Paper to be presented at the EMNet-Conference on
"Economics and Management of Franchising Networks"
Vienna, Austria, June 26 – 28, 2003
www.univie.ac.at/EMNET
LINKING BETWEEN FRANCHISING NETWORKS FOR
ENTREPRENEURSHIP AND ECONOMICAL
DEVELOPMENT----- LOOKING FOR A NEW MODEL
Jahangir Alam
Associate Professor
Department of Finance
University of Chittagong
Bangladesh
Email: jahangira@hotmail.com
Phone: Office: 0088-031-726311-14
Extension: 4234 (Auto)
Fax: 0088-031-726310
Mohammad Akter Hossan
Lecturer
Department of Finance
University of Chittagong
Bangladesh
Email: mahossan@yahoo.com
Phone: Office: 0088-031-726311-14
Extension: 4234 (Auto)
Fax: 0088-031-726310
Abstract
Entrepreneurship is an outcome of complex balancing of opportunity initiatives, risks and rewards.
Entrepreneurship is as a process by which people pursue opportunities, fulfilling needs and wants through
innovations, without regard to the resources they currently control. Entrepreneurial resource is vital ingredient of
economic development whereas a key element of economic development is that the 'people of the country' must be
major participants in the process that brought about changes in structure of economic and population growths along
with consumption pattern. Through the process of entrepreneurship, it is possible to argument the scope of capital
formation, employment generation and facilitate industrialization in a country on the hand. On the other hand,
entrepreneurship acts as a powerful tool of employment generation, raising productivity through innovation,
facilitating transfer of technology, playing key role in commercializing new products, redistribution of wealth and
income, earning foreign exchanges, promoting social welfare and the like.
Adequate information is one of the important aspects of entrepreneurship development. Entrepreneurs have
to face different problems such as, knowledge about markets, about key people in buyer organizations, and so on.
Such information and understanding is not easily, cheaply or rapidly acquired. As a result, networks between buyers,
sellers and other related parties, which form the basis of effective communication, must be established. Networks
establishment can be a demanding and time consuming process where the gap between the accentuated by physical
and cultural distance barriers. There is a considerable inertia amongst buyers who feel more secure with suppliers
from familiar sources and location. As a result, the new entrants have to face more problems as compared to others
existing entities.
A core competence of overcoming barriers of innovation and development of entrepreneurship is
franchising networks. This will reduce the costs of entrepreneurs/firms to gather information in different aspects.
The benefits are enormous over and above reducing costs of information.
The paper attempts to build a model for entrepreneurship development conducive to overall economic
development of a country - developing or developed- taking franchising networks as a main variable along with
some other associate variables.
I. Introduction
The concept of entrepreneurship is multifaceted and used in a wide variety of contexts.
At its heart are entrepreneurs, i.e. persons that are believed to have characteristic traits or behave
in some characteristic way. On the basis of these characteristic traits entrepreneurship is
described as an innovator who undertakes the new combinations of factors of production.
Innovation may occur in the form of: i) the introduction of a new goods, ii) the introduction of
new method of production, iii) the opening of a new market, iv) the conquest of a new source of
supply of factors of production and v) the reorganization of any industry. Entrepreneurs are
specially motivated and talented type of individuals who are to see potentially profitable
opportunities and tend to exploit them (Saha, 1989). It is recognized that mere existence of
resources does not guarantee economic growth (Purhit and Rahman, 1995). Experience shows
that progress is basically the human effort and it takes human agents to mobilize capital, to
exploit natural resources to create new markets and to carry on trade (Frederick and Myers).
According to J.A. Schumpter entrepreneurship is the central figure of the development process
because the entrepreneur in the modern complex economic world, can create opportunities for
production technology, by expanding or discovering new market, new product, new source of
resources, etc. All these activities will embrace risk and uncertainties and at the same time will
increase the demand for higher or increased investment in the economy. This demand for
increased investment will necessitate higher capital accumulation and thereby the demand for
increased rate of savings in the economy. The cumulative effects of all these factors will increase
level of income ands total production of goods and services in the economy. In other words, in
totality, the net result of expansion in the volume of economic activities will lead to growth in
2
national economy and if a proper and equitable distribution policy can be formulated by the state
to suit the real development in the economy will take place (Saha, 1989).
