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SHAHID ABBAS KAHLON
Table of ContentsImportance of entrepreneurship in global perspective...............................................................................2
Introduction.................................................................................................................................................2
International entrepreneurship and entrepreneurship opportunities.........................................................2
International versus Domestic Entrepreneurship.....................................................................................3
Cultural stories........................................................................................................................................3
Cultural Environment..............................................................................................................................3
Technological Environment.....................................................................................................................4
Local Foreign Competition......................................................................................................................4
Embraces Change....................................................................................................................................4
High Tolerance for Ambiguity................................................................................................................4
High Level of Integrity............................................................................................................................4
The Importance of Global Business.........................................................................................................5
Attitudes towards Entrepreneurship in Participating GEM Countries......................................................5
Entrepreneurship in Pakistan.......................................................................................................................8
Current Economic condition of Pakistan.................................................................................................8
Entrepreneurship in Pakistan: Challenges and Opportunities..................................................................9
Comparison of various entrepreneurial characteristics and framework conditions of Pakistan with Peer nations, 2012.........................................................................................................................................12
Significant of entrepreneurship in Pakistan...........................................................................................14
Unemployment......................................................................................................................................14
Downsizing............................................................................................................................................14
Entrepreneurship Aids the Economy.....................................................................................................14
Entrepreneurship facilitates the rate of development of a country.........................................................14
Entrepreneurship helps in conserving the outflow of national wealth..................................................15
Entrepreneurship is not only an exercise in self-employment but it is employment generative...........15
References.............................................................................................................................................16
Shahid Abbas Kahlon Jutt BC11-252
SHAHID ABBAS KAHLON
Importance of entrepreneurship in global perspective
Introduction Never before in the history of the world has there been such a variety of exciting international business opportunities. The movement of the once-controlled economies to more market-oriented ones, the advancement of the Pacific Rim and the new markets in the Middle East provide a myriad of possibilities for entrepreneurs wanting to start a new enterprise in a foreign market as well as for existing entrepreneurial firms desiring to expand their businesses globally. The world is truly global. As more countries become market oriented and economically developed, the distinction between foreign and domestic markets is becoming less pronounced. What was once only produced domestically is now produced internationally. For example, Yamaha pianos are now manufactured in the United States, and Nestlé chocolate (started in Europe) is made all over the world. Invacare’s wheelchairs, once produced only in the United States, are now made in Germany and China. This blurring of national identities will continue to accelerate as more products are introduced outside domestic boundaries earlier in the life of entrepreneurial firms.
International entrepreneurship and entrepreneurship opportunitiesSuch as the European Union and NAFTA (the North American Free Trade Agreement between Canada, Mexico, and the United States) have emerged and are growing. Once-developing countries, like China, are economic powers. These changes are well recognized by organizations that are investing trillions of dollars in a world economy that includes emerging markets as some of the vehicles of future growth. About 85% of the world’s population lives in developing countries, most of which are in need of major investment in infrastructure development. Just ask the potato farmers in the Chuvash Republic of Russia, who saw 26% of their crop rot because of inadequate distribution and warehousing, whether there is a need for this investment in infrastructure. Or, ask the economics professor in the Czech Republic, who had to leave the university to find other employment due to the low university wages, whether massive investment in education is needed. The professor, like many human resources in these developing countries, needs training and education to pro-vide the manpower required in the next century.
