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. Practically, monopoly in a particular product in a market becomes more influential for entrepreneurship than a competitive market. The size and composition of market both influence entrepreneurship in their own ways. The fact remains that the potential of the market constitutes the major determinant of probable rewards from entrepreneurial function.
In the absence of raw materials, neither any enterprise can be established nor can an entrepreneur be emerged. The availability of raw materials is very important for establishing any industrial activity. In contrast, the disadvantage of high-cost labor can be modified by introduction of labor-saving innovations as was done in US. It can be dealt by utilizing labor-intensive methods like Japan. They are forced to make elaborate and costly, arrangements to recruit the necessary labor. Entrepreneurs, therefore, often find difficulty to secure sufficient labor. The considerations of economic and emotional security inhibit labor mobility. And, the potential advantages of low-cost labor are regulated by the deleterious effects of labour immobility. But entrepreneurship is encouraged if there is a mobile and flexible labor force. Most less developed countries are labor rich nations owing to a dense and even increasing population. The quality rather quantity of labor is another factor, which influences the emergence of entrepreneurship. This suggests that as capital supply increases, entrepreneurship also increases. This results in increase in profit, which ultimately goes to capital formation.
Our accumulated experience suggests that with an increase in capital investment, capital-output ratio also tends to increase. Capital is therefore, regarded as lubricant to the process of production. Availability of capital facilitates is required to purchase the land, machine and raw material for producing goods. The economic factors that affect the growth of entrepreneurship are the following:Ĭapital is one of the most important perquisites to establish an enterprise. Various environmental factors influencing the entrepreneurship are as follows:Įconomic environment exercises the most direct and immediate influence on entrepreneurship. It is also due to the whole set of socio-cultural and institutional environment prevailing in the less developed countries. Economists agree that the lack of entrepreneurs is not caused by economic conditions alone. Various researchers world over have identified the factors that contribute to the development of entrepreneurship. Factors impacting emergence of Entrepreneurship
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