**TOWARDS DEVELOPING ENTREPRENEURSHIP SOCIETY BY
INSTITUTIONALIZING ENTREPRENEURSHIP DEVELOPMENT
PROGRAMMES –STRATEGIC APPROACH WITH REFERENCE
TO INDIA
Sanjiv Mittal & Akansha Gupta
University School of Management Studies,
Guru Gobind Singh Indraprastha University,
Kashmere Gate, Delhi, India-110006.
Abstract
The article brings out the importance of entrepreneurship development for developing
nations like- India to create a pool of entrepreneurs. Every society is composed of key
individuals who have the potential to spark and sustain business and economic growth.
These persons can be called as an entrepreneur who needs to be developed. What are the
benefits of entrepreneurship development and the approach that can be followed to
institutionalize the process of entrepreneurship development have been addressed in this
article. The governments of all developing countries have started entrepreneurial
movement by creating a network of institutions, which can help in bringing about the
culture of entrepreneurship in the country. The environment of entrepreneurship in India
could only be created after 1990’s when India followed the path of liberalization. The
article very clearly highlights the various problems addressed through creating a
entrepreneurship society and the various constraints which the countries are facing in the
process of entrepreneurship development. The development of entrepreneurship in
developing nations has put these countries on the path of development, resulting in
increasing the confidence of the people to start thinking in order to be successful
entrepreneurs. The role of entrepreneurship development institute of India and other
institutions have been discussed which are working diligently through their various
programmes at laying the foundations for creating entrepreneurs in this country India. In
the last the article advocates an approach for the successful implementation of
entrepreneurship development programme in any country to make it an entrepreneurial
society.
Keywords- Small and Medium Enterprises, Training, Education, Institutions Support,
entrepreneurship development.
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1. INTRODUCTION:
1.1 Entrepreneurship in India.- An Historical Perspective
Since ancient times, Indian products have made their way to markets abroad. Muslin
from India was used by the Pharaohs for Egyptian mummies (Datt and Sundharam 1968).
The jains, an ascetic religious group, have long been a trading sect in India, not out of an
entrepreneurial spirit based on materialism, but rather because trading was an occupation
that kept them relatively free from conflict with the requirements of their religious
practices. The Marwaris (formerly known as Banias) are a non-Bengali caste specializing
in domestic trade. Their enterprises have complemented those of English entrepreneurs
who allowed the Marwaris to become prominent in a diversified industrial economy.
Under the British during the 19th century, India began to industrialize, and Indian
entrepreneurs were instrumental in the spread of manufacturing (Medhora 1965).
India's first prime minister, Jawaharlal Nehru, described India’s independence, made
official on August 15, 1947, as a “tryst with destiny,” This destiny did not, however,
promise the encouragement of private enterprise in the new state. The constitution,
coming into effect on January 26, 1950, indicated specifically that the state-not
entrepreneurs from the private sector-would play the decisive role in extending the
national economy.
In 1954, the government did set up the Small Scale Industry Organization to plan the
growth of small businesses as supplements to the efforts of large industries.
Industrialization has since spread, but as a result of economic planning, the state has
remained a major player. Small firms have been perceived as weak, prompting a
government program of "reservations" to protect existing small enterprise.
In 1977, 90 percent of India's villages had no safe drinking water, while Coca-Cola had
reached every town. Hostility toward foreign investment along with political uncertainty
led to the departure from India of major American firms, including Coca-Cola. Major
reform came in 1991, when India lowered its barriers to international investment and
trade. Shortly thereafter, Rajan Pillai, a Singapore based entrepreneur of Indian origin,
announced that he would bring Coca-Cola back to India. Although many business
regulations were removed during the 1990s, many of the old bureaucratic behaviour
remained. For example, a garment exporter may still need fifty signatures for one
consignment today. Old cultural values (like the belief that business is undesirable) have
discouraged the articulation of new policy
1.2 Employment Generation through Entrepreneurship
There has been substantial growth in our higher educational system and we are
generating over 3 million graduates every year. However our employment generation
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system is not in a position to absorb the graduates passing out from the universities
leading to increase in educated unemployed, year after year. Therefore what to do?
Firstly, the educational system should highlight the importance of entrepreneurship and
prepare the students right from the college education to get oriented towards setting up of
the small scale industrial enterprises and any ventures in our rural areas which will
provide them creativity, freedom and ability to generate wealth. Apart from
entrepreneurship, the youth should have the spirit that "we can do it".
Secondly, the banking system should provide venture capital right from every village
level to the prospective entrepreneurs for undertaking new enterprises. Banks have to be
proactive to support the innovative products for enabling wealth generation by young
entrepreneurs by setting aside the "conventional tangible asset syndrome". Definitely this
involves certain amount of calculated risks, which can be eliminated by making an
analysis of successful venture capital enterprises.
Thirdly, there is a need to identify marketable products and enhancement of purchasing
power among the people. Various Govt. institutions with their large network both within
the country and abroad can provide know-how in identifying the marketable products
based on their business intelligence.
1.3 Benefits of Developing Entrepreneurship Society
The eighties witnessed a spurt in the emphasis on promoting native entrepreneurship,
especially among developing countries. The problems faced by developing countries are• The problems of unemployment,
• Poverty,
• Inadequate investment absorption capacity,
• Lack of adequate and qualitative entrepreneurial supply and
• Economic underdevelopment faced by these countries.
