'Jugaad' key to entrepreneurial success in India: Survey

NEW YORK: Bureaucracy and corruption are the two major threats to India's growth and sustainability, according to a latest survey of Indian entrepreneurs conducted by the Legatum Institute.

The survey on what Indian entrepreneurs think about India's economy, the possibilities it affords and the hindrances to continued prosperity concludes that many of those surveyed felt India's growth and sustainability are threatened by bureaucracy and corruption which require too much energy to be spent on circumventing problems rather than on productive activity.

This report is the inaugural edition of the Legatum Institute's Survey of Entrepreneurs: India, a series of detailed online surveys of entrepreneurs and senior managers of Indian enterprises. It surveys 2357 individuals, nearly 1100 of whom own their own business. More than 700 are senior managers of existing enterprises, and another group of nearly 500 individuals are aspiring entrepreneurs.

It is one of the largest surveys of entrepreneurs in the world. The survey, which was conducted by YouGov between August and October 2009, allows us to "get inside the mind" of India's enterprising class and yields insights important for business leaders, educators, investors, policymakers, and the media.

The primary conclusion of the survey shows that India's economic future is energetic, growing impressively and creating positive effects beyond immediate economic benefits.
Interestingly, the survey found the institutionalization of what is colloquially known in Indian business as "Jugaad" - a Hindi word which denotes ingenuity and improvisation required to get around, or deal with, prohibitive rules and institutions - which India's entrepreneurs seem to embody.

Survey respondents have had both a lot of experience with "jugaad" and with dealing with systemic barriers such as corrupt practices and suffocating bureaucracies. The two are certainly related, the survey finds. Commercializing innovation in environments marked by stifling, rule-bound agencies or corrupt practices, or both, frequently requires an additional repository of innovation beyond what is required in more efficient, less corrupt societies; in India that repository is jugaad.

Nearly half (49 percent) of respondents said jugaad was "very important" to their success as entrepreneurs.

Another 31 percent responded "somewhat important", and only 13 percent said "neither important nor unimportant". A miniscule 4 percent said it was either somewhat or very unimportant.

Jugaad is more important to younger than older entrepreneurs, and most important to those running companies with fewer than 50 employees, those with revenues between 5 million and 100 million rupees (USD 108,000 and USD 2,163,000), those growing at rates above 50 percent, and those between 4 and 10 years old.

Of 18 to 34 year olds, 51percent said jugaad was very important, compared to 38 percent of people over 55 years old. Of those running companies with annual revenues between 5 million and 100 million rupees (USD 108,000 and USD 2,163,000), 58 percent said jugaad was very important, compared to 33 percent of those running companies earning more than 1 billion rupees (USD 21,629,000) annually.

It appears that jugaad is most important not to enterprises that are very new and small or very large and established, but to enterprises that are fairly new and ascendant.

Economic Optimism

The future looks good. When asked a standard "right track/wrong track" question, 84 percent of those surveyed said they believed India is headed in the right direction, and 87 percent say they believe India will be in a stronger economic position in 5 years. 92 percent of respondents say that Indian society is more welcoming of entrepreneurs than it was 10 years ago.

Social Capital, Family, Networks
Family is Indian entrepreneurs' invaluable asset in more ways than one. Entrepreneurs believe that their enterprising spirit comes from family more than any other source. 48 percent used family funds to launch their enterprise, and 31 percent say it was the main source of financing.

Nearly a quarter of entrepreneurs say the main factor that enabled them to get their business started was knowing other entrepreneurs. This was equally as important as access to finance.

Dealing with Barriers to Entrepreneurship
Government is good for business - and also very bad. Government bureaucracy is also cited as one of the 3 main reasons businesses fail in India.

Corruption, corruption, corruption
40 percent of respondents have been pressured to pay a bribe, and 93 percent say corruption is a problem, with 56 percent saying it is so serious that it hurts business in India.

Motivation, Inspiration, and Opportunity
42 percent of entrepreneurs said being their own boss was the primary reason they chose their path, compared to 23 percent who say they did it for the money.

54 percent of respondents say the social impact of their enterprise is a main reason for what they do. And when asked what the biggest effect of their business is beyond creating value and satisfying customers, 31 percent say the professional growth of their employees, and 29 percent say improving the quality of life in their communities. Small, new companies and large, older companies have a stronger "social conscience" than middle-tier companies that have been around for 5 to 10 years.

The Legatum Institute is a globally-focused, independent, non-partisan organization that researches and promotes economic and social prosperity, individual liberty, and security in both advanced and developing countries. The Institute's Survey of Entrepreneurs: India was published on December 14, 2009.

SRIREKHA  N. CHAKRAVARTY
India Post News service