Chapter 2
NATURE AND DEVELOPMENT OF ENTREPRENEURSHIP
Nature of Entrepreneurship:
Entrepreneurship collectively has the power to change the
destiny of a family, city, state or the country as a whole. For
example in our own nation, the rate of economic growth in Punjab
and Haryana has been very high. Had all the states fared as well as
these two states, India could have become one of the strongest
economic powers in the world today. Why has the economic
development in these two states been so rapid whereas other states
like Bihar, Orissa, etc with much more natural resources lagged
behind? Because Punjab and Haryana have built-up a very strong
entrepreneurial base whereas other states have not been able to do
so.
The people of these two states have an entrepreneurial bent of
mind. However, the value system of the people in other economically
backward states is against entrepreneurship. They search for jobs.
They live their lives under the safety umbrella of monthly salary.
It is quite heartening that the entrepreneurial bug has bitten
people of states like Andhra Pradesh, Karnataka and Tamilnadu etc.,
which will speed up the economic growth of the country in current
decade.
Who is an entrepreneur? He is an opportunity seizer and not the
opportunist. He will look to the future and seize business
opportunities, He not only seizes opportunities but many a time
converts problems into opportunities. Let me cite an example. Some
time back, Newsweek reported a classic case of entrepreneurship.
This follows:
In a unique transaction the government of Hong Kong has recently
begun exporting night soil, a traditional Anglo-Asian euphemism for
human excrement to Communist China. Though sales are small right
now, Hong Kongs Urban Service Department which struck the deal with
China Resources Ltd., hopes to make as much as $250,000 this year
from the abundantly available commodity. Much of the night soil is
to be used in the Kwangtung Provinces methane-gas tanks for fuel
and lighting needs in local communes, but some will also be aged
and spread on Chinese soil as fertilizer. Environmentalists will be
pleased to note that the agreement should help prevent fouling of
the waters around Hong Kong.This is a unique case of
entrepreneurship. Hong Kong has converted the pollution and
environmental problems into opportunities of earning foreign
exchange for the country.
Development of Entrepreneurship in the Country:
The entrepreneurship was earlier restricted to certain
communities like Marwaris, Baniyas etc. Recently the State
Industrial Development Corporations and Small Scale Industries
institutes have made some efforts to train entrepreneurs. These
corporations have conducted short-term courses to develop
entrepreneurial capabilities in selected trainees. But there seems
to be something wrong with these projects.
Reasons for limited success in Nurture Entrepreneurship:
There is general lack of entrepreneurs in the country,
Governments effort not withstanding, especially in the rural India,
people prefer jobs to self-employment. There is need for research
and re-strategizing these development schemes.
There seems to be a problem with selection process itself.
Firstly, the candidates selected for such courses are those who
have failed to get jobs and hence have nowhere else to go. Added to
this is the widespread value system within the country where the
first preference for any qualified man is to get a job, preferably
a government job.
Secondly, such people who are unable to get jobs on their own.
Therefore, they do not have the experience of working in an
organized way. These people have limited ability to perceive the
project and build up the enterprise. Therefore, they are more
likely to fail. On the other hand such instances of failure
strengthen the believe among the people that it better to opt for a
job than to take up entrepreneurship.
We can conclude that these institutions and their programs
should target at those who can get jobs or who already have jobs
but are dissatisfied and would like to take up entrepreneurship as
a career.
Another source of ample supply of entrepreneurs could be
management institutes. For producing Entrepreneurs at these
business schools, we need to reorient the management education in
India. These management institutions at present are producing
administrative managers whereas developing countries like ours need
entrepreneurs. These institutes could take a few initiatives such
as:
Entrepreneurship should be made a compulsory subject in all
management schools. In addition, cases on successful entrepreneurs
should be developed and run in these management courses.
Project work related to a proposed entrepreneurial venture
should be introduced. It can be a feasibility report. At Asian
Institute of Management, Manila the student does not pass unless he
submits a Xerox copy of the cheque issued by the bank approving the
feasibility report.
Regular talks by successful entrepreneurs should be organized at
these institutes. Many of these emerging entrepreneurs from sunrise
industry should be called for such talks. Students should be
encouraged to generate ideas for launching new era ventures,
specially new technology area successful entrepreneur-alumni will
be more impactful making in nurturing entrepreneurship in
management student.
These institutes should start Entrepreneurship Centres to do
research on the subject and recommend policy measures to strengthen
entrepreneurship in management students. Such a centre has been
established at one of the Indian Institutes of Technology to
convert engineers into entrepreneurs.
All these steps will make million entrepreneurs bloom!
