Nature and Development of Entrepreneurship

NATURE AND DEVELOPMENT OF ENTREPRENEURSHIP

Nature of Entrepreneurship:

Entrepreneurship collectively has the power to change the destiny of a family, city, state or the country as a whole. For example in our own nation, the rate of economic growth in Punjab and Haryana has been very high.  Had all the states fared as well as these two states, India could have become one of the strongest economic powers in the world today.    Why has the economic development in these two states been so rapid whereas other states like Bihar, Orissa, etc with much more natural resources lagged behind?,  

This may be because Punjab and Haryana have built-up a very strong entrepreneurial base whereas other states have not been able to do so. 

 

The people of these two states have an entrepreneurial bent of mind. However, the value system of the people in other economically backward states is against entrepreneurship. They search for jobs. They live their lives under the safety umbrella of monthly salary. It is quite heartening that the entrepreneurial bug has bitten people of states like Andhra Pradesh, Karnataka and Tamilnadu etc., which will speed up the economic growth of the country in current decade.

Who is an entrepreneur?  He is an opportunity seizer and not the opportunist.  He will look to the future and seize business opportunities, He not only seizes opportunities but many a time converts problems into opportunities. Let me cite an example. Some time back, “Newsweek” reported a classic case of entrepreneurship. This follows:

“In a unique transaction the government of Hong Kong has recently begun exporting night soil, a traditional Anglo-Asian euphemism for human excrement – to Communist China.  Though sales are small right now, Hong Kong’s Urban Service Department which struck the deal with China Resources Ltd., hopes to make as much as $250,000 this year from the abundantly available commodity.  Much of the night soil is to be used in the Kwangtung Provinces’ methane-gas tanks for fuel and lighting needs in local communes, but some will also be aged and spread on Chinese soil as fertilizer.  Environmentalists will be pleased to note that the agreement should help prevent fouling of the waters around Hong Kong.”

This is a unique case of entrepreneurship.  Hong Kong has converted the pollution and environmental problems into opportunities of earning foreign exchange for the country. 

Development of Entrepreneurship in the Country:

The entrepreneurship was earlier restricted to certain communities like Marwaris, Baniyas etc.  Recently the State Industrial Development Corporations and Small Scale Industries institutes have made some efforts to train entrepreneurs. These corporations have conducted short-term courses to develop entrepreneurial capabilities in selected trainees.  But there seems to be something wrong with these projects. 

Reasons for limited success in Nurture Entrepreneurship:

There is general lack of entrepreneurs in the country, Government’s effort not withstanding, especially in the rural India, people prefer jobs to self-employment. There is need for research and re-strategizing these development schemes. 

There seems to be a problem with selection process itself. Firstly, the candidates selected for such courses are those who have failed to get jobs and hence have nowhere else to go. Added to this is the widespread value system within the country where the first preference for any qualified man is to get a job, preferably a government job.

Secondly, such people who are unable to get jobs on their own. Therefore, they do not have the experience of working in an organized way. These people have limited ability to perceive the project and build up the enterprise. Therefore, they are more likely to fail. On the other hand such instances of failure strengthen the belief among the people that it better to opt for a job than to take up entrepreneurship.

We can conclude that these institutions and their programs should target at those who can get jobs or who already have jobs but are dissatisfied and would like to take up entrepreneurship as a career.

Another source of ample supply of entrepreneurs could be management institutes. For producing Entrepreneurs at these business schools, we need to reorient the management education in India. These management institutions at present are producing administrative managers whereas developing countries like ours need entrepreneurs. These institutes could take a few initiatives such as:

·        Entrepreneurship should be made a compulsory subject in all management schools. In addition, cases on successful entrepreneurs should be developed and run in these management courses.

·        Project work related to a proposed entrepreneurial venture should be introduced. It can be a feasibility report. At Asian Institute of Management, Manila the student does not pass unless he submits a Xerox copy of the cheque issued by the bank approving the feasibility report.

·        Regular talks by successful entrepreneurs should be organized at these institutes. Many of these emerging entrepreneurs from sunrise industry should be called for such talks. Students should be encouraged to generate ideas for launching new era ventures, specially new technology area successful entrepreneur-alumni will be more impactful making in nurturing entrepreneurship in management student.

·        These institutes should start Entrepreneurship Centres to do research on the subject and recommend policy measures to strengthen entrepreneurship in management students. Such a centre has been established at one of the Indian Institutes of Technology to convert engineers into entrepreneurs.

All these steps will make million entrepreneurs bloom!

