SYNOPSIS

INFLUENCE OF MANAGEMENT FUNCTIONS ON

ENTREPRENEURIAL DEVELOPMENT A STUDY OF SMALL
SCALE AND TINY ENTERPRISES IN AND AROUND PUNE

A Thesis Submitted to

TILAK MAHARASHTRA VIDYAPEETH,

PUNE

For the Degree of Vidyavachaspati (Ph.D.)

(Doctor of Philosophy)
In Management

By

SUDHIR PANDE

Under the Guidance of

DR. DHANANJAY K. KESKAR
Director, IBS
Pune

October 2012
1) Introduction:
1.1 Entrepreneur and Entrepreneurship
The unprecedented growth in Indian manufacturing as well as other sectors
has pushed the Indian economy on a growth path. To grow further, there is a strong
need for reorganization of few elements such as, financial policies, international trade
policies and
nd business incubation. These can provide an additional support in terms of
increase in trade activity or international exposure. However, the benefit of these
changes may not directly reach the small scale and tiny entities. The large and
medium scale entities
ities absorb the benefits as they have sectoral lobbies in the
government. Therefore, to nurture the small and tiny industries becomes a job of their
respective owners i.e. Entrepreneurs.

Entrepreneur is a key person and business encircles him. As Vasant

Vasa Desai
states in Dynamics of Entrepreneurial development and management-
management An
entrepreneur in a developing economy is one who starts an industry, undertakes risk,
bears uncertainties, and also performs the managerial functions of decision-making
decision
and co-ordination.
ordination. He also puts the new process based on technological research into
operation. Technological soundness and leadership qualities are the basic needs to
augment the business success of any entrepreneur. It can be said that they are
stepping-stones of entrepreneurship. The stepping stones are depicted in the
following figure.

1
 In practice, it is observed that an entrepreneur faces many problems while
setting up an enterprise. These problems are divided into two types i.e. internal and
external. Small scale and large scale enterprises face almost identical problems.
However, scope of this paper is limited to small and tiny entities. During this study,
we will not be touching upon the external factors. Thus, internal factors of an
enterprise can be summarized as shown

Factors related to functional and other areas:-

1. Organizational structure.
2. Planning.
3. Production management.
4. Co-ordination.
5. Quality of product.
6. Marketing
7. Financial planning.
8. Labor availability and competence.
9. Capacity utilization or constraint.

The above mentioned factors indicate that, they are mostly related to the
Management Functions. Thus, a question arises whether properly carrying out these
management functions will lead to the success of an enterprise? Besides risk bearing
and innovation, in the process of managing an enterprise, an entrepreneur is required
to perform several management functions such as planning, organizing, directing,
controlling etc.

Management functions enable optimum utilization of resources like people,

material, equipment and energy.

An entrepreneur has to perform several functions in his daily task. He has to

plan the activities of enterprise. He has to forecast future market and technology, then
organize the material, financial and human resources for achievement of the planned
targets. He has to coordinate the efforts of all employees and direct the activity. He
has to keep a close watch on the progress done by his firm from time to time.
Supervision and control over all the activities are his constant concerns.

2
 Every entrepreneur always dreams that his small or tiny business will become
a big industry. He always takes lots of efforts for achieving this objective. This
objective is always in his mind and he tries to visualize it in his small enterprise.
Many a times he does not find a way out to overcomes the existing scenario and
constraints. There may be lot of reasons for that, but one thing is very clear that unless
and until he establishes his existing business in a very professional way he cannot go
for his dream to come true. So the first priority is always to establish the existing
activity in a systematic way. How to establish this? And here, we need to understand
management techniques in the business i.e. management functions, irrespective of his
educational competence. Then only, small and tiny enterprises can be perfect
incubators for future growth.