A word of caution:
Entrepreneurs should preferably start with trading/marketing
activities. The temptation of building a plant in the beginning
should be avoided. Such plants have proved a Waterloo for many
entrepreneurs. It is better to start as a trader or a service
provider. It would require less capital. Risk would be on a limited
scale. Once he has the feel of the market, he could possibly
integrate backwards to production activities. They should remember
that nobody could become Tata or Birla overnight.Factors
Influencing Entrepreneurship
Entrepreneurship is a function of several factors. Four sets of
factors that primarily influence entrepreneurship are as
follows:
The individual. Individuals who initiate, establish, maintain
and expand new enterprises generate entrepreneurship in a
society.
Environment. This factor is constituted by the socio-political
and economic policies of the government and financial institutions
and the opportunities available in a society as a result of such
policies.
Socio-cultural factors. Entrepreneurs grow in the traditions of
families and societies and internalize certain values and norms
from these sources. The contribution from these socio-cultural
factors, in the process of transmission, gets filtered through the
individual whom it seeks to influence.
Support system. Support systems that work for the development of
entrepreneurs include financial and commercial institutions,
research, training, extension and consultancy services, as also
large industrial units interested in developing ancillary
industries.While the individual, the environment and the support
systems directly influence entrepreneurship, the socio-cultural
milieu contribute through the individual and the support systems.
Broadly speaking, support systems and socio-cultural factors also
constitute the environment. Thus, actually there are only two
factors, on which entrepreneurship development depends. These are
the Personal characteristics of the individual and the
environment.
THE INDIVIDUAL
The three main factors, which influence the individuals behavior
are his motivational factors, factors concerning various skills
that the entrepreneurship possesses, and the factors relating to
his knowledge of several relevant aspects that are likely to
contribute to success in Entrepreneurial roles.
The motivational factor in itself has three major elements:
Entrepreneurial motivation,
Personal efficacy and
Coping capability.
Entrepreneurial Motivation:
Achievement motivation, power motivation and extension
motivation are important for entrepreneurship. In addition,
personal efficacy a sense of being effective and having control
over the situation is related to other motivational factors. An
entrepreneurial role produces stresses of different varieties and
the prospective entrepreneur must have the capability of coping
with these stresses.
Personal Efficacy: The following two sets of skills are
important for an entrepreneur:
Project development. An entrepreneur plans to establish an
enterprise. In order to be effective he should know how to conceive
the project, the stages through which he should go to establish it,
the information he may have to collect, the factors he may have to
consider in taking investment decisions, etc.
Enterprise management. Once an enterprise is started, its proper
management, which is crucial to its survival and growth, has to be
ensured. Management skills relate to accounting and financial
control, marketing, production planning and inventory control, and
to managing the people who work in the enterprise. Many new
entrepreneurs fail in the absence of these management skills.
Coping Capability: The enterprise once stared needs to be
sustained and grow at least to meet the demands of the competitive
business environment and a suitable strategy and plans needs to be
made by the entrepreneur.
ENVIRONMENT
Knowledge about the economic-political environment, more
particularly about the economic policies of the government and the
financial as well as commercial institutions, is important for the
small entrepreneur, which industries are being encouraged for the
small entrepreneur, which industries are being given assistance of
various kinds, etc., are information relevant to the prospective
entrepreneur. He should know what raw materials are available and
where. He would have to be well informed about the
infrastructure-transportation facilities, power, market, etc., in
the proposed locations of his enterprise.
He should be conversant with what help and assistance financial,
material as well as consultancy is available and from what sources.
He should know the sources through which he could approach these
agencies for assistance. He should also know about the schemes of
banks and other financial institutions. He should know about the
various schemes of the industries department of state governments
and about the effort being made to help new entrepreneurs by
voluntary agencies like Small Industries Associations and the
like.
The entrepreneur has to make a choice while setting up an
enterprise. The choice can be more rewarding if there is a wide
range of alternatives available to him. This is possible if the
entrepreneur has adequate knowledge about the various alternatives
industries, and more detailed knowledge about the industry which he
wants to set up and also about other related industries which have
a bearing on the one he selects to start. This knowledge would
cover aspects like required investments, marketability of products,
skills required for the enterprise, raw materials and other
materials needed, competitors in the field, etc. He should also
know about the manufacturing processes, choice of products and
about their commercial feasibility.
Once he selects a particular industry, in-depth knowledge about
the technological aspects of that industry would be of vital
importance. He should know the details about the processes of
manufacture, and the various technologies available for those
processes. He should also know the costs and benefits of respective
technologies so as to help him in making the appropriate
choice.
