Concept of Entrepreneurship
Emergence of Entrepreneurial Class
What is an Entrepreneur?
One who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them.
1. As per Joseph A-Schumpeter -"Entrepreneur is one who innovates, raises money, assembles inputs, chooses managers and sets the commercial organization going with his ability to identify them and opportunities which others are not able to identify and is able to fulfil such economic opportunities
2. As per Peter Drucker - "An entrepreneur is one who always searches for change, responds to it, exploits it as an opportunity. Entrepreneurs innovate. Innovation is a specific instrument of entrepreneurship."
3. As per Walker - "An entrepreneur is one who is endowed with more than average capacities in the task of organizing and coordinating the various factors of production. He should be pioneer, a captain of industry."
ENTREPRENEUR & HIS SIGNIFICANCE IN THE ECONOMY
1. An Entrepreneur brings in overall change through innovation for the maximum social good.
2. Human values inspire him to serve society. He has firm belief in social betterment and he carries out this responsibility with conviction. In the process, he accelerates: a. personal Economic as well as b. human development.
3. An Entrepreneur is a visionary and an integrated man with outstanding leadership qualities, with a desire to excel, the Entrepreneur gives top priority to Research & Development.
4. He always works for the well being of the society.
5. Entrepreneurial activities, includes all fields/sectors and develops a spirit of enterprise for the welfare of mankind.
6. Entrepreneur is one of the most important inputs in the economic development of a country or of regions within the country. Entrepreneurial competence makes all the difference in the rate of economic growth.
7. The small-scale industrial sector and business are left completely to private Entrepreneurs. Therefore, an increasingly important rote has been assigned to the identification and promotion of Entrepreneurs for the small-scale sectors.
There is a need for Entrepreneurship in India to speed up the process of activating the factors of production, leading to:
1. A higher rate of economic growth,
2. Dispersal of economic activities,
3. Development of backward and tribal areas,
4. Creation of employment opportunities
5. Improvement in the standard of living of the society and
6. Involvement of all the sections of the society in the process of growth.
7. Thus entrepreneurs play a significant role to speed up the economic development of the country.
FACTORS INFLUENCING ENTREPRENEURS
The factors influencing entrepreneurship are as follows –
1. 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
2- Religious, Social & 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.
3. Psychological factors: The psychological factors like high need for achievement determination of unique accomplishments, self-confidence, creativity, vision, leadership, etc. promote entrepreneurship among individuals On the other hand psychological factors like security, conformity & compliance, need for affiliation, etc., restrict promotion of entrepreneurship.
4. Political factors: The political system and also the political stability of a country influence the growth of entrepreneurship. The political system, which promotes free market, individual freedom and private enterprise, will promote entrepreneurship.
5. Economic policies: The economic policies of the Government and other financial institutions and their 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.
THEORIES OF ENTREPRENEURSHIP
Knight on the role of uncertainty
Schumpeter on innovation
Me Clelland's achievement and motivation theory
Peter Druckers views on entrepreneurship
1. KNIGHT ON THE ROLE OF UNCERTAINTY
Knight identifies the entrepreneur as a recipient of pure profit. Profit is the residual income available after all contractual payments have been deducted from the revenues of the enterprise. It is the reward to the entrepreneur for bearing the costs of uncertainty.
Knight identifies uncertainty with a situation where the probalities of alternative outcomes cannot, be determined either by Priori reasoning or by statistical inference.
A priori reasoning is simply irrelevant to economic situations. Statistical inference is impossible because the situation involves a unique event. It does not belong to a larger population of identical events.
In particular, there is no precedent for it, so that no assessment of probability can be made on the basis of relative frequency. This is the foundation for the Knight's distinction between uncertainty and risk.
Uncertainty is a ubiquitous aspect of business decisions because production takes time. Decisions on inputs must be made now in order, to create output for the, future. Households, as factor owners, demand spot payment for their services. At the same time they are unwilling to commit themselves on future demand for the product because they anticipate that unforeseen able changes will occur.
But the consumer does not even contract for his goods in advance, generally speaking.
A part of the reason might be the consumer's uncertainty as to his ability to pay at the end of the period, but this does not seem to be important in fact.
The main reason is that he does not know what he will want, and how much, and how badly. Consequently, he leaves it to producers to create goods and hold them ready for, his decision, when the time comes. The clue to the apparent paradox is, of course, in the "law of large numbers'.
2. SCHUMPETER ON INNOVATION
Schumpeter, perhaps more than any other writer, is very explicit about the economic function of the entrepreneur. The entrepreneur is the prime mover in economic development, and his function is to innovate, or to 'carry out new combinations'.
Five types of innovation are distinguished:
a. The introduction of new good (or an improvement in the quality of an existing good);
b. The introduction of a new method of production;
c. The opening of a new market, in particular, a export market in a new territory;
d. The 'conquest of a new source of supplyof raw materials or half-manufactured goods', and
e. The creation of a new type of industrial organization, in particular, the formation of a trust or some other type of monopoly.
Anyone who performs this function is an entrepreneur, whether he is an independent businessman or a "dependent" employee of a company such as a manager or a director.
Not all businessmen are entrepreneurs; the typical entrepreneur is the founder of a new firm rather than the manager of an established one.
Schumpeter is adamant that the entrepreneur is not a risk-bearer. Risk bearing is the function of the capitalist who lends his funds to the entrepreneur. The entrepreneur bears risk only in so far as he acts as his own capitalist.
Entrepreneurs spend a lot of their time doing non-entrepreneurial things: The entrepreneur of earlier times was not only as a rule a capitalist too, he was also often as he still is today in the case of small concerns his own technical expert, in so far as a professional specialist was not called in for special cases.
Likewise he was (and is) often his own buying and selling agent, the head of his office, his own personnel manager, and sometimes, even though as a rule he, of course employed solicitors, his own legal adviser in current affairs. And it was performing some or all of these functions that regularly filled his days.
The carrying out of new combinations can no more be a vocation than the making and execution of strategically decisions, although it is this function and not his routine work that characterizes the military leader. Therefore, the entrepreneur's essential function must always appear mixed up with other kinds of activity which as a rule, must be much more conspicuous than the essential one.
Hence, the Marshallian definition of the entrepreneur, which simply treats the entrepreneurial function as 'management' in the widest meaning, will naturally appeal to most of us. We do not accept it, simply because it does not bring out what we consider to be the salient point and the only one which specifically distinguishes entrepreneurial from other activities.
The climate most favourable to innovation is when the economy is approaching in equilibrium for then the future seems relatively easy to foresee. The first Innovations, made by the most talented entrepreneurs, prove successful, and this encourages less talented entrepreneurs to follow suit in a swarm.
Because they are-adapting ideas which are pioneers have already tried out, the risks that the capitalists perceive in backing the less talented entrepreneurs are relatively low.
3. McCLELLAND'S THEORY OF ACHIEVEMENT MOTIVATION
David McClelland has developed an Achievement Motivation Theory. According to this theory, an individual's need for achievement (nAch) refers to the need for personal accomplishment.
It is the drive to excel, to strive for success and to achieve in relation to a set of standards.
People with high, achievement motive like to take calculated risks and want to win.
They like to take on personal responsibility for solving problems and want to know how well they are doing. High achievers are not motivated by money per se, but instead; employ money as a method of keeping sure of their achievements.
Such people strive for personal achievement rather than the rewards of success.
They want to do something better and more efficiently than has been done before.
Need for achievement is simply the desire to do well not so much for the sake of social recognition or prestige but for the sake of an inner feeling of personal accomplishment.
It is this need for achievement that motivates people to take risk. People with high need for achievement behave in an entrepreneurial way. Need for achievement stimulates the behaviour of a person to be an entrepreneur.
The following psychological factors contribute to entrepreneurial motivation:
1. Need for achievement through self-study, goal setting and inter-personal support
2. Keen interest in situations involving moderate risk
3. Desire for taking personal responsibility
4. Concrete measures of task performance
5. Anticipation of future possibilities
6. Energetic or novel instrumental activity
7. Organizational skills, etc.
McClelland considers the need for achievement to be most critical to a nation's economic development. He held that a strong 'inner spirit' in individuals to attain is a measurable variable arising from a need, which the individual develops mainly in childhood and seeks to satisfy throughout his life.
This 'inner spirit' which he called need for achievement, if higher, would produce more energetic entrepreneurs capable of generating rapid economic development. High need for achievement or ambition motivates an entrepreneur to take risks, work hard, find new things, save more, reinvest the savings in industry, and so on.
The limited empirical evidence supports the hypothesis that need for achievement contributes to entrepreneurial success.
McClelland rated the achievement motivation of different countries on the basis of ideas related to need for achievement contained in the children's stories. This has come to be known as n-factor rating. He established a correlation between n-factor rating and the prosperity of the countries a generation ahead.
