ENTREPRENEURSHIP DEVELOPMENT IN INDIA:
In order to make entrepreneurship development more effective during the next century it is important to trace the historical process of entrepreneurship. The pioneering work was by McClelland. It started with identifying the entrepreneurial skills followed by the efforts by certain institutions. However, in the process of entrepreneurship development value addition is an important element. The entrepreneur often faces the lender’s dilemma regarding finances. In India one must take stock of entrepreneurship development programmes and a SWOT analysis could be one of the tools. This paper offers SWOT analysis of the existing entrepreneurship development programmes and emphasises on induction of new approaches to meet the emerging needs of the twenty-first century entrepreneur.
A very effective catalyst in the facilitation of a scientific analysis of entrepreneurship came through the pioneering work of McClleland. He has rightly hypothesized that the need for achievement, i.e., the entrepreneurial potential is the psychological factor which engenders economic growth as well as decline. The sense of high achievement and motivation introduced by the entrepreneurs brings about the required necessities in society, transform the trend of economic thinking, which is necessary to bring about the economic development. Researches by McClelland and many others have produced ample evidence to point to a close relationship between economic development of countries and the prevalence of entrepreneurship among their peoples. Entrepreneurship is not new to India. Many Indians, both within the country and in other countries, have proved to be successful entrepreneurs.
It has been found that entrepreneurial talent can be identified and developed in an individual to make success of a business enterprise irrespective of sex, caste, community and religion. It is in this context that policy initiation and promotional efforts to develop the entrepreneurial class were undertaken by industrial promotional agencies.
A concerted effort is now being made by the governments both at the Centre and in the States to promote entrepreneurial development to augment the pace and quality of economic development. A number of institutions like industrial development corporations, finance corporations, commercial banks and development banks are involved in this process of identifying, assisting, supporting and promoting entrepeneurship at different levels (small, medium and large). A number of schemes have been evolved to provide professional, technical, financial and other forms of support and incentives.
The origin of programmes for the development of entrepreneurs can be traced to the pioneering efforts of the Small Industry Extension Training Institute (SIET), now known as the National Institute of Small Industry Extension Training (nisiet) with whose collaboration, Dr. David C.McClelland of Harvard University attempted to establish that achievement motivation (a key factor in entrepreneurship) could be developed among adults. Under his guidance, six experimental training programmes on achievement motivation were conducted during 1964-65 with the active involvement of SIET faculty. The effect of such training on entrepreneurial activity was assessed in comparison with control groups. Results revealed that those who participate in the courses showed more active business behaviour, worked longer hours, made more definite attempts to start new business ventures, and actually did start more such ventures. They also made specific investment in new fixed productive capital and employed more workers. These entrepreneurs tended to achieve relatively larger percentage increases in their gross incomes, and demonstrated increased entrepreneurial activity.
Emphasizing the role of individual entrepreneurs in the economic development of a nation, McClelland (1971) maintained, “Rapid economic growth has usually been explained in terms of ‘external’ factors--favourable opportunities for trade, unusual natural resources, or the conquests that have opened up new markets or produced internal political stability.” In the present case, however, the emphasis is reversed. It is on internal factors, the human values and motives that lead men to exploit opportunities, to take advantages of favourable trade conditions, to shape their own destiny.
Going beyond a mere elucidation of the role of the entrepreneurs, McClelland developed his own theory of development of achievement motivaiton, point out the role of cultural practices and institutions in nurturing the achievement motive, the vital force behind entrepreneurship. At a practical level, McClelland and his associates went a step further to develop strategies for raising the level of achievement motivation through planned training activity. The theoretical formulations of McClelland on the achievement motive and its central position in entrepreneurship have not gone unquestioned. However, they have had a deep influence on management science, manaement practices, developmental planning and policy formulation. While one may not go all the way with McClleland in his idolization of the achievement motive, at the same time, it can scarcely be denied that his formulations have brought to focus the problems of entrepreneurial behaviour and the need to understand and manipulate its undoubted relation to economic growth and activity.
