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This study investigates the barriers to entrepreneurship and how government policy has aimed to tackle them with a latter context focusing on the Middle East in both the formal sector (economic activity is taxed and monitored by government) and the informal sector (economic activity is not taxed or monitored by government, however, it is estimated by economists).
What is entrepreneurship? (e.g. what is the role of culture - do barriers differ depending on the definition of entrepreneurship?; what is the role of innovation?; (250 words)
Entrepreneurship is the act of being an entrepreneur, which can be defined as "one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods" (Shane, A General Theory of Entrepreneurship: the Individual-Opportunity, 2003). This act may result in new business ventures or by invigorate existing organisations. The most common type of entrepreneurship is start-up companies (a company with limited operating history). As of recent, the 'entrepreneurship' term has been linked to embrace both social and political forms of enterprising activity. With reference to large corporations, they can be said to be acting like entrepreneurs and have been dubbed intrapreneurial.
Paul Reynolds, founder of GEM (Global Entrepreneurship Monitor) once said that "by the time they reach their retirement years, half of all working men in the United States probably have a period of self-employment of one or more years; one in four may have engaged in self-employment for six or more years. Participating in a new business creation is a common activity among U.S. workers over the course of their careers" (Reynolds, Entrepreneurship in the United States, 2007).
On Thursday 6th January 2010, speaking alongside Business Secretary Lord Mandelson, Gordon Brown said "going for growth" was the governments number one priority. He added "we will do everything that we can to support and unleash the entrepreneurial, innovative and dynamic talents we know we have in Britain" The Telegraph, Jan 2010). Historically, economists have proven that entrepreneurial activity has boosted the growth of not only the UK economy, but also of the western world. Publications arising from studies stemming from the Middle East and Asia, have controversially suggested that some governments have too many barriers to entrepreneurship hence slowing potential economic development.
Entrepreneurial activities are considerably diverse depending on the type of business and level of innovation. The scale can range from individual projects to creating job opportunities for many others. Many organisations have been established to aid the development of entrepreneurial activity and encourage the entrepreneurial personalities. Recent publications and scholars have suggested conceptualisations of entrepreneurship as a type of mindset, resulting in initiatives in the form of social, political and knowledge entrepreneurship.
The entrepreneurial personality (250 words)
A social entrepreneur can recognise a social problem and use entrepreneurial principles to organise, create and manage a venture to achieve a social change (Thompson, The World of the Social Entrepreneur, 2002). When in comparison to a business entrepreneur, the perceived goal of social ventures is to make a social difference and create social capital over performance measures in profit and return. Generally, the ultimate aim is to achieve greater social and environmental success. Although this mindset is commonly linked with not for profit organisations, it should not necessarily to be excluded from businesses striving for fiscal goals.
A well known case study of a social entrepreneur is Muhammad Yunus, founder and manager of Grameen Bank. The Grameen Bank is a microfinance organisation that was initially setup in Bangladesh. The establishment makes small loans to the impoverished without requiring collateral. The system of this bank is based on the idea that the poor have skills which are underutilised. The "Village Phone Program" is an application of the Grameen Bank through which female entrepreneurs can start providing wireless payphone services in rural areas of Bangladesh. This program has helped almost 30k people within Bangladesh that were previously unobtainable via remote communication to communicate with others and build up their local micro economies (Grameen Bank, grameen-info.org, 2009).
In some countries, including Bangladesh, social entrepreneurs have filled the spaces left by relatively small circumstances. They have also been known to achieve enormous synergies and benefits for other businesses within their economy. Within other countries, particularly in Europe, these individuals have tended to work closely with public sector organisations, both locally and nationally.
Political entrepreneurs can be reduced to some of the below:
A entrepreneur operating in the political or business sectors that start political ventures, groups or parties
A entrepreneur seeking profit through government contracts or arrangements with governments through political authority (rent seeking).
A entrepreneur seeking progression in their political career and popularity by perusing the conception of political policy
Knowledge entrepreneurshipÂ describes the ability to recognize or create an opportunity and take action aimed at realizing the innovative knowledge practice or product. Knowledge entrepreneurship is different from 'traditional' economicÂ entrepreneurshipÂ in that it does not aim at the realization of monetary profit, but focuses on opportunities with the goal to improve the production (research) and throughput of knowledge (as in personal transformation (Harvey & Knight, 1996)), rather than to maximize monetary profit. It has been argued that knowledge entrepreneurship is the most suitable form of entrepreneurship forÂ not-for-profitÂ educators, researchers and educational institutions.
Other interpretations of entrepreneurship personality breakdowns
Another interpretation of entrepreneurial mindsets is to break them down into nine key types. These personality profiles are based on the 9 point circler of the Enneagram, a typology of human behaviour.
The 9 Personality Types of Entrepreneurs
Focuses on the company as a means to improve the world.
Provides an extremely high level of assistance and advice to customers.
Centred around high levels of charisma and energy. Very personal brand.
Very creative, synthesised of unique talents and creativities.
Future vision focused, strive to achieve goal though curiosity and world understanding.
Looks to fix problems in very systematic approaches.
Full of life, energy & optimism. Makes customer feel they are a 'can do' and 'playful'.
Incredible will and ability to lead the world/business through any challenge.
Provide a nurturing harmony and have ability to survive and assist with an inner calm.
(T. Harv Eker, Secrets of the Millionaire Mind, 2005)
Each distinctive personality type can be said to succeed if they are true to their characteristics. Entrepreneurs knowing their strongest traits, have been able to use them as a compass for their small businesses.
Barriers to entrepreneurship in the context of Central Asia (1000 words)
Although the volume of calendar days to start up a business in Central Asia ranges from relatively low at only 8 days in Iran, to relatively high in Kazakhstan at 21 days (World Bank Development Indicators, 2009), access to information, unnecessarily difficult procedures and bureaucracy corruption constitute some or the larger barriers to entrepreneurship.
These issues coupled with extensive licensing regulatory requirements, and complex and arbitrary taxation, have unfortunately become the norm for most entrepreneurs operating in Central Asia (Center for International Private Enterprise, Asia Case Study, 2003).
Access to the government agencies processing the data is very difficult for most of the population. This coupled with regular loss and resubmission of paperwork, inaccuracies within the documentation, wrong information and licence pressures has lead start up businesses in Kyrgyzstan to fall well over the 11 days it should take. A case study published by the 'Center for International Private Enterprise' (CIPE) has produced evidence that this process has taken up to three years.