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1

Chapter 1
Entrepreneurship Development in India
1
...
It is a known fact that so many management institutes
are coming up to cater to the growing need of industries by supplying traditional
managers/corporate managers
...
The researcher feels that this study will reveal the
facts which are important to develop entrepreneurship as a career option among
management students
...
In the managerial role resources are allocated to solve problems and improve
the administrative efficiency
...
The more precise meaning of entrepreneur is; one
who perceives a need and then brings together manpower, material and capital
required to meet that need
...


1
...
It means “to
undertake”
...
Ronstadt, Entrepreneurship (Dover, MA: Lord Publishing,
1984),p
...
Stevenson and David E
...
85-94; and J
...
45-61
...


Around 1700 A
...
the term was used for architects and contractor of public works
...
Business encompasses manufacturing, transport, trade and all
other self employed vocation in the service sector
...


There are many views and opinions on the concept of entrepreneurship forwarded by
some of the world famous management gurus and economists as mentioned below
which will help in understanding this concept
...
476-477
...
Kuratko, "Entrepreneurship," International Encyclopedia of Business and Management
(London: Routledge Publishers, 1997), p
...

3

3
Drucker’s Views on Entrepreneur
“An entrepreneur is the one who always searches for change, responds to it and
exploits it as an opportunity
...
He/She is proprietary capitalist, a supplier of capital and at the same time a
manager who intervenes between the labor and the consumer
...


In underdeveloped economy resources are limited and can not be utilized for further
developments of products
...
Imitating
entrepreneurs have great opportunities in such market and can create more number of
jobs for others
...
A
...
Richard V
...
255
...
, Innovation and Entrepreneurship, UK, Elsevier Linacre House, 2006
6
Richard Cantillon, ―Essai surla nature du commerce on general, translated by H Higgs‖ Macmillon
London, 1931
...
and Gupta S
...
Entrepreneurship Development 2nd Edition, New Delhi, Galgotia
Publication, 2006,p
...


4
The entrepreneur is the one who undertakes to organize, manage, and assume the risks
of a business
...
Today, an entrepreneur is an innovator or
developer who recognizes and seizes opportunities; converts those opportunities into
workable/marketable ideas; adds value through time, effort, money, or skills; assumes
the risks of the competitive marketplace to implement these ideas; and realizes the
rewards from these' efforts
...
He or
she is an independent thinker who dares to be different in a background of common
events
...
Chief among these
characteristics are personal initiative, the ability to consolidate resources,
management skills, a desire for autonomy, and risk taking
...
8

Although no single definition of entrepreneur exists and no one profile can represent
today's entrepreneur, research is providing an increasingly sharper focus on the
subject
...

Entrepreneurship is catalyst of business and economic development
...

In fact, as noted, the entrepreneurial spirit is linked with humanity’s achievements
...
Today we

8

See 'Calvin A
...
Donald L
...
Vesper, Encyclopedia of Entrepreneurship
(Englewood Cliffs, NJ: Prentice-Hall, 1982): Ray V
...
Kuratko, "Perception of
Entrepreneurial Success Characteristics," American Journal of Small Business (winter 1986): p
...
Begley and David P
...
"Psychological Characteristics Associated with Performance in
Entrepreneurial Firms and Smaller Businesses," Journal of Business Venturing (winter 1987): p
...
Kuratko, "Entrepreneurship," International Encyclopedia of Business and Management
(London: Routledge Publishers, 1997), p
...


5
recognize that the agent of change in human history has been and most likely will
continue to be the entrepreneur
...
In England during the same period, the Industrial Revolution
was evolving, with the entrepreneur playing a visible role in risk taking and the
transformation of resources
...

In fact, until the 1950s the majority of definitions and references to entrepreneurship
had come from economists
...
11 Over the decades writers have continued to try to
describe or define what entrepreneurship is all about
...
12
In entrepreneurship, there is agreement that we are talking about a kind of behavior
that includes: (1) initiative taking, (2) the organizing or reorganizing of social
economic mechanisms to turn resources and situations to practical account, and (3)
the acceptance of risk of failure
...
Ronstadt put together a summary description:

9

Kent, Sexton, and Vesper, Encyclopedia of Entrepreneurship, xxix
...
Kirzner, ―Perception, Opportunity, and Profit: Studies‖ in the Theory of Entrepreneurship
(Chicago: University of Chicago Press, 1979)
...
38-39
...
9-12
...
A
...
Richard V
...
255
...
(Milwaukee,
WI: Center for Venture Management, summer 1975), p
...

10

6
Entrepreneurship is the dynamic process of creating incremental wealth
...
The product or
service itself may or may not be new or unique but value must somehow be infused
by the entrepreneur by securing and allocating the necessary skills and resources
...
In the twentieth century, the word became
synonymous or at least closely linked with free enterprise and capitalism
...


Whatever the specific activity they engage in, entrepreneurs in the twenty-first
century are considered the heroes of free enterprise
...
These individuals have created new products
and services and have assumed the risks associated with these ventures
...


In recognizing the importance of the evolution of entrepreneurship into the twenty first century, we have developed an integrated definition that acknowledges the
critical factors needed for this phenomenon
...
It requires an
application of energy and passion towards the creation and implementation of new
ideas and creative solutions
...
28
...


All the above definitions have focused light on entrepreneurship; on the basis of that
one can differentiate between corporate manager and entrepreneur
...
Traditional manager delegates and supervises the subordinates
while having least direct involvement
...
e
...
Traditional manager avoid risk while entrepreneur ready to accept
risk
...

Entrepreneur builds strong relations with everybody around them whereas corporate
manager follow the relationship as per the organization chart
...


This study will focus light on how to develop more number of entrepreneurs instead
of traditional managers/corporate managers
...
3
...
In the pre
colonial times the Indian trade and business was at its peak
...
Kanishka Empire in the 1st century started
nurturing Indian entrepreneurs and traders
...
D
...
Gold was pouring from all sides
...
They captured the Indian sea waters and slowly entered the Indian
business
...
This was the main reason for the downfall of Indian
business in the colonial times which had its impact in the post-colonial times too
...


