Process of Entrepreneurial Development - Entrepreneurial Development B Com Notes | EduRev

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Process of Entrepreneurial Development : Entrepreneurial Development is an important activity in the economic field of a nation. Hence state and central governments put all efforts for Entrepreneurial Development at all levels. Different programmes are organised and sponsored from village level to national level. Of course training is the core activity under Entrepreneurial Development. It includes promotional, supportive and developmental programmes. But the process of Entrepreneurial Development is subdivided into three major stages as follows:

1. Pre-training stage: Under the first stage of the process, the prepatory activities for conducting Entrepreneurial Development training programmes are undertaken. Hence it is termed as pre-training stage of the process. It includes following activities:

(a) Planning Entrepreneurial Development training programmes required by local needs.

(b) Preparing training manual and circulars.

(c) Making proper publicity of the programmes for attracting potential entrepreneurs.

(d) Providing information and guidance to the interested individuals.

(e) Chalk out details of the training programmes.

(f) Calling applications, making the scrutiny and selection of applicants for the training.

(g) Organise necessary tools and equipments for training purposes.

(h) Communicating with the applicants for attending the training.

(i) Invite expert resource persons for the training programmes.

The pre-training activities are to be organised in systematic manner for the success of the training programmes.

2. The training stage :

The second stage of the process is conducting the training programmes as per schedule. The training programmes are conducted especially at local level which may be village, Taluka or District level. Government Agencies and non-government organisations organise such kind of Entrepreneurial Development training programmes. The District Industries Centre or Maharashtra Centre for Entrepreneurship Development are government agencies which organise the Entrepreneurship Development training programmes in Maharashtra. Of course some reasonable fees are charged, against which training literature, printed manual, refreshment, meals etc. are supplied to the participants. Under this stage, following activities are undertaken.

(i) Registration of participants and distribution of training literature, manuals and training schedules.

(ii) Arrangement of lectures by resource persons and experts.

(iii) Explaining the preliminary formalities and procedures for launching new business or undertaking.

(iv) Exposing new ideas and new investment opportunities to the participants.

(v) Providing the information about supportive institutes and agencies to the prospective entrepreneurs.

(vi) Providing the information regarding different schemes, concessions, facilities available for launching new business.

(vii) Injecting high stimulation among participants to become successful entrepreneurs.

(viii) Increasing morale and confidence of the participants for launching and managing new business.

(ix) Providing and injecting managerial skills, marketing techniques and technical knowledge to prospective and existing entrepreneurs.

(x) Promoting entrepreneurial and creative qualities among participants for transforming them into successful entrepreneurs.

(xi) Preparation of different project reports as a model project and guide the participants for making project report of the proposed business.

Along with the above activities, necessary supportive and subsidiary activities are also organised under this stage. Practicals, demonstrations and visits to factory sites are also organised under the training programmes. This stage attempts to make an individual an entrepreneur. Hence it is the most important stage in the process of Entrepreneurship Development.

3. Post Training Stage : Entrepreneurship Development aims at making prospective entrepreneur a real one and real entrepreneur into a successful one. It means that the object of Entrepreneurship Development is not only making entrepreneur, but making him successful entrepreneur. It is equally essential to sustain the development of entrepreneurship by making the existing entrepreneurs successful. From that point of view, post-training stage is equally important. Under the stage, the follow-up and nursing activities are undertaken. Searching prospective entrepreneurs and to train them and make them real entrepreneur is a continuous process of Entrepreneurship Development. Further the new entrepreneur with his new business must sustain himself with the business under adverse and uncertain situations also. Post-training activity decides the rate of success of the Entrepreneurship Development programmes.

Under this stage, following activities are conducted :

(i) Follow-up activities to transform trained prospective entrepreneurs into real entrepreneurs.

(ii) Follow-up for launching a new business or undertaking by the participants of the training programme.

(iii) Assisting the prospective entrepreneurs to prepare the project report and see that it is approved by the concerned authorities.

(iv) Guiding the prospective entrepreneurs to prepare the necessary documents, comply with the legal and technical formalities for starting a business.

(v) Providing the assistance for registration of the undertaking with competent authority.

(vi) Assisting to organise all necessary resources including machineries, rawmaterials, technical knowledge etc.

(vii) Assisting for making available the required funds and finance.

(viii) Providing managerial and technical advice for launching and managing the new business.

