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How to Growth Entrepreneurship?


How to Growth Entrepreneurship?

   Socio-economic growth encompasses increase in per capita income, education, health and environmental protection.

            Classical economists regarded lack of capital as the critical constraint to economic growth. In recent year, human capital has assumed important. Entrepreneurship is human capital.

Entrepreneurship Life Style

          The role of entrepreneurs has been important in the socio-economic growth of many countries. They pull together human, capital, material and information resources to convert opportunities into new ventures. They create new jobs. They introduce modern technology and produce new products. They are change agents.

          Entrepreneurship is the driving force for socio-economic growth in the following ways:

  1. Capital Formation: Capital is an important factor for economic development. Capital formation is an addition made to the stock of physical and human capital. Entrepreneurs stimulate investment interest in new ventures to mobilize idle saving of public. Fuel economic growth.

  2. Employment Creation: Entrepreneurs create employment opportunities for self and others. New business ventures are an important source of employment opportunities. Unemployment goes down. Income levels increase. They provide employment to special focus groups. Such as women and disadvantaged persons.

  3. Increased Productivity: Entrepreneurs income. They make effective utilization of resources. This leads to increases in production and productivity. The use of new technology facilities productivity increases. Economic growth increases. Resources get effectively exploited.

    – Entrepreneurs reinvest profits to expand an existing venture or start new ventures. Resources are reallocated to productive uses. New industries emerge.

  4. Balanced Development: Entrepreneurs start new ventures. Incentives and facilities granted by the government serve as an attraction for starting a business is backward regions. This promotes balanced regional development. Local resources get utilized.

    – Entrepreneurs establish backward linkages with the suppliers and forward linkages with the distributors. This aids balanced development.

  5. Equitable Distribution: Entrepreneurs stimulate the equitable distribution of wealth, income and political power. By starting risky new ventures and running them successfully, they help reduce the concentration of wealth, income, and political power in the hands of big houses and global enterprises. Local ownership and control are ensured.

  6. Export Promotion: Entrepreneurs develop new products. They tailor their products to the changing needs and preferences of foreign customers. Exports bring valuable foreign exchange. Exports are essential for economic development. Entrepreneurs also facilitate import-substitution.

  7. Industrialization: Entrepreneurial activities are the prime source of industrialization in developing countries. Such activities provide employment opportunities. People learn new skills and earn more income. Products become cheaper and of good quality. New products are invented and marketed.

                  A healthy economy is characterized by new ventures established by entrepreneurs. Entrepreneurial revolution is a critical contributor to socio-economic growth. Entrepreneurial firms create most jobs in the economy.

Factors affecting Entrepreneurial Growth

               Entrepreneurial growth refers to all-round growth in terms of profit, sales and goal achievement over a period of time.


            Entrepreneurship does not grow automatically and spontaneously. Factors that affect its growth can be classified into:

  1. Economic Factors

  2. Non-Economic Factors

                     Let’s discuss deeply factors affecting Entrepreneurial Growth:

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Economic Factors affecting Entrepreneurship

          Economic factors refer to all economic surrounding that affects entrepreneurship. They consist of economic parameters.

  1. Economic System

  2. Capital

  3. Human Resources

  4. Raw Materials

  5. Market

  6. Competition

  7. Franchise

Economic System:

              The economic system of a country of a greatly affects entrepreneurship growth. The various models of economic system can be:

Entrepreneurship Life and affect

  1. Free Market Economics (Capitalism): They encourage freedom of choice and individual initiative. Competitive market mechanism guides business decisions. Profit serves as the driver of an economic engine. Factors of production are privately owned. This economic model is ideal for entrepreneurship growth. USA presence and example of a free economy.

  2. Centrally Planned Economies (Socialism): They are planned, controlled and regulated by the government. Public enterprises play a key role in the economy. The factors of production are government-owned. There is no room for individual initiative and creativity. This model is not suitable for entrepreneurship growth. North Korea and Cuba presents examples of centrally planned economies.