A word of caution:

Entrepreneurs should preferably start with trading/marketing activities.  The temptation of building a plant in the beginning should be avoided.  Such plants have proved a Waterloo for many entrepreneurs.  It is better to start as a trader or a service provider.  It would require less capital.  Risk would be on a limited scale.  Once he has the feel of the market, he could possibly integrate backwards to production activities. They should remember that nobody could become Tata or Birla overnight.

Factors Influencing Entrepreneurship

Entrepreneurship is a function of several factors. Four sets of factors that primarily influence entrepreneurship are as follows:

·        Individual

·        Environmental

·        Socio-Cultural

·        Support System

·        The individual. Individuals who initiate, establish, maintain and expand new enterprises generate entrepreneurship in a society.

·        Environment. This factor is constituted by the socio-political and economic policies of the government and financial institutions and the opportunities available in a society as a result of such policies.

·        Socio-cultural factors. Entrepreneurs grow in the traditions of families and societies and internalize certain values and norms from these sources. The contribution from these socio-cultural factors, in the process of transmission, gets filtered through the individual whom it seeks to influence.

·        Support system. Support systems that work for the development of entrepreneurs include financial and commercial institutions, research, training, extension and consultancy services, as also large industrial units interested in developing ancillary industries.

While the individual, the environment and the support systems directly influence entrepreneurship, the socio-cultural milieu contributes through the individual and the support systems. Broadly speaking, support systems and socio-cultural factors also constitute the environment. Thus, actually there are only two factors, on which entrepreneurship development depends. These are the Personal characteristics of the individual and the environment.

THE INDIVIDUAL

The three main factors, which influence the individual’s behavior are his motivational factors, factors concerning various skills that the entrepreneurship possesses, and the factors relating to his knowledge of several relevant aspects that are likely to contribute to success in Entrepreneurial roles.

The motivational factor in itself has three major elements:

·        Entrepreneurial motivation,

·        Personal efficacy and

·        Coping capability.

Entrepreneurial Motivation:

Achievement motivation, power motivation and extension motivation are important for entrepreneurship. In addition, personal efficacy a sense of being effective and having control over the situation is related to other motivational factors. An entrepreneurial role produces stresses of different varieties and the prospective entrepreneur must have the capability of coping with these stresses.

Personal Efficacy: The following two sets of skills are important for an entrepreneur:

·        Project development. An entrepreneur plans to establish an enterprise. In order to be effective he should know how to conceive the project, the stages through which he should go to establish it, the information he may have to collect, the factors he may have to consider in taking investment decisions, etc.

·        Enterprise management. Once an enterprise is started, its proper management, which is crucial to its survival and growth, has to be ensured. Management skills relate to accounting and financial control, marketing, production planning and inventory control, and to managing the people who work in the enterprise. Many new entrepreneurs fail in the absence of these management skills.

Coping Capability: The enterprise once stared needs to be sustained and grow at least to meet the demands of the competitive business environment and a suitable strategy and plans needs to be made by the entrepreneur.

ENVIRONMENT

Knowledge about the economic-political environment, more particularly about the economic policies of the government and the financial as well as commercial institutions, is important for the small entrepreneur, which industries are being encouraged for the small entrepreneur, which industries are being given assistance of various kinds, etc., are information relevant to the prospective entrepreneur. He should know what raw materials are available and where. He would have to be well informed about the infrastructure-transportation facilities, power, market, etc., in the proposed locations of his enterprise.

He should be conversant with what help and assistance financial, material as well as consultancy is available and from what sources. He should know the sources through which he could approach these agencies for assistance. He should also know about the schemes of banks and other financial institutions. He should know about the various schemes of the industries department of state governments and about the effort being made to help new entrepreneurs by voluntary agencies like Small Industries Associations and the like.

The entrepreneur has to make a choice while setting up an enterprise. The choice can be more rewarding if there is a wide range of alternatives available to him. This is possible if the entrepreneur has adequate knowledge about the various alternatives industries, and more detailed knowledge about the industry which he wants to set up and also about other related industries which have a bearing on the one he selects to start. This knowledge would cover aspects like required investments, marketability of products, skills required for the enterprise, raw materials and other materials needed, competitors in the field, etc. He should also know about the manufacturing processes, choice of products and about their commercial feasibility.

Once he selects a particular industry, in-depth knowledge about the technological aspects of that industry would be of vital importance. He should know the details about the processes of manufacture, and the various technologies available for those processes. He should also know the costs and benefits of respective technologies so as to help him in making the appropriate choice.