The promotion of responsible industrial entrepreneurship for SME’s was considered an
effective measure to mitigate these problems. For, entrepreneurs not only perceive an
opportunity and convert it into a viable and profitable business proposition, but also
contribute to the objectives of employment creation, output growth, technological
upgradation, improvement in quality of goods and services by shifting the isoquants of
production function.
Considering that the promotion of responsible industrial entrepreneurship is a key issue for
growth and primary engine for creating a country's wealth, many governments of
developing countries and economies in transition have renewed their focus on this vital
factor of production.
There could be two major sources of entrepreneurial initiatives. First, the State can
assume the role of an entrepreneur by promoting public sector enterprises; and second, the
initiative may come from private sector as a response to emerging opportunities. The States
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have not generally been successful entrepreneurs. The failure of a large number of public
sector enterprises especially in the command economies bear testimony to this fact. This
leaves one with the other source of entrepreneurial manifestation i.e., private initiative.
The entrepreneurs will of course keep on emerging in response to opportunities. But the
question is that of pace and quality. If one aims at hastening the process of economic
growth, the supply of competent entrepreneurs will have to be augmented.. If autonomous
supply falls short of requirements, it will have to be induced through policy interventions
and through training and motivational interventions. The `jobless growth' will have to be
converted into `job creating growth' through promotion of entrepreneurship and
self-employment.
In this context one should also debate the type of entrepreneurship, which needs to be
encouraged through policy and/or training interventions?
Should one aim at promoting entrepreneurs who venture into large scale, capital-intensive
enterprises or those new, first generation entrepreneurs who start small enterprises and grow
to medium and large? The experiences indicate that, because of their locational flexibility,
linkage with agriculture and productive sub-sectors of the economy and high labour
intensive character the SME’s play a crucial role in the economic vitality of the nations.
SMEs in developing economies can help in
Balanced regional development;
Poverty alleviation
Reduction in the incidence of unemployment by creating jobs for the teeming
millions - unemployed men and women.
• Major source of a new breed of first generation entrepreneurs.
• Industrialisation of the country
• Reducing the gap between haves and haves not
The importance of SME’s becomes all the more clear if one looks at their share in the
overall manufacturing sector of various countries - developing and developed.
•
•
•
1.4 Contribution of SME’s: some evidences
More than 90 per cent of all the enterprises both in developing and developed countries are
SME’s. Though a large proportion of SME’s (almost 40%) goes out of business every year,
the birth of new firms compensates for the businesses that make an exit. As a result the
quantum of operating firms i.e.- number of SME’s continues to grow. This flow is further
strengthened by the shift in the size of firms in favour of the small and medium enterprises.
SME’s being more labour intensive, tend to generate more employment than their `large'
counterparts. For example, between 1984 and 1996, the SME’s accounted for more than
four fifths of the increase in employment in Japan. In United States, small firms
(employment 1-19 worker) created two thirds of employment between 1990 and 1996. In
Korea they generated about 80 per cent of the jobs during 1986-96.
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The SME’s also constitute a major segment of the industrial structure in most of the
countries - irrespective of their level of economic development. For examples, during the
mid-eighties, the proportion of SME’s in the manufacturing sector was 72 per cent in Japan;
61.4 per cent in United States, 73 per cent in France and 80 per cent in Italy. Almost similar
pattern was observed in the developing counties as well. For example in Ghana, the SME’s
accounted for 97 per cent of the total enterprises. The corresponding percentage for Brazil
was 99.53 for Malaysia- 97.5. Thailand - 98.7; South Africa - 85; China - 97; and in India,
well above 95 per cent.
It is not the proportion of SME’s in the manufacturing sector, alone which is so
impressive; the contribution of SME’s to employment and value addition in the
manufacturing sector is also equally significant. At the end of 1999, with 98 per cent of
the total enterprises in Korea, the SME’s accounted for 60.9 per cent of the
manufacturing jobs and 45 per cent of the value added. In Thailand the corresponding
figures were 64.4 and 47.4 besides their 50 per cent contribution to exports In Brazil, the
contribution of SME’s was 37 per cent and 46.5 per cent in employment and value added,
respectively. In France, SME’s contributed 50.9 per cent to the value added and 64.5 per
cent to the labour force. The SME’s accounted for 68.5 per cent of the national industrial
output and 78 per cent of employment in China in the early 90s. In India, the share of
small-scale industries in the manufacturing sector was 40 per cent in the gross turn-over,
34 per cent in exports upto the year 1999 and about 68 per cent in employment in the year
2003-04.It contributes almost 40% of the gross industrial value added in the Indian
economy. When the performance of this sector is viewed against the growth in the
manufacturing and the industry sector as a whole, it instills confidence in the resilience of
the small-scale sector.
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Year
1.5 Small and Medium Enterprises in India:
Small scale industries in India can be divided into
four types of enterprises:1. Small Scale Industrial Undertakings, 2. Ancillary
Industrial Undertakings 3. Tiny Enterprises 4.
Women Entrepreneurs
Small Scale Industrial Undertakings-An industrial
undertaking in which the investment in fixed assets in
plant and machinery whether held on ownership terms
on lease or on hire purchase does not exceed Rs 10
million.
1994-95
Exports
(Rs.
