Pakistan is an impecunious and underdeveloped country where unemployment rate continues to Rise .In 2010, according to the CIA World Fact book, the unemployment rate in Pakistan was estimated to be 15% . (Economy - overview, 2011)
This percentage shows weak economic condition of Pakistan. Therefore, there is a strong need for developing entrepreneurial environment. This can play an important role in boosting our country's economy by providing employment opportunities to all segments of society.
In today's dynamic era,business world is gaining utmost importance A country cannot be called as 'developed country' unless it has a strong economic system. .For the economic growth ,there must be extensive business activities going on throughout the country. For this purpose role of Small and medium enterprise (SME's) and other entrepreneurial activities cannot be denied.
In an under developed country like Pakistan ,the entrepreneurial activities no doubt are extremely crucial. It helps in the growth of economy in a number of different ways.It encourages entrepreneur to come up with new ideas, provide with employment opportunities, increase productivity consequently lower per unit cost, helps in increasing exports, amplified domestic competition etc.Moreover,this sector not only helps in strengthen the economy through its operations but also helps in the growth of large businesses.Unfortunately,in our country the rate of entrepreneurial activities and role of SME are not up to the mark.
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In Pakistan, starting up a new venture can surely be challenging for an individuals as they face a lot of hurdles .There can be a number of different reasons for this condition. To begin with,the political and economic situation of this country are unstable. Due to increasing level of uncertainity, people are reluctant to invest in business opportunities.Secondly,in Pakistan people are risk averse .They prefer doing jobs rather than starting their businesses. Moreover, the political and economic situation of our country are unstable. Starting up a new business requires sufficient amount of funding. Majority of people who are passionate to start their own business, lack financial support.
To boost up entrepreneurial activities, government must provide favorable environment for the potential and established entrepreneurs. Besides government initiatives, organizations that support and encourage entrepreneurship can also improve the entrepreneurial rate in our country. Combined intiatives of public and private sector would give chance to a lot of talented Pakistanis to start off with their own business and come up with innovative ideas.
The Indus Entrepreneurs (TIE) is an example of such organization that is known globally for its working regarding improving entrepreneurship. It provides not only financial assistance to interested entrepreneurs but also guides and encourages them to be successful entrepreneurs.
The purpose of this study is to have an in-depth analysis of overall working of The Indus Entrepreneurs in Pakistan and its impact on entrepreneurial rate.
To study how TIE has created an economic and socio-cultural impact on the Entrepreneurial Fiber of Pakistan
To study the extent to which TIE has created an economic and socio-cultural impact on the Entrepreneurial Fiber of Pakistan.
To study the relationship of these factors in relation to TIE's activities.
2. Literature Review
Entrepreneurship is an old concept. Researchers have defined this concept in a number of different ways.According to Viramgam(2007)" Entrepreneurship is an operational process initiated by an entrepreneur by which he reaches to his ultimate objective of establishing an enterprise and managing it profitable"In other words, entrepreneurship is any activity that eventually results in profit. Rentschler (2003) further explored the topic and said that entrepreneurship is viewed as a process of creating value for the society that amalgamates exclusive combinations
of public and private resources to improve social and cultural opportunities in a varying environment while remaining true to the original task of the organization. It means entrepreneurship is not only advantageous for specific organization but it has positive impact on society as well.Furthermore,a
study conducted in Pakistan shows that "Entrepreneurship is a combination of innovation and risk taking."(Haque,2007).Later on, research shows that Governmental policy has given more importance to large-scale manufacturing as compared to SMEs.(Chemin,2008). Consequently, it has been incapable to encourage real entrepreneurship and supported cartelization and rent-seeking ( Haq ,2007)
2.1.1 Types of entrepreneurship
Always on Time
Marked to Standard
Literature highlights different types of entrepreneurship.One kind of entrepreneurship is Intrapreneurship . Hisrich ,Peters & Shepherd(2004)defined Intrapreneurship as "Entrepreneurship within the organization". Hisrich et al.(2004) further explored the topic and said that for implementation of Intrapreneurship ,the essential cultural changes can only be achieved with the help of top level dedication .
