The topic, itself is a rhetoric! Every country needs entrepreneurship if it aspires for progress and prosperity. And so does India.
Let us take a quick look at the three major reasons why we need entrepreneurship:
FACT: “India needs to create 12 million jobs every year for 10 years straight in order to address the menace of unemployment.” That’s right…12 million jobs a year, which means a million jobs a month. So, where are these jobs going to come from?
If you think large organisations are going to step up to play the messiah, you’re dead wrong! Why? Because, when it comes to job creation, young small firms are better at creating jobs as compared to big existing firms. This was also asserted by Matthews & Brueggemann (2015) in their book, Innovation and Entrepreneurship: A Competency Framework, “for economic grown and employment, small business firms are generally better positioned than large business firms, young small firms are better than small existing firms, and young high-tech firms are better overall, especially in the accelerated scalable growth segment…Small businesses’ job creation has significantly outpaced that of large businesses.”
This, in fact, can also be gathered from statistics. According to the United States Small Business Administration, since 1990, small businesses added 8 million jobs to the economy and large businesses have eliminated 4 million jobs. Hence, as we can see, large businesses are not the answer to India’s large-scale unemployment. This was also reiterated by Arvind Panagariya, the vice-president of the NITI Agog, who recently said that Indian companies do not invest in industries which have the potential to employ a lot of people or what economists refer to as labour-intensive sectors. [Note: In case you’re wondering why it happens…well, it’s because of India’s restrictive labour laws. Since labour comes in the concurrent list (i.e. Both central and state governments can make laws on it), we have reached a situation where there are in total about 200 labour laws.]
Wealth Creation & Poverty Reduction
It was Ronald Reagan, the 40th US President, who said, ‘Entrepreneurs and their small enterprises are responsible for almost all the economic growth in the United States.’ It is indeed a profound statement…and oh, so true! When an economy is doing well, you desire entrepreneurship to keep organisations on their toes. And when an economy is doing badly, you desperately need entrepreneurship to keep the economy from plummeting in a downward spiral.
Let me explain this simply: When an economy is doing badly, a new firm can come in with a brand new product/service offering. This can, in turn, create a demand for the new market offering, making consumers willing to spend. As consumer expenditure grows, creating further demand, it leads to further job creation (in order to meed the increased demand). As more people join the work force, their disposable income increases, which leads to a further rise in consumption, creating further demand and further job creation. This cycle serves a dual purpose: wealth creation and poverty reduction.
Innovation through R & D
The biggest contribution of entrepreneurship is through the infusion of ‘fresh blood’; i.e. when new firms enter markets, they challenge organisational complacency. Hence, without entrepreneurship, there is a monopoly-like situation, which is never healthy for R&D (which is a prerequisite for innovation and growth). As firms become secure in their positions, they seldom feel a need/desire to invest in research. This can spell trouble for a developing economy like India, which cannot afford organisational inertia.
According to Michael Porter, the famous Harvard professor, “innovation is the central issue in economic prosperity”. That is, “research has shown that innovation accounts for a large fraction of growth in national productivity, and the knowledge gained by one firm frequently spills over to others.”
Hence, innovation does not simply mean better products at better prices (which is only a small-term benefit), it actually means an increased knowledge base, which eventually leads to knowledge-sharing, benefiting one and all. Therefore, entrepreneurship is key to maintaining economic competitiveness for achieving long-term success.
In fact, emphasising its importance, Union Finance Minister Arun Jaitley said: “The prevailing global economic situation made it very hard for anyone to predict the emerging challenges would be.” Hence, entrepreneurship is key to handling the economic unknowns.
Entrepreneurship is a great way to control your life. We all know how stressful it has become (a) to find a job and (b) to keep the job. [Truth be told, corporates today have literally turned into blood-sucking vampires!] If you think I am being harsh (to corporates that is), ask the young IT professional, who works (and is expected to work) 14 hours a day…And it doesn’t stop at that…In fact, when you ask your manager for leave and your manager shoots you a dirty look, it actually makes you wonder – Did I ask him for leave or did I ask him for his kidney??!!?? In such a scenario, it is important to take control of your life. And the best way to do that is through entrepreneurship. Hence, don’t be a job seeker, be a job creator! And who knows, you can be the next Steve Jobs!