Role of Entrepreneur in Economic Development

Economic development depends on two factors:

a)

Gross domestic product (G.D.P),i.e. is amount of goods and service product in a year. Standard of living of the people, that is consumption of comfort and luxuries.

b)

An entrepreneur by setting new business organizations helps to increase GDP and ensure better standard of living of its people.

Setting up of new industries result in production of more and more goods. y Industries also provide more jobs to the people, which increase their income level. y The increased income helps people to buy more goods and services, in particular comforts and luxuries. y This will increase their standard of living. y These factors helps for economic development of a nation.
y

The role and importance of an entrepreneur in economic development of a nation can understand from following point :  assumption of risk : y Economist development depends on starting of more and more business organisations. y Setting up business unit involves risk. y Entrepreneur by assuming risks of starting a venture helps for economic development.  Organization of resources: y An entrepreneur by collecting necessary resources to start a business helps for economic development .

 Arrangement

of capital: y Capital is an important factor to start and manage any business. y Entrepreneur collects capital from financial institution. y Entrepreneur raises required capital by giving confidence of safety of investment and adequate returns on such investment. y Accumulation of adequate capital helps to start new business units and leads to economic growth.

 Encouragement

to innovation:

Entrepreneur takes the risk of manufacturing the new products on a large scale by starting new business units. y By producing and marketing these new products on a large scale he gives encouragement and support to scientist to undertake new inventions.
y

 Better

standard of living: y Entrepreneur helps for better standard of living of people by starting industries that produce varieties of goods and services. y Industries also provide more jobs, that will increase income level of people. y When peoples income level increase they consume more comforts and luxuries, that results in increase in there standard of living.

 Balanced

y y y

economic growth: Entrepreneur helps for balanced economic growth of a nation by starting industries in economically backward regions. Government gives various subsidies and incentives for starting industries in backward regions. These backward area will provide cheap labour and natural resources. Entrepreneur makes use of these facilities by establishing industries in these areas. These lead to economic prosperity of these regions.

 Export

promotion: y Economic prosperity of a nation depends on its exports. y Exports helps to earn foreign currency , which in turn helps to import foreign technology. y This will give stability and strength to economy.  Efficient utilization of resources: y Resources should be wasted, as these resources are precious. y Efficient use of resources also helps to control cost production. y It can ensure better quality of goods at reasonable price.

 Entrepreneur

as imitators: y Entrepreneur of developing economy are described as imitative entrepreneurs. y They imitate technology of developed countries and produce goods that are produced in advance countries through such imitation. y His act imitation reduces gap between developed and developing countries by producing and marketing foreign goods in domestic market.

 Entrepreneur

as a social reformer:

Entrepreneur produces variety of goods and services, particularly the goods and services, which have reasonable price. By producing and making available such goods to rich as well as poor, he brings social equity in the society.

Entrepreneurship
Entrepreneurship is an activity or process that is undertaken by an individual or group to establish a business organization. it is a profession that is undertaken by the people who have knowledge and experience of promoting new business units. Definition: A.H cole: entrepreneurship is defined as purposeful activity of an individual or group of individual undertaken to initiate, maintain or organize a profit oriented business unit for the production or distribution of economic goods as services.

Relationship between Entrepreneur, Entrepreneurship and Enterprise

Entrepreneur  Is a person or group of persons who promotes a business.  Who have necessary skills, qualities and capacity to organize necessary factors in order to start a business. Entrepreneurship  Its include all the activities that are necessary to start a business.  These activities include planning, organizing, necessary resources, arrangement of finance , selection of right persons to ensure that business starts functioning.

Enterprise  is the firm or organization or venture that has specific objective. The common objective of a business enterprise is to make profit. The objective of enterprise depends on entrepreneurs entrepreneurship. Entrepreneurs should make use of skills of entrepreneurship to achieve the desired results.

Distinction between Entrepreneur and Entrepreneurship

Entrepreneur is a person who undertakes the process of entrepreneurship that is organizing of necessary factors to start a business.  Entrepreneurship is a process or set of activities that are to be undertaken to start a business. Entrepreneur is a creator of new organization.  Entrepreneurship is an art of creation of an organization. Entrepreneur is a risk taker, he assume risk of starting a new business.

 Entrepreneurship

is the task of taking risk of investing capital in a business with an object of earning profit. Entrepreneur is a initiator, he personally takes interest in starting a business.  Entrepreneurship is initiative of entrepreneur in promoting and taking necessary step to promote business.

Theories of Entrepreneurship
Opinions regarding concept of entrepreneurship and emergence of entrepreneur differ. There are different school of thoughts. Experts belonging to these different schools have given different meaning to the concept of entrepreneurship and entrepreneur. These schools of thought can be classified into three theories.

These schools of thought can be classified into three theories. Psychological theory. II. Sociological theory and III. Economic view. psychological theories: Contributors to the psychological theory of entrepreneur say that people with strong psychological features will becomes entrepreneurs, like.  A person mentally tough.  A person who has personal features like creativeness, innovativeness , motivation etc. will become successful entrepreneur.
I.

Experts of this school of thought say that family and society plays and important role in the development and growth of entrepreneur. A person inherits the features and characteristic of family, that s why a business persons son becomes a businessmen, because qualities of businessmen come him by birth. Society also play an important role in the growth of this kind entrepreneurship.

