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Factors influencing E D

Anuradha Gaikwad RIT

Factors influencing E D
Economic Non - economic

The nature of the econom y is a m ajor factor that influences

entrepreneurship. 1. The eneral purchasin power of the people! m anifested "y incom e le#els and econom ic prosperity of the re ion! plays am ajor role in the success of entrepreneurial #entures. $. %urin tim es of econom ic slowdown or recession! the purchasin power declines and people rem ain reluctant to in#est! affectin entrepreneurship ad#ersely. &. In a su"sistence econom y! m ost of the people are en a ed in a riculture! consum in m ost of their output and "arterin the rest for sim ple oods and ser#ices. Entrepreneurial opportunities are few in such scenarios.

Cultural Factors Influence Entrepreneurship

'ulture refers to the custom ary practices and "eliefs that

ha#e a si nificant im pact on the "asic #alues! perceptions! preferences! and "eha#iors of people. 'ulture and entrepreneurship inter#ene in m any ways. 1. (eople traditionally en a ed in "usinesses ha#e a pro "usiness attitude and disdain workin as em ployees. $. )any people fall outside the esta"lishm ent and rem ain unsuited for the traditional jo" m arket due to a stron culture of independence or other reasons. &. *usiness school students com e under the m issionary +eal of teachers who e,hort them to "ecom e entrepreneurs e#en if the opportunity cost is #ery hi h.

The culture of consum erism where people desire m aterial oods encoura es entrepreneurship within the area as returns from a "usiness "ecom em ore than returns from a jo". .. (eople en a ed in jo"s and other ser#ices pressure their children to find secure jo"s and crush their entrepreneurship spirit at a #ery early a e. /. A culture of thrift where people spend less and sa#e for a rainy day discoura es entrepreneurship within the local com m unity as the returns from a "usiness "ecom e less attracti#e com pared to returns from a jo". 0. 'ultures where people are risk a#erse and do not attach m uch im portance to hard work and persistence are not conduci#e to entrepreneurship.

Political Environments
1nsta"le political conditions where o#ernm ent policies chan e fre2uently discoura e "usiness! as in#estors fear for the safety of their in#estm ents. $. Go#ernm ent support to econom ic de#elopm ent throu h infrastructure de#elopm ent! facilitation! industrial parks! and the like all encoura e entrepreneurship. &. 3i h ta,es that cut into the returns usually discoura e entrepreneurs. 4n the other hand! ta, holidays to encoura e "usiness attract start-ups. -. The a#aila"ility of infrastructure and utilities such as ood roads! power! com m unication facilities! and lack of corruption and "ureaucratic delays in o"tainin such utilities encoura e entrepreneurship.

Economic freedom in the form of fa#ora"le le islation and few hurdles to start and operate "usinesses encoura e entrepreneurship. /. 5hile most "usinesses accept laws related to the safe uard of la"or ri hts and the en#ironment! som e countries ha#e retro rade laws that m ake compliance #ery difficult and time consumin . 6uch le al hurdles create a "arrier to entrepreneurship.

Availability of Resources
'apital rem ains indispensa"le to start an enterprise. The a#aila"ility of capital allows the entrepreneur to "rin to ether other factors and use them to produce oods or ser#ices. $. The im portance of hum an assets or em ployees can ne#er "e underestim ated. No enterprise succeeds without a skilled and com m itted workforce. &. The #ery e,istence of the "usiness depends on the a#aila"ility of raw m aterials to process. -. (hysical infrastructure and utilities such as ood roads! parkin ! com m unication facilities! and power all play a crucial factor in the seam less functionin of a "usiness.

Entrepreneurial Skill Sets and Psychological Orientation Affects Entrepreneurship

1. 3ard work and persistence $. A"ility to mana e and minimi+e risk &. A"ility to draw up a comprehensi#e "usiness

plan! and ha#in a contin ency plan ready

-. A stron need-orientation that pro#ides the

inclination to achie#e thin s