1 Entrepreneurship and InnovationMuhammad Mahboob Ali, PhD, Post Doctorate Professor, Dhaka School of Economics. Paper will be presented at ISBR Business School, Bangalore on 11 th September ,2017.

2 What is needed is the spirit among the youth that - I can do it, we can do it and the nation can do it. Our educational institutions have to concentrate on developing the leadership traits and the confidence to perform among every youth of the nation. A. P. J. Abul Kalam(2015)

3 "Knowledge is the most powerful engine of production; it enables us to subdue Nature and satisfy our wants.” Alfred Marshall

4 Entrepreneur: In the 16th Century, organized and led French military expedition is known as an Entrepreneur. In the 17th Century who did the work of public contractor was known as Entrepreneur. In the 18th Century French Economist Richard Cantillon used Entrepreneur .

5 Entrepreneurs, according to Cantillon, are non-fixed income earners who pay known costs of production but earn uncertain incomes, due to the speculative nature of pandering to an unknown demand for their product. Jean-Baptiste Say who is credited for coining the word and advancing the concept of the entrepreneur.

6 Say pointed out that it was entrepreneurs who sought out inefficient uses of resources and capital and moved them into more productive, higher yield areas. Simply put, entrepreneurs seek opportunities for profit and, by doing so, create new markets and fresh opportunities. According to Joseph Schumpeter “carrying out innovations is the only function which is fundamental in history". He also accented that it is entrepreneurship ”replaces today’s Pareto optimum with tomorrow’s different new thing”.

7 Schumpeter described that development is a historical process of structural changes, substantially driven by innovation : Launch of a new product or a new species of already known product Application of new methods of production or sales of a product Opening of a new market Acquiring of new sources of supply of raw material or semi- finished goods; New industry structure such as the creation or destruction of a monopoly position.

8 Factors affecting entrepreneurship:Infrastructure: Physical-Social Institutionalization Financial Access Economic Factor Education Gender Balance Empowerment of People R&D Ecological balances Participation in Global value chain

9 Innovation: innovation is the “creative destruction” that develops the economy while the entrepreneur performs the function of the change creator. Competition and innovation may lead to “creative destruction”. Creation of new products and methods destroys the old products and methods. To provide risk, capital to high potential ventures in exchange for partial ownership of the firm, venture capitalists are typically active investors who seek to add value through their inter-action with and advice for the managers of the entrepreneurial venture(Arthurs and Busenitz).

10 Peter F. Drucker described that innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service. Drucker wrote that purposeful innovation results from analysis, systemic review and hard work and can be taught, replicated and learned.

11 Drucker identified seven sources of opportunity that will ultimately drive innovation:The organization’s own unexpected successes and failures, and competition. Inconsistencies, in a process, such as production, distribution, or strangeness in customer behavior. Process needs Changes in industry and market structures. Changes in demographics. Changes in meaning and perception. New knowledge.

12 Innovation is both conceptual and perceptualInnovation is both conceptual and perceptual. Drucker wrote that an innovation has to be simple and it has to be focused.  Entrepreneurs typically start firms with an innovative idea with the anticipation that the venture will become a long-term success. Entrepreneurship refers to Innovation, creation, and distribution of value and benefits to individuals, groups, organization, and society.

13 Drucker gave three conditions for an innovation :Innovation is work. It requires knowledge, ingenuity, creativity, diligence, perseverance and commitment. To succeed, innovators must build on their own strengths. Innovation is an effect on economy and society, a change in the behavior of customers, teachers, farmers, of doctors, people in general. Innovation must always be close to the market, focused on the market, and market driven.

14 Competitiveness: The set of factors, policies and institutions that determine the level of productivity of a country taking into account its level of development. Attitude refers to the individual’s mindset, particularly a risk-taking nature and levels of perseverance, qualities identified as essential among entrepreneurs. Skills refers to the set of job-related and behavioral skills required to successfully found or work in a fast-growing, innovative organization.

15 Cultural/social framework refers to the set of social and cultural factors that either support or inhibit an individual’s decision to engage in the entrepreneurial ecosystem rather than other occupational pathways. Regulatory framework refers to the administrative processes and rules required to start and operate a company, including licensing, tax and labour market regulations. Market framework refers to the availability of necessary inputs, transformation processes and customer demand necessary to operate and develop the venture.

16 Network access refers to the availability of supporting partners, advisers and enablers who transfer know-how and create opportunities for growth. Innovation and entrepreneurship offer potential for transformational impact This transformation would need to be driven by a growth oriented agenda that leverages: Export oriented SMEs with strong growth potential Growth oriented start-up companies Industry-facing research and development capabilities

17 Innovation is the process of bringing the best ideas into reality, which triggers a creative idea, which generates a series of innovative events.

18 Strategically leverage: Traditional sectors and emerging industrial verticals could benefit from a combination of the following initiatives, including: Reintroducing incentives for technology adoption Developing channels for greater access to supply chains and international markets Strengthening the national quality infrastructure Addressing technological skills gaps Building linkages between the enterprises and export oriented SMEs could be an important way to facilitate integration with global value chains and new markets.