SOCIO-CULTURAL FACTORS

Socio-cultural factors like the family background and the norms and values of the immediate social circle contribute substantially to entrepreneuship development. The values and attitudes an individual has, are a function of the socio-cultural milieu  in terms of developing normative behavior (norms of behavior) in the individual. The individual works under some pressure of the values inherited from his family. Behaviors which reflect inclinations towards initiative and risk taking, dependence or independence (self reliance), working with one’s own hands on tasks requiring manual handling, etc., are a result of the socialization process in the family, the school and society. Behavior rewarded through appreciation, encouragement, and other extrinsic as well as intrinsic devices get reinforced, and related values and norms develop. Thus, training through socialization is important. These two factors, normative and socialization are discussed below:

Normative Behavior

The following aspects of normative behavior are relevant for entrepreneurship.

·        Family expectations and pressures:

The pressure of expectations from the family plays an important role in developing entrepreneurs. When the family expects an individual to undertake some independent work, to earn enough for the family to maintain their standard of living, to employ or involve other members of the family in business etc., the individual may respond by searching for ways of meeting such expectations and pressures. In certain cases the individual may react to these pressures even negatively. But usually there are positive responses.

·        Family’s role in small business

Working for oneself is better than working for somebody else was clearly driven home by my Chinese Professor at the Asian Institute of Management, Manila, Philippines. We were discussing a case on entrepreneurship. He asked Alex, my classmate, “How much profit your company is making?”

“It made about 10 million Pesos last year”, Alex replied.

“How many managers are there in your company”, the Chinese Professor asked.

“Ten”, Alex replied.

“How much each of the managers are getting”, the professor asked.

“They are all getting different salaries but on an average they are getting around 30,000 Pesos a year”, Alex replied. (One Peso was equivalent to a rupee. This incident happened 25 years back in 1975) “That means the managers together are getting ten times 30,000 Pesos i.e. 300,000 Pesos per year. And because of your managerial capability the company is making 10 million Pesos. Are you not being exploited? Why don’t you make those one million Pesos, your share, yourself? Why do you allow your managerial capabilities to be exploited by others? Why don’t you exploit it yourself,” the professor went on. Alex had no reply. Neither had we.

The institute flooded us with cases on entrepreneurship and family managed companies in the hope of making us entrepreneurs. At that stage I could not imagine that one-day I would be running, a family managed company myself and that also reasonably successfully.

At this stage I would like to narrate a unique feature observed by me in the Philippines, where I saw some husband-wife teams of entrepreneurs. Husband and wife, classmates during college days would plan an enterprise. Husband would take up a job. The wife would start a small stores. Such stores are called sarisari stores in the Philippines. The income of the husband would support the family. Wife’s earnings from business would be ploughed back to expand the business. When the enterprise acquires a respectable size, the husband would resign his job to become the president of the company, the wife taking up the Finance Director’s position. What was surprising was that this pattern repeated itself many times broadening the base of entrepreneurship in the country.

The objective of narrating this experience is two-fold:

·      Similar pattern can be adopted in India. It is not necessary that husband takes up the job. In our environment the wife can take up a job, the husband starting the enterprise.

·     The family has a very important role to play in building up an enterprise. I would cite a live case.

A young graduate was awarded the dealership for cooking gas in Assam by a public sector undertaking under its plan of giving dealerships to unemployed engineers and graduates. Let us call him Sham. Sham being new in business took an experienced businessman as a partner. All formalities like constructing a godown etc. were completed by Sham and the dealership started. After a few months, he realized that his partner was not being fair to him. With the intervention of a common friend, the partner left. In his place, Sham took his sister, a postgraduate student, to look after the accounts. Today the business of Sham is booming.

Initial few years for any small sector enterprise are very crucial. Overhead expenditure should be kept to the bare minimum during this crucial period. Family members could help a new entrepreneur to keep his overhead expenditure low. Moreover, they will do the allotted work with certain devotion and commitment, so necessary in building up the enterprise in the beginning. The only relative who should be kept away from business is the son-in-law.

Our national slogan should be: Let millions of family managed companies bloom in India! They will create jobs and eliminate poverty.

·        Risk-taking:

Risk taking norms are important for the success of entrepreneurs. It has been reported that a successful entrepreneur takes moderate risks. He does not gamble, nor does he opt to “play safe”.