Without the commitment of top management the organization will never able to go through all the cultural changes necessary for implementation
Recently social entrepreneurship, political entrepreneurship, and knowledge entrepreneurship have emerged to give holistic conceptualizations of entrepreneurship . In 2009, new kind of entrepreneurship called as LILO (a little in, a lot out) entrepreneurship came forward.Mouau(2011). LILO entrepreneurship, requires nominal funds to begin with and to commence its operations. Bookfresh(2009).
In Pakistan the rate of entrepreneurial activities is below average. Research conducted by Seth,Anas,Khan,Merchant,&Khan(2010a) shows that SME's add 30% to GDP,25% to manufacturing value addition and 80% to non-farm employment. In 1998, the Ministry of Industries, Production & Special initiative founded the Small And Medium Enterprise Development Authority (SMEDA) to aid the difficult mission of developing SMEs in Pakistan (Chemin,2008).But the working of this government institution is not effective. As research conducted by Seth etal.(2010a)shows that over the last 10 years SME contribution to GDP is static. It means SME sector is declining and shows no growth indication.
Research shows that an entrepreneur has several distinctive characteristics. According to Joseph Alois Schumpeter,
"everyone is an entrepreneur only when he actually carries out new combinations" Elliot(2004). Entrepreneur is a person who has creative mind and who comeup with unique ideas.
According to Viramgam(2007)" Entrepreneur is a person having specific skill, ability ,awareness and self-confidence who bears the risk of operating a business in the face of uncertainty about the future conditions."It means that an entrepreneur must have a bold personality as risk taking is an important feature of entrepreneurship.Furthermore,research shows that Verma(2005) has termed Entrepreneur as"An innovator who introduces something new into the economy".Moreover,Kuratko & Hodgetts(1998),suggest that the entrepreneur is the vigorous way for bringing revolution in the business world .
2.2.1 Types of entrepreneurs
In 2004 ,Agarwal suggested five types of entrepreneurs:
the Opportunistic type , who was
motivated by financial gain,
the "Push"type , propelled by negative "push"
grounds for starting a business,
the Managerial type, high leadership,
administration and environmental skills, also wants financial returns,
the New Craftsman type, wants more autonomy at work and wish to follow a
the Idea driven Opportunist type, come out as a
Social and cultural factors are important in determining the characteristics of an entrepreneur. According to Giannetti & Simonov(2007) individuals who are related to entrepreneurial social groups have potential to become entrepreneurs. Those people with right kind of skill set and adequate funds can start up with their business. In the research conducted by Bianchi in 2009 ,it was found that on the basis of ability and resources an individual has a choice to become or become an employee in other firms. This shows that skills and financial resources are two important factors for a person to become an entrepreneur.
2.3 Economic Factor
Pakistan is an under developed country showing weak economic indicators.In 2010 ,the inflation rate in Pakistan was estimated to be 13.4%.Similarly,in fiscal year 2005-2006the percentage of Population below poverty line was 24% (Economy - overview, 2011).These figures show that Pakistan is far behind in economic development as compared to its neighboring countries. Indian and Chinese economies are continuously growing .On of the reason of their growth is entrepreneurship. Lakshmi Mittal ,Azim Premji and Mukesh Ambani all are big Indian entrepreneurs .Their wealth are worth million dollars.To compete with its neighboring countries and globally ,Pakistan must take initiative to promote entrepreneurial culture throughut the country.
