Details notes about Entrepreneurship Development on basis JNUA

1. Entrepreneurship Development
Factors affecting Entrepreneurship Development
Entrepreneurship is influenced by four distinct factors: economic development, culture,
technological development and education. In areas where these factors are present, you can
expect to see strong and consistent entrepreneurial growth.
These conditions may have both positive and negative influences on the emergence of
entrepreneurship. Positive influences constitute facilitative and conducive conditions for the
emergence of entrepreneurship, whereas negative influences create inhibiting milieu to the
emergence of entrepreneurship.
Let us look at each one of them in details.
Economic Factors
Economic environment exercises the most direct and immediate influence on
entrepreneurship. This is likely because people become entrepreneurs due to necessity when
there are no other jobs or because of opportunity.
The economic factors that affect the growth of entrepreneurship are the following:
1. Capital
Capital is one of the most important factors of production for the establishment of an
enterprise. Increase in capital investment in viable projects results in increase in profits which
help in accelerating the process of capital formation. Entrepreneurship activity too gets a
boost with the easy availability of funds for investment.
Availability of capital facilitates for the entrepreneur to bring together the land of one,
machine of another and raw material of yet another to combine them to produce goods.
Capital is therefore, regarded as lubricant to the process of production.
France and Russia exemplify how the lack of capital for industrial pursuits impeded the
process of entrepreneurship and an adequate supply of capital promoted it.
2. Labor
Easy availability of right type of workers also effect entrepreneurship. The quality rather than
quantity of labor influences the emergence and growth of entrepreneurship. The problem of
labor immobility can be solved by providing infrastructural facilities including efficient
transportation.
The quality rather quantity of labor is another factor which influences the emergence of
entrepreneurship. Most less developed countries are labor rich nations owing to a dense and
even increasing population. But entrepreneurship is encouraged if there is a mobile and
flexible labor force. And, the potential advantages of low-cost labor are regulated by the
deleterious effects of labor immobility. The considerations of economic and emotional
security inhibit labor mobility. Entrepreneurs, therefore, often find difficulty to secure
sufficient labor.
3. Raw Materials
The necessity of raw materials hardly needs any emphasis for establishing any industrial
activity and its influence in the emergence of entrepreneurship. In the absence of raw
materials, neither any enterprise can be established nor can an entrepreneur be emerged
It is one of the basic ingredients required for production. Shortage of raw material can
adversely affect entrepreneurial environment. Without adequate supply of raw materials no
industry can function properly and emergence of entrepreneurship to is adversely affected.

2. In fact, the supply of raw materials is not influenced by themselves but becomes influential
depending upon other opportunity conditions. The more favorable these conditions are, the
more likely is the raw material to have its influence of entrepreneurial emergence.
4. Market
The role and importance of market and marketing is very important for the growth of
entrepreneurship. In modern competitive world no entrepreneur can think of surviving in the
absence of latest knowledge about market and various marketing techniques.
The fact remains that the potential of the market constitutes the major determinant of
probable rewards from entrepreneurial function. Frankly speaking, if the proof of pudding
lies in eating, the proof of all production lies in consumption, i.e., marketing.
The size and composition of market both influence entrepreneurship in their own ways.
Practically, monopoly in a particular product in a market becomes more influential for
entrepreneurship than a competitive market. However, the disadvantage of a competitive
market can be cancelled to some extent by improvement in transportation system facilitating
the movement of raw material and finished goods, and increasing the demand for producer
goods.
5. Infrastructure
Expansion of entrepreneurship presupposes properly developed communication and
transportation facilities. It not only helps to enlarge the market, but expand the horizons of
business too. Take for instance, the establishment of post and telegraph system and
construction of roads and highways in India. It helped considerable entrepreneurial activities
which took place in the 1850s.
Apart from the above factors, institutions like trade/ business associations, business schools,
libraries, etc. also make valuable contribution towards promoting and sustaining
entrepreneurship’ in the economy. You can gather all the information you want from these
bodies. They also act as a forum for communication and joint action.
Social Factors
Social factors can go a long way in encouraging entrepreneurship. In fact it was the highly
helpful society that made the industrial revolution a glorious success in Europe. Strongly
affect the entrepreneurial behavior, which contribute to entrepreneurial growth. The social
setting in which the people grow, shapes their basic beliefs, values and norms.
The main components of social environment are as follows:
1. Caste Factor
There are certain cultural practices and values in every society which influence the’ actions of
individuals. These practices and value have evolved over hundred of years. For instance,
consider the caste system (the varna system) among the Hindus in India. It has divided the
population on the basis of caste into four division. The Brahmana (priest), the Kshatriya
(warrior), the Vaishya (trade) and the Shudra (artisan): It has also defined limits to the social
mobility of individuals.
By social mobility’ we mean the freedom to move from one caste to another. The caste
system does not permit an individual who is born a Shridra to move to a higher caste. Thus,
commercial activities were the monopoly of the Vaishyas. Members of the three other Hindu
Varnas did not become interested in trade and commence, even when India had extensive

3. commercial inter-relations with many foreign countries. Dominance of certain ethnical
groups in entrepreneurship is a global phenomenon
2. 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.
3. Education
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 you can well see, is very anti-
entrepreneurial.
Our educational methods have not changed much even today. The emphasis is till on
preparing students for standard jobs, rather than marking them capable enough to stand on
their feet.
4. 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 entrepreneurs’ 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 rand belongs to God and the produce of the land 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.
5. 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

4. 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.
Psychological Factors
Many entrepreneurial theorists have propounded theories of entrepreneurship that concentrate
especially upon psychological factors. These are as follows :
1. NeedAchievement
The most important psychological theories of entrepreneurship was put forward in the early)
960s by David McClelland. According to McClelland ‘need achievement’ is social motive to
excel that tends to characterise successful entrepreneurs, especially when reinforced by
cultural factors. He found that certain kinds 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.
2. 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.
Hage believes that the initial condition leading to eventual entrepreneurial behavior is the loss
of status by a group. He postulates that four types of events can produce status withdrawal:
1. i. The group may be displaced by force;
2. ii. It may have its valued symbols denigrated;
3. iii. It may drift into a situation of status inconsistency; and
4. iv. It may not be accepted the expected status on migration in a new society.
3. Motives
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
1. Managing entrepreneurs whose chief motive is security.
2. Innovating entrepreneurs, who are interested only in excitement.
3. Controlling entrepreneurs, who above all otter motives, want power and authority.

