CHAPTER III

CONCEPTUAL AND THEORETICAL REVIEW

In the last chapter the literature related to

Islam and entrepreneurship. both textually and historically.

was reviewed. However. stating the nature of the problem

would not be complete unless the relevant theories and

empirical studies are reviewed. This review would help in

fixing the definition and characteristics of entrepreneurs

and delineating the relationship between religious

values/institutions. economic. and political structure. on

the one hand and entrepreneurship on the other and. finally

stating precisily the relevant hypotheses. These issues are

taken up in this chapter. beginning with the origin of the

term 'entrepreneur'.

The word entrepreneur appeared in the French

language and was applied to leaders of military expeditions.

1 beginning with the early sixteenth century

was applied to other types of adventures

After 1700 it

like the

construction of roads. bridges. harbours and buildings and

much later even to architectures. Bernard F. de Belidor

applied it to the function of buying labour and material at

uncertain prices and selling the resultant product at a

1. Cochran. Thomas C .• 'Entrepreneurship' in David L. Sills (ed): The International Encylopedia QJ:. the Social Services. Vol. 5. The Mac Millan Company. the Free Press. 1968, pp. 87-90

54

contracted price. 2 Richard Cantillon, in early eighteenth

century drew attention to the technicality of the term. The

essence of the function of the entrepreneur was to bear

uncertainty. Cantillon considered everyone entrepreneur,

barring princes, landowners,and salaried workers. 3 But the

physiocrats of the later eighteenth century, like Francois

Quesnay and Nicolas Baudeau, considerd even agricultural

cultivators as enterpreneurs and considered essential

characteristics of an entrepreneur to be of taking risk and

creative innovations. Even A.R.J. Turgot at the same time

spoke of

capita1 4

the entrepreneur in manufucturing who risked his

J.B. Say5 provided the definition that survived

until the twentieth century who wrote of entrepreneur as the

agent who "unites all means of production and who finds in

value of the products------ the re-establishment of the

entire capital he employs, and the value of the wages, the

interest, and the rent which he pays, as well as the profits

belonging to himself". His entrepreneur mayor may not

2. Hoselitz, Bert Entrepreneurial Theory', History, vol. 3, 1951, pp.

F. 'The Explorations 193-220

3. Cochran, op.cit, p. 88

4. Hoselitz, 1951, pp. 205-212

5. Say, Sherwood,

J. B. , 1816,

Catchism of Political pp. 28-29

55

Early History of in Entrepreneurial

Economy, London,

supply capital, but to succeed must have, "j udgemen t ,

perseverence, and a knowledge of the world as well as of

business. He must possess the art of superintendence and

administration" 6

In the writings of English classical economists

one finds words like adventurer, undertaker or projector but

not entrepreneur and never provided its precise

d f · . . 7 e 1n1t10n . The term did not find place in the economic

theories of Smith to Marshall, as all these theories were

based on the theory of stationary equilibrium, established

by the multiple reactions of businessmen, consumers,

investors, and workers to the prices of goods and services. 8

Beside the theory, because of the inseparable entities of

capitalist and entrepreneur, in the classical age,

confounded the function of entrepreneur mainly because of

small sized and closely held firms. As businesses grew,

Alfred Marshall saw th dfffirence between )he functions of

9 the capitalist and management, but did not elaborate upon.

6. Say, 1816, p. 295 of 1827 edition.

7. Redlich, Fritz, 'The Origins of the Concepts of "Entrepreneur" and "Creative Entrepreneur", Explorations in Entrepreneurial History, 1949, Vol.l, pp. 1-7

8. Cochran, op.cit., p.88

9. Marshall, Alfred, Principles Q! Economics, MacMillan, New York & London, 2nd edition, 1891, p. 644.

56

Because of the rapid rise in corporate sector in

America, Francis A.Walker, in 1870's saw the distinction

between capitalists and entreprenurs, to the latter he

called as engineers of progress and the chief agents of

d . 10 pro uctlon. F.B. Hawley in 1882 saw risk-taking as

distinguishing attribute of the entrepreneur and ranked

this on par with the other factors of production;

land,labour and capital. J.R. Commons gave an explanation

of risk taking entrepreneurship which Joseph A.Schumpeter

11 had to elaborate upon.

Schumpeter gave credit to John Bates Clark for

being the first to connect profit to entreprenurship, thus,

"entrepreneurial profits considered as a surplus over

inte~'t(and rent),with successful introduction into the

economic process of technological, commercial, or

organisational . " 11 Improvements . He ascribed progressive

change through economic development to the work of

innovative busine~smen or entrepreneurs. To Schumpeter, a

magager was an entrepreneur only while he was making a

creative or innovative response, to which Arthur Cole

differed significantly where he stressed continuing general

10. Cochran, op.cit., p. 89

lla. Schumpeter, Joseph A., The Theory of Economic Development, Cambridge, Mass.: Harrand Univ.Press, 1934 (First publIshed in German in 1912)

11b. Ibid, vol. 4, p. 166 n.

57

actions of a 12 manager rather than only innovation,

thereby differing in scope within which the term could be

applied.