·        Independence:

Equally important is the norm of self-reliance. The value attributed to independence is important for entrepreneurship. Instead of waiting for suggestions or directions from others, an entrepreneur works out plans on his own, searches and explores resources, and experiences an inner urge to make the enterprise a success. This makes him self-reliant and independent.

·        Work.

Value regarding work has been found an important factor in the entrepreneurship. The one major factor that distinguishes the entrepreneurial from the non-entrepreneurial culture, is the willingness to work with one’s own .

·        Socialization.

The values supporting or influencing entrepreneurship are developed through the process of socialization. The family and other social institutions play a crucial role in training individuals to show certain behavior. One’s predisposition towards independence and initiative as well as risk-taking, primarily results from such socializing influence. The friendship of an entrepreneur has moved many people towards entrepreneurship.

Training in independence has been found to contribute to the development of achievement motivation leading to entrepreneurship. When a boy is encouraged to do things on his own, and seeks guidance and help only when needed, he is being trained for independence. Overprotection and over guidance in childhood or later in the work organisation lead to dependence, which reduces entrepreneurial qualities.

Similarity training in taking initiative and risk, is an important factor in promoting values that are supportive to entrepreneurship. When failure of an individual gets severely punished, it is quite likely that he develop what is called ‘fear of failure’ motive or the motive to avoid all possibilities of failure is not to take risks. Risk-taking behaviour on the contrary blossoms when an individual is encouraged and helped to set realistic challenging goals and to pursue them with perseverance.

SUPPORT SYSTEMS

Possibility of the success of an entrepreneur generally is enhanced by efficient and effective operation of the support systems. Several agencies and organizations operate to help and support the entrepreneur. Pareek has listed the following as examples of support system:

·        Corporations specially set-up to develop entrepreneurship and small industries in a region;

·        Financing institutions including banks;

·        Extension services of the department of industries (including SISIs): Non-governmental organizations of small industries or entrepreneurs, consultants, private agencies doing research, or providing services to entrepreneurs, training institutions, etc. Educational institutions working in the field of entrepreneurship like Institutes of Technology, Institute of Management, Universities, Engineering Colleges, etc.:

·        Development administration in the district;                        

·        Large industrial establishments interested in developing ancillary industries thereby helping small units to grow and develop.

Entrepreneurs often have to interact with these support systems. The way these systems function may encourage or discourage them. They may reinforce one kind of behavior. The style of working of these systems, therefore, is a crucial factor in promoting entrepreneurship. The quality of interaction with the entrepreneur is determined to a great extent by their working style, which reflects their concern for effectiveness of their expected role. The style will also demonstrate the norms prevailing in the organisation, norms regarding collaboration, help, result orientation, etc. The support systems, thus, can promote entrepreneurship through reinforcing behavior and adopting norms of internal working which are in harmony with them.

A Study of Environmental Factors Related to Business entrepreneurship

A research was recently conducted in Bombay, where an attempt was made to isolate environmental factors related to entrepreneurship in order to facilitate a better understanding of the developmental process of an entrepreneur.

Entrepreneurial Behavior (EB) is a function of an individual’s personality characteristics and environmental factors. This could be represented as

EB=f(P,E)

where

P=Personality charcteristics

E=Environmental factors.

These environmental factors could be either nurturant or impediments to entrepreneurial development.

The concern of this study was, therefore, to derive an understanding of the determinants of entrepreneurial success from the experiences of entrepreneurs. Greater emphasis was laid on determining environmental factors at the micro level that correlated with entrepreneurial development and success rather than those at the macro level. The factors that were concentrated on were:

·        Social/psychological factors including family, peer group formal and informal association, etc.

·        Financial.

·        Material availability.

·        Technology availability/applicability.

At the macro level, the study tried to establish the relationship between the state of the national economy and the development of entrepreneurial success was measured based on:

·        Increase in profits.

·        Increase in turnover.

·        Increase in assets.

·        Extent of diversification.

The sample for this study comprised of entrepreneurs who were members of the Small Scale Industries Federation. There were over 700 members listed. Of these, the history and other relevant data of 51 members were obtained. The research design included the administration of a structured questionnaire followed by some open-ended questions to each of these 51 respondents. In addition to this, 12 of these respondents were interviewed after a period of three months and cases were constructed on the basis of these interviews. The conclusions drawn from these cases were to further validate the findings of the study.