5. 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.
4. Others
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:
1. First came ‘need-achievement’ as described by McClelland. In all studies of
successful entrepreneurs a high achievement orientation is invariably present.
2. 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 implies that people
can control their own lives and are not influenced by external forces.
3. 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.
4. 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.
5. Finally, here is what psychologists call ‘Type A’ behavior. This is nothing but “a
chronic, incessant struggle to achieve more and more in less and less of time”
Entrepreneurs are characterize by the presence of ‘Type A’ behavior in all their
endeavors.
Business environment refers to the factors external to a business enterprise which influence
its operations and determine its effectiveness. Business environment may be healthy or
unhealthy. Healthy business environment means the conditions are favourable to the growth
of business whereas unhealthy environment implies conditions hostile or unfavourable to
business operations. Business and its environment interact with each other. Economic system
and other conditions in the environment determine the success of business enterprises. The
firm and its management have to adjust to the conditions prevalent around it. However,
business enterprises try to influence and shape the environment. Successful working of
business concerns improves the economic and social conditions in the country.
No business concern can ignore the environment around it except at its own peril. “The
penalty of environ mental disregard is heavy. It not only reduces profit margins and makes
opportunities for expansion slip, but it also arouses social hostility and makes social
environment growingly inhospitable to business operations.”
A study of business environment offers the following benefits:
1. It provides information about environment which is essential for successful operation
of business firms.

6. 2. It opens up fresh avenues for the expansion of new entrepreneurial operations. The
entrepreneurs may come forward with new ideas and with new ventures when they
find environment suitable to their enterprises.
3. Knowledge about changing environment enables businessmen to adopt a dynamic
approach and maintain harmony of business operations with the environment.
4. By studying the environment entrepreneurs can make it hospitable to the growth of
business and thereby earn popular support.
Thus, the entrepreneur should continuously study the nature of environment and its influence
on business. However, mere study is not enough. Attempts must be made to influence the
environment in order to make it congenial and favourable to entrepreneurial activities. The
most successful entrepreneur is one who not only adjusts to the environment but also
modifies the environment to suit his requirements through the direct and indirect influences
he can exercise over the system.
PHASES OF BUSINESS ENVIRONMENT
Business environment may be classified into four broad categories; namely (i)
economic, (ii) legal, (iii) political; and (iv) socio-cultural.
Economic Environment
Economic environment is of multidimensional nature. It consists of the structure of the
economy, the industrial, agricultural, trade and transport policies of the country, the growth
and pattern of national income and its distribution, the conditions prevailing in industrial,
agricultural and other sectors, the position relating to balance of trade and balance of
payments, and other miscellaneous conditions of the economy.
There is a close relationship between a business firm and the economic environment around
it. The success of a business enterprise depends considerably upon the State and growth of
the economy. Commenting on the Indian economic environment and its impact on Indian
business houses, Dr. Surinder P.S. Pruthi wrote: "The face of the Indian business has altered
considerably during the last few years as a series of legislative enactments and other
environmental features. The abolition of the managing agency system, the birth of the
concept of joint sector, the promulgation of the Monopolies and Restrictive Trade Practices
Act, the growing role of financial institutions in the management of private sector
undertakings, the emergence of a professionally trained class of managers, growing
internationalisation of business, etc., have all combined to change the face of Indian business
in recent years."

7. An economy comprises public and private sector and the relative role of the two sectors in
the economy makes a lot of difference to business. In a privately owned and controlled
economy (free economy), the primary goal of a business firm is to earn profit and
profitability is the main criterion of judging the efficiency of business. On the other hand, in
a society owned and controlled economy (closed economy), the primary goal of business is
social benefit and social responsibility is the main criterion of judging its efficiency.
In a mixed economy like India, business enterprises work for both profitability and social
interest. In this age of planning, business enterprises work within the framework of a
planned business environment. Private sector has to function within the conditions largely
created by the State. The private and public sectors must function as parts of a single
organism rather than as two separate entities.
The Industrial Policy of 1956 stressed the need for proper direction and regulation of the
private sector as well as the increasing role of the State to achieve rapid growth in national
wealth. In the words of the planners, "It (private sector) has to visualise for itself a new role
and accept in the larger interest of the country a new code of discipline. Private enterprises,
like any other institution, will endure and justify itself only to the extent to which it proves
to be an agent for promoting the public good."
Some changes were made in the Industrial Policy in 1970 and 1973. Restrictions on large
industrial houses, preferential treatment to small scale sector, boost to joint sector, etc., are
some of these changes. In recent years there has been a trend towards liberalisation,
simplification and rationalisation of industrial policy.
Legal Environment
Business must function within the framework of legal structure. Therefore, an adequate
knowledge of laws and rules is necessary for efficient managerial performance. When new
laws are made and controls exercised through legal enactments, the first reaction of the
business community is to oppose them and disobey them. Management should try to
understand what should be the right laws and strictly obey them when so made. In addition,
it can influence the government to change and improve the law and make it useful to the
business community.
There are several business laws in our country. These relate to development of corn panics,
foreign collaboration, foreign exchange, labour management, industrial disputes, social
security benefits, and other such allied problems. A working knowledge of these laws is very
helpful for the entrepreneur and the business executive. Such knowledge will keep them away
from innocent breaches and resultant penalties. Some laws differ from Slate to State and
amendments arc made from time to time. Therefore, the entrepreneur must always keep in
touch with those who know the latest position in law. In addition, an entrepreneur should:

