ENTREPRENEURSHIP AS A TOOL FOR REGIONAL ECONOMIC GROWTH

CHAPTER-1 Background of the study The study has conducted on the Entrepreneurship as a Tool for Regional Economic Growth. Entrepreneurship is the backbone of the Indian economy it contributing much more to the economy. Entrepreneurship creates employment, generating income, developing

infrastructure of the country. We can see entrepreneurship in rural and urban. Most urban entrepreneur enjoys a lot of facilities in urban area in terms of infrastructure, transportation, marketing and so on. In the rural area it is difficult to establish business due lack of all facilities available like urban entrepreneurs. But rural entrepreneurs tend a vital role in current economic scenario. In Indian context the governments are providing more facilities to the rural entrepreneurs to create their own venture and motivating them to start a business. Rural entrepreneurs developing rural trough creating employment, development of infrastructure and so on. The study is to how the entrepreneurs are work, how they back bone of the economy, what are the opportunities available and problems they are facing, what are the factors make them to start a business. Indian entrepreneurship is second to none and activity levels are at an all time high. According to the Global Entrepreneurship Monitor 2006, one in every ten Indians is engaged in some entrepreneurial activity or the other. Of this, opportunity based entrepreneurship (70 percent) is significantly higher than necessity based. Objective of the study To understand the need of the entrepreneurship in the economic growth. To know the role of the entrepreneurs in regional economic growth of the country. To know the facilities available to become an entrepreneur. To understand the challenges faced by the entrepreneurs. Need for the study The study is needed to get a practical knowledge about the entrepreneurship to fulfill the academic requirement. To know about the factors affecting entrepreneurs and how they contributing to the regional economic growth.
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Scope of the study This study is conducted on the rural entrepreneurs, how they are operating and their role in the economic growth. This study conducted in Shankaraghatta what are their challenges and opportunities they enjoying. The study also includes the overall entrepreneurs background in Indian economy. Methodology Methods of data collection is mainly concerned 1. Primary data Those data are collected by the direct response from the various departments students in Kuvempu University through the sampling methods. 2. Secondary data These data are collected through the internet and books and journals.

Limitations of the study 1. Some respondents respond were vague. 2. The study limited to 20 responds it may leads irrelevant information. 3. The scope of the study is limited to only Shankaraghatta.

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Chapter-2 ENTERPRENEUR
An entrepreneur is one who always searches for change, responds to it and exploits it as an opportunity. Innovation is the basic tool of entrepreneurs, the means by which they exploit change as an opportunity for different business of service. Peter Drucker

Measuring Rural Entrepreneurs

The starting point in analyzing the relationship between rural entrepreneurship and economic growth is to identify a measure of rural entrepreneurship. The first step is to define rural. The second step is to define entrepreneurship. Analysis of rural economic activity is always challenged by the definition of rural. The Census Bureau defines rural areas as place with less than 2500 people or places not incorporated. Yet, information on rural places consists of only basic population and housing statistics, thus limiting insight into rural economic activity. As a result, researchers are left with defining rural as non-metropolitan regions to help gain insight into the economic dynamics of small, sparsely populated regions. Due to the limitation of rural data and the wealth of information at the county level, rural will be defined as counties outside of metropolitan areas. Studying rural entrepreneurship or entrepreneurship in general, is challenged with defining an entrepreneur. Entrepreneurship is an elusive concept that is easy to discuss, difficult to describe, and even harder to define. In fact, after more than 200 years, a commonly accepted definition of entrepreneurship has failed to emerge. One of the earliest definitions arose in 1734 where entrepreneurship was said to be self-employment with an uncertain return. Two hundred years later, the importance of innovation was highlighted as entrepreneurship was described as the process of creating new combinations of products, processes, markets, or organizational forms (Schumpeter 1934). Entrepreneurship has also been defined as simply the creation of an organization (Hoy 1987; Gartner 1988). Recent research analyzing the impact of entrepreneurship on economic growth at the regional level has used measures of entrepreneurship based on new business starts.

