?Entrepreneurs don?t need artificial stimulation! But they need appropriate and facilitative environments to pursue productive entrepreneurship.” Dr Jay Mitra, co-editor of Enterprise Support Systems: An International Perspective, and Director, Centre for Entrepreneurship Research, University of Essex, shares with Sarika Malhotra as to what makes for a successful entrepreneur. Excerpts:
Will enterprise as the prime mover of economic growth help combat the current economic downturn?
The reaction to an economic downturn is to put a check on entrepreneurial activity. To an extent, it is true because money for investment dries up and markets for products and services sometimes shrink. However, all downturns push people and organisations to consider new ways in making products and services available, which can lead to innovation (for example people are more concerned with value for money in a recession, creating space for alternate markets). Also, a wider pool of labour and talent is made available as people are laid off. This can have two positive effects ? first, the availability of a prospectively cheaper pool of labour and second, the possibility of people setting up their own ventures. A downturn can also help investing communities clean up their acts and focus on sustainable enterprises with adequate business models.
What differentiates entrepreneurs from others?
The differentiating factor involves the ability to act on opportunities created by gaps in the production process, information asymmetry in the market place, and to create value through new products and services, which others imitate, resulting in growth. Whether they take real risks is questionable. But true entrepreneurs operate in highly-uncertain environments for which it is difficult to predict the outcome of the new ventures. Entrepreneurs don?t simply make products and personalised services. Their ability to organise them through new firms and new management structures, is what counts. However, not all small business owners, managers etc are entrepreneurs.
Are entrepreneurs universally alike? If so, do you think there is a universal prescription for developing entrepreneurs?
No, entrepreneurs are generally dependent on specific economic and social contexts for the outcomes. You have highly-educated entrepreneurs such as NR Narayana Murthy and others who did not have any formal education such as Dhirubhai Ambani. Both have changed the way we buy, use and consume products and services. There is no universal prescription for developing entrepreneurs. But what can be done effectively is to facilitate their efforts through the improvement of the general environment for business and its attractiveness, the reduction of some uncertainty in terms of access to information and resources, the development of positive attitudes in the wider community to productive value creation (sustainable and ethical busi- nesses), and adequate safeguards against exploitation. Entrepreneurs are not only those who set up new businesses but who change our vision for living better lives through community-based action. In the Indian context, both Nehru and Manmohan Singh are political entrepreneurs!
How do regional clusters come into being and how they fostered the viability of SMEs in traditional industries?
There is no magic in creating clusters. The best of clusters or industrial districts ? Italian small firms based industrial districts, the innovative milieu in the Swiss watch making industries, the Silicon Valley cluster of IT bio-tech, the silk clusters in South India or the automotive components clusters in Chennai and Pune ? all tend to evolve organically and establish themselves over time. They grow through a concentration of firms, in some cases a lead firm surrounded by a cluster of firms, and where their density is marked by both co-operation and competition of firms in terms of pooling of skills, marketing, technologies and capital, as these factors also get concentrated in the cluster.
A key feature is ?knowledge spillover?. It is a non-market phenomenon that means firms often take advantage of the new knowledge by the competitors without paying for the knowledge gained. This happens when you have a dense concentration of firms and where intelligence is often shared socially or informally. The pooled knowledge and resources of a cluster can also make their environment unique in industrial terms, making them attractive for job creation, international trading and connections with other clusters. A typical example of course is the Bangalore IT cluster and its links with the Silicon Valley.
The Indian IT industry has been hit by the downturn. What steps are needed to get in the rebound mode?
Fiscal stimulus measures taken by the government are going to be critical for enabling firms to regain the lost ground. The government needs to be careful about the runaway public expenditure, which it cannot afford. For small firms ? ease of credit flows, loan guarantee schemes, fiscal incentives for selective training for upgrading, generous capital allowances ? are important. For entrepreneurial firms, these measures apply but identifying opportunities for new products for the vast Indian market is also crucial.
There needs to be a pronounced Asian concordat for entrepreneurs, not just larger existing businesses. Policy makers need to break free from the traditional ideological shackles, which prevents them from taking better advantage of cohesive and strategic links, particularly with China. Working with Chinese IT hardware counterparts, the Indian software industry can make bigger global waves.