Although entrepreneurship is a vital factor in the economic development process, in
practice it has to face the problem of adequate information regarding the potential opportunities
in environment, demand and choice of potential customers, sources of necessary resources for
that new goods, various aspects of the markets, market penetration strategies, existing and
probable competitors, suppliers of raw materials, required technology and expert personnel, etc.
As a result, if entrepreneurs want to collect this information by using the traditional methods then
it will cost more to the entrepreneurs and this cost also leads to increase in the production and as
a transaction cost too.
So, in the world of information technology, entrepreneurs can only be benefited by
gathering various information mentioned earlier, exchange views with the entrepreneurs at home
and abroad, share the experience with such foreign entrepreneurs even can take suggestions from
successful entrepreneurs for overcoming any difficulties through networking support provided by
any parent network company. To use these network support, entrepreneurs have to pay royalties,
establishment and other fees to the parent network company and this system of network support
of parent company is called franchising network where entrepreneurs are called franchisee(s) and
the parent company is known as franchiser(s). By collecting information from such networking
system, entrepreneurs can reduce their cost of production and can contribute more to the
economic development.
3
This paper tries to build a structural model linking between franchising network and
entrepreneurship development and to evaluate whether this model will be able to reduce the cost
or not.
II. Critical Evaluation of Existing Theories of Entrepreneurship
At present there are a number of entrepreneurship theories for the development of
entrepreneurship. So, in this section we have tried to identify the variables used in the existing
models, to find out the merits and demerits of present theories. We have also considered all these
factors while we have tried to provide a new model. All the existing entrepreneurship theories
are divided here into two major categories- psychological theories and sociological &
anthropological theories. These theories are discussed below-
A. Psychological Theories
The essence of psychological or personal theory is the difference in individuals’ attitude.
According to this theory the difference in attitude i.e. the internal attitude and ability to judge and
forecast the situation lead a man to become a successful entrepreneur. Some important theories
of this field are critically discussed belowDavid McClelland’s theory on need for achievement is the most important one of the
various psychological theories on entrepreneurship. In his theory McClelland emphasized the
relationship of achievement motivation or need for achievement (symbolically written as n Ach)
to economic development via entrepreneurial activities. He wrote “the presumed mechanism by
which n Achievement level translate itself into economic growth is the entrepreneurial class. If
the n Achievement level is high, there will presumable be more people who behave like
entrepreneurs-----" (Islam, 1989). According to McClelland, one would expect a relatively
4
greater amount of entrepreneurship in a society if the average level of need achievement in a
society is relatively high. Because having a high n Ach encourages an individual to sit
challenging goals, work hard to achieve the goals and uses the skills and abilities needed to
accomplish them (Islam 1989). Moreover, it is the inner drive of individuals that propels them to
work more and to achieve something for their own interest by taking personal risk (Islam and
Mamun, 2000) . Need for achievement then, reflects a strong goal orientation, an obsession with
job or task to be done. So, entrepreneurship becomes the link or intervening variable between
need achievement and economic growth. Consequently, McClelland advocates increasing level
of need-achievement in a society in order to stimulate entrepreneurship and economic growth
(Islam, 1989) . Finally, according to McClelland, entrepreneurs are activated by the high extent
of achievement motivation and he also stated a desire to do well, not so much for the sake of
social recognition or prestige, but for an inner feeling of personal accomplishment, induce people
to be an entrepreneur (Islam and Mamun, 2000). He also suggests that the n Ach level can be
increased in an individual through training and by creating appropriate culture.
In the theory of withdrawal of status respect Everett Hagen’s argument is that certain
social changes are cause of psychological changes in a group or in an individual of the society.
He believes that the initial condition leading to eventual-entrepreneurial behavior is the loss of
status by a group of collectivity (Islam, 1989). According to Hagen loss of status can occur in
one of the four ways- i) the group may be displaced by force; ii) it may have its valued symbols
denigrated; iii) it may drift into a situation of status inconsistency and iv) it may not be accepted
in a new society, and the outcomes or reactions of the loss of status are retreatism, ritualism,
innovation, reformism and rebellion. Among these reactions retreatism is important for
5
entrepreneurship. Because retreatism is characterized by psychological repression of the trauma
associated with the status loss. The suppressed rage resulting from the loss of status ultimately
results in a later generation is standards of achievement being held up by mothers within the
group to their sons. For this reason the son’s becoming innovators is increased and
entrepreneurship becomes a feasible outlet for such tendencies (Islam, 1989). This theory has
been criticized for two major reasons. First reason is that this theory is post hoc that means,
Hagen discovered instances of the withdrawal of status respect by looking first at situation in
which economic growth occurred and then by looking for status losses that might have preceded
that growth. Second criticism has centered on the long period of time- as much as five or more
generations are required for the withdrawal of status respect to result in the emergence of
entrepreneurship.