Multiple researches show that entrepreneurship is positively related with economic development. As it provides job opportunities that result in accelerating the economic engine of a country
According to Verma(2005)entrepreneurship development should be viewed as a way of not only solving the problem of unemployment but also of overall economic and social advancement of nation.Today's business world is continuously changing ,Organizations are coming up with innovative products and services.Competition has become more intense. In the research conducted by
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Li , Tse and Zhao in 2009,it was identified that due to increase global competition, corporate downsizing, de-layering, and rapid technological progress ,it has become a need for organizations to focus more on entrepreneurial activities so that they can survive and flourish. Similarly Stam and Stel(2009) have found that it has become necessary to start new business in low income countries , in contrast to high income countries, where entrepreneurship is most often opportunity driven.In Avanzini (2008) opinion,entrepreneurship is an "invisible force" leading economic efforts, creating awareness, innovating, catching the attention of employees, and improving economic development,.Thurik(2009) has identified that entrepreneurial economy compels the competitive advantage by inventive activity, while knowledge overflow are significant source of this inventive activity.According to Desai(2009),the sudden increase of interest regarding entrepreneurship has demanded important examination to expose its true relationship with economic development. This has become a need for developing countries, where entrepreneurship has become a foundation of economic development policies, and where its changing aspects, are possibly uncertain.Government must strive to improve the quality of entrepreneurship.In 2008,Koster and Rai found that in order to gain substantial increase in economic development ,the value of entrepreneurship should be increased.Onthe other hand, Amorós(2009) is of the view that entrepreneurship can support to improve the economic and social situationfor developing economies by providing an appropriate atmosphere that comprised of quality institutions. Further research by Pavey(2006)found that it is the promise of entrepreneurship that there will be increase in employment, economic recovery, increased democratic participation through voters' progressive self-interest, as they become more closely apprehensive with government policies that openly affect their economic growth.
2.4 Socio-cultural factor
Culture is an important factor that has a strong impact on the concept of entrepreneurship.Lowe & Marriott found in their research in 2006 that culture has a significant function in determining attitudes to entrepreneurship, risk and failure. On the other hand, Saxena(2005) found that sociologists are of the view that , entrepreneurial activity has significant impact of social standards and beliefs. There are certain societies where people are more comfortable like in doing their own business. Such people are risk takers and they have entrepreneurial mindset.Meher. & Sahoo (2008) are of the view that some groups related to specific society produce great numbers of competent and victorious entrepreneurs, while others are unsuccessful in doing so .Similarly, socioeconomic indictors of a particular society has also a significant impact on entrepreneurial activities.Linan etal.,(2009) have identified that socioeconomic situation in the person's surroundings is related in explaining the level of entrepreneurial aim and also the way in which cultural morals will affect that aim at the end.Furthermore,in Russell (2005) opinion cultural values decide the social significance that is allocated to entrepreneurial activities, as a result of which it determine the social position of the entrepreneur and the social course of the entrepreneurial procedure.
2.5 The Indus Entrepreneurs (TiE)
In 1992,The Indus Entrepreneurs (TiE), was established in Silicon Valley.It was founded by a group of victorious entrepreneurs, corporate executives, and senior professionals associated with the Indus region.Presently,it has 13,000 members, including over 2,500 charter members.The organization is working in 13 different countries.. (Tie.,2011)
The main objective of this global organization is
To change mindsets of people.
To encourage them to become job creators rather than job-seekers.
To give back to the society through entrepreneurial activities.
TiE is a nonprofit organization.It has strongest entrepreneurial network and provides free of cost coaching facilities to its members.
2.5.1 TiE Pakistan
TiE is working in three major cities of Pakistan namely Lahore,Karachi and Islamabad.
2.5.2 TiE Islamabad
It was introduced in June, 2008 by Prime Minister of Pakistan, Mr. Syed Yousaf Raza Gillani. TiE Islamabad has group of successful entrepreneurs and professionals that are determined to support and encourge budding and current entrepreneurs of this city.(Â Islamabad, Tie,2011)
The President of TiE Islamabad is Ms. Sarah Hashwani.Recently,Â TiE Islamabad has conducted a successful conference on entrepreneurship. Its theme was TiECON Pakistan 2011: Bounce Back.Its main events were
A relatively small setting where 50-60 people will have an interactional and learning sitting with an influencial speaker.
An area for startups to show their ventures to angel investors and entrepreneurs .
To teach necessary entrepreneurial techniques to students and entrepreneurs.
Sponsors exhibited their products or services.
