While studying entrepreneurship in India just a few years ago, our group of graduate students noticed three major themes in nearly all of our entrepreneur meetings.  They were the role of microfinance for entrepreneurship, the necessity of dealing ethically as an entrepreneur, and the importance of diversification within an entrepreneurial endeavor.  These ideas continue to be reinforced in daily news stories of the importance of small micro loans to countries around the world, the importance of ethics and reputation, and how some of the most successful companies i n the world are almost always the most diversified.  Read an excerpt below from our trip blog:

“So far in our Indian travels, there have been a number of topics that have come up in many of our company visits, university forums, and individual entrepreneurial interviews. The great thing about this trip is that trends begin to emerge while visiting so many different groups of people in a number of different cities. We would like to highlight a few of these recurring topics.

The first word we keep hearing is microfinance. Microfinance has been a recent phenomenon based upon a theory developed by Dr. Muhammad Yunus who won the Nobel Peace Price in 2006. The idea has a strong basis in personal initiative and entrepreneurial action. Dr. Yunus believed that by providing minuscule loans to the world’s most desperate poor, they would in turn use the money to purchase raw materials for a particular trade and thus begin the process of lifting themselves out of poverty. Today, more than 250 institutions have implemented the microfinance concept in nearly 100 countries and the payback rate on these loans is at an amazing rate of 98%.

The reason that we keep hearing about microfinance is that many people believe this is the way to have the economic growth in India reach to the furthest rural areas. The Indian government is well aware that it cannot maintain such a high level of economic growth in just a handful of urban centers. The poor in the rural areas will also need to play their part. Charity does not have a history of encouraging personal initiative. But being given an opportunity and being held accountable for the results has helped break the cycle of poverty in thousands of lives across the world.

Here is a description by Dr Yunus himself:

“I firmly believe that all human beings have an innate skill. I call it the survival skill. The fact that the poor are alive is clear proof of their ability. They do not need us to teach them how to survive; they already know how to do this. So rather than waste our time teaching them new skills, we try to make maximum use of their existing skills. Giving the poor access to credit allows them to immediately put into practice the skills they already know – to weave, husk rice paddy, raise cows, peddle a rickshaw. And the cash they earn is then a tool, a key that unlocks a host of other abilities and allows them to explore their own potential. Often borrowers teach each other new techniques that allow them to better use their survival skills. They teach far better than we ever could.”

Another word we keep hearing is ethics. So far, both entrepreneurs that we have met in our in-depth interviews have stated how much a good reputation has been a key to their success. These were serial entrepreneurs stating that one must conduct business at the highest ethical standards at all times. This may seem to be an obvious point, but there seemed to be a strong level of personal ethics in the successful people we encountered.

A third word we have heard a number of times is diversification. A number of the entrepreneurs have stated that without the diversification of their business, they would not be around today. In the fast-changing Information Technology sector, this seems to be a key strategy in building a business in India.”

 

 Microfinance, Ethics, and Diversification in India [3:44m]: Play Now | Play in Popup | Download