In motive-Acquisition theory which is a revised version of McClelland n Ach theory
expresses that the mentality, personality, thinking power, attitude etc. are not in-born but they are
flexible and changes with situation. So, this theory advocates in favor of frequent training and
development programs to influence and motivate an individual towards a goal by changing
his/her thinking, mentality, attitude etc (Islam and Mamun, 2000).
Risk taking theory which is introduced by Richard Cantillon and John Stuart Mill defined
entrepreneurship as a mentality to take moderate or calculated risk, because people taking a very
big risk also have a great responsibility. Then, to perform this responsibility people has to take
initiatives and this initiatives result entrepreneurship.
6
Internal-External Locus of Control theory introduced by professor J.D Rotter of Ohio
University highlights the self-confidence of a person, the dependency on fortune and external
environment for becoming an entrepreneur. According to this theory internal locus of control i.e.
self confidence, extreme belief over one’s ability and power motivates individual of a society to
take initiatives for innovation which is very much helpful for individual side by side for society
too (Islam and Mamun, 2000). On the other hand, Independence Motivation theory is the similar
to internal-external Locus of control theory, which also emphasizes on the independents thinking
of entrepreneurs. This theory expresses that people having independent thinking, self-confidence,
self-controlling ability can avoid social condemnation for becoming an entrepreneur.
Another psychological theory of entrepreneurship named Creativity or Innovation Theory
highlights the physical performance as the determinant to evaluate whether an individual is
creative or not, because creative individual use their talents, thinking ability to create new and
fundamental ideas or views and they also find out techniques to bring new ideas into practice. On
the contrary, Power Motivation Theory has given emphasis on the authority to do a certain task
properly. Especially for entrepreneurship development personal power, which is related to selfinterest, is essential.
B.
Sociological and Anthropological theories
There are some other theories based on sociological and anthropological aspects. This is
because socio-cultural factors have a substantial influence in creating entrepreneur as well as
entrepreneurship (Katz et al, 1991). Moreover, social and cultural factors places a high value on
innovation, risk taking and independence is more likely to produce entrepreneurial events than a
system with contrasting values (Islam, 1989). Among these type of theories Max Weber’s
7
protestant values is ancient one. In this theory Weber argued that protestant or Calvinistic logic
or values were instrumental in promoting capitalist enterprise. These values included, first of all,
an emphasis on the inherent goodness of work itself. A person’s work was regarded as a calling
in the very literal rendering of the concept of vocation. Moreover, the experience of financial
rewards from one’s work was regarded as a manifestation that one was blessed by God, a
number of elect few predestined to share this grace. However, money created temptations to the
flesh, whose yearnings were to be suppressed. Protestant values called for self-restraint and
deferral of gratification. By investing one’s earnings in the form of capital, one could practice
such self-denial. Over a period of many years, repeated investment of earnings created the capital
base for the take off of Western societies into the economic break-through of the industrial
revolution.
In another anthropological theory named Marginal and Tension theory introduced by
Robert Park in 1928 stated that a marginal man is one whose fate has condemned him to live in
two societies. The two societies are not merely different but antagonistic cultures like occidental
and oriental culture. Sometimes, for their existence, the marginal men engage themselves in
business because marginal man can’t be accepted widely in any society. So, from the group of
marginal man there is a likelihood of creating more entrepreneurs (Islam and Mamun, 2000).
