TOWARDS AN ENTREPRENEURIAL CULTURE FOR THE TWENTY-FIRST CENTURY - Part- I
Executive summary
The world’s population is growing at a time when traditional, stable labour mar-kets are shrinking. In developed and developing countries alike, rapid globali-zation and technological change have altered both how national economies are
organized and what is produced.
Countries differ widely in their restructuring practices, but redundancies, unemployment and lack of gainful employment opportunities have been some of the main social costs of recent economic changes around the world. The ILO estimates that 88 million young people are unemployed in the world today. Unemployment among young women and men is twice or more higher than among adults.
In many countries, youth as a group are marginalized in society. An esti-mated 284 million children between the ages of 12-17 worldwide are out of school and this figure will grow to 324 million by the year 2010.1 But even children who are in school may have little information on post secondary pathways and career opportunities open to them in different sectors, especially entrepreneurship and self-employment. This limits their access to additional resources, including educa-tion and training and employment opportunities. Young women, in particular, face poorer employment prospects than men due to gender stereotyping and their dis-proportionate share of family responsibilities.
Governments around the world are increasingly concerned about the socio-economic effects of un-employment and under-employment. Urban drift and pov-erty are increasing. In many developing and transition countries, major towns and cities are now home to high numbers of street children struggling to make a living. Their social, economic and cultural isolation and lack of ties make them vulnerable
Towards an entrepreneurial culture for the twenty-first century
to exploitation and a multitude of dangers that further limit their choices and act as barriers to productive employment and well-being.
With an estimated 1.2 billion young men and women worldwide entering into the working age population over the next decade,2 societal cohesion and employ-ment creation pose a key challenge for national governments. The United Nations Youth Employment Network (YEN) 3 has recognized the impending crisis and has recommended a new approach to economic and social development, one that views young people as assets, not liabilities, and provides them all the assistance they need in preparing them for the world of work and beyond.4
Across nations, what is needed are programmes that show young people how they can directly contribute to raising levels of well-being and prosperity in their communities. Preparation starts in the classroom where students, future workers, business owners and community members must also learn how to be responsible citizens.
Entrepreneurship and enterprise education are made up of all kinds of experi-ences that give students a vision of how to access and transform opportunities of different kinds. In the promotion of entrepreneurial talent, programmes also work to increase awareness of the environmental and social implications of enterprise and to be respectful in their interactions with society. In economically disadvantaged areas, this will especially have a long-term positive impact on social inclusion and justice, as well as competitiveness (ILO, 1998).
The present study analyses fi rst the role of entrepreneurship within the society that goes far beyond the image of business creation for income generation and for making benefits. Entrepreneurship is considered as the driving force for progress in the social, governmental, and cultural arenas and this through-out time. The study takes a look at the linkages between entrepreneurship and society in relation to local economic development, employment creation, employability and poverty reduction.
Since the World Declaration on Education for All and the adoption of the Millennium Goals to reduce poverty in the world to the half till 2015, it is rec-ognized that education is not only acquiring academic knowledge but the way to prepare young people for work and living in the society. Secondary education has to meet this challenge that consists of changing orientation to skills that can deal with changing economies and work patterns and for living with rapidly changing cultural values of societies. Education that makes young people becoming entrepreneurial in a broad sense would help to achieve this goal.
The section on Findings on Entrepreneurship Education attempts to provide a brief overview of the elements of entrepreneurship and/or enterprise education programmes found in the course of the research. There is no one model. Traditions of education, work and enterprise fi nd very uneven expression from community to community, from men to women and from rural to urban locations. The fi ndings show that each education system must fi nd its own route to models of educational delivery that are the most appropriate for meeting contemporary learning needs at secondary level. The elements described here are intended to stimulate thinking around how countries could mark their own course.
Measuring the impact and success of entrepreneurship and enterprise edu-cation programmes is still a major challenge. Unfortunately, there are few tracer studies available, i.e. tracing graduates of enterprise education and self-employ-ment programmes to assess whether they have successfully been integrated into the social, cultural and economic mainstream of their communities. More importantly, it is extremely difficult to isolate the impact of a particular interven-tion without considering the interaction among different cultural, institutional and family influences on entrepreneurial behaviour in any given local or country context.