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20 Both entrepreneurship and innovation are demanding creativityBoth entrepreneurship and innovation are demanding creativity. Creativity is a process by which a symbolic domain in the culture is changed. Creativity is a function of three components: Expertise Creative thinking skills Motivation. Creativity consists of anticipation and commitment. Entrepreneurs take bold creative steps but situations encourage creativity.

21 Clayton M. Christensen divided new technology into two categories:sustaining and disruptive. Sustaining technology relies on incremental improvements to an already established technology. Disruptive technology lacks refinement, often has performance problems because it is new, appeals to a limited audience and may not yet have a proven practical application:

22 Cloud computing has been a hugely disruptive technology in the business world;Cloud computing is encompassing everything from infrastructure as a service through a software to provide service.

23 In the middle, there is a platform tier providing the micro services that power the likes of Android and iPhone apps, and also many web-delivered services. Chennai-based MyEasyDocs, Delhi-based Digiswitch Infotech and Bangalore-based CloudByte Technologies are some of examples which can contribute to smart data storage space in India in a large way in the coming years. Smart Data Storage

24 Social networking has had a major impact on the way we communicate.

25 Nobel Laureate Theodore WNobel Laureate Theodore W. Schultz argued that although farmers differ for reasons of schooling, health and experience in their ability to perceive, to interpret and to take appropriate action in responding to new information, they provide an essential human resource which is entrepreneurship. The economics of the acquisition of entrepreneurial ability is still in its early phase. The supply of entrepreneurial ability is rarely considered. Rejects the idea that the economic value of entrepreneurial activities can be considered as a return for risk bearing.

26 Abilities of entrepreneurs to deal with economic disequilibria -- to make non-routine decisions and reallocate resources -- are part of the stock of human capital. Experience, health, and education enhance the acquired abilities of entrepreneurs. As technology becomes more complex, the comparative advantage of schooling increases. Edmund Phelps (2014) argues that true life satisfaction cannot be achieved through a purposeless quest for wealth and material consumption, but rather through adventure, entrepreneurship or creative endeavors.

27 Link between innovation and entrepreneurship, the role of institutions for entrepreneurship, and the tendency of national accounts to under-record the social value of innovation and entrepreneurship. If the measures used do not capture the full social value of innovation, we are likely to underestimate the genuine rate of innovation. Least Developed countries suffers from the problem of informal sector where entrepreneurship grows but it is not properly counted.

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29 Innovation is crucial to long-term economic growthInnovation is crucial to long-term economic growth. Making innovation-driven growth happen requires action on a wide range of policy areas, from education and science and technology to product and labour markets and trade. Nobel-prize winning economist Michael Spence, research focuses on the job-market signaling model. In this model, employees signal their respective skills to employers by acquiring a certain degree of education, which is costly to them.

30 Employers will pay higher wages to more educated employees, because they know that the proportion of employees with high abilities is higher among the educated ones, as it is less costly for them to acquire education than it is for employees with low abilities. For the model to work, it is not even necessary for education to have any intrinsic value if it can convey information about the employee to the employer and if the signal is costly. The British ‘industrial revolution’ from the late eighteenth century was closely associated with the beginnings of a shift from a cottage system of outworkers using hand tools in cotton manufacture to the deployment of machine tools located in centralised factories.

31 Indian entrepreneurs who were previously compelled to migrate to the western world to seek investment and world leading technology now have access to both at home, with global industry is looking very seriously at India for opportunities to collaborate. The Indian startup system ecosystem is rapidly driven by an extremely young, diverse and inclusive entrepreneurial landscape. ( Aditya Malkani) Prof. Suresh Rao argued that in India many new-age entrepreneurs today don't come from traditional business families. And that reflects in their mindset. Authority is not linked with ownership while rapid

32 growth is their mantra. Entrepreneur need to become accountable and take decisions for their actions, in several dimensions including fiscal, monetary, emotional, ethical, moral considering time and conditions of risk or uncertainty. The exploitation of entrepreneurial opportunities may include: developing a business plan hiring the human resources acquiring financial and material resources providing leadership being responsible for both the venture's success or failure risk aversion

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34 Prof. Dan Shechtman,  Nobel Laureate pointed out that skilled entrepreneurs can fill the gap by starting hi-tech businesses with high return on investment and human capital, and hence is the key to building up thriving economies. He believed motivating university students of engineering, medicine and science as a start would help set up a group of role models of successful entrepreneurs who will then kick start a process leading to a huge difference in the life of a country.

35 Nobel Laureate Prof Amartya Sen argued that the business community plays a unique role but they are also part of the society. They should not get into making quick money on the sly. They have to think big, not just in terms of money, but also in terms of remedies for the society. He also said that India is stating that we are not just revealing the bad side, we are also doing something about it, he said. The media and the opposition are playing their role in this, he added.

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37 An entrepreneur is a person who has possession of a new enterprise, venture or idea and is accountable for the inherent risks and the outcome while a startup company or startup is a company with a limited operating history. These companies, generally newly created, are in a phase of development and research for markets. Social entrepreneurship – applying innovative, market- based models to solve social problems – is about impact and scale, not just the product or service itself. Social entrepreneurship in India has progressed significantly over the last decade.