Although all economists recognised the importance

of entrepreneurial function but found difficult to place

this unquantifiable agent into the quantified theories,

except recommending its study in empirical studies. As a

result, "entrepreneurial study continues, however, in the

unoccupied territory bordered by economics, history, and

sociOlogy".13

Therefore, economists recognised, in general, that

risk taking,innovation,and superindence and administration

are the important ingradients of entrepreneurship. However,

i t is also recognised that the entrepreneurial

characteristics would differ according to cultural setting

of the enterprise. 14

Therefore, different scholars define the function

of entrepreneur differently and some like Frank Knight

ascribed the supply of entrepreneurship to multiplicity of

12. Cole, Arthur Setting, Cambridge, P.5

H., Business Enterprise ~ its Social Mass.: Harvard University Press, 1959,

13. Cochran. op.cit.. p. 90

14. Aitken. Hugh G.J.. 'The Future Entrepreneurial Research'. Explorations in Entrepreneurial History, Second Series, 1963, pp. 3-9

58

Psychological, 15 16 social and economic factors. Schumpeter

defines it as a function of innovation, 17 Frank W. Young as

a function of group level patterns, Bert F.Hoselitz 18 as a

function of managerial skills and leadership, Fredrick

Harbinson19

as a function of organisation building capacity,

McClleland20

as a function of high n. Achievement (n.Ach.),

Harvey L 'b t' 21 e1 ens e1n as 'input completing' and 'gap

filling' , Everett 22 Hagen as a function of 'status

wi thdrawl' , 23 John Kunkel as a function of social, political

15. Deshpande, M.U., Entrepreneurship Ql industries ~ Concept, Growth, Management, Publications, 1982, pp. 35-36

16. Schumpeter, op.cit., 1934.

small Deep 5

scale Deep

17. Young, Frank W., 'A Micro-Sociological Interpretation of Entrepreneurship', in Peter Kilby (ed). Entrepreneurship and Economic Development, The Free Press, New York, 1971, pp. 139-147

18. Hoselitz, Bert F., 'Entrepreneurship and Economic Growth' , American Journal of Economics and Sociology, vol.12, No.1, Oct. 1952

19. Harbinson, Fredrick, 'Entrepreneurial Organisation As a Factor in Economic Development', Quarterly Journal of Economics, Vol.LXX, No.3, Aug. 1956, pp. 364-68

20. McClleland, D.C. ,The Achieving Society, D. Van Nostrand Co., Inc., New York, 1961, pp. 210-285

21. Leibenstein, Harvey, 'Entrepreneurship and Development', American Economic Review, Vol. LXIII, No.2, May 1968, pp. 72-82.

22. Hagen, Everett, On the Theory Ql Social Change, Vakils Feffer and Simons Pvt.Lt~ Bombay, 1962

23. Kunkel, John H., Society and Economic Growth _ A Behavioristic Perspective of Social Change, Oxford University press, London, 1970-,-pp. 260-274.

59

and economic structure, and Max Weber 24 as a function of

religious beliefs. A brief description of the views and

theories are in order.

According to Schumpeter economic development can

take place only due to innovation, in an otherwise system in

equilibrium. The innovations may relate to new product,

technology, new sources of raw material, new market, or new

organisation. An entrepreneur is the agent who works as a

catalyst to activate these events: he is considered an

innovator. He creates surpluses and could invade various

fields with spectacular success. But its applicability is

doubted in underdeveloped economies because the basic

infrastructure and capital may block the innovativeness of

25 entrepreneurs to unfold.

Frank W. Young accepts group or cluster of persons

rather than individuals to qualify as entrepreneurs. Such a

group combines the factors of production in new ways and are

called entrepreneurs. He accepts Schumpeterian definition,

24. Weber, Max, The Protestant Ethic and the Spirit of Capatalism, Trans. -ralcott Parsons, George Allen a Unwin, London, 1978 (seecond impression).

25. Singh, Pritam, 'The Role of Entrepreneurship in Economic Development', in Butani, D.H. and Singh, p. (eds.), Economic Development: Issues and Policies, Vora and Co. Publishers Ltd., Bombay, p.288. See also Nafziger, E.W., Class, Caste and Entrepreneurship: A Study of Indian Industrialists, East-West Centre, University Press of Hawaii, Honolulu, 1984, pp.16-17.

60

but includes the family background, experience, and member

ship of certain reactive groups and as reflection of general

cultural values, as necessary ingradients.

Bert F. Hoselitz considers managerial skills and

leadership as the primary factors, and financial skills as

of secondary importance for entrepreneurship. However,

subsequently he

h . 26 entrepreneurs lp.

added risk-bearing quality to

Fredrick Harbinson considers the skill of

organisation building critical to entrepreneurship, where

the entrepreneur multiplies himself by effectively

delegating the authority, who in the absence of able

deputees may not fructify.

