Factors affecting the entrepreneurial growth:
Economic Environment: - Economic environment consists of factors namely capital, land, labor and market that also influence the growth of entrepreneurship. The important economic factors are:
a. Capital: Capital is regarded as lubricant to the process of production. Capital is one of the most important prerequisites of establishing an enterprise. . Capital is required to obtain materials, machinery, equipment, etc. and to undertake innovation. 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. If capital supply increases then entrepreneurship also increases. The lack of financial resources discourages the youth and potential entrepreneurs to start new ventures. Hence, the need for fixed and working capital should be adequately met if new entrepreneurs are to come forward and grow.
b. Labor: The quality rather quantity of labor is another factor which influences the growth of entrepreneurship. Division of labor is an important element of economic development. The problem of low cost immobile labor can be avoided by planning or dropping ahead with capital intensive technologies as Germany did. The disadvantages of high cost labor can be modified by introduction of labor can be modified by introduction of labor savings innovations as was done in the U.S.A. Thus, it appears that labor problems can be solved more easily than capital can be created.
c Availability of Raw Materials and Know – How: The necessity of raw materials hardly needs and emphasis for establishing any industrial activity and it influence in the emergence of entrepreneurship. Cheap and available raw materials influence people to be an entrepreneur. Large stocks of inventories have to be dept to ensure adequate industrial supplies. So, the adequacy of raw-materials has great impact on the growth of economic development. Entrepreneurship is encouraged only if there is an adequate supply of materials and know-how. Easy availability of materials attracts more individuals towards entrepreneurship. Technical know-how is essential for innovation. With technical knowledge, men discover more and sophisticated techniques of production.
d. Market: Potentiality of the market is the probable reward for entrepreneurs. The size and composition of market both influence entrepreneurship in their own ways. Particularly, monopoly in a particular product in a market becomes more influential for entrepreneurship than a competitive market. However, the disadvantages of competitive market can be cancelled, to some extent by improvement of trams potation system facilitating the movement of raw materials and finished goods and increasing the demand for producer goods.
e. Infrastructural Facilities: - Entrepreneurship development requires certain basic infrastructure like power, transportation, communication, technical information etc. These provide external economies and improve the efficiency of investments by entrepreneurs. These infrastructural facilities are scarce in less developed countries. The entrepreneurs themselves have to procure these facilities at their own cost. They have to obtain these facilities at higher costs.This will greatly discourage the entrepreneurship development. In advanced countries, those who are desirous of starting an enterprise will find no difficulty in procuring the infrastructural facilities at reasonable costs.
f. Availability of Material and Know – How: - Entrepreneurship is encouraged only if there is an adequate supply of materials and know-how. Easy availability of materials attracts more individuals towards entrepreneurship. Technical know-how is essential for innovation. With technical knowledge, men discover more and sophisticated techniques of production.
g. Support System: - Ability, initiative and support systems include financial and commercial institutions, research, training, consultancy services, ancillary industry etc.
