Chapter 2

NATURE AND DEVELOPMENT OF ENTREPRENEURSHIP

Nature of Entrepreneurship:
Entrepreneurship collectively has the power to change the destiny of a family, city, state
or the country as a whole. For example in our own nation, the rate of economic
growth in Punjab and Haryana has been very high. Had all the states fared as well
as these two states, India could have become one of the strongest economic
powers in the world today. Why has the economic development in these two
states been so rapid whereas other states like Bihar, Orissa, etc with much more
natural resources lagged behind? Because Punjab and Haryana have built-up a
very strong entrepreneurial base whereas other states have not been able to do so.
The people of these two states have an entrepreneurial bent of mind. However, the value
system of the people in other economically backward states is against
entrepreneurship. They search for jobs. They live their lives under the safety
umbrella of monthly salary. It is quite heartening that the entrepreneurial bug has
bitten people of states like Andhra Pradesh, Karnataka and Tamilnadu etc., which
will speed up the economic growth of the country in current decade.
Who is an entrepreneur? He is an opportunity seizer and not the opportunist. He will
look to the future and seize business opportunities, He not only seizes opportunities but
many a time converts problems into opportunities. Let me cite an example. Some time
back, Newsweek reported a classic case of entrepreneurship. This follows:
In a unique transaction the government of Hong Kong has recently begun exporting
night soil, a traditional Anglo-Asian euphemism for human excrement to Communist
China. Though sales are small right now, Hong Kongs Urban Service Department which
struck the deal with China Resources Ltd., hopes to make as much as $250,000 this year
from the abundantly available commodity. Much of the night soil is to be used in the
Kwangtung Provinces methane-gas tanks for fuel and lighting needs in local communes,
but some will also be aged and spread on Chinese soil as fertilizer. Environmentalists
will be pleased to note that the agreement should help prevent fouling of the waters
around Hong Kong.
This is a unique case of entrepreneurship. Hong Kong has converted the pollution and
environmental problems into opportunities of earning foreign exchange for the country.

Development of Entrepreneurship in the Country:

The entrepreneurship was earlier restricted to certain communities like Marwaris,
Baniyas etc. Recently the State Industrial Development Corporations and Small Scale
Industries institutes have made some efforts to train entrepreneurs. These corporations
have conducted short-term courses to develop entrepreneurial capabilities in selected
trainees. But there seems to be something wrong with these projects.
Reasons for limited success in Nurture Entrepreneurship:
There is general lack of entrepreneurs in the country, Governments effort not
withstanding, especially in the rural India, people prefer jobs to self-employment. There
is need for research and re-strategizing these development schemes.
There seems to be a problem with selection process itself. Firstly, the candidates selected
for such courses are those who have failed to get jobs and hence have nowhere else to go.
Added to this is the widespread value system within the country where the first
preference for any qualified man is to get a job, preferably a government job.
Secondly, such people who are unable to get jobs on their own. Therefore, they do not
have the experience of working in an organized way. These people have limited ability to
perceive the project and build up the enterprise. Therefore, they are more likely to fail.
On the other hand such instances of failure strengthen the believe among the people that
it better to opt for a job than to take up entrepreneurship.
We can conclude that these institutions and their programs should target at those who can
get jobs or who already have jobs but are dissatisfied and would like to take up
entrepreneurship as a career.
Another source of ample supply of entrepreneurs could be management institutes. For
producing Entrepreneurs at these business schools, we need to reorient the management
education in India. These management institutions at present are producing administrative
managers whereas developing countries like ours need entrepreneurs. These institutes
could take a few initiatives such as:

Entrepreneurship should be made a compulsory subject in all management schools. In

addition, cases on successful entrepreneurs should be developed and run in these
management courses.

Project work related to a proposed entrepreneurial venture should be introduced. It

can be a feasibility report. At Asian Institute of Management, Manila the student does
not pass unless he submits a Xerox copy of the cheque issued by the bank approving
the feasibility report.

 Regular talks by successful entrepreneurs should be organized at these institutes.

Many of these emerging entrepreneurs from sunrise industry should be called for such
talks. Students should be encouraged to generate ideas for launching new era
ventures, specially new technology area successful entrepreneur-alumni will be more
impactful making in nurturing entrepreneurship in management student.

