Is entrepreneurship in our genes or the result of our environment? Defining what it is and how it evolves is a minefield, as Rebecca Harding, Global Entrepreneurship Monitor's executive director, explains. We also talk to three entrepreneurs from around the world
For all the burgeoning literature on entrepreneurship, we're no closer to establishing what an entrepreneur is and why it matters. Traditionally, economists regard entrepreneurs as market creators, but many who observe them argue that it is more complicated than this. First and foremost, it is the person who is an entrepreneur, not their nationality or their cultural or economic setting.
They are usually positive, energetic, heavily reliant on social capital and networks, and seeking solutions to the economic or social problems that they see. They may well create new markets but, more accurately, they create new opportunities for wealth creation.
Innovative, risk-taking and mould-breaking are the three terms that best summarise what an entrepreneur is about (see panel below). This broader approach is much more inclusive, allowing us to understand entrepreneurs as a "genus" with change and wealth creation as its common feature. Within that genus exist "species"; for example, mainstream entrepreneurs, high-tech entrepreneurs, public sector entrepreneurs, social entrepreneurs and so on. It is possible to be an entrepreneur and be entrepreneurial within any of these settings, because it is also possible to create wealth, either economic, societal or environmental in any of these.
Irrespective of national or socio-economic background, entrepreneurs are identifiable as a specific group. They are more likely to know other entrepreneurs than the general population, less likely to be risk averse, more likely to think they have the skills to start a business and more likely to spot business opportunities. They can survive in different settings: in large companies, in low-and high-income countries and in social as well as purely economic markets.
All of this we know from data gathered by Global Entrepreneurship Monitor (GEM), which measures entrepreneurial activity and the motivations and attitudes of entrepreneurs in some 42 countries across the world. GEM surveys a representative sample of the adult populations in these countries through telephone or face-to-face interviews.
From these it establishes how many people are engaged in some form of business start-up (up to three months old), how many are engaged in the early stages of business development (from three-42 months) and how many are involved in running or owning businesses older than 42 months.
These data allow GEM to analyse entrepreneurs in very different habitats: from South America and Africa, through Asia to Europe and North America. And, as with evolutionary theory, adaptation to survive-in this case to widely differing labour markets-is a key driver for entrepreneurs.
In a country such as Venezuela or Uganda, the imperative is simply to make a living by seizing whatever income generation opportunities exist. In more affluent nations, the income imperative may be less acute and therefore the focus is on creating and building new market opportunities using the skills, technologies or ideas and capital that is available. So a low income country will have higher levels of early stage activity than a richer one because there are not enough salaried jobs in the economy.
But just because 25 per cent of the population is engaged in the very earliest stages of business formation in Venezuela, compared to 12.4 per cent in the US, does not mean that their entrepreneurial activity is the "wrong" sort of activity. It is just different and this is key to understanding the role of the entrepreneur as an agent for change.
Higher levels of entrepreneurial zeal in a less developed country may not become successful entrepreneurial reality because the structures and systems needed to take it to the next step may not exist. In other words, entrepreneurship-which we can call the activity of building and growing a business to achieve its wealth creation goals-is stifled.
In this context, it would be at best disingenuous and at worst ill-advised to recommend to rural Africa, structures such as venture capital or science parks that support entrepreneurship in the developed world. Instead, what is needed is the rule of law, basic hygiene and elementary education.
But, it may be appropriate to recommend that women in rural Africa are trained to use computers and given seed money to allow them to build centres where other women can learn basic skills, be taught about their health and the health of their children in the interests of the welfare and long-term wealth of their communities. Such social ventures have been successful in rural India, presenting real and transferable lessons, and creating a bedrock that might sustain entrepreneurship to its conclusion.
So how do countries and companies go about creating the right conditions for entrepreneurship? This depends on the entrepreneurs themselves. There is little chance of creating an entrepreneurial culture in a rigid hierarchical, "control and command" business, however networked and flexible employees might be. Neither is a social enterprise necessarily appropriate in a setting dominated by high technology firms.
Equally, new business formation is unlikely to be influenced in the short term by planting an incubator in sub-Saharan Africa if there is no university and no skills to support the commercialisation of research, or to conduct the research in the first place. And even if there were the skills and capital, there is still no guarantee that the businesses formed would be sustainable, or that any wealth created would filter into the wider economy.