(ix) Marking available the market for the proposed products and guiding in marketing problems.

(x) Expert counselling for expansion and growth of the existing business of a new entrepreneur.

(xi) Providing guidance and assistance for rehabilitation of the sick unit launched by new entrepreneurs.

Entrepreneurial Motivation: It is very interesting to know what motivates people to go into business. Why do they become ready to accept the risk? Several research studies have been conducted worldwide to identify the factors that inspire the people to undertake business activities. Though, to earn money is an important imotivating force, people do not go into business and become entrepreneurs solely to make money. There are indeed several other factors that motivate people to become entrepreneurs. Let’s study what is exactly meant by entrepreneurial motivation and what factors motivate people to become entrepreneurs.

What is motivation?

The term ‘motivation’ has been derived from the word ‘motive’ which means an inner state of our mind that moves or activates or energizes or directs our behaviour towards our goal.

Thus, motivation is an inner spirit that activates the person’s behaviour towards the goals. Motivation may be defined as the process that motivates a person into action and induces him to continue the course of action for the achievement of goals.

Michael Julius defines motivation as “the act of stimulating someone or oneself to get a desired course of action.” ‘Motive’, ‘behaviour’ and ‘goal’ are regarded as three basic elements of the process of motivation.

What is entrepreneurial motivation?

The motives that stimulate the people to undertake entrepreneurial activities may be called the entrepreneurial motivation.
Entrepreneurship is a very risky proposition but even then some people take it up, because, there are strong motives or motivating factors that stimulate them to do so. The behavioral theories propounded by behavioural scientists explain what motivates an individual to behave entrepreneurially. Particularly Maslow’s Need Hierarchy Theory and David McClelland’s Achievement Motivation Theory are most relevant to the entrepreneurial behaviour of an individual.

Nature of Entrepreneurial Motivation: There are several different types of motivation, however, particularly the following four types of ‘motives’ stimulate the people to become entrepreneurs:

Process of Entrepreneurial Development - Entrepreneurial Development B Com Notes | EduRev

Let’s discuss them in brief.

1) Achievement Motivation: (n-Arc)
The need for achievement plays an important role in making an entrepreneur as successful. It is an inner spirit that activates an entrepreneur to strive for success.
David McClelland has developed Achievement Motivation Theory. According to him, an individual’s need for achievement (n-Ach) refers to the need for personal accomplishment. It is the drive that excels the people to success. People with high achievement motive take up the risk and want to win.

McClelland argues that the following three types of needs may simultaneously be acting on an individual:

i) Need for Affiliation (n-Aff)

ii) Need for Power (n-Pwr), and

iii) Need for Achievement (n-Ach)

According to him, in case of an entrepreneur, the high need for achievement is found dominating one. In his view, the people having high need for achievement are more likely to succeed as entrepreneurs.

People with high achievement motive are not influenced by money rewards or profit only, but they strive to satisfy their inner drives. Profit is only an external incentive for them.

McClelland’s theory gives appropriate answer to the questions: Why some people leave very cozy jobs to start their own enterprises which involves an element of risk? Why some merchants who are earning well, put their hard-earned money to stake in manufacturing? Why technologists and engineers start their own industry instead of going for safe job? All these persons have high achievement motivation.
They are unusually creative and they have high propensity of risk-taking capacity.
They want to take personal responsibility. They tend to persist in the face of adversity and take moderate risks and like to know the results of their efforts.

McClelland found achievement motivation was lower among people of underdeveloped countries than among those of developed nations.

2) Power Motivation (n-Pur).
McClelland defines the power motivation as a desire to affect the behaviour of individuals and to control and manipulate the surroundings. This means one’s desire to dominate and influence others by using physical objects and actions. Some people have drive for upward movement. They enjoy position, prestige and gaining influence over others.
This desire for power motivates people to establish human organizations and dictate them. This motive is so intense that some people become big business leaders and create their own empire.

3) Affiliation Motivation (n-Aff).
This refers to the need to establish and maintain friendly and warm relations with others. People as social animal desire friendship and association. They prefer co-operation rather than competition. People working in a group get more energy to undertake new responsibilities. The moral support of the group (may be relatives, friends, work group or any other social group) enhances the level of confidence and people prepare their mindset to accept the risk.

4) Extension Motivation: Being sympathetic to others and helping others to fulfill their ambitions is called extension motivation. The entrepreneurs with extension motivation help others while doing their own business. They use their competence and brilliance for the benefit of society. They always feel that their happiness lies in the happiness and progress of others.