These institutes should start Entrepreneurship Centres to do research on the subject

and recommend policy measures to strengthen entrepreneurship in management
students. Such a centre has been established at one of the Indian Institutes of
Technology to convert engineers into entrepreneurs.
All these steps will make million entrepreneurs bloom!
A word of caution:
Entrepreneurs should preferably start with trading/marketing activities. The temptation
of building a plant in the beginning should be avoided. Such plants have proved a
Waterloo for many entrepreneurs. It is better to start as a trader or a service provider. It
would require less capital. Risk would be on a limited scale. Once he has the feel of the
market, he could possibly integrate backwards to production activities. They should
remember that nobody could become Tata or Birla overnight.

Factors Influencing Entrepreneurship

Entrepreneurship is a function of several factors. Four sets of factors that primarily
influence entrepreneurship are as follows:

Individual

Support System

Environment

socio cultural
factor

 The individual. Individuals who initiate, establish, maintain and expand new
enterprises generate entrepreneurship in a society.
Environment. This factor is constituted by the socio-political and economic
policies of the government and financial institutions and the opportunities available in
a society as a result of such policies.
Socio-cultural factors. Entrepreneurs grow in the traditions of families and
societies and internalize certain values and norms from these sources. The
contribution from these socio-cultural factors, in the process of transmission, gets
filtered through the individual whom it seeks to influence.
Support system. Support systems that work for the development of entrepreneurs
include financial and commercial institutions, research, training, extension and
consultancy services, as also large industrial units interested in developing ancillary
industries.

While the individual, the environment and the support systems directly influence
entrepreneurship, the socio-cultural milieu contribute through the individual and the
support systems. Broadly speaking, support systems and socio-cultural factors also
constitute the environment. Thus, actually there are only two factors, on which
entrepreneurship development depends. These are the Personal characteristics of the
individual and the environment.

THE INDIVIDUAL
The three main factors, which influence the individuals behavior are his motivational
factors, factors concerning various skills that the entrepreneurship possesses, and the
factors relating to his knowledge of several relevant aspects that are likely to contribute to
success in Entrepreneurial roles.

The motivational factor in itself has three major elements:

Entrepreneurial motivation,
Personal efficacy and
Coping capability.
Entrepreneurial Motivation:
Achievement motivation, power motivation and extension motivation are important for
entrepreneurship. In addition, personal efficacy a sense of being effective and having
control over the situation is related to other motivational factors. An entrepreneurial role
produces stresses of different varieties and the prospective entrepreneur must have the
capability of coping with these stresses.

Personal Efficacy: The following two sets of skills are important for an entrepreneur:
Project development. An entrepreneur plans to establish an enterprise. In order
to be effective he should know how to conceive the project, the stages through which
he should go to establish it, the information he may have to collect, the factors he may
have to consider in taking investment decisions, etc.
Enterprise management. Once an enterprise is started, its proper management,
which is crucial to its survival and growth, has to be ensured. Management skills
relate to accounting and financial control, marketing, production planning and
inventory control, and to managing the people who work in the enterprise. Many new
entrepreneurs fail in the absence of these management skills.

Coping Capability: The enterprise once stared needs to be sustained and grow at
least to meet the demands of the competitive business environment and a suitable strategy
and plans needs to be made by the entrepreneur.

ENVIRONMENT
Knowledge about the economic-political environment, more particularly about the
economic policies of the government and the financial as well as commercial institutions,
is important for the small entrepreneur, which industries are being encouraged for the
small entrepreneur, which industries are being given assistance of various kinds, etc., are
information relevant to the prospective entrepreneur. He should know what raw materials
are available and where. He would have to be well informed about the infrastructuretransportation facilities, power, market, etc., in the proposed locations of his enterprise.
He should be conversant with what help and assistance financial, material as well as
consultancy is available and from what sources. He should know the sources through
which he could approach these agencies for assistance. He should also know about the
schemes of banks and other financial institutions. He should know about the various
schemes of the industries department of state governments and about the effort being
made to help new entrepreneurs by voluntary agencies like Small Industries Associations
and the like.
The entrepreneur has to make a choice while setting up an enterprise. The choice can be
more rewarding if there is a wide range of alternatives available to him. This is possible if
the entrepreneur has adequate knowledge about the various alternatives industries, and
more detailed knowledge about the industry which he wants to set up and also about
other related industries which have a bearing on the one he selects to start. This
knowledge would cover aspects like required investments, marketability of products,
skills required for the enterprise, raw materials and other materials needed, competitors in
the field, etc. He should also know about the manufacturing processes, choice of products
and about their commercial feasibility.
Once he selects a particular industry, in-depth knowledge about the technological aspects
of that industry would be of vital importance. He should know the details about the

processes of manufacture, and the various technologies available for those processes. He
should also know the costs and benefits of respective technologies so as to help him in
making the appropriate choice.

