Indian Entrepreneurs: An Empirical Investigation of Entrepreneur's Age and Firm Entry, Type of Ownership and Risk Behavior

By Rai, Shailendra Kumar | Journal of Services Research, April 1, 2008 | Go to article overview

Indian Entrepreneurs: An Empirical Investigation of Entrepreneur's Age and Firm Entry, Type of Ownership and Risk Behavior


Rai, Shailendra Kumar, Journal of Services Research


INTRODUCTION

The term entrepreneur originated in French economics as early as the 16th century where it was originally used to refer to military leaders, architects, contractors and organizers of musical or other entertainment. Thus, the term in its early phase had nothing to do with the economic entrepreneur of today. Cantillon (1755; cited by Killey, 1971) the originator of the economic concept of entrepreneur, defined entrepreneur as one who buys factors of production at certain prices and sells his products at uncertain prices, thereby bearing non-insurable risk that may arise due to depressed demand for his product. The term 'Entrepreneur' has been defined by different scholars in different ways. Important among them are Schumpeter (1951) and McClelland (1961) who defined entrepreneur as an innovator. Knight (1921) defined entrepreneur as someone who acts in the face of uncertainty. Mill (1954) defined entrepreneur as a risk bearer. Say (1803) and Usher (1954) regarded entrepreneur as a coordinator. Thus, the leading authorities in the area of social sciences have not been unanimous in defining the terms 'entrepreneur'.

In a nutshell, the term 'entrepreneur' can best be explained as a person who innovates on all fronts on a regular basis, works under uncertainty, bears the non-insurable risk and combines and manages the factors of production.

In the 21st century, especially after the adoption of new economic policy (NEP), entrepreneurship has assumed a more significant role in the economic development of India. Under the impact of rapidly changing business environment, the role of entrepreneurship extends beyond increasing per capita output and income; it is increasingly expected to work as a catalytic force for economic development. Rapid changes and progress across wide range of industries has taken place.

India, a country of billion plus people with tremendous cultural, linguistics and religious diversity, has tried to modernize its society and transform its economy within the framework of a functioning democracy. During the last one and a half decade, the Indian economy has been growing at a rate of 7-8 per cent per annum. Foreign exchange reserves have crossed of $ 178 billion (RBI, 2007) and rapid changes and progress across wide range of industries has taken place. Indian economy is witnessing a situation wherein, an ascending economic trajectory, continuously rising foreign exchange reserve, reduced rate of inflation, global recognition of the technological competence, energy of 540 million youth, umbilical connectedness of 20 million people of Indian origin in various parts of the planet, global interest to R&D investment etc have all come together and it apparently looks as Indian economy is poised for growth. Therefore, in the light of the changes mentioned above, it is high time to explore its impact on entrepreneurship.

OBJECTIVE OF THE STUDY

The present work has been an endeavor to highlight the important features of the entrepreneurs engaged in SSIs in the industrial clusters of Varanasi district. The study stresses on the individual differences, background characteristics of the firm and risk-taking behaviors of the entrepreneurs and how it might be related to the performance of the firms' and answer to questions such as: Whether entrepreneur's age determines the entry into the industry; initial capital invested; and type of ownership?

The main purpose behind choosing Varanasi as centre of study is that the district is well served by a number of technical institutions. The Institute of Technology, Banaras Hindu University (BHU), Industrial Training Institutes and polytechnics provide excellent training facilities to the students. BHU having a number of disciplines of technology produces hundreds of technocrats every year specializing in electrical, chemical, electrical, computer, metallurgical and other branches of engineering. Therefore, human resources to run industries is plentiful. …

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