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ENTREPRENEURSHIP Entrepreneurship is increasingly being recognized as a primary engine of economic growth. By combining existing resources with innovative ideas, entrepreneurs add value through the commercialization of new products, the creation of new jobs, and the building of new firms. The Global Entrepreneurship Monitor indicates that nations with higher levels of entrepreneurial activity enjoy strong economic growth. In short, entrepreneurs are the link between new ideas and economic growth. The benefits of entrepreneurship new jobs, higher incomes and increased wealth are especially strong in the India. However, research suggests that the spatial benefits from entrepreneurial activity are highly variable. In particular, rural (sparsely-populated) areas often find it difficult to sustain high-growth entrepreneurs. However, labor market areas include both rural and highly urbanized economies As a result; insight into the impact of entrepreneurship on rural growth is limited. Yet this type of information is crucial as entrepreneurs account for a greater share of employment in rural areas than in metro areas.

Definition of Entrepreneurship
A systematic innovation, which consists in the purposeful and organized search for changes, and it is the systematic analysis of the opportunities such changes might offer for economic and social innovation. -- Peter Drucker

The capacity and willingness to undertake conception, organization, and management of a productive venture with all attendant risks, while seeking profit as a reward. In economics, entrepreneurship is regarded as a factor of production together

with land, labor, natural resources, and capital. Entrepreneurial spirit is characterized by innovation and risk-taking, and an essential component of a nation's ability to succeed in an ever changing and more competitive global marketplace. According to the Merriam Webster Dictionary defines an entrepreneur as one who organizes, manages, and assumes the risks of a business or enterprise. From these definitions, we can extract the following qualities and characteristics of entrepreneurship:
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1. Initiative, innovation and creativity. 2. Business sense, economy, productivity and profitability 3. Organization, leadership and responsibility 4. 5. Risk management and strategy Passion and voluntarism

The Growth of Entrepreneurship in India

By the late sixties it became quite evident that two resources are the most critical (in spite of favorable policies) for development of entrepreneurship, finance (credit) and managerial capabilities. When industrial development picked up in the sixties the bankers limited credit mainly to established industrialists and merchants for existing projects with assured success and sufficient collaterals. A study of 53 projects financed by banks and the Gujarat State Financial Corporation during the period 1965-68 revealed many interesting things. More than two thirds of institutional loans were for diversifications and expansion of existing enterprises. Of the new loans, 30% were given to merchants and traders with adequate financial resources and hence the required collateral. The entrepreneur's financial stake stood very high in the transactions that a debt equity ratio 1:1. Such policies evidently were holistic to an aspiring and an otherwise competent young entrepreneurs but without enough financial resources and tangible assets. As an innovative alternative to the conventional banking system an Industrial Investment Corporation was set up as a State company in Gujarat in 1968 with attractive and unconventional credit schemes. The task next was to identify and groom potential new entrepreneurs from a variety of socioeconomic backgrounds. The entrepreneurship development program with well designed inputs for motivating, informing and skilling entrepreneurial individuals was pioneered in 1970. Several modifications have been carried out to suit the profile and needs of various groups of trainees. For example, potential micro enterprises in the rural sectors by the poor, whose ventures have only limited investment and low levels of technology must be addressed differently from those of enterprising women whose talents and creativity have been suppressed by age-old sociocultural norms and practices. Both need appropriate approaches so that they become capable of manifesting their entrepreneurial competence.
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Despite efforts made by a host of institutions, only less than 20% of the new entrepreneurs have access to training every year. This means that a large mass of potential entrepreneurs are still outside the reach of training interventions.

Entrepreneurship in Economic Development.

An entrepreneur can be regarded as a person who has the initiative skill and motivation to set up a business or enterprise of his own and who always looks for high achievements. He is the catalyst for social change and works for the common good. They look for opportunities, identify them and seize them mainly for economic gains. An action oriented entrepreneur is a highly calculative individual who is always willing to undertake risks in order to achieve their goals.