SOCIO-CULTURAL FACTORS
Socio-cultural factors like the family background and the norms and values of the
immediate social circle contribute substantially to entrepreneuship development. The
values and attitudes an individual has, are a function of the socio-cultural milieu in terms
of developing normative behavior (norms of behavior) in the individual. The individual
works under some pressure of the values inherited from his family. Behaviors which
reflect inclinations towards initiative and risk taking, dependence or independence (self
reliance), working with ones own hands on tasks requiring manual handling, etc., are a
result of the socialization process in the family, the school and society. Behavior
rewarded through appreciation, encouragement, and other extrinsic as well as intrinsic
devices get reinforced, and related values and norms develop. Thus, training through
socialization is important. These two factors, normative and socialization are discussed
below:

Normative Behavior
The following aspects of normative behavior are relevant for entrepreneurship.

Family expectations and pressures:

The pressure of expectations from the family plays an important role in developing
entrepreneurs. When the family expects an individual to undertake some independent
work, to earn enough for the family to maintain their standard of living, to employ or
involve other members of the family in business etc., the individual may respond by
searching for ways of meeting such expectations and pressures. In certain cases the
individual may react to these pressures even negatively. But usually there are
positive responses.

Familys role in small business

Working for oneself is better than working for somebody else was clearly driven
home by my Chinese Professor at the Asian Institute of Management, Manila,
Philippines. We were discussing a case on entrepreneurship. He asked Alex, my
classmate, How much profit your company is making?
It made about 10 million Pesos last year, Alex replied.
How many managers are there in your company, the Chinese Professor asked.
Ten, Alex replied.
How much each of the managers are getting, the professor asked.
They are all getting different salaries but on an average they are getting around
30,000 Pesos a year, Alex replied. (One Peso was equivalent to a rupee. This

incident happened 25 years back in 1975) That means the managers together are
getting ten times 30,000 Pesos i.e. 300,000 Pesos per year. And because of your
managerial capability the company is making 10 million Pesos. Are you not being
exploited? Why dont you make those one million Pesos, your share, yourself? Why
do you allow your managerial capabilities to be exploited by others? Why dont you
exploit it yourself, the professor went on. Alex had no reply. Neither had we.
The institute flooded us with cases on entrepreneurship and family managed
companies in the hope of making us entrepreneurs. At that stage I could not imagine
that one-day I would be running, a family managed company myself and that also
reasonably successfully.
At this stage I would like to narrate a unique feature observed by me in the
Philippines, where I saw some husband-wife teams of entrepreneurs. Husband and
wife, classmates during college days would plan an enterprise. Husband would take
up a job. The wife would start a small stores. Such stores are called sarisari stores in
the Philippines. The income of the husband would support the family. Wifes
earnings from business would be ploughed back to expand the business. When the
enterprise acquires a respectable size, the husband would resign his job to become
the president of the company, the wife taking up the Finance Directors position.
What was surprising was that this pattern repeated itself many times broadening the
base of entrepreneurship in the country.

The objective of narrating this experience is two-fold:

Similar pattern can be adopted in India. It is not necessary that husband takes up the
job. In our environment the wife can take up a job, the husband starting the
enterprise.
The family has a very important role to play in building up an enterprise. I would cite
a live case.
A young graduate was awarded the dealership for cooking gas in Assam by a public
sector undertaking under its plan of giving dealerships to unemployed engineers and
graduates. Let us call him Sham. Sham being new in business took an experienced
businessman as a partner. All formalities like constructing a godown etc. were
completed by Sham and the dealership started. After a few months, he realized that
his partner was not being fair to him. With the intervention of a common friend, the
partner left. In his place, Sham took his sister, a postgraduate student, to look after
the accounts. Today the business of Sham is booming.
Initial few years for any small sector enterprise are very crucial. Overhead
expenditure should be kept to the bare minimum during this crucial period. Family
members could help a new entrepreneur to keep his overhead expenditure low.
Moreover, they will do the allotted work with certain devotion and commitment, so

necessary in building up the enterprise in the beginning. The only relative who
should be kept away from business is the son-in-law.
Our national slogan should be: Let millions of family managed companies bloom in
India! They will create jobs and eliminate poverty.

Risk-taking:
Risk taking norms are important for the success of entrepreneurs. It has been reported
that a successful entrepreneur takes moderate risks. He does not gamble, nor does he
opt to play safe.

Independence:
Equally important is the norm of self-reliance. The value attributed to independence is
important for entrepreneurship. Instead of waiting for suggestions or directions from
others, an entrepreneur works out plans on his own, searches and explores resources,
and experiences an inner urge to make the enterprise a success. This makes him selfreliant and independent.