The challenges the world faces over the next century are so substantial that we cannot afford to ignore them. Technological change is rapid, and the opportunities created are global. China and India are taking centre stage in a world economic order where they once had bit parts and this means that the world's largest firms must think and behave entrepreneurially in terms of strategy and organisation if they are to remain competitive in the new order.
Strategy cannot be seen any longer as a linear process from conception through to implementation. Best practice is increasingly defined by the opportunities that are given to individual employees to build their own enterprises within the corporation.
Businesses now have to manage entrepreneurs on a daily basis-the challenge is to provide a platform for the diverse, flexible and globally networked employee to feel motivated enough to stay rather than set up by themselves. Similarly, the challenge for policy makers, especially in the developed world, is to ensure that they are maintaining and developing workforce skills to compete with the rapidly improving skills base of the emerging economies and, critically, to have the flexibility to work in an entrepreneurial setting.
It is no longer adequate to think of wealth creation purely in economic terms. As global inequalities grow, and as the environmental and climate change consequences of our activities become apparent, the world's largest businesses must think, not just in terms of how to be efficient, but also in terms of how to minimise their impact on the environments and communities in which they are based.
In this global context, we can't afford to be dogmatic about our approach to entrepreneurship. It is no exaggeration to say that the role of entrepreneurs in creating wealth is pivotal. But, we now need entrepreneurs who can sustain that wealth and extend it into communities.
Which is where we come back to the notion of entrepreneurs as a genus with common characteristics who have been drivers of change throughout human history. We need to understand that different species of entrepreneur can serve various purposes at different times in our development. Maybe the time has come for larger companies to think in terms of the social and environmental impact of their operations and to think about entrepreneurship in its broadest sense as a means of addressing the challenges we face.
Global economic and social order systems need to adapt. Changes in society are fuelled by changes in the economy as some groups become richer while others become poorer and while technology filters through into our everyday lives. Sometimes things change faster than at other times, but change is endemic, nevertheless.
For all the burgeoning literature on entrepreneurship, we're no closer to establishing what an entrepreneur is and why it matters. Traditionally, economists regard entrepreneurs as market creators, but many who observe them argue that it is more complicated than this. First and foremost, it is the person who is an entrepreneur, not their nationality or their cultural or economic setting.
They are usually positive, energetic, heavily reliant on social capital and networks, and seeking solutions to the economic or social problems that they see. They may well create new markets but, more accurately, they create new opportunities for wealth creation.
Innovative, risk-taking and mould-breaking are the three terms that best summarise what an entrepreneur is about (see panel below). This broader approach is much more inclusive, allowing us to understand entrepreneurs as a "genus" with change and wealth creation as its common feature. Within that genus exist "species"; for example, mainstream entrepreneurs, high-tech entrepreneurs, public sector entrepreneurs, social entrepreneurs and so on. It is possible to be an entrepreneur and be entrepreneurial within any of these settings, because it is also possible to create wealth, either economic, societal or environmental in any of these.
Irrespective of national or socio-economic background, entrepreneurs are identifiable as a specific group. They are more likely to know other entrepreneurs than the general population, less likely to be risk averse, more likely to think they have the skills to start a business and more likely to spot business opportunities. They can survive in different settings: in large companies, in low-and high-income countries and in social as well as purely economic markets.
All of this we know from data gathered by Global Entrepreneurship Monitor (GEM), which measures entrepreneurial activity and the motivations and attitudes of entrepreneurs in some 42 countries across the world. GEM surveys a representative sample of the adult populations in these countries through telephone or face-to-face interviews.
From these it establishes how many people are engaged in some form of business start-up (up to three months old), how many are engaged in the early stages of business development (from three-42 months) and how many are involved in running or owning businesses older than 42 months.
These data allow GEM to analyse entrepreneurs in very different habitats: from South America and Africa, through Asia to Europe and North America. And, as with evolutionary theory, adaptation to survive-in this case to widely differing labour markets-is a key driver for entrepreneurs.
In a country such as Venezuela or Uganda, the imperative is simply to make a living by seizing whatever income generation opportunities exist. In more affluent nations, the income imperative may be less acute and therefore the focus is on creating and building new market opportunities using the skills, technologies or ideas and capital that is available. So a low income country will have higher levels of early stage activity than a richer one because there are not enough salaried jobs in the economy.
But just because 25 per cent of the population is engaged in the very earliest stages of business formation in Venezuela, compared to 12.4 per cent in the US, does not mean that their entrepreneurial activity is the "wrong" sort of activity. It is just different and this is key to understanding the role of the entrepreneur as an agent for change.
