Max Weber in his theory says religion has a large impact on entrepreneurial development. According to Weber, some religions have basic beliefs to earn and acquire money and some have less of it. He calls then a “spirit of capitalism” and “adventurous spirit”. The spirit of capitalism will be generated when mental attitude in society is favourable to capitalism. According to Max Weber, driving entrepreneurial energies are generated by the adoption of exogenously-supplied religious beliefs. It is these beliefs which produce intensive exertion in occupational pursuits, the systematic ordering of means to ends, and the accumulation of assets. His theory suggests the belief systems of Hinduism, Buddhism and Islam do not encourage entrepreneurship. His stand has been challenged by many sociologists.

Max Weber’s Theory suited the colonial rulers who wanted to encourage European entrepreneurship in India. But it has been criticised by subsequent researchers. The theory is based on invalid assumptions, which are:

1. There is a single system of Hindu value,
2. The Indian community internalised those values and translated them to day to day behaviour, and
3. These values remained immune to and insulted against external pressures and changes. The rapid growth of entrepreneurship in India since independence proves that Hinduism is not averse to the spirit of capitalism and adventurous spirit.

Many thinkers have accepted Weber’s analysis of the linkage between religious belief and entrepreneurial growth. But this view is not accepted universally. Samuelson criticised Weber’s view on the ground that capitalism also developed in those societies where protestant ethic was “not prevalent”. Hoselitz argued that protestant could not develop industries in France because they were not given political security. It can be concluded in the words of Carol that “ethical values have some effect on entrepreneurial growth but to consider them all in all would be unrealistic”.

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