From this discussion we find some variables for the entrepreneurship development. These
variables are- i) need for achievement; ii) withdrawal of status ; iii) training for changing
individual's mentality, thinking and attitude, etc; iv) risk taking mentality; v) self-confidence,
extreme belief over one's ability and power; vi) creative ability; vii) authority or personal power;
vii) inherent goodness of work, self-restraint in the case of consumption profit and; ix) social
8
marginality. All these variables found from existing prominent theories of entrepreneurship
These psychological and sociological variables are of qualitative type that play simulative role in
an individual for becoming an entrepreneur. These variables explain only the initial stage of
entrepreneurship development process, that means why and when an individual acts as an
entrepreneur. But these variables don't explain post initial stage of entrepreneurship development
process. As a result, we don't find any guidelines relating to how entrepreneurs use their
resources (capital, skill, risk taking ability, etc) and overcoming their barriers (coordination,
knowledge) from these models
III. Shifted Entrepreneurial Success factors
In this section we have tried to know what are the shifted success factors for
entrepreneurship development from the old factors with change of time. These factors can be
used for overcoming the shortcomings of psychological and sociological models and also
enhance their applicability. Anyway, the entrepreneurial success factors are broadly divided into
four categories (Ahmed, 1981). These are a) psychological factors (need for achievement, risk
taking, need for power, internal-external locus of control, motivation for autonomy, creativity,
need for affiliation, and intelligence); b) socio-cultural factors (religious values, rural-urban
orientation, marginality and tension, social cohesion, etc.); c) personal factors (family tradition in
business, previous experience, birth order, age at entrepreneurial level, education etc.); d)
opportunity factors (economic opportunities, peer group assistance, training opportunities and
guidance, existing schemes of entrepreneurial training and guided entrepreneurship etc.). Table-1
(Islam and Nazrul, 2000) shown in the appendix reveals that among these factors risk taking is
the most important success factors irrespective of business size, location and types as well for the
9
entrepreneurs, of course according to the researchers this risk should be calculated and moderate
in nature. The second, third, fourth, and fifth important success factors are innovativeness and
well coordinated-flexible persistent actions that indicate the quest for something new, like
managerial capability, as well as adaptability; self awareness/self motivation for achievement;
self confidence and personal initiative; market knowledge relating to business environment like
market demand, competition, technology development, product development, social and political
issues etc. respectively. This chart also shows that the researchers before and after 90s tend to be
different in their focus regarding success factors of entrepreneurs. According to them, before
1990s personal and psychological factors i.e. risk taking ability of entrepreneurs, innovativeness,
and self-confidence, well coordinated flexible persistent managerial actions, personal initiative
and industriousness, dynamism and self motivation are the most success factors. On the other
hand after 1990s managerial and environmental factors of business i.e. market knowledge and
well coordinated flexible persistent managerial action factors followed by risk taking capability,
innovativeness, self motivation, moral attitudes and values, and business and other
environmental consciousness, are the most important success factors for the entrepreneurs. So, it
can be said that entrepreneurial success factors have been shifted from personal and
psychological factors to managerial and environmental factors due to the increasing complexity
in business, and development of information, demanding products and customer sophistication,
globalization of business, etc (Islam and Nazrul, 2000). This trend of entrepreneurial success
factors shown in following figure
Fig.-1:
The Shifting Focus of Global Entrepreneurial Success Factors
High
After
Business complexity,
Customer and
Sophistication.
Emphasis on
Personal and
Psychological
Factors
Time (1990)
10
Before
Emphasis
on
managerial and
environmental
factors
Source :Islam and Nazrul
From the above diagram it is clear that before 90s, complexity in business was less, customer and
product sophistication, development of information systems and globalization of business were
low in degree. So, entrepreneurial successes were dependent on personal and psychological
factors of entrepreneurs. On the other hand, due to the increase in business complexity, customer
and product sophistication, development of information system, globalization of business after
1990, the entrepreneurial success focus has been changed towards managerial and environmental
factors. So, the shift in success factors from past to present reveals that present dominating
success factors are knowledge (information) and coordination.
IV. Proposed Model
Entrepreneurship plays the key role for the economic development creating employment,
increasing investment and consumption of a nation. But entrepreneurs are facing the problems of
knowledge (information) and coordination to utilize or to use their resources like skill, risk
taking ability, capital, ideas, etc. The main objective of this model is to show how economic
growth can be accelerated through entrepreneurship development giving the network facilities in
the form of franchise for coordination and knowledge (information).
