The emergence and development of entrepreneurship is not a spontaneous one. It depends on lots of factors which are varied. The relationship between entrepreneurship and the environment is quite evident.
Entrepreneurship is nurtured in an environment that has a positive individual-level environment, firm-level environment, and macro-level environment. It is dependent upon the phenomenon of economic, social, political, and psychological factors often termed as supporting conditions to entrepreneurship development.
These all factors of the environment may have both positive and negative influences on the emergence of entrepreneurship. Positive influences constitute facilitating and conducive conditions for the emergence of entrepreneurship, whereas negative influences create an inhibiting milieu to the emergence of entrepreneurship.
There is a close and continuous interaction between the business and its environment. This interaction helps in strengthening the business firm and using its resources more effectively.
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Relationship Between Entrepreneurship and Environment
As stated above, the business environment is multifaceted, complex, and dynamic in nature and has a far-reaching impact on the survival and growth of the business. To be more specific, a proper understanding of the social, political, legal, and economic environment helps the business in the following ways:
- Determining Opportunities and Threats
- Giving Direction for Growth
- Continuous Learning
- Image Building
- Meeting Competition
Determining Opportunities and Threats
The interaction between the business and its environment would identify opportunities for and threats to the business. It helps business enterprises meet the challenges successfully.
Giving Direction for Growth
The interaction with the environment leads to opening up new frontiers of growth for the business firms. It enables the business to identify the areas for growth and expansion of their activities.
Continuous Learning
Environmental analysis makes the task of managers easier in dealing with business challenges. The managers are motivated to continuously update their knowledge, understanding, and skills to meet the predicted changes in the realm of business.
Image Building
Environmental understanding helps business organizations improve their image by showing their sensitivity to the environment within which they are working. For example, in view of the shortage of power, many companies have set up Captive Power Plants (CPP) in their factories to meet their own requirement for power.
Meeting Competition
It helps the firms to analyze the competitors’ strategies and formulate their own strategies accordingly. f. Identifying Firm’s Strengths and Weaknesses: The business environment helps to identify the individual strengths and weaknesses in view of technological and global developments.