SOCIO-CULTURAL FACTORS
Socio-cultural factors like the family background and the norms
and values of the immediate social circle contribute substantially
to entrepreneuship development. The values and attitudes an
individual has, are a function of the socio-cultural milieu in
terms of developing normative behavior (norms of behavior) in the
individual. The individual works under some pressure of the values
inherited from his family. Behaviors which reflect inclinations
towards initiative and risk taking, dependence or independence
(self reliance), working with ones own hands on tasks requiring
manual handling, etc., are a result of the socialization process in
the family, the school and society. Behavior rewarded through
appreciation, encouragement, and other extrinsic as well as
intrinsic devices get reinforced, and related values and norms
develop. Thus, training through socialization is important. These
two factors, normative and socialization are discussed below:
Normative Behavior
The following aspects of normative behavior are relevant for
entrepreneurship.
Family expectations and pressures:
The pressure of expectations from the family plays an important
role in developing entrepreneurs. When the family expects an
individual to undertake some independent work, to earn enough for
the family to maintain their standard of living, to employ or
involve other members of the family in business etc., the
individual may respond by searching for ways of meeting such
expectations and pressures. In certain cases the individual may
react to these pressures even negatively. But usually there are
positive responses.
Familys role in small business
Working for oneself is better than working for somebody else was
clearly driven home by my Chinese Professor at the Asian Institute
of Management, Manila, Philippines. We were discussing a case on
entrepreneurship. He asked Alex, my classmate, How much profit your
company is making?
It made about 10 million Pesos last year, Alex replied.
How many managers are there in your company, the Chinese
Professor asked.
Ten, Alex replied.
How much each of the managers are getting, the professor
asked.
They are all getting different salaries but on an average they
are getting around 30,000 Pesos a year, Alex replied. (One Peso was
equivalent to a rupee. This incident happened 25 years back in
1975) That means the managers together are getting ten times 30,000
Pesos i.e. 300,000 Pesos per year. And because of your managerial
capability the company is making 10 million Pesos. Are you not
being exploited? Why dont you make those one million Pesos, your
share, yourself? Why do you allow your managerial capabilities to
be exploited by others? Why dont you exploit it yourself, the
professor went on. Alex had no reply. Neither had we.
The institute flooded us with cases on entrepreneurship and
family managed companies in the hope of making us entrepreneurs. At
that stage I could not imagine that one-day I would be running, a
family managed company myself and that also reasonably
successfully.
At this stage I would like to narrate a unique feature observed
by me in the Philippines, where I saw some husband-wife teams of
entrepreneurs. Husband and wife, classmates during college days
would plan an enterprise. Husband would take up a job. The wife
would start a small stores. Such stores are called sarisari stores
in the Philippines. The income of the husband would support the
family. Wifes earnings from business would be ploughed back to
expand the business. When the enterprise acquires a respectable
size, the husband would resign his job to become the president of
the company, the wife taking up the Finance Directors position.
What was surprising was that this pattern repeated itself many
times broadening the base of entrepreneurship in the country.
The objective of narrating this experience is two-fold:
Similar pattern can be adopted in India. It is not necessary
that husband takes up the job. In our environment the wife can take
up a job, the husband starting the enterprise.
The family has a very important role to play in building up an
enterprise. I would cite a live case.A young graduate was awarded
the dealership for cooking gas in Assam by a public sector
undertaking under its plan of giving dealerships to unemployed
engineers and graduates. Let us call him Sham. Sham being new in
business took an experienced businessman as a partner. All
formalities like constructing a godown etc. were completed by Sham
and the dealership started. After a few months, he realized that
his partner was not being fair to him. With the intervention of a
common friend, the partner left. In his place, Sham took his
sister, a postgraduate student, to look after the accounts. Today
the business of Sham is booming.
Initial few years for any small sector enterprise are very
crucial. Overhead expenditure should be kept to the bare minimum
during this crucial period. Family members could help a new
entrepreneur to keep his overhead expenditure low. Moreover, they
will do the allotted work with certain devotion and commitment, so
necessary in building up the enterprise in the beginning. The only
relative who should be kept away from business is the
son-in-law.
Our national slogan should be: Let millions of family managed
companies bloom in India! They will create jobs and eliminate
poverty.
Risk-taking:
Risk taking norms are important for the success of
entrepreneurs. It has been reported that a successful entrepreneur
takes moderate risks. He does not gamble, nor does he opt to play
safe.
Independence:
Equally important is the norm of self-reliance. The value
attributed to independence is important for entrepreneurship.
Instead of waiting for suggestions or directions from others, an
entrepreneur works out plans on his own, searches and explores
resources, and experiences an inner urge to make the enterprise a
success. This makes him self-reliant and independent.
