[2024]Digital Global Overview Report 2024 Meltwater.pdf
Entrepreneurship development
1. Entrepreneurship Development: Concept and Context
Many developing countries including India are in a state of transition. They are striving to move
from a subsistence-oriented, tightly integrated, inward looking local economy to a surplus
seeking, market led, outward looking economy. Such a move is possible only with the
emergences of a multitude of a small-scale and rural enterprise in all works of life. This requires
building up of a wider base of population capable of entrepreneurial behaviour. If we take India
as an example in the context of development, we find that the initial build up of entrepreneurial
activity took place in urban center. This was followed by a trickle down effect in rural
communities over time. Development strategy today, however, seeks a more proactive and
immediate change in India. While much of policy making in this regard treats enterprise creation
as a function of appropriate economic conditions(made possible through institutional and
economic interventions), others have emphasized training and attitude change as vital elements
in the process. But it needs systematic observations and research into the process through which
entrepreneurship emerges and sustains itself.
Enterprises and entrepreneurs have been in the center stage of modernization since the days of
Industrial Revolution. Economists, sociologists, psychologists and anthropologists have studied
this concept, usually within the frontiers of their respective disciplines.
Models of entrepreneurship and research associated with them have identified several major
issues such vagueness in definition, conceptualizing entrepreneurship as a trait, significance of
innovation in entrepreneurship, meaning of activities in the post-enterprise creation stage,
validity of measures of entrepreneurial propensity and significance of demographic factors.
Evolution, Frontiers, divergence & Stagnation
For a long time there was no equivalent for the term „entrepreneur‟ in the English language.
Three words were commonly used to connote the sense the French term carried: adventurer,
undertaker and projector; these were used interchangeably and lacked the precision and
characteristics of a scientific expression (Gopakumar, 1995).
Richard Cantillon (1680-1734), gave the concept some analytical treatment and assigned the
entrepreneur an economic role by emphasizing on „risk‟ as a prominent entrepreneurial function
(Gopakumar, 1995).
J.B say and J.H. von Thunen. Jean Baptiste say (1767-1832), the French political economist
assigned the entrepreneur with a crucial role-„coordination‟ and made a distinction between the
entrepreneur and capitalist (Say,1967).
A dynamic theory of entrepreneurship was first advocated by Schumpeter (1949) who considered
entrepreneurship as the catalyst that disrupts the stationary circular flow of the economy and
thereby initiates and sustains the process of development. Embarking upon „new combinations‟
of the factors of production-which he succinctly terms innovation-the entrepreneur activates the
2. economy to a new level of development. The concept of innovation and its corollary
development embraces five functions: 1) introduction of a new good, 2) introduction of a new
method of production, 3) opening of a new market, 4) conquest of a new source of supply of raw
materials and 5) carrying out of a new organization of any industry. Schumpeter represents a
synthesis of different notions of entrepreneurship. His concept of innovation included the
elements of risk taking, superintendence and coordination. However, Schumpeter stressed the
fact that these attributes unaccompanied by the ability to innovate would not be sufficient to
account for entrepreneurship (Gopakumar, 1995).
According to the Havard School (Cole,1949) entrepreneurship comprises any purposeful activity
that initiate, maintain or develop a profit-oriented business in interaction with internal situation
of the business or with the economic, political and social circumstances surrounding the
business. This approach emphasized two types of activities: the organization or coordination
activity, and the sensitivity to the environmental characteristics that effect decision making.
Despite its stress on the human factor in the production system, the Havard tradition never
explicitly challenged the equilibrium – obsessed orthodox economic theory. This was challenged
by the neo-Austrian School who argued that disequilibrium, rather than equilibrium, was the
likely scenario and as such, entrepreneurs operate under fairly uncertain circumstances. The
essence of entrepreneurship consists in the alertness of market participants to profit
opportunities. A typical entrepreneur, according to Kirzner (1979) is the arbitrageur, the person
who discovers opportunity at low prices and sells the same items at high prices because of
intertemporal and interspatial demands.
To sum up, major theories and expositions from Cantillon to Kirzner view the entrepreneur as
performing various functional roles as risk taker, decision maker, organizer or coordinator,
innovator, employer of factors of production, gap seeker and input completer, arbitrageur, etc.
