introduction to ed

7/31/2019 Introduction to ED

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ENTREPRENEURSHIP AS A TOOL FOR REGIONAL ECONOMIC GROWTH

IMS Kuvempu University Page 1

CHAPTER-1

Background of the study

The study has conducted on the Entrepreneurship as a Tool for Regional Economic

Growth. Entrepreneurship is the backbone of the Indian economy it contributing much more to

the economy. Entrepreneurship creates employment, generating income, developing

infrastructure of the country. We can see entrepreneurship in rural and urban. Most urban

entrepreneur enjoys a lot of facilities in urban area in terms of infrastructure, transportation,

marketing and so on. In the rural area it is difficult to establish business due lack of all facilities

available like urban entrepreneurs. But rural entrepreneurs tend a vital role in current economic

scenario. In Indian context the governments are providing more facilities to the rural

entrepreneurs to create their own venture and motivating them to start a business. Rural

entrepreneurs developing rural trough creating employment, development of infrastructure and

so on. The study is to how the entrepreneurs are work, how they back bone of the economy,

what are the opportunities available and problems they are facing, what are the factors make

them to start a business.

Indian entrepreneurship is second to none and activity levels are at an all time high.

According to the Global Entrepreneurship Monitor 2006, one in every ten Indians is engaged in

some entrepreneurial activity or the other. Of this, opportunity based entrepreneurship (70

percent) is significantly higher than necessity based.

Objective of the study

To understand the need of the entrepreneurship in the economic growth. To know the role of the entrepreneurs in regional economic growth of the country. To know the facilities available to become an entrepreneur.

To understand the challenges faced by the entrepreneurs.

Need for the study

The study is needed to get a practical knowledge about the entrepreneurship to fulfill the

academic requirement. To know about the factors affecting entrepreneurs and how they

contributing to the regional economic growth.


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Scope of the study

This study is conducted on the rural entrepreneurs, how they are operating and their role

in the economic growth. This study conducted in Shankaraghatta what are their challenges and

opportunities they enjoying. The study also includes the overall entrepreneurs background in

Indian economy.

Methodology

Methods of data collection is mainly concerned

1. Primary dataThose data are collected by the direct response from the various departments students in

Kuvempu University through the sampling methods.

2. Secondary dataThese data are collected through the internet and books and journals.

Limitations of the study

1. Some respondents respond were vague.2. The study limited to 20 responds it may leads irrelevant information.3. The scope of the study is limited to only Shankaraghatta.


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Chapter-2

ENTERPRENEUR

An entrepreneur is one who always searches for change, responds to it and exploits it asan opportunity. Innovation is the basic tool of entrepreneurs, the means by which they exploit

change as an opportunity for different business of service. Peter Drucker

Measuring Rural Entrepreneurs

The starting point in analyzing the relationship between rural entrepreneurship and

economic growth is to identify a measure of rural entrepreneurship. The first step is to define

rural. The second step is to define entrepreneurship.Analysis of rural economic activity is always challenged by the definition of rural. The

Census Bureau defines rural areas as place with less than 2500 people or places not incorporated.

Yet, information on rural places consists of only basic population and housing statistics, thus

limiting insight into rural economic activity. As a result, researchers are left with defining rural

as non-metropolitan regions to help gain insight into the economic dynamics of small, sparsely

populated regions. Due to the limitation of rural data and the wealth of information at the county

level, rural will be defined as counties outside of metropolitan areas.

Studying rural entrepreneurship or entrepreneurship in general, is challenged with

defining an entrepreneur. Entrepreneurship is an elusive concept that is easy to discuss, difficult

to describe, and even harder to define. In fact, after more than 200 years, a commonly accepted

definition of entrepreneurship has failed to emerge. One of the earliest definitions arose in 1734

where entrepreneurship was said to be self-employment with an uncertain return. Two hundred

years later, the importance of innovation was highlighted as entrepreneurship was described as

the process of creating new combinations of products, processes, markets, or organizational

forms (Schumpeter 1934). Entrepreneurship has also been defined as simply the creation of an

organization (Hoy 1987; Gartner 1988). Recent research analyzing the impact of

entrepreneurship on economic growth at the regional level has used measures of

entrepreneurship based on new business starts.