McClleland, like Hoseli tz, ascribes the innovative

characteristics to entrepreneurial role. If there is no

uncertainty in a venture, no risks and therefore no

enterepreneurship is involved. Thus innovativeness and risk

taking are critical 27 and found them to be related to the

need for Achievement, which depends on child-rearing

practices. The concept of n. Ach. squares well with the

Weberian concept that performing a role in relation to some

26. Hoselitz, Growth, Vakil pp.64-65.

Bert F. Sociological Aspects Ql Economic Feffer and Simons Pvt.Ltd., Bombay, 1960,

27. McClleland, 1961, op.cit., p.216.

61

standard of excellence and that profit is only an objective

28 measure of entrepreneurial performance. Harvey

Leibenstein distinguishes between 'routine' entrepreneurship

and 'new type' of entre preneurship and finds the 'gap

filling' and 'input completing' as the most important

functions of entrepreneurship, and states that training may

help improve enhrepreneurial performances.

Everett Hagen, in explaining social change

recognises entrepreneurship as an important agent who

originate from distinctive groups in societies. He states

that 'creative innovation' and 'change' are the fundamental

characteristics of economic growth. Such groups emerge when

they experience 'withdrawl of status respect' for socio-

political reasons, which squares well with the n. Ach. of

McClleland. But Hagen considers social change as a slow

process extending over a few generations, which therefore

does not provide policy measures for backward countries.

John Kunkel has elaborated the theory of supply of

entrepreneurship expressed by behaviouristic model, and

considers that minority groups, but not all of them, supply

larger proportions of entrepreneurs in a given society. He

argues that industrial entrepreneurship depends on

28. ibid, pp.234-235.

62

'limitation structures', 'demand s truc tures, , 'opportunity

structures' and 'labour structures'.

Max Weber considers religious beliefs as the

important causative factors for the development of

capitalism and considers that Indian religion and Islam lack

such a system. His theory on Hindu religioJs beliefs is

29 criticised by a number of scholars. .

Peter Kilby, after reviewing the major theories of

entrepreneurship suggests that technology and managerial

competence are essential for enterpreneurship and he

organised 13 entrepreneurial functions into four groups,

namely; exchange relationship, political administration,

management control, and technology and that these functions

would vary according to the size, type and setting of an

enterprise 30 and that these functions could be augmented

through training and education - a position which John

Harris takes after studying Nigerian entrepreneurship.31

29. For a review of the studies related to refutation of Weber's theory see Pandey, A.N., 'Role of Religion', Seminar, April 1970 and Tripathi, Dwijendra, 'Indian Entrepreneurship in Historical Perspective - A Re-interpretation', Economic and Political Weekly. vol. VI, No.22, May 29, 1971, pp. M ~- M 66.

30. Kilby, Peter (ed.), Entrepreneurship and Economic Development, The Free Press, New York, 1971, pp.1-42.

31. Harris, J.R.,' Industrial EntrepreneJrshiP in Nigeria'. Doctoral dissertation, North Western University,1967. Ch. 2.

63

These are the major theories put forward by

scholars. most other studies are done in either of the

frameworks of these theories. In subsequent studies. some

scholars tried to club these theories into sociological.

psychological and economic theories. 32 But it is neither

necessary nor possible to classify these theories into such

categories. To take an instance. the theory of Max Weber

may well be classified as sociological or psychological.

What is important. however. is to classify them into areas

which these theories address to. For the sake of

convinience they may be categorised into the theories

related to

1. Supply of entrepreneurs

2. Characteristics and Typologies of Entrepreneurs

3. Functions of the Entrepreneurs

4. The role in Economic Development.

In general. it may be stated that the supply of

entrepreneurship depends on the socialisation process.

education. training and experience which subsequently orient

the individuals towards specific careers depending on the

environmental factors. like the opportunities and

32. For instance. Panini. M.N .. 'Networks and Styles: Industrial Enterprises in Faridabad'. Contribution to Indian Sociology. vol. II. No.1. 1977. and Singh. Sheobahal. Entrepreneurship and Social Change. Rawat Publications. Jaipur. 1985. etc.

64

limitations. Certain groups are more entrepreneurial than

others. These groups provide values and training to the

younger generation, who in turn take to entrepreneurial

career. But not all individuals of these groups become

entrepreneurs, which is due to the fact that each individual

has one's own individual experiences and may lack resources

or motivation to move into these lines.

A large number of studies are conducted in India

and elsewhere which try to delineate entrepreneurial

characteristics, and as a result a baffling list of

d · t . 33 a Jec lves is available to describe entrepreneurial

personalities, and often conflicting results are obtained.

However, four characteristics are fairly commonly repeated;

namely, risk taking ability, innovativeness, managerial

skills and n. Ach. It may be stressed that these

characteristics may not apply to all the entrepreneurs, the

degree and presence or absence would depend on the size of

33. For discussion on similar lines see, Rao, T.V., 'Characteristics of Entrepreneurs', in T.V. Rao and T.K.

Moulik (eds.), Identification and Selection of Small Scale Entrepreneurs, 11M, Ahmedabad-,--1979. See-also Manimala, Mathew, Emergence of Pioneering - Innovative Enterpreneurship: ~ Psychological Model, Working Paper, 624 (mimeographed), 11M Ahmedabad, August, 1986. An attempt is made to systematise these characteristics in Mansfield, R.S., McClleland, D.C., et a!. The Identification and Assessment Ql Competencies and other Personal Characteristics Q! Entrepreneurs in--oeveloping Countries, McBer q Co., Boston, 1987.