Higher levels of entrepreneurial zeal in a less developed country may not become successful entrepreneurial reality because the structures and systems needed to take it to the next step may not exist. In other words, entrepreneurship-which we can call the activity of building and growing a business to achieve its wealth creation goals-is stifled.
In this context, it would be at best disingenuous and at worst ill-advised to recommend to rural Africa, structures such as venture capital or science parks that support entrepreneurship in the developed world. Instead, what is needed is the rule of law, basic hygiene and elementary education.
But, it may be appropriate to recommend that women in rural Africa are trained to use computers and given seed money to allow them to build centres where other women can learn basic skills, be taught about their health and the health of their children in the interests of the welfare and long-term wealth of their communities. Such social ventures have been successful in rural India, presenting real and transferable lessons, and creating a bedrock that might sustain entrepreneurship to its conclusion.
So how do countries and companies go about creating the right conditions for entrepreneurship? This depends on the entrepreneurs themselves. There is little chance of creating an entrepreneurial culture in a rigid hierarchical, "control and command" business, however networked and flexible employees might be. Neither is a social enterprise necessarily appropriate in a setting dominated by high technology firms.
Equally, new business formation is unlikely to be influenced in the short term by planting an incubator in sub-Saharan Africa if there is no university and no skills to support the commercialisation of research, or to conduct the research in the first place. And even if there were the skills and capital, there is still no guarantee that the businesses formed would be sustainable, or that any wealth created would filter into the wider economy.
The challenges the world faces over the next century are so substantial that we cannot afford to ignore them. Technological change is rapid, and the opportunities created are global. China and India are taking centre stage in a world economic order where they once had bit parts and this means that the world's largest firms must think and behave entrepreneurially in terms of strategy and organisation if they are to remain competitive in the new order.
Strategy cannot be seen any longer as a linear process from conception through to implementation. Best practice is increasingly defined by the opportunities that are given to individual employees to build their own enterprises within the corporation.
Businesses now have to manage entrepreneurs on a daily basis-the challenge is to provide a platform for the diverse, flexible and globally networked employee to feel motivated enough to stay rather than set up by themselves. Similarly, the challenge for policy makers, especially in the developed world, is to ensure that they are maintaining and developing workforce skills to compete with the rapidly improving skills base of the emerging economies and, critically, to have the flexibility to work in an entrepreneurial setting.
It is no longer adequate to think of wealth creation purely in economic terms. As global inequalities grow, and as the environmental and climate change consequences of our activities become apparent, the world's largest businesses must think, not just in terms of how to be efficient, but also in terms of how to minimise their impact on the environments and communities in which they are based.
In this global context, we can't afford to be dogmatic about our approach to entrepreneurship. It is no exaggeration to say that the role of entrepreneurs in creating wealth is pivotal. But, we now need entrepreneurs who can sustain that wealth and extend it into communities.
Which is where we come back to the notion of entrepreneurs as a genus with common characteristics who have been drivers of change throughout human history. We need to understand that different species of entrepreneur can serve various purposes at different times in our development. Maybe the time has come for larger companies to think in terms of the social and environmental impact of their operations and to think about entrepreneurship in its broadest sense as a means of addressing the challenges we face.
Global economic and social order systems need to adapt. Changes in society are fuelled by changes in the economy as some groups become richer while others become poorer and while technology filters through into our everyday lives. Sometimes things change faster than at other times, but change is endemic, nevertheless.
Taking traditional farming techniques back to PeruZenon Porfidio Gomel Apaza
Gomel Apaza is a trained engineer, but he's spent the last 10 years unlearning the modern way of doing things. Currently nearing the end of his second MA (in Sustainable Development of Communities), Apaza has persuaded farmers in Peru's Andean "altiplano" to ditch mechanized farming methods in favour of traditions such as harvesting by hand. "Modernity may have its advantages, but the Andean man embraces nature and sees man as part of nature," he says. However effective in the short term, modern farming techniques have resulted in problems for the high Andean farming communities, from lack of biodiversity to contamination of crops and a loss of community spirit.
Traditional rituals, tools and crops have already enriched the biodiversity of the region (you can thank Apaza for the arrival in the UK of quinoa), encouraging him to broaden his horizons: "The idea is to restructure or fix things in a new context, that of the globalised world in which we live," he says. "The Andean vision shows that nothing has an end and that it's all a process of giving in a world of diversity. One has to feel part of the diversity: through it, mutual growth is achieved. The larger aim is to offer alternatives to problems which exist on a global scale."