The most appropriate definition of entrepreneurship that would fit into the rural development
context, argued here, is the broader one, the one which defines entrepreneurship as: “a force that
mobilizes other resources to meet unmet market demands”, “the ability to create and build
something from practically nothing”, “the process of creating value by pulling together a unique
package of resources to exploit an opportunity”.
Alternative Approaches
Socio-Cultural Approaches
Some scholars have stressed the importance of socio-cultural milieu in entrepreneurship
development. They suggested that the socio-cultural history accounts for the performance of
entrepreneurial functions by a considerable number of individuals.
Several writers have used a comparative framework to highlight the ways in which different
societies, with differing interests, attitudes, systems of stratification and the like, operate to
produce different kinds of businessmen and different patterns of entrepreneurial behaviour
(Swayer,1952).
3. Psychological Approaches
The focus in entrepreneurship shifted from the act to the actors (Shacer & Scott,1991) in the
work of McClelland(1961). According to McClelland and Winter(1969) need for achievement
(n-Ach) is responsible for economic development. Greater the development of n-Ach, during
early socialization of people, the more likely the economic development will be achieved. A
society with a generally high level of n-Ach will produce more rapid economic growth.
Achievement motivation could be included through training in self reliance, rewarding hard
work and persistence in goal achievement, and creating interest in excellence. In spite of being
criticized (Schatz,1971; Smelser,1976), McClelland‟s(1987) analysis has triggered off the „traits
approach‟ to comprehended entrepreneurial behaviour.
In another psycho-social theory Hagen(1962) relegates economic variables to a relatively minor
role and has put an emphasis on certain aspects of the personality. More recently, several other
psychological approaches to entrepreneurship have been suggested. Hisrich(1990) identifies
several characteristics of entrepreneurs in terms of (a) conditions that make entrepreneurship
desirable and possible,(b) the childhood family background, (c) the education level, personal
values and motivations and (d) role modeling effects and other support systems. Bird(1989) has
also examined entrepreneurial behaviour by focusing on work and the family background,
personal values and motivations.
Contemporary Focus
The two most common approaches used in researching the characteristics of entrepreneurs have
been the trait approach and the demographic approach (Robinson et al.,1991). In the trait
approach, the entrepreneur is assumed to be a particular personality type whose characteristics
are key to explaining entrepreneurship as a phenomenon (Gartner,1988;1989). Following
McClelland(1961,1987), many other researchers have explored areas such as achievement
motive, locus of control, risk taking, innovation etc.
In demographic approach, demographic information is used to arrive at a profile of a typical
entrepreneur assuming that people with similar background posses similar underlying stable
characteristics. The approach presumes that by identifying demographic characteristics of known
entrepreneurs it will be possible to predict entrepreneurship in unknown populations (Robinson
et al.,1991). The demographic variables found most examined are family background, birth
order, role model, marital status, age, education level of parents and self, socio-economic status,
previous work experience and work habits.
First, the approach assumes that human behaviour is strongly influenced by demographic
characteristics such as sex, race, or birth order.
Second, the practice of using demographic characteristics as surrogates for personality
characteristics is not appropriate. There is also a lack of adequate empirical evidence in this
regard.
4. Third, the approach does not help predict who will or will not be an entrepreneur on the basis of
knowledge of one‟s birth order, level of education or parental heritage. Besides, demographic
characteristics being static in nature cannot explain a dynamic multifaceted phenomenon like
entrepreneurship.
Hannan and Freeman(1977) have used the population-ecology model (PEM), to analyze the
concept of entrepreneurship. The PEM seeks to predict the probability of births and deaths
within a population of firms within a given industry niche, conferring the environment rather
than the person with the status of the key entity in determining organizational survival. Recent
research following this approach are focused on the presence, characteristics and change in a
population or organization in an ecological context provided by the host society (Reynolds,
1991). Deficiencies of this model have been pointed out by Bygrave and Hoffer(1991). These
models, while making statistical predictions at the population level, fail to predict the fate of
specific firms.
Entrepreneurship: An Integrative Behavioural Framework
The key elements identified are Personal Resourcefulness, Achievement Orientation, Strategic
Vision, Opportunity Seeking and Innovativeness.
