Abstract
Entrepreneurship is seen as a driving force for economic development and job creation. Hence, the government offers different forms of support to entrepreneurs. Many researchers have examined the effectiveness of government support. However, the question of how small-scale entrepreneurs perceive government assistance remains unanswered. The study seeks to assess the perception of small-scale entrepreneurs towards government support and also tries to explore some underlying factors pertaining to government support towards entrepreneurship development in Uttarakhand. The study is based on primary data collected from 240 small-scale entrepreneurs, using a self-structured questionnaire. Descriptive statistics and principal component analysis (PCA) were used to interpret the results. It has been found that small-scale entrepreneurs have a positive perception towards single window clearance system, investment promotion facility centre and timelines for business approvals. The study further found that small-scale entrepreneurs have a negative perception towards the interest rate, transparency in loan sanctioning and the behaviour of the employees of financial institutions. The study also extracted three important factors from PCA and named them as an online support system, transparency and financial support.
Introduction
Globally, the significance of entrepreneurship has been recognised as a major contributor for generating job opportunities, growth of gross domestic product and sustainable economic activities (Meyer & Klonaridis, 2020). Because of these advantages, many governments encourage small-scale businesses in their countries and provide a variety of incentives to promote these small units. In developing countries, this support flows through infrastructure support, tax rebates and easy access to government organisations, as well as electricity supply (Indarti & Langenberg, 2004). But government support is not limited to these measures apart from subsidies, tax rebates and infrastructural support, it also includes financial, marketing and technical support (Zeng et al., 2011). These wide ranges of support programmes enable small and medium-sized enterprises to address financial and non-financial constraints that obstruct their business operations while improving their entrepreneurial practices. Although the literature regarding the impact of government support and promotion of small-scale businesses is contradictory, some studies show a positive relationship between government policies and entrepreneurial growth and claim that government policies play an important role in the development of entrepreneurship. Support from the government is one of the key factors for entrepreneurs and small enterprises (Jasra et al., 2011; Rahman et al., 2019). Growth of small-scale businesses is necessary for their survival for which government support is required (Hansen et al., 2009; Indarti & Langenberg, 2004; Minniti, 2008). Another study found that government enhances the performance of the business (Apulu et al., 2011).On the other hand, some studies oppose the former and claim that government policies are not supporting entrepreneurs for instance, Tende (2014) found government policies are not significant for entrepreneurship development. This contradiction makes it difficult to generalise the findings for a large area. Despite the contradiction of literature, government policies and initiatives, in general, are important to determine the quality and quantity of entrepreneurs as these policies and programmes decide what type of business to encourage and what type of not to encourage (Minniti, 2006). Government policies impact various businesses differently, thus promoting some activities and discouraging other activities (Dobbin & Dowd, 1997). Nowadays it is more appropriate and beneficial to promote small businesses because of their significant contribution to global economic growth.