The globalization of entrepreneurship creates wealth and employment that benefit individuals and nations throughout the world. International entrepreneurship is excit-ing because it combines the many aspects of domestic entrepreneurship with other disciplines such as anthropology, economics, geography, history, jurisprudence, and language. In today’s hypercompetitive world with rapidly changing technology, it is essential for an entrepreneur to at least consider entering the global market. Many entrepreneurs find it difficult to manage and expand the venture they have created, especially into the global marketplace. They tend to forget a basic axiom in business: The only constant is change. Entrepreneurs who understand this axiom will effectively manage change by continually adapting their organizational culture, structure, procedures, and strategic direction, as well as their products and services in both a domestic and an
Shahid Abbas Kahlon Jutt BC11-252
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international orientation. Entrepreneurs in developed countries like the United States, Japan, the United Kingdom, and Germany must sell their products in a variety of new and different market areas as early as possible to further the growth of their firms. Global markets offer entrepreneurial companies new market opportunities. Since 1950, the growth of international trade and investment has often been larger than the growth of domestic economies, even than those of the United States and China. Importance of International Entrepreneurship A combination of domestic and international sales offers the entrepreneur an opportunity for expansion and growth that is not available solely in a domestic market. The Nature of International Entrepreneurship Simply stated, international entrepreneurship is “the process of an entrepreneur conducting business activities across national boundaries.” It may consist of exporting, licensing, opening a sales office in another country, or something as simple as placing a classified advertisement in the Paris edition of the International Herald Tribune .The activities necessary for ascertaining and satisfying the needs and wants of target consumers often take place in more than one country. When an entrepreneur executes his or her business model in more than one country, international entrepreneurship is occurring. The term international entrepreneurship was introduced around 1988 to describe the many untapped foreign markets that were open to new ventures reflecting a new technological and cultural environment (Morrow, 1988). McDougall (1989, p. 389) defined international entrepreneurship as “the development of international new ventures or start-ups that, from their inception, engage in international business, thus viewing their operating domain as international from the initial stages of the firm’s operation.”
International versus Domestic Entrepreneurship Although both international and domestic entrepreneurs are concerned with sales, costs, and profits, what differentiates domestic from international entrepreneurship is the variation in the relative importance of the factors affecting each decision.
International entrepreneurial decisions are more complex due to such uncontrollable factors as economics, politics, culture, and technology.
Cultural storiesWhile studying in Shanghai in the summer of 1995, I would routinely drive around the city in a taxi to get to know the area and to chat with the taxi drivers (who were always very knowledgeable about the city).
One day, the driver asked me my English name. I told him it was “Phillip,” and he looked puzzled. I asked him what
“Phillip” meant to him and he replied, “Good reception with many channels. So, I have that going for me … which is nice.
Cultural Environment The effect of culture on entrepreneurs and strategies is also significant. Entrepreneurs must make sure that each element in the business plan has some degree of congruence with the local culture. For example, in some countries point-of-purchase displays are not allowed in retail stores, while they are in the United States. An increasingly important aspect of the cultural environment in some countries concerns bribes and corruption. How should an entrepreneur deal with these situations? What is the best course of action to take and still maintain the needed high ethical standards?
Shahid Abbas Kahlon Jutt BC11-252
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Sometimes, one of the biggest problems is finding a translator. To avoid errors, entrepreneurs should hire a translator whose native tongue is the target language.
Technological Environment Technology, like culture, varies significantly across countries. The variations and availability of technology are often surprising, particularly to an entrepreneur from a developed country. While U.S. firms produce mostly standardized, relatively uniform products that meet industry standards, this is not the case in many countries, making it more difficult to achieve a consistent level of quality. New products in a country are created based on the conditions and infrastructure operating in that country. For example, U.S. car designers can assume wider roads and less expensive gasoline than European designers. When these designers work on transportation vehicles for other parts of the world, their assumptions need to be significantly altered.
Local Foreign Competition When entering a foreign market, the international entrepreneur needs to be aware of the strength of local competitors who are already established in the market. These competitive companies can often be a formidable force against foreign entry, as they are known companies with known products and services. This can be particularly difficult when there is a “buy national” attitude in the country. A sustained effort stressing the unique selling propositions of the entering product or service is necessary, including a guarantee to ensure customer satisfaction, in order to compete.
Embraces Change A global entrepreneur likes and even embraces differences in people, as well as situations. He or she constantly seeks new and exciting things and likes to “break the mold” and challenge corporate orthodoxies. Living in and learning about different cultures and ways of doing things is an exciting way to live. New ways of doing things are encouraged. Employees are taught how to manage change.
