The role of entrepreneur varies from economy to economy, country to country, varies upon its material resources, industrial climate and more importantly, the responsiveness of the political system to the growth of entrepreneurs. But it is acceptable fact that entrepreneur plays a significant role in the economic development of a country. Economic development depends upon entrepreneurial and industrial development. The entrepreneurs in a country not only launches a venture, but also contributes to the objectives of employment creation, output growth, technologies upgradation, improvement in the quality of production, export promotion import substitution and supply of goods at a reasonable price to the customer. Thus, they are key to the creation of opportunities and enterprises. The role of entrepreneurs in the economic development is being described here:
ROLE OF ENTREPRENEURS IN ECONOMIC DEVELOPMENT
(1) Employment Generation – Entrepreneur plays a significant role in generation of employment opportunities. He helps in generating employment directly and indirectly. He becomes self-employed and self-sufficient and leads of honourable life. They do not depend on government job or private job. They play a key role in generation of employment opportunities by establishing micro, small-scale enterprises and service centers, establishing industries in rural and backward areas, utilising the surplus labour, providing in training and fostering more small/tiny industries.
As we are well aware of the employment particularly in educated segment is major problem of the nation. When government creates job in various department only a small number of persons get employment and that too for a specific time period or till they retire and the vacancies re-emerge. But if some people become entrepreneur, they not only create jobs for themselves but also provide employment to many more. With the passage of time these enterprises grow and provide direct and indirect employment to many more. Thus, entrepreneur plays a significant role in economy through employment generation.
(2) Formation of Capital – Entrepreneur plays an important role in the formation of capital in the economy. His efforts to mobilise the capital result in motivating the investors to direct their idle savings in the industrial securities. Investment of public savings in industry results in productive utilisation of national resources. Robert Rustand has rightly said that entrepreneur is the creator of wealth. It is in this sense that entrepreneur generates the capital at a rapid rate and capital formation which is vital for the industrial development.
(3) Balanced Regional Development – Entrepreneurs in the public and private sectors help to remove regional disparities by setting up industries in the backward areas. It is because the government extends various concessions and subsidies to the entrepreneurs who take initiative to set up industries in the underdeveloped regions. The growth of industry and business leads to a large number of public benefits like road transport, health, education, entertainment, etc. A rapid development of entrepreneurship ensures a balanced regional development.
(4) Increase in per-capita Income – National income consists of goods and services produced in the country and those exported. Entrepreneurs have the skills of locating and identifying the opportunities to establish their own enterprises. Then possess the capabilities to covert the idle resources like land, labour and capital into goods and services. This capability helps the nation in form of increased net national product and per capital income in the country.
(5) Improvement in standard of Living – The initiative taken by entrepreneur to set up industries helps in removing scarcity of industrial commodities. New products, varied products and qualitative products are manufactured according to the requirement of different segments, area of the society. Further large scale production leads to lower cost and the purchasing power of the consumer also increases.
(6) Innovations in enterprises – Business enterprises need to be innovative for their survival and better performance. The innovative entrepreneur introduces new product, new combinations of means of production, new services. This inter-alia adds to rapid economic growth, rapid industrialisation, generation of employment, strides in trade, profit and prosperity. It is also believed that smaller firms have relatively higher necessity and capability to innovate. The various entrepreneur development programmes are aimed at accelerating the pace of small firms, growth in India. So, the innovative entrepreneur contributes to the growth to society in many ways.
(7) Dispersal of Economic power – The modern world is dominated by economic power. Economic power is the natural outcome of industrial and business activities. Industrial development may lead to concentration of economic power in a few hands which may result in increase in monopolies. This concentration of economic power creates so many evils in the business world. The increasing number of entrepreneurs helps in dispersal of economic power into the hands of many efficient managers of new enterprises. So, the setting up of a large number of enterprises helps in removing the evil of concentration of economic power.
(8) Optimum Utilisation of resources – Entrepreneurs help in the optimum utilisation of natural resources including land, labour and capital available in the country. This leads to increase in the production and productivity of the country. This in totality leads to increase in the rate of economic growth.
(9) Economic Independence – Entrepreneurs are essential for national self reliance, this means that entrepreneurs are very much required for national self-reliance. Entrepreneurs help to manufacture indigenous substitutes to imported products which reduce the dependence on foreign countries. They create the possibility of export of goods and services which in turn generate foreign exchange for the country. Hence import substitution and export promotion ensure economic independence of the country and help the country to become self reliant.
(10) Involvement of Youth in Productive activities – Many problems associated with youth unrest and social tensions are rightly considered to be due to youth not being engaged in productive activities. Every country is required to direct the energy of the youth with entrepreneurial trait to the self-employment career. Government is trying to create such environment by providing lot of schemes in country to attract and motivate the youth for establishing their own venture. This is helping the country in defusing social tension and unrest among the youth.
(11) Social Stability – Entrepreneur plays a crucial role in bringing about social stability. In each and every country, entrepreneurs are considered as a valuable human resources. The responsibility of social stability lies on his shoulders. He does so by so many ways like absorption of workforce in industries, widening self awareness, deeping self-confidence, empowering women through enterprises, elimination of poverty through enterprises, promotion of artists, handicrafts, etc.
(12) Local Demand – The role of entrepreneur is quite significant in augmenting local demand. Most of new entrepreneurs focus on the production of items which are demanded locally and can be manufactured through indigenous technology, locally available skill, resources and experiences. In order to expand the local demand, small-scale entrepreneurs in India are striving hard to expand at a faster rate than ever-increasing large scale sectors. Thus, the role of entrepreneurs is of fundamental importance to a locality for augmenting local demand.
(13) Enriching Life Styles – During the last few years, some new areas have emerged as a new business opportunity in the economy and entrepreneurs are working on it. They are playing an important role in the field of media-paper, television, radio, entertainment, tourism, catering, courier, transport, communication, education and health care, etc. These activities are helping the economy in many ways like enriching lifestyles, raising awareness, improving health, etc. Further social entrepreneurs are playing a unique role in providing social-services in the community.
Thus, entrepreneurs are key to creation of new enterprises that energise the economy and rejuvenate the established enterprises that make the economic structure. He can be set to the central figure in the process of development.