Pakistan products that are inventive was given an opportunity to search for partnerships.
mentoring sessions held between mentors and subjects.( Tiecon,2011)
2.5.3 TiE Lahore
In 2002 TiE Lahore Chapter was founded.This step was taken by Syed Babar Ali. The Lahore Chapter is emphasizing on encouragement of entrepreneurial culture among young people , giving coaching to fresh entrepreneurs.(Lahore Tie,2011)
Monis Rahman is the President of TiE Lahore. (Tiecon2010)
2.5.4 TiE Karachi
TiE's Karachi Chapter was commenced in 2001,initiative taken by President of Habib Bank,
Zakir Mahmood.The president of TiE Karachi is Sabeen Mahmud. (Tiecon2010)
2.6 Entrepreneurial Education
To improve the entrepreneurial
rate in the country , entrepreneurial education is of utmost importance. Without the quality entrepreneurial education, healthy entrepreneurial activities are not possible. According to Seth,Anas,Khan,Merchant,&Khan(2010b) the education of entrepreneur's has constructive connection with quality business.On the other hand ,according to Shinnar,Pruett.& Toney (2009)for preparing the students to perform with compatibility in changing labor market, educators extend entrepreneurship education beyond the business school. Whereas, Klandt, and Volkmann,(2006) are of the view that it is assumed that entrepreneurial thinking and acting
are not simply innate but can be developed through experience and promoted through
targeted training and education and it has become a basic condition for establishing entrepreneurship education at universities and colleges. As already discussed ,starting new venture require innovative mind and specific set of skills.Therefore,according to Levenburg,Lane and Schwarz (2006)starting a new venture requires the command and amalgamation of skills a that are different from skills required to preserve or develop an existing business .For effective learning, practical knowledge is very important. According to Nketekete and Motebang(2008)for the attainment of entrepreneurial skills, entrepreneurial activities must be done in a real business world as learning by practically performing it seems to be promoter for such skills .Instructors encounter different challenges as students are from different backgrounds. Mars& Garrison (2009)identified that as student's demographic are diverse entrepreneurship lecturers face difficulties. Furthermore Hazeldine& Miles(2007) found that originality in teaching, research, and service can be supported by increasing entrepreneurial strategy within a business school.
TiE is also trying to promote entrepreneurial education by bridging the gap between universities and industry. They are educating people through different platforms including social media. Tie is active on facebook,it has uploaded all the information related to its upcoming events. TiE facebook page has created multiplier effect and a lot of people are getting aware of TiE initiatives.
Following are the TiE initiatives
YES (Youth entrepreneurial Society)Club
TiE has established YES clubs in various universities. It will help in encouraging and generating awareness about entrepreneurship among students.
Cyber Entrepreneurs was established to authorize individuals to start their own IT
business at very minimal cost .
Microsoft BizSpark is a plan intended to provide Microsoft software access to entrepreneurs in initial phase of their businesses to assist them gain quick success .Furthermore, this will help them to connect to worldwide network of entrepreneurial organization.
Credit Awareness Plan
Its objective is to establish a help line to facilitate people who require fund from Skill Development Training Organizations,Trade bodies and Development Sector Organizations
Virtual Office Space
It provides virtual office and phone answering service. It will help in reduction of operating costs of new businesses.
H1: Entrepreneurial education has a positive impact on the economic
H2: Entrepreneurial education has a positive relationship with o the socio-
cultural factor .
Figure 2.1 Theoretical Framework
The population for this research are university students and entrepreneurs(potential and established) of Pakistan.
Sample for this research is University Students of Rawalpindi/Islamabad.Furthermore, entrepreneurs that include both potential and established entrepreneurs of Rawalpindi/Islamabad.
3.2.1 Sample Size
Data would be collected from 300 respondents thus making the sample size 300.
3.2.2 Sampling Technique
The sampling technique used in this research would be Random Sampling for University Students .Furthermore, data from entrepreneurs would be collected with the help of Area Sampling
3.3 Data Collection
Primary data for the research shall be collected with the help of Interviews and Questionnaire.