ENTREPRENEURIAL ACTIVITIES : A FACTOR IN ECONOMIC DEVELOPMENT

Adesoga Adefulu

The engine room for the development of any Economy is Entrepreneurial activities or

opportunities in the form of self-employment, creation of family business, small and

medium scale enterprises.

This paper examines the potent place of entrepreneurial activities as a factor in economic

development of a nation. It holds that the birth and development of new businesses which

is the central point of entrepreneurial activities presents employment declines and equally

leads to economic growth. It also argues that there is a circular relationship between

entrepreneurial activities and economic development. In effect, entrepreneurial activities

creates economic development and in the same breath, economic development creates

entrepreneurial activities. The contributions of small and medium enterprises were

discussed to buttress the significant position of entrepreneurial activities in economic

development.

INTRODUCTION

Pursuing an entrepreneurial opportunity in the form of self-employment, creation of a

family Business or a New Venture is increasingly becoming popular and widely

embraced. In both developed and developing nations, small and medium scale enterprises

are widely encouraged because of its causal role in economic development.

The birth and development of new businesses which is the case of entrepreneurial

activity are widely recognized as a critical aspect of market economies. Firm births are

seen as a major source of new jobs. New firms therefore may have a critical and causal

role in economic development.

METHODOLOGY

This paper is divided into seven parts including this introduction. Part two discusses the

Concept of Entrepreneurship; Part three identifies the Cannons of a Successful

Entrepreneur; Part four examines the Theories of Entrepreneurship; Part five dwells on the

Nature and Scope of Development; Part six looks at the Relationship between

Entrepreneurship Activities and Economic Development with special emphasis on the

contribution of small and medium scale enterprises and the Nigerian Economic

development while the paper is concluded in Part seven.

THE CONCEPT OF ENTREPRENEURSHIP

Entreprerieurship is the process of combining factors of production i.e. land,, labour and

capital to produce goods and services. Also, a dynamic process of creating incremental

wealth. This wealth is created by individuals who assume major risks in terms of equity, time

or career commitment of providing value for some products or services. The product or

service may or may not be new or unique but value must somehow be infused by the

Entrepreneur by securing and allocating the necessary skills or resources.

Haggens (1958) defines Entrepreneurship as function of seeking investment, production

opportunity, organizing an enterprise to undertake new production process, raising capital,

hiring labour, arranging resources and introducing new organization.

In the past, economists regarded entrepreneurship as a factor of production along with

land, labour and capital. But nowadays, treating entrepreneurship as a factor of production

has fallen out of popular usage. This is because entrepreneurship cannot be measured like the

usual factors of production Land, Labour and Capital. Moreover, entrepreneurship is

believed to be available in plentiful supply. This, like air, is not an economic good.

Entrepreneurship is very important because it's the source of new job created in an economy

and consequently the source of economic growth.

The word "entrepreneur" - originated from the French word "entreprendre", meaning to

"undertake". The word came to be used in 1885 in what was called political economy to

mean a contractor acting as intermediary between Labour and Capital.

Before attempting to define the concept of entrepreneur, it should be noted that we do not

have one indisputable definition of the term Entrepreneur and Entrepreneurship. An

Entrepreneur can be defined as a person with vision, original ideas, decision making, and

daring to try; one who decides how business has to be done, who co-ordinates and arranges

all the factors of production, one who has expertise in the field, who anticipates the market

trends, demand patterns and prices.

According to Jhingan (1975) An Entrepreneur is an economic leader, who possess the

ability to recognize opportunities for successful introduction of new commodities and

techniques and new sources of supply and to assemble the necessary plant and equipment,

management and labour-force and organize them a running concern. In other words, an

Entrepreneur has the ability to take the factors of production i.e. land, labour and capital and

use them to produce new goods and services.

An Entrepreneur could be a highly educated, trained and skilled person or

he may be an illiterate person, who possesses high business acumen. Entrepreneurs make

tough and risky decisions to produce new goods and services.

