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ENTREPRENEURSHIP
DEVELOPMENT
Factors Affecting
Entrepreneurial Growth
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Factors Affecting Entrepreneurial Growth
1. Economic Environment:
One of the most important factor affecting
entrepreneurship is economic environment. It comprises
of capital, labor, raw material and market demand.
 Capital: is one of the most important factor 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.
 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.
 Raw Materials: it is one of the basic ingredient required for

production. Shortage of raw material can adversely affect
entrepreneurial environment. Without adequate supply of
raw materials no industry can function properly and
emergence of entrepreneurship to is adversely affected.
 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.
2. Social Environment:
Strongly affect the entrepreneurial behavior, which
contribute to entrepreneurial growth. The social setting in
which the people grow, shapes their basic beliefs, values
and norms. The social factors can be
 Family Background – Joint Family can Provide Family
Resources to Invest and Expand Family Business.
 Friends and Relatives, Religion, Social status
2. Social Environment:
 Social Mobility
Degree of social and geographical mobility and the nature
of mobility channels within a system.1st view says high
degree of mobility is favorable for entrepreneurship
development. 2nd view is lack of mobility possibility
promotes entrepreneurial growth. 3rd view says a system
should neither be too rigid nor too flexible. If it is too
flexible then individual will settle towards other roles. If it is
too rigid entrepreneurs will be restricted along with other
activities.
 Social Marginality
Refers to a state of being excluded from social activity as
an "outsider."
Positively influence entrepreneurship
3. Compelling Factor
◦ Many a times, it is a compulsion rather than willingness
which forces one to become entrepreneur whether he
succeeds or fails.
 Strong desire to do something independent
 Government incentives.
 To make use of their technical and professional skill
◦ Manufacturing experience
◦ Business experience
◦ Technical know how
 Excess funds lying idle can also encourage one to
become entrepreneur.
 Responsibility of maintenance of large families, shortage
of funds
4. Cultural Factor
◦ Tangible man made objects like furniture .
◦ Intangible concept like laws, morals knowledge.
◦ Values and behavior accepted within the society.
5. Facilitating Factor
◦ Elders are resistant to permit young entrepreneur.
◦ Parents should encourage the young entrepreneur
◦ The success stories of entrepreneurs can be
incorporated in the curriculum.
6. Psychological Factor
◦ Achievement motivation means a drive to overcome
challenges.
◦ It is a personality characteristics which is a major
determinant of entrepreneurship development.
◦ Average level of achievement motivation existing in a
society ensures a relatively high amount of
entrepreneurship in the society.
 People with low achievement motivation work for money or
other such incentive.
 People with high achievement motivation work for status,
prefer personal responsibility for decision, take moderate risk
and possess interest in concrete knowledge of the result.
◦ The trait of need for achievement can be developed through
various training programs.
7. Attitude of Government:
Government all over the world can play a very important
role in the emergence of entrepreneurship. Positive
actions by the government can facilitate growth of
entrepreneurship whereas negative actions can adversely
influence entrepreneurial emergence & growth. It is the
govt. which regulates business activities.
 Govt. policies are going to influence all the decisions of the
entrepreneurs regarding what to produce, how much to produce,
of what quality to produce where to produce and for whom to
produce.
 The entrepreneurs are to operate within the concessions and
limits set by the govt. It is in the interest of the potential
entrepreneur to thoroughly scan the govt. policies before taking
decisions with regard to setting up his enterprise.
 Government should maintain a proper distribution
of economic power between private and public
sector.
 They Encourage the tempo of industrialization by
spreading entrepreneurship to every city, town or
village.
 They should disseminate the entrepreneurial talent
concentrated in a few dominant communities to a
large number of people of varied social and
economic groups.
 Several institutes should be established to
encourage the entrepreneurship.
8. Education and Technical Know How

 Education, entrepreneurship and development are
interrelated. Education helps in the development of
capabilities of individuals which facilitates the emergence
and growth of entrepreneurship
 In the modern competitive world to survive the
entrepreneurs have to keep an eye over the technological
advances taking place around. These technological
development provide opportunities for the entrepreneurs to
develop and produce new product.
9. Financial Assistance from Institutional Sources

◦ Liberal financial assistance from institution certainly
boosts moral of young entrepreneurs.
 For seeking the assistance it is necessary for the
entrepreneurs to have some financial base and the
institutions and banks also provide facilities in the form of
finance, consultancy, purchase of land, availability of fixed
assets on hire-purchase installment.
◦ The government grant finance to the entrepreneur
on concessional basis at the low rate of interest
◦ Various types of subsidies, concessions and
facilities are given to attract entrepreneurs in
backward area.
10. Accommodation in Industrial Estate

◦ The industrial estate are meant to provide wide
variety of facilities to the entrepreneur. Including
common production and testing facilities.
◦ The provision of industrial estates has helped
 Create new employment opportunity
 Disperse industry outside the concentrated cities
 Relocate the existing units operating in congested
areas
 Raise the efficiency of small units through common
facilities.
11. Encourage from Large Business

◦ Reservation policy initiated by the government
prohibits the large houses to compete with the
small.
12. Machinery on Hire-purchase

◦ Entrepreneurs are supplied machinery through
liberalized terms and condition

Time Value of Money

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ENTREPRENEURSHIP

 Labor: Easy availability of right type of workers also effect

 Raw Materials: it is one of the basic ingredient required for

 Market: The role and importance of market and

8. Education and Technical Know How

9. Financial Assistance from Institutional Sources

10. Accommodation in Industrial Estate

11. Encourage from Large Business

12. Machinery on Hire-purchase

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