11
There are three components in this model- i) development entrepreneurship through
technology; ii) Networking support for knowledge (information) and coordination to increase
economic growth; ii) franchising of this network and linking it to entrepreneurship and economic
development. These three phases of the proposed model discussed belowA. Development of Entrepreneurship through Technological development
From our earlier discussion it is clear that the present dominating success factors are
information and coordination. Based on these factors Islam and Mamun (2000) provided a model
that is shown in appendix, is the first phase of our proposed model. In this phase we have tried to
show the development of entrepreneurship through technological development. The different
integrating variables of this model are1)
Primary review of the technological development
The effectiveness and efficiency in performance of technology depends on internal and
external environmental factors. Moreover, existing environmental concepts act as the guideline
in designing and implementing the technology development programs. For this reason in
selecting, transforming, adopting or developing the technology environmental factors have been
considered as vital. Thus the present model emphasizes environmental review as the primary task
before going to take the initiative of developing technology. So, for scanning external and
internal environmental factors the Environmental Threats and Opportunity Profile (ETOP) and
Strategic Advantage Profile (SAP) are suggested by Islam and Mamun (2000) respectively in
their proposed model. Here, the external variables are organization of the social setup, politicolegal environment, socio-cultural variables, demographic variables, existing productive forces
and relations, infrastructural facilities of the community and supply of technical experts in the
society whereas internal variables to judge strengths and weaknesses are- human resource
12
availability and their capability, financial capability of the organs, present mode of operations in
comparison with competitors strength, status of information available in organization and
management capability, etc.
2) Initiating Strategies for Technology Development
Technology is a powerful tool for exploiting the competitive advantage in the
interdependent world (Sharif, 1995). So, for the development of technology in-depth
deliberation, multi oriental consideration and combination of several important tasks (Islam and
Mamun, 2000) are required. In developing countries technological development requires twofold initiatives according to Islam and Mamun. These initiatives are - 1) technological
development by national efforts 2) technology transfer from developed countries and adopting it
to the local community by careful investigations (Islam and Mamun, 2000). On the other hand, to
develop technology within the indigenous structure research and development program is the
basic contributing factor. Especially commercial research inventions and innovations are
disseminated to the entrepreneurs for adoption in the industry and agriculture by preplanned
programs and injects the financial benefits to the total economy (APO 1985). This is why
attention should be made in researching the entrepreneurship development potentiality and
strategies to the off farm sector for rural innovations and informal sector for urban innovations
(Islam and Mamun, 2000).
Another form of technology development strategy is transfer of technology from
developed countries mediation with transnational companies. This transfer and absorption of
technologies to the developing countries may be of different forms, such as, direct foreign
investment, international sub-contracting and licensing (Islam and Mamun, 2000).
13
3) Total development in the technology
Technology is a complex combination of technoware, humanware, informer and
orgaware which are dynamically interrelated (Islam and Mamun, 2000). Technological
development is further influenced by its life cycle in that passage. This life cycle of technology is
divided into four stages named innovation stage, syndication stage, diffusion stage, and
substitution stage. To face these four stages of technological development, entrepreneurs can use
technology leader, technology follower, and technology exploiter and technology extender
strategies. At the initial stage, entrepreneur comes in the market with innovative new products,
new ideas are generated by need-pull and knowledge-push concepts, (Islam and Haque, 1994)
and customers show interest to test revolutionary products. Entrepreneurial ventures gradually
march forward to the growth and maturity through occupation and expansion of market by initial
cost absorption, close contact with customers, solving problems in the new ways and learning by
doing methods. And finally technology gains its highest possible market, competition comes to
its highest peak, per unit margin on the product is minimized by auto-game between the
competitors in the total market. At the ending point extender take the opportunity to purchase the
old technology with minimum cost and by his available resources . But for inventing and
innovating new ways real entrepreneur always seeks and investigates into the technological
phenomena by latest knowledge, which was referred in the article3 as knowledge push
innovation. On the other hand with the expansion o market creative customers do not feel
satisfaction by consuming and utilizing existing products and services in traditional and
conventional patters. Rather they find new offerings or new methods for satisfying their needs.
The dynamic entrepreneur in that stage conducts survey to know the hidden demand of the
customers and translate it by the new blending of means of production for the fulfillment of new
14
demands of the product. The method of innovation in this way is regarded as demand-pull
method. Thus, reinvestigations for further innovation by creative entrepreneurs is started in the
declining stage of old technology utilization. Development in technology is further affected by
the macro environmental settings (Islam and Mamun, 2000).