A global entrepreneur needs to establish a vision that employees and customers understand. Employees should feel that they are an important part of the global organization and essential to its success. A global entrepreneur is very optimistic, assumes that everything is possible, and establishes a limited number of short-term goals to obtain the vision. He or she focuses more on outcomes than processes, works long hours, has a high energy level, and does not fear failure.
High Tolerance for Ambiguity The passion for learning from a variety of sources and viewing uncertainty as an opportunity instead of a threat allows a global entrepreneur to develop mental maps that will lead to achieving a vision. Incrementally moving initiatives in a variety of areas without completing one regularly is not a problem. This high tolerance for ambiguity makes utility a key virtue of any practice at the individual or company level.
High Level of Integrity A global entrepreneur has an extremely high standard for individual and company integrity. These established standards are used inside and outside the company. The same high ethical standards are expected from all employees and activities of the venture. A global entrepreneur focuses on the well-being of his or her employees and acts as a nurturing coach. He or she focuses on building and inspiring
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people and works effectively with others in teams. Spending more time listening than talking, a global entrepreneur values people—employees as well as customers—and wants to build a sustainable enterprise in a particular culture and country.
The Importance of Global Business Global business has become increasingly important to firms of all sizes in today’s hypercompetitive global economy. There can be little doubt that today’s entrepreneur must be able to move in the world of international business. The successful entrepreneur will be someone who fully understands how international business differs from purely domestic business and is able to respond accordingly. An entrepreneur entering the international market should address the following questions:
Channels vary significantly from country to country, each of these needs to be taken into account when deciding to go global as discussed in the following summary. Change and communication are important aspects of operating in a global environment, as are market selection and entry.
Attitudes towards Entrepreneurship in Participating GEM Countries
Participating
Country
I personally know
someone who started
a business in the
past 2 years
There are good start up
opportunities where
live in the next 6 months
a business
I have the required
knowledge/skills &
experience to start
Fear of failure would prevent me starting a business
Innovation Driven Economies
Australia
Belgium
Denmark
Finland
France
Germany
Greece
30.33
24.01
41.67
43.67
47.83
29.99
39.96
45.69
39.58
46.42
51.13
33.87
28.48
15.91
53.16
44.86
40.75
39.53
37.27
41.63
52.18
36.32
34.63
35.17
32.14
42.96
44.41
60.13
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Iceland
Ireland
Israel
Italy
Japan
Korea
Netherlands
Norway
Portugal
Slovenia Spain Sweden
Switzerland United Kingdom
United States
48.76
34.64
35.95
30.36
17.44
31.12
38.06
37.82
33.12
49.04
32.42
53.92
33.54
34.24
28.77
48.74
22.50
35.17
24.68
5.92
13.01
44.80
49.75
20.25
26.80
18.84
66.10
33.33
29.24
34.79
48.99
49.15
41.61
42.42
13.71
28.96
45.51
40.45
52.08
56.34
50.20
42.43
43.85
51.82
59.52
35.15
38.73
43.32
44.50
35.06
34.25
25.64
29.86
39.26
32.54
44.80
35.02
30.73
38.91
32.22
Efficiency Driven Economies
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Argentina
Brazil
Chile
China
Colombia
Costa Rica
Croatia
Hungary
Latvia
Macedonia
Malaysia
Mexico
Montenegro
Peru
Romania
Russia
South Africa
Taiwan
Turkey
41.71
43.41
49.48
59.70
40.90
58.30
35.13
32.78
39.48
41.45
47.79
54.61
59.93
63.90
39.05
34.02
38.64
38.87
36.43
50.35
48.12
65.05
36.17
68.18
46.38
23.32
33.33
29.10
34.26
40.06
55.56
36.07
71.39
17.52
21.65
40.91
29.63
36.14
63.54
57.94
65.60
42.33
65.10
68.80
53.19
43.36
50.75
59.72
24.33
64.65
70.88
76.48
38.18
22.69
44.30
26.42
54.18
24.96
37.69
26.75
32.71
31.49
33.79
39.24
48.98
40.42
36.16
48.46
35.72
41.12
32.96
45.99
37.52
25.44
41.64
32.52
Factor Driven - Economies
Entrepreneurship in Pakistan
Current Economic condition of PakistanRank 27th (PPP)
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47th (Nominal)
Currency 1 Pakistani Rupee (PKR)
Rs.1 = 100 Paisa’s
Fiscal year 1 July – 30 June
Trade organizations ECO, SAFTA, ASEAN, WIPO and WTO
Statistics
GDP $240 billion (nominal) (2012) $514.6 billion (2012 est.)(PPP)
GDP growth 3.7% (2012
GDP per capita $1,578 (nominal; 2012)
$3,876 (PPP; 2012)
GDP by sector agriculture: 21.2%, industry: 25.4%, services: 53.4% (2010 est.)
