Entrepreneurship and economic factors in India:
The economic environment exerts the most direct and immediate influence on entrepreneurship. This is likely because people become entrepreneurs because of the need when there are no other jobs or opportunities.
The economic factors that affect the growth of entrepreneurship in India are as follows:
(1) Capital: Capital is one of the most important production factors for the establishment of a company. Increasing capital investment in viable projects results in an increase in profits that help accelerate the capital formation process. Business activity also receives a boost with the easy availability of investment funds.
The availability of capital facilitates the entrepreneur to gather the land of one, the machine of other and the raw material of another to combine them to produce goods. Therefore, capital is considered as a lubricant for the production process.
France and Russia exemplify how a lack of capital for industrial activities prevented the entrepreneurship process and an adequate supply of capital promoted it.
(2) Labor: The easy availability of the right kind of workers also affects entrepreneurship. Quality, more than the amount of labor, influences the emergence and growth of entrepreneurship. The problem of labor immobility can be solved by providing infrastructure facilities, including efficient transportation.
Quality, more than the amount of work, is another factor that influences the emergence of entrepreneurship. Most of the less developed countries are nations rich in labor due to a dense and even growing population. But entrepreneurship is encouraged if there is a mobile and flexible workforce. And, the potential advantages of low-cost labor are regulated by the harmful effects of labor immobility. Economic and emotional security considerations inhibit labor mobility. Entrepreneurs, therefore, often find it difficult to ensure sufficient labor.
(3) Raw materials: The need for raw materials hardly needs emphasis to establish an industrial activity and its influence on the emergence of entrepreneurship. In the absence of raw materials, you cannot establish a company or create an entrepreneur. It is one of the basic ingredients necessary for production. The shortage of raw material can negatively affect the business environment. Without an adequate supply of raw material, no industry can function properly and the emergence of entrepreneurship is negatively affected.
In fact, the supply of raw materials is not influenced by themselves but becomes influential depending on other conditions of opportunity. The more favorable these conditions are, the more likely it is that the raw material has an influence on business emergence.
(4) Market: The role and importance of the market and marketing are very important for the growth of entrepreneurship. In the modern competitive world, no entrepreneur can think of living in the absence of the latest knowledge about the market and various marketing techniques and strategies. The fact is that market potential is the main determinant of the likely rewards of the business function. Frankly speaking, if the proof of the pudding lies in eating the proof of all production lies in consumption, that is, marketing.
The size and composition of the market influence entrepreneurship in its own way. Practically, the monopoly of a particular products in a market becomes more influential for entrepreneurship than a competitive and healthy market place. However, the disadvantage of a competitive market can be canceled to some extent by improving the transport system, infrastructure, facilitating the movement of raw materials and finished products, and increasing the demand for production goods.
(5) Infrastructure: The expansion of entrepreneurship presupposes properly developed communication and transport facilities. It not only helps to expand the market but also to expand business horizons. Take, for example, the establishment of a postal and telegraph system and the construction of roads and highways in India. It helped in considerable business activities that took place in the 1850s.
Also read: Concept of entrepreneurship, Types of entrepreneur, Process of entrepreneurship, Need of entrepreneurship, Barriers of Entrepreneurship, Entrepreneur vs Intrapreneur, The emergence of entrepreneural Class, Slow growth of entrepreneurship development