The criterion on n-factor rating was the inherent concern for achievement or non-induced achievement motivation. McClelland found that achievement motivation was lower among people in underdeveloped countries than among these of developed nations.
Even in USA only about ten per cent of the people were actually high achievers. It is the level of aspirations or ambitions that explains the lack of enterprise in underdeveloped countries.
Ambition is the lever of all motives and 'aimless life' a goal-less game'. Ambitions motivate men, activate them, broaden their vision and make life meaningful.
Ambition is an index of one's resourcefulness &Ambition builds up achievement pressure in the individual and provides the base for McClelland's n-factor.
Ambition is the lever of all motives.The initiative intentions of an individual are directed by hisambitions. It is the ambition electrifies man's actions.
Kakinada is an industrial town in Andhra Pradesh. The experiment started in January 1964. The main objective of the experiment was to break the barrier of limited aspirations by inducing achievement motivation. A total of fifty-two persons were selected from business and industrial community of the town.
They were given an orientation programme at Small Industry Extension Training Institute (SIET) Hyderabad. The participants were grouped into three batches. They were put under training for 3 months.
The training programme was designed in such a way that it could help the trainees improve imagination and enable them introspect their motivation.
Accordingly, the programme included the following items in its syllabi.
a. The individual strived to attain concrete and regular feedback.
b. The participants sought models of achievement to emulate.
c. The participants thought of success and accordingly set plans and goals.
d. The participants were encouraged to think and talk to themselves in a positive manner.
The impact of this training programme on the participants' behaviour was observed after a period of two years.
The observations were encouraging. It was found that those attended the programme performed better than those did not; Using Thematic Appreciation Test (TAT) assessed the participants' need for achievement.
In this TAT, ambition related pictures were displayed to the trainees and then they were asked to interpret the picture and what is happening in the picture. Thereafter, all the themes related to achievement were counted and, thus, the final score represented one's need for achievement.
McClelland reached to this conclusion that the training programme positively influenced the entrepreneurial behaviour of the participants. As regards caste, the traditional beliefs and imitation of western culture, they did not determine one's behaviour as an entrepreneur.
That the need for achievement motivation can be developed more especially in younger minds is well supported by the cross-country experiments.
For example, a 'Junior Achievement Programme" is started in the United States of America with a view to instill achievement motivation in the minds of younger generation. Similarly, in United Kingdom, "Young Enterprise" programme has been started with the same objective of inducing achievement motivation in younger minds.
The above said experiments / programmes have made us to realize that entrepreneurship' is to be developed from a very young age. Accordingly, efforts have been made to develop a school curriculum that would result in a high need for achievement among the students.
For this purpose, the success stories drawn from history and legends of the indigenous culture are introduced in course curriculum to induce in young minds the need for achievement and strong desire to do something good/ great they grow up to.
This is because the younger minds are more susceptible to change.
4. DRUCKER'S VIEWS ON ENTREPRENEUR
Peter Drucker has aptly observed that, "Innovation is the specific tool of entrepreneurs, the means by which they exploit changes as an opportunity for a different business or a different service.
It is capable of being presented as a discipline, capable of being learned and practiced. Entrepreneurs need to search purposefully for the sources of innovation, the changes and their symptoms that indicate opportunities for successful innovation. And they need to know and to apply the principles of successful innovation.
"Systematic innovation, according to him, consists in the purposeful and organized search for changes and in the systematic analysis of the opportunities such changes might offer scope for economic and social innovation.
According to Drucker, three conditions have to be fulfilled
1. Innovation at work. It requires knowledge and ingenuity. It makes great demands on diligence, persistence and commitment.
2. To succeed, innovation must build on their strengths.
3. Innovation always has to be close to the market focused on the market, indeed market-driven.
Specially, systematic innovation means monitoring sources for innovative opportunity. The first three sources lie within the enterprise, whether it be a business or a public service institution or within an industry or service sector.
They are therefore, visible primarily to people within that industry or service sector. They are basically symptoms. But they are highly reliable indicators of changes that have already occurred or can be made to occur with little effort.
These four source areas are:
1. The unexpected success, the unexpected failure, the unexpected outside event.
2. The incongruity between reality as it actually is and reality as it is assumed to be or as it "ought to be.
3. Innovation in industry structure or market structure that catches everyone unawares.
4. The second set of sources for innovative opportunity, a set of three, involves changes outside the enterprise or industry:
a. Demographics (population changes).
b. Changes in perception, mood and meaning.
c. New knowledge, both scientific and non-Scientific
Hagen considers the withdrawal of status respect as the trigger mechanism for changes in personality formation. The status withdrawal occurs when members of some social group perceive that their purposes and values in life are not respected by groups in the society whom they respect and whose esteem they value. Hagen postulates four types of events, which can produce status withdrawal:
• Displacement of a traditional elite group from its previous status by another traditional group by physical force;
• Denigration of value symbols through some change in the attitude of the superior group;
• Inconsistency of status symbols with a changing distribution of economic power; and
• Non-acceptance of expected status on migration to a new society.
For Max Weber the driving entrepreneurial energies are generated by the adoption of exogenously supplied religious beliefs. It is these beliefs which produce intensive exertion in occupational pursuits, the systematic ordering of means to ends, and the accumulation of assets. He further suggested that the belief systems of Hinduism, Buddhism and Islam do not encourage entrepreneurship. However, this contention has been challenged and refuted by sociologists like Fox, Nandy and Singer.
Characteristics of Entrepreneurial Leadership
ARE ENTREPRENEURS BORN OR MADE
Professor of Psychology Alan Jacobowitz, holds that Entrepreneurs are born, not made. This is because he observed that entrepreneurs commonly share certain personality characteristics. These include:
b. independence and tendency to be a loner and extreme self-confidence,
d. Action oriented.
In addition to identifying personality traits personality common to entrepreneurs, Jacobowitz devised a chronological scheme of entrepreneurial indicators, which he calls as the FIVE AGES ofthe entrepreneurs.
The ages include –
1. Early childhood exposure
2. Trouble in school.
3. Problems with work.
4. Desire to risk.
5. Bliss in business independence.
According to the Trait Theories Jacobowitz suggests that entrepreneurial attitude is static - that is, either people are born with the related characteristics or they are not. The intention to be an entrepreneur is influenced by the interaction of various factors.
1) These include:
2) individual characteristics,
3) individual environment,
4) business environment,
5) An individual's persona! Goal is set
6) And the existence of a viable business idea.
Through these interacting factors, individuals make several comparisons between their perceptions of a probable outcome, their intended goals, intended behaviour and actual outcomes.
When the outcomes meet or exceed perceived outcomes, positive behaviour is reinforced. It also predicts that the opposite occurs when the perceived outcomes are not met. Hence it is very clear, to be a successful entrepreneur one must have the in-born qualities and the available support system does help the entrepreneur to succeed.
A classic example is that of Mr.Dh'irubai Ambani. Because he had all the dynamic qualities of a successful Entrepreneur, as a result of which today, he is the owner of the largest private company in India. All decisions, which he had taken to grow, were instinct and no one had taught him to take decisions.
CHARACTERISTICS OF ENTREPRENEURSHIP
The characteristics or the personal qualities that contributes to the success of an Entrepreneur are as follows: -
1. Risk Taking: Entrepreneurs are moderate risk takers. They enjoy the excitement of a challenge, but they do not gamble. Entrepreneurs avoid low-risk situations because there is a lack of challenge. They avoid high-risk situations because they want to succeed. They like achievable challenges.
They do not tend to like situations where the outcome of a quest depends upon a chance and not on their efforts. They like to influence the outcome of their quest by putting in more efforts and then experiencing a sense of accomplishment. A risk situation occurs when an entrepreneur is required to make a choice between two or more alternatives whose potential outcomes are not known and must be evaluated in advance, with limited information.
A risk situation involves potential gain and potential loss. As the size of the business expands the problems and opportunities become more numerous and complex.
2. Self-Confidence: A man with self-confidence has clear thoughts and well-defined goals to achieve in his life. An entrepreneur gets into business or industry with a high level of self-confidence.
He is able to evaluate his competencies and capabilities i a realistic manner. He can set realistic and challenging goals. He is confident of achieving these goals. He possesses a sense of effectiveness, which ultimately contributes to success of his venture. He puts forward his case confidently and gets needed help from concerned agencies / authorities.
3. Optimist: An entrepreneur is able to visualize the hidden opportunities in the environment and translate them into business realities. An entrepreneur exhibits a positive and optimistic attitude towards such opportunities. The entrepreneur approaches his task with the hope of success and not with a fear of failure.
In the process of accomplishing his task he may also fail but the failure experience does not change his thinking. He is always an optimist in his outlook. The positive outlook develops a drive in the entrepreneur to attempt new things and innovate.