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ENTREPRENEURSHIP

Entrepreneurship is increasingly being recognized as a primary engine of economic

growth. By combining existing resources with innovative ideas, entrepreneurs add value through

the commercialization of new products, the creation of new jobs, and the building of new firms.

The Global Entrepreneurship Monitor indicates that nations with higher levels of entrepreneurial

activity enjoy strong economic growth. In short, entrepreneurs are the link between new ideas

and economic growth. The benefits of entrepreneurship new jobs, higher incomes and

increased wealthare especially strong in the India. However, research suggests that the spatial

benefits from entrepreneurial activity are highly variable. In particular, rural (sparsely-populated)

areas often find it difficult to sustain high-growth entrepreneurs. However, labor market areas

include both rural and highly urbanized economies As a result; insight into the impact of

entrepreneurship on rural growth is limited. Yet this type of information is crucial as

entrepreneurs account for a greater share of employment in rural areas than in metro areas.

Definition of Entrepreneurship

A systematic innovation, which consists in the purposeful and organized search for

changes, and it is the systematic analysis of the opportunities such changes might

offer for economic and social innovation.-- Peter Drucker

The capacity and willingness to undertake conception, organization, and management of

a productive venture with all attendant risks, while seeking profit as a reward.

In economics, entrepreneurship is regarded as a factor of production together

with land, labor, natural resources, and capital. Entrepreneurial spirit is characterized

by innovation and risk-taking, and an essential component of a nation's ability to succeed in an

ever changing and more competitive global marketplace.

According to the Merriam Webster Dictionary defines an entrepreneur as one who

organizes, manages, and assumes the risks of a business orenterprise. From these definitions,

we can extract the following qualities and characteristics of entrepreneurship:
http://www.businessdictionary.com/definition/capacity.htmlhttp://www.businessdictionary.com/definition/organization.htmlhttp://www.businessdictionary.com/definition/management.htmlhttp://www.businessdictionary.com/definition/risk.htmlhttp://www.businessdictionary.com/definition/profit.htmlhttp://www.businessdictionary.com/definition/reward.htmlhttp://www.businessdictionary.com/definition/economics.htmlhttp://www.businessdictionary.com/definition/factor.htmlhttp://www.businessdictionary.com/definition/production.htmlhttp://www.businessdictionary.com/definition/land.htmlhttp://www.businessdictionary.com/definition/labor.htmlhttp://www.businessdictionary.com/definition/natural-resource.htmlhttp://www.businessdictionary.com/definition/capital.htmlhttp://www.businessdictionary.com/definition/innovation.htmlhttp://www.businessdictionary.com/definition/component.htmlhttp://www.businessdictionary.com/definition/nation.htmlhttp://www.businessdictionary.com/definition/ability.htmlhttp://www.businessdictionary.com/definition/competitive.htmlhttp://www.businessdictionary.com/definition/global.htmlhttp://www.businessdictionary.com/definition/marketplace.htmlhttp://www.merriam-webster.com/dictionary/entrepreneurshiphttp://www.merriam-webster.com/dictionary/entrepreneurshiphttp://www.businessdictionary.com/definition/marketplace.htmlhttp://www.businessdictionary.com/definition/global.htmlhttp://www.businessdictionary.com/definition/competitive.htmlhttp://www.businessdictionary.com/definition/ability.htmlhttp://www.businessdictionary.com/definition/nation.htmlhttp://www.businessdictionary.com/definition/component.htmlhttp://www.businessdictionary.com/definition/innovation.htmlhttp://www.businessdictionary.com/definition/capital.htmlhttp://www.businessdictionary.com/definition/natural-resource.htmlhttp://www.businessdictionary.com/definition/labor.htmlhttp://www.businessdictionary.com/definition/land.htmlhttp://www.businessdictionary.com/definition/production.htmlhttp://www.businessdictionary.com/definition/factor.htmlhttp://www.businessdictionary.com/definition/economics.htmlhttp://www.businessdictionary.com/definition/reward.htmlhttp://www.businessdictionary.com/definition/profit.htmlhttp://www.businessdictionary.com/definition/risk.htmlhttp://www.businessdictionary.com/definition/management.htmlhttp://www.businessdictionary.com/definition/organization.htmlhttp://www.businessdictionary.com/definition/capacity.html


