Entrepreneurship is an area critical for economic development around the world. This is especially so in developing countries of the world. Even in the context of Prime Minister Narendra Modi's "Make in India" slogan it is generally believed that corporate houses and multinational corporations alone are not going to make development. Instead, much of it depends on the entrepreneurs who are seen as the engines for a country's growth and advancement. Economic development of a country depends largely on the country's ability to absorb new technology, tools and management methods. Technology absorption is enhanced when there are mature suppliers and efficient supply chains in a country. Small and medium size suppliers led by innovative entrepreneurs provide the backbone of efficient supply chains.
French in origin "entreprendre, meaning to undertake"the word entrepreneur does not lend itself to one meaning. It can be seen in various ways i.e., as a person who pioneers change and one of very high intellect, capable and innovative; as also a person who wishes to work for himself/herself and willing to take risks that comes with the challenges. As Scott Belsky, co-founder of Behance says "It's not about ideas alone. It's about making ideas happen". Problem occurs when innovations stop without realizing that in a rapidly changing global market innovation holds the key to success.
According to Austrian economist Joseph Schumpeter, an entrepreneur is willing and able to convert a new idea into a successful innovation. Entrepreneurship employs what Schumpeter called "creative destruction" to replace in whole or part inferior products and means of production bringing enhanced efficiency and competitiveness in the marketplace. The bottom line being that the value generated will be far higher than what has been invested, which is one reason why there is "high risk" involved in entrepreneurship. Path breaking efforts by entrepreneurs, in the form of new goods and services, results in new employment opportunities, which can produce a cascading effect or virtuous cycle in the economy. The stimulation of related business or sectors that support the new venture adds to further economic development.
In US, it is estimated that new, small companies (Dalin, 2000) generate more than 50 percent of all current innovations and 95 percent of all radical innovations. According to the SBA's Office of Advocacy, "Small firms accounted for 63 percent of the net new jobs created between 1993 and mid-2013 (or 14.3 million of the 22.9 million net new jobs). Since the end of recession (from mid-2009 to mid-2013), small firms accounted for about 60 percent of the net new jobs. Small firms in the 20-499 employee category led job creation." For example, the United States Small Business Administration (SBA) has focused programs for "Encore Entrepreneurs," or those over 50, who are looking to start a business once retired or as they near to retirement. This consists of training programs, including online courses. Older workers also have access to other SBA resources, such as planning, counseling, grants, contracting and local assistance. SMEs (small and medium-sized enterprises) account for 60 to 70 per cent of jobs in most (Organization for Economic Co-operation and Development) OECD countries, with a large share in Italy, Japan and a relatively smaller share in the United States.
In fact, an argument has been made that entrepreneurship should not be seen only in the context of small and medium enterprises of a country. Rather even educational institutions have become entrepreneurs of sorts by the fashion in which competition has spurred institutions to look for innovative ways to "sell" their product. This is especially so with high profile universities in the West fanning out to the Middle East and the Asia Pacific and establishing campuses with a view of not being left behind but also seeking to extract a share of the student market. Leading Universities in India can also be considered as entrepreneurs as they are trying to capitalize their brand names and fields of specializations.
There is no doubt that entrepreneurs are important to the economy as they create new business in the form of goods and services and generate employment that has an impact on the economy and secondly they add to the national income as new ventures generate additional wealth offerings either by way of products or technologies and thirdly they can also be viewed as agents of social change and community development. Some famous entrepreneurs like the Tatas and Bill Gates have spent their money to finance worthwhile causes, from education to public health.
In the context of higher education, the downside of entrepreneurship can be seen in two broad fronts: Firstly, it decreases enrollments and diminishes budgets leading to downsizing faculty and secondly, it increases competition leading to enhanced emphasis on other avenues of revenue generation often at the cost of teaching quality. This is especially in the case of private universities and institutions of higher learning, not only in India but globally as well. Government run institutions, for the most part, stays away from the cost-benefit calculation; but for the private sector, even if education is not seen fully in the perspective of a business, the viability of sustaining programs will have to be factored in with a need for an innovative process.
Undoubtedly, there are vital inferences and inputs from entrepreneurs to economic development that policy makers would do well to careful analysis. This is especially critical for India as it tries to eradicate poverty via faster economic development. Presently, educational institutions need to promote independent thinking, networking, and risk tolerance among the students so that it will result in job creators than job seekers. In the realm of the education or economic sector, the critical element lies in drawing a fine line in nurturing entrepreneurship that understands the advantages and the drawbacks. Entrepreneurship should not only enable the economic growth and modernization but also contribute to social development. Entrepreneurs are not born, rather created and nurtured through appropriate interventions.
Prof Prabir K. Bagchi
Prof Prabir K. Bagchi is the Vice Chancellor of SRM University and has been awarded the prestigious ACCENTURE AWARD, (with his co-author) twice (1995 and 2004) for outstanding paper in Logistics and Supply Chain Management. He completed his engineering from University of Calcutta in 1969.