Need for Entrepreneurship Development Economic development essentially means a process of upward change whereby the real pr capita income of a country increases over a period of time .Entrepreneurship has an important role to play in the development of a country. It is one of the most important inputs in economic development. The number and competence of entrepreneurs affect the economic growth of the country. The economic history of the presently advanced countries like USA, Russia and Japan supports the fact that economic development is the outcome for which entrepreneurship is an inevitable cause. The crucial and significant role played by the entrepreneurs in the economic development of advanced countries has made the people of developing and under developed countries conscious of the importance of entrepreneurship for economic development. It is now a widely accepted fact that active and enthusiastic entrepreneurs can only explore the potentials of the countries availability of recourses such as labour, capital and technology. The role of entrepreneurs is not identical in the various economies. Depending on the material resources, industry climate and responsiveness of the political system, it varies from economy to economy. The contribution of entrepreneurs may be more in favorable opportunity

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conditions than in economies with relatively less favorable opportunity conditions.

The Role of an Entrepreneur in Economic Development The entrepreneur who is a business leader looks for ideas and puts them into effect in fostering economic growth and development. Entrepreneurship is one of the most important inputs in the economic development of a country. The entrepreneur acts as a trigger head to give spark to economic activities by his entrepreneurial decisions. He plays a pivotal role not only in the development of industrial sector of a country but also in the development of farm and service sector. The major roles played by an entrepreneur in the economic development of an economy are discussed in a systematic and orderly manner as follows. (1) Promotes Capital Formation: Entrepreneurs promote capital formation by mobilizing the idle savings of public. They employ their own as well as borrowed resources for setting up their enterprises. Such type of entrepreneurial activities leads to value addition and creation of wealth, which is very essential for the industrial and economic development of the country. (2) Creates Large-Scale Employment Opportunities: Entrepreneurs provide immediate large-scale employment to the unemployed which is a chronic problem of underdeveloped nations. With the setting up of more and more units by entrepreneurs, both on small and large-scale numerous job opportunities are created for others. As time passes, these enterprises grow, providing direct and indirect employment opportunities to many more. In this way, entrepreneurs play an effective role in reducing the problem of unemployment in the country which in turn clears the path towards economic development of the nation. (3) Promotes Balanced Regional Development: Entrepreneurs help to remove regional disparities through setting up of industries in less developed and backward areas. The growth of industries and business in these areas lead to a large number of public benefits like road transport, health, education, entertainment, etc. Setting
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up of more industries leads to more development of backward regions and thereby promotes balanced regional development. (4) Reduces Concentration of Economic Power: Economic power is the natural outcome of industrial and business activity. Industrial development normally leads to concentration of economic power in the hands of a few individuals which results in the growth of monopolies. In order to redress this problem a large number of entrepreneurs need to be developed, which will help reduce the concentration of economic power amongst the population. (5) Wealth Creation and Distribution: It stimulates equitable redistribution of wealth and income in the interest of the country to more people and geographic areas, thus giving benefit to larger sections of the society. Entrepreneurial activities also generate more activities and give a multiplier effect in the economy. (6) Increasing Gross National Product and Per Capita Income: Entrepreneurs are always on the lookout for opportunities. They explore and exploit opportunities,, encourage effective resource mobilization of capital and skill, bring in new products and services and develops markets for growth of the economy. In this way, they help increasing gross national product as well as per capita income of the people in a country. Increase in gross national product and per capita income of the people in a country, is a sign of economic growth. (6) Improvement in the Standard of Living: Increase in the standard of living of the people is a characteristic feature of economic development of the country. Entrepreneurs play a key role in increasing the standard of living of the people by adopting latest innovations in the production of wide variety of goods and services in large scale that too at a lower cost. This enables the people to avail better quality goods at lower prices which results in the improvement of their standard of living.

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(7) Promotes Country's Export Trade: Entrepreneurs help in promoting a country's export-trade, which is an important ingredient of economic development. They produce goods and services in large scale for the purpose earning huge amount of foreign exchange from export in order to combat the import dues requirement. Hence import substitution and export promotion ensure economic independence and development. (8) Induces Backward and Forward Linkages: Entrepreneurs like to work in an environment of change and try to maximize profits by innovation. When an enterprise is established in accordance with the changing technology, it induces backward and forward linkages which stimulate the process of economic development in the country. (9) Facilitates Overall Development: Entrepreneurs act as catalytic agent for change which results in chain reaction. Once an enterprise is established, the process of industrialization is set in motion. This unit will generate demand for various types of units required by it and there will be so many other units which require the output of this unit. This leads to overall development of an area due to increase in demand and setting up of more and more units. In this way, the entrepreneurs multiply their entrepreneurial activities, thus creating an environment of enthusiasm and conveying an impetus for overall development of the area.

