Lecture: Classification of Entrepreneurs

Entrepreneurs

Clarence Danhoff Arthur H. Cole

Classification Classification

Empirical
Innovative/Aggressive

Imitative/Adoptive Rational

Fabian Cognitive

Drone

A. Clarence Danhoff classified entrepreneurs into four types –

i. Aggressive/ Innovative: Innovative entrepreneur is one who assembles and synthesis
information and introduces new combinations of factors of production. They are characterized bythe
smell of innovativeness. These entrepreneurs sense the opportunities for introduction new ideasnew
technology, new markets and creating new organizations. Innovative entrepreneurs are very much
helpful for their country because they bring about a transformation in life style
ii. Imitative/ Adoptive: Imitative entrepreneur is also known as adoptive entrepreneur. He
simplyadopts successful innovation introduced by other innovators. These entrepreneurs imitate the
existing entrepreneurs and setup their enterprise in the same manner. Instead of innovating, they just
imitate the technology and methods innovated by others. These entrepreneurs are very helpfulin less
developed countries as they contribute significantly in the growth of enterprise and entrepreneurial
culture in these countries. Further by adopting the technology, which is already tested, they generate
ample employment avenues for the youth and therefore they are treated as agent of economic
development.
iii. Fabian: The Fabian entrepreneur is timid and cautious. He imitates other innovations only if
heis certain that failure to do so may damage his business. They are very much skeptical in their
approach in adopting or innovating new technology in their enterprise. They are not adaptable to the
changing environment. They love to remain in the existing business with the age-old techniques of
Entrepreneurship Development & Business Communication (ENP2061) SoAS, GDGU
Dr. Anwesha Mandal, Asst. Professor
 Lecture: Classification of Entrepreneurs

production. They only adopt the new technology when they realize that failure to adopt will lead to
loss or collapse of the enterprise.
iv. Drone: These entrepreneurs are conservative or orthodox in outlook. They never like to get
ridof their traditional business and traditional machinery or systems of the business. They always feel
comfortable with their old fashioned technology of production even though the environment as well
as the society have undergone considerable changes. Thus, drone entrepreneurs refuse to adopt the
changes. They are laggards as they continue to operate in their traditional way and resistchanges. His
entrepreneurial activity may be restricted to just one or two innovations. They refuseto adopt changes
in production even at the risk of reduced returns.

B. Arthur H. Cole classified entrepreneurs as

i. Empirical: He is an entrepreneur hardly introduces anything revolutionary and follows
theprinciple of rule of thumb.
ii. Rational: The rational entrepreneur is well informed about the general economic
conditionsand introduces changes which look more revolutionary.
iii. Cognitive: Cognitive entrepreneur is well informed, draws upon the advice and services
ofexperts and introduces changes that reflect complete break from the existing scheme of enterprise.

Some important terms related to entrepreneurs:

i. Solo operators: These entrepreneurs prefer to set up their business individually. They
introducetheir own capital, intellect and business acumen to run the enterprise successfully. They
operate their business mainly in the form of proprietorship type of concern.
ii. Active partners: Entrepreneurs of this type jointly put their efforts to build enterprise
pooling together their own resources. They actively participate in managing the daily routine of the
business concern. As such, the business houses or the firms which are managed by the active partners
become more successful in their operation.
iii. Inventors: These entrepreneurs primarily involve themselves in Research and Development
(R and D) activities. They are creative in character and feel happy in inventing new products,
technologies and methods of production.
iv. Challengers: Entrepreneurs of this type take challenges to establish business venture as mark
of achievement. They keep on improving their standard and face boldly the odds and adversities that
come in their way. They use their business acumen and talent to convert the odds into opportunities
thereby making profit. According to them, if there is no challenge in life, there is no charm in life.
Challenges make them bold, and thus, they never hesitate to plunge themselves intouncertainties for
earning profit.

Entrepreneurship Development & Business Communication (ENP2061) SoAS, GDGU

Dr. Anwesha Mandal, Asst. Professor
 Lecture: Classification of Entrepreneurs

v. Buyers (entrepreneurs): These entrepreneurs explore opportunities to purchase the existing

units which may be seized or are in running condition. If the units they purchase are sick they turn
them around using their experiences, expertise and business acumen. By purchasing these units they
make themselves free from the hassles of building infrastructures and other facilities.
vi. Life timers: These entrepreneurs believe that business is the part and parcel of their life.
They take up the business to reunite successfully as a matter of ego satisfaction. They have a strong
desire for taking personal responsibility. Family enterprises which thrive due to high personal skills
are included under this category.

Apart from these, you will find a number of classification depending on different criteria –

a. According to the type of business

Entrepreneurs are found in various types of business coronations of varying size. We

maybroadly classify them as follows:

i. 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.

ii. Trading Entrepreneur: Trading entrepreneur is one who undertakes only trading that
includes identifying potential markets, stimulating demand for his product line and creating a
desire and interest among buyers to go in for his product. He is engaged in both domestic and
overseas trade.

iii. 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. The entrepreneur has the ability to convert economic resources and technology into a
considerably profitable venture.

iv. Corporate Entrepreneur: Corporate entrepreneur is a person who demonstrates his

innovative skill in organizing and managing corporate undertaking. A corporate entrepreneur is
thus an individual who plans, develops and manages a corporate body.

v. Agricultural Entrepreneur: Agricultural entrepreneurs are those entrepreneurs who

undertake agricultural activities as raising and marketing of crops, fertilizers 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.
Entrepreneurship Development & Business Communication (ENP2061) SoAS, GDGU
Dr. Anwesha Mandal, Asst. Professor
 Lecture: Classification of Entrepreneurs

b. According to the Technology use

The application of new technology in various sectors of the national economy is essential
for the future growth of business. Based on the use of technology, entrepreneurs may be classified
as follows:

i. Technical Entrepreneur: A technical entrepreneur demonstrates his innovative

capabilities in matter of production of goods and rendering of services. He is more skilled in
production techniques than marketing products.

ii. Non-technical Entrepreneur: They are concerned only with developing alternative
marketing and distribution strategies to promote their business.

iii. 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.

c. According to the motivation of the entrepreneur

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.

i. 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.

ii. 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.

iii. 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.

iv. Spontaneous Entrepreneur: They are persons with initiative, boldness and confidence
in their ability, which activate them to undertake entrepreneurial activity. Such entrepreneurs

Entrepreneurship Development & Business Communication (ENP2061) SoAS, GDGU

Dr. Anwesha Mandal, Asst. Professor
 Lecture: Classification of Entrepreneurs

have a strong conviction and confidence in their inborn ability.

d. According to the stages of development of an entrepreneur

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:

i. 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.

ii. 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.

iii. 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 aimis to maximise his economic returns at a level consistent with
the survival of the firm with or without an element of growth.

Entrepreneurship Development & Business Communication (ENP2061) SoAS, GDGU

Dr. Anwesha Mandal, Asst. Professor