Thursday, January 29, 2009

Entrepreneurship in emerging economies - Co Authored paper presented at IIT Mumbai

Entrepreneurship is a creative human act involving the mobilization of resources from one level of productive use to a higher level of use. "It is the process by which the individual pursues opportunities without regard to resources currently controlled. Entrepreneurship involves a willingness to take responsibility and ability to put mind to a task and see it through from inception to completion. Another ingredient of entrepreneurship is sensing opportunities, while others see chaos, contradiction, and confusion. Essence of Entrepreneurship is going against time with maturity and serving as a change agent.

Entrepreneurship is an outcome of the development process, which also encompasses the emergence of economic and social innovations. Entrepreneurship however, is often referred to as a process of “creative destruction” where new firms, technologies, or modes of commerce displace the old established order. As such, entrepreneurship could be seen as a subversive activity and a powerful de - stabilizer of the status quo. Entrepreneurship brings about innovations and changes in technology that drive economic growth. Indeed, the role of the classic Schumpeterian entrepreneur as the Lynchpin of innovation, technological growth, and economic development is rapidly becoming apparent in many emerging economies.

INTRODUCTION

The wealth and poverty of developing countries has been linked in modern times to the entrepreneurial nature of their economies. Where it has existed in plenty, entrepreneurship has played an important role in economic growth, innovation, and competitiveness and it may also play a role over time in poverty alleviation. Over 400 million individuals in developing countries are owners or managers of new firms. Of these, over 200 million are found in China and India alone, compared with just 18 million entrepreneurs in the United States.

Entrepreneurship in emerging markets is distinctive from that practiced in more developed countries. Better understanding these distinctions is critical to private sector development in developing countries. Of particular interest are new and growth-oriented enterprises, which have a greater capacity to create sustainable economic growth than micro enterprises or long-established SMEs with limited growth prospects. The distinctions between growth-oriented entrepreneurs in developing and developed markets are rooted in the inefficiency of markets in many developing countries, but the response of entrepreneurs to these inefficiencies is often surprising and counterintuitive.

WHAT MAKES ENTREPRENEURS IN DEVELOPING COUNTRIES DIFFERENT?

Some distinctive attributes of entrepreneurship in developing countries appear to improve the probability of success for growth-oriented firms, while others appear to hold back these firms.

Opportunities

Opportunities for entrepreneurs in developing countries are broader in scope than in developed markets, allowing firms to pursue a portfolio approach to strategy that can efficiently manage the higher levels of business and market risk. Entrepreneurs in developing countries face a different set of circumstances than their counterparts in developed economies. These differences are rooted in the underlying economies in which they operate. Emerging markets lack a stable of mature markets and the consistency that such markets offer. Consequently, the opportunity for entrepreneurship in emerging markets is pervasive. While Western entrepreneurs operate at the fringes of the economy emerging market entrepreneurs operate closer to the core – the needs and opportunities are more widespread.

The entrepreneur operating in segmented markets (a feature of many developing countries) often plays a surrogate role as a financial investor who manages risk through portfolio diversification. The keiretsu system in Japan and chaebols in Korea are examples of highly developed conglomerates with interlocking ownerships and business partnerships that developed in this manner.

Financial Resources

While entrepreneurial opportunities are broader and resultant strategies are naturally self-hedging in developing countries, limited personal and family savings and an absence of financial innovation severely limits the growth prospects of promising startups in developing countries.

The nature of entrepreneurial opportunities in developing countries plays a critical role in the market for entrepreneurial finance in these countries.

Reflecting the unpromising odds of entrepreneurial success, internal finance comprises the majority of financing for small and medium enterprises in most developing countries.

Entrepreneurs in emerging markets rely very heavily on informal sources of finance to start their businesses; these sources provided between 87% and 100% of the outside capital raised by entrepreneurs. Other sources of financing typically targeted by development finance institutions interested in improving access to finance in the emerging markets—bank lending and venture capital—play a very limited role at present in financing entrepreneurs, at least in the startup stage.