4. Need for achievement: The need to excel, known as achievement, is a critical factor in the personality of an entrepreneur. People with high need for achievement have desire for success in competition with others or with a self-imposed standard of excellence. They try to accomplish something new and try to involve themselves in long-term goals. They try to accomplish challenging tasks. They know their own strengths and weaknesses, the facilitating factors and constraints in the environment and the resources needed to accomplish their tasks. If the objectives are accomplished they feel elated.
5. Need for independence: The need for independence is the prime characteristic that has driven the entrepreneurs to start their own business. These entrepreneurs do not like to be controlled by others. They do not wait for direction from others and choose their own course of action. They set their own challenging goals and put efforts to achieve these goals. Independence provides opportunity for trying out new ideas and helps them achieve their goals.
6. Creativity: Entrepreneurs are highly creative people. They always try to develop new products, processes or markets. They are innovative, flexible and are willing to adopt changes. They are not satisfied with conventional and routine way of doing things. They involve themselves in finding new ways of doing the things for the better.
7. Imaginative: Successful entrepreneurs possess a high degree of imagination and foresightedness. Entrepreneurs have a great vision.
Knowing the present and the past the entrepreneur is able to predict the future events about the business more accurately than others. It is because of their visionary nature and power of imagination that helps them in anticipating problems and evolving actions strategies for such problems.
8. Administrative Ability:
A successful Entrepreneur is always a good administrator. He knows the art of getting things done by other people without hurting their feelings or self-respect. He has a strong motivation towards the achievement of a task and puts in necessary efforts in getting things done by others.
9. Communication Ability: Communication ability is the ability to communicate effectively. Good communications also means that, both the sender and the receiver understand each other and are being understood. An Entrepreneur who can effectively communicate with customers, employees, suppliers and bankers will always succeed in their business.
10. Clear Objectives: An Entrepreneur has a clear objective as to the exact nature of the business, the nature of the goods to be produced and the subsidiary activities to be undertaken. A successful Entrepreneur has the objective to establish the product, to make profit or to render social service.
11. Business Secrecy: An Entrepreneur who is successful always guards his business secrets. Leakage of business secrets to trade competitors is a serious matter; therefore, an Entrepreneur should carefully guard it. An Entrepreneur must be able to make a proper selection of his assistant since; most of the time it is the assistant who leaks the trade secret.
12. Emotional Stability: The most important personality factors contributing to the success of an Entrepreneur are emotional stability, personal relations, consideration and tactfulness. An Entrepreneur must maintain good relations with the customers if he wishes to enjoy their continued patronage. He must also maintain good relation with his employees, whom he shall motivate to perform their jobs at a high level of efficiency. An Entrepreneur who maintains good human relations with customers, employees, suppliers and the community has a better chance to succeed in his/her business.
13. Open-mindedness: Open-mindedness means a free and frank approach in accepting one's own errors and change for the better. An entrepreneur must be willing to learn from his past experience, mistakes and moulds himself for better.
14. Technical knowledge: Technical knowledge implies knowledge about the product, process or technology used in manufacturing. An entrepreneur who has a reasonable level of technical knowledge will always be successful. Technical knowledge is easy to acquire if the entrepreneur tries hard to acquire it.
15. Patience: Patience means ability to wait. Patience also means doing the work and then waiting for the result. A certain amount of patience is necessary in any type of vocation. An entrepreneur should not wait for actions but can certainly wait for result for his efforts.
16. Hard Working & Energetic: Ability and willingness to work hard is an important quality of an entrepreneur. A person having physical and mental stamina to cope with the hard work and human relation is fit to become a successful entrepreneur. By carrying out well-planned and systematic work, success is always the end result.
17. Good organizer: Entrepreneurs are good organizers of resources like men, machines, materials and money needed to start and run the business smoothly.
They can convince the employees, investors, customers and co- ordinate the activities of individuals and groups in the accomplishment of business objective. An entrepreneur works like a coordinating force among the resources, mould and manages them effectively.
EMERGENCE OF ENTREPRENEURIAL CLASS
From times immemorial, the Indian Society has been characterized by a kind of stratification of religious and regional sections. The Hindu Society projected a type of hierarchy in which the caste groups were separated from each other on the basis of function. Every member of the society followed the family occupation.
This caused immobility between occupations. The Bania was a caste that carried on the trading and money lending business, they specialized in trade and commerce and came from urban areas. In fact, because of their good financial, standing, their position was an enviable one in the urban centers. However they ranked third in the caste-hierarchy: The Brahmins ranked first and Kshatriyas second.
Following important communites can take the credit for the supply of entrepreneurs in India.
1. The Parsees: Parsees migrated from Persia in the century. They performed as artisans, carpenters, weavers etc, in the l7th century. By the 18'h century, they became well-know shipbuilders; they had set up Merchant Houses in Bombay, Burma, China and London.
They acted as "brokers for the European traders at Bombay and Surat. They were regarded as merchants and traders of repute. They emerged as the most prominent and financing community of Bombay and Gujarat
2. Traders from South India: The trading castes of south lndia were the chettis. They were subdivided into groups such as the Telugu Komatia, the Tamil Nattukottai chettis, Beri-Chettis etc. The Komattis were the chief taders not only in the Telugu districts but also in Mysore Coimbatore, Canara and other places. The chief financiers and bankers of South India were the Nattukottai Chettis. Trading in drugs, grain and cloth was done by the Beri-Chettis. In the early 19th century they were known to be respectable peddlers who travelled in caravans.
The communities that traded had trade relations with South-East Asian Countries like Burma, Ceylon, Malaya, Singapore etc. The chettiars established connections with reputed Indian business firms and also made good investments in land and property. They became important suppliers of rural credit. The Nattukottai Chettiars were a well-known business community in Burma. Their working funds invested abroad, were mainly employed in Burma.
3. The Marwari Community: This important and fairly developed business Community came from Marwar in Rajasthan. The trading and money lending castes got tremendous development in Gujarat and Rajputana on account of the famous route from Gujarat ports to the historical center of the Great Mughal State.
Rajputana was torn by feudal strife during the first half of the 19thcentury. It was not the place for large scale trading and money lending operations. Though the local trade was good, it provided a limited scope for development. Trade remained fairly constant and it was because of this that investment crossed the borders of Rajputana. Trade spread in towns through out the north, east and west of India, especially to the commercial centres of Bombay and Calcutta. With the rise of British Commerce, these traders gradually replaced the Bengalis who served as British agents in Calcutta.
The Brahmins and the Kayasthas of Bengal who operated as the British agents started turning their attention to investments in land; They even got in the professions and Administrative services. But the Subarna Banika, a Bengali trading community, filled the void created by such an occurrence. But, Bengal soon became the center for political revolution. The Britishers, both rulers and traders did not approve of this.
Wherever possible, they tried to replace a Bengali by someone who proved to be more dependable. The Rajasthani traders tried to be more co-operative than the Bengali Commercial Castes. It is because of this that the Bengali names in business are relatively unimportant and where they occur, they mostly represent the professional agent class and not the indigenous trading class.
Besides the above trading, money-lending communities that could be regarded as the source of entrepreneurs in India, there were the Bhatias and Lohanas. These communities carried out local trade and were spread all over the country, The "Khatris", a community that traded not only in Punjab but also in Afghanistan, Central Asia etc. has also been a source of entrepreneurs.
In Maharashtra, the contribution of Yajurvedi Brahmins and the Chitapavan Brahmans who took active part in trading, money lending and indigenous banking, cannot be forgotten. The above was an account of the origin of entrepreneurs in India
CAUSES OF SLOW GROWTH OF ENTREPRENEURSHIP IN INDIA
Entrepreneurship developed only in the beginning of the 19th century & 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 chances of accumulating wealth and promoting production.
2. Agriculture: Agriculture was the main occupation. Farmers and cultivators were always in the clutches of the moneylenders. 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 Rulers: The British rulers adopted discriminatory policy. Rich Indian businessmen had special connections with foreign rulers and both satisfied their selfish interests. Even the few insurance and banking services catered to the needs of some rich Indian businessmen, 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 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 in 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 Indian 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 head way 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.
STAGES OF EVOLUTION OF ENTREPRENEURSHIP
The evolutionary process of entrepreneurship activities may be divided into the following broad stages:
1. Hunting Stage The primary stage of the evolution of the economic life of man was the hunting stage. Wants were limited and very few in numbers. The family members them- selves satisfied problems of food, clothing and shelter. Producers were the consumers also.
Robinson Crusoe, living in the deserted island, satisfying his own requirements had no knowledge of business. People in some parts of Africa and India still lead this type of life. In this stage problems of production and distribution were not complex since wants were also simple and limited.
2. Pastoral Stage
With the progress of mankind gradually mental understanding developed and people started realizing that instead of killing animals, they should breed and rear them.
Thus cattle breeding encouraged the use of milk, and they had to think in terms of grazing areas for their cattle. The surplus milk, meat and other related products were spared for exchange. This stage can be termed as the first stage of economic development and the beginning of commerce.
