Entrepreneurship in the Global Economy
Entrepreneurs have been the source of innovation in many countries, especially developed nations. Entrepreneurs start companies, which, in turn, creates revenue for these countries, making their economies strong and prosperous. However, entrepreneurship remains a challenge is state controlled economies like China where government agencies build big industries and outsource jobs from Western countries. This is significant challenge for individual entrepreneurs despite their significant contribution to the growth of these economies. The challenges entrepreneurs face in state-controlled economies raise the question whether entrepreneurs can still create value in the global business economy (Kressel & Lento, 2012).
The book addresses on primary critical issue of state planning versus free enterprise. Authors also explore the challenges of entrepreneurship in the global economy. Governments play and significant role in the global economy; therefore, their involvement is essential. Entrepreneurs also create significant value in economic growth within the global economy despite the challenges they face. Various ways are suggested through which entrepreneurs can create industries and succeed in the global economy, even in state-controlled economies.
Entrepreneurship has significant benefits in promoting the success of the global economy. Entrepreneurs create new technologies and develop new products for innovation in new markets (Helmers & Rogers, 2010). There are many significant innovations that entrepreneurs introduced, such as eBay and Google. These innovations enhance economic growth globally. Besides creating innovations that fuel economic growth, entrepreneurship increase competition. The act of creating new business intensifies competition among existing businesses. Competition is beneficial to consumers who get to acquire quality products and services at lower prices. Additionally, newly established businesses has an indirect competition-enhancing effect that pushes established companies to improve their performance.
Entrepreneurship boosts productivity, which is a vital aspect of the global economy. Competition between established and new companies means that only the best will survive in the market. Although competition might affect employment, it enhances productivity. Besides enhancing productivity, entrepreneurship creates employment in the global economy. The emergence of new firms creates opportunities for new workforce, thus creating job opportunities. Unemployment is a challenge affecting growth in many economies; therefore, when a significant part of the population is employed, economies can develop (Valliere & Peterson, 2009).
However, entrepreneurs face significant challenges in doing business in the global economy. Especially when doing business in state-controlled economies. For instance, entrepreneurs face regulatory obstacles when setting up a business both in their countries and foreign nations. Entrepreneurs need to acquire business permits and licenses. Additionally, entry barriers are among the obstacles that discourage entrepreneurship. State-controlled economies often overregulate commerce, thus preventing the success of entrepreneurship by increasing the cost of starting a business. Overregulation also limits the flexibility of entrepreneurs to respond to new opportunities. Similarly, frequent changes, complex, and unclear regulations make it hard for entrepreneurs to understand the legal environment of their activities.
In some cases, overregulation makes entrepreneurship impossible by prohibiting entrepreneurs from entering some sectors because they are limited to state operations. The prohibition can be in form of strict licenses that act as non-competition agreements that limit innovative entrepreneurs from investing in productive and wealth-creating entrepreneurial activities.
Despite these challenges, governments have realized the value of entrepreneurship in enhancing economic growth and boosting growth in the global economy. Entrepreneurs create job opportunities for themselves and other people. Additionally, entrepreneurship can influence a country’s economic performance by promoting new and efficient production processes, and bringing new products to the market. These enhances productivity and competition, which are vital aspects of the global economy. Realizing these advantages, governments are now actively involved in the globalization of businesses. Governments play a significant role in the global economy by protecting intellectual and property rights. The government also streamlines and enforces commercial laws, ensures that the business climate is conducive, and reduce any regulatory burdens that might affect effective entrepreneurial activities. Therefore, to encourage entrepreneurship, governments globally should formulate policies and legislation that promote entrepreneurial activities.
Additionally, entrepreneurship is likely to succeed in deregulated economies. Governments should encourage free-operating markets and offer efficient licensing to allow entrepreneurs to do business with some level of flexibility so that they can easily respond to market changes. The regulations should also be enforced fairly to accommodate every individual that seeks to venture into the market. Moreover, governments should ensure there is no conflicting legislation, since such scenarios discourage business activity.
Entrepreneurs too have a role to play in facilitating smooth running of business operations in the global economy. For instance, when entrepreneurs seek to venture into regulated economies, it is essential to do a market research to understand all the regulatory requirements for doing business in a country. Entrepreneurs should also assess policy requirements and ensure they comply before establishing a business. Entrepreneurs should also be ready to adequately share limited resources when establishing firms despite the level of competition in the market. This will minimize the level of government intervention in entrepreneurial activities.
References
Helmers, C. & Rogers, M. (2010). Innovation and the survival of new firms in the UK. Review of
Industrial Organization, 36(3), 227–248
Kressel, H., & Lento, T. V. (2012). Entrepreneurship in the global economy : Engine for
economic growth. Cambridge, UK: Cambridge University Press.
Valliere, D. & Peterson. R. (2009). Entrepreneurship and economic growth: Evidence from
emerging and developed countries. Entrepreneurship & Regional Development 21(5–6)
459–480.