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Entrepreneurship

– Ashok K. Sinha1

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Founder Executive Director of the Institute of Entrepreneurship Development, Bihar and Ex-Managing
Director of the Bihar Industrial and Technical Consultancy Organization.
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Economy begins with the formation of social capital and culminates in the
remoleculization of culture. The formation of social capital begins with
people settling at a place for betterment and crystalises in the form of
moral economy. The crystalization of moral economy starts taking shapes
with the generation of surplus and leads to the formation of institutions
like family, community etc. And the generation of surplus gathers
momentum with the valuable utilization of land, labour and capital – the
three basic factors of production, and burgeons into economic progress.
Earlier, the social scientists explained the emergence and entourage of economy in
these terms. Subsequently, however, it was realized that each of the three
factors of production had a concomitant of its own. Land included
materials; labour entailed a specific set-up to hire and engage it; and
capital was always owned by some one and required that one’s
willingness to risk its investment. So, out of the three factors of
production – land, labor and capital – emerged an another set of three
inherent factors – material, specific set-up, and investor. With this indepth
understanding, economy came to be take as an interplay of these six
factors of production – land, labour, capital, material, organization and
investor and was noted as an exercise undertaken largely for the creation
of wealth.
After the industrial revolution, slowly but surely, there emerged another factor
which significantly changed the interplay of the factors of production and
gave it a new dimension. That factor came to be known as technology
which heightened and chastened the pitch of the interplay of the factors
and, transformed the very process, of production. From generation of
surplus to the creation of wealth, economy now became the begetter of
power.

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However, of all the seven factors of production – land, labour, capital, material,
technology, set-up and investor – only two of them labour & investor –
were animates and the rest five, inanimate. Therefore, in the framework of
economy, the tugging of focus started has remained been between the
labour (communism) and the investor (capitalism). This tugging however
between the two had been largely as partakers of the surplus generated or
the wealth created. As factors of production, however, there had been no
such conflict between the two. The labour factor rolls round the
production course like land, material, capital, technology and set-up. It
was the investor factor which alone emerged as the prime mover, the
binder, the organiser, the manager of all other factors to cohere,
contribute, convert and yield production. It was the investor who was seen
bringing together, catalyse harmonize manage and control other factors in
becoming productive. This investor, the prime mover - organiser -
harmoniser - manager - creator was the one who was called entrepreneur.
And the set-up created to organize manage and run remaining five factors
– land, labour, material, technology and capital – to yield required
production, came to be known as enterprise.

What is Entrepreneurship?

An entrepreneur in order to perform multifarious roles involved in the setting up


of an enterprise, had to be a very special person, special in terms of
abilities to feel, think and act in a particular manner. In order to feel, think
and act in that manner the person had to have a specific set and
combination of competencies. This combination could vary in degree but
not in kind. An entrepreneur, therefore, was a person with such a
combination of certain competencies which made him feel, perceive,
conceptualize, conclude and act in a particular manner. This combination
of competencies was called entrepreneurship.

Being an integral part of one’s personality, entrepreneurship could be displayed in


whichever area of activity the person was engaged. It was not limited to
any particular area of activity. Nor was it bound to any caste or creed or
clime or class or age or gender. It was embodied in the unified effort of a
person to achieve, excel, fulfill and attain a demonstrative impact in all
walks of life. It was source and resource for undertaking activities fraught
with risks and fringed with potential gains. It made one to hold and uphold
set goals, face challenges and gather ways and means to achieve them. It
got manifested in one’s self-belief, self-confidence, self-reliance and an
urge for self-fulfilment in the face of things as they were. It made one to
act and react in self-interest, telescoped in larger interests, in a manner
that was innovative and socially valuable, relevant and satisfying.

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Historical View Points

The word “entrepreneurship” is derived from French “entreprendre” which means


‘to undertake’ and it was originally used in the middle ages in the sense of
‘a person who is active, who gets things done’ and subsequently used in
reference to “contractors” who bore the risks sometimes as soldiers of
fortune, adventures, buildiers, merchants and also funeral directors. Early
references to entreprendeur in the 14th century spoke about tax contractors
who paid a fixed sum of money to government for the license to collect
taxes in their specific region. Tax entrependeurs, thus, bore the risk of
collecting individual taxes. If they collected more than the sum paid for
their licenses, they made profits and kept the excess. If they failed to
collect enough to match the cost of their licenses, it was their loss. By the
early 16th century, men engaged in leading military expeditions were
referred to as entrependeurs. After 1700, ‘entreprendeur’ was frequently
used by the French for the contractors who built Government roads,
bridges, harbours and fortifications.