A region of historic trade routes and vast empires, the Indian subcontinent was
identified with its commercial and cultural wealth for much of its long history
...
It has the world's twelfth largest
economy at market exchange rates and the fourth largest in purchasing power
...
For an entire generation from the 1950s until the 1980s, India followed
socialist-inspired policies
...
Since 1991, the nation has moved towards a market-based system
...
Across these three perspectives of entrepreneurship, two major
conclusions are apparent
...
Secondly, despite the
separate fields of analysis, entrepreneurship is clearly more than just an economic
function
...
3
...
Economy of India before British-Raj
The Indian economy in the pre-British period consisted of isolated and self-sustaining
villages on the one hand, and towns, which were the seats of administration,
pilgrimage, commerce and handicrafts, on the other
...
1-49
...
To understand pre-British India, it is essential to study the structure of the
village community, the character of towns, the character of internal and foreign trade,
the state of the means of transport and communications
...
3
...
The structure and organisation of villages
The village community was based on a simple division of labour
...
Similarly, there existed classes of people called
weavers, goldsmiths, carpenters, potters, oil pressers, washermen, cobblers, barbersurgeons, etc
...
These craftsmen were paid a stipend out of the crops at the harvest time
in lieu of the services performed
...
The raw materials produced from primary industries were the feed for the
handicrafts
...
Sir
Charles Metcalfe writes in this connection: "The village communities are little
republics having nearly everything they want within themselves; and almost
independent of foreign relations
...
This union of
the village communities, each one forming a separate little state by itself is in a high
degree conducive to their happiness, and to the enjoyment of a great portion of
freedom and independence
...
The land revenue sustained the government
...
The agriculturists could be further
divided into the land-owning and the tenants
...
These credit agencies supplied finance at exorbitant rates

16

Quoted by Iawaharlal Nehru, Discovery of India, (1947)
...
302
...
The village artisans
and menials were the servants of the village
...
The panchayats were the courts of
justice
...

enduring organisation
...
They did suffer the aggressors and were
forced to submit to exactions, plunder and extortion, but the absence of the means of
transport and communications and a centralized government helped their survival
...
3
...
Industries and handicrafts in pre-British India
The popular belief that India had never been an industrial country is incorrect
...
The muslin of Dacca, the calicos of
Bengal, the sarees of Banaras and other cotton fabrics were known to the foreigners
...
C
...

Similarly, the muslin of Dacca was known to the Greeks under the name Gangetika
...
The high
artistic skill of the Indian artisans can be visualised from this account given by T
...

Mukherjee : "A piece of the muslin 20 yards long and one yard wide could be made to
pass through a finger ring and required six months to manufacture
...
In addition to cotton
fabrics, the shawls of Kashmir, Amritsar and Ludhiana were very famous
...

The cast-iron pillar near Delhi is a testament to the high level of metallurgy that
existed in India
...
R
...
34
...
" 18 Thus, Indian exports consisted
chiefly of manufactures like cotton and silk fabrics, calicos, artistic wares, silk and
woolen cloth
...
In this way, Europe was a customer of Indian manufactures during
the 17th and 18th centuries
...
And even at a much later period, when the merchant
adventures from the West made their first appearance in India, the industrial
development of this country was, at any rate, not inferior to that of the more advanced
European nations
...
3
...
Economic consequences of British conquest
India had been conquered before the British too but the invaders settled in India
...
Whereas the early invaders Indianized
themselves, the British tried to keep a distance between them and the Indian people
and thus created the distinction erstwhile not known to Indian history--the foreign
rulers and the Indian subjects
...
The establishment of the British rule itself was a slow and
lengthy process, extending over more than a hundred years
...
During
this period England was passing through the period of changes in the techniques of
production which revolutionised manufacturing
...
171
...
1
...
The British
conquest led to the disintegration of the village community partly by the introduction
of the new land revenue system and partly by the process of commercialisation of
agriculture
...
The British were not interested in developing India as such
...
e
...


1
...
5
...
, to
Europe where these articles were in great demand
...
Tremendous expansion of productive capacity of
manufactures resulted in increased demand of raw materials for British industry and
the need to capture foreign markets
...
On the other hand, efforts were made to commercialise
agriculture so as to step up the export of raw materials
...
The decline of this industry started a chain reaction leading to
the speedy decline of other handicrafts
...
The principal causes that led to
the decay of handicrafts were as follows: -
...
The growth of quite a number of industries
and towns was possible owing to the patronage of nawabs, princes, rajas and
emperors who ruled in India
...
Cotton and silk manufactures suffered
especially
...


b)

Hostile policy of the East India Company and the British Parliament
...
They formulated certain
policies, and propagated them but when conditions changed in England they
were quick to reverse or suitably alter them
...
For instance, in the first
half of the 18th century, the British used tariff with the object of protecting
their woollen and silk manufactures on the one hand and of raising additional
revenues to finance continental wars, on the other
...
By this time, England had developed
industrially to such an extent that unrestricted competition of British
manufactures with Indian handicrafts led to their decline
...
Thus, the British
manufacturers employed the arm of political injustice in order to exploit the
Indian market
...

c)

Competition of machine-made goods
...
It also
created a gigantic industrial organisation and, consequently, the machine-made
goods began to compete with the products of Indian industries and handicrafts
...

Whereas the British emphasized the free import of machine- made
manufactured goods they did not allow the import of machinery as such
...
Thus, India became a classic example of
a colonial country supplying her imperialist rulers raw materials and
foodstuffs and providing markets for the manufactures of her rulers
...
The opening of the Suez Canal in 1869 reduced transport costs
and thus made the exploitation of the Indian market easier
...
With the spread of education, a new class grew in India which was

14
keen to imitate western dress, manners, fashions and customs so as to identify
itself with the British officials
...

Indigenous goods went out of fashion and the demand for European
commodities got a fillip
...
Thus, the British rule,
silently but surely, alienated the Indians not only from Indian culture but also
diverted in its favour their form and pattern of demand for goods
...
It led to unemployment on a vast scale
...
Lord
William Bentinck reported in 1834 : "the misery hardly finds a parallel in the
history of commerce
...
"

Another consequence of the decline of handicrafts was the compulsory backto-the-Iand movement
...

The unemployed craftsmen and artisans shifted to agriculture and increased
the proportion of population dependent on land
...
In the middle of the nineteenth
century, about 55 per cent of the population was dependent on agriculture, in
1901 it was about 68 per cent, the proportion went up to about 72 per cent in
1931
...
It led to an increase in
land-rents charged from tenants
...
Thus, the crisis in handicrafts and industries seriously crippled
Indian agriculture
...
3
...
Process of industrial-transition in India
...
It was mainly the private sector -- whether indigenous or foreign -- that

15
carried industrialisation forward
...
This explains the slow growth of
industrialisation
...
This change was brought about
by private enterprise
...


The period 1850-55 saw the establishment of the first cotton mill, first jute
mill and the first coal mine
...
In a period of 25 years, that is, by the last quarter of the 19 th century,
there were 51 cotton mills and 18 jute mills
...
By the end of the 19th century there were 194 cotton mills
and 36 jute mills, and coal production had risen to over 6 million tonnes per
annum
...
By 1900,
India had become a great exporter of rice, wheat, cotton, jute, oilseeds, tea,
etc
...
In this way India had become an
appendage of the British colonial system
...
The Britishers had experience of running industries at home
...
Besides,
much of the business developed in India was related either to the Government
or interests in some way connected with Britain
...


