You are on page 1of 5

Identifying drivers and impediments of Entrepreneurship in India Aman chandel

0101PG034

Small business plays an important role in the economic development of India. The emergence of the entrepreneurs in a society depends on the economic, social religious, cultural and psychological factors in the society. In this study Indian small business surveyed to find their perception of various factors that affect their growth and expand small businesses in India.

Introduction
This study examines the factors that affect Indian entrepreneur to grow and expand small business in India. The population of India is around 1 billion people (India online, 2011) and majority of the Indian in support of self-employment. Entrepreneurship and enterprise creation have contributed to the economic and social development of any nation. The truth is economic progress of a nation has developed by entrepreneur, who are not only innovative but able to identify and exploit resources as well. Entrepreneurs have willingness to take risk and possess ideas into opportunities. Opportunity Recognition, evaluation and exploration form the crux of entrepreneurship (By grave, 1993; Shane and Venkatraman, 2000; and Baron, 2007). Smith et al. (2009) have recognized the importance of opportunity recognition in the success of entrepreneurial pursuits. Research concentrated on individual characteristics that drive opportunity recognition like the need for achievement (McClelland, 1961), an extraordinary ability to innovate an transform markets (Schumpeter, 1934). Risk factor that differentiates an entrepreneur from others. Palich and Bagby (1995)entrepreneurs not only differ in risk taking but also differ in the perception towards the risk. Many authors have examined factors that affect the growth of business owners to expand their business in Canada (Gill et al. 2010).There are many environmental factors such as market competition ,entry barrier government policy, lack of financing ,taxes etc.that affect Indian entrepreneur to grow in India. Entrepreneur gain support, knowledge and access to different channels through their social networks including their family. For women to run organized enterprises are their skills and knowledge, their talents and abilities in business and desire to do something positive.

Literature Review
Entrepreneurship is a component of productivity and growth (Baumol, 1993).Organizations for Economic Cooperation and Development (OECD) defines entrepreneurs as agents of change who accelerate the generation, application and spread of innovative ideas, not only ensure efficient use of resources, but expand the boundaries of economic activities. Many authors (Timmons et al.,1985 Sexton, 1996; Chami 2002) defined entrepreneurial intensity as the willingness of the individual to assume risk and commitment to growth.Growth is the key factor that separates entrepreneurship from small business owners (Kazan et al. 2006). The definition of entrepreneurship includes innovation, for example introducing a new product or service, or risk taking. Past behavior may be a predictor for the future, behavior a function of intentions to grow and expand small businesses. Growth intensity of small business owners is based on expected gains, Personal factors such as lack of expertise and family business role conflict affect the small business owners to grow and expand small business. Risk perception of entrepreneurs is an important determinant in opportunity recognition. Risk plays an important role in entrepreneurial decision making (Forlani and Mullins 2000).Despite the high risk involved; entrepreneurs decide to start its own ventures as long as they perceive it to be desirable as well as feasible. When an entrepreneur has personal relations besides active social networks.it enhances his knowledge acquisition because people will share the knowledge at personal level (Sarasvathy and Kitha, 2001).Hills and Sharder (1998) found that it was not only important for an entrepreneur to acquire knowledge through social networks, but it was important to have close people to discuss competition. Innovative behavior should be good in committed relationships as entrepreneurs do not hesitate to share their ideas and plans, on the basis of relationship of trust (Kaish and Gilard, 1991). Blockhouse (1980) states that opportunity recognition and evaluation depend on entrepreneurs level of risk perception. It is proposed that entrepreneurs generally have more optimistic perceptions of risky condition than others. Some problems for the development of entrepreneurship are as follows : Inadequate Infrastructural Facilities: The strength of infrastructure development plays a crucial role in entrepreneurship development. Basic infrastructure development is a precondition for any entrepreneurial venture. Inadequate infrastructure facilities hinder the development of entrepreneurship. The distribution of goods and services is affected by the poor infrastructure facility. Lack of proper roads and rail network creates hurdles for the entrepreneur. It not creates problems in the distribution of goods but also increase the cost of distribution.

