of him or herself about reaching the set targets of success.
Diffidence does not help. Self-image is enhanced, when one is confident.
Willingness A businessman or woman must be willing to undertake any matters
concerning their business venture. He or she must not hesitate for personal or other
reasons. Willingness to extend a helping hand is very essential.
Enterprising One has to be enterprising in order to achieve significant results in
business. He or she has to have the zeal to do things. A laid- back approach will not help.
Innovative New ideas help make a business venture successful. A successful
businessman or woman must be innovative and always strive for something better. New
concepts must be formulated and new ways of doing business must be thought of.

A businessman or woman has to very competent to achieve scale the ladder of success. Certain
attributes are essential for him or her to establish their business on sound footing.
Competence refers to a persons underlying characterestics leading to his / her superior
performance. It is a good combination of various qualities and traits required to perform the job
effectively. Some people believe that entrepreneurs are born not made. Business family
background is essential to success for entrepreneurs. Other people believe that entrepreneurs
are made not born. According to some people, persons with proper knowledge and skills
acquired through education and experience can become successful entrepreneurs. In order to
resolve the controversy on what makes successful entrepreneurs, the Entrepreneurship

Development Institute of India (EDI) conducted a research and identified the following traits of
an entrepreneur:
1. Initiation
2. Watching for opportunities (vision and foresightedness)
3. Persistence
4. Information seeker
5. Quality conscious
6. Commitment to work
7. Efficiency lover
8. Proper planning
9. Self confidence
10. Assertiveness
11. Persuation
12. Effective monitoring
13. Concern for employees
According to McClelland, three qualities are:
1. Endowed with an unusual creativeness.
2. Enriched by high propensity
3. Strong need for achievement.
Nature and Characterestics of Entrepreneurship
1.
2.
3.
4.
5.
6.
7.
8.

Economic Activity
Creative activity
Purposeful activity
A function of risk bearing
An organizing function
Gap filling function
Dynamic process
Innovative function

Peter Drucker defines an entrepreneur as one who always searches for change, responds to it and
exploits it as an opportunity. Entrepreneurs innovate.
Functions of Entrepreneur
1. Innovation
2. Risk Taking
3. Organisation Building
4. Perceiving Market Opportunities
5. Gaining Command over scarce resources
6. Purchasing inputs
7. Marketing products
8. Dealing with Bureaucrats
9. Managing HR within the firm

10. Managing customer and supplier relations

11. Managing finance
12. Acquiring and overseeing assembly of the factory
13. Upgrading process and product
14. Introducing new production techniques and products
FACTORS AFFECTING ENTREPRENEURIAL GROWTH
Entrepreneurship does not emerge and grow spontaneously. Rather, it is dependent upon several economic,
social, political and psychological factors. These environmental factors may have both positive and negative
influences on the growth of entrepreneurship.
1. ECONOMIC FACTORS
a) Adequate overhead facilities: Profitable innovations require basic facilities like transportation,
communication power supply etc. They reduce cost of production and increase profit.
b) Capital: Inventions are capital oriented. In less developed countries most capital equipment have
to be imported which involves foreign exchange which acts as a difficult problem.
c) Great risk: Risk is high in case of less developed countries as there is lack of reliable
information, markets for goods and services is small etc.
d) Labor: Though there is abundant labor supply there is generally scarcity of skills at
all levels.
e) Raw Material:
f) Market:

2. SOCIAL FACTORS
A society that is rational in decision making would be favorable for decision making. Education,
research and training is given less importance in less developed countries therefore there is very
little vertical mobility of labor.
a) Legitimacy of Entrepreneurship
b) Social Mobility
c) Security
3. CULTURAL FACTORS
Religious, social and cultural factors also influence the individual taking upan entrepreneurial career, in
some countries there is religious and culturalbelief that high profit is unethical. This type of belief inhibits
growth of entrepreneurship.

4. PERSONALITY FACTORS
In less developed countries the entrepreneur is looked upon with suspicion. Public opinion in the less
developed nations sees in the entrepreneur only a profit maker and exploited.
5. MOTIVAT ION
Motivation is the act of stimulating someone or oneself to get a desired course of action, to push the right
button to get the desired results.
MOTIVATING FACTORS
1. Education background
2. Occupational experience
3. Family background
4. Desire to work independently in manufacturing line
5.Assistance from financial institution
6.Availability of technology
7. Other factor
6. Governmental Influence:
FACTORS INFLUENCING ENTERPRENURESHIP
The emergence of entrepreneurs in a society depends upon closely interlinked social, religious, cultural,
psychological, and political and economic factors.
FAMILY TRADITION: Individuals who for some reason, initiate, establish maintain and expand new
enterprises generate entrepreneurship in society. It is observed that entrepreneurs grow in the tradition of
their families and society and accept certain values and norms from these sources.
RELIGIOUS, SOCIAL AND CULTURAL FACTORS: Religious, social and cultural factors also influence
the individual taking up an entrepreneurial career, in some countries there is religious and cultural belief that
high profit is unethical. This type of belief inhibits growth of entrepreneurship.
PSYCHOLOGICAL FACTORS: The psychological factors like high need for achievement, determination
of unique accomplishment, self confidence, creativity, vision, leadership etc, promote entrepreneurship
among individuals. On the other hand psychological factors like security, conformity and compliance, need
for affiliation etc restrict promotion of entrepreneurship.
POLITICAL FACTORS: The political and also the political stability of country influence the growth of
entrepreneurship. The political system, which promotes free market, individual freedom and private
enterprise, will promote entrepreneurship.