Crores)
(at
current
prices)
29,068
(14.86)
1995-96
36,470
(25.50)
1996-97
39,249
(7.61)
1997-98
43946
(11.97)
1998-99
48979
(10.2)
Ancillary Industrial Undertakings- An industrial
1999-00 (P)
53975
undertaking which is engaged or is proposed to be
Provisional
(10.2)
engaged in the manufacture or production of parts,
components, sub-assemblies, tooling or intermediates,
or the rendering of services and the undertaking supplies or renders or proposes to supply
or render not less than 50 per cent of its production or services, as the case may be, to one
or more other industrial undertakings and whose investment in fixed assets in plant and
machinery whether held on ownership terms or on lease or on hire-purchase, does not
exceed Rs 10 million.
Tiny Enterprises- Investment limit in plant and machinery in respect of tiny enterprises
is Rs 2.5 million irrespective of location of the unit.
Women Entrepreneurs- A Small Scale Industrial Unit/ Industry related service or
business enterprise, managed by one or more women entrepreneurs in proprietary
concerns, or in which she/ they individually or jointly have a share capital of not less
than 51% as Partners/ Shareholders/ Directors of Private Limits Company/ Members of
Cooperative Society.
2. RESEARCH QUESTIONS
The various research questions being addressed in this article are as follows:1. Why entrepreneurship is needed for the development of economies in transition?
2. How entrepreneurship has contributed to the growth of industrial structure of a
country with a special role being played by the SME’s.
3. Whether training & development is required to develop entrepreneurial talent to
manage SME’s?
4. What is the role of the government in building entrepreneurship talent by the
setting up of various support institutions?
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5. How really the training and development programmes contributed in creating a
professional entrepreneurship pool?
6. What are the constraints, which has created bottlenecks in the path of
entrepreneurship development with special reference to India?
7. What can be the approach to institutionalize entrepreneurship development
programmes in any country to create entrepreneur’s vibrant economy and society?
3. LITERATURE REVIEW
3.1 Training and Development for Entrepreneurship Development
Training can be defined as any attempt, within or outside the organization, to increase
job-related knowledge and skills of either managers or employees (Kitching and
Blackburn, 2002). This can be further divided into two parts formal and Informal
training. Formal training and development is defined as “initiatives which can be
identified by both recipients and deliverers as an intervention which has a structured
mode of delivery, where the aim is to impart new awareness or knowledge of a workplace
process or activity” (Patton and Marlow, 2002). Informal training can be defined as any
ad-hoc, fragmented and flexible initiatives. Such initiatives depend on the environment of
the organization, the nature of the task in hand, the propensity of individuals to learn, and
lack a formal structure and stated objectives. Thus, we can say that be it any type of
training the main objective of this is to inculcate those skills through which the managers
can effectively work in their organizations. most researchers attempt to define a list
of generic skills areas required by small business managers.
Gibb (1997) noted that the skills associated with entrepreneurship, strategic management,
business planning, relationship management, team building and marketing are important
skills for small business managers. He also highlighted the importance of the skills
relating to networking, learning from experience, and the sourcing and ability to work
with resources and expertise from outside the firm.
Deakins and Freel (1998) suggest that business management and business strategy are
important as well as the “softer” people skills, such as team building, leadership and
appraisal and development. A report by the Centre for Enterprise (2001) echoes this
approach and highlighted leadership, business development, people development,
relationship management and strategic management as important skills that successful
business managers preferred to develop within their businesses. Taking a more functional
approach, Curran et al. (1996) and Scott et al. (1996) cited health and safety
,entrepreneurial skills, product knowledge, marketing and sales and working methods as
priority areas. They also noted that IT related knowledge and skills are one of the key
skills gaps identified in owner-managers/managers, both in terms of management
processes and manufacture and process control. It is estimated around one third of SME’s
still have manual budgeting and stock control systems, whilst less than half use IT to
control manufacturing processes. The development of e-commerce also presents new and
complex challenges in this area.
(Parker and Barom, 2000) identifies the skills, which are required at entrepreneurial
manager and employees level.
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Owner/manager level
Training Needs
Financial and Accounting practices
VAT Requirements
Health and Safety
Legal Requirements
Promotion and Advertising skills
IT
Strategic Thinking
Group working
Problem Solving
Negotiation
Communication
Supervisory/Management skills
Employees Level
Interpersonal skills
Telephone Skills
Numeric Skills
Selling
Stock Rotation
Product Knowledge
Cash Handling
Literacy
Customer Service
Point of sale Technology
Security and emergency procedures
Supervisory Skills
3.2 Importance of Training for the Small Scale Industry
The need for the training earlier in small scale sector was not taken seriously but as the
advent of the competition, new marketing opportunities, increasing operation of the
organization in coming time felt the need of training for the overall growth and
advancement of the small scale sector. Jennings and (Banfield,1993) claimed that
“training can, and should be a powerful agent of change, facilitating and enabling a
company to grow, expand and develop its capabilities thus enhancing profitability”.
Many other studies pertaining to the training sector highlighted the benefits of the
training, as training and management development enhances SME performance (Storey
and Westhead, 1994; Storey, 2004). It facilitates a firm’s expansion (Cosh et al., 1998),
existence (Marshall et al., 1995), profitability and productivity (Betcherman et al., 1997)
and competitive advantage (Huang, 2001; Smith and Whittaker, 1999). For Hallier and
Butts (1999) “organizational performance can be held back through a neglect of training
activity”. In their impact assessment study, (Marshall et al.1993) found that government
funded training investments in SME’s have significant influence in setting proactive
strategies to combat recession; 50 per cent of receiving companies as compared to 12 per
cent of the control group increased employment opportunities, increased investments and
had a perception of resultant increased profit. (Jayawarna et al, 2007) in their study of
198 SME’s in UK studied the impact of management development activities on their
performance and found out that those SME’s who provides training will outperform (in
terms of turnover growth, business survival and employment growth) from those that do
not provide training.
