Business environment economic system – Examples & Types

Business environment economic system Examples Types

Business Eenvironment

Hello, we all know that the emergence and development of entrepreneurship is not a natural phenomenon, but is a dependent phenomenon of economic, social, political, psychological factors. Often naming it as support.

Business environment – factors, Types and definition Entrepreneurs

Entrepreneurship is a prerequisite for development. This factor can be both positivity and negativity upon the emergence of entrepreneurship. Ki, the negative impact creates the inner environment for the emergence of entrepreneurship.

For analytical purposes, this status factor is grouped and discussed under two categories (ie) economic factor and non-economic factor.

Also read: Advantages and Disadvantages of Consumer behaviour

Know the steps given below: Easy Step Economic Factor System.


Capital is the most important condition for setting up an enterprise. If only capital is available, then an entrepreneur can afford land, machine, and raw materials and together produce goods ‘Capital is treated as a lubricant/fuel for the process of production‘ in capital investment. Growth increases the capital-output ratio. This results in an increase in pro t.

Capital ————–output ratio————Profit

This suggests that, as capital supply increases, entrepreneurship also increases.


Cheap labor is often less mobile or even stable for the emergence of entrepreneurship rather than the quality of labor in quantity. Adam Smith considers the division of labor as an important element in economic development. According to him, the division of labor depends on it as an important element. Market size improves labor’s productive capabilities due to improvements in mastery (ie) labor, the efficiency of labor, and improvements in cleverness. Ii appears that the labor problem clearly does not prevent entrepreneurship from emerging.

Raw material

The need for raw materials hardly emphasizes establishing any industrial activity. In the absence of raw materials, neither an enterprise nor an entrepreneur can emerge. In some cases “technological innovations can compensate for insufficient raw materials.

The Japanese case, for example, witnesses that” shortages of raw materials do not explicitly prevent entrepreneurship from emerging but follow the directions in which entrepreneurship occurred. “In fact, raw materials are not supplied by themselves, but become potential depending on the state of opportunity.” The more favorable these conditions are, the more likely it is based on the emergence of entrepreneurship of raw materials.


Market potential constitutes the major determinant of rewards proven by the entrepreneurial function. “The proof of the pudding lies in the food, the proof of all production lines in the concepts (ie) marketing.” “Market size and structure in Uranus entrepreneurship both in its own way” Monopolies in a particular product in a particular market become a potential for entrepreneurship compared to a competitive market. Bhoomi believes that due to their actions on the movement of raw materials, the improvement of transportation is much better for the heavy industry than the light industry.

Wilken claims that ‘examples of a sudden rather than potentially gradual improvement in the market provide the clearest evidence in the entrepreneurial era. Germany and Japan as prime examples where rapid improvement in the market was followed by rapid entrepreneurial presence.

Also read: The Entrepreneurial Motivations – The Mind Change

Non – Economic Factor

Sociologists and psychologists advocate that the prevalence of an economic factor on the emergence of entrepreneurship depends on the expansion of non-economic factors (ie) social and psychological in society.

The economic one can be seen based on the leadership of the economic situation. For this, let’s go to the next step.

Legitimacy of entrepreneurship

The proponents of non-Economic factors give emphasis to the relevance of a system of norms and values within the socio-culture setting for the emergence of entrepreneurship.

The social status of those playing the entrepreneurial role has been considered one of the most important contents of entrepreneur legitimacy.

To increase the legitimacy of entrepreneurship scholars have to purpose the need for change in the traditional values, which are assumed to be opposite to entrepreneurship.

McClelland had also pointed out that a complete change may not be necessary for entrepreneurial appearance”. Instead, they submit a reinterpretation of the traditional values or its synthesis with the newer values to increase entrepreneurial legitimacy.

Social mobility

Social mobility involves a degree of mobility, both social and geographical, and the nature of the mobility channel within a system. “Social mobility is not unanimous for the emergence of entrepreneurship, being unanimous.

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