3. Agricultural Stage
In search of grazing areas, they further realized that they should grow plants as food for animals. They started testing some grain products and slowly developed a taste in plants and the land was used for cultivation.
Groups of persons started living together on their agricultural fields, which were subsequently converted into small villages with their farms. Free exchange of goods was started and the activities were also divided to the extent of division of labor at the village level to complement the needs of each other. Initially each village was self-sufficient, but later they began small trading activities on barter basis
4. Handicraft State
5. Present Industrial Stage
DISTINCTION BETWEEN AN ENTREPRENEUR AND A MANAGER
Sometimes, the two terms, namely, an entrepreneur and a manager are considered as synonym, i.e., meaning the same. In fact, the two terms are two economic concepts meaning two different meanings. The major points of distinction between the two are presented in following Table 1.1.
TABLE 1.1: Difference between an Entrepreneur and a Manager
Points Entrepreneur Manager
1. Motive The main motive of an entrepreneur is to start a venture by setting up an enterprise. He undertakes the venture for his personal gratification. But, the main motive of a manager is to
render his services in an enterprise already set up by someone else.
2. Status An entrepreneur is the owner of the enterprise. A manager is the servant in the enterprise owned by the entrepreneur
3. Risk-bearing An entrepreneur being the owner
of the enterprise assumes all risks and uncertainty involved in running the enterprise. A manager as a servant does not bear any risk involved in the enterprise.
4. Rewards The reward an entrepreneur gets for bearing risks involved in the enterprise is profit which is highly uncertain. A manager gets salary as reward for the services rendered by him in the enterprise. Salary of a manager is certain and fixed.
5. Innovation Entrepreneur himself thinks over what and how to produce goods to meet the changing demands of the customers. Hence, he acts as an innovator also called a 'change agent'. But, what a manager does is simply to execute the plans prepared by the entrepreneur. Thus, a manager simply translates the entrepreneur's ideas into practice.
6. Qualifications An entrepreneur needs to possess qualities and qualifications like high achievement motive, originality in thinking, foresight, and risk-bearing ability and so on. On the contrary, a manager needs to possess distinct qualifications in terms of sound knowledge in management theory and practice.
After going through the above points of distinctions, it is clear that an entrepreneur differs from a manager. At times, an entrepreneur can be a manager also, but a manager cannot be an entrepreneur. After all, an entrepreneur is an owner, but a manager is a servant.
FUNCTIONS OF AN ENTREPRENEUR
An entrepreneur does perform all the functions necessary right from the genesis of an idea up to the establishment of an enterprise. These can be listed in the following sequential manner:
1. Idea generation and scanning of the best suitable idea.
2. Determination of the business objectives.
3. Product analysis and market research.
4. Determination of form of ownership / organisation.
5. Completion of promotional formalities.
6. Raising necessary funds.
7. Procuring machine and material.
8. Recruitment of men.
9. Undertaking the business operations.
Kilby has enumerated about 13 functions of an entrepreneur. While others can also add certain more functions to this list, the said functions appear to be major ones. For our convenience, we have classified all the entrepreneurial functions into three broad catego¬ries:
We have already discussed these functions in the beginning of our discussion while elucidating the concept of entrepreneur. Therefore, their discussion has been avoided here for the sake of repetition.
TYPES OF ENTREPRENEURS
Clarence Danhof, on the basis of his study of the American Agriculture, classified entrepreneurs in the manner that at the initial stage of economic development, entrepre-neurs have less initiative and drive and as economic development proceeds, they become more innovating and enthusiastic. Basing on this, he classified entrepreneurs into four types. These are discussed in seriatim. .
1. Innovating Entrepreneurs: An innovating entrepreneur is one who introduces new goods, inaugurates new method of production, discovers new market and reorganizes the enterprise. It is important to note that such entrepreneurs can work only when a certain level of development is already achieved, and people look forward to change and improvement.
2. Imitative Entrepreneurs: These are characterized by readiness to adopt successful innovations inaugurated by innovating entrepreneurs. Imitative entrepreneurs do not innovate the changes themselves, they only imitate techniques and technology innovated by others. Such types of entrepreneurs are particularly suitable for the under-developed regions for bringing a mushroom drive of imitation of new combinations of factors of production already available in developed regions.
3. Fabian Entrepreneurs: Fabian entrepreneurs are characterised by very great caution and skepticism in experimenting any change in their enterprises. They imitate only when it becomes perfectly clear that failure to do so would result in a loss of the relative position in the enterprise.
4. Drone Entrepreneurs: These are characterised by a refusal to adopt opportunities to make changes in production formulae even at the cost of severely reduced returns relative to other like producers. Such entrepreneurs may even suffer from losses but they are not ready to make changes in their existing production methods.
Following are some more types of entrepreneurs listed by some other behavioural scientists:
1. Solo Operators: These are the entrepreneurs who essentially work alone and, if needed at all, employ a few employees. In the beginning, most of the entrepreneurs start their enterprises like them.
2. Active Partners: Active partners are those entrepreneurs who start/carryon an enterprise as a joint venture. It is important that all of them actively participate in the operations of the business. Entrepreneurs who only contribute funds to the enterprise but do not actively participate in business activity are called simply 'partners'.
3. Inventors: Such entrepreneurs with their competence and inventiveness invent new products. Their basic interest lies in research and innovative activities.
4. Challengers: These are the entrepreneurs who plunge into industry because of the challenges it presents. When one challenge seems to be met, they begin to look for new challenges.
5. Buyers: These are those entrepreneurs who do not like to bear much risk. Hence, in order to reduce risk involved in setting up a new enterprise, they like to buy the ongoing one.
6. Life timers: These entrepreneurs take business as an integral part to their life. Usually, the family enterprise and businesses, which mainly depend on exercise of personal skill, fall in this type/category of entrepreneurs.
Of late, a new breed of entrepreneurs is coming to the fore in large industrial organizations. They are called 'Intrapreneurs'. They emerge from within the confines of an existing enterprise. In big organizations, the top executives are encouraged to catch hold of new ideas and then convert these into products through research and development activities within the framework of organization. The concept of intrapreneurship has become very popular in developed countries like America. It is found that an increasing number of intrapreneurs is leaving their jobs in big organizations and is starting own enterprises. Many of such intrapreneurs have become exceedingly successful in their ventures. What is more that they are causing a threat to the organizations they left. Such intrapreneurs breed to the innovative entrepreneurs who inaugurate new products.
ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT
The word development is used in so many ways that its precise connotation is often baffling. Nevertheless, economic development essentially means a process of upward change whereby the real per capita income of a country increases over a long period of time. Then, a simple but meaningful question arises: what causes economic development?
This question has absorbed the attention of scholars of socio-economic change for decades. In this section, we attempt to shed light on an important aspect of that larger question, the phenomenon of entrepreneurship. The one major issue we address here is: what is the significance of entrepreneurship for economic development? Does it add an important independent influence to that of other factors widely agreed to promote economic development?
Adam Smith, the foremost classical economist, assigned no significance to entrepre¬neurial role in economic development in his monumental work 'An Enquiry into the Nature and Causes of the Wealth of Nations', published in 1776. Smith extolled the rate of capital formation as an important determinant of economic development. The problem of economic development was ergo largely the ability of the people to save more and invest more in any country.
According to him, ability to save is governed by improvement in productivity to the increase in the dexterity of every worker due to division of labour. Smith regarded every person as the best judge of his own interest who should be left to pursue it to his own advantage. According to him, each individual is led by an ‘invisible hand' in pursuing his/her interest. He always advocated the policy of laissez-faire in economic affairs.
In his theory of economic development, David Ricardo identified only three factors of production, namely, machinery, capital and labour, among whom the entire produce is distributed as rent, profit and wages respectively. Ricardo appreciated the virtues of profit in capital accumulation. According to him, profit leads to saving of wealth, which ultimately goes to capital formation.
Thus, in both the classical theories of economic development, there is no room for entrepreneurship. And, economic development seems to be automatic and self-regulated. Thus, the attitude of classical economists was very cold towards the role of entrepreneur-ship in economic development. They took the attitude: "the firm is shadowy entity, and entrepreneur even shadower - or at least is shady when he is not shadowy".
The economic history of the presently developed countries, for example, America, Russia and Japan tends to support the fact that the economy is an effect for which entrepreneurship is the cause. The crucial role played by the entrepreneurs in the development of the Western countries has made the people of under-developed countries too much conscious of the significance of entrepreneurship for economic development. Now, people have begun to realize that for achieving the goal of economic development, it is necessary to increase entrepreneurship both qualitatively and quantitatively in the country. It is only active and enthusiastic entrepreneurs who fully explore the potenti-alities of the country's available resources-labour, technology and capital. Schumpeter visualized the entrepreneurs as the key figure in economic development because of his role in introducing innovations. Parson and Smelser described entrepreneurship as one of the two necessary conditions for economic development, the other being the increased output of capital.
