Various researchers world over have identified the factors that contribute to the development of entrepreneurship. Economists agree that the lack of entrepreneurs is not caused by economic conditions alone. It is also due to the whole set of socio-cultural and institutional environment prevailing in the less developed countries. Various environmental factors influencing the entrepreneurship are as follows:

Economic Factors: Economic environment exercises the most direct and immediate influence on entrepreneurship. The economic factors that affect the growth of entrepreneurship are the following:

• Capital: Capital is regarded as lubricant to the process of production.
• Labor: Entrepreneurship is encouraged if there is a mobile and flexible labor force.
• Raw Materials: The availability of raw materials is very important for establishing any industrial activity.
• Market: The size and composition of market both influence entrepreneurship in their own ways.

Social Factors: Social factors can go a long way in encouraging entrepreneurship. In fact it was the highly helpful society that made the industrial revolution a glorious success in Europe. The main components of social environment are as follows:

• Caste Factor: There are certain cultural practices and values in every society which influence the actions of individuals.
• Family background: This factor includes size of family, type of family and economic status of family. Zamindar family helped to gain access to political power and exhibit higher level of entrepreneurship.
• Education: Education enables one to understand the outside world and equips him with the basic knowledge and skills to deal with day-to-day problems.

Psychological Factors: Many entrepreneurial theorists have propounded theories of entrepreneurship that concentrate especially upon psychological factors. These are as follows:

Political Factors: An entrepreneur, however creative he/she may be, cannot function without the supportive actions of the Government. It is for the government/society to ensure the availability of required resources for the entrepreneurs and also the accessibility to them.

Question to Consider: 

1. Discuss briefly about the factors impacting emergence of entrepreneurship.