Work.
Value regarding work has been found an important factor in the
entrepreneurship. The one major factor that distinguishes the
entrepreneurial from the non-entrepreneurial culture, is the
willingness to work with ones own .
Socialization.
The values supporting or influencing entrepreneurship are
developed through the process of socialization. The family and
other social institutions play a crucial role in training
individuals to show certain behavior. Ones predisposition towards
independence and initiative as well as risk-taking, primarily
results from such socializing influence. The friendship of an
entrepreneur has moved many people towards entrepreneurship.
Training in independence has been found to contribute to the
development of achievement motivation leading to entrepreneurship.
When a boy is encouraged to do things on his own, and seeks
guidance and help only when needed, he is being trained for
independence. Overprotection and over guidance in childhood or
later in the work organisation lead to dependence, which reduces
entrepreneurial qualities.
Similarity training in taking initiative and risk, is an
important factor in promoting values that are supportive to
entrepreneurship. When failure of an individual gets severely
punished, it is quite likely that he develop what is called fear of
failure motive or the motive to avoid all possibilities of failure
is not to take risks. Risk-taking behaviour on the contrary
blossoms when an individual is encouraged and helped to set
realistic challenging goals and to pursue them with
perseverance.
SUPPORT SYSTEMS
Possibility of the success of an entrepreneur generally is
enhanced by efficient and effective operation of the support
systems. Several agencies and organizations operate to help and
support the entrepreneur. Pareek has listed the following as
examples of support system:
Corporations specially set-up to develop entrepreneurship and
small industries in a region;
Financing institutions including banks;
Extension services of the department of industries (including
SISIs): Non-governmental organizations of small industries or
entrepreneurs, consultants, private agencies doing research, or
providing services to entrepreneurs, training institutions, etc.
Educational institutions working in the field of entrepreneurship
like Institutes of Technology, Institute of Management,
Universities, Engineering Colleges, etc.:
Development administration in the district;
Large industrial establishments interested in developing
ancillary industries thereby helping small units to grow and
develop.Entrepreneurs often have to interact with these support
systems. The way these systems function may encourage or discourage
them. They may reinforce one kind of behavior. The style of working
of these systems, therefore, is a crucial factor in promoting
entrepreneurship. The quality of interaction with the entrepreneur
is determined to a great extent by their working style, which
reflects their concern for effectiveness of their expected role.
The style will also demonstrate the norms prevailing in the
organisation, norms regarding collaboration, help, result
orientation, etc. The support systems, thus, can promote
entrepreneurship through reinforcing behavior and adopting norms of
internal working which are in harmony with them.
A Study of Environmental Factors Related to Business
entrepreneurship
A research was recently conducted in Bombay, where an attempt
was made to isolate environmental factors related to
entrepreneurship in order to facilitate a better understanding of
the developmental process of an entrepreneur.
Entrepreneurial Behavior (EB) is a function of an individuals
personality characteristics and environmental factors. This could
be represented as
EB=f(P,E)
where
P=Personality charcteristics
E=Environmental factors.
These environmental factors could be either nurturant or
impediments to entrepreneurial development.
The concern of this study was, therefore, to derive an
understanding of the determinants of entrepreneurial success from
the experiences of entrepreneurs. Greater emphasis was laid on
determining environmental factors at the micro level that
correlated with entrepreneurial development and success rather than
those at the macro level. The factors that were concentrated on
were:
Social/psychological factors including family, peer group formal
and informal association, etc.
Financial.
Material availability.
Technology availability/applicability.
At the macro level, the study tried to establish the
relationship between the state of the national economy and the
development of entrepreneurial success was measured based on:
Increase in profits.
Increase in turnover.
Increase in assets.
Extent of diversification.
The sample for this study comprised of entrepreneurs who were
members of the Small Scale Industries Federation. There were over
700 members listed. Of these, the history and other relevant data
of 51 members were obtained. The research design included the
administration of a structured questionnaire followed by some
open-ended questions to each of these 51 respondents. In addition
to this, 12 of these respondents were interviewed after a period of
three months and cases were constructed on the basis of these
interviews. The conclusions drawn from these cases were to further
validate the findings of the study.
For the purpose of this study, an entrepreneurs life was divided
into two stages: First stage: Initiation and subsequent success of
an entrepreneur, the following variables were studied:
(i) Educational background,
(ii) Age
(iii) Friends
(iv) Community
(v) Prior occupational status
(vi) Family size
(vii) Parents
(viii) Marital status and wives
(ix) Joint family status
(x) Migration
(xi) Peer group
(xii) Association membership
(xiii) Financial status of family
(xiv) Economic environment
(xv) Availability of material
(xvi) Availability of technology.