8. (a) read the books that enlighten on the legal side of business
(b) consult government agencies concerned with the implementation of business laws.
(c) retain labour law consultants.
Political Environment
In a democratic country like India, politics cannot be ignored. Managers and entrepreneurs
should understand the working of the political system. Such understanding and concern for
national problems will help them in the long run in discharging their responsibilities to the
satisfaction of the public.
Public opinion is very important and today's public opinion becomes tomorrow's legislation.
Businessmen should, therefore, learn to take public opinion into account in the decision-
making process. If business does not learn how to deal adequately with public opinion, it will
face a disaster. This does not mean that business should surrender itself to public opinion.
Rather, it implies intelligent response in order to change wherever necessary and a
constructive approach to problems.
There exists an interacting relationship between business and politics. Business cannot
develop without the understanding and support of the politicians. Similarly, business strategy
and business activities influence politics and the Government. It is, therefore, in the interest
of businessman to ensure that the Government is stable and helpful to business. Government
should also take the business community into confidence while preparing and implementing
plans for the country's development.
It is commonly observed that business community and the Government are hostile to each
other and there is lack of trust among the two. Businessmen should establish a cordial
relationship and proper communication with the people in power and win their confidence.
They should try to study and understand the political processes and the working of the
Government departments and agencies.
As regards relationship of businessmen with politicians there are two opposite approaches.
The traditional approach is that businessmen should not align themselves with any political
party and should keep themselves away from the political bosses. The modern view is that
businessmen should take keen interest in the political affairs of the local, State and Central
Governments. They should have their representatives on various Government bodies at all
levels of policy formulation and planning.
Socio-Cultural Environment
Traditional culture should be protected in so far as it is not a hindrance to innovation,
motivation, and development. In under developed countries a great deal of superstition exists
and people believe that success or failure depends upon the God's mercy. Much time is
wasted when activities like laying down the foundation of a building or a project are

9. postponed for auspicious days recommended by Pandits. As a result lime and cost overruns
occur frequently. Certain occupations are not considered fit for particular castes or
communities. Social position or status is linked with ownership of land and house rather than
with ownership of an enterprise. All this results in considerable immobility and inflexibility
and thus wasted labour.
Work is done in a customary way and experimentation is resented. Incentive to hard work
and more earnings is reduced because one has to share his income with the members of the
joint family. Savings and investment are left to the household who is usually an old person
devoted to traditions and static customs. In such an economic culture carrot and stick
approach is used to motivate people. On the other hand, the modern view is that employees
should be treated as human beings. Unless a healthy work environment and modern attitudes
towards work are developed, entrepreneurship cannot flourish. Depressing social conditions
and conservative attitudes hamper innovations. It is not easy to maintain and create the
required quantity and quality of entrepreneurship.
ENVIRONMENTAL FACTORS AFFECTING ENTREPRENEURSHIP
A complex and varying combination of financial, institutional, cultural and personality
factors determines the nature and degree of entrepreneurial activity at any time. The personal
backgrounds of the entrepreneurs are determined mainly by the environment in which they
are born and brought up and work. A multitude of environmental factors determine the
entrepreneurial spirit among people. The entrepreneurs in turn create on impact on the
environment. The interaction between the entrepreneur and his environment is an ongoing
process. At any given point of time, the entrepreneurs derive meanings from the environment
prevailing at that time and try to adapt and/or change the environment to suit their needs.
The environment, particularly the external environment is dynamic. It keeps on environment
on the organisation depends largely on the degree to which the organisation depends
(immediate or remote) on the environment and organizational response to environmental
changes. All the factors outside and inside (Individual, groups, machinery, equipment,
procedures, rules, policies, etc.) an organisation interact and affect the performance of the
organisation. Some of the environmental factors which hinder entrepreneurial growth are
given below:
1. Sudden changes in Government policy.
2. Sudden political upsurge.
3. Outbreak of war or regional conflicts, e.g. ‘sons of the soil’ call.
4. Political instability or hostile Government attitude towards industry.
5. Excessive red-tapism and corruption among Government agencies.
6. Ideological and social conflicts.
7. Unreliable supply of power, materials, finance, labour and other inputs.
8. Rise in the cost of inputs.
9. Unfavourable market fluctuations.
10. Non-co operative attitude of banks and financial institutions.

10. EDP is a programme
Meaning:
As the term itself denotes, EDP is a programme meant to develop entrepreneurial abilities
among the people. In other words, it refers to inculcation, development, and polishing of
entrepreneurial skills into a person needed to establish and successfully run his / her
enterprise. Thus, the concept of entrepreneurship development programme involves
equipping a person with the required skills and knowledge needed for starting and running
the enterprise.
Small Industries Extension and Training Institute (SIET 1974), now National Institute of
Small Industry Extension Training (NISIET), Hyderabad defined EDP as “an attempt to
develop a person as entrepreneur through structural training.
The main purpose of such entrepreneurship development programme is to widen the base of
entrepreneurship by development achievement motivation and entrepreneurial skills among
the less privileged sections of the society.”
According to N. P. Singh (1985), “Entrepreneurship Development Programme is designed to
help an individual in strengthening his entrepreneurial motive and in acquiring skills and
capabilities necessary for playing his entrepreneurial role effectively. It is necessary to
promote this understanding of motives and their impact on entrepreneurial values and
behaviour for this purpose.” Now, we can easily define EDP as a planned effort to identify,
inculcate, develop, and polish the capabilities and skills as the prerequisites of a person to
become and behave as an entrepreneur.
Needfor EDPs:
That, entrepreneurs possess certain competencies or traits. These competencies or traits are
the underlying characteristics of the entrepreneurs which result in superior performance and
which distinguish successful entrepreneurs from the unsuccessful ones.
Then, the important question arises is: where do these traits come from? Or, whether these
traits are in born in the entrepreneurs or can be induced and developed? In other words,
whether the entrepreneurs are born or made? Behavioural scientists have tried to seek
answers to these questions.
A well-known behavioural scientist David C. McClelland (1961) at Harvard University made
an interesting investigation-cum-experiment into why certain societies displayed great
creative powers at particular periods of their history? What was the cause of these creative
bursts of energy? He found that ‘the need for achievement (n’ ach factor)’ was the answer to
this question. It was the need for achievement that motivates people to work hard. According
to him, money- making was incidental. It was only a measure of achievement, not its
motivation.
In order to answer the next question whether this need for achievement could be induced, he
conducted a five-year experimental study in Kakinada, i.e. one of the prosperous districts of
Andhra Pradesh in India in collaboration with Small Industries Extension and Training
Institute (SIET), Hyderabad.
This experiment is popularly known as ‘Kakinada Experiment’. Under this experiment,
young persons were selected and put through a three-month training programme and
motivated to see fresh goals.

