FACTORS AFFECTING ENTREPRENEURIAL GROWTH 1.

ECONOMIC FACTORS a) Lack of adequate overhead facilities: Profitable innovations require basic facilities like transportation,communication power supply etc. They reduce cost of production andincrease profit. b) Non availability of capital Inventions are capital oriented. In less developed countries most capitalequipmenthave to be imported which involves foreign exchange which acts as adifficult problem.c) Great risk Risk is high in case of less developed countries as there is lack of reliableinformation, markets for good and services is small etc.d) Non availability of labor and skills Though there is abundant labor supply there is generally scarcity of skills atall levels.2. SOCIAL FACTORS A society that is rational in decision making would be favorable for decisionmaking. Education, research and training is given less importance in lessdeveloped countries therefore there is very little vertical mobility of labor. 3. CULTURAL FACTORS Religious, social and cultural factors also influence the individual taking upan entrepreneurial career, in some countries there is religious and cultural b e l i e f t h a t h i g h p r o f i t i s u n e t h i c a l . T h i s t yp e o f b e l i e f i n h i b i t s g r o w t h o f entrepreneurship.4. PERSONALITY FACTORS In less developed countries the entrepreneur is looked upon with suspicion.Publicopinion in the less developed nations sees in the entrepreneur only a profitmaker and exploited.5. MOTIVATION Motivation is the act of stimulating someone or oneself to get a desiredcourse of action, to push the right button to get the desired results. MOTIVATING FACTORS

1 . E d u c a t i o n b a c k g r o u n d 2.Occupational experience3 . F a m i l y b a c k g r o u n d 4.Desire to work independently in manufacturing

line5.Assistance from financial institution6 . A v a i l a b i l i t y o f technology7 . O t h e r f a c t o r s FACTORS INFLUENCING

ENTERPRENURESHIPT h e e m e r g e n c e o f e n t r e p r e n e u r s i n a s o c i e t y d e p e n d s u p o n c l o s e l y i n t e r l i n k e d s o c i a l , r e l i g i o u s , c u l t u r a l , p s yc h o l o g i c a l , a n d p o l i t i c a l a n d economic factors. FAMILY TRADITION: I n d i v i d u a l s w h o f o r s o m e r e a s o n , i n i t i a t e , establish maintain and expand new enterprises generate entrepreneurship

ins o c i e t y. I t i s o b s e r v e d t h a t e n t r e p r e n e u r s g r o w i n t h e t r a d i t i o n o f t h e i r fa milies and society and accept certain values and norms from these sources. RELIGIOUS, SOCIAL AND CULTURAL FACTORS: Religious, socialand cultural factors also influence the individual taking up an entrepreneurial career, in some countries there is religious and cultural belief that high profitis unethical. This type of belief inhibits growth of entrepreneurship. PSYCHOLOGICAL FACTORS: The psychological factors like high needfor achievement, determination of unique accomplishment, self

confidence,c r e a t i v i t y , v i s i o n , l e a d e r s h i p e t c , p r o m o t e e n t r e p r e n eurship amongindividuals. On the other hand psychological f a c t o r s l i k e s e c u r i t y , conformity and compliance, need for affiliation etc restrict promotion of entrepreneurship. POLITICAL FACTORS: The political and also the political stability

of c o u n t r y i n f l u e n c e t h e g r o w t h o f e n t r e p r e n e u r s h i p . T h e p o l i t i c a l s ys t e m , which promotes free market, individual freedom and private enterprise, will promote entrepreneurship. ECONOMIC POLICIES: The economic policies of the government andother financial institutions and the opportunities available in a society as ar e s u l t o f s u c h p o l i c i e s p l a y a c r u c i a l

r o l e i n e x e r t i n g d i r e c t i n f l u e n c e o n entrepreneurship.In view of the haphazard development of economic zones, Government isencouraging the entrepreneurs to establish their business in backward andtribal areas. This is primarily to arrest the migration of people from thevillages to cities and to create employment opportunities locally.Government is promoting such development by giving incentives like taxholidays (both sales and income), subsidized power tariff, raw materials,transportation cost etc CAUSES OF SLOW GROWTH OF ENTREPRENEURSHIP INI NDIA Entrepreneurship developed only in the beginning of the 19th century