Educational Background:
The earlier notion that those lacking educational qualifications
were usually the ones who went in for business was not borne out,
as 41.18 per cent of entrepreneurs were professionally qualified,
27.45 per cent were graduates and the rest non-graduates S.S.C. and
below. No significant relationship could be determined between the
educational background and entrepreneurship of persons.
Age
The mean age at which entrepreneurs started an enterprise was
found to be 24.6 years, and most entrepreneurs (82.35 per cent)
thought of starting business before the age of 30. A maximum
concentration was determined between the ages of 20 to 30 years.
This indicates that the ideal time for imparting entrepreneurial
education would be somewhere between 18 to 25 years of age, so that
once the various alternatives available are highlighted, it would
be easier for an entrepreneur to start a new venture before the age
of 30. It may also be noted that not a single entrepreneur of the
sample studied started business between the age 40 to 50. It,
therefore, appears that once middle age sets in, there is a
tendency not to take any risks and to postpone the idea of
entrepreneurship till after retirement, which is borne out by the
fact that two entrepreneurs entered business between the age of 50
and 60. The average age at which, entrepreneurs actually started
business was found to be 28 years. Comparing this with the average
age at which they first thought of starting a business (24.6) it
would appear that it takes about 3 1/2 years for a business to
commerce after the idea is first conceived by the entrepreneur.
Also, 37 of the 51 entrepreneurs started the business before the
age of 30. Again, there were no fresh business ventures between the
ages of 41 and 50. Only about 20 per cent of the entrepreneurs
started their business between the ages of 31 and 40. This leads to
the conclusion that since there is a gap of 3 to 4 years between
the time when the idea of starting the business is conceived and
the business is actually started, it is desirable that sowing the
seeds of the idea of entrepreneurship, in the form of training,
should be undertaken before the age of 25.
Friends
The influence of friends was found to pay a significant role (to
the extent of 29.4 per cent of entrepreneurs surveyed) in the
development of the idea of entrepreneurship. Thus it would be
advisable to determine some details about friends while selecting
prospective entrepreneurs for intensive training as an entrepreneur
friend would most likely move him towards entrepreneurship, leading
to a larger percentage of those trained taking up the
entrepreneurial role with commitment. Also as an entrepreneur
friend is likely to induce people towards entrepreneurship, it is
recommended that Entrepreneur clubs be established by agencies
associated with the development of entrepreneurship, Such a step
would speed up the development of entrepreneurship so vital for
economic development.
Community
The community, family members and relatives were also found to
make a significant contribution in inculcating entrepreneurial
thinking in people and leading them towards entrepreneurial
activities as 13 of the 51 entrepreneurs surveyed quoted this as a
determining factor.
Prior Occupational Status
As regards the status of entrepreneurs before their entry into
business, it was found that 70.59 per cent were previously
employed, 21.57 per cent studying and 7.84 per cent unemployed.
This indicates three possible routes to entrepreneurship:
Looking out for opportunities while studying and starting a
business immediately after the completion of ones studies. In many
cases, they join the family business after completing their
studies, get some sort of apprenticeship and ultimately leave the
family firm to start their own venture.
Being unemployed and taking to entrepreneurship as a last
resort. It is, however, felt that the casualties in this category
of entrepreneurs will be the highest. All entrepreneurship
development programmes initiated by the government also concentrate
on this category of people.
Putting in some years of service and possibly after accumulation
of capital, leaving their jobs to take up entrepreneurial roles. Of
the 36 falling in this category, 13 worked in large companies, 11
in medium and 11 in small companies. One was working in the State
Government, 17 of these people left their jobs due to
dissatisfaction in the same. Thus, it is possible to locate
prospective entrepreneurs amongst those working in commercial
undertakings. Such prospective entrepreneurs would be either
dissatisfied with their jobs or will be having a very high
achievement motivation. In some cases, due to the attractive
policies which would spur them towards entrepreneurship where there
are opportunities for making more money. Unfortunately, the last
categories of perspective entrepreneurs have not been attracted at
all in our entrepreneurship development programmes. It is felt that
there is need for development of new entrepreneurship development
program to attract working persons to opt out of their jobs and
take to entrepreneurship. Such options will create job
opportunities for the unemployed and would also provide people with
some working experience including managerial experience the
opportunity to take up entrepreneurial roles. There has however
been no significant relationship demonstrated between past work
experience of the entrepreneur and his success as an
entrepreneur.
