Entrepreneurship has served as a key factor in the development and growth of several regions around the world. Employment opportunities created by entrepreneurs have helped in dealing with problems related to poverty, regional imbalance, etc. Especially developing countries, which are majorly dependent on agriculture, are trying to provide a boost to entrepreneurial ventures.

 Broadly speaking, there are two classifications of factors influencing entrepreneurship growth, i.e. economic factors affecting entrepreneurial growth and non-economic factors affecting entrepreneurial growth.


  1. Economic Factors Affecting Entrepreneurial Growth

  2. Non-economic Factors Affecting Entrepreneurial Growth

Economic Factors Affecting Entrepreneurial Growth

Essentially, these factors are responsible for ensuring the economic growth and development of a nation. Such factors provide a conducive economic environment as well as economic security for the enterprise to flourish. These economic factors influencing entrepreneurship growth are of different types, as follows:


  1. Capital

    Capital is a crucial requirement while initiating an entrepreneurial activity. It is capital which is essential to procure land, material, machines etc. An entrepreneur is able to procure all the necessities of production when adequate capital is available with them. This, in turn, leads to entrepreneurial growth.

  2. Labor

    To carry out successful business, inexpensive as well as skilled labor is essential. This will increase the overall productivity of the venture, leading to the growth and development of the entrepreneur’s venture.

  3. Raw Material

    Another factor affecting entrepreneurship development is the availability of quality raw material at affordable costs. If the raw material is readily available and is within the manufacturing unit’s proximity, it will help reduce the cost of production. However, this problem can be solved by ensuring a strong supply chain, but this might increase the cost of manufacture.

  4. Market

    In simple terms, a market is a place where both producers and customers interact. This is where actual selling and buying takes place. The market is the place where the future course of the business rests. If a consumer isn’t willing to buy a product offered by the entrepreneur, then the venture is bound to fail. However, if the entrepreneur’s product is able to serve the purpose and solve the problems of the customers, this means that the demand for the product is present in the market. This will increase sales of the business, which will lead to entrepreneurial growth.


Non-economic Factors Affecting Entrepreneurial Growth

1. Social Factors Affecting Entrepreneurial Growth

Taking care of the economic factors alone is not sufficient to ensure entrepreneurial growth. According to social scientists, the following are some of the social factors affecting entrepreneurship development:


  • Social Mobility

    Social mobility is one of the social factors affecting entrepreneurship development. It involves social as well as geographical mobility. It has been observed in the past that an entrepreneurial venture has the ability to grow more in places where the environment is flexible and liberal. Therefore, we observe that there are certain regions where more entrepreneurial activity is taking place as compared to others.

  • Entrepreneurship Legitimacy

    Every society formulates its own norms, rules and regulations. These values, in turn, act as a social environment for entrepreneurial activities. Therefore, the entrepreneur should always try to work keeping in mind that the social values and rules are complied with while fulfilling business objectives, or earning profits through the new idea. 


2. Psychological Factors

Along with the abovementioned factors, psychological factors also act as crucial factors influencing entrepreneurship. Regardless of the fact that the economic and social environment is positive and in favor of a business, it will be of no use if individuals associated with the venture are not self-motivated. The following are some of the psychological factors affecting entrepreneurship development:


  • Status Respect

    It has been observed that withdrawal of status encourages the dissatisfied people belonging to a society to opt for another unique product option. This creates room for entrepreneurial development. When an individual is not content with the present situation, then they look for innovations. This drives entrepreneurial growth.

  • Motivation For High Achievement

    The theory of need achievement propounded by D. McClelland states that entrepreneurial growth or development is dependent on the need or motivation for high achievement. He has mentioned that it is the level of motivation that decides whether a venture or an entrepreneur is bound to succeed or fail. To ensure a high level of motivation, both employees and the entrepreneur can undergo appropriate training. 


3. Political Factors Affecting Entrepreneurship

All of these factors are either directly or indirectly impacted by government action. The government frames policies and laws while keeping in mind entrepreneurs, because they understand that development of entrepreneurship in the country will bring significant benefits to the economy. Therefore, the government extends support to entrepreneurs constantly by creating special economic zones, subsidies, social schemes, industrial areas etc. Political factors are one of the most significant factors influencing entrepreneurship growth around the globe.



There are several factors influencing entrepreneurship. Therefore, an entrepreneur requires support from various stakeholders of the project at all levels. The development of entrepreneurship is necessary, especially in a country like India, because it can bring a lot of economic value as well as create employment opportunities.

To understand the factors influencing entrepreneurship growth, Harappa has launched a course on Leading Self. Taught by the best industrial experts, this course will be highly beneficial for those who are on their way or planning to become an entrepreneur soon. 

So don’t wait. Check it out now!

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