1.3 Influencing Factors

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ENTREPRENEURSHIP

DEEPAK BAJAJ


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Factors InfluencingEntrepreneur & Entrepreneurship

SESSION III

Chapter I - Entrepreneur & Entrepreneurship Management


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FACTORS INFLUENCING

ENTREPRENEUR

What makes an entrepreneur create a successful new business?Researchers, sociologists, economists have been exploringseveral avenues characteristics of an entrepreneur, life-pathcircumstances of an individual, environmental factors & finallythey examined the desirability & feasibility of becoming anentrepreneur which also affects the decision to engage inentrepreneurship. Following three basic factors are mainlyresponsible for an individuals desirability & feasibility of

becoming an entrepreneur.

Personal Characteristics Life-Path Circumstance

Environmental Factors


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Personality Characteristics

Perception ofDesirability&

Feasibility

NewVentureLife Path Circumstances

Environmental Factors


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Personality CharacteristicsOne fascinating question surrounding entrepreneurship iswhether entrepreneurs possess personality traits &

background experience that sets them apart from others.Personal Characteristics

Given the variety of businesses that entrepreneurs havecreated, identifying characteristics that entrepreneurs havein common is not an easy task. There are only a few commonpersonality characteristics attributed to entrepreneurs -

Psychologist David C McClellandhas argued thatentrepreneurs tend to have high need for achievement(nAch).

Such individuals gravitate towards situations in which theycan achieve results through their own efforts, pursuemoderately difficult goals & receive immediate feedback onhow they are doing. Though high nAch is found in performingmanagers, salespersons, professionals etc also, it remains the

most significant ingredient in entrepreneurial success.


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Another characteristic that has been found in entrepreneursis an internal locus of control.

Such people tend to have belief that that they control their

fate largely through their own efforts. This kind of beliefguides other high performer managers, professionals,salespersons etc. also.

One characteristic that sets entrepreneurs apart frommanagers etc. is high tolerance for ambiguity, ability tocontinue functioning effectively & persist even whensituations are highly uncertain.

Since entrepreneurship involves starting new organizations, agreat deal of uncertainty is frequently experienced. Manager

may not have the same degree of tolerance for ambiguities &uncertainties.


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Background Characteristics

Inquiries into child hood family environment haveconsidered factors like, birth order of the child & parentsoccupation. First born or the only child is considered to havegreater share of parents time leading to increased selfconfidence.

On the other hand, there is considerable evidence thatentrepreneurs tend to have self employed fathers & often

self employed mothers or jointly owned business. Having one or both parents as business owners provides a

salient incentive for potential entrepreneur.

Education & level of awareness is another important factor.Though entrepreneurs may be less educated than managersor professional, they have accumulated good knowledgeabout the type of enterprise they intend to start.

It is seen that female entrepreneurs generally have highlevel of education.


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Common range of age for entrepreneurs is between 25 40years. This is not rigid though; entrepreneurs below 25 years& up to the age of 55 years have also endeavoured to startnew ventures.

Work history & related experience is a significant factor ininitiating a new venture. It is observed that in a new venture,most of the founders had worked in the same industry for longenough to gain adequate experience & expertise in the field.

Creating new venture seems to be easier after the first one.This is the corridor principlewhich says that the process ofbeginning a new venture helps entrepreneurs visualize otheropportunities that they could not envision or take advantageof until they started the initial venture.

Understandably individuals who start their entrepreneurshipat lower age are better placed to exploit the corridor principlebecause of their potentially longer career.


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Life-Path Circumstances

Several types of experiences or life-paths increase theprobability of an individual take up entrepreneurship.

Major factors are discussed as follows: -

Unsatisfactory Work Environment

Negative Displacement Career Transition

Positive-Pull Influencers


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Favourable Environmental Conditions A number of environmental conditions appear to influence

entrepreneurs. Generally, they deal with the basic perquisitesof running a business, such as adequate financing, technical/skilled labour force, accessibility of suppliers, accessibility ofcustomers or new markets,easy availability of land,transportation & support services.

Other indirect conditions which provide support may be thepresence ofincubator organizations, government influences,experienced entrepreneurs, support network, proximity ofuniversities, attitude of the population & their living conditionsetc.

Incubator organizations are those whose purpose is to nurturenew ventures in their early stages of evolution by providingspace, stimulation, support & a variety of basic services atreasonable charges.


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Support networks typically important to entrepreneurs aremoral-support networkandprofessional-support network.

Moral support network would include family members &friends who provide continuous encouragement,understanding & even assistance whenever needed.

Professional support network encompasses cooperative

relationship with experts who provide advice & counsel thathelp an entrepreneur function effectively.

This type of network would include business associates,professional associations, personal affiliations such as sportsactivities, civic groups, school/college alumni group etc.


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Perception of Desirability & Feasibility When all above mentioned factors & circumstances act

positively on an individual in providing him encouragementtowards entrepreneurship, he increasingly perceivesentrepreneurship as desirable.

However, with perceived desirability potential entrepreneur

must also make a dispassionate assessment of the feasibilityof creating the new enterprise.

While personal characteristics & life-path circumstances playa major role in making this judgment, environmentalconditions are a critical aspect of feasibility assessment


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ENTREPRENEURIAL STIMULANTS

A variety of factors have helped stimulate entrepreneurialactivities & encourage economic development in our country.

Some of these stimulants are: - Increasing focus on capital formation, making capital

available to the entrepreneur to start the new enterprise.

The environment to transform scientific & technical

advancements into economically viable projects. Supportive government policies & programs.

Availability of sufficient training facilities.

Collaborative relationship between business & research

efforts & easy transferability of technology to the marketplace.

Endeavour to create an ideal climate for innovation &entrepreneurial activities.


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FACTORS AFFECTING

ENTREPRENEURSHIP GROWTH

Entrepreneurship has opened avenues of great scope in Indianeconomy.

Our national economy is most suited to the growth of smallbusiness enterprises. Small business units offer a moreconvenient means of nurturing & developing entrepreneurshipby providing the means of entry into business for newentrepreneurial talents.

Small scale industries are labour intensive & play animportant role in solving the problem of unemployment.

These industries provide industrial experience & serve as

training ground for a large number of entrepreneurs. However, in spite of favourable policies, governmental

support, change in attitude of the society, the growth ofentrepreneurship in India suffers due to certain factorsinherent in our social system.


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Growth of entrepreneurship in any country or region isgenerally affected by following factors:

Economic Factors

Infrastructural Facilities

Availability of Capital

Market Risks

Availability of Skilled Labour Social Factors

Cultural Factors

Personality Factors

Psychological & Sociological Factors


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Everett Hazen - Entrepreneurship is the psychologicalconsequences of social change, radical loss of status of asocial group.

Arthur H Cole - Besides wealth, entrepreneurs seek power,prestige, security & service to society.

Stepanek - Entrepreneurs look for independence, selfesteem, power & status in society.

Evans - Managing entrepreneurs look for security, innovatingentrepreneurs are interested in excitement & controllingentrepreneurs want power & authority.

Rostow first generation of entrepreneurs seek wealth,second generation prestige & third generation looks for art &beauty.


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Thomas Begley & David Boyd- Entrepreneurial attitudebased on psychological considerations has five dimensions.

Need Achievement is the first dimension. Second dimension is Locus of Control.

Willingness to take risks is the third dimension.

Tolerance for ambiguity is the fourth one.

Fifth dimension is what psychologists call Type Abehaviour. It is chronic incessant struggle to achievemore & more in less & less.


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Thank You

1.3 Influencing Factors

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