Further, the opening up of the Indian small industry sector to competition as

well as the increase in the need to cater to the global market demands fresh
approaches to face the radical change in the 20th century. Consequently this sector
must change first to survive as well as restructure and change to meet the new
challenges through a critical evaluation. This demands entrepreneurial culture,
organization structure, employee satisfaction and team building. The organizations
which can respond to these changes will be able to survive and retain. Considering the
aforesaid, the title for the present research is as follows.

1.2 TITLE:

Influence of Management Functions on Entrepreneurial Development

A study of Small Scale and Tiny Enterprises in and around Pune.

1.3 Aims and Objectives of the study:

1. To find out the relation between Management functions and entrepreneurship

growth.
2. How Management functions play a vital role in the success of small and tiny
industries.

3
3. To understand how the management functions regard to Planning, Organizing,
Controlling, Coordinating, Directing are carried out in small and tiny industries.

1.4 Hypotheses:

1. Success of the small and tiny enterprises and the entrepreneurship

development in that sector is related to the effective implementation of
management functions.
2. There is significant correlation between the turnover of the enterprise and
adoption of controlling methods, such as
a) ISO, JIT, ABC analysis
b) Productivity
c) Ratio analysis
3. There is significant correlation between the turnover of the enterprise and the
following factors.
a) Staff that controls various production activities
b) Staff that controls accounting activity
4. There is significant correlation between business growth and the following
factors.
a) Making timely payments to suppliers.
b) Keeping ones knowledge updated by reading books, journals, attending
qualifying courses.

2) Research Methodologies:

2.1 Primary research:

Present research falls under exploratory research. In this type of research

design, a specific problem is formulated from an operational observation. Such
studies are also known as formulative studies.

This design takes into consideration the views and experiences of some
selected respondents.

4
Field Survey:

The survey carried out was based on questionnaire. The survey of SMEs was
carried out in Pimpri, Chinchwad, Sinhagad, Parvati, and Hadpsar which are areas
in and around Pune.

According to data with MCCIA, there are 8500 units in and around Pune, of
which 75% are in small and tiny /micro sector i.e. 6375 which is considered as the
universe.

Sample size determination is done by mean method. Thus, Sample size

determined is 75 no. Actual data collection is done for 84 respondents, hence
sample size considered is 84.

2.2 Secondary research:

Literature Review [Abstract]

2.2.1 Definitions of Micro, Small & Medium Enterprises (MSMED Act 2006):-
In accordance with the provision of Micro, Small & Medium Enterprises
Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises
(MSME) are classified in two Classes:
(a) Manufacturing Enterprises- The enterprises engaged in the manufacture or
production of goods pertaining to any industry specified in the first schedule to the
industries (Development and regulation) Act, 1951). The Manufacturing
Enterprise is defined in terms of investment in Plant & Machinery

(b) Service Enterprises: The enterprises engaged in providing or rendering of

services and are defined in terms of investment in equipment.
The limit for investment in plant and machinery / equipment for
manufacturing / service enterprises, as notified, vide S.O. 1642(E) dtd.29-09-2006 are
as under:

5
 Manufacturing Sector
Enterprises Investment in plant & machinery
Micro Enterprises Does not exceed twenty five lakh rupees
Small Enterprises More than twenty five lakh rupees but
does not exceed five crore rupees
Medium More than five crore rupees but does not
Enterprises exceed ten crore rupees

Service Sector
Enterprises Investment in equipments
Micro Enterprises Does not exceed ten lakh rupees:
Small Enterprises More than ten lakh rupees but does not
exceed two crore rupees
Medium More than two crore rupees but does not
Enterprises exceed five core rupees

In our further discussion we will adopt definition for small scale and tiny
(micro) enterprises as:
Manufacturing Sector
Enterprises Investment in plant & machinery
Micro Enterprises Does not exceed twenty five lakh rupees
Small Enterprises More than twenty five lakh rupees but
does not exceed five crore rupees

