Entrepreneurship development programme is a programme meant to develop entrepreneurial abilities among the people.
The concept of entrepreneurship development programme involves equipping a person with the required skills and knowledge needed for starting and running the enterprise.
EDP is an effective way to develop entrepreneurs which can help in accelerating the pace of socio-economic development, balanced regional growth, and exploitation of locally available resources.
It takes care of all the constraints and therefore it is proved to be one of the most effective tools for developing new entrepreneurs.
1. Introduction to EDP 2. Meaning of EDP 3. Evolution 4. Objectives 5. Features 6. Course Contents and Curriculum 7. Need
8. Role 9. Rationale 10. Evaluation 11. Factors Influencing 12. Phases. 13. Models 14. Process 15. Relevance
16. Limitations 17. Institutions Involved in Providing EDPs in India 18. Achievement 19. Problems 20. Lessons from EDP Experience and Strategies for Future.
Entrepreneurship Development Programme: Meaning, Objectives, Features, Role, Evaluation, Factors and Models
EDP – Introduction to Entrepreneurship Development Programme
Entrepreneurship Development Programme is primarily meant for developing those first generation entrepreneurs who on their own cannot become successful entrepreneurs. It covers three major variables- location, target group and enterprise. Any of these can become the focus or starting point for initiating and implementing an EDP.
Entrepreneurship development programme is a programme meant to develop entrepreneurial abilities among the people. The concept of entrepreneurship development programme involves equipping a person with the required skills and knowledge needed for starting and running the enterprise.
EDP is an effective way to develop entrepreneurs which can help in accelerating the pace of socio-economic development, balanced regional growth, and exploitation of locally available resources. It takes care of all the constraints and therefore it is proved to be one of the most effective tools for developing new entrepreneurs.
The remaining two then will follow by making proper synthesis with the first. For example, if the objective is to promote women entrepreneurs, suitable location and proper entrepreneurial activities must match or if the objective, is to develop North East region. Methodology for selection of the prospective entrepreneurs as well as support services after the training have a significant impact on the success -of the entrepreneur development programme.
These programmes broadly envisage a three tiered approach, developing achievement motivation and sharpening of entrepreneurial traits and behaviour, project planning and development and guidance on industrial opportunities, incentives and facilities and rules and regulations, and developing managerial and operational capabilities. Various techniques and approaches have been developed and adopted to achieve these objectives keeping in view the target groups and or to target areas.
Past experience has shown that industrial promotion by provision of facilities, technical assistance, management training, consultancy, industrial information and other services alone are not sufficient to develop entrepreneur. Hence the EDP package was launched over the years; the EDPs have become a vital strategy for harnessing the vast untapped human skills, to channelize them into accelerating industrialisation in general and growth of the small scale sector in particular.
In line with the national programme for the promotion and development of small and medium industries in the countryside, the Industrial Service Institute (ISI) under the Department of Industrial Promotion (DIP) launched the EDP to give substance to the government’s policies of stimulation of economic growth, dispersing industries to rural areas and promoting the processing of local raw materials. The EDP was considered a part of the industrial development policy which was articulated in the Five year national economic and social development plan.
Entrepreneurship Development Programme – Meaning
Entrepreneurial Development Programme (EDP) may be defined as a programme designed to help a person in strengthening his entrepreneurial motives and in acquiring skills and capabilities necessary for playing his entrepreneurial role effectively and efficiently. It is therefore necessary to promote his understanding of motives, motivation pattern, impact on behaviour and entrepreneurial values.
A programme that seeks to do this is called an EDP This point is to be stressed here because there are several programmes which aim at providing information or managerial inputs or focus on preparation of a project. Of course a new entrepreneur requires all these inputs but programme which does not touch entrepreneurial motivation and behaviour cannot be regarded as an EDP.
Entrepreneurship is vital for an economy. The spirit of entrepreneurship can be generated within an economy by infusing the urge, motivation and providing training to the aspiring entrepreneurs or the people with the potential. Entrepreneurial development programme (EDP) is a way to achieve the aforesaid goal.
EDPs are planned programmes developed to identify, inculcate, cultivate, develop, and polish the capabilities and skills as the prerequisites of a person to become an entrepreneur. The EDPs focus on training, education, reorientation and creation of conducive and healthy environment for the growth of entrepreneurship.
EDP can be conceived as a tool for enhancing human resource. It is a programme meant to develop entrepreneurial abilities among the people. The EDP is basically designed to instill and infuse entrepreneurial motive and spirit among people and cultivating and nurturing the skills and capabilities necessary for playing successfully his/her role as an entrepreneur. An EDP involves inculcation, development, and polishing of entrepreneurial skills, knowledge in the participants which are required by them to establish and successfully run their enterprises.
An entrepreneur is a creator or a designer who design new ideas and business processes according to the market requirements and his/her own passion. Entrepreneurship is the art of starting a business, basically a startup company offering creative product, process or service. We can say that it is an activity full of creativity.
Entrepreneurship development is the process of improving the skills and knowledge of entrepreneurs through various training and classroom programs. Entrepreneurship development is concerned with the study of entrepreneurial behaviour, the dynamics of business set-up, development and expansion of the enterprise.
The whole point of entrepreneurship development is to increase the number of entrepreneurs. This accelerates employment generation and economic development. Entrepreneurship is promoted to help lessen the unemployment problem, to overcome the problem of stagnation and to increase the competitiveness and growth of business and industries.
Entrepreneurship development concentrates more on growth potential and innovation. Entrepreneurship Development has gaining increasing significance in developing an economy. It is an organised and systematic development. It is a tool of industrialization and a solution to unemployment problem for any country.
Entrepreneurship Development Programme – Evolution of EDP
Earlier, Government and other agencies were responsible for supporting potential entrepreneurs to set up their units specially in backward and tribal areas. In this context, Small Industries Service Institute and SIET Institute in the sixties tried to fill the information gap which existed and were relevant for small entrepreneurs.
“The entrepreneurs required a lot of information for setting up a business and in that context the contribution of these programmes was essentially in the area of disseminating knowledge on financial, technical and managerial aspects. To that extent, these programmes were not basically programmes towards entrepreneurship development, but were in the nature of supportive programmes for the existing and the new entrepreneurs.”
However, it was visualised that creation of industrial development corporations and other external facilities has failed to develop, an effective and sufficient condition for entrepreneurship development.
There must be an effective framework to develop the qualities of the individual who respond to the external opportunities i.e. availability of funds, financial incentives etc. Similarly, efforts should also be made so that social and organisational factors help potential entrepreneurs to perceive the opportunities and learn to respond to them.
At present, existing entrepreneurs basically emerged out of the natural growth of entrepreneurial talent of certain communities like Marwaris, Gujaratis, Parsi’s and South Indian Brahmins. This type of entrepreneurs is a highly motivated group but problem is that they be often interested in quick profits or high profits, opportunities which are normally concentrated in the already well-developed areas.
So, it would be more important to have a broad-based entrepreneurial source to command the tempo of economic growth. In this context, entrepreneurial training can make a lot of difference in performance of the entrepreneurs. By motivating non-entrepreneurial participants to start a viable enterprise, we can easily develop a valid substitute for natural institutions like business families or existing entrepreneurs.
Entrepreneurship Development Programme – Objectives
Entrepreneurship Development Programme (EDP) in India has many objectives.
The expert group constituted by the NIESBUD accepted that it must be able to help selected entrepreneurs to:
(1) Develop and strengthen their entrepreneurial quality/motivation;
(2) Analyse environment related to small industry and small business;
(3) Select project/product;
(4) Formulate projects;
(5) Understand the process and procedure of setting up of small enterprise;
(6) Know and influence the source of help/support needed for launching the enterprise;
(7) Acquire the basic management skills;
(8) Know the pros and cons of being an entrepreneur; and
(9) Acquaint and appreciate the needed social responsibility/entrepreneurial disciplines.
Further some of the other important objectives of entrepreneurial training are:
(i) To let the entrepreneur set or reset the objectives of his business and work individually and along with his group for their realisation.
(ii) To prepare him for accepting totally unforeseen risks of business after such training.
(iii) To enable him to take strategic decisions
(iv) To enable him to build an integrated team to fulfill the demands of tomorrow.
(v) To communicate fast, clearly and effectively
(vi) To develop a broad vision to see the business as a whole and to integrate his function with it.
(vii) To enable him to relate his product and industry to the total environment, to find what is significant in it and to take it into account in his decisions and actions.
(viii) To enable him to cope with and coordinate all relevant paper work, most of which is statutorily obligatory.
(ix) To make him accept industrial democracy, that is, accepting workers as partners in enterprise; and
(x) To strengthen his integrity, honesty, and compliance with law, the key to success in the long run.
