Determinants of entrepreneurship  


Helal Uddin Ahmed       | Published: May 11, 2018 22:33:00


Determinants of entrepreneurship  

Entrepreneurship has been acknowledged the world over as a key engine of socio-economic growth. Put simply, means, motive and opportunities are needed if entrepreneurship is to flourish and get a foothold in a society. In a world full of uncertainties, the entrepreneurs can recognize opportunities that many others fail to discern, and craft profitable ventures for exploiting those opportunities.  Entrepreneurship development is particularly relevant for countries like Bangladesh, as it entails substantial socio-economic and cultural benefits for the population. It also helps create job opportunities as well as socio-economic growth through innovation, change and competition. Against this backdrop, the paper titled 'Determinants of Entrepreneurial Economics in Bangladesh: An Empirical Analysis' presented by V. Rattanawiboonsom and M M Ali at the 20th Biennial Conference of Bangladesh Economic Association held in December 2017 may be reviewed, as it could identify the determinants of entrepreneurship in Bangladesh in a holistic manner.

As pointed out by Ghavami and Lotfalipoor (2008), entrepreneurs may be considered the real pioneers of economic growth and social development because of their skill in spotting business opportunities. They generate small and medium enterprises (SMEs), which allocate substantial volumes of economic inputs and are considered critical in the development strategy of developing countries like Bangladesh. The flourishing of micro, small and medium-scale enterprises in the rural and backward regions of the country is a key strategy pursued by the government for poverty alleviation and reduction of regional disparity. These enterprises are especially suitable for densely populated countries like Bangladesh, as they generate higher employment opportunities with limited investments.  Recent studies by the IMF (2012), ADB (2016) and CPD (2017) have indicated that SMEs accounted for around 99 per cent of private sector (formal) industrial establishments, generated employment opportunities for about 75 per cent of non-agricultural labour force and contributed around 25 per cent to the country's GDP.

Joseph A. Schumpeter, considered the father of entrepreneurship theory, described an entrepreneur as someone motivated by the 'dream and the will to found a private kingdom', 'the will to conquer', 'the impulse to fight, to prove oneself superior to others' and having the 'joy of creating'. Entrepreneurs generate innovative business ideas, seize new opportunities, make investments by themselves or through borrowings, take risks and enjoy profits as a reward of their endeavours. Studies on entrepreneurship in Bangladesh have shown personal attributes to be the key factors in entrepreneurial successes and failures. Women entrepreneurship has now become a much discussed issue in Bangladesh as there has been a growing realisation that the state cannot afford to keep half of its population outside the mainstream of development process. The factors that encourage women to become entrepreneurs include the urge for self-reliance; extra income; inspiration; economic freedom; upgrading social status; and economic uplift. The major constraints to women entrepreneurship in Bangladesh have been found to be dearth of required skills and education; unfriendly market environment; and lack of access to finance.

  1. Rattanawiboonsom and M M Ali have identified 16 major constraints to entrepreneurship development in Bangladesh. These are: insufficient government supports; unhelpful government programs on SMEs; insufficient capital to maintain and expand business; no guarantees for bank loans; high interest rates on bank loans; lengthy loan application process; limited business network to run business; competitions in the domestic and foreign markets; limited access to supportive technologies for business; limited access to customers; limited access to market information; limited access to suppliers; non-maintainable existing technologies; limited information on financing sources; new technology not easily attainable. They also identified some influential constraints and barriers, which include: lack of market knowledge; lack of information on market opportunities; complicated process in registering and licensing of business; limited access to information on relevant government regulations; complicated tax regulations; excessive queuing in all offices; and corruption and bribery among officials.

The authors have put forward some general recommendations for overcoming the hindrances to entrepreneurship development in Bangladesh. These include: framing pro-SME rules and regulations and other positive initiatives by the government; removal of bureaucratic red-tape and corruption; elimination of structural barriers to lending; training and capacity building of entrepreneurs; development of physical and social infrastructure including institutional development. They also made the following specific recommendations for consideration of the policy makers, planners, practitioners, scholars, bureaucracy, NGOs and human rights activists for uplift of the rural poor through entrepreneurship development.

Generating awareness: Community development workers can motivate the rural entrepreneurs to analyze their situation and develop a vision for their improved livelihood. In response, the rural poor can propose concrete actions, which can serve as a foundation for committing themselves to social action.

Forming groups: Formation of local groups has been a core element in many development interventions, especially in case of social enterprises. Essential needs like access to financial services can be better addressed through small, homogenous groups. They may provide a sense of solidarity, strength in numbers, security and confidence, unity of purpose, and dignity in entrepreneurship.

Capacity development: Social mobilisation and poverty reduction are linked to knowledge, skills and attitude of the rural entrepreneurs. Their capacities should therefore be developed for enabling them to identify and analyse their situation by means of training and motivation.

Micro-enterprises: The process of micro-enterprise development is often supported by external agencies that provide a package of inputs and services. These interventions should be carefully designed to avoid unsustainable dependency relationships.

Networking: Community-based enterprises can maximise their potential by establishing horizontal and vertical linkages. Horizontal linkages can provide entrepreneurship and vocational training, market information, consultancy services, micro-finance and access to technologies. On the other hand, vertical linkages can be set up with the local governments, the private sector, civil society and the media, which can facilitate social mobilisation and initiate dialogues among different actors.

Conducive policies at central and local levels: Sustainable socio-economic transformation in rural areas requires a change in the institutions that govern. Mobilisation of the rural poor and promoting entrepreneurship among them can only work if an enabling environment is created by framing appropriate policies and devolving power to the local level.

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