Personal Resourcefulness
The root of the entrepreneurial process can be traced to the initiative taken by some individuals
to go beyond the existing way of life. The emphasis is on initiative rather than reaction, although
events in the environment may have provided the trigger for the person to express initiative. This
aspect seems to have been subsumed within „innovation‟ which has been studied more as the
„change‟ or „newness‟ associated with the term rather „proactiveness‟.
„Personal resourcefulness‟ in the belief in one‟s own capability for initiating actions directed
towards creation and growth of enterprises. Such initiating process requires cognitively mediated
self regulations of internal feelings and emotions, thoughts and actions as suggested by Kanungo
and Misra(1992).
Achievement-Orientation
While personal initiative and purposeful behaviour can be view as a good starting point of an
entrepreneurial effort, many such initiatives fail. The archetype successful entrepreneur is
supposed to epitomize achievement motivation (McClelland,1961) which facilitates the creation
and development of enterprises in competitive environments. While critics have raised serious
5. questions regarding the unique or overarching significance of n-Ach in the emergence of
entrepreneurship (Smelser,1976), this element of personality has continued in the mainstream of
entrepreneurship theory (Shaver & Scott,1991). People with high n-Ach are known to seek and
assume high degree of personal responsibility, set challenging but realistic goals, work with
concrete feedback, research their environment and choose partners with expertise in their work
(Kanungo & Bhatnagar, 1978). Such characteristics of high n-Ach people contribute to
successful completion of tasks that they venture to take up. Hence, we see achievement
orientation as a set of cognitive and behavioural tendencies that are oriented towards ensuring
that outcomes such as enterprise creation, survival and growth are realized.
Opportunity-Seeking
The context in which an individual brings to bear his/her initiative, achievement orientation and
visioning have a strong bearing on what it produces; when these forces are directed towards
realizing surplus or value in a market environment, over a period of time, we see the creation of
enterprises. This perspective of the entrepreneur as a merchant adventurer, who in Cantillon‟s
view balances out imperfections in the market (Gopakumar,1995) in pursuit of what Bentham
terms wealth, provided the historical basis for the development of entrepreneurship. The wealth
is seen as the reward the entrepreneurial individual gains for the risk taken or exercise of
judgment where there is greater possibility for error; this distinguishes between certain return
from wage labour, and return from risk-oriented production for the market. Hence „opportunity
seeking‟ would include one‟s ability to see situations in terms of unmet needs, identifying
markets or gaps for which product concepts are to be evolved, and the search for creating and
maintaining a competitive advantage to derive benefits on a sustained basis.
Innovativeness
Schumpeter(1949) went on to conceptualize entrepreneurs as persons who are not necessarily
capitalists or those having command over resources, but as ones who create new combinations of
the factors of production and the market to derive profit. Innovativeness refers to creation of new
products, markets, product-market combinations, methods of production and organization, and
the like that enable the enterprise to gain competitive advantage in the market.
It is evident that each of the dispositions referred to may be found in all types of individuals
(entrepreneurs and non- entrepreneurs). Then how can we relate these dispositions to
entrepreneurship? We propose that when these five elements converge at high intensities, in non-
restrictive environments, it is likely to give rise to enterprise formation. Therefore, one may find
individuals who had created enterprises in the past now turning weak because they may no
longer be proactive enterprise creators; instead they may be content to play the role of managers
in their stable business, or turn to community leadership, and the like. Hence, this perspective
lends to a process view of entrepreneurship.
6. Problems of Women Entrepreneurs in India
Introduction
Women Entrepreneurs may be defined as the women or a group of women who initiate,
organize and operate a business enterprise. Government of India has defined women
entrepreneurs as an enterprise owned and controlled by a women having a minimum
financial interest of 51% of the capital and giving at least 51% of employment generated in
the enterprise to women. Like a male entrepreneurs a women entrepreneur has many
functions. They should explore the prospects of starting new enterprise; undertake risks,
introduction of new innovations, coordination administration and control of business and
providing effective leadership in all aspects of business.
Push-Pull factors and Women in business
Women in business are a recent phenomenon in India. By and large they had confide
themselves to petty business and tiny cottage industries. Women entrepreneurs engaged in
business due to push and pull factors. Which encourage women to have an independent
occupation and stands on their on legs. A sense towards independent decision-making on
their life and career is the motivational factor behind this urge. Saddled with household
chores and domestic responsibilities women want to get independence Under the influence
of these factors the women entrepreneurs choose a profession as a challenge and as an
urge to do some thing new. Such situation is described as pull factors. While in push factors
women engaged in business activities due to family compulsion and the responsibility is
thrust upon them.
