Link between Demography & Entrepreneurial Society: The Indian Case.

AuthorMurthy, Venkatesh


Global Entrepreneurship Index (GEI) demonstrated the exciting features of entrepreneurial societies. The GEI considered fourteen factors (fig. 1) to assess the entrepreneurial strengths of various countries. As per the report, ten states have qualified the test to be the top class entrepreneurship destinations (GEDI, 2015a). While the USA, Canada, Australia, Denmark, and Sweden occupied the first five ranks, countries such as Taiwan, Iceland, Switzerland, the UK, and France took the next positions from six to ten. We define these nations as entrepreneurial societies. In general, the term refers to "the rise of the entrepreneur ...(which) is not just about economics (alone, but) ... reflects profound changes in attitudes to everything from individual careers to the social contract. It signals the birth of an entrepreneurial society" (The Economist, 2009).

As India did not feature in the top ten entrepreneurial societies, we attempted to figure out if India has scored high on any of the factors in comparison with the top three entrepreneurship countries in the world. As shown in fig. 1, India's ability to conduct process innovation (factor no. 13) is par with Canada. On the competition factor, India surpassed Australia. Baring two factors, India has scored poorly on all other elements in comparison with the top three entrepreneurial countries.

Given the poor performance of India in comparison with the top entrepreneurship countries, we intended to identify India's position in Asia by comparing it with other Asian nations. India scored high on competition in comparison to all the other Asian industrialised countries (fig. 2). Interestingly, Japan and Taiwan stand out as the most dominant entrepreneurship destinations in Asia. India, in comparison to China, scored high on six factors that include competition, process innovation, cultural support, risk acceptance, and startup-skills (fig. 2). However, the overall picture of India, in comparison, appears meek.

Based on the view presented above, it becomes unclear as to when would a state achieve the status of an entrepreneurial society? So far, there have been two broad arguments to address the question. One is a socio-cultural centric argument (Audretsch, 2007: 3-27) and the other is demography and family-centric (Aldrich & Cliff, 2003). For Audretsch, high information societies are likely to attain an entrepreneurial society status. As there is a spread of information, over a period, certain societies evolve from conservative to liberal in their approach to life. It gives rise to open-mindedness, acceptance of social and cultural differences including race, ethnic identities, and multiple sexual orientations. Building on the argument, Audretsch goes on to articulate the case of the S. As a result of opening its trade borders for goods fro high-quality manufacturing destinations such as Germany and Japan, in the mid 20th century, the US invited a massive competition for its domestic automobile companies. Aggressive marketing strategies of the Ger an and Japanese automobile companies forced the US counterparts to reinvent their products. While struggling to remain competitive in the domestic market, the US companies started to lose their global presence. Soon, the automobile space in the S market appeared to be obsolete. Around the same time (the 1960s), the US witnessed a change in people's approach to lifestyle. People started to look beyond an average middle-class life. (1) Quality of being complacent with the past achievements began to be questioned.

For Audretsch, the change in people's mindset had got not much to do with a general trend (more often argued by economists) of a mature economy, which gradually moves fro manufacturing to the service sector. Instead, the pattern was primarily because people of the US realised that the old methods of manufacturing in industrial segments such as automobiles and electronics were obsolete. As a result, people of the US gave birth to computers and computer-based services. In a way, it changed the face of the industrial organisation starting from the 1960s. For Audretsch, the new age business giants such as Dell, Apple, and Microsoft were the offshoots of the change in people's attitude.

Quite in line with Audretsch's argument, Aldrich and Cliff (2003) had offered a family-centric view to show that changes in the demographic composition of the population of a country have been the key drivers of entrepreneurship in North America. For Aldrich and Cliff, changing size of family (single person families), marriage age, fertility rate, labor market participation of different gender, and other interrelated demographic features could yield insights on whether an economy is on its path to achieve the status of entrepreneurial society.

In a nutshell, The Economist (2009), Aldrich and Cliff (2003), and Audretsch (2007) have articulated the idea of entrepreneurial society on the lines of people's attitude and change...

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