External Influences on ED

7/31/2019 External Influences on ED

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INFLUENCES ONENTREPRENEURSHIP

DEVELOPMENT


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Introduction

Religious, social and cultural factors alsoinfluence the individual taking up anentrepreneurial career, in some countriesthere is religious and cultural belief that highprofit is unethical. This type of belief inhibitsgrowth of entrepreneurship.


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How Cultural Factors Influence Entrepreneurship

Culture refers to the customary practices and beliefs

that have a significant impact on the basic values,perceptions, preferences, and behaviors of people.

Culture and entrepreneurship intervene in many ways.

People traditionally engaged in businesses have a pro

business attitude and disdain working as employees. Many people fall outside the establishment and remain

unsuited for the traditional job market due to a strongculture of independence or other reasons.

Business school students come under the missionaryzeal of teachers who exhort them to becomeentrepreneurs even if the opportunity cost is very high.


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The culture of consumerism where people desirematerial goods encourages entrepreneurship withinthe area as returns from a business become more

than returns from a job. People engaged in jobs and other services pressure

their children to find secure jobs and crush theirentrepreneurship spirit at a very early age.

A culture of thrift where people spend less and savefor a rainy day discourages entrepreneurship withinthe local community as the returns from a businessbecome less attractive compared to returns from ajob.

Cultures where people are risk averse and do notattach much importance to hard work andpersistence is not conducive to entrepreneurship.


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How Political Environment Influence

Entrepreneurship

The following are some of the ways in which the

political environment influences entrepreneurship: Unstable political conditions where government

policies change frequently discourage business, asinvestors fear for the safety of their investments.

Government support to economic developmentthrough infrastructure development, facilitation,industrial parks, and the like all encourageentrepreneurship.

High taxes that cut into the returns usuallydiscourage entrepreneurs. On the other hand, taxholidays to encourage business attract start-ups.


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The availability of infrastructure and utilities such asgood roads, power, communication facilities, and

lack of corruption and bureaucratic delays inobtaining such utilities encourage entrepreneurship.

Economic freedom in the form of favorablelegislation and few hurdles to start and operate

businesses encourage entrepreneurship. While most businesses accept laws related to

safeguard of labor rights and the environment,some countries have retrograde laws that makecompliance very difficult and time consuming. Suchlegal hurdles create a barrier to entrepreneurship.


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How Economic Factors Influence Entrepreneurship

The nature of the economy is a major factor that

influences entrepreneurship. The general purchasing power of the people,

manifested by income levels and economicprosperity of the region, plays a major role in thesuccess of entrepreneurial ventures.

During times of economic slowdown or recession,the purchasing power declines and people remainreluctant to invest, affecting entrepreneurshipadversely.

In a subsistence economy, most of the peopleengage in agriculture, consuming most of theiroutput and bartering the rest for simple goods andservices. Entrepreneurial opportunities are few insuch scenarios.


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Availability of Resources as a Major Factor

that Affects Entrepreneurship

Critical factors that influence entrepreneurship include

availability of resources such as capital, human assets,raw materials, infrastructure, and utilities.

Capital remains indispensable to start an enterprise. Theavailability of capital allows the entrepreneur to bringtogether other factors and use them to produce goods

or services. The importance of human assets or employees can

never be underestimated. No enterprise succeedswithout skilled and committed workforce.

The very existence of the business depends on theavailability of raw materials to process.

Physical infrastructure and utilities such as good roads,parking space, communication facilities, and power allplay a crucial factor in the seamless functioning of a

business.


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a) Lack of adequate overhead facilities

b) Non availability of capital

c) Great risk


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How Entrepreneurial Skill Sets and Psychological

Orientation Affects Entrepreneurship

All other factors notwithstanding, the success of an

entrepreneurial venture depends on the entrepreneur.The entrepreneur is the leader and driver of the venture,and requires the following skill-set and orientation forsuccess:

hard work and persistence ability to manage and minimize risk

ability to draw up a comprehensive business plan, andhaving a contingency plan ready

a strong need-orientation that provides the inclinationto achieve things

With the collapsing trade barriers bringing in greateropportunities, and job security pass, the conditions for

entrepreneurship are better than ever before.


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MOTIVATION

Motivation is the act of stimulating someone or

oneself to get a desired course of action, to pushthe right button to get the desired results.

MOTIVATING FACTORS

1. Education background

2. Occupational experience3. Family background

4. Desire to work independently in manufacturingline

5. Assistance from financial institution6. Availability of technology

7. Other factors


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CAUSES OF SLOW GROWTH OF ENTREPRENEURSHIP IN

INDIA

Entrepreneurship developed only in thebeginning of the 19th century and though thebase for industrialization had been laid acentury ago. The following be the mainreasons, which could be responsible for lackof initiative and entrepreneurial spirit among

the Indians.


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1. Caste System: - This decided occupation formembers from each caste. The altitudes wererestrictive and therefore there were no changes

of accumulating wealth and promotingproduction.

2. Agriculture: - Agriculture was the mainoccupation. Farmers and cultivators were always

in the clutches of the money lenders. Thezamindars, nawabs and rajahs exploited thelaborers. They spent money on enjoyment andluxury and never risked money in industry.

Banking and commercial system was also absentso even if there were savings, they could not beutilized for productive use.


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3. Educational System: - Talented young menwere prepared to take white collared jobs or joingovernment or professional services. Many were

attracted towards politics. The result was thatvery few young men got attracted towardsbecoming efficient, industrialists, technicians,managers etc.

4. Colonial Rules: - The British rulers adopteddiscriminatory policy Rich Indian businessmanhad special connections with foreign rulers andboth satisfied their self interests. Even the few

insurance and banking services catered to theneeds of some rich Indian businessman,Britishers in India did also not encourageIndustrialization.


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5. Managing Agents: - There were just a handful ofpeople who were known to be having managerialskills. On common basis, these agents would lend

their skills to some top industries. Industrialists couldnot manage their own units. They were always at themercy of the managing agents who filled theirpockets with big chunks of the companies profitsand took full advantage of Indian industrialists till

the managing agency system was abolished in 1970.

6. Joint Family System: - Younger members of thefamily always depended on the Head who nevergave any kind of independence or encouraged unitsother than family business ones. A number of youngmen were discouraged from diversifying from familybusiness and doing something new and different.


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7. Religious attitude: - Indians were very religiousmi9nded. They gave more time to religion thanto earning material wealth. Religion got priorityover business. Some religions even condemnedexcess earnings and indulgence I in comforts.Industrial activity was, therefore, given

secondary consideration by the religious Indians. 8.Mindset: - The mindset of the average Indian

was never entrepreneurial. Our religiousliterature and epics told us to have patience and

to keep on working without expecting the fruitsof labor. This also killed the drive and desire toget into entrepreneurial activities.


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9. Recognition by the society: - In earlier days,the heroes India were the social reformers andthe politicians. Now it is the era of sportsmen,

models and film stars. It is sad that successful orthe struggling entrepreneurs have never beenrecognized as heroes. Entrepreneurial activitydid not get due importance in the India society.

10. Family Background: - Empirical studies haveshown that a good number of entrepreneurscome from families with industrial backgrounds.Unfortunately, only a few entrepreneurialcommunities in India made entrepreneurial

contribution. These communities could also notmake headway in the entrepreneurial field onaccount of the colonial rule, lack of infrastructureand other facilities. Entrepreneurshipdevelopment could only take place after

independence in India.


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THANK YOU

External Influences on ED

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