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Transcript

Hello!! Friends in our last class we discussed various theories of entrepreneurship through which you must have understood how different theories are proposing the different issues as far as the development of entrepreneurship is considered. In this class we will be discussing about various models of entrepreneurship. So we cannot say that one particular model is going to suit all the countries or all the situations or all the type of enterprises that we can come across. It solely depends on various factors what type of enterprise that we are taking up, under what circumstances, what are the inputs, what is the technical manpower that we have, there are good number of issues that we come across and based on that we can come out with a new model also. But understanding the existing models that are in operation under different circumstances gives us an idea so that what type of model I can adopt or can I go for combination of two or three different models and I can emerge third or fourth type of model which is already not existing but I can create the model so this is what is the understanding that we can develop by studying the different models of entrepreneurship that are being practiced under different circumstances. So Dana in the year 1998 has explained different models that what will be discussing one by one. So as I have already said there is no one best way of or for a country or for a situation to promote entrepreneurship. It depends on circumstance to circumstances. The model in order that we are going to discuss is the Laissez-faire model. So wherein the lack of intervention from the government permits entrepreneurs to become more competitive and to become well. So in this model the intervention of the government is at the minimum if at all there is minimum interference of the government so that the entrepreneur is in a more advantageous situation, so that he is happy for many reasons because the rules and regulations are at its minimum. In other words government interference and regulation obstruct economic development and that is how there should be minimum interference of the government. So we have seen that in Indian context so there was a concept of redtapism. So what is that redtapism? That is referring to intervention of the government at every level. But over a period of time now we have made good numbers of efforts to overcome that redtapism in the form of minimizing the rules and regulations and minimizing the intervention of the government. And with the launch of the programs like standup and startup we are giving so many other relaxation also just to promote entrepreneur and entrepreneurship among the society wherein we have said that there not be any tag restrictions for the period of three years. There will be good numbers of relaxation as far as environmental laws is considered, good numbers of relaxation as far as labor laws is considered so what does these relaxation mean. The relaxation means the minimum intervention of the government as far as establishment of an enterprise and continuation of that enterprise is considered so entrepreneur can take initiative to establish an enterprise and he can go ahead. Maybe in the longer run there will be some rules and regulations that he has to follow and accordingly by the time he becomes an establish entrepreneur. So this is what the Laissez-faire model explains.

Then coming to the second model which is known as the strategic interventionist model. This model indicates the government promotes the business by intervening the market place through strategy and policy formulation. Government has a definite role to play as far as formulation of the policy is considered. And its implementation also is the responsibility of the government. The entrepreneurship is encouraged by providing the training. This is what government is doing up. Already seen there are good number of institutions which are promoting the entrepreneurship and which are promoting the research in case of entrepreneurship as well as training and so on and so forth. There are opportunities of financing with the help of various financial institutions and marketing know-how and support to entrepreneurs in many ways. And the support is upto the level of hand holding. It is not that we are only giving you training and we are giving you the research support and all those things. So even after you launch your enterprise government is with you till you succeed in the form of, whenever you face any problem the government institutions comes in the way and they are going to support you and that is what is the support of the government to promote the entrepreneurship.

Then the subsidized interest rate model is another model for development of entrepreneurship. Wherein the high interest rates obviously cause heavy debt burden for the entrepreneurs. So that is how they are interested in reducing the interest rates. Then the examples of the south Korean economy is one of the best example we can say that because this model is adopted by that particular country. By this reducing interest rates you can create so many chaebols and which ultimately end with the conglomerates and the megaconglomerates. Conglomerate is a term that we generally come across related to the soils and minerals. Wherein the good number of minerals or rocks they attach by a binding force and the form a stone wherein different types of characteristics that we come across. Similarly, in this particular model with the support of the government with the minimum interest rates so there are good numbers of entrepreneurs they are coming together and they are forming the chaebols as well as the megaconglomerates. And this model is being adopted by the South Korean economy.

Then Trade facilitation model. The government facilitates paper work requirements and reduces the bureaucratic constraints rather than tangible end. So, in Kenya there is no grant available for new venture. So in some cases it may be support you to the concept like capitalism and in other cases it becomes one of the hindering factor or the budding entrepreneurs. The loans are few in quantity and minimal in values. Then government provides free consulting services to the entrepreneurs and help them step by step from the time of their inception because we are withdrawing the facilities from one side and we are providing various other facilities on the other side and policy is with the emphasis on the trade facilitation because government is going to take over the role of promoting the business by supporting through the process of facilitation of trade.

Then Yogopluralist model which is adopted by the Yugoslavis. So this model is a result of weak central government and the cultural heterogeneity of its constituent republic. When there are minimum restrictions or the government is not able to perform under such circumstances so we will come out with this type of model where the culture was an important determination of differences in economic policy as far as that country is considered which in turn contributed to the regional disparity. So hence the reforms initiated in Yugoslavia at local level and subsequently cause change in the federal level. So it is the entrepreneurs who took initiative to change the system that is prevailing in that model which is popularly known as Yogopluralist model.

Then coming to the open door and the reform model the people republic of China which has adopted this particular model wherein the utilization of open door reform model was adopted which is consistent with the Chinese culture. Basically in case of China land is not privately owned. As in case of many other countries, you cannot own the land in your name but the long term lease agreement give the feeling of ownership to the tenants. The person who would like to act as an entrepreneur will have to get the land and other resources on lease from the government and this arrangement leads to the strong incentives to produce. So these are the cultural situations which are prevailing in those situations and that is how they have adopted this particular model. The Chinese farmer are kept outside the planned sector of the economy for promoting entrepreneurship in them. They are only the producers in the government land rest of the terms are dictated by the government and the cannot act as an entrepreneur as it is possible in other country. If at all you want to do that so then you go for this particular process wherein you try to enter that door which is open and the reforms as suggested by the government.

Then coming to the next model which is known as the doi-moi model. So which basically it is practiced in the country Vietnam. The literal meaning of the doi-moi is renovation or the new thinking. This model is comfortable with the restoring prestige of the ruling communist party which was the ruling party in that particular country. It is unique blend of socialist and the free enterprise policy in a socialized state. While discussing the concept of economy we said that so the economies which the enterprises which are totally owned by the government are known as the socialistic economy and being the communist party under rule the country Vietnam was having the socialistic economy wherein they adopted this particular model. So here the complementaries and the harmony between the government firms operating under system of centralization and in the business sector operating independently. So this is the basic idea behind this socialist model which was adopted by the country China.

With this we can say that different countries have implemented a variety of models to help their entrepreneurs. So it depends on the cultural situation, it depends on the political situation, it depends on various factors which are prevailing in that country and entrepreneurship model should not be copied into the environment without verifying appropriateness. We cannot say that the model adopted by China or the model adopted by Vietnam should be replicated or should be copied in other countries or other places because the factors vary from place to place. Identification of opportunity and respond to it by entrepreneurs in culture bounded. So it is the basic culture of that particular area or locality wherein we are taking up a particular entrepreneurship process will make you to select a particular model which is suitable to that place. So, we discussed about various countries. So when we practiced same things within a country, in a country like India the model which is suitable for a particular state may not suit to another state so that is what is diversity that we have in India. So the northern part of India may be adopting a particular model that too there are good number of states. May be the model which is suitable for Uttar Pradesh may not be suitable for the state of Bihar or the model that is suitable for Bihar may not be suitable for the state of West Bengal. So it all depends on the factors which are locally available there and that is based on those locally predominant factors. The model of entrepreneurship should be selected and adopted for the benefit of the entrepreneurs.

With this we are closing this particular discussion.

Thank You.