The second characteristic of underdeveloped economies is the prevalence of particularism in the distribution of economically relevant tasks among performers. Particularistic pattern of distribution has been prevalent, for example, in the traditional Indian caste system. The advanced societies have universalistic i.e., rational approach to the allocation of resources. Again, it is to be emphasized that both these variables do not exist in the respective societies in their pure forms. The movement of society is seen from particularistic to universalistic system as it moves from backward to advanced economy. Sir Henry Maine has also postulated this movement with different terminology and that is from ‗status to contract‘. Thirdly, in the backward societies, economic activities are quite diffuse. It is so because of the fact that there is a low level of development of division of labour. Partly it is the result and, at the same time, cause of the low level of productivity. Thus, the specialization of tasks and the finer division of labour require the development of principle of specificity and rational allocation of roles. Specificity is the outcome of rational planning, the result of the combined application of the principles of universalism and achievement as the norm to economically relevant social situations. Hoselitz concludes that the analysis of social structural aspects of the differentiat ion be tw een ― advance d ‖ and ― underdevelope d ‖ economie s lea ds us to conclude that w e expect the former to exhibit predominantly universalistic norms in
determining the selection process for the attainment of economically relevant roles; that the roles themselves are functionally highly specific; that the predominant norms by which the selection proce ss for tho s e role s i s regulated are ba s ed on the principle of achievement, or ― pe rfor mance ‖ . In an underdeveloped society, on the contrary, particularism, functional diffusion and the principle of ascription predominate as regulators of social structural relations especially in its economic aspects and the orientation of actors in economically or politically influential roles is determined predominantly by considerations of their ego. Entrepreneurial characteristics, such as the ability to make new combinations of factors of production, managerial skill perception of opportunity, risk-taking, inventiveness and achievement motivation are not merely a pale reflection of these antecedent conditions; they constitute an independent causal factor mediating between structural factors and consequent economic development. Modern democratic system is more conducive to the development of innovative behaviour. According to him, they are more prone to taking up entrepreneurship as a career whose existing social status has been denigrated in the course of historicalchange.
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