Factors Affecting Entrepreneurial Growth The emergence and

development of entrepreneurship is not a spontaneous one but a

dependent phenomenon of economic, social, political, psychological
factors often nomenclature as supporting conditions to entrepreneurship
development.

1. Economic factors:
i. Capital: It is one of the most important prerequisites to establish an
enterprise. Availability of capital facilitates the entrepreneur to bring
together the land, machine and raw material to combine them into
produce goods. So, capital can be called as lubricant to the process of
production.

ii. Labour: The quality rather quantity of labour is another influential

factor of emergence entrepreneurship. It is noticed that cheap labour is
often less mobile or even immobile.

iii. Raw materials: In absence of raw materials, neither any enterprise

can be established nor an enterprise can emerged.

iv. Market: The size and composition of market both influence

entrepreneurship in their own ways. Monopoly in a particular product in
market becomes more influential for entrepreneurship than a competitive
market. German and Japan as the prime examples where rapid
improvement in market was followed by rapid entrepreneurial
appearance. 2.

Non-Economic Factors: Sociologist and psychologist advocate that

economic factors may be necessary conditions, but they are not
sufficient conditions for the appearance of entrepreneurship.

i. Social conditions:
a. Legitimacy of Entrepreneurship: It is the degree of approval and
disapproval granted entrepreneurial behaviour influences its emergence
and characteristics if it does emerge
b. Social Mobility: the degree of mobility, both social and geographical,
and nature of mobility channels within a system.
c. Marginality: Individuals or groups on the perimeter of a given social
system or between two social systems provide the person to assume the
entrepreneurial roles.
d. Security: if individuals are fearful of losing their economic assets or of
being subjected to various negative sanctions, their intrusive
entrepreneurial behaviour help to reduce insecurity.

ii. Psychological Factors:

a. Need Achievement: If the average level of need achievement in a
society is relatively high, one would expect a high amount of
entrepreneurship development in that society.

b. Withdrawal of Status Respect: The withdrawal of status respect of a

group to the genesis of entrepreneurship. It would give rise to four
possible reactions and create four different personality types:

Retreatist: who continues to work in a society but remains different to

his work and position.
Ritualist: who adopts a kind of defensive behaviour and acts in the way
accepted and approved in his society but no hopes of improving his
position.
Reformist: he is a person who foments a rebellion and attempts to
establish a new society.
Innovator: he is a creative individual and is likely to be an entrepreneur.

3. Government actions: By creating basic facilities, utilities and services

and by providing incentives and concessions, the govt. can provide the
prospective entrepreneurs a facilitative socio-economic setting.

Entrepreneurship Development Programmes:

Meaning: As the term itself denotes, EDP is a programme meant to

develop entrepreneurial abilities among the people. In other words, it
refers to inculcation, development, and polishing of entrepreneurial skills
into a person needed to establish and successfully run his / her
enterprise. Thus, the concept of entrepreneurship development
programme involves equipping a person with the required skills and
knowledge needed for starting and running the enterprise.

Need for EDP:

A well-known behavioural scientists David McClelland at Harvard
University made an interesting investigation into why certain societies
displayed greed creative power? Is whether entrepreneurs are born or
made?. He found that the 'need for achievement' was the answer to the
question.
 'Motive people to work hard leads to achievement'. According to
the scholars, Money making is incidental whereas the measurement of
achievement is valid.
Experimental study (Kakinada)
He conducted a 5 year experimental study in one of the
prosperous district of Andhra Pradesh in India in collaboration with small
industry extension and training institute (SIET). His experiment is
popularly called as 'Kakinada Experiment'.
Under the experiment, young employees/persons are selected and
put through a three month training program and motivated to see fresh
goals. One of the significant conclusion of the experiment was that the
traditional believes did not seem to inhibit. An entrepreneurs and that the
suitable training can provide the necessary motivation to the
entrepreneurs.
The achievement motivation had a positive impact on the
performance of entrepreneurs. The Kakinada experiment could be
treated as 'Precursor to the present day EDP' inputs on behavioural
aspects.
1971 - First massive program of ED embarked in India.
At present, 686 All India and state level financial institutions and
public sector banks had so far conducted EDPs in hundreds giving
training to the candidates in thousands.
Example: Junior Achievement – USA, Young Enterprises – UK.