Work.
Value regarding work has been found an important factor in the entrepreneurship. The
one major factor that distinguishes the entrepreneurial from the non-entrepreneurial
culture, is the willingness to work with ones own .

Socialization.
The values supporting or influencing entrepreneurship are developed through the
process of socialization. The family and other social institutions play a crucial role in
training individuals to show certain behavior. Ones predisposition towards
independence and initiative as well as risk-taking, primarily results from such
socializing influence. The friendship of an entrepreneur has moved many people
towards entrepreneurship.
Training in independence has been found to contribute to the development of
achievement motivation leading to entrepreneurship. When a boy is encouraged to
do things on his own, and seeks guidance and help only when needed, he is being
trained for independence. Overprotection and over guidance in childhood or later in
the work organisation lead to dependence, which reduces entrepreneurial qualities.
Similarity training in taking initiative and risk, is an important factor in promoting
values that are supportive to entrepreneurship. When failure of an individual gets
severely punished, it is quite likely that he develop what is called fear of failure
motive or the motive to avoid all possibilities of failure is not to take risks. Risktaking behaviour on the contrary blossoms when an individual is encouraged and
helped to set realistic challenging goals and to pursue them with perseverance.

SUPPORT SYSTEMS
Possibility of the success of an entrepreneur generally is enhanced by efficient and
effective operation of the support systems. Several agencies and organizations operate to
help and support the entrepreneur. Pareek has listed the following as examples of support
system:
Corporations specially set-up to develop entrepreneurship and small industries in a
region;
Financing institutions including banks;

Extension services of the department of industries (including SISIs): Nongovernmental organizations of small industries or entrepreneurs, consultants, private
agencies doing research, or providing services to entrepreneurs, training institutions,
etc. Educational institutions working in the field of entrepreneurship like Institutes of
Technology, Institute of Management, Universities, Engineering Colleges, etc.:
Development administration in the district;

Large industrial establishments interested in developing ancillary industries thereby

helping small units to grow and develop.

Entrepreneurs often have to interact with these support systems. The way these systems
function may encourage or discourage them. They may reinforce one kind of behavior.
The style of working of these systems, therefore, is a crucial factor in promoting
entrepreneurship. The quality of interaction with the entrepreneur is determined to a great
extent by their working style, which reflects their concern for effectiveness of their
expected role. The style will also demonstrate the norms prevailing in the organisation,
norms regarding collaboration, help, result orientation, etc. The support systems, thus,
can promote entrepreneurship through reinforcing behavior and adopting norms of
internal working which are in harmony with them.

A Study of Environmental Factors Related to Business entrepreneurship

A research was recently conducted in Bombay, where an attempt was made to isolate
environmental factors related to entrepreneurship in order to facilitate a better
understanding of the developmental process of an entrepreneur.
Entrepreneurial Behavior (EB) is a function of an individuals personality characteristics
and environmental factors. This could be represented as
EB=f(P,E)
where
P=Personality charcteristics
E=Environmental factors.
These environmental factors could be either nurturant or impediments to entrepreneurial
development.
The concern of this study was, therefore, to derive an understanding of the determinants
of entrepreneurial success from the experiences of entrepreneurs. Greater emphasis was

laid on determining environmental factors at the micro level that correlated with
entrepreneurial development and success rather than those at the macro level. The factors
that were concentrated on were:
Social/psychological factors including family, peer group formal and informal
association, etc.
Financial.

Material availability.
Technology availability/applicability.
At the macro level, the study tried to establish the relationship between the state of the
national economy and the development of entrepreneurial success was measured based
on:
Increase in profits.

Increase in turnover.
Increase in assets.
Extent of diversification.

The sample for this study comprised of entrepreneurs who were members of the Small
Scale Industries Federation. There were over 700 members listed. Of these, the history
and other relevant data of 51 members were obtained. The research design included the
administration of a structured questionnaire followed by some open-ended questions to
each of these 51 respondents. In addition to this, 12 of these respondents were
interviewed after a period of three months and cases were constructed on the basis of
these interviews. The conclusions drawn from these cases were to further validate the
findings of the study.

For the purpose of this study, an entrepreneurs life was divided into two stages: First
stage: Initiation and subsequent success of an entrepreneur, the following variables were
studied:

(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
(xii)
(xiii)
(xiv)
(xv)
(xvi)

Educational background,
Age
Friends
Community
Prior occupational status
Family size
Parents
Marital status and wives
Joint family status
Migration
Peer group
Association membership
Financial status of family
Economic environment
Availability of material
Availability of technology.