Harbison includes entrepreneurs among the prime movers of innovations, and Sayigh simply describes entrepreneurship as a necessary dynamic force. It is also opined that development does not occur spontaneously as a natural consequence when economic conditions are in some sense 'right': a catalyst or agent is needed, and this requires an entrepreneurial ability. It is this ability that he perceives opportunities, which either others do not see or care about. Essentially, the entrepreneur searches for change, sees need and then brings together the manpower, material and capital required to respond the opportunity what he sees. Akio Morita, the President of Sony who adopted the company's products to create Walkman Personal-Stereo and India's Gulshan Kumar of T-Series who skimmed the audiocassette starved vast Indian market are the clearest examples of such able entrepreneurs.
The role of entrepreneurship in economic development varies from economy to economy depending upon its material resources, industrial climate and the responsiveness of the political system to the entrepreneurial function. The entrepreneurs contribute more in favourable opportunity conditions than in the economies with relatively less favourable opportunity conditions.
Viewed from opportunity point of view, the underdeveloped regions, due to the paucity of funds, lack of skilled labour and non-existence of a minimum social and economic overhead, are less conducive to the emergence particularly of innovative entrepreneurs. In such regions, entrepreneurship does not emerge out of industrial background with well-developed institutions to support and encourage it. Therefore, entrepreneurs in such regions may not be an "innovator" but an "imitator" who would copy the innovations introduced by the "innovative" entrepreneurs of the developed regions. In these areas according to McCelland's concept of personality aspect of entrepreneurship, some people with high achievement motivation come forward to behave in an entrepreneurial way to change the stationary inertia, as they would not be satisfied with the present status that they have in the society.
Under the conditions of paucity of funds, and the problem of imperfect market in underdeveloped regions, the entrepreneurs are bound to launch their enterprises on a small-scale.
As imitation requires lesser funds than innovation, it is realized that such regions should have more imitative entrepreneurs. And, it is also felt that imitation of innovations introduced in developed regions on a massive scale can bring about rapid economic development in under-developed regions also. But, it does not mean that such imitation requires in any way lesser ability on the part of entrepreneurs. In this regard, Berna opines: “It involves often what has aptly been called 'subjective innovation', that is, the ability to do things which have not been done before by the particular industrialists, even though unknown to him, the problem may have been solved in the same way by the others.” These imitative entrepreneurs constitute the main spring of development of underdeveloped regions.
Further, India which itself is an under-developed country aims at decentralized industrial structure to militate the regional imbalances in levels of economic development, small-scale entrepreneurship in such industrial structure plays an important role to achieve balanced regional development. It is unequivocally believed that small-scale industries provide immediate large-scale employment, ensure a more equitable distribution of national income and also facilitate an effective resource mobilization of capital and skill, which might otherwise remain, unutilized. Lastly, the establishment of Entrepreneurship Development Institutes and alike by the Indian Government during the last decades is a good testimony to her strong realisation about the premium mobile role of entrepreneurship played in economic development.
The important role that entrepreneurship plays in the economic development of an economy can now be put in a more systematic and orderly manner as follows:
1. Entrepreneurship promotes capital formation by mobilizing the idle saving of the public.
2. It provides immediate large-scale employment. Thus, it helps reduce the unemploy¬ment problem in the country, i.e., the root of all socio-economic problems.
3. It promotes balanced regional development.
4. It helps reduce the concentration of economic power.
5. It stimulates the equitable redistribution of wealth, income and even political power in the interest of the country.
6. It encourages effective resource mobilisation of capital and skill, which might otherwise remain unutilized and idle.
7. It also induces backward and forward linkages, which stimulate the process of economic development in the country.
8. Last but no means the least; it also promotes country's export trade i.e., an important ingredient to economic development.
Thus, it is clear that entrepreneurship serves as a catalyst of economic development. On the whole, the role of entrepreneurship in economic development of a country can best be put, as "an economy is the effect for which entrepreneurship is the cause".
Women constitute around half of the total world population. So is in India also. They are, therefore, regarded as the better half of the society. In traditional societies, they were confined to the four walls of houses performing household activities.
In modern societies, they have come out of the four walls to participate in all sorts of activities. The global evidences buttress that women have been performing exceedingly well in different spheres of activities like academics, politics, administration, social work and so on. Now, they have started plunging into industry also and running their enterprises successfully. Therefore, while discussing on entrepreneurial development, it seems in the fitness of the context to study about the development of women entrepreneurs in the country. Let us begin with understanding the concept of women entrepreneurs.
CONCEPT OF WOMEN ENTREPRENEURS
Based on the general concept of entrepreneur just discussed in the previous chapter, women entrepreneurs may be defined as a woman or group of women who initiate organise and run a business enterprise. In terms of Schumpeterian concept of innovative entrepreneurs, women who innovate, imitate or adopt a business activity are called “women entrepreneurs”.
The Government of India has defined women entrepreneurs based on women participation in equity and employment of a business enterprise. Accordingly, a women entrepreneur is defined as “an enterprise owned and controlled by a women having a minimum financial interest of 51 per cent of the capital and giving at least 51 per cent of the employment generated in the enterprise to women”.
However, this definition is subject to criticism mainly on the condition of employing more than 50 per cent women workers in the enterprises owned and run by the women.
In nutshell, women entrepreneurs are those women who think of a business enterprise, initiate it, organize and combine the factors of production, operate the enterprise and undertake risks and handle economic uncertainty involved in running a business enterprise.
FUNCTIONS OF WOMEN ENTREPRENEURS
As an entrepreneur, a women entrepreneur has also to perform all the functions involved in establishing an enterprise. These include idea generation and screening, determination of objectives, project preparation, product analysis, determination of forms of business organization, completion of promotional formalities, raising funds, procuring men, machine and materials and operation of business.
Frederick Harbison has enumerated the following five functions of a women entrepreneur:
1. Exploration of the prospects of starting a new business enterprise.
2. Undertaking of risks and the handling of economic uncertainties involved in business.
3. Introduction of innovations or imitation of innovations.
4. Coordination, administration and control.
5. Supervision and leadership.
The fact remains that, like the definition of the term ‘entrepreneur’, different scholars have identified different sets of functions performed by an entrepreneur whether man or woman. All these entrepreneurial functions can be classified broadly into three categories:
These functions have already been discussed. Therefore, these are not discussed again for the sake of repetition.
GROWTH OF WOMEN ENTREPRENEURSHIP
Woman in India constitute around half of the country's population. Hence, they are regarded as the “better half of the society”. In the official proclamation, they are at par with men. But, in real life, the truth prevails otherwise. Our society is still male-dominated and women are not treated as equal partners both inside and outside four walls of the house. In fact, they are treated as abala, i.e., weak and dependent on men.
As such, the Indian women enjoy a disadvantageous status in the society. Let some facts be given. The much low literacy rate (40%), low work participation rate (28%) and low urban population share (10%) of women as compared to 60%, 52% and 18% respectively of their male counterparts well confirm their disadvantageous position in the society. Our age-old socio-cultural traditions and taboos arresting the women within four walls of their houses also make their conditions more disadvantageous.
These factors - all together - serve as non-conducive conditions for the emergence and development of women entrepreneur¬ship in the country. Given these unfavourable conditions, the development of women entrepreneurship is expectedly low in the country. This is well indicated by a dismally low level of women (5.2%) in total self-employed persons in the country. Further, women entrepreneurs in India accounted for 9.01% of the total 1.70 million entrepreneurs during 1988-89.
A cross-country comparison reveals that emergence and development of entrepreneur¬ship is largely caused by the availability of supporting conditions in a country. To quote, with improving supporting conditions, the share of women owned enterprises in the United States has risen from 7.1 % in 1977 to 32% in 1990. It is likely to reach to 50% by the turn of the 20th century.
In India women entry into business is a new phenomenon. Women entry into business, or say, entrepreneurship is traced out as an extension of their kitchen activities mainly to 3 Ps, Viz., Pickles, Powder and Pappad. Women in India plunged into business for both pull and push factors. Pull factors imply the - factors, which encourage women to start an occupation or venture with an urge to do something independently. Push factors refer to those factors, which compel women to take up their own business to tide over their economic difficulties and responsibilities. With growing awareness about business and spread of education among women over the period, women have started shifting from 3 Ps to engross to 3 modem Es, viz., Engineering, Electronics and Energy. They have excelled in these activities.
Women entrepreneurs manufacturing solar cookers in Gujarat, small foundries in Maharashtra and T.V. capacitors in Orissa have proved beyond doubt that given the opportunities, they can excel their male counterparts. Smt. Sumati Morarji (Shipping Corporation), Smt. Yamutai Kirloskar (Mahila Udyog Limited), Smt. Neena Malhotra (Exports) and Smt. Shahnaz Hussain (Beauty Clinic) are some exemplary names of successful and accomplished women entrepreneurs in our country.