Objectives of EDPs:
1. Develop and strengthen their entrepreneurial quality (i.e.,)
motivation or need for the achievement.
2. Analyse environmental setup relating to small industry and small
business.
3. Select product
4. Formulate project for the product.
5. Understand the process and procedure involved in setting up an
small enterprise.
6. Know the sources of help and support available for starting a small
scale industry.
7. Acquire the necessary managerial skills required to run a small
enterprise.
8. To know the pros and cons in becoming an entrepreneur.
9. Appreciate the needed entrepreneurial disciplines.
Important objectives:
1. Let the entrepreneur himself/herself set or reset objectives for
his/her business and strive for the realization.
2. Prepare him/her to accept the uncertainty involved in running a
business.
3. Enable him/her to take decision.
4. Enable to communicate clearly and effectively.
5. Develop a broad vision about the business.
6. Make him subscribe to industrial democracy
7. Develop passion for integrity and honesty
8. Make him learn compliance with law.

Course contents and curriculum of EDPs:

The course content of an EDP are selected in line with the
objectives of the EDPs. The training program is usually to six weeks
duration. It consists of the following six inputs:
1. General Introduction to Entrepreneurship:
Participants are exposed to a general knowledge of factors
affecting small scale industries, the role of Entrepreneurs in economic
development Entrepreneurial behaviour and the facilities available for
establishing small scale industries.
2. Motivation Training:
Induces and increases the needs for achievement among the
participants. It is the crucial input of Entrepreneurships training. It injects
confidence and positive attitude and behaviour among the participants
towards business sometimes successful Entrepreneurs are also invited
to speak about their experience in setting up and running a business.
3. Management skills:
Running a business whether large or small requires the
managerial skill participants will be imported with basic and essential
managerial skills in the functional areas like marketing, finance, HR and
production. It helps to run business smoothly.

4. Support system and procedure:

The participants also needed to be exposed to the support
available from different institutions and agencies for setting up and
running small scale enterprises.
5. Fundamentals of project feasibility study:
Participants are provided guidelines on the effective analysis of
feasibility or viability of the particular project in view of marketing,
organization, technical, financial and social aspects knowledge is also
given how to prepare the projects or feasibility report for certain
products.
6. Plant Visits:
In order to familiarize the participants with real life situation in small
business, plant visits are also arranged such trips help the participants
know more about an Entrepreneur's behaviour, personality, thoughts
and aspirations.
On the whole, the ultimate objective of Entrepreneurship training
program is to make the trainees prepared to start their own enterprise
after the completion of the training program.
The Phases of Entrepreneurial Development Programme An
entrepreneurial development programme consists of three broad
phases:
1. Pre-training Phase 2. Training Phase 3. Post-training Phase 1. Initial
Phase : This phase includes the activities and the preparations required
to launch the training programme. The main activities of this phase are:
(a) Arrangement of Infrastructure for training (b) Preparation of training
syllabus and application form (c) Tie up of guest faculty (d) Designing
tools and techniques for selecting the trainees (e) Formation of selection
committee (f) Publicity campaign for the programme Thus, initial stage
involves the identification and selection of potential entrepreneurs and
providing initial motivation to them.
2. Training Phase : In this phase the training programme is implemented
to develop motivation and skills among the participants. The objective of
this phase is to bring desirable changes in the behaviour of the trainees.
The trainers have to judge how much, and how far the trainees have
moved in their entrepreneurial pursuits. A trainer should see the
following changes in the behaviour of participants. (329) (a) Is there any
change in his entrepreneurial outlook, role and skill ? (b) Is he motivated
to plunge for entrepreneurial venture and risk that is expected of an
entrepreneur? (c) What kind of entrepreneurial behaviour does the
trainee lack? (d) Does he possess the knowledge of technology,
resources and other related entrepreneurial knowledge? (e) Is he skilful
in choosing the right project, mobilising the right resources at the right
time?
3. Post-Training or Follow-up Phase : Under this phase it is assessed
that how far the objectives of the programme have been achieved.
Monitoring and follow up reveals drawbacks in the earlier phases and
suggests guidelines, for framing the future policy. In this phase
infrastructural support, counselling and assistance in establishing new
enterprise and in developing the existing units can also be reviewed.
Selection of Potential Entrepreneurs

