Entrepreneurship
Entrepreneurship
Entrepreneurship
IP
Entrepreneurship, Economic
Development, and Society
Over the past several decades the role of entrepreneurship in economic development
has become an essential factor of employment, and innovations bring enhanced the
market competition. Entrepreneurship is the primary factor in the growth of
economies. Each new business launched has an impact on an economy and affect
people around it. The Theory of Kirzner (1973-2005) about entrepreneurship explains
how the improvement of economic health affects individuals in the first world. The
creation of new goods and services improves the quality of living of companies and
individuals.
What are the roles of
entrepreneurship in the economic
development?
Entrepreneurship plays an influential role in the economic growth and
standard of living of the country. As a startup founder or small business
owner, you may think that you are simply working hard to build your
own business and provide for yourself and your family. But you are
actually doing a whole lot more for your local community, state, region,
and the country as a whole.
Wealth creation and Sharing
By establishing the business entity, entrepreneurs invest their own resources and
attract capital (in the form of debt, equity, etc.) from investors, lenders and the public.
This mobilizes public wealth and allows people to benefit from the success of
entrepreneurs and growing businesses. This kind of pooled capital that results in
wealth creation and distribution is one of the basic imperatives and goals of economic
development.
Creates Jobs
Entrepreneurs are by nature and definition job creators, as opposed to job seekers. The
simple translation is that when you become an entrepreneur, there is one less job
seeker in the economy, and then you provide employment for multiple other job
seekers. This kind of job creation by new and existing businesses is again is one of the
basic goals of economic development. This is why for other countries they have
launched initiatives such as Startups to promote and support new startups, and also
others to attract foreign companies and their FDI into the economy. All this in turn
creates a lot of job opportunities, and is helping in augmenting our standards to a
global level.
Balanced Regional Development
Entrepreneurs setting up new businesses and industrial units help with regional development by
locating in less developed and backward areas. The growth of industries and business in these areas
leads to infrastructure improvements like better roads and rail links, airports, stable electricity and
water supply, schools, hospitals, shopping malls and other public and private services that would not
otherwise be available.
Every new business that locates in a less developed area will create both direct and indirect jobs,
helping lift regional economies in many different ways. The combined spending by all the new
employees of the new businesses and the supporting jobs in other businesses adds to the local and
regional economic output. Both central and state governments promote this kind of regional
development by providing registered MSME businesses various benefits and concessions.
GDP and Per Capita Income
For example, in India’s MSME sector, comprised of 36 million units that provide
employment for more than 80 million people, now accounts for over 37% of the
country’s GDP. Each new addition to these 36 million units makes use of even more
resources like land, labor and capital to develop products and services that add to the
national income, national product and per capita income of the country. This growth in
GDP and per capita income is again one of the essential goals of economic
development.
Standard of living
Increase in the standard of living of people in a community is yet another key goal of
economic development. Entrepreneurs again play a key role in increasing the standard
of living in a community. They do this not just by creating jobs, but also by
developing and adopting innovations that lead to improvements in the quality of life of
their employees, customers, and other stakeholders in the community. For example,
automation that reduces production costs and enables faster production will make a
business unit more productive, while also providing its customers with the same goods
at lower prices.
Exports
Any growing business will eventually want to get started with exports to expand their
business to foreign markets. This is an important ingredient of economic development
since it provides access to bigger markets, and leads to currency inflows and access to
the latest cutting-edge technologies and processes being used in more developed
foreign markets. Another key benefit is that this expansion that leads to more stable
business revenue during economic downturns in the local economy.
Community Development
A good example of how this kind of community development can be promoted is Azim
Hashim Premji, Chairman of Wipro Limited, who donated Rs. 27,514 crores for promoting
education through the Azim Premji Foundation. This foundation works with more than
350,000 schools in eight states across India.
What are the roles of
entrepreneurship in the
society?
Entrepreneurship is the capacity and willingness to develop and
participate in a business venture with the intention of making a profit
regardless of the financial risks involved. The role of entrepreneurship
in any economy is critical, as it contributes to the socio-economic
development of societies in various ways, including
1 Identifying existing opportunities in the market
An example is The World Bank 2016 Kenya Economic update placed employment
uptake by the private sector at 67% in 2014. This figure is likely to have increased
with the improved performance of Kenya in the ease of doing business ranking.
Entrepreneurship helps bridge the unemployment gap through formal and informal
business ventures that employ millions of Kenyans.
3 Contributing to national income