Small-scale businesses can play an important role in developing a state like Uttarakhand, where unemployment is a major issue and, as a result, migration from the state’s hill areas has increased like never before. More than 1,000 villages have become ghost villages. Many experts have suggested that small-scale entrepreneurship should be used to solve the problem of unemployment because it creates a large number of job opportunities. In the hope of attaining significant economic growth and generating employment opportunities in the state, the government is encouraging entrepreneurship through small-scale entrepreneurs for which a variety of policies have been introduced to promote entrepreneurship in the state. A wide-area (75%) of the state is a hilly area, while the remaining (25%) is a plain area. The entrepreneurship growth in plain areas is comparatively decent than the hilly areas, considering the various degrees of dedication, commitment and nature of entrepreneurship needed for the development of both types of areas in the state. The government has implemented different strategies and approaches to hills and plains. The policies are broadly classified into two sectors: the first sector embodies the agnostic policies like start-up policy 2018, MSME policy 2015, mega industrial and investment policy, heavy industrial investment and employment promotion policy and industrial development scheme. While the second sector incorporates, the sector-specific policies, that is, IT policy, mega textile policy, tourism policy, aroma park policy, Ayush policy, biotechnology policy, film policy, mega food park, electric vehicle manufacturing policy, solar power policy, pine litter energy production policy and other biomass, micro-and mini-hydro schemes, small-scale hydro and hydro projects. Apart from the policies, the state government has been providing incentives to foster entrepreneurship in the state. Some of the incentives are interest subsidy, capital subsidy, market fee rebate, land rate rebate, electricity duty rebate and land registration rebate. These incentives encourage local people to become entrepreneurs and open up the path for their entrepreneurial journey. State is well-known for tourism and spiritual activities such as yoga dhyana and pilgrimages as they cover a significant part of the business in the state, so the government has acknowledged the tourism industry as a way of promoting it to the next level. In order to meet contemporary market requirements and attract businessmen to invest and work in the state, the Uttarakhand government has launched major and important reforms. These reforms include online single-window clearance for all required approvals, single point secretarial clearance, investor facilitation centre, objective criteria in land allotment, the geographic information system of all land banks, auto-renewal of the consent of establishing and operating, self-third party certification in place of departmental inspection, single integrated return for all labour laws, use of supervisory control and data acquisition system to ensure the reliable power supply and commercial courts in the capital of the state. This study is an effort to evaluate the perception of small entrepreneurs towards the support and reforms introduced by the Uttarakhand government.
Literature Review
Dana (1987) examined the role of the government in establishing small businesses in two countries in Singapore and Malaysia. The study was descriptive research. The study is based on a literature review approach. The study concluded that entrepreneurs have a common driving force and it could be enhanced by government intervention.
Minniti (2006) analysed government intervention and its impact on entrepreneurship. The study used data from the global entrepreneurship monitor project. A sample of 10,422 respondents across the 10 countries was reached to get the responses and the study categories the variables into nine items that help assess the role of government in entrepreneurship development. These elements include government policies, government programmes, financial assistance, education and training, R&D transition, economic and technical resources, internal sector transparency, access to physical infrastructure and cultural and social norms. The study concludes that government interventions for enhancing the entrepreneurial environment are more effective than interventions designed to provide safety.
Minniti (2008) explored the role of government policies on entrepreneurial activities. The study is a review of past studies and concludes that government policies contribute actively towards productive entrepreneurship.
Mohd Shariff et al. (2010) examined the moderating effect of government policy on entrepreneurship and the performance of small and medium-sized businesses in Cambodia. The study is based on primary data, collected through a questionnaire, administered to 220 entrepreneurs. The data were analysed through hierarchical multiple regression analysis. The research claimed that in Cambodia, government policy plays an important role as a moderator in the growth performance of small and medium-sized businesses.
Davari et al. (2012) analysed the policies and programmes related to entrepreneurship in Iran. The study has a qualitative research design. Primary data were collected with the help of a questionnaire to 158 experts working in entrepreneurship promotion of small and medium enterprises. Data were analysed using a t-test. The study found that government policies were not supportive for entrepreneurship development.
Tseng (2012) analysed the entrepreneurial development in Taiwan. The study examined the relationship between entrepreneurship infrastructure and new business development. The study adopted an exploratory research design. The data were collected from 40 entrepreneurs through in-depth interviews. The study found that infrastructure design to motivate entrepreneurship promotes opportunity motivated entrepreneurship rather than necessity motivated entrepreneurship.
Atsu and Ojong (2014) investigated the role of the government in the growth of micro, small and medium-sized enterprises in Nigeria. The research design was ex-post facto and a random sampling method was used. The sample size was 300 entrepreneurs. The data were collected through a questionnaire and analysed through the Pearson product movement correlation coefficient. The study found that government policies are significant for entrepreneurship development as financial support; government capacity building programmes and provision by the government are significant for entrepreneurship development in Nigeria.
Doh and Kim (2014) explored the effect of government support on the development of Small & Medium-sized Enterprises (SMEs) in South Korea. Micro panel and survey data were used for the study. Data were analysed through regression analysis. According to the findings, there is a positive relationship between financial support and SMEs’ innovation.