  3. Mixed Economics: They are a mix of the free-market economy and a centrally planned economy. Both the public and private sectors coexist. The private sector is regulated by the government. This model is suitable for entrepreneurship growth in small scale enterprises. Nepal presents an example of a mixed economy where public utilities are state-controlled.


          Capital is an important factor of production. Capital refers to liquid as well as physical assets. Liquid is known as financial capital. It can be easily converted into cash.

         New venture creation is unimaginable without capital. Entrepreneurship requires capital as a prerequisite. An entrepreneur combines various factors of production, such as land, labor, raw materials and machines with the aid of capital. The expansion and diversification of business require capital. So do acquisitions and mergers. Production without capital is not possible.

           Capital can be provided by the entrepreneur from his personal savings and assets. It can also be mobilized through a loan from family, friends, and relatives. Loan can also be obtained from financial institutions, such as commercial banks, development banks, finance companies, and other institutions. Loan capital carries fixed interest payments by an entrepreneur. Profits made by entrepreneurs can also be plugged back in business to add to capital. This promotes internal growth.

        The availability of capital promotes entrepreneurship. The lack of capital limits entrepreneurship.

Human resources:

                Human resources are an important factor of production. People possessing energy and physical strength alone do not become human resources. People become human resources when they combine physical strength with competencies. Competencies consist of knowledge, skills, attitude, and potential for growth.

How to growth Entrepreneurship

             Qualitative aspects, rather than quantitative aspects, of human resources, are important for the growth of entrepreneurship. New ventures need to be managed. Skilled and qualified human resources are needed to manage innovation. Skilled human resources tend to be more mobile and productive.

           Lack of low-cost human resources, however, does not prevent the growth of entrepreneurship. Capital-intensive techniques can be used. Similarly, labor-saving technologies can be used if the labor is of the high cost. Japan and USA are using robots to deal with the problem of the high cost of labor.

Raw Materials:

                     Production is not possible without raw materials. The easy availability of raw materials facilitates the growth of entrepreneurship. Modern economics, however, are getting service-oriented. The lack of raw materials does not prevent the growth of entrepreneurs whose products are services, ideas, experiences, and information.

                    Raw materials can be imported. Technological innovations can compensate for raw material inadequacies. Japan, Hong Kong, Singapore, Korea and Taiwan present examples where raw material scarcity led to technology-oriented entrepreneurship growth.


                 A market consists of all potential customers having wants. They possess the ability and willingness to engage in exchange to satisfy wants. All products need to be market.

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               The market size and potential influences the growth of entrepreneurship. Entrepreneurship generally starts a new venture to satisfy the unmet needs of the customers or to better satisfy their current needs. The size, composition, and growth of the market influence the growth of entrepreneurship.

                In modern times, entrepreneurship is by no means limited by the limitation of local markets. The emergence of regional groupings. Such as SAARC and ASEAN has facilitated the growth of regional markets. The growing wave of globalization has been creating the world as one market.

              The revolution in transport and communications has substantially lowered logistics cost. This has facilitated access to foreign markets for entrepreneurs.

           Entrepreneurs generally practice niche marketing. They focus on those parts of target markets where needs remain unmet.


             The competitive environment facilitates the growth of entrepreneurship. Monopoly, oligopoly and monopolistic competition restrict the growth of entrepreneurship. So do licensing requirements. They restrict entry and mobility.

Women Entrepreneurs

  1. Competition can be in terms of products or geographic. A competitor is a firm in the market selling a product which is perceived as sustainable by buyers.

  2. Entrepreneurs survive and grow through competitive advantage. This advantage can be in terms of quality, cost, price or image. Markets with cut-throat competition do not attract entrepreneurs. Globalization has brought competition, everyone.

  3. Entrepreneurs have a greater chance of success in rapidly changing high growth industries. They go for market niches with a differentiated product.

Models of Competitions

Monopoly: One firm provides one product.