Entrepreneurship Development Programme – Features
The basic features of Entrepreneurship Development Programme have gone through several modifications overtime as:
(a) Identification and careful selection of entrepreneurs for training;
(b) Developing the entrepreneurial capabilities of the trainee;
(c) Equipping the trainee with the basic managerial understanding and strategies;
(d) Ensuring a viable industrial project for each potential entrepreneur;
(e) Helping him to secure the necessary financial, infrastructural and related assistance; and
(f) Training cost is highly subsidised and only token fee is charged. A deposit is, however, taken to ensure commitment of participants.
The course contents of an EDP should be formulated as per the objectives of the EDPs.
It should consist of the following:
1. General Approach to Entrepreneurship:
The participants should be given exposure about the conceptual framework of entrepreneurship role, expectation, Entrepreneurial environment etc. Innovative behaviour related issues should be focused to enlighten the entrepreneurs about their future challenges and prospects. Besides, development agencies should try to design appropriate strategies enabling the potential entrepreneur to tackle different risk inherent in an innovation activity.
These risks are as follows:
(i) Technical risks – the risk of not knowing enough about the technical processes, materials etc.
(ii) Economic Risks – the risk of market fluctuations and changes in relation to raw materials etc.
(iii) Social Risks – the risk inherent in the development of new relationship.
(iv) Environmental Risks – risk which result from environmental changes in the manager’s work as an outcome of the new activity.
Moreover, prospective entrepreneurs should be given a detailed information with regard to facilities generally provided by the government and other agencies involved in promotion of entrepreneurship.
2. Motivational Training:
Motivational training inputs are meant for developing the motivation of potential entrepreneurs and their enterprise building skills. Besides, motivational inputs also include psychological games, tests, goal setting exercises, role play etc.
The motivational inputs will be aimed at increasing the participants, understanding of the entrepreneurial personality and entrepreneurial behaviour and bring about through self-study, changes in self-concept, value, skills thereby leading to positive entrepreneurial behaviour.
The major motivational inputs may be given in the beginning of the training programme on full time basis though the learning effected through them will be reinforced and used throughout the training programme. The understanding of the entrepreneurial personality and behaviour will be supplemented through interface with one or two successful as well as not so successful entrepreneurs.
3. Developing Management Skills:
Prospective entrepreneurs should be given exposure in different types of management problems. It would sharpen their management skills. The management problems take different forms and the management patterns are peculiar to the situation. So, training for exposing managerial skills will be arranged in keeping the situational requirements. However, managerial aspects should include production planning, labour laws, cost analysis, financial accounting, selling arrangements, taxation laws etc.
4. Training for Project Management:
Project inputs are required to help the potential entrepreneurs to develop their project ideas into bankable projects. They should be given acquaintance with the industrial opportunities in the area and also necessary guidance on product selection. Necessary knowledge about project feasibility, viability and implementation should also be given to the potential entrepreneurs.
Under project preparation, technical feasibility includes selection of technology, availability of raw materials, selection of location and site, availability of plant and machinery, infrastructure facilities, roads, transport, power, manpower/personnel requirement.
Similarly, market analysis, level of competition, capital cost, working capital requirement, estimated cost of production, projected sales volume, profitability estimates, expected rate of return, projected cash flows and break even analysis are different aspects that have to be incorporated in assessing the commercial viability of the project.
Sufficient exposure is necessary with regard to financing of the project. Financing arrangement generally includes sources of financing, promoter’s contribution, level of institutional financing, seed capital, investment subsidy etc. Prospective entrepreneurs should be instructed about the importance of timely implementation of project. They should be given proper training about scheduling of various activities, provision for effective supervision and need for avoiding delay and consequent cost escalation.
5. Structural Arrangement:
Training inputs also aim at familiarising the participants about the proposed structural arrangement for the business or industrial unit. They should be given adequate familiarisation about government policy regarding development of industries, especially with regard to small scale industries, registration and licensing procedures, forms of organisation like proprietary, partnership, private company and Joint Stock Company, institutional setup etc.
6. Support System:
In most of the cases, participants are generally first generation entrepreneurs and they do not know about the government and institutional support system. Support system may also be used as motivational inputs to encourage the participants about their future prospects. They should be familiarised with the incentives/concessions available, tax-incentives, tax holiday, backward/zero industries districts concessions, soft loan scheme, special schemes for technicians etc.
This should be followed by acquainting them with procedure for approaching government departments and agencies, applying for and obtaining these concessions from them.
7. Factory Visits/In-Plant Training:
Practical exposure is also necessary. Depending upon their products the potential entrepreneurs may feel the need to gain more knowledge about the production process etc. by visiting some of the similar units in production. For this purpose, factory visits may have to be arranged.
Similarly, entrepreneurs who select relatively sophisticated products will be expected to have a good idea of the product and the process facilities should be arranged for in-plant training or prototype development on exceptional basis.
Entrepreneurship Development Programme – Need
Entrepreneurship Development Programme is very much essential for the first generation entrepreneurs because proper training and guidance will help them to get success. It is promoted to help alleviate the unemployment problem, to overcome the problem of stagnation and to increase the competitiveness and growth of business and industries.
The thrust of entrepreneurship development programme is to motivate people to accept entrepreneurship as a career. Training and successful entrepreneurs becomes ideal for other.
Following are the various needs for EDPs:
(i) Eliminates Poverty and Unemployment:
One of the important problems of any developing country is unemployment. The problem of poverty is severe and of longstanding duration in India, and is at its most acute in rural areas. In recent years central and state governments have started a number of schemes aimed at reducing rural poverty but they cannot solve the problem completely because of their shortcomings and inadequacies.
India needs to return to the syndrome of high growth rate quickly and sustain it for at least eight years to eradicate poverty, illiteracy, unemployment and backwardness. Entrepreneurship development programmes help people towards self-employment and provide entrepreneurship as a career.
Government of India has introduced various programmes to eliminate the poverty and solve the unemployment problem through National Rural Employment Programme (NREP), Integrated Rural Development Programme (IRDP) etc.
(ii) Balanced Regional Development and Growth:
One of the objectives of setting up of public enterprises is to promote balanced regional development. It can be possible through the expansion of the employment opportunities in backward regions.
The pace of economic development of different States and Regions in the country has not been uniform over the years owing to historic reasons and a number of other factors. Industrialisation plays an important role in correcting the regional imbalances and accelerating the industrial growth.
In order to remove regional inequalities and encourage balanced industrial growth of different states/regions, subsidies to industries set up in backward districts. Successful EDPs help in faster industrialisation and reduce the concentration of economic power. It is because the small scale industries can be set up in remote areas with little financial resources which help in achieving balanced regional development.
(iii) Prevents Industrial Slums:
The Indian economy, which has over the last six decades passed through various phases of growth, is now all set to enter an altogether different orbit marked by a high rate of expansion, combined with ‘inclusive growth.’ Slums are an outcome of imbalanced urban growth resulting from over-concentration of economic activities. As per the census 2001, 42.6 million of India’s population lives in slums.
This constitutes about 15% of the total urban population of the country. The urban cities are highly congested and leading to industrial slums. Decentralisation of industries is very much require for locating the industries. EDPs help in removal of industrial slums as the entrepreneurs are provided with various schemes, incentives, subsidies and infrastructural facilities to set up their own enterprises in all the regions.
(iv) Harnessing Locally Available Resources:
Human beings have inhabited the earth; they have used the earth’s resources and have continuously transformed it. Each landscape is the upshot not only of natural processes but of the actions throughout history of human beings whose responsibility is to organize, protect and manage the environment they share.
People use many of the earth’s natural resources. All of the products we use have a natural resource base. Minerals, forest products, water, and soil are just a few of the natural resources humans use to produce energy and make things people use.
Since abundant resources are available locally, proper use of these resources will help to carve out a healthy base for sound economic and rapid industrialisation. The EDPs can help in harnessing these resources by training and educating the entrepreneurs.
(v) Defuses Social Tension:
Self-employment and entrepreneurship become increasingly important in our modern economies. Many people have an ambition to “run their own business”, and these days more people than ever are starting up their own businesses. With redundancies on the increase in the recession, many people will take the chance of “working for themselves” and will relish the opportunity of being their own boss and not being answerable to anybody else.
It is, of course, admirable, but they could be digging a hole for themselves. Every young person feels frustrated if he does not get employment after completing his education. The talent of the youth must be diverted towards self-employment careers to help the country in defusing social tension and unrest among youth is possible by EDPs.
(vi) Capital Formation:
It is one of the most critical activities in getting a business started. Business creation has moved a lot from the days of Marco Polo and Schumpeter. The biggest hurdle the entrepreneurs face is in raising the initial capital needed for the new venture.