According to john kunkals, theory of entrepreneurship supply. As per this theory supply of entrepreneur depends on conducive environment in the society. Such environment should provide incentives and awards for entrepreneurship. A person is attracted by such incentives, he develops his behavior and personality to overcome an entrepreneur. Incentives and benefits attract a person towards entrepreneurship. Supply of entrepreneurship depends on these factors.

Sociological theory on entrepreneurship: Society plays an important role in the growth of a person in general and of entrepreneurs in particulars.
y

Family background, education and environment in the society play an important role in the growth of entrepreneurship. Entrepreneurship needs certain qualities like risk taking, organization skill, dynamism, courage etc.

These qualities are in born they come to a person by heredity. That is the reason, we see a businessmens son also becoming a business men. As per this view point an entrepreneur is born.

Thomas Cochran theory of cultural values:

As per the theory growth of entrepreneurship depends on value system and cultural prevailing in the society. Family background, education given in the school and conducive environment in the society can help for growth of entrepreneurs.

Economic view point: Economic factors like demand and supply, profits, equilibrium determine entrepreneurship and drive a person to become entrepreneur. Society always expects new goods and services. An innovation person understands the needs of society and he starts a business that are needed by the society. Disequilibrium is another factor that offers profitability opportunities to start business.

Mark cassons economic theory: This theory explains entrepreneurship in terms of demand and supply. The theory says, society always expects supply of new goods and services. This creates new opportunities of business entrepreneur exploits such business opportunity by starting those business units that deliver goods expected by the society .

Supply of entrepreneurs depends on availability of entrepreneur with necessary skill and qualities. This theory identifies imagination as an important skill that an entrepreneur should posses. The character of imagination an innovation help an entrepreneur to start a business that delivers the goods expected by the society.

Indian Entrepreneurs
T.V.S Group T.V. Sundaram Iyengar (18771955). Bharti Enterprises Sunil Mittal (1957- ). Kingfisher Airlines Vijay Mallya (1955- ). Air Deccan Capt. G.R Gopinath (1923-)

Problem of Developing Entrepreneur in India

Development of entrepreneur in country is not taking place to the desired extent. The problems that are faced in development of entrepreneurship can be classified as follows: y Economic factors/ causes. y Social factors/ causes. y Psychological factors / causes.

Economic factors: 1. Inadequate finance: y Finance is the basic factor to start and manage any enterprise. Adequate and timely supply of finance at reasonable cost can ensure progress of industries. Entrepreneurs in India come from poor and middle class families. They depends on these financial institutions. There are numerous financial agencies in India to finance industries and they have many schemes of finance but they are not giving adequate financial support to upcoming entrepreneurs.

There are numerous financial agencies in India to finance industries and they have many schemes of finance but they are not giving adequate financial support to upcoming entrepreneurs. Poor infrastructure: y Infrastructure facilities in India are not well developed. y Government has not given adequate importance for the development of these facilities. y Like uninterrupted supply of power, water facility , better road etc. non availability of these facilities is affecting the growth of entrepreneurship.
y

Like uninterrupted supply of power, water facility , better road etc. non availability of these facilities is affecting the growth of entrepreneurship. Lack of institutional support: Growth of entrepreneurship depends on strong institutional support. Such institutions include: y Educational and training institutions that educate and train entrepreneurs. y Entrepreneurial Development Programs (EDPs). y Research and development (R&D). y Financial institutions. y Entrepreneurship is not getting encouragement support from these institutions
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Research and development (R&D). y Financial institutions. Entrepreneurship is not getting encouragement support from these institutions. Poor implementation of economic policies : y Government has given many incentives, concessions and supporting facilities for the growth of entrepreneurship through various economic policies from time to time. These economic policies are not implemented.
y

Social factors: 1. Family Background: y It is said that entrepreneurs are born, that means birth of a entrepreneur depends on environment in the family. y Joint family system and culture in India do not help for development of entrepreneurship. y Dependence of the family members on one another, shifting the responsibility on others is the important features of joint families.

These families are traditional bound. These factors do not help for the development of qualities like independent thinking, dynamism, courage leadership etc.

Culture: 1. prevailing culture, customs and traditions are too pious in nature. 2. A persons who is doing business may not be a gentlemen, he is a greedy persons, always in search of profitable opportunities. 3. Such thought and attitude of the society do not encourage for development of entrepreneurship.
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Scientific temper: y Pandit Jawaharlal Nehru has called the industries as modern temples. y The devotion that is shown in our prayer, the dedication that is shown in temple should also be shown in an enterprise. y This calls for development of scientific temper. y Such scientific temper comes by reasoning, rational thinking etc.

Psychological factors: y An entrepreneur must have strong psychological features. y He must be mentally tough to face difficulties and uncertainties of business. He must have courage to accept the risk of promoting a business. y He should be a dynamic and self motivated person to start a innovative business. This can developed in schools and training institutions.
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Environment in Indian society is not conducive for the growth of these qualities and entrepreneurship. Factors which are affecting entrepreneurial growth are as follows:  He should be a dynamic and self motivated person to start a innovative business.  This can developed in schools and training institutions.
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Society: y Attitude of society also plays an important role in the development of entrepreneurship. y Entrepreneur should be given better status in the society. y Contributions made by the entrepreneurship must be recognized and awarded.

Government policies:  Government can play an important role by providing incentives that can motivate the people to accept entrepreneurship.