- Concept / Meaning of Entrepreneurial Growth.
- Role of Entrepreneurial Growth.
- Factors Affecting Entrepreneurial Growth.
What is Entrepreneurial Growth ?
Concept of Entrepreneurial Growth :
The process of improving entrepreneurial skills and knowledge among individuals with the help of providing well-organised training and developing supporting institutions is called entrepreneurial growth or development. Growing the start-up rates through increasing the entrepreneurial base is the main aim of such entrepreneurial growth. This will eventually help in generating employment prospects and accelerating the economic growth.
The main focus of entrepreneurial growth is on those individuals who desire to take-up new ventures or who are seeking business expansion. The role of the entrepreneurs in the economic growth of the country is significant. We can also say that entrepreneurial growth is closely associated with the economic growth, and it is an indispensable fact. Hence, the entrepreneurs have an important place in the economic growth and this is especially true in case of the small scale start-ups.
Earlier, the small ventures were assumed to play negligible role in the economic development of the country, but majority of then developing countries are more developed now due to these small ventures. The worthiness of entrepreneurial growth in economic development of a country has been proven through various researches. The studies have revealed that those nations which have encouraged the development of entrepreneurship have experienced more development than their counterparts.
In the past, entrepreneurship was considered to be an innate trait of a person and it was believed that 'entrepreneurs are born and are not made'. However, today it is accepted that it is possible to plan and develop the entrepreneurial skills by identifying opportunities, extending amenities, offering incentives, instilling competencies and team spirit among the individuals.
There are many reasons which can prove that entrepreneurial growth is critical for the economic growth of a country. Some of these reasons are creation of employment opportunities, encouraging R&D, generating lucrative profits and gains, rewards, etc. These are only a few of several benefits offered by entrepreneurship towards economic development. Hence, the advancement of entrepreneurship aids in the entire economic growth.
Role of Entrepreneurial Growth :
Following points describe the role of entrepreneurial growth :
1) Targets at Enlarging the Base of Entrepreneurs :
The objective of entrepreneurial growth is to expand the number of entrepreneurs so that the creation of new projects can be geared-up. The primary focus of entrepreneurship development is at those individuals who are venturing into a new project or who are seeking to expand the existing one.
2) Emphasizes on Enhancing the Culture and Environment for the Start-ups:
The main emphasis of entrepreneurial growth is on enhancing the culture and environment for the start-ups. It emphasizes on improving quality as well as total number of entrepreneurs by relaxing the entry level settings for the entrepreneurs.
3) Helps in Creation of Appropriate Business Environment for Accelerating the Economic Growth:
With the help of entrepreneurial growth process, prospective opportunities available in different regions of the country are identified and in adherence to it environment suitable for entrepreneurs is created in that region. Different supporting institutions like EDI, IDBI, IFCI, DIC, CED, Exim bank, State Finance Corporation, etc., have been established by the government for the growth of the entrepreneurial environment. A significant role is played by the entrepreneurial growth in promoting uniformity in entrepreneurship in different regions throughout the country.
4) Advancement and Growth of Social Wealth:
A notable change in the living standards of rural areas has been experienced due to increasing industrialization, which is result of entrepreneurial activities taking place in these regions. The provisions by the government for development of the rural areas have reached there with the help of entrepreneurial growth. It is entrepreneurial growth which aids in redirecting the unorganized and unidentified talents of these regions towards the path of well-planned industrialization. On one hand, it helps in improving the living standards of the people in . the rural areas, and helps in increasing the social wealth of these areas.
5) Helps in Developing and Promoting Professional Skills:
The objective of entrepreneurial growth is the creation of more prospects for the budding entrepreneurs and promotion of the professional abilities of the present ones.
Factors Affecting Entrepreneurial Growth :
The factors that affect the growth of entrepreneurship are classified as economic and non-economic factors. These factors are as follows :
Factors Affecting Growth of Entrepreneurship :
Economic Factors :
- Economic Resources
- Economic Conditions
- Economic Policies
- Labour Policies
- Trade Policies
- Tariff Policies
- Incentives and Subsidies
Non-Economic Factors :
- Social Factors
- Cultural Factors
- Personality Factors
- Technological
- Factors
- Educational Factors
Economic Factors :
These factors act multi-dimensionally and consist of all those forces which are essential for conducting economic activities in a country. These factors include:
1) Economic Resources :
Sufficiency of economic resources is an important factor for the growth of business. These resources include land, labour, and capital which are sometimes inaccessible to the entrepreneurs. Therefore, entrepreneurs get discouraged by the scarcity of economic resources.
2) Economic Conditions :
The feasibility of an enterprise is governed by the economic conditions. These conditions involve interest rates, per capital income, inflation, purchasing power of consumers, unemployment, etc. Some of these factors may affect the operations and processes of the enterprise.
3) Economic Policies :
Economic policies define the course of action and size of the business. In a socialist economy, all the decisions regarding what to produce, how to produce, for whom to produce, and how much to produce are taken by the government. The policies which may affect the business are monetary policy, budget, tax policy, etc.
4) Labour Policies :
In any business, the most vital factor of production is labour. The volume and costs of production mainly depend on the productivity of labour. For the successful set up of a venture, it is very important to follow favorable labour policies.
5) Trade Policies :
Trade policies manage the adequate supply of products and services within the country and also regulate the adverse balance of payments. Therefore, sufficient supply of resources may motivate the entrepreneurs to establish a new venture or expand their existing businesses.
6) Tariff Policies :
Favorable and effective tariff policies allow the entrepreneurs to expand their operations. But with the increase in tariff rates, the demand of consumers decreases and the margin of profit for entrepreneurs also shrinks.
7) Incentives and Subsidies :
Incentives and subsidies are the benefits provided by the government which act as an encouragement for entrepreneurs. They provide a high margin at low rate of risk. However, unavailability of these schemes or exemptions may hinder the growth of entrepreneurs.
Non-Economic Factors :
These factors include social factors, cultural factors, technological factors, etc., which are discussed as follows:
1) Social Factors :
These factors deal with the perception, attitudes, and lifestyle of the society. They largely impact the motivation level of the
entrepreneurs. A rational society may help the entrepreneurs in appropriate decision-making where the resources to be used and the procedure for production are decided on the basis of prevailing business environment.
2) Cultural Factors :
Culture of any country highly influences the entrepreneurship growth. These factors include a set of learning, behaviors, and basic values of people. Only a money-oriented culture can.value and acclaim the importance of entrepreneurship, e.g., protestant countries, such countries focus on work ethic and value of work.
3) Personality Factors :
Many developed and developing countries consider entrepreneurs as 'exploiter'. This creates a negative impact on the personality of the entrepreneurs. Therefore, sometimes it becomes' challenging for an entrepreneur to operate in a planned economy, where the government has set the socio-economic framework. So, in order to sustain the business enterprise, entrepreneurs have to adjust with their attitudes or processes.
4) Technological Factors :
The introduction of new technology has generated numerous opportunities for entrepreneurs to earn profit. The countries with high technological level are likely to have high entrepreneurial growth.
5) Educational Factors :
There are entrepreneurs who have a strong educational background and there are some who are under-educated. But, the growth of an entrepreneur can only be evaluated from his/her level of success.