Getting equity from family and friends has many advantages over other types of financing. Entrepreneurship development programmes helps an individual to raise capital to start a business or to grow an existing business.
(vii) Improvement in per Capita Income:
Entrepreneurs play a vital role in achieving a higher rate of economic growth. 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 the commodities decreases, consumer gets the power to buy more goods for their satisfaction. All this are possible through entrepreneurship development programmes.
(viii) Facilitating Overall Development:
Entrepreneurship development programmes are great and successful in India. If everything goes in proper channel with proper judgment, it will flourish to fill up the sky. Entrepreneurship development programmes inspires innovations, creative ideas and provide new solution to the problems.
Entrepreneurship Development Programme – Role of EDPs
EDPs comprise a number of programmes which provide the prospective entrepreneurs with information regarding the scope of new business, the process of starting new ventures, the mode of preparation of project reports, and the sources of finance. They aim at developing human resources and inducing motivation and competence in the prospective entrepreneurs. They cause proper utilization of local resources, more employment generation, promotion of small enterprises and the overall development of an area.
1. Capital Formation – An entrepreneur mobilises idle savings of the public and puts them to productive use. Thus, he helps in capital formation. This is very essential for the industrial and economic development of a country.
2. Employment Opportunities – EDPs enable prospective entrepreneurs in the setting up of their own enterprises. This enables them to get self-employment. By setting up more and more enterprises by the entrepreneurs, both on small and large scale, many job opportunities are created for others.
3. Local Resources – The proper use of local resources promote the progress and development of the area at lower cost. EDPs help in the proper use of local resources by providing guidance, assistance, education and training to the prospective entrepreneurs.
4. Balanced Regional Development – EDPs help in accelerating the pace of industrialisation in remote and backward areas. Thus, they reduce the concentration of economic power in the hands of a few. This results in the development of backward areas and balanced regional development.
6. Improved Standard of Living – Entrepreneurs now make efficient use of the resources and produce better quality products at lower costs. The consumers get better quality products at lower prices. This leads to improved standard of living of the society.
7. Economic Independence – Entrepreneurs can produce wide variety of better quality goods and services at competitive prices. They enable a country to earn foreign exchange by selling these products in the foreign market. This helps in promoting economic independence of the country.
8. Preventing Industrial Slums – EDPs can help in preventing spread of industrial slums. They can support entrepreneurs for setting up their enterprises in industrially backward areas. This will help in reducing pollution.
9. Social Tension – EDPs can help the unemployed youth for setting up enterprises by providing proper guidance, training and assistance. This results in self-employment and prevention of social tension and unrest.
EDP – Rationale of EDP
(i) EDP is meant for developing those first generation entrepreneurs who on their own cannot become successful owners of enterprises.
(ii) The effective entrepreneurial class is necessary to speed up the process of activating the factors of production to ensure higher rate of economic growth.
(iii) EDP ensures potential entrepreneurs of backward and tribal areas to set up their enterprises with the help of government and institutional support system.
(iv) EDP helps in dispersal of economic activities in different regions by providing training and other support to local people.
(v) EDP develops the persons who are interested to work as job providers by establishing enterprises not to those who are job seekers. Thus, it helps in creation of employment opportunities.
(vi) EDP improves the standard of living of the weaker sections of society and involvement of all sections in the process of economic growth.
(vii) EDP develops motivation and competence necessary for successful launching, management and growth of the enterprise.
Thus, EDP is necessary to motivate the potential entrepreneurs to convert their dreams into action. However, it is not expected to create any magical result. It is a continuous process of training and motivating them to set up enterprises in a big way.
General belief about the EDP is that individual can be developed and their perception can be changed. They may be motivated to convert their dreams/ideas into action through an effective EDP. However, it is notable that EDP is not merely a training programme. It also develops social and organisational framework which enable the potential entrepreneurs to perceive opportunities and learn to respond to them, in this way, EDP is a process of –
(i) Enhancing the motivation, knowledge and skills of the potential entrepreneurs,
(ii) Arousing and reforming the entrepreneurial behaviour in their day to day activities,
(iii) Assisting them in developing their own ventures or enterprise as a sequel to entrepreneurial action.
EDP – Evaluation of Entrepreneurial Development Programmes
Evaluation of EDPs begins with an assessment of philosophy or the central objective of the programme. The agency conducting the programme must be clear about the purpose underlying entrepreneurial development.
The objective may be to increase the production, to help the entrepreneur for selection of the product or project and for formulation of the project, to uplift certain people, to appreciate the needed social responsibility etc. Evaluation of EDPs means to check-
1. How these programmes do their work properly or not,
2. How many problems are faced by these programmes at the time of implementation?
1. How these programme do their work properly or not:
These programmes do their work properly or not, we can measure with the help of following aspects:
i. Selection strategy and the Procedure – The success of an EDP depend largely on proper selection of trainees. Evaluation of selection strategy and the procedure is very necessary. The Behavioral Science Centre (India), has been rating the selection of potential entrepreneurs, positive self-concept, initiative, independence, problem solving, hope of success, searching environment and time bound planning.
ii. To measure the financial result of Entrepreneur – In order to judge the financial health of units, return on capital employed, net profit over sales, net profit over net-worth and other ratios were used.
iii. To check the knowledge and ability of the Entrepreneur – For evaluation of the EDP, to check or measure the knowledge and ability of the entrepreneur. It refers to the education, training and experience of the entrepreneur.
iv. To consider the Socio-cultural background of Entrepreneur – It implies the environment in which the entrepreneur was born and brought up. It considers the values and attitudes of the entrepreneur.
v. To consider the Environmental Variables – For evaluation of these programmes, should consider the environmental variables. Environmental variables include Government policies, Market conditions, Availability of technology and Labour situation.
2. Problems faced by entrepreneur development programmes:
EDPs suffer on many counts.
The problems are the part of those who are involved in process such as:
i. The trainers
ii. The trainees
iii. The Entrepreneur Programme Organization
iv. The supporting organization
v. The State Government.
There are various problems faced at the time of organizing these programmes.
These problems are explained as follower:
1. Lack of National Level Policy:
There is no suitable national level policy in India for entrepreneurship development. The Government did not formulates and enforce a policy for the promotion of entrepreneurship. Because of that the entrepreneurship development programmes faced many problems at the time of their organization.
2. Difficulty in Pre-Training Phase:
It is also stated that there is ill-planned training methodology inconsistency during that phase, its content sequence, theme and the focus of the programme is not clear. There are large number of problems in that phase such as identification of business opportunities, finding and locating target group, selection of trainee and trainers etc.
3. Over Estimation of Trainees:
There are over estimation of trainees by assuming that the trainees have aptitude for self-employment and training will motivate and enable the trainees in the successful setting up of their enterprise.
4. Time Period of EDPs:
The duration period of these EDPs varies between 4 to 6 months, which is too short a period to instill basic managerial skills in the entrepreneurs. In that short period the trainees cannot develop their skills those are important for a successful entrepreneurs.
5. Lack of Infrastructure Facility:
These programmes are conducted in the rural and backward areas. In that area there are many problems regarding class rooms, guest speaker etc., so that we can say that the EDPs faced many problems such as – no proper infrastructure facility.
6. Wrong Selection Procedure:
Because of competition, the institutions not follow uniform method for the selection of trainees or prospective entrepreneurs. Some of institutions are still debating whether to have a proper identification and selection of entrepreneurs for preparing successful entrepreneurs.
7. Absence of Competent Management or Faculty:
Experience revealed that entrepreneurial failures are mostly due to incompetence faculty and management. There is a problem of non-availability of competent teachers and even they are available, they are not prepared to take classes in the rural and backward areas.
8. Non-Availability of Inputs:
Non-availability of various inputs i.e., raw materials, power etc., with poor follow up by the primary monetary institutions resulted failing in the entrepreneurship development programmes.
9. Lack of Standardization:
The course content of training are not proper standardized – It is also another problem that there are not standard even in terms of a broad module being adopted by interventions.
10. Other Problems:
Those involved in and concerned with the selection and follow up activities have either limited manpower support or a narrow linkage with other support agencies. Training institutions do not have much concern for the objectives identification and selection of entrepreneurs for preparing successful entrepreneurs.
The problem is that there is a low institutional commitment for local support to the entrepreneurs. There is also a very low level of involvement in the marketing of the products of the units. Most of the existing support organizations meant for maintenance operation are not for innovative functions.
There is also an element of cynicism. A re-orientation in the attitude of supporting organization is called forth.
EDP – 3 Important Factors Influencing: Economic, Social and Psychological Factors
There are four categories of factors that impact entrepreneurship. These include economic development, culture, technological development and education. A strong and consistent growth of entrepreneurs may be observed in areas having these factors.