Oligopoly: Small number of large provide similar products.

Monopolistic: Many small firms offer differentiated products.

Pure Competition: Many small firms offer the same products.

Also Read: Entrepreneurs and Growth: An Option, Obligation or Obsession


               The franchise is a contract which grants the right to use a brand name for royalty. It can be for product, service and entire business enterprise. Advantages of the franchise are:

  1. Training and Guidance: They are provided by the franchiser. Professional management training is given to the owner and the staff. Continuing is provided is provided. Quality assurance is also provided.

  2. Brand Name Appeal: The franchiser’s brand name appeals to the customer. The national advertising by the franchiser creates such brand name appeal. The layout facilitates and decorations are standardized.

  3. Successful Track Record: Most franchises have a successful track record. The person buying the franchise is generally assured of success.

  4. Financial Assistance: The franchiser also provides financial assistance to run the operations. The banks and financial institutions associate franchise operations with low risk.

    – Internet franchising is growing in recent years for communications and advertising.

    – Fast food and retailing are the stars of franchising.

Non-Economic Factors affecting Entrepreneurship Growth

             Economic factors are important but not sufficient conditions for entrepreneurship growth. The influence of economic factors depends on the supportive role of non-economic factors for entrepreneurship growth.

           Non-economic factors are all the political, social, psychological and technological surroundings that affect entrepreneurship. The important non-economic factors are:

  1. Political Factors

  2. Social Factors

  3. Psychological Factors

  4. Technological Factors

               The non-economic factors affecting entrepreneurship are mutually dependent and mutually reinforcing. A single factor on its own cannot effective for the growth of entrepreneurship.

Women Entrepreneurship

Political Factors:

Political factors are related to the management of public affairs. They also include legal factors consisting of laws, rules, and regulations. They define what entrepreneurs can and cannot do.

The important political factors are:

  1. Government Policies: Government policies and actions can help or hinder entrepreneurship growth. Public policies, related to industries, trade, energy, technology, tourism, labor, and taxation can promote or constrain entrepreneurship.
  2. Government Auctions: The government actions can promote entrepreneurship by developing infrastructure, such as roads, industrial districts, communication networks, etc. It can also provide utilities, such as water, electricity, and sewerage facilitates at low rates.

    – The government actions can provide incentives, subsidies, and concessions to prospective entrepreneurs. It can also provide special packages, cheap finance, and training program.

    – The government actions can decrease state participation in economic activities through privatization and outsourcing. They promote entrepreneurship.

  3. Government Regulations: Government regulations also affect entrepreneurship growth. Such regulations can be related to licensing and location of a new venture, investment, foreign exchange controls, joint ventures, technology transfer, price controls, tariffs, and quotas, etc. They also provide a legal framework for a new venture. The total commitment of the government is a must for the growth of entrepreneurship. The role of the government should be supportive and entrepreneurship-friendly. Constraints should be removed for entrepreneurship to grow and prosper.

Social Factors

Social factors refer to all social surroundings that affect entrepreneurship. They are related to human relationships. Social conditions are important for the growth of entrepreneurship. The important social factors are:

  1. Legitimacy of Entrepreneurship
  2. Social Mobility
  3. Marginal
  4. Security
  5. Social Change

The legitimacy of Entrepreneurship: Entrepreneurship operates within society. It aims to satisfy social needs. The socio-cultural norms and values of society should grant approval to entrepreneurship behavior. They should provide legitimacy to entrepreneurship. The social climate should be conducive and supportive of entrepreneurship. Entrepreneurs should get a respectable status in the society. The attitude of the society should be positive towards entrepreneurship.

Also Read: The Entrepreneurial Process

Social Mobility: A high of social mobility is conducive to the growth of entrepreneurship. Successful entrepreneurs should have upward mobility in the social hierarchy. The society should provide channels for such mobility.

