A Discriminant Model for Assessing Entrepreneurial Talent: A Case Study of Jharkhand

Tarak Nath Shaw

The IUP Journal of Bank Management, 2010, vol. IX, issue 4, 36-47

Abstract: The entrepreneurial quality and management competence of an entrepreneur play an important role in the success of an enterprise. The evaluation of an entrepreneur is therefore a prerequisite while appraising a project for financial assistance. Banks and financial institutions in India employ purely judgmental appraisal procedures to assess the capabilities of the entrepreneur. As a part of the research study on the influencing factors with regard to the effectiveness of entrepreneurs, research data pertaining to some ‘successful’ and ‘unsuccessful’ small business entrepreneurs of Jharkhand state situated in the eastern part of India have been used to develop the Discriminant Model. It has been postulated in the research that entrepreneurial success is a function of entrepreneurial traits, attitude and business skills. The Discriminant Model obtained by the use of SPSS package was able to classify 96.2% of the entrepreneurs correctly as ‘successful’ or ‘unsuccessful’. The value of Wilk’s Lambda (0.176) suggesting good discriminating power of the model, the Standardized Canonical Discriminant Function Coefficients for entrepreneurial traits (0.751), attitude (–0.059) and business skills (0.647) suggest that entrepreneurial traits and business skills are better predictors of ‘successful’ and ‘unsuccessful’ entrepreneurs. The Discriminant Model developed herein can be used as a quantitative tool to assess entrepreneurs, provide financial assistance to the right kind of entrepreneurs and thereby reduce the chances of loans becoming Non-Performing Assets (NPAs).

Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:icf:icfjbm:v:9:y:2010:i:4:p:36-47

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