For the purpose of this study, an entrepreneur’s life was divided into two stages: First stage: Initiation and subsequent success of an entrepreneur, the following variables were studied:

(i)                Educational background,

(ii)             Age

(iii)           Friends

(iv)            Community

(v)              Prior occupational status

(vi)            Family size

(vii)         Parents

(viii)       Marital status and wives

(ix)           Joint family status

(x)             Migration

(xi)           Peer group

(xii)        Association membership

(xiii)      Financial status of family

(xiv)       Economic environment

(xv)         Availability of material

(xvi)       Availability of technology.

·        Educational Background:

The earlier notion that those lacking educational qualifications were usually the ones who went in for business was not borne out, as 41.18 per cent of entrepreneurs were professionally qualified, 27.45 per cent were graduates and the rest non-graduates S.S.C. and below. No significant relationship could be determined between the educational background and entrepreneurship of persons.

·        Age

The mean age at which entrepreneurs started an enterprise was found to be 24.6 years, and most entrepreneurs (82.35 per cent) thought of starting business before the age of 30. A maximum concentration was determined between the ages of 20 to 30 years. This indicates that the ideal time for imparting entrepreneurial education would be somewhere between 18 to 25 years of age, so that once the various alternatives available are highlighted, it would be easier for an entrepreneur to start a new venture before the age of 30. It may also be noted that not a single entrepreneur of the sample studied started business between the age 40 to 50. It, therefore, appears that once middle age sets in, there is a tendency not to take any risks and to postpone the idea of entrepreneurship till after retirement, which is borne out by the fact that two entrepreneurs entered business between the age of 50 and 60. The average age at which, entrepreneurs actually started business was found to be 28 years. Comparing this with the average age at which they first thought of starting a business (24.6) it would appear that it takes about 3 1/2 years for a business to commerce after the idea is first conceived by the entrepreneur. Also, 37 of the 51 entrepreneurs started the business before the age of 30. Again, there were no fresh business ventures between the ages of 41 and 50. Only about 20 per cent of the entrepreneurs started their business between the ages of 31 and 40. This leads to the conclusion that since there is a gap of 3 to 4 years between the time when the idea of starting the business is conceived and the business is actually started, it is desirable that sowing the seeds of the idea of entrepreneurship, in the form of training, should be undertaken before the age of 25.

·        Friends

The influence of friends was found to pay a significant role (to the extent of 29.4 per cent of entrepreneurs surveyed) in the development of the idea of entrepreneurship. Thus it would be advisable to determine some details about friends while selecting prospective entrepreneurs for intensive training as an entrepreneur friend would most likely move him towards entrepreneurship, leading to a larger percentage of those trained taking up the entrepreneurial role with commitment. Also as an entrepreneur friend is likely to induce people towards entrepreneurship, it is recommended that ‘Entrepreneur clubs’ be established by agencies associated with the development of entrepreneurship, Such a step would speed up the development of entrepreneurship so vital for economic development.

·        Community

The community, family members and relatives were also found to make a significant contribution in inculcating entrepreneurial thinking in people and leading them towards entrepreneurial activities as 13 of the 51 entrepreneurs surveyed quoted this as a determining factor.

·        Prior Occupational Status

As regards the status of entrepreneurs before their entry into business, it was found that 70.59 per cent were previously employed, 21.57 per cent studying and 7.84 per cent unemployed. This indicates three possible routes to entrepreneurship:

·        Looking out for opportunities while studying and starting a business immediately after the completion of one’s studies. In many cases, they join the family business after completing their studies, get some sort of apprenticeship and ultimately leave the family firm to start their own venture.

·        Being unemployed and taking to entrepreneurship as a last resort. It is, however, felt that the casualties in this category of entrepreneurs will be the highest. All entrepreneurship development programmes initiated by the government also concentrate on this category of people.

·        Putting in some years of service and possibly after accumulation of capital, leaving their jobs to take up entrepreneurial roles. Of the 36 falling in this category, 13 worked in large companies, 11 in medium and 11 in small companies. One was working in the State Government, 17 of these people left their jobs due to dissatisfaction in the same. Thus, it is possible to locate prospective entrepreneurs amongst those working in commercial undertakings. Such prospective entrepreneurs would be either dissatisfied with their jobs or will be having a very high achievement motivation. In some cases, due to the attractive policies which would spur them towards entrepreneurship where there are opportunities for making more money. Unfortunately, the last categories of perspective entrepreneurs have not been attracted at all in our entrepreneurship development programmes. It is felt that there is need for development of new entrepreneurship development program to attract working persons to opt out of their jobs and take to entrepreneurship. Such options will create job opportunities for the unemployed and would also provide people with some working experience including managerial experience the opportunity to take up entrepreneurial roles. There has however been no significant relationship demonstrated between past work experience of the entrepreneur and his success as an entrepreneur.