Family Size
With regard to the size of families of entrepreneurs, only 13.72
per cent could be considered to have come from small families
having one or two children. The largest concentration of
entrepreneurs was in families having five children (23.53 per
cent). The percentage of families producing entrepreneurs having
five or more children was as high as 54.9 per cent. One possible
explanation for this phenomenon could be that biggest families
might have financial difficulties spurring the children towards
economic activities with higher determination. In other words,
these children had a higher N.Ach. It could also be argued that
they had the feeling that they could expect the support of
brothers/sisters in time of need, in situations where something
went wrong with their business. However, family size was in no way
related to entrepreneurial success.
Parents
Parents of entrepreneurs, except for one respondent, all fathers
of entrepreneurs had crossed the age of 40 at the time of their
entry into business. This confirms our earlier finding that there
is a certain age group, which is most appropriate for the
development of entrepreneurship. It is quite probable that they
gave mature advice to their children because of their age and
experience. Parents educational background was found to have no
correlation with the development of entrepreneurship. Families can
throw up entrepreneurs, where parents have very little education.
They can also be thrown up by families where parents are
educationally qualified. Data also indicated that entrepreneurs
could be produced by families where the father was in service
rather than in business. However, a very large percentage (58.82
per cent) of entrepreneurs did come from families where the
parental profession had influence on the development of
entrepreneurship. It was not however found to correlate with later
entrepreneurial success. No correlation was depicted either between
an individuals entrepreneurship and his brothers profession. Thus,
the same family environment may produce different individuals.
These changes may come from peer group or certain personal
characteristics.
Wife
An entrepreneur requires support, especially at the beginning of
the entrepreneurial venture. A wife is in the vantage position to
provide this support, both emotional and financial. With the
exception of 6 cases (11.77 per cent) of relatively early marriages
all the entrepreneurs surveyed had been married at ages normal for
urban population. However, there were as many as 8 (15.68 per cent)
bachelors amongst interviewed entrepreneurs. This could be related
to the risk taking capability of bachelors. But for a solitary
exception of a non-matric wife, all other wives of the
entrepreneurs surveyed were reasonably well educated. This was in
contrast to the background of mothers of these entrepreneurs. It
can be concluded that an educated wife is an asset to an
entrepreneur as she can assist her husband or take up a job should
the need arise.
Despite this educational background of the wives, it was however
found that not many of the wives of entrepreneurs were employed
(56.86 per cent). However, they were safely devices for the lean
period. The risk-taking capability was reinforced in the
entrepreneurs by the educational background of their wives and
their capability to take up jobs. The educational background of the
wives of the entrepreneurs was not found to have correlation with
the success of the entrepreneurs.
Joint Family
Is the joint family set-up a hindrance to entrepreneurship? It
is often felt that the joint family system especially of Hindu
families is an impediment to the nurturance of entrepreneurship.
The findings of this study however were found to disprove this
notion, as of the total number of entrepreneurs interviewed, as
much as 45.10 per cent were from joint families. The joint family
status was not found to have a bearing on the later success of an
entrepreneur.
Migration
An attempt was made to determine whether migration from place to
place had any effect on the nurturing of entrepreneurship. No
relationship could be determined between these two factors at the
initiation stage. However, migration from place to place was found
to correlate with later success. Thus the feeling that such
movement serves to inculcate a coping capability in entrepreneurs,
which is a desirable quality for success has been found to be
correct.
Peer Group
With regard to peer groups, it was initially felt that they
would have a significant effect on the thinking and behavior of
entrepreneurs. This belief was subsequently borne out by the
findings of this study, where as much as 56.86 per cent of those
interviewed had at least one entrepreneur friend. From this it can
be concluded that the peer group has a definite impact on the
development of entrepreneurship. People with entrepreneur friends
are more likely to become entrepreneurs. The finding could also be
used while selecting prospective entrepreneurs for intensive
entrepreneurial development programmes or other support from
governmental agencies. No relationship was however found between
having an entrepreneur friend and later success of
entrepreneurs.
Association Membership
Entrepreneurs interviewed were also asked whether they held a
membership of any associations at the time of their entry into
business. Only 7 respondents replied in the affirmative, the
remaining 44 replied that they were not members of any association
at the time of their becoming entrepreneurs. Two of the respondents
had, however, become association members subsequent to their entry
into business. Of these, one was a member of the Federation of
Small Scale Industries and the other a member of Chemical Allied
and Export Promotion Council. For development of entrepreneurship,
this is yet another area where effective steps should be taken
which would nurture entrepreneurship. It is suggested that
entrepreneur clubs be started with the support of the Government
and the Small Scale Industrial Development Corporation. These clubs
could have as members both entrepreneurs as well as those with
entrepreneurial ambitions. This mixing of entrepreneurs and
would-be-entrepreneurs should create greater awareness regarding
entrepreneurship and more of the prospective entrepreneurs or those
interested in entrepreneurship would become actual entrepreneurs.