Emerging entrepreneurs may observe both positive and negative impact of these conditions. Positive influences constitute facilitative and conducive conditions for emergence of entrepreneurship, whereas negative influences create inhibiting milieu to the emergence of entrepreneurship.
Factor # 1. Economic:
The most direct and immediate influence on entrepreneurship is witnessed through that of the economic environment in which it lives. This has a basis on the fact that a lot of people turn to become entrepreneurs in absence of suitable jobs or opportunities for them.
The economic factors affecting entrepreneurial growth are:
Availability of capital in adequate amount plays a significant role in setting up an enterprise. Increased capital investments in viable projects lead to increased profits which further accelerate the process of capital formation. Easy availability of funds from financial markets also promotes entrepreneurship.
It is ready capital at an entrepreneurs’ disposal which helps him to mobilize the required resources to undertake business activity. Capital is therefore, regarded as lubricant to the process of production. Countries like France and Russia have witnessed slower or negligible industrial growth due to non-availability of capital and thereby hampered growth of entrepreneurial process.
Entrepreneurship is also affected by the availability of good quality human capital or the right type of workers. It is the quality of workers which is more important than that of quantity to affect the emergence and growth of entrepreneurship. Most of the developing or less-developed countries are labour abundant due to dense and even increasing population. But enterprises can develop only if they get mobile and flexible work force.
Hence, another problem area in case of human capital is labour immobility which can be tackled by provision of developed infrastructural facilities including efficient transportation. The potential advantages of low cost labour availability cannot be encashed due to their immobility. The considerations of economic and emotional security inhibit labour mobility. Hence, entrepreneurs have to face serious challenges to secure sufficient labour.
(iii) Raw Materials:
The necessity of raw materials hardly needs any emphasis to establish any industrial activity and its influence in the emergence of entrepreneurship. It is impossible to set up a unit or seek entrepreneurial development in absence of raw material. Raw material is an indispensable factor of production and its absence hinders the smooth functioning of industry and hence, negatively affect emergence of entrepreneurship.
In fact, the supply of raw materials is not influenced by themselves 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.
Entrepreneurial growth and development are highly dependent on market conditions and marketing strategies. Entrepreneurs, in modern competitive world build upon their strong knowledge base about the market and various marketing techniques. It is the potential of the market that substantially determine the probable returns from entrepreneurial activities.
The act of production becomes meaningless without its consumption (i.e., marketing). Entrepreneurship is affected by both the size and composition of market. A product market set up in monopoly frame is more attractive to entrepreneurship process than that of competitive one. Though, a competitive market may be tackled to some extent by improving transportation facilities to promote free flow of raw material and finished goods, and increasing the demand for producer goods.
A well-developed communication and transportation network is a pre-condition for expansion in entrepreneurship. It not only helps to enlarge the market, but expand the business horizons as well. For instance, the establishment of post and telegraph system and construction of roads and highways in India considerably promoted entrepreneurial activities.
Apart from these, a significant contribution is made by institutions like trade, business associations, business schools, libraries, etc. in sustaining and developing entrepreneurial activities in the economy.
Factor # 2. Social:
Social factors play a significant role in encouraging entrepreneurship. In fact we take up case study of industrial success in Europe, it is revealed that it was highly helpful society which contributed largely to bring about glorious industrial success in the country. The social settings in which the people grow, shapes their basic beliefs, values and norms.
Some of the important components of social environment are:
(i) Caste Factor:
Certain cultural practices and values evolve over hundreds of years and greatly influence the individuals’ personalities and actions. For instance, caste system in India divided Hindus in four divisions – the Brahmana (priest), the Kshatriya (warrior), the Vaishya (trade) and the Shudra (artisan).
This caste system also limited the social mobility of individuals. ‘Social mobility’ refers to freedom to move to a higher caste. Then, monopoly players of commercial activities were Vaishyas. Members of the other three Hindu varnas did not show interest in trade and commerce, even when India opened up and developed extensive commercial inter-relations with foreign countries. Dominance of certain ethnical groups in entrepreneurship is seen across the globe.
(ii) Family Background:
This factor includes size of family, type of family and economic status of family. In a study by Hadimani, it has been revealed that Zamindar family helped to gain access to political power and exhibit higher level of entrepreneurship.
Background of a family in manufacturing provided a source of industrial entrepreneurship. Occupational and social status of the family influenced mobility. There are certain circumstances where very few people would have to be venturesome.
For example, in a society where the joint family system is in vogue, those members of joint family who gain wealth by their hard work denied the opportunity to enjoy the fruits of their labor because they have to share their wealth with the other members of the family.
Education enables one to understand the outside world and equips him with the basic knowledge and skills to deal with day-to- day problems. In any society, the system of education has a significant role to play in inculcating entrepreneurial values.
In India, the system of education prior to the 20th century was based on religion. In this rigid system, critical and questioning attitudes towards society were discouraged. The caste system and the resultant occupational structure were reinforced by such education. It promoted the idea that business is not a respectable occupation.
Later, when the British came to our country, they introduced an education system, just to produce clerks and accountants for the East India Company, the base of such a system, as is well evident is very anti-entrepreneurial.
Our educational methods have not changed much even today. The emphasis is still on preparing students for standard jobs, rather than making them capable enough to stand on their feet.
(iv) Attitude of the Society:
A related aspect to these is the attitude of the society towards entrepreneurship. Certain societies encourage innovations and novelties, and thus approve entrepreneur’s actions and rewards like profits. Certain others do not tolerate changes and in such circumstances, entrepreneurship cannot take root and grow.
Similarly, some societies have an inherent dislike for any money-making activity. It is said, that in Russia, in the nineteenth century, the upper classes did not like entrepreneurs. For them, cultivating the land meant a good life. They believed that land belongs to God and its produce was nothing but God’s blessing. Russian folk-tales, proverbs and songs during this period carried the message that making wealth through business was not right.
(v) Cultural Value:
Motives impel men to action. Entrepreneurial growth requires proper motives like profit-making, acquisition of prestige and attainment of social status. Ambitious and talented men would take risks and innovate if these motives are strong. The strength of these motives depends upon the culture of the society.
If the culture is economically or monetarily oriented, entrepreneurship would be applauded and praised; wealth accumulation as a way of life would be appreciated. In the less developed countries, people are not economically motivated. Monetary incentives have relatively less attraction. People have ample opportunities of attaining social distinction by non-economic pursuits. Men with organizational abilities are, therefore, not dragged into business. They use their talents for non-economic end.
Factor # 3. Psychological:
Many entrepreneurial theorists have propounded theories of entrepreneurship that concentrate especially upon psychological factors.
These are as follows:
(i) Need Achievement:
The most important psychological theories of entrepreneurship were put forward in the early 1960s by David McClelland. According to McClelland, ‘need achievement’ is social motive to excel that tends to characterize successful entrepreneurs, especially when reinforced by cultural factors. He found that certain kind of people, especially those who became entrepreneurs, had this characteristic.
Moreover, some societies tend to reproduce a larger percentage of people with high ‘need achievement’ than other societies. McClelland attributed this to sociological factors. Differences among societies and individuals accounted for ‘need achievement’ being greater in some societies and less in certain others.
The theory states that people with high need-achievement are distinctive in several ways. They like to take risks and these risks stimulate them to greater effort. The theory identifies the factors that produce such people.
Initially McClelland attributed the role of parents, specially the mother, in mustering her son or daughter to be masterful and self-reliant. Later he put less emphasis on the parent-child relationship and gave more importance to social and cultural factors. He concluded that the ‘need achievement’ is conditioned more by social and cultural reinforcement rather than by parental influence and such related factors.
(ii) Withdrawal of Status Respect:
There are several other researchers who have tried to understand the psychological roots of entrepreneurship. One such individual is Everett Hagen who stresses the psychological consequences of social change. Hagen says, at some point many social groups experience a radical loss of status. Hagen attributed the withdrawal of status respect of a group to the genesis of entrepreneurship.
Hagen believes that the initial condition leading to eventual entrepreneurial behaviour is the loss of status by a group. He postulates that four types of events can produce status withdrawal – (a) the group may be displaced by force; (b) it may have its valued symbols denigrated; (c) it may drift into a situation of status inconsistency; and (d) it may not be accepted the expected status on migration in a new society.
Other psychological theories of entrepreneurship stress the motives or goals of the entrepreneur. Cole is of the opinion that besides wealth, entrepreneurs seek power, prestige, security and service to society. Stepanek points particularly to non-monetary aspects such as independence, persons’ self-esteem, power and regard of the society.