11. One of the significant conclusions of the experiment was that the traditional beliefs did not
seem to inhibit an entrepreneur and that the suitable training can provide the necessary
motivation to the entrepreneurs (McClelland & Winter 1969). The achievement motivation
had a positive impact on the performance of entrepreneurs.
In fact, the ‘Kakinada Experiment’ could be treated as a precursor to the present day EDP
inputs on behavioural aspects. In a sense, ‘Kakinada Experiment’ is considered as the seed
for the Entrepreneurship Development Programmes (EDPs) in India.
The fact remains that it was the ‘Kakinada Experiment’ that made people appreciate the need
for and importance of the entrepreneurial training, now popularly known as ‘EDPs’, to induce
motivation and competence among the young prospective entrepreneurs.
Based on this, it was the Gujarat Industrial Investment Corporation (GIIC) which, for the first
time, started a three-month training programmes on entrepreneurship development.
Impressed by the results of GIIC’s this training programme, the Government of India
embarked, in 1971, on a massive programme on entrepreneurship development. Since then,
there is no looking back in this front. By now, there are some 686 all-India and State level
institutions engaged in conducting EDPs in hundreds imparting training to the candidates in
thousands.
Till now, 12 State Governments have established state-level Centre for Entrepreneurship
Development (CED) or Institute of Entrepreneurship Development (lED) to develop
entrepreneurship by conducting EDPs. Today, the EDP in India has proliferated to such a
magnitude that it has emerged as a national movement. It is worth mentioning that India
operates the oldest and largest programmes for entrepreneurship development in any
developing country.
The impact of India’s EDP movement is borne by the fact that the Indian model of
entrepreneurship development is being adopted by some of the developing countries of Asia
and Africa. Programmes similar to India’s EDPs are conducted in other countries also, for
example, ‘Junior Achievement Programme’ based on the principle of ‘catch them young’ in
USA and ‘Young Enterprises’ in the U. K.
Objectives of EDP:
The major objectives of the Entrepreneurship Development Programmes (EDPs) are to:
a. Develop and strengthen the entrepreneurial quality, i.e. motivation or need for
achievement.
b. Analyse environmental set up relating to small industry and small business.
c. Select the product.
d. Formulate proposal for the product.
e. Understand the process and procedure involved in setting up a small enterprise.
f. Know the sources of help and support available for starting a small scale industry.
g. Acquire the necessary managerial skills required to run a small-scale industry.
h. Know the pros and cons in becoming an entrepreneur.
i. Appreciate the needed entrepreneurial discipline.
j. Besides, some of the other important objectives of the EDPs are to:
k. Let the entrepreneur himself / herself set or reset objectives for his / her enterprise and
strive for their realization.
l. Prepare him / her to accept the uncertainty in running a business.

12. m. Enable him / her to take decisions.
n. Enable to communicate clearly and effectively.
o. Develop a broad vision about the business.
p. Make him subscribe to the industrial democracy.
q. Develop passion for integrity and honesty.
r. Make him learn compliance with law.
6 Inputs of Course Contents and Curriculum of EDPs
The course contents of an entrepreneurship development program are selected in line with
objectives of the EDPs. The EDP training programme is usually for six weeks’ duration.
It consists of the following six inputs:
1. General Introduction to Entrepreneurship:
First of all, the participants are exposed to a general knowledge of entrepreneurship such as
factors affecting small-scale industries, the role of entrepreneurs in economic development,
entrepreneurial behaviour, and the facilities available for establishing small-scale enterprises
2. Motivation Training:
The training inputs under this aim at inducing and developing the need for achievement
among the participants. This is, in fact, a crucial input of entrepreneurship training. Efforts
are made to inject confidence and positive attitude and behaviour among the participants
towards business.
It ultimately tries to make the participants start their own business enterprise after the
completion of the training programme. In order to further motivate the participants,
sometimes successful entrepreneurs are also invited to speak about their experiences in
setting up and running a business.
3. Management Skills:
Running a business, whether large or small requires the managerial skills. Since a small
entrepreneur cannot employ a management professionals /experts to manage his/her business,
he/she needs to be imparted basic and essential managerial skills in the different functional
areas of management like finance, marketing, human resource, and production.
Knowledge of managerial skills enables an entrepreneur to run his/her enterprise smoothly
and successfully. That is why the saying goes that “One man control is the best in the world
(of business) if the man is big enough to control (manage) everything.”
4. Support System and Procedure:
The participants also need to be exposed to the support available from different institutions
and agencies for setting up and running small-scale enterprises. This is followed by
acquainting them with procedure for approaching them, applying and obtaining support from
them.
5. Fundamentals of Project Feasibility Study:
Under this input, the participants are provided guidelines on the effective analysis of
feasibility or viability of the particular project relating to marketing, organization, technical,
financial, and social aspects of the project. Knowledge is also given how to prepare the
‘Project’ or ‘Feasibility Report’ for certain products.
6. Plant Visits:
In order to familiarize the participants with real life situations in small business, plant visits
are also arranged. Such trips help the participants know more about an entrepreneur’s