Gwija et al. (2014) identified the role of government policies and support mechanisms in the growth of youth entrepreneurship in Khayelitsha, South Africa’s Western Cape Province. Data were collected using questionnaires, and 132 participants were chosen at random from a population of 200 young entrepreneurs. According to the results, there is no proof that government funding has contributed to an increase in youth entrepreneurship in South Africa.
Smékalová et al. (2014) analysed the perception of small-scale and medium enterprises in the Czech Republic. The data were collected from 180 entrepreneurs through a questionnaire. Data were analysed using descriptive and chi-square test. The study revealed that the overall perception towards government support is negative.
Obaji and Olugu (2014) developed a conceptual framework for analysing the role of government in entrepreneurship development. The study adopted a literature review approach to achieve the objective of the research. The study concluded that government policies largely affect entrepreneurial success.
Tende (2014) examined the various government policies and programmes and entrepreneurship development in Nigeria. The study was descriptive. Random sampling was adopted. The sample size was 11 beneficiaries of the Entrepreneurship Development Program of National Directorate of Employment (EDP-NDE) programme. A standardised questionnaire was used to gather data. The Chi-square test was used to analyse the data. The findings indicate that credit policies and programmes have no substantial effect on the growth of entrepreneurship.
Hlaváček et al. (2015) analysed the public support system for entrepreneurship development in the Czech Republic. The study is quantitative: a survey was conducted with the help of a questionnaire. The data were analysed through t-test and f-test. The study revealed that institutional barriers have a significant impact on entrepreneurship.
Izhar et al. (2015) analysed the role of the government in nurturing entrepreneurship in Pakistan. The study was descriptive. The sample size was 200, which consisted of 100 entrepreneurs, 60 professionals and 40 students. The data were collected through a questionnaire and analysed through descriptive statistics, that is, percentage. The study found that the government of Pakistan is not playing a supportive role in promoting entrepreneurship.
Prakash et al. (2015) analysed the relationship between entrepreneurial intensity, locus of control, gender and long-term government policies. The study was descriptive and a quantitative research design was adopted. The sample size was 1,255 university students. The data were obtained by a self-structured questionnaire and subsequently analysed by multivariate analysis (MANCOVA). The study found that students considered long-term government policies as a support for starting their business.
Sharma (2016) analysed the role of promotional schemes and programmes initiated by the government of India. The study is based on both primary and secondary data. The study has a mixed research design. It is a combination of descriptive and exploratory research design. The sample size was 50 women entrepreneurs. Data were collected through interviews using a questionnaire. The study found that government schemes sometimes do not reach needy people due to corruption.
Munizu (2016) examined factors determinants of the development of micro and small entrepreneurs in Indonesia. The research was based on primary data. The sample size was 150 entrepreneurs. The data were analysed through descriptive and structural equation models and the analytical hierarchy process. The analysis revealed that government policies were significantly important for the development of micro and small enterprises.
Kaur and Ubique (2017) examined the major factors perceived by small firms when borrowing from the bank. The study is primary in nature and data were collected through a questionnaire. The sample size was 250 small-scale entrepreneurs. The data were analysed through exploratory factor analysis. The study identifies nine factors considered important by small-scale entrepreneurs while taking loans from a bank.
Oyelakin and Kandi (2017) identified the moderating role of government policies and entrepreneurship development in Nigeria. The study has a cross-sectional research design. The sample size was 342 small and medium enterprises. The data were collected through a questionnaire and data were analysed through the partial least square method. The study found that government policies are having a high impact on entrepreneurship development.
Akpoviroro and Kadiri (2018) explored the role of agencies in encouraging entrepreneurship in Nigeria. The study is exploratory. A qualitative approach was used to conduct the study, so primary data were collected with the help of in-depth interviews and the focus group method. The sample size was 10 organisations. The research stated that government policies are not stable and do not promote entrepreneurship.
