Definition of Entrepreneurship Development

Introduction

Entrepreneurship development depends upon the prevailing economic system. The existing socio-political set up and the prevailing economic policies of the Government determine the economic system. The entrepreneurship development is mainly due to the existence of such economic system. It is the entrepreneurship development that acts as a filip to new, structure of the economy and economic reforms too. The economic system differs from country to country and hence the process of entrepreneurship development differs.

The mixed economic system has been found in existence in all developing countries including India.. Under this system both the Government and individual entrepreneurs play an equal role in the entrepreneurship development. The government undertakes those activities which are vital for further economic advancement.

In a mixed economy though there are ample opportunities for the entrepreneurship development with the help of the Government support, entrepreneurship development is hindered by the deeprooted evils like religious conflicts, political instability and unethical practices like smuggling, corruption and adulteration.

Importance of Entrepreneurship Development

The need for entrepreneurship development was not felt by the classical economists like Adam Smith and David Ricardo. They thought that capital formation led to economic development.

But according to Schumpeter, the rate of economic growth depends upon the number of innovations introduced by the entrepreneurs and the extent with which the financial institutions come forward to finance the new venture businesses which are associated with high risks. He considered the fact that, the prevailing entrepreneurship development determines the economic growth and innovation itself is of no use unless it is made available to the public through new product and the activities involved in such processes are called as ‘entrepreneurship’.

According to him innovative entrepreneurs are essential for industrialisation, though imitative entrepreneurs are also equally playing their role in industrialisation. Japan is the best example for industrialisation with the imitative entrepreneurs.

The entrepreneurship development is needed on the following grounds

Optimum Utilisation of Resources

Natural resources are getting depleted over a period of time. Some of the resources are almost scarce and it is the responsibility of the entrepreneurs to identify the alternative sources of supply of resources and also to make use of the existing resources without doing much harm to the environment.

Improved Standard of Living

The living conditions of the people could be improved through planned entrepreneurship development programme. Entrepreneurs use the latest technology and manufacture those products which are essential to all people at the lowest cost and thereby try to improve the living standar4 of the people.

Ensure Industrialisation

A country is said to be advanced if there is an existence of adequate industrial units of big and small in size. The existing entrepreneurship development programmes create a congenial atmosphere for the aspiring and young entrepreneurs to come forward to set up industrial units especially in the industrially backward regions.

Innovation is the gateway

Innovation takes place in all fields activities. The application of computers enable businessmen and Government to expedite their business activities. Marked improvement has been taken place in the filed of communication due to the application of innovative technology.

Allow Global Market Entry

Entrepreneurship’ development enables the manufactures to manufacture products of international quality and thereby try to enter into the global market and compete with the products of other nations.

Pre-requisites for Entrepreneurship Development

Development does not mean the setting up of large scale industrial units. The settings up of a small scale industrial unit also play an equivalent role in the economic development.

Incubator Facilities

‘Incubators’ have been used in U.S.A. to develop entrepreneurs for small scale industries. It enables them to I translate their laboratory research into commercial products and thereby help consumers to enjoy the benefits of the recently found technology. Venture capital financing firms in these days come forward to provide incubator facilities to the entrepreneurs.

These firms select viable projects and extend not only their financial. Assistance’ but also their managerial and marketing experiences so as to enable them to stand on their own legs.

Linkage of Research and Development

Entrepreneurship development depends upon a perfect linkage between the entrepreneurs and Research and Development institutions. The very objective of setting up of Science Park is to enable the entrepreneurs’ to acquaint themselves with the latest research developments. It helps them to establish suitable small: scale industries and thereby improve the economic standard.

Cultural Behaviours

The existing cultural value is such that entrepreneurs find it: difficult to change the living style of the people. There is a wide gap between the educated and the uneducated, rural masses and urban masses, indigeneous method of production and industrial; method of production and the like. Because of these variation the: entrepreneurship development is said to be sluggish.

Cumbersome Formalities

Entrepreneurial growth is affected by:

Strict Government’s control on prices.

Foreign competition.

Poor infrastructure.

Inadequate training facilities including education. And

Cumbersome formalities to be fulfilled at the time of setting up of industrial units.

Besides there is no adequate investment for training, ambiguity in the entrepreneurship development programmes and entrepreneurial information system.

Other Obstacles

Inadequate marketing information.

Frequent change of Government and its economic policies.

Inadequate monetary incentives that commensurate with the risks.