Inspiration for the project came from a very down-to-earth source: native potatoes. "The mix of native potatoes combines a diversity of answers to external effects. Some are resistant to frost, others to drought, yet others to plagues. They protect one another by being diverse and hence complementing each other.
"Humans are rational, yet different races exclude one another. This is why I decided to promote diversity in the framework of equality."
What's an entrepreneur?
"I don't agree with being enterprising for my own good, but in collective initiatives, reached through learning and living. History makes the mistake of creating heroes: the collective effort remains unmentioned, even if that's what drives achievements. This is reflected in the Andean culture, where the biodiversity is created, not because man wills it, but because the universe does. What is important is to have a vivid and holistic spirit and to undertake actions which promote diversity for the wellbeing of all life forms."
Nomadic school for the Evenk tribes in Siberia
Alexandra Lavrillier
If films are to be believed, being sent to Siberia was always a threat in the former Soviet Union. Yet Alexandra Lavrillier went of her own volition in 1994, and stayed.
A respected anthropologist, Lavrillier has made her home among the nomadic Evenki, a Siberian tribe with a tradition as reindeer herdsman and nomads traversing a massive section of the Siberian taiga.
It is across some of this region that the Evenki school now travels, thanks to Lavrillier's determination. Soviet collectivism meant Evenk culture had all but died out, with most tribespeople assimilated and few speaking the language or adhering to traditional culture. Children had been packed off to boarding schools and had become "a lost generation", she says, neither Russian nor Evenki.
Lavrillier's nomadic school has been some years in the making. She began "climbing the levels of admin" in the late 1990s, building the school herself with help from her own organisation "Secalan" (rainbow) and others from Germany and Russia. It's with understatement that she says: "Russian bureaucracy is very difficult to understand. I was also aware that grants [for us] were sometimes contingent on making other teachers jobless."
She eventually found a champion within the regional administration who understood what she was trying to do and, having obtained enough support for two teachers' salaries, computers and books, as well as reindeer from the Evenk parents, Lavrillier finally opened the school in February 2006.
The teachers are all Evenki and travel from one encampment to another, three weeks at a time. Despite temperatures of -45C, winter's easier to travel, because a sledge carries the kit.
Its results are helping to justify the outlay to the regional authorities, which recognised it as an "official experimental school", which may help people from other disenfranchised tribes who want to copy the idea.
What's an entrepreneur?
"Although we work on different projects, I think there's the same spirit and energy. We've all had obstacles to overcome, but we aren't deterred. I also think entrepreneurs are simple people, trying to achieve something in the background."
Protecting the snow leopard through business
Shafqat Hussain
There's little distinction between conservation and enterprise if you're Shafqat Hussain. He formed Project Snow Leopard (PSL) in 1998 as part of a Yale PhD in economics and created a complementary eco-trekking company that has funded his more altruistic efforts, as well as putting the Baltistan region of northern Pakistan on the tourist map.
The idea evolved out of some work Hussain had been doing with the World Conservation Union in Pakistan and resulted in a unique form of insurance for Balti herders: by paying a very basic premium, they are compensated by PSL for every goat lost to a snow leopard attack. Hussain got initial seed funding of around £2,000-"which goes a long way in Pakistan"-from the Royal Geographical Society's Whitley Lang Foundation. But he'd envisaged it quickly becoming a self-sufficient venture, with eco-tourism underwriting PSL.
His eco-tourism business, Full Moon, promotes "low impact trekking" where group sizes are small and no rubbish is left behind. One of the big attractions for Full Moon customers has been the conservation project and Hussain is hopeful this will set a standard for other local trekking companies, encouraging them to balance ecological and profit motives. "It's important that developing countries consider biodiversity as part of society," he says. "Business ventures such as ours are for profit, but environmental and ecological considerations are inbuilt."
He sees business as inextricable from the civil and political set-up, but says: "It is not the responsibility of business to look after citizens or issues such as conservation. But business is part of society and as such, it can contribute."
The biggest obstacle to development, though, has been external and unpredictable: "After 9/11, everything went down the drain. People were afraid to visit Pakistan. Hopefully, this is a shortcoming, quite literally, in the greater scheme of things," he says. "I want to create real value for the people who live among the snow leopards."
What's an entrepreneur?
"I don't believe ideas originate at special moments-they are around us, in everyday talk. And an enterprising person has the ability to recognise a new idea. Then, they think it through and put it into practice. You need to be three people, at least."