Entrepreneurship, thus, was used to denote a particular kind of job which was
done in a particular manner by taking risk, involving profit/loss, handling
materials, fulfilling perceived needs, creating structures, providing
service, taking path-breaking initiatives etc. All these put together
suggested entrepreneurship to be the crystalization of a certain set of
characteristics and competencies that could manifest themselves in a
particular-way of doing an activity which could be in any sphere but
which certainly contained some amount of uncertainty about the end-
result. They, however, did in no way suggested that the persons doing
such jobs in that particular manner were by birth characterized to do those
jobs in that manner or belonged to any particular class or creed. They
were entreprendeur because of the nature of “activities” they chose to
engage themselves in.

Economics View Points

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The earliest attempt to invest the concept of entrepreneurship with some economic
content could be traced back to the works of an 18 th century French writer
Bernard F. de Delidor who defined entrepreneurship as buying labour and
materials at uncertain prices and selling the resultant output at contract
prices. However, it was Richard Cantillon (1680-1734) who, for the first
time, gave the concept of entrepreneurship some analytical treatment and
related it to the economic function of taking decisions about obtaining and
using resources at a risk. Later on, Adam Smith spoke of the “enterpriser”
in his The Wealth of Nations (1776) as an individual who undertook the
formation of an organization for commercial purposes. French economist
Jean Baptiste Say in his Traite d’ ‘economic politique (1803) described an
entrepreneur as one who had art and skills of creating new economic
enterprises thereby combining the “economic risk taker” of Cantallion and
the “industrial manager” of Adam Smith.

Thus, by the end of 18th century, entrepreneurship had grown from denoting
contractual to trading to organization building to creating new economic
enterprise related activities. It consisted of embracing uncertainties, taking
decisions, using resources at a risk, forming an organization, and having
“art and skills” of creating new economic enterprises. The wheel had
come full circle; entrepreneurship was finally “wedded” to enterprise
building.

In 1884, with the elaboration by the British economist John Stuart Mill on the
neccessity of entrepreneurship in private enterprise, the term
“entrepreneur” became the “fourth factor” of the economic endeavour, the
other three being land, labour and capital. For the next hundred years or
so, the role of adventurer or risk-taking entrepreneur remained untouched.
Rather, in between, the connotation of an entrepreneur changed from the
risk takers, the decision makers, “captain of industry to an elusive
character who garnered profit at the expense of others, a flimflam artist on
the fringe of legitimate business”.1

With the advent of 20th century, the concept of entrepreneurship started receiving
wide and renewed interest. An integrated view was first advocated by Joseph
Schumpeter (1883-1950) who considered entrepreneurship as “the catalyst that
disrupted the stationary circular flow of the economy and thereby initiated and
sustained the process of development.” He synthesized different notions of
entrepreneurship by including “the elements of risk taking, superintendence and
coordination with the ability to innovate.” For Harvard School (Cole, 1941)
“entrepreneurship comprises any purposeful activity that initiate, maintain or
develop a profit oriented business in interaction with the internal situation of
business or with the economic, political and social circumstances surrounding the
business.”

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Thus, by the middle of 20th century, entrepreneurship, according to major theories
and expositions, consisted of capabilities and competencies to take risks, make
decisions, organize, coordinate and innovate and initiate activities to keep the
process of economic growth and development in motion. What Belidor started in
the 18th century by investing the concept of entrepreneurship with some economic
content came to be established by the middle of 20th century as the be-all and end-
all of economic growth and developmental initiatives. Entrepreneurship got
established as that critical factor of the economic endeavour with which one could
achieve economic wonders and without which even the best and the most of the
other three factors of production could economically achieve almost nothing.

Socio-Cultural View Points

The beginning of 20th century also placed entrepreneurship in the socio-cultural


and psychological perspectives. Stressing the importance of socio-cultural milieu
in the evolution of entrepreneurship some scholars delineated certain social
characteristics that distinguished the entrepreneurs from the commoners. These
included better education, early urban environment and a relatively high social
standing. Besides, they believed that the entrepreneurs were specifically diligent,
thrifty, prudent and sober.

Psychological View Points

Psychologically, entrepreneurship was seen as immanating from the need for


achievement (n-Ach); greater the development of n-Ach during early socialization
of an individual the more likely that entrepreneurship would vigorously manifest
itself in economic growth. This achievement motivation could be inculcated
through training in self-reliance, rewarding hard work, persistence in goal
achievement and creating interest in excellence. Education and child-rearing
practices emphasing such values made larger and significant contributions in
creating a foundation for a strong n-Ach society. Thus, from the psychological
point of view, entrepreneurship largely depended upon the childhood family
background, the education level, personal values and motivation.