4) Mass Participation in Technological Innovation for Entrepreneurship
The successful implication of the technology depends on the commercialization, which
in the output of combined consideration of market demand and purposeful marketing strategy for
selling for the technology to its target markets. Other argued competent and dynamic industrial
partner, their techno-managerial capabilities for project execution commitment and interest is
also notable considering aspects in commercializing the technology to the ultimate entrepreneurs.
Thus, developing technology by taking care of market demand and planned publicity for
diffusion of technology to general mass increase the acceptability of technology to the target
clients. To keep this objective in view continuous coordination among the academic and research
institutions, research and development institutes, and engineering and production units with
assessment and reassessment of the production and commercialization results are essential (Islam
and Mamun, 2000). Providing integrated assistance package to the entrepreneurs for translating
their dream into economic reality by utilizing technological innovation is another important
prerequisite for mass entrepreneurial supply in an economy. Thus implementation of the
technology diffusion programs and integrated assistance services in combined form create
avenues for the entrepreneurs to start and run their enterprises. This way total society is blessed
with breeding and development of huge number of entrepreneurial ventures.
15
The model discussed above doesn’t base on the concept of Franchising Networks. But
from our earlier discussion, it is also found that such type of model is important in the era of
tremendous development of IT and people's perception of entrepreneurial development link to
economic development of a country or a nation. So, in the second phase of our model, the
relationship between networks and economic growth through entrepreneurship development
(Islam and Mamun, 2000). This relationship is shown belowB. Development of Entrepreneurship through Networks
In this phase we have tried to show by the figure- in the appendix how the shifted
entrepreneurial success factors accelerate entrepreneurship development as well as how it
increases the economic growth through networks. In this figure networks may be established
between entrepreneurs to entrepreneurs and also between entrepreneurs to suppliers, customers,
markets, etc. First type of network may be used for horizontal coordination and second type of
the same may be used for vertical coordination. Moreover, from this networks entrepreneurs may
collect their necessary information related with the sources of raw materials, modern and
advanced production methods, potential customer's need, potential markets, competitive products
and their familiarity to the clients, market share of the same product and it's new dimensions, etc;
with least cost. So, such networking system increases profit of entrepreneurs by reducing the cost
of production. As a result, the increased profit also increases the investment, employment and
productivity, etc; which leads economic growth. On the other hand, suppliers can establish
supply chain with low cost by collecting necessary information through this network, customers
can purchase goods and services with low cost and the ultimate result is that suppliers can
maximize their profit, can reinvest a part of this profit, can create more employment and increase
consumption. All these factors also lead to contribute to economic growth. So, it is clear that
16
networks can help a nation to accelerate its economic growth through entrepreneurship supported
by same.
C. Linking it between franchising network and entrepreneurship and economic
development:
It is the third phase of the proposed model, which is shown in the following figure. In this
section network company will collect all necessary information for the entrepreneurs. This
network company will give permission to the entrepreneurs to use their network facilities in the
form of franchise business where entrepreneurs have to pay royalties, franchise fees and other
required fees. This type of network facilities for knowledge (information) and coordination
estimates individual to act as an entrepreneur. That means such network facilities accelerate
entrepreneurship development side by side of economic growth. On the contrary, Franchise
Company can earn more profit by increasing the number of users, which also increase the
economic growth. Moreover, such type of company will assist entrepreneurs overcoming their
constraints like knowledge and coordination
Fig.-2:
Linking between Entrepreneurs and Network Company through franchising
Entrepreneur of Franchisee will
come under the network with
their resources like, venture
capital, risk taking ability skill
or experience etc.
Linking between
Entrepreneurs and
Network Company
through franchising
.
Franchiser or the Network
Company will provide
knowledge (information) and
coordination facilities both for
the Entrepreneurs or Franchisee
and also for the supplier,
Benefits of
franchisee i.e. lower
cost for collecting
information
Franchisee or
entrepreneurs can
use their capital,
skill, with the help
of knowledge and
coordination
facilities provided
by Franchiser or
Network
Company by
giving franchise
fees, royalties and
17
fees.