On the same subject, Evans distinguishes motive by three kinds of entrepreneurs – (a) Managing entrepreneurs whose chief motive is security; (b) Innovating entrepreneurs, who are interested only in excitement; (c) Controlling entrepreneurs, who above all other motives, want power and authority.
Finally, Rostow has examined inter gradational changes in the families of entrepreneurs. He believes that the first generation seeks wealth, the second prestige and the third art and beauty.
Thomas Begley and David P.Boyd studied in detail the psychological roots of entrepreneurship in the mid-1980s.
They came to the conclusion that entrepreneurial attitudes based on psychological considerations have five dimensions –
(a) First came ‘need-achievement’ as described by McClelland. In all studies of successful entrepreneurs a high achievement orientation is invariably present;
(b) The second dimension that Begley and Boyd call ‘locus of control’. This means that the entrepreneur follows the idea that he can control his own life and is not influenced by factors like luck, fate and so on. Need-achievement logically people can control their own lives and are not influenced by external forces,
(c) The third dimension is the willingness to take risks. These two researchers have come to the conclusion that entrepreneurs who take moderate risks earn higher returns on their assets than those who take no risks at all or who take extravagant risks,
(d) Tolerance is the next dimension of this study. Very few decisions are made with complete information. So all business executives must, have a certain amount of tolerance for ambiguity,
(e) Finally, here is what psychologist call “Type A” behaviour. This is nothing but “a chronic, incessant struggle to achieve more and more in less and less of time”. Entrepreneurs are characterized by presence of “Type A” behaviour in all their endeavors.
EDP – Phases: Pre-Training, Training and Post-Training Phases
The entrepreneurship development programme (EDP) normally runs through three important phases followed by EDP evaluation:
1. Pre-Training Phase:
This is a preparatory phase for launching the programme. It is a planning phase where all requisite arrangements are made to deliver a content based and useful EDP. This stage lays the foundation for a strong EDP that can deliver desired results.
i. Identification of promising area having good commercial prospects.
ii. Selection of project faculty/course coordinator who is a visionary and has relevant experience.
iii. Arrangement of infrastructural facilities for the programme like location, availability of internet, computers, food and lodging arrangements (if participants are expected to be from different cities).
iv. Conducting industrial survey/environmental scanning for identification of good business opportunities.
v. Designing the course contents.
vi. Getting support from various agencies such as DICs, SFCs, SISI etc.
vii. Advertising and publicity of EDP to reach prospective minds. Promotional campaigns through either with the help of print or electric media, leaflets, posters, etc.
viii. Selection of participants for the training program.
2. Training Phase:
The primary thrust of training programme is to instill motivation, skill or competency amongst the budding entrepreneurs. EDP should aim to provide both theoretical and hands-on practical knowledge to various trainees.
Training phase of EDP includes:
They should be taught basic principles of management and their applications in real life scenarios to realise the benefits and significance of the management functions like planning, organizing, staffing, directing, controlling and coordinating. The various techniques involved in the management process must be explained. The trainer can use case studies, management games, role- plays and simulations to polish the skills acquired by the trainees.
ii. Technical Competence:
Focus should be laid upon acquiring technical competence suitable to the area selected. Industry experts may be called upon to share their experiences. It’s important for the trainees to understand the basics of technology, rate of technological change in that industry and challenges ahead. A comparative analysis of present state of technology in developed and developing nations may be relevant at this stage.
Entrepreneurs can get ideas best suited to their regional environments. The program may cover as details of technology, plant and machinery, major suppliers, life span, special features of the machinery etc., raw materials and their availability, manufacturing process and human resource requirements. It’s important for the entrepreneurs to understand that they should not park substantial funds in fast changing technology as obsolescence is a big risk. Field trips may also be organized.
iii. Motivation and Stress Management:
The entrepreneurial training programs are designed to elevate and sustain the motivation levels of the trainees. Stress management is an important component of EDPs as entrepreneurs have to struggle through different phases before finally getting results. They should be taught stress management techniques and should also be counseled to hold-on to their beliefs and ideas. The importance of family members need to highlighted here.
Entrepreneurs are strong-willed individuals who may need family support during tough times. Family members are the ones closest to entrepreneurs. Each session in the training programme should aim at strengthening their confidence and expanding their vision. Motivation level must be raised to a greater extent because only motivated participants will survive through starting and sustaining a new venture.
3. Post Training or Follow-up Phase:
Post training support services are rendered to the participants who have successfully completed the entrepreneurship.
This phase may comprise of the following steps:
(i) Assistance in registration of the enterprise.
(ii) Loan procedures and documentation.
(iii) Facilitating infrastructure like land, plant layout, purchase of plant and machinery, power connection etc.
(iv) Securing subsidies and grants and utilizing incentives given by Centre and State government.
(v) Management consultancy and trouble shooting.
(vi) Providing up-to-date information on the industry.
(vii) Meeting with EDP organizers and participants.
Evaluation of EDP – It is important to review each aspect of EDP from pre-training to post- training phase. This helps in charting ‘lessons learnt’ and in guiding the organizers to plan better and remove loopholes in the next program. EDP evaluation should be planned alongside every phase of the program to identify and correct deviations, if any.
EDP – Top 3 Models: Psychological, Sociological and Population-Ecology Model (PEM)
Entrepreneurship helps in generating employment opportunities, earning foreign exchange, and increasing the total income of a country. The development of entrepreneurship requires proper attention and supervision by the entrepreneur. It can be performed efficiently by using various models. Schumpeter was the first who introduced the dynamic model of entrepreneurship.
The three types of models are discussed as follows:
1. Psychological Model:
Psychological model signifies that psychological factors are responsible for the development of entrepreneurial behavior in individuals. Need for achievement may be described as the internal stimulus in an individual that incites him/her to achieve something. McClelland played a significant role in the identification of factors responsible for entrepreneurship development.
He focused on actors (entrepreneurs) rather than the act (entrepreneurship) in his work on entrepreneurship (1961). In this model, McClelland in association with D. G. Winter stated that need for achievement is the prime factor for entrepreneurship development. He also asserted that a society with a high level of need for achievement comparatively produces more entrepreneurs.
After identifying the need for achievement as a prime factor for entrepreneurship development, he stated that the need of achievement can be aroused in individuals by increasing their motivation level. He suggested that motivation can be inculcated in individuals by rewarding the best performers and generating interest in excellence. McClelland also asserted that motivation-oriented training programs inspire individuals to take up entrepreneurship as a career and make them willing and eager to exploit new opportunities.
Everett Hagen’s in 1962 gave another psycho-social model of entrepreneurship development. In his model, he referred economic variables to a minor role and put an emphasis on creative personality as an important factor in developing entrepreneurial behavior. The Hagen’s model explains the causal sequence of entrepreneurial behavior, but fails to give any policy variable for entrepreneurial development.
In 1965, John Kunkel suggested a behaviorist model for entrepreneurial development. In his model, he suggested that entrepreneurial behavior is a function of the surrounding social structure, both present and past, and can be influenced by creating favorable economic and social conditions.
In the recent time, several other psychological approaches to entrepreneurship have been suggested. For example, Bird in 1989 examined entrepreneurial behavior of individuals by observing their work, family background, personal values, and motivation level.
2. Sociological Model:
Sociological model considers societal factors responsible for the development of entrepreneurial behavior in individuals. Some entrepreneurship scholars have emphasized the importance of socio-cultural surrounding in the development of entrepreneurs.
They stated that socio-cultural history has accounted for the development of entrepreneurship and the performance of entrepreneurial activities. Different societies with differing interests, attitudes, and systems of arranging people in to different classes are likely to produce different kinds of entrepreneurs and different patterns of entrepreneurial behavior.
The sociological model given by Frank W. Young is based on the theory of entrepreneurship, which is based on society’s system of stratification. The model explains that a sub-group that has a low status in a larger society leads to entrepreneurial behavior, if the institutional resources are provided by the government to the sub-group. The model suggests the creation of supporting institutions in the society to promote entrepreneurship.
3. Population-Ecology Model (PEM):
PEM analyzes the determinants of entrepreneurship development. PEM was developed Hannan and Freeman in 1977 to analyze the concept of entrepreneurship. The PEM model considers the probability of births and deaths within a population falling in a particular industry niche.
This model considers environment as the important determinant for the survival of the enterprise rather than individuals with status and personality traits. In addition, it focuses on the presence, characteristics, composition, and change in a population or in ecological circumstances in a particular society for developing entrepreneurial activity.
Entrepreneurship Development Programme – Process: 7 Step Process
Step # 1. Selection of Potential Entrepreneurs:
EDP is centered around prospective entrepreneurs. Hence, it is very important to do the first thing right. Individuals displaying entrepreneurial traits should be carefully identified and evaluated against some broad criteria to check their suitability for the EDP. They are like the protagonist of the show and an improper selection would result in a flop show.