Absence of data bank

Strategy for Entrepreneurship Development

The existing large scale industrial undertakings shall meet at a common place and streamline their R & D efforts in such a way that would enable them to minimise the time and cost overrun incurred on R & D activities.

There is a need for the setting up of entrepreneurial development institutions either at the District level or at he taluk level so that the ‘would be’ entrepreneurs may get more opportunities for acquiring skill for establishing new business units.

Managerial ability of the entrepreneurs shall be improved through conducting management training courses with the help of Institute of Management Studies.

Entrepreneurship development could be improved through the setting up of small scale industrial units especially in the backward regions. The existing unemployed graduates shall be given training as how to establish small scale industries and make use of the local men and materials.

The Government should ensure that there is a stable foreign exchange rate and controlled inflation which are supposed as favourable climate for entrepreneurship development.

There is a need for the setting up Entrepreneurship information and Service Department so that the entrepreneurs could be able to fulfil all the formalities under one roof. This would enable them to safeguard their precious time and money.

Finance should not be a limiting factor for the emerging entrepreneurs. Venture capital firms shall be started at various places so that the entrepreneurs could get not only finance but also the rich experiences of the venture capital firms.

The chart given below depicts the favourable climate necessary for the entrepreneurship development.

Entrepreneurship Development Process

It starts from identifying the potential and right candidates, linkage suitable project with each one, training and developing the managerial and entrepreneurial capabilities, counselling and motivating the entrepreneur and providing the required follow-up support to help the entrepreneurs in establishing venture. The task of developing entrepreneurs consists of the following activities:

Identifying and carefully selecting those who could be trained as entrepreneurs.

Developing their entrepreneurial capabilities

Ensuring that each potential entrepreneur has a viable industrial project

Equipping the entrepreneurs with basic managerial understanding.

Helping them to secure necessary financial, infrastructural and other assistance so that an industrial venture materialises within the shortest possible time.

Need for identification

India is a vast country with abundant natural resources. Poverty and unemployment prevail in India because of underutilisation of natural and human resources. The government is aiming at full employment and faster economic growth through planned five year plans. It also wants to bring a balanced socio-economic development. The Govt. formulates new schemes and. projects on continuous basis such as Prime Ministers Rozkar Yojana etc. Which involves investments of thousands of Crores of Rupees and then go for the competent takers of the scheme?

The need for a broad-based entrepreneurial class in India arises from the need to speed up. the process of activating the factors of production, leading to a higher rate of economic growth, dispersal of economic activities, development of backward and tribal areas, creation of employment opportunities, Improvement in the standard of living of the weaker sections of the society etc.

Besides that, many.employees in industry and commerce, workers, supervisors, merchants and salesmen and number of young engineers and graduates had latent entrepreneurial skills and a desire or capacity to be self-employed. Many lacked self-confidence to come forward for their own ventures. So, developing a programme to identify these people and give them counselling and continuous training will help to generate successful entrepreneurs in a large scale.

Identification & Selection

The inputs of identification and selection must be appropriately and comprehensively blended as per the requirement and needs of the locality and the objectives set by the collaborating agencies for entrepreneurial development programme. An integrated approach of entrepreneurial identification and selection involves. several functions at different stages. They are:

Stage 1

Contacts with local agencies

Defining the target area, resource and Clientile etc.

Development of application bank and media planning.

Stage 2

Written Test

Group Test

Interview

Stage 3: Training design and its stratification.

This multi-stage identification process helps to discriminate the potential person from the universe against the non-potential candidates at different stages. The total activities to be adopted under this integrated approach are given below:

Stage 1

Definition of target area-who will be the potential entrepreneur?

what are their background education, level of income etc?

Study of predominant skills - what are technical background, tradi-tional skills of people, and inherited professional occupation etc?

Studying Existing Resources - what kind or raw materials, institutional support and infrastructure support are available in that region? Can they really facilitate the subsequent training and follow up entrepreneurs in the particular state or region?

Study of potential demand - what are the consumer demands and what people really need to purchase, export or import, what is the marketability of the product within or outside the locality?

Stage 2

Structuring application blank and releasing advertisement for the programme.

Developing appropriate text and media mix, leaflets, posters etc. for growing awareness and interest in the target group.

Exploring further linkage to foster the identification process at the local level

Stage 3

Strengthen the linkage agencies to enable them effectively guage pre-programme operation.

Involve the local collaborating institution in the pre programme operation.