According to Sexton (2005), we are all entrepreneurs when we try new products or when

we find better ways to manage our households or our study time.

The Entrepreneur is an inventor who brings in new ideas, new commodities, new

processes and encourages his team in new activities. In the view of Schumpeter (1934),

Entrepreneur is basically an innovator who introduce new combinations, different forms of

innovations as given below:

Schumpeter's View of Entrepreneur Source: Badi & Badi (2005) Entrepreneurship

Classification of Enterpreneur

Innovative Entrepreneurs -They have initiative to start new ventures and find innovative

ways to start an enterprise. New products, new techniques and new markets are found out by

innovative entrepreneurs. The enterprising spirits of the innovative entrepreneurs open new

markets and develops enterprises.

Initiative Entrepreneurs - They copy or adopt suitable innovations made by the innovative

entrepreneurs. They contributed to the development of the economy in underdeveloped

countries.

Fabian Entrepreneur - They are shy and lazy by nature. They follow the set procedures,

customs, traditions and religions. They do not venture to take risks. They are second

generation entrepreneurs in a business family enterprise.

Drone Entrepreneur - They refuse to copy or use opportunities that come on their way. They

are conventional in their approach and stock to their set practices, products, production

methods and ideas.

CANNONS OF A SUCCESSFUL ENTREPRENEUR

The qualities of entrepreneur as an individual are essential to contributing to the success of

an enterprise.

McClelland (1961) stated the qualities of a successful entrepreneur as an individual with

technical competence, risk taking, high initiative, good judgement, intelligence to analyse

and solve problem areas, leadership qualities, confidence, positive attitude, high level of

energy, creativeness, honesty, integrity, emotional stability and fairness.

Some complementary qualities that are necessary for success of an enterprise are

- Longterm involvement: Commitment for longer period is necessary for

conceptualization, building and running an enterprise.

- Initiative: Entrepreneur must have initiative to use the available resources, draw plan of

action for all those who are involved in the enterprise.

- Goal setting: An entrepreneur must be able to set realistic but challenging goals.

- Moderate risk taking: A learner from his failures and risk taker at every stage of the

growth of an enterprise.

- High Energy level: Entrepreneur must be a man of high energy level as 1 managing

resources and running an enterprise calls for long hours of

work.

- Good Human Relations: Tactful and warm human relation is an important factor which

brings success to an entrepreneur.

- Mental Ability and Clarity in Objectives: Entrepreneur must be a man of high level of

intelligence, creative, positive thinking and decision maker with clear objectives in

mind.

REVIEW OF LITERATURE

Different eminent thinkers propounded distinctive dimensions of

entrepreneurship. Entrepreneurship involves creation of value through fusion of

capital, risk taking, technology and human talent. It's in fact, a multi - dimensional concept.

Innovation: Schumpeter (1934) defines entrepreneurship as "a creative activity". An

innovator who brings new products or services into the economy. Its essential to differentials

between invention and innovation.

Invention vs Innovation Source; Badi & Badi (2005) Entrepreneurship

Schumpeter has introduced a concept of innovation as key factor in entrepreneurship in

addition to assuming risks and organizing factors of production.

- A function of High Achievement: McClelland (1961) emphasizes achievement orientation

as the most important factor for entrepreneurs. Individuals with high achievement

orientation are not influenced by considerations of money or any other external

incentives. The individuals with high achievement orientation take calculated risks and

can make decisions where there are incomplete information.

NATURE AND SCOPE OF ECONOMIC DEVELOPMENT

Development was traditionally.seen as significant increase in the level of GNP/GDP and

the resultant per capital income. It's also seen as axountry's ability to expand its output faster

than the population growth rate. These perspectives were mostly economic and quantitative,

they provided average measures and there has never been an average citizen and did not

reckon much with poverty, income distribution, unemployment and other social indicators of

well-being (Muo, 2006).