16
Apart from the British, the Parsis, the Jews and the Americans were also
prominent first as merchants and later as industrialists
...
The Parsis were particularly progressive
to rapidly adopt European business methods
...
In
the West two principal groups were ready to set up factories: the merchants
and the master craftsmen
...
The master craftsmen did not have capital but had
understood the materials and their proper handling
...
Most Indian merchants belonged to the Baniya or
moneylending community
...
But when the factory system was introduced in India
by the British, the merchant class found greater opportunities for trade
...
Besides, there were more opportunities for lending
money
...


At the same time, Indian craftsmen too did not play the part played by their
western counter-parts in the field of industrialisation because they did not
possess large capital
...


However, Indians joined the ranks of industrialists early in the middle of the
19th century and their role grew throughout the period, continuously and
steadily
...
They
were becoming increasingly important members of companies established by
the Britishers
...


17
B)

Private enterprise and industrial growth in the first half of the 20th century: In
1905, the Swadeshi movement was started
...
Over 70 cotton mills and nearly 30 jute mills were set up in the
country
...
Extension of railways
continued at the rate of about 800 miles per annum
...


The war of 1914-18 created enormous demand for factory goods in India
...
Besides,
the government demand for war-purposes increased considerably
...
Indian mills and factories increased their
production and were working to full capacity
...


Tariff protection to Indian industries
...
Between
1924 and 1939 several major industries were given protection by the
Government, prominent among them being iron and steel industry, cotton
textiles, jute, sugar, paper and pulp industry, matches, etc
...
They were able to capture the
entire Indian market and eliminate foreign competition altogether in important
fields
...
The imports from foreign countries declined while the government
demand for them increased
...

Many new industries which came to be known as war babies were started
...
The increase in industrial
output between 1939 and 1945 was about 20 per cent
...
The
conditions of shortage created by the Second World War continued in the
post-war period, but the overall index of output went up by only 5 per cent
between 1945 and 1950
...
By the beginning of the First World
War the British controlled at least half the production in India's major
industries
...
According to one estimate, the
British controlled 43 per cent of gross assets in 1914, 10 per cent in 1935 and
only 3
...


C)

Causes of slow growth of private enterprise in India's industrialisation (18501957) : It is important to find out the reasons why Indian industry did not
expand significantly relative to the rest of the economy over the hundred years
before Independence
...


Unimaginative private enterprise
...
Indians were
reluctant to enter the industrial field because of the comparatively
easier and secure scope for profit which existed in trading and
moneylending
...

But then Indian industrialists too were so short-sighted, they rarely
bothered about the future and cared very little for replacement and for
renovation of machinery
...
They were also influenced by
their trading background viz
...
They emphasized sales than
production
...


19
II
...
Just as
British enterprise was prominent, so also British Capital was
significant in India's industrialisation
...

Capital was scarce not only because the resources of the country were
underdeveloped but also because the avenues for the investment of
surplus wealth were few
...
Accordingly, people held their wealth
in the form of gold and silver
...
The indigenous financial
institutions concerned themselves with rural moneylending and
financing of internal trade
...
In the early days of industrialisation, people were generally
hesitant to entrust their savings to the company promoters
...
The Industrial Commission
wrote in 1918 :

"The lack of financial facilities is at present one of the most serious
difficulties in the way of extension of Indian industries
...
5 lakhs capital each
in the country
...
The swadeshi movement gave a fillip to the starting
of banks but the number of bank failures in this period was so great as
to cancel any good effect from banking expansion
...


20
It is interesting to note that Indian factory-owners followed closely the
British system as regards capital resources
...
But in course of time new resources were also tapped
...
--these people were induced to part with their wealth and savings
for investment in industrial enterprises
...
It is true that shortage of capital did
affect industrialisation in India but too much importance should not be
given to this factor alone
...


Private enterprise and the role of Government
...
In the 19th century, the Government did provide
certain overhead investments which helped private enterprise
...
But the Government
did not provide the other conditions essential for private enterprise
...


The tariff policy in India reflected the needs of business interests in Great Britain
...
Till 1924 the Government
refused to impose custom duties on the import of foreign goods
...

When the Government ultimately adopted a policy of protection, it did not give
protection to all industries but only to a few selected industries which fulfilled certain
specified conditions
...
Even simple machines and standard
supplies were imported
...


In spite of these difficulties, we must admire the achievements of India's indigenous
business communities since 1850
...


1
...
7
...
In addition to this, India had to pay the costs of British administration, in the
form of home charges
...


The main forms of colonial exploitation were:
(i) Trade policies aimed at developing a colonial pattern of trade in which India would
become an exporter of foodstuffs and raw materials and an importer of manufactures;
(ii) encouragement of British capital to take up direct investment in Indian consumer
goods industries; (iii) encouragement of finance capital, through the managing agency
system, to appropriate a major portion of the profits through various malpractices; and
(iv) to force India to pay the costs of British administration as well as to finance the
wars and expeditions undertaken by the British Government
...
Thus, trade policies were a very
convenient, but a potent source of exploitation
...


Exploitation of cultivators to boost indigo-export: - East India Company
wanted to encourage indigo export
...
They were given land at a very nominal price
...
Even other zamindars were compelled to allocate a portion of
their land for indigo cultivation
...


2
...
For this purpose, the Company made
use of agents called as Gomastas
...
The price fixed was at least 15 per cent and in extreme cases, even
40 per cent lower than the market price
...
In this way, through the Company's
gomastas, the East India company was able to procure cotton and silk fabrics
at very low prices
...
The
ruthlessness of the Company was so inhuman that the artisans worked like
bonded labour and this explains their growing pauperisation
...


Exploitation through the manipulation of import and export duties - Though
Great Britain professed to be a follower of free trade, but her trade policies
towards Indian goods only revealed that she never followed the policy of free
trade
...
The aim of British trade policies was to
destroy the supremacy of the Indian goods, protect the interests of British
industries and ultimately succeed in penetrating the Indian market by the
machine-made goods
...
)

After 1700, imports of Indian printed cotton fabrics in England were
banned
...
The craze for Indian goods was so
strong that some smuggling did take place
...


b
...
The declared
policy of the East India Company was to encourage the production of
raw cotton, raw jute, sugarcane, groundnuts, raw silk and other raw
materials and to discourage the production of manufactures in India
...
Ramesh Chandra Dutt citing the famous historian H
...
Wilson mentions:

"Had this not been the case, had not such prohibitory duties and
decrees existed, the mills of Paisley and Manchester would have been
stopped in their outset, and could scarcely have been again set in
motion, even by the power of the steam
...
Had India been independent, she
would have retaliated, would have proposed prohibitive duties upon
British goods, and would thus have preserved her own productive
industry from annihilation
...
British goods were forced
upon her without paying any duty, and the foreign manufacturer
employed the arm of political injustice to keep down and ultimately

24
strangle a competitor with whom he could not have contended on equal
terms
...
)

Discriminating protection whittled down by the clause of imperial
preference -- Towards the beginning of the 20th century, there was a
strong demand by the Indian national movement to protect the interests
of Indian industries
...
During the process of implementation, only
such industries were granted protection in which the Indian industry
had to face competition with some other country and not Great Britain
...
But the woolen industry was not granted protection
because the interests of the British came in clash with those of Indian
industry
...
But in this case, the only serious competitor
was U
...
Another example was that of heavy chemicals, an industry of
national importance, in which protection was denied because there was
a clash between British and Indian interest
...
The sum and substance of this policy Was
that impm1s from Great Britain and exports to Great Britain should enjoy the most
favoured nation treatment
...
Similar preference to Great Britain
was to be shown in exports vis-a-vis other nations
...
In other words, the policy of imperial preference was used to eliminate
competitors from the Indian market so that Great Britain could have full control to
exploit it through its trade policies
...