4. METHODOLOGY OF STUDY
The study is based on the secondary sources. Various research articles and information on
experiences of other countries were analysed using content analysis method. Government
supported institutions was studied on the basis of which this conceptual article has been
made. Efforts are also on to conduct a primary study by taking a sample of one hundred first
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generation entrepreneurs to know from them the benefit of training and development which
they have undergone in manning their SME’s which is going to be a further research area
for the researcher.
4.1 Planned intervention (training and education) for entrepreneurship development:
To speed up the process of entrepreneurship in any country it is important that the educated
and un-educated youths both from urban and rural areas can be properly trained and
developed by conducting various entrepreneurship development programmes in vocational
colleges, universities and gram panchayat level. This will improve the skill, knowledge and
attitude that is required to be a successful entrepreneur. The need for entrepreneurship
development can be further highlighted through following factors:
A. Structural Factors:
Most of the developing economies are characterised by: 1.
2.
3.
4.
5.
6.
Low rates of growth,
Predominance of rural population,
Adverse land-people ratio,
Heavy dependence on agriculture,
Concentration of industries in urban areas,
Highly skewed distribution of income and wealth, besides high incidence of poverty
and unemployment
All this can be taken care of by the growth of entrepreneurship culture in the country where
an entrepreneur can create several jobs for others.
B. Emerging Global Economic Scenario:
Recent years have experienced a policy shift towards a free market economy, the world
over. During the 1980s, more than 50 developing countries implemented structural reforms,
relying more on market forces than on the state, for economic management. This trend was
followed by a few global developments such as:1.
2.
3.
4.
5.
6.
Disintegration of the USSR,
Quest for democracy in East European countries,
Oil shock of the eighties,
Reduced flow of investment resources to poorer countries,
Less demand for products from developing countries and,
Increasing non-tariff trade barriers imposed by the developed countries, etc.
So far entrepreneurs in most of the developing countries have been inward looking and
indifferent towards global changes - protected by the government policies of import
substitution. Once the national markets get integrated with the international markets -, which
they will - the SME entrepreneurs will have to change their approach to business and
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internationalise in true sense. Besides technology upgradation, acquisition and assimilation,
to make their products globally competitive, a major focus will have to be laid on human
resource development - promotion and grooming of potential and existing entrepreneurs
who think and act globally in an innovative manner. The immediate goal will have to be to
strengthen the `soft skills' of existing entrepreneurs so that they are able to cope with the
challenges emanating from changing global economic scenario.
C. Constraints to Emergence and Growth of Indigenous Entrepreneurs
One of the major bottlenecks in the economic development of the poor countries has been
identified as the lack of adequate entrepreneurial supply. This is because of the various
social, cultural and political factors. Socio-cultural factors in most of the developing
countries inhibit emergence of entrepreneurs. Colonial forces ruled most of the developing
countries, in the past. One of the major fall-outs of this prolonged colonial rule was the
suppression of entrepreneurial instinct of the local population. People started looking
forward to government jobs, which provided them access to power, social status and
economic security. Entrepreneurship became a casualty. This psyche continues to persist
to-date, despite the political freedom attained by most of them.
This was further compounded by the lack of adequate investible resources; lack of
information on markets, products and appropriate technology; apathy of banks towards the
first generation entrepreneurs; lack of collaterals and guarantees hindering their access to
credit; lack of confidence and motivation; lack of knowledge about business opportunities;
lack of information regarding how to go about formulating a business plan including market
survey; lack of information about procedures and sources of assistance including finance;
lack of knowledge about how to manage one's own enterprise; policy bias against SME’s
leading to a very limited access to government support infrastructure and the like.
From the HRD angle, it is evident that profitable entrepreneurial ventures require new
concepts and modes of thinking, which translate into entrepreneurial attitudes, skills and
techniques. Thus, an entrepreneurship development programme itself could be defined as a
learning-production system. The technical substance or content of continuous learning
endeavours could be attuned to and shaped by specific business goals and customer needs at
specific moments in time.
4.2 Justification for Developing Entrepreneurship Society:
The entrepreneurs training are required for following reasons:
1. Acceleration of industrial growth requires increased supply of entrepreneurs to
venture into projects. This supply has not been rapid, consistent and well-spread;
2. Past and recent experiences of failures of projects have brought out the criticality of
entrepreneurial competence given liberal financial, infrastructural and other support.
As the economy gets market oriented with new technologies, survival of the fittest
would need capable entrepreneurs;
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3. Success of small industries development efforts has come to depend upon the person
behind the project, the one-man owner-manager, the entrepreneur;
4. Our failure in making significant break-through in the interiors of backward districts
and rural areas in general has been primarily due to lack of supply of local
entrepreneurs, while the "outsiders" have been few despite a variety of incentives
and facilities. We need to locate, encourage and develop local entrepreneurs;
5. Surplus manpower (educated and uneducated) which has been a great liability can
become an asset once those with potential are selectively groomed for
self-employment and enterprise formation, leading to further job opportunities; and
6. Socio-economic objectives of decentralising ownership of businesses from the hands
of few cannot be served unless non-traditional sources of entrepreneurship are
tapped. Interventions through Entrepreneurship Development strategy are needed for
selectively bringing out entrepreneurs from these new sources.