However, there seems to be a general consensus that, ultimately, the outcomes of entrepreneurship or enterprise education programmes at secondary level should not only be to stimulate employment opportunities, but to prepare young people for the complexities of life in today’s urban and rural communities. Through the acquisition of practical learning, work and life skills, programmes should improve the ability of students to anticipate and respond to societal changes more easily.
Much of the evidence is anecdotal, but still valuable. Beyond quantifiable indi-cators, the success of youth entrepreneurship interventions could therefore be meas-ured in terms of contribution to learning, contribution to teaching practice, to the community and poverty reduction and to more joined-up decision-making.
A number of lessons had been drawn from the research on how to design and implement successful entrepreneurship education programmes. The first set of les-sons learned concerns the educational environment and pedagogical requirements that have to be addressed by the Ministries of Education, the curriculum institu-tions, the headmasters of schools, the teachers and the developers of entrepreneur-ship education programmes.
A second set of lessons deals with the need to create linkages between entre-preneurship education and the broader development framework for employment creation through enterprise promotion. A conducive legal and regulatory environ-ment will enforce the impact of entrepreneurship education as entrepreneurship education will contribute to a positive enterprise culture that will foster enterprise development.
However, more coordination and coherence are still needed between dif-ferent national strategies and initiatives with a common focus towards education and youth development – strategies that help young people avoid or work their way out of vulnerability and poverty. It is particularly important that education reform at secondary level be seen as an integral part of an overall social development vision. And while social development should not be driven by narrow economic issues, a strategy for education reform that makes no attempt to address younger people’s economic concerns and challenges is a hollow one.
The re-emergence of entrepreneurship
In recent years, the economic fortunes of different countries around the world have become less predictable as national economies become more closely woven together. Companies look for locations with the cheapest operating costs, while capital moves quickly across national borders seeking the highest return. Many population groups fi nd themselves moving to follow employment opportunities or to secure a better quality of life.
The old paradigm of the twentieth century is being replaced with the new paradigm of the entrepreneurial society – a society which rewards creative adapta-tion, opportunity seeking and the drive to make innovative ideas happen. In fact, most commentators would now agree that a spirit of entrepreneurship is one of the principal factors in whether communities can successfully overcome the difficulties that global changes have generated.
But while entrepreneurship is now mostly commonly associated with busi-ness creation and much of the world’s media has created an image of the modern day entrepreneur as the inspirational figure of our age – building a business empire out of nothing and in doing so, creating wealth and prosperity for him/herself and others – the true meaning of entrepreneurship goes far beyond the act of starting and running a business.
Entrepreneurs are essentially ideas people, who seize an opportunity to generate value or well-being in society by providing for unmet needs with a new product or service, or by carrying out an existing activity in a novel or more effi-cient way. They look for what is changing, what is needed and what is missing and then undertake (entreprendre) the task of achieving their vision, marshalling resources, demonstrating ingenuity in the face of obstacles and assuming responsi-bility for any risks along the way.
Entrepreneurs have historically played an important role in society because their willingness to take the lead, problem-solving skills and resilience lead to dif-ferent types of economic and social innovations – the continuous supply of which drive progress and growth. And although the end result is now most commonly associated with a business venture in the private sector, entrepreneurship has been the driving force for progress in the social, governmental and cultural arenas throughout time.
Creativity, orientation to opportunity and resilience in any person, organi-zation, industry or community can be described as entrepreneurial spirit. And as socio-economic circumstances around the world change, skills such as these are becoming more and more valuable. In fact, modern citizenship calls for people to adopt a more proactive approach to all aspects of their lives – weighing up different individual learning, employment and career opportunities and pushing their capaci-ties to the limits in overcoming everyday problems.
The following sections take a further look at how the linkages and connec-tions between entrepreneurship and society have become more apparent over the past two decades.
Entrepreneurship and local economic development
The insertion of local economies into globalized networks of production and con-sumption is reshaping local economic contexts. For example, the rural environment, and particularly the agri-business sector, have changed dramatically in Africa, Asia and Latin America over the last few decades. Competitiveness, trade liberalization, institutional changes in agricultural support and the reduction in agricultural sub-sidies now present enormous challenges for producers, consumers, civil society and private sector in the affected communities of these countries.