Problems of Women Entrepreneurs in India
Women in India are faced many problems to get ahead their life in business. A few
problems cane be detailed as;
1. The greatest deterrent to women entrepreneurs is that they are women. A kind of
patriarchal – male dominant social order is the building block to them in their way towards
business success. Male members think it a big risk financing the ventures run by women.
2. The financial institutions are skeptical about the entrepreneurial abilities of women. The
bankers consider women loonies as higher risk than men loonies. The bankers put
unrealistic and unreasonable securities to get loan to women entrepreneurs. According to a
report by the United Nations Industrial Development Organization (UNIDO), "despite
evidence that women's loan repayment rates are higher than men's, women still face more
difficulties in obtaining credit," often due to discriminatory attitudes of banks and informal
lending groups (UNIDO, 1995b).
3. Entrepreneurs usually require financial assistance of some kind to launch their ventures -
be it a formal bank loan or money from a savings account. Women in developing nations
have little access to funds, due to the fact that they are concentrated in poor rural
communities with few opportunities to borrow money (Starcher, 1996; UNIDO, 1995a). The
women entrepreneurs are suffering from inadequate financial resources and working
capital. The women entrepreneurs lack access to external funds due to their inability to
provide tangible security. Very few women have the tangible property in hand.
4. Women's family obligations also bar them from becoming successful entrepreneurs in
7. both developed and developing nations. "Having primary responsibility for children, home
and older dependent family members, few women can devote all their time and energies to
their business" (Starcher, 1996, p. 8).The financial institutions discourage women
entrepreneurs on the belief that they can at any time leave their business and become
housewives again. The result is that they are forced to rely on their own savings, and loan
from relatives and family friends.
5. Indian women give more emphasis to family ties and relationships. Married women have
to make a fine balance between business and home. More over the business success is
depends on the support the family members extended to women in the business process
and management. The interest of the family members is a determinant factor in the
realization of women folk business aspirations.
6. Another argument is that women entrepreneurs have low-level management skills. They
have to depend on office staffs and intermediaries, to get things done, especially, the
marketing and sales side of business. Here there is more probability for business fallacies
like the intermediaries take major part of the surplus or profit. Marketing means mobility
and confidence in dealing with the external world, both of which women have been
discouraged from developing by social conditioning. Even when they are otherwise in control
of an enterprise, they often depend on males of the family in this area.
7. The male - female competition is another factor, which develop hurdles to women
entrepreneurs in the business management process. Despite the fact that women
entrepreneurs are good in keeping their service prompt and delivery in time, due to lack of
organisational skills compared to male entrepreneurs women have to face constraints from
competition. The confidence to travel across day and night and even different regions and
states are less found in women compared to male entrepreneurs. This shows the low level
freedom of expression and freedom of mobility of the women entrepreneurs.
8. Knowledge of alternative source of raw materials availability and high negotiation skills
are the basic requirement to run a business. Getting the raw materials from different souse
with discount prices is the factor that determines the profit margin. Lack of knowledge of
availability of the raw materials and low-level negotiation and bargaining skills are the
factors, which affect women entrepreneur's business adventures.
9. Knowledge of latest technological changes, know how, and education level of the person
are significant factor that affect business. The literacy rate of women in India is found at low
level compared to male population. Many women in developing nations lack the education
needed to spur successful entrepreneurship. They are ignorant of new technologies or
unskilled in their use, and often unable to do research and gain the necessary training
(UNIDO, 1995b, p.1). Although great advances are being made in technology, many
women's illiteracy, strucutural difficulties, and lack of access to technical training prevent
the technology from being beneficial or even available to females ("Women Entrepreneurs in
Poorest Countries," 2001). According to The Economist, this lack of knowledge and the
continuing treatment of women as second-class citizens keeps them in a pervasive cycle of
poverty ("The Female Poverty Trap," 2001). The studies indicates that uneducated women
donot have the knowledge of measurement and basic accounting.