Step # 2. Identification of Entrepreneurial Traits and Skills:
After the selection of a group of individuals for the EDP, some broad parameters may be checked to confirm their suitability for the program.
The entrepreneurial traits may be grouped into two categories:
a. Family Background:
Various factors about the family background help in understanding the exposure and level of understanding of the concerned individual. For instance, individuals from business families are familiar to the idea of risk, return, management, and profit and loss.
i. Age – Young people have a higher willingness to take on challenges as compared to older people. They are usually more receptive to and act as catalysts of change due to their creative and innovating thinking.
ii. Level of education – Education lays a significant role in shaping the ideology of an individual. It prepares a person to take on life and issues requiring attention with ease and look for conflict resolution. Education transforms an ordinary person into an informed citizen with a concern for societal good apart from financial gains.
iii. Family structure and size – The size and type of entrepreneur’s family helps in understanding the adaptability of the person with different individuals and people with differing opinions. An individual from joint family has generally a greater risk bearing capacity and adaptability as compared to nuclear family.
iv. Working members – The number of working members of the family determines the initial scale of launch because the entrepreneur usually counts upon his/her family in the initial phases of the business.
v. Social involvement – Social participation of and acceptance for prospective entrepreneur gives him/her an edge in the ability to influence others and create initial suppliers, customers and other supply chain contacts. Networking is the key to a successful venture.
b. Human Resource Factors:
Following innate or acquired skills must be deliberated upon:
i. Need for achievement – An individual with high need for achievement succeeds better. It involves both personal achievement goals and passion towards societal achievement.
ii. Inclination to take risk – Risk taking inclination signifies the interest of an entrepreneur in redefining standard business norms or creating niche spaces.
iii. Influencing ability – An entrepreneur needs to possess strong leadership and influencing capabilities to convince people and move towards achievement of their goals
iv. Personal efficiency – It is the desire to contribute effectively and be relevant to the society. It is important to study the gaps of current scenario adequately and design new products to increase the level of customer satisfaction.
v. Aspiration – Aspiration refers to ambitions of the individual with respect to future level of achievement. This focuses upon the future plans as envisioned by the entrepreneur for himself/herself. However, practical aspirations help in motivating the entrepreneur. Non-achievement of unrealistic goals might distress him/her. These aspirations may include one’s picture of the future with at both personal and professional front.
Step # 3. Identification of Enterprise:
It is critical to identify a viable enterprise or project for prospective entrepreneur after analyzing his/her socio-personal and human resource characteristics. Most of the broad parameters discussed above hint towards probable business ideas for the individual.
Combining the same with personal inclination of the entrepreneur and his creativity, a suitable entrepreneurial project must be identified. Preliminary feasibility studies like availability of required capital and labour, desired technical and marketing assistance etc. should be examined at this time. Better planning delivers better products.
Step # 4. Contents of Training Program:
As the participants attending EDP hail from diverse backgrounds, they have different expectations from the program.
The following types of trainings are provided during the program:
i. Technical knowledge and skills – Different modules may be planned for the participants by grouping them in some homogenous groups. Digital awareness, supply chain management, cloud computing etc. are certain areas which every new venture needs to be trained about.
ii. Achievement motivation training – This training inculcated self-confidence and self-belief in the entrepreneur. As the individual faces a tough time during initial phases and may even encounter loss or failure, motivation levels have to be kept high. They have to be trained conviction and persistence to follow their dreams and be socially relevant at the same time.
iii. Support systems and procedures – Training contents must include the knowledge about various government sector schemes to be benefitted from, active angel investors and business incubators. Few sessions with people from the industry can help the entrepreneurs in identifying their initial funders and help in lifelong networking which holds the key to sustainable start-ups.
iv. Market survey – Participants can be given pilot projects to survey prospective customers and test viability and commercial feasibility of their creative ideas.
v. Managerial skill – Trying to manage everything may make the entrepreneurs end up managing nothing. The idea behind management training is to teach them prioritizing, planning, organizing, directing, controlling and learning from mistakes. Its important that adequate sessions are conducted to teach financial, marketing, human resource management and implementation of sound management information system (MIS) in their business ventures.
Step # 5. Support System:
Completion of training program prepares the new entrepreneur to start-up up his/her new venture. Assistance and support may be required for financing, legal services, raw material procurement, initial office space and infrastructure in order to initiate operations of the new venture. This stage is the pillar of strength for a well- delivered EDP.
Coordination between EDP organizers and support system is a must to give wings to entrepreneur’s dreams. In fact all relevant agencies must be involved in various stages of EDP planning and execution so that both the entrepreneur and the agencies identify workable partnerships.
Step # 6. Production:
Production phase begins the real journey of the entrepreneurial venture. Lot of teething issues are encountered at this stage like continuous power supply, outages, delay in raw material procurement, technical faults with the machinery, faulty plant layout etc. These issues need expert handling and managerial and technological skills acquired in the EDP are put to use. Once the production starts, the entrepreneurs need to identify and partner with suitable marketing channels. He/She should launch a user-friendly web portal with online or phone based assistance to answer queries and clarify doubts of prospective clients.
Step # 7. Monitoring and Follow Up:
Continuous monitoring and follow, up is vital for the success of every entrepreneur development programme. A comprehensive monitoring system should be embedded in EDP to identify and remove blockers. Feedback is an essential component of this stage. Periodic meetings with trainers, participants, industry experts and supporting agencies can help in polishing the contents of EDP and continuously update it with recent changes.
EDP – Relevance of EDP
“No EDP, no economic development.” Entrepreneurial development plan can be framed and implemented without its relevance to the political, economic, social and legal environment.
Following are the relevance of entrepreneurial development programme:
1. They should be meeting the main object of development such as generating employment, set up ancillary, small and medium sized industry, and introduction of new entrepreneur and maintain stability etc.
2. There should be proper arrangement of training and education such as setting of technical and electrical institute, handicraft making institute.
3. There should be promotion to entrepreneurial skill such as technical and managerial skill. The main aim is to import management and technical know-how required by the participants to operate their business entrepreneur.
4. It develops the spirit of social responsibility by spreading social consciousness and awareness about new venture, new technology, managerial skill, uninterrupted supply of goods or services in society.
5. There should be improvement in mobility of entrepreneurs by providing training to new entrepreneurs and after that acquired employment inside the area or outside the area.
6. There should be assistance in preparation of new projects about product /services, financial services, market of respective products.
7. Entrepreneurial Development Programme started several types of self-employment programme for removing unemployment by Integrated Rural Development Programme (IRDP), etc.
8. There should be balanced regional development and setting up of more units which leads to the development of backward areas through EDP.
9. Effective EDP is helpful in establishment and development of ancillary, tiny, small and medium industry and business.
10. EDP should be helpful in elimination of poverty and unemployment.
11. EDP should be helpful in search potential entrepreneur.
12. It should be helpful in constitution of institutional framework.
EDP – Limitations
The EDP activity has made rapid progress covering all the developed and underdeveloped regions of the country. Today, scores of organizations are involved in conducting EDPs as part of activities sponsored by various governments, public financial institutions, or nationalized banks. Several thousands of small, mostly first generation entrepreneurs have already been trained and a few thousands are being trained every year.
Yet after decades of experience in EDP activity one cannot get reliable, regular, time-related data pertaining to the efficacy of EDPs in terms of the following:
i. Developing all-round, competent, and successful first generation entrepreneurs, and
ii. Generating viable opportunities for permanent self-employment.
Absence of Built-in Mechanism for Monitoring and Evaluation of EDPs:
The biggest problem arising from the mushroom growth of EDP conducting agencies and the unplanned increase in EDPs conducted by them for widely diverse target groups is the absence of any machinery to monitor and evaluate objectively the effectiveness of the programmes conducted at public expense.
Also, there is no provision of any kind of built-in device/procedure to regularly monitor and periodically evaluate the results of an EDP conducted by an organization with funds from a public financial institution, government, or nationalized banks. Neither an organization which conducts EDPs as its primary or subsidiary activity is accountable to any overseeing agency with respect to the efficacy of EDPs conducted by it.
The funding arrangements with the financial institutions do not provide for any built- in obligation to monitor the progress and results of the EDPs conducted by an agency. The absence of accountability to monitor and evaluate results is a serious deficiency in financing EDP activity in India.
The average training of six to 12 weeks provided through EDP is completely free for a selected potential entrepreneur as the entire cost is borne by the sponsoring financial institution or nationalized bank. Even for the EDP conducting organization, this activity is costless because its overheads and direct costs of the EDP are paid for by the funding organization.