Conclusion

In fine, from historical, economics, socio-cultural and psychological points of


view, entrepreneurship was an integral of undertaking a particular kind of activity
in a particular manner with a specific objective, of courage to take calculated risks,
take decisions, set goals, act gainfully, build organizations, set-up and manage
enterprises, strive for excellence, innovate to achieve and keep the process of
development moving through consistently renewing their need for achievement,

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problem solving skill, hard work, continued education, recharged motivation with
an unwavering set of personal values.

Entrepreneurship, thus, became a catalyzing factor in all economic activities and


gave, on the one hand, the other factors of production – a perspective to be
productive and purposeful and, on the other, an enterprise, within the paradigms of
production and distribution and, an entrepreur, who like a colossus, bestrode the
economic world.

Entrepreneurship Development

Entrepreneurship as a concept may have been consolidated and clarified in the 20th
century, but entrepreneurship as a spirit is inherently rooted in the human nature.
Otherwise, how can human beings’ march from being Neanderthal to Nuclear man
be explained? It is the spirit of entrepreneurship, his risk taking ability, problem
solving skill, daring challenges, striving for excellence, that made man paragon of
all animals and protagonist in the struggle for existence. It is the spirit of
entrepreneurship that took him to the moon and is urging him to land on Mars.
Every one, irrespective of caste, creed, race or gender, is born with that
entrepreneurial spirit. All are born with that. What makes the difference is what
kind of bringing up one receives, what kind of education one is given and what
kind of company one keeps.

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“As the child grows older, his behaviour becomes successively more
differentiated. The trend is from homogeneity to heterogeneity, from
undifferentiated and global capacities and activities to ever more finely
differentiated and specialized ones, from few-general to many - specific.”1

In this ever-widening gyre of life span, whether the spirit of entrepreneurship gets
smirched by our bringing-up, education or companionship or remains afloat at the
top is a matter of chance as well as choice. Chance because what kind of family
one is born in and what kind of education one gets are not in one’s hand. And
choice because what kind of companions one has is largely in one’s control.

The Entrepreneurial Personality

The three determining factors – bringing up, education and companionship –


become simultaneously operative right from one’s birth but their terminal points
are more or less well demarcated. Bringing up, which is instrumental in
developing a child’s IQ and conscience in the form of what Immaniual Kant said,
categorical imperatives, stabilizes around the age of seven;

“While tests applied during infancy are not very reliable


predicators of how intelligent the child and the adult will be, I. Q.
measurements at age six or seven have stabilized, so that the
relative standing of a child within a group of peers is not likely to
change drastically in subsequent years.”2

Learning of ideas and attainment of understanding that is, education (learning +


understanding) stabilizes around 14 to 16 years of age:

In terms of absolute, not relative, test performance, mental ability


grows rapidly from birth through puberty, somewhat more slowly
from then until the early twenties, at which point slow but steadily
decline sets in………”1

The mental abilities include verbal comprehension, number, spatial perception,


memory, reasoning, word fluency and perceptual speed. And, from the age of 16
years or so till death, it is the kind of companionship one keeps that conditions the
growth and development of an individual;

“Normal adult human behaviour develops only through the


stimulation of other people.”
“The people and groups that provide the stimulation and contact
necessary for social development .... usually fall into two classes:

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i) Those people with authority over the individual, such as
parents and teachers, and
ii) those in positions of equality with him – age, peers such as
playmates or a circle of friends. Since the family is the
socializing agent during the critical first years of life, it
naturally has great influence. But because of the increased
specialization of the functions of the family, the rapidity of
social change that tend to divide the generations, and the
high degree of mobility and social fluidity, the peer group
is perhaps of growing importance in modern urban life.”2

These three phases of one’s mental and behavioural growth and development have
been very succinctly termed in Indian Philosophy as Sanskar, Shiksha and
Sangati. Although modern social and psychological thinkers have their
reservations about the connotations of the three terms; for denotation sake they
may safely be used to explain the process of growth and development. The
correlations among Sanskar (IQ. + conscience), Shiksha (learning +
understanding) are highly intricate and inter-twined. Sanskar tinctures and
condition Shiksha and they together conditions Sangati which in turn dilutes or
heightens the potentiality of both Shiksha and Sanskar. As such, the compatibility
among the three integrates one’s personality and behaviour pattern. And,
inconsistency among them makes one unpredictable and incoherent. For example,
a businessman’s child, right from birth, gets ample opportunity to fiddle with coins
and currencies and therefore, his attitude to money will be different when he
grows from, say, a service-class person’s child who hardly gets any chance to
handle money and that too without repeated caution to be careful. A
businessman’s child automatically receives the early socialization of the most
conducive kind which helps in the blossoming of the business sense in him for
which the service-class persons’ child may have to have very large doses of
orientation and training. The best stories heard in mother’s lap may generate n-
Ach in a child but cannot develop business sense. Therefore, when both the
children would go to school each one’s Shiksha (leaning + understanding) would
be different even if the inputs would be the same. And, each one’s choice of
companionship would be different due to the differences in early socialization and
education both independently and put together.