andt h o u g h t h e b a s e f o r i n d u s t r i a l i z a t i o n h a d b e e n l a i d a c e n t u r y a g o. The following be the main reasons, which could be responsible for

l a c k o f initiative and entrepreneurial spirit among the Indians.1. Caste System: This decided occupation for members from each

caste.T h e a l t i t u d e s w e r e r e s t r i c t i v e a n d t h e r e f o r e t h e r e w e r e n o c h a n g e s o f accumulating wealth and promoting production.2. Agriculture: A g r i c u l t u r e w a s t h e m a i n o c c u p a t i o n . F a r m e r s a n d cultivators were always in the clutches of the money lenders. The zamindars,nawabs and rajahs exploited the laborers. They spent money on enjoymentand luxury and never risked money in industry. Banking and commercials ys t e m w a s a l s o a b s e n t s o e v e n i f t h e r e w e r e s a v i n g s , t h e y c o u l d n o t b e utilized for productive use.3. Educational System: Talented young men were prepared to take

whitec o l l a r e d j o b s o r j o i n g o v e r n m e n t o r p r o f e s s i o n a l s e r v i c e s . M a n y w e r e a t t r a c t e d t o w a r d s p o l i t i c s . T h e r e s u l t w a s t h a t v e r y f e w yo u n g m e n g o t attracted towards becoming efficient, industrialists, technicians, managersetc.4. Colonial Rules: - The British rulers adopted discriminatory policy RichIndian businessman had special connections with foreign rulers and bothsatisfied their self interests. Even

the few insurance and banking services catered to the needs of some rich Indian businessman, Britishers in India didalso not encourage Industrialization.5. Managing Agents: - T h e r e w e r e j u s t a h a n d f u l o f p e o p l e w h o w e r e known to be having managerial skills. On common basis, these agents wouldlend their skills to some top industries. Industrialists could not manage their own units. They were always at the mercy of the managing agents who filledt h e i r p o c k e t s w i t h b i g c h u n k s o f t h e c o m p a n i e s p r o f i t s a n d t o o k f u l l advantage of Indian industrialists till the managing agency system was abolished in 1970.6. Joint Family System: - Younger members of the family always dependedon the Head who never gave any kind of independence or encouraged unitsother than family business ones. A number of young men were discouragedf r o m d i v e r s i f yi n g f r o m f a m i l y b u s i n e s s a n d d o i n g s o m e t h i n g n e w a n d different.7. Religious attitude: - Indians were very religious mi9nded. They gavemore time to religion than to earning material wealth. Religion

got priorityo v e r b u s i n e s s . S o m e r e l i g i o n s e v e n c o n d e m n e d e x c e s s e a r n i n g s a n d indulgence I in comforts. Industrial activity was, therefore, given

secondaryconsideration by the religious Indians.8. Mindset: - The mindset of the average Indian was never entrepreneurial.Our religious literature and epics told us to have patience and to keep on working without expecting the fruits of labor. This also killed the drive anddesire to get into entrepreneurial activities.9. Recognition by the society: - In earlier days, the heroes India were thesocial reformers and the politicians. Now it is the era of sportsmen, modelsand film stars. It is sad that successful or the struggling entrepreneurs havenever been recognized as heroes. Entrepreneurial activity did not get dueimportance in the India society.10. Family Background:

- E m p i r i c a l s t u d i e s h a v e s h o w n t h a t a g o o d number come from families with

of

entrepreneurs industrial

backgrounds.U n f o r t u n a t e l y, o n l y a f e w e n t r e p r e n e u r i a l c o m m u n i t i e s i n I n d i a madeentrepreneurial contribution. These communities could also not ma k e headway in the entrepreneurial field on account of the colonial rule, lack of infrastructure and other facilities. Entrepreneurship development could onlytake place after independence in India.