Akinyemi and Odejumo (2018) analysed the impact of some of the government policies on entrepreneurial activities in South Africa and Nigeria. Convenience sampling was used. The study is based on primary data. Questionnaires were administered to 1,200 small-scale entrepreneurs. The data were analysed using principal component analysis. The study found that government policies have a different effect on a different country and even different phases of business as well.
Saberi and Hamdan (2018) explored the moderating role of government between entrepreneurship and economic growth in Gulf Cooperation Council (GCC) countries. The study is based on secondary data. The data were analysed through time series analysis. The study found that interference by the government has an important moderating impact on the relationship between business and economic growth.
Rahman et al. (2019) explored the role of government in encouraging entrepreneurship. The study is cross-sectional and administered a questionnaire to micro-entrepreneurs in Bangladesh. The study uses PLS-SEM to analyse the data. The study found that the role of government is not instrumental in promoting entrepreneurship.
Li et al. (2020) examined the moderating and mediating role of government regulations on entrepreneurship in Pakistan. Quantitative research design was used to conduct the research. A purposive sampling method was adopted and a questionnaire was administered to 567 entrepreneurs. Data were analysed through structural equation modelling. The study found that government regulations have an impact on entrepreneurship. The study further found that government regulations have a positive moderating effect on entrepreneurship.
Saucedo-Bendek et al. (2020) examined entrepreneurs’ perceptions regarding international collaboration and government entrepreneurship programmes. The study was based on an online survey conducted in Bolivia. The sample size was 106 entrepreneurs. The study revealed that there is a negative perception about government intervention and international cooperation.
Moro et al. (2020) explored the role of government initiatives in promoting entrepreneurship. The study was based on primary data, 18,872 observations were taken to collect the data. The study found that government policies are helpful in obtaining credit. Further, the study found that government policies have been more beneficial for younger, smaller, high growth and more innovative entrepreneurs.
Research Gap
There is a growing body of literature that explores government intervention in the promotion of entrepreneurship. For instance, Minniti (2006, 2008), Akpoviroro and Kadiri (2018) and Rahman et al. (2019) have examined the role of government in the promotion of entrepreneurship. However, researchers are not unanimous about the effectiveness of government support in fostering entrepreneurship. Disagreements among researchers clearly indicate the need for further research in this field. This study attempts to fill this demand–supply gap. Most of the entrepreneurial assistance offered by the Uttarakhand government is relatively new. Hence, there is a paucity of literature addressing entrepreneurs’ perceptions towards government support in Uttarakhand. As a result, this study seeks to ascertain how small-scale enterprises perceive actual government assistance. Furthermore, the study significantly contributes to the body of knowledge on government assistance in Uttarakhand. Besides that, the findings of this study would be beneficial to the government and policy makers, as the findings can be used to improve existing and new policies in the state to promote the growth of entrepreneurship. In addition to this, the findings will be beneficial to aspiring small-scale entrepreneurs and researchers
Objectives
To examine the perception of small-scale entrepreneurs towards government support in Uttarakhand.
To identify the factors influential in developing perception of entrepreneur towards government support in the state.
Research Methodology
This study is exploratory, a quantitative analysis design has been followed to pursue research. The target population is small-scale entrepreneurs of the state. The sample was determined based on the conventional method, this method allows the researcher to decide the sample size based on previous studies (Bush & Burns, 2006). A judgmental sampling method was used to select the respondents. The respondents were diverse and included entrepreneurs engaged in automobiles, pharmaceutical, hotels and restaurants, sports and adventure, advertising, handicraft, agro-processing, food-processing, electronic, fast-moving consumer goods, plastic product manufacturing, wholesale trading, etc. In order to assess the perception of small-scale entrepreneurs towards the support of the government, the field survey method was used to collect the primary data. A self-structured questionnaire was developed and distributed to 300 small-scale entrepreneurs, out of which only 240 were suitable for the analysis.