2.2.2 Small and micro (tiny) sector:

Successful new business venture and economic development do not just
happen they are the result of the combination of right environment, planning, effort
and innovation. Right combination of this can only be achieved by the entrepreneurs.
They provide a clear blue print for stimulating research, technology, finance to help
promote matured enterprises. At the same time they grow the eco-system and give
boost to economic growth. The factors contributing to economic development are
labor, technology, natural resources, capital and entrepreneurship. The key factor in

6
this development process is the entrepreneur. This is the domain of the entrepreneur
whose policies and strategies cover such broad areas as production, marketing,
financing, pricing and personal relations. The growth of entrepreneurship largely
depends upon effective policies and their efficient implementation.
There are certain characteristics which could be observed with regards to
entrepreneurship. They are stated below.
Development in any walk of life has always depended on individual qualities of
entrepreneurship. A study of human history shows ample evidence of the role of
individuals in the process of development.
Industrial development in almost all countries has always started with individual
enterprises.
Even huge multinational and national corporations have mostly received their
inspiration from one or few individuals.
In the case of small industries, the project is usually centered on a single
individual.
Small enterprises are mostly initiated, managed and developed by one or a few
individuals.
Qualities of entrepreneurship constitute one of the major resources in the
promotion of an enterprise.
An entrepreneur is someone who ventures out; prefers change as a means of
growth, and is prepared to take calculated risks
While taking the risk, the entrepreneur is aware of the possibilities of success as
well as the consequences of failure.
Analyses the pros and cons carefully before making a decision to start the
enterprise.
An entrepreneur is involved in the planning activities before and after the decision
to start the enterprise.
An entrepreneur is motivated by an urge to make a success of the project.
An entrepreneur proceeds to accept the situation as a challenge.
An entrepreneur is persistent and full of perseverance for making a success of
himself.

7
 An entrepreneurship is a product of interaction among a number of factors. Some
of these factors are in the individual (psychological) and the rest are in the social,
cultural and economic milieu.

2.2.3 Background and Definition of entrepreneur:

Entrepreneurs are generally understood to be the people who work for
themselves, or who own an enterprise. The term entrepreneur is derived from the
French word entrependre which means to undertake. The entrepreneur undertakes to
organize, manage, and takes risk while running the enterprise.

Entrepreneurship in India:
In spite of some favorable factors, growth of entrepreneurship in India has
remained slow. India was once rich with resources. It had developed trade relations
with number of countries. Indian products were famous for workmanship. However,
during British regime, Indian cottage industries had a setback.
We are trying hard for developing our economy. The need and importance of
entrepreneurship in economic development is realized by all. Efforts are made in all
directions to speed up the entrepreneurial growth.
The most important function of entrepreneurs in India is to ensure the best
possible use of available resources. Land and labor are generally available with ease.
However, because of lack of facilities limitations are observed. The government is
taking firm steps to provide plots with all facilities by developing industrial estates.
The business unit of an entrepreneur is generally small in size. The
entrepreneurs in India use local talents and raw materials. They cater to the needs of
people in the surrounding areas. The small scale units serve as a balancing factor
against the concentration of financial power with a few large industrial houses.
Balanced regional development can be achieved and difficulty of means of transport
can be relieved as many entrepreneurs concentrate on local market.
Entrepreneurship entails self-employment. The problem of educated
unemployment in India can be solved to some extent by encouraging young people to
go to independent ventures by providing finance, training and counseling. The
successful entrepreneurs can prove to be a source of inspiration to new entrants in
business.

