Banaras Hindu University

A Project On:
Factors Influencing Entrepreneurship
Submitted To: Submitted By:
Dr. Alok Kumar Rai
Ashish Kumar(05)

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 Sushil Mohan(33)

Index:

Classification of factors…………………………………………………….3

Individual factors……………………………………………………………4

Environmental factor………………………………………………………6

Economic factors……………………………………………………………..7

Technological factor…………………………………………………………8

Socio-cultural factor………………………………………………………...9

Legitimacy of Entrepreneurship………………………………………..9

Social Mobility……………………………………………………………….10

Marginality…………………………………………………………………..10

Security…………………………………………………………………………11

Support Systems to Entrepreneurship………………………………..13

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ntrepreneur is a person who is willing and able to convert a new idea or invention into a successful in
:-Schumpeter

The definition of entrepreneurship is clearly defining that how an entrepreneur establish their
enterprise with such a superb quality of willingness and to convert it in success. There are
various definitions which emphasize at the factors which influence the entrepreneurs and
entrepreneurship.

These factors could be classified as-

 Individual factors
 Environmental Factors
 Socio-Cultural Factors
 Support Systems Entrepreneurship

Individual

Environmental Support System

Socio-Cultural

All humans have basic needs and a

desire to sustain life. Some people choose to work for themselves because a successful business can be
rewarding. Socioeconomic repression is perhaps the one factor that could force someone into
entrepreneurship. Education and age could impact entrepreneurship, but factors which define culture,
such as behavior, are inconsequential to influence an enterprise.

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 Factors
age by taking away Influencing Entrepreneur
man's initiative andSuccess - "You cannot build character and
independence."
courage by taking away man's initiative and independence." Abraham Lincoln

There are several factors influencing entrepreneur success. Getting the facts about becoming an
entrepreneur before you launch your business can help to ensure you are prepared for the
challenges that lie ahead.

Individual Factors:
There are number of individual factors may possible for an individual which is going to establish
an enterprise. These factors may be termed as:

 Desire to do something new

 Educational background
 Occupational Background

Desire to do something new:

It is a purely an individual factor which is depends upon person to person that what he think,
which type of innovative ideas came in his/her mind and how he/she manage the things related
to this business.

I am taking two examples of two different people in same area of specialization

Mr.A.K.Jha: Director of JRS Tutorials Varanasi.

.C.Wagla: Carrier Launcher Head of Varanasi centre.

blished Carrier Launcher in 1998 for training ofEstablished JRS Tutorials in 1992 for training of IIT and Medical as
MBA aspirants.

esigned to the post of chief executive officer from Usha International

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 Educational background:

It is quite true that an educated person may perform better in comparison to an uneducated
person. In most of the case of new entrepreneurship, entrepreneurs are educated but it is also true
that education is not a factor which may influence the entrepreneurship at high level.

There is number of people who was not educated but they known as a good entrepreneur.

ure, Student
Disney’s Magazine.
career He is the owner
and accomplishments of astounding.
are the Virgin brand and its
The most 360 companies.
influential His
animator, companies
Disney holds inc
th

Occupational Background:

In most of the cases an entrepreneur just influence by his / her inheritance whatever the business
is running in his/her family.

Mr. Rakesh Kohli (Chief Executive officer and founder Chair) established Stag International just
because of his father was a simple Carpenter. Stag International generally assembled the
International Table Tanis Table.

Sachin Tendulkar is just teaching Cricket because he knows his son could better

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Environmental Factor:
Environmental factors consist of segments which termed as

 Political and Legal

 Economical
 Social and Cultural
 Technological

These are the terms which surround the environment for an entrepreneur. Therefore an
entrepreneur must have to ready for any change in these factors termed as Environmental Factor.

Political and Legal:

This is one of the prominent factors who directly influence the entrepreneur by the rule and
regulations. Rule and Regulations generally made by the regulatory authority and it directly
affect the enterprise and entrepreneurs.

George Fernandez (Union Industry Ministry -1977)

Cola ban was just an example of political and legal factor for an enterprise.

In 1954 government decide to nationalization of all airlines.

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If an entrepreneur is interested to establish an enterprise would have to know the limit of
investment, taxation, subsidies provided by the government.

Economical Factor:
From a strictly economic point of view, it can be said that the same factors which promote
economic development, account for the emergence of entrepreneurship also.

These factors could be termed as:

 Capital
 Labor
 Raw material
 Market

Capital:

Capital is one of the most important perquisites to establish the enterprise. Availability of capital
facilitates the Entrepreneur to bring together the Land of one, Machine of another, and Raw Material of
yet another to combine them to produce goods.

Capital is, therefore, regard as Lubricant to the process of production.