Generation of Scale Items
For measuring perception of entrepreneurs towards government support items of scale were generated from various sources, like the review of literature and discussion with subject experts. Initially, literature related to government support was reviewed to generate items and later on some items were generated from observations of the researcher. Since the literature did not cover the recent support initiatives of Uttarakhand’s government, items had to be modified in context to support provided by the state government so that objectives of the study could be achieved.
Validity and Reliability
Bless et al. (2006) claim that there is no perfect measurement approach in the field of social science. They also suggest that researchers should test the instrument for validity and reliability. The content validity or face validity is crucial to determine whether the selected scale items seem to be a valid measure of the construct, or just make general sense (Hair et al., 2019). It is a subjective assessment of the scale items by experts hence the construct measures were presented before two experts in the field and five research scholars for evaluations and subsequent changes were made in the scale. Another important aspect of scale development is the reliability of the instrument. It deals with the consistency of the scale, reliability was assessed using Cronbach’s alpha. It is a reliability coefficient, which assesses the consistency of the entire scale. The value of alpha is 0.75, which is above the minimum acceptable value of 0.70, hence the scale is reliable. Reliability is also an indicator of convergent validity (Hair et al., 2019), convergent validity tells how well the different items of a factor are loading into the factor, a high positive correlation reflects the conceptual validity of the construct.
Data Analysis
Demographic Profile of the Respondents.
Perception of the Entrepreneurs.
The first statement was loan is not easily available. Responding to this, 20.8% strongly disagreed, 31.7% disagreed, 14.6% were neutral, 21.7% agreed and 11.3% strongly agreed. Since the majority of small-scale enterprises disagreed with the statement, this demonstrates that small-scale entrepreneurs have easy access to capital. Furthermore, when respondents were asked, financial institutions do not provide financing in accordance with needs, 30% of respondents strongly disagreed, while 27.9% disagreed, 5.8% of respondents were undecided, 23.8% agreed and 12.5% strongly agreed. Hence, it can be said that financial institutions are providing loans as per the requirement, as the majority of the respondents disagreed with the statement. In addition to loan availability, the study examined the transparency in loan sanctioning, to determine whether the loan sanctioning process is transparent or not. Respondents were directly asked that the process of providing loan is not transparent. Responding to this, 12.9% of respondents strongly disagreed, 21.7% disagreed, 19.6% were neutral, 30% agreed and 15% were strongly agreed. Hence, from the above responses, it can be said that the majority of the respondents consider the loan sanctioning process as not transparent. The study further inquired about the behaviour of the representative of the institution during the loan disbursement process. In response to the statement, employees of financial institutions do not behave well during the loan sanctioning process, 3.8% of respondents strongly disagreed, 24.6% disagreed, 18.3% were neutral, 34.2% agreed and 19.2% strongly agreed. Hence, it can be concluded that more than 50% of entrepreneurs did not find appropriate behaviour of the representative of the financial institutions. This is very important because the behaviour of financial institutions is more influential over the entire loan sanctioning process. The time between loan sanction and first instalment payment is important for small-scale businesses because, during the set-up process, the business does not generate any revenue. So the study also inquired whether financial institutions provide enough time for business setup and first instalment payment, to which 15.8% of respondents strongly disagreed, 21.7% disagreed, 17.1% were neutral, 36.3% agreed and 9.2% strongly agreed. Hence, it can be claimed that sufficient time between the business setup and the first instalment payment was not provided. In the long term, the repayment time is also important. The study asked respondents whether the loan is provided for sufficient time or not, 14.6% strongly disagreed, 27.9% disagreed, 12.9% were neutral, 33.3% agreed and 11.3% strongly agreed. Therefore, it can be claimed that the majority of the respondents considered repayment time sufficient. The cost of acquiring funds is also important for any business to grow. The study further enquired whether the interest rate charged by financial institutions is fair, to which 12.5% of the respondents strongly disagreed, 29.6% disagreed, 29.6% disagreed, 32.1% were neutral, 17.1% agreed and 8.8% strongly agreed. The majority of the respondents were not satisfied with the interest charged by the financial institutions. For small-scale entrepreneurs, the instalment amount is also important, so the researcher asked the respondents about the instalment amount being high in response to which, 17.9% strongly disagreed, 25.8% disagreed, 27.5% were neutral, 22.5% agreed and 6.3% strongly agreed. The majority of the respondents claimed the instalment amount was high.