If possible, obtain their commitment on critical issues of support, viz., on finance, raw material, land etc.

Finalise the selection tools and techniques.

Selection of Entrepreneurs

After identifying the basic requisites of entrepreneurs in terms of their qualities and skills, it is essential to adopt a selection process for choosing at persons who are having real entrepreneurial aptitude. This task of selection work helps to develop them in the proper perspective and develop them as Ii successful entrepreneurs,

The selection process usually consists of there stages, viz,,

Preliminary screening of applications

Assessment of candidates’ entrepreneurial abilities

Ascertainment of the need for training.

In this selection process, persons possessing a minimum level of entrepreneurial traits and having experience in or familiarity with commercial or industrial activity could be getting the opportunity of being selected. Technically qualified candidates having no work, experience may be selected if their entrepreneurial capacity is adequate and if they are ready to undertake smaller, simpler projects consistent with their overall background and know-now.

Then, the next step in the selection process is selecting the candidates for training who without comprehensive training inputs could not set up independent units. This helps to assess the need for training, developing training method period etc. This type of selection is considered mainly to avoid wastage of resources and to optimally utilise the limited training and development facilities.

Interview Process

Interviewing by itself is a delicate process; therefore greater care must be taken in its conduct. Interviewing procedure necessarily aim at confirming the personality, data indicated by the candidate during the pre-selection and selection stage. Interview can also include certain simulation games and activities test to understand the candidates better. This requires the formation of expert group with different sepcialisation viz., entrepreneurial studies and behavioural science, from industrial departments, development authority, from commercial and development banks etc. This gives a base for integration of various functional input in discrimination and development of entrepreneurs from the initial stage itself.

Thus in the selection process, persons possessing a minimum level of entrepreneurial traits (normally decided by a cut-off point in the scores) and having experience in or familiarity with commercial or industrial activity stand a better chance of being selected. After the selection process is over, those entrepreneurs possessing concrete project proposals and needing only procedural information guidance must be encouraged to directly seek financial assistance and set-up industries. Those candidate who needed strengthening of entrepreneurial and managerial capabilities may be admitted into training programme

Entrepreneurial Training

Imparting training is the key component in any entrepreneurial development programme. Entrepreneurs are not just born but ate developed and trained to assume entrepreneurial venture boldly. Both our union and state governments have also realised the significance of training in effectuating the self-employment schemes. The selected candidates with basic entrepreneurial traits and keen in enter into the venture are selected to impart training. training gives proper orientation and exposure to the trainees and motivate the potential entrepreneurs to take-up and manage the commercial’ venture successfully. The main objective of (entrepreneurial training is to develop motivation and competence necessary for successful launching, management and growth of the enterprise. The training process can have a inbuilt design of disciminating or screening out the potential entrepreneurs. Hence, it is verymuch essential for the budding entrepreneurs to make use of the training opportunities. This highlighted in the exhibit

To impart effective training, package has to be developed consisting of the following components:

Achievement Motivation

Product selection and project report

Business management guidance

Practical training and Work experience a Validation Training inputs etc.

These training inputs will develop the selected trainees into “Well-rounded, competent entrepreneurs”. The brief description of various inputs of training programme is given below.

Achievement Motivation

In the first phase, as intensive achievement motivation training, through a short period residential programme is given to develop the entrepreneurial traits such as need to achieve, risk taking, initiative, etc. The motivation inputs serve to (i) Increase the need for achievement; (ii) help participants realistically to define their goals and work towards their achievement; and (ii) heighten their self awareness.

Product Selection and project Report

In the initial stage of the programme itself, guidance sessions are held on selecting an appropriate industrial opportunity for each trainee consistent with his experience, competence and overall capabilities. Perceiving a profitable opportunity for commercial exploitation is an essential quality of an entrepreneur. By providing inputs on various feasible industrial opportunities through a team of experts (successful industrialists, leading traders and merchants in manufactured commodities and technical advisers from State industrial agencies), the programme covers this pre-condition into an information input. Inadequate knowledge of an opportunity or a clear project proposal need not be a handicap in aspiring to be an owner entrepreneur. The training culminates in the completion of a project report by each trainees. It is found to expose the particulars to the thought process and field experience necessary for the rational choice of business, product-line market mix, etc., and determining their feasibility in light of environmental constraints opportunities. It also constitutes an instrument for raising finance for the project and thereby links up completion of training with the support of financial institutions for implementation.