Successful entrepreneurship is correlated with urbanization; urbanization also results in an increase in individual consumption and a concomitant decrease in private savings. Thus, successful entrepreneurs are likely to find ways to access the greater pools of private saving in the countryside in order to start their businesses.

ENTREPRENEURSHIP IN INDIAN ECONOMY

India is second among all nations in Total Entrepreneurship Activity as per the Global Entrepreneurship Monitor Report 2002. The GEM-India Report 2002 notes that the economy is going through a vibrant phase, with an exceptionally high rate (17.9%) of entrepreneurial activity, second only to Thailand (18.9%), among 37 countries that participated in the GEM Project 2002.

This includes countries like Australia, Brazil, Canada, China, Hong Kong, the US and the UK, among others. The '02 figure of Total Entrepreneurial Activity for India at 17.9%, is 6.3% higher than the 11.6% recorded in '01, implying an over 50% growth in the level of entrepreneurial activity over the past one year. This growth rate outpaces the global average as reported by GEM, which shows a fall of 25% between '01 and '02. while the levels of entrepreneurial activity have improved substantially over the years — 8.97% in '00, 11.55% in '01 and 17.88% in '02 — economic growth has been declining.

Not surprisingly, the report finds that men are twice as likely as women to pursue enterprise, and the 35-44 age band is most active in this area. As per NFIB Small Business Statistics 59% of small businesses with employees are owned by a single individual. India is the fifth largest economy in the world (ranking above France, Italy, the United Kingdom, and Russia) and has the third largest GDP in the entire continent of Asia. It is also the second largest among emerging nations. The liberalization of the economy in the 1990s has paved the way for a huge number of people to become entrepreneurs.

Moreover, in India, the post-liberalization and globalization era has brought with it a growing middle class - roughly estimated to be 250 million - and rising disposable incomes. This presents a huge potential, which if tapped can be a veritable gold mine. Entrepreneurs can make the best of this by catering to various demands of this segment. India, with its abundant supply of talent in IT, management, and R&D, has become the hot bed of outsourcing of services from all parts of the globe where companies can reduce their costs, but not their quality (If the foreign company chooses the right Indian partner). In terms of improvement, there needs to be an increase in the quality and quantity of VC / Angel Investors in India. Also, the Governments need to still continue reducing the administrative burden on entrepreneurs, and coordinate among their agencies to ensure that the necessary resources are directed where they are needed. The physical infrastructure needs to be improved. Socially, the Indian society is adapting to a more risk friendly environment and also looking for jobs in the private sector.

NEED FOR ENTREPRENEURSHIP

The economics of many developing countries are in state of transition as they strive to shift from a subsistence oriented and heavily regulated environment to an outward looking, market driven economy. This transition can be greatly assisted by the emergence of a large number of small - scale and rural enterprises in all spheres of economic activity, which, in turn, requires the development of entrepreneurial skills and mind set. There has to be change in mindset in accordance to the change in times. Despite the importance of entrepreneurship for economic and social development there is as yet scant research into or systematic observation of the processes through which entrepreneurship emerges and sustains itself. Entrepreneurs play an important role in developing and contributing to the economy of a nation. It is all the more in a developing world where there are ample opportunities for innovations to exploit the available resources and initiate entrepreneurial ventures. But the emergence of entrepreneurship in all countries and in all parts of any country is not usually even. Commonly we see more entrepreneurs in comparatively more developed areas. Another paradox exists in terms of increasing number of unemployed population, seeking wage earners career and unaware of the wide opportunities for entrepreneurial career. This is, by and large, because of lack of education about entrepreneurship.

INDIA NEEDS ENTREPRENEURS…………..