In India, Kerala is a state with highest literacy (including women literacy) reflecting a congenial atmosphere for the emergence and development of women entrepreneurship in the State. According to a study, the number of women’s industrial units in Kerala was 358 in 1981, which rose to 782 in March 1984. These 782 units included 592 proprietary concerns, 43 partnership firms, 42 charitable institutions, 03 joint stock companies and 102 co-operative societies covering a wide range of activities.
On the whole, proper education of women in Kerala resulted in high motivation among them to enter into business. The financial, marketing and training assistance provided by the State Government also helped motivate women to assume entrepreneurial career. Women's desire to work at the place of residence, difficulty of getting jobs in the public and private sectors and the desire for social recognition also motivated women in Kerala for self-employment. Like Kerala, an increasing number of women are entering the business in the State of Maharashtra also.
PROBLEMS OF WOMEN ENTREPRENEURS
Women entrepreneurs encounter two sets of problems, viz., general problems of entrepreneurs and problems specific to women entrepreneurs.
These are discussed below:
1. Problem of Finance: Finance is regarded as "life-blood" for any enterprise, be it big or small. However, women entrepreneurs suffer from shortage of finance on two counts. Firstly, women do not generally have property on their names to use them as collateral for obtaining funds from external sources. Thus, their access to the external sources of funds is limited. Secondly, the banks also consider women less credit-worthy and discourage women borrowers on the belief that they can at any time leave their business. Given such situation, women entrepreneurs are bound to rely on their own savings, if any, and loans from friends and relatives, which are expectedly meager and negligible. Thus, women enterprises fail due to the shortage of finance.
2. Scarcity of Raw Material: Most of the women enterprises are plagued by the scarcity of raw material and necessary inputs. Added to this are the high prices of raw material, on the one hand, and getting raw material at the minimum of discount, on the other. The failure of many women co-operatives in 1971 engaged in basket-making is an example how the scarcity of raw material sounds the death-knell of enterprises run by women.
3. Stiff Competition: Women entrepreneurs do not have organisational set-up to pump in a lot of money for canvassing and advertisement. Thus, they have to face a stiff competition for marketing their products with both organised sector and their male counterparts. Such a competition ultimately results in the liquidation of women enter¬prises.
4. Limited Mobility: Unlike men, women mobility in India is highly limited due to various reasons. A single woman asking for room is still looked upon suspicion. Cumbersome exercise involved in starting an enterprise coupled with the officials’ humiliating attitude towards women compels them to give up idea of starting an enterprise.
5. Family Ties: In India, it is mainly a woman's duty to look after the children and other members of the family. Man plays a secondary role only. In case of married women, she has to strike a fine balance between her business and family. Her total involvement in family leaves little or no energy and time to devote for business. Support and approval of husbands seem necessary condition for women's entry into business. Accordingly, the educational level and family background of husbands positively influence women's entry into business activities.
6. Lack of Education: In India, around three-fifths (60%) of women are still illiterate. Illiteracy is the root cause of socio-economic problems. Due to the lack of education and that too qualitative education, women are not aware of business, technology and market knowledge. Also, lack of education causes low achievement motivation among women. Thus, lack of education creates problems for women in the setting up and running of business enterprises.
7. 7: Male-Dominated Society: Male chauvinism is still the order of the day in India. The Constitution of India speaks of equality between sexes. But, in practice, women are looked upon as abala, i.e. weak in all respects. Women suffer from male reservations about a woman's role, ability and capacity and are treated accordingly. In nutshell, in the male¬ dominated Indian society, women are .not treated equal to men. This, in turn, serves as a barrier to women entry into business.
8. Low Risk-Bearing Ability: Women in India lead a protected life. They are less educated and economically not self-dependent. All these reduce their ability to bear risk involved in running an enterprise. Risk bearing is an essential requisite of a successful entrepreneur.
In addition to above problems, inadequate infra structural facilities, shortage of power, high cost of production, social attitude, low need for achievement and socio-economic constraints also hold the women back from entering into business.
DEVELOPMENT OF WOMENENTREPRENEUR8-RECENT TRENDS
Days are gone when women in India remained confined to within four walls of their homes and their immense strength and potential remained unrecognized and unaccounted for. Now, they are increasingly participating in all spheres of activities.
The fact remains that the citadels of excellence in academic, politics, administration, business and industry are no longer the prerogatives of men in India. The general consensus that is emerging in all discussions relating to the development of women is that promotion of women entrepreneurs should form an integral part of all development efforts.
The experience of the United States where the share of women-owned enterprises is continuously on increase strengthens the view that the future of small-scale industries depends very much on the entry of women into industry.
Several national and international organisations and agencies have appreciated the need for and importance of developing women entrepre¬neurs in recent years. A brief review of it is given here.
With a view to develop better half of the society, the United Nations declared the decade 1975-85 as the Decade for Women: The UNIDO Preparatory Meeting on the Role of Women in Industrialisation in Developing Countries held at Vienna during 6-10 February, 1978 identified several constraints such as social, attitudinal and institutional barriers, inad¬equate employment opportunities, inappropriate and inadequate training, insufficient information and so on which held women back from participating in industrial activities. The World Conference of the United Nations Decade for Women held at Copenhagen in Denmark on 30th June 1980 also adopted a programme aimed at promoting full and equal opportunities and treatment of women in employment and their access to non-traditional skilled trades.
The First National Conference of Women Entrepreneurs held at New Delhi in November 1981 advocated the need for developing women entrepreneurs for the overall development of the country.
It called for priority to women in allotment of land, sheds, sanction of power, licensing, etc. The Second International Conference of Women Entrepreneurs organised by the National Alliance of Young Entrepreneurs (NAYE) held in 1989 at New Delhi also adopted certain declarations involving women's participation in industry. .
The Government of India has been assigning increasing importance to the development of women entrepreneurs in the country in recent years. The Sixth Five Year Plan, for example, proposed for promoting female employment in women-owned industries. The Government moved a step forward in the Seventh Five Year Plan by including a special chapter on Integration of Women in Development.
The chapter suggested:
1. To treat women as specific target groups in all development programmes.
2. To devise and diversify vocational training facilities for women to suit their varied needs and skills.
3. To promote appropriate technologies to improve their efficiency and productivity. To provide assistance for marketing their products
4. To involve women in decision-making process.
In the recent Industrial Policy 1991, the Government of India further stressed the need for conducting special entrepreneurship development programmes for women with a view to encourage women to enter industry. Product and process-oriented courses enabling women to start small-scale industries are also recommended in the Policy Statement.
There are several institutional arrangements both at the centre and the state levels like nationalized banks, state financial corporations, state industrial corporations, district industry centres and voluntary agencies like FICCI's Ladies Organization (FLO), National Alliance of Young Entrepreneurs (NAYE) which have been engaged in protecting and developing women entrepreneurs in the country. Added to these are national and international women associations set up with a purpose to create a congenial environment for developing women entrepreneurship in rural and urban areas.
Rural entrepreneurship Def:
Rural entrepreneurship can simply be defined, as entrepreneurship emerging in rural areas is rural entrepreneurship. In other words, establishing industrial units in the rural areas refers to rural entrepreneurship. Or say, rural entrepreneurship implies rural industrialization.
All the village industries have been grouped into seven major categories as follows:
1. Mineral- based industry,
2. Forest - based industry,
3. Agro - based industry,
4. Polymer and chemical- based industry,
5. Engineering and non-conventional industry,
6. Textile-industry (including khadi), and
7. Service industry.
NEED FOR RURAL ENTREPRENEURSHIP
The need for rural entrepreneurship for developing industries in the rural areas is imbued with multiplicity of justifications as listed below:
1. Rural industries being labour intensive have high potential in employment generation. Thus, they serve as an antidote to the widespread problems of disguised unemployment or under-employment stalking the rural territory.
2. By providing employment, these industries have also high potential for income generation in the rural areas. These, thus, help in reducing disparities in income between rural and urban areas.
3. These industries encourage dispersal of economic activities in the rural areas and, thus, promote balanced regional development. .
4. Development of industries in, the rural areas also helps build up village republics.
5. Rural industries also help protect and promote the art and creativity, i.e. the age-old rich heritage of the country.
6. Rural industrialization fosters economic development in rural areas. This curbs rural-urban migration, on the one hand, and also lessens the disproportionate growth in the cities, reduces growth of slums, social tensions, and atmospheric pollution, on the other.
7. Last but no means the least, rural industries being environment friendly lead to development without destruction i.e., the most desideratum of the time.
PROBLEMS OF RURAL ENTREPRENEURSHIP
Developing entrepreneurship especially rural entrepreneurship is as important is not so easy. It is constrained with several problems.
The general bottle-necks in the development of village industries are financial constraints, lack of technical know-how, lack of training and extension services, management problems, lack of quality control, high cost of production due to high input cost, lack of communication and market information, poor quality of raw materials, lack of storage and warehousing facilities, obsolete and primitive technology, and lack of promotional strategy.