More important, nothing by way of performance is expected either from the training-entrepreneur or from the agency conducting the EDP. Also, the trainee is not expected to show that despite this strengthened need achievement be or she is going to make at least some use of the training and post-training inputs received by him or her.
As for the EDP conducting organization, it is immaterial and inconsequential whether a potential entrepreneur who is supposed to have been carefully selected for his entrepreneurial traits actually becomes, or tries to become, or at least shows keenness to become an entrepreneur within a reasonable period after the completion of training.
EDP – Institutions Involved in Providing EDPs in India
In India there is a rising awareness of the importance of the entrepreneurship and its relevance to the economic growth and development. The entrepreneurship development programmes contribute immensely. The introduction of entrepreneurship development programmes and similar efforts can be traced back to 1960s.
EDM has been spearheading an entrepreneurship movement throughout the nation with a belief that entrepreneurs need not necessarily be born; they can be developed through well-conceived and well-directed activities.
The state of Gujarat was the pioneer in the country in initiating entrepreneurship development programmes. Presently there are many government aided, private organizations, and NGOs associated with the task of conducting entrepreneurship development programmes.
The most prominent organisations in India include the following organisations:
1. Indian Institute of Entrepreneurship (IIE):
HE is an autonomous organization under the Ministry of Skill Development & Entrepreneurship. The Institute is engaged in providing training, consultancy, and conducting research activities in Small and Micro Enterprises (SME), with special focus on entrepreneurship development.
2. Entrepreneurship Development Institute of India (EDII):
EDM situated in Ahmedabad is a non-profit autonomous organisation. It has been sponsored by financial institutions such as IDBI, IFCI, ICICI, and SBI. It is also assisted by the government of Gujarat. EDII has been assisting the creation of centers for entrepreneurship development and institutes of entrepreneurship development in various states of the India.
3. National Institute for Entrepreneurship & Small Business Development (NIESBUD):
NIESBUD under the Ministry of Industry, Govt. of India was set up in 1983 as an apex body to co-ordinate the activities of various institutions engaged in entrepreneurship development especially in the area of small scale industry. It is also involved in conducting training programmes for entrepreneurs and trainees. NIESBUD is engaged in preparing model syllabi for training various target groups, undertaking research documentation, conducting seminars and developing training as well as teaching aids.
4. Centre for Entrepreneurship Development CED, Gujarat:
CED was established in1979 by the Gujarat government. Its EDP is one of the oldest entrepreneurship development programme in India.
5. National Institute of Small Industry Extension Training (NISIET) Hyderabad:
It is an autonomous body under Ministry of industry. NISIET has been providing training, conducting research and consultancy activities for the development of small industry.
6. Small Industry Service Institute (SISI):
SISI established by Government of India offers vast variety of services like conducting market survey, technology demonstration, preparation of techno- economic feasibility reports, marketing of products, product standardization, management consultancy, training etc. to potential and existing entrepreneurs.
7. SBI’s Programmes:
The State Bank of India has been conducting EDPs particularly in the backward areas across different states of India.
8. Rural Development and Self-Employment Training Institute (RUDSET):
RUDSET has been jointly sponsored by Canara bank and Syndicate bank. It is engaged in promotion of entrepreneurship.
9. Science and Technology Entrepreneurship Development (STED):
Under the Department of Science 6t Technology, Govt. of India, STED, is an autonomous organization involved in entrepreneurial development and employment generation through science fit technology inputs.
10. Xavier Institute of Social Services – Ranchi:
Department of entrepreneurship development programmes of XISS, Ranchi has been engaged in conducting various entrepreneurship development programmes and skill development programmes of national level since 1974. It has been supported by funding agencies like, Industrial Development Bank of India and Industrial Finance Corporation.
11. Development Commissioner (MSME) under Ministry of Micro, Small & Medium Enterprises:
The Govt, of India through Development Commissioner (MSME) under Ministry of Micro, Small & Medium Enterprises has been undertaking various programmes related to entrepreneurship development. These programmes include a large number of vocational and entrepreneurship development programmes and other related programmes for entrepreneurship and skill development.
They are explained as under:
(i) Entrepreneurship Development Programmes (EDPs):
EDPs are being regularly conducted to cultivate the talent of aspiring youths by making them aware on various aspects of industrial activity required for setting up (Micro, Small Enterprises) MSEs. ITIs, Polytechnics and other technical institutions are generally involved in organizing the EDPs.
The course contents EDPs are planned to offer necessary information to the entrepreneurs on product and process design, manufacturing practices involved, testing and quality control, selection and usage of appropriate machinery and equipments, project profile preparation, marketing techniques, product pricing, service pricing, export opportunities, infrastructure facilities available, financial facilities available.
(ii) Entrepreneurial Skill Development Programme (ESDP):
Entrepreneurial Skill Development Programmes are basically meant to upgrade skills of the potential and existing entrepreneurs and the available workforce. These programmes provide sufficient training to develop skills of new workers and technicians. These programmes devoted for skill development of socially disadvantaged groups (ST, ST, women, OBC and minorities) are being regularly being organized in various parts of the different states.
For these ESDPs 20 percent of the total targeted people exclusively belong to the weaker sections of the society i.e. (SC/ST/women and PH).They are provided a stipend of Rs. 500 per month per candidate under the Promotional Package for MSEs. No fee is charged from the candidates under these programmes Rs.200 is charged from general candidates.
(iii) Management Development Programmes (MDPs):
Management Development Programmes are being conducted to impart training on management practices. These programmes are aimed to improve the decision -making and managerial skills of the potential and existing entrepreneurs. These programmes can help the entrepreneurs enhance their productivity and increase their profitability.
MDPs are also of short duration and the curriculum for the MDPs is designed based on the needs of the industry and are customized. 20 percent of the targeted training programmes are conducted exclusively for the weaker sections of the Society (SC/ST/Women/Physically Handicapped).
EDP – Achievement of EDP
The prime goal of EDPs is to create entrepreneurs who adopt entrepreneurial career and set up their own new small business ventures. It is a prerequisite for an overall economic development of any country.
The following achievements are as follows:
1. Improvement in per capital income- Entrepreneurs are always looking for the opportunities and exploring & exploiting the opportunities. They lead in organizing various factors of production by putting them into productivity through establishing new entrepreneurs. When more & more enterprises will establish, it will result in the increment of employment and generating wealth in the form of goods and services. Therefore, EDP play a positive role in setting up of more units and helps in generating more employment and income.
2. EDP helps an entrepreneur in formulating projects by providing the entrepreneur necessary technical guidance & support.
3. EDP helps an entrepreneur in expansion and establishment of new industrial or venture or business.
4. EDP plays an important role in developing the qualities through entrepreneurial training, education, experiments and orientation programmes.
5. EDPs helps in balanced regional development and reduces concentration of economic power in few hands only.
6. It helps in establishing entrepreneurial development institute such as EDII, NIESBOD, NAYE CED etc.
i. Increment in production and productivity.
ii. Expansion of market.
iii. Decentralization of economic resources
iv. Promote the spirit of social responsibility
v. Searching new entrepreneurial opportunity.
Achievements of Entrepreneurship Development Programmes:
1. 686 organizations are engage in organizing entrepreneurship development.
2. Around 30% entrepreneurship development trained entrepreneurs put up their enterprise.
3. The schemes offered which include entrepreneurship developments concepts are:
(a) Prime Minister’s Rojagar Yojna (PMRY)
(b) Swarnajayanti Gram Swarojgar Yojna (SGSY)
(c) Rural employment Generation Programme (REGP)
Entrepreneurship Development Programme – 9 Major Problems
Institutional framework is indispensable for the entrepreneurial development programmes. But the entrepreneurs have been facing several problems when they are interacting with the various institutions involved in the EDPs.
Following are the major problems involved in the organisation of EDPs:
1) Improper Identification and Wrong Selection – The most important problem is improper identification and faulty selection of the projects. This leads to wrong choice of technology and improper forecasting of financial requirements.
2) Undue Delays in Implementation – Undue delays are caused in the implementation of the projects which leads to cost escalations. This, in its turn, creates financial crunch, increases the burden of debt and raises the break-even point.
3) Faulty Selection of Candidates – There is no proper and uniform method adopted by various agencies for identification and selection of prospective entrepreneurs.
4) Lack of Infrastructure Facilities – There are no adequate infrastructure facilities such as satisfactory transport and communication facilities, shortage of housing accommodation, erratic power and water supply, defective sewerage systems for disposal of industrial waste, lack of proper class rooms, guest- speaker, boarding and lodging etc.
5) Lack of Competent Faculty – Lack of competent and active teaching and managing faculty in rural and backward regions is another major problem of the EDPs. Even when they are available, they are not prepared to go to the rural and backward areas where the programmes are conducted.