The government is moving towards online mechanisms to promote entrepreneurship and achieve transparency and speed in administration. In accordance with these objectives, the Uttarakhand government has also introduced some reforms. One of the primary steps is the online registration of businesses. In response to the online registration procedure has made it easy to register, 32% of entrepreneurs agreed, 17.9% strongly agreed, while only 6.7% strongly disagreed and 24% disagreed. But when it comes to the complexity of online registration, 20.4% strongly disagree, 27.5% disagreed, 22.5% agree and 12.5% strongly agreed. Another important aspect is getting approvals for business. To make it smoother, the government of Uttarakhand has introduced a single-window clearance system that provides all types of information related to policies and incentives. In response to the single window clearance system provides all types of relevant information, 23.3% disagreed, 9.6% strongly disagreed, while 22.9% agreed and 22.5% strongly agreed. Another statement about the single window clearance system was that it has reduced the bureaucracy, to which 16.7% strongly disagreed, 18.3% disagreed and 24.6% agreed and 14.6% strongly agreed. For starting a business, a lot of documentation is required which is time-consuming as well as tedious also. So to reduce the documentation, single-window clearance has given the facility to handle documentation online. So to examine the level of reduction in documentation due to single-window clearance system respondents were asked has single-window clearance reduced the documentation, replying to this, 10% strongly disagreed, 23.8% disagreed, 22.5% agreed and 17.9% strongly agreed. Moving a step ahead, the government has created an online approval system that helps small businesses to save time and cost. Responding to the statement online system saves time and cost, 5.8% strongly disagree, 27.1% disagree 27.1% of people agree, 23.3% strongly agreed and 16.7% were neutral. To monitor the status of various applications submitted to various departments for approval, the government has developed a real-time monitoring system. Responding to the statement, real-time monitoring systems provide the actual status of the applications submitted to various departments, 17% strongly disagreed, 22.5% disagreed, 15% agree, 25% strongly agreed and 20.4% were neutral. Another step taken by the Uttarakhand government is establishing an investment promotion facility centre for promoting investment in the state. This study analysed the efficiency of the investment promotion facilitation centres in handling the queries, grievances and assistance in the provision of approvals. It was asked to respondents is the promotion facilitation centres work efficiently responding to this statement, 8.3% strongly disagreed, 20.4% disagreed, 30.4% agreed and 20.8% strongly agreed and 20% were neutral. Along with an investment promotion facility centre, an investor feedback system has also been created. Concerning the responsiveness of the investor feedback system, 12% strongly disagreed, 20% disagreed, 26% agreed and 18.3% strongly agreed and 13% were neutral. In case some business dispute arises, to sort out the business disputes, Uttarakhand government has set up an online redressal mechanism. Responding to the statement, online redressal mechanism is fast and effective, 15.8% strongly disagreed, 19.6% disagreed, 25.8% agreed, 18.3% strongly agreed and 22.5% were neutral. Further, study puts some direct statements about the entrepreneurial promotion schemes and efforts. When it was asked to respondent government is making a serious effort to boost entrepreneurship, 12.9% of the respondents strongly disagreed, 17.1% disagreed, 24.6% agreed, 19.6% strongly agreed and 25.8% were neutral. Another statement was schemes and policies are not very much effective on the ground, to which 13.3% strongly disagreed, 19.6% disagreed, 25.8% agreed, 18.3% strongly agreed and 22.9% were neutral. Getting things done on time is essential for the smooth functioning of the business, all the efforts and schemes are not effective if things are not done on time. To ensure that business-related approvals and other things get done on time government has affixed tenure for performing each activity, known as timelines. Responding to, timelines for provision of services have reduced the delay in approvals, 5.4% strongly disagreed, 2.8% disagreed, 31.7% agreed, 17% strongly agreed and 25% were neutral. As the majority of respondents agreed that timelines have reduced delay in approvals hence it can be said that it is effective.
