CIPE has released the thought leader report “Creating the Environment for Entrepreneurial Success” to mark Global Entrepreneurship Week 2013.
Entrepreneurship drives economic change and innovation while at the same time it expands opportunity and unleashes the initiative of citizens. Entrepreneurs are crucial to building prosperous societies that deliver opportunity to all. In emerging economies around the world, interest in entrepreneurship is currently higher than ever amid burgeoning youth populations and a desire to move up value chains.
Unfortunately, in many developing economies, obstacles in the business environment close off entrepreneurial opportunities to huge swathes of the population. For example, a rural Kenyan entrepreneur must incur the cost of travel to Nairobi to register a business. In Lebanon, 65 percent of small and medium-sized enterprises must pay a bribe to conduct government procedures. Tunisian street vendors, most of whom cannot attain legal status, “live in constant fear of being evicted or harassed by local officials.” Even bankruptcy can be considered a crime in some places.
These barriers add to the usual challenges that entrepreneurs face with regard to capacity, financing, and market access. To be sure, some entrepreneurs prevail in spite of the obstacles. We should celebrate the successful cases that inspire future entrepreneurs. However, most would-be entrepreneurs face restricted options because they lack the connections, status, and resources enjoyed by established businesses and elite families. Women, youth, and non-elite individuals face higher hurdles to growing a business.
Experts, policymakers, and entrepreneurs have now turned their attention toward building entrepreneurship ecosystems. This attention reflects a recognition of the need for multifaceted support for entrepreneurial activity, as well as interactive effects within communities that accelerate efforts of individual entrepreneurs. As lessons in ecosystem development accumulate, it is becoming clear that initiatives to finance, educate, and connect entrepreneurs are outpacing improvements in the business environment. The majority of entrepreneurship programs struggle to incorporate the business environment pillar into the ecosystem.
This special report, Creating the Environment for Entrepreneurial Success, highlights the crucial environmental dimension of entrepreneurship ecosystems. Improving the conditions for entrepreneurship and leveling the playing field goes beyond the effort to help promising entrepreneurs. It expands the pool of potential entrepreneurs, builds incentives for entrepreneurship, eases the costs of doing business, and generates healthy competition. Policy and regulatory reforms should be integrated with comprehensive services to educate, finance, advise, and encourage entrepreneurs.