Lord Curzon's government in 1903 definitely pronounced against the policy of
Imperial preference on the following grounds:
20

Cited in Romesh Chander Dutt, The Economic History of India, Vol
...
180-81
...


(ii)

In the decision of fiscal policy concerning India, powerful sections of the
British people always exerted their influence and there was the danger that
India might be forced to shape her policy not in accordance with her own
needs but in accordance with the needs of other members of the Empire
...


(iv)

If the matter was thought from the economic point of view, Lord Curzon's
government thought, India had something but not perhaps very much to offer
to the Empire
...


All these arguments produced no effect on the British
...
Obviously, the British were more
concerned about retaining their hold on the Indian market
...

This would break their monopoly of exploitation which as rulers they were totally
unwilling to compromise
...
Writing in 1912, Alfred Chetterton in his work
"Industrial Evolution of India" in a very forthright comment explained: "Protection
would attract capital from abroad, and with the capitalist would come the technical
expert and the trained organiser of modem industrial undertakings
...

The educated Indian would play but a small part; and he would in the course of time
realise that the protective duties mainly served to enable Europeans to exploit the
country India does not want a protective tariff to enable an artificial industrial system
to be created, the masters of which will be able to take toll of the earnings of the
country, and establish a drain on its resources which will in the long run retard
progress"
...


(b)

Exploitation through export of British Capital to India

In the early phase of colonialism, the chief instrument of exploitation was trade but
later the British thought of encouraging investment in India, There were three
principal purposes of these investments
...
Secondly, in order to effectively exploit the natural resources of India, it
was essential to develop public utilities like generation of electricity and water works
...

This explains why railway development in India was planned in such a manner that it
served the colonial interests
...
4

Nature of Unemployment in India

India is a developing economy, the nature of unemployment, therefore, sharply differs
from the one that prevails in industrially advanced countries
...
It implied that in such economies machines becomes idle and demand for
labour falls because the demand for the products of industry is no longer there
...


This type of unemployment caused by economic fluctuations did arise in India during
the depression in the 1930’s which caused untold misery
...

Similarly, after the Second World War, when war-time industries were being closed,

27
there was a good deal of frictional unemployment caused by retrenchment in the
army, ordnance factories, etc
...
Similarly, the process of rationalization which started in India since 1950,
also caused displacement of labour
...


But more serious than cyclical unemployment or frictional unemployment in a
developing economy like India is the prevalence of chronic under- employment or
disguised unemployment in the rural sector and the existence of urban unemployment
among the educated classes
...


1
...
1
...


Table 1
...
0

1
...
Employed

89
...

Usual status employed staying in workforce when
classified by their weekly status
...
Unemployed

2
...


4
...
43

Usual status employed going out of work when
classified by their weekly status
...


Unemployed

underemployed

&

10
...


Source: Compiled from Planning Commission, Ninth Five Year Plan (1997-2002),
Vol
...


28
1
...
2
...
53 million workers being employed in them
...
Bulk of them were employed in the informal SSI sector which is
seriously plagued with the problem of industrial sickness
...
But this is also
true that SSI sector is the principal source of employment and has the capacity to
absorb a very large chunk of the labour force
...

There is a need to strengthen the resource base of this sector both in terms of capital
and technology and skill formation so that productive employment yields a higher
level of income
...
4
...
Growth rates of Employment
The growth rates of unemployment and labour force derived from NSS data are given
in table
...
2: Growth of Employment by Sectors
Industry
Primary

Annual growth rate of Employment (%)
1983-94
1994-00
1
...
34

1
...
51

-0
...
Mining and Quarrying

4
...
85

Secondary

2
...
14

3
...
14

2
...
Electricity, Gas & Water Supply

4
...
88

5
...
32

7
...
53

2
...
Trade

3
...
04

7
...
24

6
...
18
6
...
Financial Services
9
...
90

0
...
04

0
...
2
...
3: Unemployment Rates by Age Group 1999-2000
(As percent of labour force)
Age Group
15-19

Rural
13
...
0
14
...
8)

(16
...
3)

11
...
7

13
...
8)

(19
...
0)

8
...
9

9
...
4)

(10
...
1)

Sub Group

11
...
5

12
...
6)

(15
...
11)

30-34

6
...
9

5
...
0

3
...
6

40-44

4
...
7

4
...
6

2
...
9

50-54

4
...
1

3
...
6

2
...
0

60 & above

3
...
8

3
...
2

7
...
3

(5
...
4)

(6
...
Figures in parenthesis give the
comparative estimates for 1993-94
...


30
Table 1
...
4
30
...
7

1983

(2
...
7)

(4
...
9

16
...
2

(3
...
1)

(5
...
0

20
...
5

(2
...
8)

(4
...
5

18
...
8

2000

(3
...
2)

(5
...
0
23
...
4

24
...
7

22
...
0

25
...
3

22
...
5

23
...
5: Total Employment and Organised Sector Employment
Sector

1
...
21

1988
790
...
05

1999-00
1004
...
12
1
...
Total labour force

308
...
49

381
...
05

2
...
03

3
...
75

324
...
45

397
...
04

0
...
Organised sector

24
...
71

27
...
11

1
...
53

employment

(100
...
0)

(100
...
0)

5
...
46

18
...
44

19
...
52

-0
...
6)

(71
...
0)

(69
...
55

7
...
93

8
...
45

1
...
4)

(28
...
0)

(30
...
4 as % of 3

7
...
93

7
...
08

8
...
0

42
...
7

40
...
Private sector

Note :
1
...


3
...

The organised sector employment figures are as reported in the
Employment Market Information System of Ministry of Labour and
pertain to 31st March of 1983, 1994 and 1999
...


31
Source : Compiled and computed from Commission (2001), Report of the Task Force
on Employment Opportunities, p
...
25
...
4
...
Employment policy of the eleventh plan
Scenario of employment and unemployment on the eve of the 11th Plan
The Approach Paper of the 11th Plan has highlighted the following issues:
1
...
1% in
1993-94 to 7
...
3% in 2004-05
...


Agricultural employment has increased at less than 1% per annum, slower
than the growth in non-agricultural employment
...