Principal Component Analysis
In order to identify the factors, the scale was analysed through PCA, using Statistical Package for the Social Sciences (SPSS). PCA is the most commonly used technique to find out underlying dimensions in data, which allows the user to summarise a large number of variables into few manageable factors. Before conducting the PCA, some initial tests were conducted to determine the appropriateness of data for factor analysis. First of all, inspection of the correlation matrix was done and it was found that several coefficients were above 0.30.
In addition to this, Bartlett test of sphericity and Kaiser–Meyer–Olkin (KMO) test were used. Bartlett test of sphericity is a statistical test for the overall significance of all correlations within a correlation matrix (Hair et al., 2019). Bartlett’s test is significant (Chi-square = 2124.79, df = 171, p = .000). Hence required correlations among variables exist. Furthermore for assessing the appropriateness of sample size KMO measure of sampling adequacy was used. The value of KMO is 0.86 which is greater than 0.5, Bartlett (1954) and Kaiser (1970) recommended KMO value of 0.60 for sampling adequacy, which suggests that the sample size for factor analysis is appropriate.
Rotated Component Matrixa.
As shown in Table 3, the PCA analysis revealed the presence of three factors with an eigen value greater than one. The first factor, named as ‘online support system’ explained 32% of variance in the data set, with an eigen value of 5.77. It consists of 11 statements related to the online support system provided by the Uttarakhand government. Factor loadings on the first factor are strong and high which indicate there is a good amount of correlation among statements. The second factor, named ‘transparency’ explained 16.00% of the variance in the data set with an eigen value of 2.88. The second factor contains three statements related to the transparency of financial institutions. The third factor, named ‘financial support’ explained 8.13% of variance in the data set, with an eigen value of 1.46. It consists of four statements related to the finance and cooperation of financial institutions with small-scale entrepreneurs.
Results and Discussion
The research examined how small-scale entrepreneurs perceive government support in the state. The study focused mainly on two types of entrepreneurial support provided by the government, that is, financial support and online support system. Firstly, respondents were asked about the financial support provided by the government which includes enquiring about the availability of loans, the interest rate charged, behaviour of staff of financial institutions and transparency in sanctioning the loans. The research reveals that the perception of small-scale entrepreneurs towards financial support, specifically towards the interest rate charged, the loan sanctioning process and the behaviour of the employees of financial institutions during the loan sanctioning process, was negative, as the majority of respondents were dissatisfied with the interest rate charged as well as the loan sanctioning process and behaviour of the staff of financial institutions. High-interest rates on loans have been reported as a problem in previous studies also. One of the study conducted by PHD Chamber of Commerce and Industry (2014) found that the high cost of credit is one of the major problems faced by small-scale business in the state, moving further it was found that the respondents were not very much satisfied with the behaviour of the employees of financial institutions during loan sanction process. This is a major issue on the side of financial institutions, and the government must investigate and strive to resolve it. Funding is a vital component of every organisation, and any difficulty in obtaining funds will have an influence on the region’s entrepreneurial growth. The study further inquired about the transparency of the loan sanctioning process, and it was discovered that small-scale entrepreneurs were unsatisfied with it. Transparency should be incorporated into the loan approval process since it enhances the confidence of entrepreneurs and makes it simpler to apply and not feel dreadful if a loan is not granted. Conflict and dissatisfaction occur when transparency is missing. Hence, essential measures to enhance transparency should be taken to improve confidence in the loan sanctioning process. Likewise, the research looked into the online support system, which includes a single-window clearing system, online registration of small businesses and other features of online assistance. The small-scale entrepreneur’s perception towards online support system is positive, as the majority of the small-scale entrepreneurs were found to be satisfied with the online registration procedure, single-window clearing and land bank. Although some small-scale entrepreneurs have expressed trouble complying with the online system, this may be addressed by government organisations through training regarding the functioning of the online support system. It can be done simply by providing tutorials on various aspects of the online support system. Further, respondents were asked about the efforts taken by government to boost the entrepreneurship, to which they agreed that government is making serious efforts but when asked about the effectiveness of the policies on ground level, they reported that policies are not very effective in actual circumstances, and this is due to ineffective policy implementation. For years, the implementation phase has been a source of contention. Strict measures should be adopted to improve the efficacy of policies on the ground. Proper policy monitoring and feedback might be a feasible solution to this problem. One significant aspect of worth noting is that, small-scale entrepreneurs are positive towards online support systems and negative towards financial support, but the degree of disagreement and agreement is not very high. However, on a majority basis, it can be argued that small-scale entrepreneurs are more towards the positive side. Therefore, it can be claimed that small-scale entrepreneurs are moderately positive towards government support. The study further examined the underlying dimensions in the data using PCA, which revealed three factors which are subject for further investigation.