This process
accelerate
entrepreneurs
hip
development
Economic
Growth
There are some shortcomings of this model. These are- (i) privacy of the information; (ii)
efficient personal having the ability to identify wrong information provided by the both network
company, suppliers, customers; (iii) this model requires competent and efficient personnel for
creating new ideas by analyzing the information provided by this networks etc.
V. Conclusion
In this paper we have tried firstly to show entrepreneurship is the essential and key factor
to explore various opportunities from the surrounding environment of a nation for economic
advancement. Secondly, we critically evaluated the existing theories of entrepreneurship
development with a view to find out the success factors or variables, which play dominant role
for increasing the rate of entrepreneurship development. Thirdly, we have made an attempt to
show the shifted success factors from past to present. Finally, considering these shifted success
factors we have given a model for accelerating entrepreneurship towards economic growth.
In our proposed model we have shown initially the entrepreneurship development
through technology as a first phase. Because with the help of technology entrepreneurs can
exercise their command on available resources and it is also discussed how this technological
18
development can be possible. After this phase it is shown that franchising network can help the
entrepreneurs to collect knowledge or information for generating new ideas with low cost. It also
helps the entrepreneurs to coordinate horizontally and vertically. Then with the help of this
network entrepreneurs can earn more profit by reducing cost of production, increasing
productivity and the volume of total sales, expanding market, etc. This profit also can increase
the investment, employment, etc for the economic growth of a nation. Similarly other
stakeholders of the model like network company, suppliers, customers, etc. can also increase
their profit by expanding the number of users, establishing supply chain with low cost,
purchasing goods with low cost respectively. As a result, they can contribute to the economic
growth of the same nation along with the entrepreneurs.
References
Ahmed, S.U, "Entrepreneurship and Management Practices Among Immigrants from Bangladesh in the United
Kingdom", unpublished Doctoral Thesis, Brunel University, London, 1981.
Asian Productivity Organization, Commercialization of Indigevous Technology. Compiled and Edited by
Volunteers in Technical Assistance, 1985.
Dr. Purohit Kumar Kanchan and Rahman Shahedur, "The Development of Entrepreneurship in Bangladesh: A
Study of Entrepreneurs in Garments Industry", Chittagong University Studies, Commerce Vloume- 11, 1995.
Habrison, Fredefick and Charles Myers, Education, Manpower and Economic Growth : Strategies for Human
resources Development, New York, McGraw Hill Series in International Development
Islam M. Mainul, "Theories on Entrepreneurship", Entrepreneurship, Edited by Rahman A.H.M. Habibur,
Published by , University Grand Commission of Bangladesh, (English version) 1989.
Islam Nazrul and Mamun Z Mohammad, Entrepreneurship Development An Operational Approach, Published by
The University Press Limited, Bangladesh, 2000.
Katz. J.A. "The Institution and Infrastructre of Entrepreneurship", Enrepreneurship Theory and Practice, 1991,
15(3).
19
Saha Kumar Saroj, "Entrepreneurship and Economic Development", Entrepreneurship, Edited by Rahman A.H.M.
Habibur, Published by , University Grand Commission of Bangladesh, (English version) 1989.
Sharif, M.N, " Itegrating Busness and technology Strategies in Development Countries", Technological Forecasting
and Scial Change. Vol. 45.
20
Appendices
Table-1: Shifted Entrepreneurial Success Factor
Authors
Risk
Takin
g
Innovat
iveness
Well
coordinate,
Flexible
Persistent
Actions
Self
Awareness/self
motivation
(achievement)
Selfconfide
nce
Person
al
initiativ
es
Knowledge/i
nformation
(market
issue)
Industriousn
ess/dynamis
m
(2)
(2)
(3)
(4)
(4)
(5)
(6)
*
*
Success Factors
Moral
Intern
attitude
al
and
contro
values/en
l
vironment
(7)
Longterm
involveme
nt
Relatio
n ship
Entrepreneur
s personality
Socializati
on pattern
in childhood
Future
orientatio
n
Opport
unity
seeking
Persevera
nce and
determina
tion
(8)
(8)
(9)
(9)
(9)
(9)
(9)
(9)
*
*
(1)*
Cantillon
R. (1755)
*
Mill, J.S.
(1884)
*
*
McClelland
, D, (1961)
*
Timmos,
J.A. (1978)
*
Rahman,
A.H. M. H.