Labor:

 Availability of Labor

 Quality rather than Quantity

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Raw material:

The necessity of raw materials hardly needs any emphasis for establishing any industrial activity, and
therefore, its influence in the emergence of Entrepreneurship.

Market:

Avaibility of market attract the entrepreneurs because they are meant for fulfillment of the need of the
people.

Practically , monopoly in a particular market becomes more influential for entrepreneurship than a
competitive market .

Technological Factor:
 Awareness of new Technology
 Fore sight of new Technology
Awareness about new Technology and foresight regarding new technology always
influence the entrepreneurs.
An entrepreneur must have to attentive about the technology and its important
because in most of the cases it becomes the reason for failure.

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Socio-cultural Factors affecting Entrepreneurship:
Socio-cultural factors also have a great impact on entrepreneurship. Some of these factors
are as follows:

1. Legitimacy of Entrepreneurship

2. Social Mobility

3. Marginality

4. Security

5. Family Background

6. Friends, Relatives and Teachers

7. Religions

All the aforesaid factors do have the impact on the Entrepreneurship, so all these are to
be elaborated as follows-

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1. Legitimacy of Entrepreneurship
The proponents of non-economic factors give emphasis to the relevance of a system of
norms and values within a socio-cultural setting for the emergence of entrepreneurship. In
professional vocabulary, such system is referred to as the ‘legitimacy of entrepreneurship’ in
which the degree of approval or disapproval granted entrepreneurial behavior influences its
emergences and characteristics if it does emerge. While Schumpeter recognizes the importance
of such legitimacy in terms of appropriate social climate for entrepreneurship. Cochran calls it
cultural themes and sanctions. The social status of those playing entrepreneurial role has been
considered one of the most important content of entrepreneurial legitimacy. To increase the
legitimacy of entrepreneurship, some scholars have proposed the need for a change in traditional
values, which are assumes to be opposed to entrepreneurship. Scholars like McClelland also
point out that a complete change may not be necessary but traditional values can be re
interpreted and synthesized with newer values.

We also believe that entrepreneurship will be more likely to emerge in setting in which
legitimacy is high. But, there are others too who took the opinion that entrepreneurship can
emerge even when entrepreneurial legitimacy is low or even negative provided that the
Government actions can overcome the negative orientation.

2. Social Mobility
Social mobility Involve the degree of mobility, both social and geographical, and the
nature of mobility channels within a system. The opinion that the social mobility is crucial for
entrepreneurial emergence is not unanimous. Some hold the view that a high degree of mobility
is conducive to entrepreneurship. Both Hoselitz’s need for “openness” of a system and
McClelland’s need for “flexibility” in role relations imply the need for possibility of mobility
within a system for entrepreneurship development. In contrast, there are another group of
scholars who express the view that a lack of mobility possibility promotes entrepreneurship.
Some even speak of entrepreneurship as coming through crevices in a rigid social system.

The third opinion is a combination of first two. Rostow notes the need for both flexibility
and denial of social mobility. Brozen similarly emphasis that a system should neither be too rigid
nor too flexible. According to him, if it is too flexible, then individual will gravitate towards
other roles, if it is too rigid, entrepreneurship will be restricted along with other activities.

Our earlier study on entrepreneurship also concurs, by and large, with Brozen’s point of
view. With regard to the relationship between social mobility and the emergence of
entrepreneurship, what is particularly important is the patterning of mobility channels. Our study
brought home the point that the movement of young and educated males not only results in

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denudation of the potential entrepreneurs in the region, but also the returned migrants did not
assume entrepreneurial roles because of inter alia their lack of business knowledge due to their
mobility channels to the armed forces. It is also pointed out that the degree and nature of social
mobility alone is not likely to influence entrepreneurship, but its influence is largely determined
by other non-economic factors.

3. Marginality
A group of scholar hold a strong view that social marginality also promotes
entrepreneurship. They believe that individuals or group on the perimeter of a given social
system or between two social systems provide the personnel to assume the entrepreneurial roles.
They may be drawn from religious, cultural, ethnic, or migrant minority groups, and there
marginal social position is generally believed to have psychological effects which make
entrepreneurship particularly attractive for them.

The two preceding factor- the legitimacy of entrepreneurship and social mobility- largely
determined the influence of marginality of entrepreneurship. In situation in which
entrepreneurial legitimacy is low, mainstream individuals will be diverted to non-entrepreneurial
roles and the entrepreneurial roles will be relegated to marginal. On the contrary, in the case of
high entrepreneurial legitimacy mainstream individual will assumes the entrepreneurship and
marginal will have to find other roles of as means of mobility. From the social mobility point of
view, marginal individual and groups will be restricted, by definition, from access to the
established mobility channels in a situation. Thus, mainstream individuals and groups will have
primary access to these channels. As such marginal are likely to play entrepreneurial role in a
situation.

