MSME and Entrepreneurship Development

Entrepreneurship is the process of setting up one's own business, as distinct from taking up employment or practising a profession. The person who sets up the business is the entrepreneur, and the business unit that results is the enterprise.

Why entrepreneurship matters

• Besides giving self-employment to the entrepreneur, entrepreneurship greatly expands opportunities for the other two economic activities — employment and profession — and so becomes crucial for a nation's overall economic development.
• Every country needs entrepreneurs: a developing country needs them to initiate the development process, while a developed country needs entrepreneurship to sustain it.
• In today's India — where public-sector and large-scale employment is shrinking while globalisation opens vast opportunities — entrepreneurship can help take the country to the heights of becoming a super economic power. The need for it therefore arises from the functions entrepreneurs perform for both economic development and the business enterprise.

Characteristics of entrepreneurship

• Systematic activity — It is not a mysterious gift or a matter of chance but a systematic, step-by-step, purposeful activity. Its temperamental, skill and knowledge requirements can be acquired, learnt and developed through formal education and vocational training as well as through observation and work experience. This dispels the myth that entrepreneurs are born rather than made.
• Lawful and purposeful activity — Its object is lawful business; unlawful actions cannot be justified as entrepreneurship merely because both involve risk. Its purpose is the creation of value for personal profit and social gain.
• Innovation — Entrepreneurship is creative: by combining factors of production, entrepreneurs produce goods and services that meet society's needs, generating income and wealth. Innovation may be cost-saving or revenue-enhancing (best if both), and is welcome even when it is neither, because innovation must become a habit. It includes new products, new markets, new sources of input supply, technological breakthroughs and newer organisational forms — doing things better, cheaper, faster and with the least harm to the environment.
• Organisation of production — Production requires combining diverse factors — land, labour, capital and technology. Responding to a perceived opportunity, the entrepreneur mobilises these into a productive firm. Notably, the entrepreneur need not own any of these resources; he may simply have the idea and promote it among resource providers. In an economy with a well-developed financial system, he can convince funding institutions and then contract for equipment, materials, utilities and technology. What lies at the core is knowledge of where resources are and the best way to combine them, along with the negotiation skills to raise them in the enterprise's interest. …