Indian Entrepreneurs: An Empirical Investigation of Entrepreneur's Age and Firm Entry, Type of Ownership and Risk Behavior

Summary

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The main purpose of this paper is to present an empirical analysis of the sequence relating the firm entry, type of ownership and risk behavior which in turn depends upon the age of the entrepreneurs. The data is drawn from 70 entrepreneurs engaged in Small Scale Industries (SSIs) in the industrial clusters of Varanasi district. Entrepreneurs are examined in terms of personal characteristics. Owner's age is a major determinant of the form of organization and the financial capital structure of small businesses. Reliance upon debt capital to finance business startup is clearly associated with age of the entrepreneur. The empirical analysis also brought out the shifting patterns of entrepreneurial mix in the society. Contrary to the earlier belief that older the entrepreneur higher the entry into the business, the data supports the notion that entrepreneurship is evolving as a worthy career option for young India.

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Indian Entrepreneurs: An Empirical Investigation of Entrepreneur's Age and Firm Entry, Type of Ownership and Risk Behavior

INTRODUCTION

The term entrepreneur originated in French economics as early as the 16th century where it was originally used to refer to military leaders, architects, contractors and organizers of musical or other entertainment. Thus, the term in its early phase had nothing to do with the economic entrepreneur of today. Cantillon (1755; cited by Killey, 1971) the originator of the economic concept of entrepreneur, defined entrepreneur as one who buys factors of production at certain prices and sells his products at uncertain prices, thereby bearing non-insurable risk that may arise due to depressed demand for his product. The term 'Entrepreneur' has been defined by different scholars in different ways. Important among them are Schumpeter (1951) and McClelland (1961) who defined entrepreneur as an innovator. Knight (1921) defined entrepreneur as someone who acts in the face of uncertainty. Mill (1954) defined entrepreneur as a risk bearer. Say (1803) and Usher (1954) regarded entrepreneur as a coordinator. Thus, the leading authorities in the area of social sciences have not been unanimous in defining the terms 'entrepreneur'.

In a nutshell, the term 'entrepreneur' can best be explained as a person who innovates on all fronts on a regular basis, works under uncertainty, bears the non-insurable risk and combin...

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