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Chapter-3
ANALYSIS AND INTERPRETATION

Table: 1 Whether you male are female? Particulars Male Female TOTAL Number of Respondents 12 8 20 Percentage 60% 40% 100%

Male 12 8

Female

60%

40%

Interpretation: The above chart shows that the majority of the respondents were male out of 20 respondents male respondents were 60% (12), and female respondents were 40% (8).

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Table: 2 The age range of the respondents

Age
Below 20 20-30 30-40 40-50 Above 50 Total

Number of respondents
2 15 2 1 0 20

Percentage
10% 75% 10% 5% 0% 100%

Number of respondents 15

Percentage

2 10% Below 20 75% 20-30

2 10% 30-40

5%

0 0% Above 50

40-50

The above chart shows that majority (75%) of respondents (15) were comes under the 20-30 years age group rest of the others were 10% (2) below 20 and also 30-40 years, 5% were 40-50 and none of them above 50 years.

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Table: 3 Respondents education qualification

Qualification No. of respondents Percentage

SSLC 0 0%

PUC 2 10%

UG 4 20%

PG 14 70%

Total 20 100%

No. of respondents
SSLC PUC 0% 10% 20% UG PG

70%

Above table shows that majority of respondents were belongs to PG (70% (14)), 20% of UG respondents, rest of the respondents were PUC 10% and none of SSLC respondents.

Table: 4 Which sector is best to start a business?

Sectors No. of respondents Percentage

Manufacture 4 20%

Service 6 30%

Retail 8 40%

Wholesale 2 10%

Total 20 100%

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No. of respondents 8 6 4

Percentage

2 20% Manufacture 30% Service 40% Retail 10% Wholesale

The above chart shows that the majority of respondents (40%) prefer retail sector business, secondly 30% respondents are preferring service sector, remaining 20% and 10% are prefer manufacture and whole sale sector.

Table: 5 What is your education background require to become entrepreneur?

Qualification

Primary

Secondary 5 25%

tertiary 8 40%

Not at all 3 15%

total 20 100%

No of respondents 4 Percentage 20%

No of respondents 8

Percentage

5 4 3 40% tertiary

20% Primary

25% secondary

15% Not at all

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This chart shows that majority of people prefer tertiary education to start a business (40%), and some of the 25%, 20%, respondents prefer secondary and primary education and 15% of respondents suggest there is no need to education to start business.

Table: 6 When one who start his business what are the main obstacles he may face?

Particulars No obstacles self confidence Finance Lack of information Finding right contacts Combining family & work life Total

No of respondents 2 6 5 1 4 2 20

Percentage 10% 30% 25% 5% 20% 10% 100%

6 5 4 3 2 1 0

No of respondents Percentage

The above chart shows that 30% of the entrepreneurs are facing self confidence problem, and 25% are finance, 20% are failing in finding the right contacts for the product, 10% are no

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obstacles and combining family and work life are obstacles and remaining respondents are agreeing lack of information 5%. Table: 7 What the reason is behind becomes an entrepreneur?

Particulars Dont want work for others Want freedom to make my own decision Social states Self achievement Profit/ money making Confidence in the products services offered Total

No of respondents 4 5 0 7 2 2 20

Percentage 20% 25% 0% 35% 10% 10% 100%

No of respondents

Percentage

7 5 4 2 20% 25% 2

35% 10% 10% 0% 0 Dont want Want freedom Social states Self Profit/ money Confidence in work for to make my achievement making the products own decision services others offered

Above table shows the reasons for the entrepreneurship in that 35% respondents tells self achievement, and 25% want freedom to make my own decision, 20% dont want to work for others, 10% to profit/ money making and confidence in the products services offered and none of them tells social status reason
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Table: 8 What is the main requirement to start a business?