ECONOMIC POLICIES: The economic policies of the government and other financial institutions and the
opportunities available in a society as a result of such policies play a crucial role in exerting direct influence
on entrepreneurship.
In view of the haphazard development of economic zones, Government is encouraging the entrepreneurs to
establish their business in backward and tribal areas. This is primarily to arrest the migration of people from
the villages to cities and to create employment opportunities locally. Government is promoting such
development by giving incentives like tax holidays (both sales and income), subsidized power tariff, raw
materials, transportation cost etc.
CAUSES OF SLOW GROWTH OF ENTREPRENEURSHIP IN INDIA
Entrepreneurship developed only in the beginning of the 19th century and though the base for
industrialization had been laid a century ago. The following be the main reasons, which could be responsible
for lack of initiative and entrepreneurial spirit among the Indians.
1. Caste System: - This decided occupation for members from each caste. The altitudes were restrictive and
therefore there were no changes of accumulating wealth and promoting production.
2. Agriculture: - Agriculture was the main occupation. Farmers and cultivators were always in the clutches
of the money lenders. The zamindars, nawabs and rajahs exploited the laborers. They spent money on
enjoyment and luxury and never risked money in industry. Banking and commercial system was also absent
so even if there were savings, they could not be utilized for productive use.
3. Educational System: - Talented young men were prepared to take white collared jobs or join government
or professional services. Many were attracted towards politics. The result was that very few young men got
attracted towards becoming efficient, industrialists, technicians, managers etc.
4. Colonial Rules: - The British rulers adopted discriminatory policy Rich Indian businessman had special
connections with foreign rulers and both satisfied their self interests. Even the few insurance and banking
services catered to the needs of some rich Indian businessman, Britishers in India did also not encourage
Industrialization.
5. Managing Agents: - There were just a handful of people who were known to be having managerial skills.
On common basis, these agents would lend their skills to some top industries. Industrialists could not
manage their own units. They were always at the mercy of the managing agents who filled their pockets with
big chunks of the companies profits and took full advantage of Indian industrialists till the managing agency
system was abolished in 1970.
6. Joint Family System: - Younger members of the family always depended on the Head who never gave
any kind of independence or encouraged units other than family business ones. A number of young men
were discouraged from diversifying from family business and doing something new and different.
7. Religious attitude: - Indians were very religious minded. They gave more time to religion than to earning
material wealth. Religion got priority over business. Some religions even condemned excess earnings and
indulgence I in comforts. Industrial activity was, therefore, given secondary consideration by the religious
Indians.

8. Mindset: - The mindset of the average Indian was never entrepreneurial. Our religious literature and epics
told us to have patience and to keep on working without expecting the fruits of labor. This also killed the
drive and desire to get into entrepreneurial activities.
9. Recognition by the society: - In earlier days, the heroes India were the social reformers and the
politicians. Now it is the era of sportsmen, models and film stars. It is sad that successful or the struggling
entrepreneurs have never been recognized as heroes. Entrepreneurial activity did not get due importance in
the India society.
10. Family Background: - Empirical studies have shown that a good number of entrepreneurs come from
families with industrial backgrounds. Unfortunately, only a few entrepreneurial communities in India made
entrepreneurial contribution. These communities could also not make headway in the entrepreneurial field
on account of the colonial rule, lack of infrastructure and other facilities. Entrepreneurship development
could only take place after independence in India.

Entrepreneurship and Economic Development

Economic development means a process of upward change whereby the real per capita income of a country
increases over a period of time. Entrepreneurs serve as the catalysts in the process of industrialization and
economic growth. Technical progress alone cannot lead to economic development, unless technological
breakthroughs are put to economic use by entrepreneurs.
The entrepreneur is the key to the creation of new enterprises that energize the economy and rejuvenate the
established enterprises that make up the economic structure. Entrepreneurs initiate and sustain the process of
economic development in the following ways:
1.
2.
3.
4.
5.
6.
7.

Capital formation
Improvement in per capita income
Generation of employment
Balanced regional development
Improvement in living standards
Economic independence
Backward and forward linkages