The crucial role played by the entrepreneurs in the development of the western countries has made the people of under-developed countries too much conscious of the significance of entrepreneurship for economic development. Entrepreneurs can increase the avenues for fruitful investments. Innovate and deliver value- They improve existing products through constant innovations. THE ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT. The fact remains that the potential of the market constitutes the major determinant of probable rewards for entrepreneurial function. Some other definitions of entrepreneurs are given by the following authors. Utilizing human resources in a cost-efficient manner. Entrepreneurs borrow money from the economy to start their businesses. Entrepreneurship is thus the panacea to most of the problems of the society. He refers that status withdrawal takes a long period of time – as much as five or more generations to result in the emergence of entrepreneurship. Producers decide what to make for consumers, which guides the economy. Innovation enhances the productive capacity of an economy while holding inputs (capital and labor) constant. He innovates and identifies the possibility of producing new products on the basis of innovation. In other words, without the innovative process our real standards of living … Some are of the view that a high degree of mobility is conducive to entrepreneurship (e.g., openness of a system and need for flexibility in role relations imply the need for the possibility of mobility within a system for entrepreneurship development). Entrepreneurs generate employment both directly and indirectly. Role of Entrepreneurs. Entrepreneur is considered to be the focal point in the process of economic development. This very fact led them to the technological progress entrepreneurial roles. They can reduce the negativity and pessimism of a society. The team created by an entrepreneur for his new venture often provides the opportunity for the employees-cum-teammates to have a first-hand experience of getting involved in an entrepreneurial venture. They are at lower costs and this helps to improve the standard of life of a common man. A lot of hard work goes into starting and eventually expanding an enterprise. All this in turn creates a lot of job opportunities, and is helping in augmenting our standards to a global level. February 13, 2017 Dolly. However, because entrepreneurs take personal investment risks and corporate managers very rarely do, corporate entrepreneurship, sometimes referred to as entrepreneurship at has to be differentiated from the concept of entrepreneurship proper. The small business person may exhibit these characteristics, but only coincidentally, not as a prerequisite to establishing an enterprise. Author: Clint Reecer; Published: May 23, 2014; | Comments Off on Small Businesses Play Key Role in Economic Growth. A big problem in most developing countries today is unbalanced or uneven regional development. The entrepreneur who is a business leader looks for ideas and puts them into effect in fostering economic growth and development. Entrepreneurs create an atmosphere of enthusiasm and convey a sense of purpose. Entrepreneurs create the businesses that produce products and services that meet the wants and needs of consumers. Development of New Production Technique and a Few Others. Consumers decide what they need and want to buy, which guides the economy. Both central and state governments promote this kind of regional development by providing registered MSME businesses various benefits and concessions. Thus, import substitution and export promotion ensure economic independence and development of the country. Setting up of more industries lead to more development of backward regions and thereby promoting balanced regional development. So each and every country is required to make necessary efforts for ensuring economic independence. E. They supply labor as a factor of production. (But it appears that one labour problem clearly does not prevent entrepreneurship from emerging, for example, the problem of low cost immobile labour can be circumvented by plunging ahead with capital intensive technologies, as Germany did.). Renowned economist, Marshall observes that entrepreneur is the captain of the industry, and builder of economic structure of a country. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Each decision that an entrepreneur engages in will ultimately determine whether or not they are successful and remain successful for the foreseeable future. of India has launched initiatives such as StartupIndia to promote and support new startups, and also others like the Make in India initiative to attract foreign companies and their FDI into the Indian economy. Social entrepreneurship. The important role that entrepreneurship plays in the economic development of an economy can now be put in a more systematic and orderly manner as follows: 1. However, it is impossible for a government to provide employment opportunities to a fast growing population, howsoever sincere it may be. 6. Get solutions The various ways in which the entrepreneurial activity results in economic development and growth are: By creating a new venture, entrepreneurs generate employment opportunities for others. If there are educational institutions, technical training schools and internship opportunities, that will help build the pool of educated and