However, this would be only for the initiation of entrepreneurs and
may not necessarily lead to success. In fact, the membership of an
Association was not found to have a relationship with the success
of an entrepreneur.
Financial Status of Family
For isolating the environmental factors conducive to the
nurturance of entrepreneurship, details were collected regarding
the financial position of not only the family but also the in-laws
family (in case of married entrepreneurs) at the time they took to
entrepreneurship. The objective was to find out whether the overall
financial condition of the family and in laws family had any
relationship with an individuals movement towards entrepreneurship.
It was found that while 23.53 per cent of entrepreneurs came from
rich families, the rest were from middle class and low-income
groups. The concentration is however in the middle class families
with 35.29 per cent of the entrepreneurs from lower income groups,
i.e., below Rs 10,000 per annum. In fact 66 per cent of the
entrepreneurs were found to be from a middle class background. This
leads us to conclude that the willingness to take risks is not very
high in the low income groups but is fairly high in the middle
class which perhaps in inspired by a desire to get into the higher
income groups. For people coming from lower middle and lower income
groups, such movement towards entrepreneurship would mean
relatively higher risk. Still as much as 17.65 per cent of the
entrepreneurs were found to come from the lower income families
with an income of over Rs. 1 lakh per annum were mostly engaged in
business and the children were born in what may be called business
environment. The Indian tradition of taking up hereditary
professions must have also contributed towards children of such
families becoming entrepreneurs came from business environment.
This may be explained by the possibility that those coming from
higher income groups would take larger risks, which would be
necessary for bigger success in business. This finding is somewhat
contrary to the socio-economic objective of the government, which
feels concerned at the rich becoming richer and the poor becoming
poorer. Hence, the concentration of entrepreneurial development
programmes should be on lower and lower middle income groups. But,
can we find something common in the background of these 14
entrepreneurs from these groups which would help us in our search
of right material for development into entrepreneurs? There was
nothing very distinctive about their background. Three of them had
lived in a joint family set-up whereas the remaining 11 separately.
Two of them were the only issues of their parents whereas the
others had brothers/sisters ranging form one to seven. But, there
was one distinctive feature. Their wives were mostly illiterate.
Out of these 14, three had working-wives, one as a teacher, the
second giving private tuition and the third looking after her own
business. It can be concluded that the entrepreneurs risk taking
capability was reinforced by his wifes education. This aspect could
also be utilized while selecting prospective entrepreneurs.
Regarding the financial position of the wifes family, it was
found that 16.28 per cent of the married entrepreneurs had married
into rich families 79.07 per cent had married into middle class
families and only 4.65 per cent into lower income groups. Out of
the total of 51 entrepreneurs, 16 had received financial aid from
their relatives in amounts ranging from Rs. 5,000 to Rs. 50,000, 12
had received aid from friends in amounts varying from Rs. 1,000 to
Rs. 50,000. This indicates that most of the entrepreneurs surveyed
had accumulated some capital of their own before starting their
venture. 68.63 per cent of these entrepreneurs had accumulated
capital of above Rs.10,000 before starting out. In contrast, very
few depended on help form wife, relatives or friends. No
relationship could be determined between the receipt of financial
aid from friends or relatives at the time of starting an enterprise
and the success of the entrepreneur.Economic Environment
An attempt was made to determine whether environmental factors
at a macro level namely the particular economic condition prevalent
in the year of their becoming entrepreneurs were related to their
entrepreneurial ventures. A critical examination of the responses
revealed that a larger number of people took to entrepreneurship
when economic conditions were difficult. While inflation is a curse
for a consumer, it is not so for an entrepreneur. The demand rising
faster during an inflationary period spurs many people to take to
business. The purchasing power of money coming down would also
induce working people to move towards entrepreneurship. The
stability of the national economic environment in the year of
starting an enterprise was not found to relate to entrepreneurial
success.
Availability of Material
Easy availability of materials was expected to move individuals
towards entrepreneuship. This belief was not, however, borne out by
responses of the entrepreneurs only. (7.84 per cent) claimed that
easy availability of materials in their areas of stay was an aid to
their becoming entrepreneurs. It may, therefore, be concluded that
though easy availability of materials may spur a few individuals
towards entrepreneurship, it is not a necessary condition. There
are a large number of people who become entrepreneurs against heavy
obstacles. They seized the environmental opportunities in different
areas not necessarily restricting themselves to the easy
availability of a particular raw material. Though, easy
availability of raw material is a good reason for starting an
industry, it may be worthwhile to isolate such materials and give
specific support to certain selected entrepreneurs to develop
industries related to these materials.