According to the Ninth Plan, the major problems faced in developing entrepreneurship in rural areas are:
1. Inadequate flow of credit,
2. Use of obsolete technology, machinery, and equipment,
3. Poor quality standards, and
4. Inadequate infrastructure facilities.
One of the major problems faced in developing entrepreneurship in rural areas is lack of awareness and knowledge about the importance of developing industries in rural areas. Added to this is disinterest shown by rural people towards assuming the career as an entrepreneur for one reason or other.
Rural/village people generally want to take up salaried employment because of assured income, lesser hours of work, lesser degree of responsibility etc. This is supported by the society's higher degree of status accorded to the salaried people than to self-employed ones, or say, entrepreneurs.
Further, the rural people are generally not aware about the entrepreneurial opportunities available and also about support organisations and other information required to take the first step in their entrepreneurial career. Even those who are aware about the facilities and support system for starting entrepreneurial career find organisational climate to be not so helpful.
Thus, the environment in the family, society and the support system is generally not conducive to encourage the rural people to consider self-employment and entrepreneurial career as an option to salaried employment. Besides, developing rural entrepreneurship faces all those problems that are faced in the development of small-scale industries in the country.
HOW TO DEVELOP RURAL ENTREPRENEURSHIP?
Establishing an industry and, thereby developing entrepreneurship is not one-man activity. In fact, it involves multi-pronged activities.Though the answer to the question how to develop entrepreneurship lies in the solutions of the problems faced in this regard, yet the following measures are suggested for developing entrepreneurship in the rural areas in the country. .
1. Raw material is a must for any industry. However, the non-availability of raw materials accompanied by their prohibitive cost has weakened the viability of these industries. Past experience bears evidence that rural industries with employment potential cannot be sustained for long unless a strong raw material-base is created in rural areas itself. Therefore, an urgent policy is called for to strengthen the raw material base in rural areas.
2. Finance is considered as lubricant for setting up and running an industry. Funds, therefore, need to be made available on time at soft terms and conditions to those who really need it.
3. In order to solve the problem of marketing for rural industries, common production-cum:-marketing centres need to be set up and developed with modern infrastructure facilities, particularly, in the areas having good production and growth potential. This would help in promoting export business, on the one hand, and bringing the buyers and sellers is close interaction avoiding middleman in between them, on the other. Legislative measures have to betaken to make the government purchases compulsory from rural industries.
4. One peculiarity of rural entrepreneurs is that most of them join their entrepreneurial career not by choice but by chance.
Lack of aptitude and competency on the part of such entrepreneurs makes the units sick. Hence, there is a need to develop entrepreneurial attitude and competencies among the prospective entrepreneurs through the training interventions like Entrepreneurship Development Programmes (EDP), Women Entrepreneurship Development Programmes and TRYSEM.
5. One effective way to inculcate the entrepreneurial acumen and attitude may be imparting entrepreneurial education in the schools, colleges, and universities. That younger minds are more susceptive to be moulded is well evidenced by the popularly known Kakinada Experiments in Andhra Pradesh.
6. Sometimes the real problem in setting up industries is not the non-availability of facilities, but non-awareness of facilities whatever is available. The need is, therefore, to disseminate information about all what is available to provide to the entrepreneurs to facilitate them in setting up industries.
7. Proper provisions need to be made to impart the institutional training to orient the entrepreneurs in specific products and trades so that the local resources can be harnessed properly.
8. Our accumulated experience bears ample evidences to the fact that the nongovernmental organisations, popularly known as NGOs, can prove instrumental in developing rural entrepreneurship in the country. The role of NGOs in developing entrepreneurship is, therefore, discussed separately.
The rural environment is ripe with possibilities. The population of rural areas easily lends itself to entrepreneurial activity. Typically rural areas do not have large local businesses to employ the labor force. These individuals will be inclined to start their own ventures, given the opportunity and the ideas.
These entrepreneurial ventures form a small business base in the area, which helps stimulate the economy because the wealth stays in the local area instead of being exported to a major metropolitan headquarters of a large company.
Rural workers are also usually dedicated to the work they do and the companies they work for. This added dedication can help small business succeed and grow to be very prosperous for the owners. Once small business becomes a viable option in an area, others are interested in starting ventures to create successful opportunities of their own. Clearly, rural areas are a small business breeding ground.
The important role of entrepreneurship to create wealth and new jobs. It is important to stress that rural entrepreneurship in its substance does not differ from entrepreneurship in urban areas. Entrepreneurship in rural areas is finding a unique blend of resources, either inside or outside of agriculture.
This can be achieved by widening the base of a farm business to include all the non-agricultural uses that available resources can be put to or through any major changes in land use or level of production other than those related solely to agriculture. Thus, a rural entrepreneur is someone who is prepared to stay in the rural area and contribute to the creation of local wealth.
To some degree, however, the economic goals of an entrepreneur and the social goals of rural development are more strongly interlinked than in urban areas. For this reason entrepreneurship in rural areas is usually community based, has strong extended family linkages and a relatively large impact on a rural community.
Sources of Entrepreneurship in Rural areas:
It is a known fact that personal characteristics as well as social aspects clearly play some role in developing entrepreneurship but entrepreneurs can also be developed through conscious action
Development of entrepreneurs and of entrepreneurship can be stimulated through a set of supporting institutions and through deliberate innovative action, which stimulates changes and fully supports capable individuals or groups.
It is argued that controllable variables such as a stable system of property rights and freedom of action in the economic sphere, availability of other inputs in the economy as well as education and training contribute significantly to the development of entrepreneurship.
Therefore, policies and programs designed specifically for entrepreneurship promotion can greatly affect the supply of entrepreneurs and thus indirectly represent an important source of entrepreneurship.
These programs should include:
1. Employment training,
2. Youth training,
3. Initiating the establishment of a training and enterprise center,
4. Improving environmental and property acquisition to benefit the community
Policy implications for rural entrepreneurship development are:
Sound national economic policy with respect to agriculture, including recognition of the vital contribution of entrepreneurship to rural economic development. Policies and special programs for the development and channeling of entrepreneurial talent;
Entrepreneurial thinking about rural development, not only by farmers but also by everyone and every rural development organization; and institutions support the development of rural entrepreneurship as well as strategic development alliances.
Factors Determining the Growth of Entrepreneurship:
Entrepreneur behaviour and socio-psychological factors influencing entrepreneurship development
Behavioural Pattern of Entrepreneurs:
Habits attitudes, perception etc. of people reflects the socio-economic background from which they come. People with varied backgrounds undertake entrepreneurial activities. The type of industrial activity they undertake has a lot to do with their personal traits. This behaviour pattern of entrepreneurial can be observed in the entrepreneurial history of India.
A man and his son are in a serious car accident. The father is killed, and the son is rushed to the emergency room. Upon arrival, the attending doctor looks at the child gasps, “This child is my son! Who is the doctor?
Socio-economic factors affecting entrepreneurship development:
The socio- economic back ground from which they come affects the behaviour patterns of entrepreneurs. In order to understand their behaviour patterns, one has to analyze their background.
The background can be studied by analyzing the different socio- economic factors.
Socio-Economic Origins / Factors
Socio-Economic factors are analyzed for studying the behavior patterns of entrepreneurs, in other words entrepreneurs behave in aparticular manner because of the influence of socio-economic factors. Following are some of the factors that are considered in such a study:
1. Caste origins: Certain religions and castes encourage entrepreneurship. Caste system in India led to rigid customs and traditions. Economic activities were also caste-oriented. The caste system in India exercised an influence on the occupation of a person. Certain castes have a culture that encourages entrepreneurship.
It was because of this that few communities were engaged in trade and industry for centuries in India e.g. the Vaishyas, Khatris, Baniyas, Parsees, Jains and Marwarirs have been responsible for supply of entrepreneurship in India. This is also true in case of a number of countries e.g. the Protestant ethics in the west, the trading classes in the United States, the family business concerns of France and the Samurai in Japan. •
2. Time and age of entry:
The time and age of entry are important factors to be considered in the behavioural pattern of entrepreneurs e.g. the Marwaris enter business at a much younger age than the Parsees or Khatris.
3. Family Background:
This includes the economic status, size and the type of family e.g. because the Zamindar families had greater access to political power, they were more entrepreneurial.
Again; the joint families could expand their family business projects considerably because the family property could be invested. If the family came from a rural area, they could not enjoy the advantages like families from urban areas did, though that' consideration was not a hindrance to entrepreneurship.
4. Religious background:
Certain religions condemn the indulgence in material gains. On the other band, Max Weber says the protestant ethic among the Christians develops the right attitude for entrepreneurship. Religions teach a man to refrain from material comforts, as he has not come to this world to make money and indulge in pleasures.
A number of subsequent studies show that religions in India do not kill the entrepreneurial spirit. It is not the form of religion that is practiced but the type of interpretation that is given to the religious values and that is important for entrepreneurial success. But religion has definitely had an impact on the entrepreneurial behaviour of an individual.