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1. Initiative, innovation and creativity.2. Business sense, economy, productivity and profitability3. Organization, leadership and responsibility4. Risk management and strategy5. Passion and voluntarism

The Growth of Entrepreneurship in India

By the late sixties it became quite evident that two resources are the most critical (in spite

of favorable policies) for development of entrepreneurship, finance (credit) and managerial

capabilities. When industrial development picked up in the sixties the bankers limited credit

mainly to established industrialists and merchants for existing projects with assured success andsufficient collaterals. A study of 53 projects financed by banks and the Gujarat State Financial

Corporation during the period 1965-68 revealed many interesting things. More than two thirds of

institutional loans were for diversifications and expansion of existing enterprises. Of the new

loans, 30% were given to merchants and traders with adequate financial resources and hence the

required collateral. The entrepreneur's financial stake stood very high in the transactions that a

debt equity ratio 1:1. Such policies evidently were holistic to an aspiring and an otherwise

competent young entrepreneurs but without enough financial resources and tangible assets. As an

innovative alternative to the conventional banking system an Industrial Investment Corporation

was set up as a State company in Gujarat in 1968 with attractive and unconventional credit

schemes.

The task next was to identify and groom potential new entrepreneurs from a variety of

socioeconomic backgrounds. The entrepreneurship development program with well designed

inputs for motivating, informing and skilling entrepreneurial individuals was pioneered in 1970.

Several modifications have been carried out to suit the profile and needs of various groups of

trainees. For example, potential micro enterprises in the rural sectors by the poor, whose ventures

have only limited investment and low levels of technology must be addressed differently from

those of enterprising women whose talents and creativity have been suppressed by age-old socio-

cultural norms and practices. Both need appropriate approaches so that they become capable of

manifesting their entrepreneurial competence.


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Despite efforts made by a host of institutions, only less than 20% of the new

entrepreneurs have access to training every year. This means that a large mass of potential

entrepreneurs are still outside the reach of training interventions.

Entrepreneurship in Economic Development.

An entrepreneur can be regarded as a person who has the initiative skill and motivation to

set up a business or enterprise of his own and who always looks for high achievements. He is the

catalyst for social change and works for the common good. They look for opportunities, identify

them and seize them mainly for economic gains. An action oriented entrepreneur is a highly

calculative individual who is always willing to undertake risks in order to achieve their goals.

Need for Entrepreneurship Development

Economic development essentially means a process of upward change whereby the real

pr capita income of a country increases over a period of time .Entrepreneurship has an important

role to play in the development of a country. It is one of the most important inputs in economic

development. The number and competence of entrepreneurs affect the economic growth of the

country.

The economic history of the presently advanced countries like USA, Russia and Japan

supports the fact that economic development is the outcome for which entrepreneurship is an

inevitable cause. The crucial and significant role played by the entrepreneurs in the economic

development of advanced countries has made the people of developing and under developed

countries conscious of the importance of entrepreneurship for economic development. It is now a

widely accepted fact that active and enthusiastic entrepreneurs can only explore the potentials of

the countries availability of recourses such as labour, capital and technology.

The role of entrepreneurs is not identical in the various economies. Depending on the

material resources, industry climate and responsiveness of the political system, it varies from

economy to economy. The contribution of entrepreneurs may be more in favorable opportunity


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conditions than in economies with relatively less favorable opportunity conditions.