India needs entrepreneurs for reasons:

Ø ­ To capitalize on new opportunities
Ø ­ To create wealth and new jobs
Ø They are job providers than job seekers

A recent McKinsey & Company-Nasscom report estimates that India needs at least 8,000 new businesses to achieve its target of building a $ 87 billion IT sector by 2008. Similarly, in the next 10 years, 110-130 million Indian citizens will be searching for jobs, including 80-100 million looking for their first job; that’s seven times Australia's population. This does not include disguised unemployment of over 50% among the 230 million employed in rural India. Since traditional large employers -- including the government and the old economy players - may find it difficult to sustain this level of employment in the future, it is entrepreneurs who will create these new jobs and opportunities. For this there has to be new dimension in the mindset.

Fortunately, today's knowledge-based economy is fertile ground for entrepreneurs in India. The success stories of businesses built on a great idea executed by a talented team have great appeal in India, where access to capital is scarce and regulation has often created barriers to success. And young Indians have a dream: to be the next Sabeer Bhatia of India. Estimates indicate that several thousand 'new economy' businesses were launched last year in India. This is not just a "big-town" phenomenon. For example, when McKinsey & Company launched India Venture 2000, a business plan competition to catalyse entrepreneurship in India, many of the 4,500 teams that participated were from small towns such as Meerut, Siliguri, Warangal and Pollachi.

ADVANTAGES AND BENEFITS OF ENTREPRENEURIAL EDUCATION:

Ø The development of business plans allows students to integrate accounting, economics, finance, marketing and other disciplines
Ø They promote the founding of new businesses by graduates or enhance their employment prospects
Ø They promote technology transfer from the university to the marketplace through the development of technology-based business plans
Ø They forge links between business and the academic community
Ø Entrepreneurship education allows for experimentation with the curriculum since it is outside the traditional discipline boundaries

ENTREPRENEURSHIP GRADUATES ARE:

Ø Three times more likely to start a new business
Ø Three times more likely to be self employed
Ø Less likely to work for government
Ø Earning annual incomes 27% higher; owning 62% more assets.
Ø In large corporations, earning about $23,000/annum more than peers
Ø Slightly more satisfied, on the average, in their jobs than their MBA counterparts
Ø Dramatically increasing sales growth in small firms (by 900%)
Ø Working for high-tech firms in greater numbers
Ø More involved in new product development and R&D activities

These factors shows the necessity of entrepreneurship education, which is indicated by our research where most of the entrepreneurs show the necessity to take up this education, which shows a change in mindset of Indian entrepreneurs.

THE 9 PERSONALITY TYPES OF ENTREPRENEURS

1.The Improver: If you operate your business predominately in the improver mode, you are focused on using your company as a means to improve the world. Your overarching motto is: morally correct companies will be rewarded working on a noble cause. Improvers have an unwavering ability to run their business with high integrity and ethics.

Personality Alert: Be aware of your tendency to be a perfectionist and over-critical of employees and customers.

Entrepreneur example: Anita Roddick, Founder of The Body Shop.

2. The Advisor: This business personality type will provide an extremely high level of assistance and advice to customers. The advisor's motto is: the customer is right and we must do everything to please them. Companies built by advisors become customer focused.

Personality Alert: Advisors can become totally focused on the needs of their business and customers that they may ignore their own needs and ultimately burn out.

Entrepreneur example: John W. Nordstrom, Founder Nordstrom.

3. The Superstar: Here the business is centered around the charisma and high energy of the Superstar CEO. This personality often will cause you to build your business around your own personal brand.

Personality Alert: Can be too competitive and workaholics.

Entrepreneur example: Donald Trump, CEO of Trump Hotels & Casino Resorts.

4. The Artist: This business personality is the reserved but highly creative type. Often found in businesses demanding creativity such as web design and ad agencies. As an artist type you’ll tend to build your business around the unique talents and creativities you have.

Personality Alert: You may be overly sensitive to your customer’s responses even if the
feedback is constructive. Let go the negative self-image.

5. The Visionary: A business built by a Visionary will often be based on the future vision and thoughts of the founder. You will have a high degree of curiosity to understand the world around you and will set-up plans to avoid the landmines.

Personality Alert: Visionaries can be too focused on the dream with little focus on reality. Action must proceed vision.

Entrepreneurial example: Bill Gates, Founder of MicroSoft Inc.