Market Survey

The participants should be given opportunity to actually conduct market surveys for their chosen, projects. This would help to expose the trainees to the marketing avenues available and could be followed by sessions on methods of dealing in the markets.

Business Management Guidance

The small-scale entrepreneur has to be a manager since he cannot employ specialists to look after the multiple business decision of sales, finance, purchase, personnel etc.

It is essential for better performance, the new (trainee) entrepreneur emerging from the ranks employees and fresh graduates usually possess familiarity and experience in only one-area, either of production, sales or supervision.

The syllabus has been developed in consultation with operating entrepreneurs, trade and industry experts and past trainees. It aims at enabling the participants to look at an enterprise in totality and introduces them to the elements of planning, budgeting and control as aids to good management.

Knowledge of problem-solving through group discussions, syndicate presentation, case studies and business games may be given due emphasis on the syllabus. Business inputs are given through specialists in different subjects drawn from professionals, business and industry executives, experts of State Industrial Corporations and small-scale entrepreneurs.

Practical Training and Work Experience

Field trips to selected industrial units are arranged to expose trainees to the operational conditions. For those lacking in industrial experience, a six hours day in-plant training is arranged in relevant operating factories as long as required. A well-equipped Technical Training Workshop has to be set up by the Corporations which develops industrial skills among fresh trainees and offers product development opportunities.

Validation of Training Inputs

Tests of comparative performance of trained entrepreneurs under the programme who set up industries versus those who were rejected in the selection tests for the training but who nevertheless set up industrial units, validated the inputs package.

Follow-Up

The success of any entrepreneurial development programme lies on the follow-up measures and continuous monitoring of the training institutions and agencies. Follow-up may “be taken on all the three stages, viz., Pre-training, training and post-training stages of entrepreneurship development programme.

Pre-training follow-up measures consists of evaluation of training infra-structure training, syllabus and entire training schedule etc. Similarly, the post-training follow up measures have to be taken mainly for the purpose of helping the entrepreneurs to achieve technical, managerial, marketing and financial assistance from various supporting agencies without much difficulties.

The follow-up process normally consists of the following activities.

Preparation of history cards for each trainee with the details of bio-data, performance on the tests and interviews, traits before and after the training a

Keeping in touch with each entrepreneur who have undergone EDP. ­

Regular system of reporting should be developed to get feedback on the performance of entrepreneurs.

Project leaders have to contact the entrepreneurs by personal visits periodically.

Convening follow-up meeting and maintaining follow-up records-will ensure success of the entrepreneurial development programmes.

Continuous assessment of the impact of all developmental activities undertaken by the agencies based on certain criteria’s. They may be activity level of respondents, new business or activity started, Fixed Capital investment made, Total investments made, number of people employed, number of jobs created, mean increase in profits, diversification, quicker repayment of loan, improvement in the quality of products etc.

Summary

Entrepreneurs are not always a born geneous. Through systematic and rigorous training, entrepreneurs can be made. Young entrepreneurs have little knowledge on management, production process and marketing.

Lack of proper training prevents people to become entrepreneurs. Otherwise, they could come forward to make use of the emerging opportunities that are emanating from new technology, new economic policy and from the changing society.

Untrained entrepreneurs cannot take right decisions. They do not know the next course of action to be taken soon after the establishment of new business units. With the help of training, they could manufacture right goods at the right time with quality and minimum cost.

Training gives confidence to the entrepreneurs and their ability to bear the risks is also getting increased.

There is a need to reformulate the existing entrepreneurial development programmes that suit to the entrepreneurs of different groups. Entrepreneurs need training at regular intervals so that they could clarify their doubts which many come at every subsequent stages of manufacturing process. Training enable and motivate entrepreneurs to find alternative course, of action to be taken in the event of dearth of funds, poor quality and labour deficiencies.

The objectives of training programmes must be clear and unambiguous. While selecting entrepreneurs for training, chance must be given to a group of entrepreneurs whose status, family and social background are uniform.

Only the enthused and self-motivated entrepreneurs shall be given chance for undergoing training. The entrepreneurial development programmes become failure due to the wrong choice of selection of entrepreneurs.

The entrepreneurial development programmes must be such that there must be scope for follow up activities. In other words, the entrepreneurial development and training institutions must give refresher courses and give an opportunity to update the knowledge of entrepreneurs

Thus this lesson vividly explains the need and importance of entrepreneurship, the different stages in the process of entrepreneurship development and various strategies of identifying and promoting entrepreneurship.