skilled workers. Capital Formation 2. Entrepreneur generate employment both directly and indirectly. While explaining the contribution of entrepreneurs Prof. Karvar writes, the services of an entrepreneur are such which a paid manager cannot perform. He motivates other entrepreneurs also to invest in industrial activities. Besides, these enterprises grow, providing direct and indirect employment opportunities to many more. The social factors give emphasis to the relevance of a system of norms and value, within a sociocultural setting for the emergence of entrepreneurship. He always tries to introduce newer and newer techniques of production of goods and services. Entrepreneurship plays a major role in all countries' economies through generating new jobs and innovation, and in turn making a contribution to the economic growth. He is one of the most important inputs in the economic development of a country. Economic development essentially means a process of upward change where by the per capita income of a country increases over a long period of time. Capital, labour, raw materials and markets are the main economic factors. As a result, the society would be forced to meet the requirements of its people by importing goods and services, which is a drain on the vital foreign exchange reserves. James Burna observes that an entrepreneur is the organiser of society’s productive resources. A catalyst is needed and this requires entrepreneurial activity to a considerable extent, the diversity of activities that characterizes rich countries can be attributed to the supply of entrepreneurs.”. They convert the latent and idle resources like land, labour and capital into national income and wealth in the form of goods and services. Photo: World Bank. They employ their own as well as borrowed resources for setting up their enterprises. Another key benefit is that this expansion that leads to more stable business revenue during economic downturns in the local economy. Knowledge is embodied in a worker and the new firm is created through the worker’s effort to appropriate the value of his knowledge by way of innovative activity. They create goods and services and improve the living standards of people in a country. This way, the enterprise news has contributed towards increasing the standard of living of the people. Entrepreneurs create organizations that offer employment to millions of people. Millions of people all over the globe earn their living because of successful entrepreneurs. For it's the entrepreneurs who serve as the spark plug in the economy's engine, activating and stimulating all economic activity. 6. In the absence of entrepreneurs, all the productive resources remain idle. In this usage, anything from timber to money to the number of hours in a day can be a resource. Entrepreneurs tell consumers what they should want or need. He sets up industry in priority areas by the government in its Five Year Plan programmes. If there are educational institutions, technical training schools and internship opportunities, that will help build the pool of educated and skilled workers. 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. Technical progress alone cannot lead to economic development, unless technological breakthroughs are put to economic use by entrepreneurs. Entrepreneur plays a vital role in economic development. The entrepreneur acts as a trigger head to give spark to economic activities by his entrepreneurial decisions. A As economists Robert … The industrialisation of a country and its pace of economic development depend on the entrepreneurs. In the modern time, an entrepreneur is a wheel of economic development and kingpin of every economy. Privacy Policy3. Really speaking an entrepreneur bears the risk in setting up industry in backward areas of the country in is efforts for balanced development of the country. Now people have begun to realise that for achieving the goal of economic develo­pment, it is necessary to increase entrepreneurship both qualitatively and quantitatively in the country. Generation of Employment 4. Entrepreneurship promotes capital formation by mobilising the idle saving of the public. 4. They are small on an individual basis, but they have an additive effect when considered in aggregate. Offer quality products at affordable prices- They offer quality at an affordable price. Materials used to make the car are in limited supply. Science. Entrepreneurs are expected to provide employment opportunities to the unemployed. Role of an Entrepreneur in Economic Development. Entrepreneur performs important role in producing and presenting new products in the market. 1. 10. With the help of increasing space of entrepreneurial activities owners of factors of production get their price as income as these owners put their resources for productive purposes. Get a serviced office in Bangalore with facilities to help you grow fast. Business, Entrepreneurs, Roles, Role of Entrepreneurs. It means that if majority of people become entrepreneurs, then the economic wealth will get dispersed among the entire population. SMEs plays an important role in the economic development of a country. In this way, entrepreneurs play an effective role in reducing the problem of unemployment in the country which in turn clears the path towards economic development of the nation. E. They supply labor as a factor of production. Thus, an entrepreneur is the creator of wealth. They are, in fact, creators of wealth. But Drucker’s view of entrepreneurship occurs when resources are redirected to progressive opportunities, not used to ensure administrative efficiency. Hagen maintains that once status withdrawal has occurred, the sequence of change in personality formation is set in motion. 