5. Education and technical know-how
A higher level of education enables entrepreneurs to use their talent more profitably. Education is considered to be a good means to develop man's resourcefulness. A study has shown that a majority of entrepreneurs in the technical and, engineering industries were graduates and post-graduates.
6. Occupational background
For starting enterprise what is required is the entrepreneurial spirit. Most of the entrepreneurs have come from families where the parental occupation was employment or agriculture. It was not necessarily the business & background that influenced them into undertaking the entrepreneurial activity.
7. Migratory character:
The study shows that four - fifths of entrepreneurs were immigrants who had come from places within and outside the state.
8. Type of industry started:
Out of the forty enterprises in two districts of Andhra Pradesh, where the study was conducted, nearly two-thirds of the entrepreneurs started industries in engineering works. This factor provided scope for the analysis of entrepreneurial behavior.
9. Type of ownership preferred:
The type of ownership organization the entrepreneurs prefer also helps in understanding the socio economic background.
They come from e.g. the above study showed that nearly fifty percent of the entrepreneurs had launched their units in the partnership form, about one-third in the sole trading form. This shows that they wanted, to avoid legal formalities that existed in the Indian society for launching companies.
Thus one may conclude that the socio-economic background exercises an influence on the entrepreneur's motivation, access to resources, risk- bearing capacity etc. That in turn determines entrepreneurial behaviour and the growth of entrepreneurs.
Research has shown that entrepreneurs are motivated by a combination and interaction of a number of factors.
1. Entrepreneurship does not spring and grow automatically.
2. It does not emerge spontaneously.
3. It is the result of the availability of a number of factors. These factors can also be known as "supportive conditions" or "facilitating conditions.”Entrepreneurship can flourish under an atmosphere that is conducive; where these factors are favorable or have positive influence entrepreneurial activities can grow and develop.
Factors that determine the growth or entrepreneurship can be broadly divided into two categories viz. the economic and the non-economic factors.
Besides, the Government actions also determinel the entrepreneurial growth in a country.
OTHER FACTORS DETERMINING GROWTH OF ENTREPRENEURSHIP DEVELOPMENT:
A-Economic Factors- The economic factors that affect the growth of entrepreneurship in a country are as follows:
1. Capital: Capital is required for establishing and running an organization. It is a prerequisite for expansion and development- programmes of an enterprise.
Since capital is the life-blood of trade and commerce, it is the basic requirement for entrepreneurial activities. If it is available in abundance then the entrepreneurial activities will also grow.
In the less developed countries entrepreneurship has a slow growth on account of lack of capital. In such countries there is less domestic saving. There is also the problem of channelising savings for productive purposes. Entrepreneurs in such countries always face the problem of inadequate finance.
Besides, entrepreneurs do not get capital for experimenting on new ideas.
Innovations require financial resources in abundance. On the other hand, entrepreneurship grows in the more developed countries on account of availability of financial resources. Capital, therefore, becomes on important determinant of entrepreneurial growth.
The type of labor available in a country determines entrepreneurial growth. The labor is mobile and flexible then the entrepreneurs can get the right type of !abour.Beside entrepreneurs also require skilled labor for certain business activities.
In less developed countries though, labor is available in a large number, it is not mobile. In such countries cheap labor is always immobile on account of emotional and economic insecurity.
3. Raw Materials: The easy availability of raw materials is a must for any industrial activity. Thus factor influences the growth of entrepreneurship. Without its availability, neither can any enterprise nor can entrepreneurship emerge. Innovations require experimentation on material resources. If raw materials are available in abundance then entrepreneurship can grow and develop easily. However to a certain extent this problem can be solved.
All production and trading is done for consumers. Until and unless the products and services reach the consumer who is the last link in the chain of distribution and who is responsible for its consumption the objective of entrepreneurial activity is not achieved.
A well regulated and a developed market definitely promotes entrepreneurship. Its size and composition also influences the emergence of entrepreneurs.
Favourable marketing conditions have positive influences on entrepreneurship.
If the market has a good potential, it is expanding and offers good prospects for trade then definitely entrepreneurship will grow.
5. Adequate Overhead Facilities:
Successful entrepreneurial activities require certain basic facilities and services like transportation, communication, technical and economic information,, supply of power, irrigation facilities etc. They provide economies and make the investments of entrepreneurs fruitful.
They reduce the cost of production and help in the increase of output. In Less developed countries, entrepreneurial growth is restricted on account of scarcity of these facilities.
These services are inadequate and less developed and sometimes very, expensive. These problems affect the profit margins of entrepreneurs. They pose severe problems and discourage entrepreneurial activity.
On the other hand, entrepreneurship has more scope to grow in advanced countries as these overhead facilities are well developed and are available on a larger scale.
6. Business Risks:
Economic risk and risks arising out of uncertainties are more in less developed than in developed countries. This is because there is lack of reliable information on cost, size-of market, conditions of demand, overhead facilities etc.
An entrepreneur cannot. Make correct estimates under such circumstances and therefore faces more risks and uncertainties in less developed countries. Besides, the market for goods and services is smaller.
There is also the problem of lack of stability in both the domestic and foreign economic policy.
All these situations make business extremely risky and sometimes less viable and this discourages entrepreneurs. When entrepreneurs are put to the mercy of unforeseen conditions they either make short-term investments or do not take up project in which the risk element is high.
B. Non-Economic Factor: The non-economic factors that determine the growth of entrepreneurship are as follows:
1. Socio-cultural Factors:
According to Joseph A.Schumpeter, there has to be an appropriate social climate for entrepreneurship. Cochran calls it cultural themes and sanctions. They both talk about the existence of norms and values within a socio-cultural set-up. These have influence on entrepreneurial behavior. The behaviour can favor or disfavor entrepreneurial growth.
To increase the level of entrepreneurial activity in a country, many scholars have proposed a change in traditional values and beliefs. If these are traditional in nature, they do not favor entrepreneurial growth. For example, if the people in a follow certain customs and traditions rigidly then certain entrepreneurial activities may not be undertaken at all.
For example, business in hides, meat canning, poultry farming, etc. While others may not develop enough. If people are superstitious and believe in astrology and destiny, then business may receive a set back.
People may not get into some business activities, as the stars do not favor them. They may launch business projects only when the time according to their stars is auspicious. The economic policy or market conditions may not necessarily be favorable then.
Entrepreneurs may not get to the root cause of inefficiency or ineffectiveness in the organizations as they may feel their stars are bad or they are not destined for progress.
Scholars like McClelland suggest that a complete change in traditional values may not be necessary for entrepreneurial appearance.
They suggest a synthesis of old values with newer values or their reinterpretation.
Sometimes government actions can also help a society to overcome negative orientations. Under this factor, the opinion of social mobility is not unanimous. Some hold the view that a high degree of mobility is conducive to entrepreneurship.
Social mobility involves the degree of mobility, both social and geographical and the nature of mobility channels within a system. Scholar; like Hoselitz and McClelland propose openness of a system and flexibility in role relations. If there is mobility within a system then entrepreneurship development is promoted. On the other hand, a group of scholars feel that entrepreneurship comes from a rigid social combination of both the systems.
According to Rostowand Brozen, a social system should neither be too rigid, nor too flexible. If it is too flexible then an individual may move into other roles easily and not slick to the entrepreneurial one. On the other hand if the social system is too rigid then entrepreneurship will be restricted. It will not have a wide scope for growth and development.
Social mobility can therefore, have a strong influence on entrepreneurial growth.
Social marginality like social mobility is another factor under social conditions that acts as a determinant of entrepreneurial growth. Social marginality also promotes entrepreneurship according to a group of scholars.
Social marginality implies a situation in which there is a discontinuity between the individual’s personal attributes (eg physical characteristics intellectual make-up, social behavior patterns) and the role or roles, which the individual holds in society.
A person is likely to adopt owner manager role as a solution to marginality. e g a Brahmin who performs religious duties and rituals and earns his living from such activities may switch over to entrepreneurial activity when the society does not give much importance to these rituals.
However there are some purely structural factors like the entrepreneurial opportunity available in the society, rate of structural change in the economy etc. that facilitate entrepreneurial activities.
2. Psychological Factors:
A number of entrepreneurial theorists have given theories of entrepreneurship, wrich highlight the psychological factors affecting entrepreneurial growth. David McClelland has propounded the need for achievement, Theory.
3. GOVERNMENT ACTIONS:
The government of a country can influence both the economic as well as the non-economic factors affecting entrepreneurship. Its failure to act can create a negative influence on these factors. On the other hand, if it is interested in developing entrepreneurship it can frame suitable industrial policies. It can provide basic facilities, utilities and services.
It can provide basic concessions and create a conductive socio-economic set up. Such an atmosphere minimizes the risks and uncertainties that entrepreneurs have to encounter and induces them to perform. Supportive action of the government can promote the entrepreneur growth.