·        Family Size

With regard to the size of families of entrepreneurs, only 13.72 per cent could be considered to have come from small families having one or two children. The largest concentration of entrepreneurs was in families having five children (23.53 per cent). The percentage of families producing entrepreneurs having five or more children was as high as 54.9 per cent. One possible explanation for this phenomenon could be that biggest families might have financial difficulties spurring the children towards economic activities with higher determination. In other words, these children had a higher N.Ach. It could also be argued that they had the feeling that they could expect the support of brothers/sisters in time of need, in situations where something went wrong with their business. However, family size was in no way related to entrepreneurial success.

·        Parents

Parents of entrepreneurs, except for one respondent, all fathers of entrepreneurs had crossed the age of 40 at the time of their entry into business. This confirms our earlier finding that there is a certain age group, which is most appropriate for the development of entrepreneurship. It is quite probable that they gave mature advice to their children because of their age and experience. Parents’ educational background was found to have no correlation with the development of entrepreneurship. Families can throw up entrepreneurs, where parents have very little education. They can also be thrown up by families where parents are educationally qualified. Data also indicated that entrepreneurs could be produced by families where the father was in service rather than in business. However, a very large percentage (58.82 per cent) of entrepreneurs did come from families where the parental profession had influence on the development of entrepreneurship. It was not however found to correlate with later entrepreneurial success. No correlation was depicted either between an individual’s entrepreneurship and his brother’s profession. Thus, the same family environment may produce different individuals. These changes may come from peer group or certain personal characteristics.

·        Wife

An entrepreneur requires support, especially at the beginning of the entrepreneurial venture. A wife is in the vantage position to provide this support, both emotional and financial. With the exception of 6 cases (11.77 per cent) of relatively early marriages all the entrepreneurs surveyed had been married at ages normal for urban population. However, there were as many as 8 (15.68 per cent) bachelors amongst interviewed entrepreneurs. This could be related to the risk taking capability of bachelors. But for a solitary exception of a non-matric wife, all other wives of the entrepreneurs surveyed were reasonably well educated. This was in contrast to the background of mothers of these entrepreneurs. It can be concluded that an educated wife is an asset to an entrepreneur as she can assist her husband or take up a job should the need arise.

Despite this educational background of the wives, it was however found that not many of the wives of entrepreneurs were employed (56.86 per cent). However, they were safely devices for the lean period. The risk-taking capability was reinforced in the entrepreneurs by the educational background of their wives and their capability to take up jobs. The educational background of the wives of the entrepreneurs was not found to have correlation with the success of the entrepreneurs.

·        Joint Family

Is the joint family set-up a hindrance to entrepreneurship? It is often felt that the joint family system especially of Hindu families is an impediment to the nurturance of entrepreneurship. The findings of this study however were found to disprove this notion, as of the total number of entrepreneurs interviewed, as much as 45.10 per cent were from joint families. The joint family status was not found to have a bearing on the later success of an entrepreneur.

·        Migration

An attempt was made to determine whether migration from place to place had any effect on the nurturing of entrepreneurship. No relationship could be determined between these two factors at the initiation stage. However, migration from place to place was found to correlate with later success. Thus the feeling that such movement serves to inculcate a coping capability in entrepreneurs, which is a desirable quality for success has been found to be correct.

·        Peer Group

With regard to peer groups, it was initially felt that they would have a significant effect on the thinking and behavior of entrepreneurs. This belief was subsequently borne out by the findings of this study, where as much as 56.86 per cent of those interviewed had at least one entrepreneur friend. From this it can be concluded that the peer group has a definite impact on the development of entrepreneurship. People with entrepreneur friends are more likely to become entrepreneurs. The finding could also be used while selecting prospective entrepreneurs for intensive entrepreneurial development programmes or other support from governmental agencies. No relationship was however found between having an entrepreneur friend and later success of entrepreneurs.

·        Association Membership

Entrepreneurs interviewed were also asked whether they held a membership of any associations at the time of their entry into business. Only 7 respondents replied in the affirmative, the remaining 44 replied that they were not members of any association at the time of their becoming entrepreneurs. Two of the respondents had, however, become association members subsequent to their entry into business. Of these, one was a member of the Federation of Small Scale Industries and the other a member of Chemical Allied and Export Promotion Council. For development of entrepreneurship, this is yet another area where effective steps should be taken which would nurture entrepreneurship. It is suggested that entrepreneur clubs be started with the support of the Government and the Small Scale Industrial Development Corporation. These clubs could have as members both entrepreneurs as well as those with entrepreneurial ambitions. This mixing of entrepreneurs and would-be-entrepreneurs should create greater awareness regarding entrepreneurship and more of the prospective entrepreneurs or those interested in entrepreneurship would become actual entrepreneurs. However, this would be only for the initiation of entrepreneurs and may not necessarily lead to success. In fact, the membership of an Association was not found to have a relationship with the success of an entrepreneur.

