The Concept of Socio-Economic Growth
The socio-economic dimension of an economy indicates the demographic features which affect the economy directly or indirectly. It is composed of the quantity as well as other characteristics of the people. The market for a business is determined by the number of people as well as their purchasing pattern and capacity. The size, distribution, density, growth, age and gender mix, urbanization, and migration of population are some of the important socio-economic factors that affect entrepreneurial decisions. Socio-economic growth creates a number of entrepreneurial opportunities.
Factors Affecting Entrepreneurial Growth
There are several factors that affect entrepreneurial growth. Some of the important factors are economic, social, political, psychological, legal, technological, and global factors. These factors affect entrepreneurial growth positively as well as negatively. In other words, they are the sources of opportunities and threats for the development of entrepreneurship.
The factors affecting entrepreneurial growth may be discussed in a number of ways as mentioned below.
1. Economic Factors
There are some economic factors that affect entrepreneurial growth, They are discussed below in detail.
Capital is the most important prerequisite for the establishment and operation of any enterprise. It is needed to acquire other factors of production such. as land, labour, technology, raw materials and other business infrastructures. With an increase in capital, there is a larger possibility of enhanced productivity which. eventually boosts profit. An increase in profit further leads to capital formation. The. The least developed country like Nepal lacks suffi9ent capital. It has hindered entrepreneurship development in Nepal.
Labour is another important factor in production. An abundance of labour with physical and mental ability provides an opportunity for the growth of entrepreneurship. The soft aspects of labour as motivation, commitment, and engagement are more important than the hard aspects such as skill and qualification.
c. Raw Material
The raw material is the most important input in the production process. Easy availability of raw material promotes industrial development. It directly affects the opportunity conditions of a business. Hence, raw material is one of the important factors of entrepreneurial growth.
Entrepreneurship involves the exploitation of opportunities from market conditions. The size and growth of the market have a profound impact on entrepreneurial growth. Rapid growth in the market leads to entrepreneurial growth. Germany and Japan are examples of this. The latest cases are India and China.
2. Social Factors
The social factors that affect entrepreneurial growth are as follows.
a. Legitimacy of Entrepreneurship
The relevance of the system of social norms and value has a remarkable impact on the growth of entrepreneurship. Such a system is called the legitimacy of entrepreneurship. It is the degree of approval or disapproval granted to entrepreneurship by a society. It determines the social climate for the growth and development of entrepreneurship. If the degree of legitimacy is high, the growth of entrepreneurship is facilitated.
b. Social Mobility
Social mobility is the movement of individuals, families, households, or other categories of people within or between social groups in a society. A high degree of social mobility is regarded as favourable for the growth of entrepreneurship. However, social mobility individually may not affect entrepreneurial growth; its impact is largely determined by other social factors.
Some scholars view that social marginality is a factor to promote entrepreneurship. Marginalized social status puts psychological pressure to be engaged in entrepreneurship to uplift standards in society. The marginal groups have a positive attitude towards entrepreneurship. The group normally has a high degree of solidarity and cohesion. All these promote entrepreneurship.
Security is a significant factor for entrepreneurial development. If there is a high degree of security, people are inclined towards entrepreneurship for opportunities.
3. Psychological Factors
There are some psychological factors that determine the growth of entrepreneurship. Some of them are:
a. Need Achievement
According to the need achievement theory of McClelland, personal characteristics of high need achievement are the major determinants of entrepreneurial growth. On the other hand, a low level of need achievement hinders entrepreneurial growth.
b. Withdrawal of Status Respect
At a certain point in time, social groups may experience a radical loss of status. This may encourage them to involve in entrepreneurship by building creativity. This very fact may lead to technological and other progress through entrepreneurial roles.
4. Political Factors
Policies of the government relating to various economic aspects like prices, availability of capital, labour and other inputs, demand structure, taxation, income distribution, etc. affect the growth of entrepreneurship. Supportive government activities such as incentives and subsidies contribute towards entrepreneurial growth. On contrary, licensing, regulations, favouritism, government monopolies, etc hinder the growth of business enterprises. A stable political system and government affect entrepreneurial activities in a positive manner.