Entrepreneurship and Economic Development

Entrepreneurship and Economic Development


Prof. Satya Sidhartha Panda
MBA-HR . MJMC, CCMM,(Ph.D-India)
International Institute of Business Studies
K.H.B Main Road .RT.Nagar Bangalore (India)
Mobile No:9886984380 /08050936280
E-mail: satyasidharth@yahoo.com/satyasidharth@gmail.com


Abstract


This paper attempts to persuade the Entrepreneurship and the Role of Entrepreneurship in Economic Development.Entrepreneurship is the “process by which individuals and groups take advantage of their knowledge and resources to identify and pursue opportunities, initiate change and create value in their lives and lives of others.”

Entrepreneurship as a distinct factor of production contributes to the economic development of an economy.Thewide range of significant contributions that entrepreneurship makes to the economic development include promotion of capital formation, creation of immediate large-Scale employment ,promotion of balanced regional development , effective mobilization of capital and skill .The overall role of entrepreneurship in economic development of an economy is put as” an economy is the effect for which entrepreneurship is the cause.”



Key words: Create Value, Economy & Economic Development, effective mobilization, promotion of capital formation, large-Scale employment













INTRODUCTION:

Satisfaction drives the engines for business to invest and reap benefits. Most of all satisfaction brings life and business much closer towards moments of worthiness of the time spent. Entrepreneurship are the lifeblood of any economy, more so in the developing economy .The word entrepreneur , intrapreneur and entrepreneurship have acquired special significance in the context of economic growth in a rapidly changing socio-economic and socio-cultural climates , particularly in industry,both in developed and developing nations . Entrepreneurship is the attempt to create value through recognition of business opportunity, the management of risk-taking appropriate to the opportunity, and through the communicative and management skills to mobilize human, financial and material resources necessary to bring a project to fruition. Entrepreneurship is the propensity of mind to take calculated risks with confidence to achieve a pre-determined business or industrial objective.




In substance, it is the risk-taking ability of the individual, broadly coupled with correct decision making. When one witnesses a relatively larger number of individuals and that too, generation after generation in a particular community , who engage themselves in the industrial or commercial pursuits and appear to take risks and show enterprise , it is acknowledged to be a commercial class .The commercial class is a myth just like that of the so-called martial race .There are neither , for all time, martial races nor commercial classes. Communities which in the course history once appeared to be martial spirit have in later period emerged as mercantile societies. Those who were once concerned with and relished in trade , later in history seem to have taken to the profession of these word. Today , It is quite evident to anyone that national communities which have developed world-wide industrial and consequent commercial interests are militarily powerful; nay ,great industrial powers have today become super-military powers as well .An enterprise finds manifestation in different ways .The capacity to take risk independently and individually with a view to making profits and seizing and opportunity to make more earnings in the market-Oriented economy is the dominant characteristic of modern entrepreneurship. An enterprise , ready for the pursuit of business and responsive to profit by way of producing or marketing goods and commodities to meet the expanding and diversifying actual and potential needs and demands of the customers is what constitutes the entrepreneurial stuff .But this category of enterprising citizens throws up a species of entrepreneurs who are mostly mercantile in outlook and performance. In countries like India , a new species of entrepreneurs is desirable because here the economic progress has to be brought about along with social justice .Entrepreneurship in India therefore , has to sub-serve the national objectives. A high sense of social responsibility is thus an essential attribute of the emerging entrepreneurship in India .


According to Peter Drucker, “Entrepreneurship is neither a Science nor an art. It is a practice .It has a knowledge in entrepreneurship is a means to an end .Indeed, what constitutes knowledge in practice is largely defined by the ends, that is, by the practice. “



In developing countries, there is no dearth of ideas but there is a real Scarcity of men with the right blend of Vision and practical sense to become successful entrepreneurs .Industrial growth in a country is achieved through a mix of the large and small industry ; the entrepreneurship for the former comes through the large companies often in collaboration with the multinationals. Simultaneously, economic growth also depends upon the level of development and use of information system in the country.


Infact , the small –Scale industry sector is considered as an ideal nursery for the rapid growth and development of entrepreneurship.


Though the term entrepreneur is often used interchangeably with entrepreneurship, yet they are conceptually different .The relationship between the two is just like the two sides of the same coin as described in the following table .


Entrepreneur
Entrepreneurship
Person
Process
Organizer
Organization
Innovator
Innovation
Risk-bearer
Risk-bearing
Motivator
Motivation
Creator
Creation
Visualiser
Vision
Leader
Leadership
Imitator
Imitation


Thus, entrepreneurship is concerned with the performance and coordination of the entrepreneurial functions. This also means that entrepreneur precedes entrepreneurship.