6. The Analyst: If you run a business as an Analyst, your company is focus on fixing problems in a systematic way. Often the basis for science, engineering or computer firms, Analyst companies excel at problem solving.

Personality Alert: Be aware of analysis paralysis. Work on trusting others.

Entrepreneurial example: Intel Founder, Gordon Moore.

7.The Fireball: A business owned and operated by a Fireball is full of life, energy and optimism. Your company is life-energizing and makes customers feel the company has a get it done attitude in a fun playful manner.

Personality Alert: You may over commit your teams and act too impulsively. Balance your impulsiveness with business planning.

Entrepreneurial example: Malcolm Forbes, Publisher, Forbes Magazine.

8. The Hero: You have an incredible will and ability to lead the world and your business through any challenge. You are the essence of entrepreneurship and can assemble great companies.

Personality Alert: Over promising and using force full tactics to get your way will not work long term. To be successful, trust your leadership skills to help others find their way.

Entrepreneurial example: Jack Welch, CEO GE.

9. The Healer: If you are a Healer, you provide nurturing and harmony to your business. You have an uncanny ability to survive and persist with an inner calm.

Personality Alert: Because of your caring, healing attitude toward your business, you may avoid outside realities and use wishful thinking. Use scenario planning to prepare for turmoil.

Entrepreneurial example: Ben Cohen, Co-Founder Of Ben & Jerry’s Ice Cream.

Each business personality type can succeed in the business environment if you stay true to your character. Knowing firmly what your strong traits are can act as a compass for your small business. If you are building a team, this insight is invaluable. For the solo business owners, understand that you may need outside help to balance your business personality.

FACTORS IN ENTREPRENEURIAL SUCCESS:

• Achievement Oriented Personality
• Entrepreneurial Attitudes
• Belief in Self and Ability
• Social Context
• Precipitation Event
• Intention to Start a Venture
• Opportunity Recognition
• Controlling Resources and Timing

TOP 10 REASONS THAT BUSINESSES FAIL
10. Over-expansion. The need to get there first or to demonstrate revenue growth to anxious investors leads businesses to grow too fast.
9. Poor Capital Structure. Companies take on too much debt....Enough said!
8. Failure to Control the Controllable Costs. Businesses spend down the initial cash before it is flowing in at a positive rate.
7. Failure to Prepare for Volatility of Uncontrollable Costs. For example, energy, materials, labor, or insurance.
6. Add New Products or Divisions that Drag Down the Profitable Ones
5. Poor Internal Controls and Execution – Customer service, accounting controls, theft, fraud
4. Poorly Designed Business Model
3. Reliance on Critical Financing that Dries Up
2. Failure to Adapt to a Changing Market
1. Management in Complete Denial

EMERGING TRENDS AND CHALLENGES FOR THE 21ST CENTURY

The E-Commerce Challenge
• Electronic commerce (e-commerce) - The marketing, promoting, buying, and selling of goods and services electronically, particularly via the Internet- is the new wave in transacting business.

Advantages and Challenges of E-Commerce for Entrepreneurial Firms
Advantages:
• Ability of small firms to compete with other companies both locally and nationally.
• Convenient and easy way of doing business transactions.
Challenges:
• Avoiding being a victim of fraudulent activities online.
• Handling the costs required to maintain the site

Emerging E-Commerce Strategies
• 3-P Growth Model
• Presence
• Penetration
• Profitability
Entrepreneurship is more than the mere creation of business. Although that is certainly as important facet, it’s not the complete picture. The characteristics of seeking opportunities, taking risks beyond security, and having the tenacity to push an idea through to reality combine into a special perspective that permeates entrepreneurs. An “entrepreneurial perspective” can be developed in individuals. This perspective can be exhibited inside or outside an organization, in profit or not-for-profit enterprises, and in business or non-business activities for the purpose of bringing forth creative ideas. Thus, entrepreneurship is an integrated concept that permeates an individual’s business in an innovative manner. It is this perspective that has revolutionized the way business is conducted at every level and in every country.