6) Poor Financial Management – Financial institutions which have promised initially for participating in the EDPs fail to keep up their promises later on. This leads to inadequate finance, poor working capital management, lack of organisation and unproductive expenditure out of available working capital etc.
7) Shortage of Technical Manpower – Another major problem faced by the EDPs is the shortage of trained technical personnel needed at the location of the units. Since the units are low capital-based, they cannot afford to employ skilled technical manpower at high salaries. Seasonal availability of skilled labour leads to under-utilisation of the productive capacity.
8) Multiplicity of Government Agencies – Multiplicity of government and other agencies leads to harassment and wastage of valuable time and energy of the entrepreneurs. Bureaucratic delays are caused by Government agencies and departments as red-tapism and bureaucracy play their role erratically.
9) Shortages or Irregularities in Supply – Irregular and inadequate supply of various inputs like raw materials, half- finished goods, tools and equipments etc. hampers the production process of the small scale units. Very often, new entrepreneurs, being not able to get their requirements adequately, will be compelled to procure them at higher prices or keep their plant idle.
10) Too much Dependence on Middlemen – Small entrepreneurs have to depend too much upon middlemen and others and face severe competition in the market. They have no competence or capacity or even resources to compete with large business entrepreneurs.
11) Unsatisfactory Services – The consultancy services rendered by local level and state level agencies are quite unsatisfactory. Whatever promises and assurances are given to the entrepreneurs during the training programme by them will not at all be fulfilled. The EDPs and the trainees face many other problems which are very difficult to be solved easily.
There is over- estimation of trainees by assuming that they have aptitude for self- employment and training will provide them necessary motivation and enable them to set up their ventures successfully. But the actual situation is not like this. Because of these problems, the EDPs have not been successful as per expectation.
12) Duration Period of EDPs – The duration period of EDPs varies from 4 to 6 weeks which is very short to instill basic management skills among the prospective entrepreneurs. It should be sufficiently long enough to enable the potential entrepreneurs to understand, digest and be capable of starting their new ventures confidently.
Suggestions to Make EDPs Successful:
Following suggestions may be made to make EDPs successful:
1) Proper Balance between Stimulating, Supporting and Sustaining Activities:
There should be a proper balance between the three types of activities viz. stimulating, supporting and sustaining to make the EDPs successful. Stimulating activities are concerned with entrepreneurial education, publication of entrepreneurial facilities, help in identifying variable products and creating a common platform for entrepreneurs to moveable them to share problems, experience and success.
Supporting activities are concerned with various forms of support to the entrepreneurs In order to set up and run their ventures. They include registration, mobilisation of funds, obtaining a license, getting tax relief and management consultancy services. Finally, sustaining activities relate expansion, diversification, modernisation and quality control.
2) Selection of Trainees:
Trainees should be selected after a careful and complete screening of their education status, family background, attitude, aptitude, economic status, etc. Educated unemployed young person’s having an aptitude for self-employment should be selected for EDP The selection of wrong trainees is most likely to lead to wastage of money, efforts, time and other resources.
3) Need for Experienced and Competent Trainers:
Trainers should also be equally competent, qualified, suitable and committed to the job entrusted to them, because the success of the EDPs depends ultimately upon the trainers who must be fully acquainted with the latest knowledge and information in their respective fields.
At times, experienced and suitable trainers are found to be unwilling to work in rural and backward areas. Local trainers may be employed but they will not be available in large number and they may not be able to impress the potential entrepreneurs as much as outside experts. Therefore, the trainers should also be selected only after assessing the socio-economic needs of the area and the target group involved.
4) Role of Trainers:
The role of the trainers is very great and at the same time, complex because they have to deal with people (potential entrepreneurs or trainees) who may be having limited aspirations and who may tend to resort to fate. The trainers are required not only to impart knowledge and skill but also to bring about attitudinal change in society. The trainers have to act as catalysts or change agents. That is why the trainer is called the kingpin of EDP and he must therefore involve himself fully.
A good trainer must possess the following qualities:
i) Aptitude for development work,
ii) Faith in people’s capacity to change,
iii) Flair for public relation and field work,
iv) Interest in understanding people and getting along with them.
v) In depth study of the area and its people,
vi) Dedication, patience and resourcefulness, and
vii) Proper sense of discrimination and capacity to work under stress.
5) Designing of a Viable Project:
A viable project is a project which is feasible in terms of availability of essential inputs and market potential. The organiser of EDPs should prepare such projects by taking into account the availability of local resources, finance, training requirements and assessing the feasibility of the projects. They should select right people, provide right training, and entrust viable projects to them to make the EDPs successful.
6) Focus on Achievement Motivation:
It is quite essential to develop achievement motivation among the potential entrepreneurs through proper training and conducive environment with a view to creating their dream into reality.
7) Organising Part Time Programmes:
Part time EDPs may be conducted during the week ends or in the evening to provide opportunities to those persons who are working somewhere and who are not able to join regular EDPs.
EDP – Lessons from EDP Experience and Strategies for Future
Some tips may help in avoiding a few common problems and issues regarding EDPs. Here, a deliberate attempt has been made to avoid any specific lessons which are likely to prove unhelpful as one may tend to apply such lessons mechanically without regard to contextual differences.
Instead, the emphasis is on following general tips by way of approaches/attitudes which have been tested and proven to be universally helpful in almost all EDPs. In other words, the common denominators of success of EDP strategy or model or programme need to be understood.
They are as follows:
1. Comprehensive as against Partial Approach:
The easy temptation to take a quick, practical view and to follow a limited or partial approach must be avoided. More specifically, a holistic view of EDP strategy covering all stages must be taken; and within each stage, a similar comprehensive approach needs to be followed.
2. Integrated Approach:
All the elements of EDP activity must be looked upon as a composite, integrated whole. More specifically, the pre-training and post-training stages need to be woven into a single strong fabric. This can best be done by following the common underlying design and purpose which is to help in the realization of new, viable, and successful ventures.
3. Development Approach:
While some inputs of training process (pre-training as also post- training processes) have technical aspects, their developmental orientation should not be overlooked. Otherwise, behavioural tests or selection procedures or technical training inputs may well become specialized activities thereby losing sight of the developmental direction into which they all need to be propelled.
4. Goal-Oriented Concerns:
From the very outset, the entire process should have an implicit goal-oriented concern. As the process continues, it may not be possible to reflect goal- orientation explicitly on a day to day basis. Yet, awareness of goal orientation should permeate all activities during the entire programme.
The goal is the preparation of an appropriate, viable project suitable for each individual. It is also necessary not to overlook the importance of equipping the individual by helping him or her with required financial assistance or other such inputs for the success of the project.
5. Need-Based Flexibility:
There is no single formula for developing entrepreneurs. There are target groups as well as individuals within groups whose special needs and requirements must be constantly kept in view. Individual strengths and weaknesses must also be recognized if potential entrepreneurs are to be transformed into successful small captains of industry. This calls for flexibility and imagination.
6. Individual Counselling:
Apart from formal class-room group training, which of course is inevitable, EDPs must stress on the need for individual counselling. To the extent to which resources are provided for individual counselling, EDPs will become really successful.
7. Introspective Critical Attitude:
For continued spread and success of EDP activity, the strategy and the programme should be continually modified and developed in the light of changed circumstances and on the basis of experience. An introspective view is of prime importance for this purpose. Validation of tools/techniques used and periodic performance evaluation are the two major manifestations of such a critical spirit which requires sell improvement.
The success of EDPs rests on the proper emphasis on the following elements:
i. Not anybody or everybody can become a successful entrepreneur. EDP training should be directed in favour of persons who show promising potential. Careful selection helps to identify such potentially sound entrepreneurs. If the selection processes are thorough, further need-based training could be provided for more effective results.
ii. Without proper counselling based on strengths and weaknesses of individual entrepreneurs, it is not possible to make real progress. Statistical progress reports of numbers may well be misleading,
iii. Work experience, especially in industry or business comes across as a key element in the process of industrial entrepreneurship formation as profiles of new emerging entrepreneurs reveal. Experience gained during employment prepares the ground for successful self-employment, and experience in self-employment is equally advantageous to successful entrepreneurs,
iv. Careful selection and sound training under EDP alone may not yield satisfactory results unless adequate and timely financing is provided to the new breed of entrepreneurs. They may have the skills and competence to back a sound project, but may not have substantial finances of their own.
v. Finally, the Indian experience strongly suggests that while entrepreneurs can indeed be developed, the task is complex and it requires substantial expertise in training, organizational resources, and institutional support. The rewards are also equally substantial though they may not all come in one go.