Global Entrepreneurship Environment and Strategy Nir Kshetri, PhD Routledge R Taylor & Francis Croup NEW YORK AND LONDON
Contents ILLUSTRATIONS PREFACE AND ACKNOWLEDGEMENTS ABBREVIATIONS XIII XVII XXI 1 GLOBAL ENTREPRENEURSHIP: THE CURRENT STATUS, DEFINITIONS, TYPES AND MEASURES 1 1.1 A GLOBAL ENTREPRENEURIAL REVOLUTION 2 1.1.1 FAVORABLE ATTITUDES TOWARD CAPITALISM AND SOCIAL ACCEPTANCE OF ENTREPRENEURSHIP 2 1.1.2 RESPONSES OF POLICY MAKERS AND NON-GOVERNMENTAL ORGANIZATIONS 3 1.1.3 YOUNG PEOPLE'S ENGAGEMENT IN ENTREPRENEURIAL ACTIVITIES 3 1.1.4 THE GLOBAL FINANCIAL CRISIS AND ENTREPRENEURSHIP 4 1.2 VARIOUS TYPES OF CAPITALISM AND THEIR INFLUENCES ON ENTREPRENEURIAL ACTIVITIES 5 1.3 VARIATION IN ENTREPRENEURIAL ACTIVITIES ACROSS THE WORLD 6 1.3.1 QUALITATIVE DIFFERENCES 7 1.3.2 MOTIVATION AND INTENDED GOALS OF ENTREPRENEURIAL ACTIVITIES 7 1.3.3 GENDER BIAS AND OTHER TYPES OF DISPARITY IN ENTREPRENEURSHIP 8 1.3.4 EFFECTS OF POLITICAL, CULTURAL AND OTHER BROAD ENVIRONMENTAL FACTORS 9 vii
viii CONTENTS 1.4 DEFINITIONS AND TYPES OF ENTREPRENEURIAL ACTIVITY AND THEIR VARIATIONS WORLDWIDE 12 1.4.1 PRODUCTIVE, UNPRODUCTIVE AND OBSTRUCTIVE ENTREPRENEURSHIP 12 1.5 ENTREPRENEURSHIP INDICATORS 14 1.5.1 ENTREPRENEURIAL IMPACTS INDICATORS 15 1.5.2 DETERMINANTS OF ENTREPRENEURSHIP 19 1.6 BecoMiNG A SUCCESSFUL ENTREPRENEUR IN DIFFERENT COUNTRIES 26 1.7 CREATING AN ENTREPRENEURIAL ECONOMY AND SOCIETY 28 1.8 CONCLUDING COMMENTS 30 1.9 REVIEW QUESTIONS 31 1.10 CRITICAL DISCUSSION QUESTIONS 31 1.11 END-OF-CHAPTER CASE: CELLULAR PHONES AND MICRO-ENTREPRENEURSHIP IN DEVELOPING COUNTRIES 31 2 THE ENTREPRENEURIAL ECOSYSTEM AND ITS COMPONENTS 41 2.1 INTRODUCTION 42 2.2 COMPARING NATURAL AND ENTREPRENEURIAL ECOSYSTEMS 43 2.2.1 PRODUCTIVITY OF AN ENTREPRENEURIAL ECOSYSTEM 43 2.2.2 DIVERSITY IN AN ENTREPRENEURIAL ECOSYSTEM 44 2.2.3 POOR-QUALITY SPECIES AND PARASITES AND THEiR EFFECTS 45 2.2.4 FEEDBACK SYSTEMS 46 2.3 THE ESSENTIAL ELEMENTS OF AN ENTREPRENEURIAL ECOSYSTEM 47 2.4 THE ROLES OF POLICY AND REGULATION IN ENHANCING THE QUALITY AND PRODUCTIVITY OF AN ENTREPRENEURIAL ECOSYSTEM 51 2.4.1 Two AFRICAN SUCCESS STORIES ON THE POLICY FRONT 53 2.5 A SYSTEMS APPROACH TO UNDERSTANDING THE ENTREPRENEURIAL ECOSYSTEM: MOVING FROM PARTS TO THE WHOLE 55 2.6 CONCLUDING COMMENTS 58 2.7 REVIEW QUESTIONS 59 2.8 CRITICAL DISCUSSION QUESTIONS 59 2.9 END-OF-CHAPTER CASE: THE COLOMBIAN ENTREPRENEURIAL ECOSYSTEM 59 3 SOURCES OF ENTREPRENEURIAL FINANCE AND THEIR VARIATION ACROSS THE WORLD 73 3.1 INTRODUCTION 74 3.2 AVAILABILITY AND COSTS OF BANK FINANCING 76 3.3 THE CAPITAL MARKET 79 3.4 VENTURE CAPITAL 81 3.5 MICROFINANCE 83 3.5.1 SIZE AND STRUCTURE OF THE GLOBAL MICROFINANCE INDUSTRY 84
