What are factors influencing Entrepreneurial development in India?

What are factors influencing Entrepreneurial development in India?

Ans:   1.      Economic Factors

Capital, labour, raw materials and market are the main economic factors.

(a)     Capital:

Capital is one of the most important prerequisites to establish an enterprise. Availability of capital helps an entrepreneur to bring together the land of one, machine of another and raw material of yet another to combine them to produce goods. Therefore, capital is regarded as lubricant to the production process. Basically, capital is the life blood of any activity. If capital is available, people who have innovative ideas would like to put them into reality. Without having any obstacles, if capital is available, it will act as a lifeline to entrepreneurs. So, if capital is available, entrepreneurial activities will increase.

(b)     Labour:

The quality and quantity of labour is another factor which influences the emergence of entrepreneurship. Availability of labour makes entrepreneurship attractive. More than abundantly available labour, the presence of skilled labour force is very important because such a workforce is generally less mobile than other resources. If entrepreneurial activities are initiated near areas where labour is available, then it is easy to carry out the business more comfortably and profitably at low cost. This is why one finds textile units and machine tools manufacturing industries concentrated in certain cities like Coimbatore, Tiruppur, Ludhiana, Rajkot, Baroda, etc. just because of availability of skilled labour force required for such units.

(c)     Raw Materials:

Raw materials are required for establishing any industrial activity and therefore has an influence in the emergence of entrepreneurship. In the absence of raw materials, neither any enterprise can be established nor an entrepreneur can emerge. In some cases technological innovations can compensate for raw material inadequacies. The supply of raw materials is not influenced by themselves but becomes influential depending upon other opportunity conditions. The more favourable these conditions are, the more likely is the raw material to have its influence on entrepreneurial emergence.

(d)     Market :

It is not only the availability of capital, labour and raw materials but a readily available market that attracts entrepreneurial activities. Ultimately, it is the market that fetches revenue for any business. If sufficient market is not there, people will naturally hesitate to do business in a sector where there is no market. In addition to market opportunities, it is equally important to ensure future market opportunities for the emergence of entrepreneurial activities.

2.      Social Factors :

Development of entrepreneurship in a society may take place not just because of better economic factors but because of the presence of positive social factors. The following social factors influence the development of entrepreneurship in a society.

(a)     Social norms and values:

A society sets certain norms and values for the behaviour of people who are part of that society. If people violate or overstep these norms and values, certain restrictions are likely to be imposed on them. As a result, many people are forced to accept certain types of jobs and tasks that reflect the social environment. If the society has an open and flexible approach towards various types of jobs and works, then people will feel free to do whatever they like and even go in for innovation and creativity. When there is more openness and flexibility, entrepreneurship will not only emerge but also thrive.

(b)     Role models:

Societies that celebrate entrepreneurship and felicitate successful entrepreneurs in a way encourage many future generations to take up entrepreneurial activities. This is because successful businessmen prove to be role models for the society at large. For instance, states like Gujarat, Maharashtra and to some extent Tamil Nadu and Haryana have experienced better industrial development as a result of higher concentration of entrepreneurs compared to lesser industrialised states such as Orissa, Chattisgarh, Madhya Pradesh and other Northeastern states.

(c)     Social pressure:

At times, entrepreneurship can emerge in a society due to social restriction too. If a society is orthodox, close and imposes a lot of restrictions, then it is likely to backfire. People who are at the receiving end are likely to react strongly and go in for change. In other words, because of negative pressure, more number of people would like to become entrepreneurs as a means of improving their status. It has been noticed that where people were marginalised, they became entrepreneurs just to prove their abilities and establish an identity in the society.

(d)     Respect and Status:

If societies accord recognition and respect to people who dare to do something different and creative, it proves to be an encouragement for others to do something enterprising. Therein lies the emergence of entrepreneurship. In the traditional societies, people were looked down upon rather than encouraged for deviating from the set norms or regular occupation. This means there was no respect for change. Thus, societies where there is respect and recognition for people to do something different are more likely to see the development of entrepreneurial activities.

(e)     Security:

The view regarding role of social security in encouraging entrepreneurship development is rather divided. One school of thought is of the view that people are more prone to take entrepreneurial risks in secure social environments. On the other hand, there are others who argue that entrepreneurship will more likely emerge if there are turbulent conditions. In both cases, there is scope for entrepreneurship development.

3.      Psychological Factors

(a)     Need Achievement:

According to David McClelland’s theory of need achievement, a constellation of personality characteristics which are indicative of high need achievement is the major determinant of entrepreneurship development. Therefore, if the average level of need achievement in a society is relatively high, one would expect a relatively high amount of entrepreneurship development in that society. McClelland gives the psychological concept of achievement motivation to account for the differences in response to similar conditions. Referring to the encouraging impact of achievement motivation training programmes organised by the Small Industries Extension Training Institute (SIET), Hyderabad McClelland argues that the need achievement can be developed through the intensive training programmes.

(b)     Withdrawal of Status Respect:

E.E. Hagen attributed the withdrawal of status respect of a group to the genesis of entrepreneurship. Giving a brief sketch of history of Japan, he concludes that she developed sooner than other non-Western society except Russia due to two historical differences. First, Japan had been free from ‘colonial disruption’ and secondly, the repeated long continued withdrawal of expected status from important groups (Samurai) in her society drove them to retreatism which caused them to emerge alienated from traditional values with increased creativity. This very fact led them to the technological progress entrepreneurial roles.

Hagen believes that the initial condition leading to eventual entrepreneurial behaviour is the loss Of status by a group. He postulates four types of events can produce status withdrawal

(a)     The group may be displaced by force;

(b)     It may have its value symbols integrated;

(c)     It may drift into a situation of status inconsistency; and

(d)     It may not be accepted the expected status on migration in a new society.

He further postulates that withdrawal of status respect would give rise to four possible reactions and create four different personality types

(a)     Retreatist: He who continues to work in a society but remains different to his work and position.

(b)     Ritualist: He who adopts a kind of defensive behaviour and acts in the way accepted and approved in his society but no hopes of improving his position.

(c)     Reformist: He is a person who forements a rebellion and attempts to establish a new society; and’

(d)     Innovator: He is a creative individual and is likely to be an entrepreneur.

Hagen maintains that once status withdrawal has occured, the sequence of change in personality formation is set in motion. He refers that status withdrawal takes a long period of time – as much as five or more generations to result in the emergence of entrepreneurship.

4.      Government Actions

The government by its actions or failure to act also does influence both the economic and non-economic factors for entrepreneurship. Any interested Government in economic development can help, through its clearly expressed industrial policy, promote entrepreneurship in one way or other. By creating basic facilities, services and utilities and by providing incentives and concessions, the Government can provide the prospective entrepreneurs a facilitative socio-economic setting. Such conducive setting minimises the risks which the entrepreneurs are to face. Thus, the supportive actions of the Government appear as the most conducive to the entrepreneurial growth. This is true of the Indian entrepreneurs also.