Scarcity of Finance: Promoting entrepreneurship requires financial resources such as funds for loans, investment and technical assistance for micro enterprises. Financial support may play a role in observing opportunities and creating motivation for individuals to exploit opportunities. Entrepreneurs find it difficult to meet their fixed and working capital due to limited assets. They borrow money from the unorganized sector by paying a high rate of interest due to easy accessibility. Due to lack of adequate capital and complicated procedure of bank finance, young entrepreneurs find it difficult to set up industries. Marketing Problems: Entrepreneurs are facing problems in the field of marketing because of low level of local demand. Entrepreneurs find it difficult to achieve economies of scale. Without such economies their products and services must be sold at higher prices, beyond the scope of local customers. Small entrepreneurs find difficult to sell their products outside the locality due to increase in the cost of distribution. Marketing research, promotional strategy, advertising campaign etc. are constantly rising. The role of middlemen and commission agents makes marketing more complex. Law and Order Problem: The poor law and order situation for more than two decades. Ethnic conflicts and lack of employment opportunities leads to social disturbances in country. No industrialists outside the country willing to setup industries in country. Personal Traits and Micro Environment: People lack confidence in their strength and competence. The family members and society are beside the growth of entrepreneur. The situation among the people now changing .The family and personal obligations is sometimes a barrier in the entrepreneurial carrier. Self-motivation through the mindset for successful business, attitude to take risk and behavior towards the business society.

Objective of the Study


The objective of the study is to y Identifying drivers and impediments of entrepreneurship in India.

Methodology
The statistical data for the study have been mobilized both from the primary and secondary sources. Primary data has been collected through the designed questionnaire and secondary data has been collected through publications of Economic Survey, books and journals. Respondents were asked to indicate their agreement with each item, using a 5-point scale ranging from strongly disagree to strongly agree. Industry control variable was also used in this study. Industry control variable was measured by a single item that asked respondent to indicate the industry in which their small businesses operate.

Results
y y y y y y y y Entrepreneurs are Males In between 18-45years They mainly deals in Manufacturing business and servicing business Entrepreneurs are motivated because of risk involved, ready to take challenges and fairly amount of calculation before invest in the business. Desire to become independent, passion, admirer and wealthy motivate them highly. In family business, parents and siblings are highly supportive In new venture, they react because of the risks involved The average start up time is 3 4 months after conception of idea Gaining social recognition, becoming your own boss, leader in the community, thrilled by continuous challenges and carrying family legacy forward are the most common social economic impacting factors among entrepreneurs. Economic factors are the chief motivators for entrepreneurs, ranging from 70% to 90%.

Issues Related to Confidentiality of the Research Participants


All individuals who are approached were assured that their information regarding their income may disclose and there can be issue regarding income tax and confidentiality maintained. Any information that was obtained in connection with this study can be identified with subjects remain confidential and will be disclosed only with the subject permission and sample size is very small so it s very difficult to give conclusion by analyzing these questionnaire.

Conclusion
In conclusion, small business plays an important role in Indian economy. Therefore small business growth and expansion are very important in India. To grow and expand small businesses, it is important to improve the knowledge of small business owners and minimize their conflict. To improve the knowledge of the small business owners, Indian government should provide free training related to the business growth and expansion. To minimize the family business conflict, the Indian government may provide some support to small business owners by arranging day care services to their children.

References:
y y y y y Opportunities Recognition Process of Indian Entrepreneurs: The Role of Social Capital and Risk perception (K Nigama and P David jawahar) Rural Entrepreneurship In Assam Challenges and Opportunities (Kingshuk Adhikari , Subit Dutta) Development of Women Entrepreneurship Challenges and Opportunities (Dr. Manas Pandey) Indian Entrepreneurship and Challenges to India s Growth (Vishal Jain) Legatum Institute Survey of Entrepreneur China and India.