·        Financial Status of Family

For isolating the environmental factors conducive to the nurturance of entrepreneurship, details were collected regarding the financial position of not only the family but also the in-law’s family (in case of married entrepreneurs) at the time they took to entrepreneurship. The objective was to find out whether the overall financial condition of the family and in laws’ family had any relationship with an individual’s movement towards entrepreneurship. It was found that while 23.53 per cent of entrepreneurs came from rich families, the rest were from middle class and low-income groups. The concentration is however in the middle class families with 35.29 per cent of the entrepreneurs from lower income groups, i.e., below Rs 10,000 per annum. In fact 66 per cent of the entrepreneurs were found to be from a middle class background. This leads us to conclude that the willingness to take risks is not very high in the low income groups but is fairly high in the middle class which perhaps in inspired by a desire to get into the higher income groups. For people coming from lower middle and lower income groups, such movement towards entrepreneurship would mean relatively higher risk. Still as much as 17.65 per cent of the entrepreneurs were found to come from the lower income families with an income of over Rs. 1 lakh per annum were mostly engaged in business and the children were born in what may be called business environment. The Indian tradition of taking up hereditary professions must have also contributed towards children of such families becoming entrepreneurs came from business environment. This may be explained by the possibility that those coming from higher income groups would take larger risks, which would be necessary for bigger success in business. This finding is somewhat contrary to the socio-economic objective of the government, which feels concerned at the rich becoming richer and the poor becoming poorer. Hence, the concentration of entrepreneurial development programmes should be on lower and lower middle income groups. But, can we find something common in the background of these 14 entrepreneurs from these groups which would help us in our search of right material for development into entrepreneurs? There was nothing very distinctive about their background. Three of them had lived in a joint family set-up whereas the remaining 11 separately. Two of them were the only issues of their parents whereas the others had brothers/sisters ranging form one to seven. But, there was one distinctive feature. Their wives were mostly illiterate. Out of these 14, three had working-wives, one as a teacher, the second giving private tuition and the third looking after her own business. It can be concluded that the entrepreneurs’ risk taking capability was reinforced by his wife’s education. This aspect could also be utilized while selecting prospective entrepreneurs.

Regarding the financial position of the wife’s family, it was found that 16.28 per cent of the married entrepreneurs had married into rich families 79.07 per cent had married into middle class families and only 4.65 per cent into lower income groups. Out of the total of 51 entrepreneurs, 16 had received financial aid from their relatives in amounts ranging from Rs. 5,000 to Rs. 50,000, 12 had received aid from friends in amounts varying from Rs. 1,000 to Rs. 50,000. This indicates that most of the entrepreneurs surveyed had accumulated some capital of their own before starting their venture. 68.63 per cent of these entrepreneurs had accumulated capital of above Rs.10,000  before starting out. In contrast, very few depended on help form wife, relatives or friends. No relationship could be determined between the receipt of financial aid from friends or relatives at the time of starting an enterprise and the success of the entrepreneur.

Economic Environment

An attempt was made to determine whether environmental factors at a macro level namely the particular economic condition prevalent in the year of their becoming entrepreneurs were related to their entrepreneurial ventures. A critical examination of the responses revealed that a larger number of people took to entrepreneurship when economic conditions were difficult. While inflation is a curse for a consumer, it is not so for an entrepreneur. The demand rising faster during an inflationary period spurs many people to take to business. The purchasing power of money coming down would also induce working people to move towards entrepreneurship. The stability of the national economic environment in the year of starting an enterprise was not found to relate to entrepreneurial success.

·        Availability of Material

Easy availability of materials was expected to move individuals towards entrepreneuship. This belief was not, however, borne out by responses of the entrepreneurs only. (7.84 per cent) claimed that easy availability of materials in their areas of stay was an aid to their becoming entrepreneurs. It may, therefore, be concluded that though easy availability of materials may spur a few individuals towards entrepreneurship, it is not a necessary condition. There are a large number of people who become entrepreneurs against heavy obstacles. They seized the environmental opportunities in different areas not necessarily restricting themselves to the easy availability of a particular raw material. Though, easy availability of raw material is a good reason for starting an industry, it may be worthwhile to isolate such materials and give specific support to certain selected entrepreneurs to develop industries related to these materials.