Inflation (CPI) 7.5% (Jan 2013
Populationbelow poverty line
14% (2013)
Labour force 60.36 million (2012 est.)
Labour forceby occupation
Agriculture: 43%, industry: 20.3%,services: 36.6% (2005 est.)
Unemployment 5.6% (2012 est.)
Main industries textiles and apparel, processing, pharmaceuticals, construction materials, chemicals, cement, mining,machinery, steel, engineering, softwareand hardware, motorcycle and auto parts, electronics, paper products,fertiliser, shrimp
Ease of Doing Business Rank
107th (2013)
Entrepreneurship in Pakistan: Challenges and OpportunitiesHistorically, entrepreneurship in the sense of its modern definition7 has remained very limited in Pakistan. The development of small-scale industrial sector measured through new firm entry rate, if taken as proxy to reflect entrepreneurial activity in Pakistan, show the average annual firm entry rate in Pakistan lower than most regional averages around the world8. There is, however, a
Shahid Abbas Kahlon Jutt BC11-252
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note of caution here that a large number of new firm entries remain unregistered in Pakistan's significant small scale informal business sector. The Small and Medium Enterprise Development Authority (SMEDA) estimates that in Pakistan, small and medium enterprises (SMEs) with less than 100 employees constitute nearly 90% of all 3.5 million private firms that employ 80% of the non-agricultural labor force; and their share in the annual GDP is 40%9 . Their firm structure is dominated by sole proprietorship and most are family run businesses with no culture of taking it to the pubic (IPOs).
A review of the past 6 decades of Pakistan’s development priorities reveals that entrepreneurship has never been the focus of economic development planners. All these years of government efforts clearly show a bias towards large scale industry and neglect of the small. The historical evidence clearly indicates that, in the context of Pakistan, when one talks about industrialization, for most people it implies large plants and factories run by machines and employing a large number of workers. It definitely comes as a surprise to people when they discover the reality; that it is actually the informal sector and the small scale sector that dominates the industrial landscape of Pakistan which have been continuously ignored in the national economic policies.
However, in recent years, with the increasing realization of entrepreneurship and innovation as engines of economic growth, there had a rise in interest in Pakistan to review its economic policies by placing emphasis on entrepreneurial growth10.
As stated earlier, generally, the development of small-scale sector reflected the characteristics of entrepreneurship however this sector had largely grown up as an informal sector. The informal small scale sector has dominated employment in the construction, wholesale, retail trading, hotels, transport, communications and storage industries in urban areas. Some of the issues faced by the small and medium size firms located in different SME clusters in Pakistan are reported as follows:
• Small businesses face a complex legal, tax and administrative environment in Pakistan therefore most firms avoided the economic obligations associated with the registered status.
• Entrepreneurs generally are not tuned to conducting R&D as they believed that the high cost of production and narrow margins did not give them the leverage to go for R&D. Major rationale behind the high cost included high utility prices and minimum wage fixed by government. Another reason of lack of focus on R&D was the nature of industry, which was skill based (imitation)rather than the knowledge based. Nevertheless, research was being undertaken to explore new markets based on personal visits of entrepreneurs either privately or in some cases in groups sent out by the government organizations to promote trade.