Educational Background:
The earlier notion that those lacking educational qualifications were usually the ones
who went in for business was not borne out, as 41.18 per cent of entrepreneurs were
professionally qualified, 27.45 per cent were graduates and the rest non-graduates
S.S.C. and below. No significant relationship could be determined between the
educational background and entrepreneurship of persons.

Age
The mean age at which entrepreneurs started an enterprise was found to be 24.6 years,
and most entrepreneurs (82.35 per cent) thought of starting business before the age of
30. A maximum concentration was determined between the ages of 20 to 30 years.
This indicates that the ideal time for imparting entrepreneurial education would be
somewhere between 18 to 25 years of age, so that once the various alternatives
available are highlighted, it would be easier for an entrepreneur to start a new venture
before the age of 30. It may also be noted that not a single entrepreneur of the sample
studied started business between the age 40 to 50. It, therefore, appears that once
middle age sets in, there is a tendency not to take any risks and to postpone the idea
of entrepreneurship till after retirement, which is borne out by the fact that two
entrepreneurs entered business between the age of 50 and 60. The average age at

which, entrepreneurs actually started business was found to be 28 years. Comparing

this with the average age at which they first thought of starting a business (24.6) it
would appear that it takes about 3 1/2 years for a business to commerce after the idea
is first conceived by the entrepreneur. Also, 37 of the 51 entrepreneurs started the
business before the age of 30. Again, there were no fresh business ventures between
the ages of 41 and 50. Only about 20 per cent of the entrepreneurs started their
business between the ages of 31 and 40. This leads to the conclusion that since there
is a gap of 3 to 4 years between the time when the idea of starting the business is
conceived and the business is actually started, it is desirable that sowing the seeds of
the idea of entrepreneurship, in the form of training, should be undertaken before the
age of 25.

Friends
The influence of friends was found to pay a significant role (to the extent of 29.4 per
cent of entrepreneurs surveyed) in the development of the idea of entrepreneurship.
Thus it would be advisable to determine some details about friends while selecting
prospective entrepreneurs for intensive training as an entrepreneur friend would most
likely move him towards entrepreneurship, leading to a larger percentage of those
trained taking up the entrepreneurial role with commitment. Also as an entrepreneur
friend is likely to induce people towards entrepreneurship, it is recommended that
Entrepreneur clubs be established by agencies associated with the development of
entrepreneurship, Such a step would speed up the development of entrepreneurship
so vital for economic development.

Community
The community, family members and relatives were also found to make a significant
contribution in inculcating entrepreneurial thinking in people and leading them
towards entrepreneurial activities as 13 of the 51 entrepreneurs surveyed quoted this
as a determining factor.

Prior Occupational Status

As regards the status of entrepreneurs before their entry into business, it was found
that 70.59 per cent were previously employed, 21.57 per cent studying and 7.84 per
cent unemployed. This indicates three possible routes to entrepreneurship:
Looking out for opportunities while studying and starting a business immediately
after the completion of ones studies. In many cases, they join the family business
after completing their studies, get some sort of apprenticeship and ultimately leave
the family firm to start their own venture.
Being unemployed and taking to entrepreneurship as a last resort. It is, however, felt
that the casualties in this category of entrepreneurs will be the highest. All
entrepreneurship development programmes initiated by the government also
concentrate on this category of people.
Putting in some years of service and possibly after accumulation of capital, leaving
their jobs to take up entrepreneurial roles. Of the 36 falling in this category, 13

worked in large companies, 11 in medium and 11 in small companies. One was

working in the State Government, 17 of these people left their jobs due to
dissatisfaction in the same. Thus, it is possible to locate prospective entrepreneurs
amongst those working in commercial undertakings. Such prospective entrepreneurs
would be either dissatisfied with their jobs or will be having a very high achievement
motivation. In some cases, due to the attractive policies which would spur them
towards entrepreneurship where there are opportunities for making more money.
Unfortunately, the last categories of perspective entrepreneurs have not been attracted
at all in our entrepreneurship development programmes. It is felt that there is need for
development of new entrepreneurship development program to attract working
persons to opt out of their jobs and take to entrepreneurship. Such options will create
job opportunities for the unemployed and would also provide people with some
working experience including managerial experience the opportunity to take up
entrepreneurial roles. There has however been no significant relationship
demonstrated between past work experience of the entrepreneur and his success as an
entrepreneur.