CONTENTS ix 3.5.2 PROFIT-SEEKING MlCROFINANCE PROGRAMS 85 3.5.3 REPAYMENT RATES AND INTEREST RATES IN MICROFINANCE PROGRAMS 86 3.5.4 MICROFINANCE AND WOMEN 87 3.5.5 SOME CHALLENGES TO MICROFINANCE PROGRAMS 88 3.6 ECONOMIC AID FROM NGOS AND INTERNATIONAL AGENCIES 88 3.6.1 ACUMEN FUND'S COMBINATION OF VENTURE CAPITAL AND ECONOMIC AID 89 3.7 CROWDFUNDING 90 3.7.1 SOME EXAMPLES OF SUCCESSFUL VENTURES THAT RAISED MONEY BY CROWDFUNDING 91 3.8 SUPPLY CHAIN FINANCING 93 3.9 ~ INFORMAL FINANCING SOURCES 93 3.9.1 INFORMAL EQUITY FUNDING 94 3.9.2 INFORMAL SOURCES OF DEBT FINANCING 95 3.10 INTERNATIONAL REMITTANCES AS SOURCES OF ENTREPRENEURIAL FINANCING 96 3.11 CONCLUDING COMMENTS 98 3.12 REVIEW QUESTIONS 98 3.13 CRITICAL DISCUSSION QUESTIONS 98 3.14 END-OF-CHAPTER CASE: MICROFINANCE PROGRAMS AND VILLAGE PHONE LADIES 99 4 ENTREPRENEURSHIP IN OECD ECONOMIES 107 4.1 THE OECD IN RELATION TO ENTREPRENEURSHIP 108 4.2 THE NEWLY ACCESSED AND CANDIDATE COUNTRIES 108 4.3 DETERMINANTS OF ENTREPRENEURSHIP IN OECD ECONOMIES 117 4.3.1 REGULATORY FRAMEWORK 117 4.3.2 VALUES, CULTURE AND SKILLS 122 4.3.3 ACCESS TO FINANCE, MARKET, R&D AND TECHNOLOGY 126 4.4 CONCLUDING COMMENTS 132 4.5 REVIEW QUESTIONS 134 4.6 CRITICAL DISCUSSION QUESTIONS 134 4.7 END-OF-CHAPTER CASE: GOVERNMENTS' EXPORT PROMOTION STRATEGIES IN EU ECONOMIES 134 5 ENTREPRENEURSHIP IN POST-SOCIALIST ECONOMIES IN THE FORMER SOVIET UNION AND CENTRAL AND EASTERN EUROPE 143 5.1 INTRODUCTION 144 5.2 VARIATION ACROSS FSU&CEE ECONOMIES IN DIFFERENT FORMS OF ENTREPRENEURSHIP 145 5.3 PRODUCTIVE, UNPRODUCTIVE AND DESTRUCTIVE ENTREPRENEURSHIP IN FSU&CEE ECONOMIES 147 5.3.1 PRODUCTIVE MARKET ENTREPRENEURSHIP 148 5.3.2 UNPRODUCTIVE AND DESTRUCTIVE ENTREPRENEURSHIP 149 5.4 DETERMINANTS OF ENTREPRENEURSHIP IN FSU&CEE ECONOMIES 152
X CONTENTS 5.4.1 REGULATORY FRAMEWORK 152 5.4.2 VALUES, CULTURE AND SKILLS 155 5.4.3 ACCESS TO FINANCE, MARKET, R&D AND T ECHNOLOGY 157 5.5 CONCLUDING COMMENTS 159 5.6 REVIEW QUESTIONS 161 5.7 CRITICAL DISCUSSION QUESTIONS 161 5.8 END-OF-CHAPTER CASE: KASPERSKY LAB FROM RUSSIA WITH ANTIVIRUS 161 6 ENTREPRENEURSHIP IN THE GULF COOPERATION COUNCIL ECONOMIES 177 6.1 INTRODUCTION 178 6.2 A SURVEY OF ENTREPRENEURSHIP IN THE GCC REGION 178 6.3 DETERMINANTS OF ENTREPRENEURSHIP IN GCC ECONOMIES 181 6.3.1 REGULATORY FRAMEWORK 181 6.3.2 VALUES, CULTURE AND SKILLS 182 6.3.3 ACCESS TO FINANCE, MARKET, R&D AND TECHNOLOGY 185 6.4 FORMAL AND INFORMAL INSTITUTIONS IN RELATION TO ENTREPRENEURSHIP 187 6.4.1 THE GOVERNMENTS' REFORM MEASURES 189 6.4.2 INSTITUTIONAL CHANGE AGENTS 189 6.4.3 SELECTIVE ADAPTATION 190 6.4.4 THE "TRIPLE EMBEDDEDNESS" THESIS 190 6.4.5 THE "HOLISTIC ORDER" AND THE "EXTENDED ORDER" 192 6.4.6 WESTERN-EDUCATED LEADERS, TECHNOCRATS AND CITIZENS 195 6.4.7 GOVERNMENTS' DEPENDENCE ON BUSINESSES, AND THE MERGER OF ECONOMIC AND POLITICAL ELITES 197 6.4.8 DEPENDENCE ON WESTERN COUNTRIES 199 6.4.9 ABILITY To ACHIEVE ECONOMIC