Entrepreneurship is influenced by four distinct factors: economic development culture, technological development and education. In areas where these factors are present, you can expect to see strong and consistent entrepreneurial growth.
These conditions may have both positive and negative influences on the emergence of entrepreneurship. Positive influences constitute a facilitative and conducive condition for the emergence of entrepreneurship, whereas negative influences create inhibiting milieu to the emergence of entrepreneurship.
Economic Factors
Economic environment exercises the most direct and immediate influence on entrepreneurship. This is likely because people become entrepreneurs due to necessity when there are no other jobs or because of opportunity. The economic factors that affect the growth of entrepreneurship are the following:
- Capital
Capital is one of the most important factors of production for the establishment of an enterprise. Increase in capital investment in viable projects results in an increase in profits which help in accelerating the process of capital formation. Entrepreneurship activity too gets a boost with the easy availability of funds for investment. Availability of capital facilitates for the entrepreneur to bring together the land of one machine of another and raw material of yet another to combine them to produce goods. Capital is, therefore, regarded as a lubricant to the process of production.
France and Russia exemplify how the lacks of capital for industrial pursuits impede the process of entrepreneurship and an adequate supply of capital promoted it.
- Labor
Easy availability of the right type of workers also affect entrepreneurship. The quality rather than the number of labour influences the emergence and growth of entrepreneurship. The problem of labour immobility can be solved by providing infrastructural facilities including efficient transportation.
The quality rather the quantity of labour is another factor which influences the emergence of entrepreneurship. Most less developed countries are labour rich nations owing to a dense and even increasing population. But entrepreneurship is encouraged if there is a mobile and flexible labour force. And, the potential advantages of low-cost labour are regulated by the deleterious effects of labour immobility. The considerations of economic and emotional security inhibit labour mobility. Entrepreneurs, therefore, often find difficult to secure sufficient labour.
- Raw Materials
The necessity of raw materials hardly needs any emphasis on establishing any industrial activity and its influence in the emergence of entrepreneurship. In the absence of raw materials, neither any enterprise can be established nor can an entrepreneur be emerged.
It is one of the basic ingredients required for production. Shortage of raw material can adversely affect the entrepreneurial environment. Without an adequate supply of raw materials, no industry can function properly and the emergence of entrepreneurship is adversely affected.
In fact, the supply of raw materials is not influenced by them but becomes influential depending upon other opportunity conditions. The more favourable these conditions are the more likely is the raw material to have its influence on entrepreneurial emergence.
- Market
The role and importance of the market and marketing are very important for the growth of entrepreneurship. In the modern competitive world, no entrepreneur can think of surviving in the absence of latest knowledge about the market and various marketing techniques. The fact remains that the potential of the market constitutes the major determinant of probable rewards from an entrepreneurial function. Frankly speaking, if the proof of the pudding lies in eating, the proof of all production lies in consumption, i.e., marketing.
The size and composition of the market both influence entrepreneurship in their own ways. Practically, the monopoly in a particular .product in a market becomes more influential for entrepreneurship than a competitive market. However, the disadvantages of a competitive market can be cancelled to some extent by improvement in transportation system facilitating the movement of raw material and finished goods, and increasing the demand for producer goods.
- Infrastructure
Expansion of entrepreneurship presupposes properly developed communication and transportation facilities. It not only helps to enlarge the market but expand the horizons of business too. Take, for instance, the establishment of post and telegraph system and construction of roads and highways in India. It helped considerable entrepreneurial activities which took place in the 1850s.
Apart from the above factors, institutions like trade/ business associations, business schools, libraries, etc. also make a valuable contribution towards promoting and sustaining entrepreneurship in the economy. You can gather all the information you want from these bodies. They also act as a forum for communication and joint action.