8
Main attributes of entrepreneur

Visonary
Evaluato Risk
r taker

Decision Opportunist
maker Entrepreneur

Deployer Learner

Dedication

Entrepreneurship thus involves boldness, courage, dynamism and

preparedness
paredness for accepting risks. Schumpeter defined entrepreneur as an individual
who carries out new combines of means of production by which there occurs
disequilibrium. The entrepreneurs according to him were specially talented and
motivated class who would grasp opportunity and exploit it.
Higgins explains functions of entrepreneurs as entrepreneurship is the
function of seeing investment and production opportunity, organizing an enterprise to
undertake a new production process, raising capital, hiring
hiring labor, arranging the supply
of raw material, finding site, introducing new technique and commodities, discovering
new sources of raw materials and selecting top managers for day to day operations of
enterprise.
Entrepreneur is a key person and business encircles him. As Vasant Desai in
Dynamics of Entrepreneurial development and management (2007)states, an
entrepreneur in a developing economy is one who starts an industry, undertakes risk,
bears uncertainties, and also performs managerial functions of decision making and
co-ordination.
ordination. Technological soundness and leadership qualities are the basic needs to
augment the business interests of any entrepreneur.
Entrepreneurship is a process of exploring the opportunity for starting an
enterprise,
se, its planning, establishing, making it operational, expanding and developing
the business and accomplishing the objectives and goals and evaluating the
performance to take decisions for further growth and development.

9
2.2.4 Contributions of entrepreneurship:-
Entrepreneurship is used in each and every dimension of life whether it is
family, business, government, social group or enterprise. It plays a multi dimensional
and multi faceted role in the development of the state and nation. It helps the country
to face the problem of unemployment. It reduces the dependence of the people on the
government. Following are the few contributions of entrepreneurship in development.

Helps to solve
unemployment
Training problems Icreases
income

Community
developmen Use of money
t and resources

Increase in Entrepreneruship
Balanced
foriegn developme
reserve nt

Coping with
change Innovation
Motivation to
start entreprise

2.2.5 Functions of an entrepreneur:

a) Innovation: - Clemence defines innovation as doing the new things or doing up
the things that are already done in a new way. The success of an entrepreneur
lies in his ability of tracing the opportunity and using it in the best possible way.
His business practice would involve planning, financing, and marketing, but in all
these aspects he will have something unique of his own
b) Risk bearing: - An entrepreneur assumes risks of various kinds when he takes
the responsibility of running an enterprise.
1. He has risked the initial capital that he has invested because the rate of return
and the time for reaching the set-off stage cannot be defined.
2. He bears financial risks as he might have left a comfortable job providing
security and post retirement benefits in order to jump into the novel venture.
3. He may be required to forego several comforts on account of uncertainty of
income. In a way he has risked his personal career, his chances of
advancements, and an easy-going life.

10
c) Organization and management of resources:-
The entrepreneur develops an organization suitable for his work, directs the
activities and solves the problems and maintains the flow of work. The entrepreneur
may have efficient subordinates working under his guidance. He has to co-ordinate
efforts and controls their activities. On the job supervision is also necessary to
maintain discipline and assure quality of work.
He must perform the function of accounting and financial control. He has to
maintain his market position. In performing all these managerial functions, his main
object is to use all available resources in the best possible way.

Entrepreneur-Manager:-
The role of manager is different from that of an entrepreneur. Yet an
entrepreneur is required to perform several functions, as a manager and at times he is
an entrepreneur. Thus he has a dual role as entrepreneur and manager.
Essence of entrepreneurship lies in risk taking and innovative approach. These
are basic traits in an entrepreneur. But they are not necessary prerequisites of a
successful manager. A manager has a defined authority and the responsibility he
shoulders is limited. He has to act in conformance with the basic policies laid down
by the organization. He has some freedom as far as his field of activity is concerned
but he cannot go against the policies and procedures adopted by the firm. He cannot
choose to be his own master in decision making. He has to take in to account effects
of his actions on other departments and people.
Characteristics often attributed to entrepreneurs
Confidence Perseverance Energy Resourcefulness
Ability to take Dynamism, Optimism Versatility,
calculated risk leadership knowledge of
product, machinery,
market, technology
Creativity Ability to Ability to get along Initiative
influence well with people
Flexibility Intelligence Orientation to clear Positive response to
goals challenges
Independence Time competence Quick decision Responsibility
maker
Foresight Accuracy Cooperativeness Profit orientation
Ability to learn Responsiveness Sense of power Pleasant personality
from mistakes to suggestions
and criticism

11
 Egotism Courage Imagination Perceptiveness
Toleration for Aggressiveness Capacity for Efficacy
ambiguity enjoyment
Commitment Ability to trust Sensitivity to others Integrity
workers
Maturity,
balance
[Entrepreneurial management, by Mr. Bhargav and Shivganesh (2008).]