65

the enterprise and the level of development of the locale of

the enterprise. In case of small enterprises most of these

characteristics need to be present in some degree because of

the multifarious role of such an entrepreneur. as he cannot

afford specialists who may be delegated some of the

functions.

In small enterprises an individual performs roles

varying from bringing together all the necessary inputs.

including finance. labour. licenses. machinery and

equipment. land and building etc. to the pruduction.

management and marketing of the products. However. in

medium and large companies. many of these functions can

conviniently be delegated. where an entrepreneur can confine

oneself mainly to opportunity scanning. resource

mobilisation including professionals and overall supervision

and direction of the company. In such cases. however. the

entrepreneurial roles get compounded with the organisation.

In most theories of economic development. the

entrepreneur. i

al though very well recogni!sed. could not find

any particular place. especially in the production function.

The difficulty is that the concept of entrepreneurship is

multi-disciplinary and is a qualitative phenomenon which

does not display very clear quantifiable pattern.

Therefore. there is a need to construct socio-psychological

66

measures, that could be incorporated into the production

function to arrive at entrepreneurial performance, either in

overall economy, different sectors of industries, varying

sizes of the enterprises, or according to the regional

context. Such an attempt is made in this study on an

experimental basis.

Before attempting to a brief description of

emperical studies it may, ins u mm a r y be: s tat edt hat the

emergence and growth of entrepreneurship depends on the

entrepreneurship qualities like innovativeness, risk taking

ability, managerial skills and high n. Ach among the groups

or individuals at a given point of time when favourable

economic, social, cultural and religious values and

environments exist for the development of such qualities.

A large number of emperical studies are conducted

in India and elsewhere, which are reviewed here to encase

the problem under study.

D.R. Gadgil 34 in his historical study states that

the economic development was impeded by the colonial rule;

otherwise the craft-based industries were flourishing well

at the beginning of the eighteenth century. He also

analysed the communities involved in trade, finance and

34. D.R. Gadgil, The Industrial Evolution of India in Recent Times: 1860-1939, Oxford University Press,-nelhi,1971.

67

handicraft industries in different geographical regions

during seventeenth and eighteenth centuries. 35

Helen Lamb 36 analysed the origin of business

communities like Parsis, Gujaratis and Marwaris from middle

of the nineteenth century and she did not find any evidences

to show that the heirarchial view of society was ever an

impediment to vigorous commercial and industrial

entrepreneurship.

Andrew Brimmer 37 intensively studied the impact of

managing agency system on the setting of entrepreneurship in

India. This system provided much scarce factors of finance

and management but created problems of concentration of

wealth and wide ranging malpractices.

James 38 Berna , studied fifty two medium sized

manufacturing firms in Madras and Coimbatore and found that

35. Class 1959.

Gadgil, D.R., Origins ~ the Modern Indian Business - An Interim Report, Institute of Pacific Relations,

36. Lamb, Helen B., 'The Rise of Indian Business Communities', Pacific Affairs, vol. 28, no. 2, June 1975, pp. 98-126. See also Lamb, Helen B., 'The Indian Merchant', in Milton Singer (ed.), Traditional India: Structure and Change, American Folkore Society, Philadelphia, 1959.

37. Brimmer, Andrew F., 'The Setting of Entrepreneurship in India', Quarterly Journal of Economics, vol. 29, November 1956, pp.553-756.

38. Berna, S tat e, As i a

Jame J., Industrial Entrepreneurship in Madras Publ i shing House, London, 1960.

68

caste and tradition played little role in the emergence and

expansion of entrepreneurship and also suggested that

favourable government policies will further help diversify

the entrepreneurial base.

Leighton W. 39 Hazlehurst studied Ramnagar (a

pseudonym on India-Pakistan border) entrepreneurs and tried

to analyse the impact of migration on the entrepreneurial

structure and found that entrepreneurial continuity was

further augmented by the migrant entrepreneurs and also

noted that refugee entrepreneurs tended to be more

innovative than local entrepreneurs.

40 Robert Kennedy found that Parsi entrepreneurship

could be explained by their Zorostrian teachings. However,

Amalendu Guha 4l in his historical study of Parsis from

1750-1850 found that their success was attributable to their

interest in European forms of business organisation,

development of ship building, exploration of new markets,

39. Hazlehurst, L.W., Entrepreneurship and the Merchant Caste in ~ Punjab ~, Durham D.C., Duke----University Commonwealth Studies Centre, 1966.

40. Kennedy, Robert E. Jr., 'The Protestant Ethic and Parsis' The American Journal of Sociology, vol.68, No.1, July 1962-.-See also Desai, Ashok V., 'The Origins of Par see Enterprise', Indian Economic and Social History Review, vo1.5, Dec. 1968, pp.307-317.