Family Size
With regard to the size of families of entrepreneurs, only 13.72 per cent could be
considered to have come from small families having one or two children. The largest
concentration of entrepreneurs was in families having five children (23.53 per cent).
The percentage of families producing entrepreneurs having five or more children
was as high as 54.9 per cent. One possible explanation for this phenomenon could be
that biggest families might have financial difficulties spurring the children towards
economic activities with higher determination. In other words, these children had a
higher N.Ach. It could also be argued that they had the feeling that they could expect
the support of brothers/sisters in time of need, in situations where something went
wrong with their business. However, family size was in no way related to
entrepreneurial success.

Parents
Parents of entrepreneurs, except for one respondent, all fathers of entrepreneurs had
crossed the age of 40 at the time of their entry into business. This confirms our earlier
finding that there is a certain age group, which is most appropriate for the
development of entrepreneurship. It is quite probable that they gave mature advice to
their children because of their age and experience. Parents educational background
was found to have no correlation with the development of entrepreneurship. Families
can throw up entrepreneurs, where parents have very little education. They can also
be thrown up by families where parents are educationally qualified. Data also
indicated that entrepreneurs could be produced by families where the father was in
service rather than in business. However, a very large percentage (58.82 per cent) of
entrepreneurs did come from families where the parental profession had influence on
the development of entrepreneurship. It was not however found to correlate with later
entrepreneurial success. No correlation was depicted either between an individuals

entrepreneurship and his brothers profession. Thus, the same family environment
may produce different individuals. These changes may come from peer group or
certain personal characteristics.

Wife
An entrepreneur requires support, especially at the beginning of the entrepreneurial
venture. A wife is in the vantage position to provide this support, both emotional and
financial. With the exception of 6 cases (11.77 per cent) of relatively early marriages
all the entrepreneurs surveyed had been married at ages normal for urban population.
However, there were as many as 8 (15.68 per cent) bachelors amongst interviewed
entrepreneurs. This could be related to the risk taking capability of bachelors. But for
a solitary exception of a non-matric wife, all other wives of the entrepreneurs
surveyed were reasonably well educated. This was in contrast to the background of
mothers of these entrepreneurs. It can be concluded that an educated wife is an asset
to an entrepreneur as she can assist her husband or take up a job should the need
arise.
Despite this educational background of the wives, it was however found that not
many of the wives of entrepreneurs were employed (56.86 per cent). However, they
were safely devices for the lean period. The risk-taking capability was reinforced in
the entrepreneurs by the educational background of their wives and their capability
to take up jobs. The educational background of the wives of the entrepreneurs was
not found to have correlation with the success of the entrepreneurs.

Joint Family
Is the joint family set-up a hindrance to entrepreneurship? It is often felt that the joint
family system especially of Hindu families is an impediment to the nurturance of
entrepreneurship. The findings of this study however were found to disprove this
notion, as of the total number of entrepreneurs interviewed, as much as 45.10 per cent
were from joint families. The joint family status was not found to have a bearing on
the later success of an entrepreneur.

Migration
An attempt was made to determine whether migration from place to place had any
effect on the nurturing of entrepreneurship. No relationship could be determined
between these two factors at the initiation stage. However, migration from place to
place was found to correlate with later success. Thus the feeling that such movement
serves to inculcate a coping capability in entrepreneurs, which is a desirable quality
for success has been found to be correct.

Peer Group
With regard to peer groups, it was initially felt that they would have a significant
effect on the thinking and behavior of entrepreneurs. This belief was subsequently
borne out by the findings of this study, where as much as 56.86 per cent of those
interviewed had at least one entrepreneur friend. From this it can be concluded that
the peer group has a definite impact on the development of entrepreneurship. People

with entrepreneur friends are more likely to become entrepreneurs. The finding could
also be used while selecting prospective entrepreneurs for intensive entrepreneurial
development programmes or other support from governmental agencies. No
relationship was however found between having an entrepreneur friend and later
success of entrepreneurs.

Association Membership
Entrepreneurs interviewed were also asked whether they held a membership of any
associations at the time of their entry into business. Only 7 respondents replied in the
affirmative, the remaining 44 replied that they were not members of any association
at the time of their becoming entrepreneurs. Two of the respondents had, however,
become association members subsequent to their entry into business. Of these, one
was a member of the Federation of Small Scale Industries and the other a member of
Chemical Allied and Export Promotion Council. For development of
entrepreneurship, this is yet another area where effective steps should be taken which
would nurture entrepreneurship. It is suggested that entrepreneur clubs be started
with the support of the Government and the Small Scale Industrial Development
Corporation. These clubs could have as members both entrepreneurs as well as those
with entrepreneurial ambitions. This mixing of entrepreneurs and would-beentrepreneurs should create greater awareness regarding entrepreneurship and more
of the prospective entrepreneurs or those interested in entrepreneurship would
become actual entrepreneurs. However, this would be only for the initiation of
entrepreneurs and may not necessarily lead to success. In fact, the membership of an
Association was not found to have a relationship with the success of an entrepreneur.