The former eastern bloc countries also face new realities. At the national level, centralized state-owned companies have been privatized, and at the company level, the administrative way of managing is being replaced by a more entrepreneurial one. Many local economies, which once relied on large branch plant structures as the main source of employment, have been stripped of their livelihoods, forcing many to head towards the main cities in search of new employment opportunities.
As pace of change quickens, some regions and the citizens within them have proved more adept at repositioning themselves than others. More than ever, an entrepreneurial spirit is the key deciding factor. At the level of local governance, this means looking carefully at the problems that regions are coming up against, assessing realistic options for people, fi rms and their territory, and being more crea-tive and willing to take risks in the template for local economic policies.
Some local governments have tried to generate new employment opportunities by providing relocation incentives to large factories and companies. But this does little to reduce the vulnerability of future generations. Entrepreneurial local govern-ments have recognized that fi nancial investment is important, but that harnessing the territory’s human capital (the talents and imagination of all its people) and social capital (trust and cooperation developed through generations of relationships and networks) will be the key to stimulating new opportunities, revitalising urban and rural economies and reducing the population flight from these areas.
Small fi rm growth is now one of the main pillars of territorial competitive-ness strategies.1 But entrepreneurial local governments have also understood that economic growth cannot take place in the long term without social stability and maintaining a decent quality of life for all. This in turn rests on fi nding a balance between economic, social and environmental goals. This requires dialogue and part-nerships through which different stakeholders work together to fi nd solutions for their broad range of concerns. And while these may not always be as effective as desired, there are at least greater civil society inputs into strategies to maintain social cohesion, to protect cultural identity and to promote more environmentally friendly behaviours in local communities.
Putting the economic future of the community in the hands of its own mem-bers reduces dependency on outside forces and rejuvenates the economic and social fabric. Local business creation tends to create a ripple effect, with indirect employ-ment growing over time as disposable incomes increase and various markets for dif-ferent products and services emerge. More importantly, because of their ties to the territory, local entrepreneurs tend to create jobs rooted in the social, cultural and environmental needs of where they live. As a result, their communities are better prepared to withstand changes in the global economic environment.
Entrepreneurship and employment creation
In many developing and transition countries around the world, structural adjust-ment and the fiscal crisis of the State have reduced the levels of public sector employ-ment and its remuneration over the past twenty years. Meanwhile, in Africa and parts of Asia and Latin America, dominant economic sectors are still unable to generate enough employment opportunities for new school leavers.
A realistic option for most teenagers in certain countries is to create their own income-generating activity in the informal sector (often at subsistence level), accept poorly paid or unregulated work in that sector 2 or go in search of income-generating opportunities elsewhere. The size of the informal sector in terms of employment stands around 40 per cent in Bangladesh, India, Indonesia, Nepal and Pakistan.3 In a survey of those living in the slums of Bangkok, 87 per cent of those in employ-ment earned a living through the informal sector and undoubtedly a large number of these had little or no education.
Even in the diversified economies of the West, the increasing delocalisation of production processes has dramatically reduced the number of work opportunities in traditional manufacturing and industrial sectors, while the level and complexity of skills required in other key market areas have risen sharply.4 In some regions, changes in skill requirements have had the hardest impact on women and minority population groups whose traditional employment opportunities were found in low-skill sectors – jobs that are becoming scarcer in the new global economy.
There is no doubt that in the future, the majority of new employment oppor-tunities must come primarily from the growth of new businesses in the formal and informal economic sectors of local economies. Young people will be called on to create their own employment opportunities. This could be in traditional economic sectors or in new sources of employment such as wireless technology, web-based enterprise and business services, e-commerce, e-education and e-health. In either case, those who embrace and manage change, are willing to pursue their passions and see self-employment as a viable career option will get ahead.
Entrepreneurship and Employability
While small and micro enterprises are viewed as the only viable alternative for income and employment generation on a large scale, the survival and competitive-ness of all companies, small and large, depend increasingly on the quality of their workforces. Workers need to be able to work autonomously, to take responsibility and decisions, to be flexible and creative and to update their skills continually.
Entrepreneurship and society
Different types of relationship between entrepreneurship and the world of work:
Freelancing. From writers and photographers, to carpenters and interior design con-sultants, many people run their careers by going freelance. Working at home or lugging a laptop to their favourite thinking spot, freelancers promote their services to whoever has work to be done. They manage themselves as a business – finding the work, bal-ancing their books and taking care of their taxes and maintaining control over where, when and how they work.
