Socio-Economic Factors Influencing

6764 Words Sep 7th, 2010 28 Pages

The emergence and development of entrepreneurship is not a spontaneous one but a dependent phenomenon of economic, social, political, psychological factors often nomenclature as supporting conditions for entrepreneurship development. These conditions may have both positive and negative influences on the emergence of entrepreneurship. Positive influences constitute facilitative and conductive conditions for the emergence of entrepreneurship, whereas negative influences create inhibiting milieu to the emergence of entrepreneurship.

Some scholars have prepared a list of environmental conditions that may play a role in developing entrepreneurship in a country or
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The deleterious effects of labor immobility negate the potential advantage of low-cost labor. Adam Smith also considered division of labor as an important element in economic development. According to him, division of labor, which itself depends upon the size of the market leads to improvement in the production capacities of labor due to an increase in the dexterity of labor. Notwithstanding, it appears that the labor problem clearly does not prevent entrepreneurship from emerging. For example, the problem of low-cost immobile labor can be circumvented by plunging ahead with capital-intensive technologies, as Germany did. It can be dealt by utilizing labor-intensive method like Japan for example. By contrast, the disadvantages of high cost labor can be modified by introduction of labor saving innovations as was done in the USA. Thus it appears that labor problems can be solved more easily than capital can be created.

Raw Material
The necessity of raw materials hardly needs any emphasis for establishing any industrial activity and therefore it influence in emergence of entrepreneurship. In the absence of raw materials, neither any enterprise can be established nor can an entrepreneur be emerged. In some cases, technological innovations can compensate for raw material inadequacies. For example, in the case of Japanese, the lack of raw materials clearly does not prevent entrepreneurship from emerging but influence the direction in which entrepreneurship took