Among agricultural labour households which represent the poorest groups,
there was a sharp increase in unemployment from 9
...
3% in 2004-05
...


Non-agricultural employment expanded robustly at an annual rate of 4
...


5
...
38% per annum
during 1994-2000, despite fairly healthy GDP growth
...


6
...


1
...
5
...
To this may be added the present
backlog of about 35 million
...


The planners aims to provide 65 million additional employment opportunities
...
" However, even this
modest goal implies that the rate of growth of non-agricultural employment would
need to accelerate to 5
...
7% in 1999-2005
...

1
...
6
...
Measures would need to be taken in the Plan to boost, in
particular, Labour intensive manufacturing sector such as food processing, leather
products, footwear, textiles and service sectors such as tourism and construction
...
4
...
Critique of employment policy
Keeping in view the performance of the last decade of negative employment growth
in the organized sector, the Plan is over-ambitious about a huge reversal in the form of
15 million jobs
...
4 million -18
...
2 million in the private
sector
...
24 million jobs at present implies 121% addition to the existing job
creating potential
...
Not only that, to expect profitable public enterprises to increase job
potential in the face of loss making units reducing jobs by about 2 million is also
unrealistic
...
65 million
...
0 million in the next 5 years appears to be improbable, more so in view of the fact
that state level public sector undertakings are mostly incurring huge losses year after
year and would not be able to contribute to increase in employment
...
5

Small Scale Enterprises in India

A common classification is between traditional small industries and modem small
industries
...
Modern small-scale industries produce wide range
of goods from comparatively simple items to sophisticated products such as television
sets, electronics control system, various engineering products, particularly as

33
ancillaries to the large industries
...
For instance, during 1979-80 traditional small industries
accounted for only 13 per cent of the total output but their share in total employment
was 56 per cent
...

4,420 crores and this output was produced with the employment of 133 lakh workers,
the average output of labour in traditional small industries was roughly Rs
...


As against this, the share of modem small industries in the total output of this sector
was 74 per cent in 197980 but their share in employment was only 33 per cent
...
For
instance, in 1979-80 a total output of Rs
...

31,900
...
Among traditional village
industries, handicrafts possess the highest labour productivity; besides, handicrafts
make a significant contribution to earning foreign exchange for the country
...
On the other
hand, traditional village and small industries are largely carried on by labourers and
artisans living below the poverty line, while modem small industries can provide a
good source of livelihood
...


1
...
1
...
This is evidenced by the number of
registered units which went up from 16,000 in 1950 to 36,000 units in 1961 and to
33
...
During the last decade alone, the small-scale sector

34
has progressed from the production of simple consumer goods to the manufacture of
many sophisticated and precision products like electronics control systems, microwave components, electro-medical equipment, T
...
sets, etc
...
At the time of the 1972 Census of a Small Scale Industrial Units, there were 177 items in the reserved list
...
These units
produce over 8,000 commodities
...
2% of the registered SSI units were proprietary, only
1
...
5 per cent were private companies and just 0
...
In other words, the dominant type in the ownership pattern is
proprietary with a small fraction operating as partnerships
...
6: Production, Employment and Exports in Small Scale Sector
Year

No
...

Crores)

Employment
(Lakhs)

146
...

Crores)
At
Current
Prices
29,068

1994-95*

19
...
27

25
...
61

67
...
60

122,210

109,116

191
...
57

71
...
84

148,290

121,649

197
...
99

74
...
21

168,413

135,380

205
...
04

77
...
71

189,178

147,824

213
...
00

81
...
36

212,901

159,407

220
...
32

84
...
15

234,255

170,709

229
...
10

88
...
10

161,289

184,428

239
...
75

91
...
21

282,270

195,613

249
...
68

95
...
10

311,993

210,636

261
...
54

98
...
95

357,733

228,730

271
...
57

102
...
59

418,263

251,511

282
...
70

104
...
40

476,201

2,77,668

294
...
of Units (in lakhs)

Registered Unregistered

Average

4
...
0

Total

4
...

Crores)

Employment
(Lakhs)

At
At
Current 1993-94
Prices
Prices
13
...
8

4
...

Source: Ministry of Small Industries as given in Economic Survey (2007-08) and
Ministry of Small Scale industries
...
5
...
Output and Employment of the Small Industries
According to the Third Census, in 2001-02, there were 13
...
46 lakh units in the unregistered sector, thus recording a total
number of 105
...
Ironically, the Census estimated a
much lower figure of production by SSI sector
...
For
the purpose of comparison, the figures given earlier by the Ministry have also been
provided in above table
...
6 lakhs in
1994-95 to 123
...
1
per cent, but their production (at 1993-94 prices) increased from Rs
...
2,77,668 crores in 2005-06 i
...
an annual average growth of 8
...
As a consequence of the increase in SSI units, more especially in the
unregistered sector, employment increased from 191
...
9
lakhs in 2005-06, recording an average growth rate of 4
...
So far
as exports by the SSI sector are concerned, they increased from Rs
...
1,50,242 crores in 2005-06, recording a growth rate of 16
...

Crores)
At
Current
Prices
16
...
The Ministry has not changed the data pertaining to exports
...
8%, of employment by 4
...
1 %
...


Obviously, the growth rate of the small-scale sector has been faster both in terms of
output and employment
...
4
...
The growth of the small sector improves
the production of the non-durable consumer goods of mass consumption
...
If a big push is given to the small sector, it can
become a stabilising factor in a capital-scarce economy like India by providing a
higher output capital ratio as well as a higher employment-capital ratio
...
The capacity utilisation in the small sector as a whole was of the
order of 53 per cent
...
g
...
Industries like plastic products had
very low capacity utilisation (29 per cent)
...
Substantial increase in exports were observed in the case of readymade
garments, canned and processed fish, leather sandals and chappals, food products,
hosiery and marine products, etc
...
1,643 crores in
1980-81 and to a record high figure of Rs
...
A very
significant feature of exports from the small-scale sector is their share in nontraditional exports
...
3 per cent of total exports in 2005-2006
...
The policy of
reservation has, therefore, positively helped the growth of this sector
...
These items included

37
ice-cream, biscuits, synthetic syrups, a variety of automobile parts, corrugated paper
and boards, vinegar, poultry feed, rice milling, dal milling etc
...
As against 806 reserved items in
1977, the number of reserved items in 2007 is only 239
...
5
...
Third census of small scale industries (2001-02)
Since the data of the Second All-India Survey pertaining to 1987-88 had outlived its
utility, it was strongly felt that there was a need for undertaking a third survey of
Small Scale Industries (SSI) so that policy formulation for the SSI sector is based on
more authentic and recent information
...


Data reveal that there were 105
...
75 lakhs or 13 per cent of total, and the unregistered units were 91
...
The employment in the SSI sector was of the order of
249 lakhs, out of which registered sector contributed 61
...
7 lakhs or 75 per cent of total
...
5 persons in the registered sector and 2 persons per unit in the
unregistered sector
...