Contract work. Contract workers benefi t from the diversity of opportunities created by employers who farm out their jobs on a project-by-project basis. They pick and choose the projects they prefer, learn to live with risk and balance out their work to get them through the lean times. They fi nd their contracts through large corporations or small businesses, government or non-profi t organizations and build a portfolio of expertise that allows them to apply their skills to a wide range of projects.
Business ownership. Millions of people around the world choose to start their own business every year, working long hours to turn their ideas into business plans and to build something out of nothing – creating jobs for themselves and for others.
Intrapreneurship. Intrapreneurs, or enterprising employees, bring their ideas to fruition by using existing resources, networks and business structures, creating entrepreneurial opportunities within an established organization. Within the bounds of their jobs, they come up with projects that fulfill their goals and bolster their company’s bottom line at the same time.
Social entrepreneurship. Those who want to make the world a better place − on their terms − often choose social entrepreneurship, championing causes ranging from com-munity development to international aid, creating and running programmes that serve society’s social, but often non-revenue-generating needs. By honing their skills in fund-raising and project management, they use their entrepreneurial instincts to make a difference in their world.
In some regions within countries, local labour markets cannot even absorb the graduates of basic and higher education systems. Here under-employment is a major problem and young people usually move further a-field in search of jobs that match their skills set. This leads to significant brain drain and the emptying out of areas. For the less well-educated, where once a strong back and a will to work guaranteed steady employment, these people now fi nd themselves in low-paid, high-turnover service sector jobs.
As a result, even those who choose the more traditional employment pathways will still need entrepreneurial skills to get ahead in the modern workforce. Young people must be able to sell their competencies to the highest bidder, display self-confidence, responsibility, leadership, and accountability to succeed in their chosen profession and re-skill and seize career opportunities over their life time.
Entrepreneurship and poverty reduction
Countries differ widely in their restructuring practices, but cuts in welfare budgets, redundancies, unemployment and lack of gainful employment opportunities have been some of the main social costs of economic changes taking place around the world.
Restricted access to education, secure employment, fi nancial and infrastruc-tural capital, skills and motivation often lead young people to drift to the margins of society, where they become vulnerable 5 to a variety of dangers, including poverty, crime, disease and drug abuse. The mutually reinforcing relationship between disad-vantage and poverty is then reflected in demographic and urban patterns.
Due to the absence of gainful employment opportunities in their com-munities, young people drift towards large urban settlements where they live in unplanned settlements that are often lacking in access to basic assets and services. Certain groups are more at risk, especially those who have experienced barriers to entry and progression in different education, training and employment streams as a result of gender,6 HIV/AIDS, disability, ethnic or religious origin, are disadvantaged by geographic location or remoteness.
The problem of youth vulnerability is not exclusive to developing or transi-tion countries. In many western countries, in spite of sustained economic growth throughout the 1990s, income inequality is increasing year-on-year. Income ine-quality in the United States is the highest among all industrialized nations, due, in part, to the decline in real wages of low-skilled workers.7 The Rockefeller Founda-tion estimates that one in every eight persons in that country now lives below the poverty line.
With societies changing at an ever more rapid pace, fi nding solutions to the problems of urban and rural poverty must rest on reducing the potential vulner-ability of future generations through targeted education and training and workforce entry strategies. These should provide the right tools so that young people will be able to build preferred futures rather than merely using their survival instincts to respond to immediate exigencies.
In 2003, the Commission on the Private Sector and Development, convened by United Nations Secretary General Kofi Annan, and co-chaired by Prime Min-ister Paul Martin of Canada and Ernesto Zedillo, Mexico’s former president, was asked to respond to two questions: how can the potential of entrepreneurship be unleashed in developing countries as a force for poverty reduction, and how can the existing private sector be mobilized to meet that challenge? Answering these questions led to the report “Unleashing Entrepreneurship: Making Business Work for the Poor”.8 The messages from this Report were reinforced at the 2004 G8 meeting in the United States. In Georgia, G-8 leaders agreed on the U.S. driven action plan “Applying the Power of Entrepreneurship to the Eradication of Poverty.”
