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Thursday, July 01, 2004
Ng: Entrepreneurs
By Wilson Ng
Wired Desktop
AWARD. Last week, I was fortunate to be awarded an Entrepreneur Award.
Suddenly, people were asking me questions like what is an entrepreneur? Are there any special skills or characteristics of entrepreneurs?
If you see entrepreneurs heading the bulk of the small and medium enterprises (SME) worldwide, it takes on even more significance. Companies like Microsoft, IBM, Oracle, HP have made no bones about SMEs being where the market growth for information technology is.
Governments worldwide have also acknowledged that entrepreneurship or the formation of small and micro businesses is the key to economic growth, employment generation and poverty alleviation.
In mainstream economic theory, you will find that the term entrepreneur is noticeable only by its absence.
The terms mostly have been either the capitalist class or the labor class. The concept of the entrepreneur was not deemed relevant to the 19th or early 20th Century industrial economy. It became crucial starting the 1980s.
Who is the entrepreneur? The word, French in origin, literally means “one who takes between.”
Early writers like Kirzner viewed him as alert to profitable opportunities for exchange. There was no necessity to own resources, and profit arose from being the intermediary of an exchange.
Schumpeter, a Viennese economist, viewed the entrepreneur as an innovator, the person who brought change through the introduction of new technological processes or products.
Knight viewed him as a calculated risk taker, with profits the return for bearing the uncertainty and risk. He should be responsible for his own actions.
Shackle views him as creative and imaginative.
McCleland believes entrepreneurs have high achievement motivation, and high internal locus of control—that means they must have the confidence in their ability to influence events and outcomes.
Whatever he is, small and medium businesses and their success are vital to any economy.
In the UK and in the US, it is estimated that micro, small and medium businesses (companies with less than 250 employees) are almost 99 percent of the total number of companies. This also seems to be true worldwide.
Another study concluded that the reason why the UK economy did not grow as well as the Japanese and German economies during the ‘70s and the ‘80s was that it was dominated by large companies, in contrast to the Japanese and German economies, which had vigorous SME sectors.
Before we get carried away, here’s a caveat—entrepreneurship is hardly the nirvana or magic cure-all.
I know all of us want to be financially independent. But in the United States, and in the UK ( and probably in the Philippines), statistics show that over half of small business enterprises fail within the first five years of starting.
Let us not encourage people to jump into it unless they are equipped.
Many entrepreneurs have found that the results were not what they expected, and ended up working even harder with less financial rewards.
I know many embroiled in an entrepreneurial nightmare. The social cost and bankruptcy of small firms are high, and there is trauma and family strain from losing hard-earned savings.
(email: wilson@esprint.com.)
(July 1, 2004 issue)
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