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close this bookTraining Entrepreneurs for Small Business Creation: Lessons from Experience (ILO, 1988, 154 p.)
close this folder3. Organisation and administration
View the document(introduction...)
View the document3.1 Institution
View the document3.2 Staffing
View the document3.3 Financing
View the document3.4 Evaluation

3.1 Institution

On the other hand, national attempts to develop entrepreneurs usually require an organisation with national status. Many developing countries face not only gaps in the infrastructure but also serious quality problems with those organisations that do exist. Further, entrepreneur development on a national scale, particularly when disadvantaged target groups are involved, cannot be expected to be conducted on a self-financing basis. Even if the entrepreneur development effort plays a co-ordinating role, it will need the status, prestige, a subcontracting budget that commands respect, and a position in the priorities of the infrastructure organisations. Such requirements dictate the involvement of the government.

However, government organisations have severe limitations when dealing with private sector programmes. The imposition of bureaucratic structures and the appointment of permanent staff with civil service emoluments and attitudes curtail the flexibility of the organisation as well as its credibility with small-scale business owners and the private sector. Staff with the requisite entrepreneur training expertise and private sector know-how are not likely to be attracted by civil service remuneration. At the same time, an entrepreneur development programme is likely to be rather small in budget and staff when compared to other government activities and thus it would be difficult to appoint a head of the programme with sufficient rank and status to command the respect of other co-operating government departments.

The compromise solution is usually to create a separate grant-supported body, with a board of directors including representatives from government, trade associations, chambers of commerce, commercial and development banks, small business associations, and entrepreneur associations. An example of a comprehensive entrepreneur development structure is given by India.

At present, EDP work is being undertaken by over 50 different agencies in 20 states all over the country. Some of the agencies engaged in EDP work may be grouped as follows:

1. Twenty-five Small Industries Service Institutes (SISs) set up by the Government of India. They conduct programmes primarily for fresh engineers, technical diploma-holders and unemployed science graduates.

2. Thirteen Technical Consultancy Organisations (TCOs) jointly sponsored by all-India financial institutions Industrial Development Bank of India (IDBI); Industrial Credit and Investment Corporation of India Limited (ICICI); and Industrial Finance Corporation of India (IFCI), along with State-level financial institutions and banks. TCO programmes for entrepreneurship development are meant for young graduates, educated unemployeds, and in some cases, experienced employees, traders and women.

3. Some 10 to 12 other agencies such as nationalised banks, management institutes and voluntary organisations. Universities and colleges also are now beginning to start EDPs by way of a few elective papers as part of their regular courses of study.

Recently the following central institutions have been formed.

(a) Entrepreneurship Development Institute of India (EDI-I) set up at the initiative of Industrial Development Bank of India, with support from Industrial Credit and Investment Corporation of India Limited, Industrial Finance Corporation of India, State Bank of India and also the State Government of Gujarat. EDI-I located at Ahmedabad has started functioning from early 1983.

(b) National Institute for Entrepreneurship and Small Business Development (NIESBUD) set up at the initiative of Ministry of Industry, Government of India, has started functioning from Delhi in early 1984.1

A national umbrella organisation requires a strategy for executing its programmes on a regional and/or local basis. The delivery agencies that the umbrella organisation will work with may differ from community to community but their characteristics have been well described by the Xavier Institute:2

It must be entrepreneurial in culture and outlook. This does not mean that it must be run for profit or on commercial lines but that it has the characteristics which are identified as belonging to the essence of entrepreneurship:

Characteristics of



The entrepreneur

The institution



(a) Self-employment.

(a)

Be autonomous and relatively free from outside control.



(b) Innovation.

(b)

Readiness to try out new programmes. Not be constrained in a formal system of education.



(c) Responsibility for finances.

(c)

Dispose of own financial resources, and have discretion about their use. Not depend entirely on donor agencies.



(d) Risk taking.

(d)

Risk taking.

If particular target groups are being aimed at, the agency should relate to the local environment and people, and have good relations with the local government agencies, banks, district industries, retailers and other members of the business community. Its operation will be enhanced by the existence of a local steering committee, such as that used by the Community Economic Development Programme of the Entrepreneurship Institute for the following purposes - to:

- create linkages between the public, private and university sectors of a community, thereby enabling existing business resources contained in those communities to operate more effectively on behalf of smaller enterprises (creating the entrepreneur support network);

- reach out, identify, and select individuals with sound ideas for growing enterprises, as well as entrepreneurs who have young firms which they would like to see grow (outreach and entrepreneur identification);

- develop a mechanism to bring together the entrepreneurs with the good ideas and the entrepreneurial support network in a manner which will enable contacts to be made, information to be exchanged, and business problems to be solved so the entrepreneurs can rapidly move forward in implementing their business plans.3