• The small businessman, by and large, expected from the government to provide incentives and subsidies, given the rent-seeking culture that has now been established, businessmen, instead of focusing on their own innovation, expected help from the government most of the times.
Shahid Abbas Kahlon Jutt BC11-252
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• Businesses remained largely owner-operated and resistant to developing professional management, as the business growth was traditionally dependent on policy favors rather than on professional management and strategy. Moreover, in clusters, there was no expertise for providing practical advice on key areas such as project feasibility, business operations, brand establishment and marketing. Given the lack of market depth, input from research institutions, universities and other forms of specialized knowledge, knowledge spillovers remained narrow and imitative.
• Scarcity of skilled labor was considered as a major constraint for the development of entrepreneurship. Like all less resourceful firms, the SMEs typically had skill deficiencies and were unable to compete with larger firms' better-qualified manpower. Inter-firm transfer of skilled labor was a usual phenomenon directly influenced by relative wage levels. In this game, the larger firms had advantage over SMEs. Unfortunately, the technical skills were not adequately rewarded by the employers. Even the society never respected people having blue-collared jobs.
• Over and above, lack of trust among the business community was a serious hindrance to growth, impeded cooperation among entrepreneurs to develop the existing or explore the new markets. The entrepreneurs in their attempts to hide business information used to maintain mailing address and banks in other cities. Another serious complaint was that the labor trained by one employer, either moved to another employer or opened up his own firm. Businesses remained owner-operated owing to lack of trust on professional employees in the clusters as an employee who gained knowledge easily replicated with stolen business information.
• Small businessmen had little recourse to bank financing. They believed that the banks lent only to the big borrowers for non-commercial and political reasons. The biggest stumbling block was the State Bank of Pakistan’s Prudential Regulations and documentation requirements, which most SMEs were unable to meet. Cut-throat competition, willing to go for the solo flight, lack of attitude towards delegation, lack of corporate culture, lack of knowledge/proper homework and lack of relevant business development systems provision in the industry had knocked down the SMEs in Pakistan.
Despite these challenges, the two key potential areas of opportunity where entrepreneurship can make significant contributions are:
First, more than 2/3rd of Pakistan’s population is concentrated below the age of 30, which will change the age structure of working age population over the next few years. Majority of the youth entering the labor force over the next two decades will have little education and skills catering to market demand12. Moreover, incessant shocks to the economy such as energy crisis, international commodity price shocks, security issues, and flash floods of 2010/11 have left little resilience in the economy and absorption capacity for growing youth labor force. This required a
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rethinking about the sources of growth in Pakistan's context and entrepreneurship has the greatest potential to fill this gap.
Second, in the area of indigenous technology transfer, various researchers have underscored the need for establishing industry-university linkages. According to some estimates13 in eight years, between 1999 and 2007, Pakistan had increased R&D investment by 600% which stood at 0.7% of GDP or USD 1.176 billion. At the same time number of researchers in Pakistan has grown from187 per million in 2005 to 310 in 2007. Though Pakistan suffered significant economic challenges in the following years14, thereis still considerable R&D capacity in the nation's universities and institutions, particularly in the science and technology focused programs15. This new capacity can be converted into new entrepreneurship opportunities, economic growth and wealth creation by linking it with better trained young entrepreneurs.
The above scenario leads us to believe that the country's underdeveloped small business and entrepreneurial sector which is facing numerous economic challenges, can benefit from the available manpower resource opportunity if mobilized through an entrepreneurially oriented development approach envisaged by the GEM project.1.3 Entrepreneurship in Pakistan: Challenges and Opportunities Historically, entrepreneurship in the sense of its modern definition7 has remained very limited in Pakistan. The development of small-scale industrial sector measured through new firm entry rate, if taken as proxy to reflect entrepreneurial activity in Pakistan, show the average annual firm entry rate in Pakistan lower than most regional averages around the world8. There is, however, anode of caution here that a large number of new firm entries remain unregistered in Pakistan's significant small scale informal business sector. The Small and Medium Enterprise Development Authority (SMEDA) estimates that in Pakistan, small and medium enterprises (SMEs) with less than 100 employees constitute nearly 90% of all 3.5 million private firms that employ 80% of the non-agricultural labor force; and their share in the annual GDP is 40%9 . Their firm structure is dominated by sole proprietorship and most are family run businesses with no culture of taking it to the pubic (IPOs).