2.2.6 Success in small industry.

Every entrepreneur and each unit is working for long term growth through
annual, monthly and daily target and achieves success. Some of the important factors
that differentiate successful organizations from the unsuccessful ones are as follows-
a) The most important aspect of successful business is leadership. It calls for
clear vision, goals and objectives.
b) Ability to derive the best from its Human Resources. This is achieved by
proper communication and training.
c) Adequate but well orchestrated control.
d) Constant review of results.
e) Setting and adherence of high standards of quality and performance.
f) Planning, foresight and analysis.
g) Updating technology.
h) Effective marketing.
i) Financial planning, control and proper allocation of funds.
j) Effective production system and control.
Proper implementation of above aspects will definitely lead to a guaranteed
success. This success largely depends on the entrepreneurs individual skills and how
he functions i.e. his management skills. Hence, there is a need for adequate and well
managed control of the unit i.e. industrial engineering functions, production systems
and management functions

2.2.7 Management Functions:

Peter Drucker says Planning is a continuous process of making present
entrepreneurial decision (risk taking) systematically and with best possible knowledge
of their futurity, organizing systematically the efforts needed to carry out these

12
decisions and measuring the results of these decisions against the expectations
through an organized systematic feedback.
Basic management functions are,
1. Planning.
2. Organizing.
3. Controlling.
4. Directing.

Planning (characteristics)
1. Planning contributes to the objectives.
2. Planning is basic to managerial operation.
3. Planning is an intellectual activity.
4. Planning is directed towards efficiency.
5. Planning is a continuous process.
6. Planning helps decision making.
7. Planning is an important primary or basic function.
a. Planning is an expensive process as it takes up a great deal of efforts and time.
b. Planning is a time consuming process: It involves a good deal of investment in
time.
c. It depends on accurate and reliable data.
d. It has limitation of several external factors beyond the control of enterprise.
e. Peoples resistance to change is also a limitation of the planning.

Process of organizing:
It is a dynamic process which consists the following four major sub-processes.
1. Identification of activities: one has to identify the series of activities to be carried
out in order to achieve desire objective.
2. Grouping of activities: once all the activities are identified then the related
activities are grouped together. This may also be referred to as departmentation.
3. Assigning activities: The competent personnel/manpower that could carry out
these activities are to be identified. This is referred to as staffing.
Delegation of authority: To carry out any activity one must have enough
authority. If the authority is not their one cannot be held responsible for the
attainment for the results

13
Importance of direction:
It is the heart of administration. Effective direction provides following benefits:
1. Initiates action: Direction constitutes the life spark and like an electric current it
sets into motion the enterprise. Without direction, planning, organizing and
staffing become ineffective.
2. Ensures coordination: Coordination is a necessary byproduct of effective
direction.
3. Improves efficiency.
4. Facilitates changes.
5. Assists stability and growth.
6. Effective leadership and communication provides stability in the organization and
helps to ensure that its parts work in a harmonious way.

Controlling:
Effective control systems use mechanisms to monitor activities and take
corrective action, if necessary. The controller observes what happens and compares
that with what was supposed to happen. He or she must correct unacceptable results
and bring them upto expectations. Control facilitates delegating activities to
employees. Controllers/ supervisors are held accountable for their employees
performance. The controlling system is needed to set standard guidelines, avoid
confusions, development of a model system, to measure progress, preparation for
uncalled problems, suitable control system for organization culture and economy of
control.