13. behaviour, personality, thoughts, and aspirations. These influence him / her to behave
accordingly to run his / her enterprise smoothly and successfully.
On the whole, the ultimate objective of entrepreneurship development programme is to make
the trainees prepared to start their own enterprises after the completion of the training
programme. This is the ultimate measure of success levels of the EDPs.
What are the phases of Entrepreneurship Development Programmes in India?
EDP is primarily designed to induce motivation and competence among young prospective
entrepreneurs. So the cause and curriculum of Entrepreneurship Development programme
will be so designed that it will induce motivation and competency. The course curriculum of
EDP should be designed to cover the following aspects:
 It will give general introduction to entrepreneurship.
 It will afford motivational training.
 It will increase managerial skill of the entrepreneur,
 It makes entrepreneur to have expert knowledge on various support systems and
procedure.
 It will give fundamental idea on project feasibility study.
 It will encourage plant visit to afford practical knowledge to entrepreneurs.
After deciding on course contents and curriculum on EDP, the next important task is to
decide various phases of EDP. There are three different phases of EDP like:
 Pre-training phase
 Training phase
 Follow-up phase
1. Pre-training phase:
Pre-training phase consists of all activities and preparation to launch training programme.
Pre-training phase of EDP consists of the following activities :
 Selection of entrepreneurs for the training protgramme.
 Arrangements of infrastructure are for the programme like selection of place of
training.
 Deciding guest faculty for the programme from education industry and banks.
 Taking necessary steps for inauguration of programme.
 Formation of selection committee to select trainees from the programme.
 Making provision with regard to publicity and campaigning for the programme.
2. Training Phase:
The primary objective of training programme is to develop motivation and skill or
competency amongst the potential entrepreneurs. Care should be taken to impart both
theoretical and practical knowledge to various trainees. The training phase of EDP will be so
designed that it will answer the following questions:
(a) Whether the attitude of the entrepreneur has been tuned towards the proposed project or
no.
(b) Whether the trainee has been motivated to accept entrepreneurship as a career.
(c) How the trainee behaves like an entrepreneur.
(d) Whether the trainee has sufficient knowledge on resources and technology or not.
(e) What kind of entrepreneurial traits he lacks and what steps should be taken to set it.

14. 3. Follow-up Phase:
Follow up phase of EDP has been termed as post-training phase. The ultimate objective is to
develop competent entrepreneurs.
So that they can start their project. Post-training phase is a review phase of training
programme. It consists of reviewing of work in the following manner:
 Review of pre-training work
 Review of actual training programme
 Review of post training programme so that cost effectiveness of the present
programme can be evaluated.
Importance of Entrepreneurship in Developing Country
The entrepreneur who is a business leader looks for ideas and puts them into effect in
fostering economic growth and development. Entrepreneurship is one of the most important
input in the economic development of a country.
The nature of a developing economy is quite different from a developed economy. The
developing economy can be an agricultural country moving towards the industrialization or it
may be the one where in the industry may be in its infancy lacking advance technology.
The modern era is an era of changes. The whole world is becoming a village due to the
industrial revolution and fast developing communication technology. The globalization of
industry and commerce is bringing a vast change in various aspects of life.
Economic development of a country is the outcome of purposeful human activity. The
modern era is an era of changes. The whole world is becoming a village due to the industrial
revolution and fast developing communication technology. The globalization of industry and
commerce is bringing a vast change in various aspects of life.
Economic development of a country is the outcome of purposeful human activity. Economic
development is a highly dynamic process characterized by the pattern of demand shifts, new
products are needed, appear for the production of goods within a country.
A developing country needs entrepreneurs who are competent to perceive new opportunities
and are willing to incur the necessary risk in exploiting them. A developing economy is
required to be brought out of the vicious circle of low income and poverty. Entrepreneur can
break this vicious circle. Entrepreneurs and helping government can change a developing
economy in developed economy.
Employment Generation
Entrepreneurs not only give employment to the entrepreneur but also a source of direct and
indirect employment for many people in a country. Unemployment is a chronic problem in
most of the developing and underdeveloped countries. Entrepreneurs play an effective role in
reducing the problem of unemployment in the country which in turn clears the path towards
economic development of the nation
Entrepreneurial development is looked at as a vehicle for employment generation through
promotion of small business. India, being far more developed and forward looking country
than some of the third world countries, can provide lead to entrepreneurial development
activities. However, India can benefit from the well- documented success experiences of
developed countries like USA, Japan and UK in the field of employment generation and
small business promotion.

15. Promotes Capital Formation
Entrepreneurs mobilize the idle funds which lead to capital formation. The funds which are
used by entrepreneurs is a mix of their own and borrowed. This leads to creation of wealth
which is very essential for development of an economy.
Small Business Plan Dynamism
Great dynamism is one of the qualities of the small and medium enterprises. This quality of
dynamism originates in the inherent nature of the small business. The structure of small and
medium enterprises is less complex than that of large enterprises and therefore facilitates
quicker and smoother communication and decision- making. This allows for the greater
flexibility and mobility of small business management. Also, small enterprises, more often
make it possible for owners, who have a stronger entrepreneurial spirit than employed
mangers, to undertake risk and challenges.
Balanced Economic Development
Small business promotion needs relatively low investment and therefore can be easily
undertaken in rural and semi-urban areas. This in turn creates additional employment in these
areas and prevents migration of people from rural to urban areas. Since majority of the people
are living in the rural areas, therefore, more of our development efforts should be directed
towards this sector. Small enterprises use local resources and are best suited to rural and
underdeveloped sector
The growth of industries and business in these areas lead to a large number of public benefits
like road transport, health, education, entertainment, etc… Setting up of more industries leads
to more development of backward regions and thereby promotes balanced regional
development.
Innovations in Enterprises
Business enterprises need to be innovative for survival and better performance. It is believed
that smaller firms have a relatively higher necessity and capability to innovate. The smaller
firms do not face the constraints imposed by large investment in existing technology. Thus
they are both free and compelled to innovate.
Entrepreneurship development is accelerating the pace of small firm’s growth in India. An
increased number of small firms are expected to result in more innovations and make the
Indian industry compete in the international market.
Better standards of living
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 commodes decreases the
consumers get the power to buy more goods for their satisfaction. In this way they can
increase the standard of living of the people.
Self-Reliance
Entrepreneurs are the corner stores of national self-reliance. They help to manufacture
indigenous substitutes to imported products which reduce the dependence on foreign
countries. There is also a possibility of exporting goods and services to earn foreign exchange
for the country. Hence, the import substitution and export promotion ensure economic
independence and the country becomes self-reliance.
Facilitates Overall Development:

16. Entrepreneurs act as catalytic agent for change which results in chain reaction. Once an
enterprise is established, the process of industrialization is set in motion. This unit will
generate demand for various types of units required by it and there will be so many other
units which require the output of this unit. This leads to overall development of an area due to
increase in demand and setting up of more and more units. In this way, the entrepreneurs
multiply their entrepreneurial activities, thus creating an environment of enthusiasm and
conveying an impetus for overall development of the area
(1) Entrepreneurial Development Institute of India : The entrepreneurship development
institute of India is an apex entrepreneurship institute promoted by industrial
development bank of India, Industrial credit and Investment Corporation of India,
Industrial Finance Corporation of India and state bank of India. The institute enjoys
acute support of government of Gujarat. The institute has been operating for the past
more than 15 years now. The institute undertakes entrepreneurship development
programmes to serve the following development objectives:
(i) Accelerated industrial development.
(ii) Industrial development of rural and less-developed areas.
(iii) Improving performance of small industries.
(iv) Diversifying sources of entrepreneurship.
(v) Enlarging the small and small medium enterprise sector.
NIESBUD is an apex organisation working under the administrative control of the Ministry
of Skill Development and Entrepreneurship, Government of India.
The major activities of the Institute include Training of Trainers, Management Development
Programmes, Entrepreneurship-cum-Skill Development Programmes, Entrepreneurship
Development Programmes and Cluster Intervention.
The Core Objectives of the Institute are as follows:
To standardize and systemize the processes of selection, training, support and sustenance
of potential and existing entrepreneurs.
To support and motivate institutions/organizations in carrying out training and other
entrepreneurship development related activities.
an apex national level resource institute for acelarating as well as enhancing
the process of entrepreneurship development, to measure the impact of the same within
different strata of the society.
provide vital information and support to trainers, promoters and entrepreneurs by
organizing research and documentation activities relevant to entrepreneurship and skill
development.
To create a holistic environment to train the trainers, promoters and consultants in diverse
areas of entrepreneurship and skill Development.
To offer consultancy nationally/internationally for promotion of entrepreneurship and
small business development at national and international level.
To provide national/international forums for interaction and exchange of ideas for policy
formulation and its refinement at various levels.

17. To share experience and expertise in entrepreneurship development across national
frontiers to create awareness on it at national level.
To interchange international experience and expertise in the field of entrepreneurship
development for mapping its development at international levels too.
The main functions of the Institute are as follows:
(i) Evolving effective training, strategy and methodology.
(ii) Formulating scientific selection procedure)
(iii) Standardizing model syllabus for training for various groups.
(iv) Developing training aids, manuals and other tools.
(v) Supporting 9ther agencies engaged in entrepreneurship development.
(vi) Conducting such programmes for promoters, trainers and entrepreneurs which are
commonly not undertaken by other agencies
(vii) Organizing all those activities that help develop entrepreneurial culture in the country.
Activities of NIESBUD
1. Assisting/supporting EDPs
2. Training for trainers/promoters‡
3. Creation & capacity building of EDP Institutions.
4. Small business focus‡ National/international forum for exchange of ideas &
expressions.‡
5. Developing entrepreneurial culture.‡
6. National entrepreneurship development board (NEDB)‡
7. Services to affiliate members.‡ Sustaining entrepreneurship
NABARD is an apex development bank in india The committee to review arrangements for
institutional credit for agriculture and rural development (CRAFICARD),set up by the RBI
under the chairmanship of Shri B. Sivaraman, conceived and recommended the estb. Of
act by the parliament & focussing to uplift rural
india by increasing the credit flow for elevation of agriculture and rural non-farm sector.
1. Completed its 25 years on 12 july 2007.
2. It has been accredited with “matters concerning policy,planning and operations in the
field of
3. credit for agriculture and other economic activities in rural areas in india”.
4. RBI sold its stake in NABARD to Govt. of india , which now holds 99% stake.

18. 5. NABARD is active in developing financial inclusion policy and is a member of the
Rural planning & credit cell(RPCC) of RBI and agriculture refinance & development
corporation(ARDC).
6. It is one of the priemer agency to provide credit in rural areas .NABARD is India’s
specialised bank.
International associates of NABARD ranges from world bank affliated organisations to
global developmental agencies working in the field of agriculture and rural development.
These organisations help NABARD by advising and giving monetary aid for the upliftment
of the people in rural areas and optimising the agricultural process.
NABARD is an apex institution in the country .
stry , and
other rural industries.
development.
It has been given a certain rules as follows :
 Serves as an apex financing agency for the institutions providing investment and
production credit for promoting the various developmental activites in rural areas.
 Takes measures towards institution building for the institution building for improving
absorptive capacity of the credit delivery system ,including monitoring, training of
personnel etc.
 co-ordinates the rural financing activites of all institutions engaged in developmental
work at the field level and maintains liason with govt. of india , State govt. , RBI and
other national level institutionsconcerned with policy formulation.
 Undertakes monitoring and evaluation of projects financed by it .
 NABARD refinances the financial institutions which finances the rural sector.
 Xavier Institute of Social Services, Ranchi : Xavier Institute of Social Services,
Ranchi has been training rural entrepreneurs since 1974. Xavier Institute provides
the training and assists the trainees in drafting project proposals and obtaining the
required finance. It offers a six months programme to tribal with minimum literacy
and numeracy skills. The programme consists of:
1. Identification and selection of candidates.

19. 2. Motivation Training.
3. Managerial Training.
4. Placement and training for practical skills.
5. Market survey and preparation of project report.
6. Financial assistance.
7. Follow up and Counseling.
 Madhya Pradesh Consultancy Organization Ltd. : This is a technical management
consultancy Organization. It was promoted by all-India financial institutions and state
Corporations. It undertakes assignments for project planning, detailed engineering,
market surveys, management surveys and entrepreneurship development programmes.
The programme consists of the following stages:
1. Identification of industrial opportunities in the target area.
2. Advertising and promoting the programmes to attract applicants.
3. Selection of the participants.
4. Training, using lectures and practical instruction in the identified project.
5. Follow up with industrial development and financial institutions.
 Calcutta "Y" Self Employment Centre : This Centre was organized as registered
society by a number of prominent industrialists, businessman, bankers, professionals
and social workers. It was setup in response to rapidly increasing unemployment and
social unrest in Calcutta during the early 1970s. It began as a vocational programme
to provide self employment for educated youths. It has developed innovative
approaches to help people set up their own business. The main programme are
explained as follows:
1. Training in producing enterprise.
2. Assistance in drawing up a business plan.
3. Assistance in securing bank loans.
4. Arranging initial business contacts for their service and production.
Entrepreneurship Program in USA
The United States Government supports a wide range of entrepreneurship programs for
entrepreneurs in the United States and around the world. Among the many programs are:
· The Global Entrepreneurship Program (GEP) – The Department of State’s GEP
works to build direct partnerships that strengthen the overall entrepreneurial eco-system in
countries around the world, ensuring that aspiring and current entrepreneurs, especially those
who are looking to scale, are given an equal opportunity to do so. GEP uses a bottom-up