4. They influence income distribution through taxes and transfer payments. If innovation drives productivity, what drive… Entrepreneurs help in channelizing their savings and savings of the public to productive resources by establishing enterprises. The economic history of the presently developed countries like America, Germany, and Japan leads to support the fact that the economy is an effect for which entrepreneurship is the cause. In other words, few people have the courage and the entrepreneurial skills to set up their own production units and bridge the demand supply gap. An entrepreneur is described as an individual who identifies and exploits opportunities, usually in the form of some sort of product or technology. Join the Evoma community of Bangalore’s fast growing startups. 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. Without the role of the entrepreneur we are merely a society trading wealth amongst each other. What Institutional Factors Encourage Entrepreneurship? EFFECTIVE UTILIZATION OF RESOURCES: Entrepreneurship is all about putting to better use the resources which are considered to be of low value with an aim of earning income. It provides immediate large-scale employment. The role of entrepreneurship in the economy of a country is to inspire new business ventures that support wealth building and future prosperity. Entrepreneurs produce goods and services in large scale for the purpose of earning huge amount of foreign exchange from export. Contributes towards Providing Employment: Entrepreneur introduces new products and new techniques. 3 Answers. The entrepreneurs have an important role in encouraging the economic development or growth or progress of any country. They explore and exploit opportunities, encourage effective resource mobilisation of capital and skill, bring in new products and services and develop markets for growth of the economy. (1) Promotes Capital Formation: Entrepreneurs promote capital formation by mobilising the idle savings of public. The second and more significant force driving productivity growth is innovation – the advance of new technologies, the creation of something new or improved, or doing something in a superior way. The entrepreneur is supposed to create ideas and put them into effect in fostering economic growth and development. Answer Save. 1. Therefore, entrepreneurs play a … Entrepreneurs are able to produce goods at lower cost and supply quality goods at lower price to the community according to their requirements.When the price of of the commodities decreases the consumers get the power to buy more goods for their satisfaction. Hence he suggests in a market economy entrepreneurs can be viewed as pillars of industrial strength the movers and the shakers who constructively disturb the status quo. Adam Smith considered division of labour as an important element in economic development. Idea creation facilitates creativity innovations which are the direct result of creative ideas. Entrepreneurship, as defined, essentially consists in doing things that are not generally done in the ordinary course of business routine”. Improvement in Per Capita Income 3. He furthers postulates that withdrawal of status respect would give rise to four possible reactions and create four personality types: (i) Retreatist- He who continues to work in a society, but remains different to his work and position. Public sector steel plants and private sector industries by Modis, Tatas, Birlas and others have put the hitherto unknown places on the international map. Entrepreneurship also promotes efficient mechanism of production like right allocation of capital, labor and technology. Entrepreneurs again play a key role in increasing the standard of living in a community. It is a basis for political and social independence. This unit will generate demand for various types of resources and there will be so many other units which require the output of this unit. Hagen attributed the withdrawal of status respect of a group to the genesis of entrepreneurship e.g., Japan developed sooner than any non-western society except Russia due to two historical differences. Such types of entrepreneurial activities lead to value addition and creation of wealth, which is very essential for the industrial and … If not, their power could get misdirected and they could veer towards extremist and terrorist activities. Why do entrepreneurs play a key role in a market system? C. They determine what goods and services are produced. Development of agriculture sector and industrial sector is quite necessary for economic independence. He makes available always new and improved products to the people and takes all the efforts to improve the living standard of the people. Entrepreneurs promote capital formation by mobilising idle savings of public. For incorrect answer(s), click the op Make routine pricing decisions Innovate Purchase capital O Create market demand Take risks g. Make decisions Entrepreneurs can increase the country’s share in global export trade: India’s share in Global Merchandise exports is very low. 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