What are the main messages of these reports? On the one hand, they call for the empowerment of communities through increasing possibilities for, and the tools to sustain local entrepreneurial activities and enterprise growth. On the other, they underline the importance of increasing the supply of services and products to the poor, widening choices and reducing prices. They also suggest that the orientation to innovation, technical and organizational expertise of the private sector should be drawn into the process of extending social infrastructure in areas where govern-ments do not currently reach. The first creates employment and income growth. The second improves the quality of life for communities.
Setting new heights for the bottom line
Many programmes that help communities adapt to, and cope with, changing socio-eco-nomic circumstances often head straight for the bottom line. That is, they focus on a business-oriented expression of harnessing entrepreneurial talent, promoting individual opportunities for self-employment and income generation as a way of building commu-nity assets and reducing the symptoms of vulnerability and poverty. The old quote of Lao Tzu: “Give a man a fi sh and you feed him for a day. Teach a man to fi sh and you feed him for a lifetime” continues to be a fi tting refl ection of this tendency.
While this is a critical dimension of promoting an entrepreneurial culture, is this enough? Is the recent orientation to promoting entrepreneurship justifi able if emerging economic activities only serve to repeat the same mistakes of the past, or ingrain pov-erty even further?
If entrepreneurship is to truly benefi t the urban and rural poor around the world, a new model is needed – one that links enterprise development directly with collective or community well-being and poverty reduction, one that binds the community together rather than pulling it apart. This is particularly important as the inter-relationships between business activity, environmental degradation, food security, health, inequality and conflict become clearer.
Interventions designed to foster entrepreneurial attitudes, behaviours and skills must therefore ask and answer some critical ethical questions, particularly with regard to the “what”, “how” and “who” of the entrepreneurship process.
Meeting local needs
The first important question should be: What kinds of goods and services are being produced? Is it enough that the final product satisfies the unmet needs of a consumer in some distant place?
Entrepreneurship interventions cannot be indifferent to what they are encouraging their participants to produce. Nor should they be blind to the potential for meeting community interests. If thousands of impoverished communities use their training to manufacture T-shirts or similar products, it is fair to conclude that the impact on com-munity development will be zero.
A simple tenet of community entrepreneurship is this: Tailor goods and services to meeting the community’s basic needs, such as food, health, energy, and housing first; once these needs are met through local production, then consider moving into non essential items for broader wealth generation.
The most community-minded entrepreneurship programmes channel the entre-preneurial talents of participants directly into addressing problems that immediately affect local households and families. They teach their budding entrepreneurs that fulfilling unmet local needs is, by definition, going to be better for the community in the long term than exporting dolls houses. In doing so, they are building a lasting capacity within communities for addressing and resolving issues of concern to them.
How are the goods and services produced?
The next important question is ‘how are the goods and services produced?’ Learning to grow a business and ethical business behaviour mean more than just providing a punctual, reliable and value-for-money service to clients. They also mean paying liveable wages and providing benefits to the workers that make the business successful. They mean using natural resources in ways that do not harm the capacity of future generations to take care of their needs (sustainable development) and they imply respect for the environment in which the enterprise is located. Communities can only generate healthy, sustainable livelihoods if they assume a responsibility for the impacts between their activities and the well-being of the broader community.
The question of ownership
Lastly, we need to ask who owns the fi shing gear and the pond? Is the ownership local, or is it a franchise of a large corporation with little commitment to the community? Busi-nesses that are shaped by community needs and owned by community residents are more likely to become long-term assets for local development, creating stable jobs, feeding the local economy and generating taxes for schools, health care services and other types of essential infrastructure. Furthermore, unlike their global competitors with no links to place, when labour and environmental standards rise, such businesses will tend to adapt rather than fl ee.
Entrepreneurship training for true community development is possible, but it will not happen over night. There is still too much emphasis on the bottom line. That is a great way of helping a few street operators become rich. But if we are really going to turn around disadvantaged communities, we must teach entrepreneurs that there is one other important bottom line – the community’s. So, along with basic skills in manage-ment, marketing and organizational development, budding entrepreneurs must also be taught the value of socially useful goods and services, high environmental and labour standards and local ownership. Failing to make these criteria essential features of entre-preneurial programmes risks leaving poor communities behind for another generation.
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