ENTREPRENEURSHIP DEVELOPMENT IN INDIA:

A REVIEW
 
S.V. Prabhath
 
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.
 
Identifying entrepreneurial skills
 
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.
Pioneering efforts
 
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.
 
Value addition an important element
 
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.
 
Lender’s dilemma
 
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.
 
 
Taking stock of entrepreneurship development programmes in India
 
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)
 
Conclusions
 
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.
 
 
References
 
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.