The revolution has begun in an economic sense, and the entrepreneurial perspective is the dominant force! The past decade has witnessed the powerful emergence of entrepreneurial activity in India during the past ten years, new business incorporations averaged 600,000 per year. Although many of these incorporations may have previously been sole proprietorships or partnerships, the trend still demonstrates the popularity of venture activity, whether it was through start-ups, expansions, or development.

More specifically, 807,000 new small firms were established in 1995, an all-time record. Since 1980, Fortune 500 companies have lost more than 5 million jobs, but more than 34 million new jobs have been created. In 1996, small business created 1.6 million new jobs. Fifteen percent of the fastest-growing new firms (that is , “gazelles”) accounted for 94 percent of the net job creation, and less than one-third of these gazelles were involved in high technology. Small businesses (that is, those with fewer than 500 employees) employ 53 percent of the private work force and account for 47 percent of sales and 51 percent of private sector gross domestic product Given these findings, it would seem safe to assume that new firms with employees may number more than 600,000 in a given year, thousands of smaller firms have been founded, including many established by women, minorities, and immigrants. These new companies have come from every sector of the economy and every part of the country. Together these small firms make a formidable contribution to the economy, as many firms have hired one or two employees together to create more than 1 million net new jobs during the decade of the 1990s.

The Indian economy is a dynamic organic entity always in the process of “becoming,” rather than an established one that has already arrived. It is about prospects for the future, not about the inheritance of the past.

ENTREPRENEURSHIP IN THE FUTURE

The transformation of opportunity into performance is contingent on several factors like industry attractiveness, strategy, execution and required resources. These factors in effect are again influenced by social and physical factors. This model of entrepreneurship incorporates the effects of social encouragement (social factors) and support at infrastructural level (physical factors).

STRATEGIES FOR MANAGING THE LINKAGE BETWEEN ENTREPRENEURSHIP AND ENTREPRENEURIAL MIND SET

MACRO LEVEL STRATEGIES

There are ample opportunities in small businesses in India and such opportunities will transform India in the future. For such transformation to happen there needs to be support both at the governmental and societal level. For the government it is important to realize that the goal of small business owners will be to remain self-employed. Such people may not need financial assistance but they will need marketing and legal assistance in order to sustain themselves. Practical and cost effective programs need to be developed to address their needs because self-employed people will represent an important segment in economic revitalization.

Promoting Entrepreneurship

In India, where over 300 million people are living below the poverty line, it is simply impossible for any government to provide means of livelihood to everyone. Such situations surely demand for a continuous effort from the society, where the people are encouraged to come up with their entrepreneurial initiative.

Encouragement at societal level

In the future, innovation and entrepreneurship needs to be encouraged at Social levels, Governmental levels and Managerial levels. There must be a social attitude that views innovations with positive attitude and reject an innovation only when it is not acceptable.

Encouragement at physical level

At this level the encouragement will refer to two aspects necessary for entrepreneurship to thrive, one is the provision of venture capital and the other being infrastructural support. A real example is Export Processing Zones which are performing extremely well when given the support.

India has an extraordinary talent pool with virtually limitless potential to become entrepreneurs. India must, however, commit to creating the right environment to develop successful business builders. To do this, India must focus on four areas.

Create the right environment for success:

Entrepreneurs should find it easy to start a business. To do so, most Indians would start slow with capital borrowed from family and friends, the CEO playing the role of salesman and strategist, a professional team assembled months or perhaps years after the business was created, and few, if any, external partners. Compare this with a start-up in the Silicon Valley: a Venture Capitalist (VC) or angel investor would be brought in early on; a professional management team would drive the business; a multifunctional team would be assembled quickly; and partnerships would be explored early on to scale up the business.

To a large measure, culture shapes this style. Silicon Valley is abuzz with ideas to build global businesses; deals are continually being negotiated, teams are pulled together and partners are identified. There is almost unlimited access to multiple VCs and angel investors. Critical support services abound, including professional managers, legal firms, venture capitalists, angel investors, and placement agencies. Combine this with excellent infrastructure - connectivity, communication, and office space -- and getting started is easy.

