Entrepreneurial Development Write Up

8/22/2019 Entrepreneurial Development Write Up

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ENTREPRENEURIAL DEVELOPMENT

Chapter 1

Concept of Entrepreneurship

And 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.

Definitions:

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 whichothers 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 thanaverage capacities in the task of organizing and coordinating the various

factors of production. He should be pioneer, a captain of industry."


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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.


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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.


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3. Psychological factors: The psychological factors like high need for

achievement determination of unique accomplishments, self-confidence,

creativity, vision, leadership, etc. promote entrepreneurship amongindividuals 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 citiesand 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.

Chapter 2

THEORIES OF ENTREPRENEURSHIP

Knight on the role of uncertainty

Schumpeter on innovationMe Clelland's achievement and motivation theory

Peter Druckers views on entrepreneurship


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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.


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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.


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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.


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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.


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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.


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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 thatachievement 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 lifemeaningful.

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 his ambitions. It is the ambition electrifies man's actions.


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KAKINADA EXPERIMENT

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.


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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.


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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 bea business or a public service institution or within an industry or service

sector.


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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;


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• 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.

Chapter 3

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:a. restlessness,

b. independence and tendency to be a loner and extreme self-confidence,

c. innovative,

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 oftheentrepreneurs.


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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.

These include:

1) individual characteristics,

2) individual environment,

3) business environment,

4) An individual's persona! Goal is set

5) 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.


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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, whichhe 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 outcomeof 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 numerousand complex.


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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.


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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 waitfor 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 conventionaland 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 inanticipating 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.


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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.


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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 mouldshimself 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 asuccessful 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 businessobjective. An entrepreneur works like a coordinating force among the

resources, mould and manages them effectively.


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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 urbancenters. 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


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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.


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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


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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.


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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 theirown 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 discouragedfrom 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.


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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 madeentrepreneurial 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 themselves 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


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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 areconsidered 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.


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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 ownerof 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.


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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 belisted 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 theentrepreneurial functions into three broad categories:

1. Risk-bearing

2. Organisation

3. Innovation

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.


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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 economicdevelopment, 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.


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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.


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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.

INTRAPRENEUR

Of late, a new breed of entrepreneurs is coming to the fore in largeindustrial 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 intrapreneurshave 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?


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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.


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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


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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.


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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.


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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.


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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 ENTREPRENEURS

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”.


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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 def ined as “an enterprise owned andcontrolled 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 businessenterprise, 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.


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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:

1. Risk-bearing

2. Organisation

3. Innovations

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.


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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


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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.


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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 enterprises.


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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 husbandsseem 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. Womensuffer 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.


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8. Low Risk-Bearing Ability: Women in India lead a protected life. They are

less educated and economically not self-dependent. All these reduce theirability 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.


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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.


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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.


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Chapter 111:

RURAL ENTREPRENEURSHIP

Rural entrepreneurship Def:

Rural entrepreneurship can simply be defined, as entrepreneurship

emerging in rural areas is rural entrepreneurship. In other words, es-

tablishing 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.


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2. By providing employment, these industries have also high potential for

income generation in the rural areas. These, thus, help in reducingdisparities 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, socialtensions, 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.


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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.


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Rural/village people generally want to take up salaried employment

because of assured income, lesser hours of work, lesser degree of respon-

sibility 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 start-

ing 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. .


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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 ruralindustries 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.

Entrepreneurial Development Write Up

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