What are various types of entrepreneur?

Most Useful Classification of Entrepreneurs is on the basis of Innovation & Risk Taking

What are various types of entrepreneur?
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Entrepreneurs share certain common characteristics, but also differ from each other in several aspects. These differences can form the basis of their classification, thereby giving rise to various types of entrepreneurs. Among them the classification of Clarence Danhof based on innovation and risk taking gives a lot of insights about them. However, there are also other classifications.

The word entrepreneur is used today in several contexts, giving it a much broader meaning compared to its use in traditional literature, where it was simply used for a person attempting to establish a business. However, two characteristics always mark this term. The first is innovation. A person, who simply owns a business that was established by someone else before him, really becomes an entrepreneur only when he carries out changes in it, even if they are trivial ones. The second is risk. An entrepreneur works in the face of risk, and can either be successful or end up in failure and losses.

When these two characteristics are present in any new endeavour being carried out in any field, that individual or team attempting it is referred to as an entrepreneur in that area.

The term is also used these days for fields other than commerce. However, when used alone, the word typically refers to a entrepreneurship in a commercial venture. Commercial entrepreneurs can also be classified in more ways than one, but since innovation and risk taking is the most important characteristic of an entrepreneur, the most important of those classifications is based on the level of innovation and risk taking.

Types of Entrepreneurs by Level of Innovation & Risk Taking

Four types of entrepreneurs that were identified by Clarence Danhof, during his analysis of American agriculturists, are still considered one of the most useful classifications of entrepreneurs. He described four types:

  1. Innovative Entrepreneur: This is a category of entrepreneurs that stands at the top of the innovation ladder, conceptualizing and bringing into existence something not existing earlier. It could be a new product, a new and hitherto not attempted service, or a completely new business model. As they are always at the front of the economic expansion, they can be considered the most modern of them. When successful, they are the real role models and contribute immensely to the growth of economy. However, not every innovation is successful. High risk also means more frequent failures.

  2. Adaptive Entrepreneur: An adoptive entrepreneur is one who does not opt to revolutionize things, but instead adopts what others may have done to his own business. He is an imitator. He modifies his processes and products following those who have demonstrated their viability. Actually a very large number of real life entrepreneurs belong to this category. They play an important role in widening the impact of innovations, and also improve upon them incrementally.

  3. Fabian Entrepreneur: These categories of entrepreneurs are not outgoing in terms of creativity and innovation, but instead look at it as a way out to address a challenge. In other words, when everything is going well, they do not like to change things, but when things are not that well, they do make new changes. They are always very cautious, and would move only when sure about what they are doing.

  4. Drone Entrepreneurs: These are the least innovative and the most conservative of all entrepreneurs. They begin a business, but are unwilling to change the traditional mode of doing it. They would prefer to the age old norm, stick to the long tested rules and methods and remain highly conventional in their approach. Their contribution is stability, but sometimes they may have to pay for it, by losing their competitiveness.

Other Ways in which Entrepreneurs can be Classified

There are several other ways in which entrepreneurs can be classified. Some of them are worth mentioning. Most terms used are self explanatory.

  • By scale of business: An entrepreneur can be a large scale entrepreneur, a medium scale entrepreneur or a small scale entrepreneur.

  • By type of commerce: An entrepreneur can be an agricultural entrepreneur, trading entrepreneur, investment entrepreneur, manufacturing entrepreneur or service entrepreneur.

  • By use of technology: One can be a technology entrepreneur, a non technology entrepreneur or a professional entrepreneur.

  • By inheritance: One can be first generation entrepreneur or an inherited entrepreneur.

Entrepreneurs in Fields other than Commerce

  • Social Entrepreneur:  A social entrepreneur is one who attempts to bring about changes in the social structure and its ingredients, usually with the purpose of improving lives of an under-privileged section, or changing certain outdated or harmful social practices. For his invaluable pioneering work on civil rights, one can consider Martin Luther King as a great social entrepreneur. A similar status can be extended to the Nobel laureate Malala Yousafzai for her contribution to the cause of female education in Pakistan that was being interrupted by terrorist groups. Social entrepreneurship can also be carried on by a for profit model, where profit is aimed to sustain the work and continue the chain of benefits. Grameen Bank, a microfinance agency in Bangladesh is a good example of it.

  • Political Entrepreneur: A political entrepreneur is one who introduces new themes and methods in the political process and is thereby able to mobilize political support for the cause he aspires for. Gandhi is one of the most coveted political entrepreneurs in the recent world history, introducing non-violent protests as an effective political tool. Nelson Mandela has played a similar role against Apartheid.

Similarly, those introducing innovative methods and approaches in other fields can also be referred sometimes as entrepreneurs in their respective fields.


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