The Role of an Entrepreneur in Economic Development

The entrepreneur who is a business leader looks for ideas and puts them into effect in

fostering economic growth and development. Entrepreneurship is one of the most important

inputs in the economic development of a country. The entrepreneur acts as a trigger head to give

spark to economic activities by his entrepreneurial decisions. He plays a pivotal role not only in

the development of industrial sector of a country but also in the development of farm and service

sector. The major roles played by an entrepreneur in the economic development of an economy

are discussed in a systematic and orderly manner as follows.

(1) Promotes Capital Formation:

Entrepreneurs promote capital formation by mobilizing the idle savings of public. They employ

their own as well as borrowed resources for setting up their enterprises. Such type of

entrepreneurial activities leads to value addition and creation of wealth, which is very essential

for the industrial and economic development of the country.

(2) Creates Large-Scale Employment Opportunities:

Entrepreneurs provide immediate large-scale employment to the unemployed which is a chronic

problem of underdeveloped nations. With the setting up of more and more units by

entrepreneurs, both on small and large-scale numerous job opportunities are created for others.

As time passes, these enterprises grow, providing direct and indirect employment opportunities

to many more. In this way, entrepreneurs play an effective role in reducing the problem of

unemployment in the country which in turn clears the path towards economic development of the

nation.

(3) Promotes Balanced Regional Development:

Entrepreneurs help to remove regional disparities through setting up of industries in less

developed and backward areas. The growth of industries and business in these areas lead to a

large number of public benefits like road transport, health, education, entertainment, etc. Setting


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up of more industries leads to more development of backward regions and thereby promotes

balanced regional development.

(4) Reduces Concentration of Economic Power:

Economic power is the natural outcome of industrial and business activity. Industrial

development normally leads to concentration of economic power in the hands of a few

individuals which results in the growth of monopolies. In order to redress this problem a large

number of entrepreneurs need to be developed, which will help reduce the concentration of

economic power amongst the population.

(5) Wealth Creation and Distribution:

It stimulates equitable redistribution of wealth and income in the interest of the country to more

people and geographic areas, thus giving benefit to larger sections of the society. Entrepreneurial

activities also generate more activities and give a multiplier effect in the economy.

(6) Increasing Gross National Product and Per Capita Income:

Entrepreneurs are always on the lookout for opportunities. They explore and exploit

opportunities,, encourage effective resource mobilization of capital and skill, bring in new

products and services and develops markets for growth of the economy. In this way, they help

increasing gross national product as well as per capita income of the people in a country.

Increase in gross national product and per capita income of the people in a country, is a sign of

economic growth.

(6) Improvement in the Standard of Living:

Increase in the standard of living of the people is a characteristic feature of economic

development of the country. Entrepreneurs play a key role in increasing the standard of living of

the people by adopting latest innovations in the production of wide variety of goods and services

in large scale that too at a lower cost. This enables the people to avail better quality goods at

lower prices which results in the improvement of their standard of living.


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(7) Promotes Country's Export Trade:

Entrepreneurs help in promoting a country's export-trade, which is an important ingredient of

economic development. They produce goods and services in large scale for the purpose earning

huge amount of foreign exchange from export in order to combat the import dues requirement.

Hence import substitution and export promotion ensure economic independence and

development.

(8) Induces Backward and Forward Linkages:

Entrepreneurs like to work in an environment of change and try to maximize profits by

innovation. When an enterprise is established in accordance with the changing technology, it

induces backward and forward linkages which stimulate the process of economic development in

the country.

(9) Facilitates Overall Development:

Entrepreneurs act as catalytic agent for change which results in chain reaction. Once an

enterprise is established, the process of industrialization is set in motion. This unit will generate

demand for various types of units required by it and there will be so many other units which

require the output of this unit. This leads to overall development of an area due to increase in

demand and setting up of more and more units. In this way, the entrepreneurs multiply their

entrepreneurial activities, thus creating an environment of enthusiasm and conveying an impetus

for overall development of the area.