A review of the past 6 decades of Pakistan's development priorities reveals that entrepreneurship has never been the focus of economic development planners. All these years of government efforts clearly show a bias towards large scale industry and neglect of the small. The historical evidence clearly indicates that, in the context of Pakistan, when one talks about industrialization, for most people it implies large plants and factories run by machines and employing a large number of workers. It definitely comes as a surprise to people when they discover the reality; that it is actually the informal sector and the small scale sector that dominates the industrial landscape of Pakistan which have been continuously ignored in the national economic policies.
Comparison of various entrepreneurial characteristics and framework conditions of Pakistan with Peer nations, 2012.
Shahid Abbas Kahlon Jutt BC11-252
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Details Pakistan Iran Turkey Saudi Arabia Egypt West Bank& Gaza
Entrepreneurial Characteristic
TEA Rate 9.1 12.4 8.6 9.4 7.0 10.4
Nascent Entrepreneurship rate
6.6 4.8 3.7 5.9 2.1 7.9
New Business Ownership rate
2.7 7.8 5.1 3.5 4.9 2.6
Necessity driven Entrepreneurship
41% 38% 37% 10% 53% 32%
Female to male TEA ratio
1 to 4.5 n.a. 1 to 3.7 n.a. 1 to 2. 2 n.a.
Perceived capability to carry out
56.2 % 65.7% 54.2% 69.3% 63.4% 57.0%
Entrepreneurship Fear of failure
27.73% 37.51% 32.52% 37.82% 34.43% 40.0%
Entrepreneurial Attitude in Pakistan: Respondents expressing the opinion and agreeing with the statement
Statement All Male FemailI personally know someone personally who started .a
48.2% 64.3% 30.6%
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business in the past 2 yearsThere will be good startup opportunities whereI live in the next six months.
51.7% 62.0% 39.3%
I have the knowledge, skill and experience tostart a new business.
56.6% 67.7% 44.0%
Fear of failure would prevent me fromstarting a business.
31.5% 32.0% 32.0%
Most people consider starting a new businessa good career choice.
77.3% 77.8% 76.7%
Entrepreneurial attitudes of the non-entrepreneurially active working age population in various provinces of Pakistan are presented In above table. The key findings are as follows.
• The people of Punjab are more likely to agree with the statement “I personally know someone who has started a business in the last two years” which is a proxy for networking than respondents in any other region.
• In addition the people of Punjab had the highest proportion of the non-entrepreneurially active population reporting that there were good start up opportunities in their local area in the next six months.
• The people of Sindh were the most likely to agree with statement that “I have the knowledge, skill and experience required to start a new business”.
• The people of Khyber Pakhtoon Khowa had the lowest fear of failure to start a business.
Perceptions of entrepreneurship among non-entrepreneurially active working age population towards entrepreneurship in various provinces of Pakistan
Significant of entrepreneurship in Pakistan
UnemploymentThe high population growth in the past few decades has ensured that a very large number of young people are now entering the labour market. Even though it is among the seven most populous Asian nations, Pakistan has a lower population density than Bangladesh, Japan, India, and the Philippines. In the past, excessive red tape made firing
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from "jobs", and consequently hiring, difficult Significant progress in taxation and business reforms has ensured that many firms now are not compelled to operate in the underground economy.In late 2006, the government launched an ambitious nationwide service employment scheme aimed at disbursing almost $2 billion over five years.Mean wages were $0.98 per man hour in 2009. Rate of unemployment is 25%.High inflation and limited wage growth have drawn more women into the workforce to feed their families, in spite of cultural resistance and domestic abuse over the issue.