Evaluation of EDP:
Evaluation of EDP is necessary to see whether the objective of
EDP's is fulfilled or not. In simple words, there is a need to have a look
into how many participants have actually started their own enterprises
after completing the training. This calls for evaluation of EDPs.
So far 16 evaluation studies have been conducted by various
organizations and individual researchers. The most recent and
nationwide evaluation study on EDPs is carried out by a ED institute of
India Ahmedabad.
It is observed that one out of every four actually started his/her
enterprise after undergoing Entrepreneurial training.
Blocked - 10%. Given up - 29% (idea of launching) 430 trainees -
cannot be contacted
However, the performance of EDPs across the states and across the ED
organization have not been uniform. This non-impressive performance
lies the need for looking at the problems and
constraints of EDP's.
Problem faced by EDP:
1. Trainer - motivations are not found upto the mark in motivating the
trainees to start their own enterprises.
 2. ED organization lack in commitment and sincerity in conducting the
EDPs.
3. Non-conductive environment and constraints make the trainer -
motivators role ineffective.
4. The antithetic attitude of the supporting agencies like banks and
financial institutions serves as stum-bling block to the success of
EDPs.
5. Selection of wrong trainees also leads to low success role of EDPs.
'Problems are not with the strategy but with its implementations'.

Institutional support to small entrepreneurs

SIDO (Small Industries Development Organisation)
SIDO is a subordinate once of the department of SSI and ARI. It
is an apex body and monitoring the policies for formulating, coordinating
and monitoring the policies and programmes for promotion and
development of small scale industries. The main functions of SIDO are
classified into (1) Coordination - To evolve national policies, to
coordinate between various govts. Coordinate the programmes for the
development of industrial estates. (2) Industrial development - To
reserve items for production by small scale industries, render required
support for the development of ancillary units (3) Extension - To improve
technical process, production, selecting appropriate machinery,
preparing factory layout and design.
NSIC (National Small Industries Corporation Ltd)
NSIC an enterprise under the union ministry of industries, was
set up in 1955 to promote, aid and foster the growth of small scale
industries in the country, to provide machinery on ire-purchase scheme
to SSI, to provide equipment leasing facility, to help in export marketing
of the provided products of SSI, to participate in bulk purchase
programme of the Government, to impart training in various industrial
trades, to undertake the construction of industrial estates.
SSIB (Small Scale Industries Board)
The government of India constituted a SSIB in 1954 to advice
on development of small scale industries in the country. SSIB is also
known as central small industries board. SSIB is created to facilitate
coordination and inter institutional linkages. It is an apex advisory body
to render service, advice to the government to all issues pertaining in the
development of SSI. 'Industrial minister is the Chairman'.
SSIDC (State Small Industries Development Corporations)
SSIDC were set up in various states under the companies act 1956, as
state government undertaking to cater to the primary developmental
need of the tine, village industries in the state union territories under this
jurisdiction.
Important functions are (i) to procure and distribute scarce raw
materials (ii) to supply machinery on repurchase system (iii) to provide
assistance for marketing of the products of SSI. (iv) to construct
industrial estates/ sheds, providing allied infrastructure facilities and their
maintenance.
SISIs (Small Industries Service Institutes)
The SISIs are set up to provide consultancy and training to small
entrepreneurs both existing and prospective. The main functions are, To
serve as interface between central and state government To render
technical support services To supply promotional programmes To
conduct EDP programmes
DICs (The District Industries Centres)
DICs was started on May 8, 1978 with a view to provide
integrated administrative framework at the distinct level for promotion of
small scale industries in rural areas.
Functions : The DICs role is mainly promotional and
development (i) To conduct industrial potential surveys keeping in view
the availability of resources in terms of material and human skills,
infrastructure demand for product etc. To prepare techno-economic
surveys and identify product lines and then to provide investment advice
to entrepreneurs. (ii) To prepare an action to effectively implement the
schemes identified. (iii) To guide entrepreneurs in matters relating to
selecting the most appropriate machinery and equipment sources of
supply and procedure for procuring imported machinery.
TCO (Technical Consultancy Organisation)
A network of technical consultancy organizations was
established by the All India Financial Institutions in the seventies and
eighties in collaboration with the state level financial and development
institutions and commercial banks to cater to the consultancy needs of
small business and new entrepreneurs.
Financial Institutions:
Commercial banks - IDBI, IFCI, ICICI, LIC, UTI, SFCs, SIDBI, EXIM
BANK
Support Institutions
NSIC, SIDO, SSIB, SSIDC, SISIs, DICS, INDUSTRIAL ESTATES