Availability of Technology
Regarding availability of technology in the area of the
entrepreneurs stay facilitating his movement towards
entrepreneurship, again only 4 of the entrepreneurs surveyed
replied in the affirmative. Thus, some people may become
entrepreneurs due to the easy availability of technology in nearby
areas, but it is not a necessary condition for
entrepreneurship.
Developmental Theory of Entrepreneurship
The research described earlier indicates a possibility of
formulation of a developmental theory of entrepreneurship.
Although the various aspects of the developmental process of
entrepreneurship require detailed verification, the process appears
quite clearly as an extension of the process of occupational choice
in the individual which in turn is a part of individuals total
striving for an adequate life adjustment.
Process of occupational choice
The general process of the occupational choice can be shown as
follows:
Fantasy periodTentative decision making period
Stage of exploration and preparation for implementing the
decision
Free expression of a wish without any consideration of
expediency
Interest: Includes all vocations, which appeal to the
individual.
Preference: Involves comparison of the relative attractiveness
to the subject out of several vocation.Crystallized choice very
close to the decision
This would be true for any occupation except for a few
exceptional cases where decisions about the occupational choice are
taken under traumatic conditions. With this one cycle of the
occupational choice process is over.
In the case of entrepreneurship one visualizes the beginning of
another cycle. This cycle is shown as follows:
There can be cases where an individual on failure in the trial
stage goes back to the stage of exploration and preparation for
implementing a new decision-may be for taking up a job.
Model for Entrepreneurship Development
As entrepreneurship is closely related to the economic
development it would be desirable to augment the supply of
entrepreneurs in the country to speed up its economic development.
Hence, the support to entrepreneurship development should not be
restricted only to the second cycle. It would be worthwhile to give
support from childhood itself. For this both the cycles should be
combined to give a model for Entrepreneurship Development. This
model is shown below:
First cycle Second Cycle
N-Achievement stories in text books Entrepreneur
Family supportOrganization development consultancy
Fantasy
stageTentative Exploration
decision &
making Implement-
stage ation stageTrail stageCommitment and stability stage
N-Achievement stories through mass mediaEntrepreneurship
journals & Institution providing information about the
opportunities existing for the entrepreneurs. Support system of
government Organization development consultancy
First cycle Second Cycle
The above discussion leads towards the stages of a Developmental
Theory of Entrepreneurship, consisting of the following five
stages:
Fantasy stage. This is dependent on many environmental and
experiential factors. Stories with Achievement Motivation themes
could spur fantasies of being entrepreneurs. Tentative decision
making stage. At a certain stage, say after completing education or
while working a person tries converting the fantasies into
realities, evaluating them and making a tentative decision of
becoming an entrepreneur. As per this study mean age at which this
stage gets over was 24.60 years.
This detail about entrepreneurial opportunities should be fed to
the prospective entrepreneurs under this stage. The Entrepreneurs
Club suggested earlier can be of benefit to people under this
stage. Similarly journals/magazines on entrepreneurial
opportunities and other institutions providing such information
would help the prospective entrepreneurs in their movement towards
an entrepreneurial career.
Stage to exploration to implement the decision. The person then
tries to further explore details about types of business to be
undertaken, sources of finance, etc. As per the study the mean age
at which this stage was over 28 years. Thus on an average
entrepreneurs took 3.4 years in stage 3.
Trial stage. The entrepreneur launches the project but keeps an
escape route like keeping a lien on the job, having a working wife,
etc. This is the most crucial stage for the entrepreneurship
development. Commitment and stability. His commitment as an
entrepreneur is complete.
The most crucial stage for an entrepreneur is stages 4, i.e.,
trial stage. Many prospective entrepreneurs go back to the
exploration stage for finding alternative occupational choice.
Problems of this stage could be lack of marketing facilities, lack
of finance, inability to cope up with the strains of
entrepreneurial role, etc. It is here that the entrepreneurs should
get full support from family as well as the other support systems
of the government in solving their problems of this stage.
Conclusion: The research provides a framework for launching a
national entrepreneurship development program in the country for
its rapid economic development. Its importance should be realized
from the fact that entrepreneurs generate wealth, others generally
consume it. Entrepreneurship base needs to be expanded for and
Indias dream of prosperity to become a reality.
Individual
Environment
socio cultural factor
Support System
Trial stage
Commitment
Stability stage