41. Guha, Amalendu, 'The Comprador Role of Parsi 1750-1850', Economic and Political Weekly, vol.5, November 28, 1970, pp. Ml07-Ml15.

69

Seths: No.48,

acquisition of working knowledge of English language and

adaptation to political milieu.

Thomas A. T ' b 42 1m erg analysed! the Marwari

entrepreneurial community and seems to conclude that as

entrepreneurs the Marwaris performed crucial roles in the

development of the industrial and commercial economy of

India. This role was facilitated by the strong community

support to migrant Marwaris by providing accommodation,

finance and supportive values. Their austerity and hard

work helped them to build strong capitalist base.

D.K. Taknet 43 in his recent study on Marwaris

tried to show that the phenomenal growth of entrepreneurship

of Marwari community is the product of geography and

history. The hard living conditions forced migration and

provided them innovativeness, frugality, thrift, delegence,

racial cooperation and intimacy, charity, devotion to

religion and morality, endurance and simplicity.

Raymond Lee Owens and Ashis Naudy44 found that

42, Timberg, Thomas A. The Marwaris: From Traders to Industrialists, Vikas Publishing House Pvt.-rtd., New Delh~ 1978. Also see his Business and Industry in Nineteenth Century India, E.P.W., Vol. V, No.29, 1970. 43. Taknet, D.K .• Industrial Entrepreneurship Q! Shekawati Marwaris, Jaipur, 1968. 44. Ownes, R.E. and Nandy, Ashis, The New Vaisyas Entrepreneurial Opportunity and Response in an-rfidian ~~ Caroline Academic Press, Allied Publishers, 1978. See also Owens, R.E., 'Peasant Entrepreneurs in North Indian Industrial ci ty, in Milton Singer (ed), op. ci t., pp. 133-166

70

n. Ach. was not higher in the successfull entrepreneurs

belonging to Mahisyas in Howrah as compared to those from

higher casts. This could be explained by the supportive

community and positive self image in case of Mahisyas as

compared to those from higher castes, in which case the

entrepreneurs were deviants.

Richard Fox 45 studied the bazaar economy of a

north Indian town and found that scale of business

enterprise among traditional merchants was not correlated

with a difference in religious ethics, psychology, caste or

family loyalty. Instead the status of bazaar merchant was

reduced due to colonial rule in India.

McKim M . t 46 .. d R h" arr10 reV1s1te amgar 1 1n 1969 after 18 years

and found that the traditional peasants had taken to modern

methods of cultivation and that the social structure

responded to the opportunities and process of modernisation.

Milton Singer 47 in his Madras city study of 19

and Traditional Singer (ed.),

Occupational Durham university,

!

45. Fox, Richard G., 'Pariah Capitalism Merchants Past and Present,' in Milton Entrepreneurship and Modernisation of Culture in South Asia, Monograph No.1Z-,-1973, pp-. 16-36.

46. As reported in Singer, Milton,'Introduction' in Milton, Singer,(ed.), op.cit., pp. 1-15.

47. ibid, pp. 1-15. See also Singer, Milton, 'Religion and social change in India; The Max Weber Thesis, Phase three', Economic Development and Cultural Change, Vol. 14, No.4, J u 1 Y 1 9 6 6, P p. 4 9 7 - 5 0-5 -

71

industrial leaders found that the industrialists have

adopted adaptive strategies to 'compartmentalise' their

actions in industry from their traditional rituals and caste

obligations.

Michael 48 M.Ames also stressed this

compartmentalisation of the obligations of extended joint

family and workplace, implying that the joint family was a

alive concept despite the requirements of modern living

conditioned by the industrial life of Jamshedpur workers.

E. Wayne N f · 49 a zlger, in his study of

Vishakhapatanam entrepreners concluded that there was a

disproportionate representation of high castes and, families

with higher socio-economic status, which these castes did to

maintain or to defend the previleged status, and to enhance

or consolidate the high economic position of the family,

implying that pre-industrial caste and class groups

survived the process of capitalist industrialisation and

substantiated his point in relation to the dominant groups

in other contries as well.

48. Ames, Michael M, 'The structural Dimension of Family Life in the Steel City of Jamshedpur', in Milton singer, 1973, op.cit, pp. 107-132.

49. Nafziger, E.Wayne, Caste, Class and Entrepreneuship ~ ~ Study Q! Indian Industrialists, An East West Book, Centre Honolulu, 1978, esp. pp. 85,123.

72

V.R.Gaikwar and R.N.Tripathi 50 studied small

entrepreneurs in Andhra Pradesh and found that non-business

comminities do better because trading communities found

industrial production carrying more risk and long gestation

period as compared to trade.

SIET 51 Hyderabad studied small units in Hyderbad

and Secunderabad and found that ~'ounger age, formal

education, urban backgound, experience in industry, high

scores in levels of aspirations, risk taking and adoption

intensity were some of the characteristics that were

positively associated with the quality of entrepreneurship.

But factors like technical education, high monthly income,

contacts wi th influential people, membership of

organisations and n. Ach. were not associated wi th

entrepreneurship.