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Chapter-3

ANALYSIS AND INTERPRETATION

Table: 1

Whether you male are female?

Interpretation:

The above chart shows that the majority of the respondents were male out of 20 respondents

male respondents were 60% (12), and female respondents were 40% (8).

1 2

12

60%

8

40%

Male Female

Particulars Number of Respondents Percentage

Male 12 60%

Female 8 40%

TOTAL 20 100%


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Table: 2

The age range of the respondents

The above chart shows that majority (75%) of respondents (15) were comes under the 20-30

years age group rest of the others were 10% (2) below 20 and also 30-40 years, 5% were 40-50

and none of them above 50 years.

Below

20

20-30 30-40 40-50 Above

50

2

15

21

010%75%

10% 5% 0%

Number of respondents Percentage

Age Number of respondents Percentage

Below 20 2 10%

20-30 15 75%

30-40 2 10%

40-50 1 5%

Above 50 0 0%

Total 20 100%


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Table: 3

Respondents education qualification

Qualification SSLC PUC UG PG Total

No. of respondents 0 2 4 14 20

Percentage 0% 10% 20% 70% 100%

Above table shows that majority of respondents were belongs to PG (70% (14)), 20% of UG

respondents, rest of the respondents were PUC 10% and none of SSLC respondents.

Table: 4

Which sector is best to start a business?

Sectors Manufacture Service Retail Wholesale Total

No. of respondents 4 6 8 2 20

Percentage 20% 30% 40% 10% 100%

0%

10%

20%

70%

No. of respondents

SSLC PUC UG PG


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The above chart shows that the majority of respondents (40%) prefer retail sector business,

secondly 30% respondents are preferring service sector, remaining 20% and 10% are prefer

manufacture and whole sale sector.

Table: 5

What is your education background require to become entrepreneur?

Qualification Primary Secondary tertiary Not at all total

No of respondents 4 5 8 3 20

Percentage 20% 25% 40% 15% 100%

Manufacture Service Retail Wholesale

4

6

8

2

20% 30% 40% 10%

No. of respondents Percentage

Primary secondary tertiary Not at all

4

5

8

3

20% 25% 40% 15%

No of respondents Percentage


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This chart shows that majority of people prefer tertiary education to start a business (40%), and

some of the 25%, 20%, respondents prefer secondary and primary education and 15% of

respondents suggest there is no need to education to start business.

Table: 6

When one who start his business what are the main obstacles he may face?

Particulars No of respondents Percentage

No obstacles 2 10%

self confidence 6 30%

Finance 5 25%

Lack of information 1 5%

Finding right contacts 4 20%

Combining family & work life 2 10%

Total 20 100%

The above chart shows that 30% of the entrepreneurs are facing self confidence problem, and

25% are finance, 20% are failing in finding the right contacts for the product, 10% are no

0

1

2

34

5

6

No of respondents

Percentage


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obstacles and combining family and work life are obstacles and remaining respondents are

agreeing lack of information 5%.

Table: 7

What the reason is behind becomes an entrepreneur?


Dont want work for others 4 20%

Want freedom to make my own decision 5 25%

Social states 0 0%

Self achievement 7 35%

Profit/ money making 2 10%

Confidence in the products services offered 2 10%

Total 20 100%

Above table shows the reasons for the entrepreneurship in that 35% respondents tells self

achievement, and 25% want freedom to make my own decision, 20% dont want to work for

others, 10% to profit/ money making and confidence in the products services offered and none of

them tells social status reason

4

5

0

7

2 2

20% 25% 0%35% 10% 10%

Dont want

work for

others

Want freedom

to make my

own decision

Social states Self

achievement

Profit/ money

making

Confidence in

the products

services

offered



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Table: 8

What is the main requirement to start a business?