Although fixed investment per unit was Rs
...
5 lakhs for the entire SSI sector, it was
of the order of Rs
...
7 lakhs in the registered sector and barely 0
...
Relatively speaking, fixed investment per unit in the registered
sector was nine times that in the unregistered sector
...
1
...
33 lakhs for the unregistered sector
...
Similarly, labour
productivity (i
...
Output-employment ratio) of the registered sector was Rs
...
29 lakhs
as against merely 0
...


38
Annual production per unit in the registered sector was Rs
...
78 lakhs as against that
of the unregistered sector only Rs
...
86 lakhs - 17 times
...
Interestingly,
52
...
6% of the units indicated that they were not interested
...
7: Final Results of SSI Third Census (Selected Magnitudes of SSI Sector2001-02)

13
...
46

105
...
1)

(86
...
0)

Fixed Investment

91,792

62,557

1,54,349

(Rs
...
5)

(40
...
0)

2,03,255

79,015

2,82,270

(72
...
0)

(100
...
6

187
...
3

(24
...
3)

(100
...
92

6
...
4)

(76
...
0)

38,400

46,888

85,288

Registered SSI
No
...

crore)
Employment (lakhs)
No
...
of sick units as per RBI
criteria (Nos
...

** Criteria adopted: Erosion of net worth or delay in repayment of loan among units
having outstanding institutional loan
...


1
...
4
...

The main features of the Policy were:

39
The Small-Scale Industrial Sector has emerged as a dynamic and vibrant sector of the
economy during the eighties
...
It also provided employment
opportunities to around 12 million people
...


I)

Tiny Enterprises

Government have already announced increase in the investment limits in plant and
machinery of small scale industries, ancillary units and export-oriented units to Rs
...
75 lakhs and Rs
...
Such limits in respect of "TINY"
enterprises would now be increased from the present Rs
...
5 lakhs,
irrespective of locations of the unit
...


II)

Financial Support Measures

Inadequate access to credit'-both short term and long term-remains a perennial
problem facing the small-scale sector
...


To provide access to the capital market and to encourage modernisation and
technological upgradation it was decided to allow equity participation by other
industrial undertakings in the SSI, not exceeding 24 per cent of the total shareholding
...


40

A beginning has been made towards solving the problem of delayed payments to
small industries by setting up of 'factoring' services through Small Industries
Development Bank of India (SIDBI)
...
Factoring services
imply that SIDBI or any commercial bank will buy the manufacturer's invoices from
SSI units and take the responsibility for collecting payments due to them by charging
a commission
...

The TDC would coordinate the activities of the Tool Rooms, Process cum - Product
Development Centres (PPDs), existing as well as to be established under SIDO, and
would also interact with the other industrial research and development organisations
to achieve its objectives
...


Though the Small Scale Sector is making significant contribution to total exports,
both direct and indirect, a large potential remains untapped
...


V)

Modernisation, Technological and Quality Upgradation

Industry Associations would be encouraged and ported to establish quality
counselling and commenting facilities
...


41

VI)

Promotion of Entrepreneurship

Government will continue to support first generation entrepreneur through training
and will support their efforts
...
Industry Associations would also be encouraged to participate in this venture
effectively
...


VII)

Village Industries : Handloom Sector

Handloom sector contributes about 30 per cent of the total textile production in the
country
...


Janata cloth scheme which sustains weavers often on a minimum level of livelihood
will be phased out by the terminal year of the VIII Plan and replaced by the omnibus
project package scheme under which substantial funds will be provided for
modernisation of looms, training, provision of better designs, provision of better dyes
and chemicals and marketing assistance
...
Scheme for training and
design development and for production and marketing assistance will be given
encouragement
...

The programmes of intensive development of KVI through area approach with tie-up
with DRDA, TRYSEM and ongoing developmental programmes relating to weaker
sections like Scheduled Castes, Scheduled Tribes and Women would be extended
throughout the country
...
5
...
Village and small industries in the ninth and tenth plan
The Ninth Plan mentions that during the last few years "the growth of SSI Sector in
the non-reserved areas has been higher than in the reserved categories which is proof
of their inherent strength and resilience of the small scale sector and its ability to
respond to the challenge of the market forces
...

To improve technology of SSIs, SIDBl has already set up a Technology Development
and Modernisation Fund with a corpus of Rs
...
The Government has also
setup Technology Trust Funds with contributions from State Governments and
industry associations for transfer and acquisition of the latest technologies
...
50 such IIDCs
were to be set up during the Eighth Plan pen out of which 22 have been approved
...


To provide technological support and training to small scale sector, tool rooms with
German, Danish and Italian assistance are being set up at Indore, Ahmedabad,
Bhubneshwar, Jamshedpur and Aurangabad
...
By March 1996, the total credit provided by public sector banks
stood at Rs
...
This has risen to Rs
...


21

Planning Commission, Ninth Five Year Plan (1997-2002), Vol
...
576
...
8: Performance of the VSI (Village Small industries) Sector Production,
Employment and Exports
Sub – Sector
(Scheme)
Unit

A
...

Small Rs
...
5 1,40,940

15
...
0

435

3
...
4

10,000

5
...
9 1,32,821

29
...
4

26,450

6
...
8

47,204

20
...
4

19
...
9

23
...
2

8
...
2

52
...
5

1
...
6

0
...
3

0
...
7

17
...
4

71
...
0

-0
...
1

5
...
9

6
...
4

Crore

Industries
2
...
Handloom Mill
cloth

Sq
...


4
...
m
...
Raw silk

Mill
Sq
...


6
...


Handicrafts

Crore

Employment
1
...
Coir Fibre

Million
persons

3
...


Million

Powerloom

persons

cloth
5
...
8

3
...
6 1,26,000

14
...


Million

Handicrafts

persons

8
...
8

70
...
2

700

16
...
3

4,500

15
...
6

N
...


-

1,525

2,530

165
...
7

11,950

10,610

88
...
7

Exports
1
...


Scale

Crore

Industries
2
...

Crore

3
...

cloth

Crore

4
...


Powerloom

Crore

cloth
5
...

Crore

6
...


Handicrafts

Crore

*Targets have been taken from the Ninth Five Year Plan (1997-2002)
...
II
...
6

The Need for Rapid Industrialisation

The Planners justified their strategy of rapid economic development through rapid
industrialisation
...


At the time of Independence, India was essentially agrarian, though the
country with its vast natural and human resources was ideally suited for
industries
...
Resources should, therefore be applied more
towards the development of industry rather than to agriculture
...


Indian agriculture was already suffering form heavy population pressure on
land and productivity of labour on land was quite low—it was even thought
that marginal productivity of labour on land might be zero and even be
negative
...
The setting up and
expansion of the industrial sector was thus a necessary condition for raising
the national product in general and for agricultural development in particular
...