Sears (1971) holds that in discussing development, three questions are critical; what has

been happening to poverty; what has been happening to unemployment and what has been

happening to inequality and goes on to argue that development could not have taken place

unless these three variables are declining.

Alkali (1977) sees development as a dynamic process that involves quantitative growth

and qualitative change and must ultimately lead to improved natural welfare of the people.

Rodney (1972) look at development from the individual level as implying increased skills

and capacity, greater freedom, creativity, self-discipline, responsibility and material well

being and agrees that this is tied to the state of the society as a whole.

Ojo (2003) Posits that in addition to improvement in standard of living that encompasses

material consumption, education, health and environmental protection, development involves

some equal opportunities, political freedom and civil liberties.

Sandstorm (2005) widens the concept of development to include an enabling environment

for people to enjoy long, healthy and creative lives, an inner dimension which incorporates

the moral and spiritual angles people becoming better people, and cultural liberty. He holds

that development is a peoples movement, not a government funded affair since development

issues relate to values and relationship which you cannot buy with government funding, and

that the ultimate goal of development is freeing the human being to become as good a human

being as humanly possible.

From the foregoing, the following are now generally accepted as the core values and

objectives of development

- Sustenance the ability to meet basic needs: food, shelter, health and protection.

- Self Esteem to be a person. Enhancing the sense of worth, and self-respect of

individuals.

- Freedom from Servitude to be able to choose freedom.

E N T R E P R E N E U R I A L A C T I V I T E S A N D E C O N O M I C DEVELOPMENT

There is no doubt that there is a circular relationship between the two concepts.

Entrepreneurship activities creates economic development and vice versa Economic

development creates entrepreneurial activities. Entrepreneurial activities generating new

business presents employment dealings and leads to economic growth/development. In the

same breath, when the economic powers of the people are enhanced, it equally leads to

various entrepreneurial activities.

In the light of the above therefore, the various contributions of small and medium scale

enterprise to the Nigerian Economic Developments are examined below. The SME are

believed to form the large chunk of entrepreneurial activities and therefore are considered as

the engine room for the development of any economy.

( 1 ) Creation of Employment Opportunities SME's play the critical

role of principal safety net for the bulk of the population in Nigeria and their labour

intensity structure accounts for their recognition as a job creation avenue. The SME's

employs the largest number of people in many developing countries.

- Capacity Building - They serve as bedrock who are expected to assist in further

entrepreneurship and skill developments.

- Servicing of Large Scale Industries The SME's provides intermediate or semi-processed

goods for the use of Large Scale firms. On this regard, they provide linkages between

local producers of raw materials and large industrial concerns.

- Technological Acquisition Rudimentary technology of small business offers veritable

outlets for technological advancement. For example, the moulds for the production of

plastic chairs are now produced in Nigeria.

- Even Development SME's can easily be located in any part of the country including

rural areas since they can survive on rudimentary industrial infrastructure. They

therefore serve as major facilitators for industrial spread and rural development, thus

helping in mitigating rural-urban drift.

- Poverty Alleviation Small businesses help to reduce poverty and inequality in the

economy because capital required to set up small business are easily affordable. On the

other hand, the nature of such industries allows the employment of both skilled and

unskilled labour inequality gaps.

- Improvement in Rural Infrastructure and living standard of the people - Whenever small

business are cited in rural areas, they help to improve rural infrastructure and the living

standards of the people. They help to attract electricity, roads, and telecommunication

facilities to the host communities and also create linkage business that can improve the

earning power of rural dwellers. This apparently impacts on the quality of life of local

dwellers.

- Provide Regular and Variety of Choices to the Customer The SME's engages in a

variety of goods and services, therefore, the customer can regularly make their choice,,

and the business will also enjoy competitive advantage over Large firms.

- Economic Growth and Industrialization The national economic development prospects

hinge on entrepreneurial energy of vibrant SME's as most big business concern grew

from small scale to become big icons, and as they grow, they protect the nation from the

geographical cost benefit permutations of a few multinationals who are ever prepared to

close up their business and relocate at the slightest provocation or appearance of

economic downturn.