10. Low-level risk taking attitude is another factor affecting women folk decision to get into
business. Low-level education provides low-level self-confidence and self-reliance to the
women folk to engage in business, which is continuous risk taking and strategic cession
making profession. Investing money, maintaining the operations and ploughing back money
for surplus generation requires high risk taking attitude, courage and confidence. Though
8. the risk tolerance ability of the women folk in day-to-day life is high compared to male
members, while in business it is found opposite to that.
11. Achievement motivation of the women folk found less compared to male members.
The low level of education and confidence leads to low level achievement and advancement
motivation among women folk to engage in business operations and running a business
concern.
12. Finally high production cost of some business operations adversely affects the
development of women entrepreneurs. The installation of new machineries during expansion
of the productive capacity and like similar factors dissuades the women entrepreneurs from
venturing into new areas.
How to Develop Women Entrepreneurs?
Right efforts on from all areas are required in the development of women entrepreneurs and
their greater participation in the entrepreneurial activities. Following efforts can be taken
into account for effective development of women entrepreneurs.
1. Consider women as specific target group for all developmental programmes.
2. Better educational facilities and schemes should be extended to women folk from
government part.
3. Adequate training programme on management skills to be provided to women
community.
4. Encourage women's participation in decision-making.
5. Vocational training to be extended to women community that enables them to
understand the production process and production management.
6. Skill development to be done in women's polytechnics and industrial training institutes.
Skills are put to work in training-cum-production workshops.
7. Training on professional competence and leadership skill to be extended to women
entrepreneurs.
8. Training and counselling on a large scale of existing women entrepreneurs to remove
psychological causes like lack of self-confidence and fear of success.
9. Counselling through the aid of committed NGOs, psychologists, managerial experts and
technical personnel should be provided to existing and emerging women entrepreneurs.
10. Continuous monitoring and improvement of training programmes.
11. Activities in which women are trained should focus on their marketability and
profitability.
12. Making provision of marketing and sales assistance from government part.
13. To encourage more passive women entrepreneurs the Women training programme
should be organised that taught to recognize her own psychological needs and express
9. them.
14. State finance corporations and financing institutions should permit by statute to extend
purely trade related finance to women entrepreneurs.
15. Women's development corporations have to gain access to open-ended financing.
16. The financial institutions should provide more working capital assistance both for small
scale venture and large scale ventures.
17. Making provision of micro credit system and enterprise credit system to the women
entrepreneurs at local level.
18. Repeated gender sensitisation programmes should be held to train financiers to treat
women with dignity and respect as persons in their own right.
19. Infrastructure, in the form of industrial plots and sheds, to set up industries is to be
provided by state run agencies.
20. Industrial estates could also provide marketing outlets for the display and sale of
products made by women.
21. A Women Entrepreneur's Guidance Cell set up to handle the various problems of women
entrepreneurs all over the state.
22. District Industries Centres and Single Window Agencies should make use of assisting
women in their trade and business guidance.
23. Programmes for encouraging entrepreneurship among women are to be extended at
local level.
24. Training in entrepreneurial attitudes should start at the high school level through well-
designed courses, which build confidence through behavioral games.
25. More governmental schemes to motivate women entrepreneurs to engage in small scale
and large-scale business ventures.
26. Involvement of Non Governmental Organisations in women entrepreneurial training
programmes and counselling.
Conclusion
Independence brought promise of equality of opportunity in all sphere to the Indian women
and laws guaranteeing for their equal rights of participation in political process and equal
opportunities and rights in education and employment were enacted. But unfortunately, the
government sponsored development activities have benefited only a small section of
women. The large majority of them are still unaffected by change and development
activities have benefited only a small section of women i.e. the urban middle class women.
The large majority of them are still unaffected by change and development. The reasons are
well sighted in the discussion part of this article. It is hoped that the suggestions forwarded
in the article will help the entrepreneurs in particular and policy-planners in general to look
into this problem and develop better schemes, developmental programmes and
opportunities to the women folk to enter into more entrepreneurial ventures. This article
10. here tries to recollect some of the successful women entrepreneurs like Ekta Kapoor,
Creative Director, Balaji Telefilms, Kiran Mazumdar Shaw, CEO, Biocon, Shahnaz Husain and
Vimalben M Pawale, Ex President, Sri Mahila Griha Udyog Lijjat Papad (SMGULP).