Gloria V.Javillonar and George R.Peters 52 in

their study considered family rather than individuals as

50. Gaikwar,V.R. and Tripathi, R.N., Socio-Psychological Factors Influencing Industrial Entrepreneurship in Rural Areas, National Institute of Community Development, Hyderabad, 1970

51. SIET, Socio-Psychological Factors Influencing !he Adoption and the Innovation Q.! Starting ~ small industry Unit, small Industry Extension Training Institute, Hyderabad, 1974.

52. Javillonar, Social Psyclogical British Journal of 324-328

G.V. and Peters, G.R, 'Sociological and Aspects of Indian Entrepreneurship', The Sociology, Vo1.24, No.3, Sept. 1973, pp.

73

qualified for entrereneurship. found n. Ach. motive as

inconsistent. and that extended family helped entry into

entrepreneurship.

Ashish 53 Nandy studied entrepreneurs and a

matching non-entrepreneur group from Howrah in West Bengal

and found that entrepreneurial exposure is an important

factor for entry into production. He also found that n.Ach.

is the best predictor. followed by n.Power and the sense of

efficacy to entrepreneurship.

54 K.L.Sharma studied the entrepreneurs in Uttar

'Pradesh and Punjab and found that socio-economic milieu.

non-business background were the most important determinants

of entrepreneurship. However. in a later study55 he

suggested a multivariate model of entrepreneurship wi th

four stages. namely; entry. expansion. perception of

stability and commitment to sustained growth. He concludes

that the role of government policies and their

implementation is essential to sustain entrepreneurial

interest.

53. Nandy,Ashis, Entrepreneurial Men', pp. 98-105

'Entrepreneurial Cultures and E.P.W., Vol. VIII, No. 47, Nov. 1973,

54 . S h a r rna , K . L; , En t rep r e n e uri a 1 G row t han d I n d u s t ria I Development Programmes in Punjab and Uttar pradesh, Punjab Agricultural University, Ludhiana. 1976. 55. Sharma, K.L., 'A Multivariate Model for The Anaysis of Entreprenership in Manufacturing Organisation, Sociological Bulletin', Vol.27, No 1.. March 1978. pp. 48-62.

74

M. U. Desphande 56 studied the small industries of

Marathwada region and found that government policies, the

upper strata of society, social and political leadership,

occupational background, family aspirations, and general

infrastructure as the important factors for the development

of entrepreneurship.

There are some studies which are conducted in

other cultural contexts that emphasise different

characteristics of entrepreneurship and also stress the

sociological and economic factors as important 57 Mo s t 0 f

them emphasise that certain groups take to entrepreneurship

in large numbers and that the social structure is not an

impediment to the origin and growth of entrepreneurship,

56. Deshpande, M.U., Entrepreneurship - of Small Sca~

Industries, Deep and Deep Publication, New Delhi, 1982.

I 57. For instance, Alexander, A.P., Greek Industrialists An Economic and Social Analysis, Cen~of Planning and E con 0 m i c Res ear ch , A the n s , 1 9 6 4; H a r r is, J 0 h n R; 'N i g e ria n Entrepreneurship in Industry' in Peter Kilby (ed.), 1971, o p . cit ., P P . 3 3 1- 3 5 6; Hi r s c hme in, J 0 han n e s, 'T h e 0 rig ins 0 f Entrepreneurship in Meiji Japan', in Peter Kieby(ed), op.cit, pp. 241-266, Carrol, John J. ,The Fillipino Manufacturing Entrepreneur _ Agent ~nd Product Ql Change, Cornell University Press, Ithaca, 1965. Nafziger, E.W. Nigerian Entrepreneurship ~ ~ study in Indigenous Footwear Industry, (unpublished Doctoral Dissert.), University of Illinois. 1967. Herskovitz, M.J. and Harwitz. M.(eds) Economic Transition in Africa. North Western University Press, Evanston, 1964;Morse. Richard. Local Entrepreneurial ~itiative ~nd Development in the Phillipines. Malaysia. Indonesia and India: Research observations', East-West Technology-and Development-rnBtitute, Honolulu. 18 February. 1975(unpublished Report), and other similar studies.

75

instead it is the economic milieu that influences and

regulates the supply of entrepreneurship. The primordial

relationships survive in the process of industrialisation

and often some traditional institutions even help in the

supply and growth of entrepreneurship.

There are but only a few empirical studies

available on the Muslim entrepreneurship and even less so,

in case of Muslim entrepreneurship in India. These studies

may be reviewed in brief here.

A.J.Meyer 58 in his study of Middle East noted

that minority status is not an important factor in

mobilising entrepreneurship. He states that in lebanon the

Muslim and Christian populations is almost 50 percent each.

but there were Christian Industrialists in majority. in

Syria there were only 10 percent Christian but most

en t repreneur s were Mus 1 ims. I n Turkey. I raq and Saudi Arab i a

the entrepreneurs were Muslims. mainly Sunni Muslims. But in

Bahrain and Iran Shia Muslims and in Africa Ismaili Muslims

were entrepreneurs. He noted further that in Islamic

societies the capitalism is expanding fast with indigenous

entrepreneurs and Muslims are found even more enterprising

in countries other than the ones to which they belong. He

58. Meyer.A.J. 'Entrepreneurship and Economic Development in the Middle East'. I~~ Public QEenion Qua~!~. Vol.22. 1985. pp. 391-6

76

concluded that management, risk taking and innovations are

highly important factors in the growth of entrepreneurship.