Entrepreneurship development of the Sanskar and Shiksha kind happens on its


own. It is more or less generic. Mukesh and Anil Ambani had to be entrepreneurs.
Right from their birth they received the required inputs. But entrepreneurship
development of the Shiksha and Sanskar kind is strenuous and deliberate. It
required planned interventions at the macro as well as micro level. First, to take
initiative for entrepreneurship development some source or set-up has to be
created to formulate, plan, implement and regulate initiatives. This has to be done
at the macro level. And second, to provide inputs for entrepreneurship

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development at the ground level packages in the form of Entrepreneurship
Development Progremme (EDP) have to be created and inputs administered. The
initiatives for entrepreneurship development taken at the macro level depend and
vary with the socio-economic development level a nation has attained. The inputs
for entrepreneurship development provided at the micro level are required to be
adjusted to suit the social background and gender of the target groups. The macro
level exercise, more or less, can be generalized and structured as the socio-
economic development process is similar if not the same everywhere. On the other
hand, the micro level exercise, as required to be in consonance with culture,
societies, target groups, tend to vary from time to time, clime to clime and people
to people. Thus, entrepreneurship development initiatives are subject to socio-
economic level of the state, on the one hand, and socio-cultural level of the people,
on the other.

The entrepreneurship development, at the macro level is to promote and


precipitate economic evolution for which the human factor has to be given positive
strokes to enable and achieve creative response to the environment and get
engaged in the process of innovation. Needless to say, the pace and pattern of
growth are conditioned by the opportunities offered by the environment like
natural resources and other historical factors. But, in spite of that, full economic
exploitation of opportunity depends upon the strength of the entrepreneurial
impulses in society. In order to have more and more of entrepreneurial impulses,
to enable and achieve creative response to the environment, the entrepreneurship
development initiatives are taken at the macro level. This “entrepreneurial
function, according to Schumpeter, need not be embodied in a physical person and
certainly not in a particular individual. “Every social environment has its own
ways of filling the entrepreneurial function. For instance, the practice of farmers in
the USA has been revolutionized again and again by the introduction of methods
worked out in the Department of Agriculture, and by the Department’s success in
teaching these methods. In this case, then, it is the Department if Agriculture that
acted as an entrepreneur. Again, the entrepreneurial function may and often is
filled cooperatively. With the development of large corporations, this has become
of major importance: aptitudes that no single individual combines can be built into
a corporate personality”.1

Alexander Gerschenkron in his research2 into the process of development of


relatively backward states in the 19th century grouped countries with respect to
capital supply, entrepreneurship and ideology in three types or stages of
development:

“In advanced countries, private entrepreneurship are able to


provide the necessary capital and no radical ideology motivates
either the state or the entrepreneur (UK). In a relatively
backward country (France and Germany) banks provide both

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capital and entrepreneurial guidance and a radical ideology
(St. Simonian ideology and nationalism) is a motivating factor.
In a still more backward country (Hungary and Tsarist Russia)
the state provides capital and entrepreneurial guidance and the
motivating ideology is still more radical (surprisingly,
Marxism)”.1

In the process of describing the three sources of initiatives at the macro level
Gerschenkron has culled out another historical fact which is, that in a backward
country, if the state does not actively play a real entrepreneurial role,
industrialization opportunities get missed.

Thus, at the macro level, the initiative for developing entrepreneurship depends
upon the economic level of a nation. In an under-developed country the state has
to perform entrepreneurial function. For, in an under-developed stage in a country
the social structure, the economic opportunities, the environment, the policy
statements - all are in a state of flux, unformed and undefined. Therefore, a state
alone can perceive opportunities and have “the energy and will power to innovate
in the face of resistance which all social environments offer to change”. By
performing this entrepreneurial function, the state not only puts economic
evolution in motion but also provides a direction to it. This entrepreneurship is
integrated and limited.

In a developing country the social structure is more or less formed; the economy is
in motion; the environment is charged with hopes and expectations; the policy
statements have been made; the direction have been given as such institutions
would have consequently been formed. At this stage the state through specialized
institutions perform the task of initiating entrepreneurship development and give
momentum to the economy in motion. This entrepreneurship development through
institutions is moderate and classified.