We need to acknowledge the role of entrepreneurs who had been the principal agents of change. It is they who introduced technical change and innovations, introduced new products and processes, and discovered new markets and sources for the supply of raw materials. The growth and development of the SSI sector has been largely due to the diffusion of such innovations by entrepreneurs who perceived opportunities and seized them with determination, overcoming the resistance to change inherent in the socio-economic environment. However, this class of entrepreneurs belonged to a few well-defined socio-regional groups like the Gujaratis, Sindhis, and Parsis in the northern India, and the Chettiars in the southern India. As a consequence, growth of the small scale sector was largely confined to these entrepreneurial classes.
One of the important elements of entrepreneurship is the dynamic process of creating incremental wealth. Individuals bearing risk in terms of equity, time and commitment to the chosen path of career create this wealth. The product or service introduced by the entrepreneur in itself may or may not be new or unique but they must somehow infuse value by securing and allocating the necessary skills and resources.
Any venture needs capital to survive. At the same time lack of adequate and timely finance causes irreparable damages leading to a large number of business failures. Failure due to lack of proper financing is often an indicator of other problems: managerial incompetence, lack of financial understanding, poor investments, poor planning and the like. Many successful entrepreneurs have overcome the lack of finance while establishing their ventures. To those entrepreneurs, money is a resource but never an end in itself.
While this is the entrepreneur’s picture, the term lending institutions face a different problem with the mandate of the state before them. The state level institutions created to offer long term concessional finance to the small scale sector were faced with a dilemma. On the one hand, sizable part of available funds remained unutilized or underutilized if they followed traditional norms of lending based on the belief that entrepreneurship is the exclusive privilege of certain business communities. On the other, if they advanced concessional loans to first generation entrepreneurs, they had to take a high risk of default in the repayment of loans.
Entrepreneurship is now recognized as a discipline. The entrepreneurial traits of aggressiveness, initiative, drive and willingness to take risks, analytical ability, and skill in human relations can be imparted and nurtured through well designed training. Today there are many institutions offering entrepreneurship as a programme throughout the length and breadth of the country to impart the skills of entrepreneurship. At this stage it is important to take stock of the existing entrepreneurial development programmes through a SWOT analysis which might be revealing.
The present set of entrepreneurship development programmes in the country need to take steps in the direction of correcting the weaknesses, particularly with a view to developing skills suited to the twenty-first century entrepreneur. A comparison of the present entrepreneur with that of the twenty-first century entrepreneur is indicative enough to necessitate a review of the existing methods and skills and newer approaches to the deployed for entrepreneurship development in the country.
Present entrepreneur 21st Century entrepreneur
1. Planner 1 Visionary
2. Organiser 2 Leader
3. Controller 3 Strategist
4. Motivator 4 Learner
5. Risk-taker 5 Builder
6. Stake holder 6 Achiever
7. Profit maker 7 Value provider (profit giver)
In order to make entrepreneurship development more effective during the next century it is imperative to revamp the existing setup. There is a need to change the thinking. As it is axiomatically said, everything has changed but our thinking. Unless this change takes place, it will be difficult to pave way for creation of entrepreneurs to take on tomorrow. New means of communication and information should be adopted for this. Time has come to review the entire gamut of entrepreneurship development in the light of globalisation and the new economic policy. Entrepreneurship development should be an integral part of school education at plus-two level: the idea is to catch them young. The challenges now facing business and society are monumental as whole industries transform themselves or become obsolete. More than any other development in this century, information technology is providing fuel for the fire of innovation and changing the world. It is entrepreneurialism that takes this fuel and breathes new life into the fire.
1. McClelland, David, (1976). Achieving Society. New York: Irvington publishers, p. 512.
2. McClelland, David and David Winter (19781). Motivating Economic Achievement. New York: The Free Press, p. 415.