20. approach, leveraging the help of innovators and entrepreneurs to be advocates for free and
open markets where they live and work. Local entrepreneurs, particularly in emerging
markets, are often best positioned to generate political will to address policies that hinder new
businesses and job growth.
· The Global Entrepreneurship Week (GEW), each year in late November in
partnership with the Kaufmann Foundation, more than 250 U.S. embassies and consulates
worldwide promote this weeklong celebration of the innovators and job creators who launch
startups that bring ideas to life, drive economic growth, and expand human welfare. Since
2008, when the first GEW comprised events in 77 countries, GEW has expanded to more
than 150 countries, engaging roughly 25 million participants through 115,000 activities.
Entreprenuership in UK
An entrepreneur starts a new enterprise and assumes full responsibility to receive profit from
the venture. In spite of the downfall in economy, some businesses showed signs of growth in
the latter half of the year 2009. The tourism industry in London has actually managed to
survive better in this recession. Online information, guidance and services are available for
entrepreneurship in UK. Avail advice on all key aspects that include market research, finance,
legal, marketing and e-commerce.
The British Government aims to offer support for developing entrepreneurship in UK. They
assist entrepreneurs in UK to
 Start and expand in London
 Promote international trade
 Support innovation, research and development
 Offer aid to overcome financial and economic challenges
 Provide training programmes to enhance performance
The government has also introduced financial measures to aid entrepreneurship in UK during
recession to raise funds.
 Loans up to £50,000 are available under the scheme Small Loans for Businesses’. The
entrepreneurs in UK must submit a viable and comprehensive business plan.
 The scheme Enterprise Finance Guarantee’ offers government guarantee to lenders. If
you have a strong business plan but the bank has denied the loan due to lack of
collateral, then, this scheme is a safe option.
 For loans and equity finance, utilize the scheme Finance for Business’. The British
Government must be convinced with the business plan submitted by the entrepreneurs
in UK.
 Projects that support job creation by entrepreneurs in UK can avail Grant for Business
Development (GBI). It is mandatory that these projects are efficient, modern and can
expand. Capital is available for acquisition of key assets. The Grant amount will
depend on the size, location and quality of the project.
 To promote entrepreneurship in UK for innovative products, The Grant for Research
and Development has made available special grants.
Access To Finance For Entrepreneurship In UK

21. Many entrepreneurs in UK find it difficult to raise funds during the recession. Accessing
credit is either at higher credit rates, overdrafts or after meeting many regulations.
Entrepreneurs in UK are seeking alternative sources for raising capital. The British
Government has designed many specific schemes to aid small and medium businesses. They
have launched £75 million as Capital Enterprise Fund, of which the government has funded
£50 million. Business Link is a free business online portal to offer support services for all
businesses. Organizations that also offer advice and financial assistance are:
 The East London Small Business Centre (ELSBC) has started a Gateway to Finance’
programme for helping small business entrepreneurs in UK, especially East London to
raise funds. They help existing entrepreneurs in UK across all 33 London Boroughs to
start, grow or expand.
 Barking and Dagenham Small Business Centre (BDSBC) is a local agency to support
businesses of the respective borough. They have the required knowledge, skills and
expertise to offer free impartial and confidential advice. Following services are
provided free of cost to aid entrepreneurship in UK:
o 4 day courses on starting a business
o Counselling on business ideas, business plan and marketing strategies on an
individual basis
o Raising finance for start ups, or for expanding
o Guidance on accounting and legal aspects of business
 Croydon Economic Development Company focuses on the business community of
that borough in South London with the help of funding from the government. They
have formed cluster groups and tailored workshops to encourage partnerships
especially in the areas of childcare, hair & beauty, music, food and designers.
 Enterprise Enfield is a non-profit making business advisory organization to help new
and established entrepreneurship in UK especially, North London. The London
Development Agency and Learning & Skills Council have funded this organization.
They offer expert business advice, organize seminars and business networking,
provide access to low cost premises and offer awards.
Government Support For Entrepreneurship In UK
The British Government provides not just financial assistance but also other support
networks for the betterment of entrepreneurship in UK. They assist in technical
matters, manufacturing processes, imports and exports, marketing strategies,
innovation, design implementation and guidance in legal matters.
mentors offer coaching to entrepreneurs in UK to improvise their business.
There are special programmes that are structures to assist businesses in achieving an
accelerated growth. These coaching programmes include performance benchmarking, market
research, innovation, investment and training skills for workforce.
-minded people through business collaboration
networks. Similarly there are networks for innovation that guide entrepreneurs in UK. These
networks help collaborate supply chain management, market exploitation and sharing of
technology and processes for a mutual benefit.
Manufacturing Advisory Service (MAS) and Designing Demand are two councils that offer

22. expert knowledge on manufacturing advice and performance enhancement for a specific
project.
the right working environment. Research and development centres, laboratories, commercial
clusters and social regeneration projects are managed property services offered to targeted
entrepreneurs in UK to diversify. These centres can share technical, scientific and research
resources.
f large group of knowledge-based businesses is formed. The UK Science Park
Association (UKSPA) encourages innovation led entrepreneurship in UK by providing an
environment by linking with research centres and universities.
entrepreneurship in UK, they identify and develop skills required by businesses. Thus, they
improve productivity, morale, motivation and profits.
offers guidance to businesses. They also maximize foreign direct investment. To encourage
exports, Export Credits Guarantee Department (ECGD) offers insurance policy relating to
exports. There are special grants for participating in overseas exhibitions.
socially beneficial. The Low Carbon Energy Demonstration offers finance to develop
technologies that promote the use of less carbon.
UK to grow and develop. They assist in technologies, innovation and community
development.
Entrepreneurship in Japan
The popular opinion of entrepreneurship in Japan is that it is hard, getting funding and
finding venture capital seems to be have been hard in the past and incubators seem rare.
When discussing the problem it is generally put into three categories; political, cultural and
the Japanese perception on entrepreneurship. What I’ve found when reading is however that
the future seems extremely bright. Japan has had enormous success in the past taking western
concepts to adapt and improve them.
Cultural problems
To understand why the Japanese entrepreneurial market looks like it does I think you need to
understand the Japanese working-culture. Until very recently, life-time employment was the
norm at Japanese companies, meaning that once you got out of school and started working
you kept that job until you retired[1]. This system has been given up more and more during
the recession of the 90’s and have been moving more toward a more dynamic workforce.
Japanese companies have a strictly seniority-based wage system, so entry-level workers will
all make the same amount of money regardless of competence or productivity. It is argued[1]
that this will prevent Japanese people from taking the risks of entrepreneurship when they can
get a good salary and guaranteed increase in pay with time.