Financial Status of Family

For isolating the environmental factors conducive to the nurturance of
entrepreneurship, details were collected regarding the financial position of not only
the family but also the in-laws family (in case of married entrepreneurs) at the time
they took to entrepreneurship. The objective was to find out whether the overall
financial condition of the family and in laws family had any relationship with an
individuals movement towards entrepreneurship. It was found that while 23.53 per
cent of entrepreneurs came from rich families, the rest were from middle class and
low-income groups. The concentration is however in the middle class families with
35.29 per cent of the entrepreneurs from lower income groups, i.e., below Rs 10,000
per annum. In fact 66 per cent of the entrepreneurs were found to be from a middle
class background. This leads us to conclude that the willingness to take risks is not
very high in the low income groups but is fairly high in the middle class which
perhaps in inspired by a desire to get into the higher income groups. For people
coming from lower middle and lower income groups, such movement towards
entrepreneurship would mean relatively higher risk. Still as much as 17.65 per cent of
the entrepreneurs were found to come from the lower income families with an income
of over Rs. 1 lakh per annum were mostly engaged in business and the children were
born in what may be called business environment. The Indian tradition of taking up
hereditary professions must have also contributed towards children of such families
becoming entrepreneurs came from business environment. This may be explained by

the possibility that those coming from higher income groups would take larger risks,
which would be necessary for bigger success in business. This finding is somewhat
contrary to the socio-economic objective of the government, which feels concerned at
the rich becoming richer and the poor becoming poorer. Hence, the concentration of
entrepreneurial development programmes should be on lower and lower middle
income groups. But, can we find something common in the background of these 14
entrepreneurs from these groups which would help us in our search of right material
for development into entrepreneurs? There was nothing very distinctive about their
background. Three of them had lived in a joint family set-up whereas the remaining
11 separately. Two of them were the only issues of their parents whereas the others
had brothers/sisters ranging form one to seven. But, there was one distinctive feature.
Their wives were mostly illiterate. Out of these 14, three had working-wives, one as a
teacher, the second giving private tuition and the third looking after her own business.
It can be concluded that the entrepreneurs risk taking capability was reinforced by his
wifes education. This aspect could also be utilized while selecting prospective
entrepreneurs.
Regarding the financial position of the wifes family, it was found that 16.28 per cent
of the married entrepreneurs had married into rich families 79.07 per cent had married
into middle class families and only 4.65 per cent into lower income groups. Out of the
total of 51 entrepreneurs, 16 had received financial aid from their relatives in amounts
ranging from Rs. 5,000 to Rs. 50,000, 12 had received aid from friends in amounts
varying from Rs. 1,000 to Rs. 50,000. This indicates that most of the entrepreneurs
surveyed had accumulated some capital of their own before starting their venture.
68.63 per cent of these entrepreneurs had accumulated capital of above Rs.10,000
before starting out. In contrast, very few depended on help form wife, relatives or
friends. No relationship could be determined between the receipt of financial aid from
friends or relatives at the time of starting an enterprise and the success of the
entrepreneur.

Economic Environment
An attempt was made to determine whether environmental factors at a macro level
namely the particular economic condition prevalent in the year of their becoming
entrepreneurs were related to their entrepreneurial ventures. A critical examination of the
responses revealed that a larger number of people took to entrepreneurship when
economic conditions were difficult. While inflation is a curse for a consumer, it is not so
for an entrepreneur. The demand rising faster during an inflationary period spurs many
people to take to business. The purchasing power of money coming down would also
induce working people to move towards entrepreneurship. The stability of the national
economic environment in the year of starting an enterprise was not found to relate to
entrepreneurial success.

Availability of Material
Easy availability of materials was expected to move individuals towards
entrepreneuship. This belief was not, however, borne out by responses of the
entrepreneurs only. (7.84 per cent) claimed that easy availability of materials in their
areas of stay was an aid to their becoming entrepreneurs. It may, therefore, be

concluded that though easy availability of materials may spur a few individuals
towards entrepreneurship, it is not a necessary condition. There are a large number of
people who become entrepreneurs against heavy obstacles. They seized the
environmental opportunities in different areas not necessarily restricting themselves
to the easy availability of a particular raw material. Though, easy availability of raw
material is a good reason for starting an industry, it may be worthwhile to isolate
such materials and give specific support to certain selected entrepreneurs to develop
industries related to these materials.