Needs Finance Qualification Self confidence Govt. support Total

No of respondents 8 3 9 0 20

Percentage 40% 15% 45% 0% 100%

Above chart shows that there are 45% of respondents prefer self confidence, 40% respondents

prefer finance, 15% prefer qualification and none of them prefer Govt. support to start a

entrepreneurship.

Table: 9

Whether entrepreneur tool for economic growth

Particulars Yes No Total

Respondents 20 0 20

Percentage 100% 0% 100%

Finance Qualification Self confidence Govt support

8

3

9

040% 15%

45%0%



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Above chart shows all the respondents agree with entrepreneurship tool for economic growth.

Table: 10

How entrepreneur tool for economic growth?


Creation of employment 10 50%

High productivity 7 35%

Tax contribution 2 10%

Cheaper price 1 5%

Total 20 100%

100%

0%

Respondents

Yes No


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Above chart shows that 50% respondents agree with entrepreneurs create a employment, 35% of

respondents for high productivity, 10% for tax payment, 5% are for cheaper price.

Table: 11

How entrepreneurship benefit to the economy?


Income distribution 9 45%

Increasing the per capital

income

6 30%

Utilization of raw-materials 2 10%

Utilization of local resources 3 15%

Total 20 100%

Creation of

employment

High

productivity

Tax

contribution

Cheaper price

10

7

2

150% 35% 10% 5%



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The above chart shows that how the entrepreneur grow the economy, in that 45% of respondents

prefer equal income distribution among the people, 30% believe increasing the per capita

income, 15% believe utilization of local resources, and 10% believe that utilization of raw

material.

Income

distribution

Increasing the

per capital

income

Utilization of raw-

materials

Utilization of

local resources

9

6

2

3

45% 30% 10% 15%



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Chapter-4

Findings

During the survey period we find some favorable and unfavorable factors which are

Most of the entrepreneurs are starting their business within the age of 20-40 with themain aim of self-achievement.

Most of the entrepreneurs like retail, and service sector. Most of the enterprises dont want manufacture sector because soon loosing the market

and high completion from large scale enterprises.

Entrepreneurship creates self employment to the entrepreneurs. Most of the entrepreneurs are marginally very small scale, they want start a business in

rural and semi urban places so it leads to development of regional economic growth.

The main obstacles of the entrepreneurs are lack of self-confidence, finance and findingthe right contacts for their business venture.

Small scale enterprises are contributing 17% economic growth and GDP; they willcontribute about 22% by the end of 2012.

Entrepreneurship leads to development of infrastructure in urban, rural, and all over thecountry.

Entrepreneurship leads equal distribution of income among the people and also increasesthe per capita income of the country.

There is no any educational requirement to the entrepreneurs primary is enough.

Suggestion

After finding the problems we have some suggestion they are

Entrepreneurship should grow in the country still in order to enhancing the productivityand income.

To motivate the entrepreneurs govt. should take some initiatives to develop theentrepreneurship in the country.


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Entrepreneurs should have self confidence and financial institutions offers more andmore assistant to the entrepreneurs in order to develop the small and medium enterprises

because they are the main player in the economic development.

Rural entrepreneurs should be increase in order to create a rural employment andgenerate high rural income.

More information are required to start a new business to the new comers so trainingcenters should be increase.

More subsidies and other technical assistant should be provide by the Govt.

Conclusion

Entrepreneurship is the tool for the economic development but some entrepreneurs fail in

their job because their self confidence. Indian small scale enterprises contributing 17% GDP at

present that will be 22% by 2012. Entrepreneurship must be developed and supported so that

there is a proliferation of SMEs in the country. An entrepreneur's entry into business does not

guarantee his/her survival. Attrition rate for new entrepreneurs is very high in many countries of

the world. While this may be because their chosen business inappropriate or a lack of adequate

technical or business expertise, one critical reason is that overall macro and micro environment

in which they are forced to operate. So India should utilize all the resources and should become

best entrepreneurial country among others Therefore a key consideration by the government

should be to critically evaluate the exiting macroeconomic policies and their impact on

grassroots entrepreneurship development.

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