Several factors are attributed to the increase in the likelihood of marginals becoming
entrepreneurs. For example one of these is the presence of positives attitudes towards
entrepreneurship within the groups. The second important factor is the high degree of group
solidarity. The relative social blockage has been considered the third important factor in
promoting entrepreneurship by individuals. Nevertheless, marginality alone, like many other
factors, cannot be considered a sufficient condition for promoting entrepreneurship for various
reasons. For example, not all the marginal groups are likely to be entrepreneurs particularly in
situations in which mainstream entrepreneurs exist. Furthermore, the vulnerable marginal efforts
for entrepreneurship are most likely to be negated by political attacks. Thus, whether marginality
promote entrepreneurship will depend upon a favourable condition of other factors.

4. Security
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 Several scholars have advocated entrepreneurial security as an important facilitator of
entrepreneurial behaviours. Yet, scholars are not consensus on the amount of the security that is
needed. While A.H. Cole suggests ‘minimal’ security, McClelland speaks of ‘moderate’
certainty, for example. However, Peterson and Berger maintain that entrepreneurship is more
likely to emerge in to under tribulent conditions than under conditions of equilibrium. Redlich
provides the middle position in this regard when he suggests that in security does not hinder
entrepreneurship, but rather that different kinds of insecurity will result in different kinds of
entrepreneurship.

We also regard security to be a significant factor for entrepreneurship development. This

is reasonable too because if individuals are fearful of losing their economic assets or of being
subjected to various negative sanctions, they will not be inclined to increase their insecurity by
behaving entrepreneurially.

5. Family Background
Family background of a person also plays a great role in becoming or supporting
entrepreneurship. In a business family a person is supposed to be supported by family for
becoming entrepreneur because his family is better aware of all the aspects of business.
Generally it happens that after a certain period of time a businessman asks his son that it is the
time you should also involve and look after in the same business or he may asks to enter into
some other business of his choice. Here we can see that it is not a compulsion but if his son is
willing for that there is full support of his family. On contrary, if a person from the non-business
family wants to enter into a business, first of all his family will rarely support him because they
themselves are not aware of business dimension for that person finance part will also be a
problem.

6. Friends, Relatives and Teachers

Friends, relatives and teachers also do play a great role in supporting entrepreneurs.
Whenever a person want to start a venture he does take suggestion from his friends relatives and
teachers. The following qualities of all those matters a lot.

 Confidence on the person

 Willingness to help
 Risk taking ability

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 So, the confidence on the person by his closer ones has a great impact for entrepreneurship.
If friends, relatives and teachers will be having confidence on the person as well as on his
project, they will support him like, friends and teachers will motivate him and relatives may also
support him financially.

Willingness to help by all the closer ones also affects the entrepreneurship. If they are not
willing to help it will have an adverse effect on entrepreneurship the person will be having a
great business idea.

If the friends, relatives and teachers are not somewhat risk taker, they will not give their
opinion in favour of entrepreneurship. Until and unless a person is having ability to take risk he
will not support to the entrepreneurship.

7. Religions
Religion of an entrepreneur also have a great impact on his entrepreneurial mobility. In
India religion is very important factor affecting the entrepreneurship. We can see that rarely a
Muslim want to set up a business of flowers and garlands for the purpose of worship in the
temple this is because of his cultural values. In this case even having a great opportunity, a
Muslim will not go for entrepreneurial mobility because of his values. If we see in Hindu
religion basically, Marwari, Gujrati, Sindhi are leaders in business sector, they rarely chose to
inter into service sector.

Support Systems to Entrepreneurship

The support systems for developing entrepreneurs, government has taken certain steps.
One of the most important guarantees to the process is the state contribution to developing the
respective infrastructure and creating the legislative basis, required for developing
entrepreneurship.

One of the supportive measures is the tax exemption for investments made for the
development of a company. Another measure is the state support system that is being
continuously developed.

Other activities for supporting entrepreneurs include the following:

 informing businesses of the measures of the support systems to entrepreneurship;

 disseminating information on the services provided by other entrepreneurship supporting
funds and foundations;
 providing free consultations to businesses in their starting phase;

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  introducing the consultants from the support system to the users;
 Providing the starting businesses with a package of the related materials.

Information related to the supporting funds and foundation should be disseminated to the
entrepreneurs so that they should be able to stand properly in his business in the initial phase.

The budding entrepreneurs should be provided free consultancy in the initial phase so
that they may build up confidence for the further business.

References:

 Books(Robert D. Hisrich, Michael P. Peters)

 Web page of Entrepreneurship Development Institute,
Gujrat
www.ediindia.org

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THANK YOU

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