23. Political outlook
Japan has a history of most kinds of startups, from starting to-be industry giants in the 50’s to
the equivalent of Microsoft[2] in the 70’s. Everyone knows that after World War II, Japan
had tremendous success starting up companies that liberally borrowed technology and
concepts from the Unites States and made them even more successful. Until the 90’s this
worked perfectly, but it seems as though they caught up at that point and was forced to start
creating by themselves; something they were not set up to do.
During the 90’s government regulations were definitely stifling entrepreneurial activity,
but they quickly realized that to be able to get out of the recession and continue their
economic growth they needed entrepreneurs in all fields. “The government is beginning
to recognize their Investment and exits
“Although the country is the world’s second-largest economy, it has generated only $3 billion
a year, on average, in venture funding, for about 3,000 investment deals annually. […] In the
U.S., by comparison, startups get funding to the tune of $30 billion a year over deal volume
of about 4,000 investments. Silicon Valley’s venture funds and their compatriots enjoy
returns three to four times higher than Japanese funds.”[6] The lack of investment is seen as a
problem, but according to Michael Korver[7] there is money to be spent and the interest to
spend money is getting larger.
Angel investing is really starting to take hold[8], but Japanese companies for some reason do
not produce as high return on investment as western companies, something that’s been
holding the investment market back. Other problems that almost fall into the political
category are problems such as going public with your company. “Onerous listing criteria also
make it extremely difficult for young companies to go p
Japan is an extremely entrepreneurial society, with a long history of individuals creating
businesses and striking out on their own.
Despite this history, the phenomenon of ‘Startup entrepreneurship’ is not yet the engine of
economic growth and innovation that Japan needs; With global change and pace of
innovation ever accelerating, Japan must evolve its to meet the challenges of the new global
technology marketplace. While Startups are becoming more common, entrepreneurship in
Japan is most commonly found in the form of local storefront business or ‘hako mono’ (lit.
‘box goods’) companies, selling physical products via traditional distribution networks.
While these businesses are an important part of the business landscape, they are but a part of
the picture for entrepreneurship. By many measures, startups are the next big thing for
business in Japan. At the center of this change is an energetic and growing population of
technology executives, students, and entrepreneurs that are helping Japan to catch up with the
likes of Silicon Valley and Tel Aviv in the creation of innovative new technology and
service-based companies.
When we talk about ‘Startup’ entrepreneurship, we are describing the Silicon Valley
phenomenon of a new kind of business offering – developing as-yet-unknown products and
services. When creating business models with so many unknowns contained within, we begin
to define the process as true ‘Innovation.’ As desirable as innovation is, it is extremely hard
for it to occur at scale in any economy. Innovation is an emergent property that arises only
out of the wider social and economic environment -- and only when the right combination of
resources and behaviors are present.

24. Researchers and economists have spent a great deal of time figuring out what lies beneath the
world’s truly prosperous innovation ecosystems (with startups being one of the most obvious
fruits on the tree when innovation works.) Looking at Japan at present what seems to be
happening? A look at the details shows us how the ingredients of Innovation are coming
together in Japan today: chief among these are availability of talent and capital, and the
prevailing social norms.
Japan’s Challenges and Opportunities:
Capital: Is the money to start a company available? Money for startups comes in three
primary flavors:
 Family/Personal Money – Where many startups get going is with savings on hand.
Personal financing is just as easy or hard in Japan as in other first-world economies
with one exception: Japanese families are still generally dubious skepticism for
startup risk-taking.
 Seed Funding–Seed funding is more widely available in 2015 than it has ever been,
but it is still a challenge. Such funding is concentrated in Tokyo, so startups
attempting to get something going in other parts of Japan will likely need to relocate
themselves to the capital to get noticed. Even in Tokyo, there are relatively few
activist investors or angels to work with, so bandwidth and availability are
constrained. This does match, however to a relatively small number of startups
competing for each available angel-funded dollar. Across a series of interviews over
the last month, the answer to the question “Can a qualified group of individuals with a
good idea get seed capital in Japan?” the answer varies from ‘absolutely’ to a
qualified yes.
 Venture Capital – There is also a limited though growing number of sophisticated
investors in the venture space. Such firms do exist and are looking for opportunities to
invest in formal funding rounds for startups that have emerged from concept to
delivery with scalable business models. While the number of VCs and dollars are
increasing, there are still relatively few funds at work.
Talent – This is an area where Japan excels – as there is a lot of talent available in the
functional areas of engineering, design, marketing, etc. That being said, at present there are
relatively few individuals with extensive startup entrepreneur experience (the chicken and
egg dilemma) so startups are highly dependent upon mentors and partners for guidance.
Social: This is the most important and challenging of the ingredients for startup
entrepreneurship, and where most would-be startup ecosystems fail to reach the tipping point
and become true generators of large-scale innovative change. The social aspect of innovation
ecosystems deals with people’s assumptions about how to interact with each other and with
new ideas – critical to startup success. The social aspects of Startups are the most critical
remaining element in the Startup picture for Japan, a subject which we will discuss this in
more detail in the near future.
The Startup Phenomenon in Japan has come a long way, and still has a long way to go to
begin to provide the economic engine that innovation brings to other more startup-tolerant
societies. Most of that journey will come in the form of greater tolerance and understanding
of the social norms that allow individuals to take the risks required to truly innovate new

25. products and services. I am looking forward to exploring that area in more detail in my next
article on Japan.