2.2.8 Production Function:

Production process is a very vast subject as it covers all management functions
and also engineering functions. It is applicable to all types of industries, small scale
and large scale. However, we restrict our scope to small and tiny entities. It is
necessary to understand the term Production.
In economics, production means creation of utility by the application of mans
mental and physical powers to the materials already supplied by nature. It is
important to note that nature gives the natural resources which man changes by dint of
his labor to make them more useful to him and for this purpose he changes the form
of matter already existing. Production may, therefore, be defined as addition of value

14
by moving the articles from one place to another or by changing its form, or by
adjusting the time of its use so that it will command a higher value than before.
View the production function in three angles
1. Production as a system
2. As an organizational function
3. Decision making in production.

Production system receives inputs in the form of materials, personnel, capital,

utilities and information. These inputs are changed in a conversion sub system in to
desired products and services which are called the out puts.

Production system table

INPUTS ACTIVITIES OUTCOME
People service Planning Quality customer
Time Organizing Revenue earned
Money Coordinating Revenue saved
Equipment Directing Sales made
Supplies Developing Products made

Organizational function - The core of a production system is its conversion sub-

system wherein workers, materials and machines are used to convert inputs into
products and services. This process of conversion is at the heart of production
function and is present in some form in all organizations. It may be stated that every
organization irrespective of its purpose, has a production function, where departments
and personnel play a central role achieving the objectives of the organization

Decision making For managing production function, it is required to take a series

of decisions. They plan, organize, staff, direct and control all the activities in the
process of converting all inputs in to finished products. At each level it is expected to
make decision. There are three general categories.
a. Strategic decision.-major, long term, related to product, process, mfg. facilities.
b. Operational. - planning production to meet demands.

15
c. Control decision. - relating to day-to-day activities of workers, quality of product,
production and over heads.
Production management refers to the application of management principles to
the production function in a factory that is planning, organizing, directing, and
controlling. First is the development of factory system of production.
At this juncture, one can not overlook the industrial and systems
engineering.

2.2.9 Industrial Engineering Functions:

Industrial engineering functions are essentially management functions for
controlling and managing any activity. Industrial engineering involves the application
of a set of techniques to analyze, design and control a productive system (i.e.
productive system is the system employed to produce goods and services). According
to Mr.S.Chand, Industrial Engineering and Production Management (2008); major
tools of industrial engineering are:
Method study.
Work measurement.
Motion economy.
Financial Incentives.
Organization and methods.
Layout.
Capacity planning.
Production planning and control.
Inventory control. (etc.)

2.2.10 Importance of financial information for entrepreneurs.

In todays competitive environment it is necessary for any entrepreneur to be
proactive in his approach towards the growth of his business. In earlier chapters we
have seen the effects of various management aspects on business, but this chapter
aims at throwing some light on facets of financial information which is necessary for
entrepreneur to be proactive in his actions and finally succeed in his aim providing
best products or services. Financial analysis is defined as the process of discovering

16
economic facts about an enterprise and /or a project on the basis of an interpretation
of financial data.

2.2.11 Psychological analysis of entrepreneurship

Here we have discussed various motivational theories from entrepreneurs
point of view.
Needs Theory:
Need for achievement:
The most important and perhaps the only psychological factor which has been
researched in relation to entrepreneurship is n-achievement. McCleland (1961) and
McCleland and Winter (1969) have proved adequately that achievement motive is
critical factor that leads an individual towards entrepreneurship.
Psychologists have found that entrepreneurs by and large are people with high
drive and activity level. They constantly struggle to achieve something which they
could call as their own accomplishment. They always like themselves to be different
than others and want to accomplish the things which are not easy to accomplish. It is
also observed that they (entrepreneurs) do not make efforts to achieve the things
which are almost impossible to achieve. Such people (entrepreneurs) work very hard
to achieve their goals.

Need for influencing others:

The entrepreneur after building up his organization has to increasingly deal
with people of his own organization. In order to be able to deal with people
effectively entrepreneur must have drive to influence them. He must have the ability
and skill to sell them (i.e. to sell to the people in the organization) his own ideas and
to lead them in the process of establishing and expanding his organization. The drive
to influence the people and lead them may also be called need of power.