Downsizing This downsizing has all but destroyed the long standing notion of job security in large corporations. As a result employees of large companies after downsizing start their own business. Because they already have the experience of doing business. In Pakistan this trend has been started because there are problems of laodshading industries are doing downsizing, and employees are starting their own business. When they start their business other unemployed people can do work there.
Entrepreneurship Aids the EconomyMost economists agree that entrepreneurship is essential to the vitality of any economy, developed or developing. Entrepreneurs create new businesses, generating jobs for themselves and those they employ. In many cases, entrepreneurial activity increases competition and, with technological or operational changes, it can increase productivity as well. In the United States, for example, small businesses provide approximately 75 percent of the net new jobs added to the American economy each year and represent over 99 percent of all U.S. employers. The small businesses in the United States are often ones created by self-employed entrepreneurs.
“Entrepreneurs give security to other people; they are the generators of social welfare,” Carl J. Schramm, president and chief executive officer of Ewing Marion Kauffman Foundation, said in February 2007. The foundation is dedicated to fostering entrepreneurship, and Schramm is one of the world’s leading experts in this field.
Others agree that the benefits of small businesses go beyond income. Hector V. Baretto, administrator of the U.S. Small Business Administration (SBA), explains, “Small businesses broaden the base of participation in society, create jobs, decentralize economic power, and give people a stake in the future.”
Entrepreneurship facilitates the rate of development of a countryEntrepreneurship facilitates the rate of development of a country by significantly contributing to the following factors.
By increasing the rate of growth in GDP of a country Increasing productivity. Growing employment opportunity. Increasing economic diversification. Optimum use of local resources Continued innovation in techno – managerial practices Improving in international
competitiveness.
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Entrepreneurship helps in conserving the outflow of national wealthThe developing countries usually have a limited national wealth. However, they need to spend this wealth to import goods and services. Also, to trade with other countries, they need foreign exchange. Entrepreneurship helps in conserving the outflow of the national wealth in the following ways.
As entrepreneurship is a low-cost strategy of economic development, job creation and technical innovation. Thus they enable the production locally and reduce the need of import.
Entrepreneurs also bear the costs and risk of launching a new venture, developing a new product, commercializing an invention, adopting a technology and enveloping a new market. They will even help in generation of foreign exchange, thus conserving the outflow of national wealth.
o Entrepreneurship is an exercise in low-cost strategy.o Entrepreneurship is a low-cost strategy for Economic development.o Job creation.o Technical innovation
The entrepreneurs bear the costs and risks of launching a new venture, developing a new product, commercializing an invention, adapting a technology and developing a new market, there by offering a highly leveraged strategy of development.
Entrepreneurship alone results in generating wealth and employment, in increasing GDP and the overal development of society. Governments need to spend a lot of money if they have to provide employment and to establish enterprises. But by encouraging entrepreneurs and by supporting them government can achieve these targets easily. So entrepreneurship is called an excercise in low-cost strategy.
Entrepreneurship is not only an exercise in self-employment but it is employment generative.
It does not necessarily generate resources.It can be organized only with existing usable wealth.It has a strong tendency of self-saturation. So, once availed, it blocks the employment opportunities for others for another 10 years assuming an average 3 promotions in a 30-year service career.
Entrepreneurship or self-employment overcomes these problems as
Adds to the GNP
It has unique characteristics of self-generation.
In other words, entrepreneurship offers employment to others. As it is economic activity, it also leads to the emergence of other economic activities. This creates unending employment oppotunities.Thus, Entrepreneurship is not only an exercise in self-employment, but it is employment generative.
Shahid Abbas Kahlon Jutt BC11-252
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References
www.gem.org
www.smeda.org
www.finance.gov.pk
www.viewpointonline.net
Shahid Abbas Kahlon Jutt BC11-252