Availability of Technology
Regarding availability of technology in the area of the entrepreneurs stay facilitating
his movement towards entrepreneurship, again only 4 of the entrepreneurs surveyed
replied in the affirmative. Thus, some people may become entrepreneurs due to the
easy availability of technology in nearby areas, but it is not a necessary condition
for entrepreneurship.

Developmental Theory of Entrepreneurship

The research described earlier indicates a possibility of formulation of a developmental
theory of entrepreneurship.
Although the various aspects of the developmental process of entrepreneurship require
detailed verification, the process appears quite clearly as an extension of the process of
occupational choice in the individual which in turn is a part of individuals total striving
for an adequate life adjustment.

Process of occupational choice

The general process of the occupational choice can be shown as follows:

Fantasy period

Tentative decision
making period

Free expression of a
wish without any
consideration
of
expediency

Interest: Includes all

vocations,
which
appeal
to
the
individual.
Preference: Involves
comparison of the
relative
attractiveness to the
subject
out
of

Stage of exploration
and preparation for
implementing the
decision
Crystallized choice
very close to the
decision

several vocation.
This would be true for any occupation except for a few exceptional cases where
decisions about the occupational choice are taken under traumatic conditions. With
this one cycle of the occupational choice process is over.
In the case of entrepreneurship one visualizes the beginning of another cycle. This
cycle is shown as follows:

Trial stage

Commitment

Stability stage

There can be cases where an individual on failure in the trial stage goes back to the
stage of exploration and preparation for implementing a new decision-may be for
taking up a job.

Model for Entrepreneurship Development

As entrepreneurship is closely related to the economic development it would be desirable
to augment the supply of entrepreneurs in the country to speed up its economic
development. Hence, the support to entrepreneurship development should not be
restricted only to the second cycle. It would be worthwhile to give support from
childhood itself. For this both the cycles should be combined to give a model for
Entrepreneurship Development. This model is shown below:

First cycle
NAchievement Entrepreneur
stories in text
books
Fantasy
Tentative Exploration
stage
decision &
making
Implementstage
ation stage
NEntrepreneurship
Achievement journals & Institution
stories
providing information
through mass about the opportunities
media
existing
for
the
entrepreneurs.

Second Cycle
Family
support

Organization
development
consultancy

Trail
stage

Commitment and
stability stage

Support
system
of
governme
nt

Organization
development
consultancy

First cycle

Second Cycle

The above discussion leads towards the stages of a Developmental Theory of

Entrepreneurship, consisting of the following five stages:
Fantasy stage. This is dependent on many environmental and experiential factors.
Stories with Achievement Motivation themes could spur fantasies of being
entrepreneurs.
Tentative decision making stage. At a certain stage, say after completing
education or while working a person tries converting the fantasies into realities,
evaluating them and making a tentative decision of becoming an entrepreneur. As per
this study mean age at which this stage gets over was 24.60 years.
This detail about entrepreneurial opportunities should be fed to the prospective
entrepreneurs under this stage. The Entrepreneurs Club suggested earlier can be of
benefit to people under this stage. Similarly journals/magazines on entrepreneurial
opportunities and other institutions providing such information would help the
prospective entrepreneurs in their movement towards an entrepreneurial career.
Stage to exploration to implement the decision. The person then tries to
further explore details about types of business to be undertaken, sources of finance,
etc. As per the study the mean age at which this stage was over 28 years. Thus on an
average entrepreneurs took 3.4 years in stage 3.
Trial stage. The entrepreneur launches the project but keeps an escape route like
keeping a lien on the job, having a working wife, etc. This is the most crucial stage
for the entrepreneurship development.
Commitment and stability. His commitment as an entrepreneur is complete.
The most crucial stage for an entrepreneur is stages 4, i.e., trial stage. Many prospective
entrepreneurs go back to the exploration stage for finding alternative occupational choice.
Problems of this stage could be lack of marketing facilities, lack of finance, inability to
cope up with the strains of entrepreneurial role, etc. It is here that the entrepreneurs
should get full support from family as well as the other support systems of the
government in solving their problems of this stage.

Conclusion: The research provides a framework for launching a national

entrepreneurship development program in the country for its rapid economic
development. Its importance should be realized from the fact that entrepreneurs generate
wealth, others generally consume it. Entrepreneurship base needs to be expanded for and
Indias dream of prosperity to become a reality.