DEVELOPMENT WITHOUT REFORMS 200 6.5 CONCLUDING COMMENTS 202 6.6 REVIEW QUESTIONS 205 6.7 CRITICAL DISCUSSION QUESTIONS 205 6.8 END-OF-CHAPTER CASE: CELLULAR PHONES AND ENTREPRENEURSHIP IN THE GCC ECONOMIES 205 7 ENTREPRENEURSHIP IN AFRICA 215 7.1 INTRODUCTION 216 7.2 A SURVEY OF ENTREPRENEURSHIP IN AFRICA 216 7.2.1 POSITIVE AND ENCOURAGING SIGNS 217 7.2.2 NATURAL RESOURCES AND THEIR RELATIONS To ENTREPRENEURSHIP 222 7.3 DETERMINANTS OF ENTREPRENEURSHIP IN AFRICA 223 7.3.1 REGULATORY FRAMEWORK 223 7.3.2 VALUES, CULTURE AND SKILLS 228
CONTENTS Xi 7.3.3 ACCESS TO FINANCE, MARKET, R&D AND T ECHNOLOGY 229 7.4 FOREIGN COMPANIES' ENTREPRENEURIAL ACTIVITIES IN AFRICA 232 7.4.1 ARBITRAGE STRATEGIES 233 7.4.2 ALLEGATIONS REGARDING THE EXPLOITATION OF AFRICA'S RESOURCES BY FOREIGN MULTINATIONALS 235 7.4.3 Low DEGREE OF LINKAGE TO THE LOCAL ECONOMY 236 7.5 WESTERN RESPONSE TO THE Low LEVEL OF ENTREPRENEURIAL ACTIVITY IN AFRICA 236 7.6 CONCLUDING COMMENTS 237 7.7 REVIEW QUESTIONS 240 7.8 CRITICAL DISCUSSION QUESTIONS 240 7.9 END-OF-CHAPTER CASE: ENTREPRENEURSHIP IN THE AFRICAN FISHERIES INDUSTRIES 241 8 ENTREPRENEURSHIP IN CHINA 251 8.1 INTRODUCTION 252 8.2 A SURVEY OF ENTREPRENEURSHIP IN CHINA 253 8.2.1 SOME MACRO-ECONOMIC INDICATORS 253 8.2.2 EMERGENCE OF WORLD-CLASS ENTREPRENEURIAL FIRMS AND GLOBAL BRANDS 254 8.2.3 INEQUALITIES IN INCOME AND WEALTH 255 8.2.4 THE INFORMAL ECONOMY 255 8.2.5 MOTIVATION OF CHINESE ENTREPRENEURS 255 8.3 INSTITUTIONAL CHANGES AND ENTREPRENEURSHIP 256 8.3.1 CHANGES IN FORMAL INSTITUTIONS 256 8.3.2 CHANGES IN INFORMAL INSTITUTIONS 262 8.4 DETERMINANTS OF ENTREPRENEURSHIP IN CHINA 264 8.4.1 REGULATORY FRAMEWORK 264 8.4.2 VALUES, CULTURE AND SKILLS 264 8.4.3 ACCESS TO FINANCE, MARKET, R&D AND T ECHNOLOGY 266 8.5 CONCLUDING COMMENTS 270 8.6 REVIEW QUESTIONS 271 8.7 CRITICAL DISCUSSION QUESTIONS 272 8.8 END-OF-CHAPTER CASE.- ENTREPRENEURSHIP IN THE CHINESE CLEAN TECHNOLOGY INDUSTRY 272 9 ENTREPRENEURSHIP IN INDIA 283 9.1 INTRODUCTION 284 9.2 A SURVEY OF ENTREPRENEURSHIP IN INDIA 285 9.2.1 ENTREPRENEURSHIP IN THE INDIAN ICT AND OFFSHORING SECTOR 285 9.2.2 Low OVERALL ENTREPRENEURIAL PERFORMANCE 286 9.2.3 LACK OF TRICKLEDOWN EFFECT AND SIGNS OF OLIGARCHIC CAPITALISM 287 9.3 DETERMINANTS OF ENTREPRENEURSHIP 288
xii CONTENTS 9.3.1 REGULATORY FRAMEWORK 288 9.3.2 VALUES, CULTURE AND SKILLS 289 9.3.3 ACCESS TO FINANCE, MARKET, R&D AND T ECHNOLOGY 292 9.4 CONCLUDING COMMENTS 298 9.5 REVIEW QUESTIONS 298 9.6 CRITICAL DISCUSSION QUESTIONS 299 9.7 END-OF-CHAPTER CASE: THE ENTREPRENEURIAL CHIEF MINISTER AND ANDHRA PRADESH STATE'S EMERGENCE AS A GLOBAL ICT HUB 299 APPENDIX 1 INTEGRATIVE CASES (ICS) 311 APPENDIX 2 ONLINE SOURCES OF GLOBAL ENTREPRENEURSHIP- RELATED DATA AND STATISTICS 335 APPENDIX 3 PREPARING AN INTERNATIONAL BUSINESS PLAN (IBP) 341 INDEX 351