ENTREPRENEURSHIP

DEEPAK BAJAJ

SESSION III
Chapter I - Entrepreneur & Entrepreneurship Management

Factors Influencing Entrepreneur & Entrepreneurship

FACTORS INFLUENCING ENTREPRENEUR

What makes an entrepreneur create a successful new business? Researchers, sociologists, economists have been exploring several avenues characteristics of an entrepreneur, life-path circumstances of an individual, environmental factors & finally they examined the desirability & feasibility of becoming an entrepreneur which also affects the decision to engage in entrepreneurship. Following three basic factors are mainly responsible for an individuals desirability & feasibility of becoming an entrepreneur.

Personal Characteristics Life-Path Circumstance Environmental Factors

Personality Characteristics

Life Path Circumstances

Perception of Desirability & Feasibility

New Venture

Environmental Factors

Personality Characteristics
One fascinating question surrounding entrepreneurship is whether entrepreneurs possess personality traits & background experience that sets them apart from others.

Personal Characteristics

Given the variety of businesses that entrepreneurs have created, identifying characteristics that entrepreneurs have in common is not an easy task. There are only a few common personality characteristics attributed to entrepreneurs Psychologist David C McClelland has argued that entrepreneurs tend to have high need for achievement (nAch). Such individuals gravitate towards situations in which they can achieve results through their own efforts, pursue moderately difficult goals & receive immediate feedback on how they are doing. Though high nAch is found in performing managers, salespersons, professionals etc also, it remains the most significant ingredient in entrepreneurial success.

Another characteristic that has been found in entrepreneurs is an internal locus of control.
Such people tend to have belief that that they control their fate largely through their own efforts. This kind of belief guides other high performer managers, professionals, salespersons etc. also. One characteristic that sets entrepreneurs apart from managers etc. is high tolerance for ambiguity, ability to continue functioning effectively & persist even when situations are highly uncertain. Since entrepreneurship involves starting new organizations, a great deal of uncertainty is frequently experienced. Manager may not have the same degree of tolerance for ambiguities & uncertainties.

Background Characteristics

Inquiries into child hood family environment have considered factors like, birth order of the child & parents occupation. First born or the only child is considered to have greater share of parents time leading to increased self confidence.
On the other hand, there is considerable evidence that entrepreneurs tend to have self employed fathers & often self employed mothers or jointly owned business. Having one or both parents as business owners provides a salient incentive for potential entrepreneur. Education & level of awareness is another important factor. Though entrepreneurs may be less educated than managers or professional, they have accumulated good knowledge about the type of enterprise they intend to start. It is seen that female entrepreneurs generally have high level of education.

Common range of age for entrepreneurs is between 25 40 years. This is not rigid though; entrepreneurs below 25 years & up to the age of 55 years have also endeavoured to start new ventures. Work history & related experience is a significant factor in initiating a new venture. It is observed that in a new venture, most of the founders had worked in the same industry for long enough to gain adequate experience & expertise in the field. Creating new venture seems to be easier after the first one. This is the corridor principle which says that the process of beginning a new venture helps entrepreneurs visualize other opportunities that they could not envision or take advantage of until they started the initial venture. Understandably individuals who start their entrepreneurship at lower age are better placed to exploit the corridor principle because of their potentially longer career.

Life-Path Circumstances

Several types of experiences or life-paths increase the probability of an individual take up entrepreneurship. Major factors are discussed as follows:

Unsatisfactory Work Environment Negative Displacement Career Transition Positive-Pull Influencers

Favourable Environmental Conditions

A number of environmental conditions appear to influence entrepreneurs. Generally, they deal with the basic perquisites of running a business, such as adequate financing, technical/ skilled labour force, accessibility of suppliers, accessibility of customers or new markets,easy availability of land, transportation & support services. Other indirect conditions which provide support may be the presence of incubator organizations, government influences, experienced entrepreneurs, support network, proximity of universities, attitude of the population & their living conditions etc. Incubator organizations are those whose purpose is to nurture new ventures in their early stages of evolution by providing space, stimulation, support & a variety of basic services at reasonable charges.

