ED: Factors affecting entrepreneurship (2024)

Factors affecting entrepreneurship

Entrepreneurship is a human skill, which can be developed. Due to entrepreneurship development, living standards of society can tend to rise, new opportunities of employment can be created and rapid economic and industrial development become possible. There are a number of factors affecting entrepreneurship or motivating entrepreneurs as follows.

• Individual
  Entrepreneur is an individual having specific knowledge, skills and efficiency. Any new enterprise is created by an individual or group of individuals. The creativity of an individual encourages him to establish a new enterprise. Creativity consists of innovation, search and research. Personality, social conditions, social support, education and training etc. factors lay an important role for developing such skills and motivate an individual to become an entrepreneur.

• Industrial development
  More suitable the industrial environment in a nation, more rapid development of entrepreneurship. More favourable industrial environment is one, where transportation, communication, electricity, labour, water, raw materials etc are easily available. Such industrial environment by and large affect entrepreneur development.

• Social environment
  Social system plays a vital role in social environment. As an individual is born and developed in a family and society, social values, ethical standards, family structure, caste and religious attitudes of social environment affect entrepreneurship development.

• Economic environment:
  The economy in which enough capital fund is available for establishing an enterprise and market incentives are also available, encourages entrepreneurship development. Banking, education, industrial policy, economic policy, Exim policy interest rate etc. Factors of economic environment affect entrepreneurship development. Thus economic soundness and free economy motivate entrepreneur development.

• Technological environment
  Technology is an art of converting the natural resources into goods and services more beneficial to society. Due to technological development new product, new production process new raw material, new researches are encouraged for modernization.

• Political environment
  Government also plays an important role in entrepreneurship development. Due to Globalization, Indian economy has adopted free industrial policy, restrictions on industries have been minimized and MRTP act has been cancelled, which has motivated many entrepreneurs to establish and to develop industries in Indian economy.

• Incentives
  Incentives are also one of the important factors affecting entrepreneurship. If motivating loans, policies, organizations are developed, it leads to rapid entrepreneurship development.

• Profit making
  It is the profit that induces the prospective entrepreneurs to get into the business and start new activities. Profit, therefore, is a factor which induces the entrepreneur to engage and utilize the factors of production and for development.