(1979)
*
*
*
*
*
*
*
*
*
*
*
*
Homaday,
J.A. (1982)
Meridith et
al. (1982)
Continue to next page
21
Ahmed S.
U.
(1981)
*
*
*
*
Homaday,
J.A. (1982)
*
*
*
*
*
*
*
*
*
*
Stanworth,
J. (1989)
Kao, J. J.
(1989)
Ray, D.D.
(1993)
*
*
*
*
*
*
Sengupta,
S.K;
Debnath,
S.K, (1994)
*
Osborne,
R.L, (1995)
Krackhardl,
D, (1995)
McKenna,
S.D., (1996)
Carrier, C.,
(1996)
*
*
*
*
*
*
*
*
*
*
22
Continued from previous page
Authors
Risk
Taki
ng
Inno
vativ
eness
Well
coordinate
,
Flexible
Persistent
Actions
(1)*
(2)
(2)
Self
Awarenes
s/self
motivatio
n
(achievem
ent)
Self
conf
iden
ce
Pers
onal
initi
ative
s
(4)
(4)
Knowl
edge/in
formati
on
(market
issue)
(5)
Industri
ousness
/dynam
ism
Success Factors
Moral
Internal
attitude
control
and
values/en
vironment
(6)
(7)
Longterm
involve
ment
(8)
Relatio
n ship
Manag
ement
Entreprene
urs
personality
Socializati
on pattern
in childhood
Future
orientat
ion
Opport
unity
seekin
g
Perseve
rance
and
determi
nation
(9)
(9)
(9)
(9)
(9)
(9)
(8)
(3)
Brandstaller,
H., (1997)
*
*
Frese, M.,
Fay, D.,
Hilburger, K.,
Leng, T.,
Tag, A., (1997)
*
Enright, M.,
McDonald, K.,
(1997)
Chen, C.C.,
Greene, O. G.,
Crick, A.,
(1998)
*
*
*
*
*
*
*
Anderson, A.
R.. (1998)
*
Van Horn,
R.L., Harvey,
M. G., (1998)
No. of
researches
suggested
*
11
9
9
7
6
6
*
5
4
2
2
2
1
1
1
1
1
1
Source: Islam Nazrul and Mamun Z Mohammad, Entrepreneurship Development An Operational Approach, Published by The University Press Limited, Bangladesh, 2000
23
Fig.-2 :
Development of Entrepreneurship through Technology
Primary review
of the existing
technological
environment by
ETOP and SAP
Investment in basic and
applied research in the
formal and informal
sector for supporting
technology development
at the national level
Technological
development in the
indigenous structure
Total
TO development in the
technology structure
* Mass
Participation in
technological
innovation
Technoware
Multi disciplinary experts'
participation from home
and abroad for conducting
high technological
feasibility study
Transformation of
locally adaptive and
environmentally suitable
technology
* Planned
publicity for
dissemination
of information
Humanwae
* Providing
integrated
assistance
package to
translate
technological
innovation into
entrepreneurial
ventures
Inforware
Orgaware
Entrepreneurial supply in
the greater society
Re-energizing the process
after reassessment
Industrialization in the country
and multiplier impact of
development
Deliberate government and
entrepreneurs associations' efforts for
graduation of the enterprises
Gradual increase in micro and
small enterprises development
Proposed Model for Promoting Entrepreneurship through Technological Development
Source: Islam and Mamun
24
Fig. 3:
Development of Entrepreneurship through Networks
Old success
factors-
-Personal
(family
tradition,
experienc
e, birth
order, age
education
)
Psycholo
gical
(need for
achievem
ent, risk
taking,
need for
power,
motivatio
n for
autonomy
,
creativity
)
Knowledge
(Information)
New or
changed
Factors
Coordination
Supplier,
Customers, Markets
Supply chain
with low
cost
Networks
Fo
r
-Sources of
raw materials
-New markets
-New
invention
in production
Methods
Maximizing profit
that will increase –
 Consumption
 Reinvestment
 Employment
Reduce the cost of
transactions for
entrepreneurs
Accelerate or
encourage
Entrepreneurship
Entrepreneurs
-Increase productivity
-Capital formation
-Increase employment
Between the entrepreneur and
also with the suppliers, customers,
markets
25
Increase
economic
Growth