- (10) Better Utilization of Indigenous Resources The considerable low capital outlay

required for setting up SME's enable them to - convert minimal resources into

productive ventures. They also provide veritable outlets for technological

advancement especially in businesses with rudimentary technological requirements.

CONCLUSION

From the foregoing analysis, it is logically clear that entrepreneurial activities whether small

or medium scale dimensions is a critical factor in economic development of any nation.

Small business industries are major catalyst to economic development as evidenced by the

rapid transformation of the Asian Tiger countries of Malaysia, Indonesia, Taiwan, and

Hongkong in the recent past. Developing countries having realized the importance of small

business for economic growth now look for ways and means to achieve this objective by

encouraging and assisting small business to grow. Indeed, the small business enterprise is

crucial to economic development vis-a-vis its contribution to the Gross Domestic Product

(GDP) as well as export.

The contribution of entrepreneurial activities to the nation's economic development is

paramount. In the same vein, where there is economic wellbeing of the people or

development, it also speaks volume that various shades of entrepreneurial activities will

develop when the environment is right in terms of basic infrastructural facilities, adequate

and harmonized tax regime, and where large number of the nation and society live above

poverty line, obviously there will be attraction to entrepreneurial activities. There is therefore

a circular relationship between entrepreneurial activities and economic development

following the various contributions of small and medium scale business and their umbrella

body NASSI Nigerian Asspciation of Small Scale Industries to the economic growth of

Nigeria.

In the final conclusion, (Ogunleye, 2000) submitted that Small Business should be seen as a

means for enhanced economic opportunity, innovation and growth.

REFERENCES

Alkali, R. A (1997) The World Bank and Nigeria: Cornucopia or Pandorax,

Kaduna, Baraka Press & Publishers Ltd.

Badi, R. V. et al (2005) Entrepreneurship, India, Vvinda Publication, Ltd.

vFapohunda, O. (2006) Newspaper Publication on Managing Life during and after work

through entrepreneurship development. The Guardian, Tuesday September 12,2006.

Hisrich, R. D et al (2005) Entrepreneurship, Mc-Graw Hill / Irwin.

Holt, D. H (1992) Entrepreneurship, Prentice Hall Inc., New Jersey, USA.

Muo, I. K (2006), Leadership Values and Development, presented at First College

Conference on Values, Virtues and Development Crises in Nigeria. Organised by

the College of Social and Management Sciences, Tai Solarin University of

Education, Ijebu-Ode 25-26 April, 2006.

Muo, I. K. (2006) Governance and Economic Development, presented at International

Conference on Corruption and the Challenge of Human Development, organized by

PPCSS, Babcock University, Ilisan 13-15 June.

Neye, R (2005) Seminar presentation on The Contribution of Small and Medium Scale

Enterprise to the Development of The Nigerian Economy, Department of Business

Administration and Marketing, School of Management & Social Sciences, Babcock

University, Ilisan.

Ogunleye, G. A (2000), Nigeria Deposit Insurance Corporation, Quarterly Volume 10, No 4,

December(;; 25 36).

Ojo, M. O. (2003) Globalization and Economic Development: International Experiences in

Globalization and African Economic Development, Proceedings of2003 Annual

Conference, Nigeria Economic Society.

Reynolds, P. E et al (1997) The Entrepreneurial Process Economic Growth, Men, Women

& Minorities, Greenwood Publishing Group Inc.

Rodney, W. (1972) How Europe Underdeveloped Africa, Dares-salaam, Tanzanian

Publishing House.

Sandstorm, H. M (2005) The Place of Human Development in Development Theory.

International Conference on Human Development, Convenant University, Ota 27 lh

June.

Schumpeter, J. A (1934) The Theory of Economic Development translated by R. Opie

(Cambridge, M. A. Harvard University Press)

Seers, D. etaI( 1 9 7 1 ) Development in a Divided World, London, Penguin