The Entrepreneurial Motivating Factors: Several research studies have been conducted in India to identify the factors that inspire entrepreneurs. R. A. Sharma (1980) has done pioneering study in this regard. Studies done by BEVVN Murthy (1986) and P. N. Misra (1987) are also prominent in identifying various motivating factors that prompted entrepreneurs to undertake business activities. K. Sadhak (1989) has also contributed towards detecting the factors that motivated entrepreneurs.

The motivating factors reported by above mentioned researchers are more or less similar. All these factors have been summed up as follows.

1) Educational background / knowledge: The formal technical knowledge acquired through courses offered by renowned educational institutions is found to have motivated entrepreneurs to enter into industry. The example of Mrs. Kiran Muzumdar-Shaw can be cited here. She did her graduation in Zoology and post graduation in brewing and malting, which prompted her to establish Biocon Ltd. The Company (Biocon) started with the seed capital of just Rs.10,000/-  is now a multi-billion dollar company.

2) Occupational / Business experience: The occupational background or enough business experience in a particular line of business motivates the people to become entrepreneurs.

3) Desire to do something new: Creativity is the outcome of dynamic human brain. Some people always strive to do something new and innovative. The strong desire to do something new and independent in life prompts entrepreneurs to be in the business.

4) Family background: The entrepreneurial activities of fore fathers prompt the next generations to take up business activities. In India, the business background of family has motivated the people to enter into business. For example, Tatas, Birlas, Ambanis, Kotaks, Kirloskars etc.

5) Government assistance and support: Easy financial assistance from institutional sources and many other kind of support prompt some people to undertake business activities.

The assistance and support includes the following -

  • Seed capital assistance.
  • Easy availability of business loan and subsidy on it.
  • Machinery on hire purchase.
  • Leasing scheme.
  • Factoring scheme.
  • Availability of venture capital.
  • Tax concessions.
  • Export assistance.
  • Training in technical and marketing aspects.
  • Accommodation in Industrial Estates (such as sufficient open space / plot or factory shade etc.) and above all, the positive attitude of the government to help new entrepreneurs.

6) Encouragement from big business houses: The success stories of big business also motivate the people to become entrepreneurs. Not only that, some big business houses stimulate entrepreneurs to take up the production of allied or ancillary products. For example, automobile industry has motivated many medium and small entrepreneurs to undertake the production of halogen bulbs, horns and other accessories of vehicles.

7) Promising demand for the product / service: Ever increasing or heavy demand for a particular product or service attracts people towards production of such product / service. There is an expanding market for some goods or services, the entrepreneurs find their ways in such areas. Recently it was found that there is increasing demand for ‘fitness’ service, hence a number of new entrepreneurs opened up their ‘fitness centres’ in big cities as well as in small towns.

8) Unsound / weak units available at a cheap price.
When some ailing industrial unit (financially weak or sick unit) is available at cheap price, this attracts the entrepreneurs to take up such unit and revive it.
Interesting to note here that, Mr. Dhirubhai Ambani started production of cloth by purchasing a closed textile mill at Naroda. Further, Vidya Murkumbi and Narendra Murkumbi bought some ailing sugar mills and turned them around.

9) Availability of labour and raw material.
Availability of required type and grade of labour and material at competitive rates motivate people to undertake business activities. In Sivkashi, easy availability of labour comparatively at cheaper rates has motivated many entrepreneurs to start their business there.  Calendar printing, match-box making and crackers-making businesses have flourished there. The labour cost behind these products is very less due to cheap wage rates there.

10) Other factors.
BEVVN Murthy et. al. have studied and classified the motivating factors in three broad groups as follows:

A) Ambitious factors.

a) To make money.

b) To continue family business.

c) To secure self-employment.

d) To fulfill desire of self / wife / parents.

e) To gain social prestige.

f) Making of descent living.

g) Self-employment of children.

h) Desire to do something creative.

B) Compelling factors.

a) Unemployment.

b) Dissatisfaction with the job so far held.

c) Make use of technical or professional skills.

d) Revival of sick unit started by father.

e) Make use of idle or excess funds.

f) Maintenance of large family.

C) Facilitating factors.

a) Success stories of other entrepreneurs.

b) Experience of business.

c) Inherited property.

d) Encouragement by family member / friends / relatives etc.

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