Tracing the History of Entrepreneurship: Where Do We Go Now?

As support for the new-age, tech-savvy, risk-taking entrepreneurial individual rises, an economist assess why collaborative entrepreneurship models may be a better bet for the country

The idea of entrepreneurship has found different expressions in the policy debates in India.   During the heydays of central planning – from 1960 to 1990 – entrepreneurship development was an integral part of the promotional measures adopted to develop small and marginal enterprises (SMEs).  There was explicit recognition of SMEs as strategically important to the economy as their share in employment, exports and investment was substantial. Equally stressed was their ability to achieve balanced and equitable growth and reduction in poverty. Entrepreneurship was thought to be a critical attribute of SMEs, which could enable them to be ingenious and resilient even in the face of adversities. Importantly, it was assumed that entrepreneurship is a skill that can be inculcated in individuals through systematic training (‘entrepreneurs are created, not born’ was the tagline of the time).  Special institutions were, hence, set up by the central and state governments to identify and train aspiring individuals in entrepreneurship and business planning. 

Entrepreneurship training received a big push during the 1980s, the decade that coincided with the sixth and the seventh Five Year Plans.  The decade witnessed, on the one hand, the launching of schemes to promote self-employment to tackle the rural unemployment problem and, on the other, a shift in policy towards technological self-reliance.  The coverage of training was extended across regions and population segments. In 1982 the National Science & Technology Entrepreneurship Development Board (NSTEDB) was set up under the Department of Science and Technology, Government of India with the goal of creating job creators in the knowledge driven and technology intensive sectors. Unfortunately, there is no conclusive evidence yet to suggest that these initiatives resulted in any significant outcomes in terms of enterprise start up in the small enterprise sector.  

The framework of governance of India changed decisively in the early 1990s as the country formally embarked on the path of neo-liberal economic reforms. The discourse on entrepreneurship development too has changed since then.  With liberalisation of trade and industrial policies, and globalisation of finance and technology sectors, the image of entrepreneur has transformed from that of an individual driven by necessity to fight all odds to create opportunities for self and others to one of a self-driven, classy, technologically savvy individual, who is a disruptor of the status quo. Such an entrepreneur, we are told, is a genuine risk taker.  The myriad schemes as part of the current initiatives like Start-up India and Make in India showcases this entrepreneur. They are largely found in sectors like retail, food, and fintech, and are supported by venture investors.   

The past decade has witnessed the rise of another class of entrepreneurs – the social entrepreneurs. Their businesses are positioned precariously in the continuum that spans non-profit social organisations to purely profit-oriented, shareholder-driven commercial businesses. They are focused on capitalising the structural maladies within the local spaces and devising entrepreneurial ways to modify them by founding locally embedded organisations. Case studies of entrepreneurs, who have discovered smart ways to assist farmers in planning agricultural operations and accessing right markets are widely available these days. They deal in market information, smart warehousing, farm management solutions, soil and meteorological sensing, crop and cattle insurance solutions etc.  Similar stories are available of enterprises that mediate health and educational services for the poor in distinct localities.  Some of them have proven the viability of their business models, while many continue to be troubled by bottlenecks in accessing capital and market. Compared to their counterparts at tech start-ups in e-commerce and consumer products and services, the social entrepreneurs find the ecosystem challenges more daunting, especially relating to affordable capital. 

The changing landscape of entrepreneurship, no doubt, is highly inspiring.  But the changes do not completely represent the socio-economic realities of India. A large majority of the country’s productive population is stuck almost permanently in informal economic transactions, while the distribution of productive resources is highly skewed. The small enterprises are predominantly rural, micro and unregistered.  Their survival depends on innovative strategies, often romanticised by outsiders as ‘jugaad’. How will these producers be included in the moving narratives of new entrepreneurialism in India? 

Clearly, there are no short cuts. Systemic changes in the distribution of basic resources is the key to it.  The state will have to champion those changes. Unfortunately, the state is keener to retreat from its developmental role. Rural producers struggle to survive the onslaught of competition as they lack access to new raw materials, capital and markets. Farmers are made to destroy crops or sell at distress prices as they lack the capacity to hold the stock to fetch a better price.  The double burden of productive and reproductive labour leave women with little time and energy and pose intimidating barriers to their skill acquisition. Capital formation in the public sector has been slow for many years now leaving significant deficits in investment in basic infrastructural facilities in water conservation, irrigation, power supply, and storage and warehousing.   

As the state retreats and the individual falters, collectivisation has emerged as a strategy under neo-liberal governance. The country has experimented with many models of collective organisation over the last three decades like self-help groups, producer cooperatives, and mutually aided cooperatives. What seems to have attracted wider attention is the institutional form called producer companies. The producer company model introduced in the early 2000s is a hybrid form of organisation combining the features of cooperatives and companies. They are aggregations of shareholdings, small producer groups promoted by government and non-government agencies as well as by large business establishments (under the umbrella of corporate social responsibility). There are about 5000 Farmer Producer Organisations in India currently. The membership of these organisations vary widely. The success stories of producer organisations (like Rangsutra Craft Duniya, Masuta, or Sahaj Samruddha) underscore the advantage of collective businesses in terms of economising costs and maximising returns by bypassing exploitative intermediary channels. But again, examples of exemplary producer companies that can stand up to the challenges of market are really rare. 

A critical lacuna in the existing models of promoting entrepreneurship and innovation at the local level seems to be the lack of emphasis on forging institutional linkages. Individual motivation is essential in spurring an entrepreneurial career. But the success of entrepreneurship depends on the ability of individuals to draw benefits from networks and social structures. That is why fostering partnerships is important for entrepreneurship promotion – partnership between state and private sectors, businesses and non-businesses, collectives and corporations, society and technology.  As the livelihood environment becomes more complex and challenging, a new imagination of entrepreneurship as a collaborative endeavour seems to have a better transformative potential as it can expand the scope and quality of entrepreneurship by leveraging resources from multiple partners. Venture Collaborative Entrepreneurship (VCE) process of Ashoka is one example of a collaborative platform. Through VCE, Ashoka attempted to identify social change areas, search for and support social entrepreneurs and help launch demonstration projects. Though the process was evaluated to have positive effects, similar experimentations have not come up to help small, local entrepreneurs with viable ideas. The time is opportune now for developing locally embedded entrepreneurship platforms that can catalyse similar collaborative processes.

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