Economic Development:

The Word development is used in so many ways that its precise connotation is often baffling. Nevertheless, economic development essentially means a process of upward change whereby the real per capital income of a country increases over a long period of time .Entrepreneurship and economic development are closely interknitted. The development of entrepreneurial skills and investment in the business sector increases productivity and job opportunities resulting in overall growth and economic development. Entrepreneurship development, therefore, is a precondition to economic growth, across generations and across borders. In India there is a dearth of skilled human resource in industries, and demands high level of entrepreneurship development programs for the growth of economy. Hence, our government has felt it as the need of the hour and initiated various entrepreneurial development programs to enhance economic development.



The economic history of the presently developed countries , for example ,America ,Russia and Japan tends to support the fact that the economy is an effect for which entrepreneurship is the cause .The crucial role played by the entrepreneurs in the development of the western countries has made the people of under-developed countries too much conscious of the significance of entrepreneurship for economic development .

Now ,people have begun to realize that for achieving the goal for economic development, it is necessary to increase entrepreneurship both qualitatively and quantitatively in the country .It is only active and enthusiastic entrepreneurs who fully explore the potentialities of the country`s available resources-labour,technology and capital .The role of entrepreneurship in economic development varies from economy to economy depending upon its material resources, industrial climate and the responsiveness of political system to the entrepreneurial function. The entrepreneurs contribute more in favorable opportunity conditions than in the economies with relatively less favorable opportunity conditions .Viewed from opportunity point of view , the underdeveloped regions, due to the paucity of funds ,lack of skilled labour and non-existence of a minimum social and economic overheads, are less conducive to the emergence particularly of innovative entrepreneurs. In the same regions, entrepreneurship does not emerge out of industrial background with well developed institutions to support and encourage it . Therefore , entrepreneurs in such regions may not be an ‘innovator’ but an ‘imitator’ who would copy the innovations introduced by the ‘innovative’ entrepreneurs of the development regions. In these areas, according to McCelland`s concept of personality aspect of entrepreneurship , some people with high achievement motivation come forward to behave in an entrepreneurial way to change the stationary inertia , as they would not be satisfied with the present status that they have in the society .



Further, India which itself is an under-developed country aims at decentralized industrial structure to militate the regional imbalances in levels of economic development ,Small –Scale entrepreneurship in such industrial structure plays an important role to achieve balanced regional development .The important role that entrepreneurship plays in the economic development of an economy can now be put in a more systematically as bellows :




Entrepreneurship provides immediate large-Scale employment .Thus; it helps reduce the unemployment problem in the country, i.e., the root of all socio-economic problems.
Entrepreneurship promotes capital formation by mobilizing the idle saving of the public.
It promotes balanced regional development.
It helps reduce the concentration of economic power.
It encourages effective resource mobilization of capital and skill which might otherwise remain unutilized and idle.
It also induces backward and forward linkages which stimulate the process of economic development in the country.
It also promotes country`s export trade.

Thus, it is clear that entrepreneurship serves as a catalyst of economic development .On the whole the role of entrepreneurship in economic development of a country can best be as an economy is the effect for which entrepreneurship is the cause.



A flourishing entrepreneur brandishes inimitable knacks and the ascendancy to think and plan tactically. It is the perspicacity of the entrepreneur to recognize opportunities and put them to the best possible deployment that becomes the mannerism of a successful entrepreneur. It has been palpable that a booming economy has always had an incessant supply of inventive and pliant entrepreneurs.

Entrepreneurs have most certainly proved as momentous benefactor to the economic growth. Moreover, the trinkets of owning a business have led to the materialization of entrepreneurship in a big way across the globe. But all this has necessitated competency based strategies to orient them towards high-order achievements in entrepreneurial venture. To sustain the growth of India’s GDP at 10%, there is an increasing demand for entrepreneurial ventures with right strategies and core competencies to withstand the pressure of MNCs and more importantly to start ventures abroad reaping the benefits of globalization.

Conclusion:

Entrepreneurship and new venture creation has long been a driving force in commercializing new technologies and developing new markets, creating new jobs, and growing economies in both mature and emerging nations. In mature economies, entrepreneurs discover new business opportunities that exploit the infrastructure, technology, knowledge, and educated workforce advantages of developed countries. In emerging nations, entrepreneurs identify attractive opportunities that make use of domestic advantages such as abundant labour, developing markets, and ambitious workers. By making the best use of available resources (labour, capital, infrastructure, material resources), entrepreneurs accelerate regional development and help nations to move toward markets and industries that are best suited to their unique comparative advantages. Given the importance of entrepreneurship in international economic change and development, it is critical that modern professionals, administrators, managers, and entrepreneurs understand the scale and scope of international entrepreneurship and use its principles to efficiently and effectively participate in global economic development. From a Strictly economic viewpoint, it can be said that same factors which promote economic development account for emergence of entrepreneurship also.


References:
D.C.McClland: Op.Cit.,1961,PP. 211-217
Adam Smith, An Enquiry into the Nature and Causes of Wealth of Nations, G.Routtedge & sons Ltd.London ,1776,p.7.
Small-Scale Industries in India : Govt.Of India ,New Delhi ,March 1982
Various articles on WTO, TRIPS Published in News Paper –The Economic Times, The New Indian Express