-There is a point of view which argues that lack of social mobility in rigid social systems promotes entrepreneurship. Still, others advocate that the social system should be neither too rigid nor too flexible for the growth of entrepreneurship. Caste-based social barriers limit entrepreneurship.

– It should be noted that social mobility alone is not enough for the growth of entrepreneurship. Its influence is determined by other non-economic factors.

Marginal: Marginal people are individuals or groups on the perimeter of a social system or between two social systems. Marginal position can be based on religious, cultural, ethnic or migrant minority groups. Marginal promotes entrepreneurship. Social legitimacy to entrepreneurship helps marginals to assume entrepreneurial roles.

The marginal groups should have a positive attitude towards entrepreneurship.

Security: Security facilitates entrepreneurship. It can be from minimal to moderate. No individual will venture toward entrepreneurship if there is fear of losing economic assets or of being subjected to negative sanctions. Entrepreneurs should have both physical as well as economic security.

Social Change: Social change implies modifications in relationships and behavior patterns of individuals or groups in society. Lifestyle, social values, and norms change over time. Social change is reflected by disintegrating joint family, delayed marriages, working women, and social pressures against smoking and environment pollution. Entrepreneurship growth is affected by social change. It should change with social change.

Psychological Factors

Psychological factors that affect entrepreneurship growth are:

  1. Need to achieve
  2. Withdrawal of social respectable

Need to Achieve: The high need for achievement promotes entrepreneurship growth. This needs motives entrepreneurs towards the accomplishment of challenging jobs. They take the initiative to start a new venture, convert innovations into new products, and take risks.

What is Women Entrepreneurship

– Entrepreneurship growth is high in those societies where the need for achievement is relatively higher.

Withdrawal of Social Respectable: Entrepreneurship is the product of social change. Social change causes a loss in the status of certain social groups. Withdrawal of social respect of such groups motivates them to seek outlets in entrepreneurship.

The reasons for status withdrawal can be:

  • Displacement of the group from the power.

  • Defamation of important symbols of the group.

  • Status inconsistency of the group.

  • Inability to receive expected status in a new society.

Technological Factors

Technological factors refer to all technological surroundings that affect entrepreneurship. The technology converts resources into products. It consists of skills, methods, systems, and equipment. It includes inventions and innovations.

Technology affects entrepreneurship growth by bringing about changes in jobs, skills, lifestyles, products, production methods and process. Automation, computerization, robotics, informatics, biotechnology, and nanotechnology have all influenced entrepreneurship. Technology is the main source of new ventures for entrepreneurs.

The key technological factors that affect entrepreneurship are:

  • Level of Technology: It can be labor-based where human labor is mainly used. It can be capital-based where machinery is mainly used.
  • The pace of Technological Change: Technology is a dynamic force. Its speed of change is fast. It can make existing ventures obsolete. It can create entirely new ventures. It can rejuvenate existing ventures by technological up-gradation. Entrepreneurship must adapt to changing technology.
  • Research and Development (R & D): R & D is the source of innovation. Increased budgetary allocations for R & D promote the growth of entrepreneurship.
  • E-commerce: E-commerce is the new wave in the transaction business. It is marketing, promoting, buying and selling of goods and services else tropically via the internet. The modes of internet use E-commerce can be:

    – E-tailing: Websites for shopping and making purchase called virtual stores. Reaching current, new and potential customers.

    – EDI (Electronic Data Interchange): Business to business exchange.

    – E-mail and Computer Networking (Faxing)

    – Business to business buying and selling.

    – Websites with e-manes are developed for:

    – Company Information

    – Corporate image building

    – Product information

    – Marketing: Advertising, product sale, customer communications, online catalog

    – Customer service-oriented

    – Recruiting of employees

    – Business-to-business transaction online

    – Business-to-business communications

    – Various other processes

Entrepreneurship Growth


               The role of entrepreneurs has been important in the socio-economic growth of many countries. They pull together human, capital, material and information resources to convert opportunities into new ventures. They create new jobs. They introduce modern technology and produce new products.

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