In a developed country the social structure is fully formed; the economy is in


momentum; the environment is charged with achievements and aspirations; the
policy has achieved liberation; the direction is a matter of choice. At this stage of a
nation’s growth the market takes over the charge of initiating entrepreneurship
development and puts the economy in an orbit of its own. This entrepreneurship
development through market is liberal and localized.

The Indian scenario

After independence in 1947, the Indian Government assumed the entrepreneurial


role and responding to the environment in the face of all challenges, promoted the
great public sector organizations that still are epitomes of entrepreneurship. After
1960, the government passed on the entrepreneurial role to specialized institutions

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like the Industrial Development Bank of India (IDBI), the Industrial Credit and
Investment Corporation of India (ICIC), the Industrial Finance Corporation of
India (IFCI) and others. These specialized institutions played their entrepreneurial
role vigorously till 1985-90. After that, with the advent of liberalization in 1990-
1991 the mantle of entrepreneurship development has been take over by the
market.

At the micro level, entrepreneurship development interventions are directed to


groom more and more first generation entrepreneurs through education and
training. The inputs are provided to enable individuals to creatively respond to his
environment by bringing about, in his own humble way, “improvements in
productive commercial methods, changes in production techniques, conquest of
new markets, development of new commodities, etc.” and innovate to add on to
the process of economic evolution.

“The developing countries at present have an enormous


opportunity in their ability to borrow already well-developed
technology. But to adapt this technology to the needs of
development requires entrepreneurial decision. Such adaptation
is not possible without complete mastery………And such
mastery can come only by developing local talent in the field”.3

Entrepreneurship development at the micro level does that. It develops “local


talents” to master technology, methods of production, markets, products relevant
for the development of the country, to perceive opportunities and have “the energy
and will power to innovate in the face of resistance which all social environments
offer to change.”4

Entrepreneurship development at the macro level, being conditioned by the level


of socio-economic development a nation has achieved is, as stated earlier, more or
less structured. At the micro level, however, it requires a number of factors to
combine and coalesce to produce results. In India it happened in 1960 when three
independent developments took place and, as chance would have it, they were in
the three areas that constitute any process of innovation: the individual, the
entrepreneurial guidance and the technical and financial support.

Individually, in one of the villages of Andhra Pradesh, Professor David C.


McClelland of Harvard’s Department of Social Relations, after years of careful
study and research discovered “the exact type of motivation that makes a better
entrepreneur – the man who starts a business”.1

“That man (entrepreneur) has a particular thought pattern;


very simply, he’s thinking all the time about doing

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something better, improving his performance. He’s thinking
in terms of constantly improving his own performance”.2

Prof. McClelland further added that it was possible to increase the motivational
level of the people and turn underachievers into achievers. “Even Indian
businessman, a notoriously lethargic group, can be instilled with the spirit of
entrepreneurship”.3 The theories of Prof. McClelland which he demonstrated with
considerable success in India as well as abroad, propounded that first, persons
having certain level of motivation (n-Ach) and other aptitudes succeeded as
entrepreneurs, and second, those motivation and aptitudes could be raised to the
entrepreneurial level by administering certain inputs.

Thus, Prof. McClelland’s identification of basic entrepreneurial competencies, on


the one hand, and his formulation of inputs to invigorate them, on the other,
opened up new vistas for the economic development of undeveloped and
developing countries. By identifying, training and providing support to the
potential local individuals a nation could build its own pool of entrepreneurs to
usher in the needed economic evolution.

Taking a lead from Prof. McCleland’s findings, the Small Industries Extension
Training Institute (SIET), Hyderabad, designed an integrated package of training
inputs for developing the entrepreneurial capabilities of those who desired. SIET
worked on two basic assumptions first, that some people wanted to be on their
own but due to lack of knowledge and/or confidence did not venture in that
direction and, second, that such individuals having desire to be on their own could
be developed, to a certain extent, as entrepreneurs. The SIET package constituted
an instrument to provide entrepreneurial guidance and direction to those aspiring
to develop entrepreneurship. And, SIET being a government organization, its
package was an indirect official acceptance of the need for such a guidance and
direction to propagate entrepreneurship. But in SIET package the stress was laid
more on entrepreneurship in itself rather than entrepreneurship in relation to
enterprise. It was basically personality oriented rather than project-oriented
package of inputs.