Support networks typically important to entrepreneurs are moral-support network and professional-support network. Moral support network would include family members & friends who provide continuous encouragement, understanding & even assistance whenever needed. Professional support network encompasses cooperative relationship with experts who provide advice & counsel that help an entrepreneur function effectively. This type of network would include business associates, professional associations, personal affiliations such as sports activities, civic groups, school/college alumni group etc.

Perception of Desirability & Feasibility

When all above mentioned factors & circumstances act positively on an individual in providing him encouragement towards entrepreneurship, he increasingly perceives entrepreneurship as desirable. However, with perceived desirability potential entrepreneur must also make a dispassionate assessment of the feasibility of creating the new enterprise. While personal characteristics & life-path circumstances play a major role in making this judgment, environmental conditions are a critical aspect of feasibility assessment

ENTREPRENEURIAL STIMULANTS
A variety of factors have helped stimulate entrepreneurial activities & encourage economic development in our country. Some of these stimulants are:

Increasing focus on capital formation, making capital available to the entrepreneur to start the new enterprise.
The environment to transform scientific & technical advancements into economically viable projects. Supportive government policies & programs. Availability of sufficient training facilities. Collaborative relationship between business & research efforts & easy transferability of technology to the market place. Endeavour to create an ideal climate for innovation & entrepreneurial activities.

FACTORS AFFECTING ENTREPRENEURSHIP GROWTH

Entrepreneurship has opened avenues of great scope in Indian economy. Our national economy is most suited to the growth of small business enterprises. Small business units offer a more convenient means of nurturing & developing entrepreneurship by providing the means of entry into business for new entrepreneurial talents. Small scale industries are labour intensive & play an important role in solving the problem of unemployment. These industries provide industrial experience & serve as training ground for a large number of entrepreneurs. However, in spite of favourable policies, governmental support, change in attitude of the society, the growth of entrepreneurship in India suffers due to certain factors inherent in our social system.

Growth of entrepreneurship in any country or region is generally affected by following factors:

Economic Factors

Infrastructural Facilities Availability of Capital Market Risks Availability of Skilled Labour

Social Factors Cultural Factors Personality Factors Psychological & Sociological Factors

Psychological & Sociological Factors

These two factors need to be considered together.

Need Achievement According to McClelland need

achievement (nAch) is a social motive to excel that tends to characterize successful entrepreneur especially when reinforced by cultural factors.

It has been observed that some societies tend to produce larger percentage of people with higher nAch than other societies. People with high nAch like to take risks & these risks stimulate them to greater efforts. McClelland suggested that nAch is conditioned more by social & cultural reinforcement rather than other factors.

Psychosocial Factor Many sociologists & researchers have

theorized on psychological & sociological roots of entrepreneurship. A few of the opinions are :

Everett Hazen - Entrepreneurship is the psychological

consequences of social change, radical loss of status of a social group.

Arthur H Cole - Besides wealth, entrepreneurs seek power,

prestige, security & service to society.

Stepanek - Entrepreneurs look for independence, self

esteem, power & status in society.

Evans - Managing entrepreneurs look for security, innovating

entrepreneurs are interested in excitement & controlling entrepreneurs want power & authority.

Rostow first generation of entrepreneurs seek wealth,

second generation prestige & third generation looks for art & beauty.

Thomas Begley & David Boyd - Entrepreneurial attitude

based on psychological considerations has five dimensions. Need Achievement is the first dimension.

Second dimension is Locus of Control. Willingness to take risks is the third dimension. Tolerance for ambiguity is the fourth one. Fifth dimension is what psychologists call Type A behaviour. It is chronic incessant struggle to achieve more & more in less & less.

Thank You