How to Develop Entrepreneurship
By Ichak Kalderon Adizes, PhD.
Recently, I attended the Central and East European Management Development Association’s annual convention. One of the topics discussed was ‘how to develop entrepreneurship.’
Here is what I had to say:
Schools of management are preoccupied with the subject of entrepreneurship because the entrepreneurial spirit acts as the foundation for effective leadership. Without entrepreneurship, management schools train staff people or bureaucrats; they are training employees instead of employers.
I suggest to you that entrepreneurship is not the problem of developing nations. They have plenty of entrepreneurs. When people in developing regions are provided with opportunity, they will likely start a business. For example, the streets are full of peddlers who exhibit entrepreneurial spirit and some people, when denied the opportunity to express it in the open market, will turn their focus to the black market.
This entrepreneurial spirit is prominent among developing nations because there is no work, and it becomes essential to come up with something to do in order to survive. In order to get out of the slums, creativity and the willingness to take risks is encouraged from a young age.
Furthermore, I suggest that developing entrepreneurial people is a problem of developed countries. Why?
I suggest to you that a certain part of the entrepreneurial spirit is a born characteristic, like a talent for music or athletics. To me, to develop an entrepreneur is not to create him or her from scratch. It is, rather, to take innate talent and help him or her learn how to use this talent effectively, without “killing” that talent in the process.
Take, for example, the training of artists. Sending a highly talented painter to an art school can be detrimental to their innovative, artistic output. They might lose their nerve to be different. A similar detriment can happen to young entrepreneurs who attend business schools in developed countries. There, they learn many rules, theories, and case studies of failed companies, which can promote risk-aversion. At graduation, they would rather look for a well-paying job than start a business.
Consider the Internet and digital technology, for example. The new companies, like Google, Dell and Apple are not established by MBAs, but by some nerds working from their garages without any business education.
If a business school student is creative, which is a component of being entrepreneurial, he or she will go into consulting or investment banking. Very few of them start their own company. Starting a business requires a certain level of romanticism and naïveté; it requires not knowing too much or how difficult the process will be.
Entrepreneurs from developing countries do their best to immigrate to a developed country, like the USA, because they will find the infrastructure and business environment necessary for success. The capital markets work, the judiciary system works, telecommunication and transportation work, and there are large pools of qualified people from which to hire qualified employees. Conversely, the environment of an immigrant’s country of origin, typically an emerging economy, is commonly lacking an advanced infrastructure. Additionally, the business environment is not supportive. For example, in market economies, everything is permitted unless specifically prohibited. It is the opposite in countries in transition, where the dictatorial climate of the past still lingers. There everything is prohibited unless specifically permitted, and getting those permits takes time, connections, and often money for bribes. However, in capitalist society, government does not compete with private enterprise and, traditionally, stays out of business endeavors. In the mixed economies of emerging countries, where the role of government is not as well defined, if there is economic opportunity in the marketplace, the government will compete with private enterprise.
Thus, I suggest to you, schools of business in emerging economies should not worry about how to develop entrepreneurial people. They should worry more about how not to undermine the existing entrepreneurial spirit with too much ineffective or stifling education. What emerging economies need is a supportive, entrepreneurial infrastructure. This should be their focus for change.
Developed countries, on the other hand, have a great infrastructure but dying entrepreneurial spirit. They import it from abroad. (I wonder if there are statistics on what percentages of today’s American entrepreneurs are immigrants…I suggest it is high.) If they are going to stimulate the entrepreneurial spirit, their educational system of management should be less structured and more experiential.
What are the repercussions of this analysis?
Developed and developing countries have different needs and should thus have different solutions. Schools of management in emerging economies should have a different program than the MBA programs of the developed countries, which they unfortunately all copy, and train those that end up being employed rather than employing.
Developing countries need to focus on how to create the appropriate infrastructure for entrepreneurship to succeed, a subject which is, granted, more political than management schools can handle. But that is where the secret of building entrepreneurship for developing countries lies.
Dr. Ichak Kalderon Adizes
President of Adizes Institute
Dr. Adizes is a consultatnt to top corporations and governments and is recently recognized by Leadership Excellence magazine as a top “Thought Leader” in 2008(LINK).