38 More and more people are using entrepreneurial skills in building sustainable enterprises for profit and non-profit to effect change in India. Please be noted that Social business is not a new phenomenon as it prevails in this subcontinent for long 1000 years back. Mises and Hayek developed a modern society owes its preservation to private or separate ownership of the means of production and to market-exchange processes. The economic freedom stemming from private ownership and free markets becomes a necessary condition for an overarching political freedom.

39 Although the first entrepreneurship course was introduced in the 1940s atthe Harvard Business School ,it took until the 1970s before the number of universities offering these types of course increased dramatically. The government of India has taken many initiatives towards strengthening the innovation ecosystem, the most important of which are: the establishment of the National Innovation Council,

40 whose mandate is to coordinate various innovation- related activities, and the Science, Technology and Innovation Policy 2013 of India, which is intended to promote entrepreneurship and science-led solutions for sustainable and inclusive growth. With a focus on this new policy initiative, the current innovation ecosystem and the challenges it faces, and it discusses the efforts made by the government towards the promotion of innovation for entrepreneurship development and sustainable growth .

41 Max Weber saw unfettered bureaucracy as a threat to individual freedom, trapping individuals in an impersonal "iron cage" of rule-based, rational control. Harvey Leibenstein described that x-efficiency is the effectiveness with which a given set of inputs are used to produce outputs. If a firm is producing the maximum output it can, given the resources it employs, such as men and machinery, and the best technology available, it is said to be technical- efficient. x-inefficiency occurs when technical- efficiency is not achieved.

42 Lifelong Learning and Innovation in Companies Entrepreneurial learning does not stop, say, five years after starting a firm. It will continue to develop depending on the initiatives employed by managers and their employees, as well as on the specific situational challenges the firms faces. Entrepreneurship as a career path for management students has gained importance and should be given its due share of consideration that it demands. Entrepreneurial companies contribute to economic welfare as they increase the innovative capacity of the economy.

43 These enterprises also lead to more flexible markets and intensified competition. Moreover, through entrepreneurship, new businesses and jobs are created (De Clerck & De Sutter, 2003), an issue of utmost importance in today’s global business environment. Small businesses run by New Delhi street vendors or small scale shops work on nominal profits, Prime Minister Narendra Modi recently said that it is important to change the attitude towards the whole country for them.

44 In relation to the process of entrepreneurship education, the classical lecturing approach does not seem to satisfy students in these programs. They would like to become more involved in approving the learning content and to get increased levels of responsibility in order to improve their leadership skills, communication skills, and independence. Both students and entrepreneurs would also value increased interaction between themselves. India is a much more entrepreneurial society than the United States. The 95% refers to workers in the informal sector. Most firms in the informal and formal sector are small. However, informal sector to be converted to formal sector. (Alex Tabarrok ,2017). The problem with developing countries is not that they lack entrepreneurs but that entrepreneurs cannot grow their firms large enough to become major employers.

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46 Five predictions to prepare and finalize marketing plan :Consumers will prefer convenient online transactions TV isn't going away. Won't be able to afford crunching numbers at year's end The focus will be on lifetime customer value, not attracting new clients. Influencers will keep their status

47 Start-up India, is in the Action Plan, refers to promotion of innovative enterprises with considerable extent of research and development carried out in collaboration with higher educational and scientific research institutions .

48 Technology Business Incubators promoted for normally established in collaboration with a host of leading higher educational and scientific research institutions. Linking industry with academia to focus on new areas that have potential for development is the direction planned to be pursued for encouraging startup entities in various sectors. The entities are sector and scale neutral. To facilitate the youth to take up innovative ventures, creating a favourable and liberal eco system is a pre- requisite. Easier entry and faster exit are emphasised for the success of these enterprises which involve high risk.( Dama Nagayya, Balla Appa Rao).

49 Entrepreneurship and innovation can lead to Economic growth plus change.Informal sector should be gradually converted to formal sector . SDGs can be implemented especially following goals through entrepreneurships:

50 India will be the number one economic stable country but to attain it with social justice and equitable distribution needs regional cooperation under BIMSTEC for which Indian Prime Minister can played important role to strengthen and effective it. Entrepreneurship ecosystem which often includes: government programs and services that promote entrepreneurship and support entrepreneurs and startups non-governmental organizations such as small-business associations and organizations that offer advice and

51 mentoring to entrepreneurs (e. gmentoring to entrepreneurs (e.g., through websites or entrepreneurship centers) small-business advocacy organizations that lobby governments for increased support for entrepreneurship programs and more small business-friendly laws and regulations entrepreneurship resources and facilities (e.g., business incubators and seed accelerators) entrepreneurship education and training programs offered by schools, colleges and universities

52 “Imagination is more important than knowledge.” - Albert Einsteinfinancing (e.g., bank loans, venture capital financing, angel investing and government and private foundation grants. “Imagination is more important than knowledge.” - Albert Einstein

53 THANK YOU