Almost around the sametime when SIET was formulating its package of inputs, a
peculiar uneasiness was wreathing in the corridors of the technical and financial
support institutions in Gujarat. The institutions were getting disturbed by the fact
that the same faces appeared again and again to seek and avail the technical and
financial support for setting up enterprises and took resort to manipulations. In
order to break the stalemate, encouraging new people seemed to be the only
answer. So, a decision was taken to make technical and financial support available
to capable persons on encouraging terms. But the problem was how and where to
find those ‘capable’ persons? How to assess them as ‘capable’? After much of
deliberation and discussion it was decided that a technocrat at middle management

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level having work experience of over a decade or so in a large industrial unit
would be a safe bet. But experience and knowledge alone were not indicative of
one being entrepreneurial. The person must also have a viable project idea which
would be denotive of the extent to which his project ideas were realistic. So, an
announcement to that effect was made which brought about tremendous response.
But the next problem faced was; whom to select? And on what basis? There was
no scientifically validated selection tools and techniques available. A consensus,
therefore, again was reached that one who declared that one was not happy with
one’s boss/job would be selected for training and financial support subject to the
viability of one’s project and the quality and quantum of one’s technical education
and experience in relation to the project proposed.

Thus, from the very beginning the Gujarat experiment stressed on two aspects:
first, the economic viability of the project and, second, in relation to the project,
the technical competence of the person being groomed as entrepreneur. With these
two pre-requistes the Gujarat programme for entrepreneurship development
focussed on inputs in two areas – market survey and preparation of the project
report by the entrepreneur himself so that he may have the first hand feel of the
market wherein he was to operate and get on-the-job training in the handling of the
very project/service he had chosen. Because of the focus on these two aspects of
enterprise building the Gujarat model of entrepreneurship development
programme proved to be replicable and effective in developing entrepreneurship
suited to the socio-cultural and economic environment of the varying regions.

In the formulation and promotion of the programme package for entrepreneurship


development the financial institutions and Banks played a pivotal role. They
conceived and set-up specialized organizations like the state-level Technical
Consultancy Organizations and the State Financial Corporations (SFC) to make
available technical & financial support and Entrepreneurship Development
Institutes to provide motivational and training inputs to the aspiring individuals
and help develop entrepreneurship to operate at micro-level of economic
evolution.

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Chapter-4

Why Entrepreneurship Development?

“By the mid-1950s, the supply of entrepreneurial capabilities had come to be


recognized as one of the critical factors in economic development (United Nations,
1955)” that, according to Prof. McCleland could be sufficiently had only in a
society with a generally high level of n-Ach. But ‘economic evolution takes place
through sectional or sectoral changes rather than through social aggregates”. And
the economic evolution gets further evolved by the introduction of new
innovations – improvements in productive and commercial methods, changes in
production techniques, conquest of new markets, development of new
commodities, etc. “without this creative response by man to his environment, no
evolution could take place”. And this process of innovation was result of the
creative response of entrepreneurs to their environment.

“Entrepreneurial activity and innovations form the very


cornerstone of Schumpeter’s theory of economic
development……. He emphasises that the carrying out of
innovations is a function sui generis and that function is
performed by the entrepreneur.”

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Entrepreneurship development, therefore, becomes prime need for keeping
economic evolution in motion. This could be embodied in the state as an
institution. This could be structured in specialized institutions as well as
individuals. But entrepreneurship has to be there for a nation aspiring to surge
economically ahead. Besides, as the entrepreneurial role-play shifts from the
government to institutions to market, entrepreneurship becomes liberal and
localized and the entrepreneurship spreads from the public to private to people’s
sector. This shift and spread is inevitable because the economic growth and
development brings about corresponding changes in the social structure which, in
turn, leads to adjustments in the entrepreneurial role. Because, “man is
predominately a product of the society in which he lives. His personality is not
biological, but social”. And therefore, perhaps, Alfred Adler declared that driving
force in man was innate social urge - striving to attain the goal of a perfect society.
Thus, the need for entrepreneurship development immanates from this very social
urge as well as his innate urge to stretch his hand beyond his reach, need to
achieve, desire to excel. The formation of social capital begins due to this very
urge; what he fails to do individually, he attempts to achieve collectively which is
the first step towards the formation of social capital and attaining the goal of a
perfect society. And whosoever initiates the formation of the social capital is the
first entrepreneur and the first innovator.
Both at the macro and the micro level the adjustments required in the
entrepreneurial role play, due to the silently shifting nature of the social crust on
which all economic initiatives rests, necessitates the development of
entrepreneurship to suit the needed roles. Besides, farther the source of
entrepreneurship development gets removed from the centre, the nearer it gets to
the people. And due to its very proximity to people entrepreneurship lies in
serving the interests of the people in more than one ways – empowering human
resource, enriching social capital, generating employment, creating wealth and
above all serving social purpose.
Therefore, once the economy gets market oriented, entrepreneurship alone
maintains the momentum of economy. Limited entrepreneurship at the state level
is enough to set the economy in motion; moderate entrepreneurship at the
institution level is sufficient to give momentum to the economy, but it is the
liberated entrepreneurship at the market level which alone plays the protagonist in
the evolution of economy. As such when the economic evolution is at the people’s
level professional as well as academic institutions have to necessarily promote
entrepreneurship and motivate their alumni to be entrepreneurial rather than
employment seekers. Otherwise, the opportunities that market throws in plenty,
due to non-availability of sufficient number of local entrepreneurs, go waste and
the economy loses its momentum to that extent and fails to attain its orbit by that
margin.