·        Availability of Technology

Regarding availability of technology in the area of the entrepreneurs’ stay facilitating his movement towards entrepreneurship, again only 4 of the entrepreneurs surveyed replied in the affirmative. Thus, some people may become entrepreneurs due to the easy availability of  technology in nearby areas, but it is not a necessary condition for entrepreneurship.

Developmental Theory of Entrepreneurship

The research described earlier indicates a possibility of formulation of a developmental theory of entrepreneurship.

Although the various aspects of the developmental process of entrepreneurship require detailed verification, the process appears quite clearly as an extension of the process of occupational choice in the individual which in turn is a part of individual’s total striving for an adequate life adjustment.

·        Process of occupational choice

The general process of the occupational choice can be shown as follows:

Fantasy period	Tentative decision making period	Stage of exploration and preparation for implementing the decision
Free expression of a wish without  any consideration of expediency	Interest: Includes all vocations, which appeal to the individual. Preference: Involves comparison of the relative attractiveness to the subject out of several vocation.	Crystallized choice very close to the decision

This would be true for any occupation except for a few exceptional cases where decisions about the occupational choice are taken under traumatic conditions. With this one cycle of the occupational choice process is over.

In the case of entrepreneurship one visualizes the beginning of another cycle. This cycle is shown as follows:

Stability stage

Commitment

Trial stage

   

There can be cases where an individual on failure in the trial stage goes back to the stage of exploration and preparation for implementing a new decision-may be for taking up a job.

Model for Entrepreneurship Development

As entrepreneurship is closely related to the economic development it would be desirable to augment the supply of entrepreneurs in the country to speed up its economic development. Hence, the support to entrepreneurship development should not be restricted only to the second cycle. It would be worthwhile to give support from childhood itself. For this both the cycles should be combined to give a model for Entrepreneurship Development. This model is shown below:

        First   cycle                                                    Second Cycle

 

N-Achievement stories in text books	Entrepreneur	Family   support	Organization development consultancy
Fantasy stage	Tentative     Exploration decision     & making       Implement-   stage          ation stage	Trail   stage	Commitment and stability stage
N-Achievement stories through mass media	Entrepreneurship journals & Institution providing information about the opportunities existing for the entrepreneurs.	Support   system   of     government	Organization development consultancy

First   cycle                                                             Second Cycle

The above discussion leads towards the stages of a Developmental Theory of Entrepreneurship, consisting of the following five stages:

·        Fantasy stage. This is dependent on many environmental and experiential factors. Stories with Achievement Motivation themes could spur fantasies of being entrepreneurs.

·         Tentative decision making stage. At a certain stage, say after completing education or while working a person tries converting the fantasies into realities, evaluating them and making a tentative decision of becoming an entrepreneur. As per this study mean age at which this stage gets over was 24.60 years.

This detail about entrepreneurial opportunities should be fed to the prospective entrepreneurs under this stage. The Entrepreneurs Club suggested earlier can be of benefit to people under this stage. Similarly journals/magazines on entrepreneurial opportunities and other institutions providing such information would help the prospective entrepreneurs in their movement towards an entrepreneurial career.

·         Stage to exploration to implement the decision. The person then tries to further explore details about types of business to be undertaken, sources of finance, etc. As per the study the mean age at which this stage was over 28 years. Thus on an average entrepreneurs took 3.4 years in stage 3.

·        Trial stage. The entrepreneur launches the project but keeps an escape route like keeping a lien on the job, having a working wife, etc. This is the most crucial stage for the entrepreneurship development.

·         Commitment and stability. His commitment as an entrepreneur is complete.

The most crucial stage for an entrepreneur is stages 4, i.e., trial stage. Many prospective entrepreneurs go back to the exploration stage for finding alternative occupational choice. Problems of this stage could be lack of marketing facilities, lack of finance, inability to cope up with the strains of entrepreneurial role, etc. It is here that the entrepreneurs should get full support from family as well as the other support systems of the government in solving their problems of this stage.

Conclusion: The research provides a framework for launching a national entrepreneurship development program in the country for its rapid economic development. Its importance should be realized from the fact that entrepreneurs generate wealth, others generally consume it. Entrepreneurship base needs to be expanded for and India’s dream of prosperity to become a reality.