ENTREPRENEURSHIP DEVELOPMENT: Meaning, Objectives, Process, factor affecting Entrepreneurial development and John Kao’s Model of Entrepreneurship

 MEANING AND INTRODUCTION OF ENTREPRENEURSHIP DEVELOPMENT

•    Entrepreneurship development is basically the process of improving the skill set as well as the knowledge of the entrepreneurs.

•        This can be done through various methods such as classroom sessions or training programmer specially designed to increase the entrepreneurial acumen.

•        Another definition of this term could be the process of enhancing the capacity to develop, manage and organize a business venture while keeping in mind the risks associated with it.

OBJECTIVES OF ENTREPRENEURSHIP DEVELOPMENT

i)                    To develop entrepreneurial attitude among the youth of the nation.

ii)                 To develop entrepreneurial qualities and to search for new business ideas.

iii)              To motivate and guide the youth for undertaking new business opportunities.

iv)             To conduct new entrepreneurship development programmers for inspiring new undertakings.

v)          To provide information regarding different facilities, concession and schemes sponsored by the government for promoting entrepreneurship.

vi)             To contribute for economic and industrial development of the country.

BASIS FOR ENTREPRENEURSHIP DEVELOPMENT

       1. Incubator facilities.

      2. Research and development.

      3. Cultural manners.

      4. Difficult formalities and other obstacles.

ENTREPRENEURSHIP DEVELOPMENT PROCESS

1. Identification of the prospective candidates.

2. Selection of the prospective candidates.

3. Development of entrepreneurial capabilities among selecting candidates.

4. Matching the potential entrepreneur with viable industrial project.

5. Providing motivation and financial assistance to the entrepreneurs.

 

FACTORS AFFECTING ENTREPRENEURSHIP DEVELOPMENT

I)             Economic Factors

• Economic environment exercises the most direct and immediate influence on entrepreneurship.

•     This is likely because people become entrepreneurs due to necessity when there are no other jobs or because of opportunity.

 The economic factors that affect the growth of entrepreneurship are the following:

1.      Capital:

•   Capital is one of the most important factors of production for the establishment of an enterprise. Increase in capital investment in viable projects results in increase in profits which help in accelerating the process of capital formation.

•      Entrepreneurship activity too gets a boost with the easy availability of funds for investment.

2.      Labor:

•        Easy availability of right type of workers also effect entrepreneurship. The quality rather than quantity of labor influences the emergence and growth of entrepreneurship.

•    The problem of labor immobility can be solved by providing infrastructural facilities including efficient transportation.

3.      Raw Material:

•     The necessity of raw materials hardly needs any emphasis for establishing any industrial activity and its influence in the emergence of entrepreneurship.

•   In the absence of raw materials, neither any enterprise can be established nor can an entrepreneur be emerged

4.      Market:

•        The role and importance of market and marketing is very important for the growth of entrepreneurship.

•        In modern competitive world no entrepreneur can think of surviving in the absence of latest knowledge about market and various marketing techniques.

5.      Infrastructure:

•  Expansion of entrepreneurship presupposes properly developed communication and transportation facilities.

•        It not only helps to enlarge the market, but expand the horizons of business too.

 

II)         Social Factors:

1.    Caste Factor

•        There are certain cultural practices and values in every society which influence the’ actions of individuals. These practices and value have evolved over hundreds of years.

•       For instance, consider the caste system (the varna system) among the Hindus in India. It has divided the population on the basis of caste into four divisions. The Brahmana (priest), the Kshatriya (warrior), the Vaishya (trade) and the Shudra (artisan): It has also defined limits to the social mobility of individuals.

2.    Family Background

•        This factor includes size of family, type of family and economic status of family.

•        In a study by Hadimani, it has been revealed that Zamindar family helped to gain access to political power and exhibit higher level of entrepreneurship.

3.    Education

•   Education enables one to understand the outside world and equips him with the basic knowledge and skills to deal with day-to-day problems.

•   In any society, the system of education has a significant role to play in inculcating entrepreneurial values.

4.    Attitude of the Society

•    A related aspect to these is the attitude of the society towards entrepreneurship. Certain societies encourage innovations and novelties, and thus approve entrepreneurs’ actions and rewards like profits.

5.    Cultural Value

•     Motives impel men to action. Entrepreneurial growth requires proper motives like profit making, acquisition of prestige and attainment of social status.

•        Ambitious and talented men would take risks and innovate if these motives are strong.

 

III)      Psychological Factors

1.    Need Achievement

•     The most important psychological theories of entrepreneurship was put forward in the early) 960s by David McClelland.

•   According to McClelland ‘need achievement’ is social motive to excel that tends to characterize successful entrepreneurs, especially when reinforced by cultural factors.

•        He found that certain kinds of people, especially those who became entrepreneurs, had this characteristic.

2.    Withdrawal of Status Respect

•        There are several other researchers who have tried to understand the psychological roots of entrepreneurship.

•     One such individual is Everett Hagen who stresses the-psychological consequences of social change. Hagen says, at some point many social groups experience a radical loss of status.

•  Hagen attributed the withdrawal of status respect of a group to the genesis of entrepreneurship.

3.    Motives

•   Other psychological theories of entrepreneurship stress the motives or goals of the entrepreneur.

•        Cole is of the opinion that besides wealth, entrepreneurs seek power, prestige, security and service to society.

John Kao’s Model of Entrepreneurship

•      John J. Kao has developed a conceptual model of entrepreneurship. This model is explained in his article titled ‘entrepreneurship, creativity and organization’.

•   This article was written in the year 1989. This model is also known as the ECO entrepreneurship, creativity, organization model.

•        According to John Kao, entrepreneurship and creativity results from the interrelationship of the following three elements as shown in the figure.

These three elements are the person, the task and the organization.

1. Entrepreneurial Personality: The overall success of a new venture largely depends upon the skill, qualities, traits and determination of the entrepreneur.

2. Entrepreneurial Task: It is a role played by entrepreneur in an enterprise. The major task of the entrepreneur is to recognize and exploit opportunities.

3. Entrepreneurial Environment: It involves the availability of resources, infrastructure, competitive pressures, social values, rules and regulations, stage of technology etc.

4. Organizational Context: It is the immediate setting in which creative and entrepreneurial work takes place. It involves the structure, rules, policies, culture, human resource system, communication system.

• The entire three elements exists in the external environment which includes resources, infrastructure, competition, society, laws and technology.

• The factors prevailing in the external environment can facilitate or impede the creative entrepreneurship development