Entrepreneurship and economic development are intimately related. Schumpeter opines that entrepreneurial process is a major factor in economic development and the entrepreneur is the key to economic growth. Whatever be the form of economic and political set-up of the country, entrepreneurship is indispensable for economic development. Entrepreneurship is an approach to management that can be applied in start-up situations as well as within more established businesses. The growing interest, in the area of entrepreneurship has developed alongside interest in the changing role of small businesses. Small entrepreneurship has a fabulous potential in a developing country like India. So, statistical data and its analyses of several countries show that small industries have grown faster than large industries over the last couple of decades.Large industries first lost jobs while small industries created new workplaces.

The crux of the article is to examine the role of entrepreneurship in economic development. The focus is on small scale industries, which led to the main source of employment in the country. "The growth position of the less developed countries today, is significantly different in many respects from that of the presently developed countries on the eve of their entry into modern economic growth." The term `entrepreneurship' calls to mind so many mixed images that a precise definition can be vague. The word entrepreneur comes from French word `entreprendre', meaning `to do something' or `to undertake'. Or the word `entrepreneur' is literally translated, means `between-taker' or `go-between'. By the 16th century, the word entrepreneur had emerged to refer to someone who undertakes a business venture.

Richard Cantillon was the first economist who used this word (entrepreneur) in 1730 and argued that entrepreneurship entailed bearing the risk of buying at certain prices and selling at uncertain prices. Entrepreneurship goes with risk and an entrepreneur is a risk-bearer where risk means fear of loss. The term `entrepreneur' was further popularized by Jean Baptist Say, a French economist around 1800 and he says that entrepreneurship, "shifts economic resources out of an area of lower and into an area of higher productivity and greater yield". Finally, Joseph Schumpeter added the notion of innovation in 1934. In his view, an entrepreneur is an innovator. He allowed for many kinds of innovation including market innovation, product innovation, process innovation, factor innovation and even organizational innovation. Schumpeter's influential work emphasized the role of the entrepreneur in creating and responding to economic development. Innovation means `anything doing differently'.