A first challenge for India is to create a handful of such areas of excellence - the breeding ground where ideas grow into businesses. Some already exist in a very preliminary way (the businesses are there). For example, Gurgaon and Hyderabad for remote services, or Bangalore for IT services. But these areas of excellence need strengthening before they can claim to be India's own "Valley." One way of strengthening these areas is to consider the role of universities and educational institutions - places where excellence typically thrives. Creating such educational institutions by strengthening the Indian Institutes of Technology (IIT's) and Indian Institute of Management (IIM) and starting new ones is going to be very important. The real challenge is to spread quality across a large base of population.

Ensure that entrepreneurs have access to the right skills:

A survey McKinsey & Company conducted last year revealed that most Indian start-up businesses face two skill gaps: entrepreneurial (how to manage business risks, build a team, identify and get funding) and functional (product development know-how, marketing skills, etc.). In other countries, entrepreneurs either gain these skills by hiring managers or have access to "support systems" such as universities or other institutions that may nurture many regional businesses. In addition, business schools give young graduates the skills and knowledge required for business today.

India can move toward ensuring that the curriculum at universities is modified to address today's changing business landscape, particularly in emerging markets, and to build 'centres of entrepreneurial excellence' in institutes that will actively assist entrepreneurs.

Ensure that entrepreneurs have access to 'smart' capital:

For a long time, Indian entrepreneurs have had little access to capital. It is true that in the last few years, several Venture Funds have entered the Indian market. And, while the sector is still in its infancy in India (with estimated total disbursements of <$ 0.5 billion last year), VCs are providing capital as well as critical knowledge and access to potential partners, suppliers, and clients across the globe. However India has only a few angel investors who support an idea in the early stages before VCs become involved. While associations such as TIE are seeking to bridge the gap (by working at creating a TIE India Angel Forum), this is India's third challenge: creating a global support network of 'angels' willing to support young businesses.

Enable networking and exchange:

Entrepreneurs learn from experience - theirs and that of others. Much of the success of Indians in Silicon Valley is attributed to the experience, sharing and support TIE members have extended to young entrepreneurs. Clearly, India would benefit from creating a strong network of entrepreneurs and managers that entrepreneurs could draw on for advice and support.
The rapid pace of globalization and the fast growth of Asian economies present tremendous opportunities and challenges for India. Through planning and focus, India can aspire to create the pool of entrepreneurs who will be the regions -- and the world's -- leaders of tomorrow.

MICRO LEVEL STRATEGIES

Based on our study we have found that the entrepreneurs are low on competencies such as Self confidence, Assertiveness, persuasion, Sees & Acts on Opportunities, Concern for high quality work and commitment to work. These appear to be directly connected with the work culture and mind set. The emphasis will have to be on holistic development of entrepreneurial mindset not only in terms of enhancing the areas of strengths but also rectifying the areas of weakness’, because weakness in any one competence can adversely impact the performance which re-in forces the statement “excellence cannot come in pockets”.

Entrepreneur Associations

These associations will focus on developing the various functional facets of entrepreneurship.

Academic institutions

These institutions will focus on developing the various facets of entrepreneurial mindset.

Joint Work Centers between the entrepreneur associations and institutions

The above two strategies cannot be done in isolation and hence the need for a common forum to ensure holistic approach towards developing the enterprise and the entrepreneur as a unique entity. This forum will effectively facilitate the linkage between entrepreneurship and the entrepreneurial mindset

FUTURE PERSPECTIVE

Entrepreneurship as in the past will determine technical innovations, status of social institutions and political management systems. On the basis of these factors, we can expect the future to be a place where basic needs will remain and only the wants will change. India will overcome the barriers of infrastructure; we will also visualize a strong manufacturing and agricultural sector. These developments will enable us to successfully incorporate the second wave of Dot.com revolution in the economy.