Needs No of respondents Percentage

Finance Qualification 8 40% 3 15%

Self confidence 9 45%

Govt. support 0 0%

Total 20 100%

No of respondents 9 8

Percentage

40% Finance

15% Qualification

45% Self confidence

0%

Govt support

Above chart shows that there are 45% of respondents prefer self confidence, 40% respondents prefer finance, 15% prefer qualification and none of them prefer Govt. support to start a entrepreneurship.

Table: 9 Whether entrepreneur tool for economic growth

Particulars Respondents Percentage

Yes 20 100%

No 0 0%

Total 20 100%

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Respondents
Yes 0% No

100%

Above chart shows all the respondents agree with entrepreneurship tool for economic growth.

Table: 10 How entrepreneur tool for economic growth?

Particulars Creation of employment High productivity Tax contribution Cheaper price Total

No of respondents 10 7 2 1 20

Percentage 50% 35% 10% 5% 100%

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No of respondents 10 7

Percentage

2 50% Creation of employment 35% High productivity 1 10% Tax contribution 5% Cheaper price

Above chart shows that 50% respondents agree with entrepreneurs create a employment, 35% of respondents for high productivity, 10% for tax payment, 5% are for cheaper price.

Table: 11 How entrepreneurship benefit to the economy?

Particulars Income distribution Increasing income Utilization of raw-materials Utilization of local resources Total the per

No of respondents 9 capital 6

Percentage 45% 30%

2 3 20

10% 15% 100%

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No of respondents 9

Percentage

3 2 45% Income distribution 30% Increasing the per capital income 10% Utilization of rawmaterials 15% Utilization of local resources

The above chart shows that how the entrepreneur grow the economy, in that 45% of respondents prefer equal income distribution among the people, 30% believe increasing the per capita income, 15% believe utilization of local resources, and 10% believe that utilization of raw material.

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Chapter-4 Findings
During the survey period we find some favorable and unfavorable factors which are Most of the entrepreneurs are starting their business within the age of 20-40 with the main aim of self-achievement. Most of the entrepreneurs like retail, and service sector. Most of the enterprises dont want manufacture sector because soon loosing the market and high completion from large scale enterprises. Entrepreneurship creates self employment to the entrepreneurs. Most of the entrepreneurs are marginally very small scale, they want start a business in rural and semi urban places so it leads to development of regional economic growth. The main obstacles of the entrepreneurs are lack of self-confidence, finance and finding the right contacts for their business venture. Small scale enterprises are contributing 17% economic growth and GDP; they will contribute about 22% by the end of 2012. Entrepreneurship leads to development of infrastructure in urban, rural, and all over the country. Entrepreneurship leads equal distribution of income among the people and also increases the per capita income of the country. There is no any educational requirement to the entrepreneurs primary is enough.

Suggestion
After finding the problems we have some suggestion they are Entrepreneurship should grow in the country still in order to enhancing the productivity and income. To motivate the entrepreneurs govt. should take some initiatives to develop the entrepreneurship in the country.

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Entrepreneurs should have self confidence and financial institutions offers more and more assistant to the entrepreneurs in order to develop the small and medium enterprises because they are the main player in the economic development. Rural entrepreneurs should be increase in order to create a rural employment and generate high rural income. More information are required to start a new business to the new comers so training centers should be increase. More subsidies and other technical assistant should be provide by the Govt.

Conclusion
Entrepreneurship is the tool for the economic development but some entrepreneurs fail in their job because their self confidence. Indian small scale enterprises contributing 17% GDP at present that will be 22% by 2012. Entrepreneurship must be developed and supported so that there is a proliferation of SMEs in the country. An entrepreneur's entry into business does not guarantee his/her survival. Attrition rate for new entrepreneurs is very high in many countries of the world. While this may be because their chosen business inappropriate or a lack of adequate technical or business expertise, one critical reason is that overall macro and micro environment in which they are forced to operate. So India should utilize all the resources and should become best entrepreneurial country among others Therefore a key consideration by the government should be to critically evaluate the exiting macroeconomic policies and their impact on grassroots entrepreneurship development.

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