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Besides, entrepreneurship development being a part of the socio-economic
development process, it also includes individual, familial, social and state
considerations. In a succinct manner it can be stated that, if self-help is the best
help, then self-employment is the best employment and entrepreneurship the
highest form of self-employment from every point of view – individual, familial,
social and national.

Individual View

From an individual’s point of view for getting an employment one has to satisfy so
many conditions. One must be in a certain age-group, have some minimum
qualification and experience, satisfy a host of other criteria laid down by the
appointing authority and above all, one has to compete against un-known others.
When employed one works for some-one-else, one works as some-one else wants
one to work. There is little scope for doing as one wishes, what one wishes, how
one wishes. There is hardly any freedom of choice. One is not a man but a
member, an instrument. In employment one’s emoluments are fixed, one’s salary
is scaled, and one’s promotion phased out. Unless one is extra-ordinary - and only
one or two can be that – one has to slog through the hierarchy.

But, in self-employment or entrepreneurial venture, one is on one’s own. One


works for one self. There is no age limit, no qualification bar. There is no end of
choice of work. Openings are as many as one perceives. The return is in
proportion to hard work one puts in, the commitment and dedication one brings
into play. One can become a millionaire if one strikes it rich. One manages one’s
own self and one’s time; one is one’s own Boss.

Familial View

From the family point of view, one can comprehend the advantages of an
entrepreneurial career by comparing it with even the best of employment at the
level of three generations – one’s father, one’s own and one’s yet-to-be born
children.

If one’s father is employed, one’s father’s achievements cannot be of much use to


one. Even if the father happens to be a highly placed person, legitimately that is
not going to help one in any way. Of course, one can share the comforts and
facilities available to one’s father but one cannot inherit nor the father can
bequeath a single bit of that. After one’s father’s retirement, his status, his powers,
the comforts and privileges all end with that. And if one aspires to attain one’s
father’s position, then one has to begin from the beginning, pass through the same
motion, with perhaps increased pre-conditions and by facing tougher competition.

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But it would not be so if one’s father is either self-employed or is an entrepreneur.
Irrespective of one’s age, qualification and other fitness conditions, one would just
step into one’s father’s shoes. Besides, one would not begin from the beginning
but from where one’s father had left. The assets and comforts that one has been
enjoying would remain intact. All that the father built would come to one
automatically - position, power, purse, everything.

Similarly, if one is employed, then one cannot shape one’s children’s future with
any certainty. One can at the most provide them education keeping in view the
emerging employment market. But what they become would be more a matter of
chance or destiny than planned diligence. One cannot anticipate employment
market, the level and degree of competition one’s children would have to face.
One can, at best make sure of leaving one’s Provident Fund and LIC policy for
one’s family in case something untoward happened. But one’s experience and
expertise put in at one’s working place will be of no use to the children. And, even
if one’s employer happened to be quite considerate and sympathetic, he would at
the most absorb one’s wife or son in a position where one fits in by virtue of one’s
qualification and his considerations.

But if one is self-employed or is an entrepreneur, then from the very beginning


one can plan the education and other training of one’s children keeping in view
that they grow to take over and expand the existing business proposition and
successfully run the same on a larger scale. And, on top of that, as long as one
lived, the advantages of one’s varied and vast experiences will go a long way to
help the children.

Social View

Looking beyond individual and familial view, one being a social animal, has
responsibilities towards the society in which one lives. It is not enough to pay
one’s taxes in time and honestly. It is not enough to walk on the pavement at one’s
left side. It is not enough to attend to one’s neighbours in their hours of joy or
sorrow. It is not enough to contribute few chips in the welfare funds for the
disabled or the destitutes. All these are not enough if one has socio-economic
considerations in mind. One has to do far more than that. One has to create
opportunities, generate income, cultivate higher motivation and values and set new
examples. For that one has to be more than an employed person. One has to be an
entrepreneur, then alone one can be free to choose, to invest, to take calculated
risk, to plan, to implement and to succeed the way one deemed best in social
interests. The story of an ascetic and a butcher is highly relevant and illustrative of
this point.