4.3 Promoting Entrepreneurship: The Regional Experiences
Fortunately a wealth of experience in fostering entrepreneurship is accumulated over time in
developed as well as developing countries. A directory based on a comprehensive
worldwide survey, by International Labour Office, in 1989-90 contains information on 204
entrepreneurship development programmes carried out by 116 organisations in 40 different
countries. Based on a review of 12 cases representing Asia, Europe, North America and
Latin America, it was observed that many innovative and successful approaches to promote
entrepreneurship through training and educational interventions are in vogue. However, they
vary according to the objectives with which the programmes are undertaken
Various countries have, of course, adopted various approaches to promote entrepreneurship
through training intervention. It will be pertinent to review some of the global experiences of
promoting entrepreneurship through training intervention viz. EDPs.
i) African Experience:
Since their independence during the 60s, most of the African countries have been striving to
strengthen their economies through promotion of SME’s. A wide range of programmes
targeted at women, youths, unemployed, artisans, released civil servants, etc. are n vogue to
promote entrepreneurship. The programme inputs, besides credit on easy terms, include
help in opportunity identification and business plan preparation, counselling and information
support. These programmes have major focus on management. Specialised ED training
organizations have also been established in a few countries, e.g., Malawi Entrepreneurship
Development Institute, Lilongway (Malawi), Entrepreneurship Development Department
under the National Board for Small Scale Industries (NBSSI), and Empressario Tecnogia
(EMPRETEC) in Ghana; Small Industries Development Organisation (SIDO) in Zambia;
and Management Development Institute (MDI), Banjul, in The Gambia. Special
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programmes for women are also gaining momentum. Efforts have also been made to
introduce entrepreneurship in technical education system, through Commonwealth
Association of Polytechnics in Africa (CAPA).
However, despite well-intended policies, the policy implementation gap is the major
hindrance in the emergence and growth of SME entrepreneurs in most of the African
countries.
ii) Caribbean Experience:
Though a comprehensive policy framework to promote entrepreneurship is generally
lacking in most of the countries belonging to the region, some significant initiatives are
underway in countries like Barbados and Jamaica. The National Development Foundations
(NDFs), which are operating in many countries of the region, provide credit and technical
assistance to small entrepreneurs. Counselling to Small entrepreneurs forms an integral part
of the NDFs' mandate. The Hawaii Entrepreneurship Training and Development Institute
(HETADI) has one of the more replicated and internationalised programme in the Caribbean
countries. Another institute, which is very active in the field, is Barbados Institute of
Management and Productivity (BIMAP). The EDPs include training need assessment, on
the job counselling, simplified skills in accounting and management practices. The total
programme aims at (a) assisting small enterprises to survive; (b) changing the attitude of
bankers; (c) making small business grow. The approach has led to rapid growth in creation
and expansion of small enterprises. The Barbados approach, replicated in seven Caribbean
countries, has achieved considerable success in terms of start-ups such as 72 per cent in
Monkserrat, 63 per cent in St. Vincent, 76 per cent in St. Kitts, 86 per cent in Antigua, etc.
iii) Latin American Experience:
There are about 12 better known institutions directly involved in New Enterprise Creation
programmes - one each in Brazil and Chile and Peru and 9 in Colombia. Of these 12
programmes, 9 are housed in universities, mostly addressing the student community. These
programmes range from 6 weeks to 16 weeks. Major training inputs cover information,
management, marketing, business plan preparation, opportunity guidance, behavioural
training and technical training, depending upon the organisation. Start up rate also varies
between 20 per cent and 30 per cent. Servicrio Nacional De Aprendizaje (SENA) Bagota
(Columbia) and Centre de Desarrollo Cali (Columbia) are the two major centres involved in
ED training with high reputation and wide coverage.
iv) Asian Experience:
Asian region has very rich experience in developing small-scale industries and
entrepreneurship. Policies for entrepreneurship development through training intervention
are quite comprehensive. A large number of organisations are engaged in entrepreneurship
development activities in most of the Asian countries. In India alone there are about 700
such organisations with three national institutions to give thrust to entrepreneurship
development. Similarly, Philippines, Korea and Malaysia have small industry Commissions
12
and Boards with a large number of institutes specialising in entrepreneurship training and
education. The programmes address the needs of potential and existing entrepreneurs,
unemployed, women, rural disadvantaged group, ex-servicemen, etc. and are very
comprehensive in nature. These include planned publicity of entrepreneurial opportunities,
identification of potential entrepreneurs, and also help in selecting right kind of business
opportunities, preparation of business plan, management inputs and behavioural inputs.
The New Enterprise Creation programmes of Penelitian Dan Pengenbangan Manajemen
Indonesia, MARA in Malaysia, UPISSI, Manila and Psytech Management Consultants
International, Metro Manila in Philippines; TECHNONET ASIA in Thailand, Industrial
Enterprise Development Institute of Nepal; Centre for Entrepreneurship Development
(CED), Sri Lanka, National Institute of Small Business and Entrepreneurship Development
in Delhi (India) and Entrepreneurship Development Institute of India, Ahmedabad, in India
are some of the major players in the field of entrepreneurship training and education in Asia.
The discussion indicates that entrepreneurship development has assumed the status of a
movement in the developing countries. It may, however, be noted that entrepreneurship
development is a function of four major elements viz; the entrepreneur, the enterprise, the
environment and the institutions. Thus, any comprehensive intervention to hasten the pace
of entrepreneurial supply must address itself to all the four elements.