Conclusion
The first objective of the study was to analyse the perceptions of small-scale entrepreneurs towards government support. Based on the findings, the study revealed that the majority of small-scale entrepreneurs have a positive perception towards single window clearance system, the investment promotion facility centre and timelines for business approvals. The study further found that small-scale entrepreneurs have a negative perception towards the interest rate, transparency in loan sanctioning and the behaviour of the employees of financial institutions. The findings of this study are partially consistent with the previous studies of Smékalová et al. (2014) and Saucedo-Bendek et al. (2020). Both studies found that small-scale entrepreneurs have a negative perception towards government intervention. Further proceeding with the second objective, the study has explored the factors influential in developing the perception of small-scale entrepreneurs towards government support. Based on the results of the PCA, three important factors influencing the perception of small-scale entrepreneurs towards government support were extracted. Subsequently, these factors were named as, ‘online support system, financial support and transparency’. These three important factors accounts for 32.06%, 16% and 8% of the variation respectively in the data set. Furthermore, it can be concluded that government needs to improve the financial support, transparency and behaviour of employees of financial institutions and banks. Findings of this study are significant and have practical implications for policy maker, government and researchers.
Recommendations
In light of the findings, the study makes the following recommendations. Firstly, the government should try to reduce the interest burden of small-scale entrepreneurs. It could be done by increasing the subsidy on interest and by providing equity finance to small-scale entrepreneurs so that they can get the required capital for their operations. Secondly, the government should provide an online platform for small-scale entrepreneurs where fund suppliers such as banks, financial institutions and small-scale entrepreneurs can come together and negotiate. It will reduce extensive documentation and simplify the procedure of loan sanctioning. Thirdly, the government should increase transparency by setting up an online window for accepting loan applications and establishing some objective criteria for sanctioning the loans. Fourthly, the government should increase access to capital for small-scale entrepreneurs. It could be accomplished by setting up a dedicated loan division in banks for small-scale entrepreneurs. Finally, the government and financial institutions should provide soft skills training to the employees of financial institutions and banks to ensure that the loan sanctioning process runs smoothly.
Limitations and Future Research
This study has certain limitations: firstly, the factors extracted through PCA need to be confirmed with confirmatory factor analysis. Secondly, the study was confined to six districts, namely, Almora, Nainital, Udham Singh Nagar, Dehradun, Pauri and Haridwar. The results obtained from these districts may not be completely representative of the entire state. Finally, all efforts were made to collect data from both rural as well as urban small-scale entrepreneurs. But due to less availability of rural entrepreneurs in selected districts, an equal number of urban and rural small-scale entrepreneurs could not be included in the survey. Future research should be conducted in order to enhance the theoretical foundation of each factor. The researcher can also conduct a study to identify if there is any difference between the perception of male and female entrepreneurs towards government support.
Appendix
Scale: All Variables
Case Processing: Summary.
Reliability Statistics.
Kaiser–Meyer–Olkin and Bartlett’s Test.
