Entrepreneurship introduces a critical element of dynamism into an economic system. It is no coincidence that the world's leading economy, the U.S., is believed to be the most entrepreneurial society in the world.

Globalisation will force India Inc to regain its lost spirit of innovation

Does India lack entrepreneurial spirit? Popular thinking suggests that India's relative economic stagnation may be in part due to inadequate entrepreneurship in the country. The overall Indian psyche, where the majority has experienced poverty within the memory of the last two generations, also has an important impact. In the complete absence of any meaningful safety net, the downside of a failed 'big dream' is severe. I am not surprised if some Indian entrepreneurs tended to lose steam once a certain minimum level of return was met.

At the turn of the 1990s, the Indian consumer had access to a fair variety of products made for very Indian needs by Indians. They were low cost, low quality goods, which survived only in the domestic market-but they were there. And they weren't in existence a half-century back. The same is true of big business. From their trading roots, family-owned business became large diversified groups with significant capital investments. The growth of Indian private enterprise in this period certainly suggests no lack of entrepreneurial spirit. The reasons lie elsewhere.

Government has had a major hand in effectively throttling enterprise-through policies protecting incumbents, absence of market mechanisms that differentiated between superior and inferior performers and creating conditions that made the domestic market a safer, more profitable option than going global.

Despite the prevailing socialist mindset, several Indian companies continued innovating. The Indian software industry is perhaps the best example of what is possible without structural bottlenecks. Thankfully, some of this has changed in the last decade. I see two sets of changes-the first is the obvious introduction of dynamism into the system through the process of globalisation. While new opportunities have opened up in international markets, the bar has been raised in the domestic market through international products and services being available to Indian consumers. The domestic market will no longer be lower-risk. It will force Indian entrepreneurs to regain their spirit of innovation.

The more subtle change is social: increase in literacy levels, greater consumer awareness, enhanced media penetration, and basic changes in family structure. These changes are bound to result in a higher level of entrepreneurial activity in future.

In keeping with the demands for greater innovation in Indian firms, several have fundamentally redesigned structures. There are no easy answers to how the rate of change in entrepreneurial activity can be increased. The solutions to eliminate some of the structural constraints to entrepreneurship are really no different from the solutions to driving higher economic growth rates. Entrepreneurship extends beyond a conventional business and economic perspective. Creativity, innovation, and bringing a vision to life are as much entrepreneurial activities in a social sphere-and have the same impact on society, as does business entrepreneurship to the economy.