Moreover, keeping in view the long-term strategy to sustain entrepreneurship development,
one has to focus on the entire enterprise building process, which is a multi-stage one
involving
(i)
Early socialisation - when an individual is conditioned right from the
adolescent stage to think and act in an entrepreneurial manner;
(ii)
Start up stage - when a person conceives, plans and implements a business
venture;
(iii)
Survival stage - when an enterprise passes through the teething troubles and
strives to sustain the operations above break-even level, and
(iv)
Growth stage - when the business operations are consolidated and reoriented
leading to enterprise growth. Ideally the HRD interventions will need to
address the emerging needs at each stage of enterprise building.
4.4 Government supported institutional infrastructure for HRD development in
SME’s sector in India
In India, Government has given its full hearted support to this sector by establishing
many institutes which provides research., consultancy, training, marketing and financial
support to small entrepreneurs so that they can grow. Many institutions have come up
into this to provide possible support for the training and development. In this direction,
the establishment of Ministry of small and medium enterprises was the first and profound
step.
A. Ministry of Micro, Small and Medium Enterprises (MSME)
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The President under Notification dated 9th May 2007 has amended the Government of
India (Allocation of Business) Rules, 1961. Pursuant to this amendment, Ministry of
Agro and Rural Industries (Krishi Evam Gramin Udyog Mantralaya) and Ministry of
Small Scale Industries (Laghu Udyog Mantralaya) have been merged into a single
Ministry, namely, “MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES
(SUKSHMA LAGHU AUR MADHYAM UDYAM MANTRALAYA)”
Programmes and schemes include:•
•
•
•
•
•
•
•
Scheme for International Cooperation
Scheme of Surveys, Studies and Policy Research
Entrepreneurship Development Institution Scheme
Prime Minister's Rozgar Yojna (PMRY)
Scheme of Fund for Regeneration of Traditional Industries (SFURTI)
Rural Employment Generation Programme (REGP)
Product Development, Design Intervention and Packaging (PRODIP)
Khadi Karigar Janashree Bima Yojana for Khadi Artisans
B. National Institute Of Micro, Small And Medium Enterprises (Nimsme),
HyderabadThe institute has emerged as an apex organization by making enactment in Micro, Small,
Medium Enterprises Development (MSMED) Bill in the Parliament and came into
operation as the name of Nimsme from 11th April 2007 and entertaining the needs of
the SME Sector through its different schools- School of Enterprise Development (SED),
School of Enterprise Management (SEM) , School of Entrepreneurship and Extension
(SEE) , School of Enterprise Information and Communication (SEIC). Apart from the
individual schools for cater9ing to their specific needs they are also running the following
8 weeks programmes for the SME’s: •
•
•
•
•
•
•
•
•
•
•
•
•
•
Trainers’ Training in Entrepreneurship Development
SME’s Financing – Approaches & Strategies
SME’s Policy & Promotion in Developing Economies
SME’s Management Consultancy
Environmental Management in Small Medium Enterprises
Planning and Promotion of Agro and Food Enterprises
Total Quality Management & ISO 9001:2000/14001:2004 & Six Sigma
Tourism and Hospitality Management
Micro Finance for Micro Enterprises SHG Approach (MISA)
Empowerment of Women through Enterprises
Promotion of Micro Enterprises
Training Methods & Skills for Managers
Intellectual Property Right (IPR’s) and Implications for SME’s
Food Processing Enterprises for women
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C. National Institute for Entrepreneurship And Small Business Development
(Niesbud), Noida- The National Institute for Entrepreneurship and small Business
Development (NIESBUD) was established in 1983 by the Ministry of Industry (now
Ministry of Small Scale Industries), Govt. of India, as an apex body for coordinating and
overseeing the activities of various institutions/ agencies engaged in Entrepreneurship
Development Particularly in the area of small industry and small business.
Their Training Programmes comes under the category of:•
•
•
•
•
•
Trainers Training Programmes
Small Business Promoters Programmes
Development officer’s orientation Programmes
Continuing Education Programmes for SME Entrepreneurs
International Training Programmes
Entrepreneurship Development Programmes
D. The Indian Institute of Entrepreneurship (IIE)- The Indian Institute of
Entrepreneurship (IIE) was established in 1993 by the Ministry of Industry, Government
of India with its Headquarter at Guwahati to undertake training, research and consultancy
activities in the field of small industry and entrepreneurship. The Institute was registered
under the Societies Registration Act XXI of 1860. It started its activities from April 1994.
Besides the Government of India, North Eastern Council, Small Industries Development
Bank of India and the Government of Arunachal Pradesh are its sponsors.
Their Programmes Include:•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Banker's Meet
EDP under REGP Scheme of KVIC
EDP under REGP Scheme of KVIC Intrapreneurship Development Program
Entrepreneurship Development Program
EDP under REGP Scheme of KVIC
Entrepreneurship Development Programme
Entrepreneurship Awareness Programme
EDP under REGP Scheme of KVIC
Faculty Development Programme in Entrepreneurship
EDP under REGP Scheme of KVIC
REAP
Summer Course on Entrepreneurship for College/University Students
TEDP on Gems Stone Processing
Entrepreneurship Development Program
Entrepreneurship Development Program
E. Small Industries Development Bank of India (SIDBI)- Small Industries
Development Bank of India (SIDBI) was established in April 1990 under an Act of
Indian Parliament as the principal financial institution for Promotion, Financing,
15
Development of industry in the small scale sector and Co-coordinating the functions of
other institutions engaged in similar activities. Since its inception, SIDBI has been
assisting the entire spectrum of SME Sector including the tiny, village and cottage
industries through suitable schemes tailored to meet the requirement of setting up of new
projects, expansion, diversification, modernization and rehabilitation of existing units.