An Ascetic was very proud of his asceticism. He had renounced the world, fasted
for countless number of days, meditated for such long hours and days that birds

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made nests in his matted hair. He felt so happy and satisfied with himself to the
extent that he became proud of his asceticism. Then, all of a sudden, he heard a
voice telling him about a butcher living in a certain village, who was more
satisfied and happy than him. The ascetic did not believe his ears. A butcher and
happy! How that could be? So he went to see the butcher. He arrived in the said
village and then at the butcher’s shop. He saw him quite engrossed in his business,
giving whatever each customer wanted, speaking with every one softly and
sweetly, handling the pieces of flesh with utmost delicacy, weighing meticulously.
After having seen his last customer off, the butcher turned towards the ascetic and
said, “So you have seen how happy and satisfied I am”. The ascetic was taken
aback, “How could he know about it”? he thought. The butcher smilingly said, “I
am a self-employed person. I can afford to be honest to myself as well as to others.
I do what I believe in. I believe in what I do. There is no dichotomy between my
belief and action. And, therefore, I have the same level of self-control which you
could achieve after years of fasting and meditation. In that respect I am your equal.
But then, I have an edge over you and, therefore, I am better off. I serve the
society wherein I was born and brought up. I have to be humble and honest to
continue serving and earning my livelihood. I cannot afford to be proud and
haughty. This is what social interactions do. They balance your being and keep
shaping your growth by keeping them within bounds. An advantage of social
check and balance that you don’t have. And therefore, I am more happy and
satisfied but not proud of myself or my vocation”.

National View

From the national point of view, creation of employment opportunities is one of


the major functions as well as fetters of an economy. Functions because providing
productive employment to people helps economy in further consolidating the
social capital which is its base. And, fetters because it has to create employment
opportunities, not in one or two but hundreds in number of thousands for which a
good chunk of fund out of the surplus generated has to be diverted and to that
extent further required developmental initiatives have to be pruned and whetted.
Thus, each employment is an expenditure to the Exchequer not only for creating
an opportunity but also for sustaining that opportunity. And, to that extent,
creation of employment opportunities fetters an economy.

However, with the level of growth an economy achieves, it sheds and shares this
fetter part of its social responsibilities. At the under-developed level, it has no
choice but to bear the burden and play the role of a creator of employment
opportunities. At the developing level, it creates institutions to share and snare the
burden and the economy then plays the role of a provider of employment
opportunities. At the developed level, the ‘burden’ is taken care and veered by the
people themselves, in the garb of entrepreneurs, and the economy plays the role of
a facilitator in the creation of employment opportunities.

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Against the long-drawn expenditure, in increasing order, involved in the creation
and sustenance of employment opportunities - Provident Fund, Gratuity etc. -
entrepreneurship, on the one hand, relieves the economy in more than one ways
and, on the other, opens up a new inflow of income to the Exchequer. To bring
home the point, the following true life story will be of immense help.

Two friends while travelling from Ahmedabad to Mumbai, to face the final
interview for the post of ticket collector, bought some fried groundnuts at a small
station. Both of them found the preparation exceptionally delicious. Reacting on
that one spoke to the other, “If we get hold of the man who prepares this and hire
his services, pack them in neat pouches and sell the same in the metropolis, I am
sure it would be a good business and yield a handsome return.”

“You may be right”, the other said, “but at present we should think of the
interview we have to face in order to get selected”. But his friend’s mind was
engrossed in tossing the business opportunity he had perceived. So, by the time he
got down at Bombay Central, he already had made up his mind and had dropped
the idea of attending the interview. He brought another ticket back to the station
where he had bought the fried ground-nut, got in touch with the person who used
to prepare the same, negotiated with him to do the job for him for a month, paid
him advance out of whatever money he had and thus started a business venture
which, in less than two years time, yielded handsome profits. He expanded his
business and, in less than five years time, was an owner of a big business
establishment, a grand residential place, a fleet of cars and created employment
avenues for thousands. He paid income tax, sales-tax wealth-tax, - all going to the
Exchequer. On the other hand his friend got employed in the Railways as a ticket-
collector and was still working as such. The Railway had to provide him
residential accommodation, accounted for his salary, contributed in the Provident
Fund, aside a sum for the gratuity to be paid to him and provide for pension/family
pension, after his retirement.

The narrative is just to depict the ways in which employment is a drain on the
Exchequer and as a part of the growth as compared to self-employment or
entrepreneurial venture which contributes in the growth and development of
economy.

An individual is a unit of the family to which he belongs, a member of the society


in which he grows, a citizen of the nation which provides him resources and
opportunities. By earning through employment, one can meet most of one’s family
responsibilities. Through self-employment, one can fulfil most of one’s social
responsibilities as well. But it is through entrepreneurship alone that national
obligations can be met.

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