However, in the contmporary Middle East entrepreneurship was

all risk and management and no innovation. Despite the

Koranic injunctions against riba, the capitalist class is

expanding, often inheritance laws are flouted and extended

59 family loyalty is strong.

Yusif A.sayigh,60 in his study lof 207 innovative

entrepreneurs found that in Lebanon, religious and social

structure is not found any factor of significance in

inhibiting the supply of entrepreneurs. In a subsequent

analysis,61 he stressed that though cultural values do pose

some resistance to development but the" stickiness " of

cultural pattern is not high as the sociologists emphasised

conventionally. The traditional society is undergoing rapid

change with the pace of industrialisation and that there is

no reason to believe that cultures or relegion of the Arabs

are any impediments to economic development.

59. ibid, pp. 394-395, See also Meyer, A.J., Middle Eastern Capitalism, Cambridge, Mass., Harvard University Press, 1959, pp. 18-31.

60. Sayigh, Y.A., Entrepreneurs ~ Lebanon ~ The Role ~ Business Leader in a Developing Economy, Combridge, Mass., Harvard University Press, 1962. In his Bibliographical study he tried to build a typology of entrepreneurship.

61. Sayigh, Y.A., 'Cultural Problems and Development of the Arab World' in Bellah, Religion and Progress in Modern Asia. The Free York, 1965, pp. 56-73.

77

the Economic R. N. (ed.) ,

Press, New

62 Van Leur, J.C., in his study of Indonesia noted

that Islam and Muslim mercenaries that came to Indonesia

brought with them the expansion of trade but in no way the

religion contributed or inhibited the economic development

of that country.

J.M.Van 63 der Kroef , similarly in his study of

Indonesian entrepreneurs divided the middle class into five

categories and stated that the development of the country

was impeded by the political factors but he did not consider

the religious or cultural factors as impediments to the

entrepreneurial development in Indonesia.

Hafeez Malik 64 in his comaparative analysis of

East and West Pakistan for the post-independence period

tried to search the spirit of capitalism in Islam and

concludes that Islamic ideology reinforced the economic

development. However, he emphasised political and economic

factors as very important.

62. Van Leur, J.C. Indonesian Trade and Sciety: Essay in Asian Social and Economic History, W.Van Hoeve Ltd: The Hague, Sandung, 1955, esp. pp. 701-204,112,116.

63. Kroei, J.M. Van der, 'Entrepreneurs and Middle Class in Indonesia', Economic Development and Cultural Change, Vol.2,1953-54, pp. 297-375.

64. Malik, Hafeez, 'The Spirit of Capitalism and Pakistani Islam', Islam and Modern Age, Vol,10, 1979, ipp. 19-48.

I

78

65 The theme of Zafar Altaf's study relates to the

relationship of the size of the enterprise and access to

government benefits. capital and technology. He found that

the industrial entrepreneurs mainly originated from trading

communities. The laws of inheritance induced horizontal

multiplication of units rather than vertical growth.

Amongst the most important motives. he discovered 'desire

for independence' and 'financial gains'. He also found

education as a modernising factor of Pakistani

entrepreneurs. He noted that the occupational

representation in entreprenurship is growing.

Gustav F.Papanek 66 studied Pakistani industrialists

and concluded that a responsive I

bureau!cracy. favourable

government policies. a value system and institutions not

hostile to entrepreneurship. a group of responsive traders

and stable political system favoured the growth and

development of entrepreneurship.

Perhaps. the problem related to Islamic ideology

and Muslim entrepreneurship is most vigorously attented to

65. Altai. Zafar. Pakistani Entrepreneurs ~ Deve 1 opmen t • London. 1983.

Characteristics and attitudes. Groom Their Helm.

66. Papanek. entrepreneurship' pp.317··J30.

Gustav in Peter

F .• K i 1 by

79

'The (ed. ) .

Development of 1971. op.cit ..

67 in an empirical way by Hanna Papanek She studied Memons

work ethic, attitudes and values and arrives at her theory

of' par t i ai' mo d ern i sat ion. She found that the Memons are

extremely devout, pilgrimage to Makkah (Hajj) stands as a

cherished value, large numbers observe daily prayers, pay

regular Zakah (poor tax), but get around customary laws of

inheritance of 1937 Shariat Act and also get around the

religious sanctions against usury (riba), yet display that

vigorous entrepreneurship which is comparable wi th

calvinist austerity. The entrepreneurs under study seem to

have compartmentalised the work and religious observance.