Their Training Programmes comes under the category of:•
•
•
•
Enterprise promotion
Human Resource Development of the SME’s
Technology Upgradation
Quality and Environment Management
F. The Khadi and Village Industries Commission (KVIC)- The Khadi and Village
Industries Commission (KVIC) is a statutory body created by an Act of Parliament
(No.61 of 1956 and as amended by Act No. 12 of 1987). Established in April 1957, it
took over the work of the former All India Khadi and Village Industries Board. The broad
objectives
that
the
KVIC
has
set
before
it
are
The social objective of providing employment, The economic objective of producing
saleable articles, and The wider objective of creating self-reliance amongst the poor and
building up of a strong rural community spirit. The KVIC is charged with the planning,
promotion, organization and implementation of programs for the development of Khadi
and other village industries in the rural areas in coordination with other agencies engaged
in rural development wherever necessary.
They are running various short-term courses of 2 weeks to full-fledged courses of 1 year
to cater the different needs of the small-scale sector like•
•
•
•
•
•
•
•
•
Charka Mechanic Course
Design Weaving Course
Duster making
Bee-keeping Field Man Course
Bamboo Article making
Bakery Course
Spices & Masala Course
Hand made paper and agro based industry courses
Polymer and chemical industry based courses etc.
G. ENTREPRENEURSHIP DEVELOPMENTINSTITUTE OF INDIA
AHMEDABAD, GUJARAT (EDI)
EDI a national resource institution is registered under the societies registration act 1860
and public trust act 1950 with the objective of promoting entrepreneurship through
education, research, training and institution building. Their programmes include: -
16
•
•
•
•
•
•
•
•
•
•
•
Specialized training programmes on rural marketing
Open learning diploma in business entrepreneurship
Training of Trainers Programmes
Performance Improvement and Growth Programme
Small Industry Management Assistants' Programme and Intrapreneurship
Programme
Faculty development programmes
Summer Camps on entrepreneurial adventures for youth and succession planning in
entrepreneurial continuity (SPEC)
Programme on Assessing Entrepreneurial Potential for Financing New/Growth
Ventures
Training Programme on Informal/Micro Credit Delivery Systems for Functionaries
of NGOs
Appreciation/Sensitisation Workshops on Entrepreneurship Development for Policy
Makers/Senior Officials
Indian technical and economic cooperation (ITEC), ministry of external affairs,
sponsored programmes
• Entrepreneurship & small business promotion
• Business development service providers for micro enterprise & micro
finance
• Industrial and infrastructure project preparation & appraisal
• Computer applications for SME’s
• Basic course on English language and business communication
H. Progress Harmony Development (PHD) Chamber of Commerce and Industry.
Among the non-governmental organizations promoting entrepreneurship in India is the
Progress Harmony Development (PHD) Chamber of Commerce and Industry. The
Englishman James Currie conceived the concept, and the Chamber was established in
1905 to promote the interests of the Delhi mercantile community.
Since 1988, the Konrad Adenauer Foundation of Germany has cooperated with the PHD
Chamber of Commerce and Industry, with the common belief that only the development
of enterprising spirit and initiative among individuals can help a society achieve selfreliance and optimal development.
Functions of the PHD Chamber of Commerce and Industry include:
•
•
Providing support to the economic and social growth process by developing
entrepreneurial skills and attributes;
Promoting not only new ventures, but also improving the productivity of existing
self- employment; including rural and less developed areas in PHD activities;
17
•
•
Fostering a spirit of self-reliance and self-confidence to make entrepreneurship
self- generating; and
Providing specific services such as training, consulting, and a computerized data
bank
Apart from its direct support of entrepreneurship development, the PHD Chamber of
Commerce and Industry has expanded activities into a larger socioeconomic interest, with
a special focus on rural development
4.4 Constraints In Entrepreneurship Training And Development
Though there are many organizations funded by the government, which provides training
to the SMEs as per their needs, and requirements but still the rate of the SME’s enroll
themselves for the formal training of their managers and the employees are very low.
Certain widely quoted reasons why they are not motivated to enroll for the same are•
Owners of small firms are overwhelmingly concerned with short-term survival
issues, whereas many training benefits are long term'. (Westhead and Storey,
1999)
•
The kinds of structured vocational education and training (VET) courses that are
offered to them fail to meet their needs (Raffo et al., 2000). These courses are
typically viewed by small business as ill focused, inappropriate and often
inaccessible.
•
Small Scale Sector being self-employed isolated, working long hours and being
unable to afford time away from their business. Gibb (1997)
A final point, unique to many owner managers of SME’s, is the influence of their own
self-belief (a necessary characteristic to carry them through the trials of starting up a
business). Goffe and Scase (1995) believe that that this attitude creates an extreme
reluctance to accept external advice, which has its roots in the SME owners’ commitment
to independence and “I do it my way” attitude.
5. RESULTS & FINDINGS
A comparison of the performance of trained entrepreneurs vis-à-vis non-trained but
comparable group of entrepreneurs as per the preliminary investigation done by the
researcher in India showed the following:.