The second wave of Dot.coms will see the Dot.coms as only a support system though they will co-exist with other forms of Entrepreneurship. If we widen Dot.com and look at IT industry as a whole then we can safely project that there won’t be a single aspect of our life remaining untouched by it. The IT driven economy will limit number of jobs and will demand sophisticated skills. The retirement age will decrease with the business institutions demanding younger people who are not resistant to change. Entrepreneurs and not managers will be in demand, as only they will be equipped to find order in chaos. The focus of entrepreneurial energy will shift from achieving volume sales to fulfill a specific requirement. Governance will become more transparent and will be willing to accept changes necessary for growth and development. More autonomy will become the basis of all issues.

The future will see Entrepreneurship as the key driver of economic development Technological obsolescence will become order of the day and there will be more space for leisure. New businesses will be credited with providing variety of new jobs in the economy. New and small business will also develop more than their share of product and service innovation. At one end we will see the technological upheavals in quick succession and on the other end there will be social value systems and cultural issues undergoing slow but dynamic transformations.

CONCLUSION

India has shown a drastic transformation by overtaking the industrial and manufacturing economy to the services economy. Irrespective of the economy drivers all the sectors are performing good. This is attributed to the fact that the income levels have increased by which the disposable income have also risen. This is generating a derived demand for physical goods and services.

Are the Indian Entrepreneurs geared up to take on this opportunity? Point to ponder. We have seen that the Indian entrepreneurs have shown a good initiative capability, but are not capable of taking the task to its logical conclusion. There has to be a change in the mindset and the entrepreneurial characteristics. The external environment is facilitating toward changing this attitude.

Today entrepreneurs are focusing on being specialist in their approach rather than being generalists as perceived before. There is a focus on skill and thus the importance of vocational and entrepreneurship training is gaining momentum with the current generation.

Younger generation and student community wants to be self employed. They wish to be job providers than the job seekers. This is a changing trend to the conventional thought of job safety and security.

Most entrepreneurs are the second generation entrepreneurs who are in the growing phase of the economy. They cannot show the similar characteristics as been shown by the older generations. There has to be a change in their approach and mindset, such that they are the driving force behind the maturity of the economy.

India is the fifth largest economy in the world and the third largest GDP in the entire continent of Asia. The liberalization of the economy in 1990s has paved the way for a large number of people to become entrepreneurs.

Moreover, in India, the post liberalization and globalization era has brought with it a growing middle class roughly estimated to be 250 million and rising disposable incomes. This presents a huge potential, which if tapped can be a veritable gold mine.

During the first phase of liberalization, business was slowly progressing as the markets had opened up and it was a transformation phase. During the middle phase, the business progression was moderate as Indian entrepreneurs had to scale up their operations to reach the set benchmarks of many foreign players. Today we find a keen competition among different players in the industry. The monopolistic market scenario has changed into oligopolistic structure. It has transformed more into the survival of the fittest.

The emerging economy is providing flavor in choosing sector of choice. The services has brought in a whole domain of activities from It, ITES, Retailing, Consultancy, Financial Services etc. It has provided various options for expansion and diversification. Entrepreneurs need not stick to the same business. Even though the existing business is self sufficient and doing good, the economy has opened up for various opportunities.

We foresee a new dimension and entrepreneurial spurt in the present emerging economies. What is “right”, “proper”, “just”, and “fair” to an entrepreneur? These terms, and the question of how they are interpreted, are becoming increasingly important in today’s competitive and technologically complex environment. There is a change in mindset and the sustainability of this change in the long run will ensure a holistic development.

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Courtesy: Prof. C.S.Dikshit, Christ University Institute of Management, Bangalore & Kalpesh R Shah

2 comments:

vineshkumar said...

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henrylow said...

Small Business owners are largely forgotten. That’s why I only focus on them. I have experience several members of my family file bankruptcy due to small business failures. I also I suffered through 2 destroyed businesses due to failure however, in my failings I have learned some of the secrets to success. (Who can say they know it all?)


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