Rapid industrialisation was an essential condition for the development of not
only agriculture but also for all other sectors in the country
...
) would increase
...
would help in the
expansion of agricultural production
...


4
...

The growth rates are much higher in industry than in agriculture
...


5
...


It was for all these reasons that industrialisation was emphasized by the Indian
planners
...
6
...
Heavy Industry Vs Light industry
An important aspect of the investment strategy formulated by professor Mahalanobis
was the emphasis on heavy industries producing basic machines and metals
...
The Planning Commission supported this strategy for two reasons:

1
...


2
...


The Planning Commission rejected the alternative strategy of emphasising light
industries producing consumption goods
...
But
this could be achieved by neglecting the accumulation of capital stock in the country
...
The capital goods
approach based on the Russian experience, expected people to sacrifice in the short
period in favour of a high level of living in the long period
...


1
...
2
...

Small scale industries and supply of consumer goods
...
Naturally, they did not ignore or
neglect the growth of small sector for instance, the Second Plan framework stated:
―The greater the marketable surplus of consumer goods in the household or hand

47
industries, the greater will be the possibilities of investment in heavy industries
without any fear of inflation
...
For another,
increasing rate of investment on heavy industries with long gestation periods would
be responsible for increase in money supply with the general public and in the
absence of matching supply of consumer goods will result in inflationary pressures
...
It was asserted that the input-output ratio would
be low in small-scale and cottage industries and the gestation period was also very
short and obviously, the small sector was ideally suited to increase the supply of
consumer goods
...


Nehru also gave due importance to small-scale industries and agriculture which were
the sources of consumer goods
...
That
does not mean that small industries should be ignored
...
‖23 The framework of the Second Five
Year Plan stated : ―The strategy requires all-out efforts for the maximum utilization of
capacity I existing industries and for the development of additional production in the
capital light or small sector of industries
...
On agriculture, Nehru Stated : ―We
shall find that this industrial progress cannot be achieved without agriculture advance
and progress… Everyone knows that unless we are self-sufficient in agriculture we
cannot have the wherewithal to advance in industries
...
We cannot import both food and

22

Second five Year Plan –The Framework,p
...
51
...
63
...
‖25

It is thus clear that the Mahalanobis strategy of self-sustained growth based on heavy
industries did not ignore or neglect the growth of small and cottage industries for
increasing the supply of consumer goods
...
In his strategy of
development, therefore, he provided for fiscal and physical controls including
rationing to keep the prices in check
...
The Mahalanobis investment strategy assigned a dominant
role to the public sector
...
Except in isolated
cases, the private sector too was not keen on providing infrastructural facilities
...
Above all, the public sector would prevent the rise of monopoly ownership
and exploitation which are inherent in the private sector
...


The role of private sector
...
In a large area of economic activity
...
But the activities of the
private sector were seen to be essentially complementary to a rapidly growing public
sector
...
The planners anticipated a growing trend

25

Government of India, Problems in Third Plan-A Critical Miscellany, pp
...


49
towards concentration of economic power in the private sector and to counter this
trend, the planners provided larger opportunities for new entrants for medium and
small-sized units and also for extensive use of controls and regulations and also use of
appropriate fiscal measures
...
Initially, the Planning Commission relied
considerably on foreign aid to meet India’s requirements of capital goods, as our
foreign exchange earnings were inadequate
...
They also emphasised that the creation of
export surplus and export promotion should go hand in hand with rapid
industrialisation
...
The Third Plan clearly brought out this point :
―One of the main drawbacks in the past has been that the programme for exports has
not been regarded as an integral part of the country’s development effort
...
6
...


Development strategy and employment objective

The Mahalanobis strategy of planning was essentially to achieve the objective of selfsustained long-term growth via investment in the heavy sector
...
This strategy
naturally came in conflict with the employment objective of our plans
...
To solve the conflict between rapid
growth on the one side and immediate increase in employment opportunities on the
other, Mahalanobis strategy adopted a ―policy of encouraging labour-intensive
techniques in consumer goods industries even as the capital-intensive sector of heavy
industry was being expanded rapidly
...
7

Approaches to Entrepreneurship

To understand the nature of entrepreneurship, it is important to consider some of the
theory development so as to better recognize the emerging importance of
entrepreneurship
...
As the field has developed, research methodology has progressed from
empirical surveys of entrepreneurs to more contextual and process-oriented research
...


A theory of entrepreneurship is defined as a verifiable and logically coherent formulation of relationships, or underlying principles that either explain entrepreneurship,
predict entrepreneurial activity (for example, by characterizing conditions that are
likely to lead to new profit opportunities to the formation of new enterprises), or
provide normative guidance (that is, prescribe the right action in particular
circumstances)
...


In the study of contemporary entrepreneurship, one concept recurs: Entrepreneurship
is interdisciplinary
...
27 Thus we need to recognize the diversity of theories as an
emergence of entrepreneurial understanding
...
Although numerous methods and models attempt to structure the
26

Raphael Amit, Lawrence Glosten, and Eitan Mueller, "Challenges to Theory Development in
Entrepreneurial Research," Journal of Management Studies (September 1993): 815-834; Ivan Bull and
Howard Thomas, "A Perspective on Theory Building in Entrepreneurship," Journal of Business
Venturing (May 1993): 181-182; Ivan Bull and Gary E
...
MacMillan and Jerome
A
...
Venkataraman, "The
Promise of Entrepreneurship as a Field of Research," Academy of Management Review (January 2000):
217-226
...
Gartner, "What Are We Talking about When We Talk about Entrepreneurship?" Journal
of Business Venturing (January 1990): 15-28; see also Lanny Herron, Harry J
...
Willard, "Towards a Theory of
Entrepreneurship," Journal of Business Venturing (May 1993): 183-195
...


28

First, we will discuss the "integrative"

approach, as described by Michael H
...
Lewis, and Donald L
...
29
Their model incorporates theoretical and practical concepts as they affect
entrepreneurship activity
...
Ronstadt
...
Gartner, is multidimensional and weaves together
the concepts of individual, environment, organization, and process
...

1
...
1
...

(1994)
...
1, this model is built around the concepts of input to
the entrepreneurial process and outcomes from the entrepreneurial process
...
1 focuses on the entrepreneurial process itself and identifies
five key elements that contribute to the process
...
Next is the individual entrepreneur, the
person who assumes personal responsibility for conceptualizing and implementing a
new venture
...
g
...

Implementing this business concept typically requires some type of organizational
context, which could range from a sole proprietorship run out of the entrepreneur's
home or a franchise of some national chain to an autonomous business unit within a
large corporation
...
These key elements are then combined throughout the
stages of the entrepreneurial process
...

28

The special issue dealing with models of Entrepreneurship: Theory and Practice 17(2) (1993)
...
Chrisman, Alan Bauerschmidt, and Charles W
...