•
•
The EDP trained entrepreneurs got significantly higher (156%) return on equity
compared to the non-trained group whose ROI was 66%;
The capital productivity (capital to output ratio) in the target groups was
significantly higher (0.69) compared to the control group (1.47);
18
•
•
•
The annual average growth in investment in the case of trained entrepreneurs
(43.54%) is statistically significantly higher than the control groups;
The average annual growth in sales (57.84%) is significantly higher compared to the
control group (35.04%); and
Even the growth in the profits of the trained entrepreneurs was significantly higher
(57.84%) than the control groups (35.04%), indicating a more efficient management
of resources by the trained entrepreneurs.
The study has also proved the effectiveness of these programmes in terms of new
investments, employment generation, diversification of the sources of entrepreneurial
supply, self-employment of the educated and unemployed men and women. From a variety
of criteria of cost-benefits, the investments in funding EDPs have been worth their while.
This is despite the fact that not more than 33 per cent of those trained under the programme
have been able to start their enterprises. Almost an equal number has been blocked in the
process of becoming entrepreneurs after getting training because of the inadequacies of the
support system. Non-availability of credit has been one of the major hurdles in the success.
5.1 Approach to institutionalise entrepreneurship development programme- a
strategic framework
At this stage it will be pertinent to ask: whether institutionalisation of entrepreneurship
development strategy approach is replicable? If yes, what are the preconditions for its
successful transfer? and, how to institutionalise the strategy keeping in view the
long-terms goals?
Transfer of the approach
Answer to the first question is obviously `yes'. For, a number of organisations in India and
other developing countries have already adopted/adapted EDI's entrepreneurship
development approach.
With reference to the second question, it may be mentioned that the success of the approach
emanates from the harmony among four key factors of entrepreneurship development viz.,
entrepreneur, enterprise, institutions and environment and their proper integration in the
ED programmes. For, training interventions for entrepreneurship development could bear
fruits only when the environment (policy support, institutional infrastructure, supply of
funds, attitude of government officials, etc.) responds appropriately to facilitate emergence
and growth of new entrepreneurs. Following are the major requirements for successful
implementation of ED programmes in any developing country.
i) Commitment of the Government:
Unless appropriate policies and programmes are formulated which encourage development
of small-scale enterprises and facilitate entry of new entrepreneurs, entrepreneurship
development efforts in isolation are not likely to succeed. Training is not a solution by itself.
This calls for the commitment of the decision makers, which must get reflected in
19
formulation of conducive policies where new entrepreneurship could emerge, survive and
grow.
ii) Organisational Needs:
It is essential that one or more organisations, new or existing depending upon the local needs
and conditions, are identified for initiating/housing entrepreneurship development activities
in the country. The organisation should have sufficient operational flexibility required for
initiating and experimenting with such new programmes. It should also be one, which has
formal linkages with various networking agencies like financial institutions, industrial
assistance agencies, etc. Such linkages would facilitate timely support to trained/ new
entrepreneurs and influencing government policies through joint efforts.
iii) Manpower Requirements:
The integrated process of developing a group of entrepreneurs calls for competent
trainer-motivators possessing certain personality traits, behavioural qualities, adequate
knowledge about business environment and management, etc. Therefore, in order to perform
the varied tasks involved, a cadre of well-trained trainer motivators will have to be created.
While selecting such trainer-motivators, personality traits and commitment levels should be
given sufficient weightage compared to educational qualifications and work experience.
5.2 Institutionalisation of the strategy
The transfer of ED programmes is only the beginning. In the long run the activity must
sustain on its own merit.. The process could be initiated either by an existing organisation or
a new institution set up for the purpose or through intervention by the State of international
development agencies. The process can follow the steps outlined below:
STEP I:
Study the feasibility of launching entrepreneurship development activities
through training supplemented by policy and infrastructural support and like.
The study needs to examine policies related to SME’s to existing
institutional network to serve SME’s, identification of an institution from
amongst existing ones where EDP activities could be housed, need for EDPs,
necessary and sufficient conditions to launch EDPs etc.
STEP II:
Conduct EDP Appreciation Workshops for Planers, Policy-makers and key
officials from support agencies (and own organisation, if necessary),
representatives of women organisations, education institutions, NGOs,
industry associations, banks, training organisations etc. to create a favourable
and conducive environment for EDPs.
STEP III:
Identify and determine the programme goals.
STEP IV:
Identify the Target Group(s).
20
STEP V:
Identify the potential sponsors/ funding agencies and constitute a Governing/
Monitoring/ Advisory Council (High Power Committee) to plan, review, and
guide progress of the ED activity from time to time.
STEP VI:
Prepare and submit Project Proposal for getting long term funding support
for the programme.
STEP VII:
Firm up funding for EDPs and also get assurance of financing the projects of
new entrepreneurs.
STEP VIII:
Design an appropriate organisational structure, with selection and
appointment of a suitable Chief Executive.
STEP IX:
Identify and select right kind of faculty resources and send them for
specialised Training of Trainers, if needed.
STEP X:
Select appropriate content, sequencing and methodology for the
programmes.
STEP XI:
Develop training material and teaching aids, etc. in local language.
STEP XII:
Prepare and finalise programme implementation strategies.
STEP XIII:
Identify viable business opportunities.
STEP XIV:
Launch pilot ED Programmes.
STEP XV:
Evolve Monitoring and Evaluation systems for ED activities.
STEP XVI:
Undertake review and revision of the programme, if necessary.
STEP XVII: Spread the programme to more regions/ states/ towns/ villages; develop
networking (through intranet or other mechanisms) among the key players in
ED to facilitate sharing of information, experience and resource leading to
synergic effect; make long-term plans for ED Activities i.e.,
Institutionalisation.
21
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