Goal Setting Theory:

The goal setting theory of motivation is useful for motivating individuals. It is
also useful for motivating the groups. The entrepreneur sets goals for enterprise. The
entrepreneurs use participatory methods such as consensus seeking, meeting, sharing,
working in team, interaction, validating and like to help the employees to set the
individual and team goals and decide strategies to achieve them.

17
2.2.12 Entrepreneurial Company in the 21stcentury:
The trend toward globalization, the advent of new technology, and the
information movement are all examples of forces in this new millennium that are
causing firms to examine their cultures, structures and systems for flexibility and
adaptability. Innovation and entrepreneurial thinking are essential elements in the
strategies of growing ventures.
In order to bring about the necessary transition, the entrepreneur must
carefully plan and then gradually implement the process. Hofer and Charan have
suggested a seven step process,
1] The entrepreneur must want to make the change and must want it strongly enough
to undertake major modifications in his own task behavior.
2] The day-to- day decision making procedures of the organization must be changed.
Specifically participation in this process must be expanded.
3] The two or three key operation task those are primarily responsible for the
organization success must be institutionalized. This may involve the selection of
new people to supplement or replace indispensible individuals who have
performed these tasks in the past.
4] Middle level management must be developed.
5] The firms strategy should be evaluated and modified, if necessary, to achieve
growth.
6] The organizational structure and its management systems and procedures must be
slowly modified to fit the company`s new strategies.
7] The firm must develop a professional board of directors.

2.2.13 Emerging trends and expectations:

Technology not only enhances present competitive strength but also creates
opportunity for future growth for any organization. Below is the comparative chart
which is self explanatory for understanding emerging trends and expectations.

18
 New and old economy
Issue Old industrial economy New knowledge economy
Markets
Economic Steady and linear, quite Volatile- extremely fast change, with
Development predictable explosive upsurges and sudden downturns
and chaotic the direction of the economy`s
changes is not perfectly clear
Market changes Slow and linear Fast and unpredictable
Lifecycle Products Long Short
and Technologies
Key Economy Large industrial firms Innovative entrepreneurial
Drivers Knowledge based firms
Scope of Competition Local Global hyper-competition
Competition: name Size: The big eats small Speed: The fast eats the slow
of the game
Enterprise
Pace of Business Slow Appreciably faster than ever rising
customer expectations
Emphasis on Stability Change management
Business Strategy pyramid- vision, Opportunity driven dynamic strategy
Development mission, goal, action plan
Approach
Success Measure Profit Market capitalization
Organization of Mass production Flexible and lean production
Production
Key Drivers to Capital Resources: people, knowledge, capability
Growth
Key Sources of Research Research, systematic innovation,
Innovation knowledge management, integration, new
business creation, venture strategies, new
business models

19
 Issue Old industrial economy New knowledge economy
Main Sources of Access to raw material, Distinctive capabilities: institutional
Competitive cheap labor and capital excellence moving with speed; human
Advantage for conversion; cost resources; customer partnership;
reduction through differentiation strategies and competitive
economies of scale strategies
Scarce Resources Financial capital Human capital
Decision Making Vertical Distributed
Innovation Process Periodic, linear Continuous, systemic
Production Focus Internal process Entire value chain
Strategic Alliance Rare, Go alone mindset Teaming up to add complementary
with Other Firms resources
Organizational Hierarchical, Interconnected subsystems; flexible,
Structures bureaucratic, functional, devolved, employee empowerment, flat or
pyramid structure networked structure
Business Model Traditional: command New refocused on people knowledge, and
and control coherence
Work Force
Leadership Vertical Shared: employee empowerment and self
leadership
Work force Mainly male, high No gender bias; high proportion of
characteristics proportion of semi- graduates
skilled or unskilled
Skills Mono-skilled, Multi-skilled, flexible
standardized
Education A skill or a degree Continuous learning
Requirements
Management- Confrontation Cooperation, teamwork
Employee Relation
Employment Stable Affected by market opportunity/risk factor
Employees Seen as Expense Investment
[Technological change and manpower development, by Mr. Bhattacharyaa, 2008]

20
2.3 Analysis of data and findings:-
All responses to the questions were analyzed and following are the main
findings.