29
Michael H
...
Lewis, and Donald L
...

30
Morris, et al
...
‖

52

Figure 1
...
Lewis, and Donald L Sexton, "Reconceptualizing
Entrepreneurship: An Input-Output Perspective," SAM Advanced Management
journal 59(1) (winter 1994): 21-31
...
Entrepreneurship is a variable
...
Based on this level of "entrepreneurial intensity," final
outcomes can include one or more going ventures, value creation, new products and
processes, new technologies, profit, jobs, and economic growth
...


This model not only provides a fairly comprehensive picture regarding the nature of
entrepreneurship, but can also be applied at different levels
...


53
1
...
2
...
Ronstadt, stresses making assessments
qualitatively, quantitatively, strategically, and ethically in regard to the entrepreneur,
the venture, and the environment
...
2 depicts this model
...
Ronstadt termed this process "the
entrepreneurial perspective"
...
2: Entrepreneurial Assessment Approach

Type of
Venture

Qualitative,
Quantitative,
Strategic,
and
Ethical

Type of
Venture

Type of
Venture

ASSESSMENTS

Do the Results of Assessments Make Sense Given:
Stage of Entrepreneurial Career
Prior Experience and
Education

Early Career

Midcareer

Late Career

Source: Robert C
...

1984), 39
...
7
...
Multidimensional Approach
A more detailed process approach to entrepreneurship is the multidimensional
approach
...
Special factors that relate to each of these dimensions are as follows
31
32

Ronstadt, Entrepreneurship,39

Bradley R
...
39-45

54
The individual
1
...
Locus of control
3
...
Job satisfaction
5
...
Entrepreneurial parents
7
...
Education
The Environment
1
...
Presence of experienced entrepreneurs
3
...
Accessibility of suppliers
5
...
Governmental influence
7
...
Availability of land or facilities
9
...
Attitude of the area population
11
...
Living conditions
The Organization
1
...
Entrepreneurial environment
3
...
Strategic variables


Cost



Differentiation



Focus

5
...
Location a business opportunities
2
...
Marketing products and services
4
...
Building an organization
6
...
3: Variables in New Venture Creation
The individual
1
...
Locus of control
3
...
Job satisfaction
5
...
Entrepreneurial parents
7
...
Education

The Environment
1
...
Presence
of
experienced
entrepreneurs
3
...
Accessibility of suppliers
5
...
Governmental influence
7
...
Availability of land or facilities
9
...
Attitude of the area population
11
...
Living conditions

The Organization
1
...
Entrepreneurial environment
3
...
Strategic variables
 Cost
 Differentiation
 Focus
5
...
Location a business opportunities
2
...
Marketing products and services
4
...
Building an organization
6
...
Gartner, ―A Conceptual Framework for Describing the
Phenomenon of New Venture Creation‖, Academy of Management Review (October
1985): 702
...
This type of the process moves
entrepreneurship from a segmented school of thought to a dynamic, interactive
process approach
...
8

Intrapreneurship

The global economy is creating profound and substantial changes for organizations
and industries throughout the world
...
In response to rapid, continuous,
and significant changes in their external and internal environments, many established
companies have restructured their operations in fundamental and meaningful ways
...
33

The new century is seeing corporate strategies focused heavily on innovation
...
34 Peter Drucker, the renowned management expert, described four major developments that explain the emergence of this economy
...
Second, demographic trends such as two-wage-earner
families, continuing education of adults, and the aging population added fuel to the
proliferation of newly developing ventures
...
Fourth, American
industry began to learn how to manage entrepreneurship
...
Zahra, Donald F
...
Jennings, "Entrepreneurship and the Acquisition
of Dynamic Organizational Capabilities," Entrepreneurship Theory and Practice (spring 1999): 5-10
...
Drucker, "Our Entrepreneurial Economy," Harvard Business Review (January / February
1984): 59-64
...
Corporate entrepreneurship is envisioned to
be a process that can facilitate firms' efforts to innovate constantly and cope
effectively with the competitive realities that, companies encounter when competing
in international markets
...
35

1
...
1
...
Most researchers agree that the term
refers to entrepreneurial activities that receive organizational sanction and resource
commitments for the purpose of innovative results
...


Defining the Concept
Operational definitions of corporate entrepreneurship have evolved over the last 30
years through scholars' work
...
An innovation can be a new product or
service, an administrative system, or a new plan or program pertaining to
organizational members
...


35

Bruce R
...
Bluedorn, "Corporate Entrepreneurship and Strategic Management‖
Strategic Management Journal 20 (1999): 421--444; see also Jeffrey G
...
Miles,
"Corporate Entrepreneurship and the Pursuit of Competitive Advantage," -Entrepreneurship Theory
and Practice (March 1999): 47-64
...
Burgelman, "Designs for Corporate Entrepreneurship:' California Management Review
(winter] 984): 154-166; Rosabeth M
...
Kuratko,
"Intrapreneurship: Developing Innovation in the Corporation' Advances in Global High Technology
Management 3 (1993): 3-14
...


58
Researcher Shaker A
...

These activities may take place at the corporate, division (business), functional, or
project levels, with the unifying objective of improving a company's competitive
position and financial performance
...
Guth and Ari Ginsberg have
stressed that corporate entrepreneurship encompasses two major phenomena: new
venture creation without existing organizations and the transformation of
organizations through strategic renewal
...
Under this
definition, strategic renewal (which is concerned with organizational renewal
involving major strategic and/or structural changes), innovation (which is concerned
with introducing something new to the marketplace), and corporate venturing
(corporate entrepreneurial efforts that lead to the creation of new business
organizations within the corporate organization) are all important and legitimate parts
of the corporate entrepreneurship process
...
8
...
The Need for Corporate Entrepreneuring
Many companies today are realizing the need for corporate entrepreneuring
...
S
...
In fact, in many of his books, Tom Peters has devoted entire
sections to innovation in the corporation
...


38

Shaker A
...

39
William D
...

40
Pramodita Sharma and James J
...

41
Tom Peters, Liberation Management (New York: Alfred A
...
Knopf, 1997)
...
42

The first of these issues, the problem of competition, has always plagued businesses
...
In contrast to previous decades, changes, innovations,
and improvements are now very common in the marketplace
...


Another of these problems, losing the brightest people to entrepreneurship, is escalating as a result of two major developments
...
This enhancement of
entrepreneurship has made the choice more appealing to both young and seasoned
employees
...
The healthy capital market
enables new entrepreneurs to launch their projects
...


The modern corporation, then, is forced into seeking avenues for developing in-house
entrepreneuring
...
This new "corporate revolution" represents an appreciation for and a desire to
develop entrepreneurs within the corporate structure
...
Hayes and William J
...
Kuratko, "Developing Entrepreneurship
within Organizatiol1s IS Today's Challenge," Entrepreneurship, Innovation, and Change (June 1995):
99-104

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