However, she reported number of mosques in factory

compounds, that usury is not a tormenting issue, Jamat

protects marriages through mediations and teaches frugality,

and community fines on members on conspicuous

consumption. In her own words,"Islamic religious

prescriptions were assimilated into the general system of

67. Papanek, Hanna, tpakistan's New Industrialists and Businessmen: Focus on the Memons' in Milton Singer (ed), 1973, op.cit., 1973, pp. 61-106. On the related theme see also her Leadership and social Chage ~ the Khoja Ismaili Community" Ph.D.Dissertation, Harvard University, 1962; 'Punjabi Muslim Businessmen and Industrialists in Pakistan', Paper presented at the conference of the Reserch committee on the Punjab, University of Pennsylvania, Philadelphia, May, 1971; 'Entrepreneurs in East Pakistan', in Robert and Mary Jane Beech (eds.), Bengal: Change and Continui ty, Lanshing :Asian studies Centre, Michigan State University, 1971, pp. 119-150, and IPakistan's Big Businessmen: Muslim Seperatism, Entrepreneurship, and Partial Modernisation,' Economic Development and Cultural Change, Vol.12, No.1, Oct.1972, pp. 1-32.

80

values of community and genrally seen as positive forces in

supporting self-confidence and pride in the occupational

68 roles".

On Indian Muslim entrepreneurs there are no

specific studies except the one by Mattison Mines on

Pallavaram Tamil speaking Muslim Merchants 69 in Madras state

and S.M.A. Rizvi on Muslim Karkhanedars 70 of walled city of

Delhi.

Mines argues that urbanisation of Muslims

increased in India during 1901-1961, and analysed the

religious percepts like loan on interest with their economic

behaviour and found that both co-existed and also discovered

that many Pathan Muslims practiced money lending. Nor did

he find the community values, including negative attitude

towards education, as any obstacles to economic pursuit.

All the economic values and attitudes were conditioned by

the bazaar economy rather than religious beliefs. In fact a

large number of his respondents showed pride in business

68. ibid., p.103

69. Mines, Mattison, 'The Muslim Merchants in Indian Industrial Development I in Milton Singer (ed), 1973, op. cit., pp. 37-60. See also Mine, Mattison, Muslim Merchants: The Economic Behaviour Q.!. an Indian Muslim Communi ty, SI~CR,

New Delhi, 1972.

70. Rizvi, Karchanedars Kinship and pp.27-48.

S.M.A., 'Kinship and Industry Among the Muslim in Delhi', in Imtiaz Abmed (ed.), Family,

Merriage among Muslims in India, Manohar, 1976,

81

occupation as it was in tradition of the Prophet. But in

general, their economic behaviour was rational.

Similarly respondents in Rizvi's Delhi study

described work as ibadat (worship) if it was done honestly.

But cocludes that growing industrialisation brought more

individualism and that families were getting partitioned

into smaller units.

Some studies, while conducting research on

entrepreneurship try to find out the community and caste

composition, where occasionally some Muslim entrepreneurs

also appear. But the tendency is to club all the Muslims in

one category instead of classifying them by caste. For

instance, Sheobahal Singh in his study found 39 percent

71 Muslim entrepreneurs Nothing is analysed in relation to

their caste composition and its relationship with

entrepreneurship.

The theories and empirical studies on

entrepreneurial communities, regional studies in India and

abroad in relation to religious factors, and studies related

to entrepreneurial characteristics throw some questions and

trends into relief. The theories and empirical studies

71. Singh, Sheobahal, Entrepreneurship and Social Change, Rawat Publications. Jaipur, 1985,

82

related to entrepreneurial characteristics reveal that risk

taking. innovativeness. n.Ach. and managerial competence and

status withdrawl or marginal group status are. by and large.

are accepted attributes. albiet with different degrees of

emphasis. Therefore. these areas become critical to be

examined in relation to entrepreneurship.

Secondly. most empirical studies on the

relationship between religion and entrepreneurship seem to

differ on direction and emphasis showing that religious

values may be important for development or inhibiton of the

origin and growth of entrepreneurship. This relationship

needs to be examined in the light of Islamic percepts.

Thirdly. some empirical studies agree that social

structure of Asian societies inhibit or retard the growth of

entrepreneurship but most disagree with this proposition.

Therefore. this aspect also needs to be studied empirically.

Fourthly. most agree that stable political

environment. favouarable government policies. sympathetic

bureaucracy and favourable institutional or infrastructural

development facilitate entrepreneurship.

Finally. and perhaps a less important issue is I

related to the fact that entrepreneurship ~s an individual

or group phenomenon (organisation or family).

83

Therefore. the hypotheses of the study may be

stated. thus;

1 ) Muslim religious values are not relevant to

entrepreneurship.

2 Indian Muslim social structure and entrepreneurial

origin and growth are independent.

3) Muslim entrepreneurs are no better or worse off than

the non-Muslim entrepreneurs.

4) The entrepreneurial development is not dependent on

political milieu. or government administration and

institutional development.

5 ) The entrepreneurial qualities like risk taking.

innovativeness. n. Ach .• and managerial competence are not

discriminatory characteristics between higher and lower

levels of entreprenurship. and

6 ) Entrepreneurship is not a group phemmenon.

Alternatively. it is an individual phenomenon and groups are

only supportive entities.

84