2.3.1 FINDINGS
Findings
1. a) Turnover of the small enterprises is not dependent on capital investment
alone.
b) Turnover of small enterprises depends more on market conditions.
2. Entrepreneurs of small scale and micro enterprises are found less innovative in
developing new products. They copy products developed by competitors.
3. Entrepreneurs prefers to develop personal contact with customers.
4. Entrepreneurs are interested in improving their quality of the products and also
they prefer to accept changes in their product for their sustainable growth in the
market.
5. Conversion of business leads into actual execution of orders is very important
and entrepreneurs make efforts towards the same.
6. Entrepreneurs of small and micro enterprises like to take calculated risk in
business.
7. Short term business targets are determined in terms volume of sales or work
orders.
8. Entrepreneurs have to strike a balance in making payments in to suppliers, labor
and creditors.
9. A large majority of respondents were aware of industrial engineering but had
constraints to implement.
10. Productivity and other controlling techniques such as ISO, just in time, ABC
analysis, ratio analysis are utilized only to small extent.
11. Entrepreneurs were found to be less aware of layout planning of the unit.
12. In small and micro scale units majority of staff is deployed on production
activity. Controlling coordinating and accounting activity found weak as
manpower is not made available/adequate.
13. Employees in the small scale units accepts entrepreneurs as leader. However his
lack of managerial skills as times affects his business.

21
 14. Motivation in small scale enterprises depends more on the leadership quality of
the entrepreneur, which is found weak.
15. Entrepreneurs are found lacking in professional approach.
16. Entrepreneurs in small and tiny enterprise are weak in decision making.
Entrepreneurs are required to gain command on managerial qualities for efficient
business control and decision making.
17. Entrepreneurs take enough efforts for recovery of receivables.
18. Small scale entrepreneurs generally comply with all legal or government
requirements for smooth running of the unit.
19. Entrepreneurs in small and tiny scale units are finding problems in managing
business activity.

2.3.2 Validation of Hypotheses:-

Validation of Hypotheses was done by following methods.
1. Each question was analyzed by using SPSS. Output given by SPSS, i.e.
descriptive statistic, frequency table, histogram, bar chart were studied.
2. By applying chi-square test to group of questions under each hypothesis.
3. By using multiple regression analysis.
All the hypotheses are validated and accepted.

2.3.3 Major conclusions:-

Entrepreneurs of small and tiny enterprises do not effectively employ
management functions such as Planning, Organizing, Controlling,
Coordinating, Directing.
Entrepreneurial functions are not adopted effectively in small and tiny
businesses, such as innovativeness, organization and management resources,
risk bearing, and leadership.
Controlling methods have significant association with turnover of the
enterprise.
Management staff [controlling staff] and accounting staff also, have
significant association with turnover of the enterprise.
Business growth is predicted by variables such as, - making timely payments
to suppliers and keeping ones knowledge updated by various means.

22
 Entrepreneurs of small and tiny enterprises do not effectively adopt
managerial role.

2.3.4 Key Recommendations:-

Entrepreneur Manager balance should be achieved by entrepreneur.
Management deficiencies in small enterprises should be minimized by proper
adoption of planning, organizing, controlling, coordinating, leading and
directing.
Improving managerial skills by leaning through training programs and by
qualification.
An entrepreneur should always be mindful of the following :
1. Leadership.
2. Remaining updated in current technology [Professional].
3. Decision making.
4. Ability to observe and adapt.
5. Enthusiasm.
6. To learn from feedback.
And develop these qualities to be successful.

Sudhir Pande Dr. Dhananjay Keskar

Research Scholar Research Guide

23