Entrepreneurship is defined as the ability of a business owner to undertake the risk of investing in a new business venture. Globalisation has dramatically reduced this stringent regulatory regime of government. However, the chances of market failure necessitates government’s intervention (Chakravarti, 2005). Moreover, scholars have identified government to provide the perfect environment for the growth of small and micro enterprises. Government can provide stability to the price and currency. It is the authority that enforces property rights which is the primary condition for entrepreneurs to undertake the risk of investment. Entrepreneurs are crucial for industrialisation and innovation (Mousley, 2015). One of the main components of any governmental agenda is that it always incorporates economic development as an important object, specifically for developing countries. This paper emphasises on the role of government in facilitating entrepreneurial activity and propagation of small businesses to support overall objective of economic development.
In the works of Sikalieh, Mokaya and Namusonge (2012), the concept of entrepreneurship has been defined as the heart of contemporary business framework. Many researchers have identified entrepreneurship as an innovative force that is responsible for creation of wealth in the economy. They are the one undertaking risk in terms of equity and time so that an organisation can provide value to the customers in terms of quality products and services.
The contribution of entrepreneurs as a stimulator of economic growth can be illustrated from the success of Silicon Valley in California. The success of Silicon Valley is accrued to the sound venture capital base and the use of highly skilled labour, who are contributing towards innovation particularly in the technological field. Researchers have identified California’s Silicon Valley as an ideal evidence of a well-functioning ecosystem of entrepreneurs (Valkokari, 2015). This high growth of the entire Silicon Valley owes its success to the financial support from various governmental and non-governmental programs. This had reduced the risk of investing in the new venture and evoked informational transparency (Valkokari, 2015).
Small businesses are identified as the driver of economic growth and they are substantial in providing innovation with greater employment opportunity. Small enterprises offer greater scope for development of new products and provide support to the big businesses. It has been noticed by many scholars that the supply chain incorporates many small firms which led to the birth of the concept of outsourcing (Hatten, 2015).
According to the small business survey 2014, almost 74% of the small businesses are family owned with multi-management feature. They are more significant in the primary sector, retail, construction, etc. In terms of female representation in the SMEs (small and marginal enterprises), almost 18% were managed by single woman and a further 27% of SMEs were found to be run by female and male employees equally (Department for Business Innovation and Skills, 2015).
The government needs to support the growth of small businesses so that they can prosper to become market leaders. Multinational companies (MNCs) like, Nike, Microsoft and Apple were small businesses in their initial years. Thus, if small businesses are provided with necessary support from the government it will be easier for them to climb the ladder of high growth. In developing countries like, India, the government is taking a number of initiatives to encourage entrepreneurial activities in SMEs (The Indian Express, 2016).
There are a number of ways through which government can support entrepreneurial activities. It is important for the government of a country to start nurturing the spirit of entrepreneurship from an early age, like helping the fresh graduates from the business school to set up their business with easy access to market and clearance of the number of regulatory bindings. The following approaches of the government could prove to be highly beneficial for entrepreneurial activities.
Cheaper and faster start-ups: The government can alter the process of registration of a new business venture through online registration.
Supportive legislation and regulations: The amendments in the national bankruptcy laws and legal bindings can effectively support entrepreneurs of the SMEs to grow in a competitive market. Further, the government can provide tax exemptions which will foster the growth of SME by increasing their revenue.
Access to capital: Government subsidy over capital and financial loans will make it easier for the small firms to get the necessary assistance to continue their production and not get subdued by the big capitalists.
Development of Skills: Establishments of training and consultancy service institutions which will help the young entrepreneurs to take profitable business decisions in a cost effective way (Hernandez, 2010).
Online presence: The government can launch an online platform where the entrepreneurs of the SMEs will be able to access world market and the establishment of secure payment infrastructures so that the latter can expand its business across the world.
In the UK, the report prepared by Young (2013) explained the ways that can help in the development for entrepreneurial activities through greater emphasis on the SMEs. According to him, the strongest barrier towards the growth of young entrepreneurs is the access to investible capital. In order to address this challenge, the solution suggested by Young (2013) could be advantageous for potential entrepreneurs which was to issue start-up loans. UK government has also invested £30 million in the fund for start-up loans and has increased the age-limit of the candidates for entrepreneurship from 18-24 to 30.
Most of the organisations have identified innovation as their key driver to success.